EXHIBIT 10.13
EXECUTION COPY
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U.S. $150,000,000
LOAN PURCHASE AND REPURCHASE AGREEMENT
by and among
ARBOR REALTY FUNDING LLC
as the Seller
WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Purchaser
and
ARBOR REALTY TRUST, INC.,
as the Guarantor
Dated as of December 23, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................................................... 1
Section 1.1 Certain Defined Terms................................................................. 1
Section 1.2 Other Terms........................................................................... 26
Section 1.3 Computation of Time Periods........................................................... 26
Section 1.4 Interpretation........................................................................ 26
ARTICLE II PURCHASE OF ELIGIBLE ASSETS........................................................................... 27
Section 2.1 Purchase and Sale..................................................................... 27
Section 2.2 Transaction Mechanics; Related Matters................................................ 27
Section 2.3 Reduction of Maximum Amount; Optional Repurchases..................................... 30
Section 2.4 Extension of Facility Maturity Date................................................... 30
Section 2.5 Payment of Price Differential......................................................... 31
Section 2.6 Request for Additional Transaction for Excess Margin.................................. 32
Section 2.7 Margin Account Maintenance............................................................ 33
Section 2.8 Income Payments....................................................................... 34
Section 2.9 Payment, Transfer and Custody......................................................... 35
Section 2.10 Disputes Regarding Market Value Determination......................................... 36
Section 2.11 Hypothecation or Pledge of Purchased Assets........................................... 37
Section 2.12 Fees.................................................................................. 37
Section 2.13 Increased Costs; Capital Adequacy; Illegality......................................... 37
Section 2.14 Taxes................................................................................. 39
ARTICLE III CONDITIONS TO TRANSACTIONS........................................................................... 40
Section 3.1 Conditions to Closing and Initial Purchase............................................ 40
Section 3.2 Conditions Precedent to all Transactions.............................................. 41
Section 3.3 Additional Opinions................................................................... 45
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................ 46
Section 4.1 Representations and Warranties of the Seller.......................................... 46
ARTICLE V COVENANTS.............................................................................................. 56
Section 5.1 Covenants of the Seller............................................................... 56
ARTICLE VI ADMINISTRATION AND SERVICING.......................................................................... 70
Section 6.1 Servicing............................................................................. 70
Section 6.2 Seller as Servicer.................................................................... 70
Section 6.3 Third Party Servicer.................................................................. 70
Section 6.4 Duties of the Seller.................................................................. 71
Section 6.5 Authorization of the Seller........................................................... 72
Section 6.6 Collection of Payments................................................................ 73
Section 6.7 Realization Upon Defaulted Purchased Items............................................ 73
Section 6.8 Maintenance of Insurance Policies..................................................... 74
Section 6.9 Termination Event..................................................................... 74
Section 6.10 Modification.......................................................................... 74
Section 6.11 Inspection............................................................................ 75
Section 6.12 Servicing Compensation................................................................ 75
Section 6.13 Payment of Certain Expenses by Servicer............................................... 75
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Section 6.14 Pooling and Servicing Agreements...................................................... 75
Section 6.15 Servicer Default...................................................................... 76
ARTICLE VII [RESERVED]........................................................................................... 76
ARTICLE VIII SECURITY INTEREST................................................................................... 76
Section 8.1 Security Interest..................................................................... 76
Section 8.2 Release of Lien on Purchased Assets................................................... 78
Section 8.3 Further Assurances.................................................................... 78
Section 8.4 Remedies.............................................................................. 78
Section 8.5 Waiver of Certain Laws................................................................ 78
ARTICLE IX POWER OF ATTORNEY..................................................................................... 79
Section 9.1 Purchaser's Appointment as Attorney-in-Fact........................................... 79
ARTICLE X TERMINATION EVENTS..................................................................................... 80
Section 10.1 Termination Events.................................................................... 80
Section 10.2 Remedies.............................................................................. 84
Section 10.3 Determination of Termination Events................................................... 86
ARTICLE XI INDEMNIFICATION....................................................................................... 87
Section 11.1 Indemnities by the Seller............................................................. 87
ARTICLE XII [RESERVED]........................................................................................... 88
ARTICLE XIII MISCELLANEOUS....................................................................................... 88
Section 13.1 Amendments and Waivers................................................................ 88
Section 13.2 Notices, Etc.......................................................................... 88
Section 13.3 Set-offs.............................................................................. 88
Section 13.4 No Waiver; Remedies................................................................... 89
Section 13.5 Binding Effect........................................................................ 89
Section 13.6 Term of this Agreement................................................................ 89
Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue.................. 89
Section 13.8 Waiver of Jury Trial.................................................................. 89
Section 13.9 Costs, Expenses and Taxes............................................................. 90
Section 13.10 Legal Matters......................................................................... 90
Section 13.11 Recourse Against Certain Parties...................................................... 91
Section 13.12 Protection of Right, Title and Interest in the Purchased Assets; Further Action
Evidencing Transactions............................................................... 91
Section 13.13 Confidentiality....................................................................... 92
Section 13.14 Execution in Counterparts; Severability; Integration.................................. 93
Section 13.15 Seller's Waiver of Setoff............................................................. 94
Section 13.16 Assignments and Participations; Hypothecation of Purchased Assets..................... 94
Section 13.17 Heading and Exhibits.................................................................. 95
Section 13.18 Single Agreements..................................................................... 95
Section 13.19 Disclosure Relating to Certain Federal Protections.................................... 95
Section 13.20 Intent................................................................................ 95
Section 13.21 Periodic Due Diligence Review......................................................... 96
Section 13.22 Use of Employee Plan Assets........................................................... 97
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SCHEDULES
Schedule 1 Representations and Warranties Regarding Mortgage Assets....................................... 1
Schedule 2 Asset Pricing.................................................................................. 1
Schedule 3 Accounts....................................................................................... 1
Schedule 4 Approved Servicers............................................................................. 1
Schedule 5 List of Existing Financing Facilities.......................................................... 1
Schedule 6 Exceptions to Subsection 4.1(h)(h)............................................................. 1
Schedule 7 UCC Filing Locations........................................................................... 1
Schedule 8 List of Subsidiaries........................................................................... 1
EXHIBITS
Exhibit I-1 Form of Closing Certificate of Seller.......................................................... 1
Exhibit I-2 Form of Closing Certificate of Guarantor....................................................... 1
Exhibit I-3 Form of Closing Certificate of Pledgor......................................................... 1
Exhibit II-1 Form of Confirmation - Mezzanine Loan Transactions............................................. 1
Exhibit II-2 Form of Confirmation - Whole Loan and Junior Interest Transactions............................. 1
Exhibit III Power of Attorney.............................................................................. 1
Exhibit IV Form of Transaction Request.................................................................... 1
Exhibit V Form of Account Agreement...................................................................... 1
Exhibit VI-1 Form of Perfection Certificate of the Seller................................................... 1
Exhibit VI-2 Form of Perfection Certificate of the Pledgor.................................................. 1
Exhibit VII-1 Form of Seller's Release Letter................................................................ 1
Exhibit VII-2 Form of Warehouse Lender's Release Letter...................................................... 1
Exhibit VIII Form of Servicer Notice........................................................................ 1
Exhibit IX Form of Request for Additional Transactions for Excess Margin.................................. 1
Exhibit X Compliance Certificate......................................................................... 1
Exhibit XI Form of Summary of Purchased Asset Data Summary................................................ 1
Exhibit XII Form of Margin Deficit Notice.................................................................. 1
Exhibit XIII Form of Assignment............................................................................. 1
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LOAN PURCHASE AND REPURCHASE AGREEMENT
THIS LOAN PURCHASE AND REPURCHASE AGREEMENT (such agreement as amended,
modified, waived, supplemented, extended, replaced or restated from time to
time, the "Agreement") is made as of this 23rd day of December, 2003, by and
among:
(1) ARBOR REALTY FUNDING LLC, a Delaware limited liability company, as
the seller (together with its successors and permitted assigns in such capacity,
the "Seller");
(2) WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
(together with its successors and assigns, "Wachovia"), as the purchaser
(together with its successors and assigns in such capacity, the "Purchaser");
and
(3) ARBOR REALTY TRUST, INC., a Maryland corporation (together with its
successors and assigns, "Arbor"), as the guarantor (together with its successors
and permitted assigns in such capacity, the "Guarantor").
R E C I T A L S
WHEREAS, the Seller desires to sell and the Purchaser desires to
purchase from time to time Eligible Assets under the terms and conditions stated
herein; and
WHEREAS, the parties desire that the Seller repurchase the Purchased
Assets on or before the Facility Maturity Date under the terms and conditions
stated herein.
NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises
and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are
defined above or in this Article I.
(b) As used in this Agreement and the schedules, exhibits and other
attachments hereto, unless the context requires a different meaning, the
following terms shall have the following meanings:
"40 Act": Defined in Subsection 10.1(e).
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"Accepted Servicing Practices": With respect to any Mortgage Asset, those
mortgage servicing practices of prudent mortgage lending institutions that
service Mortgage Assets of the same type, size and structure as such Mortgage
Asset in the jurisdiction where the related Mortgaged Property is located, but
in any event, in accordance with the terms of the Repurchase Documents and
without prejudice to the interests of the Purchaser.
"Account Agreement": A letter agreement among the Seller, the Purchaser and
Wachovia substantially in the form of Exhibit V attached hereto.
"Accrual Period": With respect to the first Payment Date, the period from and
including the applicable Purchase Date to but excluding such first Payment Date,
and, with respect to any subsequent Payment Date, the period from and including
the previous Payment Date to but excluding such subsequent Payment Date.
"Additional Amount": Defined in Section 2.14.
"Adjusted Eurodollar Rate": For any Eurodollar Period, a rate per annum equal to
a fraction, expressed as a percentage and rounded upwards (if necessary) to the
nearest 1/100 of 1%, (i) the numerator of which is equal to the Eurodollar Rate
for such Eurodollar Period and (ii) the denominator of which is equal to 100%
minus the Eurodollar Reserve Percentage for such Eurodollar Period.
"Advance Rate": With respect to a Mortgage Asset of a certain Class and the
applicable Type of Underlying Mortgaged Property, the "Advance Rate" set forth
in the applicable column on Schedule 2 attached hereto.
"Affiliate": With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person, or is a director of such Person. For purposes of this definition,
"control" (including the terms "controlling," "controlled by" and "under common
control with") when used with respect to any specified Person means the
possession, direct or indirect, of the power to vote 20% or more of the voting
securities of such Person or to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Aggregate Unpaids": At any time, an amount equal to the sum of the aggregate
Purchase Price outstanding for all Transactions, the aggregate Price
Differential outstanding, Margin Deficits outstanding, Breakage Costs, Increased
Costs, Taxes, Additional Amounts, Late Payment Fees and all other amounts owed
by the Seller to the Purchaser or by the Seller or any other Person under this
Agreement, the Repurchase Documents and any fee letter (including, without
limitation, the Fee Letter and the Custodial Fee Letter) delivered in connection
with the transactions contemplated by this Agreement or the Repurchase Documents
(whether due or accrued).
"Agreement": Defined in the Preamble of this Agreement.
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"ALTA": The American Land Title Association.
"Alternative Market Price Quote": The good faith determination of the price at
which a Mortgage Asset could readily be sold by a bona fide third-party that (a)
is not the Seller, the Guarantor, the Pledgor or any Affiliate of the Seller,
the Guarantor or the Pledgor, (b) regularly engages in the business of buying
and/or selling assets similar in type, size and structure as the Purchased
Assets and in the same jurisdiction as the related Underlying Mortgaged
Property, and (c) is familiar with the market for such Mortgage Assets.
"Anti-Money Laundering Laws": Defined in Subsection 4.1(nn).
"Applicable Law": For any Person or Property of such Person, all existing and
future applicable laws, rules, regulations (including temporary and final income
tax regulations), statutes, treaties, codes, ordinances, permits, certificates,
orders and licenses of and interpretations by any Governmental Authority
(including, without limitation, usury laws, the Federal Truth in Lending Act,
and Regulation Z and Regulation B of the Board of Governors of the Federal
Reserve System), and applicable judgments, decrees, injunctions, writs, awards
or orders of any court, arbitrator or other administrative, judicial or
quasi-judicial tribunal or agency of competent jurisdiction.
"Asset Schedule and Exception Report": Defined in the Custodial Agreement.
"Asset Tape": Defined in Subsection 5.1(ff).
"Asset Value": As of any date of determination for each Eligible Asset or
Purchased Asset, as applicable, with respect to a Mortgage Asset of a certain
Class and the applicable Type of Underlying Mortgaged Property, the lesser of
(a) the product of the Book Value of such Mortgage Asset times the Advance Rate
applicable thereto and (b) the product of the Market Value of such Mortgage
Asset times the LTV applicable thereto; provided, however, (i) the Asset Value
of any Mortgage Asset shall not include any portion of a Mortgage Asset that
exceeds the Sub-Limit applicable thereto at any time, unless waived in writing
by the Purchaser in its sole and absolute discretion, and (ii) the Asset Value
shall be deemed to be zero (0) for each Mortgage Asset (A) in respect of which
there is a breach of a representation and warranty set forth in Schedule 1
(assuming each representation and warranty is made as of the date the Asset
Value is determined), (B) in respect of which the complete Mortgage Asset File
has not been delivered to the Custodian within the time period required by the
Custodial Agreement, (C) which is a Table Funded Purchased Asset in respect of
which the Mortgage Asset Files have not been delivered to the Custodian within
three (3) Business Days following the Purchase Date, or (D) that has been
released from the possession of the Custodian under the Custodial Agreement to
the Seller for a period in excess of twenty (20) calendar days.
"Assignment": The transfer of all of the Seller's rights and interests under an
Eligible Asset pursuant to an assignment agreement among the Seller and the
Purchaser, which agreement shall be in the form of Exhibit XIII and is otherwise
satisfactory to the Purchaser in its discretion.
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"Assignment of Leases": With respect to any Mortgage, an assignment of leases
thereunder, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the Underlying Mortgaged
Property is located to reflect the assignment of leases to the Purchaser.
"Assignment of Mortgage": With respect to any Mortgage, an assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment of the Mortgage to the Purchaser.
"Availability": At any time, an amount equal to the positive excess (if any) of
(a) the Maximum Amount minus (b) the aggregate Purchase Price outstanding for
all Transactions on such day; provided, however, on and after the occurrence of
the Facility Maturity Date (not including any extensions thereof) or a
Termination Event, the Availability shall be zero (0).
"Bailee": With respect to each Table Funded Purchased Asset, the related title
company or other settlement agent, in each case, approved by the Purchaser in
its sole discretion.
"Bailee Agreement": The Bailee Agreement among the Seller, the Purchaser and the
Bailee in the form of Annex 13 to the Custodial Agreement.
"Bailee's Trust Receipt": A Trust Receipt in the form of Attachment 2 to the
Bailee Agreement.
"Bankruptcy Code": The United States Bankruptcy Reform Act of 1978 (11 U.S.C.
Section 101, et seq.), as amended from time to time.
"Base Rate": On any date, a fluctuating rate per annum equal to the lower of (a)
the Prime Rate or (b) the Federal Funds Rate plus 0.5%.
"Benefit Plan": Any employee benefit plan as defined in Section 3(3) of ERISA in
respect of which the Seller or the Guarantor or any ERISA Affiliate of the
Seller or the Guarantor is, or at any time during the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Book Value": With respect to any Mortgage Asset at any time, an amount, as
certified by the Seller, equal to the price that the Seller initially paid or
advanced for or in respect of such Mortgage Asset, as such Book Value may be
marked down by the Seller from time to time, including any loss/price
adjustments, less an amount equal to the sum of all principal paydowns paid and
realized losses recognized relating to such Mortgaged Asset.
"Borrower": Defined in the Custodial Agreement.
"Borrower Reserve Payments": Any payments made by a Borrower under the
applicable Mortgage Loan Documents which, pursuant to the terms of such Mortgage
Loan Documents, are required to be deposited into escrow or into a reserve to be
used for a specific purpose (e.g., tax and insurance escrows).
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"Breakage Costs": Defined in Subsection 2.5(b).
"Business Day": Any day other than a Saturday or a Sunday on which (a) banks are
not required or authorized to be closed in Minneapolis, Minnesota or Charlotte,
North Carolina, and (b) if the term "Business Day" is used in connection with
the determination of the Eurodollar Rate, dealings in United States dollar
deposits are carried on in the London interbank market.
"Capital Lease Obligations": For any Person, all obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) Property to the extent such obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"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 that is not a corporation,
including, without limitation, any and all member or other equivalent interests
in any limited liability company or partnership interests or other equivalents
in any kind of partnership, and any and all warrants or options to purchase any
of the foregoing.
"Class": With respect to a Mortgage Asset, such Mortgage Asset's classification
as a Whole Loan, a Junior Interest or a Mezzanine Loan.
"Closing Date": December 23, 2003.
"Code": The Internal Revenue Code of 1986, as amended from time to time.
"Collection Account": The account set forth on Schedule 3 established by the
Seller in the name of the Purchaser and subject to an Account Agreement, into
which all Income shall be deposited. Funds in the Collection Account may be
invested at the direction of the Purchaser in Permitted Investments.
"Commercial Real Estate": Any real estate included in the definition of Type.
"Commercial Real Estate Loan": Any loan secured by Commercial Real Estate.
"Commitment Fee": Defined in the Fee Letter.
"Commonly Controlled Entity": An entity, whether or not incorporated, that is
under common control with the Seller or the Guarantor within the meaning of
Section 4001 of ERISA or is part of a group which includes the Seller or the
Guarantor and that is treated as a single employer under Section 414 of the
Code.
"Compliance Certificate": Defined in Subsection 3.2(e).
"Confirmation": Defined in Subsection 2.2(c).
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"Consolidated Adjusted EBITDA": For any period, the sum, without duplication,
for such period of (a) the Net Income of the Seller or the Guarantor for such
period, (b) the sum of the provisions for such period for income taxes, interest
expense, and depreciation and amortization expense used in determining such Net
Income, (c) amounts deducted in accordance with GAAP in respect of other
non-cash expenses in determining such Net Income and (d) the amount of any
aggregate net loss (or minus the amount of any gain) during such period arising
from the sale, exchange or other disposition of capital assets by the Seller or
the Guarantor.
"Consolidated Interest Expense": For any period with respect to any Person, the
amount that, in conformity with GAAP, would be set forth opposite the caption
"interest expense" or any like caption (including, without limitation, imputed
interest included in payments under financing leases) on a consolidated income
statement of such Person for such period excluding the amortization of any
original issue discount.
"Contractual Obligation": With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its Property is bound or is subject.
"Custodial Agreement": That Custodial Agreement, dated as of the date hereof, by
and among the Purchaser, the Seller and the Custodian, as the same shall be
amended, modified, waived, supplemented, extended, replaced or restated from
time to time.
"Custodial Fee Letter": The Custodial Fee Letter between the Seller and the
Custodian, as such letter may be amended, modified, waived, supplemented,
extended, restated or replaced from time to time.
"Custodial Identification Certificate": Defined in the Custodial Agreement.
"Custodian": ▇▇▇▇▇ Fargo Bank Minnesota, National Association, and its successor
in interest as the custodian under the Custodial Agreement, and any successor
Custodian under the Custodial Agreement.
"Debt Service Coverage Ratio" or "DSCR": With respect to any Mortgage Asset, as
of any date of determination, for the period of time to be determined in the
Purchaser's sole discretion (it being understood that it is the Purchaser's
intent to make the determination based on the period of twelve (12) consecutive
complete calendar months preceding such date (or, if such Mortgage Asset was
originated less than twelve (12) months from the date of determination, the
number of months from the date of origination)), the ratio of (a) the aggregate
Net Cash Flow in respect of the Underlying Mortgaged Properties relating to such
Mortgage Asset for such period to (b) the sum of (i) the aggregate amount of all
amounts due for such period in respect of all Indebtedness that was outstanding
from time to time during such period that is secured, directly or indirectly, by
such Underlying Mortgaged Properties (including, without limitation, by way of a
pledge of the equity of the owner(s) of such Underlying Mortgaged Properties) or
that is otherwise owing by the owner(s) of such Underlying Mortgaged Properties,
including, without limitation, all
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scheduled principal and/or interest payments due for such period in respect of
each Mortgaged Asset that is secured or supported by such Underlying Mortgaged
Properties plus (ii) the amount of all Ground Lease payments to be made in
respect of such Underlying Mortgaged Properties during such period, as any of
the foregoing elements of DSCR may be adjusted by the Purchaser as determined by
the Purchaser in its discretion; provided, however, that all such calculations
shall be made taking into account any senior or pari passu debt secured directly
or indirectly by the applicable Underlying Mortgaged Property; provided,
further, however, the DSCR shall not be less than the Minimum DSCR.
"Defaulted Mortgage Asset": Any Mortgage Asset (a) that is ninety (90) days or
more delinquent, (b) for which there is a breach of any of the representations
and warranties set forth on Schedule 1 hereto, or (c) for which there is a
non-monetary default (beyond any applicable notice and cure period) under the
related Mortgage Loan Documents.
"Delinquent Mortgage Asset": A Mortgage Asset that is thirty (30) or more days,
but less than ninety (90) days, delinquent.
"Dollars" and "$": Lawful money of the United States of America.
"Due Diligence Costs": Defined in Section 13.21.
"Due Diligence Review": The performance by the Purchaser of any or all of the
reviews permitted under Section 13.21 with respect to any or all of the
Purchased Items, as desired by the Purchaser from time to time.
"Electronic Transmission": The delivery of information and executed documents in
an electronic format acceptable to the applicable recipient thereof.
"Eligible Asset": A Mortgage Asset that as of any date of determination:
(a) is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset;
(b) with respect to the portion of such Mortgage Asset to be acquired
by the Purchaser, the funding obligations have been satisfied in full and there
is no unfunded commitment with respect thereto;
(c) has been approved by the Purchaser in its sole and absolute
discretion;
(d) has an LTV not in excess of the Maximum LTV;
(e) has a DSCR equal to or greater than the Minimum DSCR;
(f) is not a construction loan;
(g) is not a loan to an operating business (other than a hotel);
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(h) in the case a Junior Interest with a "B note" in an "A/B
structure", the "B note" has a floating rate of interest with a remaining term
to maturity of less than seven (7) years;
(i) from and after the date that the aggregate Purchase Price for all
outstanding Transactions exceeds $100,000,000, the Seller shall, on a
prospective basis, maintain a reasonable mix of Mortgage Assets (as among the
Whole Loans, the Mezzanine Loans and the Junior Interests), as determined by the
Purchaser in its discretion; and
(j) in the case of Wachovia Assets, more than thirty (30) Business Days
have elapsed since the date the Seller acquired such Mortgage Asset from the
Purchaser or its Affiliates (direct or indirect);
provided, however, notwithstanding a Mortgage Asset's failure to conform to the
criteria set forth above, the Purchaser may, in its sole and absolute
discretion, designate in writing any such non-compliant Mortgage Asset as an
Eligible Asset, which may include a temporary or permanent waiver of one (1) or
more Eligible Asset requirements.
"Environmental Laws": Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 331 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300, et
seq.), the Environmental Protection Agency's regulations relating to underground
storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.), and the rules and regulations
thereunder, each as amended, modified, waived, supplemented, extended, restated
or replaced from time to time.
"Equity Interests": Defined in the Pledge Agreement.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliate": (a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Seller or the Guarantor, (b) a trade or business (whether or not incorporated)
under common control (within the meaning of Section 414(c) of the Code) with the
Seller or the Guarantor, or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as the Seller, the Guarantor,
any corporation described in clause (a) above or any trade or business described
in clause (b) above.
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"Eurocurrency Liabilities": Defined in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Eurodollar Disruption Event": The occurrence of any of the following: (a) the
Purchaser or any of its assignees or participants has determined that it would
be contrary to law or to the directive of any central bank or other Governmental
Authority (whether or not having the force of law) to obtain United States
dollars in the London interbank market to fund any Transaction, (b) the
inability, for any reason, of the Purchaser or any of its assignees or
participants to determine the Adjusted Eurodollar Rate, (c) the Purchaser or any
of its assignees or participants shall have determined that the rate at which
deposits of United States dollars are being offered to the Purchaser or any of
its assignees or participants in the London interbank market does not accurately
reflect the cost to the Purchaser or such assignee or participant of making,
funding or maintaining any Transaction, or (d) the inability of the Purchaser or
any of its assignees or participants to obtain United States dollars in the
London interbank market to make, fund or maintain any Transaction.
"Eurodollar Period": With respect to any Transaction, (i) initially, the period
commencing on the Purchase Date with respect to such Transaction and ending on
the earlier of the related Repurchase Date and one-month, two-months,
three-months, six-months or such longer period, if available, to be offered by
the Purchaser, in each case as selected by the Seller (provided, that the Seller
may not select a Eurodollar Period longer than six-months if the last day of
such Eurodollar Period occurs after the Facility Maturity Date), and (ii)
thereafter, each period commencing on the day following the last day of the
preceding Eurodollar Period applicable to such Transaction and ending on the
earliest of (x) the related Repurchase Date, (y) the date that is one-month,
two-months, three-months, six-months or otherwise thereafter, as the case may
be, or (z) the Facility Maturity Date.
"Eurodollar Rate": With respect to each Eurodollar Period during which a
Transaction is outstanding, the rate per annum equal to the rate appearing at
page 3750 of the Telerate Screen as one-month, two-month, three-month, six-month
or other LIBOR, as selected by the Seller in accordance with this Agreement, at
or about 9:00 a.m., Charlotte, North Carolina time, three (3) Business Days
prior to the beginning of such Eurodollar Period (and if such date is not a
Business Day, the Eurodollar Rate in effect on the Business Day immediately
preceding such date), or, if no such rate appears on Telerate page 3750 at such
time and day, then the Eurodollar Rate shall be determined by Wachovia at its
principal office in Charlotte, North Carolina as its rate (each such
determination, absent manifest error, to be conclusive and binding on all
parties hereto and their assignees) at which thirty (30) day deposits in United
States Dollars are being, have been, or would be offered or quoted by Wachovia
to major banks in the applicable interbank market for Eurodollar deposits at or
about 11:00 a.m. on such day. The Purchaser's determination of Eurodollar Rate
shall be conclusive upon the parties absent manifest error on the part of the
Purchaser.
"Eurodollar Reserve Percentage": For any period means the percentage, if any,
applicable during such period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal
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Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any basic, emergency, supplemental,
marginal or other reserve requirements) with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to the
applicable Eurodollar Period.
"Excepted Persons": Defined in Subsection 13.13(a).
"Exception": Defined in the Custodial Agreement.
"Excess Margin": Defined in Subsection 2.6(a).
"Exchange Act": The Securities Exchange Act of 1934, as amended, modified,
waived, supplemented, extended, restated or replaced from time to time.
"Executive Order": Defined in Subsection 4.1(nn).
"Existing Financing Facilities": The financing facilities identified on Schedule
5 hereto.
"Extension Fee": Defined in Section 2.4.
"Extension Fee Payment Date": Defined in Section 2.4.
"Facility Maturity Date": Subject to Article X, the earlier of (a) December 23,
2006, as such original Facility Maturity Date may be extended pursuant to
Section 2.4 hereof, or (b) the date on which this Agreement shall terminate in
accordance with the provisions hereof or by operation of law.
"Facility Period": The period commencing on the Closing Date and terminating on
the Facility Maturity Date.
"FDIA": Defined in Subsection 13.20(b).
"FDICIA": Defined in Subsection 13.20(c).
"Federal Funds Rate": For any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the overnight
federal funds rates as in Federal Reserve Board Statistical Release H.15(519) or
any successor or substitute publication selected by the Purchaser (or, if such
day is not a Business Day, for the next succeeding Business Day), or, if, for
any reason, such rate is not available on any day, the rate determined, in the
sole opinion of the Purchaser, to be the rate at which overnight federal funds
are being offered in the national federal funds market at 9:00 a.m.
"Fee Letter": The Fee Letter, dated December 23, 2003, between the Purchaser and
the Seller, as amended, modified, waived, supplemented, extended, restated or
replaced from time to time.
"Final Maturity Date": Defined in Section 2.4.
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"Financial Covenants": The covenants set forth in Subsections 5.1(bb) - (ee).
"FIRREA Appraisal": An appraisal prepared by an independent third-party
appraiser approved by the Purchaser in its reasonable discretion and satisfying
the requirements of Title XI of the Federal Institutions, Reform, Recovery and
Enforcement Act of 1989 (as supplemented, amended, modified and replaced from
time to time) and the regulations promulgated thereunder, as in effect on the
date of such appraisal.
"Foreclosed Loan": A loan the security for which has been foreclosed upon by the
Seller.
"GAAP": Generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.
"Governing Documents": As to any Person, the articles or certificate of
incorporation or formation, by-laws, limited liability company agreement,
general partnership agreement, limited partnership agreement or other applicable
organizational or governing documents of such Person.
"Governmental Authority": Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
any court or arbitrator having jurisdiction over such Person, any of its
Subsidiaries or any of its Properties, and any accounting board or authority
(whether or not a part of government) that is responsible for the establishment
or interpretation of national or international accounting principles, in each
case whether foreign or domestic.
"Ground Lease": With respect to any Commercial Real Estate Loan for which the
Borrower has a leasehold interest in the related Mortgaged Property or space
lease within such Mortgaged Property, the lease agreement creating such
leasehold interest.
"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
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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": Defined in the Preamble of this Agreement.
"Guaranty": The Guaranty, dated December 23, 2003, executed by the Guarantor in
favor of the Purchaser.
"H.15": Federal Reserve Statistical Release H.15.
"Income": With respect to any Purchased Items, at any time, all of the
following: collections, prepayments, recoveries, insurance and condemnation
proceeds and all other payments or proceeds on or in respect of the Purchased
Items, including, without limitation, any principal thereof then payable and all
interest, dividends, fees or other distributions payable thereon, less the
Servicing Fee, and amounts received from any Interest Rate Protection Agreement.
Income shall not include any Borrower Reserve Payments.
"Increased Costs": Any amounts required to be paid by the Seller to the
Purchaser pursuant to Section 2.13.
"Indebtedness": For any Person: (a) obligations created, issued or incurred by
such Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of Property to another Person subject to an understanding
or agreement, contingent or otherwise, to repurchase such Property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within ninety (90) days of the date the respective goods are delivered or the
respective services are rendered; (c) indebtedness of others secured by a Lien
on the Property of such Person, whether or not the respective indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person; (e) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (f) indebtedness of others
guaranteed by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; (h)
indebtedness of general partnerships of which such Person is secondarily or
contingently liable (other than by endorsement of instruments in the course of
collection), whether by reason of any agreement to acquire such indebtedness to
supply or advance sums or otherwise; and (i) Capital Lease Obligations of such
Person.
"Indemnified Amounts": Defined in Subsection 11.1(a).
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"Indemnified Parties": Defined in Subsection 11.1(a).
"Independent Director": A natural Person who (a) is not at the time of initial
appointment as Independent Director, and may not have been at any time during
the five (5) years preceding such initial appointment or at any time while
serving as Independent Director, (i) a stockholder, partner, member or direct or
indirect legal or beneficial owner of the Seller, the Guarantor or any Affiliate
of the Seller or the Guarantor; (ii) a contractor, creditor, customer, supplier,
director (with the exception of serving as the Independent Director of the
Seller), officer, employee, attorney, manager or other Person who derives any of
its purchases or revenues from its activities with the Seller, the Guarantor or
any Affiliate of the Seller or the Guarantor; (iii) a natural Person who
controls (directly or indirectly or otherwise) the Seller, the Guarantor or any
Affiliate of the Seller or Guarantor or who controls or is 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 and (b) otherwise satisfies the then current requirements of the Rating
Agencies. A Person who is an employee of a nationally recognized organization
that supplies independent directors and who otherwise satisfies the criteria in
clause (a) but for the fact that such organization receives payment from Seller
or Guarantor for providing such independent director shall not be disqualified
from serving as an Independent Director hereunder.
"Insolvency Event": With respect to a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its Property in an involuntary
case under any applicable Insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its Property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of ninety (90)
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its Property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"Insolvency Laws": The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar debtor relief laws
from time to time in effect affecting the rights of creditors generally.
"Insolvency Proceeding": Any case, action or proceeding before any court or
other Governmental Authority relating to any Insolvency Event.
"Instrument": Any "instrument" (as defined in Article 9 of the UCC), other than
an instrument that constitutes part of chattel paper.
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"Interest Rate Protection Agreement": With respect to any or all of the Mortgage
Assets, any short sale of US Treasury securities, futures contracts, options
related contracts, interest rate swaps, cap or collar agreements or similar
arrangements providing for protection against fluctuations in interest rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies, and acceptable to the Purchaser in its discretion.
"Junior Interest": (a) A junior participation interest or rated certificate in a
performing Commercial Real Estate Loan or (b) a "B note" in an "A/B structure"
in a performing Commercial Real Estate Loan.
"Junior Interest Note": The original executed promissory note, Participation
Certificate, Participation Agreement and any other evidence of a Junior
Interest, as applicable.
"Late Payment Fee": Defined in Subsection 2.5(a).
"Lien": Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person's assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person's assets or properties).
"Liquidity": The amount equal to the sum of (i) the Maximum Amount less the
aggregate Repurchase Price of all Purchased Assets subject to Transactions under
this Repurchase Agreement, plus (ii) the amount of cash flows of the Guarantor
in excess of the amount of cash flow required to maintain compliance with the
Financial Covenants, plus (iii) any uncalled and unfunded equity capital, plus,
(iv) to the extent the Guarantor has availability under its other facilities
that is not pledged or utilized to make capital calls in connection with the
obligations under the Repurchase Documents, the amount of such unutilized or
unpledged availability.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Asset, the ratio of
the outstanding principal amount of such Mortgage Asset at the time of a
Transaction for such Mortgage Asset to the Market Value of the related
Underlying Mortgaged Property at such time, which shall be determined by a third
party appraiser selected by the Purchaser, as such LTV may be adjusted by the
Purchaser as the Purchaser determines in its sole discretion; provided, however,
that all such calculations shall be made taking into account any senior or pari
passu debt secured directly or indirectly by the applicable Underlying Mortgaged
Property; provided, further, however, the LTV shall not exceed the Maximum LTV.
"Margin Base": On any day, the aggregate Asset Value of all Purchased Assets.
"Margin Deficit": Defined in Subsection 2.7(a).
"Margin Deficit Notice": Defined in Subsection 2.7(a).
"Market Value": As of any date in respect of any Mortgage Asset, the price at
which such Mortgage Asset could readily be sold, which shall be determined by a
third-party appraiser
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selected by the Purchaser, as such determination of price may be adjusted by the
Purchaser as the Purchaser determines in its sole discretion (which price may be
determined to be zero).
"Material Adverse Effect": A material adverse effect on (a) the Property,
business, operations, financial condition or prospects of the Seller, the
Guarantor or the Pledgor, (b) the ability of each of the Seller, the Guarantor
or the Pledgor to perform its obligations under any of the Repurchase Documents
to which it is a party, (c) the validity or enforceability of any of the
Repurchase Documents, (d) the rights and remedies of the Purchaser under any of
the Repurchase Documents, (e) the timely payment of any amounts payable under
the Repurchase Documents, or (f) the Asset Value of the Purchased Assets.
"Materials of Environmental Concern": Any mold, petroleum (including, without
limitation, 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.
"Maximum Amount": Subject to Subsection 2.3(a), $150,000,000; provided, however,
on and after the Facility Maturity Date, the Maximum Amount shall mean the
aggregate Purchase Price outstanding for all Transactions.
"Maximum LTV": With respect to any Eligible Asset at any time, the Loan-to-Value
Ratio for the related Underlying Mortgaged Property set forth on Schedule 2
under the heading "Maximum LTV" for the applicable Class of such Mortgage Asset
and the applicable Type of Underlying Mortgage Property.
"Mezzanine Collateral": Defined in Schedule 1, Part II.
"Mezzanine Loan": A performing mezzanine loan secured by pledges of all the
Capital Stock of the Person that owns income producing Commercial Real Estate.
"Mezzanine Note": The original executed promissory note or other evidence of
Mezzanine Loan indebtedness.
"Minimum DSCR": With respect to any Eligible Asset at any time, the DSCR for the
related Underlying Mortgaged Property set forth on Schedule 2 under the heading
"Minimum DSCR" for the applicable Class of such Mortgage Asset and the
applicable Type of Underlying Mortgage Property.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
"Mortgage": Each mortgage, assignment of rents, security agreement and fixture
filing, or deed of trust, assignment of rents, security agreement and fixture
filing, or similar instrument creating and evidencing a Lien on real property
and other property and rights incidental thereto.
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"Mortgage Asset": An Assignment of a Whole Loan, a Junior Interest or a
Mezzanine Loan (i) the Underlying Mortgaged Property for which is included in
the categories for Types of Mortgage Assets, and (ii) that is listed on a
Confirmation and the Custodian has been instructed to hold for the Purchaser
pursuant to the Custodial Agreement. Mortgage Assets shall not include any
Retained Interest (if any).
"Mortgage Asset File": Defined in the Custodial Agreement.
"Mortgage Asset File Checklist": Defined in the Custodial Agreement.
"Mortgage Loan Documents": Defined in the Custodial Agreement.
"Mortgage Note": The original executed promissory note or other evidence of the
Indebtedness of a Borrower with respect to a Mortgage Asset.
"Mortgaged Property": The Commercial Real Estate (including all improvements,
buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) and all other collateral securing repayment of the debt evidenced by
a Mortgage Note or a Junior Interest Note.
"Mortgagee": The record holder of a Mortgage Note secured by a Mortgage.
"Multiemployer Plan": A "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the immediately
preceding five (5) years contributed to by the Seller, the Guarantor or any
ERISA Affiliate on behalf of its employees.
"Net Cash Flow": With respect to any Underlying Mortgaged Property, for any
period, the Net Income (or deficit) attributable to such property for such
period, determined in accordance with GAAP, less the amount of all (a) capital
expenditures incurred, (b) reserves established, (c) leasing commissions paid
(other than commissions paid from reserves held under the Mortgage Loan
Documents) and (d) tenant improvements paid during such period (other than
tenant improvements paid from reserves held under the Mortgage Loan Documents)
in each case attributable to such property, plus all non-cash charges deducted
in the calculation of such net income.
"Net Income": With respect to any Person for any period, the net income of such
Person for such period as determined in accordance with GAAP.
"Non-Table Funded Purchased Asset": A Purchased Asset that is not a Table Funded
Purchased Asset.
"Non-Wachovia Assets": Any Mortgage Asset issued or extended by a Person other
than Wachovia Corporation or an Affiliate of Wachovia Corporation.
"OFAC Regulations": Defined in Subsection 4.1(nn).
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"Officer's Certificate": A certificate signed by a Responsible Officer of the
Seller or the Guarantor, as applicable.
"Operating Account": The account of the Seller set forth on Schedule 3 hereto.
"Opinion of Counsel": A written opinion of counsel, which opinion and counsel
are acceptable to the Purchaser in its sole discretion.
"Original Purchase Date": The date a Purchased Asset was purchased by the Seller
or its Affiliates from Wachovia Corporation or its Affiliates other than
pursuant to this Agreement.
"Originator": With respect to each Mortgage Asset, the Person who originated
such Mortgage Asset.
"Other Costs": Defined in Subsection 13.9(c).
"Participation Agreement": Defined in the Custodial Agreement.
"Participation Certificate": Defined in the Custodial Agreement.
"Payment Date": The next to the last Business Day of each calendar month.
"PBGC": The Pension Benefit Guaranty Corporation or any entity succeeding to any
or all of its functions under ERISA.
"Pension Plans": Defined in Subsection 4.1(u).
"Periodic Advance Repurchase Payment": Defined in Subsection 2.5(a).
"Permitted Investments": Investments of any one or more of the following types:
(a) marketable obligations of the United States, the full and timely
payment of which are backed by the full faith and credit of the United States of
America and that have a maturity of not more than 270 days from the date of
acquisition;
(b) marketable obligations, the full and timely payment of which are
directly and fully guaranteed by the full faith and credit of the United States
and that have a maturity of not more than 270 days from the date of acquisition;
(c) bankers' acceptances and certificates of deposit and other
interest-bearing obligations (in each case having a maturity of not more than
270 days from the date of acquisition) denominated in dollars and issued by any
bank with capital, surplus and undivided profits aggregating at least
$100,000,000, the short-term obligations of which are rated of least A-1 by S&P
and P-1 by Moody's;
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(d) repurchase obligations with a term of not more than ten (10) days
for underlying securities of the types described in clauses (a), (b) and (c)
above entered into with any bank of the type described in clause (c) above;
(e) commercial paper rated at least A-1 by S&P and P-1 by Moody's;
(f) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of any foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time such investment, or
the commitment to make such investment, is entered into, the short-term debt
rating of such depository institution or trust company shall be at least A-1 by
S&P and P-1 by Moody's; and
(g) money market mutual funds possessing the highest available rating
from S&P and Moody's.
"Permitted Liens": Any of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced: (a) Liens
for state, municipal or other local taxes if such taxes shall not at the time be
due and payable, (b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens, arising in
the ordinary course of business securing obligations that are not overdue for a
period of more than thirty (30) days, (c) Liens granted pursuant to or by the
Repurchase Documents, and (d) in the case of the Purchased Assets only and not
the Seller's interest therein, with respect to any Underlying Mortgaged
Property, Liens which are permitted pursuant to the terms of the Mortgage Loan
Documents.
"Person": An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Plan": An employee benefit or other plan established or maintained by any
Seller, the Guarantor or any ERISA Affiliate and covered by Title IV of ERISA,
other than a Multiemployer Plan.
"Pledge Agreement": The Pledge and Security Agreement, dated as of December 23,
2003, between the Purchaser and the Pledgor, as amended, modified, waived,
supplemented, extended, restated or replaced from time to time.
"Pledgor": Arbor Realty Limited Partnership, a Delaware limited partnership.
"Pooling and Servicing Agreements": Any and all pooling and servicing agreements
governing servicing and other matters entered into in connection with a
securitization of the senior interest in a Mortgage Asset, where such
transaction is rated by one (1) or more Rating Agencies.
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"Post-Default Rate": In respect of any day a Transaction is outstanding or any
other amount under this Agreement or any other Repurchase Document is not paid
when due to the Purchaser at the stated Repurchase Date or otherwise when due (a
"Post-Default Day"), a rate per annum determined on a 360 day per year basis
during the period from and including the due date to but excluding the date on
which such amount is paid in full equal to the applicable Pricing Rate plus 500
basis points.
"Pre-Approved Purchaser": A bank, financial institution or similar Person having
a rating assigned by S&P of BBB or better (or an equivalent rating assigned by
another Rating Agency) or a special purpose vehicle.
"Price Differential": For each Accrual Period and each Transaction outstanding,
the sum of the products (for each day during such Accrual Period) of:
R x PP x 1
----
D
where:
R = the Rate applicable on such day;
PP = the Purchase Price for such Transaction on such day; and
D = 360 or, to the extent the Rate is based on the Base Rate, 365 or
366 days, as applicable,
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of any Price Differential in excess of the
maximum permitted by Applicable Law and (ii) the Price Differential shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Pricing Rate": With respect to a Mortgage Asset of a certain Class and Type, at
any date of determination a rate per annum equal to the sum of (a) the
applicable Rate on such date plus (b) the applicable Pricing Spread on such
date; provided, however, after a Termination Event, the Pricing Rate for each
Transaction shall be increased an additional 500 basis points.
"Pricing Spread": The point spreads set forth on Schedule 1 to the Fee Letter
corresponding to the Classes and Types of Mortgage Assets set forth therein.
"Prime Rate": The rate announced by Wachovia from time to time as its prime rate
in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Wachovia in connection with extensions of credit to debtors.
"Property": Any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed, and whether tangible or intangible.
"PSA Servicer": A third party servicer (other than the Seller) servicing all or
a portion of the Purchased Assets under a Pooling and Servicing Agreement.
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"Purchase Agreement": Any purchase agreement by and between the Seller and any
third party, including, without limitation, any Affiliate of the Seller,
pursuant to which the Seller has purchased Mortgage Assets subsequently sold to
the Purchaser hereunder.
"Purchase Date": The date on which Eligible Assets are transferred by the Seller
to the Purchaser or its designee (including the Custodian).
"Purchase Price": On each Purchase Date, the price at which Eligible Assets are
transferred by the Seller to the Purchaser or its designee (including the
Custodian) which shall equal the Asset Value for such Eligible Assets on the
Purchase Date decreased by the amount of any cash transferred by the Seller to
the Purchaser pursuant to Subsection 2.3(b) or Section 2.7 hereof or applied to
reduce the Seller's obligations in respect of principal under Section 2.8
hereof.
"Purchased Asset Data Summary": Defined in Subsection 5.1(t)(vi).
"Purchased Assets": The Eligible Assets sold by the Seller to the Purchaser
pursuant to a Transaction in accordance with Article II.
"Purchased Items": Defined in Subsection 8.1(a).
"Purchaser": Defined in the Preamble to this Agreement.
"Purchaser's Account": A special account (account number 4659360000127, ABA #
▇▇▇▇▇▇▇▇▇) in the name of the Purchaser maintained at Wachovia.
"Rate": For any Eurodollar Period and for each Transaction outstanding and for
each day during such Eurodollar Period, the Rate per annum equal to the Adjusted
Eurodollar Rate plus the applicable Pricing Spread; provided, however, the Rate
for any Accrual Period shall be the Base Rate (plus the applicable Pricing
Spread) if a Eurodollar Disruption Event occurs or a Termination Event occurs.
"Rating Agency": Each of S&P, Moody's and any other statistical rating agency
that has been requested to issue a rating in connection with the matter at
issue.
"Regulations T, U and X": Regulations T, U and X of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be amended,
modified, waived, supplemented, extended, restated or replaced from time to
time.
"REO Property": Real property acquired by the Seller, including a Mortgaged
Property, acquired through foreclosure of a Mortgage Asset or by deed in lieu of
such foreclosure.
"Reportable Event": Any of the events set forth in Section 4043(c) of ERISA or a
successor provision thereof, other than those events as to which the notice
requirement has been waived by regulation.
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"Repurchase Date": The earlier of (i) the Facility Maturity Date or (ii) the
Business Day on which the Seller is to repurchase the Purchased Assets from the
Purchaser (a) as specified by the Seller and agreed to by the Purchaser in the
related Confirmation or (b) if a Transaction is terminable by the Seller on
demand, the date determined in accordance with Subsection 2.2(j), as such date
in clauses (ii)(a) and (b) may be modified by application of the provisions of
Articles II or X.
"Repurchase Documents": This Agreement, the Custodial Agreement, the Account
Agreement, the Fee Letter, the Guaranty, the Assignments, the Pledge Agreement,
each Confirmation, the Custodial Fee Letter, any UCC financing statements filed
pursuant to the terms of this Agreement or any other Repurchase Document and any
additional document the execution of which is necessary or incidental to
carrying out the terms of the foregoing documents.
"Repurchase Obligations": Defined in Subsection 8.1(b).
"Repurchase Parties": The collective reference to the Seller and the Guarantor.
"Repurchase Price": The price at which Purchased Assets are to be transferred
from the Purchaser or its designee (including the Custodian) to the 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
accrued and unpaid Price Differential applicable to each such Transaction as of
the date of such determination.
"Request for Additional Transaction for Excess Margin": Defined in Subsection
2.6(a).
"Responsible Officer": With respect to any Person, any duly authorized officer
of such Person with direct responsibility for the administration of the
Repurchase Documents and also, with respect to a particular matter, any other
duly authorized officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Retained Interest": (a) With respect to any Mortgage Asset with an unfunded
commitment on the part of the Seller, all of the obligations, if any, to provide
additional funding with respect to such Eligible Asset, and, (b) with respect to
any Eligible Asset that is transferred by the Seller to the Purchaser, (i) all
of the obligations, if any, of the agent(s) under the documentation evidencing
such Eligible Asset and (ii) the applicable portion of the interests, rights and
obligations under the documentation evidencing such Eligible Asset that relate
to such portion(s) of the Indebtedness that is owned by another lender or is
being retained by the Seller pursuant to clause (a) of this definition.
"S&P": Standard & Poor's, a division of The McGraw Hill Companies, Inc., and any
successor thereto.
"SEC": Defined in Subsection 13.19(a).
"Security Agreement": With respect to any Mortgage Asset, any contract,
instrument or other document related to security for repayment thereof (other
than the related Mortgage and
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Mortgage Note) executed by the Borrower and/or others in connection with such
Mortgage Asset, including, without limitation, any security agreement, UCC
financing statement, Liens, warranties, guaranty, title insurance policy, hazard
insurance policy, chattel mortgage, letter of credit, accounts, bank accounts or
certificates of deposit or other pledged accounts, and any other documents and
records relating to any of the foregoing.
"Seller": Defined in the Preamble of this Agreement.
"Seller Asset Schedule": Defined in the Custodial Agreement.
"Seller-Related Obligations": Any obligations of the Seller hereunder and under
any other arrangement between the Seller, the Guarantor or an Affiliate of the
Seller or the Guarantor on the one hand and the Purchaser or an Affiliate of the
Purchaser on the other hand.
"Seller Release Letter": Defined in Subsection 3.2(l).
"Servicer": A Person (other than the Seller) servicing all or a portion of the
Purchased Assets under a Servicing Agreement, which Servicer shall be acceptable
to the Purchaser in its reasonable discretion.
"Servicer Account": Any account established by a Servicer or a PSA Servicer in
connection with the servicing of the Purchased Assets.
"Servicer Default": Defined in Section 6.15.
"Servicer Notice": The notice from the Seller to a Servicer, substantially in
the form of Exhibit VIII attached hereto.
"Servicing Agreement": An agreement entered into by the Seller and a third party
for the servicing of the Purchased Assets, the form and substance of which has
been approved by the Purchaser in its reasonable discretion.
"Servicing Fee": Defined in Section 6.12.
"Servicing File": With respect to each Purchased Asset, the file retained by the
Seller consisting of the originals of all documents in the Mortgage Asset File
that are not delivered to the Custodian and copies of all documents in the
Mortgage Asset File set forth in Section 3.1 of the Custodial Agreement.
"Servicing Records": Defined in Section 6.2.
"SIPA": Defined in Subsection 13.19(a).
"Solvent": As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the Property of such
Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such
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value is established and liabilities evaluated for purposes of Section 101(32)
of the Bankruptcy Code; (b) the present fair salable value of the Property of
such Person in an orderly liquidation of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's Property would constitute unreasonably small capital.
"Sub-Limit": With respect to the characteristics of the Underlying Mortgaged
Properties:
(a) the aggregate Purchase Price for all outstanding Transactions
involving Junior Interests shall not exceed 75% of the Maximum Amount;
(b) the aggregate Purchase Price for all outstanding Transactions
involving Mezzanine Loans shall not exceed 60% of the Maximum Amount;
(c) the aggregate Purchase Price for all outstanding Transactions
involving Ground Leases shall not exceed 25% of the Maximum Amount; and
(d) the aggregate Purchase Price for all outstanding Transactions
involving hotels shall not exceed 25% of the Maximum Amount.
"Subsidiary": With respect to any Person, any corporation, partnership, limited
liability company or other entity of which at least a majority of the securities
or other ownership interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions of such corporation, partnership, limited liability company or
other entity (irrespective of whether or not at the time securities or other
ownership interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person.
"Table Funded Purchased Asset": A Purchased Asset which is sold to the Purchaser
simultaneously with the origination or acquisition thereof, which origination or
acquisition, pursuant to the Seller's request, is financed with the Purchase
Price and paid directly to a title company or other settlement agent, in each
case, approved by the Purchaser in its sole discretion, for disbursement to the
parties entitled thereto in connection with such origination or acquisition. A
Purchased Asset shall cease to be a Table Funded Purchased Asset after the
Custodian has delivered a Trust Receipt to the Purchaser certifying its receipt
of the Mortgage Asset File therefor.
"Table Funded Trust Receipt": A Trust Receipt in the form of Annex 2-B to the
Custodial Agreement.
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"Tangible Net Worth": As of a particular date:
(a) all amounts that would be included under capital on a balance sheet
of the Seller or the Guarantor, as applicable, at such date determined in
accordance with GAAP, less
(b)(i) amounts owing to the Seller or the Guarantor, as applicable,
from Affiliates, or from officers, employees, partners, members, directors,
shareholders or other Persons similarly affiliated with the Seller or the
Guarantor, as applicable, or their respective Affiliates, (ii) intangible assets
of the Seller or the Guarantor, as applicable, and (iii) the value of REO
Property and Foreclosed Loans of the Seller or the Guarantor, as applicable.
"Taxes": Any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Governmental Authority.
"Termination Event": Defined in Section 10.1.
"Test Period": The most recent calendar quarter.
"Title Exception": Defined in Schedule 1, Part I.
"Total Indebtedness": With respect to any Person, for any period, the aggregate
consolidated Indebtedness of such Person during such period maintained in
accordance with GAAP.
"Transaction": Defined in Section 2.1.
"Transaction Request": Defined in Subsection 2.2(a).
"Transfer Documents" The documents executed by the Seller with respect to a
Purchased Asset which transfer title to such Purchased Asset to the Purchaser,
including, without limitation, an Assignment and any Assignment of Mortgage and
UCC-3 assignments.
"Transferee": Defined in Subsection 13.16(a).
"Transferor": The seller of mortgage assets under a Purchase Agreement.
"True Sale Opinion": A "true sale" opinion of outside counsel to the Seller in
form and substance satisfactory to the Purchaser.
"Trust Receipt": Defined in the Custodial Agreement.
"Type": With respect to a Mortgaged Property, such Mortgaged Property's
classification as one of the following: multifamily, retail, office, industrial,
hotel or self-storage facility.
"UCC-9 Policy": Defined in Schedule I, Part II.
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"UCC Financing Statement": A financing statement on Form UCC-1 or the proper
national UCC form, naming the Purchaser as the "Secured Party" and the Seller as
the "Debtor" and describing the Purchased Items.
"Underlying Mortgaged Property": (a) In the case of a Whole Loan, the Mortgaged
Property securing the Whole Loan, (b) in the case of a Junior Interest, the
Mortgaged Property securing such Junior Interest (if the Junior Interest is of
the type described in clause (a) of the definition thereof), or the Mortgaged
Property securing the Mortgage Loan in which such Junior Interest represents a
junior participation (if the Junior Interest is of the type described in clause
(b) of the definition thereof), and, (c) in the case of a Mezzanine Loan, the
Mortgaged Property that is held by the Person the Capital Stock of which is
pledged as collateral security for such Mezzanine Loan.
"Underwriting Package": Any internal document prepared by the Seller for its
evaluation of a Mortgage Asset, to include at a minimum the data required in the
relevant Confirmation. In addition, with respect to any Mortgage Asset, the
Underwriting Package shall include, to the extent applicable, (i) a copy of the
appraisal, (ii) the current rent roll, (iii) a minimum of two (2) years of
property level financial statements to the extent available, (iv) the current
financial statement of the Borrower on the Commercial Mortgage Loan, (vi) the
complete Mortgage Asset File, (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 Purchaser may request.
"Uniform Commercial Code" or "UCC": The Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Purchased Items is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"United States": The United States of America.
"Unmatured Termination Event": Any event that, with the giving of notice or the
lapse of time, or both, would become a Termination Event.
"Unused Fee": The "Unused Fee" payable under the Fee Letter.
"Wachovia": Wachovia Bank, National Association, a national banking association
in its individual capacity, and its successors and assigns.
"Wachovia Assets": Any Mortgage Asset issued or extended by Wachovia Corporation
or an Affiliate of Wachovia Corporation.
"Warehouse Lender's Release Letter": Defined in Subsection 3.2(l).
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"Whole Loan": A performing Commercial Real Estate whole loan secured by a first
priority security interest in the Underlying Mortgaged Property.
SECTION 1.2 OTHER TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and used but not specifically defined herein, are used herein
as defined in such Article 9.
SECTION 1.3 COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
SECTION 1.4 INTERPRETATION.
In each Repurchase Document, unless a contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Repurchase Documents;
(iii) reference to any gender includes each other gender;
(iv) reference to day or days without further qualification means
calendar days;
(v) reference to any time means Charlotte, North Carolina time;
(vi) reference to any agreement (including any Repurchase
Document), document or instrument means such agreement, document or instrument
as amended, supplemented or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms of the other
Repurchase Documents, and reference to any promissory note includes any
promissory note that is an extension or renewal thereof or a substitute or
replacement therefor; and
(vii) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any Section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such Section or other provision.
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ARTICLE II
PURCHASE OF ELIGIBLE ASSETS
SECTION 2.1 PURCHASE AND SALE.
Subject to the terms and conditions hereof, from time to time during
the Facility Period and at the written request of the Seller, the parties hereto
shall enter into transactions in which the Seller transfers Eligible Assets to
the Purchaser in a sales transaction against the transfer of funds by the
Purchaser representing the Purchase Price for such Purchased Assets, with a
simultaneous agreement by the Purchaser to transfer to the Seller and the Seller
to repurchase such Purchased Assets in a repurchase transaction at a date
certain not later than the Facility Maturity Date, against the transfer of funds
by the Seller representing the Repurchase Price for such Purchased Assets. Each
such transaction shall be referred to herein as a "Transaction" and shall be
governed by this Agreement, unless otherwise agreed in writing.
SECTION 2.2 TRANSACTION MECHANICS; RELATED MATTERS.
(a) From time to time during the Facility Period but no more frequently
than once per week, in the sole and absolute discretion of the Purchaser, the
Purchaser will purchase from the Seller the Seller's rights and interests (but
none of its obligations) under certain Eligible Assets; provided, however, at no
time shall the Seller have more than twenty (20) Transactions outstanding under
this Agreement and at no time shall the aggregate Purchase Price of the
outstanding Transactions and any proposed Transactions exceed the Maximum
Amount. The Seller shall request a Transaction by delivering to the Purchaser
(with a copy to the Custodian), via Electronic Transmission, an executed request
in the form of Exhibit IV attached hereto (a "Transaction Request"), a Seller
Asset Schedule and an Underwriting Package. The Transaction Request shall set
forth, among other things, (i) the proposed Purchase Date, that, except with
respect to the initial Transaction, shall be at least, (A) in the case of
Non-Wachovia Assets, twelve (12) Business Days (in the case of each individual
Eligible Asset identified in a Transaction Request plus twelve (12) additional
Business Days for each additional Eligible Asset in excess thereof identified in
a Transaction Request), and, (B) in the case of Wachovia Assets, seven (7)
Business Days (in the case of each individual Eligible Asset identified in a
Transaction Request plus seven (7) additional Business Days for each additional
Eligible Asset in excess thereof identified in a Transaction Request) after the
delivery of the Transaction Request, the Seller Asset Schedule, the complete
Underwriting Package and any supplemental requests (requested orally or in
writing) relating to the proposed Eligible Assets, (ii) the proposed Purchase
Price, which shall be in a minimum amount of $1,000,000, (iii) the proposed
Repurchase Date, (iv) the applicable Class and Type for each Mortgage Asset for
which the Seller is requesting the Transaction, and (v) additional terms or
conditions not inconsistent with this Agreement. The Purchaser shall have, (1)
in the case of Non-Wachovia Assets, ten (10) Business Days (in the case of each
individual Eligible Asset identified in a Transaction Request plus ten (10)
additional Business Days for each additional Eligible Asset in excess thereof
identified in a Transaction Request), and, (2) in the case of Wachovia Assets,
five (5) Business
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Days (in the case of each individual Eligible Asset identified in a Transaction
Request plus five (5) additional Business Days for each additional Eligible
Asset in excess thereof identified in a Transaction Request) from the receipt
thereof to review the Transaction Request, the Seller Asset Schedule, the
Underwriting Package and any supplemental requests (requested orally or in
writing) relating to the proposed Eligible Assets.
(b) The Purchaser shall notify the Seller of the Purchaser's tentative
approval (and the proposed Purchase Price for each Eligible Asset) or final
disapproval of each proposed Eligible Asset within, (i) in the case of
Non-Wachovia Assets, ten (10) Business Days (in the case of each individual
Eligible Asset identified in a Transaction Request plus ten (10) additional
Business Days for each additional Eligible Asset in excess thereof identified in
a Transaction Request) and, (ii) in the case of Wachovia Assets, five (5)
Business Days (in the case of each individual Eligible Asset identified in a
Transaction Request plus five (5) additional Business Days for each additional
Eligible Asset in excess thereof identified in a Transaction Request) after its
receipt of the Transaction Request, the Seller Asset Schedule, the complete
Underwriting Package and any supplemental requests (requested orally or in
writing) relating to such proposed Eligible Asset. Unless the Purchaser notifies
the Seller of the Purchaser's approval of such proposed Eligible Asset within
the applicable period, the Purchaser shall be deemed not to have approved such
proposed Eligible Asset.
(c) Provided that the Purchaser has tentatively agreed to purchase the
Eligible Assets described in the Transaction Request and the proposed Purchase
Price is acceptable to the Seller, the Seller shall forward to the Purchaser,
via Electronic Transmission, at least two (2) Business Days prior to the
requested Purchase Date an executed confirmation of each Transaction,
substantially in the form of Exhibit II attached hereto (a "Confirmation"). The
Confirmation shall specify any additional terms or conditions of the Transaction
not inconsistent with this Agreement. The Confirmation shall be irrevocable and
shall be deemed to be a certification by the Seller that all conditions
precedent to such Transaction set forth in Article III have been satisfied
(except the Purchaser's consent). Unless otherwise agreed in writing, upon
receipt of the Confirmation, the Purchaser may, in its sole and absolute
discretion, agree to enter into the requested Transaction with respect to an
Eligible Asset, and such agreement shall be evidenced by the Purchaser's
signature on the Confirmation. Any Confirmation executed by the Purchaser shall
be deemed to have been received by the Seller on the date actually received by
the Seller.
(d) Upon receipt of the Confirmation executed by the Purchaser, (i) the
Seller shall release or cause to be released to the Custodian in accordance with
the Custodial Agreement (1) in the case of a Non-Table Funded Purchased Asset,
no later than 11:00 a.m. two (2) Business Days prior to the requested Purchase
Date, and, (2) in the case of a Table Funded Purchased Asset, no later than 1:00
p.m. three (3) Business Days following the applicable Purchase Date, the
Mortgage Asset File pertaining to each Eligible Asset to be purchased by the
Purchaser, and (ii) the Seller shall deliver to the Custodian, in connection
with the applicable delivery under clause (i) above, a Custodial Identification
Certificate and a Mortgage Asset File Checklist required under Section 3.2 of
the Custodial Agreement.
(e) Except as set forth in Section 2.3, each Confirmation, together
with this Agreement, shall constitute conclusive evidence of the terms agreed
between the Purchaser and
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the Seller with respect to the Transaction to which the Confirmation relates,
and the Seller's acceptance of the related proceeds shall constitute the
Seller's agreement to the terms of such Confirmation. It is the intention of the
parties that each Confirmation shall not be separate from this Agreement but
shall be made a part of this Agreement.
(f) Subject to the terms and conditions of this Agreement, during the
term of this Agreement, the Seller may sell to the Purchaser, repurchase from
the Purchaser and resell to the Purchaser Eligible Assets hereunder.
(g) In no event shall a Transaction be entered into when any Unmatured
Termination Event or Termination Event has occurred and is continuing or when
the Repurchase Date for such Transaction would be later than the Facility
Maturity Date.
(h) Pursuant to the Custodial Agreement, the Custodian shall deliver to
the Purchaser and the Seller by 11:00 a.m. on the Purchase Date for each
Non-Table Funded Purchased Asset a Trust Receipt and an Asset Schedule and
Exception Report with respect to the Eligible Assets that the Seller has
requested Purchaser purchase on such Purchase Date. With respect to each Table
Funded Purchased Asset, the Seller shall cause the Bailee to deliver to the
Custodian with a copy to the Purchaser no later than 10:00 a.m. on the Purchase
Date by facsimile the related Basic Mortgage Asset Documents, the insured
closing letter (if any), the escrow instructions (if any), a fully executed
Bailee Agreement, a Bailee's Trust Receipt issued by the Bailee thereunder and
such other evidence satisfactory to the Purchaser in its discretion that all
documents necessary to effect a transfer of the Purchased Assets to the
Purchaser have been delivered to Bailee. With respect to each Table Funded
Purchased Asset, the Custodian shall deliver to the Purchaser a Table Funded
Trust Receipt no later than 1:00 p.m. on the Purchase Date, which documents
shall be acceptable to the Purchaser in its sole discretion. In the case of a
Table Funded Purchased Asset, on the second (2nd) Business Day following the
Custodian's receipt of the related Mortgage Loan Documents comprising the
Mortgage Asset File, the Custodian shall deliver to the Purchaser a Trust
Receipt certifying its receipt of the documents required to be delivered
pursuant to the Custodial Agreement, together with an Asset Schedule and
Exception Report relating to the Basic Mortgage Asset Documents, with any
Exceptions identified by the Custodian as of the date and time of delivery of
such Asset Schedule and Exception Report. The Custodian shall deliver to the
Purchaser an Asset Schedule and Exception Report relating to all of the Mortgage
Loan Documents within five (5) Business Days of its receipt of the Mortgage
Asset Files. Subject to the provisions of this Article II and Article V of the
Custodial Agreement, the Purchase Price for each Eligible Asset will be made
available to the Seller in accordance with Subsection 2.2(i).
(i) On each Purchase Date, the Purchaser shall, upon satisfaction of
the applicable conditions set forth in this Section 2.2 and Article III, make
available to the Seller in same day funds to the Operating Account an amount
equal to the least of (i) the Purchase Price for such Transaction(s), (ii) an
amount equal to the Availability on such Purchase Date, or (iii) the Maximum
Amount.
(j) In the case of individual Transactions terminable upon demand (if
any), such demand shall be made by the Purchaser or the Seller no later than
such time as is customary in
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accordance with market practice, by telephone or otherwise, on or prior to the
Business Day on which such termination will be effective. The Seller shall
repurchase the Purchased Assets by no later than 3:00 p.m. on the Repurchase
Date. On a Repurchase Date, termination of a Transaction will be effected by
transfer to the Seller or its designee of the Purchased Assets after the
Purchaser receives the Repurchase Price for the Purchased Asset. In connection
with the termination of a Transaction, any Income in respect of any Purchased
Assets received by the Purchaser and not previously credited or transferred to,
or applied to the obligations of, the Seller pursuant to Section 2.8 shall be
netted against the Repurchase Price by the Purchaser. To the extent a net amount
is owed to one party, the other party shall pay such amount to such party.
(k) Notwithstanding anything contained in this Agreement or any
Repurchase Document to the contrary, in no event may the Seller sell or the
Purchaser purchase a Wachovia Asset if less than thirty (30) Business Days have
elapsed since the Seller acquired such asset from Wachovia or its Affiliates
(direct or indirect).
SECTION 2.3 REDUCTION OF MAXIMUM AMOUNT; OPTIONAL REPURCHASES.
(a) Prior to the Facility Maturity Date (as it may be extended from
time to time in accordance with Section 2.4), the Seller shall have the right on
an annual basis, upon at least two (2) Business Days' prior written notice to
the Purchaser, to terminate in whole or reduce in part the portion of the
Maximum Amount that exceeds the sum of the aggregate Purchase Price for all
Transactions outstanding, accrued Price Differential and Breakage Costs;
provided, however, that each partial reduction of the Maximum Amount shall be in
an aggregate amount equal to $1,000,000 or an integral multiple thereof. Each
notice of reduction or termination pursuant to this Subsection 2.3(a) shall be
irrevocable.
(b) The Seller may repurchase Purchased Assets or pay a portion of the
Purchase Price outstanding without penalty or premium (but subject to Subsection
2.5(b)) on any date. If the Seller intends to make such a repurchase or payment,
the Seller shall give two (2) Business Days' prior written notice thereof to the
Purchaser, designating the Purchased Assets to be repurchased or to which such
payment is to be applied. If such notice is given, on receipt of the Repurchase
Price (or portion thereof) for the Purchased Assets specified in such notice,
such amount shall be applied to the Purchase Price for the designated Purchased
Assets. The amount of the Purchase Price of the Purchased Assets thus
repurchased shall be available for subsequent Transactions subject to the terms
of this Agreement.
SECTION 2.4 EXTENSION OF FACILITY MATURITY DATE.
At the written request of the Seller delivered to the Purchaser no
earlier than sixty (60) days and no later than forty-five (45) days prior to the
Facility Maturity Date, the Purchaser may in its sole discretion grant one
extension of the Facility Maturity Date for a period not to exceed one (1) year
by giving written notice of such extension and the final Facility Maturity Date
(the "Final Maturity Date") to the Seller no later than fifteen (15) days before
the expiration of the Facility Maturity Date. Any failure by the Purchaser to
deliver such notice of extension shall be deemed to be the Purchaser's
determination not to extend the original Facility Maturity Date. An extension of
the Facility Maturity Date is subject to the following requirements: (i) no
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Unmatured Termination Event or Termination Event shall have occurred and be
continuing on the date of the request to extend or thereafter to and including
the original Facility Maturity Date, (ii) the Seller shall pay to the Purchaser
an extension fee ("Extension Fee"), payable in quarterly installments over the
term of the extension commencing with the original Facility Termination Date
(or, if such day is not a Business Day, the next Business Day) and on the
twenty-third (23rd) day (or, if such day is not a Business Day, the next
Business Day) (the "Extension Fee Payment Date") of every third (3rd) month
thereafter, calculated as the sum of the products of (A) 1/8%, and (B) the
Purchase Price outstanding on the Extension Fee Payment Date; provided, however,
if the Facility Maturity Date is extended for less than a one (1) year period,
the Extension Fee will be calculated in the same manner except that the period
of time over and the dates on which the Extension Fee is payable shall be
adjusted accordingly, (iii) no additional Transactions shall be permitted to be
entered into after the original Facility Maturity Date, (iv) the Seller must
amortize and pay to the Purchaser the aggregate Repurchase Price for all
Transactions then outstanding in equal quarterly installments over the term of
the extension commencing with the first (1st) Payment Date after the original
Facility Maturity Date and on the Payment Date for each quarter thereafter, and,
(v) not later than the Final Maturity Date, the Seller shall pay to Purchaser an
amount equal to the aggregate Repurchase Price then outstanding, together with
the other Aggregate Unpaids and any other amounts then owing to the Purchaser by
the Seller pursuant to this Agreement or any other Repurchase Document. The
Seller confirms that the Purchaser, in its sole and absolute discretion, without
regard to the value or performance of the Purchased Assets or any other factor,
may elect not to extend the Facility Maturity Date.
SECTION 2.5 PAYMENT OF PRICE DIFFERENTIAL.
(a) Notwithstanding that the Purchaser and the Seller intend that the
Transactions hereunder be sales to the Purchaser of the Purchased Assets, the
Seller shall pay to the Purchaser the accreted value of the Price Differential
of each Transaction (each such payment, a "Periodic Advance Repurchase Payment")
on each Payment Date. The Purchaser shall deliver to the Seller, via Electronic
Transmission, notice of the required Periodic Advance Repurchase Payment (along
with the calculation of the Unused Fee, if any, and other amounts owed and to be
paid under Section 2.8) on or prior to the second (2nd) Business Day preceding
each Payment Date. If the Seller fails to make all or part of the Periodic
Advance Repurchase Payment and the other amounts due by 3:00 p.m. on the Payment
Date, the Seller shall be obligated to pay to the Purchaser (in addition to, and
together with, the Periodic Advance Repurchase Payment and the other amounts
due) interest on the unpaid amounts at a rate per annum equal to the
Post-Default Rate (the "Late Payment Fee") until the unpaid amounts are received
in full by the Purchaser. If the Periodic Advance Repurchase Payment includes
any estimated Price Differential, the Purchaser shall recalculate such Price
Differential after the Payment Date and, if necessary, make adjustments to the
Periodic Advance Repurchase Payment amount due on the following Payment Date.
(b) If the Seller repurchases Purchased Assets on any day prior to the
last day of the Eurodollar Period or if the Seller repurchases Purchased Assets
on any day that is not a Repurchase Date for such Purchased Assets, the Seller
shall indemnify the Purchaser and hold the Purchaser harmless from any losses,
costs and/or expenses that the Purchaser may sustain or
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incur arising from the reemployment of funds obtained by the Purchaser 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 Eurodollar
Period. The Purchaser 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 Purchaser 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 Subsection 2.5(b) shall survive
termination of this Agreement and the repurchase of all Purchased Assets subject
to Transactions hereunder.
SECTION 2.6 REQUEST FOR ADDITIONAL TRANSACTION FOR EXCESS MARGIN.
(a) If, at any time during the Facility Period, the Margin Base exceeds
the aggregate Purchase Price of all Transactions then outstanding, so long as no
Unmatured Termination Event or Termination Event has occurred and is continuing,
the Seller may request an additional Transaction for Excess Margin by delivering
to the Purchaser, via Electronic Transmission, at least two (2) Business Days
prior to the requested Purchase Date, an executed Request for Additional
Transaction for Excess Margin in the form of Exhibit IX attached hereto
("Request for Additional Transaction for Excess Margin"); provided, however,
that the Purchase Price of the outstanding Transactions and the Purchase Price
set forth in the proposed Request for Additional Transaction for Excess Margin
shall not exceed the Maximum Amount. The Request for Additional Transaction for
Excess Margin shall, among other things, (A) specify (i) the amount of the
additional Purchase Price to be paid by Purchaser in respect of the outstanding
Transactions, (ii) the requested Purchase Date, (iii) the Excess Margin with
respect to all outstanding Transactions before giving effect to the requested
Transaction, (iv) the remaining Excess Margin after giving effect to the
requested Transaction, (v) the aggregate Purchase Price of all Transactions
outstanding after giving effect to the requested Transaction, and (vi) the
Request for Additional Transaction for Excess Margin equals or exceeds
$1,000,000, and (B) include a certification that, (x) upon the consummation of
the additional Transaction, the Margin Base will be equal to or greater than the
aggregate Purchase Price of all outstanding Transactions, and (y) all conditions
precedent to such Transaction set forth in Articles II and III have been
satisfied. Each Request for Additional Transaction for Excess Margin shall be
irrevocable. For the purposes of this Section 2.6, "Excess Margin" shall be the
excess of the Margin Base over the aggregate Purchase Price of all outstanding
Transactions as of the date of such determination.
(b) Upon confirming that the Request for Additional Transaction for
Excess Margin correctly reflects the information set forth in Subsection 2.6(a)
and that, after giving effect to the requested Transaction, the amount of the
Margin Base would be equal to or greater than the aggregate Purchase Price of
all outstanding Transactions, within two (2) Business Days the Purchaser shall
remit in accordance with Subsection 2.2(i) an amount equal to the lesser of (i)
the additional Purchase Price set forth in such Request for Additional
Transaction for Excess Margin and (ii) the Availability, and the Purchaser shall
send a revised Confirmation with respect to such Purchased Assets. In the event
that the Purchaser's assessment of the Margin Base would alter the information
set forth in any Request for Additional Transaction for Excess Margin, the
Purchaser shall promptly notify the Seller in writing of such assessment.
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(c) The Purchaser shall not be obligated to remit the additional
Purchase Price requested pursuant to a Request for Additional Transaction for
Excess Margin where the Purchaser reasonably determines the Margin Base as
calculated by the Seller (i) is based on erroneous information or would result
in a Transaction other than in accordance with the terms of this Agreement, or
(ii) does not reflect the Purchaser's current determination of Market Value as
provided in the definition thereof.
SECTION 2.7 MARGIN ACCOUNT MAINTENANCE.
(a) If at any time the Purchaser determines (based on such factors as
the Purchaser determines to rely on its sole discretion, including but not
limited to a credit analysis of the Underlying Mortgaged Properties and the
current market conditions for the Mortgage Asset) that the Margin Base is less
than the aggregate Purchase Price for all outstanding Transactions (a "Margin
Deficit"), then the Purchaser may by notice to the Seller in the form of Exhibit
XII (as such notice is more particularly set forth below, a "Margin Deficit
Notice") require the Seller to transfer to the Purchaser or its designee
(including the Custodian) cash or Eligible Assets so that the aggregate Asset
Value of the Purchased Assets will thereupon equal or exceed the aggregate
Purchase Price for all outstanding Transactions, provided that, prior to or
contemporaneously with the delivery of such Margin Deficit Notice, the Purchaser
has informed the Seller of the methodology (in reasonable detail) utilized by
the Purchaser to determine such Margin Deficit. Notwithstanding anything to the
contrary in this Agreement, the Seller shall transfer such cash or Eligible
Assets to the Purchaser's Account no later than twenty-four (24) hours after
such Margin Deficit Notice shall be deemed to have been received under Section
13.2. All cash transferred to the Purchaser pursuant to this Section 2.7 shall
be deposited in the Purchaser's Account and shall be attributed to such
Transaction as the Purchaser shall determine in its sole discretion. Eligible
Assets shall be transferred to the Purchaser in the same manner as Eligible
Assets are transferred under Section 2.2.
(b) To the extent any such Margin Deficit is the result of a reduction
in the Market Value of any Mortgage Asset, the Seller may dispute the
determination of such Market Value by the Purchaser pursuant to the provisions
of Section 2.10 of this Agreement, provided that no such dispute shall relieve,
waive or delay the Seller's obligation to timely satisfy the Margin Deficit in
accordance with this Section 2.7. The failure of the Seller to satisfy the
Margin Deficit on a timely basis shall constitute a Termination Event and the
Seller shall be precluded from disputing the Margin Base determined by the
Purchaser. If (i) the Seller satisfies the Margin Deficit on a timely basis,
(ii) the Seller timely satisfies the provisions set forth in Section 2.10 of
this Agreement with respect to a dispute of the determination of the Market
Value of any Purchased Asset, and, (iii) pursuant to the terms of such Section
2.10, a revised Market Value for such Mortgage Asset is determined that (if used
in lieu of the Market Value used by the Purchaser in determining the Margin
Base) would have resulted in a reduction of the Margin Deficit paid by the
Seller, then the Purchaser shall promptly remit the difference to the Seller
without any interest or other amounts due thereon.
(c) The Purchaser's election, in its sole and absolute discretion, not
to deliver a Margin Deficit Notice at any time there is a Margin Deficit shall
not in any way limit or impair its right to deliver a Margin Deficit Notice at
any time a Margin Deficit exists.
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SECTION 2.8 INCOME PAYMENTS.
The Purchaser shall be entitled to receive an amount equal to all
Income paid or distributed on or in respect of the Purchased Items, which amount
shall be deposited by the Seller and any Servicer or PSA Servicer under a
Pooling and Servicing Agreement into the Collection Account. The Seller hereby
agrees to instruct each applicable Servicer to transfer within two (2) Business
Days of receipt thereof, and each applicable PSA Servicer under a Pooling and
Servicing Agreement to deposit within two (2) Business Days of the date on which
such Person is obligated under the applicable Pooling and Servicing Agreement to
disburse such funds, all Income with respect to the Purchased Items directly
into the Collection Account. On each Payment Date, any amounts on deposit in the
Collection Account shall be withdrawn by the Purchaser and shall be applied as
follows:
FIRST, to the payment of all fees, expenses, and other obligations then
due to the Purchaser pursuant to this Agreement (including, without limitation,
the Unused Fee and the Commitment Fee), other than the Price Differential and
Purchase Price on the Purchased Assets;
SECOND, to the extent not paid by the Seller, to the payment of fees
and expenses owed to the Custodian under the Custodial Agreement or Custodial
Fee Letter;
THIRD, to the payment of accrued and unpaid Price Differential on the
Purchased Assets and Late Payment Fees outstanding;
FOURTH, to the extent not previously paid pursuant to Section 2.3, to
pay the Repurchase Price for Purchased Assets then subject to a request to
repurchase in accordance with the terms of Section 2.3;
FIFTH, without limiting the Seller's obligations to cure Margin
Deficits in a timely manner in accordance with Section 2.7, to the Purchaser for
the payment of any Margin Deficit outstanding;
SIXTH, to the extent any Income includes payments or prepayments of
principal on the underlying Mortgaged Asset (including, without limitation,
insurance or condemnation proceeds or recoveries from any foreclosures), such
payments shall be applied to reduce the aggregate Purchase Price outstanding for
the related Transaction;
SEVENTH, to the payment of Breakage Costs, Indemnified Amounts,
Increased Costs, Additional Amounts and all other amounts then due and owing to
the Purchaser pursuant to this Agreement and the other Repurchase Documents; and
EIGHTH, to the Operating Account, for such purposes as the Seller shall
determine in its sole discretion.
provided, however, that if a Margin Deficit is outstanding or an Unmatured
Termination Event or Termination Event has occurred and is continuing, such
amounts shall not be transferred to the
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Operating Account but shall remain in the Collection Account and applied in
reduction of the Aggregate Unpaids.
Notwithstanding anything to the contrary contained herein, in the event
any Borrower Reserve Payments are deposited into the Collection Account, such
Borrower Reserve Payments shall, upon written request of the Seller, be promptly
transferred from the Collection Account to the Operating Account for the Seller
to transfer into the appropriate escrow or reserve accounts.
SECTION 2.9 PAYMENT, TRANSFER AND CUSTODY.
(a) Unless otherwise expressly provided herein, all amounts to be paid
or deposited by the Seller hereunder shall be paid or deposited in accordance
with the terms hereof no later than 3:00 p.m. on the day when due in lawful
money of the United States, in immediately available funds and without
deduction, set-off or counterclaim to the Purchaser's Account and if not
received before such time shall be deemed to be received on the next Business
Day. The Seller shall, to the extent permitted by Applicable Law, pay to the
Purchaser interest on any amounts not paid when due hereunder or under the
Repurchase Documents at the Post Default Rate, payable on demand; provided,
however, that such interest rate shall not at any time exceed the maximum rate
permitted by Applicable Law. Such interest shall be for the account of, and
distributed to, the Purchaser. All computations of interest and all computations
of the Price Differential and other fees hereunder shall be made on the basis of
a year consisting of 360 days (other than calculations with respect to the Base
Rate which shall be based on a year consisting of 365 or 366 days, as
applicable) for the actual number of days (including the first but excluding the
last day) elapsed. The Seller acknowledges that it has no rights of withdrawal
from the foregoing Purchaser's Account or from the Collection Account.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of the Price Differential or any fee payable
hereunder, as the case may be.
(c) If any Transaction requested by the Seller and approved by the
Purchaser, pursuant to Section 2.2, 2.3 or Section 2.6, is not, for any reason,
made or effectuated, as the case may be, on the date specified therefor, the
Seller shall indemnify the Purchaser against any reasonable loss, cost or
expense incurred by the Purchaser including, without limitation, any loss
(including loss of anticipated profits, net of anticipated profits, if any, in
the reemployment of such funds in the manner determined by the Purchaser in its
sole discretion), or reasonable cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Purchaser
to fund or maintain such Transaction.
(d) On the Purchase Date for each Transaction, ownership of the
Purchased Assets shall be transferred to the Purchaser or its designee
(including the Custodian) against the simultaneous transfer of the Purchase
Price to the Seller not later than 3:00 p.m. simultaneously with the delivery to
the Custodian of the Purchased Assets relating to each Transaction in accordance
with and subject to the provisions of Subsection 2.2(h). The Seller hereby
sells, transfers, conveys and assigns to the Purchaser or its designee
(including the Custodian) all the
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right, title and interest of the Seller in and to the Purchased Items together
with all right, title and interest in and to the proceeds of any related
Purchased Items.
(e) In connection with such sale, transfer, conveyance and assignment,
(i) in the case of a Non-Table Funded Purchased Asset, on or prior to each
Purchase Date, and (ii) in the case of a Table Funded Purchased Asset, on or
prior to the date and time specified in Subsection 2.2(d), the Seller shall
deliver or cause to be delivered and released to the Purchaser or its designee
(including the Custodian) (x) the Custodial Identification Certificate and (y)
the documents identified in Section 3.1 of the Custodial Agreement.
(f) Any Mortgage Asset Files not delivered to the Purchaser or its
designee (including the Custodian) are and shall be held in trust by the Seller
or its designee for the benefit of the Purchaser as the owner thereof. The
Seller or its designee shall maintain a copy of the Mortgage Asset File and the
originals of the Mortgage Asset File not delivered to the Purchaser or its
designee (including the Custodian). The possession of the Mortgage Asset File by
the Seller or its designee is at the will of the Purchaser for the sole purpose
of servicing the related Purchased Asset, and such retention and possession by
the Seller or its designee is in a custodial capacity only. Each Mortgage Asset
File retained or held by the Seller or its designee shall be segregated on the
Seller's books and records from the other assets of the Seller or its designee,
and the books and records of the Seller or its designee shall be marked
appropriately to reflect clearly the sale of the related Purchased Asset to the
Purchaser. The Seller or its designee shall release its custody of the Mortgage
Asset File only in accordance with written instructions from the Purchaser,
unless such release is required as incidental to the servicing of the Purchased
Assets or is in connection with a repurchase of any Purchased Asset by the
Seller.
SECTION 2.10 DISPUTES REGARDING MARKET VALUE DETERMINATION.
Subject to Section 2.7, if the Seller has a good faith basis to dispute
any determination of the Market Value by the Purchaser, the Seller may notify
the Purchaser of such dispute within three (3) Business Days after any such
determination thereof by Purchaser. The Seller may, at its sole cost and
expense, (A) if the dispute involves the appraised value of an Underlying
Mortgaged Property used by the Purchaser in determining the Market Value of a
Purchased Asset, within forty-five (45) calendar days of the date of the notice
to the Purchaser deliver a new FIRREA Appraisal of such Underlying Mortgaged
Property, in which case the appraised value set forth in such new FIRREA
Appraisal shall be used in lieu of the disputed appraised value in the
determining the Market Value of such Purchased Asset, and, (B) if the dispute
involves the price at which a Purchased Asset could readily be sold used by the
Purchaser in determining the Market Value of such Purchased Asset, within three
(3) Business Days (or, in the case of Mezzanine Loans, fifteen (15) calendar
days) of the date of the notice to the Purchaser deliver up to three (3) written
Alternative Market Price Quotes, in which case the average of the Alternative
Market Price Quotes on the one hand and the market price used by the Purchaser
on the other shall be used in lieu of the disputed market price in the
determination of the Market Value of such Purchased Asset. Notwithstanding
anything to the contrary herein, in the event that the Seller fails to timely
deliver to the Purchaser any notice of dispute within such three (3) Business
Day period or fails to deliver such appraisal within forty-five (45) calendar
days or such Alternative Market Price Quotes within such three (3) Business Days
(or, in the
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case of Mezzanine Loans, fifteen (15) calendar days), respectively, the
Purchaser's determination of the Market Value shall be final and conclusive.
SECTION 2.11 HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS.
Title to all Purchased Items shall pass to the Purchaser, and the
Purchaser shall have free and unrestricted use of all Purchased Assets and
Purchased Items. Nothing in this Agreement shall preclude the Purchaser from
engaging in repurchase transactions with the Purchased Items or otherwise
pledging, repledging, transferring, hypothecating, or rehypothecating the
Purchased Items, all on terms that the Purchaser may determine in its sole
discretion. Nothing contained in this Agreement shall obligate the Purchaser to
segregate any Purchased Items delivered to the Purchaser by the Seller.
SECTION 2.12 FEES.
(a) On or prior to the Closing Date, the Seller shall pay to the
Purchaser the Commitment Fee agreed to by the Seller and the Purchaser in the
Fee Letter.
(b) To the extent not paid by the Seller under the Fee Letter, the
Pricing Differential and the Unused Fee shall be paid to the Purchaser from the
Collection Account to the extent funds are available on each Payment Date
pursuant to Section 2.8.
(c) To the extent not paid by the Seller, the Custodian's fees and
expenses shall be paid to the Custodian from the Collection Account to the
extent funds are available on each Payment Date pursuant to Section 2.8.
(d) The Seller shall pay to ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC, as counsel to the
Purchaser, on the Closing Date, its reasonable estimated fees and out-of-pocket
expenses in immediately available funds and shall pay all additional reasonable
fees and out-of-pocket expenses of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC within ten (10) days
after receiving an invoice for such amounts.
SECTION 2.13 INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
(a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation, or (ii) the compliance by
the Purchaser with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) shall (a)
subject the Purchaser to any Tax (except for Taxes on the overall net income of
the Purchaser), duty or other charge with respect to any ownership interest in
the Purchased Items, or any right to enter into Transactions hereunder, or on
any payment made hereunder, (b) impose, modify or deem applicable any reserve
requirement (including, without limitation, any reserve requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding any reserve
requirement, if any, included in the determination of the Price Differential),
special deposit or similar requirement against assets of, deposits with or for
the amount of, or credit extended by, the Purchaser or (c) impose any other
condition affecting the ownership interest in the Purchased Items conveyed to
the Purchaser hereunder or the Purchaser's rights hereunder,
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the result of which is to increase the cost to the Purchaser or to reduce the
amount of any sum received or receivable by the Purchaser under this Agreement,
then within ten (10) days after demand by the Purchaser (which demand shall be
accompanied by a statement setting forth the basis for such demand), the Seller
shall pay directly to the Purchaser such additional amount or amounts as will
compensate the Purchaser for such additional or increased cost incurred or such
reduction suffered.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by the Purchaser with any law, guideline, rule, regulation,
directive or request from any central bank or other Governmental Authority or
agency (whether or not having the force of law), including, without limitation,
compliance by the Purchaser with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of the Purchaser as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which the Purchaser could
have achieved but for such introduction, change or compliance (taking into
consideration the policies of the Purchaser with respect to capital adequacy) by
an amount deemed by the Purchaser to be material, then from time to time, within
ten (10) days after demand by the Purchaser (which demand shall be accompanied
by a statement setting forth the basis for such demand), the Seller shall pay
directly to the Purchaser such additional amount or amounts as will compensate
the Purchaser for such reduction. For the avoidance of doubt, any interpretation
of Accounting Research Bulletin No. 51 by the Financial Accounting Standards
Board shall constitute an adaptation, change, request or directive subject to
this Subsection 2.13(b).
(c) If as a result of any event or circumstance similar to those
described in clause (a) or (b) of this Section 2.13, the Purchaser is required
to compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to the Purchaser in connection with
this Agreement or the funding or maintenance of Purchased Items hereunder, then
within ten (10) days after demand by the Purchaser, the Seller shall pay to the
Purchaser such additional amount or amounts as may be necessary to reimburse the
Purchaser for any amounts payable or paid by it.
(d) In determining any amount provided for in this Section 2.13, the
Purchaser may use any reasonable averaging and attribution methods. The
Purchaser making a claim under this Section 2.13 shall submit to the Seller a
written description as to such additional or increased cost or reduction and the
calculation thereof, which written description shall be conclusive absent
demonstrable error.
(e) If the Purchaser shall notify the Purchaser that a Eurodollar
Disruption Event as described in clause (a) of the definition of "Eurodollar
Disruption Event" has occurred, the Purchaser shall in turn so notify the
Seller, whereupon all Transactions in respect of which the Price Differential
accrues at the Adjusted Eurodollar Rate shall immediately be converted into
Transactions in respect of which the Price Differential accrues at the Base
Rate.
(f) If, as a result of any event or circumstance described in clause
(a), (b) or (c) of this Section 2.13, the Seller is required to make payments to
the Purchaser, the Seller shall have
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the right to elect, by written notice to the Purchaser, to convert the Rate at
which the Price Differential accrues from the Eurodollar Rate to the Base Rate.
SECTION 2.14 TAXES.
(a) All payments made by a Borrower in respect of a Purchased Item and
all payments made by the Seller under this Agreement will be made free and clear
of and without deduction or withholding for or on account of any Taxes. If any
Taxes are required to be withheld from any amounts payable to the Purchaser,
then the amount payable to such Person will be increased (such increase, the
"Additional Amount") such that every net payment made under this Agreement after
withholding for or on account of any Taxes (including, without limitation, any
Taxes on such increase) is not less than the amount that would have been paid
had no such deduction or withholding been deducted or withheld. The foregoing
obligation to pay Additional Amounts, however, will not apply with respect to
net income or franchise taxes imposed on the Purchaser, with respect to payments
required to be made by the Seller under this Agreement, by a taxing jurisdiction
in which the Purchaser is organized, conducts business or is paying taxes (as
the case may be).
(b) The Seller will indemnify the Purchaser for the full amount of
Taxes payable by such Person in respect of Additional Amounts and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. All payments in respect of this indemnification shall be made within
ten (10) days from the date a written invoice therefor is delivered to the
Seller.
(c) Within thirty (30) days after the date of any payment by the Seller
of any Taxes, the Seller will furnish to the Purchaser, at its address set forth
under its name on the signature pages hereof, appropriate evidence of payment
thereof.
(d) If the Purchaser is created or organized under the laws of the
United States or a political subdivision thereof, the Purchaser shall deliver to
the Seller, within fifteen (15) days after the date hereof, two (or such other
number as may from time to time be prescribed by Applicable Laws) duly completed
copies of IRS Form W-9 (or any successor forms of other certificates or
statements that may be required from time to time by the relevant United States
taxing authorities or Applicable Laws). If the Purchase is not created or
organized under the laws of the United States or a political subdivision
thereof, the Purchaser shall deliver to the Seller, (i) within fifteen (15) days
after the date hereof, two (or such other number as may from time to time be
prescribed by Applicable Laws) duly completed copies of IRS Form W-8BEN or Form
W-8ECI (or any successor forms or other certificates or statements that may be
required from time to time by the relevant United States taxing authorities or
Applicable Laws), as appropriate, to permit the Seller to make payments
hereunder for the account of the Purchaser without deduction or withholding of
United States federal income or similar Taxes, and (ii) upon the obsolescence
of, or after the occurrence of any event requiring a change in, any form or
certificate previously delivered pursuant to this Subsection 2.14(d), copies (in
such numbers as may from time to time be prescribed by Applicable Laws or
regulations) of such additional, amended or successor forms, certificates or
statements as may be required under Applicable
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Laws or regulations to permit the Seller to make payments hereunder for the
account of the Purchaser without deduction or withholding of United States
federal income or similar Taxes.
(e) Without prejudice to the survival of any other agreement of the
Seller hereunder, the agreements and obligations of the Seller contained in
Section 2.13 and this Section 2.14 shall survive the termination of this
Agreement.
ARTICLE III
CONDITIONS TO TRANSACTIONS
SECTION 3.1 CONDITIONS TO CLOSING AND INITIAL PURCHASE.
The Purchaser shall not be obligated to enter into any Transaction
hereunder nor shall the Purchaser be obligated to take, fulfill or perform any
other action hereunder until the following conditions have been satisfied, in
the sole discretion of, or waived in writing by, the Purchaser:
(a) Each Repurchase Document shall have been duly executed by, and
delivered to, the parties thereto, and the Purchaser shall have received such
other documents, instruments, agreements and legal opinions as the Purchaser
shall reasonably request in connection with the Transactions contemplated by
this Agreement, each in form and substance satisfactory to the Purchaser;
(b) The Purchaser shall have received (i) satisfactory evidence that
the Seller and the Guarantor have obtained all required consents and approvals
of all Persons, including all requisite Governmental Authorities, to the
execution, delivery and performance of this Agreement and the other Repurchase
Documents to which each is a party and the consummation of the transactions
contemplated hereby or thereby or (ii) an Officer's Certificate from each of the
Seller and the Guarantor in form and substance reasonably satisfactory to the
Purchaser affirming that no such consents or approvals are required; it being
understood that the acceptance of such evidence or Officer's Certificate shall
in no way limit the recourse of the Purchaser against the Seller or the
Guarantor for a breach of the Seller's or the Guarantor's representation or
warranty that all such consents and approvals have, in fact, been obtained;
(c) The Seller, the Guarantor and the Pledgor shall each be in
compliance in all material respects with all Applicable Laws and Contractual
Obligations and shall have delivered to the Purchaser as to this and other
closing matters certification in the form of Exhibit I-1, I-2 and I-3,
respectively;
(d) The Seller shall have delivered to the Purchaser a duly executed
Power of Attorney in the form of Exhibit III;
(e) The Seller and the Pledgor shall have delivered to the Purchaser a
perfection certificate in the form of Exhibit VI-1 and VI-2, respectively;
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(f) Any and all consents and waivers applicable to the Seller, the
Guarantor or to the Purchased Items shall have been obtained;
(g) The UCC Financing Statements described in Subsection 4.1(n)(v)
shall have been filed in the appropriate filing offices;
(h) The Purchaser shall be in receipt of such Opinions of Counsel from
the counsel to the Seller, the Guarantor and the Custodian as the Purchaser may
require, each in form and substance satisfactory to the Purchaser in its sole
discretion, including, without limitation, corporate opinions and perfection
opinions (filing and possession);
(i) The Purchaser shall be in receipt of a good standing certificate
and certified copies of the Governing Documents and applicable resolutions of
the Seller, the Guarantor and the Custodian evidencing the corporate or other
authority for the Seller, the Guarantor and the Custodian with respect to the
execution, delivery and performance of the Repurchase Documents and each of the
other documents to be delivered by the Seller, the Guarantor and the Custodian
from time to time in connection herewith;
(j) The Purchaser shall be in receipt of the Servicing Agreements, the
Pooling and Servicing Agreements (if any) and Purchase Agreements, certified as
true, correct and complete copies of the originals, together with the Servicer
Notices, fully executed by the Seller and Servicer;
(k) The Purchaser shall be in receipt of a Certified copy of each
Pooling and Servicing Agreement in effect for any Eligible Asset;
(l) The Purchaser shall have received payment from the Seller of the
Commitment Fee and the amount of actual costs and expenses, including, without
limitation, the fees and expenses of counsel to the Purchaser as contemplated by
Section 13.9, incurred by the Purchaser in connection with the development,
preparation and execution of this Agreement, the other Repurchase Documents and
any other documents prepared in connection herewith or therewith;
(m) The Purchaser shall have completed to its satisfaction such due
diligence as it may require in its sole and absolute discretion; and
(n) The Purchaser shall have received all such other and further
documents, certifications, reports, approvals and legal opinions as the
Purchaser may reasonably require.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL TRANSACTIONS.
The Purchaser's agreement to enter into each Transaction (including the
initial Transaction) is subject to the satisfaction of the following further
conditions precedent, both immediately prior to entering into such Transaction
and also after giving effect to the consummation thereof and the intended use of
the proceeds of the sale:
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(a) no Applicable Law shall prohibit or render it unlawful, and no
order, judgment or decree of Governmental Authority shall prohibit, enjoin or
render it unlawful, to enter into such Transaction by the Purchaser in
accordance with the provisions hereof or any other transaction contemplated
herein;
(b) the Seller, the Guarantor, the Pledgor and each Servicer and PSA
Servicer shall have delivered to the Purchaser all reports and other information
required to be delivered as of the date of such Transaction;
(c) the Seller shall have delivered a Confirmation, via Electronic
Transmission, in accordance with the procedures set forth in Section 2.2, and
the Purchaser shall have determined that the Mortgage Asset described in such
Confirmation is an Eligible Asset, shall have approved the purchase of the
Mortgage Asset to be included in such Transaction in its sole and absolute
discretion and shall have obtained all necessary internal credit and other
approvals for such Transaction;
(d) no Unmatured Termination Event or Termination Event shall have
occurred and be continuing;
(e) the Purchaser shall have received a Compliance Certificate in the
form of Exhibit X attached hereto ("Compliance Certificate") from a Responsible
Officer of the Seller and Guarantor that, among other things: (i) shows in
detail the calculations demonstrating that, after giving effect to the requested
Transaction, the aggregate Purchase Price of the Transactions outstanding shall
not exceed the Maximum Amount, (ii) the Seller and the Guarantor have observed
or performed all of their covenants and other agreements, and satisfied every
condition, contained in this Agreement, the Repurchase Documents and the related
documents to be observed, performed or satisfied by them, and that such
Responsible Officer has obtained no knowledge of any Unmatured Termination Event
or Termination Event except as specified in such certificate, (iii) states that
all representations and warranties contained in this Agreement are true and
correct on and as of such day as though made on and as of such day and shall be
deemed to be made on such day, and (iv) the Guarantor is in compliance with the
Financial Covenants;
(f) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall not exceed the
Asset Value of all the Purchased Assets subject to outstanding Transactions or
the Maximum Amount;
(g) subject to the Purchaser's right to perform one or more Due
Diligence Reviews pursuant to Section 13.21, the Purchaser shall have completed
in accordance with Section 2.2 its due diligence review of the Mortgage Asset
File and the Underwriting Package for each Purchased Asset and such other
documents, records, agreements, instruments, mortgaged properties or information
relating to such Mortgage Asset as the Purchaser in its sole discretion deems
appropriate to review and such review shall be satisfactory to the Purchaser in
its sole discretion;
(h) with respect to any Eligible Asset to be purchased hereunder on the
related Purchase Date that is not serviced by the Seller, the Seller shall have
provided to the Purchaser
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copies of the related Servicing Agreements and the Pooling and Servicing
Agreements, certified as true, correct and complete copies of the originals,
together with Servicer Notices fully executed by the Seller and the Servicer;
(i) the Purchaser shall have received all fees and expenses of the
Purchaser and counsel to the Purchaser as contemplated by Section 13.9 and the
Fee Letter and, to the extent the Seller is required hereunder to reimburse the
Purchaser for such amounts the Purchaser shall have received the reasonable
costs and expenses incurred by them in connection with the entering into of any
Transaction hereunder, including, without limitation, costs associated with due
diligence recording or other administrative expenses necessary or incidental to
the execution of any Transaction hereunder, which amounts, at the Purchaser's
option, may be withheld from the sale proceeds of any Transaction hereunder;
(j) none of the following shall have occurred and/or be continuing:
(i) an event or events shall have occurred in the good
faith determination of the Purchaser resulting in the effective absence
of a "repo market" or related "lending market" for purchasing (subject
to repurchase) or financing debt obligations secured by commercial
mortgage loans or securities, or an event or events shall have occurred
resulting in the Purchaser not being able to finance Mortgage Assets
through the "repo market" or "lending market" with traditional
counterparties at rates that would have been reasonable prior to the
occurrence of such event or events;
(ii) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities backed by
Mortgage Assets, or an event or events shall have occurred resulting in
the Purchaser not being able to sell securities backed by Mortgage
Assets at prices that would have been reasonable prior to such event or
events; or
(iii) there shall have occurred a material adverse change
in the financial condition of the Purchaser that affects (or can
reasonably be expected to affect) materially and adversely the ability
of the Purchaser to fund its obligations under this Agreement.
(k) for each Non-Table Funded Purchased Asset, the Purchaser shall have
received from the Custodian on each Purchase Date a Trust Receipt and an Asset
Schedule and Exception Report with respect to each Eligible Asset, each dated
the Purchase Date, duly completed and, in the case of the Asset Schedule and
Exception Report, with exceptions acceptable to the Purchaser in its sole
discretion in respect of Eligible Assets to be purchased hereunder on such
Business Day. In the case of a Table Funded Purchased Asset, the Purchaser shall
have received on the related Purchase Date the Table Funded Trust Receipt and
all other items described in the second (2nd) sentence of Subsection 2.2(h),
each in form and substance satisfactory to the Purchaser in its sole discretion,
provided that the Purchaser subsequently receives the items described in
Subsections 2.2(d) and (h) and the other delivery requirements under the
Custodial Agreement on or before the date and time specified herein and therein,
which items shall be in form and substance satisfactory to the Purchaser in its
sole discretion;
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(l) the Purchaser shall have received from the Seller a Warehouse
Lender's Release Letter substantially in the form of Exhibit VII-B hereto (or
such other form acceptable to the Purchaser) ("Warehouse Lender's Release
Letter"), if applicable, or a Seller's Release Letter substantially in the form
of Exhibit VII-A hereto (or such other form acceptable to the Purchaser)
("Seller's Release Letter") covering each Eligible Asset to be sold to the
Purchaser;
(m) prior to the purchase of any Eligible Asset acquired (by purchase
or otherwise) by the Seller from any Affiliate of the Seller, the Purchaser
shall have received certified copies of the applicable Purchase Agreements and a
True Sale Opinion;
(n) the Purchase Price specified in a Confirmation for a Transaction
shall not be less than $1,000,000;
(o) on and as of such day, the Seller, the Guarantor and the Custodian
shall have performed all of the covenants and agreements contained in the
Repurchase Documents to be performed by such Person at or prior to such day;
(p) the Repurchase Date for such Transaction is not later than the
Facility Maturity Date;
(q) the Purchaser shall have received evidence satisfactory to the
Purchaser that the Seller has delivered an irrevocable instruction to each
Servicer or PSA Servicer under a Pooling and Servicing Agreement, as applicable,
to pay Income with respect to the Purchased Items directly to the Collection
Account as provided herein, which instructions may not be modified without the
prior written consent of the Purchaser;
(r) both immediately prior to the requested Transaction and also after
giving effect thereto and to the intended use thereof, the representations and
warranties made by the Seller and the Guarantor in Section 4.1 shall be true,
correct and complete on and as of such Purchase Date in all material respects
with the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made only as of
a specific date, as of such specific date);
(s) the Purchaser shall be in receipt of the evidence of insurance
required by Section 9.1 of the Custodial Agreement;
(t) the Seller shall have delivered any other opinion or closing item
required by Section 3.1 that was not delivered on the Closing Date (including,
without limitation, the filing of UCC financing statements against the Seller
and the Pledgor, an opinion regarding perfection by possession, perfection by
filing and other matters delivered on behalf of the Seller and acceptable to the
Purchaser in its discretion, the Guarantor's resolution duly executed, an
opinion on behalf of the Guarantor acceptable to the Purchaser in its
discretion, a fully executed Servicing Agreement and the establishment of the
Collection Account);
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(u) a certification of good standing for the Seller for the Seller in
each jurisdiction where the Mortgaged Property is located;
(v) other conditions to such Purchase set forth in this Agreement or
the Custodial Agreement are satisfied; and
(w) to the extent applicable, the Seller shall have delivered the
opinions required by Section 3.3; and
(x) the Purchaser shall have received all such other and further
documents, reports, certifications, approvals and legal opinions as the
Purchaser in its sole discretion shall reasonably require.
Each Confirmation delivered by the Seller hereunder shall constitute a
certification by the Seller that all the conditions set forth in Section 3.1 and
this Section 3.2 have been satisfied (both as of the date of such notice or
request and as of the date of such purchase).
The failure of the Seller or Guarantor, as applicable, to satisfy any
of the foregoing conditions precedent in respect of any Transaction shall,
unless such failure was expressly waived in writing by the Purchaser on or prior
to the related Purchase Date, give rise to a right of the Purchaser, which right
may be exercised at any time on the demand of the Purchaser, to rescind the
related Transaction and direct the Seller to pay to the Purchaser for the
benefit of the Purchaser an amount equal to the Purchase Price, the Price
Differential, Breakage Costs and other amounts due in connection therewith
during any such time that any of the foregoing conditions precedent were not
satisfied.
SECTION 3.3 ADDITIONAL OPINIONS.
To the extent required by any Rating Agency at any time, the Seller
shall (i) amend its Governing Documents to require two (2) Independent Directors
and add any other provision that may be required by any such Rating Agency in
its sole and absolute discretion or by the Purchaser in its reasonable
discretion, (ii) provide to the Purchaser a non-consolidation opinion regarding
the Seller, the Pledgor and the Guarantor, which opinion shall be satisfactory
to the Purchaser in its reasonable discretion and the Rating Agencies in their
sole and absolute discretion, (iii) provide the Purchaser with one (1) or more
legal opinions addressing the single-member limited liability company structure
of the Seller, which opinions shall be satisfactory to the Purchaser in its
reasonable discretion and the Rating Agencies in their sole and absolute
discretion, and (iv) any additional opinions or requirements that any Rating
Agency may require, which opinions shall be satisfactory to the Purchaser in its
reasonable discretion and the Rating Agencies in their sole and absolute
discretion.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
Each of the Seller and the Guarantor represents and warrants, as of the
date of this Agreement and any Transaction hereunder and at all times while any
Repurchase Document and any Transaction hereunder is in full force and effect,
as follows:
(a) Organization and Good Standing. Each of the Seller's and the
Guarantor's exact legal name is set forth on the signature pages to this
Agreement. The Seller has been duly organized, and is validly existing as a
limited liability company in good standing, under the laws of the State of
Delaware, with all requisite limited liability company power and authority to
own or lease its Properties and conduct its business as such business is
presently conducted, and had, at all relevant times, and now has, all necessary
power, authority and legal right to acquire, own and sell the Purchased Items.
The Guarantor has been duly organized, and is validly existing as a corporation
in good standing, under the laws of the State of Maryland, with all requisite
corporate power and authority to own or lease its Properties and conduct its
business as such business is presently conducted.
(b) Due Qualification. Each of the Seller and the Guarantor is duly
qualified to do business and is in good standing as a limited liability company
and corporation, respectively, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of Property or
the conduct of its business requires such qualification, licenses or approvals.
(c) Power and Authority; Due Authorization; Execution and Delivery.
Each of the Seller and the Guarantor (i) has all necessary power, authority and
legal right (A) to execute and deliver the Repurchase Documents to which it is a
party, (B) to carry out the terms of the Repurchase Documents to which it is a
party, (C) with respect to the Seller, to sell and assign an ownership interest
in the Purchased Items, and (D) with respect to the Seller, to sell the
Purchased Items on the terms and conditions provided herein, and (ii) has duly
authorized by all necessary corporate action (A) the execution, delivery and
performance of the Repurchase Documents to which it is a party, and (B) with
respect to the Seller, the sale and assignment of an ownership interest in the
Purchased Items on the terms and conditions herein provided. The Repurchase
Documents to which each of the Seller and the Guarantor is a party have been
duly executed and delivered by the Seller and the Guarantor, as applicable.
(d) Binding Obligation. Each of the Repurchase Documents to which each
of the Seller and the Guarantor is a party constitutes a legal, valid and
binding obligation of the Seller and the Guarantor, as applicable, enforceable
against the Seller and the Guarantor in accordance with its respective terms,
except as such enforceability may be limited by Insolvency Laws and by general
principles of equity (whether considered in a suit at law or in equity).
(e) No Violation. The consummation of the transactions contemplated by
the Repurchase Documents to which each of the Seller and the Guarantor is a
party and the
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fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Seller's or the
Guarantor's, as applicable, Governing Documents or any material Contractual
Obligation of the Seller or the Guarantor, as applicable, (ii) result in the
creation or imposition of any Lien (other than Permitted Liens) upon any of the
Seller's or the Guarantor's, Properties pursuant to the terms of any such
Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.
(f) No Proceedings. There is no material litigation, proceeding or
investigation pending or, to the best knowledge of each of the Seller or the
Guarantor, threatened against the Seller or the Guarantor, before any
Governmental Authority (i) asserting the invalidity of the Repurchase Documents
to which each of the Seller and the Guarantor is a party, (ii) seeking to
prevent the consummation of any of the transactions contemplated by the
Repurchase Documents to which each of the Seller and the Guarantor is a party,
or (iii) seeking any determination or ruling that could reasonably be expected
to have Material Adverse Effect.
(g) All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority (if any)
required for the due execution, delivery and performance by the Seller and the
Guarantor of the Repurchase Documents to which each of the Seller and the
Guarantor is a party (including the transfer of and the grant of a security
interest in the Purchased Items) have been obtained, effected or given and are
in full force and effect.
(h) Bulk Sales. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not require compliance
with any "bulk sales" act or similar law by the Seller or the Guarantor.
(i) Solvency. Neither the Seller nor the Guarantor is the subject of
any Insolvency Proceedings or Insolvency Event. The Transactions under this
Agreement and any other Repurchase Document to which each of the Seller and the
Guarantor is a party do not and will not render the Seller or the Guarantor not
Solvent.
(j) Selection Procedures. No procedures believed by the Seller or the
Guarantor to be adverse to the interests of the Purchaser were utilized by the
Seller or the Guarantor in identifying and/or selecting the Purchased Assets. In
addition, each Purchased Asset shall have been underwritten in accordance with
and satisfy any applicable standards that have been established by the Seller,
the Guarantor and any of their Affiliates and are then in effect.
(k) Taxes. Each of the Seller and the Guarantor has filed or caused to
be filed all tax returns that are required to be filed by it. Each of the Seller
and the Guarantor has paid or made adequate provisions for the payment of all
Taxes and all assessments made against it or any of its Property (other than any
amount of Tax the validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Seller), and no tax Lien has been
filed and, to each of the Seller's and the Guarantor's knowledge, no claim is
being asserted, with respect to any such Tax, fee or other charge.
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(l) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including, without limitation, the use of the
proceeds from the sale of the Purchased Items) will violate or result in a
violation of Section 7 of the Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X. Neither the
Seller nor the Guarantor owns or intends to carry or purchase, and no proceeds
from the Transactions will be used to carry or purchase, any "margin stock"
within the meaning of Regulation U or to extend "purpose credit" within the
meaning of Regulation U.
(m) Environmental Matters.
(i) No Properties owned or leased by the Seller or the
Guarantor and, to the knowledge of each of the Seller and the
Guarantor, no Properties formerly owned or leased by the Seller or the
Guarantor, or any Subsidiaries thereof, contain, or have previously
contained, any Materials of Environmental Concern in amounts or
concentrations that constitute or constituted a violation of, or
reasonably could be expected to give rise to liability under,
Environmental Laws;
(ii) Each of the Seller and the Guarantor is in
compliance, and has in the last five (5) years (or such shorter period
as the Seller and/or the Guarantor shall have been in existence) been
in compliance, with all applicable Environmental Laws, and, to the
knowledge of the Seller and the Guarantor, there is no violation of any
Environmental Laws that reasonably could be expected to interfere with
the continued operations of the Seller or the Guarantor;
(iii) Neither the Seller nor the Guarantor has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability under any Environmental Law, nor does the Seller or
the Guarantor have knowledge that any such notice will be received or
is being threatened;
(iv) Materials of Environmental Concern have not been
transported or disposed of by the Seller or the Guarantor in violation
of, or in a manner or to a location that reasonably could be expected
to give rise to liability under, any applicable Environmental Law, nor
has any of them generated, treated, 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
Seller and the Guarantor, threatened, under any Environmental Law to
which Seller or the Guarantor 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 the Seller or the Guarantor is a party;
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(vi) There has been no release or, to the best knowledge
of each of the Seller and the Guarantor, 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 the Seller or the Guarantor may become
liable; and
(vii) To the best knowledge of each of the Seller and the
Guarantor, each of the representations and warranties set forth in the
preceding clauses (i) through (vi) is true and correct with respect to
each parcel of real property owned or operated by the Seller and the
Guarantor.
(n) Security Interest.
(i) This Agreement and the applicable Transfer Documents
constitute a valid transfer to the Purchaser of all right, title and
interest of the Seller in, to and under all Purchased Items, free and
clear of any Lien of any Person claiming through or under the Seller,
the Guarantor or any of their Affiliates, except for Permitted Liens
and the Seller's repurchase rights described in Article II, and is
enforceable against creditors of and purchasers from the Seller. If the
conveyances contemplated by this Agreement are determined to be
transfers for security, then this Agreement constitutes a grant of a
security interest in all Purchased Items to the Purchaser, that, upon
the delivery of the Transfer Documents and Mortgage Asset Files to the
Custodian and the filing of the financing statements described in
Subsection 4.1(n)(v), shall be a first priority perfected security
interest in all Purchased Items to the extent such Purchased Items can
be perfected by possession or by filing, subject only to Permitted
Liens. Neither the Seller nor any Person claiming through or under the
Seller shall have any claim to or interest in the Collection Account,
except for the interest of the Seller in such property as a debtor for
purposes of the UCC;
(ii) The Purchased Items constitute either a "general
intangible," an "instrument," an "account," "investment property," a
"security," a "deposit account" and/or "chattel paper" within the
meaning of the applicable UCC;
(iii) Other than the Lien and transfers contemplated
hereunder, the Seller has not sold, assigned, pledged, encumbered or
otherwise conveyed any of the Purchased Items to any Person, and,
immediately prior to the sale to the Purchaser, the Seller was the sole
owner of such Purchased Items, and the Seller owns and has good and
marketable title to the Purchased Items free and clear of any Lien
(other than Permitted Liens);
(iv) The Seller has received all consents and approvals,
if any, required by the terms of any Purchased Items to the sale and
granting of a security interest in the Purchased Items hereunder to the
Purchaser;
(v) Upon the filing of the UCC Financing Statements
describing the Purchased Items, in the jurisdictions and recording
offices listed on Schedule 7 attached hereto, the security interests
granted hereunder in the Purchased Items shall constitute
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fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Seller in, to
and under such Purchased Items that can be perfected by filing under
the UCC;
(vi) Upon execution and delivery of the Account Agreement,
the Purchaser shall either be the owner of, or have a valid and fully
perfected first priority security interest in, the Collection Account
and the deposits and investment property therein;
(vii) The Seller has not authorized the filing of and is
not aware of any financing statements against the Seller that include a
description of collateral covering the Purchased Items other than any
financing statement (A) relating to the security interests granted to
the Seller under the Purchase Agreements (if any), (B) that has been
terminated, or (C) pursuant hereto. The Seller is not aware of the
filing of any judgment or tax Lien filings against the Seller;
(viii) Upon receipt by Custodian of each Mortgage Note,
Mezzanine Note or Junior Interest Note, as applicable, endorsed in
blank by a duly authorized officer of the Seller and payment by the
Purchaser of the applicable Purchase Price, either a purchase shall
have been completed by the Purchaser of each Mortgage Note or Junior
Interest Note, as applicable, or the Purchaser shall have a valid and
fully perfected first priority security interest in each Mortgage Note
or Junior Interest Note, as applicable;
(ix) All original Mortgage Notes, Mezzanine Notes and
Junior Interest Notes have been, or, subject to the delivery
requirements contained herein, will be delivered to the Custodian; and
(x) None of the Mortgage Notes, Mezzanine Notes or Junior
Interest Notes has any marks or notations indicating that they have
been pledged, assigned or otherwise conveyed to any Person other than
the Purchaser.
(o) Location of Offices. The Seller's location (within the meaning of
Article 9 of the UCC) is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. The office where the Seller keeps all the records (within the meaning of
Article 9 of the UCC) is at the address of the Seller referred to in Section
13.2 hereof (or at such other locations as to which the notice and other
requirements specified in Subsection 5.1(n) shall have been satisfied). The
Seller's organizational identification number is 3739319. The Seller has not
changed its name, whether by amendment of its certificate of incorporation, by
reorganization or otherwise, and has not changed its location within the four
(4) months preceding the Closing Date.
(p) Tradenames. The Seller has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which it has
done or is doing business.
(q) Value Given. The Seller shall have given reasonably equivalent
value to each Transferor in consideration for the transfer to the Seller of the
Purchased Items under the applicable Purchase Agreement, no such transfer shall
have been made for or on account of an
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antecedent debt owed by the Transferor thereunder to the Seller, and no such
transfer is or may be voidable or subject to avoidance under any section of the
Bankruptcy Code.
(r) [RESERVED].
(s) Compliance with Anti-Money Laundering Laws. Each of the Seller and
the Guarantor has complied with all applicable anti-money laundering laws and
regulations, including, without limitation, the USA Patriot Act of 2001
(collectively, the "Anti-Money Laundering Laws"). To the extent applicable, each
of the Seller and the Guarantor has established an adequate anti-money
laundering compliance program as required by the Anti-Money Laundering Laws, has
conducted the requisite due diligence in connection with the origination or
acquisition of each Mortgage Asset for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Borrower and
the origin of the assets used by the said Borrower to purchase the property in
question, and maintains, and will maintain, sufficient information to identify
the applicable Borrower for purposes of the Anti-Money Laundering Laws. To the
knowledge of the Seller and the Guarantor, no Mortgage Asset is subject to
nullification pursuant to Executive Order 13224 (the "Executive Order") or the
regulations promulgated by the Office of Foreign Assets Control of the United
States Department of the Treasury (the "OFAC Regulations") or in violation of
the Executive Order or the OFAC Regulations, and no Borrower is subject to the
provisions of such Executive Order or the OFAC Regulations nor listed as a
"blocked person" for purposes of the OFAC Regulations.
(t) Investment Company Act. Neither the Seller nor the Guarantor is,
and neither is controlled by, an "investment company" within the meaning of the
40 Act, as amended, or is exempt from the provisions of the 40 Act.
(u) ERISA. The Seller, the Guarantor and each ERISA Affiliate have made
all required contributions to each Benefit Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Benefit Plan. Neither the Seller, the Guarantor nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan, nor has there been a complete or partial
withdrawal by the Seller, the Guarantor or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization. The present value of all benefits vested under all "employee
pension benefit plans," as such term is defined in Section 3(2) of ERISA,
maintained by each of the Seller and the Guarantor, or in which employees of the
Seller or the Guarantor are entitled to participate, as from time to time in
effect (herein called the "Pension Plans"), does not exceed the value of the
assets of the Pension Plan allocable to such vested benefits (based on the value
of such assets as of the last annual valuation date). No prohibited
transactions, accumulated funding deficiencies, withdrawals or reportable events
have occurred with respect to any Pension Plans that, in the aggregate, could
subject the Seller or the Guarantor to any material tax, penalty or other
liability. No Lien in favor of the PBGC or a Pension Plan has arisen or is
likely to arise on account of any Pension Plan. No notice of intent to terminate
a Pension Plan under Section 4041(b) of ERISA has been filed, nor has any
Pension Plan been
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terminated under Section 4041(c) of ERISA, nor has the PBGC instituted
proceedings to terminate or appoint a trustee to administer a Pension Plan, and
no event has occurred or condition exists that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
(v) PUHCA. Neither the Seller nor the Guarantor is a "holding company"
or a "subsidiary holding company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or any successor
statute.
(w) Compliance with Law. Each of the Seller and the Guarantor has
complied in all respects with all Applicable Laws to which it may be subject,
and no Purchased Item contravenes any Applicable Laws (including, without
limitation, laws, rules and regulations relating to licensing, truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy).
(x) Income. The Seller acknowledges that all Income received by it or
its Affiliates and the Servicers or PSA Servicer with respect to the Purchased
Items sold hereunder are held and shall be held for the benefit of the Purchaser
until deposited into the Collection Account as required herein.
(y) Set-Off, etc. No Purchased Item has been compromised, adjusted,
extended, satisfied, subordinated, rescinded, set-off or modified by the Seller,
the Transferor or the Borrower thereof, and no Purchased Item is subject to
compromise, adjustment, extension (except as set forth in the related Mortgage
Asset File), satisfaction, subordination, rescission, set-off, counterclaim,
defense, abatement, suspension, deferment, deduction, reduction, termination or
modification, whether arising out of transactions concerning the Purchased Item
or otherwise, by the Seller, the Transferor or the Borrower with respect
thereto, except for amendments to such Purchased Assets otherwise permitted
under Section 6.10 of this Agreement.
(z) Full Payment. Neither the Seller nor the Guarantor has knowledge of
any fact that should lead it to expect that any Purchased Asset will not be paid
in full.
(aa) [RESERVED].
(bb) Assignments. The Assignments do not violate any provisions of the
underlying Mortgage Asset Files or Mortgage Loan Documents, such documents do
not contain any express or implied prohibitions on sales or assignments of such
Purchased Assets, and such agreements are valid, binding and enforceable against
the Seller.
(cc) Eligibility of Purchased Assets. With respect to each Purchased
Asset, each representation and warranty on Schedule 1 is true and correct.
(dd) Acting as Principal. The Seller will engage in such Transactions
as principal, or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal.
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(ee) No Broker. The Seller has not dealt with any broker, investment
banker, agent, or other Person, except for the Purchaser (or an Affiliate of the
Purchaser), who may be entitled to any commission or compensation in connection
with the sale of Purchased Assets pursuant to this Agreement.
(ff) Ability to Perform. Neither the Seller nor the Guarantor believes,
nor does either have any reason or cause to believe, that it cannot perform each
and every agreement and covenant contained in the Repurchase Documents
applicable to it to which it is a party.
(gg) No Unmatured Termination Event. No Unmatured Termination Event or
Termination Event has occurred and is continuing hereunder.
(hh) Financial Condition.
(i) The consolidated balance sheet of the Guarantor and
its consolidated Subsidiaries provided to the Purchaser and the related
consolidated statements of income and retained earnings and of cash
flows, copies of which have heretofore been furnished to the Purchaser,
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 as of the date of such financial statements and
other information. All such financial statements, including the related
schedules and notes thereto (if any), have been prepared in accordance
with GAAP applied consistently throughout the periods involved (except
as disclosed therein). Except as set forth on Schedule 6 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 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, that is not
reflected in the foregoing statements or in the notes thereto. During
the period from the date of the financial statements and other
financial information delivered to the Purchaser, 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.
(ii) The operating forecast and cash flow projections of
the Guarantor and its consolidated Subsidiaries, copies of which have
heretofore been furnished to the Purchaser, have been prepared in good
faith under the direction of a Responsible Officer of the Guarantor and
in accordance with GAAP. The Guarantor 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. The Guarantor shall
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not be required to provide information in its projections if the
disclosure of such information would violate Applicable Laws relating
to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(ii) Servicing Agreements. The Seller has delivered to the Purchaser
all Servicing Agreements and all Pooling and Servicing Agreements with respect
to the Purchased Assets, and, to the best of the Seller's knowledge, no material
default or event of default exists thereunder.
(jj) Existing Financing Facilities. All credit facilities, repurchase
facilities or substantially similar facilities of the Seller and the Guarantor
that are presently in effect are listed under the definition of "Existing
Financing Facilities." To the Seller's and the Guarantor's knowledge, no
material defaults or events of default exist thereunder.
(kk) [RESERVED].
(ll) True and Complete Disclosure. To the Seller's and the Guarantor's
actual knowledge, the information, reports, certificates, documents, financial
statements, books, records, files, exhibits and schedules furnished in writing
by or on behalf of each of the Seller and the Guarantor to the Purchaser in
connection with the negotiation, preparation or delivery of this Agreement and
the other Repurchase Documents or included herein or therein or delivered
pursuant hereto or thereto, when taken as a whole, do not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date
hereof by or on behalf of each of the Seller and the Guarantor to the Purchaser
in connection with this Agreement and the other Repurchase Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to a Responsible Officer of the Seller or the Guarantor,
after due inquiry, that could reasonably be expected to have a Material Adverse
Effect that has not been disclosed to the Purchaser. All projections furnished
on behalf of the Seller or the Guarantor to the Purchaser were prepared and
presented in good faith by or on behalf of the Seller or the Guarantor.
(mm) No Reliance. Each of the Seller and the Guarantor has made its own
independent decisions to enter into the Repurchase Documents and each
Transaction and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors (including,
without limitation, legal counsel and accountants) as it has deemed necessary.
Each of the Seller and the Guarantor is not relying upon any advice from the
Purchaser as to any aspect of the Transactions, including, without limitation,
the legal, accounting or tax treatment of such Transactions.
(nn) [RESERVED].
(oo) Insurance. Each of the Seller and the Guarantor has and maintains,
with respect to its Properties and business, insurance which meets the
requirements of Subsection 5.1(ll). In
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addition, the Seller shall maintain the insurance required by Section 5.7 of the
Custodial Agreement.
(pp) Purchased Assets. (i) There are no outstanding rights, options,
warrants or agreements for the purchase, sale or issuance of the Purchased
Assets created by, through, or as a result of the Seller's or the Guarantor's
actions or inactions; (ii) there are no agreements on the part of any Repurchase
Party to issue, sell or distribute the Purchased Assets, 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 Assets.
(qq) No Change. Since September 30, 2003 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.
(rr) Subsidiaries. The Seller is a Subsidiary of the Guarantor and
Schedule 8 sets forth the name of each direct or indirect Subsidiary of the
Seller and the Guarantor, and, with respect to the Seller only, 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.
(ss) Labor Relations. Neither the Seller nor the Guarantor 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 complaint pending
or, to the best knowledge of each of the Seller and the Guarantor and each of
the Subsidiaries, threatened against the Seller or the Guarantor 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, to the knowledge
of the Repurchase Parties, threatened, (ii) no strike, labor dispute, slowdown
or stoppage pending or, to the best knowledge of each of the Seller and the
Guarantor, threatened against the Seller or the Guarantor, and (iii) no union
representation question existing with respect to the employees of a Repurchase
Party and to the knowledge of the Repurchase Parties, no union organizing
activities are taking place with respect to any thereof.
(tt) Separateness. As of the date hereof, the Seller (i) owns no
assets, and does not engage in any business, other than the assets and
transactions specifically contemplated by this Repurchase Agreement; (ii) has
not incurred any indebtedness or obligation, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than (W) with respect to Retained Interests, (X) commitments to make loans which
may become Eligible Assets, and (Y) as permitted herein; (iii) has not made any
loans or advances to any Affiliate other than loans to the Guarantor that have
been disclosed in writing to and approved by the Purchaser, and has not acquired
obligations or securities of its Affiliates; (iv) has paid its debts and
liabilities (including, as applicable, shared personnel and overhead
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expenses) only from its own assets; (v) complies with the provisions of its
organizational documents; (vi) does all things necessary to observe
organizational formalities and to preserve its existence, and has not amended,
modified or otherwise changed its Governing Documents, or suffered same to be
amended, modified or otherwise changed; (vii) maintains 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 the GAAP consistently applied or as a
matter of Applicable Law); (viii) 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; (ix) 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;
(x) does not engage in or suffer any change of ownership, dissolution, winding
up, liquidation, consolidation or merger in whole or in part; (xi) does not
commingle its funds or other assets with those of any Affiliate or any other
Person; (xii) maintains its accounts separately from those of any Affiliate or
any other Person; (xiii) does not hold itself out to be responsible for the
debts or obligations of any other Person; (xiv) has not (A) filed or consented
to the filing of any Insolvency 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, (B) 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 (C) made any assignment for the benefit of the
Seller's creditors; (xv) has at least one (1) Independent Director or such
greater number as required by the Purchaser or any Rating Agency; (xvi) shall
maintain an arm's length relationship with its Affiliates; (xvii) maintain a
sufficient number of employees in light of contemplated business operations;
(xviii) use separate stationary, invoices and checks; and (xvix) allocate fairly
and reasonably any overhead for shared office space.
ARTICLE V
COVENANTS
SECTION 5.1 COVENANTS OF THE SELLER.
From the date hereof until the Aggregate Unpaids are paid in full:
(a) Compliance with Laws. Each of the Seller and the Guarantor will
comply in all material respects with all Applicable Laws (including
Environmental Laws), including those with respect to the Purchased Items or any
part thereof, and all Contractual Obligations.
(b) Preservation of Company Existence. Each of the Seller and the
Guarantor will preserve and maintain its company existence, rights, franchises
and privileges in the jurisdiction of its formation and will qualify and remain
qualified in good standing as a corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
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privileges and qualification has had, or could reasonably be expected to have, a
Material Adverse Effect.
(c) Performance and Compliance with Purchased Assets. The Seller will,
at its expense, timely and fully perform and comply (or cause the Transferors to
perform and comply pursuant to the Purchase Agreements) with all provisions,
covenants and other promises required to be observed by it under the Purchased
Items and all other agreements related to such Purchased Items.
(d) Keeping of Records and Books of Account. Each of the Seller and the
Guarantor will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Purchased Items in the event of the destruction of the originals thereof) and
will keep and maintain all documents, books, records and other information
reasonably necessary or advisable in which complete entries are made in
accordance with GAAP and Applicable Laws.
(e) Perfection. The Seller will (i) acquire such Purchased Items
pursuant to and in accordance with the terms of the Purchase Agreements, (ii)
take all action necessary to perfect, protect and more fully evidence the
Seller's ownership of such Mortgage Assets under the Purchase Agreements free
and clear of any Lien other than the Lien created hereunder and Permitted Liens,
including, without limitation, (A) file and maintain effective financing
statements against the Transferors in all necessary or appropriate filing
offices, and filing continuation statements, amendments or assignments with
respect thereto in such filing offices, and (B) execute or cause to be executed
such other instruments or notices as may be necessary or appropriate, and (iii)
take all additional action that the Purchaser may reasonably request to perfect,
protect and more fully evidence the respective interests of the parties to this
Agreement in the Purchased Items.
(f) Delivery of Income. The Seller will deposit and cause all Servicers
to deposit all Income received in respect of the Purchased Items into the
Collection Account within two (2) Business Days of receipt thereof. The Seller
shall instruct all PSA Servicers under the Pooling and Servicing Agreements to
deposit into the Collection Account within two (2) Business Days of the date the
PSA Servicer is obligated to disburse the same under the Pooling and Servicing
Agreements all Income in respect of the Purchased Items and the Seller shall
take reasonable steps necessary to enforce such instructions.
(g) Termination Events. Each of the Seller and the Guarantor will
provide the Purchaser with immediate written notice of the occurrence of each
Termination Event and each Unmatured Termination Event of which the Seller or
the Guarantor has knowledge or has received notice. In addition, no later than
two (2) Business Days following the Seller's or the Guarantor's knowledge or
notice of the occurrence of any Termination Event or Unmatured Termination
Event, the Seller or the Guarantor will provide to the Purchaser a written
statement of a Responsible Officer of the Seller or the Guarantor setting forth
the details of such event and the action that the Seller or the Guarantor
proposes to take with respect thereto.
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(h) Adverse Claims. The Seller will not create, or participate in the
creation of, or permit to exist, any Liens in relation to each Purchased Item
other than Permitted Liens or as disclosed to the Purchaser and existing as of
the date of this Agreement.
(i) Seller's Assets. With respect to each Purchased Item acquired by
the Purchaser, the Seller will (i) take all action necessary to perfect, protect
and more fully evidence the Purchaser's ownership of such Purchased Item,
including, without limitation, (A) filing and maintaining effective financing
statements against the Seller in all necessary or appropriate filing offices,
and filing continuation statements, amendments or assignments with respect
thereto in such filing offices, and (B) executing or causing to be executed such
other instruments or notices as may be necessary or appropriate and (ii) taking
all additional action that the Purchaser may reasonably request to perfect,
protect and more fully evidence the respective interests of the parties to this
Agreement and the Repurchase Documents in such Purchased Items.
(j) Notices. Each of the Seller and the Guarantor will furnish notice
to the Purchaser with respect to the following:
(i) Representations. Forthwith upon receiving knowledge of the
same, the Seller or the Guarantor shall notify the Purchaser if any
representation or warranty set forth in Section 4.1 or Schedule 1 was
incorrect at the time it was given or deemed to have been given and at
the same time shall deliver to the Purchaser a written notice setting
forth in reasonable detail the nature of such facts and circumstances.
In particular, but without limiting the foregoing, the Seller and the
Guarantor shall notify the Purchaser in the manner set forth in the
preceding sentence before any Purchase Date of any facts or
circumstances within the knowledge of the Seller or the Guarantor that
would render any of the said representations and warranties untrue at
the date when such representations and warranties were made or deemed
to have been made;
(ii) Proceedings. As soon as possible and in any event within three
(3) Business Days after the Seller or the Guarantor receives notice or
obtains knowledge thereof, notice of any settlement of, material
judgment (including a material judgment with respect to the liability
phase of a bifurcated trial) in or commencement of any labor
controversy (of a material nature), litigation, action, suit,
arbitration or proceeding before any court or governmental department,
commission, board, bureau, agency, arbitrator, investigation or
instrumentality, domestic or foreign, affecting (A) the Purchased
Items, (B) the Repurchase Documents, (C) the Purchaser's interest in
the Purchased Items, or (D) the Seller or the Guarantor or any of their
Affiliates and, with respect to this clause (D) only, the amount in
controversy exceeds $250,000;
(iii) Material Events. Promptly upon becoming aware thereof, notice
of any other event or circumstances that, in the reasonable judgment of
the Seller or the Guarantor, is likely to have a Material Adverse
Effect;
(iv) Casualty. With respect to any Purchased Asset hereunder,
promptly upon receipt of notice or knowledge that the Underlying
Mortgaged Property has been
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damaged by waste, fire, earthquake or earth movement, flood, tornado or
other casualty, or otherwise damaged so as to affect adversely the
Asset Value of such Purchased Asset;
(v) Liens. Promptly upon receipt of notice or knowledge of any
Lien or security interest on, or claim asserted against, any Purchased
Item other than Permitted Liens;
(vi) Assets. Promptly upon any material change in the market
value of any or all of the Seller's or the Guarantor's assets that
could reasonably be expected to have a Material Adverse Effect;
(vii) Defaults. (A) Any material default (beyond any
applicable notice and cure period) related to any Purchased Item, or
(B) any default (beyond any applicable notice and cure period) under
any Contractual Obligation of the Seller or the Guarantor or any of
their Subsidiaries, which, if not cured, could reasonably be expected
to have a Material Adverse Effect;
(viii) Servicers. The resignation or termination of any
Servicer under any Servicing Agreement with respect to any Purchased
Asset or any PSA Servicer under a Pooling and Servicing Agreement;
(ix) Sales. 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 of the
Seller or the Guarantor whether now owned or hereafter acquired, with
the exception of (A) this Agreement and (B) any Sale of Property by the
Seller or the Guarantor that is not material to the conduct of its
business and is effected in the ordinary course of business;
(x) Ratings. 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 Purchaser) and of any
downgrade in such rating once established; and
(xi) Losses. Any loss or expected loss in respect of any
Purchased Asset, 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 Asset.
Each notice pursuant to this Subsection 5.1(j) shall be accompanied by a
statement of a Responsible Officer of the Seller or the Guarantor, as
applicable, setting forth details of the occurrence referred to therein and
stating what action the Seller or the Guarantor, as applicable, has taken or
proposes to take with respect thereto.
(k) Purchased Assets Not to be Evidenced by Instruments. Neither the
Seller nor the Guarantor will take any action to cause any Purchased Item that
is not, as of the applicable Purchase Date, evidenced by an Instrument to be so
evidenced except in connection with the enforcement or collection of such
Purchased Items.
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(l) Security Interests. The Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Purchased Item other than Permitted Liens, whether now existing
or hereafter transferred hereunder, or any interest therein, and the Seller will
not sell, pledge, assign or suffer to exist any Lien on its interest, if any,
hereunder. The Seller will promptly notify the Purchaser of the existence of any
Lien other than Permitted Liens on any Purchased Item, and the Seller shall
defend the right, title and interest of the Purchaser in, to and under the
Purchased Items against all claims of third parties other than Permitted Liens.
(m) Deposits to Collection Account. Subject to Subsection 2.8(c), the
Seller will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to the Collection Account cash or cash proceeds other
than Income in respect of Purchased Items.
(n) Change of Name or Location of Loan Files. The Seller shall not (i)
change its name, organizational number, identity, structure or jurisdiction of
formation, move the location of its principal place of business and chief
executive office, or change the offices where it keeps the records (as defined
in the UCC) from the location referred to in Section 13.2, or (ii) move, or
consent to the Custodian moving, the Mortgage Asset Files from the location
thereof on the Closing Date, unless the Seller has given at least thirty (30)
days' prior written notice to the Purchaser and has taken all actions required
under the UCC of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Purchaser in the Purchased Items.
(o) Exceptions. The Seller shall promptly correct any and all
Exceptions set forth on any Asset Schedule and Exception Report.
(p) ERISA Matters. The Seller will not (i) engage or permit any ERISA
Affiliate to engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States Department
of Labor, (ii) permit to exist any accumulated funding deficiency, as defined in
Section 302(a) of ERISA and Section 412(a) of the Code, or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan, (iii) fail to
make any payments to a Multiemployer Plan that the Seller or any ERISA Affiliate
may be required to make under the agreement relating to such Multiemployer Plan
or any law pertaining thereto, (iv) terminate any Benefit Plan so as to result
in any liability, (v) permit to exist any occurrence of any Reportable Event or
(vi) otherwise violate the provisions of ERISA or the Code with respect to any
Benefit Plan.
(q) Purchase Agreements; Servicing Agreements. The Seller will not
materially amend, modify, waive or terminate any provision of any Purchase
Agreement, Servicing Agreement or Pooling and Servicing Agreement without the
prior written consent of the Purchaser. Notwithstanding the foregoing, but
subject to the Purchaser's rights under Article VI, the Seller shall have the
right to terminate any of the foregoing upon the occurrence of a material
default (beyond any applicable notice and cure period) of the other party
thereto.
(r) Compliance with Anti - Money Laundering Laws. The Seller shall
comply with all applicable Anti - Money Laundering Laws. The Seller shall
conduct the requisite due
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diligence in connection with the origination or acquisition of each Mortgage
Asset for purposes of the Anti - Money Laundering Laws, including with respect
to the legitimacy of the applicable Borrower and the origin of the assets used
by the said Borrower to purchase the property in question, and will maintain
sufficient information to identify the applicable Borrower for purposes of the
Anti-Money Laundering Laws.
(s) Financial Statements. The Seller and the Guarantor, as applicable,
shall deliver to the Purchaser:
(i) as soon as available, and in any event within forty - five (45)
calendar days after the end of each fiscal quarter of each of the
Seller and the Guarantor, the unaudited consolidated balance sheets of
the Seller, the Guarantor and their consolidated Subsidiaries as at the
end of such period and the related unaudited consolidated statements of
income and retained earnings and of cash flows for the Seller, the
Guarantor and their consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period, accompanied
by a certificate of a Responsible Officer of the Seller and Guarantor,
which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated
financial condition and results of operations of the Seller, the
Guarantor and their consolidated Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject
to normal year-end adjustments);
(ii) as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of each of the Seller and the
Guarantor, the audited consolidated balance sheets of the Seller, the
Guarantor and their consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for the Seller, the Guarantor and
their consolidated Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous year, accompanied
by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall not be qualified as
to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Seller, the
Guarantor and their respective consolidated Subsidiaries as at the end
of, and for, such fiscal year in accordance with GAAP;
(iii) with respect to each Purchased Asset, if provided to the
Seller or any Servicer or PSA Servicer by the Borrower under any
Purchased Asset, as soon as available, but in any event not later than
forty - five (45) days after the end of each fiscal quarter of the
Seller, the operating statement and rent roll for each Underlying
Mortgaged Property; provided, however, the Purchaser reserves the right
in its reasonable discretion to request such information on a monthly
basis (to be provided no later than thirty (30) days after the end of
each month);
(iv) with respect to each Purchased Asset, if provided to the
Seller by the Borrower under any Purchased Asset, as soon as available,
but in any event not later than
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thirty (30) days after receipt thereof, the annual balance sheet with
respect to such Borrower;
(v) with respect to each Purchased Asset, as soon as available
but in any event not later than thirty (30) days after receipt thereof,
(A) the related monthly securitization report, if any, and any other
reports delivered under the Pooling and Servicing Agreements to the
Seller, if any, and, (B) within forty - five (45) days after the end of
each quarter, a copy of the standard monthly exception report, prepared
by the Seller in the ordinary course of its business in respect of the
related Purchased Asset or Underlying Mortgaged Property;
(vi) from time to time such other information regarding the
financial condition, operations or business of the Seller and the
Guarantor as the Purchaser may reasonably request;
(vii) as soon as reasonably possible, and in any event within
thirty (30) days after a Responsible Officer of the Seller or Guarantor
knows, or with respect to any Plan or Multiemployer Plan to which the
Seller, the Guarantor or any ERISA Affiliate makes direct
contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial
officer of the Seller or the Guarantor setting forth details respecting
such event or condition and the action, if any, that the Seller, the
Guarantor or their ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with
or given to the PBGC by the Seller, the Guarantor or an ERISA Affiliate
with respect to such event or condition):
(A) any Reportable Event (provided that a failure to
meet the minimum funding standard of Section 412 of the Code
or Section 302 of ERISA or any successor provision thereof,
including without limitation the failure to make on or before
its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA or any successor provision
thereof, shall be a "Reportable Event" regardless of the
issuance of any waivers in accordance with Section 412(d) of
the Code or any successor provision thereof); and any request
for a waiver under Section 412(d) of the Code or any successor
provision thereof for any Plan;
(B) the distribution under Section 4041(c) of ERISA
or any successor provision thereof of a notice of intent to
terminate any Plan or any action taken by the Seller, the
Guarantor or an ERISA Affiliate to terminate any Plan;
(C) the institution by the PBGC of proceedings under
Section 4042 of ERISA or any successor provision thereof for
the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Seller, the
Guarantor or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan;
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(D) the complete or partial withdrawal from a
Multiemployer Plan by the Seller, the Guarantor or any ERISA
Affiliate that results in liability under Section 4201 or 4204
of ERISA or any successor provision thereof (including the
obligation to satisfy secondary liability as a result of a
purchaser default) that would have a Material Adverse Effect
or the receipt by the Seller, the Guarantor or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or any successor provision thereof or that it intends
to terminate or has terminated under Section 4041A of ERISA or
any successor provision thereof;
(E) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Seller, the Guarantor or
any ERISA Affiliate to enforce Section 515 of ERISA or any
successor provision thereof, which proceeding is not dismissed
within thirty (30) days; and
(F) the adoption of an amendment to any Plan that
would result in the loss of tax exempt status of the trust of
which such Plan is a part if the Seller, the Guarantor or an
ERISA Affiliate fails to provide timely security to such Plan
in accordance with the provisions of Section 401(a)(29) of the
Code or Section 307 of ERISA or any successor provision
thereof; and
(viii) 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); provided, that any financial statements delivered by the
Seller with respect to the Borrower under any Underlying Mortgage Loan
shall be delivered to the Purchaser in the form received by the Seller.
(t) Certificates; Other Information. The Seller and the Guarantor, as
applicable, shall furnish to the Purchaser:
(i) concurrently with the delivery of the financial statements
referred to in Subsections 5.1(s)(i) and (ii) above and in connection
with the delivery of each Confirmation, a Compliance Certificate from a
Responsible Officer of each of the Seller and the Guarantor, which
Compliance Certificate shall, among other things, on a quarterly basis
describe in detail the calculations supporting the Responsible
Officer's certification of the Guarantor's compliance with the
Financial Covenants;
(ii) as soon as available, but in any event not later than
ninety (90) days after the end of each fiscal year of the Seller and
Guarantor, respectively, and provided that the disclosure does not
violate Applicable Laws relating to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a copy of the
projections of the Seller and Guarantor of the operating budget and
cash flow budget of Seller and Guarantor, respectively, for the
succeeding fiscal year, such projections to be
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accompanied by a certificate of a Responsible Officer certifying that
such projections have been prepared in good faith based upon reasonable
assumptions;
(iii) promptly upon receipt thereof, copies of all reports
submitted to each of the Seller and the Guarantor by independent
certified public accountants in connection with each annual, interim or
special audit of the books and records of the Seller and the Guarantor
made by such accountants, including, without limitation, any management
letter commenting on the Seller's and the Guarantor's internal controls
submitted by such accountants to management in connection with their
annual audit;
(iv) within forty - five (45) days of the end of each calendar
quarter, the Seller shall provide the Purchaser with a quarterly
report, which report shall include, among other items, a summary of
such Seller's delinquency and loss experience with respect to Purchased
Assets serviced by the Seller or any Servicer or PSA Servicer or any
designee of the foregoing, the Seller's internal risk rating and/or
surveillance on the Purchased Assets, and, to the extent provided to
the Seller or any Servicer or PSA Servicer by the Borrowers under any
Purchased Assets, operating statements, the occupancy status of such
Purchased Property and other property level information plus any such
additional reports as the Purchaser may reasonably request with respect
to the Seller or any Servicer or PSA Servicer servicing portfolio or
pending originations of Mortgage Assets;
(v) within thirty (30) days after the same are sent, copies of
all financial statements, reports, notices and other documents that
each of the Seller and the Guarantor sends to its stockholders and,
within thirty (30) days after the same are filed, copies of all
financial statements and reports that the Seller and the Guarantor may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority;
(vi) no later than the fifteenth (15th) day of each month,
with respect to each Purchased Asset, a Purchased Asset Data Summary,
substantially in the form of Exhibit XI ("Purchased Asset Data
Summary"), properly completed;
(vii) to the extent not prohibited by Applicable Law, the
Seller shall promptly provide the Purchaser with copies of all
documents that the Seller, the Guarantor or any Subsidiary of the
Seller or the Guarantor is required to file with any regulatory body in
accordance with its regulations;
(viii) the Seller shall promptly deliver or cause to be
delivered to the Purchaser (i) any report or material notice received
by the Seller from any obligor under the Purchased Assets promptly
following receipt thereof and (ii) any other such document or
information relating to the Purchased Assets as the Purchaser may
reasonably request in writing from time to time;
(ix) no later than sixty (60) days after the end of each
fiscal quarter of the Seller and the Guarantor, an updated list of
Subsidiaries as of such time; and
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(x) promptly, such additional financial and other information
as the Purchaser may from time to time reasonably request.
(u) Existence, etc. Each of the Seller and the Guarantor shall:
(i) continue to engage in business of the same general type as
now conducted by it and maintain and preserve its legal existence and
all of its material rights, privileges, licenses and franchises
necessary for the operation of its business; provided, however, that
nothing in this Subsection 5.1(u) shall prohibit any transaction
expressly permitted under Subsection 5.1(v);
(ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any
of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained in accordance with
GAAP; and
(iii) permit representatives of the Purchaser, upon reasonable
notice (unless a Unmatured Termination Event or Termination Event shall
have occurred and is continuing, in which case, no prior notice shall
be required) during normal business hours and at the expense of the
Seller and the Guarantor, to examine, copy and make extracts from the
Seller's, the Guarantor's or any of their Subsidiaries' books and
records, to inspect any of their Properties, and to discuss its
business and affairs with their officers, employees and independent
accountants, all to the extent reasonably requested by the Purchaser.
(v) Prohibition of Fundamental Changes. Neither the Seller nor the
Guarantor shall enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets; provided, however, that each of the Seller and the Guarantor may merge
or consolidate with (i) any wholly owned Subsidiary of the Seller or the
Guarantor, respectively, or (ii) any other Person if the Seller or the
Guarantor, as applicable, is the surviving entity; and provided, further, that,
if after giving effect thereto, no Unmatured Termination Event or Termination
Event would exist hereunder.
(w) Margin Deficit. If at any time there exists a Margin Deficit, the
Seller shall cure such Margin Deficit in accordance with Section 2.7.
(x) Transactions with Affiliates. Each of the Seller and the Guarantor
may enter into any transaction with an Affiliate, provided that such transaction
is upon fair and reasonable terms no less favorable to the Seller or the
Guarantor than it would obtain in a comparable arm's length transaction with a
Person that is not an Affiliate; provided, further, that in no event shall the
Seller transfer to the Purchaser hereunder any Eligible Asset acquired by the
Seller from an Affiliate of the Seller unless the Seller shall have delivered a
certified copy of the related Purchase Agreement and a True Sale Opinion has
been delivered to the Purchaser prior to such sale.
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(y) Limitations on Guarantees. The Seller shall not create, incur,
assume or suffer to exist any Guarantees.
(z) Sub-Limits. The Seller shall not sell to the Purchaser any
Eligible Assets if, after giving effect to such Transactions, a Sub - Limit
would be exceeded, unless waived in writing by the Purchaser in its sole and
absolute discretion.
(aa) Limitation on Distributions. The Seller shall not declare or make
any payment on account of, or set apart assets for, a sinking or other analogous
fund for the purchase, redemption, defeasance, retirement or other acquisition
of any equity or partnership interest of the Seller, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Seller, except
that the Seller may declare and pay dividends so long as no Unmatured
Termination Event or Termination Event shall have occurred and be continuing, in
an amount necessary to comply with any Applicable Laws governing real estate
investment trusts.
(bb) Maintenance of Liquidity. The Guarantor shall not permit, for any
calendar quarter, Liquidity for such Test Period to be less than the greater of
(i) $15,000,000 and (ii) an amount equal to the amount necessary to cover the
debt service and any protective advances on the Mortgaged Assets for a period of
not less than six (6) months, as reasonably determined by the Guarantor and
confirmed by the Purchaser.
(cc) Maintenance of Tangible Net Worth. The Guarantor shall not permit,
for any Test Period, Tangible Net Worth at any time to be less than the sum of
(i) $75,000,000 plus, (ii) an amount equal to 75% of the aggregate proceeds
received by the Guarantor in connection with the offering or issuance of any
Capital Stock of the Guarantor after the Closing Date, plus (iii) an amount
equal to 80% of the consolidated retained earnings of the Guarantor accrued
after the Closing Date.
(dd) Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.
The Guarantor shall not permit the ratio of Total Indebtedness to Tangible Net
Worth at any time to be greater than 4:0 to 1:0 for the Seller.
(ee) Interest Coverage. The Guarantor shall not permit, for any Test
Period, the ratio of (i) the sum of Consolidated Adjusted EBITDA of the
Guarantor for such Test Period to (ii) the Consolidated Interest Expense of the
Guarantor for such Test Period to be less than 2:0 to 1:0.
(ff) Servicer; Servicing Tape. The Seller shall cause each Servicer and
PSA Servicer to provide to the Purchaser and to the Custodian, via Electronic
Transmission, promptly upon request by the Purchaser a remittance report
containing servicing information, including, without limitation, those fields
reasonably requested by the Purchaser from time to time, on a loan-by-loan
basis and in the aggregate, with respect to the Purchased Items serviced
hereunder by the Seller or any Servicer or PSA Servicer for the month (or any
portion thereof) prior to the date of the Purchaser's request (such remittance
report, an "Asset Tape"). The Seller shall not cause the Purchased Items to be
serviced by a third party other than pursuant to the Servicing Agreements
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or the Pooling and Servicing Agreements or, if not serviced thereunder, by any
Servicer other than a Servicer expressly approved in writing by the Purchaser,
which approval shall be deemed granted by the Purchaser with respect to each
Servicer listed on Schedule 4 attached hereto, as such schedule may be amended
or supplemented from time to time, after the execution of this Agreement.
(gg) Extension or Amendment of Purchased Assets. The Seller will not,
except as otherwise permitted in Section 6.10, extend, amend, waive or otherwise
modify, or permit any Servicer to extend, amend, waive or otherwise modify, the
material terms of any Purchased Item, provided that the foregoing shall not
prohibit the Seller, a Servicer or a PSA Servicer from permitting, prior to a
default thereunder, any Borrower to exercise an extension option contained in
any Mortgage Loan Documents.
(hh) Remittance of Prepayments. The Seller shall remit or cause to be
remitted to the Purchaser with sufficient detail, via Electronic Transmission,
to enable the Purchaser to appropriately identify the Purchased Item to which
any amount remitted applies, all full or partial principal prepayments
(regardless of the source of repayment) on any Purchased Item that the Seller, a
Servicer or a PSA Servicer has received or that have been deposited into the
Collection Account no later than one (1) Business Days following the date such
prepayment was received or deposited.
(ii) Custodial Agreement and Account Agreement. The Seller shall
maintain each of the Custodial Agreement and the Account Agreement in full force
and effect and shall not amend or modify either of the Custodial Agreement or
the Account Agreement or waive compliance with any provisions thereunder without
the prior written consent of the Purchaser.
(jj) Inconsistent Agreements. Each of the Seller and the Guarantor
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into any agreement containing any provision that would be
violated or breached by any Transaction hereunder or by the performance by the
Seller or the Guarantor of its obligations under any Repurchase Document.
(kk) Escrow Imbalance. The Seller shall (to the extent it is acting as
a servicer) or shall cause the Servicer to, no later than five (5) Business Days
after learning (from any source) of any material imbalance in any escrow
account, fully and completely correct and eliminate such imbalance, including,
without limitation, depositing its own funds into such account to eliminate any
overdrawal or deficit, to the extent required by the applicable Servicing
Agreement (in the case of a Servicer).
(ll) Maintenance of Property; Insurance. The Seller and the Guarantor
shall keep all Property useful and necessary in its business in good working
order and condition, shall 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
Purchaser, upon written request, full information as to the insurance carried.
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(mm) Interest Rate Protection Agreements. The Seller shall perform its
duties and obligations under and shall otherwise maintain any existing Interest
Rate Protection Agreements.
(nn) Payment of Obligations. Each of the Seller and the Guarantor shall
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 the Seller, the Guarantor or any of
their Subsidiaries, as the case may be.
(oo) Distributions in Respect of Purchased Assets. If the Seller shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for any Purchased Assets, or otherwise in respect thereof,
the Seller shall accept the same as the Purchaser's agent, hold the same in
trust for the Purchaser and deliver the same forthwith to the Purchaser (or its
designee) in the exact form received, together with duly executed instruments of
transfer or assignment in blank and such other documentation as the Purchaser
shall reasonably request. If any sums of money or property are paid or
distributed in respect of the Purchased Assets and received by the Seller (other
than the Borrower Reserve Payments), the Seller shall promptly pay or deliver
such money or property to the Purchaser and, until such money or property is so
paid or delivered to the Purchaser, hold such money or property in trust for the
Purchaser, segregated from other funds of the Seller.
(pp) Limitation on Indebtedness. The Seller shall not create, incur,
assume or suffer to exist any Indebtedness of the Seller, except Indebtedness of
the Seller permitted under this Agreement.
(qq) Unrelated Activities. The Seller shall not engage in any activity
other than activities specifically permitted by this Section 5.1, 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.
(rr) Governing Documents. The Seller shall not amend its Governing
Documents without the prior written consent of the Purchaser.
(ss) Separateness. The Seller shall (i) own no assets, and shall not
engage in any business, other than the assets and transactions specifically
contemplated by this Agreement; (ii) not incur any indebtedness or obligation,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (A) pursuant hereto and under the
agreements and documents evidencing, securing or in any other way related to the
Purchased Assets, (B) 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 Assets, and (C) 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
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joinder by a mortgagee; (iii) not make any loans or advances to any Affiliate
other than loans to the Guarantor which are disclosed in writing to and approved
by the Purchaser, and shall not acquire obligations or securities of its
Affiliates; (iv) pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) only from its own assets; (v) comply with the
provisions of its Governing Documents; (vi) do all things necessary to observe
organizational formalities and to preserve its existence, and will not amend,
modify or otherwise change its Governing Documents; (vii) 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 the GAAP consistently applied or as a
matter of Applicable Law) and file its own tax returns (except to the extent
consolidation is required or permitted under Applicable Law); (viii) be, and at
all times will hold itself out to the public as, a legal entity separate and
distinct from any other entity (including any Affiliate), shall correct any
known misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, and shall not identify itself or any of its Affiliates
as a division of the other; (ix) 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; (x) not engage in or suffer
any change of ownership, dissolution, winding up, liquidation, consolidation or
merger in whole or in part; (xi) not commingle its funds or other assets with
those of any Affiliate or any other Person; (xii) maintain its accounts separate
from those of any Affiliate or any other Person; (xiii) shall not hold itself
out to be responsible for the debts or obligations of any other Person; (xiv)
shall not, without the vote of its Independent Director, (A) file or consent to
the filing of any Insolvency 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, (B) 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
(C) make any assignment for the benefit of the Seller's creditors; (xv) shall
have at all times at least one (1) Independent Director (or such greater number
as required by the Purchaser or the Rating Agencies); (xvi) shall maintain an
arm's length relationship with its Affiliates; (xvii) maintain a sufficient
number of employees in light of contemplated business operations; (xviii) use
separate stationary, invoices and checks; and (xvix) allocate fairly and
reasonably any overhead for shared office space.
(tt) Pledge Agreement. Neither the Seller nor the Guarantor shall take
any direct or indirect action inconsistent with the Pledge Agreement or the
security interest granted thereunder to the Purchaser in the Equity Interests.
(uu) Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Unmatured Termination Event or Termination Event if such
action is taken or condition exists.
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ARTICLE VI
ADMINISTRATION AND SERVICING
SECTION 6.1 SERVICING.
(a) Appointment. The Purchaser hereby appoints the Seller as its agent
to service the Purchased Items and enforce its rights in and under such
Purchased Items. The Seller hereby accepts such appointment and agrees to
perform the duties and obligations with respect thereto as set forth herein.
(b) The Seller covenants to maintain or cause the servicing of the
Purchased Items to be maintained in conformity with Accepted Servicing Practices
and in a manner at least equal in quality to the servicing Seller provides for
Mortgage Assets that it owns. In the event that the preceding language is
interpreted as constituting one or more servicing contracts, each such servicing
contract shall terminate automatically upon the earliest of (i) a Termination
Event, (ii) the date on which this Agreement terminates, or (iii) the transfer
of servicing approved by the Purchaser.
SECTION 6.2 SELLER AS SERVICER.
If the Purchased Items are serviced by the Seller, the Seller agrees
that, until the repurchase of a Purchased Item on a Repurchase Date, the
Purchaser is the owner of all servicing records for the period that the
Purchaser owns the Purchased Items, including, but not limited to, any and all
servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, computer programs, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history
records, and any other records relating to or evidencing the servicing of such
Purchased Items (the "Servicing Records"). The Seller covenants to safeguard
such Servicing Records and to deliver them promptly to Purchaser or its designee
(including the Custodian) at the Purchaser's request.
SECTION 6.3 THIRD PARTY SERVICER.
If the Purchased Items are serviced by a Servicer or a PSA Servicer
pursuant to a Servicing Agreement or Pooling and Servicing Agreement, as
applicable, the Seller (i) shall, in accordance with Subsection 3.2(h), provide
a copy of each Servicing Agreement and Pooling and Servicing Agreement to the
Purchaser, which shall be in form and substance acceptable to the Purchaser,
and, in connection with each Servicing Agreement, shall provide a Servicer
Notice to the Purchaser substantially in the form of Exhibit VIII hereto, fully
executed by the Seller and the Servicer; and (ii) hereby irrevocably assigns to
the Purchaser and the Purchaser's successors and assigns all right, title and
interest of the Seller in, to and under, and the benefits of, each Servicing
Agreement and each Pooling and Servicing Agreement with respect to the Purchased
Items. Notwithstanding the fact that the Seller has contracted with the
Servicers to service the Purchased Items, the Seller shall remain liable to the
Purchaser for the acts of the Servicers and for the performance of the duties
and obligations set forth herein. The Seller agrees that no Person shall assume
the servicing obligations with respect to the Purchased Items as successor to
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a Servicer unless such successor is approved in writing by the Purchaser (which
approval shall not be unreasonably withheld or delayed) prior to such assumption
of servicing obligations.
SECTION 6.4 DUTIES OF THE SELLER.
(a) Duties. The Seller shall take or cause to be taken all such actions
as may be necessary or advisable to collect the Purchased Items from time to
time, all in accordance with Applicable Laws, with reasonable care and
diligence, and in accordance with the standard set forth in Subsection 6.1(b).
Without limiting the foregoing, the duties of the Seller shall include the
following:
(i) preparing and submitting claims to, and post - billing liaison
with, Borrowers on each Purchased Item;
(ii) maintaining all necessary servicing records with respect to
the Purchased Items and providing such reports to the Purchaser in
respect of the servicing of the Purchased Items (including information
relating to its performance under this Agreement) as may be required
hereunder or as the Purchaser may reasonably request;
(iii) maintaining and implementing administrative and operating
procedures (including, without limitation, an ability to recreate
Servicing Records evidencing the Purchased Items in the event of the
destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or
advisable for the collection of the Purchased Items;
(iv) promptly delivering to the Purchaser or the Custodian, from
time to time, such information and servicing records (including
information relating to its performance under this Agreement) as the
Purchaser or the Custodian may from time to time reasonably request;
(v) identifying each Purchased Item clearly and unambiguously in
its Servicing Records to reflect that such Purchased Item is owned by
the Purchaser pursuant to this Agreement;
(vi) notifying the Purchaser of any material action, suit,
proceeding, dispute, offset, deduction, defense or counterclaim of
which it has knowledge or has received notice (A) that is or is
threatened to be asserted by a Borrower with respect to any Purchased
Item (or portion thereof); or (B) that is reasonably expected to have a
Material Adverse Effect;
(vii) notifying the Purchaser of any proposed changes in its
collection policies that could have an adverse effect on the
collectibility of the Purchased Items, on the Seller or on the
interests of the Purchaser;
(viii) maintaining the perfected security interest of the Purchaser
in the Purchased Items;
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(ix) maintaining, in substantially the same manner as the
Custodian holds the Underlying Mortgaged Asset Documents, all Servicing
Records and Servicing Files relating to each Purchased Item; and
(x) remitting and causing all Servicers and the PSA Servicers
under Servicing Agreements and the Pooling and Servicing Agreements, if
applicable, to remit all Income to the Collection Account as required
by Subsection 5.1(f).
(b) Purchaser's Rights. Notwithstanding anything to the contrary
contained herein, the exercise by the Purchaser of its rights hereunder shall
not release the Seller from any of its duties or responsibilities with respect
to the Purchased Items. The Purchaser shall not have any obligation or liability
with respect to any Purchased Items, nor shall any of them be obligated to
perform any of the obligations of the Seller hereunder.
(c) Servicing Programs. In the event that the Seller or the Servicers
use any software program in servicing the Purchased Items that are licensed from
a third party, the Seller shall use its best reasonable efforts to obtain,
either before the Closing Date or as soon as possible thereafter, whatever
licenses or approvals are necessary to allow the Purchaser to use such programs.
SECTION 6.5 AUTHORIZATION OF THE SELLER.
(a) The Purchaser hereby authorizes the Seller (including any successor
thereto) to take any and all reasonable steps in its name and on its behalf
necessary or desirable and not inconsistent with the sale of the Purchased Items
to the Purchaser, in the determination of the Seller, to collect all amounts due
under any and all Purchased Items, including, without limitation, endorsing any
of their names on checks and other instruments representing Income, executing
and delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Purchased Items and, after the delinquency of any Purchased Item
and to the extent permitted under and in compliance with Applicable Law, to
commence proceedings with respect to enforcing payment thereof, to the same
extent as the Seller could have done if it had continued to own such Purchased
Items. The Purchaser shall furnish the Seller (and any successors thereto) with
any powers of attorney and other documents necessary or appropriate to enable
the Seller to carry out its servicing and administrative duties hereunder and
shall cooperate with the Seller to the fullest extent in order to ensure the
collectibility of the Purchased Items. In no event shall the Seller be entitled
to make the Purchaser a party to any litigation without the Purchaser's express
prior written consent.
(b) The Seller shall take such action as the Purchaser may deem
necessary or advisable to enforce collection of the Purchased Items; provided,
however, subject to all other rights of the Purchaser contained herein, that the
Purchaser may, at any time that a Termination Event or Unmatured Termination
Event has occurred and is continuing, notify any Borrower with respect to any
Purchased Items of the assignment of such Purchased Items to the Purchaser and
direct that payments of all amounts due or to become due be made directly to the
Purchaser
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or any servicer, collection agent or lock - box or other account designated by
the Purchaser and, upon such notification and at the expense of the Seller, the
Purchaser may enforce collection of any such Purchased Items and adjust, settle
or compromise the amount or payment thereof.
SECTION 6.6 COLLECTION OF PAYMENTS.
(a) Collection Efforts, Modification of Purchased Items. The Seller
will, consistent with the standard set forth in Subsection 6.1(b), collect all
payments called for under the terms and provisions of the Purchased Items and
when the same become due and shall follow those collection procedures that it
follows with respect to all comparable Purchased Items that it services for
itself or others.
(b) Acceleration. To the extent consistent with the standard set forth
in Subsection 6.1(b), the Seller shall accelerate the maturity of all or any
scheduled payments and other amounts due under any Purchased Asset in which a
default under the terms thereof has occurred and is continuing (after the lapse
of any applicable grace period) promptly after such Purchased Item becomes a
Defaulted Mortgage Asset.
(c) Taxes and Other Amounts. To the extent provided for in any
Purchased Item, the Seller shall, consistent with the standard set forth in
Subsection 6.1(b), collect all payments with respect to amounts due for taxes,
assessments and insurance premiums relating to such Purchased Item and remit
such amounts to the appropriate Governmental Authority or insurer on or prior to
the date such payments are due.
SECTION 6.7 REALIZATION UPON DEFAULTED PURCHASED ITEMS.
The Seller shall, to the extent consistent with the standard set forth
in Subsection 6.1(b), use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Underlying Mortgaged Property relating
to a Defaulted Mortgage Asset and will act as sales and processing agent for
such Underlying Mortgaged Property that it repossesses. Consistent with
Subsection 6.1(b), the Seller shall follow such other practices and procedures
that it deems necessary or advisable and as are customary and usual in its
servicing of contracts and other actions by the Seller in order to realize upon
such Underlying Mortgaged Property, which practices and procedures may include
reasonable efforts to enforce all obligations of Borrowers and repossessing and
selling such Underlying Mortgaged Property at public or private sale in
circumstances other than those described in the preceding sentence. In any case
in which any such Underlying Mortgaged Property has suffered damage, the Seller
shall not, unless required by the applicable Mortgage Loan Documents, expend
funds in connection with any repair or toward the repossession of such
Underlying Mortgaged Property unless it reasonably determines that such repair
and/or repossession shall increase the recoveries by an amount greater than the
amount of such expenses. The Seller shall remit to the Collection Account the
recoveries received in connection with the sale or disposition of Underlying
Mortgaged Property relating to a Defaulted Mortgage Asset. The Seller shall
consult with the Purchaser prior to taking any action under this Section 6.7 and
shall take only those actions as the Purchaser may approve in its sole
discretion,
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SECTION 6.8 MAINTENANCE OF INSURANCE POLICIES.
The Seller shall consistent with the standard set forth in Subsection
6.1(b) ensure that each Borrower maintains an insurance policy with respect to
any Underlying Mortgaged Property in an amount at least equal to the sum of the
Purchase Price of the related Purchased Item and shall ensure that each such
insurance policy names the Purchaser as loss payee and as an insured thereunder
and that all of the Seller's right, title and interest therein is fully assigned
to the Purchaser. Additionally, the Seller shall require that each Borrower
maintain property damage liability insurance during the term of each Purchased
Item in amounts and against risks customarily insured against by the Borrower on
property owned by it. If a Borrower fails to maintain property damage insurance,
the Seller may, in its discretion, purchase and maintain such insurance on
behalf of, and at the expense of, the Borrower. In connection with its
activities as the Seller, the Seller agrees to present, on behalf of the
Purchaser, claims to the insurer under each insurance policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Purchased Item. The Seller's insurance
policies with respect to the Underlying Mortgaged Property shall insure against
liability for physical damage relating to such property in accordance with the
requirements of Subsection 6.1(b). Until the Purchased Items are repurchased by
the Seller, the Seller hereby disclaims any and all right, title and interest in
and to any insurance policy and insurance proceeds with respect to any
Underlying Mortgaged Property, including any insurance policy with respect to
which it is named as loss payee and as an insured, and agrees that it has no
equitable, beneficial or other interest in the insurance polices and insurance
proceeds other than being named as loss payee and as an insured. The Seller
acknowledges that, with respect to the insurance policies and insurance proceeds
thereof, it is acting solely in the capacity as agent for the Purchaser.
SECTION 6.9 TERMINATION EVENT.
If the servicer of the Purchased Items is the Seller, upon the
occurrence of a Termination Event, the Purchaser shall have the right to
terminate the Seller as the servicer of the Purchased Items and transfer
servicing to its designee, at no cost or expense to the Purchaser, at any time
thereafter. If the servicer of the Purchased Items is not the Seller, the
Purchaser shall have the right, as contemplated in the applicable Servicer
Notice, upon the occurrence of a Termination Event, to terminate any applicable
Servicing Agreement and transfer servicing to its designee, at no cost or
expense to the Purchaser, it being agreed that the Seller will pay any and all
fees required to terminate such Servicing Agreement and to effectuate the
transfer of servicing to the designee of the Purchaser. The Seller shall fully
cooperate and shall cause all Servicers to fully cooperate with the Purchaser in
transferring the servicing of the Purchased Items to the Purchaser's designee.
SECTION 6.10 MODIFICATION.
Unless otherwise agreed to by the Purchaser in its reasonable
discretion until the repurchase of any Purchased Item, the Seller and the
Servicers shall have no right to waive, amend, modify or alter the material
terms of such Purchased Item and the Seller shall have no
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obligation or right to repossess such Purchased Item or substitute another
Purchased Item, in each case except as provided in the Custodial Agreement.
SECTION 6.11 INSPECTION.
In the event the Seller or its Affiliate is servicing the Purchased
Items, the Seller shall permit the Purchaser to inspect the Seller's or its
Affiliate's servicing facilities, as the case may be, for the purpose of
satisfying the Purchaser that that Seller or its Affiliate, as the case may be,
has the ability to service the Purchased Items as provided in this Agreement.
SECTION 6.12 SERVICING COMPENSATION.
As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Seller shall be entitled to receive a
servicing fee to the extent of funds available therefor in the amount of 25
basis points per annum to be paid monthly (the "Servicing Fee").
SECTION 6.13 PAYMENT OF CERTAIN EXPENSES BY SERVICER.
The Seller and any Servicer will be required to pay all expenses
incurred by them in connection with their activities under this Agreement,
including fees and disbursements of independent accountants, Taxes imposed on
the Seller or the Servicers, expenses incurred in connection with payments and
reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Seller. The Seller
shall be required to pay all reasonable fees and expenses owing to any bank or
trust company in connection with the maintenance of the Collection Account and
the Operating Account. The Seller shall be required to pay such expenses for its
own account and shall not be entitled to any payment therefor other than the
Servicing Fee.
SECTION 6.14 POOLING AND SERVICING AGREEMENTS.
Notwithstanding the provisions of this Article VI, to the extent the
Purchased Items are serviced by a PSA Servicer (other than the Seller or any
Servicer) under a Pooling and Servicing Agreement, (a) the standards for
servicing those Purchased Items shall be those set forth in the applicable
Pooling and Servicing Agreement, (b) the Seller shall enforce its rights and
interests under such agreements for and on behalf of the Purchaser, (c) the
Seller shall instruct the applicable PSA Servicer to deposit all Income received
in respect of the Purchased Items into the Collection Account within one (1)
Business Day of the date the PSA Servicer is obligated to make payments under
the applicable Pooling and Servicing Agreement, (d) prior to a Termination
Event, the Seller shall not take any action or fail to take any action or
consent to any action or inaction under any Pooling and Servicing Agreement
where the effect of such action or inaction would prejudice the interests of the
Purchaser, (e) the Seller will not consent to any change or modification to any
payment dates, interests rates, fees, payments of principal or interest,
maturity dates, restrictions on Indebtedness or any monetary term or release any
Borrowers, guarantors or collateral without the consent of the Purchaser, and,
(f) following a Termination Event, the Purchaser shall be entitled to exercise
any and all rights of the Seller under such Pooling and Servicing Agreements as
such rights relate to the Purchased Items.
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SECTION 6.15 SERVICER DEFAULT.
Any material breach by the Seller, any of its Servicers or the PSA
Servicer of the obligations contained in this Article VI or in Subsections
2.9(f) and 5.1(gg) shall constitute a "Servicer Default".
ARTICLE VII
[RESERVED]
ARTICLE VIII
SECURITY INTEREST
SECTION 8.1 SECURITY INTEREST.
(a) Each of the following items or types of property, whether now owned
or hereafter acquired, now existing or hereafter created and wherever located,
is hereinafter referred to as the Purchased Items (the "Purchased Items"): all
Purchased Assets, the Equity Interests, all rights and security interests under
each Purchase Agreement (but not the obligations thereunder) to the extent those
rights relate to the Purchased Assets, all Mortgage Loan Documents, all Mortgage
Asset Files, including, without limitation, all promissory notes, all Security
Agreements relating to the Purchased Assets and any other collateral pledged or
otherwise relating to such Purchased Assets, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, computer storage media, accounting records and other books and records
relating thereto, all mortgage guaranties and insurance (issued by governmental
agencies or otherwise) and any mortgage insurance certificate or other document
evidencing such mortgage guaranties or insurance relating to any Purchased
Asset, all servicing fees to which such Seller is entitled and servicing and
other rights relating to the Purchased Assets, all Servicing Agreements,
Servicing Records, Servicing Files and Servicer Accounts established pursuant to
any Servicing Agreement, Pooling and Servicing Agreement or otherwise and all
amounts on deposit therein, from time to time, all rights of the Seller under
any Pooling and Servicing Agreements relating to the Purchased Assets, all other
agreements or contracts relating to, constituting, or otherwise governing, any
or all of the foregoing to the extent they relate to the Purchased Assets,
including the right to receive principal and interest payments and any related
fees, breakage fees, late fees and penalties with respect to the Purchased
Assets and the right to enforce such payments, insurance policies and the rights
to any insurance proceeds, the Collection Account and all monies, cash,
deposits, securities or investment property from time to time on deposit in the
Collection Account, or any collection account, escrow account, collateral
account or lock - box account related to the Purchased Items, rights of the
Seller under any letter of credit, guarantee, or other credit support or
enhancement related to the Purchased Items, any Interest Rate Protection
Agreements relating to the Purchased Assets, all "general intangibles",
"accounts", "chattel paper", "deposit accounts", "instruments", "securities" and
"investment
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property" as defined in the Uniform Commercial Code as in effect from time to
time relating to or constituting any and all of the foregoing, and any and all
replacements, substitutions, distributions on or proceeds of any and all of the
foregoing.
(b) The Purchaser and the Seller intend that the Transactions hereunder
be sales to the Purchaser of the Purchased Assets and not loans from the
Purchaser to the Seller secured by the Purchased Assets. However, in order to
preserve the Purchaser's rights under this Agreement in the event that a court
or other forum recharacterizes the Transactions hereunder as loans and as
security for the repayment of the Aggregate Unpaids and performance by the
Seller of all of the Seller's obligations to the Purchaser hereunder and under
the Repurchase Documents and the Transactions entered into hereunder
(collectively, the "Repurchase Obligations") and Seller - Related Obligations,
the Seller hereby assigns, pledges and grants a security interest in all of its
right, title and interest in, to and under the Purchased Items to the Purchaser
to secure the Repurchase Obligations and Seller - Related Obligations,
including, without limitation, the repayment of all amounts owing to the
Purchaser hereunder. The assignment, pledge and grant of security interest
contained herein shall be, and the Seller hereby represents and warrants to the
Purchaser that it is, a first priority perfected security interest. The Seller
agrees to ▇▇▇▇ its computer records and tapes to evidence the interests granted
to the Purchaser hereunder. All Purchased Items shall secure the payment of all
obligations of the Seller now or hereafter existing under this Agreement and the
other Repurchase Documents, including, without limitation, the Seller's
obligation to repurchase Purchased Assets, or if such obligation is so
recharacterized as a loan, to repay such loan for the Repurchase Price and to
pay the Aggregate Unpaids and any and all other amounts owing to the Purchaser
hereunder.
(c) Pursuant to the Custodial Agreement, the Custodian shall hold the
Mortgage Asset Files as exclusive bailee pursuant to the terms of the Custodial
Agreement and shall deliver the Trust Receipts to the Purchaser, each such Trust
Receipt to reflect that the Custodian has reviewed such Mortgage Asset Files in
the manner and to the extent required by the Custodial Agreement and identifying
any deficiencies in such Mortgage Asset Files as so reviewed.
(d) The assignment under this Section 8.1 does not constitute and is
not intended to result in a creation or an assumption by the Purchaser of any
obligation of the Seller or any other Person in connection with any or all of
the Purchased Items or under any agreement or instrument relating thereto.
Anything herein to the contrary notwithstanding, (i) the Seller shall remain
liable under the Purchased Assets to the extent set forth therein to perform all
of its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Purchaser of any of its rights
in the Purchased Assets shall not release the Seller from any of its duties or
obligations under the Purchased Assets, and (iii) the Purchaser shall not have
any obligations or liability under the Purchased Assets by reason of this
Agreement, nor shall the Purchaser be obligated to perform any of the
obligations or duties of the Seller thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
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SECTION 8.2 RELEASE OF LIEN ON PURCHASED ASSETS.
At such time as any Purchased Asset is repurchased in accordance with
this Agreement, and the Repurchase Price and all other amounts due with respect
thereto have been paid in full, the Purchaser will, to the extent requested by
the Seller, release its interest in such Purchased Asset and any related
Purchased Items; provided, that, the Purchaser will make no representation or
warranty, express or implied, with respect to any such Purchased Asset or
Purchased Items in connection with such release, except that the Purchaser shall
represent and warrant that it has not assigned, conveyed, pledged or otherwise
transferred such Purchased Asset or Purchased Items to any other Person.
SECTION 8.3 FURTHER ASSURANCES.
The provisions of Section 13.12 shall apply to the security interest
granted under Section 8.1 as well as to the Transactions hereunder.
SECTION 8.4 REMEDIES.
Upon the occurrence of a Termination Event, the Purchaser shall have,
with respect to the security interest in the Purchased Items granted pursuant to
Section 8.1, and in addition to all other rights and remedies available to the
Purchaser under this Agreement or other Applicable Law, all rights and remedies
of a secured party upon default under the UCC.
SECTION 8.5 WAIVER OF CERTAIN LAWS.
The Seller agrees, to the full extent that it may lawfully so agree,
that neither it nor anyone claiming through or under it will set up, claim or
seek to take advantage of any appraisement, valuation, stay, extension or
redemption law now or hereafter in force in any locality where any Purchased
Items may be situated in order to prevent, hinder or delay the enforcement or
foreclosure of this Agreement, or the absolute sale of any of the Purchased
Items or any part thereof, or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and each of the
Seller, for itself and all who may at any time claim through or under it, hereby
waives, to the full extent that it may be lawful so to do, the benefit of all
such laws and any and all right to have any of the properties or assets
constituting the Purchased Items marshaled upon any such sale, and agrees that
the Purchaser or any court having jurisdiction to foreclose the security
interests granted in this Agreement may sell the Purchased Items as an entirety
or in such parcels as the Purchaser or such court may determine.
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ARTICLE IX
POWER OF ATTORNEY
SECTION 9.1 PURCHASER'S APPOINTMENT AS ATTORNEY - IN - FACT.
(a) Following the occurrence and during the continuance of a
Termination Event, the Seller hereby irrevocably constitutes and appoints the
Purchaser and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney - in - fact with full irrevocable power and
authority in the place and stead of the Seller and in the name of the Seller or
in its own name, from time to time in the Purchaser's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments that may
be reasonably necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the Seller
hereby gives the Purchaser the power and right, on behalf of the Seller, without
assent by, but with notice to, the Seller, to do the following (in each case to
the extent the Seller is not prohibited by Applicable Law or any applicable
Contractual Obligation):
(i) in the name of the Seller, or in its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any mortgage insurance or with respect to any other Purchased Items and
to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Purchaser
for the purpose of collecting any and all such moneys due under any
such mortgage insurance or with respect to any other Purchased Items
whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(iii) (A) to direct any party liable for any payment under any
Purchased Items to make payment of any and all moneys due or to become
due thereunder directly to the Purchaser or as the Purchaser shall
direct; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Purchased
Items; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any
Purchased Items; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Purchased Items or any proceeds thereof and to enforce
any other right in respect of any Purchased Items; (E) to defend any
suit, action or proceeding brought against the Seller with respect to
any Purchased Items; (F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Purchaser may
deem appropriate, provided that same does not impose any civil or
criminal liability on the Seller or the Guarantor; and (G) generally,
to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any Purchased Items as fully and completely as
though the Purchaser were the absolute owner thereof for all purposes,
and to do, at the Purchaser's option and
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the Seller's expense, at any time, and from time to time, all acts and
things that the Purchaser deems necessary to protect, preserve or
realize upon the Purchased Items and the Purchaser's Liens thereon and
to effect the intent of this Agreement, all as fully and effectively as
such Seller might do;
(iv) to direct the actions of the Custodian with respect to
the Purchased Items under the Custodial Agreement; and
(v) to execute, from time to time, in connection with any sale
provided for in Section 10.2, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Purchased
Items.
The Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) The powers conferred on the Purchaser hereunder are solely to
protect the Purchaser's interests in the Purchased Items and shall not impose
any duty upon it to exercise any such powers. The Purchaser shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Purchaser nor any of its officers, directors, employees
or agents shall be responsible to the Seller for any act or failure to act
hereunder.
ARTICLE X
TERMINATION EVENTS
SECTION 10.1 TERMINATION EVENTS.
The following events shall be Termination Events ("Termination Events")
hereunder:
(a) the aggregate Repurchase Price for all Transactions outstanding on
any day exceeds the Maximum Amount and the same continues unremedied for two (2)
Business Days after notice from the Purchaser; provided, however, during the
period of time that such event remains unremedied, no additional Transaction
will be made under this Agreement; or
(b) a Servicer Default occurs and is continuing; or
(c) the Facility Maturity Date shall have occurred; or
(d) an Insolvency Event relating to the Seller, the Guarantor or any
Affiliate of the Seller or the Guarantor shall have occurred; or
(e) the Seller or the Guarantor shall become required to register as an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the
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"40 Act") or the arrangements contemplated by the Repurchase Documents shall
require registration as an "investment company" within the meaning of the 40
Act; or
(f) a regulatory, tax or accounting body has ordered that the
activities of the Seller or the Guarantor of the Seller or Guarantor
contemplated in the Repurchase Documents be terminated or, as a result of any
other event or circumstance, the activities of the Seller or the Guarantor
contemplated in the Repurchase Documents may reasonably be expected to cause the
Seller or the Guarantor to suffer materially adverse regulatory, accounting or
tax consequences; or
(g) there shall exist any event or occurrence that has caused a
Material Adverse Effect; or
(h) (i) the Internal Revenue Service shall file notice of a Lien
pursuant to Section 6323 of the Code with regard to any assets of the Seller,
the Guarantor or the Pledgor, and such Lien shall not have been released within
five (5) Business Days; or
(i) any material adverse change in the credit quality of the Seller or
the Guarantor shall occur; or
(j) [RESERVED]; or
(k) (i) any Repurchase Document, or any Lien or security interest
granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the
legally valid, binding and enforceable obligation of the Seller, the
Guarantor or the Pledgor, or
(ii) the Seller, the Guarantor, the Pledgor or any other party
shall, directly or indirectly, contest in any manner the effectiveness,
validity, binding nature or enforceability of any Repurchase Document
or any Lien or security interest thereunder, or
(iii) the Purchased Items shall not have been sold to the
Purchaser, or the Liens contemplated under the Repurchase Documents
shall cease or fail to be first priority perfected Liens on any
Purchased Items or the Equity Interests in favor of the Purchaser or
shall be Liens in favor of any Person other than the Purchaser; or
(l) the Seller, the Guarantor or the Pledgor shall have failed to
observe or perform in any material respect any of the covenants or agreements of
the Seller, the Guarantor or the Pledgor set forth in this Agreement or the
other Repurchase Documents to which the Seller, the Guarantor or the Pledgor is
a party and the same continues unremedied for a period of twenty (20) days after
the earlier to occur of (i) the date on which written notice of such failure
requiring the same to be remedied shall have been given to the Seller, the
Guarantor or the Pledgor by the Purchaser, and (ii) the date on which the
Seller, the Guarantor or the Pledgor becomes aware thereof (provided, however,
in the case of a failure which is capable of cure but cannot reasonably be cured
within such twenty (20) day period (other than the payment of
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money), and provided the Seller or the Guarantor shall have timely commenced to
cure such failure within such twenty (20) day period (with evidence of same
delivered to the Purchaser) and thereafter diligently and expeditiously proceeds
to cure the same, such twenty (20) day period shall be extended for an
additional twenty (20) day period); or
(m) any representation, warranty or certification made by the Seller,
the Guarantor or the Pledgor in this Agreement or any Repurchase Document or in
any certificate delivered pursuant to this Agreement or any Repurchase Document
shall prove to have been incorrect in any material respect when made and that
continues to be unremedied for a period of twenty (20) Business Days after the
earlier to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Seller, the
Guarantor or the Pledgor by the Purchaser, and (ii) the date on which the
Seller, the Guarantor or the Pledgor becomes aware thereof; or
(n) the Seller shall have failed to give instructions or notice to the
Purchaser as required by this Agreement, or to deliver any required reports
hereunder, on or before the date such instruction, notice or report is required
to be made or given, as the case may be, under the terms of this Agreement and
such failure continues unremedied for a period of two (2) Business Days after
the earlier to occur of (i) the date on which written notice of such failure
requiring the same to be remedied shall have been given to the Seller by the
Purchaser and (ii) the date on which the Seller becomes aware thereof; or
(o) the Seller shall have failed to make any payment due with respect
to recourse debt or other obligations or an event or condition shall have
occurred that would permit acceleration of such recourse debt or other
obligations whether or not such event or condition has been waived; or
(p) the Seller shall default in the payment of any Repurchase Price due
or any amount due under Section 2.8 or any other provision of this Agreement or
the Repurchase Documents when due (whether at stated maturity, upon acceleration
or at mandatory or optional prepayment) or the Seller's, any Servicer's or any
PSA Servicer's failure to deposit to the Collection Account all Income as
required by Subsection 5.1(f); or
(q) the Seller shall default in the payment of any other amount payable
by it hereunder or under any other Repurchase Document after notification by the
Purchaser of such default, and such default shall have continued unremedied for
two (2) Business Days; or
(r) a final judgment or judgments for the payment of money in excess of
$750,000 in the aggregate shall be rendered against the Seller, the Guarantor or
any of their Affiliates by one (1) or more courts, administrative tribunals or
other bodies having jurisdiction, and the same shall not be satisfied,
discharged (or provision shall not be made for such discharge) or bonded, or a
stay of execution thereof shall not be procured, within thirty (30) days from
the date of entry thereof; or
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(s) the Seller shall grant, or suffer to exist, any Lien on any
Purchased Item (except Permitted Liens) or the Pledgor shall grant, permit or
suffer to exist any Lien on any portion of the Equity Interests; or
(t) the Seller, the Guarantor or any of their Affiliates shall be in
default under (i) any Indebtedness or Guarantee Obligation of the Seller, the
Guarantor or of their Affiliates, which default (A) involves the failure to pay
a matured obligation, or (B) permits the acceleration of the maturity of
obligations by any other party to or beneficiary with respect to such
Indebtedness, (ii) any other material Contractual Obligation to which the
Seller, the Guarantor or any of their Affiliates is a party, which default (A)
involves the failure to pay a matured obligation, or (B) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
of such contract, or (iii) any Seller - Related Obligation; or
(u) [RESERVED]; or
(v) (i) the Seller, the Guarantor or an ERISA Affiliate shall engage in
any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Benefit Plan, (ii) any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan, or any Lien in favor of the PBGC or a Plan shall
arise on the assets of the Seller, the Guarantor or any ERISA Affiliate, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Purchaser, likely
to result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) the Seller,
the Guarantor or any ERISA Affiliate shall, or in the reasonable opinion of the
Purchaser is likely to, incur any liability in connection with a withdrawal
from, or the insolvency or reorganization of, a Multiemployer Plan, or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
(w) the Seller fails to transfer Purchased Assets on the applicable
Purchase Date or fails to repurchase Purchased Assets on the applicable
Repurchase Date; or
(x) the Pledgor shall cease to own directly 100% of the issued and
outstanding Capital Stock of the Seller and/or the Guarantor shall cease to own
indirectly 72% of the issued and outstanding Capital Stock of the Pledgor; or
(y) the Seller, the Guarantor or the Pledgor shall admit its inability
to, or its intentions not to, perform its obligations, covenants or agreements
under any Repurchase Document.
For the purposes of Subsections 10.1(d), (r) and (t) and the next
sentence and not with respect to any other provision of this Agreement, the
percentage used in the term Affiliate shall be 50% instead of 20%. Subject to
the preceding sentence, upon the occurrence of any event described in
Subsections 10.1(d), (r) or (t) with respect to any Affiliate, including any
Person that
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becomes an Affiliate of the Seller, the Pledgor or the Guarantor as
a result of an exercise by the Seller, the Pledgor or the Guarantor of its
remedies in connection with a pledge to the Seller, the Pledgor or the Guarantor
of interests in such Person, the Seller shall promptly notify the Purchaser of
same in writing and the Purchaser will make a determination in its reasonable
discretion and within a reasonable period of time as to whether such event shall
constitute a Termination Event.
SECTION 10.2 REMEDIES.
(a) If a Termination Event occurs, the following rights and remedies
are available to the Purchaser; provided, that a Termination Event shall be
deemed to be continuing unless expressly waived by the Purchaser in writing.
(i) At the option of the Purchaser, exercised by written notice to
the Seller (which option shall be deemed to have been exercised, even
if no notice is given, immediately upon the occurrence of an Insolvency
Event of the Seller, the Guarantor or any of their Affiliates), the
Repurchase Date for each Transaction hereunder, if it has not already
occurred, shall be deemed immediately to occur (except that, in the
event that the Purchase Date for any Transaction has not yet occurred
as of the date of such exercise or deemed exercise, such Transaction
shall be deemed immediately cancelled). The Purchaser shall (except
upon the occurrence of an Insolvency of the Seller, the Guarantor or
any of their Affiliates) give notice to the Seller of the exercise of
such option as promptly as practicable.
(ii) If the Purchaser exercises or is deemed to have exercised the
option referred to in Subsection 10.2(a)(i),
(A) (1) the Seller's obligations in such Transactions
to repurchase all Purchased Items, at the Repurchase Price
therefor on the Repurchase Date, and, without duplication, to
pay the Aggregate Unpaids and all other amounts owed by the
Seller hereunder and under the other Repurchase Documents,
shall thereupon become immediately due and payable, (2) all
Income paid after such exercise or deemed exercise shall be
retained by the Purchaser and applied to the aggregate unpaid
Repurchase Price, the Aggregate Unpaids and any other amounts
owed by the Seller hereunder and under the other Repurchase
Documents, and (3) the Seller shall immediately deliver to the
Purchaser any Purchased Items subject to such Transactions
then in the Seller's possession or control; and
(B) all Income actually received by the Purchaser
pursuant to Section 2.8 (excluding any Late Payment Fees paid
pursuant to Subsection 2.5(a)) shall be applied to the
aggregate unpaid Repurchase Price and Aggregate Unpaids and
any other amounts owed by the Seller hereunder or the other
Repurchase Documents.
(iii) Upon the occurrence of one or more Termination Events, and
subject to Section 6.14, the Purchaser shall have the right to obtain
physical possession of the
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Servicing Records (subject to the provisions of the Custodial
Agreement), the Servicing Files and all other files of the Seller
relating to the Purchased Items and all documents relating to the
Purchased Items which are then or may thereafter come into the
possession of the Seller or any third party acting for the Seller, and
the Seller shall deliver to the Purchaser such assignments as the
Purchaser shall request, and the Purchaser shall have the right to
appoint any Person to act as the Servicer for the Purchased Assets. The
Purchaser shall be entitled to specific performance of all agreements
of the Seller contained in the Repurchase Documents.
(iv) At any time after the second (2nd) Business Day following
notice to the Seller (which notice may be the notice given under
Subsection 10.2(a)(i)), in the event the Seller has not repurchased all
Purchased Items, the Purchaser may (A) immediately sell, without demand
or further notice of any kind, at a public or private sale and at such
price or prices as the Purchaser may deem reasonably satisfactory any
or all Purchased Items subject to such Transactions hereunder and apply
the proceeds thereof to the aggregate unpaid Repurchase Price, the
Aggregate Unpaids and any other amounts owed by the Seller hereunder
and under the other Repurchase Documents, or (B) in its sole
discretion, elect, in lieu of selling all or a portion of such
Purchased Items, to give the Seller credit for such Purchased Items in
an amount equal to the Market Value of the Purchased Items against the
aggregate unpaid Repurchase Price, the Aggregate Unpaids and any other
amounts owing by the Seller hereunder and under the other Repurchase
Documents. The proceeds of any disposition of Purchased Items shall be
applied first to the costs and expenses incurred by the Purchaser in
connection with the Seller's default; second to the costs of related
covering and/or related hedging transactions; third to the Repurchase
Price; fourth to the Aggregate Unpaids and any other amounts owed by
the Seller hereunder or under the other Repurchase Documents; and fifth
to the Seller.
(v) The Seller agrees that the Purchaser may obtain an
injunction or an order of specific performance to compel the Seller to
fulfill any of its obligations as set forth in Article X if the Seller
fails or refuses to perform its obligations as set forth therein.
(vi) The Seller shall be liable to the Purchaser, payable as
and when incurred by the Purchaser, for (A) the amount of all
reasonable actual out-of-pocket expenses, including legal or other
expenses incurred by the Purchaser in connection with or as a
consequence of a Termination Event, and (B) all reasonable costs
incurred in connection with hedging or covering transactions.
(vii) The Purchaser shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or Applicable Law.
(b) The Purchaser may exercise one or more of the remedies available to
the Purchaser immediately upon the occurrence of a Termination Event and, except
to the extent provided in Subsections 10.2(a)(i) and 10.2(a)(iv), at any time
thereafter without notice to the Seller. All rights and remedies arising under
this Agreement, as amended from time to time, are cumulative and not exclusive
of any other rights or remedies that the Purchaser may have.
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(c) The Purchaser may enforce its rights and remedies hereunder without
prior judicial process or hearing, and the Seller hereby expressly waives any
defenses the Seller might otherwise have to require the Purchaser to enforce its
rights by judicial process. The Seller also waives any defense (other than a
defense of payment or performance) the Seller might otherwise have arising from
the use of nonjudicial process, enforcement and sale of all or any portion of
the Purchased Items, or from any other election of remedies. The Seller
recognizes that nonjudicial remedies are consistent with the usages of the
trade, are responsive to commercial necessity and are the result of a bargain at
arm's-length.
(d) To the extent permitted by Applicable Law, the Seller shall be
liable to the Purchaser for interest on any amounts owing by the Seller
hereunder, from the date the Seller becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the Seller or (ii) satisfied in full
by the exercise of the Purchaser's rights hereunder. Interest on any sum payable
by the Seller to the Purchaser under this Subsection 10.2(d) shall accrue
interest from and after the date of the Termination Event at a rate equal to the
Post-Default Rate.
(e) In addition to the rights under this Section 10.2, upon a
Termination Event the Purchaser shall no longer be obligated to enter into any
additional Transactions pursuant to any outstanding Confirmation and the
Purchaser shall have the following additional rights if a Termination Event
occurs:
(i) The Purchaser and the Seller agree and acknowledge that the
Purchased Assets constitute collateral that may decline rapidly in
value. Accordingly, notwithstanding anything to the contrary in this
Agreement, the Purchaser shall not be required to give notice to the
Seller or any other Repurchase Party prior to exercising any remedy in
respect of a Termination Event. If no prior notice is given, the
Purchaser shall give notice to the Seller of the remedies effected by
the Purchaser promptly thereafter. The Purchaser shall act in good
faith in exercising its rights pursuant to this section.
(ii) The Purchaser may, in its sole discretion, elect to hold any
Purchased Asset for its own account and earn the related interest on
the full face amount thereof.
(f) The Purchaser shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or Applicable Law.
SECTION 10.3 DETERMINATION OF TERMINATION EVENTS.
In making a determination as to whether a Termination Event has
occurred, the Purchaser shall be entitled to rely on reports published or
broadcast by media sources believed by the Purchaser to be generally reliable
and on information provided to it by any other sources believed by it to be
generally reliable, provided that (i) the Purchaser reasonably and in good faith
believes such information to be accurate and has taken such steps as may be
reasonable in the circumstances (including consulting with the Seller, the
Pledgor and/or the Guarantor) to attempt to verify such information.
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ARTICLE XI
INDEMNIFICATION
SECTION 11.1 INDEMNITIES BY THE SELLER.
(a) The Seller agrees to hold the Purchaser and its Affiliates and the
Purchaser and its Affiliates' officers, directors, shareholders, employees,
agents, Affiliates and advisors (each an "Indemnified Party" and collectively
the "Indemnified Parties") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of any
kind that may be imposed on, incurred by or asserted against such Indemnified
Party (collectively, the "Indemnified Amounts") relating to or arising out of
this Agreement, the Repurchase Documents 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 Repurchase Documents 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 or, with respect to any Purchased Item that is a Wachovia Asset, for
or in connection with any matters arising from events that occurred prior to the
Original Purchase Date. Without limiting the generality of the foregoing, the
Seller agrees to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Indemnified Amounts with respect to all Purchased
Items 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 Item for any sum owing thereunder, or to enforce
any provisions of any Purchased Item, 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 of 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 agrees to reimburse an Indemnified Party as and when billed by such
Indemnified Party for all such Indemnified Party's costs, expenses and fees
incurred in connection with the enforcement or the preservation of such
Indemnified Party's rights under this Agreement, the Repurchase Documents and
any transaction contemplated hereby or thereby, including, without limitation,
the reasonable fees and disbursements of its counsel.
(b) Any amounts subject to the indemnification provisions of this
Section 11.1 shall be paid by the Seller to the Indemnified Party within five
(5) Business Days following such Person's demand therefor.
(c) The obligations of the Seller under this Section 11.1 shall survive
the resignation or removal of the Purchaser and the termination of this
Agreement.
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ARTICLE XII
[RESERVED]
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 AMENDMENTS AND WAIVERS.
Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Seller, the Purchaser and the Guarantor. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 13.2 NOTICES, ETC.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice by
mail, five (5) days after being deposited in the United States mail, first class
postage prepaid, (b) notice by telex, when telexed against receipt of answer
back, or (c) notice by facsimile copy, when verbal communication of receipt is
obtained.
SECTION 13.3 SET-OFFS.
In addition to any rights and remedies of the Purchaser provided by
this Agreement and by Applicable Law, the Purchaser shall have the right,
without prior notice to Seller or the Guarantor, any such notice being expressly
waived by Seller and the Guarantor to the extent permitted by Applicable Law,
upon any amount becoming due and payable by Seller or the Guarantor to the
Purchaser hereunder, under the Repurchase Documents or otherwise (whether at the
stated maturity, by acceleration or otherwise) to set - off and appropriate and
apply against such amount any and all monies and other property of Seller or the
Guarantor, any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any and all other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, and in each case at any time held or owing by
the Purchaser or any Affiliate thereof to or for the credit or the account of
Seller or the Guarantor. The Purchaser agrees promptly to notify the Seller and
the Guarantor after any such set - off and application made by the Purchaser,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
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SECTION 13.4 NO WAIVER; REMEDIES.
No failure on the part of the Purchaser to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude
any further exercise thereof or the exercise of any other right. The rights and
remedies herein provided are cumulative and not exclusive of any rights and
remedies provided by law.
SECTION 13.5 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Seller, the Purchaser, the Guarantor and their respective successors and
permitted assigns.
SECTION 13.6 TERM OF THIS AGREEMENT.
(a) This Agreement, including, without limitation, the Seller's and the
Guarantor's representations, covenants and duties set herein, create and
constitute the continuing obligation of the parties hereto in accordance with
its terms and shall remain in full force and effect until the Aggregate Unpaids
are paid in full; provided, however, that the indemnification and payment
provisions of Article XI, the provisions of Sections 2.5(b), 2.13, 2.14, 13.9,
13.11 and 13.13 and any other provision that by its terms expressly survives
termination, shall be continuing and shall survive any termination of this
Agreement.
(b) Subject to Subsection 13.6(a), this Agreement may be terminated by
the Purchaser or the Seller upon giving written notice to the other and to the
Guarantor, except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transaction then outstanding.
SECTION 13.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
OBJECTION TO VENUE.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF). EACH OF THE PARTIES HERETO HEREBY AGREES TO THE NON -
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN
ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 13.8 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
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RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 13.9 COSTS, EXPENSES AND TAXES.
(a) The Seller agrees to pay as and when billed by the Purchaser all of
the reasonable out - of - pocket costs and expenses incurred by the Purchaser in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement, the Repurchase
Documents or any other documents and agreements prepared in connection herewith
or therewith. The Seller agrees to pay as and when billed by the Purchaser 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 Purchaser and (ii) all the due
diligence, inspection, testing and review costs and expenses incurred by the
Purchaser with respect to the Purchased Assets under this Agreement, including,
but not limited to, those costs and expenses incurred by the Purchaser and
reimbursable by the Seller pursuant to Subsection 11.1(a) of this Agreement.
(b) The Seller shall pay on demand any and all stamp, sales, excise and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the Repurchase
Documents or the other documents to be delivered hereunder or thereunder or the
funding or maintenance of Transactions hereunder.
SECTION 13.10 LEGAL MATTERS.
(a) In the event of any conflict between the terms of this Agreement,
any other Repurchase Document and any Confirmation, the documents shall control
in the following order of priority: first, the terms of the Confirmation shall
prevail, then the terms of this Agreement shall prevail, and then the terms of
the other Repurchase Documents shall prevail.
(b) Each of the Seller and the Guarantor hereby acknowledges that:
(i) it has been advised by counsel in the negotiation, execution
and delivery of the Repurchase Documents;
(ii) it has no fiduciary relationship with the Purchaser; and
(iii) no joint venture exists with the Purchaser.
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SECTION 13.11 RECOURSE AGAINST CERTAIN PARTIES.
No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of the Purchaser or the Guarantor as contained in this Agreement,
the Repurchase Documents or any other agreement, instrument or document entered
into by the Purchaser or the Guarantor any such party pursuant hereto or thereto
or in connection herewith or therewith shall be had against any administrator of
the Purchaser or the Guarantor or any incorporator, Affiliate (direct or
indirect), owner, member, partner, stockholder, officer, director, employee,
agent or attorney of the Purchaser or the Guarantor or of any such
administrator, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of the Purchaser or the Guarantor
contained in this Agreement, the Repurchase Documents and all of the other
agreements, instruments and documents entered into by it pursuant hereto or
thereto or in connection herewith or therewith are, in each case, solely the
corporate obligations of the Purchaser or the Guarantor, and that no personal
liability whatsoever shall attach to or be incurred by any administrator of the
Purchaser or the Guarantor or any incorporator, owner, member, partner,
stockholder, Affiliate (direct or indirect), officer, director, employee, agent
or attorney of the Purchaser or the Guarantor, or of any such administrator, as
such, or any other of them, under or by reason of any of the obligations,
covenants or agreements of the Purchaser or the Guarantor contained in this
Agreement or in any other such instruments, documents or agreements, or that are
implied therefrom, and that any and all personal liability of every such
administrator of the Purchaser or the Guarantor and each incorporator, owner,
member, partner, stockholder, Affiliate (direct or indirect), officer, director,
employee, agent or attorney of the Purchaser or the Guarantor, or of any such
administrator, or any of them, for breaches by the Purchaser or the Guarantor of
any such obligations, covenants or agreements, which liability may arise either
at common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement. The provisions of this Section 13.11 shall survive the
termination of this Agreement.
SECTION 13.12 PROTECTION OF RIGHT, TITLE AND INTEREST IN THE PURCHASED
ASSETS; FURTHER ACTION EVIDENCING TRANSACTIONS.
(a) The Seller shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the right, title and interest of the Purchaser to the
Purchased Items to be promptly recorded, registered and filed, and at all times
to be kept recorded, registered and filed, all in such manner and in such places
as may be required by law fully to preserve and protect the right, title and
interest of the Purchaser hereunder to all property comprising the Purchased
Items. The Seller shall deliver to the Purchaser file - stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recording, registration or filing.
The Seller shall execute any and all documents reasonably required to fulfill
the intent of this Subsection 13.12(a).
(b) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that the Purchaser may
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reasonably request in order to perfect, protect or more fully evidence the
Transactions hereunder and the security interest granted in the Purchased Items,
or to enable the Purchaser to exercise and enforce their rights and remedies
hereunder or under any Repurchase Document.
(c) If the Seller fails to perform any of its obligations hereunder,
the Purchaser may (but shall not be required to) perform, or cause performance
of, such obligation; and the Purchaser's costs and expenses incurred in
connection therewith shall be payable by the Seller. The Seller irrevocably
appoints the Purchaser as its attorney - in - fact and authorizes the Purchaser
to act on behalf of the Seller (i) to execute on behalf of the Seller as debtor
and to file financing statements necessary or desirable in the Purchaser's sole
discretion to perfect and to maintain the perfection and priority of the
interest in the Purchased Items, and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Purchased Items as a financing statement in such offices as the Purchaser in
its sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests in the Purchased Items. This
appointment is coupled with an interest and is irrevocable.
(d) Without limiting the generality of the foregoing, the Seller will
not earlier than six (6) months and not later than three (3) months prior to the
fifth anniversary of the date of filing of the financing statement referred to
in Subsection 3.1(g) or any other financing statement filed pursuant to this
Agreement or in connection with any Transaction hereunder, unless the Aggregate
Unpaids have been paid in full:
(i) execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing
statement; and
(ii) deliver or cause to be delivered to the Purchaser an opinion
of the counsel for the Seller, in form and substance reasonably
satisfactory to the Purchaser, confirming and updating the opinion
delivered pursuant to Subsection 3.1(h) with respect to perfection and
otherwise to the effect that the security interest hereunder continues
to be an enforceable and perfected security interest, subject to no
other Liens of record except as provided herein or otherwise permitted
hereunder, which opinion may contain usual and customary assumptions,
limitations and exceptions.
SECTION 13.13 CONFIDENTIALITY.
(a) Each of the Purchaser, the Seller and the Guarantor shall maintain
and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement and all information with respect to the other
parties, including all information regarding the Purchased Items and each
party's business obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
each such party and its officers and employees may (i) disclose such information
to its external accountants, attorneys, investors, potential investors,
Affiliates and the agents of such Persons ("Excepted Persons"); provided,
however, that each Excepted Person shall, as a condition to any such disclosure,
agree for the benefit of the Purchaser, the Seller and the Guarantor that such
information shall be used solely in connection with such Excepted Person's
evaluation of, or
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relationship with, the Seller, the Guarantor and their Affiliates, (ii) disclose
the existence of the Agreement and the Repurchase Documents, but not the
financial terms thereof, (iii) disclose such information as is required by
Applicable Law, and (iv) disclose the Agreement and such information in any
suit, action, proceeding or investigation (whether in law or in equity or
pursuant to arbitration) involving any of the Repurchase Documents for the
purpose of defending itself, reducing its liability, or protecting or exercising
any of its claims, rights, remedies or interests under or in connection with any
of the Repurchase Documents. It is understood that the financial terms that may
not be disclosed except in compliance with this Subsection 13.13(a) include,
without limitation, all fees and other pricing terms and all Termination Events
and priority of payment provisions.
(b) Anything herein to the contrary notwithstanding, each of the Seller
and the Guarantor hereby consents to the disclosure of any nonpublic information
with respect to it by the Purchaser to any prospective or actual assignee,
participant or pledgee provided each such Person is informed of the confidential
nature of such information and such Person agrees to be bound by the
confidentiality provisions set forth herein.
(c) Notwithstanding anything herein to the contrary, the foregoing
shall not be construed to prohibit (i) disclosure of any and all information
that is or becomes publicly known; (ii) disclosure of any and all information
(A) if required to do so by any Applicable Law, (B) to any Governmental
Authority having or claiming authority to regulate or oversee any respects of
the Purchaser's, the Seller's or the Guarantor's business or that of their
respective Affiliates, (C) pursuant to any subpoena, civil investigative demand
or similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Purchaser, the Seller or the Guarantor or an officer,
director, employer, shareholder, owner, member, partner, agent, employee or
Affiliate of any of the foregoing is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document approved
in writing in advance by the Seller and the Guarantor, or (E) to any Affiliate,
independent or internal auditor, agent, employee or attorney of the Custodian
having a need to know the same, provided that the Custodian advises such
recipient of the confidential nature of the information being disclosed and such
Person agrees to be bound by the confidentiality provisions set forth herein; or
(iii) any other disclosure authorized by the Purchaser, the Seller or the
Guarantor, as applicable.
(d) Notwithstanding anything to the contrary contained herein or in any
related document, all Persons may disclose to any and all Persons, without
limitation of any kind, the federal income tax treatment of any of the
transactions contemplated by this Repurchase Agreement or any other related
document, any fact relevant to understanding the federal tax treatment of such
transactions and all materials of any kind (including opinions or other tax
analyses) relating to such federal income tax treatment.
SECTION 13.14 EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts (including by facsimile), each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal
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or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement and any other Repurchase Document executed in connection herewith
contain the final and complete integration of all prior expressions by the
parties hereto and thereto with respect to the subject matter hereof and thereof
and shall constitute the entire agreement among the parties hereto and thereto
with respect to the subject matter hereof and thereof, superseding all prior
oral or written understandings.
SECTION 13.15 SELLER'S WAIVER OF SETOFF.
Each of the parties hereto (other than the Purchaser) hereby waives any
right of setoff it may have or to which it may be entitled under this Agreement
from time to time against the Purchaser or its assets.
SECTION 13.16 ASSIGNMENTS AND PARTICIPATIONS; HYPOTHECATION OF
PURCHASED ASSETS.
(a) Neither the Seller nor the Guarantor may assign any of its rights
or obligations under this Agreement without the prior written consent of the
Purchaser and any attempt by the Seller or the Guarantor to assign any of its
rights or obligations under this Agreement without the prior written consent of
the Purchaser shall be null and void. The Purchaser may upon notice to the
Seller and the Guarantor, and, (i) without the consent of the Seller or the
Guarantor (A) in the case of a Pre - Approved Purchaser or (B) after a
Termination Event, and (ii) with the prior written consent of the Seller and the
Guarantor (not to be unreasonably withheld or delayed) in the case of a Person
that is not a Pre - Approved Purchaser, sell, transfer, assign, pledge or grant
participation interests to any Person in any Transaction, its interest in the
Purchased Assets or any other interest of the Purchaser under this Agreement
(any such entity, a "Transferee"), provided that any assignment effected
pursuant to this Subsection 13.16(a) shall be in respect of Purchased Assets
with a minimum Purchase Price of $5,000,000 (other than in the case of (i) an
assignment of all of the interests then held by the Purchaser (or a Transferee)
or (ii) a transfer to an Affiliate of the Purchaser (or a Transferee). Each of
the Seller and the Guarantor agrees to cooperate with the Purchaser, at the
Purchaser's expense, in connection with any such assignment, transfer, pledge,
participation or sale, 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, pledge, participation or sale.
(b) The Purchaser shall have free and unrestricted use of all Purchased
Assets and nothing in this Agreement shall preclude the Purchaser from engaging
in repurchase transactions with the Purchased Assets or otherwise pledging,
transferring, hypothecating, or rehypothecating the Purchased Assets; provided,
however, that the Purchaser shall transfer the Purchased Assets to the Seller on
the applicable Repurchase Date free and clear of any Lien on any of the
Purchased Assets. Nothing contained in this Agreement shall obligate the
Purchaser to segregate any Purchased Assets transferred to the Purchaser by the
Seller.
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SECTION 13.17 HEADING AND EXHIBITS.
The headings herein are for purposes of references only and shall not
otherwise affect the meaning or interpretation of any provision hereof. The
schedules and exhibits attached hereto and referred to herein shall constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
SECTION 13.18 SINGLE AGREEMENTS.
The Purchaser, the Seller and the Guarantor 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 that each has been entered into
in consideration of the other Transactions. Accordingly, each of the Purchaser,
the Seller and the Guarantor agrees 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.
SECTION 13.19 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 Exchange Act, the provisions of the Securities Investor
Protection Act of 1970 ("SIPA") will not provide protection to the other parties
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 Exchange Act, SIPA will not provide protection
to the other parties 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 Code, 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.
SECTION 13.20 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 (except insofar as the type of
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Purchased Assets 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 (except
insofar as the type of Purchased Assets subject to such Transaction would render
such definition inapplicable).
(b) 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 Purchased
Assets subject to such Transaction would render such definition inapplicable).
(c) 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 or regulations promulgated thereunder).
(d) It is understood that any party's right to liquidate Purchased
Assets delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Section 10.2 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.
SECTION 13.21 PERIODIC DUE DILIGENCE REVIEW.
Each of the Seller and the Guarantor acknowledges that the Purchaser
has the right to perform continuing due diligence reviews with respect to the
Purchased Items for purposes of verifying compliance with the representations,
warranties, covenants, agreements and specifications made hereunder, or
otherwise, and each of the Seller and the Guarantor agrees that upon reasonable
(but no less than one (1) Business Day's) prior notice, unless a Termination
Event shall have occurred, in which case no notice is required, to the Seller or
the Guarantor, as applicable, the Purchaser or its authorized representatives
shall be permitted during normal business hours to examine, inspect, and make
copies and extracts of, the Mortgage Asset Files and any and all documents,
records, agreements, instruments or information relating to such Purchased Items
in the possession or under the control of the Seller, the Guarantor and/or the
Custodian. Each of the Seller and the Guarantor also shall make available to the
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Asset Files and the Purchased Items.
Each of the Seller and the Guarantor shall also make available to the Purchaser
any accountants or auditors of the Seller or the Guarantor to answer any
questions or provide any documents as the Purchaser may require. The Seller will
also cause each of the Servicers and PSA Servicers (to the extent permitted
under the applicable Pooling and Servicing Agreement) to cooperate with the
Purchaser by permitting the Purchaser to conduct due diligence reviews of files
of each such Servicer and PSA Servicer. Without limiting the generality of the
foregoing, the Seller acknowledges that the Purchaser may purchase Purchased
Items from the Seller based solely upon the information provided by the Seller
to the
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Purchaser in the Seller Asset Schedule and the representations, warranties and
covenants contained herein, and that the Purchaser, at its option, has the right
at any time to conduct a partial or complete due diligence review on some or all
of the Purchased Items purchased in a Transaction, including, without
limitation, ordering new credit reports and new appraisals on the related
Mortgaged Properties and otherwise re - generating the information used to
originate such Purchased Assets. The Purchaser may underwrite such Purchased
Assets itself or engage a mutually agreed upon third party underwriter to
perform such underwriting. Each of the Seller and the Guarantor agrees to
cooperate with the Purchaser and any third party underwriter in connection with
such underwriting, including, but not limited to, providing the Purchaser and
any third party underwriter with access to any and all documents, records,
agreements, instruments or information relating to such Purchased Assets in the
possession, or under the control, of the Seller or the Guarantor. The Purchaser
shall pay all out - of - pocket costs and expenses incurred by the Purchaser not
exceeding $2,500 per Underlying Mortgaged Property in connection with the
Purchaser's activities pursuant to this Section 13.21 ("Due Diligence Costs");
provided that, in the event that an Unmatured Termination Event or Termination
Event shall have occurred, the Seller shall reimburse the Purchaser for all Due
Diligence Costs (without regard to $2,500 cap) incurred by the Purchaser from
and after the date of such Unmatured Termination Event or Termination Event in
connection with the Purchaser's activities pursuant to this Section 13.21.
SECTION 13.22 USE OF EMPLOYEE PLAN ASSETS.
(a) If assets of an employee benefit plan subject to any provision
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 Subsection 13.22(a) above, any such
Transaction shall proceed only if the Plan Party furnishes or has furnished to
the other party 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 13.22, the
Seller shall be deemed (i) to represent to the Purchaser that since the date of
the Seller's latest such financial statements, there has been no material
adverse change in the Seller's financial condition which Seller has not
disclosed to the Purchaser, and (ii) to agree to provide the Purchaser with
future audited and unaudited statements of its financial condition as they are
issued, so long as it is a Seller in any outstanding Transaction involving a
Plan Party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER: ARBOR REALTY FUNDING LLC
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
Arbor Realty Funding LLC
c/o Arbor Commercial Mortgage LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (516) 832 - 6431
Confirmation No.: (516) 832 - 7431
[Signatures Continued on the Following Page]
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THE PURCHASER: WACHOVIA BANK, NATIONAL ASSOCIATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: _________________________________
Title: ________________________________
Wachovia Bank, National Association
One Wachovia Center, Mail Code: NC0166
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (704) 715 - 0066
Confirmation No.: (704) 715 - 7818
[Signatures Continued on the Following Page]
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THE GUARANTOR: ARBOR REALTY TRUST, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
Arbor Realty Trust, Inc.
c/o Arbor Commercial Mortgage LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (516) 832 - 6431
Confirmation No.: (516) 832 - 7431
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