Exhibit 10.7
------------
ANNEX I
TO
MASTER REPURCHASE AGREEMENT
SUPPLEMENTAL TERMS AND CONDITIONS
DATED AS OF DECEMBER 21, 2004
BETWEEN
ANTHRACITE FUNDING, LLC,
AS SELLER
AND
DEUTSCHE BANK, AG, CAYMAN ISLANDS BRANCH, AS BUYER
TABLE OF CONTENTS
Page
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1 OTHER APPLICABLE ANNEXES.............................................1
2 ADDITIONAL AND SUBSTITUTE DEFINITIONS................................1
3 INITIATION; CONFIRMATION; TERMINATION; FEES.........................21
4 MARGIN MAINTENANCE..................................................30
5 INCOME PAYMENTS AND PRINCIPAL PAYMENTS..............................32
6 SECURITY INTEREST...................................................34
7 PAYMENT, TRANSFER AND CUSTODY.......................................35
8 SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES.....42
9 SUBSTITUTION........................................................43
10 REPRESENTATIONS.....................................................44
11 NEGATIVE COVENANTS OF SELLER........................................48
12 AFFIRMATIVE COVENANTS OF SELLER.....................................49
13 SINGLE-PURPOSE ENTITY...............................................52
14 EVENTS OF DEFAULT; REMEDIES.........................................54
15 RECORDING OF COMMUNICATIONS.........................................60
16 NOTICES AND OTHER COMMUNICATIONS....................................60
17 NON-ASSIGNABILITY...................................................60
18 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.......................61
19 NO RELIANCE.........................................................62
20 INDEMNITY...........................................................62
21 DUE DILIGENCE.......................................................63
22 SERVICING...........................................................64
23 MISCELLANEOUS.......................................................65
EXHIBITS AND SCHEDULES
SCHEDULE I-A Original Purchase Percentages, CF Sweep Purchase
Percentages, Buyer's Margin Percentages and
Applicable Spreads
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Monthly Reporting Package
EXHIBIT IV Form of Custodial Delivery
EXHIBIT V Form of Power of Attorney
EXHIBIT VI Representations and Warranties Regarding Individual
Purchased Loans and Purchased Securities
EXHIBIT VII Collateral Information
EXHIBIT VIII Advance Procedure
EXHIBIT IX Form of Re-Direction Letter
ANNEX I TO
MASTER REPURCHASE AGREEMENT
Supplemental Terms and Conditions
---------------------------------
This Annex I forms a part of the Master Repurchase Agreement dated as
of December 21, 2004, between Anthracite Funding, LLC, as seller, and Deutsche
Bank AG, Cayman Islands Branch, as buyer (the "Agreement"). Capitalized terms
used in this Annex I without definition shall have the respective meanings
assigned to such terms in the Agreement. This Annex I is intended to supplement
the Agreement and shall, wherever possible, be interpreted so as to be
consistent with the Agreement; however, in the event of any conflict or
inconsistency between the provisions of this Annex I, on the one hand, and the
provisions of the Agreement, on the other, the provisions of this Annex I shall
govern and control. All references in the Agreement to "the Agreement" shall be
deemed to mean and refer to the Agreement, as supplemented and modified by this
Annex I or as otherwise modified after the date hereof.
1 OTHER APPLICABLE ANNEXES
In addition to this Annex I, the following Annexes and any Schedules
thereto shall form a part of the Agreement and shall be applicable thereunder:
Annex II - Names and Addresses for Communications Between Parties.
2 ADDITIONAL AND SUBSTITUTE DEFINITIONS
(a) In addition to the terms defined in the Agreement, the following
terms shall have the respective meanings set forth below:
"Accepted Servicing Practices" shall mean with respect to any
Purchased Loan, those mortgage servicing practices of prudent mortgage
loan servicers which service mortgage or other commercial loans of the
same type as such Purchased Loan in the jurisdiction where the related
Mortgaged Property is located.
"Accelerated Repurchase Date" shall have the meaning
specified in Section 14(b)(i) of this Annex I.
"Affiliate" shall mean, when used with respect to any
specified Person, any other Person directly or indirectly controlling,
controlled by, or under common control with, such Person. Control
shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise and "controlling" and "controlled" shall have meanings
correlative thereto; provided, however, with respect to Seller, no
Person shall be deemed an Affiliate of Seller due to such Person's
having Blackrock Financial Management as such Person's manager.
"Agreement" shall have the meaning specified in the
introductory paragraph of this Annex I.
"Alternative Rate" shall have the meaning specified in
Section 3(g) of this Annex I.
"Alternative Rate Transaction" shall mean, with respect to
any Pricing Rate Period, any Transaction with respect to which the
Pricing Rate for such Pricing Rate Period is determined with reference
to the Alternative Rate.
"Applicable Spread" shall mean, with respect to a Transaction
involving Purchased Securities in any Rating Category and/or Purchased
Loans in any Collateral Type Grouping,
(i) so long as no Event of Default shall have
occurred and be continuing, the incremental per annum rate
(expressed as a number of "basis points", each basis point
being equivalent to 1/100 of 1%) specified in Schedule I-A
attached to this Annex I as being the "Applicable Spread" for
Purchased Securities in such Rating Category or Purchased
Loans, in such Collateral Type Grouping, and
(ii) after the occurrence and during the continuance
of an Event of Default, the applicable incremental per annum
rate described in clause (i) of this definition, plus 400
basis points (4.0%).
"Assignment of Leases" shall mean with respect to any
Purchased Loan, any assignment of leases, rents and profits or
equivalent instrument, whether contained in the related Mortgage or
executed separately, assigning to the holder or holders of such
Mortgage all of the related Mortgagor's interest in the leases, rents
and profits derived from the ownership, operation, leasing or
disposition of all or a portion of the related Mortgaged Property as
security for repayment of such Purchased Loan.
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, an assignment of the mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of
the jurisdiction wherein the related property is located to reflect
the assignment and pledge of the Mortgage.
"Business Day" shall mean a day other than (i) a Saturday or
Sunday, or (ii) either (a) with respect to a US Loan, a day in which
the New York Stock Exchange or banks in the State of New York or
Illinois are authorized or obligated by law or executive order to be
closed or (b) with respect to an English Loan, a day on which banks in
London, England are closed for interbank or foreign exchange
transactions. When used with respect to a Reset Date, a "Business Day"
shall mean a day on which banks in London, England are closed for
interbank or foreign exchange transactions.
"Buyer" shall mean Deutsche Bank AG, Cayman Islands Branch,
or any successor.
"Cash Management Account" shall mean a segregated interest
bearing account, in the name of Buyer, established at the Depository.
"CF Sweep Event" shall mean, with respect to any Purchased
Security or Purchased Loan as of any date, a determination by Buyer in
the exercise of its good faith business judgment that (i) the
Repurchase Price of such Purchased Security or such Purchased Loan as
of such date exceeds (ii) the product obtained by multiplying the
Market Value of such Purchased Security or Purchased Loan as of such
date by the "CF Sweep Purchase Percentage" for such Purchased Security
or Purchased Loan, as set forth in Schedule I-A attached to this Annex
I.
"CF Sweep Purchase Percentage" shall mean, with respect to
any Transaction as of any day, the "CF Sweep Purchase Percentage"
specified for the applicable Rating Category or Collateral Type
Grouping in Schedule I-A attached to this Annex I.
"Change of Control" shall mean any of the following events
have occurred:
(i) BlackRock Financial Management shall cease to
act as the external manager of the Sponsor with exclusive
responsibility for the Sponsor's investment decision-making;
(ii) any two of Messrs. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
or ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall cease to occupy the senior managerial
position each such Person occupies as of the date of the
Agreement at BlackRock Financial Management (or a comparable
senior managerial position at BlackRock Financial Management
acceptable to the Buyer); or
(iii) a merger, reorganization or consolidation of
the Sponsor where the successor entity is not the Sponsor as
of the Closing Date.
"Collateral" has the meaning given to that term in Section 6
of this Annex I.
"Collateral Information" shall mean, with respect to each
Purchased Loan, the information set forth in Exhibit VII attached
hereto.
"Collateral Type Grouping" shall mean, with respect to the
Eligible Loans, any of the types of Eligible Loans listed in Schedule
I-A attached to this Annex I.
"Collection Period" shall mean (i) with respect to the first
Remittance Date in any month, the period beginning on but excluding
the last Cut-off Date in the month preceding the month in which such
Remittance Date occurs and continuing to and including the Cut-off
Date immediately preceding such Remittance Date and (ii) with respect
to the second Remittance Date in any month, the period beginning on
but excluding the first Cut-off Date in the month in which such
Remittance Date occurs and continuing to and including the Cut-off
Date immediately preceding such Remittance Date.
"Credit Gain" shall mean, with respect to the Purchased
Securities in any Rating Category, any gain in value of such Purchased
Securities as determined by Buyer in the exercise of its good faith
business judgment (including, without limitation, as a result of any
bond rating upgrade affecting such Purchased Securities).
"Credit Loss" shall mean, with respect to the Purchased
Securities in any Rating Category, (i) any loss in value of such
Purchased Securities as determined by Buyer in the exercise of its
good faith business judgment (including, without limitation, as a
result of any realized loss (as such term or any comparable term is
defined or otherwise used in the Securitization Document for such
Purchased Securities)), (ii) any appraisal reduction (as such term or
any comparable term is defined in the Securitization Document for such
Purchased Securities), or (iii) any Purchased Security experiences a
rating downgrade or is placed on credit watch for possible downgrade
or with negative implications or other similar status and, with
respect to any Purchased Loans, any loss in value of such Purchased
Loans as determined by Buyer in the exercise of its good faith
business judgment (including, without limitation, as a result of any
losses in connection with a foreclosure).
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of December 21, 2004, by and among the Custodian, the Seller
and the Buyer.
"Custodial Delivery" shall mean the form executed by Seller
in order to deliver the Purchased Loan Schedule and the Purchased Loan
File to Buyer or its designee (including the Custodian) pursuant to
Section 7, a form of which is attached hereto as Exhibit IV.
"Custodian" shall mean LaSalle Bank National Association or
any successor Custodian appointed by Buyer with the prior written
consent of Seller (which consent shall not be unreasonably withheld or
delayed).
"Cut-off Date" shall mean the second Business Day preceding
each Remittance Date.
"DB Securitization" shall mean a securitization (including,
but not limited to, a real estate mortgage investment conduit (or
REMIC), re-REMIC, re-securitization or collateralized debt obligation
(or CDO) transaction) where Deutsche Bank Securities Inc. or its
Affiliate is acting as lead manager and book runner where the Seller
or an Affiliate of the Seller contributes Purchased Securities or
Purchased Loans that were previously subject to Transactions.
"Default" shall mean any event which, with the giving of
notice, the passage of time, or both, would constitute an Event of
Default.
"Deficit Cure Amount" shall mean, with respect to any
Purchased Security or any Purchased Loan as of any date, the amount
(expressed in United States Dollars) obtained by dividing (i) the
Repurchase Price of such Purchased Security or Purchased Loan as of
such date by (ii) the "Original Purchase Percentage" for the Rating
Category for such Purchased Security or Collateral Type Grouping for
such Purchased Loan, as set forth in Schedule I-A attached to this
Annex I.
"Depository" shall mean LaSalle Bank National Association or
any successor Depository appointed by Buyer with the prior written
consent of Seller (which consent shall not be unreasonably withheld or
delayed).
"Diligence Materials" shall mean the Preliminary Due
Diligence Package together with the Supplemental Due Diligence List.
"Draft Appraisal" shall mean a short form appraisal, "letter
opinion of value," or any other form of draft appraisal reasonably
acceptable to Buyer.
"Early Repurchase Date" shall have the meaning specified in
Section 3(d) of this Annex I.
"Eligible Loans" shall mean any of the following types of
performing loans, which performing loans are acceptable to Buyer in
the exercise of its good faith business judgment and are secured
directly or indirectly by or the payments on which are derived from a
property that may include, but not be limited to, multifamily, retail,
office, warehouse, or hospitality property (or any other property type
acceptable to Buyer in the exercise of its good faith business
judgment, but excluding in all cases undeveloped land) that is located
in the United States of America, its territories or possessions, or
England, Wales, Northern Ireland or Scotland or another jurisdiction
(provided, that with respect to (1) any performing loans located in a
jurisdiction other than the United States of America, its territories
or possessions, or England, Wales, Northern Ireland or Scotland or (2)
any performing loans described in clauses (iii)(y) or (iv)(y) below
which are located in England, Wales, Northern Ireland or Scotland,
such loans must be approved by Buyer in its sole discretion as
contemplated in Section 3(a) hereto):
(i) subject to the following proviso, performing
commercial mortgage loans secured by first liens on
multifamily or commercial properties which satisfy the
following criteria (referred to on Schedule 1-A as the "1st
Lien--Low Leverage" Collateral Type Grouping):
(a) LTV determined by Buyer for the
Mortgaged Property securing directly such loan
(including for purposes of this calculation, such
loan but excluding any loan junior to such loan and
secured directly or indirectly by the related
Mortgaged Property) does not exceed 70%; and
(b) the underwritten debt service coverage
ratio at the related Purchase Date as determined by
Buyer in the exercise of its good faith business
judgment (giving effect to any cash reserves and
letters of credit acceptable to Buyer which are
substituted for such cash reserves) for the
Mortgaged Property securing directly such loan
(including for purposes of this calculation, such
loan but excluding any loan junior to such loan and
secured directly or indirectly by the related
Mortgaged Property) is not less than 1.35x,
(ii) subject to the following proviso, performing
commercial mortgage loans secured by first liens on
multifamily or commercial properties which satisfy the
following criteria (referred to on Schedule 1-A as the "1st
Lien--Other" Collateral Type Grouping):
(a) LTV determined by Buyer for the
Mortgaged Property securing directly such loan
(including for purposes of this calculation, such
loan but excluding any loan junior to such loan and
secured directly or indirectly by the related
Mortgaged Property) does not exceed 75%;
(b) the underwritten debt service coverage
ratio at the related Purchase Date as determined by
Buyer in the exercise of its good faith business
judgment (giving effect to any cash reserves and
letters of credit acceptable to Buyer which are
substituted for such cash reserves) for the
Mortgaged Property securing directly such loan
(including for purposes of this calculation, such
loan but excluding any loan junior to such loan and
secured directly or indirectly by the related
Mortgaged Property) is not less than 1.25x; and such
loan is not of the type which satisfies the criteria
set forth in clause (i)(a) and (i)(b) above,
provided, that with respect to any Eligible Loan of the type
described in this clause (ii) which has an LTV in excess of
75% and which Buyer accepts for inclusion in a Transaction,
Buyer shall in good faith consider administering such
Eligible Loan as two Eligible Loans with the portion of such
Eligible Loan equal to 75% LTV treated as an Eligible Loan of
the type described in this clause (ii) and the balance of
such Eligible Loan up to a LTV of 85% (or 90% in the
determination of the Buyer in its sole and absolute
discretion) treated as an Eligible Loan of the type described
in clause (iv) below),
(iii) (x) loans secured by second liens in, junior
participation interests in or junior notes in performing
commercial mortgage loans secured by first liens in
multifamily or commercial properties or (y) performing
mezzanine loans secured by pledges of the entire equity
ownership interests (or the applicable lesser ownership
interest approved by Buyer in its sole discretion) in
entities that directly or indirectly own multifamily or
commercial properties (or participation interests in such
performing mezzanine loans), each of which satisfy the
following criteria (referred to on Schedule 1-A as the "2nd
Lien/B-Note/Mezzanine Loan/Participation--Low Leverage"
Collateral Type Grouping):
(a) LTV determined by Buyer for the
Mortgaged Property from which payments on such loan,
participation, junior note or mezzanine loan are
derived (including for purposes of this calculation,
such loan, participation, junior note or mezzanine
loan and any loan senior to such loan,
participation, junior note or mezzanine loan and
secured directly or indirectly by the related
Mortgaged Property and excluding any more junior
loan or participation) does not exceed 75%; and
(b) the underwritten debt service coverage
ratio at the related Purchase Date as determined by
Buyer in the exercise of its good faith business
judgment (giving effect to any reserves and letters
of credit acceptable to Buyer which are substituted
for such cash reserves) for the Mortgaged Property
from which payments on such loan, participation,
junior note or mezzanine loan are derived (including
for purposes of this calculation, such loan,
participation, junior note or mezzanine loan and any
loan senior to such loan, participation, junior note
or mezzanine loan and secured directly or indirectly
by the related Mortgaged Property and excluding any
more junior loan or participation) is not less than
1.30x,
(iv) (x) loans secured by second liens in, junior
participation interests in or junior notes in performing
commercial mortgage loans secured by first liens in
multifamily or commercial properties or (y) performing
mezzanine loans secured by pledges of the entire equity
ownership interests (or the applicable lesser ownership
interest approved by Buyer in its sole discretion) in, or
preferred equity ownership interests in, entities that
directly or indirectly own multifamily or commercial
properties (or participation interests in such performing
mezzanine loans), each of which satisfy the following
criteria (referred to on Schedule 1-A as the "2nd
Lien/B-Notes/Mezzanine Loan/Participation/Preferred
Equity--Other" Collateral Type Grouping):
(a) LTV determined by Buyer for the
Mortgaged Property from which payments on such loan,
participation interest, junior note, mezzanine loan
or ownership are derived or securing indirectly such
loan, participation interest, junior note, mezzanine
loan or ownership (including for purposes of this
calculation, such loan, participation interest,
junior note, mezzanine loan or ownership and any
loan senior to such loan, participation interest,
junior note, mezzanine loan or ownership and secured
directly or indirectly by the related Mortgaged
Property and excluding any more junior loan or
participation) exceeds 75% but does not exceed 85%
(or 90%, in the determination of the Buyer in its
sole and absolute discretion);
(b) the underwritten debt service coverage
ratio at the related Purchase Date as determined by
Buyer (giving effect to any reserves and letters of
credit acceptable to Buyer which are substituted for
such cash reserves) for the property securing
indirectly such loan, participation interest, junior
note, mezzanine loan or ownership (including for
purposes of this calculation, such loan,
participation interest, junior note, mezzanine loan
or ownership and any loan senior to such loan,
participation interest, junior note, mezzanine loan
or ownership and secured directly or indirectly by
the related Mortgaged Property and excluding any
more junior loan or participation) is not less than
1.15x; and
(c) such loan, participation interest,
junior note, mezzanine loan or ownership is not of
the type which satisfies the criteria set forth in
clause (iii)(a) and (iii)(b) above.
"Eligible Securities" shall mean performing commercial
mortgage-backed securities that (A) (i) either (a) have a rating of
"CCC" (or its equivalent) or higher from any Rating Agency or (b) are
unrated securities, in each case with respect to this clause (b)
issued in a conduit commercial mortgage-backed securities offering,
which securities are acceptable to Buyer in the exercise of its good
faith business judgment provided, that "Eligible Securities" shall
exclude securities derived from the re-securitization (including for
this purpose "re-REMIC") of Eligible Securities and (ii) are
denominated in United States Dollars or (B) (i) have a rating of "B-"
(or its equivalent) or higher from any Rating Agency and (ii) are
denominated in United Kingdom Sterling or another currency, approved
by Buyer in its sole discretion as contemplated in Section 3(a).
"English Loan" shall mean any Eligible Loan governed by
English law and secured (inter alia) by Mortgaged Property located in
England, Wales, Northern Ireland or Scotland.
"English Loan Supplement" shall mean the Master Repurchase
Agreement English Loan Supplement dated hereof and made between the
(1) the Seller and (2) the Buyer.
"Environmental Report" shall have the meaning specified in
paragraph 12 of Exhibit VI.
"Equity" shall mean, with respect to each Purchased Loan or
Purchased Security, the amount (not less than zero) equal to the
Market Value of such Purchased Loan or Purchased Security minus the
related Repurchase Price.
"Equity Deficit" shall mean the amount (not less than zero)
equal to the Minimum Seller's Equity Requirement minus the Seller's
Equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and, as of the relevant date, any
subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which Seller is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(l1) of the Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which Seller is a member.
"Exit Fee" shall mean the fee payable by the Seller either:
(x) pursuant to Section 3(d) of this Annex I in the
event Seller terminates a Transaction on demand and
repurchases any Purchased Loan or any Purchased Security, or
(y) pursuant to Section 14(a)(iii) of this Annex I
if an Event of Default on the part of Seller occurs and Buyer
disposes of any Purchased Loan or any Purchased Security,
in each case of (x) or (y), in an amount equal to
0.50% of the related Market Value times the applicable
Original Purchase Price; provided, that no Exit Fee shall be
due and payable:
(1) if the reason for the termination of a
Transaction is the related Purchased Loan of the
type described in clause (i) of the definition of
Eligible Loan or Purchased Security is simultaneous
with such termination being included in a
securitization (including, but not limited to, a
real estate mortgage investment conduit (or REMIC),
re-REMIC, re-securitization or collateralized debt
obligation (or CDO) transaction where Deutsche Bank
Securities Inc. or its Affiliate is acting as lead
manager and book runner), or
(2) if in connection with the termination
of the Transaction, Buyer has accepted a
substitution pursuant to Section 9(a) of this Annex
I, or
(3) in connection with the repurchase by
Seller of any Purchased Loans or Purchased
Securities on any Business Day 90 or fewer days
prior to the Repurchase Date; provided, however,
that if within 180 days of such early repurchase,
the Purchased Loans and Purchased Securities that
were the subject of such early repurchase are
included in a securitization (including, but not
limited to, a real estate mortgage investment
conduit (or REMIC), re-REMIC, re-securitization or
collateralized debt obligation (or CDO) transaction)
where neither Deutsche Bank Securities Inc. nor its
Affiliate is acting as lead manager and book runner,
then the Exit Fee that would otherwise apply in the
absence of this clause (3) shall apply, and the
obligation of Seller to pay such Exit Fee shall
survive any termination of this Agreement.
"Extension Conditions" and "Extension Date Repurchase Price"
shall have the respective meanings specified in Section 3(e) of this
Annex I.
"Facility Amount" shall mean $200,000,000.
"Filings" shall have the meaning specified in Section 6 of
this Annex I.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied as in effect from time to time.
"Governmental Authority" shall mean any national or federal
government, any state, regional, local or other political subdivision
thereof with jurisdiction and any Person with jurisdiction exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty" shall mean the Guaranty, dated as of the date
hereof, from the Sponsor to the Buyer, of full and timely payment of
all amounts due under this Agreement to the Buyer.
"Hedging Transactions" shall mean, with respect to any or all
of the Purchased Securities and/or Purchased Loans, any short sale of
U.S. Treasury Securities or mortgage-related securities, futures
contract (including Eurodollar futures) or options contract or any
interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the
exchange of nominal interest obligations, either generally or under
specific contingencies, entered into by Sponsor or Seller or an
Affiliate of either such Person (or following an Event of Default, by
Buyer), with one or more counterparties reasonably acceptable to the
Buyer.
"Indemnified Amounts" and "Indemnified Parties" shall have
the meaning specified in Section 20 of this Annex I.
"Insured Closing Letter and Escrow Instructions" shall mean a
letter addressed to Seller and Buyer from the Settlement Agent for
each Table Funded Purchased Loan and related escrow instructions,
which letter and instructions shall be in form and substance
reasonably acceptable to Buyer and Seller.
"LIBOR" shall mean the rate per annum calculated as set forth
below:
(i) On each Pricing Rate Determination Date, LIBOR
for the next Pricing Rate Period will be the rate for
deposits in United States dollars for a one-month period
which appears on Telerate Page 3750 as of 11:00 a.m., London
time, on such date; or
(ii) On any Pricing Rate Determination Date on which
no such rate appears on Telerate Page 3750 as described
above, LIBOR for the next Pricing Rate Period will be
determined on the basis of the arithmetic mean of the rates
at which deposits in United States dollars are offered by the
Reference Banks at approximately 11:00 a.m., London time, on
such date to prime banks in the London interbank market for a
one-month period.
All percentages resulting from any calculations or determinations
referred to in this definition will be rounded upwards, if necessary,
to the nearest multiple of 1/100th of 1% and all U.S. dollar amounts
used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent or more being rounding upwards).
"LIBO Rate" shall mean, with respect to any Pricing Rate
Period pertaining to a Transaction, a rate per annum determined for
such Pricing Rate Period in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
LIBOR
-----------------------------------
1 - Reserve Requirement
"LIBOR Transaction" shall mean, with respect to any Pricing
Rate Period, any Transaction with respect to which the Pricing Rate
for such Pricing Rate Period is determined with reference to the LIBO
Rate.
"LTV" shall mean the ratio of total loan to appraised value
for the Mortgaged Property securing directly or indirectly an Eligible
Loan or from which the payments on such Eligible Loan are derived. If
Seller has not received an appraisal (or Draft Appraisal) approved by
Buyer from an MAI Appraiser or (in relation to an English Loan) a
valuation by a suitably qualified valuer on the basis of the then
current Statements of Asset Valuation Practice and Guidance Notes
issued by the Royal Institution of Chartered Surveyors, "LTV" shall
mean the ratio of total loan to market value for the Mortgaged
Property securing directly or indirectly an Eligible Loan or from
which the payments on such Eligible Loan are derived, as determined by
the Buyer in the exercise of its good faith business judgment.
"Mezzanine Note" shall mean a note or other evidence of
indebtedness of the owner or owners of all equity or ownership
interests in an underlying real property owner secured by a pledge of
such ownership interests.
"Midland" shall mean Midland Loan Services, Inc., a Delaware
corporation.
"Minimum CMBS Diversification" means, at any time, ten (10)
or more issues of Purchased Securities are then subject to
Transactions.
"Minimum Seller's Equity Requirement" means an amount equal
to $45,000,000.
"Moody's" shall mean ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" shall mean a mortgage, deed of trust, deed to
secure debt or other instrument, creating a valid and enforceable
first lien on or a first priority ownership interest in an estate in
fee simple or leasehold estate in real property and the improvements
thereon, securing a mortgage note or similar evidence of indebtedness.
"Mortgage Note" shall mean (in relation to a US Loan) a note
or other evidence of indebtedness of a Mortgagor secured by a Mortgage
or (in relation to an English Loan) the credit agreement or other loan
instrument pursuant to which the related loan has been advanced.
"Mortgaged Property" shall mean the real property securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean (in relation to a US Loan) the obligor
on a Mortgage Note and the grantor of the related Mortgage or (in
relation to an English Loan) the grantor(s) of the Mortgage(s)
securing repayment of the related Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been, or
were required to have been, made by Seller or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"New Collateral" shall mean an Eligible Loan or Eligible
Security that Seller proposes to be included as Collateral.
"Original Purchase Percentage" shall mean, with respect to
any Transaction as of any day, the "Original Purchase Percentage"
specified for the applicable Rating Category or Collateral Type
Grouping in Schedule I-A attached to this Annex I.
"Originated Collateral" shall mean any Collateral that is an
Eligible Loan and whose Purchased Loan Documents were prepared by
Seller, Sponsor or an Affiliate controlled by the Sponsor.
"Permitted Purchased Loan Modification" shall mean any
modification of a Purchased Loan, other than a modification which (1)
amends or modifies the interest rate, principal amount, maturity date
or any other financial or economic term (including, but not limited
to, the amortization schedule) of a Purchased Loan, (2) extends any
payment date for the payment of such principal or interest, (3)
amends, modifies or waives any cash management or reserve account
requirements of a Purchased Loan, (4) releases or subordinates any
portion of the collateral securing such Purchased Loan, (5) waives any
foreclosure rights with respect to any portion of the collateral
securing such Purchased Loan or (6) is reasonably likely to materially
and adversely affect the rights or interests of the Buyer hereunder.
"Person" shall mean an individual, corporation, limited
liability company, business trust, partnership, joint tenant or
tenant-in-common, trust, unincorporated organization, or other entity,
or a federal, state or local government or any agency or political
subdivision thereof.
"Plan" means an employee benefit or other plan established or
maintained by Seller or any ERISA Affiliate during the five year
period ended prior to the date of this Agreement or to which Seller or
any ERISA Affiliate makes, is obligated to make or has, within the
five year period ended prior to the date of this Agreement, been
required to make contributions and that is covered by Title IV of
ERISA or Section 302 of ERISA or Section 412 of the Code, other than a
Multiemployer Plan.
"Portfolio Collateral" shall mean, collectively, the
Portfolio Securities and the Purchased Loans.
"Portfolio Securities" shall mean, collectively, the
Purchased Securities and, to the extent transferred to the Buyer, the
Related Securities.
"Pre-Existing Collateral" shall mean any Collateral that is
an Eligible Loan and is not Originated Collateral.
"Preliminary Due Diligence Package" shall mean with respect
to any New Collateral, a summary memorandum outlining the proposed
transaction, including potential transaction benefits and all material
underwriting risks, all Underwriting Issues and all other
characteristics of the proposed transaction that a reasonable buyer
would consider material, together with the following due diligence
information relating to the New Collateral to be provided by Seller to
Buyer pursuant to this Agreement:
With respect to each Eligible Loan:
(i) the Collateral Information;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical
information, if available;
(iv) description of the Mortgaged Property and the
ownership structure of the borrower and the sponsor
(including, without limitation, the board of directors, if
applicable) and financial statements of the borrower and the
sponsor;
(v) indicative debt service coverage ratios;
(vi) indicative loan-to-value ratio;
(vii) term sheet outlining the transaction
generally;
(viii) Seller's relationship with the Mortgagor, if
any; and
(ix) with respect to any New Collateral that is
Pre-Existing Collateral, a list that specifically and
expressly identifies any Purchased Loan Documents that relate
to such New Collateral but are not in Seller's possession;
and
(x) any exceptions to the representations and
warranties set forth in Exhibit VI to the Agreement or (in so
far as those representations and warranties relate to English
Loans) the representations and warranties set forth in the
English Loan Supplement.
With respect to each Eligible Security:
(i) collateral summary books which include, to the
extent provided to the Seller, the following:
(A) loan detail and asset description
(B) map, photo
(C) rent roll
(D) operating information
(E) appraisal, environmental, engineering
summary;
(ii) the Seller's underwriting materials and
analysis, which includes the executive summary, all loss
scenarios and the asset summaries for the twenty (20) largest
loans used in the Seller's roll-up meetings;
(iii) loan data disk;
(iv) materials furnished to the Rating Agencies in
connection with the issuance of the Eligible Securities, to
the extent provided to Seller;
(v) Securitization Documents;
(vi) remittance report for most recent period in
Seller's possession;
(vii) quarterly remittance reports in Seller's
possession;
(viii) accounting reports delivered with respect to
the Eligible Security in Seller's possession;
(ix) legal opinions delivered with respect to the
Eligible Security in Seller's possession; and
(x) a copy of the executed trade ticket (including
evidence of the dollar price paid and purchase spread over
Treasuries or other relevant benchmark for such Eligible
Security) and any adjustments to the purchase price not
reflected in such trade ticket.
"Pricing Rate Determination Date" shall mean (a) in the case
of the first Pricing Rate Period with respect to any Transaction, the
second (2nd) Business Day preceding the first day of such Pricing Rate
Period and (b) with respect to any subsequent Pricing Rate Period, the
second (2nd) Business Day preceding the first day of the Pricing Rate
Period commencing on and including the first Remittance Date in a
calendar month. Each Pricing Rate Determination Date after the first
Pricing Rate Period with respect to any Transaction, shall be
applicable to the immediately following two Pricing Rate Periods.
"Pricing Rate Period" shall mean, (a) in the case of the
first Pricing Rate Period with respect to any Transaction, the period
commencing on and including the Purchase Date for such Transaction and
ending on and excluding the following Remittance Date, and (b) in the
case of any subsequent Pricing Rate Period, the period commencing on
and including such Remittance Date and ending on and excluding the
following Remittance Date; provided, however, that in no event shall
any Pricing Rate Period end subsequent to the Repurchase Date.
"Principal Payment" shall mean, with respect to any Purchased
Loans or Purchased Securities, any payment or prepayment of principal
received by the Depository in respect thereof.
"Purchased Loan Documents" shall mean, with respect to a
Purchased Loan, the documents comprising the Purchased Loan File for
such Purchased Loan.
"Purchased Loan File" shall mean the documents specified as
the "Purchased Loan File" in Section 7(e), or (in relation to an
English Loan) the documents specified as the "Purchased Loan File" in
the English Loan Supplement together (in each case) with any
additional documents and information required to be delivered to Buyer
or its designee (including the Custodian) pursuant to this Agreement.
"Purchased Loan Schedule" shall mean a schedule of Purchased
Loans attached to each Trust Receipt and Custodial Delivery containing
information substantially similar to the Collateral Information.
"Purchased Loans" shall mean (i) with respect to any
Transaction, the Eligible Loans sold by Seller to Buyer in such
Transaction until such Eligible Loans are repurchased pursuant to this
Agreement and (ii) with respect to the Transactions in general, all
Eligible Loans sold by Seller to Buyer and any additional collateral
delivered by Seller to Buyer pursuant to Section 4(a) of this Annex I
until such Eligible Loans are repurchased pursuant to this Agreement.
"Rating Agency" shall mean any of Fitch Inc., Moody's and
Standard & Poor's.
"Rating Category" shall mean any of the rating categories
listed in Schedule I-A attached to this Annex I.
"Reference Banks" shall mean banks each of which shall (i) be
a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market and (ii) have an established place
of business in London. Initially, the Reference Banks shall be ▇▇
▇▇▇▇▇▇ Chase Bank, Barclays Bank, Plc and Deutsche Bank AG. If any
such Reference Bank should be unwilling or unable to act as such or if
the Buyer shall terminate the appointment of any such Reference Bank
or if any of the Reference Banks should be removed from the Reuters
Monitor Money Rates Service or in any other way fail to meet the
qualifications of a Reference Bank, the Buyer in the exercise of its
good faith business judgment may designate alternative banks meeting
the criteria specified in clauses (i) and (ii) above.
"Related Securities" shall mean commercial mortgage backed
securities (other than the Purchased Securities) issued as part of the
same transaction as the transaction in which the Purchased Securities
are issued and having a lower rating than such Purchased Securities or
having no rating.
"Relevant System" shall mean (a) The Depository Trust Company
in New York, New York, or (b) such other clearing organization or
book-entry system as is designated in writing by the Buyer.
"Remittance Date" shall mean each of the twelfth (12th) and
the twentieth (20th) calendar day of each month, or the next
succeeding Business Day, if either such calendar day shall not be a
Business Day; provided however, that with respect to any Purchased
Loan or Purchased Security denominated in a currency other than United
States Dollars, there shall be only one (1) Remittance Date per month
which Remittance Date shall be a day of month agreed upon by Buyer and
Seller as of the related Purchase Date.
"Requirement of Law" shall mean any law, treaty, rule,
regulation, code, directive, policy, order or requirement or
determination of an arbitrator or a court or other Governmental
Authority whether now or hereafter enacted or in effect.
"Reserve Requirement" shall mean, with respect to any Pricing
Rate Period, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect
during such Pricing Rate Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of such Board of Governors) maintained by the Buyer.
"Reset Date" shall mean, with respect to any Transaction, the
day prior to the first day of the Pricing Rate Period commencing on
and including the first Remittance Date in a calendar month with
respect to such Transaction.
"Securitization Document" shall mean, with respect to any
Eligible Securities, any pooling and servicing agreement or other
agreement governing the issuance and administration of such Eligible
Securities and any offering document used in the distribution and sale
of such Eligible Securities (including, without limitation, the
preliminary and final private placement memorandum, prospectus and/or
offering memorandum).
"Seller" shall mean Anthracite Funding LLC, a Delaware
limited liability company.
"Seller's Equity" means an aggregate amount equal to the sum
of the Equity with respect to each Purchased Loan and Purchased
Security, which amount and its relationship to the Minimum Seller's
Equity Requirement (i.e. lower than on the one hand or equal to or
greater than on the other hand) shall determine the applicable
"Original Purchase Percentage," "CF Sweep Purchase Percentage" and
"Buyer's Margin Percentage" as set forth on Schedule I-A to this Annex
I for each Transaction. Upon request of Seller made from time to time,
Buyer shall provide to Seller information with respect to the Equity
with respect to each Purchased Loan and Purchased Security. In
addition, Seller's Equity shall include any cash and the value as
determined by Buyer of other collateral (including, without
limitation, Eligible Loans or Eligible Securities) which the Seller
pledges and/or delivers to the Buyer and the Seller and the Buyer
agree in writing shall be included in the determination of Seller's
Equity.
"Servicing Agreement" has the meaning specified in Section
22(b) of this Annex I.
"Servicing Records" has the meaning specified in Section
22(b) of this Annex I.
"Settlement Agent" shall mean, with respect to any
Transaction involving Table Funded Purchased Loans, an entity
satisfactory to the Buyer in its reasonable discretion (which may be a
title company, escrow company or attorney in accordance with local law
and practice in the jurisdiction where the related Table Funded
Purchased Loan is being originated), to which the Purchase Price is to
be wired by Buyer at the request of Seller.
"Single-Purpose Entity" shall mean a Person, other than an
individual, which is formed or organized solely for the purpose of
holding, directly and subject to this Agreement, the Portfolio
Collateral, does not engage in any business unrelated to the Portfolio
Collateral and the financing thereof, does not have any assets other
than the Portfolio Collateral and the financing thereof, or any
indebtedness other than as permitted by the Agreement, has its own
separate books and records and its own accounts, in each case which
are separate and apart from the books and records and accounts of any
other Person, holds itself out as being a Person and separate and
apart from any other Person. If the foregoing entity is a limited
partnership or limited liability company, (i) its partnership
agreement or limited liability company agreement (as applicable) shall
provide that the partnership or limited liability company shall
dissolve upon the withdrawal or dissolution of the last remaining
general partner or managing member, but the partnership or limited
liability company will not be dissolved if the remaining partners or
members, within ninety (90) days, by majority vote elect to continue
the partnership or limited liability company and appoint a new general
partner or new managing member, and (ii) the partnership agreement or
limited liability company agreement (as applicable) must provide that
the dissolution and winding up or bankruptcy or insolvency filing of
such partnership or limited liability company shall require the
unanimous consent of all members (including the board of directors of
such members).
"Sovereign Repurchase Event" shall mean as a result of
sovereign action or inaction (directly or indirectly), Buyer becomes
unable to perform any absolute or contingent obligation to make a
payment or transfer or to receive a payment or transfer in respect of
any Transaction hereunder or to comply with any other material
provision of the Agreement relating to such Transaction.
"Sponsor" shall mean Anthracite Capital Inc., a Maryland
corporation.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Supplemental Due Diligence List" shall mean, with respect to
any New Collateral, information or deliveries concerning the New
Collateral that Buyer shall reasonably request in addition to the
Preliminary Due Diligence Package.
"Survey" shall mean a certified ALTA/ACSM (or applicable
state standards for the state in which the Collateral is located)
survey of a Mortgaged Property prepared by a registered independent
surveyor and in form and content satisfactory to the Buyer and the
company issuing the Title Policy for such Property.
"Table Funded Purchased Loan" shall mean a Purchased Loan
which is sold to the Buyer simultaneously with the origination or
acquisition thereof, which origination or acquisition is financed with
the Purchase Price, pursuant to Seller's request, paid directly to the
Settlement Agent for disbursement in connection with such origination
or acquisition. A Purchased Loan shall cease to be a Table Funded
Purchased Loan after the Custodian has delivered a Trust Receipt to
Buyer certifying its receipt of the Purchased Loan File therefor.
"Table Funded Trust Receipt" shall have the meaning given to
such term in the Custodial Agreement.
"Target Price" shall mean, with respect to any Purchased
Securities or Purchased Loans as of any date, the amount (expressed in
United States Dollars) obtained by multiplying (i) the Market Value of
such Purchased Securities or Purchased Loans as of such date by (ii)
the "Original Purchase Percentage" for the Rating Category applicable
to such Purchased Securities or the Collateral Type Grouping
applicable to such Purchased Loans, as set forth in Schedule I-A
attached to this Annex I.
"Telerate Page 3750" shall mean the display page currently so
designated on the Dow ▇▇▇▇▇ Service (or such other page as may replace
that page on that service for the purpose of displaying comparable
rates or prices).
"Title Policy" shall have the meaning specified in paragraph
8 of the first paragraph of Exhibit VI.
"Transaction Conditions Precedent" shall have the meaning
specified in Section 3(b) of this Annex I.
"Transaction Documents" shall mean, collectively, the
Agreement, this Annex I, any other applicable Annexes to the
Agreement, the Guaranty, the Custodial Agreement and all Confirmations
executed pursuant to the Agreement and this Annex I in connection with
specific Transactions.
"Transition Down Date" shall have the meaning specified in
Section 4(a) of this Annex I.
"Transition Up Date" shall have the meaning specified in
Section 3(l) of this Annex I.
"Trustee" shall mean, with respect to any Eligible
Securities, the trustee under the Securitization Document applicable
to such Eligible Securities.
"Trust Receipt" shall mean a trust receipt issued by
Custodian to Buyer confirming the Custodian's possession of certain
Purchased Loan Files which are the property of and held by Custodian
for the benefit of the Buyer (or any other holder of such trust
receipt).
"UCC" shall have the meaning specified in Section 6 of this
Annex I.
"Underwriting Issues" shall mean, with respect to any
Collateral as to which Seller intends to request a Transaction, all
material information that has come to Seller's attention that, based
on the making of reasonable inquiries and the exercise of reasonable
care and diligence under the circumstances, would be considered a
materially "negative" factor (either separately or in the aggregate
with other information) including but not limited to, to the extent of
the Seller's knowledge, whether any of the Purchased Securities or
Purchased Loans were rejected for inclusion in, or repurchased from,
any securitization transaction, warehouse loan facility or a
repurchase transaction due to the breach of a representation and
warranty), or a material defect in loan documentation or closing
deliveries (such as any absence of any material Purchased Loan
Document(s)), to a reasonable institutional mortgage Buyer in
determining whether to originate or acquire the Collateral in
question.
"US Loan" shall mean any Eligible Loan governed by the law of
a state forming part of the United States of America and secured
(inter alia) by Mortgaged Property located in the United States of
America.
(b) The following capitalized terms shall have the respective meanings
set forth below, in lieu of the meanings for such terms set forth in the
Agreement:
"Buyer's Margin Percentage" shall mean, with respect to the
Purchased Loans or Purchased Securities, as of any date, the "Buyer's
Margin Percentage" specified for the applicable Rating Category or
Collateral Type Grouping in Schedule I-A attached to this Annex I.
"Confirmation" shall have the meaning specified in Section
3(b) of this Annex I.
"Event of Default" shall have the meaning specified in
Section 14 of this Annex I.
"Margin Notice Deadline" shall mean 11:00 a.m. (New York City
time).
"Market Value" shall mean, with respect to any Purchased
Securities as of any relevant date, the market value for such
Purchased Securities on such date, as determined by Buyer in the
exercise of its good faith business judgment or, with respect to any
Purchased Loans as of any relevant date, the lesser of (x) the market
value for such Purchased Loans on such date, as determined in good
faith by Buyer in the exercise of its good faith business judgment and
(y) the par amount of such Purchased Loan (and including the value of
any Hedging Transactions assigned with such Purchased Securities or
Purchased Loans for which the Buyer or an Affiliate of the Buyer is
the counterparty). The Market Value of all Purchased Securities and
Purchased Loans shall be determined by Buyer, in the exercise of its
good faith business judgment, on each Business Day during the term of
the Agreement.
"Price Differential" shall mean, with respect to any
Transaction as of any date, the aggregate amount obtained by daily
application of the Pricing Rate for such Transaction to the Repurchase
Price for such Transaction on a 360-day-per-year basis for the actual
number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding) the
date of determination (reduced by any amount of such Price
Differential previously paid by Seller to Buyer with respect to such
Transaction).
"Pricing Rate" shall mean, for any Pricing Rate Period, with
respect to a Transaction involving Purchased Securities in any Rating
Category and/or Purchased Loans in any Collateral Type Grouping on
Schedule I-A of this Annex I, an annual rate equal to the LIBO Rate
for the Pricing Rate Period commencing on and including the first
Remittance Date in a calendar month plus the relevant Applicable
Spread for such Transaction, subject to adjustment and/or conversion
as provided in Sections 3(g) and 3(h); provided, that with respect to
a Transaction involving Purchased Securities in any Rating Category
and/or Purchased Loans in any Collateral Type Grouping on Schedule I-A
of this Annex in each case denominated in a currency other than United
States Dollars and for which the interest accrues at a rate other than
the LIBOR Rate (e.g., EURIBOR), the Pricing Rate shall equal such
other interest rate for the Pricing Rate Period commencing on and
including the first Remittance Date in a calendar month plus the
relevant Applicable Spread for such Transaction, subject to adjustment
and/or conversion as provided in Section 3(g) and 3(h).
"Purchase Price" shall mean, with respect to any Purchased
Securities or Purchased Loans, (i) initially the price at which such
Purchased Securities or Purchased Loans are transferred by Seller to
Buyer on the applicable Purchase Date and (ii) thereafter, such price
increased by the amount of any cash transferred by Buyer to Seller
pursuant to Section 3(l) or 4(b) hereof. The Purchase Price as of any
Purchase Date for any Purchased Securities in a particular Rating
Category or any Purchased Loans in a particular Collateral Type
Grouping shall be an amount equal to the product obtained by
multiplying
(i) the Market Value of such Purchased Securities (or, if the
Securities proposed to be included in a Transaction are being or were
acquired by the Seller from the Sponsor, the acquisition cost of the
Sponsor in such Securities, if lower than the Market Value) or such
Purchased Loans by (ii) the "Original Purchase Percentage" for such
Rating Category or such Collateral Type Grouping, as set forth in
Schedule I-A attached to this Annex I; and
(2) the Seller may request that the Purchase Price set forth
in a Confirmation be determined applying a percentage lower than the
Original Purchase Percentage set forth in Schedule I-A attached to
this Annex I and, in such event, such lower percentage shall be deemed
the "Original Purchase Percentage" for purposes of the calculation of
the Target Price but not for any other purpose under the Agreement.
The Purchase Price shall be expressed in United States Dollars with
respect to any Purchased Securities or Purchased Loans denominated in
United States Dollars. Any Purchased Loans or Purchased Securities
denominated in a currency other than United States Dollars shall be
purchased in such other currency.
"Purchased Securities" shall mean, (i) with respect to any
Transaction, the Eligible Securities sold by Seller to Buyer in such
Transaction until such Eligible Securities are repurchased pursuant to
this Agreement, and (ii) with respect to the Transactions in general,
all Eligible Securities sold by Seller to Buyer and any additional
collateral delivered by Seller to Buyer pursuant to Section 4(a) of
this Annex I until such Eligible Securities are repurchased pursuant
to this Agreement. Whenever Purchased Securities are rated by more
than one Rating Agency and a split rating applies to such Purchased
Securities (i.e., one Rating Agency rates such Purchased Securities at
a lower rating level than the other of such Rating Agencies), then for
all purposes of this Agreement where a rating is to be selected
(including, without limitation, in the determination of any
percentages pursuant to Schedule I-A of this Annex I), the lower of
the ratings shall apply.
"Replacement Collateral" shall have the meaning specified in
Section 14(b)(ii) of this Annex I.
"Repurchase Date" shall mean the Business Day immediately
preceding the third anniversary of the date of the Agreement;
provided, however, that if all of the Extension Conditions described
in Section 3(e) of this Annex I shall be timely satisfied, the
Repurchase Date shall be extended to the Business Day immediately
preceding the fourth anniversary of the date of the Agreement.
"Repurchase Price" shall mean, with respect to any Purchased
Securities or Purchased Loans as of any date, the price at which such
Purchased Securities or Purchased Loans are to be transferred from
Buyer to Seller upon termination of the related Transaction in whole
or in part; such price shall be an amount determined in each case as
the sum of the Purchase Price of such Purchased Securities or
Purchased Loans and the Price Differential with respect to such
Purchased Securities or Purchased Loans as of the date of such
determination, minus all Income and cash actually received by Buyer in
respect of such Transaction pursuant to Sections 4(a), 5(b), 5(c),
5(d) and 5(e) of this Annex I. The Repurchase Price shall be expressed
in United States Dollars with respect to any Purchased Securities or
Purchased Loans denominated in United States Dollars. Any Purchased
Loans or Purchased Securities denominated in a currency other than
United States Dollars shall be repurchased in such other currency.
3 INITIATION; CONFIRMATION; TERMINATION; FEES
The provisions of Paragraph 3 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 3:
(a) Subject to the terms and conditions set forth in the Agreement
(including, without limitation, the "Transaction Conditions Precedent"
specified in Section 3(b) of this Annex I) the Buyer shall from time to time
enter into Transactions with the Seller on any Business Day from and including
the date of the Agreement to but excluding the three year anniversary date of
the date of the Agreement and pursuant to any such Transaction, Seller shall be
entitled to sell, repurchase and re-sell any assets in accordance with this
Agreement. An agreement to enter into a Transaction shall be made in writing at
the initiation of Seller as provided below; provided, however, that the
aggregate Repurchase Price (excluding the Price Differential with respect to
the Purchased Securities and Purchased Loans as of the date of determination)
for all Transactions shall not exceed the Facility Amount. Seller shall give
Buyer written notice of each proposed Transaction and Buyer shall inform Seller
of its determination with respect to any assets proposed to be sold to Buyer by
Seller solely in accordance with Exhibit VIII attached hereto. Buyer shall have
the right to review all Eligible Loans and Eligible Securities proposed to be
sold to Buyer in any Transaction and to conduct its own due diligence
investigation of such Eligible Loans and Eligible Securities as Buyer
reasonably determines. Buyer shall be entitled to make a determination, in the
exercise of its good faith business judgment, that it shall not purchase any or
all of the assets proposed to be sold to Buyer by Seller. On the Purchase Date
for the Transaction which shall be not less than three (3) Business Days
following the approval of an Eligible Loan or an Eligible Security by the Buyer
in accordance with Exhibit VIII hereto, the Purchased Securities or Purchased
Loans shall be transferred to Buyer or its agent against the transfer of the
Purchase Price to an account of Seller. With respect to a Transaction involving
an Eligible Loan or Eligible Security to be purchased by Buyer in a currency
other than United States Dollars, Seller shall give Buyer irrevocable notice of
sale of such Eligible Loan or Eligible Security at least one (1) Business Day
in advance of the related Purchase Date; provided further, that, if Seller does
not complete such Transaction on the Purchase Date set forth in such
irrevocable notice, Seller shall pay Buyer any amounts, if any, as may be
required pursuant to Section 3(i) hereof. Any proposal by Seller for
Transactions relating to Eligible Loans or Eligible Securities denominated in
United Kingdom Sterling or for which the related Mortgaged Property is located
in England, Wales, Northern Ireland or Scotland shall be governed by the
English Loan Supplement which supersedes this Annex I; provided, that any
Eligible Loans for which the related Mortgaged Property is located in England,
Wales, Northern Ireland or Scotland and which are described in clauses (iii)(y)
and (iv)(y) of the definition of Eligible Loans to be entered into by Seller
and Buyer must be approved by Buyer in its sole discretion and consent and
subject to applicable terms and conditions set forth at such time. From time to
time, Seller may propose to Buyer that Buyer and Seller enter into Transactions
involving Eligible Loans or Eligible Securities denominated in a currency other
than United States Dollars or United Kingdom Sterling or for which the related
Mortgaged Property is located outside of the United States or England, Wales,
Scotland or Northern Ireland. Any proposal by Seller for Transactions relating
to Eligible Loans or Eligible Securities denominated in a currency other than
United States Dollars or United Kingdom Sterling or for which the related
Mortgaged Property is located outside of the United States or England, Wales,
Northern Ireland or Scotland may be entered into by Seller and Buyer at Buyer's
sole discretion and consent and subject to applicable terms and conditions set
forth at such time. All outstanding and/or proposed Transactions denominated in
a currency other than United States Dollars shall be converted to United States
Dollars on each Purchase Date (or, on the relevant Purchase Date with respect
to proposed Transactions) or on any other date in relation to which a
determination is required to give effect to the Repurchase Agreement, in each
case on the basis of the spot rate for the sale of such other currency against
the purchase of United States Dollars in the [London foreign exchange market]
quoted by any leading international bank selected by the Buyer on the first
date immediately preceding the date of calculation on which commercial banks
and foreign exchange markets are open for business in London.
(b) Upon agreeing to enter into a Transaction hereunder, provided each
of the Transaction Conditions Precedent (as hereinafter defined) shall have
been satisfied (or waived by Buyer), Buyer shall promptly (and in any event
within five (5) Business Days) deliver to Seller a written confirmation in the
form of Exhibit I attached hereto of each Transaction (a "Confirmation").
Unless otherwise agreed by the parties, Buyer shall deliver a separate
Confirmation with respect to each Purchased Loan or Purchased Security which is
the subject of a Transaction. Such Confirmation shall describe the Purchased
Securities (including CUSIP number, if any) and/or Purchased Loans, shall
identify Buyer and Seller, and shall set forth:
(i) the Purchase Date,
(ii) the Purchase Price for such Purchased Securities and/or
Purchased Loans,
(iii) the Repurchase Date,
(iv) the Pricing Rate applicable to the Transaction
(including the Applicable Spread)
(v) the acquisition cost; and
(vi) and any additional terms or conditions not inconsistent
with the Agreement. With respect to any Transaction, the Pricing Rate
shall be determined initially on the Pricing Rate Determination Date
applicable to the first Pricing Rate Period for such Transaction, and
shall be reset on each Reset Date for the next two succeeding Pricing
Rate Periods for such Transaction. Buyer or its agent shall determine
in accordance with the terms of this Agreement the Pricing Rate on
each Pricing Rate Determination Date for the next succeeding two
Pricing Rate Periods and notify Seller of such rate for such periods
on the Reset Date. For purposes of this Section 3(b), the "Transaction
Conditions Precedent" shall be deemed to have been satisfied with
respect to any proposed Transaction if:
(1) no Default or Event of Default under the Agreement shall have
occurred and be continuing as of the Purchase Date for such proposed
Transaction;
(2) Seller shall have certified to Buyer in writing the acquisition
cost of such Securities (including therein reasonable supporting documentation
required by the Buyer, if any);
(3) the representations and warranties made by Seller in any of the
Transaction Documents shall be true and correct in all material respects as of
the Purchase Date for such Transaction;
(4) Buyer shall have (A) determined, in accordance with the applicable
provisions of Section 3(a) of this Annex I, that the assets proposed to be sold
to Buyer by Seller in such Transaction are Eligible Securities and/or Eligible
Loans and (B) with respect to any Eligible Loan only, obtained internal credit
approval for the inclusion of such Eligible Loan as a Purchased Loan in a
Transaction;
(5) [reserved];
(6) Buyer shall have received the Guaranty executed by the Sponsor;
(7) following the consummation of such Transaction, the total
Repurchase Price of Transactions with respect to Purchased Loans of the types
described in clauses (iii) and (iv) of the definition of Eligible Loan shall
not exceed $100,000,000;
(8) with respect to any proposed Transaction for Securities in the
event the Seller or an Affiliate of the Seller owns the Related Securities, the
Seller shall have (x) caused ownership of the Related Securities to be
transferred to the Seller simultaneous with or prior to the purchase of the
Purchased Securities by Buyer and (y) delivered to the Buyer a power of
attorney and any other documentation reasonably required by the Buyer
sufficient to permit the Buyer upon the occurrence and during the continuance
of an Event of Default to register the transfer of the Related Securities from
Seller to Buyer or its designee;
(9) Buyer shall have determined that, with respect to the Purchased
Securities then subject to Transactions, following the consummation of the
proposed Transaction:
(i) the aggregate Market Value with respect to all Purchased
Securities then subject to Transactions in each Rating Category set
forth below does not exceed the applicable percentage set forth below
as a percentage of the Market Value of all Purchased Securities then
subject to Transactions:
Rating Category (or the Maximum Market Value (%)
equivalent)
BB- 45
B+ 35
B 35
▇- ▇▇
▇▇&▇▇▇ ▇▇
(▇▇) if the number of separate issues of Purchased Securities
then subject to Transactions with a minimum $20,000,000 outstanding
face or notional principal amount per issue is less than or equal to
ten (10), then the aggregate outstanding face or notional principal
amount of all Purchased Securities then subject to Transactions issued
by a single issuer does not exceed $100,000,000; provided, however, if
the number of issues is greater than ten (10), than the aggregate
outstanding face or notional principal amount of all Purchased
Securities then subject to Transactions issued by a single issuer may
exceed $100,000,000;
(10) Buyer shall have determined that, with respect to any Purchased
Securities which are the subject of a proposed Transaction and are rated
"B+"(or the equivalent) or lower or are not rated, such Purchased Securities,
together with any Purchased Securities issued by the same trust, entitle the
holder thereof to control the selection of the special servicer for the
mortgage loans underlying such Purchased Securities; and
(11) with respect to any proposed Transaction for Purchased Securities
in a "real estate mortgage investment conduit" (or REMIC), in the event the
Seller or an Affiliate of the Seller owns the Related Securities (it being
understood that for purposes of this provision, Related Securities shall
include (a) the securities issued in such "real estate mortgage investment
conduit" (or REMIC) transaction which have no rating and (b) if such unrated
securities do not entitle the holder thereof to control the selection of the
special servicer for the mortgage loans underlying such Purchased Securities
(i.e. serve as the controlling class), the securities which have a rating and
entitle the holder thereof to control the selection of the special servicer for
the mortgage loans underlying such Purchased Securities (i.e. serve as the
controlling class)), the Seller shall have either
(x) (i) caused ownership of the Related Securities
to be transferred to the Seller simultaneous with or prior to
the purchase of the Purchased Securities by Buyer and (ii)
delivered to the Buyer a power of attorney and any other
documentation reasonably required by the Buyer sufficient to
permit the Buyer upon the occurrence and during the
continuance of an Event of Default to register the transfer
of the Related Securities from Seller to Buyer or its
designee, or
(y) delivered to the Buyer an agreement satisfactory
to Buyer irrevocably conveying and transferring to Buyer the
right to control the selection of the special servicer for
the related mortgage loans if an Event of Default occurs
under the Agreement.
(c) Each Confirmation, together with the Agreement, including this
Annex I, shall be conclusive evidence of the terms of the Transaction(s)
covered thereby unless objected to in writing by Seller no more than two (2)
Business Days after the date such Confirmation is received by Seller. An
objection sent by Seller with respect to any Confirmation must state
specifically that the writing is an objection, must specify the provision(s) of
such Confirmation being objected to by Seller, must set forth such provision(s)
in the manner that Seller believes such provisions should be stated, and must
be received by Buyer no more than two (2) Business Days after such Confirmation
is received by Seller.
(d) No Transaction shall be terminable on demand by Buyer (other than
upon the occurrence and during the continuance of an Event of Default by Seller
or if a Sovereign Repurchase Event occurs). Seller shall be entitled to
terminate a Transaction in whole or in part on demand and repurchase all or a
portion of Purchased Securities and/or Purchased Loans subject to a Transaction
on any Business Day prior to the Repurchase Date (an "Early Repurchase Date");
provided, however, that:
(i) Seller repurchases on such Early Repurchase Date, all or
the portion of the Purchased Securities and/or Purchased Loans subject
to such Transaction which Seller has elected to repurchase,
(ii) Seller notifies Buyer in writing of its intent to
terminate such Transaction and repurchase such Purchased Securities
and/or Purchased Loans no later than five (5) Business Days prior to
such Early Repurchase Date,
(iii) on such Early Repurchase Date, Seller pays to Buyer an
amount equal to the sum of the Repurchase Price for such Transaction
(or, in the case of a termination of a Transaction in part an amount
acceptable to the Buyer in the exercise of its good faith business
judgment but not more than such Repurchase Price), the Exit Fee, if
any, and any other amounts payable under this Agreement (including,
without limitation, Section 3(i) of this Annex I) with respect to such
Transaction against transfer to the Seller or its agent of such
Purchased Securities and/or Purchased Loans;
(iv) on such Early Repurchase Date, if the Minimum Seller's
Equity Requirement has not been achieved and if a CF Sweep Event has
occurred and is continuing with respect to any Purchased Security or
Purchased Loan, Seller shall, if the Purchased Security or Purchased
Loan in question is not being redeemed or satisfied by the underlying
obligor, only be permitted to repurchase a Purchased Security or
Purchased Loan (other than the Purchased Security or Purchase Loan
that triggered a CF Sweep Event) if Seller pays to Buyer an amount, in
addition to the amount referred to in clause (iii) above, on account
of and to reduce the Repurchase Price of the Purchased Securities or
Purchased Loans in respect of which such CF Sweep Event occurred,
until the Repurchase Price for such Purchased Securities or Purchased
Loans has been reduced to the amount (expressed in United States
Dollars) obtained by multiplying (i) the Market Value of such
Purchased Securities or Purchased Loans as of such date by (ii) the
"CF Sweep Purchase Percentage" applicable to such Purchased Securities
or Purchased Loans, as set forth in Schedule I-A attached to this
Annex I, respectively as of the date of such payment (as determined by
Buyer after giving effect to such Principal Payment); and
(v) if the reason for the termination of a Transaction is the
related Purchased Security or Purchased Loan is simultaneous with such
termination being included in a collateralized debt obligation (or
CDO) transaction, then the proceeds of the transfer of such Purchased
Security or Purchased Loan shall be applied as follows:
(1) first, to pay to Buyer the amount referred to in clause (iii)
above;
(2) second, if a Transition Down Date has occurred, to reduce the
Repurchase Price of any Purchased Securities or Purchased Loans then subject to
Transactions in respect of which the Market Value is less than the Buyer's
Margin Amount (using the higher Original Purchase Percentages and CF Sweep
Purchase Percentages and lower Margin Maintenance Percentages then in effect as
described in Section 4 of this Annex I) until the Repurchase Price of all such
Purchased Securities and Purchased Loans then subject to Transactions equals
the Target Price (for this purpose, making such payment in the order of those
Purchased Securities or Purchased Loans with the largest to smallest excess of
Repurchase Price over Target Price); and
(3) third, to pay any excess to the Seller.
Such notice shall set forth the Early Repurchase Date and shall identify with
particularity the Purchased Securities and/or Purchased Loans to be repurchased
on such Early Repurchase Date.
(e) On the Repurchase Date, termination of the applicable Transactions
will be effected by transfer to Seller or its agent of the Purchased Securities
and Purchased Loans and any Income in respect thereof received by Buyer (and
not previously credited or transferred to, or applied to the obligations of,
Seller pursuant to Section 5 of this Annex I) against the simultaneous transfer
of the Repurchase Price to an account of Buyer. Notwithstanding the foregoing,
provided all of the Extension Conditions (as hereinafter defined) shall have
been satisfied, the Repurchase Date shall be extended with respect to all of
the Transactions until the first (1st) anniversary of the originally scheduled
Repurchase Date (all of the other terms and conditions of such Transactions
remaining the same). For purposes of the preceding sentence, the "Extension
Conditions" shall be deemed to have been satisfied if:
(i) Seller shall have given Buyer written notice, not less
than thirty (30) days prior to the originally scheduled Repurchase
Date, of Seller's desire to extend the Repurchase Date,
(ii) no Default or Event of Default under the Agreement shall
have occurred and be continuing as of the originally scheduled
Repurchase Date,
(iii) Seller shall have paid Buyer an extension fee in an
amount equal to one-quarter of one percent (0.25%) of the aggregate
outstanding Repurchase Price of all Transactions as of the Business
Day prior to the third anniversary of the date of the Agreement (such
Repurchase Price, the "Extension Date Repurchase Price"); and
(iv) Seller shall have reduced the Repurchase Price of any
Purchased Securities or Purchased Loans then subject to Transactions
to the extent necessary to cause the Repurchase Price of all Purchased
Securities and Purchased Loans then subject to Transactions to equal
the Target Price.
In the event the Repurchase Date is extended pursuant to this Section 3(e) of
Annex I, then Seller shall be required to terminate all Transactions in part by
paying 50% of the Extension Date Repurchase Price by not later than the initial
Remittance Date occurring in March 2008, by paying 75% of the Extension Date
Repurchase Price by not later than the initial Remittance Date occurring in
June 2008 and by paying any unpaid portion of the Repurchase Price of all
Transactions on the Repurchase Date, as extended. Each such payment of the
Repurchase Price of all Transactions shall reduce the Repurchase Price of
individual Transactions on a pro rata basis.
(f) Reserved.
(g) If prior to the first day of any Pricing Rate Period with respect
to any Transaction, (i) Buyer shall have determined (which determination shall
be conclusive and binding upon Seller) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate
determined or to be determined for such Pricing Rate Period will not adequately
and fairly reflect the cost to Buyer (as determined and certified by Buyer) of
making or maintaining Transactions during such Pricing Rate Period, Buyer shall
give telecopy or telephonic notice thereof to Seller as soon as practicable
thereafter. If such notice is given, the Pricing Rate with respect to such
Transaction for such Pricing Rate Period, and for any subsequent Pricing Rate
Periods until such notice has been withdrawn by Buyer, shall be a per annum
rate (the "Alternative Rate") equal to a rate determined based on an index
approximating the behavior of LIBOR as reasonably determined by Buyer (which
may be the Prime Rate).
(h) Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for Buyer to effect Transactions as contemplated
by the Transaction Documents, (a) the commitment of Buyer hereunder to enter
into new Transactions and to continue Transactions as such shall forthwith be
canceled, and (b) the Transactions then outstanding shall be converted
automatically to Alternative Rate Transactions on the last day of the then
current Pricing Rate Period or within such earlier period as may be required by
law. If any such conversion of a Transaction occurs on a day which is not the
last day of the then current Pricing Rate Period with respect to such
Transaction, Seller shall pay to Buyer such amounts, if any, as may be required
pursuant to Section 3(i) of this Annex I.
(i) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer
harmless from any net loss or expense (not to include any lost profit or
opportunity) (including, without limitation, reasonable attorneys' fees
actually incurred and disbursements) which Buyer may sustain or incur as a
consequence of (i) default by Seller in selling Eligible Securities or Eligible
Loans after Seller has notified Buyer of a proposed Transaction and Buyer has
agreed to purchase such Eligible Securities or Eligible Loans in accordance
with the provisions of this Agreement (including also, but not limited to, a
default by Seller in selling Eligible Securities and Eligible Loans on the
Purchase Date as set forth in an irrevocable notice in accordance with Section
3(a) hereto), (ii) any payment of the Repurchase Price on any day other than a
Remittance Date, (iii) with respect to any Purchased Securities or Purchased
Loans denominated in a currency other than United States Dollars, any
unscheduled payment of the Repurchase Price (excluding Price Differential) on a
Remittance Date without at least four (4) Business Day's prior notice by Seller
to Buyer, or (iv) default by the Seller in terminating any Transaction after
the Seller has given a notice in accordance with Section 3(d) of a termination
of a Transaction (in each case of (i)-(iv) above, including, without
limitation, any such loss or expense in the nature of a breakage cost
attributable thereto arising from the reemployment of funds obtained by Buyer
to maintain Transactions hereunder or from fees payable to terminate the
deposits from which such funds were obtained). As a condition to Seller's
liability under this paragraph, Buyer shall promptly deliver to Seller a
certificate as to such costs, losses, damages and expenses, setting forth the
calculations therefor and including any available supporting documentation,
which certificate shall be conclusive and binding on Seller in the absence of
manifest error.
(j) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any directive from any central bank or other
Governmental Authority having jurisdiction over Buyer made subsequent to the
date hereof:
(i) shall subject Buyer to any tax of any kind whatsoever
with respect to the Transaction Documents, any Purchased Security or
Purchased Loan or any Transaction, or change the basis of taxation of
payments to Buyer in respect thereof (except for changes in the rate
of tax on Buyer's overall net income);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of Buyer which is not otherwise
included in the determination of the LIBO Rate hereunder; or
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering into, continuing or
maintaining Transactions or to reduce any amount receivable under the
Transaction Documents in respect thereof; then, in any such case, Seller shall
promptly pay Buyer, upon its demand, any additional amounts necessary to
compensate Buyer for such increased cost or reduced amount receivable. If Buyer
becomes entitled to claim any additional amounts pursuant to this Section 3(j),
it shall promptly notify Seller of the event by reason of which it has become
so entitled. As a condition to Seller's liability under this paragraph, Buyer
shall promptly deliver to Seller a certificate as to the calculation of any
additional amounts payable pursuant to this subsection and including any
available supporting documentation, which certificate shall be conclusive and
binding upon Seller in the absence of manifest error. This covenant shall
survive the termination of the Agreement and this Annex I and the repurchase by
Seller of any or all of the Purchased Securities and Purchased Loans.
(k) If Buyer shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation
or application thereof or compliance by Buyer or any corporation controlling
Buyer with any directive regarding capital adequacy from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on Buyer's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which Buyer or
such corporation could have achieved but for such adoption, change or
compliance by an amount which is deemed by Buyer to be material, then from time
to time, after submission by Buyer to Seller of a written request therefore,
Seller shall pay to Buyer such additional amount or amounts as will compensate
Buyer for such reduction. As a condition to Seller's liability under this
paragraph, Buyer shall promptly deliver to Seller a certificate as to the
calculation of any additional amounts payable pursuant to this subsection and
including any available supporting documentation, which certificate shall be
conclusive and binding upon Seller in the absence of manifest error. This
covenant shall survive the termination of the Agreement and this Annex I and
the repurchase by Seller of any or all of the Purchased Securities and
Purchased Loans.
(l) If (x) the Seller's Equity at any time equals or exceeds the
Minimum Sellers' Equity Requirement and with respect to the Purchased
Securities only, the number of issues of Purchased Securities which are then
subject to Transactions at any time equals or exceeds the Minimum CMBS
Diversification or (y) the rating of any Purchased Security then subject to a
Transaction is upgraded (such date, the "Transition Up Date"), then, so long as
an Event of Default shall not have occurred,
(i) the Original Purchase Percentage, CF Sweep Purchase
Percentage and Buyer's Margin Percentage shall, without further action
of the parties, immediately be deemed increased as set forth in
Schedule I-A attached hereto (1) in the case of clause (x), with
respect to all Purchased Securities and Purchased Loans then subject
to Transactions (i.e. the percentages that apply shall shift
horizontally to the right one column under each such heading), or (2)
in the case of clause (y), with respect to the affected Purchased
Security (i.e. the percentages that apply shall shift vertically
upward to the applicable Rating Category), and
(ii) on the Purchase Date for the initial Transaction
following the Transition Up Date or on any Business Day not less than
five (5) Business Days after the Transition Up Date, as determined by
Seller, the Buyer shall transfer to an account of Seller the
corresponding increase in the Purchase Price which reflects the new
higher Original Purchase Percentage for the applicable Purchased Loans
and Purchased Securities referred to in the preceding clause (i) and
Buyer and Seller shall enter into an amended and restated Confirmation
reflecting such change in Purchase Price for each prior Transaction;
provided, that such increase in Purchase Price reflecting the higher Original
Purchase Percentage for each Purchased Security or Purchased Loan which was
included in a Transaction prior to such Purchase Date shall in no event reduce
the Seller's Equity below the Minimum Seller's Equity Requirement.
4 MARGIN MAINTENANCE
(a) Paragraphs 4(a) and 4(b) of the Agreement are hereby modified in
their entirety to read as follows:
"(a) If at any time, either (i) the Market Value of any of the
Purchased Securities or any of the Purchased Loans shall be less
than the Buyer's Margin Amount for such Purchased Securities or
Purchased Loans, respectively (a "Margin Deficit"), or (ii) a
Credit Loss shall occur with respect to the Purchased Securities
in any Rating Category subject to the last sentence of this
Paragraph 4(a) or a Credit Loss shall occur with respect to the
Purchased Loans in any Collateral Type Grouping, then Buyer may by
notice to Seller require Seller to transfer to Buyer (A) cash or
(B) additional collateral or a letter of credit acceptable to
Buyer in its sole and absolute discretion, so that the sum
obtained by adding the Market Value of such Purchased Securities
or Purchased Loans plus such cash and additional collateral or
letter of credit shall equal or exceed the Deficit Cure Amount for
such Purchased Securities or Purchased Loans, respectively, as of
the same date. Seller's failure to cure any Margin Deficit as
required by the preceding sentence shall constitute an Event of
Default under the Transaction Documents and shall entitle Buyer to
exercise its remedies under Section 14 of Annex I (including,
without limitation, the liquidation remedy provided for in Section
14(c)(iv) of Annex I). For purposes of this Paragraph 4(a), a
Credit Loss shall only be deemed to have occurred with respect to
the Purchased Securities in any Rating Category if and to the
extent such Credit Loss shall not have been offset by Credit Gains
with respect to Purchased Securities in the same Rating Category."
In connection with the foregoing, if the Margin Deficit is caused
at any time by the Seller's Equity (which previously exceeded the
Minimum Seller's Equity Requirement) falling below the Minimum
Seller's Equity Requirement or by the Minimum CMBS Diversification
(which previously was in effect) no longer being in effect (such
date, the "Transition Down Date"), then
(1) except as described in clause (2)
below, the Original Purchase Percentages and CF
Sweep Purchase Percentages shall automatically be
reduced to the lower Original Purchase Percentages
and CF Sweep Purchase Percentages and the Buyer's
Margin Percentages shall automatically be increased
to the higher Buyer's Margin Percentages, in each
case for the Purchased Securities and/or Purchased
Loans subject to Transactions as of such Transition
Down Date, and
(2) in the event the Transition Down Date
was caused by a collateralized debt obligation (or
CDO) transaction, (x) during the (9) months
following the closing of such transaction the
Original Purchase Percentages, CF Sweep Purchase
Percentage and Buyer's Margin Percentages shall not
be reduced or increased as described in (1) above
and shall remain at the Original Purchase
Percentages, CF Sweep Purchase Percentages and
Buyer's Margin Percentages that applied immediately
before the collateralized debt obligation (or CDO)
transaction (i.e. during such nine (9) month period
Buyer shall apply Income deposited in the Cash
Management Account pursuant to Section 5 utilizing
such higher or lower percentages, as the case may
be) and (y) at the end of such nine (9) month
period, the Original Purchase Percentages, CF Sweep
Purchase Percentages and Buyer's Margin Percentages
shall be determined by whether the Minimum Seller's
Equity Requirement and the Minimum CMBS
Diversification is achieved at such time."
"(b) If any time the aggregate Market Value of any Purchased
Security in any Rating Category or Purchased Loan in any
Collateral Type Grouping multiplied by the "Original Purchase
Percentage" for such Rating Category or such Collateral Type
Grouping as such Original Purchase Percentage may be adjusted in
accordance with this Agreement shall be greater than the aggregate
Repurchase Price for the Transaction relating to such Purchased
Security or Purchased Loan, respectively (a "Margin Excess") then
Seller may by notice to Buyer require Buyer to transfer to Seller
cash in an amount (expressed in United States Dollars) up to the
Margin Excess; provided, that any such transfer of cash (1) shall
be subject to the restrictions set forth in the parenthetical in
and the proviso to the definition of "Purchase Price", (2) shall
not be in an amount less than $1,000,000 and (3) shall be
evidenced by amended and restated Confirmations.
(b) If any notice is given by Buyer under Paragraph 4(a) of the
Agreement at or before the Margin Notice Deadline on any Business Day, the
Seller shall transfer cash or additional collateral or letter of credit as
provided in Paragraph 4(a) no later than the close of business in the relevant
market on the next Business Day. If any such notice is given after the Margin
Notice Deadline, the Seller shall transfer such cash or additional collateral
or letter of credit no later than the close of business in the relevant market
on the second Business Day following such notice. If any notice is given by
Seller under Paragraph 4(b) of the Agreement prior to the close of business on
any Business Day, the Buyer shall transfer cash as provided in Paragraph 4(b)
no later than the close of business in the relevant market on the second
following Business Day. Notice required pursuant to Paragraph 4(a) or 4(b) of
the Agreement may be given by any means of telecopier or telegraphic
transmission and shall be delivered in accordance with the terms of the
Agreement. The failure of Buyer or Seller, on any one or more occasions, to
exercise its rights under Paragraph 4(a) or 4(b) of the Agreement shall not
change or alter the terms and conditions to which the Agreement is subject or
limit the right of Buyer or Seller to do so at a later date. Buyer and Seller
agree that any failure or delay by either party to exercise its rights under
Paragraph 4(a) or 4(b) of the Agreement shall not limit such party's rights
under the Agreement or otherwise existing by law or in any way create
additional rights for such party.
(c) Paragraph 4(d) of the Agreement is hereby modified in its entirety
to read as follows:
"(d) Any cash transferred to Buyer or Seller pursuant to Paragraph
4(a) or 4(b) of the Agreement with respect to any Purchased
Securities or any Purchased Loans shall be attributed to the
relevant Transaction."
(d) Paragraphs 4(e) and 4(f) of the Agreement are hereby deleted in
their respective entireties.
5 INCOME PAYMENTS AND PRINCIPAL PAYMENTS
The provisions of Paragraph 5 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 5:
(a) The Cash Management Account shall be established at the Depository
concurrently with the execution and delivery of the Agreement and this Annex I
by Seller and Buyer. Buyer shall have sole dominion and control over the Cash
Management Account. The Seller shall cause all Income in respect of the
Purchased Securities and the Purchased Loans and the associated Hedging
Transactions to be deposited directly into the Cash Management Account. Such
Income shall be remitted by the Depository in accordance with the applicable
provisions of Sections 5(b), 5(c), 5(d), 5(e), 5(f) and 14(a)(iii) of this
Annex I.
(b) With respect to Purchased Loans, Seller shall deliver to each
Mortgagor, issuer of a participation or borrower under a Purchased Loan an
irrevocable direction letter in the form attached as Exhibit IX to this
Agreement instructing the Mortgagor, issuer of a participation or borrower to
pay all Income under the related Purchased Loan to the Cash Management Account
and shall provide to Buyer proof of such delivery. If a Mortgagor, issuer of a
participation or borrower forwards any Income with respect to a Purchased Loan
to Seller rather than directly to the Cash Management Account, Seller shall (i)
deliver an additional irrevocable direction letter to the applicable Mortgagor,
issuer of a participation or borrower and make other commercially reasonable
efforts to cause such Mortgagor, issuer of a participation or borrower to
forward such amounts directly to the Cash Management Account and (ii) within
one Business Day deposit in the Cash Management Account any such amounts.
(c) So long as no Event of Default or CF Sweep Event with respect to
any Purchased Security and Purchased Loan shall have occurred and be
continuing, all Income received by the Depository in respect of the Purchased
Securities and the Purchased Loans and the associated Hedging Transactions
(other than Principal Payments) during each Collection Period shall be applied
by the Depository on the related Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding as of such
Remittance Date; and
(ii) second, to remit to Seller the remainder, if any.
(d) So long as no Event of Default or CF Sweep Event with respect to
any Purchased Security and Purchased Loan shall have occurred and be
continuing, any Principal Payment received by the Depository in respect of any
of the Purchased Securities and the Purchased Loans during each Collection
Period shall be applied by the Depository on the related Remittance Date in the
following order of priority:
(i) first, to make a payment to Buyer on account of the
Repurchase Price of the Purchased Securities or Purchased Loans in
respect of which such Principal Payment has been received, until the
Repurchase Price for such Purchased Securities or Purchased Loans has
been reduced to the Target Price for such Purchased Securities or
Purchased Loans, respectively as of the date of such payment (as
determined by Buyer after giving effect to such Principal Payment);
(ii) second, to make a payment to Buyer on account of the
Repurchase Price of any other Purchased Securities or Purchased Loans
as to which the Repurchase Price exceeds the Target Price (for this
purpose, making such payment in the order of those Purchased
Securities or Purchased Loans with the largest to smallest excess of
Repurchase Price over Target Price), until the aggregate Repurchase
Price for all of such Purchased Securities or Purchased Loans has been
reduced to the aggregate Target Price for all of the Purchased
Securities or Purchased Loans, respectively as of the date of such
payment (as determined by Buyer after giving effect to such Principal
Payment); and
(iii) third, to remit to Seller the remainder of such
Principal Payment.
(e) If a CF Sweep Event with respect to any Purchased Security and
Purchased Loan shall have occurred and be continuing, all Income received by
the Depository in respect of the Purchased Securities and the Purchased Loans
and the associated Hedging Transactions shall be applied by the Depository on
the Business Day next following the Business Day on which such funds are
deposited in the Cash Management Account as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of
the Purchased Securities and Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer pro rata on account
of the Repurchase Price of the Purchased Securities or the Purchased
Loans in respect of which the CF Sweep Event occurred, until the
Repurchase Price for such Purchased Securities or such Purchased Loans
has been reduced to the Target Price for such Purchased Securities or
such Purchased Loans as of the date of such payment (as determined by
Buyer after giving effect to such remittance);
(iii) third, to make a payment to Buyer pro rata on account
of the Repurchase Price of any other Purchased Securities or Purchased
Loans for which a CF Sweep Event shall not have occurred and as to
which the Repurchase Price exceeds the Target Price, until the
aggregate Repurchase Price for all of the Purchased Securities and all
of the Purchased Loans has been reduced to the aggregate Target Price
for all of the Purchased Securities and Purchased Loans as of the date
of such payment (as determined by Buyer after giving effect to such
remittance); and
(iv) fourth, to remit to Seller the remainder.
(f) If an Event of Default shall have occurred and be continuing, all
Income received by the Depository in respect of the Purchased Securities and
the Purchased Loans and the associated Hedging Transactions shall be applied by
the Depository on the Business Day next following the Business Day on which
such funds are deposited in the Cash Management Account as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of
the Purchased Securities and Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer pro rata on account
of the Repurchase Price of the Purchased Securities and Purchased
Loans until the Repurchase Price for all of the Purchased Securities
in all Rating Categories and all of the Purchased Loans in all
Collateral Type Groupings has been reduced to zero; and
(iii) third, to remit to Seller the remainder.
6 SECURITY INTEREST
Paragraph 6 of the Agreement is hereby modified in its entirety to
read as follows:
The Buyer and Seller intend that all Transactions hereunder be
sales to the Buyer of the Purchased Securities and Purchased
Loans and not loans from the Buyer to Seller secured by the
Purchased Securities and Purchased Loans. However, in the event
any such Transaction is deemed to be a loan, Seller hereby
pledges all of its right, title, and interest in, to and under
and grants a first priority lien on, and security interest in,
all of the following property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located
(collectively, the "Collateral") to the Buyer to secure the
payment and performance of all other amounts or obligations
owing to the Buyer pursuant to this Agreement and the related
documents described herein:
(a) the Purchased Securities purchased pursuant to this Agreement
and all "securities accounts" created in connection therewith
(as defined in Section 8-501(a) of the UCC) to which any or all
of such Purchased Securities are credited;
(b) the Purchased Loans purchased pursuant to this Agreement,
Servicing Agreements in connection with this Agreement,
Servicing Records in connection with this Agreement, insurance
relating to such Purchased Loans, and collection and escrow
accounts relating to such Purchased Loans;
(c) the Cash Management Account created in connection with this
Agreement and all monies from time to time on deposit in such
Cash Management Account;
(d) all "general intangibles", "accounts" and "chattel paper" as
defined in the UCC relating to or constituting any and all of
the foregoing; and
(e) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, and records (but excluding any
financial models or other proprietary information) and files
relating to any and all of any of the foregoing.
The Buyer's security interest in the Collateral shall terminate only upon
termination of the Seller's obligations under this Agreement and the documents
delivered in connection herewith and therewith. For purposes of the grant of
the security interest pursuant to Paragraph 6 of the Agreement, the Agreement
shall be deemed to constitute a security agreement under the New York Uniform
Commercial Code (the "UCC"). Buyer shall have all of the rights and may
exercise all of the remedies of a secured creditor under the UCC and the other
laws of the State of New York. In furtherance of the foregoing, (a) Seller, at
its sole cost and expense, shall cause to be filed in such locations as may be
necessary to perfect and maintain perfection and priority of the security
interest granted hereby, UCC-1 financing statements and continuation statements
(collectively, the "Filings"), and shall forward copies of such Filings to
Buyer upon completion thereof, and (b) Seller shall from time to time take such
further actions as may be reasonably requested by Buyer to maintain and
continue the perfection and priority of the security interest granted hereby
(including marking its records and files to evidence the interests granted to
Buyer hereunder).
7 PAYMENT, TRANSFER AND CUSTODY
The provisions of Paragraph 7 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 7; provided that, with respect to any Purchased Loans that are English
Loans, this Section 7 of Annex I shall be superseded by the English Loan
Supplement:
(a) On the Purchase Date for each Transaction, ownership of the
Portfolio Securities and/or Purchased Loans shall be transferred to Buyer or
its designee (including the Custodian) against the simultaneous transfer of the
Purchase Price to an account of Seller specified in the Confirmation relating
to such Transaction.
(b) On or prior to the applicable Purchase Date, the Seller shall
deliver the related Portfolio Securities re-registered in the name of the Buyer
or other designee of the Buyer in accordance with the Custodial Agreement (or,
subject to the approval of Buyer, together with documentation sufficient to
permit the re-registration of the Purchased Securities by the Buyer in the name
of the Buyer or other designee of the Buyer) and the Buyer or its other
designee shall have all rights of conversions, exchange, subscription and any
other rights, privileges and options pertaining to such Portfolio Securities as
the owner thereof, and in connection therewith, the right to deposit and
deliver any and all of such Portfolio Securities with any committee, depositary
transfer, agent, register or other designated agency upon such terms and
conditions as the Buyer may determine. The Portfolio Securities shall be held
by the Buyer or its designee, as exclusive bailee and agent for the Buyer,
either directly or through the facilities of a Relevant System, as "securities
intermediary" (as defined in Section 8-102(a)(14) of the UCC and 31 C.F.R.
Section 357.2) and credited to the "securities account" (as defined in Section
8-501(a) of the UCC) of the Buyer. The Buyer, as "entitlement holder" (as
defined in Section 8-102(a)(7) of the UCC) with respect to such Portfolio
Securities, shall be entitled to receive all cash dividends and distributions
paid in respect thereof. Any such dividends or distributions with respect to
such Portfolio Securities received by the Seller shall be promptly remitted to
the Cash Management Account.
(c) With respect to the Portfolio Securities that shall be delivered
or held in uncertificated form and the ownership of which is registered on
books maintained by the issuer thereof or its transfer agent, the Seller shall
cause the registration of such security or other item of investment property in
the name of Buyer or its designee and at the request of the Buyer, shall take
such other and further steps, and shall execute and deliver such documents or
instruments necessary in the reasonable opinion of the Buyer, to effect a
legally valid transfer to Buyer hereunder. With respect to such Portfolio
Securities that shall be delivered or held in definitive, certificated form,
the Seller shall deliver to the Buyer or its designee (which shall be the
Custodian initially) the original of the relevant certificate registered in the
name of the Buyer or its designee (or, subject to the approval of Buyer,
together with documentation sufficient to permit the re-registration of the
Purchased Securities by the Buyer in the name of the Buyer or other designee of
the Buyer). Unless otherwise instructed by Buyer, any delivery of a security or
other item of investment property in definitive, certificated form shall be
made to the Custodian. With respect to such Portfolio Securities that shall be
delivered through a Relevant System in book entry form and credited to or
otherwise held in a securities account, the Seller shall take such actions
necessary to provide instruction to the relevant financial institution or other
entity, which instruction shall be sufficient if complied with to register the
transfer of such Portfolio Securities from Seller to Buyer or its designee. In
connection with any account to which such Portfolio Securities are credited or
otherwise held, the Seller shall execute and deliver such other and further
documents or instruments necessary, in the reasonable opinion of the Buyer, to
effect a legally valid transfer to Buyer hereunder. Any account to which such
Portfolio Securities are credited or otherwise held shall be designated in
accordance with the Custodial Agreement or such variation thereon as the Buyer
may direct. Any delivery of such Portfolio Security in accordance with this
paragraph, or any other method acceptable to the Buyer, shall be sufficient to
cause the Buyer to be the "entitlement holder" (as defined in Section
8-102(a)(7) of the UCC) with respect to such Portfolio Securities and, if the
Transaction is recharacterized as a secured financing, to have a perfected
first priority security interest therein. No Portfolio Securities, whether
certificated or uncertificated, shall remain in the name, or possession, of
Seller or any of its agents or in any securities account in the name of Seller
or any of its agents.
(d) As a condition to Buyer's purchase of any Securities, Seller shall
deliver to Buyer on or prior to the Purchase Date with respect to such
Securities:
(A) copies of the executed Securitization Document
governing such Securities, and the offering documents related to such
Securities, each certified by the Seller as a true, correct and
complete copy of the original document delivered to the Seller, and
any ancillary documents required to be delivered to holders of the
Securities under such Securitization Document;
(B) one or more officer's certificates with respect
to the completeness of the documents delivered as may be reasonably
requested by Buyer,
(C) an instruction letter from the Seller to the
Trustee under such Securitization Document, instructing the Trustee to
remit all sums required to be remitted to the holder of such
Securities under such Securitization Document to the Depository or as
otherwise directed in a written notice signed by Seller and Buyer,
(D) copies of all distribution statements, if any,
delivered to the Seller pursuant to such Securitization Document
during the three-month period immediately preceding such Purchase
Date, and
(E) any other documents or instruments necessary in
the reasonable opinion of the Buyer to consummate the sale of such
Securities to the Buyer or, if such Transaction is recharacterized as
a secured financing, to create and perfect in favor of Buyer a valid
perfected first priority security interest in such Securities.
(e) On or before each Purchase Date with respect to each Purchased
Loan, Seller shall deliver or cause to be delivered to Buyer or its designee
the Custodial Delivery in the form attached hereto as Exhibit IV. On or before
each Purchase Date, with respect to each Table Funded Purchased Loan, the
Seller shall cause the Settlement Agent to deliver to the Custodian by
facsimile the related Mortgage Note, the Insured Closing Letter and Escrow
Instructions, and a Settlement Agent trust receipt issued thereunder. In
connection with each sale, transfer, conveyance and assignment of a Purchased
Loan, on or prior to each Purchase Date with respect to such Purchased Loan
(other than a Table Funded Purchased Loan) or by not later than 12:00 p.m. (New
York time) on the third Business Day following the applicable Purchase Date
with respect to each Table Funded Purchased Loan, the Seller shall deliver or
cause to be delivered and released to the Custodian the following original
documents (collectively, the "Purchased Loan File"), pertaining to each of the
Purchased Loans identified in the Custodial Delivery delivered therewith:
With respect to each Purchased Loan secured by a Mortgage:
(i) The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of _________ without
recourse" and signed in the name of the last endorsee (the "Last
Endorsee") by an authorized Person (in the event that the Mortgage
Loan was acquired by the Last Endorsee in a merger, the signature
must be in the following form: "[Last Endorsee], successor by
merger to [name of predecessor]"; in the event that the Purchased
Loan was acquired or originated by the Last Endorsee while doing
business under another name, the signature must be in the
following form: "[Last Endorsee], formerly known as [previous
name]").
(ii) The original of any guarantee executed in connection
with the Mortgage Note (if any).
(iii) The original Mortgage with evidence of recording
thereon, or a copy thereof together with an officer's certificate
of Seller certifying that such represents a true and correct copy
of the original and that such original has been submitted for
recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
(iv) The originals of all assumption, modification,
consolidation or extension agreements with evidence of recording
thereon, or copies thereof together with an officer's certificate
of Seller certifying that such represent true and correct copies
of the originals and that such originals have each been submitted
for recordation in the appropriate governmental recording office
of the jurisdiction where the Mortgaged Property is located.
(v) The original Assignment of Mortgage in blank for each
Purchased Loan, in form and substance acceptable for recording and
signed in the name of the Last Endorsee (in the event that the
Purchased Loan was acquired by the Last Endorsee in a merger, the
signature must be in the following form: "[Last Endorsee], successor
by merger to [name of predecessor]"; in the event that the Purchased
Loan was acquired or originated while doing business under another
name, the signature must be in the following form: "[Last Endorsee],
formerly known as [previous name]").
(vi) The originals of all intervening assignments of
mortgage with evidence of recording thereon, or copies thereof
together with an officer's certificate of Seller certifying that
such represent true and correct copies of the originals and that
such originals have each been submitted for recordation in the
appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located.
(vii) The original attorney's opinion of title and abstract
of title or the original mortgagee title insurance policy, or if the
original mortgagee title insurance policy has not been issued, the
irrevocable marked commitment to issue the same.
(viii) The original of any security agreement, chattel
mortgage or equivalent document executed in connection with the
Purchased Loan.
(ix) The original assignment of leases and rents, if any,
with evidence of recording thereon, or a copy thereof together with an
officer's certificate of Seller, certifying that such copy represents
a true and correct copy of the original that has been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(x) The originals of all intervening assignments of
assignment of leases and rents, if any, or copies thereof, with
evidence of recording thereon.
(xi) A copy of the UCC-1 financing statements, certified as
true and correct by Seller, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof certified
by Seller to have been sent for filing, and UCC-3 assignments executed
by Seller in blank, which UCC-3 assignments shall be in form and
substance acceptable for filing.
(xii) An environmental indemnity agreement (if any).
(xiii) An omnibus assignment in blank (if any).
(xiv) A disbursement letter from the Mortgagor to the
original mortgagee (if any).
(xv) Mortgagor's certificate or title affidavit (if
any).
(xvi) A survey of the Mortgaged Property (if any) as
accepted by the title company for issuance of the Title Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if
any).
(xviii) An assignment of permits, contracts and
agreements (if any).
With respect to each Purchased Loan which is a mezzanine loan secured
by a pledge of the entire equity ownership interest in an entity that owns a
multifamily or commercial property:
(i) The original Mezzanine Note signed in connection with
the Purchased Loan bearing all intervening endorsements, endorsed
"Pay to the order of __________ without recourse" and signed in
the name of the Last Endorsee by an authorized Person (in the
event that the Mezzanine Note was acquired by the Last Endorsee in
a merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the
event that the Purchased Loan was acquired or originated by the
Last Endorsee while doing business under another name, the
signature must be in the following form: "[Last Endorsee],
formerly known as [previous name]").
(ii) The original of the loan agreement and the
guarantee, if any, executed in connection with the Purchased Loan.
(iii) The original intercreditor or loan coordination
agreement, if any, executed in connection with the Purchased Loan.
(iv) The original security agreement executed in
connection with the Purchased Loan.
(v) Copies of all documents relating to the formation and
organization of the borrower of such Purchased Loan, together with
all consents and resolutions delivered in connection with such
borrower's obtaining the Purchased Loan.
(vi) All other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or
otherwise affecting such Purchased Loan, or otherwise executed or
delivered in connection with, or otherwise relating to, such
Purchased Loan, including all documents establishing or
implementing any lockbox pursuant to which Seller is entitled to
receive any payments from cash flow of the underlying real
property.
(vii) The assignment of Purchased Loan sufficient to
transfer to Buyer all of Seller's rights, title and interest in
and to the Purchased Loan.
(viii) A copy of the borrower's opinion of counsel (if
any).
(ix) A copy of the UCC-1 financing statements, certified
as true and correct by the Seller, and all necessary UCC-3
continuation statements with evidence of filing thereon or copies
thereof certified by the Seller to have been sent for filing, and
UCC-3 assignments executed by the Seller in blank, which UCC-3
assignments shall be in form and substance acceptable for filing.
(x) The original certificates representing the pledged
equity interests (if any).
(xi) Stock powers relating to each pledged equity
interest, executed in blank, if an original stock certificate is
provided.
(xii) Assignment of any management agreements, agreements
among equity interest holders or other material contracts.
(xiii) If no original stock certificate is provided,
evidence (which may be an officer's certificate confirming such
circumstances) that the pledged ownership interests have been
transferred to, or otherwise made subject to a first priority
security interest in favor of, the Seller.
With respect to each Purchased Loan which consists of a preferred
equity interest in an entity that owns a multifamily or commercial property
(the "Property Owner"):
(i) An fully executed counterpart of the organizational
agreement of the Property Owner, together with all amendments
thereof;
(ii) Copies of all other documents relating to the
formation and organization of the Property Owner;
(iii) The original of any agreement entered into between
the holder of such preferred equity interest and any creditor of
the Property Owner;
(iv) Copies of all consents and resolutions, if any,
delivered in connection with the origination of such
Purchased Loan;
(v) All other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or
otherwise affecting such Purchased Loan, or otherwise executed or
delivered in connection with, or otherwise relating to, such
Purchased Loan, including all documents establishing or
implementing any lockbox pursuant to which Seller is entitled to
receive any payments from cash flow of the underlying real
property or setting forth any representations and warranties to
induce the funding of the Purchased Loan or providing the holder
of the Purchased Loan with any option or other pre-emptive rights;
(vi) The assignment of Purchased Loan sufficient to
transfer to Buyer all of Seller's rights, title and interest in
and to the Purchased Loan, together with any necessary consents
for such assignment and transfer (if not already provided for in
the organizational agreement of Property Owner);
(vii) A copy of any opinion of counsel delivered in
connection with the origination of such Purchased Loan;
(viii) The original certificates representing the pledged
equity interests (if any);
(ix) Stock powers relating to each pledged equity
interest, executed in blank, if an original stock certificate is
provided;
(x) Assignment of any management agreements, agreements
among equity interest holders, or other material contracts;
(xi) If no original stock certificate is provided,
evidence (which may be an officer's certificate confirming such
circumstances) that the preferred equity interests have been
transferred to, or otherwise made subject to a first priority
security interest in favor of, the Seller;
(xii) For any mortgage, deed of trust, or other real
property security instrument to which Property Owner is a party or
its assets are subject, copies of the documents that this
agreement would require Seller to deliver to Buyer for a purchased
Mortgage Loan, but excluding any assignment documents in favor of
Buyer; and
(xiii) If obtained for the Purchased Loan and not already
included in "xii," then a copy of a mezzanine lender endorsement
relating to Property Owner's policy of title insurance,
identifying the holder of the Purchased Loan as the beneficiary of
such endorsement.
With respect to each Purchased Loan which is a junior participation
interest (including a junior or "B" note) in a commercial mortgage loan secured
by a first lien on a multifamily or commercial property;
(i) Originals or copies of all of the applicable documents
described above with respect to a Purchased Loan secured by a
Mortgage.
(ii) The original of any participation agreement,
intercreditor agreement and/or servicing agreement executed in
connection with the Purchased Loan.
(iii) The assignment of Purchased Loan sufficient to
transfer to Buyer all of Seller's Preferred Equity rights, title and
interest in and to the Purchased Loan.
From time to time, Seller shall forward to the Custodian additional original
documents or additional documents evidencing any assumption, modification,
consolidation or extension of a Purchased Loan approved in accordance with the
terms of the Agreement, and upon receipt of any such other documents, the
Custodian shall hold such other documents as Buyer shall request from time to
time. With respect to any documents which have been delivered or are being
delivered to recording offices for recording and have not been returned to
Seller in time to permit their delivery hereunder at the time required, in lieu
of delivering such original documents, Seller shall deliver to Buyer a true
copy thereof with an officer's certificate certifying that such copy is a true,
correct and complete copy of the original, which has been transmitted for
recordation. Seller shall deliver such original documents to the Custodian
promptly when they are received. With respect to all of the Purchased Loans
delivered by Seller to Buyer or its designee (including the Custodian), Seller
shall execute an omnibus power of attorney substantially in the form of Exhibit
V attached hereto irrevocably appointing Buyer its attorney-in-fact with full
power upon the occurrence and during the continuance of an Event of Default to
(i) complete and record the Assignment of Mortgage, (ii) complete the
endorsement of the Mortgage Note or Mezzanine Note and (iii) take such other
steps as may be necessary or desirable to enforce Buyer's rights against such
Purchased Loans and the related Purchased Loan Files and the Servicing Records.
Buyer shall deposit the Purchased Loan Files representing the Purchased Loans,
or direct that the Purchased Loan Files be deposited directly, with the
Custodian. The Purchased Loan Files shall be maintained in accordance with the
Custodial Agreement. Any Purchased Loan Files not delivered to Buyer or its
designee (including the Custodian) are and shall be held in trust by Seller or
its designee for the benefit of Buyer as the owner thereof. Seller or its
designee shall maintain a copy of the Purchased Loan File and the originals of
the Purchased Loan File not delivered to Buyer or its designee. The possession
of the Purchased Loan File by Seller or its designee is at the will of the
Buyer for the sole purpose of servicing the related Purchased Loan, and such
retention and possession by the Seller or its designee is in a custodial
capacity only. The books and records (including, without limitation, any
computer records or tapes) of Seller or its designee shall be marked
appropriately to reflect clearly the sale of the related Purchased Loan to
Buyer. Seller or its designee (including the Custodian) shall release its
custody of the Purchased Loan File only in accordance with written instructions
from Buyer, unless such release is required as incidental to the servicing of
the Purchased Loans or is in connection with a repurchase of any Purchased Loan
by Seller.
(f) Unless an Event of Default on the part of Seller shall have
occurred and be continuing, Buyer shall exercise all voting and corporate
rights with respect to the Portfolio Securities in accordance with Seller's
written instructions; provided, however, that Buyer shall not be required to
follow Seller's instructions concerning any vote or corporate right if doing so
would, in Buyer's good faith reasonable business judgment, impair the Purchased
Securities or be inconsistent with or result in any violation of any provision
of the Transaction Documents. Upon the occurrence and during the continuation
of an Event of Default on the part of Seller, Buyer shall be entitled to
exercise all voting and corporate rights with respect to the Portfolio
Securities without regard to Seller's instructions (including, but not limited
to, if an Act of Insolvency shall occur with respect to Seller or the Sponsor,
to the extent Seller controls or is entitled to control selection of the
special servicer, Buyer may transfer such special servicing to an entity
satisfactory to Buyer).
8 SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES
The provisions of Paragraph 8 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 8:
(a) Title to all Purchased Securities and Purchased Loans shall pass
to Buyer on the applicable Purchase Date, and Buyer shall have free and
unrestricted use of all Purchased Securities and Purchased Loans. Nothing in
the Agreement or any other Transaction Document shall preclude Buyer from
engaging in repurchase transactions with the Purchased Securities and Purchased
Loans or otherwise selling, transferring, pledging, repledging, hypothecating,
or rehypothecating the Purchased Securities and Purchased Loans, but no such
transaction shall relieve Buyer of its obligations under Section 17 or Buyer's
obligations to transfer the Purchased Securities and/or Purchased Loans to
Seller pursuant to Sections 3 or 14 of this Annex I or of Buyer's obligation to
credit or pay Income to, or apply Income to the obligations of, Seller pursuant
to Section 5 hereof.
(b) Nothing contained in the Agreement or any other Transaction
Document shall obligate Buyer to segregate any Purchased Security or Purchased
Loan delivered to Buyer by Seller. Notwithstanding anything to the contrary in
this Agreement or any other Transaction Document, no Purchased Security or
Purchased Loan shall remain in the custody of the Seller or an Affiliate of the
Seller.
9 SUBSTITUTION
Paragraph 9 of the Agreement ("Substitution") is hereby deleted in its
entirety and replaced by the following:
(a) In the case of any Transaction for which the Repurchase Date is
other than the Business Day immediately following the Purchase Date and with
respect to which Seller does not have any existing right to substitute
substantially the same Eligible Loans or Eligible Securities for the Purchased
Loans or Purchased Securities, respectively, Seller shall have the right,
subject to the proviso to this sentence, upon notice to Buyer, which notice
shall be given at or prior to 10:00 a.m. (New York time) on such Business Day,
to substitute substantially the same Eligible Loans or Eligible Securities for
any Purchased Loans or Purchased Securities, respectively, provided, however,
that Buyer may elect, in the exercise of its good faith business judgment, by
the close of business on the Business Day notice is received, or by the close
of the next Business Day if notice is given after 10:00 a.m. (New York time) on
such day, not to accept such substitution. In the event such substitution is
accepted by Buyer, such substitution shall be made by Seller's transfer to
Buyer of such other Eligible Loans or Eligible Securities and Buyer's transfer
to Seller of such Purchased Loans or Purchased Securities, respectively, and
after substitution, the substituted Eligible Loans or Eligible Securities shall
be deemed to be Purchased Loans or Purchased Securities, respectively. In the
event Buyer elects not to accept such substitution, Buyer shall offer Seller
the right to terminate the Transaction.
(b) In the event Seller exercises its right to substitute or terminate
under sub-paragraph (a), Seller shall be obligated to pay to Buyer, by the
close of the Business Day of such substitution or termination, as the case may
be, an amount equal to (A) Buyer's actual out-of-pocket cost (including all
fees, expenses and commissions) of (i) entering into replacement transactions;
(ii) entering into or terminating hedge transactions; and/or (iii) terminating
transactions or substituting mortgage loans in like transactions with third
parties in connection with or as a result of such substitution or termination,
and (B) to the extent Buyer determines not to enter replacement transactions,
the loss incurred by Buyer directly arising or resulting from such substitution
or termination. The foregoing amounts shall be solely determined and calculated
by Buyer in good faith, with such calculations provided to Seller in writing
prior to the closing of such substitution or termination.
10 REPRESENTATIONS
(a) In addition to the representations and warranties appearing in
Paragraph 10 of the Agreement, Seller represents and warrants to Buyer that as
of the Purchase Date for the purchase of any Purchased Securities or Purchased
Loans by Buyer from Seller and any Transaction thereunder and as of the date of
the Agreement and at all times while the Agreement and any Transaction
thereunder is in full force and effect:
(i) Organization. Seller is duly organized, validly existing
and in good standing under the laws and regulations of the state of
Seller's organization and is duly licensed, qualified, and in good
standing in every state where such licensing or qualification is
necessary for the transaction of Seller's business. Seller has the
power to own and hold the assets it purports to own and hold, and to
carry on its business as now being conducted and proposed to be
conducted, and has the power to execute, deliver, and perform its
obligations under the Agreement and the other Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents
have been duly executed and delivered by Seller, for good and valuable
consideration. The Transaction Documents constitute the legal, valid
and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms subject to bankruptcy,
insolvency, and other limitations on creditors' rights generally and
to equitable principles.
(iii) Non-Contravention. Neither the execution and delivery
of the Transaction Documents, nor consummation by Seller of the
transactions contemplated by the Transaction Documents (or any of
them), nor compliance by Seller with the terms, conditions and
provisions of the Transaction Documents (or any of them) will conflict
with or result in a breach of any of the terms, conditions or
provisions of (i) the limited liability company agreement of Seller,
(ii) any contractual obligation to which Seller is now a party or the
rights under which have been assigned to Seller or the obligations
under which have been assumed by Seller or to which the assets of
Seller are subject or constitute a default thereunder, or result
thereunder in the creation or imposition of any lien upon any of the
assets of Seller, other than pursuant to the Transaction Documents,
(iii) any judgment or order, writ, injunction, decree or demand of any
court applicable to Seller, or (iv) any applicable Requirement of Law.
Seller has all necessary licenses, permits and other consents from
Governmental Authorities necessary to acquire, own and sell the
Portfolio Collateral and for the performance of its obligations under
the Transaction Documents.
(iv) Litigation; Requirements of Law. There is no action,
suit, proceeding, investigation, or arbitration pending or, to the
best knowledge of Seller, threatened against Seller, the Sponsor or
any of their respective assets, which may result in any material
adverse change in the business, operations, financial condition,
properties, or assets of Seller or the Sponsor, or which may have an
adverse effect on the validity of the Transaction Documents or the
Purchased Securities or any action taken or to be taken in connection
with the obligations of Seller under any of the Transaction Documents.
Seller is in compliance in all material respects with all Requirements
of Law. Neither Seller nor the Sponsor is in default in any material
respect with respect to any judgment, order, writ, injunction, decree,
rule or regulation of any arbitrator or Governmental Authority.
(v) No Broker. Seller has not dealt with any broker,
investment banker, agent, or other Person (other than Buyer or an
Affiliate of Buyer) who may be entitled to any commission or
compensation in connection with the sale of Purchased Securities
pursuant to any of the Transaction Documents.
(vi) Good Title to Purchased Securities and Purchased Loans.
Immediately prior to the purchase of any Purchased Securities or
Purchased Loans by Buyer from Seller, such Purchased Securities and
Purchased Loans are free and clear of any lien, encumbrance or
impediment to transfer (including any "adverse claim" as defined in
Section 8-102(a)(1) of the UCC), and Seller is the record and
beneficial owner of and has good and marketable title to and the right
to sell and transfer such Purchased Securities and Purchased Loans to
Buyer and, upon transfer of such Purchased Securities or Purchased
Loans to Buyer, Buyer shall be the owner of such Purchased Securities
and Purchased Loans free of any adverse claim. In the event the
related Transaction is recharacterized as a secured financing of the
Purchased Securities or Purchased Loans, the provisions of the
Agreement are effective to create in favor of the Buyer a valid
security interest in all rights, title and interest of the Seller in,
to and under the Collateral and the Buyer shall have a valid,
perfected first priority security interest in the Purchased Securities
or Purchased Loans (and without limitation on the foregoing, the
Buyer, as entitlement holder, shall have a "security entitlement" to
the Purchased Securities).
(vii) No Default. No Default or Event of Default exists under
or with respect to the Transaction Documents.
(viii) Representations in Securitization Documents. All of
the Purchased Securities have been validly issued and are fully paid
and non-assessable and not subject to preemptive rights and have been
offered, issued and sold in compliance with all Requirements of Law.
To the extent that an Affiliate of the Seller is a party thereto, the
Securitization Documents are genuine, in full force and effect and the
legal, valid and binding obligation of such Affiliate enforceable in
accordance with their terms. The Securitization Documents have not
been altered or modified in any material respect, except as disclosed
to the Buyer in writing. The Seller has not waived the performance of
any action or any default, breach or violation resulting from action
or inaction under a Securitization Document and has not been made
aware of any such waiver. Except as disclosed to the Buyer in writing,
there is no default, breach, violation or event of acceleration
existing under a Securitization Document and no event has occurred
which, with the passage of time or giving of notice or both and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration thereunder. Each Purchased
Security is freely assignable and the related Securitization Document
permits the Seller to sell, assign or pledge such Purchased Security.
(ix) Representations and Warranties Regarding Purchased
Loans; Delivery of Purchased Loan File. Seller represents and warrants
to the Buyer that each Purchased Loan sold hereunder and each pool of
Purchased Loans sold in a Transaction hereunder, as of each Purchase
Date for a Transaction conform to the applicable representations and
warranties set forth in Exhibit VI attached hereto (or, in relation to
an English Loan, Exhibit 1 to the English Loan Supplement), except as
disclosed to the Buyer in writing. It is understood and agreed that
the representations and warranties set forth in Exhibit VI (or, in
relation to an English Loan, in Exhibit 1 of the English Loan
Supplement) hereto, if any, shall survive delivery of the respective
Purchased Loan File to Buyer or its designee (including the
Custodian). With respect to each Purchased Loan, the Mortgage Note or
Mezzanine Note, the Mortgage (if any), the Assignment of Mortgage (if
any) and any other documents required to be delivered under this
Agreement and the Custodial Agreement for such Purchased Loan have
been delivered to the Buyer or the Custodian on its behalf. Seller or
its designee is in possession of a complete, true and accurate
Purchased Loan File with respect to each Purchased Loan, except for
such documents the originals of which have been delivered to the
Custodian.
(x) Adequate Capitalization; No Fraudulent Transfer. Seller
has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations. Seller
is generally able to pay, and as of the date hereof is paying, its
debts as they come due. Seller has not become, or is presently,
financially insolvent nor will Seller be made insolvent by virtue of
Seller's execution of or performance under any of the Transaction
Documents within the meaning of the bankruptcy laws or the insolvency
laws of any jurisdiction. Seller has not entered into any Transaction
Document or any Transaction pursuant thereto in contemplation of
insolvency or with intent to hinder, delay or defraud any creditor.
(xi) Consents. No consent, approval or other action of, or
filing by Seller with, any Governmental Authority or any other Person
is required to authorize, or is otherwise required in connection with,
the execution, delivery and performance of any of the Transaction
Documents (other than consents, approvals and filings that have been
obtained or made, as applicable).
(xii) Members. Seller does not have any members other than
the Sponsor.
(xiii) Organizational Documents. Seller has delivered to
Buyer certified copies of its certificate of formation and limited
liability company agreement, together with all amendments thereto and
certified copies of its sole member's organizational document,
together with all amendments thereto.
(xiv) No Encumbrances. There are (i) no outstanding rights,
options, warrants or agreements on the part of Seller for a purchase,
sale or issuance, in connection with the Purchased Securities or
Purchased Loans, (ii) no agreements on the part of the Seller to
issue, sell or distribute the Purchased Securities or Purchased Loans,
and (iii) no obligations on the part of the Seller (contingent or
otherwise) to purchase, redeem or otherwise acquire any securities or
any interest therein or to pay any dividend or make any distribution
in respect of the Purchased Securities.
(xv) Federal Regulations. Seller is not (A) an "investment
company," or a company "controlled by an investment company," within
the meaning of the Investment Company Act of 1940, as amended, or (B)
a "holding company," or a "subsidiary company of a holding company,"
or an "affiliate" of either a "holding company" or a "subsidiary
company of a holding company," as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
(xvi) Taxes. Seller has filed or caused to be filed all tax
returns which to the knowledge of Seller would be delinquent if they
had not been filed on or before the date hereof and has paid all taxes
shown to be due and payable on or before the date hereof on such
returns or on any assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it and any of
its assets by any Governmental Authority; no tax liens have been filed
against any of Seller's assets and, to Seller's knowledge, no claims
are being asserted with respect to any such taxes, fees or other
charges.
(xvii) ERISA. Seller does not have any Plans or any ERISA
Affiliates and makes no contributions to any Plans or any
Multiemployer Plans.
(xviii) Judgments/Bankruptcy. Except as disclosed in writing
to Buyer, there are no judgments against Seller or the Managing Member
unsatisfied of record or docketed in any court located in the United
States of America and no Act of Insolvency has ever occurred with
respect to Seller or the Managing Member.
(xix) Full and Accurate Disclosure. No information contained
in the Transaction Documents, or any written statement furnished by or
on behalf of Seller pursuant to the terms of the Transaction
Documents, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under
which they were made.
(xx) Financial Information. All financial data concerning
Seller and the Purchased Securities and Purchased Loans that has been
delivered by or on behalf of Seller to Buyer is true, complete and
correct in all material respects and has been prepared in accordance
with GAAP. Since the delivery of such data, except as otherwise
disclosed in writing to Buyer, there has been no change in the
financial position of Seller or the Purchased Securities and Purchased
Loans, or in the results of operations of Seller, which change is
reasonably likely to have in a material adverse effect on Seller.
(xxi) Chief Executive Office. On the date of the Agreement,
the Seller's chief executive office and principal place of business is
located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. The location where
the Seller keeps its books and records, including all computer tapes
and records relating to the Collateral is its chief executive office.
(b) On the Purchase Date for any Transaction, Seller shall be deemed
to have made all of the representations set forth in Section 10(a) of this
Annex I as of such Purchase Date.
11 NEGATIVE COVENANTS OF SELLER
On and as of the date hereof and each Purchase Date and until the
Agreement and this Annex I are no longer in force with respect to any
Transaction, Seller shall not without the prior written consent of the Buyer:
(a) take any action which would directly or indirectly impair or
adversely affect Buyer's title to the Purchased Securities or the Purchased
Loans;
(b) transfer, assign, convey, grant, bargain, sell, set over, deliver
or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any
interest in the Purchased Securities or the Purchased Loans (or any of them) to
any Person other than Buyer, or engage in repurchase transactions or similar
transactions with respect to the Purchased Securities or Purchased Loans (or
any of them) with any Person other than Buyer;
(c) with respect to any Purchased Securities purchased by Buyer where
the Related Securities are owned by the Seller or an Affiliate of the Seller,
transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise
dispose of or pledge or hypothecate, directly or indirectly, any interest in
the Related Securities (it being understood that for purposes of this provision
Related Securities shall include (a) the securities issued in a "real estate
mortgage investment conduit" transaction which have no rating and (b) if such
unrated securities do not entitle the holder thereof to control the selection
of the special servicer for the mortgage loans underlying such Purchased
Securities, the securities which have a rating and entitle the holder thereof
to control the selection of the special servicer for the mortgage loans
underlying such Purchased Securities); provided however, that this subsection
(c) shall not apply or be operative as to any Purchased Securities as to which
Seller has delivered an agreement reasonably satisfactory to Buyer irrevocably
conveying and transferring to Buyer the right to control the selection of the
special servicer for the related mortgage loans;
(d) create, incur or permit to exist any lien, encumbrance or security
interest in or on the Portfolio Securities or the Purchased Loans, except as
described in Paragraph 6 of the Agreement;
(e) create, incur or permit to exist any lien, encumbrance or security
interest in or on any of the other Collateral subject to the security interest
granted by Seller pursuant to Paragraph 6 of the Agreement;
(f) modify or terminate any of the organizational documents of Seller;
(g) consent or assent to any amendment or supplement to, or
termination of, any Securitization Document, any note, loan agreement, mortgage
or guaranty relating to the Purchased Loans or other material agreement or
instrument relating to the Portfolio Securities or the Purchased Loans other
than in accordance with Section 7(f) or a Permitted Purchased Loan
Modification; provided, that for purposes of this Section 11(g) only, the Buyer
agrees to not unreasonably withhold, delay or condition a written request from
the Seller to consent to an amendment to a Purchased Loan and to respond to any
such written request within ten (10) Business Days;
(h) subject to Section 12(r), admit any additional members in Seller,
or permit the sole member in Seller to assign or transfer all or any portion of
its member interest in Seller;
(i) at any time after an Event of Default on the part of Seller, has
occurred and is continuing, vote or take any action to permit any rights
afforded to a holder of the Portfolio Securities under the related
Securitization Documents; or
(j) after the occurrence and during the continuation of any Default or
Event of Default, make any distribution, payment on account of, or set apart
assets for, a sinking or other analogous fund for the purchase, redemption,
defeasance, retirement or other acquisition of any equity or ownership interest
of Seller, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of Seller.
12 AFFIRMATIVE COVENANTS OF SELLER
(a) Seller shall promptly notify Buyer of any material adverse change
in its business operations and/or financial condition; provided, however, that
nothing in this Section 12 shall relieve Seller of its obligations under the
Agreement.
(b) Seller shall provide Buyer with copies of such documents as Buyer
may reasonably request evidencing the truthfulness of the representations set
forth in Section 10.
(c) Seller (1) shall defend the right, title and interest of the Buyer
in and to the Collateral against, and take such other action as is necessary to
remove, the Liens, security interests, claims and demands of all Persons (other
than security interests by or through Buyer) and (2) shall, at Buyer's
reasonable request, take all action necessary to ensure that Buyer will have a
first priority security interest in the Portfolio Securities and Purchased
Loans subject to any of the Transactions in the event such Transactions are
recharacterized as secured financings.
(d) Seller shall notify Buyer and the Depository of the occurrence of
any Default or Event of Default with respect to Seller as soon as possible but
in no event later than the second (2nd) Business Day after obtaining actual
knowledge of such event.
(e) Seller shall, at all times with respect to Purchased Securities
then subject to Transactions, cause the special servicer rating of the special
servicer with respect to all mortgage loans underlying such Purchased Security
to be no lower than "above-average" by Standard & Poor's Ratings Group. If an
Act of Insolvency occurs with respect to Seller or Sponsor, Seller shall permit
Buyer to transfer special servicing with respect to all mortgage loans
underlying the Portfolio Securities to an entity satisfactory to Buyer at
Seller's expense, to the extent the Seller controls or is entitled to control
the selection of the special servicer. If the Purchased Securities at any time
do not entitle the holder of such Purchased Securities to control the selection
of the special servicer for the related mortgage loans (i.e. such securities
are not the controlling class) and the Seller shall not have (i) caused
ownership of the Related Securities to be transferred to the Seller
simultaneous with or prior to the purchase of the Purchased Securities by Buyer
and (ii) delivered to the Buyer a power of attorney and any other documentation
reasonably required by the Buyer sufficient to permit the Buyer upon the
occurrence and during the continuance of an Event of Default to register the
transfer of the Related Securities from Seller to Buyer or its designee, then
Seller shall either
(x) deliver an agreement reasonably satisfactory to Buyer
irrevocably conveying and transferring to Buyer the right to control
the selection of the special servicer for the related mortgage loans
or
(y) upon request of Buyer, terminate the related Transaction
on demand pursuant to and in accordance with Section 3(d) of this
Annex I.
(f) Seller shall maintain a hedging strategy acceptable to Buyer. At
any time Transactions are outstanding between Buyer and Seller hereunder,
Seller shall deliver to Buyer on a monthly basis by not later than the
fifteenth (15th) day of each month and upon written request of Buyer more
frequently within two (2) Business Days of request a written report describing
in reasonable detail the hedging strategy maintained by the Sponsor for the
Sponsor and its Affiliates (including the Seller) and the Hedging Transactions
with hedge counterparties entered into or proposed to be entered into in
furtherance of such strategy. Seller acknowledges and agrees that upon the
occurrence and during the continuance of an Event of Default under this
Agreement, Buyer may enter into Hedging Transactions at the reasonable expense
of the Seller designed to hedge against interest rate risk and achieve interest
rate protection with respect to the Purchased Loans and the Purchased
Securities.
(g) Seller shall promptly (and in any event not later than two (2)
Business Days following receipt) deliver to Buyer (i) any notice of the
occurrence of an event of default under or report received by or required to be
delivered by Seller pursuant to the Securitization Documents; (ii) any notice
of transfer of servicing under the Securitization Documents and (iii) any other
information with respect to the Portfolio Collateral as may be reasonably
requested by Buyer from time to time to the extent such information is in
Seller's possession or can be obtained by Seller at a reasonable cost.
(h) Seller will permit Buyer or its designated representative to
inspect Seller's records with respect to the Collateral and the conduct and
operation of its business related thereto upon reasonable prior written notice
from Buyer or its designated representative, at such reasonable times and with
reasonable frequency, and to make copies of extracts of any and all thereof,
subject to the terms of any confidentiality agreement between the Buyer and the
Seller. Buyer shall act in a commercially reasonable manner in requesting and
conducting any inspection relating to the conduct and operation of Seller's
business.
(i) If the Seller shall at any time become entitled to receive or
shall receive any rights, whether in addition to, in substitution of, as a
conversion of, or in exchange for the Portfolio Securities, or otherwise in
respect thereof, the Seller shall accept the same as the Buyer's agent, hold
the same in trust for the Buyer and deliver the same forthwith to the Buyer in
the exact form received, duly endorsed by the Seller to the Buyer, if required,
together with an undated bond or other securities power covering such
certificate duly executed in blank to be held by the Buyer hereunder as
additional collateral security for the Transactions. If any sums of money or
property so paid or distributed in respect of the Portfolio Securities shall be
received by the Seller, the Seller shall, until such money or property is paid
or delivered to the Buyer, hold such money or property in trust for the Buyer,
segregated from other funds of the Seller, as additional collateral security
for the Transactions.
(j) At any time from time to time upon reasonable prior written
request of Buyer, at the sole expense of Seller, Seller will promptly and duly
execute and deliver such further instruments and documents and take such
further actions as Buyer may reasonably request for the purposes of obtaining
or preserving the full benefits of this Agreement including the first priority
security interest granted hereunder and of the rights and powers herein granted
(including, among other things, filing such UCC financing statements as Buyer
may reasonably request). If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall be
immediately delivered to the Buyer, duly endorsed in a manner satisfactory to
the Buyer, to be held as Collateral pursuant to this Agreement, and the
documents delivered in connection herewith.
(k) Seller shall provide Buyer with the following financial and
reporting information:
(i) Within 45 days after the last day of the first three
fiscal quarters in any fiscal year, Sponsor's unaudited consolidated
statement of income and statements of changes in cash flow for such
quarter and balance sheet as of the end of such quarter (which
statement and balance sheet shall separately break out the statement
of income and changes in cash flow and balance sheet of the Seller),
in each case presented fairly in accordance with GAAP and certified as
being true and correct by an officer's certificate;
(ii) Within 90 days after the last day of its fiscal year,
Sponsor's audited consolidated statement of income and statement of
changes in cash flow for such year and balance sheet as of the end of
such year (which statements and balance sheets shall separately break
out the statement of income and changes in cash flow and balance sheet
of the Seller), in each case presented fairly in accordance with GAAP,
and accompanied, in all cases, by an unqualified report of Deloitte &
Touche or another nationally recognized independent certified public
accounting firm consented to by Buyer;
(iii) Within 45 days after the last day of each calendar
quarter in any fiscal year, an officer's certificate from the Seller
addressed to Buyer certifying that, as of such calendar month, (x)
Seller is in compliance with all of the terms, conditions and
requirements of this Agreement, and (y) no Event of Default exists;
and
(iv) Within 15 days after each month end, a monthly reporting
package containing all information set forth on Exhibit III attached
hereto.
(l) Seller shall at all times comply in all material respects with all
laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.
(m) Seller shall at all times keep proper books of records and
accounts in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and set aside on its books from its
earnings for each fiscal year all such proper reserves in accordance with GAAP.
(n) Seller shall observe, perform and satisfy all the terms,
provisions, covenants and conditions required to be observed, performed or
satisfied by it, and shall pay when due all costs, fees and expenses required
to be paid by it, under the Transaction Documents. Seller shall pay and
discharge all taxes, levies, liens and other charges on its assets and on the
Collateral that, in each case, in any manner would create any lien or charge
upon the Collateral, except for any such taxes as are being appropriately
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves have been provided in accordance with
GAAP.
(o) Seller shall advise Buyer in writing of the opening of any new
chief executive office or the closing of any such office and of any change in
Seller's name or the places where the books and records pertaining to the
Purchased Securities are held not less than fifteen (15) Business Days prior to
taking any such action.
(p) Seller will maintain records with respect to the Collateral and
the conduct and operation of its business with no less a degree of prudence
than if the Collateral were held by Seller for its own account and will furnish
Buyer, upon reasonable request by Buyer or its designated representative, with
reasonable information reasonably obtainable by Seller with respect to the
Collateral and the conduct and operation of its business.
(q) Seller shall provide Buyer with access to operating statements,
the occupancy status and other property level information, with respect to the
Mortgaged Properties, plus any such additional reports as Buyer may reasonably
request.
(r) In the event the Sponsor proposes to sell or transfer equity
ownership interests in the Seller or equity in a collateralized debt obligation
transaction which securitizes Purchased Securities or Purchased Loans subject
to Transactions, the Seller shall notify the Buyer in writing of such sale or
transfer and provide to Buyer or an Affiliate of Buyer designated by Buyer the
opportunity to co-invest on the same terms and not be subject to any preferred
distributions or equity returns of third party investors. Buyer shall notify
the Seller in writing within ten (10) Business Days of its decision to
co-invest or not to co-invest on such terms; provided, that if Buyer does not
deliver written notice by the end of such ten (10) Business Day period of any
decision, then Buyer shall be deemed to have decided not to co-invest.
13 SINGLE-PURPOSE ENTITY
Seller hereby represents and warrants to Buyer, and covenants with
Buyer, that as of the date hereof and so long as any of the Transaction
Documents shall remain in effect:
(a) It is and intends to remain solvent and it has paid and will pay
its debts and liabilities (including employment and overhead expenses) from its
own assets as the same shall become due.
(b) It has complied and will comply with the provisions of its
certificate of formation and its limited liability company agreement.
(c) It has done or caused to be done and will do all things necessary
to observe limited liability company formalities and to preserve its existence.
(d) It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its members and any other Person, and it will file its own tax returns (except
to the extent consolidation is required under GAAP or as a matter of law).
(e) It has been, is and will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name, shall
not identify itself or any of its Affiliates as a division or part of the
other, shall maintain and utilize separate stationery, invoices and checks, and
shall pay to any Affiliate that incurs costs for office space and
administrative services that it uses, the amount of such costs allocable to its
use of such office space and administrative services.
(f) It has not owned and will not own any property or any other assets
other than Portfolio Collateral and cash.
(g) It has not engaged and will not engage in any business other than
the acquisition, ownership, financing and disposition of Portfolio Collateral
in accordance with the applicable provisions of the Transaction Documents.
(h) It has not entered into, and will not enter into, any contract or
agreement with any of its Affiliates, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available
on an arm's-length basis with Persons other than such Affiliate.
(i) It has not incurred and will not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (A) obligations under the
Transaction Documents and (B) unsecured trade payables, in an aggregate amount
not to exceed $1,000,000 at any one time outstanding, incurred in the ordinary
course of acquiring, owning, financing and disposing of Portfolio Collateral;
provided, however, that any such trade payables incurred by Seller shall be
paid within 30 days of the date incurred.
(j) It has not made and will not make any loans or advances to any
other Person, and shall not acquire obligations or securities of any member or
any Affiliate of any member (other than in connection with the acquisition of
the Portfolio Securities and Purchased Loans) or any other Person.
(k) It will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(l) Neither it nor its sole member will seek its dissolution,
liquidation or winding up, in whole or in part, or suffer any Change of
Control, consolidation or merger with respect to Seller or the Sponsor.
(m) It will not commingle its funds and other assets with those of any
of its Affiliates or any other Person.
(n) It has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any of its Affiliates or any other Person.
(o) It has not held and will not hold itself out to be responsible for
the debts or obligations of any other Person.
(p) The Seller shall not permit its sole member to take any of the
following actions: (i) dissolve or liquidate, in whole or in part; (ii)
consolidate or merge with or into any other entity or convey or transfer all or
substantially all of its properties and assets to any entity; (iii) institute
any proceeding to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief under the
Bankruptcy Code or consent to the filing of any such petition or to the
appointment of a receiver, rehabilitator, conservator, liquidator, assignee,
trustee or sequestrator (or other similar official) of the such member or
Seller or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, or make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any of the foregoing; (v)
amend the certificate of formation or limited liability company agreement of
Seller; (vi) enter into any transaction with an Affiliate not in the ordinary
course of Seller's business; or (vii) withdraw as the sole member of Seller.
(q) It has no liabilities, contingent or otherwise, other than those
normal and incidental to the acquisition, ownership, financing and disposition
of Portfolio Collateral.
(r) It has conducted and shall conduct its business consistent with
the requirements of being a Single-Purpose Entity.
(s) It shall not maintain any employees.
14 EVENTS OF DEFAULT; REMEDIES
After the occurrence and during the continuance of an Event of Default
on the part of Seller, Seller hereby appoints Buyer as attorney-in-fact of
Seller for the purpose of carrying out the provisions of this Agreement and
taking any action and executing or endorsing any instruments that Buyer may
deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Furthermore, Paragraph 11 of the Agreement is amended by the deletion of
clauses (i) and (vi) in the first paragraph, by the addition of "or Purchased
Loans" in clause (ii) of the first paragraph after the term Purchased
Securities and by the addition of the following at the end of the first
paragraph before the phrase, "(each an `Event of Default')":
(i) either (A) the Transaction Documents shall for any
reason not cause, or shall cease to cause, Buyer to be the owner
free of any adverse claim of any of the Purchased Securities or
Purchased Loans, or (B) if a Transaction is recharacterized as a
secured financing, the Transaction Documents with respect to any
Transaction shall for any reason cease to create a valid first
priority security interest in favor of Buyer in any of the
Purchased Securities or Purchased Loans;
(ii) in the event that the Buyer or any of its Affiliates
is a party to an ISDA Master Agreement with Seller and an event
occurs which would constitute an Event of Default or an Additional
Termination Event under any Transaction between Seller and the
Buyer or any of its Affiliates (capitalized terms used in this
paragraph (ix) shall have the respective meanings ascribed to them
in the ISDA Master Agreement (including respective Schedules and
Confirmations) between Seller and the Buyer and/or any of its
Affiliates);
(iii) failure of the Buyer to receive on any Remittance
Date the accreted value of the Price Differential (less any amount
of such Price Differential previously paid by Seller to Buyer)
(including, without limitation, in the event the Income paid or
distributed on or in respect of the Purchased Securities and
Purchased Loans is insufficient to make such payment and the
Seller does not make such payment or cause such payment to be
made) (except that such failure shall not be an Event of Default
by Seller if sufficient Income, other than Principal Payments, is
on deposit in the Cash Management Account and the Depository fails
to remit such funds to Buyer);
(iv) failure of the Seller to make any other payment
owing to the Buyer which has become due, whether by acceleration
or otherwise under the terms of this Agreement which failure is
not remedied within the applicable period (in the case of a
failure pursuant to Paragraph 4) or five Business Days (in the
case of any other such failure);
(v) any governmental, regulatory, or self-regulatory
authority shall have taken any action to remove, limit, restrict,
suspend or terminate the rights, privileges, or operations of
Seller, which suspension has a material adverse effect on the
financial condition or business operations of Seller;
(vi) Buyer shall have determined, in the exercise of its
good faith business judgment, (A) that there has been a material
adverse change in the business, operations, corporate structure or
financial condition, creditworthiness or prospects of Seller or
the Sponsor; (B) that Seller or the Sponsor will not meet or has
breached any of its obligations under any Transaction pursuant to
any of the Transaction Documents; or (C) that a material adverse
change in the financial or legal condition of Seller or the
Sponsor may occur due to the pendency or threatened pendency of a
material legal action against Seller or the Sponsor;
(vii) a Change of Control or an Act of Insolvency shall
have occurred with respect to the Sponsor;
(viii) any representation made by Seller or Buyer shall
have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated (other than the
representations and warranties set forth in Section 10(a)(viii) or
(ix) or (xix) (in the case of (xix), with respect to the affected
Purchased Securities or Purchased Loans only) made by the Seller,
which shall not be considered an Event of Default if incorrect or
untrue in any material respect, provided the Buyer terminates the
related Transaction in whole or in part, as applicable, and
repurchases the related Purchased Securities or Purchased Loans on
an Early Repurchase Date no later than three (3) Business Days
after receiving notice of such incorrect or untrue representation;
unless the Seller shall have made any such representation with
knowledge that it was materially incorrect or untrue at the time
made);
(ix) the Sponsor shall fail to observe any of the
financial covenants set forth in Section 5 of the Guaranty or
shall have defaulted or failed to perform under the Guaranty;
(x) a final judgment by any competent court in the United
States of America for the payment of money in an amount greater
than $250,000 (in the case of the Seller) or $1,000,000 (in the
case of the Sponsor) shall have been rendered against Seller or
the Sponsor, and remained undischarged or unpaid for a period of
thirty (30) days, during which period execution of such judgment
is not effectively stayed;
(xi) Sponsor shall have defaulted or failed to perform
under any note, indenture, loan agreement, guaranty, swap
agreement or any other contract, agreement or transaction to which
it is a party, which default (A) involves the failure to pay a
matured obligation in excess of $1,000,000, or (B) permits the
acceleration of the maturity of obligations by any other party to
or beneficiary of such note, indenture, loan agreement, guaranty,
swap agreement or other contract agreement or transaction, or
Sponsor shall breach any covenant or condition, shall fail to
perform, admits its inability to perform or state its intention
not to perform its obligations under any Transaction or in respect
of any repurchase agreement, reverse repurchase agreement,
securities contract or derivative transaction with any party;
provided, however, that any such default, failure to perform or
breach shall not constitute an Event of Default if Sponsor cures
such default, failure to perform or breach, as the case may be,
within the grace period, if any, provided under the applicable
agreement; or
(xii) if Seller or Buyer shall breach or fail to perform
any of the terms, covenants, obligations or conditions of this
Agreement, other than as specifically otherwise referred to in
this definition of "Event of Default", and such breach or failure
to perform is not remedied within five (5) Business Days after
notice thereof to Seller or Buyer from the applicable party or its
successors or assigns; provided, that if such breach or failure to
perform is a default other than a default which can be cured by
the payment of a sum of money and is susceptible of cure but
cannot reasonably be cured within such five (5) Business Days
period, such five (5) Business Days period shall be extended to a
period of ten (10) calendar days in total.
(b) Paragraph 11(a)-(i) of the Agreement is hereby deleted and
replaced with the following and with Section 14(b) below:
If an Event of Default shall occur and be continuing with respect to
Seller, the following rights and remedies shall be available to Buyer:
(i) At the option of Buyer, exercised by written notice
to Seller (which option shall be deemed to have been exercised,
even if no notice is given, immediately upon the occurrence of an
Act of Insolvency), the Repurchase Date for each Transaction
hereunder shall, if it has not already occurred, be deemed
immediately to occur (the date on which such option is exercised
or deemed to have been exercised being referred to hereinafter as
the "Accelerated Repurchase Date")
(ii) If Buyer exercises or is deemed to have exercised
the option referred to in Section 14(a)(i) of this Annex I:
(A) Seller's obligations hereunder to repurchase all
Purchased Securities and Purchased Loans shall
become immediately due and payable on and as of
the Accelerated Repurchase Date; and
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each Transaction
(determined as of the Accelerated Repurchase
Date) shall be increased by the aggregate amount
obtained by daily application of, on a 360 day
per year basis for the actual number of days
during the period from and including the
Accelerated Repurchase Date to but excluding the
date of payment of the Repurchase Price (as so
increased), (x) the Pricing Rate for such
Transaction multiplied by (y) the Repurchase
Price for such Transaction (decreased by (I) any
amounts actually remitted to Buyer by the
Depository Seller or Sponsor from time to time
pursuant to Section 5 of this Annex I and applied
to such Repurchase Price, and (II) any amounts
applied to the Repurchase Price pursuant to
Section 14(a)(iii) of this Annex I); and (C) the
Custodian shall, upon the request of Buyer,
deliver to Buyer all instruments, certificates
and other documents then held by the Custodian
relating to the Purchased Securities and
Purchased Loans.
(C) In addition to any rights and remedies of the
Buyer provided by this Agreement and by law, the
Buyer shall have the right, without prior notice
to the Seller, any such notice being expressly
waived by the Seller to the extent permitted by
applicable law, upon any amount becoming due and
payable by the Seller hereunder (whether at the
stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such
amount any and all deposits (general or special,
time or demand, provisional or final), in any
currency, and any other credits, indebtedness or
claims, in any currency, in each case whether
direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing
by the Buyer or any Affiliate thereof to or for
the credit or the account of the Seller. The
Buyer agrees promptly to notify the Seller after
any such set-off and application made by the
Buyer; provided that the failure to give such
notice shall not affect the validity of such
set-off and application.
(iii) After five (5) Business Days' notice to Seller
(which notice need not be given if an Act of Insolvency shall have
occurred with respect to the Seller or the Sponsor, and which may
be the notice given under Section 14(a)(i) above), Buyer may (A)
immediately sell, at a public or private sale in a commercially
reasonable manner and at such price or prices as Buyer may
reasonably deem satisfactory any or all of the Purchased
Securities and Purchased Loans or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Purchased
Securities and Purchased Loans, to give Seller credit for such
Purchased Securities and Purchased Loans in an amount equal to the
Market Value of such Purchased Securities and Purchased Loans
against the aggregate unpaid Repurchase Price for such Purchased
Securities and Purchased Loans and any other amounts owing by
Seller under the Transaction Documents. The proceeds of any
disposition of Purchased Securities and Purchased Loans effected
pursuant to this Section 14(a)(iii) shall be applied, (v) first,
to the costs and expenses incurred by Buyer in connection with
Seller's default; (w) second, to consequential damages, including,
but not limited to, costs of cover and/or Hedging Transactions, if
any; (x) third, to the Repurchase Price; (y) fourth, to the Exit
Fee, if any; and (z) fifth, to any other outstanding obligation of
Seller to Buyer or its Affiliates.
(iv) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Securities and Purchased
Loans on a particular Business Day, or in a transaction with the
same purchaser, or in the same manner because the market for such
Purchased Securities and Purchased Loans may not be liquid. In
view of the nature of the Purchased Securities and Purchased
Loans, the parties agree that liquidation of a Transaction or the
Purchased Securities and Purchased Loans does not require a public
purchase or sale and that a good faith private purchase or sale
shall be deemed to have been made in a commercially reasonable
manner. Accordingly, Buyer may elect, in its sole discretion, the
time and manner of liquidating any Purchased Securities and
Purchased Loans, and nothing contained herein shall (A) obligate
Buyer to liquidate any Purchased Securities and Purchased Loans on
the occurrence and during the continuance of an Event of Default
or to liquidate all of the Purchased Securities and Purchased
Loans in the same manner or on the same Business Day or (B)
constitute a waiver of any right or remedy of Buyer.
(v) Seller shall be liable to Buyer for (A) the amount of
all expenses, including reasonable legal fees and expenses,
actually incurred by Buyer in connection with or as a consequence
of an Event of Default with respect to Seller, (B) consequential
damages, including, without limitation, all costs incurred in
connection with covering transactions or Hedging Transactions, and
(C) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default with respect
to Seller.
(vi) Buyer shall have, in addition to its rights and
remedies under the Transaction Documents, all of the rights and
remedies provided by applicable federal, state, foreign, and local
laws (including, without limitation, if the Transactions are
recharacterized as secured financings, the rights and remedies of
a secured party under the UCC of the State of New York, to the
extent that the UCC is applicable, and the right to offset any
mutual debt and claim), in equity, and under any other agreement
between Buyer and Seller. Without limiting the generality of the
foregoing, Buyer shall be entitled to set off the proceeds of the
liquidation of the Purchased Securities and Purchased Loans
against all of Seller's obligations to Buyer, whether or not such
obligations are then due, without prejudice to Buyer's right to
recover any deficiency.
(vii) Buyer may exercise any or all of the remedies
available to Buyer immediately upon the occurrence of an Event of
Default and at any time during the continuance thereof. All rights
and remedies arising under the Transaction Documents, as amended
from time to time, are cumulative and not exclusive of any other
rights or remedies which Buyer may have.
(viii) Buyer may enforce its rights and remedies
hereunder without prior judicial process or hearing, and Seller
hereby expressly waives any defenses Seller might otherwise have
to require Buyer to enforce its rights by judicial process. Seller
also waives any defense Seller might otherwise have arising from
the use of nonjudicial process, disposition of any or all of the
Purchased Securities and Purchased Loans, or from any other
election of remedies. Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at arm's
length.
(c) If an Event of Default occurs and is continuing with respect
to Buyer, the following rights and remedies shall be available to Seller:
(i) Upon tender by Seller of payment of the aggregate
Repurchase Price for all Purchased Securities and Purchased Loans,
Buyer's right, title and interest in such Purchased Securities and
Purchased Loans shall be deemed transferred to Seller, and Buyer
shall deliver such Purchased Securities and Purchased Loans to
Seller.
(ii) If Seller exercises the option referred to in
Section 14(b)(i) hereof and Buyer fails to deliver any Purchased
Securities or Purchased Loans to Seller, after three (3) Business
Days' notice to Buyer, Seller may (A) purchase securities or
loans, as applicable ("Replacement Collateral"), that are in as
similar an amount and interest rate as is reasonably practicable
and in the same Rating Category as such Purchased Securities or
the same Collateral Type Grouping as such Purchased Loans or (B)
in its sole discretion elect, in lieu of purchasing Replacement
Collateral, to be deemed to have purchased Replacement Collateral
at a price therefor equal to the Market Value of such Purchased
Securities or Purchased Loans as of such date.
(iii) Buyer shall be liable to Seller for any excess of
the price paid (or deemed paid) by Seller for Replacement
Collateral therefor over the Repurchase Price for the Purchased
Securities and Purchased Loans replaced thereby. In addition,
Buyer shall be liable to Seller for interest at the related
Pricing Rate on such remaining liability with respect to each such
purchase (or deemed purchase) of Replacement Collateral calculated
on a 360-day year basis for the actual number of days during the
period from and including the date of such purchase (or deemed
purchase) until paid in full by Buyer.
15 RECORDING OF COMMUNICATIONS
EACH OF BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION)
FROM TIME TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS
BETWEEN ITS EMPLOYEES AND THOSE OF THE OTHER PARTY WITH RESPECT TO
TRANSACTIONS; PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD COMMUNICATIONS SHALL
BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF
THE APPLICABLE PARTY. EACH OF BUYER AND SELLER HEREBY CONSENTS TO THE
ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER
PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE
RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES'
AGREEMENT.
16 NOTICES AND OTHER COMMUNICATIONS
The provisions of Paragraph 13 of the Agreement are hereby modified
and superseded in their respective entireties by the following provisions of
this Section 16:
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by
one of the means set forth in (a), (b) or (c) above, to the address specified
in Annex II hereto or at such other address and person as shall be designated
from time to time by any party hereto, as the case may be, in a written notice
to the other parties hereto in the manner provided for in this Section. A copy
of all notices, consents, approvals and requests directed to Seller (other than
Confirmations) shall be delivered concurrently to the following: Dechert LLP,
4000 ▇▇▇▇ Atlantic Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire, Telefax Number: 215.994.2222. A notice shall be deemed
to have been given: (a) in the case of hand delivery, at the time of delivery,
(b) in the case of registered or certified mail, when delivered or the first
attempted delivery on a Business Day, (c) in the case of expedited prepaid
delivery upon the first attempted delivery on a Business Day, or (d) in the
case telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section may elect to waive any deficiencies and treat the
notice as having been properly given.
17 NON-ASSIGNABILITY
The provisions of Paragraph 15 of the Agreement are hereby modified
and superseded in their respective entireties by the following provisions of
this Section 17:
(a) The rights and obligations of the parties under the Transaction
Documents and under any Transaction shall not be assigned by either party
without the prior written consent of the other party; provided, however, that
Buyer may assign its rights and obligations under the Transaction Documents
and/or under any Transaction to any Affiliate whose long term unsecured debt
rating is (either directly or indirectly through its being part of a holding
company or other form of corporate organization) investment grade by a
nationally recognized statistical rating organization, without the prior
written consent of Seller.
(b) Buyer shall be entitled to issue one or more participation
interests with respect to any or all of the Transactions; provided, however,
that (i) Buyer shall act as exclusive agent for all participants in any
dealings with Seller in connection with such Transactions and (ii) Seller shall
not be obligated to deal directly with any party other than Buyer in connection
with such Transactions, or to pay or reimburse Buyer for any costs that would
not have been incurred by Buyer had no participation interests in such
Transactions been issued.
(c) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns. Nothing in the Transaction
Documents, express or implied, shall give to any Person, other than the parties
to the Transaction Documents and their respective successors, any benefit or
any legal or equitable right, power, remedy or claim under the Transaction
Documents.
18 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) Each party irrevocably and unconditionally (i) submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any
Transaction under the Agreement and (ii) waives, to the fullest extent it may
effectively do so, any defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court and any right of jurisdiction on
account of its place of residence or domicile.
(b) To the extent that either party has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding,
from jurisdiction of any court or from set off or any legal process (whether
service or notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) with respect to itself or any
of its property, such party hereby irrevocably waives and agrees not to plead
or claim such immunity in respect of any action brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any
Transaction under the Agreement.
(c) The parties hereby irrevocably waive, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding and irrevocably consent to the service of any summons
and complaint and any other process by the mailing of copies of such process to
them at their respective address specified herein. The parties hereby agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Section 18 shall affect the right of
the Buyer to serve legal process in any other manner permitted by law or affect
the right of the Buyer to bring any action or proceeding against the Seller or
its property in the courts of other jurisdictions.
(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER.
19 NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants
to the other that, in connection with the negotiation of, the entering into,
and the performance under, the Transaction Documents and each Transaction
thereunder:
(a) It is not relying (for purposes of making any investment decision
or otherwise) upon any advice, counsel or representations (whether written or
oral) of the other party to the Transaction Documents, other than the
representations expressly set forth in the Transaction Documents.
(b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party.
(c) It is a sophisticated and informed Person that has a full
understanding of all the terms, conditions and risks (economic and otherwise)
of the Transaction Documents and each Transaction thereunder and is capable of
assuming and willing to assume (financially and otherwise) those risks;
(d) It is entering into the Transaction Documents and each Transaction
thereunder for the purposes of managing its borrowings or investments or
hedging its underlying assets or liabilities and not for purposes of
speculation; and
(e) It is not acting as a fiduciary or financial, investment or
commodity trading advisor for the other party and has not given the other party
(directly or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.
20 INDEMNITY
The Seller hereby agrees to indemnify the Buyer, the Buyer's designee
and each of its officers, directors, employees and agents ("Indemnified
Parties") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, taxes (including stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement and the documents delivered in connection
herewith, other than income taxes of the Buyer), fees, costs, expenses
(including reasonable attorneys fees and disbursements actually incurred) or
disbursements (all of the foregoing, collectively "Indemnified Amounts") which
may at any time (including, without limitation, such time as this Agreement
shall no longer be in effect and the Transactions shall have been repaid in
full) be imposed on or asserted against any Indemnified Party in any way
whatsoever arising out of or in connection with, or relating to, this Agreement
or any Transactions thereunder or any action taken or omitted to be taken by
any Indemnified Party under or in connection with any of the foregoing;
provided, that Seller shall not be liable for Indemnified Amounts resulting (A)
from the gross negligence or willful misconduct of any Indemnified Party or (B)
attributable to Buyer's ownership of any Purchased Loan following enforcement
of its rights under this Agreement with respect thereto (unless and to the
extent such liability relates to an event, circumstance or condition which
occurred prior to the enforcement of such rights). Without limiting the
generality of the foregoing, Seller agrees to hold Buyer harmless from and
indemnify Buyer against all Indemnified Amounts with respect to all Purchased
Loans relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation ERISA, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
Buyer's gross negligence or willful misconduct. In any suit, proceeding or
action brought by Buyer in connection with any Purchased Loan for any sum owing
thereunder, or to enforce any provisions of any Purchased Loan, Seller will
save, indemnify and hold Buyer harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Seller of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from Seller. Seller
also agrees to reimburse Buyer as and when billed by Buyer for all Buyer's
costs and expenses incurred in connection with Buyer's due diligence reviews
with respect to the Purchased Loans and Purchased Securities (including,
without limitation, those incurred pursuant to Section 21) and the enforcement
or the preservation of Buyer's rights under this Agreement or any Transaction
contemplated hereby, including without limitation the reasonable fees and
disbursements of its counsel. Seller hereby acknowledges that, the obligation
of Seller hereunder is a recourse obligation of Seller.
21 DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Purchased Securities and the Purchased
Loans, for purposes of verifying compliance with the representations,
warranties and specifications made hereunder, or otherwise, and Seller agrees
that upon reasonable prior written notice to Seller, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Purchased Loan Files, Servicing
Records and any and all documents, records, agreements, instruments or
information relating to such Purchased Securities and Purchased Loans in the
possession or under the control of Seller, any other servicer or subservicer
and/or the Custodian. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Purchased Loan Files and the Purchased Securities and Purchased
Loans. Without limiting the generality of the foregoing, Seller acknowledges
that Buyer may enter into Transactions with the Seller based solely upon the
information provided by Seller to Buyer and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on some or all of
the Purchased Securities and Purchased Loans. Buyer may underwrite such
Purchased Loans itself or engage a third party underwriter to perform such
underwriting. Seller agrees to reasonably cooperate with Buyer and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to any
and all documents, records, agreements, instruments or information relating to
such Purchased Securities and Purchased Loans in the possession, or under the
control, of Seller. Seller further agrees that Seller shall reimburse Buyer for
any and all out-of-pocket costs and expenses reasonably incurred by Buyer in
connection with Buyer's activities pursuant to this Section 21.
22 SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans
hereby, Seller, Midland, PNC Bank NA or Sponsor shall continue to service the
Purchased Loans for the benefit of Buyer and, if Buyer shall exercise its
rights to pledge or hypothecate the Purchased Loans prior to the Repurchase
Date pursuant to Section 8, Buyer's assigns; provided, however, that the
obligations of Seller, Midland, PNC Bank NA or Sponsor to service any of the
Purchased Loans shall cease, at Seller's option, upon the payment by Seller to
Buyer of the Repurchase Price therefor. Seller shall service or cause the
servicer to service the Purchased Mortgage Loans in accordance with Accepted
Servicing Practices.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "Servicing
Agreements"), files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Loans (the "Servicing
Records") so long as the Purchased Loans are subject to this Agreement. Seller
grants Buyer a security interest in all servicing fees and rights relating to
the Purchased Loans and all Servicing Records to secure the obligation of the
Seller or its designee to service in conformity with this Section and any other
obligation of Seller to Buyer. Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer's request.
(c) Upon the occurrence and continuance of an Event of Default, Buyer
may, in its sole discretion, (i) sell its right to the Purchased Loans on a
servicing released basis or (ii) terminate the Seller or any sub-servicer of
the Purchased Loans with or without cause, in each case without payment of any
termination fee.
(d) Seller shall not employ sub-servicers (other than Midland, PNC
Bank NA or the Sponsor) to service the Purchased Loans without the prior
written approval of Buyer. If the Purchased Loans are serviced by a
sub-servicer, Seller shall irrevocably assign all rights, title and interest in
the Servicing Agreements in the Purchased Loans to Buyer.
(e) Seller shall cause any sub-servicers engaged by Seller to execute
a letter agreement with Buyer acknowledging Buyer's security interest and
agreeing that it shall deposit all Income with respect to the Purchased Loans
in the Cash Management Account.
(f) The payment of servicing fees shall be subordinate to payment of
amounts outstanding under any Transaction and this Agreement.
23 MISCELLANEOUS
(a) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time
in effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(b) All rights, remedies and powers of Buyer hereunder and in
connection herewith are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers of
Buyer whether under law, equity or agreement. In addition to the rights and
remedies granted to it in this Agreement, Buyer shall have all rights and
remedies of a secured party under the UCC.
(c) The Transaction Documents may be executed in counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(d) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(e) Without limiting the rights and remedies of Buyer under the
Transaction Documents, Seller shall pay Buyer's reasonable out-of-pocket costs
and expenses, including reasonable fees actually incurred and expenses of
accountants, attorneys and advisors, incurred in connection with the
preparation, negotiation, execution and consummation of, and any amendment,
supplement or modification to, the Transaction Documents and the Transactions
thereunder. Seller agrees to pay Buyer on demand all costs and expenses
(including reasonable expenses actually incurred for legal services of every
kind) of any subsequent enforcement of any of the provisions hereof, or of the
performance by Buyer of any obligations of Seller in respect of the Purchased
Securities, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Collateral and
for the custody, care or preservation of the Collateral (including insurance
costs) and defending or asserting rights and claims of Buyer in respect
thereof, by litigation or otherwise. In addition, Seller agrees to pay Buyer on
demand all reasonable costs and expenses (including reasonable expenses for
legal services actually incurred) incurred in connection with the maintenance
of the Cash Management Account and registering the Collateral in the name of
Buyer or its nominee. All such expenses shall be recourse obligations of Seller
to Buyer under this Agreement.
(f) Each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or be invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(g) The parties acknowledge and agree that although they intend to
treat each Transaction as a sale of the Purchased Securities and Purchased
Loans, in the event that such sale shall be recharacterized as a secured
financing, this Annex I shall also serve as a security agreement with respect
to Buyer's rights in the Collateral. In order to secure and to provide for the
prompt and unconditional repayment of the Repurchase Price and the performance
of its obligations under the Agreement, Seller hereby pledges to Buyer and
hereby grants to Buyer a first priority security interest in all of its rights
in the Purchased Securities and Purchased Loans. Seller hereby covenants to
duly execute any Form UCC-1 financing statements as reasonably required by
Buyer in order to perfect its security interest created hereby in such rights
and obligations granted above, it being agreed that Seller shall pay any and
all fees required to file such financing statements.
(h) This Agreement contains a final and complete integration of all
prior expressions by the parties with respect to the subject matter hereof and
thereof and shall constitute the entire agreement among the parties with
respect to such subject matter, superseding all prior oral or written
understandings.
(i) The parties understand that this Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding
the meaning and legal significance of this Agreement and that it is satisfied
with its legal counsel and the advice received from it.
(j) Should any provision of this Agreement require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all parties have
participated in the preparation of this Agreement.
(k) The parties recognize that each Transaction is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
IN WITNESS WHEREOF, the parties have executed this Annex I as of the
3rd day of December, 2004.
BUYER:
------
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH
By: /s/▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
By: /s/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
SELLER:
-------
ANTHRACITE FUNDING, LLC, a Delaware limited
liability company
By: Anthracite Capital, Inc., a Maryland
corporation, its sole member
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBITS AND SCHEDULES
SCHEDULE I-A Original Purchase Percentages, CF Sweep Purchase
Percentages, Buyer's Margin Percentages and
Applicable Spreads
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Monthly Reporting Package
EXHIBIT IV Form of Custodial Agreement
EXHIBIT V Form of Power of Attorney
EXHIBIT VI Representations and Warranties Regarding Individual
Purchased Loans
EXHIBIT VII Collateral Information
EXHIBIT VIII Transaction Procedure
EXHIBIT IX Redirection Letter
SCHEDULE I-A
Original Purchase Percentages, CF Sweep Purchase Percentages
Buyer's Margin Percentages and Applicable Spreads
-------------------------------------------------
ELIGIBLE LOANS:
----------------- ------------------------- -------------------------- ---------------------------- --------- -----------
Collateral Original CF Sweep Purchase Buyer's Margin Percentage Spread Limits
Type Purchase Percentage Percentage in
Grouping Basis
Points
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
MSER(1)<$45mm MSER>$45mm MSER<$45mm MSER>$45mm MSER<$45mm MSER>$45mm
> or = > or = > or =
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
1st Lien - Low 75% 90% 85% 92% 111.11% 105.26% 80 N/A
Leverage2
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
1st Lien - 70% 85% 85% 90% 111.11% 105.26% 100 N/A
Other3
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
2nd 65% 75% 70% 80% 133.33% 117.65% 150 N/A
Lien/B-Note/
Mezzanine
Loans/
Participation -
Low Leverage4
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
2nd 55% 60% 65% 70% 133.33% 125.00% 200 $40mm-$75mm6
Lien/B-Note/
Mezzanine
Loans/
Participation/
Preferred
Equity - Other5
----------------- ------------ ------------ ------------- ------------ -------------- ------------- --------- -----------
ELIGIBLE SECURITIES:
--------------------- ---------------------------- ---------------------------- ----------------------------- -----------
Rating Category Original CF Sweep Buyer's Margin Percentage Spread
Purchase Percentage Purchase Percentage in Basis
Points,7
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
MSER<$45mm MSER>or=$45mm MSER<$45mm MSER>or=$45mm MSER<$45mm MSER>or=$45mm Initial
/Div 8<10 /Div>10 /Div<10 /Div>10 /Div<10 /Div>10 90 days
/after
90 days
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
BBB- & higher 75% 85% 82.5% 90% 117.65% 108.11% 50/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
BB+ & BB 65% 75% 80% 82.5% 121.21% 117.65% 100/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
BB- 60% 70% 75% 80% 125.00% 117.65% 125/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
B+ & B 55% 65% 70% 75% 133.33% 125.00% 125/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
B- 45% 55% 60% 65% 142.86% 133.33% 125/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
NR/CCC 25% 30% 30% 35% 285.71% 250.00% 155/155
--------------------- -------------- ------------- ------------- -------------- -------------- -------------- -----------
__________________
1 "MSER" means Minimum Seller's Equity Requirement.
2 Loan-to-Value not to exceed 70% and Debt Service Coverage Ratio of at
least 1.35x.
3 Loan-to-Value not to exceed 75% (or, 90% in Buyer's sole and absolute
discretion) and Debt Service Coverage Ratio of at least 1.25x.
4 Loan-to-Value not to exceed 75% and Debt Service Coverage Ratio of at
least 1.30x.
5 Loan-to-Value not to exceed 85% (or, 90% in Buyer's sole and absolute
discretion) and Debt Service Coverage Ratio of at least 1.15x.
6 If at any time the aggregate Repurchase Price (excluding accrued Price
Differential) is equal to or less than $80,000,000, the aggregate
Repurchase Price (excluding accrued Price Differential) with respect to
all Transactions involving Purchased Loans of the Category Type Group "2nd
Lien/B-Note/Mezzanine Loans/Participation/Preferred Equity -- Other" may
not exceed $40,000,000; if at any time the aggregate Repurchase Price
(excluding accrued Price Differential) is greater than $80,000,000 but
less than $150,000,000, then the aggregate Repurchase Price with respect
to all Transactions involving Purchased Loans of the Category Type Group
"2nd Lien/B-Note/Mezzanine Loans/Participation/Preferred Equity -- Other"
may not exceed 50% of such aggregate Repurchase Price (excluding accrued
Price Differential); if at any time the aggregate Repurchase Price
(excluding accrued Price Differential) is equal to or greater than
$150,000,000, the aggregate Repurchase Price (excluding accrued Price
Differential) with respect to all Transactions involving Purchased Loans
of the Category Type Group "2nd Lien/B-Note/Mezzanine
Loans/Participation/Preferred Equity -- Other" may not exceed $75,000,000.
7 For any Rating Category, the spread in basis points during the initial 90
days commencing the date of the Agreement is the lesser of the two
provided spread in basis points (if the provided spread in basis points
are different); the spread in basis points during any period after the
initial 90 days commencing the date of the Agreement is the greater of the
two provided spread in basis points (if the provides spread in basis
points are different).
8 "DIV" means Minimum CMBS Diversification.
EXHIBIT I
CONFIRMATION STATEMENT
DEUTSCHE BANK AG,
Cayman Islands Branch
Ladies and Gentlemen:
Deutsche Bank AG, Cayman Islands Branch, is pleased to deliver our
written CONFIRMATION of our agreement to enter into the Transaction pursuant to
which Deutsche Bank AG, Cayman Islands Branch shall purchase from you the
Purchased Securities and/or Purchased Loans identified in Annex I, pursuant to
the Master Repurchase Agreement between Deutsche Bank AG, Cayman Islands Branch
(the "Buyer") and Anthracite Funding, LLC ("Seller"), dated as of December 21,
2004 (the "Agreement"; capitalized terms used herein without definition have
the meanings given in the Agreement), as follows below and on the attached
Schedule 1:
Purchase Date: __________, 20__
Purchased Securities/
Purchased Loans:
Aggregate Principal
Amount of Purchased
Securities/Purchased Loans
(Original/Current):
Percentage Class Purchased: _________%
Repurchase Date:
Buyer's Purchase Price: $
Original Purchase Percentage:
Pricing Rate: one-month LIBOR plus ______%
Margin Maintenance Percentage:
Seller's Acquisition Cost/
Acquisition Price: $ / %
Dollar Price Paid or
Benchmark/Spread to
Benchmark:
Buyer's Margin Percentage:
Margin Notice Deadline: 11:00 a.m.
Governing Agreements/Trustee: As identified on attached
Schedule 1
Name and address for
communications: Buyer: Deutsche Bank AG, Cayman
Islands Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Seller: Anthracite Funding, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH
By: __________________________________
Name: ________________________________
Title: _______________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
AGREED AND ACKNOWLEDGED:
ANTHRACITE FUNDING, LLC,
a Delaware limited liability company
By: Anthracite Capital, Inc.,
a Maryland corporation, its sole member
By: __________________________________
Name: ________________________________
Title: _______________________________
Schedule 1 to Confirmation Statement
Purchased Securities:
Aggregate Principal Amount (Original/Current):
CUSIP NO.:
Securitization Document (including Master
Servicer, Special Servicer and Trustee):
-------------------------------------------------------------------------------
Purchased Loans:
Aggregate Principal Amount (Original/Current):
Purchased Loan Documents:
Summary of Purchased Securities/Purchased Loans
Purchased Security/Purchased Loan: ______
Spread
over
Seller Seller's Buyer's Original Buyer's one
Outstanding Owned Acquisition Market Rating, Purchase Purchase month
Class, if any Balance Face Cost Value if any Percentage Price LIBOR
------------- ----------- ------ ----------- ------ ------ ---------- ------- -----
EXHIBIT II
AUTHORIZED REPRESENTATIVES OF SELLER
------------------------------------
Name Specimen Signature
---- ------------------
▇▇▇▇▇▇▇ ▇▇▇▇ CFO/COO/Treasurer __________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vice President/Secretary __________________
▇▇▇▇▇ ▇▇▇▇▇▇ CEO/President __________________
EXHIBIT III
MONTHLY REPORTING PACKAGE
-------------------------
FORM OF AGGREGATE COLLATERAL REPORT
AGGREGATE COLLATERAL REPORT INFORMATION
FOR EACH PORTFOLIO SECURITY
Portfolio Security Information (By Rating Category):
Issuer, Series and Class
Beginning Balance
Pass-Through Rate
Principal Distribution Amount
Interest Distribution Amount
Total Distribution
Principal Losses
Interest Shortfalls/Recoveries
Ending Certificate Balance
Available credit support, in %, available to Portfolio Security*
Additional Underlying Trust Expenses
Rating
CUSIP No.
Deal Name Description
Payment Date
Trustee, Master Servicer, Special Servicer
Special Servicing Report
Details
Mortgage Loan Information:
Aggregate Outstanding Balance
Realized Losses per Asset for Underlying Trust for the Prior Month
Cumulative Realized Losses per Asset
Dollar Amount and Percentage of Aggregate Pool Balance of:
Purchased Loans 30-59 days delinquent
Purchased Loans 60-89 days delinquent
Purchased Loans 90 or more days delinquent
Purchased Loans in Foreclosure
REO - Listing of Assets
Number of loans at start and end of the month
Outstanding principal balance at start and end of the month
Repayments - Listing of Assets
Foreclosures - Listing of Assets
Bankruptcies - Listing of Assets
Current weighted average maturity
Current weighted average coupon (Based on Pay Rate)
______________________
* Only to the extent provided in Portfolio Security distribution date
statements.
EXHIBIT IV
FORM OF CUSTODIAL DELIVERY
--------------------------
On this ______ of ________, 20__, Anthracite Funding, LLC ("Seller"),
as the Seller under that certain Master Repurchase Agreement, dated as of
December 21, 2004 (the "Repurchase Agreement") between the Seller and Deutsche
Bank AG, Cayman Islands Branch ("Buyer"), does hereby deliver to LaSalle Bank
National Association ("Custodian"), as custodian under that certain Custodial
Agreement, dated as of December 21, 2004, among Buyer, Seller and Custodian,
the Purchased Loan Files with respect to the Purchased Loans to be purchased by
Buyer pursuant to the Repurchase Agreement, which Purchased Loans are listed on
the Purchased Loan Schedule attached hereto and which Purchased Loans shall be
subject to the terms of the Custodial Agreement on the date hereof.
With respect to the Purchased Loan Files delivered hereby, for the
purposes of issuing the Trust Receipt, the Custodian shall review the Purchased
Loan Files to ascertain delivery of the documents listed in Section 3(g) to the
Custodial Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Custodial Agreement.
IN WITNESS WHEREOF, the Seller has caused its name to be signed hereto
by its officer thereunto duly authorized as of the day and year first above
written.
ANTHRACITE FUNDING, LLC, a Delaware
limited liability company
By: Anthracite Capital, Inc., a Maryland
corporation, its sole member
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT V
FORM OF POWER OF ATTORNEY
-------------------------
"Know All Men by These Presents, that Anthracite Funding, LLC
("Seller"), does hereby appoint Deutsche Bank AG, Cayman Islands Branch
("Buyer"), its attorney-in-fact to act in Seller's name, place and stead in any
way which Seller could do with respect to (i) the completion of the
endorsements of the Mortgage Notes and the Assignments of Mortgages and the
Mezzanine Notes, (ii) the recordation of the Assignments of Mortgages and (iii)
the enforcement of the Seller's rights under the Purchased Loans purchased by
Buyer pursuant to the Master Repurchase Agreement dated as of December 21, 2004
between Seller and Buyer and to take such other steps as may be necessary or
desirable to enforce Buyer's rights against such Purchased Loans, the related
Purchased Loan Files and the Servicing Records to the extent that Seller is
permitted by law to act through an agent.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT
ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OF FACSIMILE OF THIS INSTRUMENT
MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE
INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE
OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY,
AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER'S ASSIGNS, HEREBY AGREES
TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND
ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD
PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
IN WITNESS WHEREOF Seller has caused this Power of Attorney to be
executed and the Seller's seal to be affixed this _____ day of __________,
20__.
ANTHRACITE FUNDING, LLC, a Delaware
limited liability company
By: Anthracite Capital, Inc., a Maryland
corporation, its sole member
By: _____________________________
Name: ___________________________
Title: __________________________
(Seal)
EXHIBIT VI
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
SECURED BY A MORTGAGE
---------------------
With respect to each Purchased Loan of the type described in clauses
(i) or (ii) of the definition of Eligible Loan (or which is a loan secured by a
second lien on multifamily or commercial property as set forth in clauses
(iii)(a) or (iv)(a) of the definition of Eligible Loan), the Seller represents
and warrants on each Purchase Date as follows, other than as set forth on the
exception report provided to Buyer in accordance with the Agreement.
1. Purchased Loan Schedule and Collateral Information. The information
set forth in the Purchased Loan Schedule and the Collateral Information is
complete, true and correct in all material respects.
2. Whole Loan; Ownership of Purchased Loans. Each Purchased Loan is a
whole loan and not a participation interest in a whole loan. Immediately prior
to the transfer to the Buyer of the Purchased Loans, the Seller had good title
to, and was the sole owner of, each Purchased Loan. The Seller has full right,
power and authority to transfer and assign each of the Purchased Loans to or at
the direction of the Buyer and has validly and effectively conveyed (or caused
to be conveyed) to the Buyer or its designee all of the Seller's legal and
beneficial interest in and to the Purchased Loans free and clear of any and all
pledges, liens, charges, security interests and/or other encumbrances. The sale
of the Purchased Loans to the Buyer or its designee does not require the Seller
to obtain any governmental or regulatory approval or consent that has not been
obtained.
3. Payment Record. No scheduled payment of principal and interest
under any Purchased Loan was 30 days or more past due as of the Purchase Date
without giving effect to any applicable grace period, and no Purchased Loan was
30 days or more delinquent in the twelve-month period immediately preceding the
Purchase Date.
4. Lien; Valid Assignment. The Mortgage related to and delivered in
connection with each Purchased Loan constitutes a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable first priority lien (or
with respect to loans secured by second liens as set forth in clauses (iii)(a)
or (iv)(a) of the definition of Eligible Loan, enforceable second priority
lien) upon the related Mortgaged Property, prior to all other liens and
encumbrances, except for
(a) the lien for current real estate taxes and assessments not
yet due and payable,
(b) covenants, conditions and restrictions, rights of way,
easements and other matters that are of public record and/or are
referred to in the related lender's title insurance policy,
(c) exceptions and exclusions specifically referred to in such
lender's title insurance policy, and
(d) other matters to which like properties are commonly subject,
none of which matters referred to in clauses (b), (c) or (d)
materially interferes with the security intended to be provided by
such Mortgage or the marketability or current use of the Mortgaged
Property or the current ability of the Mortgaged Property to generate
operating income sufficient to service the Purchased Loan debt (the
foregoing items (a) through (d) being herein referred to as the
"Permitted Encumbrances"). The related assignment of such Mortgage
executed and delivered in favor of the Buyer is in recordable form and
constitutes a legal, valid and binding assignment, sufficient to
convey to the assignee named therein all of the assignor's right,
title and interest in, to and under such Mortgage. Such Mortgage,
together with any separate security agreements, chattel mortgages or
equivalent instruments, establishes and creates a valid and, subject
to the exceptions set forth in paragraph 13 below, enforceable
security interest in favor of the holder thereof in all of the related
Mortgagor's personal property used in, and reasonably necessary to
operate the related Mortgaged Property. A Uniform Commercial Code
financing statement has been filed and/or recorded in all places
necessary to perfect a valid security interest in such personal
property, and such security interest is a first or second priority
security interest, subject to any prior purchase money security
interest in such personal property and any personal property leases
applicable to such personal property. Notwithstanding the foregoing,
no representation is made as to the perfection of any security
interest in rents or other personal property to the extent that
possession or control of such items or actions other than the filing
of Uniform Commercial Code financing statements are required in order
to effect such perfection.
5. Assignment of Leases and Rents. The Assignment of Leases set forth
in the Mortgage (or in a separate instrument) and related to and delivered in
connection with each Purchased Loan establishes and creates a valid, subsisting
and, subject to the exceptions set forth in paragraph 13 below, enforceable
first or second priority perfected lien and first or second priority perfected
security interest in the related Mortgagor's interest in all leases,
sub-leases, licenses or other agreements pursuant to which any person is
entitled to occupy, use or possess all or any portion of the real property
subject to the related Mortgage, and each assignor thereunder has the full
right to assign the same. The related assignment of any Assignment of Leases,
not included in a Mortgage, executed and delivered in favor of the Buyer is in
recordable form and constitutes a legal, valid and binding assignment,
sufficient to convey to the assignee named therein all of the assignor's right,
title and interest in, to and under such Assignment of Leases.
6. Mortgage Status; Waivers and Modifications. No Mortgage has been
satisfied, canceled, rescinded or subordinated in whole or in material part,
and the related Mortgaged Property has not been released from the lien of such
Mortgage, in whole or in material part, nor has any instrument been executed
that would effect any such satisfaction, cancellation, subordination,
rescission or release except for any partial reconveyances of portions of the
real property that do not materially adversely affect the value of the
property. None of the terms of any Mortgage Note, Mortgage or Assignment of
Leases have been impaired, waived, altered or modified in any respect, except
by written instruments, all of which are included in the related Mortgage File.
7. Condition of Property; Condemnation. Except as set forth in an
engineering report prepared in connection with the origination or acquisition
of the related Purchased Loan, each Mortgaged Property is, to the Seller's
knowledge, free and clear of any damage that would materially and adversely
affect its value as security for the related Purchased Loan (normal wear and
tear excepted). The Seller has received no notice of any pending or threatened
proceeding for the condemnation of all or any material portion of any Mortgaged
Property. To the Seller's knowledge (based on surveys and/or title insurance
obtained in connection with the origination or acquisition of the Purchased
Loans) as of the date of the origination or acquisition of each Purchased Loan,
all of the material improvements on the related Mortgaged Property which were
considered in determining the appraised value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of such property,
except for encroachments that are insured against by the lender's title
insurance policy referred to herein or that do not materially and adversely
affect the value or marketability of such Mortgaged Property, and no
improvements on adjoining properties materially encroached upon such Mortgaged
Property so as to materially and adversely affect the value or marketability of
such Mortgaged Property, except those encroachments that are insured against by
the Title Policy referred to herein.
8. Title Insurance. Each Mortgaged Property is covered by an American
Land Title Association (or an equivalent form thereof as adopted in the
applicable jurisdiction) lender's title insurance policy (the "Title Policy")
in the original principal amount of the related Purchased Loan after all
advances of principal. Each Title Policy insures that the related Mortgage is a
valid first or second priority lien on such Mortgaged Property, subject only to
the exceptions stated therein (or an escrow letter or a marked up title
insurance commitment on which the required premium has been paid exists which
evidences that such Title Policy will be issued). Each Title Policy (or, if it
has yet to be issued, the coverage to be provided thereby) is in full force and
effect, all premiums thereon have been paid and, to the Seller's knowledge, no
material claims have been made thereunder and no claims have been paid
thereunder. No holder of the related Mortgage has done, by act or omission,
anything that would materially impair the coverage under such Title Policy.
Immediately following the transfer and assignment of the related Purchased Loan
to the Buyer, such Title Policy (or, if it has yet to be issued, the coverage
to be provided thereby) will inure to the benefit of the Buyer without the
consent of or notice to the insurer.
9. No Holdbacks. The proceeds of each Purchased Loan have been fully
disbursed and there is no obligation for future advances with respect thereto.
With respect to each Purchased Loan, any and all requirements as to completion
of any on-site or off-site improvement and as to disbursements of any funds
escrowed for such purpose that were to have been complied with on or before the
Purchase Date have been complied with, or any such funds so escrowed have not
been released.
10. Mortgage Provisions. The Mortgage Note or Mortgage for each
Purchased Loan, together with applicable state law, contains customary and
enforceable provisions for comparable mortgaged properties similarly situated
(subject to the exceptions set forth in paragraph 13) such as to render the
rights and remedies of the holder thereof adequate for the practical
realization against the related Mortgaged Property of the principal benefits of
the security intended to be provided thereby.
11. Buyer under Deed of Trust. If any Mortgage is a deed of trust, (1)
a trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage, and (2) no fees or expenses are
payable to such trustee by the Seller, the Buyer or any transferee thereof
except in connection with a trustee's sale after default by the related
Mortgagor or in connection with any full or partial release of the related
Mortgaged Property or related security for the related Purchased Loan.
12. Environmental Conditions. An environmental site assessment (or an
update of a previous assessment) was performed with respect to each Mortgaged
Property in connection with the origination or acquisition of the related
Purchased Loan, a report of each such assessment (an "Environmental Report")
has been delivered to the Buyer, and to Seller's knowledge there is no material
and adverse environmental condition or circumstance affecting any Mortgaged
Property that was not disclosed in such report. Each Mortgage requires the
related Mortgagor to comply with all applicable federal, state and local
environmental laws and regulations. Where such Environmental Report disclosed
the existence of a material and adverse environmental condition or circumstance
affecting any Mortgaged Property, (i) a party not related to the Mortgagor was
identified as the responsible party for such condition or circumstance, (ii)
the related Mortgagor was required either to provide additional security and/or
to obtain an operations and maintenance plan or (iii) the related Mortgagor
provided evidence that applicable federal, state or local governmental
authorities would not take any action, or require the taking of any action, in
respect of such condition or circumstance. The related Purchased Loan Documents
contain provisions pursuant to which the related borrower or a principal of
such borrower has agreed to indemnify the mortgagee for damages resulting from
violations of any applicable Environmental Laws.
13. Loan Document Status. Each Mortgage Note, Mortgage and other
agreement that evidences or secures a Purchased Loan and that was executed by
or on behalf of the related Mortgagor is the legal, valid and binding
obligation of the maker thereof (subject to any non-recourse provisions
contained in any of the foregoing agreements and any applicable state
anti-deficiency or market value limit deficiency legislation), enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and there is no valid defense, counterclaim or right of offset or
rescission available to the related Mortgagor with respect to such Mortgage
Note, Mortgage or other agreements.
14. Insurance. Each Mortgaged Property is, and is required pursuant to
the related Mortgage to be, insured by (a) a fire and extended perils insurance
policy issued by an insurer meeting the requirements of such Purchased Loan
providing coverage against loss or damage sustained by reason of fire,
lightning, windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicles and smoke, and, to the extent required as of the
date of origination by the originator of such Purchased Loan consistent with
its normal commercial mortgage lending practices, against other risks insured
against by persons operating like properties in the locality of the Mortgaged
Property in an amount not less than the lesser of the principal balance of the
related Purchased Loan and the replacement cost (not allowing for depreciation)
of the Mortgaged Property, and not less than the amount necessary to avoid the
operation of any co-insurance provisions with respect to the Mortgaged
Property; (b) a business interruption or rental loss insurance policy, in an
amount at least equal to six months of operations of the Mortgaged Property
(other than Manufactured Housing Communities); (c) a flood insurance policy (if
any portion of the Mortgaged Property is located in an area identified by the
Federal Emergency Management Agency as having special flood hazards) and (d) a
comprehensive general liability insurance policy in amounts as are generally
required by commercial mortgage lenders, and in any event not less than $1
million per occurrence. Such insurance policy contains a standard mortgagee
clause that names the Mortgagee as an additional insured and that requires at
least thirty days' (in the case of termination or cancellation other than for
nonpayment of premiums) and at least ten days' (in the case of termination or
cancellation for nonpayment of premiums) prior notice to the holder of the
Mortgage, and no such notice has been received, including any notice of
nonpayment of premiums, that has not been cured. Each Mortgage obligates the
related Mortgagor to maintain all such insurance and, upon such Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from such Mortgagor. Other than as set forth in paragraph 17(h)
hereof, each Mortgage provides that casualty insurance proceeds will be applied
either to the restoration or repair of the related Mortgaged Property or to the
reduction or defeasance of the principal amount of the Purchased Loan.
15. Taxes and Assessments. There are no delinquent or unpaid taxes or
assessments (including assessments payable in future installments), or other
outstanding charges affecting any Mortgaged Property which are or may become a
lien of priority equal to or higher than the lien of the related Mortgage. For
purposes of this representation and warranty, real property taxes and
assessments shall not be considered unpaid until the date on which interest
and/or penalties would be first payable thereon.
16. Mortgagor Bankruptcy. To Seller's actual knowledge, no Mortgagor
is a debtor in any state or federal bankruptcy or insolvency proceeding.
17. Leasehold Estate. Each Mortgaged Property consists of the related
Mortgagor's fee simple estate in real estate or, if the related Purchased Loan
is secured in whole or in part by the interest of a Mortgagor as a lessee under
a ground lease of a Mortgaged Property (a "Ground Lease"), by the related
Mortgagor's interest in the Ground Lease but not by the related fee interest in
such Mortgaged Property (the "Fee Interest"). With respect to any Purchased
Loan secured by a Ground Lease but not by the related Fee Interest:
a. Such Ground Lease or a memorandum thereof has been duly recorded;
such Ground Lease (or the related estoppel letter or lender
protection agreement between the Seller and related lessor)
permits the current use of the Mortgaged Property and permits the
interest of the lessee thereunder to be encumbered by the related
Mortgage and does not restrict the use of the related Mortgaged
Property by such lessee, its successors or assigns in a manner
that would adversely effect the security provided by the related
Mortgage by limiting in any way its current use; and there has
been no material change in the payment terms of such Ground Lease
since the origination or acquisition of the related Purchased
Loan, with the exception of material changes reflected in written
instruments that are a part of the related Mortgage File;
b. The lessee's interest in such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than Permitted Encumbrances;
c. The Mortgagor's interest in such Ground Lease is assignable to
the Buyer and its successors and assigns upon notice to, but
without the consent of, the lessor thereunder (or, if such
consent is required, it has been obtained prior to the Purchase
Date) and, in the event that it is so assigned, is further
assignable by the Buyer and its successors and assigns upon
notice to, but without the need to obtain the consent of, such
lessor;
d. Such Ground Lease is in full force and effect, and the Seller has
received no notice that an event of default has occurred
thereunder, and, to the Seller's knowledge, there exists no
condition that, but for the passage of time or the giving of
notice, or both, would result in an event of default under the
terms of such Ground Lease;
e. Such Ground Lease, or an estoppel letter or other agreement, (A)
requires the lessor under such Ground Lease to give notice of any
default by the lessee to the mortgagee, provided that the
mortgagee has provided the lessor with notice of its lien in
accordance with the provisions of such Ground Lease to the extent
such Ground Lease requires such notice, (B) further provides that
no notice of termination given under such Ground Lease (including
rejection of such Ground Lease in a bankruptcy proceeding) is
effective against the holder of the Mortgage unless a copy of
such notice has been delivered to such holder and the lessor has
offered to enter into a new lease with such holder on terms that
do not materially vary from the economic terms of the Ground
Lease;
f. A mortgagee is permitted a reasonable opportunity (including,
where necessary, sufficient time to gain possession of the
interest of the lessee under such Ground Lease) to cure any
default under such Ground Lease, which is curable after the
receipt of notice of any such default, before the lessor
thereunder may terminate such Ground Lease;
g. Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty
years beyond the stated maturity date of the related Purchased
Loan;
h. Under the terms of such Ground Lease and the related Mortgage,
taken together, any related insurance proceeds or condemnation
award other than in respect of a total loss will be applied
either to the repair or restoration of all or part of the related
Mortgaged Property, with the mortgagee or a Buyer appointed by it
having the right to hold and disburse such proceeds as the repair
or restoration progresses (except in such cases where a provision
entitling another party to hold and disburse such proceeds would
not be viewed as commercially unreasonable by a prudent
commercial mortgage lender for conduit programs), or to the
payment or defeasance of the outstanding principal balance of the
Purchased Loan together with any accrued interest thereon;
i. Such Ground Lease does not impose any restrictions on subletting
which would be viewed as commercially unreasonable by prudent
commercial mortgage lenders in the lending area where the
Mortgaged Property is located; and
j. Such Ground Lease provides, or the lessor has otherwise agreed,
that such Ground Lease may not be amended or modified without the
prior written consent of the mortgagee under such Purchased Loan.
18. Escrow Deposits. All escrow deposits and payments relating to each
Purchased Loan that are, as of the Purchase Date required to be deposited or
paid have been so deposited or paid.
19. LTV Ratio. The gross proceeds of each Purchased Loan to the
related Mortgagor at origination did not exceed the non-contingent principal
amount of the Purchased Loan and either: (a) such Purchased Loan is secured by
an interest in real property having a fair market value (i) at the date the
Purchased Loan was originated at least equal to 80 percent of the original
principal balance of the Purchased Loan or (ii) at the Purchase Date at least
equal to 80 percent of the principal balance of the Purchased Loan on such
date; provided that for purposes hereof, the fair market value of the real
property interest must first be reduced by (x) the amount of any lien on the
real property interest that is senior to the Purchased Loan and (y) a
proportionate amount of any lien that is in parity with the Purchased Loan
(unless such other lien secures a Purchased Loan that is cross-collateralized
with such Purchased Loan, in which event the computation described in clauses
(a)(i) and (a)(ii) of this paragraph 19 shall be made on a pro rata basis in
accordance with the fair market values of the Mortgaged Properties securing
such cross-collateralized Purchased Loans; or (b) substantially all the
proceeds of such Purchased Loan were used to acquire, improve or protect the
real property which served as the only security for such Purchased Loan (other
than a recourse feature or other third party credit enhancement within the
meaning of Treasury Regulations Section 1.860G-2(a)(1)(ii)).
20. Advancement of Funds by the Seller. The Seller has not and, to the
Seller's actual knowledge, no other holder of a Purchased Loan has advanced
funds or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by such Purchased Loan.
21. No Mechanics' Liens. As of the date of the Mortgage, and to the
actual knowledge of the Seller as of the Purchase Date, each Mortgaged Property
is free and clear of any and all mechanics' and materialmen's liens that are
prior or equal to the lien of the related Mortgage, and no rights are
outstanding that under law could give rise to any such lien that would be prior
or equal to the lien of the related Mortgage except, in each case, for liens
insured against by the Title Policy referred to herein or otherwise bonded.
22. Compliance with Usury Laws. Each Purchased Loan complied with, or
is exempt from, all applicable usury laws in effect at its date of origination.
23. Cross-collateralization; Cross-default. No Purchased Loan is
cross-collateralized or cross-defaulted with any loan other than one or more
other Purchased Loans.
24. Releases of Mortgaged Property. Except as described in the next
sentence, no Mortgage Note or Mortgage requires the mortgagee to release all or
any material portion of the related Mortgaged Property from the lien of the
related Mortgage except upon payment in full or defeasance of all amounts due
under the related Purchased Loan. The Mortgages relating to those Purchased
Loans identified on the Purchased Loan Schedule require the mortgagee to grant
releases of portions of the related Mortgaged Properties upon (a) the
satisfaction of certain legal and underwriting requirements and (b) except
where the portion of the Mortgaged Property permitted to be released was not
considered by the Seller to be material in the underwriting of the Purchased
Loan, either (1) the payment of a release price set forth therein and
prepayment consideration in connection therewith or (2) the partial defeasance
of such Purchased Loan.
No Purchased Loan permits the release or substitution of collateral if
such release or substitution (a) would create a "significant modification" of
such Purchased Loan within the meaning of Treas. Reg. ss.1.1001 3 or (b) would
cause such Purchased Loan not to be a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code (without regard to clauses (A)(i) or (A)(ii)
thereof).
25. No Equity Participation or Contingent Interest. No Purchased Loan
contains any equity participation by the lender or provides for negative
amortization or for any contingent or additional interest in the form of
participation in the cash flow of the related Mortgaged Property.
26. No Material Default. To the Seller's knowledge, there exists no
material default, breach, violation or event of acceleration (and no event
which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and
adversely affects the value of the Purchased Loan and the related Mortgaged
Property; provided, however, that this representation and warranty does not
address or otherwise cover any default, breach, violation or event of
acceleration that specifically pertains to any matter otherwise covered by any
other representation and warranty made by the Seller in any of paragraphs 3, 7,
12, 14, 15 and 17 of this Exhibit VI.
27. Local Law Compliance. Based on due diligence considered reasonable
by prudent commercial mortgage lenders in the lending area where each Mortgaged
Property is located, the improvements located on or forming part of each
Mortgaged Property complies with applicable zoning laws and ordinances, or
constitutes a legal non-conforming use or structure or, if any such improvement
does not so comply, such non-compliance does not materially and adversely
affect the value of the related Mortgaged Property as determined by the
appraisal performed at origination.
28. Junior Liens. None of the Purchased Loans permits the related
Mortgaged Property to be encumbered by any lien junior to or of equal priority
with the lien of the related Mortgage without the prior written consent of the
holder thereof or the satisfaction of debt service coverage or similar criteria
specified therein. To Seller's knowledge, none of the Mortgaged Properties is
encumbered by any lien junior to the lien of the related Mortgage. Each
Purchased Loan contains a "due on sale" clause that provides for the
acceleration of the payment of the unpaid principal balance of the Purchased
Loan if, without the prior written consent of the holder of the Purchased Loan,
the related Mortgaged Property is transferred or sold.
29. Actions Concerning Purchased Loans. To the knowledge of the
Seller, there are no actions, suits or proceedings pending or threatened before
any court, administrative agency or arbitrator concerning any Purchased Loan or
related Mortgagor or Mortgaged Property that might adversely affect title to
the Purchased Loan or the validity or enforceability of the related Mortgage or
that might materially and adversely affect the value of the Mortgaged Property
as security for the Purchased Loan or the use for which the premises were
intended.
30. Servicing. The servicing and collection practices used by the
Seller have been in all material respects legal, proper and prudent and have
met customary industry standards for servicing of commercial Purchased Loans
similar to the Purchased Loans in question.
31. Licenses and Permits. To the Seller's knowledge, as of the date of
origination of each Purchased Loan, the related Mortgagor was in possession of
all material licenses, permits and franchises required by applicable law for
the ownership and operation of the related Mortgaged Property as it was then
operated.
32. Assisted Living Facility Regulation. If any Mortgaged Property is
operated as an assisted living facility, to the Seller's knowledge, (a) the
related Mortgagor and operator, if different, is in compliance in all material
respects with all federal and state laws applicable to the use and operation of
the related Mortgaged Property and (b) if the operator of the Mortgaged
Property participates in Medicare or Medicaid programs, the facility is in
compliance in all material respects with the requirements for participation in
such programs.
33. Non-Recourse Exceptions. The Purchased Loan Documents for each
Purchased Loan provide that such Purchased Loan constitutes the non-recourse
obligations of the related obligor thereon except that either (i) such
provision does not apply in the case of fraud by the Mortgagor or (ii) such
documents provide that the Mortgagor shall be liable to the holder of the
Purchased Loan for losses incurred as a result of fraud by the Mortgagor.
34. Single Purpose Entity. The Mortgagor on each Purchased Loan with
an outstanding principal balance in excess of $5,000,000, was, as of the
origination of the Purchased Loan, a Single Purpose Entity. For this purpose, a
"Single Purpose Entity" shall mean an entity, other than an individual, whose
organizational documents provide substantially to the effect that it was formed
or organized solely for the purpose of owning and operating one or more
Mortgaged Properties securing the Purchased Loans and prohibit it from engaging
in any business unrelated to such Mortgaged Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Purchased Loan documents, substantially to the effect that it does not
have any assets other than those related to its interest in and operation of
such Mortgaged Property or Properties, or any indebtedness other than as
permitted by the related Mortgage or the other related Purchased Loan
documents, that it has its own books and records and accounts separate and
apart from any other person, and that it holds itself out as a legal entity,
separate and apart from any other person.
Each borrower of a Purchased Loan in excess of $10,000,000 is an
entity which has represented in connection with the origination of the
Purchased Loan, or whose organizational documents as of the date of origination
of the Purchased Loan, provided that so long as the Purchased Loan is
outstanding it will have at least one independent director, manager or
executive committee member.
35. Separate Tax Parcels. To Seller's actual knowledge, each Mortgaged
Property constitutes one or more complete separate tax lots or is subject to an
endorsement under the related title insurance policy.
36. Operating or Financial Statement. The related Purchased Loan
Documents require the related borrower to furnish to the mortgagee at least
annually an operating statement with respect to the related Mortgaged Property.
37. Purchased Loan Modifications. Any Purchased Loan that was
"significantly modified" prior to the Purchase Date so as to result in a
taxable exchange under Section 1001 of the Code either (a) was modified as a
result of the default or reasonably foreseeable default of such Purchased Loan
or (b) satisfies the provisions of either clause (a)(i) of paragraph 19
(substituting the date of the last such modification for the date the Purchased
Loan was originated) or clause (a)(ii) of paragraph 19, including the proviso
thereto.
38. Inspections. The Seller (or if the Seller is not the originator,
the originator of the Purchased Loan) has inspected or caused to be inspected
each Mortgaged Property in connection with the origination of the related
Purchased Loan.
39. Defeasance. Each Purchased Loan containing provisions for
defeasance of mortgage collateral either (i) requires the prior written consent
of, and compliance with the conditions set by, the holder of the Purchased
Loan, or (ii) requires that (A) defeasance may not occur prior to the time
permitted by applicable "real estate mortgage investment conduit" rules and
regulations (if applicable), (B) the replacement collateral consist of U.S.
governmental securities in an amount sufficient to make all scheduled payments
under the Mortgage Note when due, (C) independent public accountants certify
that the collateral is sufficient to make such payments, (D) counsel provide an
opinion that the Buyer has a perfected security interest in such collateral
prior to any other claim or interest, and (E) all costs and expenses arising
from the defeasance of the mortgage collateral shall be borne by the borrower.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
NOT SECURED BY A MORTGAGE WHICH IS A MEZZANINE LOAN
SECURED BY A PLEDGE OF THE ENTIRE EQUITY OWNERSHIP INTEREST
OR A PREFERRED EQUITY OWNERSHIP INTEREST, IN EACH CASE,
IN AN ENTITY THAT OWNS
A MULTIFAMILY OR COMMERCIAL PROPERTY
With respect to each Purchased Loan of the type described in clauses
(iii)(b) and (iv)(b) of the definition of Eligible Loan (except a loan secured
by a second lien on multifamily or commercial property, which is described in
Representations and Warranties Regarding Each Individual Purchased Loan Secured
by a Mortgage set forth in this Exhibit VI), the Seller represents and warrants
on each Purchase Date as follows, other than as set forth on the exception
report provided to Buyer in accordance with the Agreement:
(1) Purchased Loan Information. The information set forth in the
Purchased Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. To the
Seller's knowledge, there exists no material default, breach, violation or
event of acceleration (and no event which, with the passage of time or the
giving of notice, or both, would constitute any of the foregoing) under the
documents evidencing or securing the Purchased Loan, in any such case to the
extent the same materially and adversely affects the value of the Purchased
Loan and the related underlying real property.
(3) No Offsets, Defenses or Counterclaims. There is no valid offset,
defense or counterclaim to such Purchased Loan.
(4) Equity Pledges. With respect to each Purchased Loan which is a
Mezzanine Loan only, the pledge of ownership interests securing such Purchased
Loan relates to all direct or indirect equity or ownership interests in the
underlying real property owner (so that, except for the equity interests
pledged to Seller, there are no direct or indirect equity or ownership
interests in underlying real property owner or in any constituent entity) and
has been fully perfected in favor of Seller as mezzanine lender.
(5) Lockbox. The lockbox administrator, if any, is not an Affiliate of
Seller.
(6) Enforceability. The Purchased Loan Documents have been duly and
properly executed by the parties thereto, and each is the legal, valid and
binding obligation of the parties thereto, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Loan is not usurious. Seller has fully and validly
perfected all security interests created or intended to be created pursuant to
the Purchased Loan Documents.
(7) Waivers and Modifications. The terms of the related Purchased Loan
Documents have not been impaired, waived, altered or modified in any material
respect (other than by a written instrument which is included in the related
Purchased Loan File).
(8) Valid Assignment. The assignment of Purchased Loan constitutes the
legal, valid and binding assignment of such Purchased Loan from Seller to or
for the benefit of Buyer. No consent or approval by any third party is required
for any such assignment of such Purchased Loan, for Buyer's exercise of any
rights or remedies under the assignment of Purchased Loan, or for Buyer's sale
or other disposition of such Purchased Loan if Buyer acquires title thereto,
other than consents and approvals which have been obtained. No third party
(including underlying real property owner and underlying real property
mortgagee) holds any "right of first refusal," "right of first negotiation,"
"right of first offer," purchase option, or other similar rights of any kind on
account of the occurrence of any of the foregoing. No other impediment exists
to any such transfer.
(9) Certain Representations and Warranties. To the Seller's actual
knowledge, all representations and warranties in the Purchased Loan Documents
and in the underlying real property mortgage documents are true and correct in
all material respects.
(10) Parties Authorized. To the extent required under applicable law
as of the Purchase Date, each party to the Purchased Loan Documents was
authorized to do business in the jurisdiction in which the related underlying
real property is located at all times when it held the Purchased Loan to the
extent necessary to ensure the validity and enforceability of such Purchased
Loan.
(11) No Advances of Funds. No party to the Purchased Loan Documents
has advanced funds on account of any default under the Purchased Loan or under
the underlying real property mortgage documents.
(12) Servicing. The servicing and collection practices used by Seller
for the Purchased Loan have complied with applicable law in all material
respects and are consistent with those employed by prudent servicers of
comparable Purchased Loans.
(13) No Assignment. Seller has not effectuated any transfer, sale,
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(14) No Bankruptcy. To Seller's actual knowledge, none of the
following parties is a debtor in any state or federal bankruptcy or insolvency
proceeding: Seller; underlying real property owner; or underlying real property
mortgagee.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A JUNIOR PARTICIPATION INTEREST
(OR JUNIOR OR "B" NOTE) IN A PERFORMING COMMERCIAL
MORTGAGE LOAN SECURED BY A FIRST LIEN ON
A MULTIFAMILY OR COMMERCIAL PROPERTY
------------------------------------
With respect to each Purchased Loan of the type described in clauses
(iii)(a) or (iv)(a) of the definition of Eligible Loan, the Seller represents
and warrants on each Purchase Date as follows, other than as set forth on the
exception report provided to Buyer in accordance with the Agreement.
(1) Purchased Loan Information. The information set forth in the
Purchased Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. There exists
no material default, breach, violation or event of acceleration (and no event
which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and
adversely affects the value of the Purchased Loan and the related underlying
real property.
(3) No Offsets, Defenses or Counterclaims. There is no valid offset,
defense or counterclaim to such Purchased Loan.
(4) Lockbox. The lockbox administrator, if any, is not an Affiliate of
Seller.
(5) Enforceability. The Purchased Loan Documents have been duly and
properly executed by the parties thereto, and each is the legal, valid and
binding obligation of the parties thereto, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Loan is not usurious. Seller has fully and validly
perfected all security interests created or intended to be created pursuant to
the Purchased Loan Documents.
(6) Waivers and Modifications. The terms of the related Purchased Loan
Documents have not been impaired, waived, altered or modified in any material
respect (other than by a written instrument which is included in the related
Purchased Loan File).
(7) Valid Assignment. The assignment of Purchased Loan constitutes the
legal, valid and binding assignment of such Purchased Loan from Seller to or
for the benefit of Buyer. No consent or approval by any third party is required
for any such assignment of such Purchased Loan, for Buyer's exercise of any
rights or remedies under the assignment of Purchased Loan, or for Buyer's sale
or other disposition of such Purchased Loan if Buyer acquires title thereto,
other than consents and approvals which have been obtained. No third party
(including underlying real property owner and underlying real property
mortgagee) holds any "right of first refusal," "right of first negotiation,"
"right of first offer," purchase option, or other similar rights of any kind on
account of the occurrence of any of the foregoing. No other material impediment
exists to any such transfer.
(8) Certain Representations and Warranties. To the Seller's knowledge,
all representations and warranties in the Purchased Loan Documents and in the
underlying documents for the performing commercial mortgage loan secured by a
first lien on a multifamily or commercial property to which such Purchased Loan
relates are true and correct in all material respects.
(9) Parties Authorized. To the extent required under applicable law as
of the Purchase Date, each party to the Purchased Loan Documents was authorized
to do business in the jurisdiction in which the related underlying real
property is located at all times when it held the Purchased Loan to the extent
necessary to ensure the validity and enforceability of such Purchased Loan.
(10) No Advances of Funds. No party to the Purchased Loan Documents
has advanced funds on account of any default under the Purchased Loan or under
the underlying real property mortgage documents.
(11) Servicing. The servicing and collection practices used by Seller
for the Purchased Loan have complied with applicable law in all material
respects and are consistent with those employed by prudent servicers of
comparable Purchased Loans.
(12) No Assignment. Seller has not effectuated any transfer, sale,
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(13) No Bankruptcy. To Seller's actual knowledge, none of the
following parties is a debtor in any state or federal bankruptcy or insolvency
proceeding: Seller; underlying real property owner; or underlying real property
mortgagee.
EXHIBIT VII
COLLATERAL INFORMATION
----------------------
Loan ID #:
Borrower Name:
Borrower Address:
Borrower City:
Borrower State:
Borrower Zip Code:
Recourse?
Guaranteed?
Related Borrower Name(s):
Original Principal Balance:
Note Date:
Loan Date:
Loan Type (e.g. fixed/arm):
Current Principal Balance:
Current Interest Rate (per annum):
Paid to date:
Annual P&I:
Next Payment due date:
Index (complete whether fixed or arm):
Gross Spread/Margin (complete whether fixed or arm):
Life Cap:
Life Floor:
Periodic Cap:
Periodic Floor:
Rounding Factor:
Lookback (in days):
Interest Calculation Method (e.g., Actual/360):
Interest rate adjustment frequency:
P&I payment frequency:
First P&I payment due:
First interest rate adjustment date:
First payment adjustment date:
Next interest rate adjustment date:
Next payment adjustment date:
Conversion Date:
Converted Interest Rate Index:
Converted Interest Rate Spread:
Maturity date:
Loan term:
Amortization term:
Hyper-Amortization Flag:
Hyper-Amortization Term:
Hyper-Amortization Rate Increase:
Balloon Amount:
Balloon LTV:
Prepayment Penalty Flag:
Prepayment Penalty Text:
Lockout Period:
Lien Position:
Fee/Leasehold:
Ground Lease Expiration Date:
Property Name:
Property Address:
Property City:
Property Zip Code:
Property Type (General):
Property Type (Specific):
Cross-collateralized (Yes/No)*:
Property Size:
Year built:
Year renovated:
Actual Average Occupancy:
Occupancy Rent Roll Date:
Underwritten Average Occupancy:
Largest Tenant:
Largest Tenant SF:
Largest Tenant Lease Expiration:
2nd Largest Tenant:
2nd Largest Tenant SF:
2nd Largest Tenant Lease Expiration:
3rd Largest Tenant:
3rd Largest Tenant SF:
3rd Largest Tenant Lease Expiration:
Underwritten Average Rental Rate/ADR:
Underwritten Vacancy/Credit Loss:
Underwritten Other Income:
Underwritten Total Revenues:
Underwritten Replacement Reserves:
Underwritten Management Fees:
Underwritten Franchise Fees:
Underwritten Total Expenses:
Underwritten Leasing Commissions:
Underwritten Tenant Improvement Costs:
Underwritten NOI:
Underwritten NCF:
Underwritten Debt Service Constant:
Underwritten DSCR at NOI:
Underwritten DSCR at NCF:
Underwritten NOI Period End Date:
Hotel Franchise:
Hotel Franchise Expiration Date:
Appraiser Name: (if Applicable)
Appraised Value: (if Applicable)
Appraisal Date: (if Applicable)
Appraisal Cap Rate: (if Applicable)
Appraisal Discount Rate: (if Applicable)
Underwritten LTV:
Environmental Report Preparer:
Environmental Report Date:
Environmental Report Issues:
Architectural and Engineering Report Preparer:
Architectural and Engineering Report Date:
Deferred Maintenance Amount:
Ongoing Replacement Reserve Requirement per A&E Report:
Immediate Repairs Escrow % (e.g. 125%):
Replacement Reserve Annual Deposit:
Replacement Reserve Balance:
Tenant Improvement/Leasing Commission Annual Deposits:
Tenant Improvement/Leasing Commission Balance:
Taxes paid through date:
Monthly Tax Escrow:
Tax Escrow Balance:
Insurance paid through date:
Monthly Insurance Escrow:
Insurance Escrow Balance:
Reserve/Escrow Balance as of Date:
Probable Maximum Loss %:
Covered by Earthquake Insurance (Yes/No):
Number of times 30 days late in last 12 months:
Number of times 60 days late in last 12 months:
Number of times 90 days late in last 12 months:
Servicing Fee:
Notes:
_____________________
* If yes, give property information on each property covered and in
aggregate as appropriate. Loan ID'
EXHIBIT VIII
ADVANCE PROCEDURE
-----------------
Final Approval of New Collateral Which is an Eligible
Security/Preliminary Approval of New Collateral Which is an Eligible Loan.
(a) Seller may, from time to time, submit to Buyer a
Preliminary Due Diligence Package for Buyer's review and approval in
order to enter into a Transaction with respect to any New Collateral
that Seller proposes to be included as Collateral under the Agreement.
(b) Upon Buyer's receipt of a complete Preliminary Due
Diligence Package, Buyer, within two (2) Business Days, shall have the
right to request, in Buyer's good faith business judgment, additional
diligence materials and deliveries that Buyer shall specify on a
Supplemental Due Diligence List. Upon Buyer's receipt of all of the
Diligence Materials or Buyer's waiver thereof, Buyer, within two (2)
Business Days (in the case of an Eligible Security) or five (5)
Business Days and following receipt of internal credit approval (in
the case of an Eligible Loan), shall either (i) notify Seller of the
Purchase Price and the Market Value for the New Collateral or (ii)
deny, in Buyer's sole and absolute discretion, Seller's request for a
Transaction. Buyer's failure to respond to Seller within two (2) or
five (5) Business Days, as applicable, shall be deemed to be a denial
of Seller's request for an Advance, unless Buyer and Seller have
agreed otherwise in writing. With respect to a Transaction involving
an Eligible Loan or Eligible Security to be purchased by Buyer in a
currency other than United States Dollars, Seller shall give Buyer
irrevocable notice of sale of such Eligible Loan or Eligible Security
at least one (1) Business Day in advance of the related Purchase Date
as set forth in Section 3(a) of Annex I.
Final Approval of New Collateral which is an Eligible Loan. Upon
Buyer's notification to Seller of the Purchase Price and the Market Value for
any New Collateral which is an Eligible Loan, Seller shall, if Seller desires
to enter into a Transaction with respect to such New Collateral, satisfy the
conditions set forth below (in addition to satisfying the Transaction
Conditions Precedent to obtaining each advance) as a condition precedent to
Buyer's approval of such New Collateral as Collateral, all in a manner
reasonably satisfactory to Buyer and pursuant to documentation reasonably
satisfactory to Buyer:
(a) Delivery of Purchased Loan Documents. Seller shall
deliver to Buyer: (i) with respect to New Collateral that is
Pre-Existing Collateral, each of the Purchased Loan Documents, except
Purchased Loan Documents that Seller expressly and specifically
disclosed in Seller's Preliminary Due Diligence Package were not in
Seller's possession; and (ii) with respect to New Collateral that is
Originated Collateral, each of the Purchased Loan Documents.
(b) Environmental and Engineering. Buyer shall have received
a "Phase 1" (and, if necessary, "Phase 2") environmental report, an
asbestos survey, if applicable, and an engineering report, each in
form reasonably satisfactory to Buyer, by an engineer or environmental
consultant reasonably approved by Buyer.
(c) Appraisal. Buyer shall have received either an appraisal
approved by Buyer (or a Draft Appraisal), each by an MAI appraiser or
(in relation to an English Loan) a valuation by a suitably qualified
valuer on the basis of the then current Statements of Asset Valuation
Practice and Guidance Notes issued by the Royal Institution of
Chartered Surveyors. If Buyer receives only a Draft Appraisal prior to
entering into a Transaction, Seller shall deliver an appraisal
approved by Buyer by an MAI appraiser or (in relation to an English
Loan) a valuation by a suitably qualified valuer on the basis of the
then current Statements of Asset Valuation Practice and Guidance Notes
issued by the Royal Institution of Chartered Surveyors on or before
thirty (30) days after the Purchase Date.
(d) Insurance. Buyer shall have received certificates or
other evidence of insurance demonstrating insurance coverage in
respect of the Mortgaged Property of types, in amounts, with insurers
and otherwise in compliance with the terms, provisions and conditions
set forth in the Purchased Loan Documents. Such certificates or other
evidence shall indicate that Seller will be named as an additional
insured as its interest may appear and shall contain a loss payee
endorsement in favor of such additional insured with respect to the
policies required to be maintained under the Purchased Loan Documents.
(e) Survey. Buyer shall have received all surveys of the
Mortgaged Property that are in Seller's possession.
(f) Lien Search Reports. Buyer or Buyer's counsel shall have
received, as reasonably requested by Buyer, satisfactory reports of
UCC, tax lien, judgment and litigation searches and title updates
conducted by search firms and/or title companies acceptable to Buyer
with respect to the Eligible Loan, Mortgaged Property, Seller and
Mortgagor, such searches to be conducted in each location Buyer shall
reasonably designate or (in relation to an English Loan) office copy
entries of each title to a Mortgaged Property which are not less than
6 months old (where the relevant property is registered at HM Land
Registry) or relevant Land Charges Searches (where the relevant
property is not registered at HM Land Registry).
(g) Opinions of Counsel. Buyer shall have received copies of
all legal opinions in the Seller's possession with respect to the
Eligible Loan which shall be in form and substance reasonably
satisfactory to Buyer.
(h) Additional Real Estate Matters. Seller shall have
delivered to Buyer to the extent in Seller's possession such other
real estate related certificates and documentation as may have been
requested by Buyer, such as: (i) certificates of occupancy issued by
the appropriate Governmental Authority and either letters certifying
that the Mortgaged Property is in compliance with all applicable
zoning laws issued by the appropriate Governmental Authority or
evidence that the related Title Policy includes a zoning endorsement
and (ii) abstracts of all leases in effect at the Mortgaged Property
and estoppel certificates, in form and substance acceptable to Buyer,
from any ground lessor and from any tenant that occupies 7.5% or more
of the rentable space at the Mortgaged Property, and in any event from
tenants whose occupancies aggregate not less than 70% of the occupied
rentable square footage at the Mortgaged Property.
(i) Other Documents. Buyer shall have received such other
documents as Buyer or its counsel shall reasonably deem necessary.
Within two (2) Business Days of Seller's satisfaction of all of the conditions
enumerated in clauses (a) through (i) above, Buyer shall either (i) if the
Purchased Loan Documents with respect to the New Collateral are not reasonably
satisfactory in form and substance to Buyer, notify Seller that Buyer has not
approved the New Collateral as Collateral or (ii) notify Seller that Buyer has
approved the New Collateral as Collateral. Buyer's failure to respond to Seller
within two (2) Business Days shall be deemed to be a denial of Seller's request
that Buyer approve the New Collateral, unless Buyer and Seller have agreed
otherwise in writing.
EXHIBIT IX
FORM OF REDIRECTION LETTER
--------------------------
[Letterhead of Seller]
[__________], 2004
[Borrower Name]
[Address]
Re: [__________]
To Whom It May Concern:
[__________] has transferred all of its interest in the Loan to
Anthracite Funding, LLC, ("Anthracite"), and, accordingly, Anthracite is now
your lender with regard to the Loan. All notices, demands and requests to be
given to the lender under the documents evidencing, securing and/or governing
the Loan shall be sent to the following address (until such address for notice
is changed in accordance with the Loan documents):
Anthracite Funding, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
with a copy to:
[ ]
All payments to be made to Anthracite under the Loan shall be made by
wire transfer in accordance with the following instructions:
[__________]
ABA No. [__________]
Account No. [__________]
Account Name: Anthracite Funding, LLC subject to
the security interest of Deutsche
Bank AG, Cayman Islands Branch
Reference: [__________]
Please feel free to call [_________] at (___) [___-____]
should you have any questions or concerns.
Thank you.
[__________], a [__________] corporation
By:
Its:
ANTHRACITE FUNDING, LLC, a Delaware
limited liability company
By: Anthracite Capital, Inc., a
Maryland corporation, its
sole member
By: _________________________
Name: _______________________
Title: ______________________