AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
Exhibit 10.1
EXECUTION
VERSION
AMENDED
AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT
(this “Agreement”) dated as of
September 26, 2008, between the UNITED STATES DEPARTMENT OF
THE TREASURY (“Purchaser”) and FEDERAL HOME
LOAN MORTGAGE CORPORATION (“Seller”), acting
through the Federal Housing Finance Agency (the
“Agency”) as its duly appointed conservator
(the Agency in such capacity, “Conservator”).
Reference is made to Article 1 below for the meaning of
capitalized terms used herein without definition.
Background
A. The Agency has been duly appointed as Conservator for
Seller pursuant to Section 1367(a) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (as
amended, the “FHE Act”). Conservator has
determined that entry into this Agreement is (i) necessary
to put Seller in a sound and solvent condition;
(ii) appropriate to carry on the business of Seller and
preserve and conserve the assets and property of Seller; and
(iii) otherwise consistent with its powers, authorities and
responsibilities.
B. Purchaser is authorized to purchase obligations and
other securities issued by Seller pursuant to
Section 306(l)
of the Federal Home Loan Mortgage Corporation Act, as amended
(the “Charter Act”). The Secretary of the
Treasury has determined, after taking into consideration the
matters set forth in
Section 306(l)(1)(C)
of the Charter Act, that the purchases contemplated herein are
necessary to (i) provide stability to the financial
markets; (ii) prevent disruptions in the availability of
mortgage finance; and (iii) protect the taxpayer.
C. Purchaser and Seller executed and delivered the Senior
Preferred Stock Purchase Agreement dated as of September 7,
2008 (the “Original Agreement”), and the
parties thereto desire to amend and restate the Original
Agreement in its entirety as set forth herein.
THEREFORE, the parties hereto agree as follows:
Terms and
Conditions
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth below:
“Affiliate” means, when used with respect to a
specified Person (i) any direct or indirect holder or group
(as defined in Sections 13(d) and 14(d) of the Exchange
Act) of holders of 10.0% or more of any class of capital stock
of such Person and (ii) any current or former director or
officer of such Person, or any other current or former employee
of such Person that currently exercises or formerly exercised a
material degree of Control over such Person, including without
limitation each current or former Named Executive Officer of
such Person.
“Available Amount” means, as of any date of
determination, the lesser of (a) the Deficiency Amount as
of such date and (b) the Maximum Amount as of such date.
“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks are
authorized to close under United States federal law and the law
of the State of New York.
“Capital Lease Obligations” of any Person shall
mean the obligations of such Person to pay rent or other amounts
under any lease of (or other similar arrangement conveying the
right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such
Person under GAAP and, for purposes hereof, the amount of such
obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP.
“Control” shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Deficiency Amount” means, as of any date of
determination, the amount, if any, by which (a) the total
liabilities of Seller exceed (b) the total assets of Seller
(such assets excluding the Commitment and any unfunded amounts
thereof), in each case as reflected on the balance sheet of
Seller as of the applicable date set forth in this Agreement,
prepared in accordance with GAAP; provided,
however, that:
(i) for the avoidance of doubt, in measuring the Deficiency
Amount liabilities shall exclude any obligation in respect of
any capital stock of Seller, including the Senior Preferred
Stock contemplated herein;
(ii) in the event that Seller becomes subject to
receivership or other liquidation process or proceeding,
“Deficiency Amount” shall mean, as of any date of
determination, the amount, if any, by which (a) the total
allowed claims against the receivership or other applicable
estate (excluding any liabilities of or transferred to any LLRE
(as defined in Section 5.4(a)) created by a receiver)
exceed (b) the total assets of such receivership or other
estate (excluding the Commitment, any unfunded amounts thereof
and any assets of or transferred to any LLRE, but including the
value of the receiver’s interest in any LLRE);
(iii) to the extent Conservator or a receiver of Seller, or
any statute, rule, regulation or court of competent
jurisdiction, specifies or determines that a liability of Seller
(including without limitation a claim against Seller arising
from rescission of a purchase or sale of a security issued by
Seller (or guaranteed by Seller or with respect to which Seller
is otherwise liable) or for damages arising from the purchase,
sale or retention of such a security) shall be subordinated
(other than pursuant to a contract providing for such
subordination) to all other liabilities of Seller or shall be
treated on par with any class of equity of Seller, then such
liability shall be excluded in the calculation of Deficiency
Amount; and
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(iv) the Deficiency Amount may be increased above the
otherwise applicable amount by the mutual written agreement of
Purchaser and Seller, each acting in its sole discretion.
“Designated Representative” means Conservator
or (a) if Conservator has been superseded by a receiver
pursuant to
Section 1367(a)
of the FHE Act, such receiver, or (b) if Seller is not in
conservatorship or receivership pursuant to
Section 1367(a)
of the FHE Act, Seller’s chief financial officer.
“Director” shall mean the Director of the
Agency.
“Effective Date” means the date on which this
Agreement shall have been executed and delivered by both of the
parties hereto.
“Equity Interests” of any Person shall mean any
and all shares, interests, rights to purchase or otherwise
acquire, warrants, options, participations or other equivalents
of or interests in (however designated) equity, ownership or
profits of such Person, including any preferred stock, any
limited or general partnership interest and any limited
liability company membership interest, and any securities or
other rights or interests convertible into or exchangeable for
any of the foregoing.
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
“GAAP” means generally accepted accounting
principles in effect in the United States as set forth in the
opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board from time to time.
“Indebtedness” of any Person means, for
purposes of Section 5.5 only, without duplication,
(a) all obligations of such Person for money borrowed by
such Person, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title
retention agreements relating to property or assets purchased by
such Person, (d) all obligations of such Person issued or
assumed as the deferred purchase price of property or services,
other than trade accounts payable, (e) all Capital Lease
Obligations of such Person, (f) obligations, whether
contingent or liquidated, in respect of letters of credit
(including standby and commercial), bankers’ acceptances
and similar instruments and (g) any obligation of such
Person, contingent or otherwise, guaranteeing or having the
economic effect of guaranteeing any Indebtedness of the types
set forth in clauses (a) through (f) payable by
another Person other than Mortgage Guarantee Obligations.
“Liquidation End Date” means the date of
completion of the liquidation of Seller’s assets.
“Maximum Amount” means, as of any date of
determination, $100,000,000,000 (one hundred billion dollars),
less the aggregate amount of funding under the Commitment prior
to such date.
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“Mortgage Assets” of any Person means assets of
such Person consisting of mortgages, mortgage loans,
mortgage-related securities, participation certificates,
mortgage-backed commercial paper, obligations of real estate
mortgage investment conduits and similar assets, in each case to
the extent such assets would appear on the balance sheet of such
Person in accordance with GAAP as in effect as of the date
hereof (and, for the avoidance of doubt, without giving effect
to any change that may be made hereafter in respect of Statement
of Financial Accounting Standards No. 140 or any similar
accounting standard).
“Mortgage Guarantee Obligations” means
guarantees, standby commitments, credit enhancements and other
similar obligations of Seller, in each case in respect of
Mortgage Assets.
“Named Executive Officer” has the meaning given
to such term in
Item 402(a)(3)
of
Regulation S-K
under the Exchange Act, as in effect on the date hereof.
“Person” shall mean any individual,
corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, estate,
unincorporated organization or government or any agency or
political subdivision thereof, or any other entity whatsoever.
“SEC” means the Securities and Exchange
Commission.
“Senior Preferred Stock” means the Variable
Liquidation Preference Senior Preferred Stock of Seller,
substantially in the form of Exhibit A hereto.
“Warrant” means a warrant for the purchase of
common stock of Seller representing 79.9% of the common stock of
Seller on a fully-diluted basis, substantially in the form of
Exhibit B hereto.
2. COMMITMENT
2.1. Commitment. Purchaser hereby commits to
provide to Seller, on the terms and conditions set forth herein,
immediately available funds in an amount up to but not in excess
of the Available Amount, as determined from time to time (the
“Commitment”); provided, that in no
event shall the aggregate amount funded under the Commitment
exceed $100,000,000,000 (one hundred billion dollars). The
liquidation preference of the Senior Preferred Stock shall
increase in connection with draws on the Commitment, as set
forth in Section 3.3 below.
2.2. Quarterly Draws on Commitment. Within
fifteen (15) Business Days following the determination of
the Deficiency Amount, if any, as of the end of each fiscal
quarter of Seller which ends on or before the Liquidation End
Date, the Designated Representative may, on behalf of Seller,
request that Purchaser provide immediately available funds to
Seller in an amount up to but not in excess of the Available
Amount as of the end of such quarter. Any such request shall be
valid only if it is in writing, is timely made, specifies the
account of Seller to which such funds are to be transferred, and
contains a certification of the Designated Representative that
the requested amount does not exceed the Available Amount as of
the end of the applicable quarter. Purchaser shall provide such
funds within sixty (60) days of its receipt of such request
or, following any determination by the Director that the
Director will be mandated by law to appoint a receiver for
Seller if such funds are not received sooner, such shorter
period as may be necessary
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to avoid such mandatory appointment of a receiver if reasonably
practicable taking into consideration Purchaser’s access to
funds.
2.3. Accelerated Draws on Commitment.
Immediately following any determination by the Director that
the Director will be mandated by law to appoint a receiver for
Seller prior to the Liquidation End Date unless Seller’s
capital is increased by an amount (the “Special
Amount”) up to but not in excess of the then current
Available Amount (computed based on a balance sheet of Seller
prepared in accordance with GAAP that differs from the most
recent balance sheet of Seller delivered in accordance with
Section 5.9(a) or (b)) on a date that is prior to the date
that funds will be available to Seller pursuant to
Section 2.2, Conservator may, on behalf of Seller, request
that Purchaser provide to Seller the Special Amount in
immediately available funds. Any such request shall be valid
only if it is in writing, is timely made, specifies the account
of Seller to which such funds are to be transferred, and
contains certifications of Conservator that (i) the
requested amount does not exceed the Available Amount (including
computations in reasonable detail and satisfactory to Purchaser
of the then existing Deficiency Amount) and (ii) the
requested amount is required to avoid the imminent mandatory
appointment of a receiver for Seller. Purchaser shall provide
such funds within thirty (30) days of its receipt of such
request or, if reasonably practicable taking into consideration
Purchaser’s access to funds, any shorter period as may be
necessary to avoid mandatory appointment of a receiver.
2.4. Final Draw on Commitment. Within fifteen
(15) Business Days following the determination of the
Deficiency Amount, if any, as of the Liquidation End Date
(computed based on a balance sheet of Seller as of the
Liquidation End Date prepared in accordance with GAAP), the
Designated Representative may, on behalf of Seller, request that
Purchaser provide immediately available funds to Seller in an
amount up to but not in excess of the Available Amount as of the
Liquidation End Date. Any such request shall be valid only if it
is in writing, is timely made, specifies the account of Seller
to which such funds are to be transferred, and contains a
certification of the Designated Representative that the
requested amount does not exceed the Available Amount (including
computations in reasonable detail and satisfactory to Purchaser
of the Deficiency Amount as of the Liquidation End Date).
Purchaser shall provide such funds within sixty (60) days
of its receipt of such request.
2.5. Termination of Purchaser’s
Obligations. Subject to earlier termination pursuant to
Section 6.7, all of Purchaser’s obligations under and
in respect of the Commitment shall terminate upon the earliest
of: (a) if the Liquidation End Date shall have occurred,
(i) the payment in full of Purchaser’s obligations
with respect to any valid request for funds pursuant to
Section 2.4 or (ii) if there is no Deficiency Amount
on the Liquidation End Date or if no such request pursuant to
Section 2.4 has been made, the close of business on the
15th Business Day following the determination of the
Deficiency Amount, if any, as of the Liquidation End Date;
(b) the payment in full of, defeasance of or other
reasonable provision for all liabilities of Seller, whether or
not contingent, including payment of any amounts that may become
payable on, or expiry of or other provision for, all Mortgage
Guarantee Obligations and provision for unmatured debts; and
(c) the funding by Purchaser under the Commitment of an
aggregate of $100,000,000,000 (one hundred billion dollars). For
the avoidance of doubt, the Commitment shall not be
terminable by Purchaser solely by reason of (i) the
conservatorship, receivership or other insolvency proceeding of
Seller or (ii) the Seller’s financial condition or any
adverse change in Seller’s financial condition.
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| 3. | PURCHASE OF SENIOR PREFERRED STOCK AND WARRANT; FEES |
3.1. Initial Commitment Fee. In consideration
of the Commitment, and for no additional consideration, on the
Effective Date (or as soon thereafter as is practicable) Seller
shall sell and issue to Purchaser, and Purchaser shall purchase
from Seller, (a) one million (1,000,000) shares of Senior
Preferred Stock, with an initial liquidation preference equal to
$1,000 per share ($1,000,000,000 (one billion dollars)
liquidation preference in the aggregate), and (b) the
Warrant.
3.2. Periodic Commitment Fee.
(a) Commencing March 31, 2010, Seller shall pay to
Purchaser quarterly, on the last day of March, June, September
and December of each calendar year (each a “Periodic Fee
Date”), a periodic commitment fee (the
“Periodic Commitment Fee”). The Periodic
Commitment Fee shall accrue from January 1, 2010.
(b) The Periodic Commitment Fee is intended to fully
compensate Purchaser for the support provided by the ongoing
Commitment following December 31, 2009. The amount of the
Periodic Commitment Fee shall be set not later than
December 31, 2009 with respect to the ensuing five-year
period, shall be reset every five years thereafter and shall be
determined with reference to the market value of the Commitment
as then in effect. The amount of the Periodic Commitment Fee
shall be mutually agreed by Purchaser and Seller, subject to
their reasonable discretion and in consultation with the
Chairman of the Federal Reserve; provided, that Purchaser
may waive the Periodic Commitment Fee for up to one year at a
time, in its sole discretion, based on adverse conditions in the
United States mortgage market.
(c) At the election of Seller, the Periodic Commitment Fee
may be paid in cash or by adding the amount thereof ratably to
the liquidation preference of each outstanding share of Senior
Preferred Stock so that the aggregate liquidation preference of
all such outstanding shares of Senior Preferred Stock is
increased by an amount equal to the Periodic Commitment Fee.
Seller shall deliver notice of such election not later than
three (3) Business Days prior to each Periodic Fee Date. If
the Periodic Commitment Fee is not paid in cash by 12:00 pm
(New York time) on the applicable Periodic Fee Date
(irrespective of Seller’s election pursuant to this
subsection), Seller shall be deemed to have elected to pay the
Periodic Commitment Fee by adding the amount thereof to the
liquidation preference of the Senior Preferred Stock, and the
aggregate liquidation preference of the outstanding shares of
Senior Preferred Stock shall thereupon be automatically
increased, in the manner contemplated by the first sentence of
this section, by an aggregate amount equal to the Periodic
Commitment Fee then due.
3.3. Increases of Senior Preferred Stock
Liquidation Preference as a Result of Funding under the
Commitment. The aggregate liquidation preference of the
outstanding shares of Senior Preferred Stock shall be
automatically increased by an amount equal to the amount of each
draw on the Commitment pursuant to Article 2 that is funded
by Purchaser to Seller, such increase to occur simultaneously
with such funding and ratably with respect to each share of
Senior Preferred Stock.
3.4. Notation of Increase in Liquidation
Preference. Seller shall duly xxxx its records to reflect
each increase in the liquidation preference of the Senior
Preferred Stock contemplated
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herein (but, for the avoidance of doubt, such increase shall be
effective regardless of whether Seller has properly marked its
records).
4. REPRESENTATIONS
Seller represents and warrants as of the Effective Date, and
shall be deemed to have represented and warranted as of the date
of each request for and funding of an advance under the
Commitment pursuant to Article 2, as follows:
4.1. Organization and Good Standing. Seller is
a corporation, chartered by the Congress of the United States,
duly organized, validly existing and in good standing under the
laws of the United States and has all corporate power and
authority to carry on its business as now conducted and as
proposed to be conducted.
4.2. Organizational Documents. Seller has made
available to Purchaser a complete and correct copy of its
charter and bylaws, each as amended to date (the
“Organizational Documents”). The Organizational
Documents are in full force and effect. Seller is not in
violation of any provision of its Organizational Documents.
4.3. Authorization and Enforceability. All
corporate or other action on the part of Seller or Conservator
necessary for the authorization, execution, delivery and
performance of this Agreement by Seller and for the
authorization, issuance and delivery of the Senior Preferred
Stock and the Warrant being purchased under this Agreement, has
been taken. This Agreement has been duly and validly executed
and delivered by Seller and (assuming due authorization,
execution and delivery by the Purchaser) shall constitute the
valid and legally binding obligation of Seller, enforceable
against Seller in accordance with its terms, except to the
extent the enforceability thereof may be limited by bankruptcy
laws, insolvency laws, reorganization laws, moratorium laws or
other laws of general applicability affecting creditors’
rights generally or by general equitable principles (regardless
of whether enforcement is sought in a proceeding in equity or at
law). The Agency is acting as conservator for Seller under
Section 1367 of the FHE Act. The Board of Directors of
Seller, by valid action at a duly called meeting of the Board of
Directors on September 6, 2008, consented to the
appointment of the Agency as conservator for purposes of
Section 1367(a)(3)(I)
of the FHE Act, and the Director of the Agency has appointed the
Agency as Conservator for Seller pursuant to
Section 1367(a)(1)
of the FHE Act, and each such action has not been rescinded,
revoked or modified in any respect.
4.4. Valid Issuance. When issued in accordance
with the terms of this Agreement, the Senior Preferred Stock and
the Warrant will be duly authorized, validly issued, fully paid
and non-assessable, free and clear of all liens and preemptive
rights. The shares of common stock to which the holder of the
Warrant is entitled have been duly and validly reserved for
issuance. When issued and delivered in accordance with the terms
of this Agreement and the Warrant, such shares will be duly
authorized, validly issued, fully paid and nonassessable, free
and clear of all liens and preemptive rights.
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4.5. Non-Contravention.
(a) The execution, delivery or performance by Seller of
this Agreement and the consummation by Seller of the
transactions contemplated hereby do not and will not
(i) conflict with or violate any provision of the
Organizational Documents of Seller; (ii) conflict with or
violate any law, decree or regulation applicable to Seller or by
which any property or asset of Seller is bound or affected, or
(iii) result in any breach of, or constitute a default
(with or without notice or lapse of time, or both) under, or
give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien upon any
of the properties or assets of Seller, pursuant to any note,
bond, mortgage, indenture or credit agreement, or any other
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Seller is a party or by which
Seller is bound or affected, other than, in the case of
clause (iii), any such breach, default, termination,
amendment, acceleration, cancellation or lien that would not
have and would not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the business,
property, operations or condition of the Seller, the authority
of the Conservator or the validity or enforceability of this
Agreement (a “Material Adverse Effect”).
(b) The execution and delivery of this Agreement by Seller
does not, and the consummation by Seller of the transactions
contemplated by this Agreement will not, require any consent,
approval, authorization, waiver or permit of, or filing with or
notification to, any governmental authority or any other person,
except for such as have already been obtained.
5. COVENANTS
From the Effective Date until such time as the Senior Preferred
Stock shall have been repaid or redeemed in full in accordance
with its terms:
5.1. Restricted Payments. Seller shall not,
and shall not permit any of its subsidiaries to, in each case
without the prior written consent of Purchaser, declare or pay
any dividend (preferred or otherwise) or make any other
distribution (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, with
respect to any of Seller’s Equity Interests (other than
with respect to the Senior Preferred Stock or the Warrant) or
directly or indirectly redeem, purchase, retire or otherwise
acquire for value any of Seller’s Equity Interests (other
than the Senior Preferred Stock or the Warrant), or set aside
any amount for any such purpose.
5.2. Issuance of Capital Stock. Seller shall
not, and shall not permit any of its subsidiaries to, in each
case without the prior written consent of Purchaser, sell or
issue Equity Interests of Seller or any of its subsidiaries of
any kind or nature, in any amount, other than the sale and
issuance of the Senior Preferred Stock and Warrant on the
Effective Date and the common stock subject to the Warrant upon
exercise thereof, and other than as required by (and pursuant
to) the terms of any binding agreement as in effect on the date
hereof.
5.3. Conservatorship. Seller shall not (and
Conservator, by its signature below, agrees that it shall not),
without the prior written consent of Purchaser, terminate, seek
termination of or permit to be terminated the conservatorship of
Seller pursuant to Section 1367 of the FHE Act, other
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than in connection with a receivership pursuant to
Section 1367 of the FHE Act.
5.4. Transfer of Assets. Seller shall not, and
shall not permit any of its subsidiaries to, in each case
without the prior written consent of Purchaser, sell, transfer,
lease or otherwise dispose of (in one transaction or a series of
related transactions) all or any portion of its assets
(including Equity Interests in other persons, including
subsidiaries), whether now owned or hereafter acquired (any such
sale, transfer, lease or disposition, a
“Disposition”), other than Dispositions for
fair market value:
(a) to a limited life regulated entity
(“LLRE”) pursuant to
Section 1367(i)
of the FHE Act;
(b) of assets and properties in the ordinary course of
business, consistent with past practice;
(c) in connection with a liquidation of Seller by a
receiver appointed pursuant to Section 1367(a) of the FHE
Act;
(d) of cash or cash equivalents for cash or cash
equivalents; or
(e) to the extent necessary to comply with the covenant set
forth in Section 5.7 below.
5.5. Indebtedness. Seller shall not, and shall
not permit any of its subsidiaries to, in each case without the
prior written consent of Purchaser, incur, assume or otherwise
become liable for (a) any Indebtedness if, after giving
effect to the incurrence thereof, the aggregate Indebtedness of
Seller and its subsidiaries on a consolidated basis would exceed
110.0% of the aggregate Indebtedness of Seller and its
subsidiaries on a consolidated basis as of June 30, 2008 or
(b) any Indebtedness if such Indebtedness is subordinated
by its terms to any other Indebtedness of Seller or the
applicable subsidiary. For purposes of this covenant the
acquisition of a subsidiary with Indebtedness will be deemed to
be the incurrence of such Indebtedness at the time of such
acquisition.
5.6. Fundamental Changes. Seller shall not,
and shall not permit any of its subsidiaries to, in each case
without the prior written consent of Purchaser, (i) merge
into or consolidate or amalgamate with any other Person, or
permit any other Person to merge into or consolidate or
amalgamate with it, (ii) effect a reorganization or
recapitalization involving the common stock of Seller, a
reclassification of the common stock of Seller or similar
corporate transaction or event or (iii) purchase, lease or
otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any
other Person or any division, unit or business of any Person.
5.7. Mortgage Assets. Seller shall not own, as
of any applicable date, Mortgage Assets in excess of (i) on
December 31, 2009, $850 billion, or (ii) on
December 31 of each year thereafter, 90.0% of the aggregate
amount of Mortgage Assets of Seller as of December 31 of the
immediately preceding calendar year; provided, that in no
event shall Seller be required under this Section 5.7 to
own less than $250 billion in Mortgage Assets.
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5.8. Transactions with Affiliates. Seller
shall not, and shall not permit any of its subsidiaries to,
without the prior written consent of Purchaser, engage in any
transaction of any kind or nature with an Affiliate of Seller
unless such transaction is (i) pursuant to this Agreement,
the Senior Preferred Stock or the Warrant, (ii) upon terms
no less favorable to Seller than would be obtained in a
comparable arm’s-length transaction with a Person that is
not an Affiliate of Seller or (iii) a transaction
undertaken in the ordinary course or pursuant to a contractual
obligation or customary employment arrangement in existence as
of the date hereof.
5.9. Reporting. Seller shall provide to
Purchaser:
(a) not later than the time period specified in the
SEC’s rules and regulations with respect to issuers as to
which Section 13 and
15(d) of the
Exchange Act apply, annual reports on
Form 10-K
(or any successor or comparable form) containing the information
required to be contained therein (or required in such successor
or comparable form);
(b) not later than the time period specified in the
SEC’s rules and regulations with respect to issuers as to
which Section 13 and
15(d) of the
Exchange Act apply, reports on
Form 10-Q
(or any successor or comparable form)containing the information
required to be contained therein (or required in such successor
or comparable form);
(c) promptly from time to time after the occurrence of an
event required to be therein reported (and in any event within
the time period specified in the SEC’s rules and
regulations), such other reports on
Form 8-K
(or any successor or comparable form);
(d) concurrently with any delivery of financial statements
under paragraphs (a) or (b) above, a certificate of
the Designated Representative, (i) certifying that Seller
is (and since the last such certificate has at all times been)
in compliance with each of the covenants contained herein and
that no representation made by Seller herein or in any document
delivered pursuant hereto or in connection herewith was false or
misleading in any material respect when made, or, if the
foregoing is not true, specifying the nature and extent of the
breach of covenant and/or representation and any corrective
action taken or proposed to be taken with respect thereto, and
(ii) setting forth computations in reasonable detail and
satisfactory to the Purchaser of the Deficiency Amount, if any;
(e) promptly, from time to time, such other information
regarding the operations, business affairs, plans, projections
and financial condition of Seller, or compliance with the terms
of this Agreement, as Purchaser may reasonably request; and
(f) as promptly as reasonably practicable, written notice
of the following:
(i) the occurrence of the Liquidation End Date;
(ii) the filing or commencement of, or any written threat
or notice of intention of any Person to file or commence, any
action, suit or proceeding, whether at law or in equity or by or
before any governmental authority or in arbitration, against
Conservator, Seller or any other Person which, if adversely
determined, would reasonably be expected to have a Material
Adverse Effect;
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(iii) any other development that is not a matter of general
public knowledge and that has had, or would reasonably be
expected to have, a Material Adverse Effect.
5.10. Executive Compensation. Seller shall
not, without the consent of the Director, in consultation with
the Secretary of the Treasury, enter into any new compensation
arrangements with, or increase amounts or benefits payable under
existing compensation arrangements of, any Named Executive
Officer of Seller.
6. MISCELLANEOUS
6.1. No Third-Party Beneficiaries. Until the
termination of the Commitment, at any time during the existence
and continuance of a payment default with respect to debt
securities issued by Seller
and/or a
default by Seller with respect to any Mortgage Guarantee
Obligations, any holder of such defaulted debt securities or
beneficiary of such Mortgage Guarantee Obligations
(collectively, the “Holders”) may
(a) deliver notice to the Seller and the Designated
Representative requesting exercise of all rights available to
them under this Agreement to draw on the Commitment up to the
lesser of the amount necessary to cure the outstanding payment
defaults and the Available Amount as of the last day of the
immediately preceding fiscal quarter (the “Demand
Amount”), (b) if Seller and the Designated
Representative fail to act as requested within thirty
(30) days of such notice, seek judicial relief for failure
of the Seller to draw on the Commitment, and (c) if
Purchaser shall fail to perform its obligations in respect of
any draw on the Commitment, and Seller
and/or the
Designated Representative shall not be diligently pursuing
remedies in respect of such failure, file a claim in the United
States Court of Federal Claims for relief requiring Purchaser to
pay Seller the Demand Amount in the form of liquidated damages.
Any payment of liquidated damages to Seller under the previous
sentence shall be treated for all purposes, including the
provisions of the Senior Preferred Stock and Section 3.3 of
this Agreement, as a draw and funding of the Commitment pursuant
to Article 2. The Holders shall have no other rights under
or in respect of this Agreement, and the Commitment shall not
otherwise be enforceable by any creditor of Seller or by any
other Person other than the parties hereto, and no such creditor
or other Person is intended to be, or shall be, a third party
beneficiary of any provision of this Agreement.
6.2. Non-Transferable; Successors. The
Commitment is solely for the benefit of Seller and shall not
inure to the benefit of any other Person (other than the Holders
to the extent set forth in Section 6.1), including any
entity to which the charter of Seller may be transferred, to any
LLRE or to any other successor to the assets, liabilities or
operations of Seller. The Commitment may not be assigned or
otherwise transferred, in whole or in part, to any Person
(including, for the avoidance of doubt, any LLRE to which a
receiver has assigned all or a portion of Seller’s assets)
without the prior written consent of Purchaser (which may be
withheld in its sole discretion). In no event shall any
successor to Seller (including such an LLRE) be entitled to the
benefit of the Commitment without the prior written consent of
Purchaser. Seller and Conservator, for themselves and on behalf
of their permitted successors, covenant and agree not to
transfer or purport to transfer the Commitment in contravention
of the terms hereof, and any such attempted transfer shall be
null and void ab initio. It is the expectation of the
parties that, in the event Seller were placed into receivership
and an LLRE formed to purchase certain of its assets and assume
certain of its liabilities, the Commitment would remain with
Seller for the benefit of the holders of the
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debt of Seller not assumed by the LLRE.
6.3. Amendments; Waivers. This Agreement may
be waived or amended solely by a writing executed by both of the
parties hereto, and, with respect to amendments to or waivers of
the provisions of Sections 5.3, 6.2 and 6.11, the
Conservator; provided, however, that no such
waiver or amendment shall decrease the aggregate Commitment or
add conditions to funding the amounts required to be funded by
Purchaser under the Commitment if such waiver or amendment
would, in the reasonable opinion of Seller, adversely affect in
any material respect the holders of debt securities of Seller
and/or the
beneficiaries of Mortgage Guarantee Obligations, in each case in
their capacities as such, after taking into account any
alternative arrangements that may be implemented concurrently
with such waiver or amendment. In no event shall any rights
granted hereunder prevent the parties hereto from waiving or
amending in any manner whatsoever the covenants of Seller
hereunder.
6.4. Governing Law; Jurisdiction; Venue. This
Agreement and the Warrant shall be governed by, and construed in
accordance with, the federal law of the United States of America
if and to the extent such federal law is applicable, and
otherwise in accordance with the laws of the State of New York.
The Senior Preferred Stock shall be governed as set forth in the
terms thereof. Except as provided in section 6.1 and as
otherwise required by law, the United States District Court for
the District of Columbia shall have exclusive jurisdiction over
all civil actions arising out of this Agreement, the Commitment,
the Senior Preferred Stock and the Warrant, and venue for any
such civil action shall lie exclusively in the United States
District Court for the District of Columbia.
6.5. Notices. Any notices delivered pursuant
to or in connection with this Agreement shall be delivered to
the applicable parties at the addresses set forth below:
If to Seller:
c/o Federal
Housing Finance Authority
0000 X Xxxxxx, XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
If to Purchaser:
United States Department of the Treasury
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx XX 00000
Attention: Under Secretary for Domestic Finance
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with a copy to:
United States Department of the Treasury
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx XX 00000
Attention: General Counsel
If to Conservator:
Federal Housing Finance Authority
0000 X Xxxxxx, XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
All notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail. All
notices hereunder shall be effective upon receipt.
6.6. Disclaimer of Guarantee. This Agreement
and the Commitment are not intended to and shall not be deemed
to constitute a guarantee by Purchaser or any other agency or
instrumentality of the United States of the payment or
performance of any debt security or any other obligation,
indebtedness or liability of Seller of any kind or character
whatsoever.
6.7. Effect of Order; Injunction; Decree. If
any order, injunction or decree is issued by any court of
competent jurisdiction that vacates, modifies, amends,
conditions, enjoins, stays or otherwise affects the appointment
of Conservator as conservator of Seller or otherwise curtails
Conservator’s powers as such conservator (except in each
case any order converting the conservatorship to a receivership
under
Section 1367(a)
of the FHE Act), Purchaser may by written notice to Conservator
and Seller declare this Agreement null and void, whereupon all
transfers hereunder (including the issuance of the Senior
Preferred Stock and the Warrant and any funding of the
Commitment) shall be rescinded and unwound and all obligations
of the parties (other than to effectuate such rescission and
unwind) shall immediately and automatically terminate.
6.8. Business Day. To the extent that any
deadline or date of performance of any right or obligation set
forth herein shall fall on a day other than a Business Day, then
such deadline or date of performance shall automatically be
extended to the next succeeding Business Day.
6.9. Entire Agreement. This Agreement,
together with the Senior Preferred Stock and Warrant, contains
the entire agreement between the parties hereto with respect to
the transactions contemplated hereby and supersedes and cancels
all prior agreements, including, but not limited to, all
proposals, term sheets, statements, letters of intent or
representations, written or oral, with respect thereto.
6.10. Remedies. In the event of a breach by
Seller of any covenant or representation of Seller set forth
herein, Purchaser shall be entitled to specific performance (in
the case of a breach of
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covenant), damages and such other remedies as may be available
at law or in equity; provided, that Purchaser shall not
have the right to terminate the Commitment solely as a result of
any such breach, and compliance with the covenants and the
accuracy of the representations set forth in this Agreement
shall not be conditions to funding the Commitment.
6.11. Tax Reporting. Neither Seller nor
Conservator shall take, or shall permit any of their respective
successors or assigns to take, a position for any tax,
accounting or other purpose that is inconsistent with Internal
Revenue Service Notice
2008-76 (or
the regulations to be issued pursuant to such Notice) regarding
the application of Section 382 of the Internal Revenue Code
of 1986, as amended, a copy of which Notice has been provided to
Seller in connection with the execution of this Agreement.
6.12. Non-Severability. Each of the provisions
of this Agreement is integrated with and integral to the whole
and shall not be severable from the remainder of the Agreement.
In the event that any provision of this Agreement, the Senior
Preferred Stock or the Warrant is determined to be illegal or
unenforceable, then Purchaser may, in its sole discretion, by
written notice to Conservator and Seller, declare this Agreement
null and void, whereupon all transfers hereunder (including the
issuance of the Senior Preferred Stock and the Warrant and any
funding of the Commitment) shall be rescinded and unwound and
all obligations of the parties (other than to effectuate such
rescission and unwind) shall immediately and automatically
terminate.
[Signature Page Follows]
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