EXHIBIT 10.3
MASTER REPURCHASE
AGREEMENT
September 1996 Version
Dated as of February 28, 2003
Between: DSHI GREEN, INC., as Seller
and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC, as Buyer
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which one party ("Seller") agrees to transfer to the other ("Buyer")
securities or other assets ("Securities") against the transfer of funds
by Buyer, with a simultaneous agreement by Buyer to transfer to Seller
such Securities at a date certain or on demand, against the transfer of
funds by Seller. Each such transaction shall be referred to herein as a
"Transaction" and, unless otherwise agreed in writing, shall be governed
by this Agreement, including any supplemental terms or conditions
contained in Annex I hereto and in any other annexes identified herein
or therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the
commencement by such party as debtor of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation,
moratorium, dissolution, delinquency or similar law, or such
party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such
party or any substantial part of its property, or the convening
of any meeting of creditors for purposes of commencing any such
case or proceeding or seeking such an appointment or election,
(ii) the commencement of any such case or proceeding against
such party, or another seeking such an appointment or election,
or the filing against a party of an application for a protective
decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of an order
for relief, such an appointment or election, the issuance of
such a protective decree or the entry of an order having a
similar effect, or (C) is not dismissed within 15 days, (iii)
the making by such party of a general assignment for the benefit
of creditors, or (iv) the admission in writing by such party of
such party's inability to pay such party's debts as they become
due;
(b) "Additional Purchased Securities", Securities provided by Seller
to Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of
any date, the amount obtained by application of the Buyer's
Margin Percentage to the Repurchase Price for such Transaction
as of such date;
(d) "Buyer's Margin Percentage", with respect to any Transaction as
of any date, a percentage (which may be equal to the Seller's
Margin Percentage) agreed to by Buyer and Seller or, in the
absence of any such agreement, the percentage obtained by
dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for
such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any
principal thereof and all interest, dividends or other
distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a)
hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in
the relevant Confirmation, Annex I hereto or otherwise as the
deadline for giving notice requiring same-day satisfaction of
margin maintenance obligations as provided in Paragraph 4 hereof
(or, in the absence of any such agreement, the deadline for such
purposes established in accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date,
the price for such Securities on such date obtained from a
generally recognized source agreed to by the parties or the most
recent closing bid quotation from such a source, plus accrued
Income to the extent not included therein (other than any Income
credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless
contrary to market practice for such Securities);
(k) "Price Differential", with respect to any Transaction as of any
date, the aggregate amount obtained by daily application of the
Pricing Rate for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual number of
days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price
Differential previously paid by Seller to Buyer with respect to
such Transaction);
(l) "Pricing Rate", the per annum percentage rate for determination
of the Price Differential;
2
(m) "Prime Rate", the prime rate of U.S. commercial banks as
published in The Wall Street Journal (or, if more than one such
rate is published, the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to
be transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and
(ii) thereafter, except where Buyer and Seller agree otherwise,
such price increased by the amount of any cash transferred by
Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased
by the amount of any cash transferred by Seller to Buyer
pursuant to Paragraph 4(a) hereof or applied to reduce Seller's
obligations under clause (ii) of Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to
Buyer in a Transaction hereunder, and any Securities substituted
therefor in accordance with Paragraph 9 hereof. The term
"Purchased Securities" with respect to any Transaction at any
time also shall include Additional Purchased Securities
delivered pursuant to Paragraph 4(a) hereof and shall exclude
Securities returned pursuant to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined
by application of the provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are
to be transferred from Buyer to Seller upon termination of a
Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase
Price and the Price Differential as of the date of such
determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of
any date, the amount obtained by application of the Seller's
Margin Percentage to the Repurchase Price for such Transaction
as of such date;
(t) "Seller's Margin Percentage", with respect to any Transaction as
of any date, a percentage (which may be equal to the Buyer's
Margin Percentage) agreed to by Buyer and Seller or, in the
absence of any such agreement, the percentage obtained by
dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for
such Transaction.
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or
in writing at the initiation of either Buyer or Seller. On the
Purchase Date for the Transaction, the Purchased Securities
shall be transferred to Buyer or its agent against the transfer
of the Purchase Price to an account of Seller.
3
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or
Seller (or both), as shall be agreed, shall promptly deliver to
the other party a written confirmation of each Transaction (a
"Confirmation"). The Confirmation shall describe the Purchased
Securities (including CUSIP number, if any), identify Buyer and
Seller and set forth (i) the Purchase Date, (ii) the Purchase
Price, (iii) the Repurchase Date, unless the Transaction is to
be terminable on demand, (iv) the Pricing Rate or Repurchase
Price applicable to the Transaction, and (v) any additional
terms or conditions of the Transaction not inconsistent with
this Agreement. The Confirmation, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the
Confirmation relates, unless with respect to the Confirmation
specific objection is made promptly after receipt thereof. In
the event of any conflict between the terms of such Confirmation
and this Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand
shall be made by Buyer or Seller, no later than such time as is
customary in accordance with market practice, by telephone or
otherwise on or prior to the business day on which such
termination will be effective. On the date specified in such
demand, or on the date fixed for termination in the case of
Transactions having a fixed term, termination of the Transaction
will be effected by transfer to Seller or its agent of the
Purchased Securities and any Income in respect thereof received
by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Paragraph 5
hereof) against the transfer of the Repurchase Price to an
account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular
party hereto is acting as Buyer is less than the aggregate
Buyer's Margin Amount for all such Transactions (a "Margin
Deficit"), then Buyer may by notice to Seller require Seller in
such Transactions, at Seller's option, to transfer to Buyer cash
or additional Securities reasonably acceptable to Buyer
("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities, including
any such Additional Purchased Securities, will thereupon equal
or exceed such aggregate Buyer's Margin Amount (decreased by the
amount of any Margin Deficit as of such date arising from any
Transactions in which such Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular
party hereto is acting as Seller exceeds the aggregate Seller's
Margin Amount for all such Transactions at such time (a "Margin
Excess"), then Seller may by notice to Buyer require Buyer in
such Transactions, at Buyer's option, to transfer cash or
Purchased Securities to Seller, so that the aggregate Market
Value of the Purchased Securities, after deduction of any such
cash or any Purchased Securities so transferred, will thereupon
not
4
exceed such aggregate Seller's Margin Amount (increased by the
amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a)
or (b) of this Paragraph at or before the Margin Notice Deadline
on any business day, the party receiving such notice shall
transfer cash or Additional Purchased Securities as provided in
such subparagraph no later than the close of business in the
relevant market on such day. If any such notice is given after
the Margin Notice Deadline, the party receiving such notice
shall transfer such cash or Securities no later than the close
of business in the relevant market on the next business day
following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be
attributed to such Transactions as shall be agreed upon by Buyer
and Seller.
(e) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer or
Seller (or both) under subparagraphs (a) and (b) of this
Paragraph may be exercised only where a Margin Deficit or Margin
Excess, as the case may be, exceeds a specified dollar amount or
a specified percentage of the Repurchase Prices for such
Transactions (which amount or percentage shall be agreed to by
Buyer and Seller prior to entering into any such Transactions).
(f) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer and
Seller under subparagraphs (a) and (b) of this Paragraph to
require the elimination of a Margin Deficit or a Margin Excess,
as the case may be, may be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single
Transaction hereunder (calculated without regard to any other
Transaction outstanding under this Agreement).
5
5. INCOME PAYMENTS
Seller shall be entitled to receive an amount equal to all Income paid
or distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its discretion), on
the date such Income is paid or distributed either (i) transfer to or
credit to the account of Seller such Income with respect to any
Purchased Securities subject to such Transaction or (ii) with respect to
Income paid in cash, apply the Income payment or payments to reduce the
amount, if any, to be transferred to Buyer by Seller upon termination of
such Transaction. Buyer shall not be obligated to take any action
pursuant to the preceding sentence (A) to the extent that such action
would result in the creation of a Margin Deficit, unless prior thereto
or simultaneously therewith Seller transfers to Buyer cash or Additional
Purchased Securities sufficient to eliminate such Margin Deficit, or (B)
if an Event of Default with respect to Seller has occurred and is then
continuing at the time such Income is paid or distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed
to be loans, Seller shall be deemed to have pledged to Buyer as security
for the performance by Seller of its obligations under each such
Transaction, and shall be deemed to have granted to Buyer a security
interest in, all of the Purchased Securities with respect to all
Transactions hereunder and all Income thereon and other proceeds
thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall
be in immediately available funds. All Securities transferred by one
party hereto to the other party (i) shall be in suitable form for
transfer or shall be accompanied by duly executed instruments of
transfer or assignment in blank and such other documentation as the
party receiving possession may reasonably request, (ii) shall be
transferred on the book-entry system of a Federal Reserve Bank, or (iii)
shall be transferred by any other method mutually acceptable to Seller
and Buyer.
6
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities in
the possession of Seller shall be segregated from other securities in
its possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the
books and records of the holder, including a financial or securities
intermediary or a clearing corporation. All of Seller's interest in the
Purchased Securities shall pass to Buyer on the Purchase Date and,
unless otherwise agreed by Buyer and Seller, nothing in this Agreement
shall preclude Buyer from engaging in repurchase transactions with the
Purchased Securities or otherwise selling, transferring, pledging or
hypothecating the Purchased Securities, but no such transaction shall
relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation
to credit or pay Income to, or apply Income to the obligations of,
Seller pursuant to Paragraph 5 hereof.
Required Disclosure for Transactions in Which the Seller Retains
Custody of the Purchased Securities Seller is not permitted to
substitute other securities for those subject to this Agreement and
therefore must keep Buyer's securities segregated at all times, unless
in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that
Buyer's securities will likely be commingled with Seller's own
securities during the trading day. Buyer is advised that, during any
trading day that Buyer's securities are commingled with Seller's
securities, they [will]* [may]** be subject to liens granted by Seller
to [its clearing bank]* [third parties]** and may be used by Seller
for deliveries on other securities transactions. Whenever the
securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy
[the clearing]* [any]** lien or to obtain substitute securities.
*Language to be used under 17 C.F.R B403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
**Language to be used under 17 C.F.R. B403.5(d) if Seller is a
financial institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities.
After substitution, the substituted Securities shall be deemed
to be Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be
deemed, for purposes of subparagraph (a) of this Paragraph, to
have agreed to and accepted in this Agreement substitution by
Seller of other Securities for Purchased Securities; provided,
however, that such other Securities shall have a Market Value at
least equal to the Market Value of the Purchased Securities for
which they are substituted.
7
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that (i)
it is duly authorized to execute and deliver this Agreement, to enter
into Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (ii) it will engage in such
Transactions as principal (or, if agreed in writing, in the form of an
annex hereto or otherwise, in advance of any Transaction by the other
party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its
behalf (or on behalf of any such disclosed principal), (iv) it has
obtained all authorizations of any governmental body required in
connection with this Agreement and the Transactions hereunder and such
authorizations are in full force and effect and (v) the execution,
delivery and performance of this Agreement and the Transactions
hereunder will not violate any law, ordinance, charter, bylaw or rule
applicable to it or any agreement by which it is bound or by which any
of its assets are affected. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to
purchase Purchased Securities upon the applicable Purchase Date, (ii)
Seller fails to repurchase or Buyer fails to transfer Purchased
Securities upon the applicable Repurchase Date, (iii) Seller or Buyer
fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one
business day's notice, to comply with Paragraph 5 hereof, (v) an Act of
Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have
been made or repeated, or (vii) Seller or Buyer shall admit to the other
its inability to, or its intention not to, perform any of its
obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall
be deemed to have been exercised immediately upon the occurrence
of an Act of Insolvency), declare an Event of Default to have
occurred hereunder and, upon the exercise or deemed exercise of
such option, the Repurchase Date for each Transaction hereunder
shall, if it has not already occurred, be deemed immediately to
occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise
or deemed exercise, such Transaction shall be deemed immediately
canceled). The nondefaulting party shall (except upon the
occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such option as promptly as
practicable.
(b) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to
have exercised the option referred to in subparagraph (a) of
this Paragraph, (i) the defaulting party's obligations in such
Transactions to repurchase all Purchased Securities, at the
Repurchase Price therefor on the Repurchase Date determined in
accordance with subparagraph (a)
8
of this Paragraph, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed
exercise shall be retained by the nondefaulting party and
applied to the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder, and (iii) the
defaulting party shall immediately deliver to the nondefaulting
party any Purchased Securities subject to such Transactions then
in the defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of the
aggregate Repurchase Prices for all such Transactions, all
right, title and interest in and entitlement to all Purchased
Securities subject to such Transactions shall be deemed
transferred to the nondefaulting party, and the defaulting party
shall deliver all such Purchased Securities to the nondefaulting
party.
(d) If the nondefaulting party exercises or is deemed to have
exercised the option referred to in subparagraph (a) of this
Paragraph, the nondefaulting party, without prior notice to the
defaulting party, may:
(i) as to Transactions in which the defaulting party is
acting as Seller, (A) immediately sell, in a recognized
market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting
party may reasonably deem satisfactory, any or all
Purchased Securities subject to such Transactions and
apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion
elect, in lieu of selling all or a portion of such
Purchased Securities, to give the defaulting party
credit for such Purchased Securities in an amount equal
to the price therefor on such date, obtained from a
generally recognized source or the most recent closing
bid quotation from such a source, against the aggregate
unpaid Repurchase Prices and any other amounts owing by
the defaulting party hereunder; and
(ii) as to Transactions in which the defaulting party is
acting as Buyer, (A) immediately purchase, in a
recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the
nondefaulting party may reasonably deem satisfactory,
securities ("Replacement Securities") of the same class
and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting
party as required hereunder or (B) in its sole
discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement
Securities at the price therefor on such date, obtained
from a generally recognized source or the most recent
closing offer quotation from such a source.
9
Unless otherwise provided in Annex I, the parties acknowledge and agree
that (1) the Securities subject to any Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a
generally recognized source for prices or bid or offer quotations for
any Security, the nondefaulting party may establish the source therefor
in its sole discretion and (3) all prices, bids and offers shall be
determined together with accrued Income (except to the extent contrary
to market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as
Buyer, the defaulting party shall be liable to the nondefaulting
party for any excess of the price paid (or deemed paid) by the
nondefaulting party for Replacement Securities over the
Repurchase Price for the Purchased Securities replaced thereby
and for any amounts payable by the defaulting party under
Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party
is acting as Buyer shall not increase above the amount of such
Repurchase Price for such Transaction determined as of the date
of the exercise or deemed exercise by the nondefaulting party of
the option referred to in subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party
for (i) the amount of all reasonable legal or other expenses
incurred by the nondefaulting party in connection with or as a
result of an Event of Default, (ii) damages in an amount equal
to the cost (including all fees, expenses and commissions) of
entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result
of an Event of Default, and (iii) any other loss, damage, cost
or expense directly arising or resulting from the occurrence of
an Event of Default in respect of a Transaction.
(h) To the extent permitted by applicable law, the defaulting party
shall be liable to the nondefaulting party for interest on any
amounts owing by the defaulting party hereunder, from the date
the defaulting party becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the defaulting party
or (ii) satisfied in full by the exercise of the nondefaulting
party's rights hereunder. Interest on any sum payable by the
defaulting party to the nondefaulting party under this Paragraph
11(h) shall be at a rate equal to the greater of the Pricing
Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
10
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller
agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made
by either of them in respect of any Transaction shall be deemed to have
been made in consideration of payments, deliveries and other transfers
in respect of any other Transactions hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied
against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications
hereunder may be given by a party to the other by mail, facsimile,
telegraph, messenger or otherwise to the address specified in Annex II
hereto, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All
notices, demands and requests hereunder may be made orally, to be
confirmed promptly in writing, or by other communication as specified in
the preceding sentence.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase
transactions. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any
such other provision or agreement.
15. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement
and under any Transaction shall not be assigned by either party
without the prior written consent of the other party, and any
such assignment without the prior written consent of the other
party shall be null and void. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by
either party upon giving written notice to the other, except
that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
11
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party
from assigning, charging or otherwise dealing with all or any
part of its interest in any sum payable to it under Paragraph 11
hereof.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise
of any remedy hereunder by any party shall constitute a waiver of its
right to exercise any other remedy hereunder. No modification or waiver
of any provision of this Agreement and no consent by any party to a
departure herefrom shall be effective unless and until such shall be in
writing and duly executed by both of the parties hereto. Without
limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision
of the Employee Retirement Income Security Act of 1974 ("ERISA")
are intended to be used by either party hereto (the "Plan
Party") in a Transaction, the Plan Party shall so notify the
other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction
does not constitute a prohibited transaction under ERISA or is
otherwise exempt therefrom, and the other party may proceed in
reliance thereon but shall not be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if Seller
furnishes or has furnished to Buyer its most recent available
audited statement of its financial condition and its most recent
subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph,
Seller shall be deemed (i) to represent to Buyer that since the
date of Seller's latest such financial statements, there has
been no material adverse change in Seller's financial condition
which Seller has not disclosed to Buyer, and (ii) to agree to
provide Buyer with future audited and unaudited statements of
its financial condition as they are issued, so long as it is a
Seller in any outstanding Transaction involving a Plan Party.
12
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of
the United States Code, as amended (except insofar as the type
of Securities subject to such Transaction or the term of such
Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of
Title 11 of the United States Code, as amended (except insofar
as the type of assets subject to such Transaction would render
such definition inapplicable).
(b) It is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to
Paragraph 11 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the
Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as
that term is defined in FDIA and any rules, orders or policy
statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition
inapplicable).
(d) It is understood that this Agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
and each payment entitlement and payment obligation under any
Transaction hereunder shall constitute a "covered contractual
payment entitlement" or "covered contractual payment
obligation", respectively, as defined in and subject to FDICIA
(except insofar as one or both of the parties is not a
"financial institution" as that term is defined in FDICIA).
20. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange
Commission ("SEC") under Section 15 of the Securities Exchange
Act of 1934 ("1934 Act"), the Securities Investor Protection
Corporation has taken the position that the provisions of the
Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction
hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to
any Transaction hereunder; and
13
(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.
14
BUYER:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
SELLER:
DSHI GREEN, INC.,
a Delaware corporation
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
BUYER:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
SELLER:
DSHI GREEN, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: VICE PRESIDENT
ANNEX I TO
MASTER REPURCHASE AGREEMENT
Supplemental Terms and Conditions
This Annex I forms a part of the Master Repurchase Agreement dated as of
February 28, 2003, between DSHI GREEN, INC., a Delaware corporation, as seller,
and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., as buyer (as amended, modified
and in effect from time to time, including each Annex thereto, the (or this)
"Agreement"). Capitalized terms used in this Annex I without definition shall
have the respective meanings assigned to such terms in the Agreement. This Annex
I is intended to supplement the Agreement and shall, wherever possible, be
interpreted so as to be consistent with the Agreement; however, in the event of
any conflict or inconsistency between the provisions of this Annex I, on the one
hand, and the provisions of the Agreement, on the other, the provisions of this
Annex I shall govern and control. All references in the Agreement to "the
Agreement" shall be deemed to mean and refer to the Agreement, as supplemented
and modified by this Annex I or as otherwise modified after the date hereof.
1. OTHER APPLICABLE ANNEXES
In addition to this Annex I, the following Annexes and any Schedules
thereto shall form a part of the Agreement and shall be applicable thereunder:
Annex II -Names and Addresses for Communications Between Parties.
2. ADDITIONAL AND SUBSTITUTE DEFINITIONS
(a) In addition to the terms defined in the Agreement, the following
terms shall have the respective meanings set forth below:
"Accepted Servicing Practices" shall mean with respect to any
Purchased Loan, those mortgage or mezzanine loan servicing practices of
prudent lending institutions which service loans of the same type as
such Purchased Loan in the jurisdiction where the related underlying
real estate directly or indirectly securing such Purchased Loan is
located, and in any event shall require the servicer of such Purchased
Loan to service such Purchased Loan (a) in accordance with (i)
applicable laws, (ii) the terms and provisions of the Purchased Loan and
the Transaction Documents, and (iii) the customary and usual standards
of practice of prudent institutional commercial mortgage loan servicers,
and (b) to the extent consistent with the foregoing requirements, in the
same manner in which such servicer services commercial mezzanine loans,
participation interests or preferred equities, as applicable, for other
third party portfolios of mezzanine loans, participation interests or
preferred equities, as applicable, similar to the Purchased Loans, but
without regard to any relationship which such servicer or any Affiliate
of such servicer may have with the related Purchased Loan Borrower or
Underlying Borrower or any Affiliate of such Purchased Loan Borrower or
Underlying Borrower or to such servicer's or its Affiliates right to
receive compensation for its services or its interest, or that of its
Affiliates, in the Purchased Loans (including, in the case where the
Purchased Loan is serviced by Seller or its Affiliates, the right, title
and interest of Seller in the Purchased Loans or under the Transactions
Documents).
"Accelerated Repurchase Date" shall have the meaning specified
in Section 15 of this Annex I.
"Additional Collateral" shall have the meaning specified in
Section 4(a) of this Annex I.
"Adjusted Par Value" shall mean, with respect to any Purchased
Loans, an amount determined as (a) the Purchase Price divided by the
Original Purchase Percentage for such Purchased Loans, minus (b) the
Principal Payments made with respect to such Purchased Loans after the
Purchase Date.
"Adverse Market Change" shall have the meaning specified in
Section 3(b) of this Annex I.
"Affiliate" shall mean, when used with respect to any specified
Person, any other Person directly or indirectly controlling, controlled
by, or under common control with, such Person. Control shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise and
"controlling" and "controlled" shall have meanings correlative thereto.
"Agreement" shall have the meaning specified in the introductory
paragraph of this Annex I.
"Alternative Rate" shall mean, for any Pricing Rate Period or
portion thereof with respect to any Transaction, an annual rate equal to
the sum of (i) the Federal Funds Effective Rate (as defined below) as of
the first day of such Pricing Rate Period plus (ii) 200 basis points,
plus (iii) the relevant Applicable Spread for such Transaction. For
purposes of the foregoing, the "Federal Funds Effective Rate" means, for
any day, an interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m.
(New York time) on such day on such transactions received by the Buyer
from three Federal funds brokers of recognized standing selected by the
Buyer in its sole discretion.
"Alternative Rate Transaction" shall mean, with respect to any
Pricing Rate Period, any Transaction with respect to which the Pricing
Rate for such Pricing Rate Period is determined with reference to the
Alternative Rate.
"Applicable Spread" shall mean, with respect to a Transaction
involving Purchased Loans in any Collateral Type Grouping, (i) so long
as no Event of Default shall have occurred and be continuing, the
incremental per annum rate (expressed as a number of "basis points",
each basis point being equivalent to 1/100 of 1%) specified in Schedule
I-A attached to this Annex I as being the "Applicable Spread" for
Purchased Loans in such Collateral Type Grouping, provided that after
the occurrence and during
2
the continuance of an Event of Default, the Applicable Spread shall be
the sum of (A) the applicable incremental per annum rate described in
clause (i) of this definition plus (B) an additional 500 basis points
(5.0%).
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, an assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of
the jurisdiction wherein the related property is located to reflect the
assignment and pledge of the Mortgage.
"Breakage Costs" shall mean, with respect to any Purchased Loan,
any amount necessary to compensate Buyer and any Funding Party (as
defined below) for any losses or costs (including, without limitation,
the costs of breaking any "LIBOR" contract, if applicable, or funding
losses determined on the basis of Buyer's or such Funding Party's
reinvestment rate and the Pricing Rate) if the Purchased Loan, or any
portion thereof, is repurchased for any reason whatsoever on any date
other than a Remittance Date. For purposes of the foregoing definition,
a "Funding Party" means any bank or other entity, if any, which is
indirectly or directly funding Buyer with respect to the Transactions or
the Purchased Loans under the Agreement, in whole or in part, including,
without limitation, any direct or indirect assignee of, or participant
in, the Transactions or the Purchased Loans.
"Business Day" shall mean a day other than (i) a Saturday or
Sunday, or (ii) a day in which the New York Stock Exchange or banks in
the State of New York, Florida, or Illinois are authorized or obligated
by law or executive order to be closed.
"Buyer" shall mean Greenwich Capital Financial Products, Inc.,
or any successor.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
capital stock of a corporation, and all equivalent equity ownership
interests in a Person which is not a corporation and any and all
warrants or options to purchase any of the foregoing.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations either (i) are
required to be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in
accordance with GAAP, or (ii) constitute liabilities under any tax
retention operating lease or so-called "synthetic" lease transaction, or
any obligations arising with respect to any other similar transaction
which is the functional equivalent of or takes the place of borrowing
but which does not constitute a liability on the consolidated balance
sheets of such Person and its Subsidiaries.
"Cash Management Account" shall mean a segregated interest
bearing account, in the name of Buyer, established at the Depository.
3
"CF Sweep Event" shall mean, with respect to any Purchased Loan
as of any date, a determination by Buyer that (i) the aggregate
Repurchase Price of such Purchased Loan as of such date exceeds (ii) the
product obtained by multiplying the aggregate Market Value of such
Purchased Loan as of such date by the "CF Sweep Percentage" for such
Purchased Loan, as set forth in Schedule I-A attached to this Annex I.
"Change of Control" shall mean any of the following events have
occurred:
(i) Sponsor ceases to manage and control the affairs
of Seller and own, directly or indirectly, 100% of the issued
share capital, warrants and rights to acquire limited liability
company interests of the Seller; or
(ii) Any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator
of any such plan), other than one or more members of the
Immediate Family of the late ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (and/or trusts or
other entities for his and/or their exclusive benefit), becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a person
or group shall be deemed to have "beneficial ownership" of all
securities that such person or group has the right to acquire
(such right, an "option right"), whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of 50 percent or more of the equity
securities of Sponsor entitled to vote for members of the board
of directors or equivalent governing body of Sponsor on a
fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to
any option right); or
(iii) during any period of 24 consecutive months, a
majority of the members of the board of directors or other
equivalent governing body of Sponsor cease to be composed of
individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least
a majority of that board or equivalent governing body or (iii)
whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause
(ii) and clause (iii), any individual whose initial nomination
for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election
or removal of one or more directors by any person or group other
than a solicitation for the election of one or more directors by
or on behalf of the board of directors); or
4
(iv) any two of ▇▇▇▇ Kransoff, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ cease for any reason to be associated with
Sponsor, such that they are neither senior executives of Sponsor
nor members of the Board of Directors of Sponsor.
"Collateral Bankruptcy Event" means, with respect to each
Purchased Loan, the occurrence of any of the following: (i) an
involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (a) liquidation, reorganization or other relief
in respect of the Mortgagor or the borrower under the Purchased Loan or
its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now
or hereafter in effect or (b) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Mortgagor or the borrower under the Purchased Loan or for a substantial
part of its assets, and, in any such case, such proceeding or petition
shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered, (ii) the
Mortgagor or borrower under the Purchased Loan shall (a) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (b) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
this clause, (c) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Mortgagor or borrower under the Purchased Loan or for a substantial
part of its assets, (d) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (e)
make a general assignment for the benefit of creditors or (f) take any
action for the purpose of effecting any of the foregoing, or (iii) the
Mortgagor or the borrower under the Purchased Loan shall admit in
writing or fail generally to pay its debts as they become due.
"Collateral Information" shall mean, with respect to each
Purchased Loan, the information set forth in Exhibit VII attached
hereto.
"Collateral Type Grouping" shall mean, with respect to the
Eligible Loans, any of the alphabetical groupings of Eligible Loans
listed in Schedule I-A attached to this Annex I.
"Collection Period" shall mean with respect to the Remittance
Date in any month, the period beginning on but excluding the Cut-off
Date in the month preceding the month in which such Remittance Date
occurs and continuing to and including the Cut-off Date immediately
preceding such Remittance Date.
"Commitment Expiration Date" shall mean the Initial Commitment
Expiration Date or the Extended Commitment Expiration Date (if the
Commitment Expiration Date is extended as provided in Section 3(m) of
this Annex I), as applicable.
"Consolidated Tangible Net Worth" means, as of any date of
determination, the consolidated stockholders' equity of Sponsor as shown
on is balance sheet as of that date less the stockholders' equity of the
Sponsor Mortgage Subsidiary and less the aggregate amount of goodwill
and other assets subject to classification as "intangible assets."
5
"Consolidated Total Indebtedness" means as of any date of
determination, all Indebtedness of Sponsor and its Subsidiaries
outstanding at such date, determined on a consolidated basis in
accordance with GAAP, after eliminating intercompany items; provided,
however, that for purposes of defining "Consolidated Total Indebtedness"
the term "Indebtedness" shall not include short term obligations
consisting of accounts payable within 60 days, Indebtedness of the
Sponsor Mortgage Subsidiary for which none of Sponsor or other
Subsidiaries have any personal liability, or the portion of nonrecourse
Indebtedness of Subsidiaries of Sponsor that is allocable to the owners
of minority interests in such Subsidiaries, based on such owners'
percentage interests in such Subsidiaries, provided that such owners are
not Affiliates of Sponsor.
"Credit Agreement" shall mean that certain Third Amended and
Restated Revolving Credit Agreement dated as of November 27, 2002, among
Sponsor and certain of its Subsidiaries, the lenders named therein, and
Bank of America, N.A., as Administrative Agent, Guaranty Bank, as
Syndication Agent, and Fleet National Bank and U.S. Bank, National
Association, as Co-Documentation Agents, with Banc of America Securities
LLC, as sole Lead Arranger and Sole Book Manager.
"Credit Loss" shall mean with respect to any Purchased Loan, (1)
any reduction in the underwritten debt service coverage ratio as
determined by Buyer (giving effect to any reserves) for the real
property securing directly or indirectly such Purchased Loan (including
for purposes of this calculation, such loan and any loan junior to or
pari passu with such loan and secured, directly or indirectly, by the
related property) to below the lesser of (x) 1.05x or (y) if the
underwritten debt service coverage for such real property as determined
by Buyer was less than l.05x on the Purchase Date for such Purchased
Loan, such lesser underwritten debt service coverage ratio which is set
forth in the Confirmation for such Purchased Loan, (2) any monetary
default or other material default by the borrower under the Purchased
Loan which is not cured within the applicable grace period, if any,
provided for such cure under the applicable loan documents for the
Purchased Loan, or (3) any loss in value of such Purchased Loan as
determined by Buyer in the exercise of its good faith business judgment.
"Custodial Agreement" shall mean the Custodial Agreement, dated
on or about the date hereof, by and among the Custodian, Seller and
Buyer, as amended, modified and in effect from time to time.
"Custodial Delivery" shall mean the form executed by Seller in
order to deliver the Purchased Loan Schedule and the Purchased Loan File
to Buyer or its designee (including the Custodian) pursuant to Section 7
of the Agreement, a form of which is attached hereto as Exhibit IV.
"Custodian" shall mean Wachovia Bank, National Association, or
any successor Custodian appointed by Buyer with the prior written
consent of Seller (which consent shall not be unreasonably withheld or
delayed).
"Cut-off Date" shall mean the second Business Day preceding each
Remittance Date.
6
"Debt" means, with respect to any Person at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, (iv) all
Capitalized Lease Obligations of such Person, (v) all obligations of
such Person to purchase securities, loan or other property which arise
out of or in connection with the sale of the same or substantially
similar securities, loans or property, including without limitation the
obligations of Seller under the Agreement and under any and all other
repurchase agreements, (vi) all obligations of such Person to reimburse
any bank or other person in respect of amounts paid under a letter of
credit or similar instrument, (vii) all Debt of others secured by a lien
on any asset of such Person to the extent of the fair market value of
such asset, whether or not such Debt is assumed by such Person, and
(viii) all Debt of others guaranteed by such Person to the extent such
Debt represents a liability of such Person.
"Default" shall mean any event which, with the giving of notice,
the passage of time, or both, would constitute an Event of Default.
"Deficit Cure Amount" shall mean, with respect to the Purchased
Loans in any Collateral Type Grouping as of any date, the amount
(expressed in dollars) obtained by dividing (i) the Repurchase Price of
such Purchased Loans as of such date by (ii) the "Original Purchase
Percentage" for such Collateral Type Grouping, as set forth in Schedule
I-A attached to this Annex I.
"Depository" shall mean Wachovia Bank, National Association, or
any successor Depository appointed by Buyer and (provided no Event of
Default exists) reasonably satisfactory to Seller.
"Depository Agreement" shall have the meaning set forth in
Section 3(b) of this Annex I.
"Diligence Materials" shall mean the Preliminary Due Diligence
Package together with the Supplemental Due Diligence List.
"Draft Appraisal" shall mean a short form appraisal, "letter
opinion of value," or any other form of draft appraisal acceptable to
Buyer.
"Draw Fee" shall have the meaning specified in Section 3(f) of
this Annex I.
"Early Repurchase Date" shall have the meaning specified in
Section 3(d) of this Annex I.
"Eligible Account" shall mean a segregated custodial account
which is either: (i) an account maintained with Depository, or (ii) an
account maintained with a depository institution or trust company which
has been approved by Buyer and Seller in writing.
7
"Eligible Loans" shall mean any of the following types of loans,
which loans are acceptable to Buyer in the exercise of its good faith
business judgment and are secured directly or indirectly by a property
that is a multifamily, retail, office, warehouse, healthcare or
hospitality property (or any other property type acceptable to Buyer)
and is located in the United States of America, its territories or
possessions, and which would not, if the same became Purchased Loans,
cause any non-compliance or non-conformity with the Facility Limits:
(i) performing Whole Loans which satisfy the
following criteria:
(a) the ratio of loan to value determine by
Buyer for the real property securing directly such loan
(including for purposes of this calculation, such loan
and any loan senior to, junior to or pari passu with
such loan and secured, directly or indirectly, by the
related property) does not exceed 85%; and
(b) the underwritten debt service coverage
ratio as determined by Buyer (giving effect to any
reserves) for the real property securing directly such
loan (including for purposes of this calculation, such
loan and any loan senior to, junior to or pari passu
with such loan and secured directly or indirectly, by
the related property) is not less than 1.20x.
(ii) Junior Participation Interests in performing
commercial mortgage leans secured by first liens in multifamily
and commercial real property which satisfy the following
criteria:
(a) the ratio of total loan to value
determined by Buyer for the real property securing
indirectly such loan (including for purposes of this
calculation, such loan and any loan senior to, junior to
or pari passu with such loan and secured, directly or
indirectly, by the related property) does not exceed 80%
(or 85% if the purchase of such Junior Participation
Interest is part of a Greenwich Transaction); and
(b) the underwritten debt service coverage
ratio as determined by Buyer (giving effect to any
reserves) for the real property securing indirectly such
loan (including for purposes of this calculation, such
loan and any loan senior to, junior to or pari passu
with such loan and secured, directly or indirectly, by
the related property) is not less than 1.15x.
(iii) performing Mezzanine Loans which satisfy the
following criteria:
(a) the ratio of total loan to value
determined by Buyer for the real property securing
indirectly such loan (including for purposes of this
calculation, such loan and any loan senior to, junior to
or pari passu with such loan and secured, directly or
indirectly, by the related property) does not exceed
85%; and
8
(b) the underwritten debt service coverage
ratio at origination as determined by Buyer (giving
effect to any reserves) for the real property securing
indirectly such loan (including for purposes of this
calculation, such loan and any loan senior to, junior to
or pari passu with such loan and secured, directly or
indirectly, by the related property) is not less than
1.10x; and
(iv) any other Whole Loan, Junior Participation
Interest or Mezzanine Loan, or other financial transaction,
which does not conform to the criteria set forth in clauses
(i)-(iii) above, or other financial transaction, and Buyer
elects in its sole discretion to purchase, in which case the
criteria for the ratio of total loan to value and the
underwritten debt service coverage ratio, and any modifications
to the Facility Limits with respect to such loan or other
transaction, shall be set forth in the related Confirmation for
the Transaction under which such loan is purchased by Buyer.
Non-performing loans and loans secured by undeveloped
land shall not be Eligible Loans.
"Environmental Law" means any environmental law, ordinance,
rule, regulation or order of a federal, state or local governmental
authority, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601 et seq.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections
6901 et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Sections 1251 et seq.), the Clean Air Act (42 U.S.C. Sections
7401 et seq.) and the regulations promulgated pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at
the date of the Agreement and, as of the relevant date, any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Sections
414(b) or (c) of the Code of which Seller is a member and (ii) solely
for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Code, described in Section
414(m) or (o) of the Code of which Seller is a member.
"Expanded Facility Amount" shall have the meaning specified in
the definition of Facility Amount below.
"Expanded Facility Modification" shall have the meaning
specified in the definition of Facility Amount below.
9
"Extended Commitment Expiration Date" shall have the meaning
specified in Section 3(1).
"Extension Conditions" shall have the meaning specified in
Section 3(f) of this Annex I.
"Extension Period" shall have the meaning specified in Section
3(f) of this Annex I.
"Facility Amount" shall mean $100,000,000, subject to increase
as set forth in the next sentence. The parties may increase the Facility
Amount to up to $200,000,000 (the "Expanded Facility Amount") but only
in the event each of Buyer and Seller enters into a written agreement
modifying the Agreement in order to increase the Facility Amount (the
"Expanded Facility Modification"), it being acknowledged and understood
that each of Buyer and Seller may elect whether or not it will enter
into such an amendment in its sole and absolute discretion. As of the
Initial Commitment Commencement Date, an increase in the Facility Amount
above $100,000,000 has not been approved by either Buyer or Seller.
"Facility Limits" shall mean the "Facility Limits" set forth in
Part II of Schedule I-A attached to this Annex I.
"Filings" shall have the meaning specified in Section 6 of this
Annex I.
"Fitch" means Fitch, Inc.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied as in effect from time to time.
"Governmental Authority" shall mean any national or federal
government, any state, regional, local or other political subdivision
thereof with jurisdiction and any Person with jurisdiction exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Greenwich Transaction" shall mean any Transaction designated as
a "Greenwich Transaction" in the related Confirmation, consisting of a
Purchased Loan which was either initially acquired by Seller from
Greenwich or an Affiliate of Greenwich or which is originated by Seller
simultaneously with the origination by Greenwich or its Affiliate of the
related Underlying Loan as part of a single combined loan closing for
the simultaneous origination of such Purchased Loan and Underlying Loan.
"Guarantee Obligation" means 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
10
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 obligations, or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed
to be the maximum stated amount of the primary obligation relating to
such Guarantee Obligation (or, if less, the maximum stated liability set
forth in the instrument embodying such Guarantee Obligation), provided,
however, that in the absence of any such stated amount or stated
liability, the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in
respect thereof as reasonably determined by Sponsor in good faith,
subject to Buyer's reasonable approval.
"Guaranty" shall mean the Guaranty, dated as of the date hereof,
from the Sponsor to the Buyer, of full and timely payment of all amounts
due and performance of all obligations owed by Seller under the
Agreement to the Buyer.
"Hedging Transactions" shall mean, with respect to any or all of
the Purchased Loans, any short sale of U.S. Treasury Securities or
mortgage-related securities, futures contract (including Eurodollar
futures) or options contract or any interest rate swap, cap or collar
agreement or similar arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies, entered
into by Seller, with Buyer or its Affiliates as counterparties or one or
more other counterparties acceptable to the Buyer.
"Indebtedness" of any Person at any date means, without
duplication, (a) all indebtedness of such Person for borrowed money, (b)
all obligations of such Person for the deferred purchase price of
property or services (other than trade liabilities and other accounts
payable and accrued expenses incurred in the ordinary course of business
and payable in accordance with customary practices, which are not 60
days or more past due), to the extent such obligations constitute
indebtedness for the purposes of GAAP, (c) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (d) all obligations of such Person under financing leases
and capital leases, (e) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (f) all
Guarantee Obligations of such Person (excluding in any calculation of
consolidated indebtedness of Sponsor, Guarantee Obligations of Sponsor
in respect of primary obligations of any Subsidiary), (g) all
reimbursement obligations of such Person for letters of credit and other
similar contingent liabilities, (h) all liabilities secured by any Lien
(other than Liens for taxes not yet due and payable) on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, (i) any repurchase
obligation or liability
11
of such Person or any of its Subsidiaries with respect to accounts or
notes receivable sold by such Person or any of its Subsidiaries, (j)
Senior Preferred Stock, (k) such Person's pro rata share of recourse
debt of Special Investment Affiliates and any recourse loans where such
Person is liable as a general partner or otherwise, and (l) all
obligations to make advances and contributions to Investment Affiliates.
"Indemnified Amounts" and "Indemnified Parties" shall have the
meaning specified in Section 20 of this Annex I.
"Initial Commitment Expiration Date" shall mean February 27,
2004.
"Initial Commitment Commencement Date" shall mean February 28,
2003.
"Initial Scheduled Repurchase Date" shall mean February 27,
2006.
"Investment Affiliate" means any Person in which Sponsor,
directly or indirectly, has an ownership interest, whose financial
results are not consolidated under GAAP with the financial results of
Sponsor on the consolidated financial statements of Sponsor.
"Junior Participation Interest" shall mean a junior
participation interest or a junior co-lender interest (such as a "B"
noteholder's interest in an "A/B" loan structure in a commercial
mortgage loan secured by a first lien in multifamily or commercial real
property.
"LIBOR" shall mean the rate per annum (rounded upwards, if
necessary, to the next 1/100th of 1%) calculated on each Pricing Rate
Determination Date for the next Pricing Rate Period as equal to the rate
for U.S. dollar deposits for a one month period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such Pricing Rate
Determination Date; provided, however, that if such rate does not appear
on Telerate Page ▇▇▇▇, "▇▇▇▇▇" determined on each Pricing Rate
Determination Date for the next Pricing Rate Period shall mean a rate
per annum equal to the rate at which U.S. dollar deposits are offered in
immediately available funds in the London Interbank Market to the London
office of National Westminster Bank, Plc (or its successors) by leading
banks in the Eurodollar market at 11:00 a.m., London time, on the
Pricing Rate Determination Date. "Telerate Page 3750" means the display
designated as "Page 3750" on the Associated Press-Dow ▇▇▇▇▇ Telerate
Service (or such other page as may replace Page 3750 on the Associated
Press-Dow ▇▇▇▇▇ Telerate Service or such other service as may be
nominated by the British Bankers' Association as the information vendor
for the purpose of displaying British Bankers' Association interest
settlement rates for U.S. Dollar deposits). LIBOR determined on the
basis of the rate displayed on Telerate Page 3750 in accordance with the
provisions hereof shall be subject to corrections, if any, made in such
rate and displayed by the Associated Press-Dow ▇▇▇▇▇ Telerate Service
within one (1) hour of the time when such rate is first displayed by
such Service.
"LIBO Rate" shall mean, with respect to any Pricing Rate Period
pertaining to a Transaction, a rate per annum determined for such
Pricing Rate Period (rounded upwards, if necessary, to the next 1/100th
of 1%) equal to (a) the LIBO Rate for such Pricing Rate Period
multiplied by (b) the Statutory Reserve Rate.
12
"LIBOR Transaction" shall mean, with respect to any Pricing Rate
Period, any Transaction with respect to which the Pricing Rate for such
Pricing Rate Period is determined with reference to the LIBO Rate.
"Material Control Issues" shall have the meaning specified in
Section 22(a).
"Maximum Leverage Ratio" shall mean the maximum ratio of the
Consolidated Total Indebtedness of Sponsor to the Consolidated Tangible
Net Worth of Sponsor permitted hereunder, which shall be equal to (I)
2.75:1.00, except that (II) if the Credit Agreement is revised to
provided for a maximum ratio of the Consolidated Total Indebtedness of
Sponsor to the Consolidated Tangible Net Worth of Sponsor which is
greater or less than the amount set forth in clause (I) above, the
Maximum Leverage Ratio shall, subject to the proviso at the end of this
sentence, be the maximum ratio of the Consolidated Total Indebtedness of
Sponsor to the Consolidated Tangible Net Worth of Sponsor set forth in
the Credit Agreement; provided, however, that in no event shall the
Maximum Leverage Ratio under this Agreement decrease to less than
2.0625:1.00, or increase to more than 3.4375:1.00. Revisions to the
Credit Agreement shall not be effective for purposes of the foregoing
definition unless the revisions are made pursuant to a binding written
amendment to the Credit Agreement executed and delivered by all required
parties, and Buyer has received a certified copy of such amendment from
Sponsor. Seller agrees to cause Sponsor to promptly provide any such
amendments to the Credit Agreement to Buyer after execution and delivery
of the same by the parties thereto.
"Mezzanine Loan" means a loan secured by pledges of the entire
equity ownership interests in entities that own directly or indirectly
multifamily or commercial properties.
"Mezzanine Note" shall mean a note or other evidence of
Mezzanine Loan indebtedness.
"Minimum Net Worth Amount" shall mean the minimum Consolidated
Tangible Net Worth of Sponsor permitted hereunder, which shall be equal
to (I) the sum of (a) $898,400,000, plus (b) an amount equal to 75
percent of the aggregate proceeds received by Sponsor in connection with
any offering or issuance of Capital Stock of Sponsor after the November
27, 2002, plus (c) 80 percent of the consolidated retained earnings of
Sponsor accrued after the November 27, 2002 (which accrued consolidated
retained earnings shall be computed on a cumulative basis without
deduction for any losses), except that (II) if the Credit Agreement is
revised to provided for a minimum Consolidated Tangible Net Worth for
Sponsor which is greater or less than the amount set forth in clause (I)
above, the Minimum Net Worth Amount shall, subject to the proviso at the
end of this sentence, be the minimum Consolidated Tangible Net Worth for
Sponsor set forth in the Credit Agreement; provided, however, that in no
event shall the Minimum Net Worth Amount under this Agreement decrease
to an amount which is less than 75% of the amount set forth in clause
(I) above, or increase to an amount more than 125% of the amount set
forth in clause (I) above. Revisions to the Credit Agreement shall not
be effective for purposes of the foregoing definition unless the
revisions are
13
made pursuant to a binding written amendment to the Credit Agreement
executed and delivered by all required parties, and Buyer has received a
certified copy of such amendment from Sponsor. Seller agrees to cause
Sponsor to promptly provide any such amendments to the Credit Agreement
to Buyer after execution and delivery of the same by the parties
thereto.
"Moody's" shall mean ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure
debt or other instrument, creating a valid and enforceable first
priority lien on or a first priority ownership interest in an estate in
fee simple in real property and the improvements thereon, securing a
mortgage note or similar evidence of indebtedness.
"Mortgage Note" shall mean a note or other evidence of
indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note and the
grantor of the related Mortgage.
"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been, or were
required to have been, made by Seller or any ERISA Affiliate and which
is covered by Title IV of ERISA.
"New Collateral" shall mean an Eligible Loan that Seller
proposes to be included as Collateral.
"Original Purchase Date" shall mean the date a Purchased Loan
was purchased by Seller or its Affiliates from Buyer or its Affiliates.
"Originated Collateral" shall mean any Collateral that is an
Eligible Loan and whose Purchased Loan Documents were prepared by or on
behalf of Seller.
"Permitted Investments" means any one or more of the following
obligations or securities having at the time of purchase, or at such
other time as may be specified, the required ratings, if any, provided
for in this definition:
(a) direct obligations of, or guaranteed as to timely
payment of principal and interest by, the United States of America or
any agency or instrumentality thereof provided that such obligations are
backed by the full faith and credit of the United States of America in
each case denominated in dollars and maturing within one (1) year from
the date of acquisition thereof;
(b) direct obligations of, or guaranteed as to timely
payment of principal and interest by, the Federal Home Loan Mortgage
Corporation, the Federal Home Loan Bank, the Federal National Mortgage
Association or the Federal Farm Credit System, provided
14
that any such obligation, at the time of purchase or contractual
commitment providing for the purchase thereof, is qualified by any
Rating Agency as an investment of funds backing securities rated "AAA"
(or such comparable rating);
(c) demand and time deposits in or certificates of deposit
of, or bankers' acceptances issued or guaranteed by, or placed with, and
money market deposit accounts issued or offered by, any domestic office
of any bank or trust company, savings and loan association or savings
bank organized under the laws of the United States of America or any
States thereof and maturing within one hundred eighty (180) days from
the date of acquisition thereof, provided that, such depository
institution or trust company has a combined capital and surplus and
undivided profits of not less than $500,000,000 and is rated at least
"A-2" by Standard & Poor's Ratings Services and "P-2" by ▇▇▇▇▇'▇
Investors Services, Inc. in the note or commercial paper rating
category;
(d) general obligations of or obligations guaranteed by any
State of the United States or any political subdivision thereof or the
District of Columbia receiving the highest debt rating available for
such securities by any Rating Agency;
(e) commercial or finance company paper (including both
non-interest- bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one
year after the date of issuance thereof) that is rated by any Rating
Agency in its highest short-term unsecured debt rating category at the
time of such investment or contractual commitment providing for such
investment, and is issued by a corporation the outstanding senior
long-term debt obligations of which are then rated by any such Rating
Agency in its highest long-term unsecured debt rating category;
(f) fully collateralized repurchase obligations with a term
of not more than thirty (30) days with respect to any security described
in subsections (a) or (b) above entered into with a depository
institution or trust company (acting as principal) described in
subsection (c) above;
(g) such other obligations as are acceptable as Permitted
Investments to Seller and Buyer, as indicated by their written approval
thereof.
"Person" shall mean an individual, corporation, limited
liability company, business trust, partnership, joint tenant or
tenant-in-common, trust, unincorporated organization, or other entity,
or a federal, state or local government or any agency or political
subdivision thereof.
"Plan" means an employee benefit or other plan established or
maintained by Seller or any ERISA Affiliate during the five year period
ended prior to the date of the Agreement or to which Seller or any ERISA
Affiliate makes, is obligated to make or has, within the five year
period ended prior to the date of the Agreement, been required to make
contributions and that is covered by Title IV of ERISA or Section 302 of
ERISA or Section 412 of the Code, other than a Multiemployer Plan.
"Portfolio Collateral" shall mean, collectively, all the
Purchased Loans.
15
"Portfolio Securities" shall mean, collectively, all Securities
which are part of the Purchased Loan Documents.
"Pre-Existing Collateral" shall mean any Collateral that is an
Eligible Loan and is not Originated Collateral.
"Preliminary Due Diligence Package" shall mean with respect to
any New Collateral, a summary memorandum outlining the proposed
transaction, including potential transaction benefits and all material
underwriting risks, all Underwriting Issues and all other
characteristics of the proposed transaction that a reasonable buyer
would consider material, together with the following due diligence
information relating to the New Collateral to be provided by Seller to
Buyer pursuant to the Agreement:
With respect to each Eligible Loan:
(i) the Collateral Information;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical
information, if available;
(iv) description of the Mortgaged Property and the
ownership structure of the borrower and the sponsor (including,
without limitation, the board of directors, if applicable);
(v) indicative debt service coverage ratios;
(vi) indicative loan-to-value ratio;
(vii) term sheet outlining the transaction generally;
(viii) Seller's Affiliate relationship with the
Mortgagor, if any; and
(ix) with respect to any New Collateral that is
Pre-Existing Collateral, a list that specifically and expressly
identifies any Purchased Loan Documents that relate to such New
Collateral but are not in Seller's possession; and
(x) any exceptions to the representations and
warranties set forth in Exhibit VI to the Agreement.
"Pricing Rate Determination Date" shall mean (a) in the case of
the first Pricing Rate Period with respect to any Transaction, the
second (2nd) Business Day preceding the first day of such Pricing Rate
Period and (b) with respect to any subsequent Pricing Rate Period, the
second (2nd) Business Day preceding the first day of the Pricing Rate
Period.
"Pricing Rate Period" shall mean, (a) in the case of the first
Pricing Rate Period with respect to any Transaction, the period
commencing on and including the Purchase Date for such Transaction and
ending on and including the following Remittance Date,
16
and (b) in the case of any subsequent Pricing Rate Period, the period
commencing on the calendar day following each Remittance Date and ending
on and including the following Remittance Date; provided, however, that
in no event shall any Pricing Rate Period end subsequent to the
Repurchase Date.
"Principal Payment" shall mean, with respect to any Purchased
Loans, any payment or prepayment of principal or any proceeds of
redemption received by the Depository in respect thereof.
"Purchased Loan Borrower(s)" shall mean the Mortgagors, the
borrower(s) and/or other obligor(s) for the repayment of the Purchased
Loan(s) and payment and performance of the other obligations owed to the
holder(s) of the Purchased Loan(s) under the applicable Purchased Loan
Documents.
"Purchased Loan Documents" shall mean, with respect to a
Purchased Loan, the documents evidencing, securing and relating to such
Purchased Loan or the collateral for the Purchased Loan.
"Purchased Loan File" shall mean the documents specified as the
"Purchased Loan File" in Section 7(e), together with any additional
documents and information required to be delivered to Buyer or its
designee (including the Custodian) pursuant to the Agreement.
"Purchased Loans" shall mean (i) with respect to any
Transaction, the Eligible Loans sold by Seller to Buyer in such
Transaction and (ii) with respect to the Transactions in general, all
Eligible Loans sold by Seller to Buyer and any Additional Collateral
delivered by Seller to Buyer pursuant to Section 4(a) of this Annex I.
"Purchased Loan Schedule" shall mean a schedule of Purchased
Loans attached to each Trust Receipt and Custodial Delivery containing
information substantially similar to the Collateral Information.
"Relevant System" shall mean (a) The Depository Trust Company in
New York, New York, or (b) such other clearing organization or
book-entry system as is designated in writing by Buyer.
"Remittance Date" shall mean the first (1st) calendar day of
each month, or the next succeeding Business Day, if such calendar day
shall not be a Business Day.
"Requirement of Law" shall mean any law, treaty, rule,
regulation, code, directive, policy, order or requirement or
determination of an arbitrator or a court or other governmental
authority whether now or hereafter enacted or in effect.
"Reset Date" shall mean, with respect to any Pricing Rate
Period, the second Business Day preceding the first day of such Pricing
Rate Period with respect to any Transaction.
17
"S&P" shall mean Standard & Poor's Rating Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SEC" shall mean the Securities and Exchange Commission, and any
successor thereto.
"Seller" shall mean DSHI Green, Inc., a Delaware corporation.
"Seller's Differential Coverage Ratio" means for any period for
which Buyer elects to make a determination of Seller's Differential
Coverage Ratio, the following ratio:
(a) the excess of (1) all Income in respect of the
Portfolio Collateral received by the Depository with respect to
such period, exclusive, however, of any Principal Payments, over
(2) all expenses incurred by Seller in any way attributable to
such period which are not reimbursed by underlying borrowers or
obligors unaffiliated with Seller with respect to the Portfolio
Collateral in connection with the closing or the underlying
loans and other transactions by which the Portfolio Collateral
is created or administered, including without limitation
servicing, overhead and administrative costs and expenses and
interest on indebtedness, but excluding, however, any Price
Differential paid to Buyer;
over
(b) the sum of the aggregate of the Price Differentials
for all Transactions paid or payable to Buyer for such period.
"Senior Preferred Stock" means the stated value of any preferred
stock issued by Sponsor or any of its direct or indirect Subsidiaries
which is not typical preferred stock but instead is both (i) redeemable
by the holders thereof on any fixed date or upon the occurrence of any
event and (ii) as to payment of dividends or amounts on liquidation,
either guaranteed by Sponsor or any direct or indirect Subsidiary of
Sponsor or secured by any property of Sponsor or any direct or indirect
Subsidiary of Sponsor.
"Servicing Agreement" has the meaning specified in Section
22(b).
"Servicing Records" has the meaning specified in Section 22(b).
"Special Investment Affiliate" means an Investment Affiliate for
the obligations of which any of Sponsor or its Subsidiaries has personal
liability, as a general partner or otherwise.
"Special-Purpose Entity" shall mean a Person, other than an
individual, which is formed or organized solely for the purpose of
holding, directly and subject to the Agreement, the Portfolio
Collateral, does not engage in any business unrelated to the Portfolio
Collateral and the financing thereof, does not have any assets other
than the Portfolio Collateral and the financing thereof, or any
indebtedness other than as permitted by the Agreement, has its own
separate books and records and its own accounts, in each
18
case which are separate and apart from the books and records and
accounts of any other Person, holds itself out as being a Person,
separate and apart from any other Person and provides in its formation
and organizational documents for the inclusion of at least one
"independent director" on terms and conditions approved by Buyer. If the
foregoing entity is a limited partnership or limited liability company,
(i) its partnership agreement or limited liability company agreement (as
applicable) shall provide that the partnership or limited liability
company shall dissolve upon the withdrawal or dissolution of the last
remaining general partner or managing member, but the partnership or
limited liability company will not be dissolved if the remaining
partners or members, within ninety (90) days, by majority vote elect to
continue the partnership or limited liability company and appoint a new
general partner or new managing member, and (ii) the partnership
agreement or limited liability company agreement (as applicable) must
provide that the dissolution and winding up or bankruptcy or insolvency
filing of such partnership or limited liability company shall require
the unanimous consent of all partners or members (including the
affirmative vote of the independent directors).
"Sponsor" shall mean LNR Property Corporation, a Delaware
corporation.
"Sponsor Mortgage Subsidiary" means a wholly-owned, single
purpose Subsidiary of Sponsor that may be formed (or may have been
formed) solely for the purpose of engaging in the mortgage banking
business and incidental activities directly related thereto.
"Sponsor Project" means any parcel of real property wholly owned
in fee simple of record by Sponsor or any wholly-owned Subsidiary of
Sponsor, or any leasehold estate in any parcel of real estate
wholly-owned by Sponsor or any wholly-owned Subsidiary pursuant to a
ground lease having a remaining term (including extensions of the term
available pursuant to a renewal or extension option) of at least July
29, 2010, together with any and all improvements thereon, which is fully
improved for use and operated as a commercial or industrial property
(including multi-family residential, office, retail and warehouse
properties), and with respect to which a certificate of occupancy or
comparable authorization has been issued by the applicable governmental
authority.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one (1) and the
denominator of which is the number one (1) minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the
Board to which Buyer or its Affiliates is or are subject for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board of Governors of the Federal
Reserve System). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Transactions shall be deemed to
constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to Buyer under such
Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
19
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of
any class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time
owned by such Person and/or one or more Subsidiaries of such Person and
(ii) any partnership, limited liability company, association, joint
venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the
time.
"Supplemental Due Diligence List" shall mean, with respect to
any New Collateral, information or deliveries concerning the New
Collateral that Buyer shall reasonably request in addition to the
Preliminary Due Diligence Package.
"Survey" shall mean a certified ALTA/ACSM (or applicable state
standards for the state in which the Collateral is located) survey of a
Mortgaged Property prepared by a registered independent surveyor and in
form and content satisfactory to Buyer and the company issuing the Title
Policy for such Property.
"Target Price" shall mean, with respect to any of the Purchased
Loans as of any date, the amount (expressed in dollars) obtained by
multiplying (i) the lesser of the Adjusted Par Value or Market Value of
such Purchased Loans as of such date by (ii) the "Original Purchase
Percentage" for the Collateral Type Grouping applicable to such
Purchased Loans, as set forth in Schedule I-A attached to this Annex I.
"Title Policy" shall have the meaning specified in paragraph 8
of the first paragraph of Exhibit VI.
"Transaction Conditions Precedent" shall have the meaning
specified in Section 3(b) of this Annex I.
"Transaction Documents" shall mean, collectively, the Agreement,
this Annex I, any other applicable Annexes to the Agreement, the
Custodial Agreement, the Depository Agreement and all Confirmations
executed pursuant to the Agreement and this Annex I in connection with
specific Transactions.
"Trust Receipt" shall have the meaning specified in the
Custodial Agreement. "UCC" shall have the meaning specified in Section 6
of this Annex I.
"Underlying Borrower(s)" shall mean the borrower(s) and/or other
obligor(s) for the repayment of the Underlying Loan(s) and payment and
performance of the other obligations owed to the holder(s) of the
Underlying Loan(s) under the applicable Underlying Loan Documents.
"Underlying Loan(s)" shall mean, with respect to any Purchased
Loan secured directly or indirectly, through direct or indirect
mortgages, deeds of trust or pledges of equity taken at various tiers of
ownership interests or otherwise, by a real property or properties, each
loan other than the Purchased Loan which is secured by a mortgage, deed
20
of trust or equity pledge directly or indirectly in such real property
or properties which is senior to the Purchased Loan.
"Underwriting Issues" shall mean, with respect to any Collateral
as to which Seller intends to request a Transaction, all material
information that has come to Seller's attention that, based on the
making of reasonable inquiries and the exercise of reasonable care and
diligence under the circumstances, would be considered a materially
"negative" factor (either separately or in the aggregate with other
information), or a material defect in loan documentation or closing
deliveries (such as any absence of any material Purchased Loan
Document(s)), to a reasonable institutional mortgage buyer in
determining whether to originate or acquire the Collateral in question.
"Whole Loan" shall mean a commercial mortgage loan secured by a
first lien in multifamily and commercial real property.
(b) The following capitalized terms shall have the respective
meanings set forth below, in lieu of the meanings for such terms set forth in
the Agreement:
"Buyer's Margin Amount" shall mean, with respect to any
Purchased Loan as of any date, the amount obtained by dividing the
Repurchase Price for such Purchased Loan by the applicable Buyer's
Margin Percentage.
"Buyer's Margin Percentage" shall mean, with respect any
Transaction as of any date, the "Buyer's Margin Percentage" specified
for the applicable Collateral Type Grouping in Schedule I-A attached to
this Annex I.
"Confirmation" shall have the meaning specified in Section 3(b)
of this Annex I.
"Event of Default" shall have the meaning specified in Section
14 of this Annex I.
"Market Value" shall mean, with respect to any Purchased Loans
as of any relevant date, the lesser of (x) the market value for such
Purchased Loans on such date, as determined by Buyer its sole judgment,
exercised in good faith, based on the performance of the Purchased
Loans, the Underlying Loans, the Purchased Loan Borrowers, the
Underlying Borrowers and the real property or properties directly or
indirectly securing such Underlying Loans and Purchased Loans, and (y)
the par amount of such Purchased Loan; provided, that in the event of
(i) any Collateral Bankruptcy Event, or (ii) the occurrence and
continuance of any monetary default or other material default by the
Purchased Loan Borrower which is not cured prior to the expiration of
the applicable grace period, if any, provided for such cure under the
applicable loan documents for the Purchased Loan (assuming, for purposes
of this definition of Market Value, and in order to avoid a circumstance
whereby the effect of this provision is avoided by virtue of
non-assertion of the occurrence of a default, that written notice of
such default is given to the borrower under the Purchased Loan at the
time such monetary or other material default occurs or is discovered by
Seller or Buyer), at Buyer's option, the Market Value of such Purchased
Loan may be designated as zero. The Market Value of all Purchased Loans
shall be determined by Buyer its sole judgment, exercised in good faith
subject to the
21
proviso in the preceding sentence, on each Business Day during the term
of the Agreement, or less frequently from time to time if Buyer elects
in its sole discretion.
"Price Differential" shall mean, with respect to any Transaction
as of any date, the aggregate amount obtained by daily application of
the Pricing Rate for such Transaction to the Repurchase Price for such
Transaction on a 360-day-per-year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for
such Transaction and ending on (but excluding) the date of determination
(reduced by any amount of such Price Differential previously paid by
Seller to Buyer with respect to such Transaction).
"Pricing Rate" shall mean, for any Pricing Rate Period with
respect to any Transaction, an annual rate equal to the LIBO Rate for
such Pricing Rate Period plus the relevant Applicable Spread for such
Transaction; provided, that the Pricing Rate shall be the Alternative
Rate for any Pricing Rate Period or portion thereof for which the
Alternative Rate is provided to be used under either of, or both,
Sections 3(g) and 3(h) of this Annex I.
"Purchase Price" shall mean, with respect to any Purchased
Loans, the price at which such Purchased Loans are transferred by Seller
to Buyer on the applicable Purchase Date. The Purchase Price as of any
Purchase Date for any Purchased Loans in a particular Collateral Type
Grouping shall be an amount (expressed in dollars) equal to the product
obtained by multiplying (i) the lesser of (A) the lesser of the
acquisition cost or the purchase price paid by Seller for such Purchased
Loans (or, if the Purchased Loans proposed to be included in a
Transaction are being or were acquired by Seller from the Sponsor or any
Affiliate thereof, the lesser of the acquisition cost or the purchase
price paid by the Sponsor or Affiliate for the same, if lower than that
paid by Seller), or (B) the Market Value of such Purchased Loans (or, in
the case of Purchased Loans, the par amount of Purchased Loans, if lower
than Market Value), by (ii) the "Original Purchase Percentage" for such
Collateral Type Grouping applicable to such Purchased Loans, as set
forth in Schedule I-A attached to this Annex I.
"Replacement Collateral" shall have the meaning specified in
Section 14(b)(ii) of this Annex I.
"Repurchase Date" shall mean the Initial Scheduled Repurchase
Date; provided, however, that if all of the Extension Conditions
described in Section 3(e) of this Annex I shall be timely satisfied, the
Repurchase Date shall mean the first anniversary of the Initial
Scheduled Repurchase Date.
"Repurchase Price" shall mean, with respect to any Purchased
Loans as of any date, the price at which such Purchased Loans are to be
transferred from Buyer to Seller upon termination of the related
Transaction; such price will be determined in each case as the sum of
(a) the Purchase Price of such Purchased Loans, and (b) the Price
Differential with respect to such Purchased Loans as of the date of such
determination, minus (to the extent not previously applied to the
amounts indicated in clauses (a) through (b) above) all Income and cash
actually received by Buyer on account of the Repurchase Price in
22
respect of such Transaction pursuant to Sections 4(a), 5(b), 5(c), 5(d)
and 5(e) of this Annex I.
3. INITIATION; CONFIRMATION; TERMINATION; FEES
The provisions of Paragraph 3 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 3:
(a) On or after the Initial Commitment Commencement Date and prior
to the Commitment Expiration Date and subject to the terms and conditions set
forth in the Agreement (including, without limitation, the "Transaction
Conditions Precedent" specified in Section 3(b) of this Annex I), an agreement
to enter into a Transaction shall be made in writing at the initiation of Seller
as provided below; provided, however, that the aggregate Repurchase Price
(excluding the Price Differential with respect to the Purchased Loans as of the
date of determination) for all Transactions shall not exceed the Facility
Amount. Seller shall give Buyer written notice of each proposed Transaction and
Buyer shall inform Seller of its determination with respect to any assets
proposed to be sold to Buyer by Seller solely in accordance with Exhibit VIII
attached hereto. Buyer shall have the right to review all proposed assets to be
sold to Buyer in any Transaction and to conduct its own due diligence
investigation of such assets as Buyer determines. Upon receipt of all Diligence
Materials, Buyer shall advise Seller whether it will purchase the assets
proposed to be sold to Buyer by Seller within five (5) Business Days. Buyer
shall be entitled to make a determination, in the exercise of its sole
discretion, that it shall not purchase any or all of the assets proposed to be
sold to Buyer by Seller. On the Purchase Date for the Transaction which shall be
not less than three (3) Business Days following the approval of an Eligible Loan
by Buyer in accordance with this Section and Exhibit VIII hereto, the Purchased
Loan shall be transferred to Buyer or its agent against the transfer of the
Purchase Price to an account of Seller. On or prior to each Purchase Date,
Seller shall deliver to Buyer an advance request in the form of Exhibit X
attached hereto. To the extent Buyer enters into a Transaction with Seller with
respect to a Purchased Loan which is an Eligible Loan of the type described in
clause (iv) of the definition thereof (i.e., such Eligible Loan does not satisfy
the characteristics described in clauses (i)-(iii) of the definition thereof),
then such loan shall be deemed to be an Eligible Loan for all purposes of the
Agreement.
(b) At closing of a Transaction, provided each of the Transaction
Conditions Precedent (as hereinafter defined) shall have been satisfied (or
waived by Buyer), Buyer shall deliver to Seller a written confirmation in the
form of Exhibit I attached hereto of each Transaction (a "Confirmation"). In the
absence of execution and delivery by Buyer of a Confirmation for a proposed
Transaction, Buyer shall under no circumstance be deemed to have agreed to enter
into such Transaction. Such Confirmation shall describe the Purchased Loan(s)
which shall be the subject of the proposed Transaction, shall identify Buyer and
Seller, and shall set forth (i) the Purchase Date, (ii) the Purchase Price for
such Purchased Loans, (iii) the Repurchase Date, (iv) the Pricing Rate
applicable to the Transaction (including the Applicable Spread) and (v) any
additional terms or conditions not inconsistent with the Agreement With respect
to any Transaction, the Pricing Rate shall be determined initially on the
Pricing Rate Determination Date applicable to the first Pricing Rate Period for
such Transaction, and shall be reset on each Reset Date for the next succeeding
Pricing Rate Period for such Transaction. Buyer or its agent shall determine in
accordance with the terms of the Agreement the Pricing Rate on 23
23
each Pricing Rate Determination Date for the related Pricing Rate Period and
notify Seller of such rate for such period on the Reset Date. For purposes of
this Section 3(b), the "Transaction Conditions Precedent" shall be deemed to
have been satisfied with respect to any proposed Transaction if:
(1) no Default or Event of Default under the Agreement shall
have occurred and be continuing as of the Purchase Date for such
proposed Transaction;
(2) Seller shall have certified to Buyer in writing the
acquisition cost of such Purchased Loan (including therein reasonable
supporting documentation required by Buyer, if any);
(3) the representations and warranties made by Seller in any
of the Transaction Documents shall be true and correct in all material
respects as of the Purchase Date for such Transaction;
(4) Buyer shall have received the Diligence Materials and
completed to Buyer's satisfaction its due diligence review and financial
modeling with respect to the assets proposed to be sold to Buyer by
Seller;
(5) Buyer or the Custodian on behalf of Buyer shall have
received the applicable Transaction documents and other documents and
opinions specified in Section 7 of this Annex I;
(6) Buyer shall have determined, in accordance with the
applicable provisions of Section 3(a) of this Annex I, that the assets
proposed to be sold to Buyer by Seller in such Transaction are Eligible
Loans;
(7) Seller shall have paid to Buyer the applicable Draw Fee
due and payable with respect to the Transaction (which amount may be
held back from funds remitted to Seller by Buyer);
(8) none of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred resulting
in the effective absence of a "repo market" or comparable
"lending market" for financing mortgage securities or mortgage
loans or an event or events shall have occurred resulting in
Buyer not being able to finance any Transactions and/or
Purchased Loans through the "repo market" or "lending market"
with traditional counterparties at rates which would have been
reasonable prior to the occurrence of such event or events; or
(ii) an event or events shall have occurred resulting
in the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
24
(iii) there shall have occurred a material adverse
change in the "repo market" or comparable "lending market" or in
the financial condition of Buyer which effects (or can
reasonably be expected to effect) materially and adversely the
ability of Buyer to fund its obligations under the Agreement;
(9) the purchase by Buyer from Seller of the Purchased Loans
shall be completed prior to the Commitment Expiration Date and shall not
result in non-compliance with the Facility Limits or the aggregate of
the Purchase Prices for all Transactions to exceed the Facility Amount;
and
(10) Seller shall have delivered to Buyer a due
authorization, execution and enforceability opinion of Seller's counsel,
in such form reasonably acceptable to Buyer, including an opinion that
Buyer has a perfected security interest in such collateral as is the
subject of the Transaction, subject to reasonable and customary
exceptions, qualifications and assumptions.
Notwithstanding anything to the contrary contained in the Agreement, in
no event shall any Transaction hereunder be consummated until such time as Buyer
has received all of the following (to the extent not delivered as of the Initial
Commitment Commencement Date), each in form and substance reasonably
satisfactory to Buyer: (i) the fully executed Custodial Agreement; and (iii) a
control agreement with respect to the Cash Management Account executed by the
Depository (the "Depository Agreement"); and (iv) organizational documents with
respect to each of Seller and Sponsor.
(c) Each Confirmation, together with the Agreement, including this
Annex I, shall be conclusive evidence of the terms of the Transaction(s) covered
thereby unless objected to in writing by Seller no more than two (2) Business
Days after the date such Confirmation is received by Seller. An objection sent
by Seller with respect to any Confirmation must state specifically that the
writing is an objection, must specify the provision(s) of such Confirmation
being objected to by Seller, must set forth such provision(s) in the manner that
Seller believes such provisions should be stated, and must be received by Buyer
no more than two (2) Business Days after such Confirmation is received by
Seller. Seller shall execute a written acceptance accepting each Confirmation
not objected to by Seller within the aforementioned two (2) Business Day period.
(d) Provided no Event of Default exists and no unsatisfied Margin
Call has been made, Seller shall be entitled to partially prepay a portion of
the Repurchase Price with respect to one or more Purchased Loans, or terminate a
Transaction on demand and repurchase the Purchased Loan subject to such
Transaction on any Business Day prior to the Repurchase Date (an "Early Payment
Date" as to any partial prepayment of the Repurchase Price for any Purchased
Loan, and an "Early Repurchase Date" as to an early termination of a
Transaction); provided, however, that Seller:
(i) repurchases on such Early Repurchase Date the Purchased
Loan subject to such Transaction, if Seller has elected to terminate
such Transaction,
25
(ii) notifies Buyer in writing of its intent to partially
prepay the Repurchase Price for a Purchased Loan (including the specific
Early Payment Date and the amount of the prepayment), or to terminate
the Transaction and repurchase the Purchased Loan (including the
specific Early Repurchase Date and identifying with particularity the
Purchased Loan to be repurchased on such Early Repurchase Date), as
applicable, no later than five (5) Business Days prior to such Early
Repurchase Date or Early Payment Date, as applicable, and
(iii) on such Early Repurchase Date (as to each Transactions
which Seller has elected to terminate) pays to Buyer an amount equal to
the sum of the Repurchase Price for the related Transaction and any
other amounts payable under the Agreement (including, without
limitation, Section 3(i) and Section 3(j) of this Annex I) with respect
to such Transaction against transfer to Seller or its agent of the
related Purchased Loan; and
(iv) if a CF Sweep Event exists on any Early Repurchase Date
or Early Payment Date, the repurchase of such Purchased Loan on such
Early Repurchase Date or prepayment of such Purchased Loan on such Early
Payment Date shall cause there to be no more CF Sweep Event, or Seller
shall, simultaneously with the repurchase or prepayment of such
Purchased Loan, prepay a portion of the Repurchase Price of one or more
other Purchased Loans in an amount sufficient such that the CF Sweep
Event shall no longer exist.
(e) On the Repurchase Date (or applicable Early Repurchase Date),
termination of the Transactions will be effected by transfer to Seller or its
agent of the Purchased Loans and any Income in respect thereof received by Buyer
(and not previously credited or transferred to, or applied to the obligations
of, Seller pursuant to Section 5 of this Annex I) against the simultaneous
transfer of the Repurchase Price to an account of Buyer. Provided no Event of
Default has occurred and is continuing, all such transfers (and/or releases of
security interests) shall be free and clear of all liens and security interests
created by the Buyer in and to the interest of Buyer in the relevant Purchased
Loans and Purchased Loan Files.
(f) Notwithstanding the foregoing, if all of the Extension
Conditions (as hereinafter defined) shall have been satisfied, the Repurchase
Date shall mean and be extended with respect to all of the Transactions until,
the first (1st) anniversary of the Initial Scheduled Repurchase Date (the
"Extension Period"). For purposes of the preceding sentence, the "Extension
Conditions" shall be deemed to have been satisfied if (i) Seller shall have
given Buyer written notice, not more than sixty (60) days nor less than thirty
(30) days prior to the Initial Scheduled Repurchase Date, of Seller's desire to
extend the Repurchase Date; and (ii) no Default or Event of Default under the
Agreement shall have occurred and be continuing as of the Initial Scheduled
Repurchase Date. During the Extension Period, on the Remittance Dates occurring
in March, 2006, June, 2006 and September, 2006, Seller shall be required to
prepay the Repurchase Price of all Transactions in part by paying to Buyer on
each such Remittance Date 25% of the Repurchase Price which would have been
payable with respect to each Transaction on the Initial Scheduled Repurchase
Date had the Repurchase Date not been extended pursuant to this Section 3(e)
(each such payment a "Quarterly Reduction Payment"); provided, however, that any
Principal Payment made during the Extension Period which is paid to Buyer and
applied to
26
reduce the Repurchase Price of any Purchased Loans shall be credited against the
amount of the next Quarterly Reduction Payment required to be paid by Seller
and, if any Quarterly Reduction Payment is reduced to zero by virtue of such
credits, shall be credited against the next subsequent Quarterly Reduction
Payment due hereunder and so on until all Quarterly Reduction Payments have been
made or credited in full. During the Extension Period, Buyer shall have no
obligation to enter into any further Transactions for the purchase by Buyer of
any Eligible Loans from Seller.
(g) On each Purchase Date, Seller shall pay to Buyer a usage fee
(the "Draw Fee") in an amount equal to 1% of the Purchase Price specified in the
related Confirmation with respect to such Transaction, which Draw Fee for each
such Transaction shall be deemed fully earned and nonrefundable on the Purchase
Date for such Transaction. If the Facility Limit is increased above $100,000,000
pursuant to an Expanded Facility Modification, Seller shall additionally pay to
Buyer on the date of execution and delivery of such Expanded Facility
Modification a one-time commitment fee equal to 0.25% of the amount by which the
Facility Limit is increased above $100,000,000, and thereafter, if and to the
extent a Transaction is entered into which results in the total of all the
Repurchase Prices for all outstanding Transactions exceeding $100,000,000, the
Draw Fee for such Transaction shall be the sum of (i) 1% of that portion (if
any) of the Purchase Price for such Transaction which, when aggregated with the
total of all the Repurchase Prices for all other outstanding Transactions,
amounts to the sum of $100,000,000, and (ii) 0.75% of the remaining portion of
the Purchase Price for such Transaction.
(h) If prior to the first day of any Pricing Rate Period with
respect to any Transaction, (i) Buyer shall have determined (which determination
shall be conclusive and binding upon Seller) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate
determined or to be determined for such Pricing Rate Period will not adequately
and fairly reflect the cost to Buyer (as determined and certified by Buyer) of
making or maintaining Transactions during such Pricing Rate Period, Buyer shall
give telecopy or telephonic notice (followed by prompt written notice) thereof
to Seller as soon as practicable thereafter. If such notice is given, the
Pricing Rate with respect to such Transaction for such Pricing Rate Period, and
for any subsequent Pricing Rate Periods until such notice has been withdrawn by
Buyer, shall be a per annum rate equal to the Alternative Rate.
(i) Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for Buyer to effect Transactions as contemplated
by the Transaction Documents, (a) the commitment of Buyer hereunder to enter
into new Transactions and to continue Transactions as such shall forthwith be
canceled, and (b) the Transactions then outstanding shall be converted
automatically to Alternative Rate Transactions, for which the Pricing Rate shall
be the Alternative Rate, on the last day of the then current Pricing Rate Period
or within such earlier period as may be required by law. If any such conversion
of a Transaction occurs on a day which is not the last day of the then current
Pricing Rate Period with respect to such Transaction, Seller shall pay to Buyer
such amounts, if any, as may be required pursuant to Section 3(j) of this Annex
I.
(j) Upon demand by Buyer, Seller shall indemnify Buyer and hold
Buyer harmless from any net loss or expense (not to include any lost profit or
opportunity) (including, without
27
limitation, reasonable attorneys' fees and disbursements) which Buyer may
sustain or incur as a consequence of (i) default by Seller in terminating any
Transaction after Seller has given a notice in accordance with Section 3(d) of a
termination of a Transaction, or (ii) any payment of the Repurchase Price on any
day other than a Remittance Date (including, without limitation, all Breakage
Costs and any other actual loss or expense arising from the reemployment of
funds obtained by Buyer to maintain Transactions hereunder or from fees payable
to terminate the deposits from which such funds were obtained). A certificate as
to such costs, losses, damages and expenses, setting forth the calculations
therefor shall be submitted promptly by Buyer to Seller and shall be conclusive
and binding on Seller in the absence of manifest error.
(k) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:
(i) shall subject Buyer to any tax of any kind
whatsoever with respect to the Transaction Documents, any
Purchased Loan or any Transaction, or change the basis of
taxation of payments to Buyer in respect thereof (except for
changes in the rate of tax on Buyer's overall net income);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any office of Buyer
which is not otherwise included in the determination of the LIBO
Rate hereunder; or
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering into, continuing or
maintaining Transactions or to reduce any amount receivable under the
Transaction Documents in respect thereof; then, in any such case, Seller shall
promptly pay Buyer, upon its demand, any additional amounts necessary to
compensate Buyer for such increased cost or reduced amount receivable. If Buyer
becomes entitled to claim any additional amounts pursuant to this Section 3(j),
it shall promptly notify Seller of the event by reason of which it has become so
entitled. A certificate as to the calculation of any additional amounts payable
pursuant to this subsection shall be submitted by Buyer to Seller and shall be
conclusive and binding upon Seller in the absence of manifest error. This
covenant shall survive the termination of the Agreement and this Annex I and the
repurchase by Seller of any or all of the Purchased Loans.
(l) If Buyer shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Buyer or any corporation
controlling Buyer with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof does or shall have the effect of reducing the rate
of return on Buyer's or such corporation's capital as a consequence of its
obligations hereunder to a
28
level below that which Buyer or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Buyer's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
Buyer to be material, then from time to time, after submission by Buyer to
Seller of a written request therefor, Seller shall pay to Buyer such additional
amount or amounts as will compensate Buyer for such reduction. A certificate as
to the calculation of any additional amounts payable pursuant to this subsection
shall be submitted by Buyer to Seller and shall be conclusive and binding upon
Seller in the absence of manifest error. This covenant shall survive the
termination of the Agreement and this Annex I and the repurchase by Seller of
any or all of the Purchased Loans.
(m) The Commitment Expiration Date shall be the Initial Commitment
Expiration Date; if provided that no Default or Event of Default has occurred
and is then continuing, and Seller, not earlier than 60 days prior to the
Initial Commitment Expiration Date and not later than 30 days prior to the
Initial Commitment Expiration Date, makes a written request to Buyer for an
extension of the Commitment Expiration Date, Buyer may at its sole option
exercised in its sole discretion elect by written notice to Seller to extend the
Commitment Expiration Date to be the date which is 364 days after the Initial
Commitment Expiration Date (the "Extended Commitment Expiration Date"). The
Initial Commitment Expiration Date shall not be extended as provided above
unless and until Buyer makes such written election to extend, and it is
understood and agreed that Buyer may grant or deny Seller's request for an
extension of the Initial Commitment Expiration Date in Buyer's sole discretion.
If so extended the Commitment Expiration Date shall thereupon mean the Extended
Commitment Expiration Date.
(n) Seller, on its behalf and on behalf of the Sponsor, agrees that
Seller and Sponsor shall hire Greenwich Capital Markets, Inc. or another
Affiliate of Buyer designed by it as the lead manager and bookrunner on any
future collateralized debt obligation securitization transactions or similar
capital markets transactions intended to finance any Purchased Loans or the
repurchase thereof, and shall in good faith give strong consideration to
Greenwich Capital Markets, Inc. and the applicable Affiliates of Buyer for the
role of primary bookrunner in any such transactions, provided that the terms
offered by Greenwich Capital Markets, Inc. shall be reasonably within prevailing
market standards for such transactions.
4. MARGIN MAINTENANCE
(a) Paragraph 4(a) of the Agreement is hereby modified in its
entirety to read as follows:
"(a) If at any time, either (i) the aggregate
Market Value of any of the Purchased Loans shall be less than
Buyer's Margin Amount for such Purchased Loans, respectively (a
"Margin Deficit"), or (ii) a Credit Loss shall occur with
respect to any Purchased Loans, then Buyer may by notice to
Seller (a "Margin Call") require Seller to transfer to Buyer (A)
cash or (B) additional collateral acceptable to Buyer in its
sole and absolute discretion (such cash or additional collateral
paid by Seller to Buyer is herein referred to as "Additional
Collateral"), so that the sum obtained by adding the Market
Value of each of the Purchased
29
Loans plus such Additional Collateral shall equal or exceed the
Deficit Cure Amount for such Purchased Loans, respectively, as
of the same date (the foregoing amount of such Additional
Collateral required to cure the Margin Deficit with respect to
any Purchased Loan is herein referred to as the "Required
Payment Amount" with respect to such Purchased Loan); provided,
that Seller may with respect to any Purchased Loan subject to a
Margin Call, in lieu of transferring Additional Collateral in
the Required Payment Amount for such Purchased Loan to Buyer as
aforesaid, prepay the Repurchase Price for such Purchased Loan
by transferring cash in the amount of the Required Payment
Amount to Buyer, accompanied by a written notice to Buyer
requesting application of such amount to the Repurchase Price
for such Purchased Loan as a prepayment thereof. Seller's
failure to cure any Margin Deficit as required by the preceding
sentence prior to expiration of the two (2) Business Day time
period set forth in the first or second sentence, as applicable,
of Paragraph 4(c) below shall constitute an Event of Default
under the Transaction Documents and shall entitle Buyer to
exercise its remedies under Section 15 of Annex I (including,
without limitation, the liquidation remedy provided for in
Section 15(iv) of Annex I)."
(b) Paragraph 4(b) of the Agreement is hereby deleted in its
entirety.
(c) Paragraph 4(c) of the Agreement is hereby modified in its
entirety to read as follows:
"(c) If any Margin Call is given by Buyer under
Paragraph 4(a) of the Agreement, Seller shall transfer
Additional Collateral as provided in Paragraph 4(a) by no later
than two (2) Business Days after the giving of such notice.
Notice required pursuant to Paragraph 4(a) of the Agreement may
be given by any means of telecopier or telegraphic transmission
and shall be delivered in accordance with the terms of the
Agreement. The failure of Buyer on any one or more occasions, to
exercise its rights under Paragraph 4(a) of the Agreement shall
not change or alter the terms and conditions to which the
Agreement is subject or limit the right of Buyer or Seller to do
so at a later date. Buyer and Seller agree that any failure or
delay by Buyer to exercise its rights under Paragraph 4(a) of
the Agreement shall not limit such party's rights under the
Agreement or otherwise existing by law or in any way create
additional rights for such party."
(d) Paragraph 4(d) of the Agreement is hereby modified in its
entirety to read as follows:
30
"(d) Any Additional Collateral transferred to
Buyer pursuant to Paragraph 4(a) of the Agreement with respect
to any Purchased Loans shall be attributed to the Transaction
relating to such Purchased Loans."
(e) Paragraphs 4(e) and 4(f) of the Agreement are hereby deleted in
their respective entireties.
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
The provisions of Paragraph 5 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 5:
(a) The Cash Management Account shall be established at the
Depository concurrently with the execution and delivery of the Agreement and
this Annex I by Seller and Buyer. Buyer shall have sole dominion and control
over the Cash Management Account. All Income in respect of the Portfolio
Collateral, as well as any payments in respect of associated Hedging
Transactions, shall be deposited directly into the Cash Management Account and
shall be remitted by the Depository in accordance with the applicable provisions
of Sections 5(b), 5(c), 5(d), 5(e), 5(f) and 15 of this Annex I.
(b) So long as no Event of Default shall have occurred and be
continuing, and subject to application in accordance with Section 5(d) of this
Annex I in the event a CF Sweep Event with respect to any Purchased Loans shall
have occurred, all Income (other than Principal Payments) received by the
Depository in respect of the Portfolio Collateral and the associated Hedging
Transactions during each Collection Period shall be applied by the Depository on
the related Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding as of such Remittance
Date;
(ii) second, to remit to Buyer an amount equal to any premium
or accrued interest included in the Purchase Price for the Purchased
Loans;
(iii) third, if the Remittance Date is on or after the Initial
Scheduled Repurchase Date, the remainder shall be applied as provided in
Section 5(f) of this Annex I below; and
(iv) fourth, the remainder shall be remitted to Seller.
(c) So long as no Event of Default shall have occurred and be
continuing, any Principal Payment received by the Depository in respect of any
Portfolio Collateral during each Collection Period shall be applied by the
Depository on the related Remittance Date in the following order of priority:
(i) first, to make a payment to Buyer on account the
Repurchase Price of the Purchased Loans in respect of which such
Principal Payment has been received, until the Repurchase Price for such
Purchased Loans has been reduced to either (A) if the
31
Remittance Date is prior to the Initial Scheduled Repurchase Date, the
Target Price for such Purchased Loans, or (B) if the Remittance Date is
on or after the Initial Scheduled Repurchase Date, zero;
(ii) second, (A) to make a payment on account of the
Repurchase Price of any other Purchased Loans as to which the Repurchase
Price exceeds the Target Price (for this purpose, making such payment in
the order of those Purchased Loans with the largest to smallest excess
of Repurchase Price over Target Price), until the Repurchase Price for
each of the Purchased Loans has been reduced to the Target Price for
such Purchased Loans, respectively as of the date of such payment (as
determined by Buyer after giving effect to such Principal Payment), and
(B) if the Remittance Date is on or after the Initial Scheduled
Repurchase Date, to make a payment from any amount remaining after the
application under the foregoing clause (A) on account of the Repurchase
Price of such other Purchased Loans pari passu until the aggregate
Repurchase Price for all of such Purchased Loans has been reduced to
zero; and
(iii) third, as follows: (A) so long as no Event of Default
shall have occurred and be continuing and no CF Sweep Event shall have
occurred, the remainder of such Principal Payment shall prior to the
Initial Scheduled Repurchase Date be remitted to Seller and from and
after the Initial Scheduled Repurchase Date shall be applied as provided
in Section 5(f) below; (B) if a CF Sweep Event shall have occurred, but
no Event of Default shall have occurred and be continuing, the remainder
of such Principal Payment shall be applied as provided in Section 5(d)
of this Annex I below with respect to other Income; and (C) if an Event
of Default shall have occurred and be continuing, the remainder of such
Principal Payment shall be applied as provided in Section 5(e) of this
Annex I below with respect to other Income.
(d) If a CF Sweep Event with respect to one or more Purchased Loans
shall have occurred, then until the Repurchase Price for each of such Purchased
Loans has been reduced to the Target Price for such Purchased Loans, and so long
as no Event of Default shall have occurred and be continuing, all Income (other
than Principal Payments, except for the portion of each Principal Payment
available for application pursuant to this Section 5(d) under the provisions of
Section 5(c)(iii)(B) of this Annex I above) received by the Depository in
respect of the Portfolio Collateral and the associated Hedging Transactions
shall be applied by the Depository on the Business Day next following the
Business Day on which such funds are deposited in the Cash Management Account as
follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of
the Purchased Loans as of such Business Day; and
(ii) second, to make payments on account of the Repurchase
Price of each of the Purchased Loans as to which a CF Sweep Event shall
have occurred (for this purpose, making such payment in the order of
those Purchased Loans with the largest to smallest excess of Repurchase
Price over Target Price), until the aggregate Repurchase Price for all
of such Purchased Loans has been reduced to the aggregate Target Price
for all of such
32
Purchased Loans, respectively as of the date of such payment (as
determined by Buyer after giving effect to such payment);
(iii) third, if the Remittance Date is on or after the Initial
Scheduled Repurchase Date, the remainder shall be applied as provided in
Section 5(f) of this Annex I below; and
(iv) fourth, the remainder shall be remitted to Seller.
(e) If an Event of Default shall have occurred and be continuing,
all Income (including all Principal Payments) received by the Depository in
respect of the Portfolio Collateral and the associated Hedging Transactions
shall be applied by the Depository on the Business Day next following the
Business Day on which such funds are deposited in the Cash Management Account as
follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of
the Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer pro rata on account
of the Repurchase Price of the Purchased Loans until the Repurchase
Price for all of the Purchased Loans has been reduced to zero; and
(iii) third, to remit to Buyer an amount equal to any costs or
expenses due and owing by Seller as of such Business Day; and
(iv) fourth, to remit to Seller the remainder.
(f) Income to be applied on any Remittance Date under the foregoing
provisions of this Section 5 in the manner set forth in this Section 5(f) shall
be applied on such Remittance Date to remit to Buyer as a prepayment, of the
Repurchase Price of all Purchased Loans pari passu until the aggregate
Repurchase Price for all such Purchased Loans has been reduced to zero.
(g) From and after the occurrence of an Event of Default, Buyer is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all amounts held by Buyer and any
other obligations at any time owing to Buyer, to or for the credit or the
account of Seller against any of or all the obligations of Seller now or
hereafter existing under the Agreement irrespective of whether or not Buyer
shall have made any demand under the Agreement (and without prior notice to
Seller) and although such obligations may be unmatured, whereupon such
obligations owing by Buyer or its Affiliates to Seller shall, to the extent (and
only to the extent) of such set off actually made by Buyer, be discharged. The
rights of Buyer under this Section are in addition to other rights and remedies
(including other rights of setoff) which Buyer may have.
(h) At the end of each Collection Period and prior to the Remittance
Date for such Collection Period, Seller shall provide to Buyer (in electronic
form with Depository's information contained therein) a statement and analysis
of all Income for such period, indicating
33
the Purchased Loans to which each element of Income relates and the amounts
constituting interest on each Purchased Loan, Principal Payments on each
Purchased Loan and other Income. Upon Buyer's receipt and verification of the
information contained in the statement and analysis of Income required above,
Buyer agrees to direct the Depository to remit to Seller such amounts as Seller
is entitled to pursuant to the applicable provisions of Sections 5(b), 5(c),
5(d), 5(e), 5(f) and 15 of this Annex I to the extent of funds on account,
provided, in the event Buyer fails to approve or object to any such statement
and analysis of Income within three (3) Business Days after receipt of such
statement and analysis of Income, Buyer agrees, subject to the terms and
provisions of Article 5 hereof, to disburse such funds in accordance with the
statement and analysis of Income submitted by Seller. In the event Buyer
disagrees with any statement and analysis of Income prepared by Seller, Buyer
shall promptly provide Seller with written notice thereof and the parties shall
cooperate in good faith to resolve the matters raised in Buyer's written
objection. Seller and Buyer further agree that in the event any statement and
analysis of Income contains any inaccurate information (or is otherwise
incomplete), the parties will work together in good faith to correct any such
incorrect or incomplete information, and any excess or deficiency of funds shall
be disbursed and/or remitted, as applicable, to or by such party promptly upon
receipt and verification of such corrected statement and analysis of Income.
6. SECURITY INTEREST
Paragraph 6 of the Agreement is hereby modified in its entirety to read
as follows:
Buyer and Seller intend that all Transactions hereunder be sales
to Buyer of the Purchased Loans and not loans from Buyer to Seller secured by
the Purchased Loans. However, in the event any such Transaction is deemed to be
a loan, Seller hereby pledges all of its right, title, and interest in, to and
under and grants a first priority lien on, and security interest in, all of the
following property, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located (collectively, the "Collateral") to Buyer
to secure the payment and performance of all amounts or obligations owing to
Buyer pursuant to the Agreement and the related documents described herein:
(a) the Portfolio Securities, all "securities accounts" (as defined
in Section 8-501 (a) of the UCC) to which any or all of the
Portfolio Securities are credited and all "securities
entitlements" (as defined in Section 8-102(a)(17) of the UCC)
therein;
(b) the Purchased Loans, Servicing Agreements, Servicing Records,
insurance relating to the Purchased Loans, and all of Seller's
"deposit accounts" (as defined in the UCC, including, without
limitation, collection and escrow accounts) relating to the
Purchased Loans;
(c) the Cash Management Account and all monies from time to time on
deposit in the Cash Management Account;
(d) all "general intangibles" (including "payment intangibles"),
"accounts," "chattel paper," "documents" and "instruments" as
defined in the UCC relating to or constituting any and all of
the foregoing;
34
(e) all "supporting obligations" and "letter of credit rights" as
defined in the UCC relating to or constituting any and all of
the foregoing; and
(f) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, tort claims, insurance claims
and other rights to payments, and records (but excluding any
financial models or other proprietary information) and files
relating to any and all of any of the foregoing.
Buyer's security interest in the Collateral shall terminate only
upon termination of Seller's obligations under the Agreement and the documents
delivered in connection herewith and therewith. For purposes of the grant of the
security interest pursuant to Paragraph 6 of the Agreement, the Agreement shall
be deemed to constitute a security agreement under the Uniform Commercial Code
as in effect in any applicable jurisdiction (the "UCC"). Buyer shall have all of
the rights and may exercise all of the remedies of a secured creditor under the
UCC and the other laws of any applicable jurisdiction, including the State of
New York. In furtherance of the foregoing, (a) Seller, at its sole cost and
expense, shall cause to be filed in such locations as may be necessary to
perfect and maintain perfection and priority of the security interest granted
hereby, UCC-1 financing statements and continuation statements (collectively,
the "Filings"), and shall forward copies of such Filings to Buyer upon
completion thereof, and (b) Seller shall from time to time take such further
actions as may be reasonably requested by Buyer to maintain and continue the
perfection and priority of the security interest granted hereby (including
marking its records and files to evidence the interests granted to Buyer
hereunder).
7. PAYMENT, TRANSFER AND CUSTODY
The provisions of Paragraph 7 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 7:
(a) On the Purchase Date for each Transaction, ownership of the
Purchased Loans shall be transferred to Buyer or its designee (including the
Custodian) against the simultaneous transfer of the Purchase Price to an account
of Seller specified in the Confirmation relating to such Transaction.
(b) On or prior to the applicable Purchase Date, Seller shall
deliver the related Portfolio Securities (if there are any) re-registered in the
name of Buyer or other designee of Buyer in accordance with the Custodial
Agreement and Buyer or its other designee shall have all rights of conversions,
exchange, subscription and any other rights, privileges and options pertaining
to such Portfolio Securities as the owner thereof, and in connection therewith,
the right to deposit and deliver any and all of the Portfolio Securities with
any committee, depositary transfer, agent, register or other designated agency
upon such terms and conditions as Buyer may determine. The Portfolio Securities
shall be held by Buyer or its designee, as exclusive bailee and agent for Buyer,
either directly or through the facilities of a Relevant System, as "securities
intermediary" (as defined in Section 8-102(a)(14) of the UCC and 31 C.F.R.
Section 357.2) and credited to the "securities account" (as defined in Section
8-501(a) of the UCC) of Buyer. Buyer, as "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC) with respect to the Portfolio Securities, shall
be entitled to receive all cash dividends and distributions paid in
35
respect thereof. Any such dividends or distributions with respect to the
Portfolio Securities received by Seller shall be promptly remitted to the Cash
Management Account.
(c) With respect to Portfolio Securities (if any) that shall be
delivered or held in uncertificated form and the ownership of which is
registered on books maintained by the issuer thereof or its transfer agent,
Seller shall cause the registration of such security or other item of investment
property in the name of Buyer or its designee and at the request of Buyer, shall
take such other and further steps, and shall execute and deliver such documents
or instruments necessary in the reasonable opinion of Buyer, to effect a legally
valid transfer to Buyer hereunder. With respect to Portfolio Securities (if any)
that shall be delivered or held in definitive, certificated form, Seller shall
deliver to Buyer or its designee (which shall be the Custodian initially) the
original of the relevant certificate registered in the name of Buyer or its
designee. Unless otherwise instructed by Buyer, any delivery of a security or
other item of investment property in definitive, certificated form shall be made
to the Custodian. With respect to Portfolio Securities that shall be delivered
through a Relevant System in book entry form and credited to or otherwise held
in a securities account, Seller shall take such actions necessary to provide
instruction to the relevant financial institution or other entity, which
instruction shall be sufficient if complied with to register the transfer of
Portfolio Securities from Seller to Buyer or its designee. In connection with
any account to which the Portfolio Securities are credited or otherwise held,
Seller shall execute and deliver such other and further documents or instruments
necessary, in the reasonable opinion of Buyer, to effect a legally valid
transfer to Buyer hereunder. Any account to which the Portfolio Securities are
credited or otherwise held shall be designated in accordance with the Custodial
Agreement or such variation thereon as Buyer may direct. Any delivery of a
Portfolio Security in accordance with this paragraph, or any other method
acceptable to Buyer, shall be sufficient to cause Buyer to be the "entitlement
holder" (as defined in Section 8-102(a)(7) of the UCC) with respect to the
Portfolio Securities and, if the Transaction is recharacterized as a secured
financing, to have a perfected first priority security interest therein. No
Portfolio Securities, whether certificated or uncertificated, shall remain in
the name, or possession, of Seller or any of its agents or in any securities
account in the name of Seller or any of its agents.
(d) As a condition to Buyer's purchase of any Purchased Loans
involving any Securities, Seller shall deliver to Buyer on or prior to the
Purchase Date with respect to such Securities:
(A) one or more officer's certificates with respect to
the completeness of the documents delivered and one or more opinions of
counsel as may be reasonably requested by Buyer,
(B) an instruction letter from Seller to the issuer of
and/or trustee in respect of the Securities, as applicable, instructing
the issuer and/or trustee, as applicable, to remit all sums required to
be remitted to the holder of such Securities to the Depository or as
otherwise directed in a written notice signed by Seller and Buyer, and
(C) any other documents or instruments necessary in the
reasonable opinion of Buyer to consummate the transfer of such
Securities to Buyer or, if such
36
Transaction is recharacterized as a secured financing, to create and
perfect in favor of Buyer a valid perfected first priority security
interest in such Securities.
(e) On or before each Purchase Date, Seller shall deliver or cause
to be delivered to Buyer or its designee the Custodial Delivery in the form
attached hereto as Exhibit IV. In connection with each sale, transfer,
conveyance and assignment of a Purchased Loan, on or prior to each Purchase Date
with respect to such Purchased Loan, Seller shall deliver or cause to be
delivered and released to the Custodian the following original documents
(collectively, the "Purchased Loan File"), pertaining to each of the Purchased
Loans identified in the Custodial Delivery delivered therewith:
With respect to each Purchased Loan which is a Whole Loan:
(i) The original Mortgage Note bearing all intervening
indorsements, indorsed "Pay to the order of _______________without
recourse" and signed in the name of the last Indorsee (the "Last
Indorsee") by an authorized Person (in the event that the Purchased Loan
was acquired by the Last Indorsee in a merger, the signature must be in
the following form: "[Last Indorsee], successor by merger to [name of
predecessor]"; in the event that the Purchased Loan was acquired or
originated by the Last Indorsee while doing business under another name,
the signature must be in the following form: "[Last Indorsee], formerly
known as [previous name]").
(ii) The original of any guarantee executed in connection
with the Mortgage Note (if any).
(iii) The original Mortgage with evidence of recording
thereon, or a copy thereof together with an officer's certificate of
Seller certifying that such represents a true and correct copy of the
original and that such original has been submitted for recordation in
the appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located.
(iv) The originals of all assumption, modification,
consolidation or extension agreements with evidence of recording
thereon, or copies thereof together with an officer's certificate of
Seller certifying that such represent true and correct copies of the
originals and that such originals have each been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(v) The original Assignment of Mortgage to Buyer or its
designee, or in blank, as Buyer requires, for each Purchased Loan
evidenced by a Mortgage Note secured by a Mortgage, in form and
substance acceptable for recording and signed in the name of the Last
Indorsee (in the event that such Purchased Loan was acquired by the Last
Indorsee in a merger, the signature must be in the following form:
"[Last Indorsee], successor by merger to [name of predecessor]"; in the
event that such Purchased Loan was acquired or originated while doing
business under another name, the signature must be in the following
form: "[Last Indorsee], formerly known as [previous name]").
37
(vi) The originals of all intervening assignments of mortgage
with evidence of recording thereon, or copies thereof together with an
officer's certificate of Seller certifying that such represent true and
correct copies of the originals and that such originals have each been
submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.
(vii) The original attorney's opinion of title and abstract of
title or the original mortgagee title insurance policy, or if the
original mortgagee title insurance policy has not been issued, the
irrevocable marked commitment to issue the same.
(viii) The original of any security agreement, chattel mortgage
or equivalent document executed in connection with the Purchased Loan.
(ix) The original assignment of leases and rents, if any,
with evidence of recording thereon, or a copy thereof together with an
officer's certificate of Seller, certifying that such copy represents a
true and correct copy of the original that has been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(x) The originals of all intervening assignments of
assignment of leases and rents, if any, or copies thereof, with evidence
of recording thereon.
(xi) A copy of the UCC-1 financing statements, certified as
true and correct by Seller, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof certified
by Seller to have been sent for filing, and UCC-3 assignments from
Seller to Buyer or its designee, which UCC-3 assignments shall be in
form and substance acceptable for filing.
(xii) An environmental indemnity agreement (if any).
(xiii) An omnibus assignment in blank (if any).
(xiv) A disbursement letter from the Mortgagor to the original
mortgagee (if any).
(xv) Mortgagor's certificate or title affidavit (if any).
(xvi) A survey of the Mortgaged Property (if any) as accepted
by the title company for issuance of the Title Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if any).
(xviii) An assignment of permits, contracts and agreements (if
any).
(xix) An assignment of any interest rate cap agreement or
other interest rate protection agreement entered into by the Mortgagor
or its affiliates, with the counterparty's written consent to such
assignment and agreement not to amend or modify
38
the underlying cap or other interest rate protection agreement and to
make all payments thereunder to Buyer as assignee.
(xx) A copy of the fully executed Intercreditor Agreement.
(xxi) A copy of any estoppel letter from the Mortgagor.
(xxii) A copy of the Purchase Agreement.
(xxiii) Any other documents or instruments necessary in the
reasonable opinion of Buyer to consummate the sale of such Purchased
Loan to Buyer or required to be delivered under this Agreement or, if
such Transaction is recharacterized as a secured financing, to create
and perfect in favor of Buyer a valid perfected first priority security
interest in such Purchased Loan.
With respect to each Purchased Loan which is a Mezzanine Loan:
(i) The original Mezzanine Note signed in connection with
the Purchased Loan bearing all intervening indorsements, endorsed "Pay
to the order of _______________ without recourse" and signed in the name
of the Last Indorsee by an authorized Person (in the event that the
Mezzanine Note was acquired by the Last Indorsee in a merger, the
signature must be in the following form: "[Last Indorsee], successor by
merger to [name of predecessor]"; in the event that the Purchased Loan
was acquired or originated by the Last Indorsee while doing business
under another name, the signature must be in the following form: "[Last
Indorsee], formerly known as [previous name]").
(ii) The original of the loan agreement and the guarantee, if
any, executed in connection with the Purchased Loan.
(iii) The original intercreditor or loan coordination
agreement, if any, executed in connection with the Purchased Loan.
(iv) The original security agreement executed in connection
with the Purchased Loan.
(v) Copies of all documents relating to the formation and
organization of the borrower of such Purchased Loan, together with all
consents and resolutions delivered in connection with such borrower's
obtaining the Purchased Loan.
(vi) All other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or
otherwise affecting such Purchased Loan, or otherwise executed or
delivered in connection with, or otherwise relating to, such Purchased
Loan, including all documents establishing or implementing any lockbox
pursuant to which Seller is entitled to receive any payments from cash
flow of the underlying real property.
(vii) The assignment of Purchased Loan sufficient to transfer
to Buyer all of Seller's rights, title and interest in and to the
Purchased Loan.
39
(viii) A copy of the borrower's opinion of counsel (if any).
(ix) A copy of the UCC-1 financing statements, certified as
true and correct by Seller, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof certified
by Seller to have been sent for filing, and UCC-3 assignments from
Seller to Buyer or its designee, which UCC-3 assignments shall be in
form and substance acceptable for filing.
(x) The pledge agreement and original certificates
representing the pledged equity interests (if any).
(xi) Stock powers relating to each pledged equity interest,
executed in blank, if an original stock certificate is provided.
(xii) Assignment of any management agreements, agreements
among equity interest holders or other material contracts.
(xiii) If no original stock certificate is provided, evidence
satisfactory to Buyer that the pledged ownership interests have been
transferred to, or otherwise made subject to a first priority security
interest in favor of, Seller.
(xiv) Copies of all loan documents and related closing
documents pertaining to the closing of the senior indebtedness incurred
or owed by the owner of the real property with respect to which the
borrower of the Mezzanine Loan has pledged its ownership interests,
whether directly or indirectly through intermediate entities, including
without limitation the organizational documents of such owner, with an
officer's certificate of Seller certifying that such documents represent
true and correct copies of the originals.
(xv) An assignment of any interest rate cap agreement or
other interest rate protection agreement entered into by the borrower
under the Purchased Loan or its affiliates with respect to the Purchased
Loan, with the counterparty's written consent to such assignment and
agreement not to amend or modify the underlying cap or other interest
rate protection agreement and to make all payments thereunder to Buyer
as assignee.
(xvi) An original servicing agreement, if any, executed in
connection with the Purchased Loan.
(xvii) A copy of the Purchase Agreement.
(xviii) A copy of the borrower's fee title insurance policy in
respect of the mezzanine loan and a certified copy of the related
survey.
(xix) Any other documents or instruments necessary in the
reasonable opinion of Buyer to consummate the sale of such Purchased
Loan to Buyer or required to be delivered under this Agreement or, if
such Transaction is recharacterized as a secured financing, to create
and perfect in favor of Buyer a valid perfected first priority security
interest in such Purchased Loan.
40
With respect to each Purchased Loan which is a Junior Participation
Interest (including a junior or "B" note):
(i) Original counterparts, if available, and otherwise
certified copies of all of the documents described above with respect to
a Purchased Loan which is a Whole Loan.
(ii) The original of any participation agreement,
participation certificate, intercreditor agreement and/or servicing
agreement executed in connection with the Purchased Loan.
(iii) Copies of all loan documents and related closing
documents pertaining to the closing of the senior indebtedness incurred
or owed by the owner of the real property, including without limitation
the organizational documents of such owner.
With respect to each Purchased Loan which is of the type described in
clause (iv) of the definition of Eligible Loan, any of the documentation
referred to above in this Section 7(b) of Annex I which is determined by Buyer
to be necessary to effectuate the sale, transfer, conveyance and assignment of
such Purchased Loan.
In addition, with respect to each Purchased Loan, Seller shall deliver
an instruction letter from Seller to either the Mortgagor or the borrower under
such Purchased Loan or the servicer with respect to such Purchased Loan,
instructing the Mortgagor, the borrower or the servicer, as applicable, to remit
all sums required to be remitted to the holder of such Purchased Loan under the
loan documents to the Depository for deposit in the Cash Management Account or
as otherwise directed in a written notice signed by Seller and Buyer, if Buyer
so requires.
From time to time, Seller shall forward to the Custodian additional
original documents or additional documents evidencing any assumption,
modification, consolidation or extension of a Purchased Loan approved in
accordance with the terms of the Agreement, and upon receipt of any such other
documents, the Custodian shall hold such other documents as Buyer shall request
from time to time. With respect to any documents which have been delivered or
are being delivered to recording offices for recording and have not been
returned to Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Seller shall deliver to
Buyer a true copy thereof with an officer's certificate certifying that such
copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to the
Custodian promptly when they are received. With respect to all of the Purchased
Loans delivered by Seller to Buyer or its designee (including the Custodian),
Seller shall execute an omnibus power of attorney substantially in the form of
Exhibit V attached hereto irrevocably appointing Buyer its attorney-in-fact with
full power to (i) complete and record the Assignment of Mortgage, (ii) complete
the endorsement of the Mortgage Note or Mezzanine Note and (iii) take such other
steps as may be necessary or desirable to enforce Buyer's rights against such
Purchased Loans and the related Purchased Loan Files and the Servicing Records,
Buyer shall deposit the Purchased Loan Files representing the Purchased Loans,
or direct that the Purchased Loan Files be deposited directly, with the
Custodian. The Purchased Loan Files shall be maintained in accordance with the
Custodial Agreement. Any Purchased Loan Files not delivered to Buyer or its
designee (including the Custodian) are and shall be held in trust by Seller or
its designee for the benefit of
41
Buyer as the owner thereof. Seller or its designee shall maintain a copy of the
Purchased Loan File and the originals of the Purchased Loan File not delivered
to Buyer or its designee. The possession of the Purchased Loan File by Seller or
its designee is at the will of Buyer for the sole purpose of servicing the
related Purchased Loan, and such retention and possession by Seller or its
designee is in a custodial capacity only. The books and records (including,
without limitation, any computer records or tapes) of Seller or its designee
shall be marked appropriately to reflect clearly the sale of the related
Purchased Loan to Buyer. Seller or its designee (including the Custodian) shall
release its custody of the Purchased Loan File only in accordance with written
instructions from Buyer, unless such release is required as incidental to the
servicing of the Purchased Loans or is in connection with a repurchase of any
Purchased Loan by Seller.
(f) In the event that any portion of the Portfolio Collateral
consists of or is secured by a letter of credit, Seller shall promptly, and in
any event within two (2) Business Days after becoming a beneficiary thereunder,
notify Buyer thereof and enter into a tri-party agreement with Buyer and the
issuer and/or confirming bank with respect to the "letter-of-credit rights"
(within the meaning of the UCC) assigning such letter-of-credit rights to Buyer
and directing all payments thereunder to the Cash Management Account, all in
form and substance satisfactory to Buyer. In the event that any portion of the
Portfolio Collateral consists of "electronic chattel paper" (within the meaning
of the UCC) or "transferable records" (within the meaning of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act), Seller shall take all steps necessary to grant Buyer control
thereof.
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED LOANS
The provisions of Paragraph 8 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 8:
(a) Title to all Purchased Loans shall pass to Buyer on the
applicable Purchase Date subject to the terms and conditions of the Agreement,
and Buyer shall have free and unrestricted use of all Purchased Loans. Nothing
in the Agreement or any other Transaction Document shall preclude Buyer from
engaging in repurchase transactions with the Purchased Loans or otherwise
selling, transferring, pledging, repledging, hypothecating, or rehypothecating
the Purchased Loans, but no such transaction shall relieve Buyer of its
obligations to transfer the Purchased Loans to Seller pursuant to Section 3 of
this Annex I or of Buyer's obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Section 5 hereof.
(b) Nothing contained in the Agreement or any other Transaction
Document shall obligate Buyer to segregate any Purchased Loans delivered to
Buyer by Seller. Notwithstanding anything to the contrary in the Agreement or
any other Transaction Document, no Purchased Loan shall remain in the custody of
Seller or an Affiliate of Seller.
9. SUBSTITUTION
(a) Paragraph 9 of the Agreement ("Substitution") is hereby deleted
in its entirety.
10. REPRESENTATIONS
42
(a) In addition to the representations and warranties appearing in
Section 13 of this Annex 1 and elsewhere in the Agreement, Seller represents and
warrants to Buyer that as of the Purchase Date for the purchase of any Purchased
Loans by Buyer from Seller and any Transaction thereunder and as of the date of
the Agreement and at all times while the Agreement and any Transaction
thereunder is in full force and effect:
(i) Organization. Seller is duly organized, validly existing
and in good standing under the laws and regulations of the state of
Seller's organization and is duly licensed, qualified, and in good
standing in every state where such licensing or qualification is
necessary for the transaction of Seller's business. Seller has the power
to own and hold the assets it purports to own and hold, and to carry on
its business as now being conducted and proposed to be conducted, and
has the power to execute, deliver, and perform its obligations under the
Agreement and the other Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents
have been duly executed and delivered by Seller, for good and valuable
consideration. The Transaction Documents constitute the legal, valid and
binding obligations of Seller, enforceable against Seller in accordance
with their respective terms subject to bankruptcy, insolvency, and other
limitations on creditors' rights generally and to equitable principles.
(iii) Non-Contravention. Neither the execution and delivery
of the Transaction Documents, nor consummation by Seller of the
transactions contemplated by the Transaction Documents (or any of them),
nor compliance by Seller with the terms, conditions and provisions of
the Transaction Documents (or any of them) will conflict with or result
in a breach of any of the terms, conditions or provisions of (i) the
formation, organizational or other governing documents of Seller, (ii)
any contractual obligation to which Seller is now a party or the rights
under which have been assigned to Seller or the obligations under which
have been assumed by Seller or to which the assets of Seller are subject
or constitute a default thereunder, or result thereunder in the creation
or imposition of any lien upon any of the assets of Seller, other than
pursuant to the Transaction Documents, (iii) any judgment or order,
writ, injunction, decree or demand of any court applicable to Seller, or
(iv) any applicable Requirement of Law. Seller has all necessary
licenses, permits and other consents from Governmental Authorities
necessary to acquire, own and sell the Portfolio Collateral and for the
performance of its obligations under the Transaction Documents.
(iv) Litigation: Requirements of Law. There is no action,
suit, proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against Seller, the Sponsor or any of
their respective assets, nor is there any action, suit, proceeding,
investigation, or arbitration pending or threatened against the Sponsor
which may result in any material adverse change in the business,
operations, financial condition, properties, or assets of Seller or the
Sponsor, or which may have an adverse effect on the validity of the
Transaction Documents or the Purchased Loans or any action taken or to
be taken
43
in connection with the obligations of Seller under any of the
Transaction Documents. Seller is in compliance in all material respects
with all Requirements of Law. Neither Seller nor the Sponsor is in
default in any material respect with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any arbitrator or
Governmental Authority.
(v) No Broker. Seller has not dealt with any broker,
investment banker, agent, or other Person (other than Buyer or an
Affiliate of Buyer) who may be entitled to any commission or
compensation in connection with the sale of Purchased Loans pursuant to
any of the Transaction Documents.
(vi) Good Title to Purchased Loans. Immediately prior to the
purchase of any Purchased Loans by Buyer from Seller, such Purchased
Loans are free and clear of any lien, encumbrance or impediment to
transfer (including any "adverse claim" as defined in Section
8-102(a)(1) of the UCC), and Seller is the record and beneficial owner
of and has good and marketable title to and the right to sell and
transfer such Purchased Loans to Buyer and, upon transfer of such
Purchased Loans to Buyer, Buyer shall be the owner of such Purchased
Loans free of any adverse claim. In the event the related Transaction is
recharacterized as a secured financing of the Purchased Loans, the
provisions of the Agreement are effective to create in favor of Buyer a
valid security interest in all rights, title and interest of Seller in,
to and under the Collateral and Buyer shall have a valid, perfected
first priority security interest in the Purchased Loans (and without
limitation on the foregoing, Buyer, as entitlement holder, shall have a
"security entitlement" to the Portfolio Securities).
(vii) No Default. No Default or Event of Default exists under
or with respect to the Transaction Documents.
(viii) Representations and Warranties Regarding Purchased
Loans; Delivery of Purchased Loan File. Seller represents and warrants
to Buyer that each Purchased Loan sold hereunder and each pool of
Purchased Loans sold in a Transaction hereunder, as of each Purchase
Date for a Transaction conform to the applicable representations and
warranties set forth in Exhibit VI attached hereto, except (a) as
disclosed to Buyer in writing prior to the related Purchase Date for the
Transaction in which such Purchased Loan is purchased by Buyer, and (b)
for Greenwich Transactions, any matters arising from Buyer's origination
and administration of the Purchased Loan prior to the Original Purchase
Date. It is understood and agreed that the representations and
warranties set forth in Exhibit VI hereto, if any, shall survive
delivery of the respective Purchased Loan File to Buyer or its designee
(including the Custodian). With respect to each Purchased Loan, the
Mortgage Note or Mezzanine Note, the Mortgage (if any), the Assignment
of Mortgage (if any) and any other documents required to be delivered
under the Agreement and the Custodial Agreement for such Purchased Loan
have been delivered to Buyer or the Custodian on its behalf. Seller or
its designee is in possession of a complete, true and accurate Purchased
Loan File
44
with respect to each Purchased Loan, except for such documents the
originals of which have been delivered to the Custodian.
(ix) Adequate Capitalization: No Fraudulent Transfer. Seller
has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations. Seller
is generally able to pay, and as of the date hereof is paying, its debts
as they come due. Seller has not become, or is presently, financially
insolvent nor will Seller be made insolvent by virtue of Seller's
execution of or performance under any of the Transaction Documents
within the meaning of the bankruptcy laws or the insolvency laws of any
jurisdiction. Seller has not entered into any Transaction Document or
any Transaction pursuant thereto in contemplation of insolvency or with
intent to hinder, delay or defraud any creditor.
(x) Consents. No consent, approval or other action of, or
filing by Seller with, any Governmental Authority or any other Person is
required to authorize, or is otherwise required in connection with, the
execution, delivery and performance of any of the Transaction Documents
(other than consents, approvals and filings that have been obtained or
made, as applicable).
(xi) Ownership. Seller does not have any stockholders,
partner, members or other holders of ownership interests other than
entities owned directly or indirectly by the Sponsor. Set forth on
Exhibit IX attached hereto is a true, complete and correct ownership
chart for the Seller and Sponsor.
(xii) Organizational Documents. Seller has delivered to Buyer
true, correct and complete copies of its formation, organizational and
other governing documents, and of the Credit Agreement, together with
all amendments thereto.
(xiii) No Encumbrances. There are (i) no outstanding rights,
options, warrants or agreements on the part of Seller for a purchase,
sale or issuance, in connection with the Purchased Loans, (ii) no
agreements on the part of Seller to issue, sell or distribute the
Purchased Loans, and (iii) no obligations on the part of Seller
(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 Portfolio Securities.
(xiv) Federal Regulations. Seller is not (A) an "investment
company," or a company "controlled by an investment company," within the
meaning of the Investment Company Act of 1940, as amended, or (B) a
"holding company," or a "subsidiary company of a holding company," or an
"affiliate" of either a "holding company" or a "subsidiary company of a
holding company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(xv) Taxes. Seller has filed or caused to be filed all tax
returns which to the knowledge of Seller would be delinquent if they had
not been filed on or
45
before the date hereof and has paid all taxes shown to be due and
payable on or before the date hereof on such returns or on any
assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it and any of its assets by any
Governmental Authority; no tax liens have been filed against any of
Seller's assets and, to Seller's knowledge, no claims are being asserted
with respect to any such taxes, fees or other charges.
(xvi) ERISA. Seller does not have any Plans or any
ERISA Affiliates and makes no contributions to any Plans or any
Multiemployer Plans.
(xvii) Judgments/Bankruptcy. Except as disclosed in
writing to Buyer, there are no judgments against Seller or the Sponsor
unsatisfied of record or docketed in any court located in the United
States of America and no Act of Insolvency has ever occurred with
respect to Seller or the Sponsor.
(xviii) Full and Accurate Disclosure. No information
contained in the Transaction Documents, or any written statement
furnished by or on behalf of Seller pursuant to the terms of the
Transaction Documents, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances
under which they were made.
(xix) Financial Information. All financial data
concerning Seller and the Purchased Loans that has been delivered by or
on behalf of Seller to Buyer is true, complete and correct in all
material respects and has been prepared in accordance with GAAP. Since
the delivery of such data, except as otherwise disclosed in writing to
Buyer, there has been no change in the financial position of Seller or
the Purchased Loans, or in the results of operations of Seller, which
change is reasonably likely to have in a material adverse effect on
Seller.
(xx) Selection Process. The Purchased Loans were
selected from among the outstanding Portfolio Collateral owned by the
Sponsor and its Affiliates as to which the representations and
warranties set forth in the Agreement could be made and such selection
was not made in a manner so as to affect adversely the interests of
Buyer.
(xxi) Chief Executive Office. On the date of the
Agreement, Seller's chief executive office and principal place of
business is located at c/o LNR Property Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The location where Seller
keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
(b) On the Purchase Date for any Transaction, Seller shall be deemed
to have made all of the representations set forth in Section 10(a) of this Annex
I as of such Purchase Date.
11. NEGATIVE COVENANTS OF SELLER
46
On and as of the date hereof and each Purchase Date and until the
Agreement and this Annex I are no longer in force with respect to any
Transaction, Seller shall not without the prior written consent of Buyer:
(a) take any action which would directly or indirectly impair or
adversely affect Buyer's title to the Purchased Loans;
(b) transfer, assign, convey, grant, bargain, sell, set over,
deliver or otherwise dispose of, or pledge or hypothecate, directly or
indirectly, any interest in the Purchased Loans (or any of them) to any Person
other than Buyer, or engage in repurchase transactions or similar transactions
with respect to the Purchased Loans (or any of them) with any Person other than
Buyer;
(c) create, incur or permit to exist any lien, encumbrance or
security interest in or on the Purchased Loans, except as described in Paragraph
6 of the Agreement;
(d) create, incur or permit to exist any lien, encumbrance or
security interest in or on any of the other Collateral subject to the security
interest granted by Seller pursuant to Paragraph 6 of the Agreement;
(e) modify or terminate any of the organizational documents of
Seller;
(f) consent or assent to any amendment or supplement to, or
termination of, any note, loan agreement, mortgage or guaranty relating to the
Purchased Loans or other material agreement or instrument relating to the
Purchased Loans other than in accordance with Section 22 of this Annex I;
(g) admit any additional members, partners, shareholders or other
holders of ownership interest in Seller, or suffer or permit any pledge or
encumbrance of any membership or other ownership interest in Seller, other than
a pledge of the stock in Seller as security for the Sponsor's revolving credit
facility;
(h) after the occurrence and during the continuation of any Default or
Event of Default, make any distribution, payment on account of, or set apart
assets for any equity or ownership interest of Seller, or for a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of any equity or ownership interest of Seller, whether now or
hereafter outstanding, or make any other distribution in respect to any equity
or ownership interest of Seller, either directly or indirectly, whether in cash
or property or in obligations of Seller;
(i) file a financing statement, or an amendment or termination
statement with respect to a financing statement, except as approved by Buyer in
each instance; or
(j) dissolve or liquidate, in whole or in part, or consolidate or
merge with or into any other entity.
12. AFFIRMATIVE COVENANTS OF SELLER
47
(a) Seller shall promptly notify Buyer of any material adverse
change in its business operations and/or financial condition; provided, however,
that nothing in this Section 12 shall relieve Seller of its obligations under
the Agreement.
(b) Seller shall provide Buyer with copies of such documents as
Buyer may request evidencing the truthfulness of the representations set forth
in Section 10.
(c) Seller (1) shall defend the right, title and interest of Buyer
in and to the Collateral against, and take such other action as is necessary to
remove, the Liens, security interests, claims and demands of all Persons (other
than security interests by or through Buyer) and (2) shall, at Buyer's request,
take all action reasonably necessary to ensure that Buyer will have a first
priority security interest in the Purchased Loans in the event such Transactions
are recharacterized as secured financings.
(d) Seller shall notify Buyer and the Depository of the occurrence
of any Default or Event of Default with respect to Seller as soon as possible
but in no event later than the second (2nd) Business Day after obtaining actual
knowledge of such event.
(e) Seller shall promptly (and in any event not later than two (2)
Business Days following receipt) deliver to Buyer any information with respect
to the Portfolio Collateral as may be reasonably requested by Buyer from time to
time.
(f) Seller will permit Buyer or its designated representative to
inspect Seller's records with respect to the Collateral and the conduct and
operation of its business related thereto upon reasonable prior written notice
from Buyer or its designated representative, at such reasonable times and with
reasonable frequency, and to make copies of extracts of any and all thereof;
provided, however, that Seller shall only bear the cost of one such inspection
per year of the term of the Agreement.
(g) If Seller shall at any time become entitled to receive or shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for the Portfolio Securities, or otherwise in respect
thereof, Seller shall accept the same as Buyer's agent, hold the same in trust
for Buyer and deliver the same forthwith to Buyer in the exact form received,
duly endorsed by Seller to Buyer, if required, together with an undated bond
power covering such certificate duly executed in blank to be held by Buyer
hereunder as additional collateral security for the Transactions. If any sums of
money or property so paid or distributed in respect of the Purchased Loans shall
be received by Seller, to the extent otherwise required by the Agreement, Seller
shall, until such money or property is paid or delivered to Buyer, hold such
money or property in trust for Buyer, segregated from other funds of Seller, as
additional collateral security for the Transactions.
(h) At any time from time to time upon request of Buyer, at the sole
expense of Seller, Seller will promptly and duly execute and deliver such
further instruments and documents and take such further actions as Buyer may
reasonably request for the purposes of obtaining or preserving the full benefits
of the Agreement including the first priority security interest granted
hereunder and of the rights and powers herein granted (including, among other
things, filing such Uniform Commercial Code financing statements as Buyer may
reasonably request). If any
48
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument, negotiable document,
certificated security or chattel paper, such note, instrument, document,
security or chattel paper shall be immediately delivered to Buyer, duly endorsed
in a manner satisfactory to Buyer, to be held as Collateral pursuant to the
Agreement, and the documents delivered in connection herewith. Seller hereby
irrevocably authorizes Buyer at any time and from time to time to file in any
filing office in any jurisdiction any initial financing statements and
amendments thereto that (1) indicate the Collateral (i) as all assets of Seller
or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (2) contain any other information required by part 5 of Article 9 of
the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether Seller is an organization, the
type of organization and any organization identification number issued to
Seller, and (ii) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. Seller
agrees to furnish any such information to Buyer promptly upon request. Seller
also ratifies its authorization for Buyer to have filed in any jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.
(i) Seller shall provide Buyer with the following financial and
reporting information:
(i) As soon as available and in any event within the
earlier of (a) 3 Business Days after Sponsor files its Form 10-Q
with the SEC or (b) 60 days after the last day of each of the
first three calendar quarters, Sponsor's unaudited consolidated
statements of income and statements of changes in cash flow for
such quarter and balance sheets as of the end of such quarter
(accompanied by Sponsor's and Seller's calculations, with such
supporting information as Buyer shall reasonably require, of
Consolidated Total Indebtedness and Consolidated Tangible Net
Worth) in each case presented fairly in accordance with GAAP and
certified as being true and correct by an officer's certificate
in the form attached hereto as Exhibit XI;
(ii) As soon as available and in any event within the
earlier of (a) 3 Business Days after Sponsor files its Form 10-K
with the SEC or (b) 120 days after the last day of each calendar
year, Sponsor's audited consolidated statements of income and
statements of changes in cash flow for such year and balance
sheets as of the end of such year presented fairly in accordance
with GAAP, and accompanied, in all cases, by an unqualified
report of a nationally recognized independent certified public
accounting firm consented to by Buyer;
(iii) Within 45 days after the last day of each
calendar quarter, an officer's certificate in the form attached
hereto as Exhibit XI from Seller addressed to Buyer certifying
that, as of such calendar month, (x) Seller is in compliance
with all of the terms, conditions and requirements of the
Agreement, and (y) no Event of Default exists;
49
(iv) To the extent received from the Purchased Loan
Borrower or Underlying Borrowers under the Purchased Loans (or
otherwise coming within the possession or control of Seller or
an Affiliate), within 45 days after the last day of each
calendar quarter, any and all property level financial
information with respect to the Purchased Loans that is in the
possession or control of Seller or an Affiliate, or such other
information as may be mutually determined and agreed upon in
writing by both Buyer and Seller, including, without limitation,
rent rolls and income statements; and
(v) Within 15 days after each month end, a monthly
reporting package containing all information set forth on
Exhibit III attached hereto.
(j) Seller shall at all times comply in all material respects with
all laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.
(k) Seller shall at all times keep proper books of records and
accounts in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and set aside on its books from its
earnings for each fiscal year all such proper reserves in accordance with GAAP.
(l) Seller shall observe, perform and satisfy all the terms,
provisions, covenants and conditions required to be observed, performed or
satisfied by it, and shall pay when due all costs, fees and expenses required to
be paid by it, under the Transaction Documents. Seller shall pay and discharge
all taxes, levies, liens and other charges on its assets and on the Collateral
that, in each case, in any manner would create any lien or charge upon the
Collateral, except for any such taxes as are being appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided in accordance with GAAP.
(m) Seller will maintain records with respect to the Collateral and
the conduct and operation of its business with no less a degree of prudence than
if the Collateral were held by Seller for its own account and will furnish
Buyer, upon request by Buyer or its designated representative, with information
reasonably obtainable by Seller with respect to the Collateral and the conduct
and operation of its business.
(n) Seller shall provide Buyer with access to operating statements,
the occupancy status and other property level information, with respect to the
Mortgaged Properties, plus any such additional reports as Buyer may reasonably
request.
(o) Seller hereby covenants and agrees that all interest and
original issue discount received or accrued with respect to the Portfolio
Collateral shall be treated as portfolio interest within the meaning of Sections
871(h) and 881(c) of the Internal Revenue Code, as amended, and no amount will
be required to be deducted from any remittance on the Portfolio Collateral on
account of withholding tax or otherwise, [to be discussed]
50
13. SPECIAL PURPOSE ENTITY
(a) Seller hereby represents and warrants to Buyer, and covenants
with Buyer, that as of the date hereof and so long as any of the Transaction
Documents shall remain in effect:
(b) It is and shall remain solvent and pay its debts and liabilities
(including employment and overhead expenses), if any, from its own assets as the
same shall become due.
(c) It has complied and will comply with the provisions of its
Certificate of Incorporation (as hereinafter defined), bylaws and other
governing documents, as such documents may be amended from time to time.
(d) It will do all things necessary to observe corporate formalities
and to preserve its existence.
(e) It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its shareholders and any other Person, (except to the extent consolidation is
required under GAAP principles consistently applied as in effect from time to
time or as a matter of law) and it will file its own tax returns (except to the
extent consolidation is required or permitted under applicable law).
(f) It is, and will at all times, hold itself out to the public as a
legal entity separate and distinct from any other entity (including any
Affiliate), correct any known misunderstanding regarding its status as a
separate entity, conduct business in its own name, and not hold itself out or
its Affiliates out as a division of the other.
(g) It has not owned and will not own any property or any other
assets other than the Purchased Loans, loans made to Sponsor as permitted under
this Agreement, cash and its interest under any associated Hedging.
Transactions, the Transaction Documents and any and all agreements and documents
relating to the Purchased Loans and any loan made to Sponsor as permitted
hereunder.
(h) It has not engaged and will not engage in any business except as
contemplated under Section 3 of the Certificate of Incorporation of Seller dated
March ___, 2003 ("Certificate of Incorporation").
(i) It has not entered into, and will not enter into, any contract
or agreement with any of its Affiliates except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arm's-length basis with Persons other than such Affiliate.
(j) It has not incurred and will not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (A) obligations under the
Transaction Documents and any Hedging Transactions; (B) provided no Event of
Default exists, loans and advances from the Sponsor to Seller from time to time
(provided Sponsor enters into a subordination and standstill agreement
satisfactory to Buyer with respect thereto; the parties acknowledge and agree
that the form of subordination and standstill agreement attached hereto as
Exhibit XII is satisfactory); (C) customary
51
representations, warranties, indemnities and other agreements in connection with
the origination, acquisition, servicing, collection, enforcement, financing,
participation, securitization, sale or other disposition of the Purchased Loans
and any loan made to Sponsor as permitted under and in accordance with the terms
of this Agreement; (D) obligations under zoning and other governmental
regulations, rules, prohibitions and ordinance and proposed restrictions,
covenants, conditions, limitations, easements, rights-of-way and other matters
existing of public record or proposed to be recorded or filed in the future
governing or affecting mortgaged real property or that may otherwise require the
consent of or joinder by a mortgagee, and (E) unsecured trade payables, in an
aggregate amount not to exceed $200,000 at any one time outstanding, incurred in
the ordinary course of originating, acquiring, owning, servicing, collecting,
enforcing, financing, securitizing, selling and disposing of the Purchased
Loans; provided, however, that any such trade payables incurred by Seller shall
be paid within 90 days of the date incurred.
(k) It has not made and will not make any loans or advances to any
other Person, other (i) than Eligible Loans that are offered to become Purchased
Loans under the terms of this Agreement, and (ii) loans and advances to Sponsor
from time to time from excess cash flow otherwise available for distribution by
Seller to its shareholders, so long as no Event of Default exists, and shall not
acquire obligations or securities of any other Person other than Eligible Loans.
(l) It will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(m) It will not seek its dissolution, liquidation or winding up, in
whole or in part, or consent to any Change of Control or consolidate or merge
with any other Person.
(n) It will not commingle its funds and other assets with those of
any of its Affiliates or any other Person.
(o) It has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any of its Affiliates or any other Person.
(p) It has not held and will not hold itself out to be responsible
for the debts or obligations of any other Person.
(q) It shall not take, nor consent to its shareholder or any direct
or indirect parent thereof taking with respect to Seller, any of the following
actions: (i) dissolve or liquidate, in whole or in part; (ii) consolidate or
merge with or into any other entity or convey or transfer all or substantially
all of its properties and assets to any entity; (iii) institute any proceeding
to be adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or answer or
consent seeking reorganization or relief under the Bankruptcy Code or consent to
the filing of any such petition or to the appointment of a receiver,
rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or
other similar official) of Seller or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, or make an assignment for
the benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due, or take any action in furtherance of
52
any of the foregoing; (v) without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, amend the provisions of Section 3 or
Section 9 of Seller's Certificate of Incorporation or fail to advise Buyer of
any other amendment to Seller's Certificate of Incorporation or the bylaws of
Seller or other governing documents of Seller; (vi) enter into any transaction
with an Affiliate not in the ordinary course of Seller's business; or (vii)
consent to its shareholder withdrawing as the sole equity owner of Seller.
(r) It has and shall have no liabilities, contingent or otherwise,
other than those permitted under this Agreement, under the terms of any Hedging
Transaction or any loan made to Seller by Sponsor as permitted hereunder and
those normal and incidental to the acquisition, origination, ownership,
management, servicing, administration, collection, enforcement, financing,
securitization, sale and disposition of the Purchased Loans and any loan made to
a Sponsor as permitted under this Agreement.
(s) It has conducted and shall conduct its business consistent in
all material respects with the requirements of Section 3 and Section 9 of the
Certificate of Incorporation.
(t) It shall not maintain any employees.
(u) Upon request by Buyer, it shall promptly amend its formation,
organizational and other governing documents to reflect the provisions of this
Section 13.
14. EVENTS OF DEFAULT; REMEDIES
Paragraph 11 of the Agreement is hereby deleted and replaced with the
following provisions of this Section 14 and the provisions of Section 15 of this
Annex I below:
Each of the following shall constitute an "Event of Default" under the
Agreement and this Annex I:
(i) Either (A) the Transaction Documents shall for any
reason not cause, or shall cease to cause, Buyer to be the owner free of
any adverse claim of any of the Portfolio Collateral, or (B) if a
Transaction is recharacterized as a secured financing, the Transaction
Documents with respect to any Transaction shall for any reason cease to
create a valid first priority security interest in favor of Buyer in any
of the Purchased Loans;
(ii) in the event that the Buyer or any of its Affiliates is
a party to any Hedging Transaction and a default or breach occurs
thereunder on the part of Seller or any of its Affiliates which results
in the early termination of such Hedging Transaction or otherwise is not
cured within the cure period for such default or breach provided under
the terms and conditions of such Hedging Transaction;
(iii) failure of Buyer to receive on any Remittance Date the
accreted value of the Price Differential (less any amount of such Price
Differential previously paid by Seller to Buyer) (including, without
limitation, in the event the Income paid or distributed on or in respect
of the Purchased Loans into the Cash Management Account is
53
insufficient to make such payment and Seller does not make such payment
or cause such payment to be made);
(iv) failure of Buyer to receive the Repurchase Price for any
Purchased Loans on the date the same is due under the Agreement (whether
on the Repurchase Date, Early Repurchase Date or otherwise as provided
herein);
(v) failure of Seller to make any other payment (i.e., a
payment of a type not specified in any other clause of this Section 14)
owing to Buyer which has become due, whether by acceleration or
otherwise under the terms of the Agreement which failure is not remedied
within the applicable period (in the case of a failure pursuant to
Paragraph 4) or five Business Days after written notice from Buyer to
Seller (in the case of any other such failure);
(vi) any governmental, regulatory, or self-regulatory
authority shall have taken any action to remove, limit, restrict,
suspend or terminate the rights, privileges, or operations of Seller,
which suspension has a material adverse effect on the financial
condition or business operations of Seller, taken as a whole;
(vii) Buyer shall have determined, in the exercise of its good
faith business judgment, (A) that there has been a material adverse
change in the business, operations, corporate structure or financial
condition, creditworthiness or prospects, taken as a whole, of either of
Seller or Sponsor; (B) that Seller or Sponsor will not meet or has
breached any of its obligations under any Transaction pursuant to any of
the Transaction Documents; or (C) that a material adverse change in the
financial or legal condition of Seller or Sponsor may occur due to the
pendency or threatened pendency of a material legal action against
Seller or Sponsor;
(viii) a Change of Control shall have occurred;
(ix) an Act of Insolvency shall have occurred with respect to
Seller or Sponsor;
(x) any representation made by Seller to Buyer shall have
been incorrect or untrue in any material respect when made or repeated
or deemed to have been made or repeated;
(xi) Sponsor shall have defaulted or failed to perform under
the Guaranty;
(xii) a final judgment or judgments by any competent court(s)
in the United States of America for the payment of money in an aggregate
amount (as to all such outstanding judgments) greater than $250,000 (in
the case of Seller) or $5,000,000 (in the case of Sponsor) shall have
been rendered against Seller or Sponsor, and remained undischarged or
unpaid for a period of thirty (30) days, during which period execution
of such judgment is not effectively stayed;
(xiii) if Seller shall breach or fail to perform any of the
terms, covenants, obligations or conditions of the Agreement, other than
as specifically otherwise referred to in this definition of "Event of
Default", and such breach or failure to perform is not
54
remedied within five (5) Business Days after notice thereof to Seller
from Buyer or its successors or assigns or, as to any breach or failure
to perform which by its nature cannot be remedied with the payment of
money and which is capable of being cured within thirty (30) days after
the occurrence such breach or failure but not within five (5) Business
Days, such longer period of time as is reasonably necessary to
effectuate a cure, not to exceed thirty (30) days after notice of such
breach or failure is given to Seller by Buyer, so long as Seller is
diligently acting to remedy such breach or failure during such period of
cure;
(xiv) Buyer shall have determined, in the exercise of its good
faith business judgment, that Seller's Differential Coverage Ratio is
less than 1.50:1.00;
(xv) if the ratio of the Consolidated Total Indebtedness of
Sponsor to the Consolidated Tangible Net Worth of Sponsor shall exceed
the Maximum Leverage Ratio;
(xvi) if the Consolidated Tangible Net Worth of Sponsor shall
at any time be less than the Minimum Net Worth Amount;
(xvii) Seller or Sponsor shall have defaulted or failed to
perform under any other note, indenture, loan agreement, guaranty, swap
agreement or any other contract, agreement or transaction to which it is
a party, which default (A) involves the failure to pay a matured
obligation or matured obligations aggregating (among all such matured
obligations in excess of $250,000 (in the case of Seller) or $5,000,000
(in the case of Sponsor), or (B) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such
note, indenture, loan agreement, guaranty, swap agreement or other
contract agreement or transaction, or Seller or Sponsor shall breach any
covenant or condition, shall fail to perform, admits its inability to
perform or state its intention not to perform its obligations under any
Transaction or in respect of any repurchase agreement, reverse
repurchase agreement, securities contract or derivative transaction with
any party.
15. REMEDIES
If an Event of Default shall occur and be continuing with respect to
Seller, the following rights and remedies shall be available to Buyer:
(i) At the option of Buyer, exercised by written notice to
Seller (which option shall be deemed to have been exercised, even if no
notice is given, immediately upon the occurrence of an Act of
Insolvency), the Repurchase Date for each Transaction hereunder shall,
if it has not already occurred, be deemed immediately to occur (the date
on which such option is exercised or deemed to have been exercised being
referred to hereinafter as the "Accelerated Repurchase Date")
(ii) If Buyer exercises or is deemed to have exercised the
option referred to in Section 15(i) of this Annex I:
(A) Seller's obligations hereunder to repurchase all
Purchased Loans shall become immediately due and
payable on and as of the Accelerated Repurchase
Date; and
55
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each
Transaction (determined as of the Accelerated
Repurchase Date) shall be increased by the
aggregate amount obtained by daily application
of, on a 360 day per year basis for the actual
number of days during the period from and
including the Accelerated Repurchase Date to but
excluding the date of payment of the Repurchase
Price (as so increased), (x) the Pricing Rate
for such Transaction multiplied by (y) the
Repurchase Price for such Transaction (decreased
by (I) any amounts actually remitted to Buyer by
the Depository or Seller from time to time
pursuant to Section 5 of this Annex I and
applied to such Repurchase Price, and (II) any
amounts applied to the Repurchase Price pursuant
to Section 15(iii) of this Annex I); and (C) the
Custodian shall, upon the request of Buyer,
deliver to Buyer all instruments, certificates
and other documents than held by the Custodian
relating to the Purchased Loans,
(iii) Upon the occurrence of an Event of Default with respect
to Seller, Buyer may (A) immediately sell, at a public or private sale
at such price or prices as Buyer may deem satisfactory any or all of the
Purchased Loans or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Loans, to give Seller credit for such
Purchased Loans in an amount equal to the Market Value of such Purchased
Loans against the aggregate unpaid Repurchase Price for such Purchased
Loans and any other amounts owing by Seller under the Transaction
Documents. The proceeds of any disposition of Purchased Loans effected
pursuant to this Section 15(iii) shall be applied, (w) first, to the
costs and expenses incurred by Buyer in connection with Seller's
default; (x) second, to consequential damages, including, but not
limited to, costs of cover and/or Hedging Transactions, if any; (y)
third, to the Repurchase Price; and (z) fourth, to any other outstanding
obligation of Seller to Buyer or its Affiliates.
(iv) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Loans on a particular Business
Day, or in a transaction with the same purchaser, or in the same manner
because the market for such Purchased Loans may not be liquid. In view
of the nature of the Purchased Loans, the parties agree that liquidation
of a Transaction or the Purchased Loans does not require a public
purchase or sale and that a good faith private purchase or sale shall be
deemed to have been made in a commercially reasonable manner.
Accordingly, Buyer may elect, in its sole discretion, the time and
manner of liquidating any Purchased Loans, and nothing contained herein
shall (A) obligate Buyer to liquidate any Purchased Loans on the
occurrence and during the continuance of an Event of Default or to
liquidate all of the Purchased Loans in the same manner or on the same
Business Day or (B) constitute a waiver of any right or remedy of Buyer.
(v) Seller shall be liable to Buyer for (A) the amount of
all expenses, including reasonable legal fees and expenses, actually
incurred by Buyer in connection with or as a consequence of an Event of
Default with respect to Seller, (B) consequential damages, including,
without limitation, all costs incurred in connection with covering
56
transactions or Hedging Transactions, and (C) any other loss, damage,
cost or expense directly arising or resulting from the occurrence of an
Event of Default with respect to Seller.
(vi) Buyer shall have, in addition to its rights and remedies
under the Transaction Documents, all of the rights and remedies provided
by applicable federal, state, foreign, and local laws (including,
without limitation, if the Transactions are recharacterized as secured
financings, the rights and remedies of a secured party under the UCC, to
the extent that the UCC is applicable, and the right to offset any
mutual debt and claim), in equity, and under any other agreement between
Buyer and Seller. Without limiting the generality of the foregoing,
Buyer shall be entitled to set off the proceeds of the liquidation of
the Purchased Loans against all of Seller's obligations to Buyer,
whether or not such obligations are then due, without prejudice to
Buyer's right to recover any deficiency.
(vii) Buyer may exercise any or all of the remedies available
to Buyer immediately upon the occurrence of an Event of Default and at
any time during the continuance thereof. All rights and remedies arising
under the Transaction Documents, as amended from time to time, are
cumulative and not exclusive of any other rights or remedies which Buyer
may have.
(viii) Buyer may enforce its rights and remedies hereunder
without prior judicial process or hearing, and Seller hereby expressly
waives any defenses Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives any defense
Seller might otherwise have arising from the use of nonjudicial process,
disposition of any or all of the Purchased Loans, or from any other
election of remedies. Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm's length.
(ix) To the extent that applicable law imposes duties on
Buyer to exercise remedies in a commercially reasonable manner, Seller
acknowledges and agrees that it is not commercially unreasonable for
Buyer (i) to fail to incur expenses reasonably deemed significant by
Buyer to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against
Persons obligated on Collateral or to remove liens on or any adverse
claims against Collateral, (iv) to exercise collection remedies against
Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature,
(vi) to contact other Persons, whether or not in the same business as
Seller, for expressions of interest in acquiring all or any portion of
such Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral
is of a specialized nature, (viii) to dispose of Collateral by
57
utilizing internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose of
assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure Buyer
against risks of loss, collection or disposition of Collateral or to
provide to Buyer a guaranteed return from the collection or disposition
of Collateral, or (xii) to the extent deemed appropriate by Buyer, to
obtain the services of other brokers, investment bankers, consultants
and other professionals to assist Buyer in the collection or disposition
of any of the Collateral. Seller acknowledges that the purpose of this
Section 15(ix) is to provide non-exhaustive indications of what actions
or omissions by Buyer would not be commercially unreasonable in Buyer's
exercise of remedies against the Collateral and that other actions or
omissions by Buyer shall not be deemed commercially unreasonable solely
on account of not being indicated in this Section 15(ix). Without
limitation upon the foregoing, nothing contained in this Section 15(ix)
shall be construed to grant any rights to Seller or to impose any duties
on Buyer that would not have been granted or imposed by the Agreement or
by applicable law in the absence of this Section 15(ix).
(x) Buyer shall not be required to make any demand upon, or
pursue or exhaust any of its rights or remedies against, Seller, any
other obligor, guarantor, pledgor or any other Person with respect to
the payment of the obligations of Seller hereunder or to pursue or
exhaust any of its rights or remedies with respect to any Collateral
therefor or any direct or indirect guarantee thereof. Buyer shall not be
required to marshal the Collateral or any guarantee of the obligations
of Seller hereunder or to resort to the Collateral or any such guarantee
in any particular order, and all of its rights hereunder or under any
other document or instrument executed in connection herewith shall be
cumulative. To the extent it may lawfully do so, Seller absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and
covenants not to assert against Buyer, any valuation, stay,
appraisement, extension, redemption or similar laws and any and all
rights or defenses it may have as a surety now or hereafter existing
which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or
privately under the power of sale conferred by the Agreement, or
otherwise.
(xi) Seller hereby appoints Buyer as attorney-in-fact of
Seller for the purpose, after the occurrence and during the continuance
of an Event of Default, of carrying out the provisions of the Agreement
and taking any action and executing or endorsing any instruments that
Buyer may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest so long as any Transaction remains outstanding.
(xii) In addition to any rights and remedies of Buyer provided
by the Agreement and by law, the Buyer shall have the right, without
prior notice to Seller, any such notice being expressly waived by
Seller, upon any amount becoming due and payable by Seller hereunder
(whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits,
58
indebtedness, liabilities or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Buyer to or for the credit or
the account of Seller, in which case the amount due by Buyer to or for
the credit or the account of Seller will be discharged by Seller to the
extent so set-off by Buyer.
16. NOTICES AND OTHER COMMUNICATIONS
The provisions of Paragraph 13 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 16:
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a), (b) or (c) above, to the address specified in
Annex II hereto or at such other address and person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section. A notice shall
be deemed to have been given: (a) in the case of hand delivery, at the time of
delivery, (b) in the case of registered or certified mail, when delivered or the
first attempted delivery on a Business Day, (c) in the case of expedited prepaid
delivery upon the first attempted delivery on a Business Day, or (d) in the case
telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section may elect to waive any deficiencies and treat the
notice as having been properly given.
17. NON-ASSIGNABILITY
The provisions of Paragraph 15 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 17:
(a) The rights and obligations of the parties under the Transaction
Documents and under any Transaction shall not be assigned by either party
without the prior written consent of the other party, provided, however, that
Buyer may assign its rights and obligations under the Transaction Documents
and/or under any Transaction, without the prior written consent of Seller.
(b) Buyer shall be entitled to issue one or more participation
interests with respect to any or all of the Transactions.
(c) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Nothing in the Transaction
Documents, express or implied, shall give to any Person, other than the parties
to the Transaction Documents and their respective successors, any benefit or any
legal or equitable right, power, remedy or claim under the Transaction
Documents.
59
18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) The Agreement (including this Annex I) shall be governed by the
laws of the State of New York without giving effect to the conflict of laws
principles thereof.
(b) Each party irrevocably and unconditionally (i) submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement and (ii) waives, to the fullest extent it may effectively do
so, any defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.
(c) The parties hereby irrevocably waive, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding and irrevocably consent to the service of any
summons and complaint and any other process by the mailing of copies of such
process to them at their respective address specified herein. The parties hereby
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Section 18 shall affect the right
of Buyer to serve legal process in any other manner permitted by law or affect
the right of Buyer to bring any action or proceeding against Seller or its
property in the courts of other jurisdictions.
(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THE AGREEMENT (INCLUDING THIS ANNEX I), ANY OTHER TRANSACTION
DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
19. NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants to
the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and each Transaction
thereunder:
(a) it is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or representations (whether
written or oral) of the other party to the Transaction Documents, other than the
representations expressly set forth in the Transaction Documents.
(b) it has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party;
60
(c) it is a sophisticated and informed Person that has a full
understanding of all the terms, conditions and risks (economic and otherwise) of
the Transaction Documents and each Transaction thereunder and is capable of
assuming and willing to assume (financially and otherwise) those risks;
(d) it is entering into the Transaction Documents and each
Transaction thereunder for the purposes of managing its borrowings or
investments or hedging its underlying assets or liabilities and not for purposes
of speculation; and
(e) it is not acting as a fiduciary or financial, investment or
commodity trading advisor for the other party and has not given the other party
(directly or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.
20. INDEMNITY
Seller hereby agrees to indemnify Buyer, Buyer's designee and each of
its officers, directors, employees and agents ("Indemnified Parties") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, taxes (including stamp, excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by the
Agreement and the documents delivered in connection herewith, other than income
taxes of Buyer), fees, costs, expenses (including reasonable attorneys fees and
disbursements) or disbursements (all of the foregoing, collectively "Indemnified
Amounts") which may at any time (including, without limitation, such time as the
Agreement shall no longer be in effect and the Transactions shall have been
repaid in full) be imposed on or asserted against any Indemnified Party in any
way whatsoever arising out of or in connection with, or relating to, the
Agreement or any Transactions thereunder or any action taken or omitted to be
taken by any Indemnified Party under or in connection with any of the foregoing;
provided, that Seller shall not be liable for Indemnified Amounts resulting from
the gross negligence or willful misconduct of any Indemnified Party or, with
respect to any Purchased Loan which is the subject of a Greenwich Transaction,
for or in connection with any matters arising from events which occurred prior
to the Original Purchase Date for such Purchased Loan. Without limiting the
generality of the foregoing, Seller agrees to hold Buyer harmless from and
indemnify Buyer against all Indemnified Amounts with respect to all Purchased
Loans relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation ERISA, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
Buyer's gross negligence or willful misconduct or, with respect to any Purchased
Loan which is the subject of a Greenwich Transaction, any matters arising from
events which occurred prior to the Original Purchase Date for such Purchased
Loan. In any suit, proceeding or action brought by Buyer in connection with any
Purchased Loan for any sum owing thereunder, or to enforce any provisions of any
Purchased Loan, Seller will save, indemnify and hold Buyer harmless from and
against all expense (including, without limitation, reasonable attorneys' fees
and expenses), loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by Seller of any
61
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time (such time being limited to any time after the Original
Purchase Date with respect to Greenwich Transactions, however) owing to or in
favor of such account debtor or obligor or its successors from Seller. Seller
also agrees to reimburse Buyer as and when billed by Buyer for all Buyer's costs
and expenses incurred in connection with Buyer's due diligence reviews with
respect to the Purchased Loans (including, without limitation, those incurred
pursuant to Section 21) and the enforcement or the preservation of Buyer's
rights under the Agreement or any Transaction contemplated hereby, including
without limitation the reasonable fees and disbursements of its counsel. Seller
hereby acknowledges that, the obligation of Seller hereunder is a recourse
obligation of Seller.
21. DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to
Seller, Buyer or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and extracts of, the
Purchased Loan Files, Servicing Records and any and all documents, records,
agreements, instruments or information relating to such Purchased Loans in the
possession or under the control of Seller, any other servicer or subservicer
and/or the Custodian. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Purchased Loan Files and the Purchased Loans. Without limiting
the generality of the foregoing, Seller acknowledges that Buyer may enter into
Transactions with Seller based solely upon the information provided by Seller to
Buyer and the representations, warranties and covenants contained herein, and
that Buyer, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Purchased Loans. Buyer may
underwrite such Purchased Loans itself or engage a third party underwriter to
perform such underwriting. Seller agrees to reasonably cooperate with Buyer and
any third party underwriter in connection with such underwriting, including, but
not limited to, providing Buyer and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Purchased Loans in the possession, or under the control, of Seller.
Seller further agrees that Seller shall reimburse Buyer for any and all
out-of-pocket costs and expenses reasonably incurred by Buyer in connection with
Buyer's activities pursuant to this Section 21, including, without limitation,
reasonable attorneys' fees and expenses.
22. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans
hereby, Seller shall continue to service or cause the Purchased Loans to be
serviced for the benefit of Buyer and, if Buyer shall exercise its rights to
pledge or hypothecate the Purchased Loans prior to the Repurchase Date pursuant
to Section 8, Buyer's assigns. Seller shall service or cause the Purchased Loans
to be serviced in accordance with Accepted Servicing Practices approved by Buyer
and maintained by other prudent mortgage lenders with respect to mortgage loans
similar to the Purchased Loans. Notwithstanding anything contained in the
Agreement to the contrary, Seller shall not take any of the following actions
without the express written consent of Buyer
62
("Material Control Issues"): (i) any waiver or release of any material right,
condition or benefit under any Purchased Loan; (ii) take any action to foreclose
and/or enforce any remedies with respect to any Purchased Loan; (iii) amend or
modify, or approve the amendment or modification of, any material terms or
provisions of any Purchased Loan or any loan documents, securitization documents
or other agreements respecting the same; or (iv) take any other action which
would materially modify or materially and adversely affect or impair any
Purchased Loan.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "Servicing
Agreements"), files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Loans (the "Servicing
Records") so long as the Purchased Loans are subject to the Agreement. Seller
grants Buyer a security interest in all servicing fees and rights relating to
the Purchased Loans and all Servicing Records it may have to secure the
obligation of Seller or its designee to service in conformity with this Section
and any other obligation of Seller to Buyer. Seller covenants to safeguard such
Servicing Records and to deliver them promptly to Buyer or its designee
(including the Custodian) at Buyer's request.
(c) Upon the occurrence and continuance of an Event of Default,
Buyer may, in its sole discretion, (i) sell its right to the Purchased Loans on
a servicing released basis or (ii) terminate Seller or any sub-servicer of the
Purchased Loans with or without cause, in each case without payment of any
termination fee. Notwithstanding any provision of the Agreement to the contrary,
upon the occurrence of an Event of Default, Buyer shall have sole control over
all decisions, approvals or determinations made with respect to the servicing
and administration of the Purchased Loans and the exercise of all rights and
remedies with respect to the Purchased Loans and the related loan and
securitization documents evidencing and securing the Purchased Loans.
(d) Seller shall not employ sub-servicers (other than Lennar
Partners Inc., for so long as it remains an Affiliate of Sponsor) to service the
Purchased Loans without the prior written approval of Buyer. If the Purchased
Loans are serviced by a sub-servicer, Seller shall irrevocably assign all
rights, title and interest in the Servicing Agreements in the Purchased Loans to
Buyer.
(e) Seller shall cause any sub-servicers engaged by Seller to
execute a letter agreement with Buyer acknowledging Buyer's security interest
and agreeing that it shall deposit all Income with respect to the Purchased
Loans in the Cash Management Account.
(f) The payment of servicing fees shall be subordinate to payment of
amounts outstanding under any Transaction and the Agreement, and Seller shall
cause Lennar Partners Inc. to enter into an acknowledgement and agreement for
the benefit of Buyer acknowledging such subordination, and confirming the amount
and terms of its servicing fees.
(g) Upon the occurrence of any Collateral Bankruptcy Event, any
failure of any Purchased Loan Borrower to make any required payment of
principal, interest or other amounts due under such Purchased Loan, or any
failure of any Purchased Loan Borrower to otherwise to
63
perform fully any material covenants or other obligations under any of the
related loan documents within any applicable grace period, Seller shall promptly
notify Buyer in writing, by e-mail and by fax. Upon the prior written approval
or direction of Buyer, Seller (or Buyer at Buyer's option) shall issue notices
of default, declare events of default, declare due the entire outstanding
principal balance, and otherwise take all actions under the related loan
documents evidencing and securing the Purchased Loan in preparation for Buyer to
realize upon the underlying collateral. Except as otherwise provided in written
instructions delivered to Seller by Buyer, Seller shall not obtain or cause
Buyer to obtain title to any Mortgaged Property or other collateral securing
such Purchased Loan as a result or in lieu of foreclosure or otherwise, and
shall not otherwise acquire possession of, or take other action with respect to,
any Mortgaged Property or other collateral directly or indirectly securing such
Purchased Loan, if, as a result of any such action, Buyer would be considered to
hold title to, to be a "mortgagee in possession" of, or to be an "owner" or
"operator" of, such Mortgaged Property or other collateral directly or
indirectly securing such Purchased Loan within the meaning of any federal, state
or local law, rule, regulation or statute (including, without limitation, any
Environmental Laws) or a "discharger or responsible party" thereunder. In the
event that title to any of the Mortgaged Properties or other collateral securing
such Purchased Loan is acquired by Buyer or Persons designated by Buyer or by a
third party at a foreclosure or trustee's sale, the servicing rights of Seller
with respect to such Purchased Loan shall terminate, unless Buyer shall have
agreed or directed in writing that Seller shall continue to perform servicing
with respect to any such Mortgaged Property or other collateral.
23. MISCELLANEOUS
(a) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time in
effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(b) All rights, remedies and powers of Buyer hereunder and in
connection herewith are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers of
Buyer whether under law, equity or agreement. In addition to the rights and
remedies granted to it in the Agreement, Buyer shall have all rights and
remedies of a secured party under the Uniform Commercial Code.
(c) The Transaction Documents may be executed in counterparts, each
of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(d) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(e) Without limiting the rights and remedies of Buyer under the
Transaction Documents, Seller shall pay Buyer's reasonable out-of-pocket costs
and expenses, including reasonable fees and expenses of accountants, attorneys
and advisors, incurred in connection with the preparation, negotiation,
execution and consummation of, and any amendment, supplement or modification to,
the Transaction Documents and the Transactions thereunder. Seller agrees to pay
Buyer on demand all costs and expenses (including reasonable expenses for legal
services of
64
every kind) of any subsequent enforcement of any of the provisions hereof, or of
the performance by Buyer of any obligations of Seller in respect of the
Purchased Loans, or any actual or attempted sale, or any exchange, enforcement,
collection; compromise or settlement in respect of any of the Collateral and for
the custody, care or preservation of the Collateral (including insurance costs)
and defending or asserting rights and claims of Buyer in respect thereof, by
litigation or otherwise. In addition, Seller agrees to pay Buyer on demand all
reasonable costs and expenses (including reasonable expenses for legal services)
incurred in connection with the maintenance of the Cash Management Account and
registering the Collateral in the name of Buyer or its nominee. All such
expenses shall be recourse obligations of Seller to Buyer under the Agreement.
(f) Each provision of the Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Agreement shall be prohibited by or be invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of the Agreement.
(g) The parties acknowledge and agree that although they intend to
treat each Transaction as a sale of the Purchased Loans, in the event that such
sale shall be recharacterized as a secured financing, this Annex I shall also
serve as a security agreement with respect to Buyer's rights in the Collateral.
In order to secure and to provide for the prompt and unconditional repayment of
the Repurchase Price and the performance of its obligations under the Agreement,
Seller hereby pledges to Buyer and hereby grants to Buyer a first priority
security interest in all of its rights in the Purchased Loans. Buyer may without
Seller's execution, consent or approval, and Seller hereby covenants that it
shall at Buyer's request duly execute any Form UCC-1 financing statements as may
be required by Buyer in order to perfect its security interest created hereby in
such rights and obligations granted above, it being agreed that Seller shall pay
any and all fees required to file such financing statements.
(h) The Agreement contains a final and complete integration of all
prior expressions by the parties with respect to the subject matter hereof and
thereof and shall constitute the entire agreement among the parties with respect
to such subject matter, superseding all prior oral or written understandings.
(i) The parties understand that the Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding the
meaning and legal significance of the Agreement and that it is satisfied with
its legal counsel and the advice received from it.
(j) Should any provision of the Agreement require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all parties have
participated in the preparation of the Agreement.
65
(k) The parties recognize that each Transaction is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
(l) Any notice, acknowledgment, statement or certificate (including,
without limitation, any Confirmation) given by Buyer to any Seller shall be
effective as, and shall be deemed to be, a notice, acknowledgment, statement or
certificate given to each and every Seller. Buyer may, without necessity of any
inquiry, rely solely upon any notice, acknowledgment, statement or certificate
of any of (1) any Seller or (2) any authorized representative of Seller set
forth on Exhibit II or otherwise designated by any Seller from time to time, as
constituting the joint and several statement and certificate of each and every
Seller fully authorized by each and every Seller. Any disbursements of funds to
Seller provided for in Article 5 of this Annex I or otherwise in the Agreement
or the Transaction Documents shall be deemed properly made to Seller if
disbursed to any Seller or its designee.
66
IN WITNESS WHEREOF, the parties have executed this Annex I as of the
28th day of February, 2003.
BUYER:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
SELLER:
DSHI GREEN, INC.,
a Delaware corporation
By:
----------------------
Name:
----------------------
Title:
----------------------
IN WITNESS WHEREOF, the parties have executed this Annex I as of the
28th day of February, 2003.
BUYER:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
----------------------
Name:
----------------------
Title:
----------------------
SELLER:
DSHI GREEN, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: VICE PRESIDENT
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
AGREED AND ACKNOWLEDGED:
_________, a ___________
By:
------------------------
Its:
------------------------
2