BOND [LOGO]
MARKET
ASSOCIATION I S M A
The Bond Market Association International Securities Market Association
New York o Washington o London ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇.▇. ▇▇▇, ▇▇-▇▇▇▇, ▇▇▇▇▇▇
www. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ ▇▇▇.▇▇▇▇.▇▇▇
2000 VERSION
TBM/AISMA
GLOBAL MASTER REPURCHASE AGREEMENT
Dated as of March 29, 2001
BETWEEN: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. as Agent for
Salomon Brothers International Limited
("PARTY A")
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AND
NC Residual II Corporation ("PARTY B")
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1. APPLICABILITY
(a) From time to time the parties hereto may enter into transactions in
which one party, acting through a Designated Office, ("Seller") agrees
to sell to the other, acting through a Designated Office, ("Buyer")
securities and financial instruments ("Securities") (subject to
paragraph 1(c), other than equities and Net Paying Securities) against
the payment of the purchase price by Buyer to Seller, with a
simultaneous agreement by Buyer to sell to Seller Securities equivalent
to such Securities at a date certain or on demand against the payment
of the repurchase price by Seller to Buyer.
(b) Each such transaction (which may be a repurchase transaction
("Repurchase Transaction") or a buy and sell back transaction
("Buy/Sell Back Transaction")) shall be referred to herein as a
"Transaction" and shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto, unless
otherwise agreed in writing.
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(c) If this Agreement may be applied to:
(i) Buy/Sell Back Transactions, this shall be specified in Annex I
hereto, and the provisions of the Buy/Sell Back Annex shall
apply to such Buy/Sell Back Transactions;
(ii) Net Paying Securities, this shall be specified in Annex I
hereto and the provisions of Annex I, paragraph 1(b) shall
apply to Transactions involving Net Paying Securities.
(d) If Transactions are to be effected under this Agreement by either party
as an agent, this shall be specified in Annex I hereto, and the
provisions of the Agency Annex shall apply to such Agency Transactions.
2. DEFINITIONS
(a) "Act of Insolvency" shall occur with respect to any party hereto upon -
(i) its making a general assignment for the benefit of, entering
into a reorganisation, arrangement, or composition with
creditors; or
(ii) its admitting in writing that it is unable to pay its debts as
they become due; or
(iii) its seeking, consenting to or acquiescing in the appointment
of any trustee, administrator, receiver or liquidator or
analogous officer of it or any material part of its property;
or
(iv) the presentation or filing of a petition in respect of it
(other than by the counterparty to this Agreement in respect
of any obligation under this Agreement) in any court or before
any agency alleging or for the bankruptcy, winding-up or
insolvency of such party (or any analogous proceeding) or
seeking any reorganisation, arrangement, composition,
re-adjustment, administration, liquidation, dissolution or
similar relief under any present or future statute, law or
regulation, such petition (except in the case of a petition
for winding-up or any analogous proceeding, in respect of
which no such 30 day period shall apply) not having been
stayed or dismissed within 30 days of its filing; or
(v) the appointment of a receiver, administrator, liquidator or
trustee or analogous officer of such party or over all or any
material part of such party's property; or
(vi) the convening of any meeting of its creditors for the purposes
of considering a voluntary arrangement as ferred to in section
3 of the Insolvency Act 1986 (or any analogous proceeding);
(b) "Agency Transaction", the meaning specified in paragraph 1 of the
Agency Annex;
(c) "Appropriate Market", the meaning specified in paragraph 10;
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(d) "Base Currency", the currency indicated in Annex I hereto;
(e) "Business Day" -
(i) in relation to the settlement of any Transaction which is to
be settled through Clearstream or Euroclear, a day on which
Clearstream or, as the case may be, Euroclear is open to
settle business in the currency in which the Purchase Price
and the Repurchase Price are denominated;
(ii) in relation to the settlement of any Transaction which is to
be settled through a settlement system other than Clearstream
or Euroclear, a day on which that settlement system is open to
settle such Transaction;
(iii) in relation to any delivery of Securities not falling within
(i) or (ii) above, a day on which banks are open for business
in the place where delivery of the relevant Securities is to
be effected; and
(iv) in relation to any obligation to make a payment not falling
within (i) or (ii) above, a day other than a Saturday or a
Sunday on which banks are open for business in the principal
financial centre of the country of which the currency in which
the payment is denominated is the official currency and, if
different, in the place where any account designated by the
parties for the making or receipt of the payment is situated
(or, in the case of a payment in euro, a day on which TARGET
operates);
(f) "Cash Margin", a cash sum paid to Buyer or Seller in accordance with
paragraph 4;
(g) "Clearstream", Clearstream Banking, societe anonyme, (previously
Cedelbank) or any successor thereto;
(h) "Confirmation", the meaning specified in paragraph 3(b);
(i) "Contractual Currency", the meaning specified in paragraph 7(a);
(j) "Defaulting Party", the meaning specified in paragraph 10;
(k) "Default Market Value", the meaning specified in paragraph 10;
(i) "Default Notice", a written notice served by the non-Defaulting Party
on the Defaulting Party under paragraph 10 stating that an event shall
be treated as an Event of Default for the purposes of this Agreement;
(j) "Defaulting Party", the meaning specified in paragraph 10;
(k) "Default Market Value", the meaning specified in paragraph 10;
(l) "Default Notice", a written notice served by the non-Defaulting Party
on the Defaulting Party under paragraph 10 stating that an event shall
be treated as an Event of Default for the purpose of this Agreement;
(m) "Default Valuation Notice", the meaning specified in paragraph 10;
(n) "Default Variation Time", the meaning specified in paragraph 10;
(o) "Deliverable Securities", the meaning specified in paragraph 10;
(p) "Designated Office", with respect to a party, a branch or office of
that party which is
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specified as such in Annex I hereto or such other branch or office as
may be agreed to by the parties;
(q) "Distributions", the meaning specified in sub-paragraph (w) below;
(r) "Equivalent Margin Securities", Securities equivalent to Securities
previously transferred as Margin Securities;
(s) "Equivalent Securities", with respect to a Transaction, Securities
equivalent to Purchased Securities under that Transaction. If and to
the extent that such Purchased Securities have been redeemed, the
expression shall mean a sum of money equivalent to the proceeds of the
redemption;
(t) Securities are "equivalent to" other Securities for the purposes of
this Agreement if they are: (i) of the same issuer; (ii) part of the
same issue; and (iii) of an identical type, nominal value, description
and (except where otherwise stated) amount as those other Securities,
provided that -
(A) Securities will be equivalent to other Securities
notwithstanding that those Securities have been redenominated
into euro or that the nominal value of those Securities has
changed in connection with such redenomination; and
(B) where Securities have been converted, subdivided or
consolidated or have become the subject of a takeover or the
holders of Securities have become entitled to receive or
acquire other Securities or other property or the Securities
have become subject to any similar event, the expression
"equivalent to" shall mean Securities equivalent to (as
defined in the provisions of this definition preceding the
proviso) the original Securities together with or replaced by
a sum of money or Securities or other property equivalent to
(as so defined) that receivable by holders of such original
Securities resulting from such event;
(u) "Euroclear", ▇▇▇▇▇▇ Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System or any successor thereto;
(v) "Event of Default", the meaning specified in paragraph 10;
(w) "Income", with respect to any Security at any time, all interest,
dividends or other distributions thereon, but excluding distributions
which are a payment or repayment of principal in respect of the
relevant securities ("Distributions");
(x) "Income Payment Date", with respect to any Securities, the date on
which Income is paid in respect of such Securities or, in the case of
registered Securities, the date by reference to which particular
registered holders are identified as being entitled to payment of
Income;
(y) "LIBOR", in relation to any sum in any currency, the one month London
Inter Bank Offered Rate in respect of that currency as quoted on page
3750 on the Bridge
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Telerate Service (or such other page as may replace page 3750 on that
service) as of 11:00 a.m., London time, on the date on which it is to
be determined;
(z) "Margin Ratio", with respect to a Transaction, the Market Value of the
Purchased Securities at the time when the Transaction was entered into
divided by the Purchase Price (and so that, where a Transaction relates
to Securities of different descriptions and the Purchase Price is
apportioned by the parties among Purchased Securities of each such
description, a separate Margin Ratio shall apply in respect of
Securities of each such description), or such other proportion as the
parties may agree with respect to that Transaction;
(aa) "Margin Securities", in relation to a Margin Transfer, Securities
reasonably acceptable to the party calling for such Margin Transfer;
(bb) "Margin Transfer", any, or any combination of, the payment or repayment
of Cash Margin and the transfer of Margin Securities or Equivalent
Margin Securities;
(cc) "Market Value", with respect to any Securitibs as of any time on any
date, the price for such Securities at such time on such date obtained
from a generally recognised source agreed to by the parties (and where
different prices are obtained for different delivery dates, the price
so obtainable for the earliest available such delivery date) (provided
that the price of Securities that are suspended shall (for the purposes
of paragraph 4) be nil unless the parties otherwise agree and (for all
other purposes) shall be the price of those Securities as of close of
business on the dealing day in the relevant market last preceding the
date of suspension) plus the aggregate amount of Income which, as of
such date, has accrued but not yet been paid in respect of the
Securities to the extent not included in such price as of such date,
and for these purposes any sum in a currency other than the Contractual
Currency for the Transaction in question shall be converted into such
Contractual Currency at the Spot Rate prevailing at the relevant time;
(dd) "Net Exposure", the meaning specified in paragraph 4(c);
(ee) the "Net Margin" provided to a party at any time, the excess (if any)
at that time of (i) the sum of the amount of Cash Margin paid to that
party (including accrued interest on such Cash Margin which has not
been paid to the other party) and the Market Value of Margin Securities
transferred to that party under paragraph 4(a) (excluding any Cash
Margin which has been repaid to the other party and any Margin
Securities in respect of which Equivalent Margin Securities have been
transferred to the other party) over (ii) the sum of the amount of Cash
Margin paid to the other party (including accrued interest on such Cash
Margin which has not been paid by the other party) and the Market Value
of Margin Securities transferred to the other party under paragraph
4(a) (excluding any Cash Margin which has been repaid by the other
party and any Margin Securities in respect of which Equivalent Margin
Securities have been transferred by the other party) and for this
purpose any amounts not denominated in the Base Currency shall be
converted into the Base Currency at the Spot Rate
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prevailing at the relevant time;
(ff) "Net Paying Securities", Securities which are of a kind such that, were
they to be the subject of a Transaction to which paragraph 5 applies,
any payment made by Buyer under paragraph 5 would be one in respect of
which either Buyer would or might be required to make a withholding or
deduction for or on account of taxes or duties or Seller might be
required to make or account for a payment for or on account of taxes or
duties (in each case other than tax on overall net income) by reference
to such payment;
(gg) "Net Value", the meaning specified in paragraph 10;
(hh) "New Purchased Securities", the meaning specified in paragraph 8(a);
(ii) "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 basis or 365 day basis in accordance with the applicable ISMA
convention, unless otherwise agreed between the parties for the
Transaction), 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 calculation or, if earlier,
the Repurchase Date;
(jj) "Pricing Rate", with respect to any Transaction, the per annum
percentage rate for calculation of the Price Differential agreed to by
Buyer and Seller in relation to that Transaction;
(kk) "Purchase Date", with respect to any Transaction, the date on which
Purchased Securities are to be sold by Seller to Buyer in relation to
that Transaction;
(ll) "Purchase Price", on the Purchase Date, the price at which Purchased
Securities are sold or are to be sold by Seller to Buyer;
(mm) "Purchased Securities", with respect to any Transaction, the Securities
sold or to be sold by Seller to Buyer under that Transaction, and any
New Purchased Securities transferred by Seller to Buyer under paragraph
8 in respect of that Transaction;
(nn) "Receivable Securities", the meaning specified in paragraph 10;
(oo) "Repurchase Date", with respect to any Transaction, the date on which
Buyer is to sell Equivalent Securities to Seller in relation to that
Transaction;
(pp) "Repurchase Price", with respect to any Transaction and as of any date,
the sum of the Purchase Price and the Price Differential as of such
date;
(qq) "Special Default Notice", the meaning specified in paragraph 14;
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(rr) "Spot Rate", where an amount in one currency is to be converted into a
second currency on any date, unless the parties otherwise agree, the
spot rate of exchange quoted by Barclays Bank PLC in the London
inter-bank market for the sale by it of such second currency against a
purchase by it of such first currency;
(ss) "TARGET", the Trans-European Automated Real-time Gross Settlement
Express Transfer System;
(tt) "Term", with respect to any Transaction, the interval of time
commencing with the Purchase Date and ending with the Repurchase Date;
(uu) "Termination", with respect to any Transaction, refers to the
requirement with respect to such Transaction for Buyer to sell
Equivalent Securities against payment by Seller of the Repurchase Price
in accordance with paragraph 3(f), and reference to a Transaction
having a "fixed term" or being "terminable upon demand" shall be
construed accordingly;
(vv) "Transaction Costs", the meaning specified in paragraph 10;
(ww) "Transaction Exposure", with respect to any Transaction at any time
during the period from the Purchase Date to the Repurchase Date (or, if
later, the date on which Equivalent Securities are delivered to Seller
or the Transaction is terminated under paragraph 10(g) or 10(h)), the
difference between (i) the Repurchase Price at such time multiplied by
the applicable Margin Ratio (or, where the Transaction relates to
Securities of more than one description to which different Margin
Ratios apply, the amount produced by multiplying the Repurchase Price
attributable to Equivalent Securities of each such description by the
applicable Margin Ratio and aggregating the resulting amounts, the
Repurchase Price being for this purpose attributed to Equivalent
Securities of each such description in the same proportions as those in
which the Purchase Price was apportioned among the Purchased
Securities) and (ii) the Market Value of Equivalent Securities at such
time. If (i) is greater than (ii), Buyer has a Transaction Exposure for
that Transaction equal to that excess. If (ii) is greater than (i),
Seller has a Transaction Exposure for that Transaction equal to that
excess; and
(xx) except in paragraphs 14(b)(i) and 18, references in this Agreement to
"written" communications and communications "in writing" include
communications made through any electronic system agreed between the
parties which is capable of reproducing such communication in hard copy
form.
3. INITIATION; CONFIRMATION; TERMINATION
(a) A Transaction may be entered into orally or in writing at the
initiation of either Buyer or Seller.
(b) Upon agreeing to enter into a Transaction hereunder Buyer or Seller (or
both), as shall have been agreed, shall promptly deliver to the other
party written confirmation
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of such Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including
CUSIP or ISIN or other identifying number or numbers, 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 (in which case the Confirmation shall
state that it is terminable on demand);
(iv) the Pricing Rate applicable to the Transaction;
(v) in respect of each party the details of the bank account[s] to
which payments to be made hereunder are to be credited;
(vi) where the Buy/Sell Back Annex applies, whether the Transaction
is a Repurchase Transaction or a Buy/Sell Back Transaction;
(vii) where the Agency Annex applies, whether the Transaction is an
Agency Transaction and, if so, the identity of the party which
is acting as agent and the name, code or identifier of the
Principal; and
(viii) any additional terms or conditions of the Transaction;
and may be in the form of Annex II hereto or may be in any other form
to which the parties agree.
The Confirmation relating to a Transaction shall, together with this
Agreement, constitute prima facie evidence of the terms agreed between
Buyer and Seller for that Transaction, unless objection is made with
respect to the Confirmation promptly after receipt thereof. In the
event of any conflict between the terms of such Confirmation and this
Agreement, the Confirmation shall prevail in respect of that
Transaction and those terms only.
(c) On the Purchase Date for a Transaction, Seller shall transfer the
Purchased Securities to Buyer or its agent against the payment of the
Purchase Price by Buyer.
(d) Termination of a Transaction will be effected, in the case of on demand
Transactions, on the date specified for Termination in such demand,
and, in the case of fixed term Transactions, on the date fixed for
Termination.
(e) In the case of on demand Transactions, demand for Termination shall be
made by Buyer or Seller, by telephone or otherwise, and shall provide
for Termination to occur after not less than the minimum period as is
customarily required for the settlement or delivery of money or
Equivalent Securities of the relevant kind.
(f) On the Repurchase Date, Buyer shall transfer to Seller or its agent
Equivalent
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Securities against the payment of the Repurchase Price by Seller (less
any amount then payable and unpaid by Buyer to Seller pursuant to
paragraph 5).
4. MARGIN MAINTENANCE
(a) If at any time either party has a Net Exposure in respect of the other
party it may by notice to the other party require the other party to
make a Margin Transfer to it of an aggregate amount or value at least
equal to that Net Exposure.
(b) A notice under sub-paragraph (a) above may be given orally or in
writing.
(c) For the purposes of this Agreement a party has a Net Exposure in
respect of the other party if the aggregate of all the first party's
Transaction Exposures plus any amount payable to the first party under
paragraph 5 but unpaid less the amount of any Net Margin provided to
the first party exceeds the aggregate of all the other party's
Transaction Exposures plus any amount payable to the other party under
paragraph 5 but unpaid less the amount of any Net Margin provided to
the other party; and the amount of the Net Exposure is the amount of
the excess. For this purpose any amounts not denominated in the Base
Currency shall be converted into the Base Currency at the Spot Rate
prevailing at the relevant time.
(d) To the extent that a party calling for a Margin Transfer has previously
paid Cash Margin which has not been repaid or delivered Margin
Securities in respect of which Equivalent Margin Securities have not
been delivered to it, that party shall be entitled to require that such
Margin Transfer be satisfied first by the repayment of such Cash Margin
or the delivery of Equivalent Margin Securities but, subject to this,
the composition of a Margin Transfer shall be at the option of the
party making such Margin Transfer.
(e) Any Cash Margin transferred shall be in the Base Currency or such other
currency as the parties may agree.
(f) A payment of Cash Margin shall give rise to a debt owing from the party
receiving such payment to the party making such payment. Such debt
shall bear interest at such rate, payable at such times, as may be
specified in Annex I hereto in respect of the relevant currency or
otherwise agreed between the parties, and shall be repayable subject to
the terms of this Agreement.
(g) Where Seller or Buyer becomes obliged under sub-paragraph (a) above to
make a Margin Transfer, it shall transfer Cash Margin or Margin
Securities or Equivalent Margin Securities within the minimum period
specified in Annex I hereto or, if no period is there specified, such
minimum period as is customarily required for the settlement or
delivery of money, Margin Securities or Equivalent Margin Securities of
the relevant kind.
(h) The parties may agree that, with respect to any Transaction, the
provisions of subparagraphs (a) to (g) above shall not apply but
instead that margin may be provided
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separately in respect of that Transaction in which case -
(i) that Transaction shall not be taken into account when
calculating whether either party has a Net Exposure;
(ii) margin shall be provided in respect of that Transaction in
such manner as the parties may agree; and
(iii) margin provided in respect of that Transaction shall not be
taken into account for the purposes of sub-paragraphs (a) to
(g) above.
(i) The parties may agree that any Net Exposure which may arise shall be
eliminated not by Margin Transfers under the preceding provisions of
this paragraph but by the repricing of Transactions under sub-paragraph
(j) below, the adjustment of Transactions under sub-paragraph (k) below
or a combination of both these methods.
(j) Where the parties agree that a Transaction is to be repriced under this
sub-paragraph, such repricing shall be effected as follows -
(i) the Repurchase Date under the relevant Transaction (the
"Original Transaction") shall be deemed to occur on the date
on which the repricing is to be effected (the "Repricing
Date");
(ii) the parties shall be deemed to have entered into a new
Transaction (the "Repriced Transaction") on the terms set out
in (iii) to (vi) below;
(iii) the Purchased Securities under the Repriced Transaction shall
be Securities equivalent to the Purchased Securities under the
Original Transaction;
(iv) the Purchase Date under the Repriced Transaction shall be the
Repricing Date;
(v) the Purchase Price under the Repriced Transaction shall be
such amount as shall, when multiplied by the Margin Ratio
applicable to the Original Transaction, be equal to the Market
Value of such Securities on the Repricing Date;
(vi) the Repurchase Date, the Pricing Rate, the Margin Ratio and,
subject as aforesaid, the other terms of the Repriced
Transaction shall be identical to those of the Original
Transaction;
(vii) the obligations of the parties with respect to the delivery of
the Purchased Securities and the payment of the Purchase Price
under the Repriced Transaction shall be set off against their
obligations with respect to the delivery of Equivalent
Securities and payment of the Repurchase Price under the
Original Transaction and accordingly only a net cash sum shall
be paid by one party to the other. Such net cash sum shall be
paid within the period specified in sub-paragraph (g) above.
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(k) The adjustment of a Transaction (the "Original Transaction") under this
sub-paragraph shall be effected by the parties agreeing that on the
date on which the adjustment is to be made (the "Adjustment Date") the
Original Transaction shall be terminated and they shall enter into a
new Transaction (the "Replacement Transaction") in accordance with the
following provisions -
(i) the Original Transaction shall be terminated on the Adjustment
Date on such terms as the parties shall agree on or before the
Adjustment Date;
(ii) the Purchased Securities under the Replacement Transaction
shall be such Securities as the parties shall agree on or
before the Adjustment Date (being Securities the aggregate
Market Value of which at the Adjustment Date is substantially
equal to the Repurchase Price under the Original Transaction
at the Adjustment Date multiplied by the Margin Ratio
applicable to the Original Transaction):
(iii) the Purchase Date under the Replacement Transaction shall be
the Adjustment Date;
(iv) the other terms of the Replacement Transaction shall be such
as the parties shall agree on or before the Adjustment Date;
and
(v) the obligations of the parties with respect to payment and
delivery of Securities on the Adjustment Date under the
Original Transaction and the Replacement Transaction shall be
settled in accordance with paragraph 6 within the minimum
period specified in sub-paragraph (g) above.
5. INCOME PAYMENTS
Unless otherwise agreed -
(i) where the Term of a particular Transaction extends over an
Income Payment Date in respect of any Securities subject to
that Transaction, Buyer shall on the date such Income is paid
by the issuer transfer to or credit to the account of Seller
an amount equal to (and in the same currency as) the amount
paid by the issuer;
(ii) where Margin Securities are transferred from one party ("the
first party") to the other party ("the second party") and an
Income Payment Date in respect of such Securities occurs
before Equivalent Margin Securities are transferred by the
second party to the first party, the second party shall on the
date such Income is paid by the issuer transfer to or credit
to the account of the first party an amount equal to (and in
the same currency as) the amount paid by the issuer;
and for the avoidance of doubt references in this paragraph to the
amount of any Income paid by the issuer of any Securities shall be to
an amount paid without any
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withholding or deduction for or on account of taxes or duties
notwithstanding that a payment of such Income made in certain
circumstances may be subject to such a withholding or deduction.
6. PAYMENT AND TRANSFER
(a) Unless otherwise agreed, all money paid hereunder shall be in
immediately available freely convertible funds of the relevant
currency. All Securities to be transferred hereunder (i) shall be in
suitable form for transfer and shall be accompanied by duly executed
instruments of transfer or assignment in blank (where required for
transfer) and such other documentation as the transferee may reasonably
request, or (ii) shall be transferred through the book entry system of
Euroclear or Clearstream, or (iii) shall be transferred through any
other agreed securities clearance system or (iv) shall be transferred
by any other method mutually acceptable to Seller and Buyer.
(b) Unless otherwise agreed, all money payable by one party to the other in
respect of any Transaction shall be paid free and clear of, and without
withholding or deduction for, any taxes or duties of whatsoever nature
imposed, levied, collected, withheld or assessed by any authority
having power to tax, unless the withholding or deduction of such taxes
or duties is required by law. In that event, unless otherwise agreed,
the paying party shall pay such additional amounts as will result in
the net amounts receivable by the other party (after taking account of
such withholding or deduction) being equal to such amounts as would
have been received by it had no such taxes or duties been required to
be withheld or deducted.
(c) Unless otherwise agreed in writing between the parties, under each
Transaction transfer of Purchased Securities by Seller and payment of
Purchase Price by Buyer against the transfer of such Purchased
Securities shall be made simultaneously and transfer of Equivalent
Securities by Buyer and payment of Repurchase Price payable by Seller
against the transfer of such Equivalent Securities shall be made
simultaneously.
(d) Subject to and without prejudice to the provisions of sub-paragraph
6(c), either party may from time to time in accordance with market
practice and in recognition of the practical difficulties in arranging
simultaneous delivery of Securities and money waive in relation to any
Transaction its rights under this Agreement to receive simultaneous
transfer and/or payment provided that transfer and/or payment shall,
notwithstanding such waiver, be made on the same day and provided also
that no such waiver in respect of one Transaction shall affect or bind
it in respect of any other Transaction.
(e) The parties shall execute and deliver all necessary documents and take
all necessary steps to procure that all right, title and interest in
any Purchased Securities, any Equivalent Securities, any Margin
Securities and any Equivalent Margin Securities shall pass to the party
to which transfer is being made upon transfer of the same in accordance
with this Agreement, free from all liens, claims, charges and
encumbrances.
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(f) Notwithstanding the use of expressions such as "REPURCHASE DATE",
"REPURCHASE PRICE", "MARGIN", "NET MARGIN", "MARGIN RATIO" and
"SUBSTITUTION", which are used to reflect terminology used in the
market for transactions of the kind provided for in this Agreement, all
right, title and interest in and to Securities and money transferred or
paid under this Agreement shall pass to the transferee upon transfer or
payment, the obligation of the party receiving Purchased Securities or
Margin Securities being an obligation to transfer Equivalent Securities
or Equivalent Margin Securities.
(g) Time shall be of the essence in this Agreement.
(h) Subject to paragraph 10, all amounts in the same currency payable by
each party to the other under any Transaction or otherwise under this
Agreement on the same date shall be combined in a single calculation of
a net sum payable by one party to the other and the obligation to pay
that sum shall be the only obligation of either party in respect of
those amounts.
(i) Subject to paragraph 10, all Securities of the same issue,
denomination, currency and series, transferable by each party to the
other under any Transaction or hereunder on the same date shall be
combined in a single calculation of a net quantity of Securities
transferable by one party to the other and the obligation to transfer
the net quantity of Securities shall be the only obligation of either
party in respect of the Securities so transferable and receivable.
(j) If the parties have specified in Annex I hereto that this paragraph
6(j) shall apply, each obligation of a party under this Agreement
(other than an obligation arising under paragraph 10) is subject to the
condition precedent that none of those events specified in paragraph
10(a) which are identified in Annex I hereto for the purposes of this
paragraph 6(j) (being events which, upon the serving of a Default
Notice, would be an Event of Default with respect to the other party)
shall have occurred and be continuing with respect to the other party.
7. CONTRACTUAL CURRENCY
(a) All the payments made in respect of the Purchase Price or the
Repurchase Price of any Transaction shall be made in the currency of
the Purchase Price (the "Contractual Currency") save as provided in
paragraph 10(c)(ii). Notwithstanding the foregoing, the payee of any
money may, at its option, accept tender thereof in any other currency,
provided, however, that, to the extent permitted by applicable law, the
obligation of the payer to pay such money will be discharged only to
the extent of the amount of the Contractual Currency that such payee
may, consistent with normal banking procedures, purchase with such
other currency (after deduction of any premium and costs of exchange)
for delivery within the customary delivery period for spot transactions
in respect of the relevant currency.
(b) If for any reason the amount in the Contractual Currency received by a
party, including amounts received after conversion of any recovery
under any judgment or
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order expressed in a currency other than the Contractual Currency,
falls short of the amount in the Contractual Currency due and payable,
the party required to make the payment will, as a separate and
independent obligation, to the extent permitted by applicable law,
immediately transfer such additional amount in the Contractual Currency
as may be necessary to compensate for the shortfall.
(c) If for any reason the amount in the Contractual Currency received by a
party exceeds the amount of the Contractual Currency due and payable,
the party receiving the transfer will refund promptly the amount of
such excess.
8. SUBSTITUTION
(a) A Transaction may at any time between the Purchase Date and Repurchase
Date, if Seller so requests and Buyer so agrees, be varied by the
transfer by Buyer to Seller of Securities equivalent to the Purchased
Securities, or to such of the Purchased Securities as shall be agreed,
in exchange for the transfer by Seller to Buyer of other Securities of
such amount and description as shall be agreed ("New Purchased
Securities") (being Securities having a Market Value at the date of the
variation at least equal to the Market Value of the Equivalent
Securities transferred to Seller).
(b) Any variation under sub-paragraph (a) above shall be effected, subject
to paragraph 6(d), by the simultaneous transfer of the Equivalent
Securities and New Purchased Securities concerned.
(c) A Transaction which is varied under sub-paragraph (a) above shall
thereafter continue in effect as though the Purchased Securities under
that Transaction consisted of or included the New Purchased Securities
instead of the Securities in respect of which Equivalent Securities
have been transferred to Seller.
(d) Where either party has transferred Margin Securities to the other party
it may at any time before Equivalent Margin Securities are transferred
to it under paragraph 4 request the other party to transfer Equivalent
Margin Securities to it in exchange for the transfer to the other party
of new Margin Securities having a Market Value at the time of transfer
at least equal to that of such Equivalent Margin Securities. If the
other party agrees to the request, the exchange shall be effected,
subject to paragraph 6(d), by the simultaneous transfer of the
Equivalent Margin Securities and new Margin Securities concerned. Where
either or both of such transfers is or are effected through a
settlement system in circumstances which under the rules and procedures
of that settlement system give rise to a payment by or for the account
of one party to or for the account of the other party, the parties
shall cause such payment or payments to be made outside that settlement
system, for value the same day as the payments made through that
settlement system, as shall ensure that the exchange of Equivalent
Margin Securities and new Margin Securities effected under this
sub-paragraph does not give rise to any net payment of cash by either
party to the other.
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9. REPRESENTATIONS
Each party represents and warrants to the other that -
(a) it is duly authorised to execute and deliver this Agreement, to enter
into the Transactions contemplated hereunder and to perform its
obligations hereunder and thereunder and has taken all necessary action
to authorise such execution, delivery and performance;
(b) it will engage in this Agreement and the Transactions contemplated
hereunder (other than Agency Transactions) as principal;
(c) the person signing this Agreement on its behalf is, and any person
representing it in entering into a Transaction will be, duly authorised
to do so on its behalf;
(d) it has obtained all authorisations of any governmental or regulatory
body required in connection with this Agreement and the Transactions
contemplated hereunder and such authorisations are in full force and
effect;
(e) the execution, delivery and performance of this Agreement and the
Transactions contemplated hereunder will not violate any law,
ordinance, charter, by-law or rule applicable to it or any agreement by
which it is bound or by which any of its assets are affected;
(f) it has satisfied itself and will continue to satisfy itself as to the
tax implications of the Transactions contemplated hereunder;
(g) in connection with this Agreement and each Transaction -
(i) unless there is a written agreement with the other party to
the contrary, it is not relying on any advice (whether written
or oral) of the other party, other than the representations
expressly set out in this Agreement;
(ii) it has made and will make its own decisions regarding the
entering into of any Transaction based upon its own judgment
and upon advice from such professional advisers as it has
deemed it necessary to consult;
(iii) it understands the terms, conditions and risks of each
Transaction and is willing to assume (financially and
otherwise) those risks; and
(h) at the time of transfer to the other party of any Securities it will
have the full and unqualified right to make such transfer and that upon
such transfer of Securities the other party will receive all right,
title and interest in and to those Securities tree of any lien, claim,
charge or encumbrance.
On the date on which any Transaction is entered into pursuant hereto,
and on each day on which Securities, Equivalent Securities, Margin
Securities or Equivalent Margin Securities are to be transferred under
any Transaction, Buyer and Seller shall each be
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deemed to repeat all the foregoing representations. For the avoidance
of doubt and notwithstanding any arrangements which Seller or Buyer may
have with any third party, each party will be liable as a principal for
its obligations under this Agreement and each Transaction.
10. EVENTS OF DEFAULT
(a) If any of the following events (each an "Event of Default") occurs in
relation to either party (the "Defaulting Party", the other party being
the "non-Defaulting Party") whether acting as Seller or Buyer -
(i) Buyer fails to pay the Purchase Price upon the applicable
Purchase Date or Seller fails to pay the Repurchase Price upon
the applicable Repurchase Date, and the non-Defaulting Party
serves a Default Notice on the Defaulting Party; or
(ii) if the parties have specified in Annex I hereto that this
sub-paragraph shall apply, Seller fails to deliver Purchased
Securities on the Purchase Date or Buyer fails to deliver
Equivalent Securities on the Repurchase Date, and the
non-Defaulting Party serves a Default Notice on the Defaulting
Party; or
(iii) Seller or Buyer fails to pay when due any sum payable under
sub-paragraph (g) or (h) below, and the non-Defaulting Party
serves a Default Notice on the Defaulting Party; or
(iv) Seller or Buyer fails to comply with paragraph 4 and the
non-Defaulting Party serves a Default Notice on the Defaulting
Party; or
(v) Seller or Buyer fails to comply with paragraph 5 and the
non-Defaulting Party serves a Default Notice on the Defaulting
Party; or
(vi) an Act of Insolvency occurs with respect to Seller or Buyer
and (except in the case of an Act of Insolvency which is the
presentation of a petition for winding-up or any analogous
proceeding or the appointment of a liquidator or analogous
officer of the Defaulting Party in which case no such notice
shall be required) the non-Defaulting Party serves a Default
Notice on the Defaulting Party; or
(vii) any representations made by Seller or Buyer are incorrect or
untrue in any material respect when made or repeated or deemed
to have been made or repeated, and the non-Defaulting Party
serves a Default Notice on the Defaulting Party; or
(viii) Seller or Buyer admits to the other that it is unable to, or
intends not to, perform any of its obligations hereunder
and/or in respect of any Transaction and the non-Defaulting
Party serves a Default Notice on the Defaulting Party; or
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(ix) Seller or Buyer is suspended or expelled from membership of or
participation in any securities exchange or association or
other self regulating organisation, or suspended from dealing
in securities by any government agency, or any of the assets
of either Seller or Buyer or the assets of investors held by,
or to the order of, Seller or Buyer are transferred or ordered
to be transferred to a trustee by a regulatory authority
pursuant to any securities regulating legislation and the
non-Defaulting Party serves a Default Notice on the Defaulting
Party; or
(x) Seller or Buyer fails to perform any other of its obligations
hereunder and does not remedy such failure within 30 days
after notice is given by the non-Defaulting Party requiring
it to do so, and the non-Defaulting Party serves a Default
Notice on the Defaulting Party;
then sub-paragraphs (b) to (f) below shall apply.
(b) The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur and, subject to the following provisions, all Cash
Margin (including interest accrued) shall be immediately repayable and
Equivalent Margin Securities shall be immediately deliverable (and so
that, where this sub-paragraph applies, performance of the respective
obligations of the parties with respect to the delivery of Securities,
the payment of the Repurchase Prices for any Equivalent Securities and
the repayment of any Cash Margin shall be effected only in accordance
with the provisions of sub-paragraph (c) below).
(c) (i) The Default Market Values of the Equivalent Securities and any
Equivalent Margin Securities to be transferred, the amount of
any Cash Margin (including the amount of interest accrued) to
be transferred and the Repurchase Prices to be paid by each
party shall be established by the non-Defaulting Party for all
Transactions as at the Repurchase Date; and
(ii) on the basis of the sums so established, an account shall be
taken (as at the Repurchase Date) of what is due from each
party to the other under this Agreement (on the basis that
each party's claim against the other in respect of the
transfer to it of Equivalent Securities or Equivalent Margin
Securities under this Agreement equals the Default Market
Value therefor) and the sums due from one party shall be set
off against the sums due from the other and only the balance
of the account shall be payable (by the party having the claim
valued at the lower amount pursuant to the foregoing) and such
balance shall be due and payable on the next following
Business Day. For the purposes of this calculation, all sums
not denominated in the Base Currency shall be converted into
the Base Currency on the relevant date at the Spot Rate
prevailing at the relevant time.
(d) For the purposes of this Agreement, the "Default Market Value" of any
Equivalent Securities or Equivalent Margin Securities shall be
determined in accordance with
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sub-paragraph (e) below, and for this purpose -
(i) the "Appropriate Market" means, in relation to Securities of
any description, the market which is the most appropriate
market for Securities of that description, as determined by
the non-Defaulting Party;
(ii) the "Default Valuation Time" means, in relation to an Event of
Default, the close of business in the Appropriate Market on
the fifth dealing day after the day on which that Event of
Default occurs or, where that Event of Default is the
occurrence of an Act of Insolvency in respect of which under
paragraph 10(a) no notice is required from the non-Defaulting
Party in order for such event to constitute an Event of
Default, the close of business on the fifth dealing day after
the day on which the non-Defaulting Party first became aware
of the occurrence of such Event of Default;
(iii) "Deliverable Securities" means Equivalent Securities or
Equivalent Margin Securities to be delivered by the Defaulting
Party;
(iv) "Net Value" means at any time, in relation to any Deliverable
Securities or Receivable Securities, the amount which, in the
reasonable opinion of the non-Defaulting Party, represents
their fair market value, having regard to such pricing sources
and methods (which may include, without limitation, available
prices for Securities with similar maturities, terms and
credit characteristics as the relevant Equivalent Securities
or Equivalent Margin Securities) as the non-Defaulting Party
considers appropriate, less, in the case of Receivable
Securities, or plus, in the case of Deliverable Securities,
all Transaction Costs which would be incurred in connection
with the purchase or sale of such Securities;
(v) "Receivable Securities" means Equivalent Securities or
Equivalent Margin Securities to be delivered to the Defaulting
Party; and
(vi) "Transaction Costs" in relation to any transaction
contemplated in paragraph 10(d) or (e) means the reasonable
costs, commission, fees and expenses (including any ▇▇▇▇-up or
▇▇▇▇-down) that would be incurred in connection with the
purchase of Deliverable Securities or sale of Receivable
Securities, calculated on the assumption that the aggregate
thereof is the least that could reasonably be expected to be
paid in order to carry out the transaction;
(e) (i) If between the occurrence of the relevant Event of Default and
the Default Valuation Time the non-Defaulting Party gives to
the Defaulting Party a written notice (a "Default Valuation
Notice") which --
(A) states that, since the occurrence of the relevant
Event of Default, the non-Defaulting Party has sold,
in the case of Receivable Securities, or purchased,
in the case of Deliverable Securities, Securities
which form
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part of the same issue and are of an identical type and description as
those Equivalent Securities or Equivalent Margin Securities, and that
the non-Defaulting Party elects to treat as the Default Market Value -
(aa) in the case of Receivable Securities, the net proceeds of such
sale after deducting all reasonable costs, fees and expenses
incurred in connection therewith (provided that, where the
Securities sold are not identical in amount to the Equivalent
Securities or Equivalent Margin Securities, the non-Defaulting
Party may either (x) elect to treat such net proceeds of sale
divided by the amount of Securities sold and multiplied by the
amount of the Equivalent Securities or Equivalent Margin
Securities as the Default Market Value or (y) elect to treat
such net proceeds of sale of the Equivalent Securities or
Equivalent Margin Securities actually sold as the Default
Market Value of that proportion of the Equivalent Securities
or Equivalent Margin Securities, and, in the case of (y), the
Default Market Value of the balance of the Equivalent
Securities or Equivalent Margin Securities shall be determined
separately in accordance with the provisions of this paragraph
10(e) and accordingly may be the subject of a separate notice
(or notices) under this paragraph 10(e)(i)); or
(bb) in the case of Deliverable Securities, the aggregate cost of
such purchase, including all reasonable costs, fees and
expenses incurred in connection therewith (provided that,
where the Securities purchased are not identical in amount to
the Equivalent Securities or Equivalent Margin Securities, the
non-Defaulting Party may either (x) elect to treat such
aggregate cost divided by the amount of Securities sold and
multiplied by the amount of the Equivalent Securities or
Equivalent Margin Securities as the Default Market Value or
(y) elect to treat the aggregate cost of purchasing the
Equivalent Securities or Equivalent Margin Securities actually
purchased as the Default Market Value of that proportion of
the Equivalent Securities or Equivalent Margin Securities,
and, in the case of (y), the Default Market Value of the
balance of the Equivalent Securities or Equivalent Margin
Securities shall be determined separately in accordance with
the provisions of this paragraph 10(e) and accordingly may be
the subject of a separate notice (or notices) under this
paragraph 10(e)(i));
(B) states that the non-Defaulting Party has received, in the case of
Deliverable Securities, offer quotations or, in the case of Receivable
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Securities, bid quotations in respect of Securities of the relevant
description from two or more market makers or regular dealers in the
Appropriate Market in a commercially reasonable size (as determined by
the non-Defaulting Party) and specifies -
(aa) the price or prices quoted by each of them for, in the case of
Deliverable Securities, the sale by the relevant market marker
or dealer of such Securities or, in the case of Receivable
Securities, the purchase by the relevant market maker or
dealer of such Securities;
(bb) the Transaction Costs which would be incurred in connection
with such a transaction; and
(cc) that the non-Defaulting Party elects to treat the price so
quoted (or, where more than one price is so quoted, the
arithmetic mean of the prices so quoted), after deducting, in
the case of Receivable Securities, or adding, in the case of
Deliverable Securities, such Transaction Costs, as the Default
Market Value of the relevant Equivalent Securities or
Equivalent Margin Securities: or
(C) states--
(aa) that either (x) acting in good faith, the non-Defaulting Party
has endeavoured but been unable to sell or purchase Securities
in accordance with sub-paragraph (i)(A) above or to obtain
quotations in accordance with sub-paragraph (i)(B) above (or
both) or (y) the non-Defaulting Party has determined that it
would not be commercially reasonable to obtain such
quotations, or that it would not be commercially reasonable to
use any quotations which it has obtained under sub-paragraph
(i)(B) above; and
(bb) that the non-Defaulting Party has determined the Net Value of
the relevant Equivalent Securities or Equivalent Margin
Securities (which shall be specified) and that the non-
Defaulting Party elects to treat such Net Value as the Default
Market Value of the relevant Equivalent Securities or
Equivalent Margin Securities,
then the Default Market Value of the relevant Equivalent Securities or
Equivalent Margin Securities shall be an amount equal to the Default
Market Value specified in accordance with (A), (B)(cc) or, as the case
may be, (C)(bb) above.
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(ii) If by the Default Valuation Time the non-Defaulting Party has
not given a Default Valuation Notice, the Default Market Value
of the relevant Equivalent Securities or Equivalent Margin
Securities shall be an amount equal to their Net Value at the
Default Valuation Time; provided that, if at the Default
Valuation Time the non-Defaulting Party reasonably determines
that, owing to circumstances affecting the market in the
Equivalent Securities or Equivalent Margin Securities in
question, it is not possible for the non-Defaulting Party to
determine a Net Value of such Equivalent Securities or
Equivalent Margin Securities which is commercially reasonable,
the Default Market Value of such Equivalent Securities or
Equivalent Margin Securities shall be an amount equal to their
Net Value as determined by the non-Defaulting Party as soon as
reasonably practicable after the Default Valuation Time.
(f) The Defaulting Party shall be liable to the non-Defaulting Party for
the amount of all reasonable legal and other professional expenses
incurred by the non-Defaulting Party in connection with or as a
consequence of an Event of Default, together with interest thereon at
LIBOR or, in the case of an expense attributable to a particular
Transaction, the Pricing Rate for the relevant Transaction if that
Pricing Rate is greater than LIBOR.
(g) If Seller fails to deliver Purchased Securities to Buyer on the
applicable Purchase Date Buyer may -
(i) if it has paid the Purchase Price to Seller, require Seller
immediately to repay the sum so paid;
(ii) if Buyer has a Transaction Exposure to Seller in respect of
the relevant Transaction, require Seller from time to time to
pay Cash Margin at least equal to such Transaction Exposure;
(iii) at any time while such failure continues, terminate the
Transaction by giving written notice to Seller. On such
termination the obligations of Seller and Buyer with respect
to delivery of Purchased Securities and Equivalent Securities
shall terminate and Seller shall pay to Buyer an amount equal
to the excess of the Repurchase Price at the date of
Termination over the Purchase Price.
(h) If Buyer fails to deliver Equivalent Securities to Seller on the
applicable Repurchase Date Seller may -
(i) if it has paid the Repurchase Price to Buyer, require Buyer
immediately to repay the sum so paid;
(ii) if Seller has a Transaction Exposure to Buyer in respect of
the relevant Transaction, require Buyer from time to time to
pay Cash Margin at least equal to such Transaction Exposure;
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(iii) at any time while such failure continues, by written notice to
Buyer declare that that Transaction (but only that
Transaction) shall be terminated immediately in accordance
with sub-paragraph (c) above (disregarding for this purpose
references in that sub-paragraph to transfer of Cash Margin
and delivery of Equivalent Margin Securities and as if
references to the Repurchase Date were to the date on which
notice was given under this subparagraph).
(i) The provisions of this Agreement constitute a complete statement of the
remedies available to each party in respect of any Event of Default.
(j) Subject to paragraph 10(k), neither party may claim any sum by way of
consequential loss or damage in the event of a failure by the other
party to perform any of its obligations under this Agreement.
(k) (i) Subject to sub-paragraph (ii) below, if as a result of a
Transaction terminating before its agreed Repurchase Date
under paragraphs 10(b), 10(g)(iii) or 10(h)(iii), the
non-Defaulting Party, in the case of paragraph 10(b), Buyer,
in the case of paragraph 10(g)(iii), or Seller, in the case of
paragraph 10(h)(iii), (in each case the "first party") incurs
any loss or expense in entering into replacement transactions,
the other party shall be required to pay to the first party
the amount determined by the first party in good faith to be
equal to the loss or expense incurred in connection with such
replacement transactions (including all fees, costs and other
expenses) less the amount of any profit or gain made by that
party in connection with such replacement transactions;
provided that if that calculation results in a negative
number, an amount equal to that number shall be payable by the
first party to the other party.
(ii) If the first party reasonably decides, instead of entering
into such replacement transactions, to replace or unwind any
hedging transactions which the first party entered into in
connection with the Transaction so terminating, or to enter
into any replacement hedging transactions, the other party
shall be required to pay to the first party the amount
determined by the first party in good faith to be equal to the
loss or expense incurred in connection with entering into such
replacement or unwinding (including all fees, costs and other
expenses) less the amount of any profit or gain made by that
party in connection with such replacement or unwinding;
provided that if that calculation results in a negative
number, an amount equal to that number shall be payable by the
first party to the other party.
(l) Each party shall immediately notify the other if an Event of Default,
or an event which, upon the serving of a Default Notice, would be an
Event of Default, occurs in relation to it.
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11. TAX EVENT
(a) This paragraph shall apply if either party notifies the other that -
(i) any action taken by a taxing authority or brought in a court
of competent jurisdiction (regardless of whether such action
is taken or brought with respect to a party to this
Agreement); or
(ii) a change in the fiscal or regulatory regime (including, but
not limited to, a change in law or in the general
interpretation of law but excluding any change in any rate of
tax),
has or will, in the notifying party's reasonable opinion, have a
material adverse effect on that party in the context of a Transaction.
(b) If so requested by the other party, the notifying party will furnish
the other with an opinion of a suitably qualified adviser that an event
referred to in sub-paragraph (a)(i) or (ii) above has occurred and
affects the notifying party.
(c) Where this paragraph applies, the party giving the notice referred to
in sub-paragraph (a) may, subject to sub-paragraph (d) below, terminate
the Transaction with effect from a date specified in the notice, not
being earlier (unless so agreed by the other party) than 30 days after
the date of the notice, by nominating that date as the Repurchase Date.
(d) If the party receiving the notice referred to in sub-paragraph (a) so
elects, it may override that notice by giving a counter-notice to the
other party. If a counter-notice is given, the party which gives the
counter-notice will be deemed to have agreed to indemnify the other
party against the adverse effect referred to in sub-paragraph (a) so
far as relates to the relevant Transaction and the original Repurchase
Date will continue to apply.
(e) Where a Transaction is terminated as described in this paragraph, the
party which has given the notice to terminate shall indemnify the other
party against any reasonable legal and other professional expenses
incurred by the other party by reason of the termination, but the other
party may not claim any sum by way of consequential loss or damage in
respect of a termination in accordance with this paragraph.
(t) This paragraph is without prejudice to paragraph 6(b) (obligation to
pay additional amounts if withholding or deduction required); but an
obligation to pay such additional amounts may, where appropriate, be a
circumstance which causes this paragraph to apply.
12. INTEREST
To the extent permitted by applicable law, ii any sum of money payable
hereunder or under any Transaction is not paid when due, interest shall
accrue on the unpaid sum
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as a separate debt at the greater of the Pricing Rate for the
Transaction to which such sum relates (where such sum is referable to a
Transaction) and LIBOR on a 360 day basis or 365 day basis in
accordance with the applicable ISMA convention, for the actual number
of days during the period from and including the date on which payment
was due to, but excluding, the date of payment.
13. Single Agreement
Each party acknowledges that, and has entered into this Agreement 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 are made in
consideration of each other. Accordingly, each party 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, and (ii) 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.
14. NOTICES AND OTHER COMMUNICATIONS
(a) Any notice or other communication to be given under this Agreement -
(i) shall be in the English language, and except where expressly
otherwise provided in this Agreement, shall be in writing;
(ii) may be given in any manner described in sub-paragraphs (b) and
(c) below;
(iii) shall be sent to the party to whom it is to be given at the
address or number, or in accordance with the electronic
messaging details, set out in Annex I hereto.
(b) Subject to sub-paragraph (c) below, any such notice or other
communication shall be effective -
(i) if in writing and delivered in person or by courier, at the
time when it is delivered;
(ii) if sent by telex, at the time when the recipient's answerback
is received;
(iii) if sent by facsimile transmission, at the time when the
transmission is received by a responsible employee of the
recipient in legible form (it being agreed that the burden of
proving receipt will be on the sender and will not be met by a
transmission report generated by the sender's facsimile
machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), at the time when
that mail is delivered or its delivery is attempted;
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(v) if sent by electronic messaging system, at the time that
electronic message is received;
except that any notice or communication which is received, or delivery
of which is attempted, after close of business on the date of receipt
or attempted delivery or on a day which is not a day on which
commercial banks are open for business in the place where that notice
or other communication is to be given shall be treated as given at the
opening of business on the next following day which is such a day.
(c) If -
(i) there occurs in relation to either party an event which, upon
the service of a Default Notice, would be an Event of Default;
and
(ii) the non-Defaulting Party, having made all practicable efforts
to do so, including having attempted to use at least two of
the methods specified in sub-paragraph (b)(ii), (iii) or (v),
has been unable to serve a Default Notice by one of the
methods specified in those sub-paragraphs (or such of those
methods as are normally used by the non-Defaulting Party when
communicating with the Defaulting Party),
the non-Defaulting Party may sign a written notice (a "Special Default
Notice") which -
(aa) specifies the relevant event referred to in paragraph
10(a) which has occurred in relation to the
Defaulting Party;
(bb) states that the non-Defaulting Party, having made all
practicable efforts to do so, including having
attempted to use at least two of the methods
specified in sub-paragraph (b)(ii), (iii) or (v), has
been unable to serve a Default Notice by one of the
methods specified in those sub-paragraphs (or such of
those methods as are normally used by the
non-Defaulting Party when communicating with the
Defaulting Party);
(cc) specifies the date on which, and the time at which,
the Special Default Notice is signed by the
non-Defaulting Party; and
(dd) states that the event specified in accordance with
sub-paragraph (aa) above shall be treated as an Event
of Default with effect from the date and time so
specified.
On the signature of a Special Default Notice the relevant event shall
be treated with effect from the date and time so specified as an Event
of Default in relation to the Defaulting Party, and accordingly
references in paragraph 10 to a Default Notice shall be treated as
including a Special Default Notice. A Special Default Notice shall be
given to the Defaulting Party as soon as practicable after it is
signed.
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(d) Either party may by notice to the other change the address, telex or
facsimile number or electronic messaging system details at which
notices or other communications are to be given to it.
15. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for Transactions. Each
provision and agreement herein shall be treated as separate from any
other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
16. NON-ASSIGNABILITY; TERMINATION
(a) Subject to sub-paragraph (b) below, neither party may assign, charge or
otherwise deal with (including without limitation any dealing with any
interest in or the creation of any interest in) its rights or
obligations under this Agreement or under any Transaction without the
prior written consent of the other party. 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.
(b) Sub-paragraph (a) above 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 10(c) or (f) above.
(c) Either party may terminate this Agreement by giving written notice to
the other, except that this Agreement shall, notwithstanding such
notice, remain applicable to any Transactions then outstanding.
(d) All remedies hereunder shall survive Termination in respect of the
relevant Transaction and termination of this Agreement.
(e) The participation of any additional member State of the European Union
in economic and monetary union after 1 January 1999 shall not have the
effect of altering any term of the Agreement or any Transaction, nor
give a party the right unilaterally to alter or terminate the Agreement
or any Transaction.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of England. Buyer and Seller hereby irrevocably submit for all
purposes of or in connection with this Agreement and each Transaction
to the jurisdiction of the Courts of England.
Party A hereby appoints the person identified in Annex I hereto as its
agent to receive on its behalf service of process in such courts. If
such agent ceases to be its agent,
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Party A shall promptly appoint, and notify Party B of the identity of,
a new agent in England.
Party B hereby appoints the person identified in Annex I hereto as its
agent to receive on its behalf service of process in such courts. If
such agent ceases to be its agent, Party B shall promptly appoint, and
notify Party A of the identity of, a new agent in England.
Each party shall deliver to the other, within 30 days of the date of
this Agreement in the case of the appointment of a person identified in
Annex I or of the date of the appointment of the relevant agent in any
other case, evidence of the acceptance by the agent appointed by it
pursuant to this paragraph of such appointment.
Nothing in this paragraph shall limit the right of any party to take
proceedings in the courts of any other country of competent
jurisdiction.
18. 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
modification, waiver or consent 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)
hereof will not constitute a waiver of any right to do so at a later
date.
19. WAIVER OF IMMUNITY
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or
otherwise) from jurisdiction, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in any
action or proceeding in the Courts of England or of any other country
or jurisdiction, relating in any way to this Agreement or any
Transaction, and agrees that it will not raise, claim or cause to be
pleaded any such immunity at or in respect of any such action or
proceeding.
20. RECORDING
The parties agree that each may electronically record all telephone
conversations between them.
21. THIRD PARTY RIGHTS
No person shall have any right to enforce any provision of this
Agreement under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇.
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Salomon ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. as Agent for NC Residual II Corporation
Salomon Brothers International Limited
By: /s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------- --------------------------------------
Title: Managing Director Title: President
-------------------------------------- --------------------------------------
Date: March 29, 2001 Date: March 29, 2001
-------------------------------------- --------------------------------------
YOUR COUNTERPARTY IN ANY TRANSACTION ENTERED PURSUANT TO THIS MASTER AGREEMENT
IS SALOMON BROTHERS INTERNATIONAL LIMITED. SALOMON BROTHERS INTERNATIONAL
LIMITED IS NOT REGISTERED AS A BROKER-DEALER UNDER THE SECURITIES EXCHANGE ACT
OF 1934.
ANNEX 1, PART I
Supplemental Terms or Conditions
1. The following elections shall apply:
(a) Paragraph 1(d). ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. shall act as agent for
Salomon Brothers International Limited.
(b) Paragraph 2 (d). The Base Currency shall be: US Dollars.
(c) Paragraph 2 (1). Salomon Brothers International Limited's Designated
Offices shall be: Victoria Plaza, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇ OSB.
NC Residual II Corporation's Designated Offices shall be:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Paragraph 6(j) terms shall apply.
(e) Paragraph 10(a)(ii) terms shall apply.
(f) Paragraph 14. For purposes of paragraph 14 of this Agreement --
(i) Address for notices and other communications for the Buyer
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telex:
Answerback:
Other: ▇▇▇▇▇▇▇.▇.▇▇▇▇▇@▇▇▇▇.▇▇▇
(ii) Address for notices and other communications for the Seller --
Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telex:
Answerback:
Other: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
(g) All other elections shall be made by the Parties prior to a particular
Transaction or pursuant to a separate agreement.
2. The following Supplemental Terms and Conditions shall apply:
(a) Paragraph 4 is hereby deleted in its entirety.
(b) With effect from the date of execution of the Agreement, paragraphs 8
(Substitution) and 10 (Events of Default) of the Agreement shall apply
to all repurchase transactions and buy/sell back transactions into
which the Parties have entered before that date and which are
outstanding at that date in substitution for any corresponding
provisions in any previous master agreement between the Parties
governing such transactions.
(c) ADDITIONAL DEFINITIONS.
(i) Notwithstanding the definition in Paragraph 1(a) of the
Agreement, "Securities" shall mean certain non-investment grade
rated and unrated securities acceptable to the Buyer in its sole
discretion and generated from the securitization of mortgage
loans underwritten by Buyer.
(ii) Notwithstanding the definition set forth in Paragraph 2(oo) of
the Agreement, "REPURCHASE DATE" shall mean the calendar day of
each month (or the next succeeding business day thereto) as
determined by the Buyer and the Sellers on or prior to the
initial purchase date.
(iii) Notwithstanding the definition set forth in Paragraph 2(w) of
the Agreement, "INCOME" shall mean, with respect to any Purchased
Security, any principal thereof and all interest, dividends or
other distributions thereon.
(iv) "ADJUSTED LEVERAGE RATIO" shall mean on any date of
determination, the ratio of (a) Total Liabilities to (b) Adjusted
Tangible Net Worth.
(v) "ADJUSTED TANGIBLE NET WORTH": on any date of determination, the
Tangible Net Worth of NCFC minus 25% of the amount by which the
book value of Junior Securitization Interests included in
calculating Tangible Net Worth exceeds Indebtedness of the type
described in paragraph 2(s) of this Annex.
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(vi) "AFFILIATE" shall mean with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, such Person, whether through the
ownership of voting securities, by contract or otherwise.
(vii) "DAILY LEVERAGE RATIO" shall mean as of any date of
determination, the ratio of (a) Total Liabilities of NCFC and its
Subsidiaries on such date to (b) Tangible Net Worth of NCFC and
its Subsidiaries as of the last day of the most recently
completed month.
(viii) "GAAP" shall mean generally accepted accounting principles in
the United States set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination
(ix) "GREENWICH"shall mean Greenwich Capital Financial Products, Inc.
(x) "GUARANTOR" shall mean New Century Mortgage Corporation.
(xi) "GUARANTOR SECURITIZATION TRANSACTION" shall mean an issuance of
Mortgage-backed Securities by either Borrower, or by SBRC, ▇▇▇▇▇
▇▇▇▇▇▇, or Greenwich or an Affiliate of any of them on behalf of
either Borrower, through a trust or other entity created by
either Borrower, SBRC, ▇▇▇▇▇ ▇▇▇▇▇▇ or Greenwich, which
Mortgage-backed Securities are either secured (in whole or in
part) by Mortgage Loans originated or acquired by such Borrower
or evidence the entire beneficial ownership interest therein, and
in connection with which one or more Junior Securitization
Interests are issued to such Borrower or an Affiliate of such
Borrower.
(xii) "GUARANTY" shall mean that certain guaranty, dated March 29,
2001, between Guarantor and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. as agent
for Salomon Brothers International Limited.
(xiii) "INITIAL PURCHASE DATE" shall mean the date of the Initial
Purchase.
(xiv) "INITIAL PURCHASE PRICE" shall mean the price paid in connection
with the one time initial purchase of the securities.
(xv) "JUNIOR SECURITIZATION INTERESTS" shall mean a Mortgage-backed
Security created in a Guarantor Securitization Transaction that
represents a
3
subordinated right to receive principal or interest payments on
the underlying Mortgage Loans (whether or not such subordination
arises only under particular circumstances).
(xvi) "LENDERS" shall have the meaning assigned to it in paragraph
2(s) of this Annex.
(xvii) "LEVERAGE RATIO" shall mean on any date of determination, the
ratio of (a) Total Liabilities to (b) Tangible Net Worth.
(xviii) "NCFC" shall mean New Century Financial Corporation, a
Delaware corporation.
(xix) "OBLIGATIONS" shall have the meaning assigned to it in paragraph
2(s) of this Annex.
(xx) "▇▇▇▇▇ ▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities
Inc.
(xxi) "PRICING MARGIN", unless otherwise set forth in the related
Confirmation, shall equal 1.65% per annum for all Purchased
Securities.
(xxii) Unless otherwise set forth in the related Confirmation,
"PRICING RATE" shall mean one month LIBOR, plus the applicable
Pricing Margin; provided that upon the occurrence of an Event of
Default, the Pricing Rate shall equal the Pricing Rate as set
forth herein (or in the related Confirmation) plus 2.00% per
annum.
(xxiii) "QUARTERLY AVERAGE LEVERAGE RATIO" shall mean for each
three-month period ending on March 31, June 30, September 30 or
December 31 of any year during the term of this Agreement, the
ratio of (a) the average daily amount of Total Liabilities of
NCFC and it Subsidiaries outstanding during such three-month
period to (b) the average of the Tangible Net Worth of NCFC and
its Subsidiaries at the end of each month during such three-month
period.
(xxiv) "REO SUB" shall mean New Century REO Corp., a California
corporation.
(xxv) "SALOMON REO AGREEMENT": shall mean a Master Loan and Security
Agreement dated as of April 1, 2000 by and among the Guarantor,
NC Capital Corporation and SBRC, as the same may be amended,
supplemented, restated or otherwise modified in accordance with
this Agreement and in effect from time to time.
4
(xxvi) "SBRC" shall mean Salomon Brothers Realty Corp., a Delaware
corporation.
(xxvii) "SERVICER" shall mean Ocwen Financial Corporation or its
successors or assigns.
(xxviii)"TANGIBLE NET WORTH" shall mean Guarantor will at all times
during each fiscal year maintain Tangible Net Worth of not less
than (a) the greater of (i) $85,000,000 or (ii) eighty-five
percent (85%) of the Tangible Net Worth at the end of its most
recently completed fiscal year (or, in the case of the Tangible
Net Worth at the end of any fiscal year, its prior fiscal year)
plus (b) ninety percent (90%) of capital contributions made
during such fiscal year plus (c) fifty percent (50%) of positive
year-to-date net income. NCFC will at all times during each
fiscal year maintain Tangible Net Worth of not less than (a) the
greater of (i) $130,000,000 or (ii) eighty-five percent (85%) of
the Tangible Net Worth at the end of its most recently completed
fiscal year (or, in the case of Tangible Net Worth at the end of
any fiscal year, its prior fiscal year) plus (b) ninety percent
(90%) of capital contributions made during such fiscal year plus
(c) fifty percent (50%) of positive year-to-date net income. The
Seller will at all times during each fiscal year maintain
Tangible Net Worth of not less than $1.00.
(xxix) "TOTAL LIABILITIES" shall mean at any time of determination,
the amount, on a consolidated basis, of the liabilities of the
Guarantor or NCFC, as applicable, and its respective
Subsidiaries, determined in accordance with GAAP, minus
subordinated debt.
(xxx) "UNDERLYING CREDIT AGREEMENT" shall have the meaning assigned to
it in paragraph 2(s) of this Annex.
(d) EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall, in addition to
the definition set forth in the Agreement, include the following
events:
(i) Seller shall default under, or fail to perform as requested
under, or shall otherwise breach the material terms of any
instrument, agreement or contract relating to indebtedness
(including repurchase agreements), and such default, failure or
breach shall entitle any counterparty to declare such
indebtedness to be due and payable prior to the maturity thereof
and the aggregate amount of such potentially accelerated
indebtedness shall equal at least $5,000,000 or such lesser
amount included in the cross acceleration provisions of any other
material instrument, agreement or contract relating to
indebtedness (including repurchase agreements);
(ii) Seller or Guarantor shall default under, or fail to perform as
requested under, or shall otherwise breach the material terms of
any instrument, agreement or
5
contract relating to indebtedness (including repurchase
agreements) between Seller or its affiliates, on the one hand,
and Buyer or its affiliates on the other;
(iii) in the good faith judgment of Buyer any material adverse change
shall have occurred with respect to Seller, Guarantor or Seller
and Seller's subsidiaries taken as a whole; or
(iv) the GAAP net worth of Guarantor is less than $40,000,000.
(e) REMEDIES/SET-OFF. After the occurrence and during the continuation of
an Event of Default, in addition to its rights pursuant to the
Agreement, Buyer shall have the right to proceed against any of
Seller's or the Guarantor's assets which may be in the possession of
Buyer, any of Buyer's Affiliates or its designee, including the right
to liquidate such assets and to set-off the proceeds against monies
owed by Seller or Guarantor to Buyer pursuant to the Agreement. Buyer
may set off cash, the proceeds of the liquidation of the Purchased
Securities, any other collateral or its proceeds and all other sums or
obligations owed by Buyer to Seller under the Agreement against all of
Seller's or Guarantor's obligations to Buyer, whether under the
Agreement, under a Transaction, or under any other agreement between
the parties, or otherwise, whether or not such obligations are then
due, without prejudice to Buyer's right to recover any deficiency.
(f) EXPENSES. Seller agrees to pay on demand (i) all out-of-pocket costs
and expenses of Buyer in connection with the preparation, negotiation,
execution, delivery, modification and amendment of this Agreement
(including, without limitation, the fees and expenses of counsel for
Buyer with respect thereto), (ii) Buyer's actual and reasonable due
diligence expenses (not to exceed $10,000 per quarter), (iii) Buyer's
custodial fees and expense, and (iv) all costs and expenses of Buyer
in connection with the enforcement of this Agreement, whether in any
action, suit or litigation, any bankruptcy, insolvency or other
similar proceeding affecting creditors' rights generally (including,
without limitation, the fees and expenses of counsel for Buyer)
whether or not the transactions contemplated hereby are consummated.
(g) COMMITMENT FEE. The Seller agrees to pay to the Buyer, a commitment
fee equal to 2% of the Initial Purchase Price (the "COMMITMENT FEE").
The Commitment Fee shall be earned and owing on the Initial Purchase
Date and shall be payable in three equal installments due on (i) the
Initial Purchase Date, (ii) the 30 day anniversary of the initial
Payment Date (or the next succeeding business day thereto if such date
is not a business day), and (iii) the 60 day anniversary of the
initial Payment Date (or the next succeeding business day thereto if
such date is not a business day). The Commitment Fee shall be paid in
dollars, in immediately available funds, in accordance with the
Buyer's instructions. At the option of the Buyer, any installment due
may be netted out of any Purchase Price to be paid to the Seller.
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(h) INTENT/SECURITY INTEREST. Seller and Buyer intend that the
Transactions hereunder be sales to Buyer of the Purchased Securities
and not loans from Buyer to Seller secured by the Purchased
Securities. However, in order to preserve Buyer's rights under the
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for
Seller's performance of all of its obligations hereunder, Seller
hereby grants Buyer a fully perfected first priority security interest
in the Purchased Securities, the records, and all related property,
insurance, Income, accounts (including any interest of Seller in
escrow accounts) and any other contract rights, payments, rights to
payment (including payments of interest or finance charges) general
intangibles and other assets relating to the Purchased Securities
(including, without limitation, any other accounts) or any interest in
the Purchased Securities and any proceeds and distributions with
respect to any of the foregoing and any other property, rights, titles
or interests as are specified on a Transaction Notice.
(i) COVENANTS. In addition to all other obligations of the Seller and
Guarantor pursuant to the Agreement, the Seller and Guarantor hereby
covenants with the Buyer as follows:
(i) The Seller and Guarantor will cause the Servicer to provide
monthly performance reporting to the Buyer, in form acceptable to
the Buyer.
(ii) Seller will provide monthly compliance certificates to the Buyer
substantially in the form currently provided to U.S. Bank
National Association under the credit agreement between the
Guarantor, U.S. Bank National Association and the lenders named
therein.
(iii) If an Event of Default has occurred and is occurring, the Seller
and Guarantor shall not pay any dividends or distributions with
respect to any capital stock or other equity interests in Seller,
whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Seller.
(iv) Without the prior written consent of the Buyer, there shall not
occur any change of executive management of the Seller or the
Guarantor.
(v) FINANCIAL COVENANTS
(A) TANGIBLE NET WORTH. Guarantor will at all times during
each fiscal year maintain Tangible Net Worth of not
less than (a) the greater of (i) $85,000,000 or (ii)
eighty-five percent (85%) of the Tangible Net Worth at
the end of its most recently completed fiscal year (or,
in the case of the Tangible Net Worth at the end of any
fiscal year, its prior fiscal year) plus (b) ninety
percent (90%) of capital contributions made during such
fiscal year plus (c) fifty percent (50%) of positive
7
year-to-date net income. NCFC will at all times during
each fiscal year maintain Tangible Net Worth of not
less than (a) the greater of (i) $130,000,000 or (ii)
eighty-five percent (85%) of the Tangible Net Worth at
the end of its most recently completed fiscal year (or,
in the case of Tangible Net Worth at the end of any
fiscal year, its prior fiscal year) plus (b) ninety
percent (90%) of capital contributions made during such
fiscal year plus (c) fifty percent (50%) of positive
year-to-date net income. The Seller will at all times
during each fiscal year maintain Tangible Net Worth of
not less than $1.00.
(B) MINIMUM LIQUIDITY. The Guarantor will not permit the
amount of cash held by the Guarantor to be less than
$10,000,000.
(C) LEVERAGE RATIO. The Guarantor will not permit the
Leverage Ratio of the Guarantor to be greater than 8.0
to 1.0 as of the last day of each fiscal quarter of the
Seller. NCFC will not permit (i) the Quarterly Average
Leverage Ratio for any period of measurement to be
greater than 10.0 to 1.0, (ii) the Daily Leverage Ratio
on any date to be greater than 15.0 to 1.0, or (iii)
the Adjusted Leverage Ratio as of the last day of each
fiscal quarter to be greater than 12.0 to 1.0.
(j) ROLLOVER TRANSACTIONS. Provided that all conditions in the Agreement
have been satisfied, including the requirements set forth in this
Paragraph 2(j), each Purchased Security that is repurchased by Seller
on the applicable Repurchase Date shall automatically become subject
to a new Transaction and the Repurchase Date for such new Transaction
shall be the immediately subsequent Repurchase Date, provided that if
the Repurchase Date so determined is later than the Termination Date,
the Repurchase Date for such Transaction shall automatically reset to
the Termination Date, and the provisions of this sentence as it might
relate to a new Transaction shall expire on such date; PROVIDED, THAT,
the Repurchase Price paid by the Seller on each Repurchase Date, shall
be sufficient so that the purchase price of the new Transaction
entered into on such Repurchase Date shall equal an amount which is at
least $2,000,000 less than the Purchase Price from the immediately
preceding Purchase Date; PROVIDED FURTHER, THAT, the Repurchase Price
paid by the Seller on each Repurchase Date occurring in every third
month following the initial Purchase Date, shall be sufficient so that
the Purchase Price of the new Transaction entered into on such
Repurchase Date shall equal an amount which is at least $9,000,000
less than the Purchase Price from the Purchase Date occurring three
months prior. In the event that the Seller repurchases the
Certificates prior to any Repurchase Date, the Seller shall not be
required to pay any breakage fees with respect to any such early
repurchase.
8
(k) CONDITIONS PRECEDENT. (A) The following conditions shall apply to the
initial purchase:
The Seller shall cause each of following conditions to occur:
(i) the execution of the Guaranty by the Guarantor.
(ii) U.S. Bank National Association shall have extended the maturity
of its subordinated debt of New Century Financial Corporation to
at least December 31, 2003.
(iii) Guarantor shall have closed the sale of its mortgage servicing
rights to Ocwen Financial Corporation.
(iv) The Buyer shall have received an opinion of counsel in form and
substance satisfactory to Buyer and its counsel.
(v) The Buyer shall have received all fees and expenses payable to
buyer (including the first installment of the Commitment Fee).
(vi) The representations and warranties contained in the Agreement
shall be true and correct and all covenants shall be complied
with.
(B) Prior to entering into each Transaction (including the Initial
Purchase) pursuant to the Agreement, the following conditions
shall apply:
(i) No default or Event of Default shall have occurred or be
continuing.
(ii) All representations and warranties shall be true and correct and
all covenants shall be complied with.
(iii) Seller shall:
(A) provide all documents necessary (including but not limited
to, bond powers, transferor certificates and opinions of
counsel) to register the Purchased Securities in the name of
the Buyer; and
(B) deliver an instruction letter to the related trustees
instructing that all payments be remitted to Buyer with
respect to the Purchased Securities.
9
(l) INCOME PAYMENTS. Notwithstanding the provisions set forth in Paragraph 5(i)
of the Agreement, any income received by the Buyer shall be applied as
follows:
(i) first to reduce the amount of any unpaid expenses owed the Buyer;
(ii) second to reduce the amount of any accrued and unpaid Price
Differential; and
(iii) third to reduce the remaining amount to be transferred to the Buyer
by the Seller upon termination of such transaction.
Buyer and Seller hereby acknowledge and agree that all Income shall be
property of the Buyer and in the event that any Income is received by the
Seller (i) the Seller shall hold such Income separate and apart from the
assets of the Seller, in trust for the Buyer, and (ii) the Seller shall
immediately remit such Income to the Buyer.
(m) TERMINATION DATE. Notwithstanding the provisions set forth in Paragraph
16(c) of the Agreement, the Agreement shall terminate on the earlier of (i)
December 31, 2002, or (ii) at the non-defaulting party's option upon the
occurrence of an Event of Default caused by the other party hereto.
(n) Each party to this agreement (such party, "Party X") agrees that, upon the
insolvency of Party X or any of its affiliates or the default of Party X or
any of its affiliates under any transaction with the other party hereto or
any of such other party's affiliates (such other party or any of its
affiliates, a "Non-Defaulting Party"), each Non-Defaulting Party may,
without prior notice to Party X: (a) liquidate any transaction between
Party X and any Non-Defaulting Party (which liquidation may include the
conversion of amounts denominated in multiple currencies into a single
currency if deemed necessary or desirable by the Non-Defaulting Party), (b)
reduce any amounts due and owing to Party X under any transaction between
Party X and any Non-Defaulting Party by setting off against such amounts
due and owing to a Non-Defaulting Party by Party X, and (c) treat all
security for, and all amounts due and owing to Party X under any
transaction between Party X and any Non-Defaulting Party as security for
all transactions between Party X and any Non-Defaulting Party; provided,
however, that the exercise of the remedies described in clauses (a), (b)
and (c) above (or in any other similar provision in any agreement between
the parties) shall be deemed to occur immediately subsequent to, but
independent of, the exercise of any netting, liquidation, set-off or other
similar provision contained in any master agreement between the parties;
provided further that each provision and agreement hereof shall be treated
as independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other
provision or agreement.
10
For purposes of the foregoing, the term "affiliate" shall not include any
entity that controls or is under common control with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Holdings Inc., but in any event such term shall include ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Holdings Inc. and any entity controlled by it.
Clauses (a), (b) and (c) of this paragraph 2(n) shall be deemed not to
include any references to the affiliates of the Non-Defaulting Party and
Party X to the extent that their inclusion would prejudice the
enforceability of this paragraph 2(n).
(o) In the event that the Parties enter into a hold in custody repo Transaction
hereunder in which Salomon Brothers International Limited acts as the
Seller, segregation of the Securities the subject of such repo Transaction
shall take place by movement of such Securities from Salomon Brothers
International Limited's firm account within the relevant settlement system
to its customer account within such relevant settlement system. The Buyer
hereby consents to such segregation arrangements.
(p) Paragraph 8 of the Agreement shall be amended by adding at the end of the
paragraph the following paragraphs (e), (f) and (g):
(e) In the case of any transaction for which the Repurchase Date is not
the Business Day immediately following the Purchase Date and with
respect to which Seller does not have any existing right to vary the
Transaction, Seller shall have the right (subject to the proviso to
this sub-paragraph) by notice to Buyer (such notice to be given at or
prior to 12 pm (London time) on that Business Day) to vary that
Transaction in accordance with sub-paragraphs (a) and (b) above,
provided however that Buyer may elect by close of business on the
Business Day notice is received (or by close of business on the next
Business Day if notice is received after 12 pm (London time) on that
day) not to vary that Transaction. If Buyer elects not to vary the
Transaction, Seller shall have the right by notice to Buyer to
terminate the Transaction on the Business Day specified in that
notice, such Business Day (unless the parties otherwise agree) not to
be later than two Business Days after the date of the notice.
(f) If Seller exercises its right to vary the Transaction or to terminate
the Transaction under sub-paragraph (e) above, notwithstanding
paragraph 10(h), Seller shall be required to pay to Buyer by close of
business on the Business Day of such variation or termination an
amount equal to:
(i) Buyer's actual cost (including all fees, expenses and
commissions) of (aa) entering into replacement transactions; (bb)
entering into or terminating hedge transactions; and (cc)
terminating or varying transactions with third parties in
connection with or as a result of such variation or termination,
and
(ii) to the extent that Buyer party does not enter into replacement
transactions, the loss incurred by Buyer directly arising or
resulting from such variation or termination,
11
in each case as determined and calculated in good faith by Buyer.
(g) Where one party (the "Requesting Party") has requested the other party
to transfer Equivalent Margin Securities to it in exchange for the
transfer to the other party of new Margin Securities in accordance
with paragraph 8(d) but the other party does not agree to the request
if the Requesting Party so elects by written notice specifying the
Equivalent Margin. Securities to be transferred and the Business Day
on which those Equivalent Margin Securities are to be transferred
(such Business Day (unless the parties otherwise agree) not to be
later than two Business Days after the date of the notice) the other
party shall, unless otherwise agreed, transfer those Equivalent Margin
Securities to the Requesting Party in exchange for the transfer to the
other party of Cash Margin of an amount equal to the Market Value of
the Equivalent Margin Securities so transferred.
(q) 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 to so proceed.
(r) Seller shall maintain Hedging Amounts reasonably acceptable to the Buyer
with respect to the Securities and shall pledge such Hedge Amounts to the
buyer on the related Purchase Date.
(s) INDEBTEDNESS. The Guarantor and NCFC will not, and will not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) any Obligations pursuant to the Fourth Amended and Restated Credit
Agreement, dated as of May 26, 1999, among the Guarantor, the lenders
from time to time party thereto(the "Lenders"), and U.S. Bank National
Association, as agent for the Lenders (the "Agent"); as amended by the
First Amendment to the Fourth Amended and Restated Credit Agreement,
dated as of August 31, 1999, among the Guarantor, the Lenders, and the
Agent; as amended by the Second Amendment to the Fourth Amended and
Restated Credit Agreement, dated as of October 14, 1999, among the
Guarantor, the Lenders, and the Agent; as amended by the Third
Amendment to the Fourth Amended and Restated Credit Agreement, dated
as of May 24, 2000, between the Guarantor, the Lenders, and the Agent;
and as further amended by the Fourth Amendment to the Fourth Amended
and Restated Credit Agreement, dated as of June 29, 2000,
12
among the Guarantor, NC Capital Corporation, the Lenders, and the
Agent (collectively, the "Underlying Credit Agreement").
(ii) current liabilities not more than 90 days overdue, unless contested in
good faith by appropriate proceedings and any reserves required by
GAAP have been established, incurred by NCFC, the Guarantor or New
Century Residual II Corporation in the ordinary course of business
otherwise than for money borrowed;
(iii) Indebtedness incurred to finance the purchase of equipment and
secured solely by Liens on such equipment, in an aggregate amount not
to exceed $10,000,000;
(iv) Indebtedness incurred to finance Junior Securitization Interests which
Indebtedness is secured only by such Junior Securitization Interests,
provided, such Indebtedness does not exceed 65% of the value of such
Junior Securitization Interests determined in accordance with GAAP;
(v) intercompany Indebtedness of NCFC to the Guarantor or New Century
Capital Corporation in an aggregate amount not to exceed $1,000,000;
(vi) intercompany Indebtedness of the Guarantor or New Century Residual II
Corporation to NCFC incurred in the ordinary course of business;
(vii) obligations under gestation repurchase agreements or similar
arrangements of the type described in paragraph 2(t)(vi) of this
Annex;
(viii) obligations in respect of letters of credit issued by USBNA for the
account of the Guarantor or NCFC with an aggregate face amount not to
exceed $1,250,000;
(ix) Indebtedness incurred by the Guarantor in connection with the Salomon
REO Agreement in an aggregate amount not to exceed $3,000,000; and
(x) intercompany Indebtedness between the Guarantor and the Seller
incurred in the ordinary course of business.
(t) LIENS. The Guarantor and NCFC will not, and will not permit any of their
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien with respect to any property now owned or hereafter acquired
by NCFC, the Guarantor or the Seller, or any income or profits therefrom,
except:
(i) the security interests granted to the Agent for the benefit of the
Lenders pursuant to the Underlying Credit Agreement;
(ii) Liens in connection with deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age pensions or
other
13
social security obligations, in the ordinary course of business of
NCFC or the Guarantor;
(iii) Liens for taxes, fees, assessments and governmental charges not
delinquent or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established
in accordance with GAAP;
(iv) encumbrances consisting of zoning regulations, easements, rights of
way, survey exceptions and other similar restrictions on the use of
real property and minor irregularities in title thereto which do not
materially impair their use in the operation of its business;
(v) Liens on equipment arising under any capitalized lease obligation or
other purchase money Liens on equipment acquired after the Signing
Date to secure Indebtedness permitted pursuant to paragraph 2(s)(iii);
(vi) Liens incurred in connection with gestation repurchase agreements or
similar arrangements, including, without limitation, (i) arrangements
under which NCFC or its Subsidiaries are required to repurchase
Mortgage-backed Securities or Mortgage Loans from any Lender or fother
counterparty reasonably satisfactory to the Agent, or (ii) credit
facilities structured as loan and security agreements; provided, that
(x) such gestation repurchase agreements or similar arrangements are
not used to fund wet Mortgage Loans, and (y) such gestation repurchase
agreements or similar arrangements are entered into in the ordinary
course of business in contemplation of the subsequent non-recourse
sale of such Mortgage-backed Securities or Mortgage Loans;
(vii) Liens on Junior Securitization Interests which secure Indebtedness
permitted by paragraph 2(s)(iv); and
(viii) a pledge of the stock of REO Sub to SBRC pursuant to the Salomon REO
Agreement.
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC. AS AGENT FOR
SALOMON BROTHERS INTERNATIONAL LIMITED
Accepted as of
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇
--------------------------------
Authorized Signatory
Title: VP
NC RESIDUAL II CORPORATION
Accepted as of March 29, 2001
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Authorized Signatory
Title: President
ACCEPTED AND ACKNOWLEDGED
NEW CENTURY MORTGAGE CORPORATION
Accepted as of March 29, 2001
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Authorized Signatory
Title: EVP