Exhibit 99.3
EXECUTION COPY
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AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Among
CDC MORTGAGE CAPITAL INC., as Buyer
NEW CENTURY MORTGAGE CORPORATION, as Seller
and
NC CAPITAL CORPORATION, as Seller
Dated as of May 10, 2002
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TABLE OF CONTENTS
Page
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1. APPLICABILITY ............................................ 1
2. DEFINITIONS .............................................. 1
3. INITIATION; TERMINATION .................................. 20
4. MARGIN AMOUNT MAINTENANCE ................................ 30
5. INCOME PAYMENTS .......................................... 30
6. REQUIREMENTS OF LAW ...................................... 31
7. SECURITY INTEREST ........................................ 33
8. PAYMENT, TRANSFER AND CUSTODY ............................ 34
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS .............. 35
10. SELLER'S REPRESENTATIONS ................................. 35
11. COVENANTS OF SELLER ...................................... 41
12. EVENTS OF DEFAULT ........................................ 51
13. REMEDIES ................................................. 53
14. INDEMNIFICATION AND EXPENSES ............................. 56
15. RECORDING OF COMMUNICATIONS .............................. 57
16. SINGLE AGREEMENT ......................................... 57
17. NOTICES AND OTHER COMMUNICATIONS ......................... 58
18. ENTIRE AGREEMENT; SEVERABILITY ........................... 58
19. NON-ASSIGNABILITY ........................................ 58
20. TERMINABILITY ............................................ 58
21. GOVERNING LAW ............................................ 59
22. SUBMISSION TO JURISDICTION; WAIVERS ...................... 59
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23. NO WAIVERS, ETC. ......................................... 60
24. SERVICING ................................................ 60
25. INTENT ................................................... 61
26. BUYER'S REPRESENTATIONS .................................. 62
27. NETTING .................................................. 63
28. PERIODIC DUE DILIGENCE REVIEW ............................ 63
29. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT .................. 64
30. MISCELLANEOUS ............................................ 65
31. CONFIDENTIALITY .......................................... 66
32. CONFLICTS ................................................ 66
33. SET-OFF. ................................................. 66
34. MOST FAVORED STATUS. ..................................... 67
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35. OBLIGATIONS JOINT AND SEVERAL. ........................... 67
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EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
SCHEDULE 2 Subsidiaries
SCHEDULE 3 Litigation
EXHIBIT I Transaction Request
EXHIBIT II Underwriting Guidelines
EXHIBIT III Form of Opinion Letter
EXHIBIT IV UCC Filing Jurisdictions
EXHIBIT V Form of Account Agreement
EXHIBIT VI Form of True Sale Certification
EXHIBIT VII-A Form of Seller's Release Letter
EXHIBIT VII-B Form of Warehouse Lender's Release Letter
EXHIBIT VIII Form of Servicer Notice
EXHIBIT IX Form of Request for Additional Transactions for Excess Margin
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AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
This is an AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as
of May 10, 2002, among NEW CENTURY MORTGAGE CORPORATION, a California
corporation ("NCMC"), NC CAPITAL CORPORATION, a California corporation ("NCCC",
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and together with NCMC, "Seller") and CDC MORTGAGE CAPITAL INC., a New York
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corporation ("Buyer").
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WHEREAS, the Seller and the Buyer are parties to that certain Master
Repurchase Agreement, dated as of July 19, 2001 (the "Original Repurchase
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Agreement"), between the Seller and the Buyer; and
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WHEREAS the Seller has requested Buyer to agree to amend certain
provisions of the Original Repurchase Agreement as set forth in this Amended and
Restated Master Repurchase Agreement. The Buyer is willing to agree to such
amendments, but only on the terms and subject to the conditions set forth in
this Amended and Restated Master Repurchase Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Sellers and the Buyer hereby agree as follows:
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
Seller agrees to transfer to Buyer Mortgage Loans against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to
Seller such Mortgage Loans at a date certain not later than 364 days after
the date of transfer, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and shall be
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governed by this Agreement, unless otherwise agreed in writing.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement in
the singular to have the same meanings when used in the plural and vice
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versa). Terms otherwise not defined herein shall have the meanings assigned
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thereto in the Custodial and Disbursement Agreement.
"Account Agreement" shall mean a letter agreement among NCCC, NCMC,
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Servicer, Buyer and the Bank substantially in the form of Exhibit V
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attached hereto.
"Act of Insolvency" shall mean, with respect to any Person, (i) the filing
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of a petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or
suffering any such petition or proceeding to be commenced by another which
is consented to, not timely contested or results in entry of an order for
relief which is not discharged within thirty (30) days; (ii) the seeking or
consenting to the
appointment of a receiver, trustee, custodian or similar official for
such Person or any substantial part of the property of such Person;
(iii) the appointment of a receiver, conservator, or manager for such
Person by any governmental agency or authority having the jurisdiction
to do so; (iv) the making or offering by such Person of a composition
with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such Person of its inability to pay
its debts or discharge its obligations as they become due or mature;
or (vi) that any governmental authority or agency or any person,
agency or entity acting or purporting to act under governmental
authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any
substantial part of the property of such Person, or shall have taken
any action to displace the management of such Person or to curtail its
authority in the conduct of the business of such Person.
"Additional Purchased Assets" shall mean Mortgage Loans or cash
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provided by Seller to Buyer or its designee pursuant to Section 4.
"Adjusted Leverage Ratio" shall mean on any date of determination, the
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ratio of (a) Total Liabilities to (b) Adjusted Tangible Net Worth.
"Adjusted Tangible Net Worth" shall mean on any date of determination,
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the Tangible Net Worth of Guarantor minus 25% of the amount by which
the book value of Junior Securitization Interests included in
calculating Tangible Net Worth exceeds Indebtedness of the type
described in Section 11(s)(4).
"Affiliate" shall mean with respect to any Person, any "affiliate" of
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such Person, as such term is defined in the Bankruptcy Code.
"Agreement" shall mean this Amended and Restated Master Repurchase
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Agreement, as the same may be further amended, supplemented or
otherwise modified in accordance with the terms hereof.
"ALTA" shall mean the American Land Title Association.
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"Appraised Value" shall mean the value set forth in an appraisal made
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in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Asset Schedule and Exception Report" shall have the meaning assigned
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thereto in the Deutsche Custodial and Disbursement Agreement.
"Asset Value" shall mean as of any date of determination with respect
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to each Eligible Asset, the lesser of (a) the Purchase Percentage
multiplied by the Market Value of such Mortgage Loan as of such date
of determination, and (b) the outstanding principal balance of such
Eligible Asset as of such date of determination; provided, that, the
following additional limitations on Asset Value shall apply:
(1) the aggregate Asset Value of Wet-Ink Mortgage Loans may not
exceed the Wet-Ink Sub-Limit at any time;
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(2) the aggregate Asset Value of Second Lien Mortgage Loans may
not exceed the Second Lien Sub-Limit at any time;
(3) the aggregate Asset Value of Second Lien Mortgage Loans with a
CLTV in excess of 100% shall not exceed the Second Lien CLTV
Sub-Limit at any time;
(4) the aggregate Asset Value of a single Mortgage Loan shall not
exceed the Mortgage Loan Sub-Limit;
(5) the aggregate Asset Value of Jumbo Mortgage Loans may not
exceed the Jumbo Sub-Limit at any time;
(6) the aggregate Asset Value of Jumbo(500) Mortgage Loans may not
exceed the Jumbo(500) Sub-Limit at any time;
(7) the aggregate Asset Value of Jumbo(750) Mortgage Loans may not
exceed the Jumbo(750) Sub-Limit at any time;
(8) The aggregate Asset Values of C Credit Mortgage Loans and C
Minus Credit Mortgage Loans may not exceed the C/C- Credit
Sub-Limit at any time;
(9) [Reserved];
(10) The aggregate Asset Value of Non-owner Occupied Mortgage Loans
may not exceed $25,000,000;
(11) The aggregate Asset Value of High Cost Mortgage Loans may not
exceed $10,000,000; and
(12) the Asset Value shall be deemed to be zero with respect to
each Mortgage Loan (i) in respect of which there is a breach
of a representation and warranty set forth in Schedule 1
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(assuming each representation and warranty is made as of the
date Asset Value is determined), (ii) in respect of which
there is a delinquency in the payment of principal and/or
interest which continues for a period in excess of twenty nine
(29) calendar days (without regard to any applicable grace
periods), (iii) which has not been repurchased by Seller by
the earlier to occur of (A) the Termination Date and (B) the
180th day after the date on which it is first purchased by
Buyer, (iv) which has been released from the possession of
Custodian under the Custodial and Disbursement Agreement to
Seller for a period in excess of ten (10) calendar days, (v)
which exceed the limitations on Asset Value set forth above or
(vi) which is a Wet-Ink Mortgage Loan, for which Custodian has
failed to receive the related Mortgage Documents by the
seventh (7/th/) Business Day following the applicable
Origination Date of such Wet-Ink Mortgage Loan.
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"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
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assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the
Mortgage to Buyer.
"Bank" shall mean U.S. Bank National Association, a national banking
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association, and its successors in interest, or such other depository
institution as may be acceptable to Buyer in its sole discretion, and
their respective successors in interest.
"Bank of America Financing Facility" shall mean the Master Repurchase
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Agreement dated as of May 10, 2002, as may be amended from time to time,
by and between New Century Funding A and Bank of America, N.A. and all
other documents or agreements executed in connection therewith, or
replacement facilities with substantially similar terms (including, but
not limited to, amounts and rates) with financial institutions approved by
Buyer.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
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amended from time to time.
"Basic Status Report and Exception Report" shall have the meaning assigned
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thereto in the US Bank Custodial Agreement.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
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(ii) a day on which banks in the State of New York (or state in which any
of Custodian, Disbursement Agent, Seller or Buyer is located) is
authorized or obligated by law or executive order to be closed.
"Buyer" shall mean CDC Mortgage Capital Inc., a New York corporation, and
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its successors in interest and assigns.
"C Credit Mortgage Loan" shall mean each Mortgage Loan originated in
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accordance with the Underwriting Guidelines criteria for "C" credit
mortgage loans.
"C/C- Credit Sub-Limit" shall mean an amount equal to $60,000,000.
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"C Minus Credit Mortgage Loans" shall mean each Mortgage Loan originated
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in accordance with the Underwriting Guidelines criteria for "C-" credit
mortgage loans.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
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such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Class" shall mean with respect to a Purchased Asset, the designation of
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such Purchased Asset as one or more of the following: (i) a Mortgage Loan,
(ii) a Wet-Ink Mortgage Loan, (iii) a Second Lien Mortgage Loan, (iv) a
Jumbo Mortgage Loan, (v) a Jumbo(500)
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Mortgage Loan, (vi) a Jumbo(750) Mortgage Loan, (vii) a C Credit Mortgage
Loan, (viii) a C Minus Credit Mortgage Loan, (ix) a Non-owner Occupied
Mortgage Loan, and/or (x) a High Cost Mortgage Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
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to time.
"Collection Account" shall mean the account established by the Bank
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subject to an Account Agreement, into which all Income shall be deposited.
"Combined Loan-to-Value Ratio or CLTV" shall mean with respect to any
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Second Lien Mortgage Loan, the sum of the original principal balance of
such Mortgage Loan and the outstanding principal balance of any related
first lien as of the date of origination of the Mortgage Loan, divided by
the lesser of the Appraised Value of the Mortgage Property as of the
Origination Date or the purchase price of the Mortgaged Property.
"Commonly Controlled Entity" shall mean an entity, whether or not
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incorporated, which is under common control with Seller within the meaning
of Section 4001 of ERISA or is part of a group which includes Seller and
which is treated as a single employer under Section 414 of the Code.
"Company Securitization Transaction" shall mean an issuance of
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Mortgage-backed Securities by NCCC, NCMC, or by SBRC, or any other
registered broker dealer, or an Affiliate of any of them, on behalf of
NCCC or NCMC, through a trust or other entity created by NCCC or NCMC,
SBRC or any other registered broker-dealer which Mortgage-backed
Securities are either secured (in whole or in part) by Mortgage Loans
originated or acquired by NCCC or NCMC or evidence the entire beneficial
ownership interest therein, and in connection with which one or more
Junior Securitization Interests are issued to NCCC or NCMC or any
Affiliate.
"Change of Control" shall mean the occurrence, after the Effective Date,
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of any of the following circumstances: (a) Guarantor not owning, directly
or indirectly, all of the issued and outstanding capital stock of NCMC; or
(b) any Person, or two or more Persons acting in concert, other than the
Management Shareholders, acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of Guarantor (or other securities convertible into such
securities) representing 35% or more of the combined voting power of all
securities of Guarantor entitled to vote in the election of directors; (c)
any Person, or two or more Persons acting in concert, other than the
Management Shareholders, acquiring by contract or otherwise, or entering
into a contract or arrangement which upon consummation will result in its
or their acquisition of and, control over securities of Guarantor (or
other securities convertible into such securities) representing 35% or
more of the combined voting power of all securities of Guarantor entitled
to vote in the election of directors; or (d) Xxxxxx Xxxx ceasing to be
Chairman and Chief Executive Officer of Guarantor.
"Confirmation" shall have the meaning specified in Section 3(c).
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"Countrywide Financing Facility" shall mean the Master Repurchase
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Agreement, dated as of July 28, 2000, and Annex I thereto, as may be
amended from time to time, among between Countrywide Warehouse Lending and
NC Residual Corporation II, and all other documents or agreements executed
in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with
financial institutions approved by Buyer.
"Custodial and Disbursement Agreement" shall mean either the US Bank
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Custodial Agreement or the Deutsche Custodial and Disbursement Agreement,
as applicable.
"Custodial Identification Certificate" shall have the meaning assigned
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thereto in the Custodial and Disbursement Agreement.
"Custodian" shall mean (i) U.S. Bank National Association, a national
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banking association, and its successors in interest, as custodian under
the US Bank Custodial Agreement; or (ii) Deutsche Bank National Trust
Company, a national banking association, and its successors in interest,
as custodian under the Deutsche Custodial and Disbursement Agreement, and
any successor Custodian under the Deutsche Custodial and Disbursement
Agreement, as applicable; provided that Buyer in its sole discretion may
terminate U.S. Bank National Association as custodian at any time after
August 15, 2002.
"Daily Leverage Ratio" shall mean on any date of determination, the ratio
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of (a) Total Liabilities of Guarantor and its Subsidiaries on such date to
(b) Tangible Net Worth of Guarantor and its Subsidiaries as of the last
day of the most recently completed month.
"Default" shall mean an Event of Default or an event that with notice or
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lapse of time or both would become an Event of Default.
"Deutsche Custodial and Disbursement Agreement" shall mean that custodial
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and disbursement agreement, dated as of May 10, 2002, by and among Buyer,
NCCC, NCMC and Custodian, as the same shall be modified and supplemented
and in effect from time to time.
"Disbursement Agent" shall mean Deutsche Bank National Trust Company, a
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national banking association, and its successors in interest, as
disbursement agent under the Custodial and Disbursement Agreement, and any
successor Disbursement Agent under the Custodial and Disbursement
Agreement.
"Dollars" and "$" shall mean lawful money of the United States of America.
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"Due Diligence Review" shall mean the performance by Buyer of any or all
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of the reviews permitted under Section 27 with respect to any or all of
the Mortgage Loans, as desired by Buyer from time to time.
"Early Termination Percentage" shall mean 25 basis points (0.25%) less
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0.02 basis points (0.02%) for each calendar month that has elapsed since
March 15, 2002.
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"Effective Date" shall mean the date upon which the conditions precedent
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set forth in Section 3(a)(1) shall have been satisfied.
"Electronic Transmission" shall mean the delivery of information in an
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electronic format acceptable to the applicable recipient thereof.
"Eligible Asset" shall mean a Mortgage Loan, including a Wet-Ink Mortgage
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Loan, (i) as to which the representations and warranties in Schedule 1
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attached hereto are true and correct, (ii) which is underwritten strictly
in accordance with the Underwriting Guidelines of Seller, and (iii) which
is secured by a Residential Dwelling.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that is
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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)(11) of the Code and the lien created under Section 302(f) of ERISA
and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Seller is a member.
"Eurodollar Rate" shall mean, with respect to each day a Transaction is
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outstanding, the rate per annum equal to the rate appearing at page 5 of
the Telerate Screen as one-month LIBOR at or about 9:00 a.m., New York
time, on such date (and if such date is not a Business Day, the Eurodollar
Rate in effect on the Business Day immediately preceding such date), and
if such rate shall not be so quoted, the average rate per annum at which
three mutually acceptable banks are offered Dollar deposits at or about
9:00 a.m., New York City time, on such date by prime banks in the
interbank eurodollar market where the eurodollar and foreign currency
exchange operations in respect of its Transactions are then being
conducted for delivery on such day for a period of thirty (30) days and in
an amount comparable to the amount of the Transactions to be outstanding
on such day. The Eurodollar Rate shall be reset by Buyer as described
above and Buyer's determination of Eurodollar Rate shall be conclusive
upon the parties absent manifest error on the part of Buyer
"Event of Default" has the meaning specified in Section 12.
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"Excess Margin" has the meaning specified in Section 3(r).
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"Existing Financing Facilities" shall mean the Bank of America Financing
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Facility, Countrywide Financing Facility, the Greenwich Financing
Facility, the Xxxxxx Xxxxxxx Financing Facility, the Salomon Financing
Facility, the Salomon NCMC Financing Facility, the Salomon REO Financing
Facility, the Salomon Residual Financing Facility, the US Bank Financing
Facility, the UBS Financing Facility and the USB Financing Facility.
"Xxxxxx Mae" shall mean the Federal National Mortgage Association, and its
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successors in interest.
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"Foreclosed Loan" shall mean a loan the property securing which has been
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foreclosed upon by Seller.
"Xxxxxxx Mac" shall mean the Federal Home Loan Mortgage Corporation, and
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its successors in interest.
"GAAP" shall mean generally accepted accounting principles as in effect
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from time to time in the United States.
"Governmental Authority" shall mean any nation or government, any state or
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other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction
over NCCC, NCMC, Guarantor, any of their respective Subsidiaries or any of
their properties.
"Greenwich Financing Facility" shall mean the Residual Financing Facility
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Agreement dated as of June 23, 1999, as may be amended from time to time,
by and between NCCC and Greenwich Capital Financial Products, Inc. and all
other documents or agreements executed in connection therewith, or
replacement facilities with substantially similar terms (including, but
not limited to, amounts and rates) with financial institutions approved by
Buyer.
"Guarantee" shall mean, as to any Person, any obligation of such Person
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directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness
against loss (whether by virtue of partnership arrangements, by agreement
to keep-well another Person, to purchase assets, goods, securities or
services, or to agree to take-or-pay arrangement or otherwise); provided
that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii)
obligations to make servicing advances for delinquent taxes and insurance,
or other obligations in respect of a Mortgaged Property, or other
principal and interest advances made in the ordinary course of servicing
the Mortgage Loans. The amount of any Guarantee of a Person shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative
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meanings.
"Guarantor" shall mean New Century Financial Corporation, a California
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corporation, and its successors in interest.
"Guaranty" shall mean the Guaranty, dated as of the date hereof, made by
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Guarantor in favor of Buyer, which shall be in form and substance
satisfactory to Buyer in all respects.
"Income" shall mean, with respect to any Mortgage Loan at any time, all
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collections and proceeds on or in respect of the Mortgage Loans,
including, without limitation, any principal thereof then payable and all
interest or other distributions payable thereon less any related servicing
fee(s) charged by Servicer.
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"Indebtedness" shall mean, for any Person: (a) obligations created, issued
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or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise,
to repurchase such Property from such Person); (b) obligations of such
Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within 90 days of the
date the respective goods are delivered or the respective services are
rendered; (c) Indebtedness of others secured by a Lien on the Property of
such Person, whether or not the respective Indebtedness so secured has been
assumed by such Person; (d) obligations (contingent or otherwise) of such
Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such
Person; (e) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (f) Indebtedness of others
Guaranteed by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person;
and (h) Indebtedness of general partnerships of which such Person is
secondarily or contingently liable (other than by endorsement of
instruments in the course of collection), whether by reason of any
agreement to acquire such indebtedness to supply or advance sums or
otherwise; and (i) Capital Lease Obligations of such Person.
"Initial Funding" shall mean the date upon which the conditions precedent
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set forth in Section 3(a)(2) shall have been satisfied.
"Interest Rate Protection Agreement" shall mean, with respect to any or all
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of the Mortgage Loans, any short sale of US Treasury securities, or futures
contract, or options related contract, or interest rate swap, cap or collar
agreement or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies and
acceptable to Buyer.
"Investment" shall mean with respect to any Person, any direct or indirect
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purchase or other acquisition by that Person of, or a beneficial interest
in, stock or other securities of any other Person, or any direct or
indirect loan, advance (other than advances to employees for moving and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by that Person to any other
Person, including all Indebtedness and accounts receivable from that other
Person which are not current assets or did not arise from sales to that
other Person in the ordinary course of business.
"Jumbo Mortgage Loans" shall mean each Mortgage Loan with a principal
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balance as of origination of more than $275,000.
"Jumbo Sub-Limit" shall mean an amount equal to $140,000,000
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"Jumbo(500) Mortgage Loans" shall mean each Mortgage Loan with a principal
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balance as of origination of more than $500,000 and less than or equal to
$750,000.
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"Jumbo(500) Sub-Limit" shall mean an amount equal to $80,000,000.
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"Jumbo(750) Mortgage Loans" shall mean shall mean each Mortgage Loan with a
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principal balance as of origination of more than $750,000.
"Jumbo(750) Sub-Limit" shall mean an amount equal to $40,000,000.
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"Junior Securitization Interests" shall mean a Mortgage-backed Security
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created in a Company Securitization Transaction that represents a
subordinated right to receive principal or interest payments on the
underlying Mortgage Loans (whether or not such subordination arises only
under particular circumstances).
"Late Payment Fee" has the meaning specified in Section 5(b).
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"Leverage Ratio" shall mean on any date of determination, the ratio of (a)
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Total Liabilities to (b) Tangible Net Worth.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest or
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similar encumbrance.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan, the
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ratio of the original outstanding principal amount of such Mortgage Loan at
the time of origination to the lesser of (a) the Appraised Value of the
related Mortgaged Property at origination of such Mortgage Loan and (b) if
the related Mortgaged Property was purchased within twelve (12) months of
the origination of such Mortgage Loan, the purchase price of the related
Mortgaged Property.
"Management Shareholders" shall mean Xxxxxx X. Xxxx, Xxxx X. Xxxxxxx, and
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Xxxxxx X. Xxxxxxxxx.
"Margin Base" shall mean the aggregate Asset Value of all Purchased Assets
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which are Eligible Assets.
"Margin Deficit" has the meaning specified in Section 4.
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"Market Value" shall mean, as of any date in respect of any Mortgage Loan,
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the price at which such Mortgage Loan could readily be sold as determined
in Buyer's sole discretion using its reasonable business judgment, which
price may be determined to be zero. Buyer's determination of Market Value
shall be conclusive upon the parties absent manifest error on the part of
Buyer.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
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Property, business, operations, financial condition or prospects of NCCC,
NCMC or Guarantor, (b) the ability of NCCC or NCMC to perform its
obligations under any of the Repurchase Documents to which it is a party,
(c) the validity or enforceability of any of the Repurchase Documents, (d)
the rights and remedies of Buyer under any of the Repurchase Documents, (e)
the timely payment of any amounts payable under the
-10-
Repurchase Documents, (f) the Asset Value of the Purchased Assets or (g)
the ability of Guarantor to perform its obligations under the Guaranty.
"Maximum Amount" shall mean $400,000,000.
--------------
"Xxxxxx Xxxxxxx Financing Facility" shall mean the Master Loan and Security
---------------------------------
Agreement dated December 1, 2000, as may be amended from time to time,
between NCCC and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital, Inc. and all
other documents or agreements executed in connection therewith, or
replacement facilities with substantially similar terms (including, but not
limited to, amounts and rates) with financial institutions approved by
Buyer.
"Mortgage" shall mean the mortgage, deed of trust or other instrument
--------
securing a Mortgage Note, which creates a first lien or second lien on a
fee simple Residential Dwelling securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the Custodial
-------------
and Disbursement Agreement.
"Mortgage Loan" shall mean a mortgage loan originated in accordance with
-------------
the Underwriting Guidelines which Custodian has been instructed to hold for
Buyer pursuant to the Custodial and Disbursement Agreement including any
Wet-Ink Mortgage Loan listed on a Transaction Request, and which Mortgage
Loan includes, without limitation, (i) a Mortgage Note and related
Mortgage, and (ii) all right, title and interest of Seller in and to the
Mortgaged Property covered by such Mortgage.
"Mortgage Loan Sub-Limit" shall mean $1,000,000.
-----------------------
"Mortgage Note" shall mean the original executed promissory note or other
-------------
evidence of the indebtedness of a Mortgagor with respect to a Mortgage
Loan.
"Mortgage-backed Security" shall mean a security (including, without
------------------------
limitation, a participation certificate) that is an interest in a pool of
Mortgage Loans or is secured by such an interest.
"Mortgaged Property" shall mean a fee simple interest in the real property
------------------
(including all improvements, buildings, fixtures, building equipment and
personal property thereon and all additions, alterations and replacements
made at any time with respect to the foregoing) and all other collateral
securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagee" shall mean the record holder of a Mortgage Note secured by a
---------
Mortgage.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
---------
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
------------------
Section 3(37) of ERISA to which contributions have been or are required to
be made by Seller or any ERISA Affiliate and that is covered by Title IV of
ERISA.
-11-
"NCCC" shall mean NC Capital Corporation, a California corporation, and its
----
successors in interest.
"NCMC" shall mean New Century Mortgage Corporation, a California
----
corporation, and its successors in interest.
"NCRC" shall mean NC Residual II Corporation, a Delaware corporation, and
----
its successors in interest.
"Net Worth" shall mean with respect to any Person, on any date of
---------
determination, the net worth of such Person as of such date, determined in
accordance with GAAP.
"Non-owner Occupied Mortgage Loans" shall mean each Mortgage Loan with
---------------------------------
respect to which the improvements on the Mortgaged Property are not
occupied by the owner of such Mortgaged Property.
"Non-Use Fee" has the meaning specified in Section 3(p).
-----------
"Origination Date" shall mean the date a Mortgage Loan is funded by any
----------------
originator and the proceeds are disbursed to a borrower under such Mortgage
Loan.
"Payment Calculation Date" shall mean the tenth (10/th/) day of each month.
------------------------
"Payment Date" shall mean two (2) Business Days after the Payment
------------
Calculation Date.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Periodic Advance Repurchase Payment" has the meaning specified in Section
-----------------------------------
5(b).
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
----
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any day a Transaction is
-----------------
outstanding or any other amount under this Agreement or any other
Repurchase Document that is not paid when due to Buyer at the stated
Repurchase Date or otherwise when due (a "Post-Default Day"), a rate per
annum on a 360 day per year basis during the period from and including the
due date to but excluding the date on which such amount is paid in full
equal to 4% per annum plus the Prime Rate on such Post-Default Day.
----
"Price Differential" means, with respect to any Transaction hereunder as of
------------------
any date, the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Purchase Price for such Transaction on a
360 day per year basis for the actual
-12-
number of days during the period commencing on (and including) the Purchase
Date for such Transaction and ending on (but excluding) the Repurchase Date
(reduced by any amount of such Price Differential previously paid by Seller
to Buyer with respect to such Transaction).
"Pricing Rate" shall mean a rate per annum equal to the sum of (a) the
------------
Eurodollar Rate plus (b) the Pricing Spread.
"Pricing Spread" shall mean the applicable rates per annum set forth below
--------------
for each type of Eligible Asset for each day during the related Interest
Period:
(b) Mortgage Loans (other than Wet-Ink Mortgage Loans), 0.95% (95)
basis points; and
(c) Wet-Ink Mortgage Loans, 1.25% (125) basis points.
"Prime Rate" shall mean the prime rate announced to be in effect from time
----------
to time, as published as the average rate in The Wall Street Journal.
--- ---- ------ -------
"Property" shall mean any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" shall mean any purchase agreement by and between NCCC
------------------
or NCMC and any third party, including without limitation, any Affiliate of
NCCC or NCMC, pursuant to which NCCC or NCMC has purchased assets
subsequently sold to Buyer hereunder.
"Purchase Date" shall mean the date on which Purchased Assets are
-------------
transferred by Seller to Buyer or its designee (including Custodian).
"Purchase Percentage" shall mean the applicable percentage set forth below
-------------------
for each type of Eligible Assets:
(a) Mortgage Loans (other than Wet-Ink Mortgage Loans), 98%; and
(b) Wet-Ink Mortgage Loans, 98%.
"Purchase Price" shall mean on each Purchase Date, the price at which
--------------
Purchased Assets are transferred by Seller to Buyer or its designee
(including Custodian) which shall equal the Asset Value for such Purchased
Assets on the Purchase Date.
"Purchased Assets" shall mean the Mortgage Loans sold by Seller to Buyer in
----------------
a Transaction, and any Additional Purchased Assets.
"Purchased Items" has the meaning specified in Section 7.
---------------
"Qualified Originator" means NCMC, any of its subsidiaries set forth on
--------------------
Schedule 2, or any other originator of Mortgage Loans acceptable to Buyer
in its sole discretion.
-13-
"Quarterly Average Leverage Ratio" shall mean for each three (3) month
--------------------------------
period ending on March 31, June 30, September 30 or December 31 of any year
during the term of this Agreement, the ratio of (a) the average daily
amount of Total Liabilities of Guarantor and its Subsidiaries outstanding
during such three (3) month period to (b) the average of the Tangible Net
Worth of Guarantor and its Subsidiaries at the end of each month during
such three (3) month period.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
----------------------
Governors of the Federal Reserve System (or any successor), as the same may
be modified and supplemented and in effect from time to time.
"REO Property" shall mean real property acquired by Seller, including a
------------
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by
deed in lieu of such foreclosure.
"REO Sub" shall mean New Century REO Corp., a California corporation.
-------
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(b) of ERISA or a successor provision thereof, other than those events
as to which the thirty day notice period is waived under subsections .13,
.14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615 or one or more successor
provision thereof.
"Repurchase Date" shall mean the date on which Seller is to repurchase the
---------------
Purchased Assets from Buyer as specified in the related Confirmation,
including any date determined by application of the provisions of Sections
3 or 13; which date shall be specified as "open" unless otherwise requested
by Seller and agreed by Buyer; provided that in no event shall the
Repurchase Date be in excess of 364 days after the Purchase Date.
"Repurchase Documents" shall mean this Agreement, the Custodial Agreement,
--------------------
the Custodial and Disbursement Agreement, the Guaranty and the Account
Agreement.
"Repurchase Obligations" shall have the meaning specified in Section 7(b).
----------------------
"Repurchase Price" means the price at which Purchased Assets are to be
----------------
transferred from Buyer or its designee (including Custodian) to Seller upon
termination of a Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase
Price and the Price Differential as of the date of such determination
decreased by all cash, Income and Periodic Advance Repurchase Payments
(including Late Payment Fees, if any) actually received by Buyer pursuant
to Sections 5(a) or 5(b), respectively.
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
-14-
"Residential Dwelling" shall mean any one of the following: (i) a detached
--------------------
single family dwelling, (ii) a two-to-four family dwelling, (iii) a unit in
a condominium project, (iv) a detached single family dwelling in a planned
unit development or (v) manufactured housing units. Mortgaged Properties
that consist of the following property types are not Residential Dwellings:
(a) co-operative units, (b) log homes, (c) earthen homes, (d) underground
homes, (e) mobile homes, and (f) any dwelling situated on more than ten
acres of property.
"Residual Finance Subsidiaries" shall mean (a) NC Residual Corporation, a
-----------------------------
Delaware corporation, as long as it is a wholly-owned Subsidiary of NCMC
and does not amend its Certificate of Incorporation as in effect on March
20, 1998, and (b) any other wholly-owned Subsidiary of NCMC or NCCC that,
pursuant to its Articles or Certificate of Incorporation, has a purpose
limited to the ownership of Junior Securitization Interests, the
establishment of one or more securitization trusts, issuing securities
backed by such Junior Securitization Interests, otherwise financing such
Junior Securitization Interests, and lawful activities incidental to and
necessary and convenient to the foregoing.
"Residual Financing Agreements" shall mean collectively, the Global Master
-----------------------------
Repurchase Agreement dated as of March 29, 2001 by and between Xxxxxxx
Xxxxx Barney, Inc., as Agent for Salomon Brothers International, Inc., and
NCCC, as amended, supplemented, restated or otherwise modified and in
effect from time to time, (ii) the Global Master Repurchase Agreement dated
as of March 29, 2001 by and between Xxxxxxx Xxxxx Xxxxxx, Inc., as Agent
for Salomon Brothers International, Inc., and NCRC, as amended,
supplemented, restated or otherwise modified and in effect from time to
time, and (iii) any similar agreements pursuant to which "Residual
Financing" (as defined in the Residual Security Agreement) is hereafter
provided to NCMC or NCCC or any Subsidiary of NCMC or NCCC.
"Residual Security Agreement" shall mean the Amended and Restated Security
---------------------------
Agreement dated as of April 30, 2000 by and among NCCC, NCRC and U.S. Bank
National Association, as collateral agent for (i) the Lenders (as defined
therein), (ii) U.S. Bancorp Leasing & Financial, successor in interest to
FBS Business Finance Corp. (the "Lessor"), as Lessor under any present or
future leases of equipment by the Lessor, as lessor, to NCCC, NCMC or
Guarantor, as lessee, or as lender under any present or future loan by the
Lessor, as lender, to NCCC, NCMC or Guarantor, as borrower, secured by
equipment and (iii) the Subordinated Noteholder (as defined therein).
"Responsible Officer" shall mean, as to any Person, the chief executive
-------------------
officer, the chief financial officer, the treasurer or the chief operating
officer of such Person.
"Risk Rating" shall mean the risk rating of a Mortgage Loan, as determined
-----------
using the Underwriting Guidelines.
"Restricted Payment" shall mean, with respect to any Person, collectively,
------------------
all dividends or other distributions of any nature (cash, securities,
assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without
limitation, warrants, options or rights therefor) issued by such Person,
-15-
whether such securities are now or may hereafter be authorized or
outstanding and any distribution in respect of any of the foregoing,
whether directly or indirectly.
"Salomon Financing Facility" shall mean TBMA/ISMA Global Master Repurchase
--------------------------
Agreement, as may be amended from time to time, by and between Xxxxxxx
Xxxxx Xxxxxx Inc. as agent for Salomon Brothers International Ltd. and NCCC
and Annex I thereto, dated as of March 29, 2001 and all other documents or
agreements executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"Salomon NCMC Financing Facility" shall mean the Letter Agreement, dated
-------------------------------
December 1, 2000, as may be amended from time to time, by and among Salomon
Brothers Realty Corp., NCCC and NCMC and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"Salomon REO Financing Facility" shall mean the Master Loan and Security
------------------------------
Agreement dated as of April 1, 2000, as may be amended from time to time,
by and between NCMC, NCCC and SBRC, and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"Salomon Residual Financing Facility" shall mean TBMA/ISMA Global Master
-----------------------------------
Repurchase Agreement, as may be amended from time to time, by and between
Xxxxxxx Xxxxx Xxxxxx Inc as Agent for Salomon Brothers International Ltd.
and NC Residual II Corporation and Annex I thereto, dated as of March 29,
2001 and all other documents or agreements executed in connection
therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial
institutions approved by Buyer; provided that amounts available under the
Salomon Residual Financing Facility may be reduced by up to $2,000,000 per
month and $9,000,000 per quarter in accordance with its terms.
"SBRC" shall mean Salomon Brothers Realty Corp., a Delaware corporation.
----
"Second Lien Mortgage Loans" shall mean an Eligible Asset secured by a lien
--------------------------
on the Mortgaged Property, subject to one prior lien on such Mortgaged
Property.
"Second Lien Sub-Limit" shall mean an amount equal to $40,000,000.
---------------------
"Second Lien CLTV Sub-Limit" shall mean with respect to Second Lien
--------------------------
Mortgage Loans with a Combined Loan to Value Ratio of greater than 100%,
$20,000,000.
"Security Agreement" shall mean with respect to any Mortgage Loan, any
------------------
contract, instrument or other document related to security for repayment
thereof (other than the related Mortgage and Mortgage Note), executed by
the Mortgagor and/or others in connection with such Mortgage Loan,
including without limitation, any security agreement, guaranty, title
insurance policy, hazard insurance policy, chattel mortgage,
-16-
letter of credit or certificate of deposit or other pledged accounts, and
any other documents and records relating to any of the foregoing.
"Seller" shall mean NCCC and NCMC.
------
"Seller Asset Schedule" shall have the meaning assigned thereto in the
---------------------
Custodial and Disbursement Agreement.
"Seller-Related Obligations" shall mean any obligations of NCCC or NCMC
--------------------------
hereunder and under any other arrangement between NCCC, NCMC or an
Affiliate of NCCC or NCMC on the one hand and Buyer or an Affiliate of
Buyer on the other hand.
"Servicer" shall have the meaning specified in Section 24.
--------
"Servicer Account" shall mean any account established by Servicer in
----------------
connection with the servicing of the Mortgage Loans.
"Servicing Agreement" has the meaning specified in Section 24.
-------------------
"Servicing Contract" shall mean a contract or agreement purchased by NCCC
------------------
or NCMC or entered into by NCCC or NCMC for its own account (and not as
nominee or subservicer), whether now existing or hereafter purchased or
entered into, pursuant to which NCCC or NCMC services Mortgage Loans or
Mortgage Loan pools for Persons other than itself or the other Seller.
"Servicing File" means with respect to each Mortgage Loan, the file
--------------
retained by Seller consisting of originals of all documents in the Mortgage
File which are not delivered to a Custodian and copies of all documents in
the Mortgage File set forth in Section 2 of the Custodial and Disbursement
Agreement.
"Servicing Records" has the meaning specified in Section 24.
-----------------
"Settlement Agent" shall mean, with respect to any Transaction, the entity,
----------------
which may be a title company, escrow company or attorney in accordance with
local law and practice in the jurisdiction where the related Wet-Ink
Mortgage Loan is being originated, which funds such Mortgage Loan with
amounts wired pursuant to the terms of an Existing Financing Facility.
"Sub-Limit" shall mean any of the Web-Ink Sub-Limit, the Second Lien
---------
Sub-Limit, the Second Lien CLTV Sub-Limit, the Mortgage Loan Sub-Limit, the
Jumbo Sub-Limit, the Jumbo(500) Sub-Limit, the Jumbo(750) Sub-Limit at any
time, and the C/C- Credit Sub-Limit.
"Subordinated Debt" shall mean any Indebtedness of NCCC or NCMC, now
-----------------
existing or hereafter created, incurred or arising, which is subordinated
in right of payment to the payment of all obligations hereunder in a manner
and to an extent that Buyer has approved in writing prior to the creation
of such Indebtedness.
-17-
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership, limited liability company or other entity of which at least a
majority of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of
whether or not at the time securities or other ownership interests of any
other class or classes of such corporation, partnership or other entity
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person
and one or more Subsidiaries of such Person.
"Tangible Net Worth" shall mean on any date of determination, the
------------------
consolidated Net Worth of Guarantor, NCCC or NCMC, as applicable, and its
respective Subsidiaries, minus the consolidated book value of all assets of
Guarantor, NCCC or NCMC, as applicable, and its respective Subsidiaries (to
the extent reflected as an asset in the balance sheet of Guarantor, NCCC or
NCMC, as applicable, or any such Subsidiary at such date) which are treated
as intangibles under GAAP, including, without limitation, such items as
deferred financing expenses, net leasehold improvements, good will,
trademarks, trade names, service marks, copyrights, patents, licenses and
unamortized debt discount and expense; provided, that Junior Securitization
Interests shall not be treated as intangibles for purposes of this
definition.
"Term Purchased Asset" shall mean any Purchased Asset for which Buyer and
--------------------
Seller shall have agreed that the Repurchase Date is not "open".
"Termination Date" shall mean the date which is 364 days from March 14,
----------------
2002 which shall be March 14, 2003 or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law, as may be extended pursuant to Section 3(n).
"Termination Fee" has the meaning specified in Section 3(p).
---------------
"Test Period" shall mean each consecutive three-month period commencing
-----------
with the three-month period from the Effective Date to the date that is
three months after the Effective Date, provided that with respect to the
first Test Period, for purposes of determining if a Non-Use Fee is payable,
the first Test Period shall begin on August 1, 2001 and end on the date
that is 3 months after the Effective Date.
"Total Liabilities" shall mean on any date of determination, the amount, on
-----------------
a consolidated basis, of the liabilities of Guarantor, NCCC or NCMC, as
applicable, and its respective Subsidiaries, determined in accordance with
GAAP, minus Subordinated Debt.
"Transaction" has the meaning specified in Section 1.
-----------
"Transaction Request" means a request from Seller to Buyer, in the form
-------------------
attached as Exhibit I hereto, to enter into a Transaction.
-18-
"True Sale Certification" shall mean a true sale certification in the form
-----------------------
of Exhibit VI attached hereto.
----------
"Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
-------------
confirming Custodian's possession of certain Mortgage Files which are held
by Custodian for the benefit of Buyer or the registered holder of such
trust receipt.
"UBS Financing Facility" shall mean the Committed Note Purchase Agreement
----------------------
dated as of May 10, 2002, as may be amended from time to time, by and
between New Century Funding I and UBS Real Estate Securities Inc. (formerly
known as Xxxxx Xxxxxx Real Estate Securities Inc.) and all other documents
or agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts
and rates) with financial institutions approved by Buyer; provided that the
UBS Financing Facility may be terminated or amounts available to Seller
thereunder may be reduced so long as it is a result of the repayment of all
amounts due thereunder other than as a result of an acceleration or a
default.
"Underwriting Guidelines" shall mean the underwriting guidelines delivered
-----------------------
by Seller to Buyer on or prior to the Effective Date and as may be modified
or supplemented from time to time thereafter as approved by Buyer in its
sole discretion attached hereto as Exhibit II.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code
----------------------- ---
as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Purchased
Items is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "Uniform Commercial Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"US Bank Custodial Agreement" shall mean that custodial agreement, dated as
---------------------------
of July 19, 2001 by and among Buyer, NCCC, NCMC and Custodian, as the same
shall be modified and supplemented and in effect from time to time.
"US Bank Financing Facility" shall mean the Subordinated Loan Agreement by
--------------------------
and among NCMC and US Bank National Association, dated April 28, 2000, as
may be amended from time to time, and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"USB Financing Facility" shall mean the Fifth Amended and Restated Credit
----------------------
Agreement dated as of May 23, 2001, as may be amended from time to time, by
and among NCCC, NCMC and U.S. Bank National Association as agent for the
lenders thereunder and all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar
terms (including, but not limited to, amounts and
-19-
rates) with financial institutions approved by Buyer; provided that on or
prior to July 31, 2001 Bank United may cease being a lender thereunder and
the commitment may be reduced by the amount of Bank United's commitment
amount.
"USB Settlement Account" shall mean the following account of U.S. Bank
----------------------
National Association as agent for the lenders under the USB Financing
Facility, U.S. Bank National Association, Minneapolis, Minnesota, ABA #
0000-0000-0 for credit to New Century Mortgage Corporation, Collateral
Account #1731-0097-1378.
"Wet-Ink Mortgage Loan" shall mean an Eligible Asset which is sold to Buyer
---------------------
within 6 Business Days of, the origination thereof by Seller, which
origination is in accordance with the Underwriting Guidelines and is funded
in part or in whole with cash advanced directly to the USB Settlement
Account or an escrow agent, Settlement Agent, or Warehouse Lender approved
by Buyer in its sole discretion.
"Wet-Ink Sub-Limit" shall mean an amount equal to (i) with respect to the
-----------------
first five (5) Business Days of each calendar month, $200,000,000, (ii)
with respect to the last three (3) Business Days of each calendar month,
$200,000,000 and (iii) at all other times, $160,000,000.
"Worth Purchase Agreement" shall mean the mortgage loan purchase agreement,
------------------------
dated as of July 1, 2001 between Worth Funding Incorporated and NCMC, as
the same shall be modified and supplemented and in effect from time to
time, pursuant to which NCMC buys certain of the Eligible Assets from Worth
Funding Incorporated.
3. INITIATION; TERMINATION
(a) Conditions Precedent to the Effective Date.
------------------------------------------
(1) The Effective Date hereof is subject to the satisfaction,
immediately prior to or concurrently therewith, of the conditions
precedent that Buyer shall have received from Seller any fees and
expenses payable hereunder (including, without limitation, the
fee required pursuant to Section 3(q)), and all of the following
documents, each of which shall be satisfactory in form and
substance to Buyer and its counsel:
(A) The following Repurchase Documents delivered to Buyer:
(1) Amended and Restated Master Repurchase
--------------------------------------
Agreement. This Amended and Restated Master Repurchase
Agreement duly completed and executed by the parties
thereto. In addition, Seller shall have taken such other
action as Buyer shall have requested in order to perfect the
security interests created pursuant to this Agreement;
(2) Deutsche Custodial and Disbursement Agreement.
---------------------------------------------
The Deutsche Custodial and Disbursement Agreement, duly
executed and delivered by NCMC, NCCC, Buyer and Deutsche
Bank
-20-
National Trust Company. In addition, Seller shall have taken
such other action as Buyer shall have requested in order to
transfer the Purchased Assets pursuant to this Agreement;
(3) UCC Financing Statements. Amendments to the UCC
------------------------
Financing Statements naming each of NCCC and NCMC as Debtor
and Buyer as Secured Party and describing the Purchased
Items;
(4) Opinions of Counsel. An opinion or opinions of
-------------------
outside counsel to each of NCCC, NCMC and Guarantor,
substantially in the form of Exhibit III;
-----------
(5) Organizational Documents. A good standing
------------------------
certificate and certified copies of the charter and by-laws
(or equivalent documents) of each of NCCC, NCMC and
Guarantor and of all corporate or other authority for NCCC,
NCMC or Guarantor, as applicable, with respect to the
execution, delivery and performance of the Repurchase
Documents to which it is a party and each other document to
be delivered by NCCC, NCMC or Guarantor from time to time in
connection herewith (and Buyer may conclusively rely on such
certificate until it receives notice in writing from NCCC,
NCMC or Guarantor, as applicable, to the contrary);
(6) Underwriting Guidelines. A copy of Seller's
-----------------------
current Underwriting Guidelines, and any material changes to
the Underwriting Guidelines made since the Underwriting
Guidelines were last delivered to Buyer;
(7) Servicing Agreement(s). Any Servicing Agreement,
----------------------
certified as a true, correct and complete copy of the
original;
(8) Consents and Waivers. Any and all irrevocable
--------------------
consents and waivers required under the Existing Financing
Facilities;
(9) UCC Amendments and Releases. Any and all
---------------------------
amendments or terminations of UCC financing statements
required by Buyer; and
(10) Other Documents. Such other documents as Buyer may
---------------
reasonably request, in form and substance reasonably
acceptable to Buyer.
(b) Conditions Precedent to all Transactions. Buyer's obligation to enter
----------------------------------------
into each Transaction (including the initial Transaction) is subject
to the satisfaction of the following further conditions precedent,
both immediately prior to entering into
-21-
such Transaction and also after giving effect to the consummation
thereof and the intended use of the proceeds of the sale:
(1) Seller shall have delivered a Transaction Request via Electronic
Transmission in accordance with the procedures set forth in
Section 3(c);
(2) no Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents;
(3) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall
not exceed the Maximum Amount;
(4) both immediately prior to the requested Transaction and also
after giving effect thereto and to the intended use thereof, the
representations and warranties made by Seller in Section 10,
shall be true, correct and complete on and as of such Purchase
Date in all material respects with the same force and effect as
if made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific
date, as of such specific date);
(5) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall
not exceed the Asset Value of all the Purchased Assets subject to
outstanding Transactions;
(6) subject to Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 28, Buyer shall have completed its
due diligence review of the Mortgage File for each Purchased
Asset, and such other documents, records, agreements,
instruments, mortgaged properties or information relating to such
Purchased Asset as Buyer in its sole discretion deems appropriate
to review and such review shall be satisfactory to Buyer in its
sole discretion;
(7) Buyer shall have received from Seller certified copies of any
Servicing Agreement relating to the Eligible Assets and Buyer
shall have reviewed and approved each such Servicing Agreement in
its sole discretion;
(8) Buyer shall have received all fees and expenses of counsel to
Buyer as contemplated by Section 14(b) which amount, at Buyer's
option, may be withheld from the sale proceeds of any Transaction
hereunder;
(9) Buyer shall have approved, in its sole discretion, all exceptions
to the Underwriting Guidelines;
(10) none of the following shall have occurred and/or be continuing:
(A) an event or events shall have occurred in the good faith
determination of Buyer resulting in the effective absence of a
"repo
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market" or comparable "lending market" for financing debt
obligations secured by mortgage loans or securities or an event
or events shall have occurred resulting in Buyer not being able
to finance Purchased Assets through the "repo market" or "lending
market" with traditional counterparties at rates which would have
been reasonable prior to the occurrence of such event or events;
or
(B) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed
by mortgage loans or an event or events shall have occurred
resulting in Buyer not being able to sell securities backed by
mortgage loans at prices which would have been reasonable prior
to such event or events; or
(C) there shall have occurred a material adverse change in
the financial condition of Buyer which affects (or can reasonably
be expected to affect) materially and adversely the ability of
Buyer to fund its obligations under this Agreement; or
(11) with respect to each Eligible Asset, Buyer shall have received
from Custodian on each Purchase Date an Asset Schedule and
Exception Report or Trust Receipt and Basic Status Report, as
applicable, dated the Purchase Date, duly completed and with
exceptions acceptable to Buyer in its sole discretion in respect
of Eligible Assets to be purchased hereunder on such Business
Day;
(12) Buyer shall have received from Seller a Warehouse Lender's
Release Letter substantially in the form of Exhibit VII-B hereto
-------------
(or such other form acceptable to Buyer) or a Seller's Release
Letter substantially in the form of Exhibit VII-A hereto (or such
-------------
other form acceptable to Buyer) covering each Eligible Asset to
be sold to Buyer;
(13) The aggregate requested Purchase Price of Eligible Assets that
are not Wet-Ink Mortgage Loans that Seller has requested Buyer
purchase pursuant to the Transaction Request is equal to or in
excess of $10,000,000;
(14) Buyer shall not have determined that the introduction of, or a
change in, any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyer has
made it unlawful, and no Governmental Authority shall have
asserted that it is unlawful, for Buyer to enter into
Transactions;
(15) With respect to Mortgage Loans for which U.S. Bank National
Association is or is to be Custodian, after August 15, 2002,
Buyer shall have approved such Transaction in its sole
discretion; and
(16) The Repurchase Date for such Transaction is not later than the
Termination Date.
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Each Transaction Request delivered by Seller hereunder shall constitute a
certification by each of NCCC and NCMC that all the conditions set forth in
this Section 3(b) have been satisfied (both as of the date of such notice
or request and as of the date of such purchase).
Each of NCCC and NCMC hereby request that Buyer, on each Business Day,
convert each Eligible Asset which is a Wet-Ink Mortgage Loan for which the
Mortgage File has been received by the Custodian in accordance with the
Custodial Agreement to a dry Mortgage Loan and this request shall
constitute a certification by each of NCCC and NCMC that all the conditions
set forth in this Section 3(b) have been satisfied (both as of the date
hereof and as of the date of such conversion).
(c)
(1) With respect to all Mortgage Loans for which Deutsche Bank
National Trust Company is or is to be the Custodian, Seller shall
request a Transaction by delivering to Custodian, Disbursement
Agent and Buyer via Electronic Transmission a request in the form
of Exhibit I attached hereto (a "Transaction Request") in
--------- -------------------
accordance with the timeframe set forth in Section 3(a) of the
Custodial and Disbursement Agreement. Such Transaction Request
shall describe the Purchased Assets in a Seller Asset Schedule
and set forth (i) the Purchase Date, (ii) the Purchase Price,
(iii) the Repurchase Date, (iv) the Pricing Rate applicable to
the Transaction, (v) the applicable Purchase Percentages and (vi)
additional terms or conditions not inconsistent with this
Agreement. Each such Transaction Request in respect of Eligible
Assets that are not Wet-Ink Mortgage Loans shall be for an
aggregate Purchase Price equal to or in excess of $10,000,000.
(2) With respect to all Mortgage Loans for which U.S. Bank National
Association is or is to be the Custodian, Seller shall request a
Transaction by delivering to Custodian and Buyer via Electronic
Transmission a request in the form of Exhibit I attached hereto
---------
(a "Transaction Request") no later than (i) 9:00 a.m. New York
-------------------
time on the requested Purchase Date with respect to the initial
purchase of each Eligible Asset that is not a Wet-Ink Mortgage
Loan and with respect to each Wet-Ink Mortgage Loan anticipated
to be purchased on such Purchase Date (with a final Seller Asset
Schedule to be delivered no later than 11:30 a.m. New York time
on the related Purchase Date) and (ii) 4:00 p.m. New York time on
the Business Day prior to the date a Wet-Ink Mortgage Loan
converts with respect to each Wet-Ink Mortgage Loan for which
Custodian has received the related Mortgage File and there are no
Fatal Exceptions with respect thereto and such Wet-Ink Mortgage
Loan is converting to a dry Mortgage Loan on the Purchase Date.
Such Transaction Request shall describe the Purchased Assets in a
Seller Asset Schedule and set forth (i) the Purchase Date, (ii)
the Purchase Price, (iii) the Repurchase Date, (iv) the Pricing
Rate applicable to the Transaction, (v) the applicable Purchase
-24-
Percentages and (vi) additional terms or conditions not
inconsistent with this Agreement. Each such Transaction Request
in respect of Eligible Assets that are not Wet-Ink Mortgage Loans
shall be for an aggregate Purchase Price equal to or in excess of
$10,000,000.
On each Purchase Date, Buyer shall forward to Seller a confirmation (a
"Confirmation") by Electronic Transmission setting forth with respect to
------------
each Transaction funded on such date, (1) the mortgage loan number, (2) the
Purchase Price for such Purchased Assets, (3) the Market Value of the
related Mortgage Loans as of the date of such Confirmation, (4) the
outstanding principal amount of the related Mortgage Loans, (5) the
Repurchase Date, (6) the Pricing Rate and (7) the Class designations of
such Purchased Assets. Buyer shall forward to Seller a revised Confirmation
by Electronic Transmission notifying Seller as to any changes made by Buyer
in the Pricing Spread, Purchase Percentage or Reduction Amount pursuant to
the terms hereof.
On each date that all the documents set forth in Section 2(a)(i) of
the Custodial and Disbursement Agreement are received by the Custodian with
respect to any Wet-Ink Mortgage Loan, and Custodian delivers to Buyer a
Trust Receipt attaching an Asset Schedule and Exception Report or Basic
Status Report and Exception Report, as applicable, with respect to such
Eligible Assets, Buyer shall forward to Seller a new Confirmation by
Electronic Transmission setting forth the following information, updated to
reflect the revised Pricing Rate, and, if applicable, Market Value as a
result of the conversion of such Mortgage Loan, (1) the mortgage loan
number, (2) the Purchase Price for such Purchased Assets, (3) the Market
Value of the related Mortgage Loans, (4) the outstanding principal amount
of the related Mortgage Loans, (5) the Repurchase Date, (6) the Pricing
Rate and (7) the Class designations of such Purchased Assets.
In the event Seller disagrees with any terms of the Confirmation,
Seller shall notify Buyer in writing of such disagreement within one (1)
Business Day after receipt of such Confirmation unless a corrected
Confirmation is sent by Buyer. An objection sent by Seller must state
specifically that it is an objection, must specify the provision(s) being
objected to by Seller, must set forth such provision(s) in the manner that
Seller believes they should be stated, and must be received by Buyer no
more than one (1) Business Day after the Confirmation was received by
Seller.
(d) Any Confirmation by Buyer shall be deemed to have been received by
Seller on the date actually received by Seller.
(e) Except as set forth in Section 3(c), each Confirmation, together with
this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to
which the Confirmation relates, and Seller's acceptance of the related
proceeds shall constitute Seller's agreement to the terms of such
Confirmation. It is the intention of the parties that each
Confirmation shall not be separate from this Agreement but shall be
made a part of this Agreement.
-25-
(f) On the Repurchase Date, termination of a Transaction will be effected
by transfer to Seller or its designee of the Purchased Assets (and any
Income in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to
Section 5) which amount shall be netted against the simultaneous
receipt of the Repurchase Price by Buyer. To the extent a net amount
is owed to one party, the other party shall pay such amount to such
party. Seller is obligated to obtain the Mortgage Files from Buyer or
its designee (including Custodian) at Seller's expense on the
Repurchase Date.
(g) Subject to the terms and conditions of this Agreement, during the term
of this Agreement Seller may sell to Buyer, repurchase from Buyer and
resell to Buyer Eligible Assets hereunder.
(h) In no event shall a Transaction be entered into when any Default or
Event of Default has occurred and is continuing or when the Repurchase
Date for such Transaction would be later than the Termination Date.
(i) With respect to all Mortgage Loans for which Deutsche Bank National
Trust Company is or is to be the Custodian, with respect to each
Eligible Asset that is not a Wet-Ink Mortgage Loan, Seller shall
deliver to Custodian the Mortgage File pertaining to each Eligible
Asset to be purchased by Buyer no later than the time set forth in the
Custodial and Disbursement Agreement. With respect to all Mortgage
Loans for which U.S. Bank National Association is or is to be the
Custodian, with respect to each Eligible Asset that is not a Wet-Ink
Mortgage Loan, no later than 12:00 noon, New York time, two (2)
Business Days prior to the requested Purchase Date (or such lesser
time as Custodian and Seller may agree), Seller shall deliver to
Custodian the Mortgage File, as applicable, pertaining to each
Eligible Asset to be purchased by Buyer.
(j)
(1) With respect to all Mortgage Loans for which Deutsche Bank
National Trust Company is or is to be the Custodian, with respect
to each Eligible Asset that is not a Wet-Ink Mortgage Loan,
pursuant to the Custodial and Disbursement Agreement, Custodian
shall deliver to Buyer and Seller an Asset Schedule and Exception
Report with respect to the Eligible Assets which Seller has
requested Buyer purchase on such Purchase Date, and no later than
5 p.m., New York City time, on each Purchase Date, Custodian
shall deliver to Buyer a Trust Receipt in respect of all such
Eligible Assets purchased by Buyer on such Purchase Date. Subject
to the provisions of this Section 3 and Section 11 of the
Custodial and Disbursement Agreement, the Purchase Price for each
Eligible Asset that is not a Wet-Ink Mortgage Loan will be made
available to Seller by Disbursement Agent transferring, the
aggregate amount of such Purchase Price in accordance with the
Custodial and Disbursement Agreement.
-26-
(2) With respect to all Mortgage Loans for which U.S. Bank National
Association is or is to be the Custodian, with respect to each
Eligible Asset that is not a Wet-Ink Mortgage Loan, pursuant to
the Custodial Agreement, Custodian shall deliver to Buyer and
Seller, by no later than 11:30 a.m., New York time on a Purchase
Date, a Trust Receipt in respect of all such Eligible Assets
purchased by Buyer on such Purchase Date. Subject to the
provisions of this Section 3, the Purchase Price for each
Eligible Asset which is not a Wet-Ink Mortgage Loan will then be
made available to Seller by Buyer transferring via wire transfer,
in the aggregate amount of such Purchase Price in funds
immediately available pursuant to wire instructions set forth in
the Transaction Request (subject to the purchase limits set forth
herein). Pursuant to the Custodial Agreement, Custodian shall
deliver to Buyer a Basic Status Report and Exception Report no
later than 11:00 a.m. New York time on each Purchase Date.
(k)
(1) With respect to all Mortgage Loans for which Deutsche Bank
National Trust Company is or is to be the Custodian, subject to
the provisions of this Section 3 and Section 11 of the Custodial
and Disbursement Agreement, the Purchase Price for each Eligible
Asset which is a Wet-Ink Mortgage Loan will then be made
available to Seller by Disbursement Agent transferring the
aggregate amount of such Purchase Price in accordance with the
Custodial and Disbursement Agreement. Seller shall deliver the
Mortgage File related thereto to Custodian, for receipt by
Custodian no later than seven (7) Business Days following the
Origination Date of such Wet-Ink Mortgage Loan.
(2) With respect to all Mortgage Loans for which U.S. Bank National
Association is or is to be the Custodian, with respect to each
Eligible Asset that is a Wet-Ink Mortgage Loan, pursuant to the
Custodial Agreement, Custodian shall deliver to Buyer and Seller,
by no later than 11:30 a.m., New York time on a Purchase Date, a
Trust Receipt in respect of all such Wet-Ink Mortgage Loans
purchased by Buyer on such Purchase Date. Subject to the
provisions of this Section 3, the Purchase Price for each
Eligible Asset which is a Wet-Ink Mortgage Loan will then be made
available to Seller by Buyer transferring, via wire transfer, to
the USB Settlement Account, in the aggregate amount of such
Purchase Price in funds immediately available to the USB Account.
Seller shall deliver the Mortgage File related thereto to
Custodian, for receipt by Custodian no later than seven (7)
Business Days following the Origination Date of such Wet-Ink
Mortgage Loan.
(l) Seller may repurchase any individual Purchased Asset without penalty
or premium, but subject to the last sentence of this Section 3(l), on
any date. The Repurchase Price payable for the repurchase of any such
Purchased Asset shall be reduced as provided in Section 5(d). If
Seller intends to make such a repurchase,
-27-
Seller shall give one (1) Business Day's prior written notice thereof
to Buyer, designating the Purchased Assets to be repurchased. If such
notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, and, on receipt, such amount
shall be applied to the Repurchase Price for the designated Purchased
Assets. The amount of the original Purchase Price of the Purchased
Assets thus repurchased shall be available for subsequent Transactions
subject to the terms of this Agreement. If any Term Purchased Asset is
repurchased on any date other than the Repurchase Date for such Term
Purchased Asset, Seller shall pay to Buyer any amount determined by
Buyer in its sole discretion, exercised in good faith, as necessary to
compensate Buyer for any additional losses, costs or expenses which it
may reasonably incur as a result of such repurchase, including,
without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by
Buyer to fund or maintain such Transaction.
(m) [Reserved]
(n) At the request of Seller made at least 90 days, but in no event
earlier than 360 days, prior to the then current Termination Date,
Buyer may in its sole discretion extend the Termination Date for a
period of 364 additional days or such other period to be determined by
Buyer in its sole discretion by giving written notice of such
extension to Seller no later than sixty (60) days after Buyer's
receipt of Seller's request. Any failure by Buyer to deliver such
notice of extension shall be deemed to be Buyer's determination not to
extend the then current Termination Date.
(o) [Reserved]
In the event Seller fails to maintain the average aggregate principal
balance of Transactions outstanding hereunder for any Test Period
equal to at least $200,000,000, Seller agrees to pay to Buyer on the
fifth (5/th/) Business Day of the next succeeding calendar month a
non-use fee (the "Non-Use Fee") equal to 25 basis points (0.25%) per
-----------
annum of the amount equal to the Maximum Amount less the average
aggregate principal balance of Transactions outstanding hereunder over
such Test Period; provided that the Seller shall not be required to
pay such Non-Use Fee if, during the applicable Test Period, the
Buyer's determination of Market Value resulted in Purchase Prices with
respect to a requested Transaction during such Test Period equal to
less than 99% of the outstanding principal balance of the Eligible
Assets Seller requested Buyer purchase during such Test Period. No
Non-Use Fee shall be payable by Seller if Buyer does not purchase any
Eligible Assets during such Test Period due to the occurrence of any
event set forth in Section 3(b)(10). In addition, in the event Seller
terminates this Agreement in accordance with Section 20, Seller shall
pay to Buyer on the fifth (5/th/) Business Day of the next succeeding
calendar month a termination fee (the "Termination Fee") equal to a
---------------
percentage per annum equal to the Early Termination Percentage,
calculated based on the actual number of days remaining and assuming a
360 day year, of the Maximum Amount for the period
-28-
commencing on the date of such termination and ending on the original
Termination Date, as may have been extended pursuant to Section 3(n);
provided, however, that if Buyer assigns its obligation to purchase
Eligible Assets from Seller under this Agreement, no Termination Fee
will be payable by Seller in the event Seller terminates this
Agreement in accordance with Section 20. All such payments pursuant to
this clause (p) shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to Buyer at the
account set forth in Section 8(a) hereof.
(p) Seller agrees to pay to Buyer on or prior to the Effective Date a
facility fee equal to 12.5 basis points (0.125%) per annum of the
Maximum Amount, such payment to be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer
at the account set forth in Section 8(a) hereof.
(q) With respect to Mortgage Loans held by Deutsche Bank National Trust
Company, on any day on which the Margin Base for such Mortgage Loans
exceeds the aggregate outstanding Purchase Price of all Transactions
with respect to such Mortgage Loans, so long as no Default or Event of
Default has occurred and is continuing:
(1) Seller may prepare a Request for Additional Transactions for
Excess Margin in the form of Exhibit IX attached hereto ("Request
---------- -------
for Additional Transactions for Excess Margin"), (A) specifying
---------------------------------------------
(i) the increase in Purchase Price for all outstanding
Transactions and the requested Purchase Date, (ii) the Excess
Margin with respect to all outstanding Transactions before giving
effect to the requested Transaction, (iii) the remaining Excess
Margin after giving effect to the requested Transaction, and (iv)
the aggregate outstanding Purchase Price of the Transactions
after giving effect to the requested Transaction, and (B)
including a certification that, upon the consummation of the
additional Transactions, the Margin Base will be equal to or
greater than the aggregate outstanding Purchase Price of all
Transactions, and the excess of the Margin Base over the
aggregate outstanding Purchase Price, after giving effect to the
Transaction, shall be the "Excess Margin".
-------------
(2) Seller shall transmit via Electronic Transmission the Request for
Additional Transactions for Excess Margin to Disbursement Agent
and Buyer prior to 12:00 noon, New York City time, on the
requested Purchase Date. Upon confirming that the Request for
Additional Transactions for Excess Margin correctly reflects the
information set forth in Section 3(r)(1) and that, after giving
effect to the requested Transaction, the amount of the Margin
Base would be equal to or greater than the aggregate outstanding
Purchase Prices of all Transactions, Buyer shall cause
Disbursement Agent to remit the additional Purchase Price in the
amount set forth in such Request for Additional Transactions for
Excess Margin and send a revised Confirmation with respect to
such Purchased Assets. In the event that Buyer's assessment of
the Margin Base would
-29-
alter the information set forth in any Request for Additional
Transactions for Excess Margin, Buyer shall promptly notify
Seller in writing of such assessment.
(3) Buyer shall not be obligated to cause Disbursement Agent to remit
the additional Purchase Price requested pursuant to a Request for
Additional Transactions for Excess Margin which (i) Buyer
reasonably determines is based on erroneous information or would
result in a Transaction other than in accordance with the terms
of this Agreement, or (ii) does not reflect Buyer's current
determination of Market Value as provided in the definition
thereof.
4. MARGIN AMOUNT MAINTENANCE
(a) If at any time the Margin Base is less than the aggregate Purchase
Price for all outstanding Transactions (a "Margin Deficit"), then
--------------
Buyer may by notice to Seller (as such notice is more particularly set
forth below, a "Margin Deficit Notice"), require Seller to transfer to
---------------------
Buyer or its designee (including Custodian) cash or Eligible Assets
("Additional Purchased Assets") so that the aggregate Asset Value of
---------------------------
the Purchased Assets, including any such Additional Purchased Assets,
will thereupon equal or exceed the aggregate Purchase Prices for such
Purchased Assets. If Buyer delivers a Margin Deficit Notice to Seller
on or prior to 6 p.m. (New York time) on any Business Day, then Seller
shall transfer Additional Purchased Assets to Buyer no later than 5
p.m. (New York time) the following Business Day. In the event Buyer
delivers a Margin Deficit Notice to Seller after 6 p.m. (New York
time) on any Business Day, then such Margin Deficit Notice shall be
deemed to have been delivered on the following Business Day and Seller
shall be required to transfer Additional Purchased Assets no later
than 5 p.m. (New York time) on the subsequent Business Day. All cash
transferred to Buyer pursuant to this Section 4(a) shall be deposited
in the account set forth in Section 8(a) hereof and shall be deemed to
reduce the aggregate Purchase Price with respect to all outstanding
Transactions.
(b) Buyer's election, in its sole and absolute discretion, not to deliver
a Margin Deficit Notice at any time there is a Margin Deficit shall
not in any way limit or impair its right to deliver a Margin Deficit
Notice at any time a Margin Deficit exists.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment
date on the Purchased Assets subject to that Transaction such Income
shall be the property of Buyer. Buyer agrees that until a Default or
an Event of Default has occurred and Buyer otherwise directs as
contemplated in each Servicer Notice, each Servicer that is not Seller
shall be permitted to continue to remit Income in accordance with the
respective Servicing Agreement. In the event that Seller is the
Servicer of any Mortgage Loans, Buyer agrees that until a Default or
an Event
-30-
of Default has occurred, Seller shall be permitted to continue to
remit or retain Income with respect to such Mortgage Loans in
accordance with its current existing business practice. Upon notice of
a Default or an Event of Default to Seller hereunder or to Servicer
pursuant to a Servicer Notice, Seller shall, and pursuant to the
Servicer Notice, Servicer shall be required to, deposit promptly all
Income in a deposit account (the title of which shall indicate that
the funds therein are being held in trust for Buyer) (the "Collection
----------
Account") with the Bank and which is subject to the Account Agreement.
-------
All funds in the Collection Account may be withdrawn by Buyer and
applied as determined by Buyer. Seller may not give any instruction
with respect to the Collection Account after a Default or an Event of
Default.
(b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Assets, Seller shall pay
to Buyer the accreted value of the Price Differential (less any amount
of such Price Differential previously paid by Seller to Buyer) of each
Transaction through but not including the Payment Calculation Date
(each such payment, a "Periodic Advance Repurchase Payment") on each
-----------------------------------
Payment Date. Buyer shall deliver to Seller, via Electronic
Transmission, notice of the required Periodic Advance Repurchase
Payment on or prior to the second Business Day preceding each Payment
Date. If Seller fails to make all or part of the Periodic Advance
Repurchase Payment by 5:00 p.m., New York City time, on the Payment
Date, Seller shall be obligated to pay to Buyer (in addition to, and
together with, the Periodic Advance Repurchase Payment) interest on
the unpaid amount of the Periodic Advance Repurchase Payment at a rate
per annum equal to the Post-Default Rate (the "Late Payment Fee")
----------------
until the overdue Periodic Advance Repurchase Payment is received in
full by Buyer.
(c) Seller shall hold or cause to be held for the benefit of, and in trust
for, Buyer all income, including without limitation all Income
received by or on behalf of Seller with respect to such Purchased
Assets. All such Income shall be held in trust for Buyer, shall
constitute the property of Buyer and shall not be commingled with
other property of Seller, any affiliate of Seller or the applicable
Servicer except as expressly permitted above in this Section 5. Funds
deposited in the Collection Account during any month shall be held
therein, in trust for Buyer.
(d) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Advance Repurchase Payments
actually received by Buyer for such Transaction pursuant to Sections
5(a) and 5(b) as of the applicable Repurchase Date, respectively,
excluding any Late Payment Fees paid pursuant to Section 5(b); it
being understood that the Late Payment Fees are properties of Buyer
that are not subject to offset against the Repurchase Price.
6. REQUIREMENTS OF LAW
(a) If any Requirement of Law (other than with respect to any amendment
made to Buyer's certificate of incorporation and by-laws or other
organizational or
-31-
governing documents) or any change in the interpretation or
application thereof or compliance by Buyer with any request or
directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date
hereof:
(1) shall subject Buyer to any tax of any kind whatsoever with
respect to this Agreement or any Transaction (excluding net
income taxes) or change the basis of taxation of payments to
Buyer in respect thereof;
(2) 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, 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 Eurodollar Rate
hereunder;
(3) 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,
continuing or maintaining any Transaction or to reduce any amount due or
owing hereunder in respect thereof, then, in any such case, Seller shall
promptly pay Buyer such additional amount or amounts as calculated by Buyer
in good faith as will compensate Buyer for such increased cost or reduced
amount receivable.
(b) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law (other than with respect to any amendment made
to Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or
in the interpretation or application thereof or compliance by Buyer or
any corporation controlling Buyer with any request or directive
regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority made subsequent to the date hereof
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 (taking into
consideration Buyer's or such corporation's policies with respect to
capital adequacy) by an amount deemed by Buyer to be material, then
from time to time, Seller shall promptly pay to Buyer such additional
amount or amounts as will compensate Buyer for such reduction.
(c) Any payments made by Seller to Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however,
that if Seller shall be required by law to deduct or withhold any
taxes from any sums payable to Buyer, then Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant
authority in accordance with applicable law, (B) pay to Buyer the sum
that would have been payable had such deduction or withholding not
been made, and (C) at the time the Price Differential is paid, pay to
Buyer all additional
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amounts as specified by Buyer to preserve the after-tax yield Buyer
would have been received had such tax not been imposed.
(d) If Buyer becomes entitled to claim any additional amounts pursuant to
this Section, (i) it shall promptly notify Seller of the event by
reason of which it has become so entitled and (ii) at the sole option
of Buyer, (x) Buyer may terminate this Agreement and Seller shall not
be required to pay any Termination Fee or (y) this Agreement shall
continue in full force and effect, but, Seller shall not be required
to pay any Non-Use Fee with respect to each Test Period during which
Buyer is entitled to such additional amounts solely under this
Section. A certificate as to any additional amounts payable pursuant
to this Section submitted by Buyer to Seller shall be conclusive in
the absence of manifest error.
7. SECURITY INTEREST
(a) Each of the following items or types of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Purchased Items": all
---------------
Mortgage Loans, all rights under each Purchase Agreement (but not the
obligations thereunder), all rights of NCMC under the Worth Purchase
Agreement with respect to Mortgage Loans originated by Worth Funding
Incorporated, all Mortgage Files, including without limitation all
promissory notes, all Servicing Records relating to the Mortgage Loans
(as defined in Section 24(c)), all Servicing Agreements relating to
the Mortgage Loans and any other collateral pledged or otherwise
relating to such Mortgage Loans, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and
other books and records relating thereto, all mortgage guaranties and
insurance (issued by governmental agencies or otherwise) and any
mortgage insurance certificate or other document evidencing such
mortgage guaranties or insurance relating to any Mortgage Loan, all
servicing fees to which such Seller is entitled and servicing and
other rights relating to the Mortgage Loans, all Servicer Accounts
established pursuant to any Servicing Agreement and all amounts on
deposit therein, from time to time, all Purchase Agreements or other
agreements or contracts relating to, constituting, or otherwise
governing, any or all of the foregoing to the extent they relate to
the Purchased Assets including the right to receive principal and
interest payments with respect to the Purchased Assets and the right
to enforce such payments, the Collection Account and all monies from
time to time on deposit in the Collection Account, all "general
intangibles", "accounts", "chattel paper", "deposit accounts" and
"investment property" as defined in the Uniform Commercial Code as in
effect from time to time relating to or constituting any and all of
the foregoing, and any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(b) Buyer and Seller intend that the Transactions hereunder be sales to
Buyer of the Purchased Assets and not loans from Buyer to Seller
secured by the Purchased Assets. However, in order to preserve Buyer's
rights under this Agreement in the
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event that a court or other forum recharacterizes the Transactions
hereunder as loans and as security for the performance by Seller of
all of Seller's obligations to Buyer hereunder and the Transactions
entered into hereunder ("Repurchase Obligations") and the
----------------------
Seller-Related Obligations, each of NCCC and NCMC hereby assigns,
pledges and grants a security interest in all of its right, title and
interest in, to and under the Purchased Items and Purchased Assets to
Buyer to secure the Repurchase Obligations and Seller-Related
Obligations, including without limitation the repayment of all amounts
owing to Buyer hereunder. The assignment, pledge and grant of security
interest contained herein shall be, and each of NCCC and NCMC hereby
represents and warrants to Buyer that it is, a first priority
perfected security interest. Each of NCCC and NCMC agrees to xxxx its
computer records and tapes to evidence the interests granted to Buyer
hereunder. All Purchased Items shall secure the payment of all
obligations of Seller now or hereafter existing under this Agreement,
including, without limitation, Seller's obligation to repurchase
Purchased Assets, or if such obligation is so recharacterized as a
loan, to repay such loan, for the Repurchase Price and to pay any and
all other amounts owing to Buyer hereunder.
(c) Pursuant to the Custodial and Disbursement Agreement, Custodian shall
hold the Mortgage Files as exclusive bailee and agent for Buyer
pursuant to the terms of the Custodial and Disbursement Agreement and
shall deliver to Buyer Trust Receipts each to the effect that
Custodian has reviewed such Mortgage Files in the manner and to the
extent required by the Custodial and Disbursement Agreement and
identifying any deficiencies in such Mortgage Files as so reviewed.
8. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds to
be made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer
at the following account maintained by Buyer; Account No. GLA 111569
SER, for the account of CDC Mortgage Capital, Inc., Bank of New York,
ABA No. 000000000, Attn: Xxxx Xxxxxxx not later than 3 p.m., New York
City time, on the date on which such payment shall become due (and
each such payment made after such time shall be deemed to have been
made on the next succeeding Business Day). Notwithstanding the
preceding sentence, on each Repurchase Date, Seller shall remit
payment of the Repurchase Price to the Settlement Account in
accordance with Section 11 of the Custodial Agreement. Seller
acknowledges that it has no rights of withdrawal from the foregoing
account.
(b) On the Purchase Date for each Transaction, ownership of the Purchased
Assets shall be transferred to Buyer or its designee (including
Custodian) against the simultaneous transfer of the Purchase Price to
or on behalf of Seller not later than 6 p.m., New York City time,
simultaneously with the delivery to Custodian of the Purchased Assets
relating to each Transaction in accordance with the terms hereof and
of the Custodial and Disbursement Agreement. Each of NCCC and NCMC
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hereby sells, transfers, conveys and assigns to Buyer or its designee
(including Custodian) without recourse, but subject to the terms of
this Agreement, all the right, title and interest of NCCC and NCMC, as
applicable, in and to the Purchased Assets together with all right,
title and interest in and to the proceeds of any related Purchased
Items.
(c) In connection with such sale, transfer, conveyance and assignment, on
or prior to each Purchase Date, Seller shall deliver or cause to be
delivered and released to Buyer or its designee (including Custodian)
(i) the Custodial Identification Certificate and (ii) the documents
identified in the Custodial and Disbursement Agreement.
(d) Any Mortgage Files not delivered to Buyer or its designee (including
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 Mortgage File and the originals of the
Mortgage File not delivered to Buyer or its designee (including
Custodian). The possession of the Mortgage File by Seller or its
designee is at the will of Buyer for the sole purpose of servicing the
related Purchased Asset, and such retention and possession by Seller
or its designee is in a custodial capacity only. Each Mortgage File
retained or held by Seller or its designee shall be segregated on
Seller's books and records from the other assets of Seller or its
designee and the books and records of Seller or its designee shall be
marked appropriately to reflect clearly the sale of the related
Purchased Asset to Buyer. Seller or its designee shall release its
custody of the Mortgage File only in accordance with written
instructions from Buyer, unless such release is required as incidental
to the servicing of the Purchased Assets or is in connection with a
repurchase of any Purchased Asset by Seller.
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets and Purchased Items shall pass to Buyer and
Buyer shall have free and unrestricted use of all Purchased Assets and
Purchased Items. Nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Assets and Purchased
Items or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Purchased Assets and Purchased Items, all on terms that
Buyer may determine in its sole discretion. Nothing contained in this
Agreement shall obligate Buyer to segregate any Purchased Assets and
Purchased Items delivered to Buyer by Seller.
10. SELLER'S REPRESENTATIONS
Each of NCCC and NCMC represents and warrants to Buyer that as of the
Purchase Date for the purchase of any Purchased Assets by Buyer from Seller
and as of the date of this Agreement and any Transaction hereunder and at
all times while the Repurchase Documents and any Transaction hereunder is
in full force and effect:
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(a) Acting as Principal. Seller will engage in such Transactions as
-------------------
principal (or, if agreed in writing in advance of any Transaction by
the other party hereto, as agent for a disclosed principal).
(b) Solvency. Neither the Repurchase Documents nor any Transaction
--------
thereunder are entered into in contemplation of insolvency or with
intent to hinder, delay or defraud any of Seller's creditors. The
transfer of the Mortgage Loans subject hereto and the obligation to
repurchase such Mortgage Loans is not undertaken with the intent to
hinder, delay or defraud any of Seller's creditors. Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any
successor provision thereof and the transfer and sale of the Mortgage
Loans pursuant hereto and the obligation to repurchase such Mortgage
Loan (i) will not cause Seller to become insolvent, (ii) will not
result in Seller having unreasonably small capital, and (iii) will not
result in debts that would be beyond Seller's ability to pay as the
same mature. Seller received reasonably equivalent value in exchange
for the transfer and sale of the Purchased Assets and Purchased Items
subject hereto.
(c) No Broker. Seller has not dealt with any broker, investment banker,
---------
agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased
Assets pursuant to this Agreement.
(d) Ability to Perform. Seller does not believe, nor does it have any
------------------
reason or cause to believe, that it cannot perform each and every
covenant contained in the Repurchase Documents applicable to it to
which it is a party.
(e) No Defaults. No Default or Event of Default has occurred and is
-----------
continuing hereunder.
(f) Legal Name; Existence. NCMC's exact legal name is New Century Mortgage
---------------------
Corporation. NCCC's exact legal name is NC Capital Corporation. Each
of NCCC and NCMC (a) is a corporation duly organized, validly existing
and in good standing under the laws of California, (b) has all
requisite corporate or other power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted,
except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse
Effect; and (c) is qualified to do business and is in good standing in
all other jurisdictions in which the nature of the business conducted
by it makes such qualification necessary, except where failure so to
qualify could not be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect.
(g) Financial Condition. Seller has heretofore furnished to Buyer a copy
-------------------
of (a) its consolidated balance sheet for the fiscal year ended
December 31, 2000, and the related consolidated statements of income
and retained earnings and of cash flows for Seller and its
consolidated Subsidiaries for such fiscal year, each audited by and
with the unqualified opinion thereon of KPMG LLP and (b) its
consolidated
-36-
balance sheet for the quarterly fiscal period of Seller as of March
31, 2001 and its consolidated balance sheet as of May 31, 2001 and the
related consolidated statements of income and retained earnings and of
cash flows for Seller and its consolidated Subsidiaries for such
periods, setting forth in each case in comparative form the figures
for the previous year. All such financial statements are complete and
correct and fairly present, in all material respects, the consolidated
financial position of Seller and its Subsidiaries and the consolidated
results of their operations as at such dates and for such fiscal
periods, all in accordance with GAAP applied on a consistent basis.
Since May 31, 2001, there has been no material adverse change in the
consolidated business, operations or financial condition of Seller and
its consolidated Subsidiaries taken as a whole from that set forth in
said financial statements.
(h) Litigation. There are no actions, suits, arbitrations, investigations
----------
(including, without limitation, any of the foregoing which are pending
or threatened) or other legal or arbitrable proceedings affecting
Seller or any of its Subsidiaries or affecting any of the Property of
any of them before any Governmental Authority which (i) questions or
challenges the validity or enforceability of the Repurchase Documents
or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate
amount greater than $500,000 except as set forth on Schedule 3, or
(iii) individually or in the aggregate, if adversely determined, could
reasonably be likely to have a Material Adverse Effect.
(i) No Breach. Neither (a) the execution and delivery of the Repurchase
---------
Documents nor (b) the consummation of the transactions therein
contemplated to be entered into by Seller in compliance with the terms
and provisions thereof will conflict with or result in a breach of the
organizational documents of NCCC, NCMC or Guarantor, or any applicable
law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, or any Servicing Agreement or other
material agreement or instrument to which NCCC, NCMC, Guarantor or any
of their respective Subsidiaries is a party or by which any of them or
any of their Property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument
or result in the creation or imposition of any Lien (except for the
Liens created pursuant to the Repurchase Documents) upon any Property
of NCCC, NCMC or Guarantor, or any of their respective Subsidiaries
pursuant to the terms of any such agreement or instrument, other than
a breach or default for which a consent or waiver has been obtained
pursuant to Section 3(a)(1)(F).
(j) Action. Each of NCCC, NCMC and Guarantor has all necessary corporate
------
or other power, authority and legal right to execute, deliver and
perform its obligations under each of the Repurchase Documents to
which it is a party, as applicable; the execution, delivery and
performance by NCCC, NCMC or Guarantor of each of the Repurchase
Documents to which it is a party have been duly authorized by all
necessary corporate or other action on its part; and each Repurchase
Document to which it is a party has been duly and validly executed
-37-
and delivered by NCCC, NCMC or Guarantor, as applicable, and
constitutes a legal, valid and binding obligation of NCCC, NCMC or
Guarantor, as applicable, enforceable against NCCC, NCMC or Guarantor,
as applicable, in accordance with its terms.
(k) Approvals. No authorizations, approvals or consents of, and no filings
---------
or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by
NCCC, NCMC or Guarantor, as applicable, of the Repurchase Documents to
which it is a party or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens
created pursuant to the Repurchase Documents.
(l) Margin Regulations. Neither any Transaction hereunder, nor the use of
------------------
the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation T, U or X.
(m) Taxes. Each of NCCC, NCMC, Guarantor and their respective Subsidiaries
-----
have filed all Federal income tax returns and all other material tax
returns that are required to be filed by them and have paid all taxes
due pursuant to such returns or pursuant to any assessment received by
it or any of its Subsidiaries, 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. The charges, accruals and reserves on the books of
NCCC, NCMC, Guarantor and their respective Subsidiaries in respect of
taxes and other governmental charges are, in the opinion of NCCC, NCMC
or Guarantor, as applicable, adequate.
(n) Investment Company Act. None of NCCC, NCMC, Guarantor nor any of their
----------------------
respective Subsidiaries is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(o) Purchased Assets.
----------------
(1) Neither NCCC nor NCMC has assigned, pledged, or otherwise
conveyed or encumbered any Mortgage Loan to any other Person
(except as between any of NCCC, Worth Funding Incorporated and
NCMC), and immediately prior to the sale of such Mortgage Loan to
Buyer, NCCC and/or NCMC was the sole owner of such Mortgage Loan
and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released
simultaneously with the sale to Buyer hereunder. No Mortgage Loan
sold to Buyer hereunder was acquired (by purchase or otherwise)
by NCCC or NCMC from an Affiliate of NCCC or NCMC (except as
between any of NCCC, Worth Funding Incorporated and NCMC), as
applicable unless a True Sale Certification has been delivered to
Buyer.
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(2) The provisions of this Agreement are effective to either
constitute a sale of Purchased Items to Buyer or to create in
favor of Buyer a valid and fully perfected security interest in
all right, title and interest of NCCC and NCMC in, to and under
the Purchased Items.
(3) Upon receipt by Custodian of each Mortgage Note, endorsed in
blank by a duly authorized officer of NCCC or NCMC, as
applicable, either a purchase shall have been completed by Buyer
of each Mortgage Note or Buyer shall have a valid and fully
perfected first priority security interest in the applicable
Mortgage Note and in such Seller's interest in the related
Mortgaged Property.
(4) Upon the filing of financing statements on Form UCC-1 naming
Buyer as "Secured Party", and NCCC and NCMC as "Debtor" and
describing the Purchased Items, in the jurisdictions and
recording offices listed on Exhibit IV attached hereto, the
----------
security interests granted hereunder in the Purchased Items will
constitute fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and
interest of NCCC and NCMC in, to and under such Purchased Items,
which can be perfected by filing under the Uniform Commercial
Code.
(5) Upon execution and delivery of the Account Agreement, Buyer shall
either be the owner of, or have a valid and fully perfected first
priority security interest in, the investment property and all
deposit accounts comprising Purchased Items.
(6) With respect to each Purchased Asset, each of the representations
and warranties on Schedule 1 is true and correct.
(p) Chief Executive Office/Jurisdiction of Organization. On the Effective
---------------------------------------------------
Date, and during the four months immediately preceding the Effective
Date, each of NCCC and NCMC's chief executive office, is, and has been
located at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000. On
the Effective Date, each of NCCC and NCMC's jurisdiction of
organization is California.
(q) Location of Books and Records. The location where each of NCCC and
------------------------------
NCMC keeps its books and records, including all computer tapes and
records related to the Purchased Items is its chief executive office.
(r) Reserved.
--------
(s) Servicing Agreements. Seller has delivered to Buyer all Servicing
--------------------
Agreements with respect to the Purchased Mortgage Loans and no default
or event of default exists thereunder.
(t) Existing Financing Facilities. All credit facilities, repurchase
-----------------------------
facilities or substantially similar facilities of Seller which are
presently in effect are listed under the definition of "Existing
Financing Facilities." Seller has delivered to
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Buyer copies of all Existing Financing Facilities and no defaults or
events of default exist thereunder.
(u) True and Complete Disclosure. (a) The information, reports, financial
----------------------------
statements, exhibits and schedules furnished in writing by or on
behalf of NCCC, NCMC or Guarantor to Buyer in connection with the
negotiation, preparation or delivery of this Agreement and the other
Repurchase Documents or included herein or therein or delivered
pursuant hereto or thereto (other than with respect to the Mortgage
Loans), when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under
which they were made, not misleading. All written information
furnished after the date hereof by or on behalf of each of NCCC, NCMC
and Guarantor to Buyer in connection with this Agreement and the other
Repurchase Documents and the transactions contemplated hereby (other
than with respect to the Mortgage Loans) and thereby will be true,
complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which
such information is stated or certified. There is no fact known to a
Responsible Officer of either NCCC or NCMC, after due inquiry, that
could reasonably be expected to have a Material Adverse Effect that
has not been disclosed herein, in the other Repurchase Documents or in
a report, financial statement, exhibit, schedule, disclosure letter or
other writing furnished to Buyer for use in connection with the
transactions contemplated hereby or thereby.
(v) ERISA. NCCC, NCMC, Guarantor and any of their respective ERISA
-----
Affiliates are not and will not be in the future, required to
contribute to any Plan (including Multiemployer Plans) subject to the
applicable provisions of ERISA.
(w) Worth Purchase Agreement. Each Eligible Asset sold by Seller to Buyer,
------------------------
which was originated by Worth Funding Incorporated, was purchased by
Seller pursuant to the Worth Purchase Agreement.
(x) Compliance with Anti-Money Laundering Laws. Seller has complied with
------------------------------------------
all applicable anti-money laundering laws and regulations, including
without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); Seller has established an adequate
--------------------------
anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of
the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets
used by the said Mortgagor to purchase the property in question, and
maintains, and will maintain, sufficient information to identify the
applicable Mortgagor for purposes of the Anti-Money Laundering Laws.
-40-
11. COVENANTS OF SELLER
On and as of the date of this Agreement and each Purchase Date and until
this Agreement is no longer in force with respect to any Transaction, each
of NCCC and NCMC covenants that it will:
(a) Financial Statements. Seller shall deliver to Buyer:
--------------------
(1) as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the unaudited
consolidated balance sheets of Guarantor, Seller and their
consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated statements of income and retained
earnings and of cash flows for Guarantor, Seller and their
consolidated Subsidiaries for such period and the portion of the
fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Guarantor and Seller, as
applicable, which certificate shall state that said consolidated
financial statements fairly present in all material respects the
consolidated financial condition and results of operations of
Guarantor or Seller and its consolidated Subsidiaries, as
applicable, in accordance with GAAP, consistently applied, as at
the end of, and for, such period (subject to normal year-end
adjustments);
(2) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Guarantor or Seller, the
consolidated balance sheets of Guarantor and Seller and their
respective consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor and Seller and
their respective consolidated Subsidiaries for such year, setting
forth in each case in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing,
which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial
statements fairly present the consolidated financial condition
and results of operations of Guarantor and Seller and their
respective consolidated Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP, and a certificate of
such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except
as specifically stated, of any Default or Event of Default;
(3) prior to the end of each fiscal year, final annual budgets,
forecasts and pro-forma cash flow projections developed by
Guarantor, NCMC and NCCC for their next succeeding fiscal year;
(4) as soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of Seller, management
reports containing such
-41-
information with respect to each Junior Securitization Interest
owned by any of NCCC, NCMC or their respective Affiliates, and
the related Company Securitization Transaction, as Buyer may
request, including, without limitation, information concerning
reserve account balances, cash receipts, prepayment and credit
loss experience, REO Property inventory status and loss
projections, and relevant gain on sale assumptions;
(5) from time to time such other information regarding the financial
condition, operations, or business of Seller as Buyer may
reasonably request; and
(6) as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the balance sheet and
statement of profits and losses as at the end of such period for
Worth Funding Incorporated.
Seller will furnish to Buyer, at the xxxx Xxxxxx furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a
certificate of a Responsible Officer of Seller to the effect that, to the
best of such Responsible Officer's knowledge, Seller during such fiscal
period or year has observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Repurchase Documents to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate (and, if any Default or Event of Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action Seller has taken or proposes to take with respect
thereto).
(b) Litigation. Seller will promptly, and in any event within ten (10)
----------
days after service of process on any of the following, give to Buyer
notice of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are
threatened or pending) or other legal or arbitrable proceedings
affecting Seller or any of its Subsidiaries or affecting any of the
Property of any of them before any Governmental Authority that (i)
questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim or claims in an
aggregate amount greater than $500,000, or (iii) which, individually
or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect.
(c) Existence, etc. Each of NCCC and NCMC will:
--------------
(1) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the
operation of its business (provided that nothing in this Section
11(c)(1) shall prohibit any transaction expressly permitted under
Section 11(d));
(2) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply
with such requirements could be
-42-
reasonably likely (either individually or in the aggregate) to
have a Material Adverse Effect;
(3) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied;
(4) not move its chief executive office from the address referred to
in Section 10(p) or change its jurisdiction of organization
unless it shall have provided Buyer thirty (30) days' prior
written notice of such change;
(5) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being
maintained; and
(6) permit representatives of Buyer, upon reasonable notice (unless a
Default shall have occurred and is continuing, in which case, no
prior notice shall be required), during normal business hours, to
examine, copy and make extracts from its books and records, to
inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested
by Buyer.
(d) Restriction on Fundamental Changes. Guarantor, NCCC and NCMC will not,
----------------------------------
and will not permit any of their Subsidiaries to, engage in any
business activities or operations substantially different from or
unrelated to those in which Guarantor, NCCC and NCMC were engaged on
the Effective Date, enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions,
any of its assets, whether now owned or hereafter acquired, or acquire
by purchase or otherwise all or substantially all the business or
Property of, or stock or other evidence of beneficial ownership of,
any Person, except:
(1) Guarantor, NCCC or NCMC may sell or otherwise dispose of property
in the ordinary course of business, provided such sales do not
include all or substantially all of the assets of Guarantor, NCCC
or NCMC;
(2) Guarantor and its Subsidiaries other than Seller may engage in
any business involving the origination, acquisition, servicing or
sale of consumer Indebtedness; and
(3) the Seller may transfer assets with a book value not to exceed
$6,000,000 at any time to REO Sub, provided that Buyer's interest
has been released in such assets in accordance herewith.
-43-
(e) Margin Deficit. If at any time there exists a Margin Deficit, Seller
--------------
shall cure same in accordance with Section 4.
(f) Notices. Seller shall give notice to Buyer:
-------
(1) promptly upon receipt of notice or knowledge of the occurrence of
any Default or Event of Default;
(2) with respect to any Purchased Asset, promptly upon receipt of any
principal prepayment (in full or partial) of such Purchased
Asset;
(3) with respect to any Purchased Asset hereunder, promptly upon
receipt of notice or knowledge that the underlying Mortgaged
Property has been damaged by waste, fire, earthquake or earth
movement, flood, tornado or other casualty, or otherwise damaged
so as to affect adversely the Asset Value of such Purchased Asset
(provided that Seller may satisfy its obligations under this
clause (3) by causing Servicer to notify Buyer of any such
damage);
(4) promptly upon receipt of notice or knowledge of (i) any material
default related to any Purchased Item, (ii) any Lien or security
interest on, or claim asserted against, any Purchased Item or
(iii) any event or change in circumstances which could reasonably
be expected to have a Material Adverse Effect;
(5) promptly upon any material change in the market value of any or
all of Seller's assets which could reasonably be expected to have
a Material Adverse Effect;
(6) no later than five Business Days after the end of each such
month, of all amounts borrowed under the Existing Financing
Facilities during such month, in the form of a daily tabulation
of all such amounts borrowed;
(7) upon any material amendment to the Existing Financing Facilities,
any decrease in the gross amount available to be borrowed
thereunder, or any change in custodian or custodial arrangements
relating thereto; and
(8) promptly upon the occurrence of any default or event of default
under the Existing Financing Facilities.
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of Seller setting forth details of the occurrence
referred to therein and stating what action Seller has taken or proposes to
take with respect thereto.
(g) Reports. Seller shall provide Buyer with a quarterly report, which
-------
report shall include, among other items, a summary of such Seller's
delinquency and loss experience with respect to Mortgage Loans
serviced by Seller, any Servicer or any designee of either, operating
statements and the occupancy status of such
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Mortgaged Property and other property level information, plus any such
additional reports as Buyer may reasonably request with respect to
Seller or any Servicer's servicing portfolio or pending originations
of Mortgage Loans.
(h) Underwriting Guidelines. All Eligible Assets will conform with, and
-----------------------
will be assigned a Risk Rating in accordance with, the Underwriting
Guidelines. Seller shall not make any material change in the
Underwriting Guidelines without the prior written consent of Buyer and
shall review the Underwriting Guidelines periodically to confirm that
they are being complied with in all material respects and are adequate
to meet Seller's business objectives. In the event Seller makes any
material amendment or modification to the Underwriting Guidelines,
Seller shall promptly deliver to Buyer a complete copy of the amended
or modified Underwriting Guidelines. Seller shall deliver to Buyer a
complete copy of the then-current Underwriting Guidelines (i) on the
1/st/ day of each Test Period and (ii) promptly upon Buyer's request.
(i) Affiliate Transactions. Guarantor, NCCC and NCMC will not, and will
----------------------
not permit any of their Subsidiaries to, enter into any transaction
with an Affiliate of Guarantor, NCCC or NCMC, except: (a) transactions
in the ordinary course of business on terms no less favorable to
Guarantor, NCCC or NCMC than those that would be obtained in an
arm's-length transaction; (b) Indebtedness described in Sections
11(s)(5) and 11(s)(10); (c) guaranties of Indebtedness described in
Section 11(k); (d) transfers of assets by NCMC to NCCC and REO Sub as
described in Sections 11(k)(3) and 11(k)(4); and (e) transfers by NCCC
and NCCC of Junior Securitization Interests to Residual Finance
Subsidiaries. In no event shall Seller transfer to Buyer hereunder any
Mortgage Loan acquired by Seller from an Affiliate of Seller (other
than each other Seller or Worth Funding Incorporated) unless a True
Sale Certification has been delivered to Buyer prior to such sale.
(j) Liens. Guarantor, NCCC and NCMC will not, and will not permit any of
-----
their Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien with respect to any property now owned or
hereafter acquired by Guarantor, NCCC or NCMC, or any income or
profits therefrom, except:
(1) [Reserved];
(2) Liens in connection with deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age pensions
or other social security obligations, in the ordinary course of
business of Guarantor, NCCC or NCMC;
(3) Liens for taxes, fees, assessments and governmental charges not
delinquent or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP;
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(4) encumbrances consisting of zoning regulations, easements, rights
of way, survey exceptions and other similar restrictions on the
use of real property and minor irregularities in title thereto
which do not materially impair their use in the operation of its
business;
(5) Liens on equipment arising under any capitalized lease obligation
or other purchase money Liens on equipment acquired after the
Effective Date to secure Indebtedness permitted pursuant to
Section 11(s)(3);
(6) Liens incurred in connection with gestation repurchase agreements
or similar arrangements, including, without limitation, (i)
arrangements under which Guarantor or its Subsidiaries are
required to repurchase Mortgage-backed Securities or Mortgage
Loans from any lender or other counterparty reasonably
satisfactory to Buyer, or (ii) credit facilities structured as
loan and security agreements; provided, that such gestation
repurchase agreements or similar arrangements are entered into in
the ordinary course of business in contemplation of the
subsequent non-recourse sale of such Mortgage-backed Securities
or Mortgage Loans, including without limitation, liens granted
under the Existing Financing Facilities;
(7) Liens on Junior Securitization Interests which secure
Indebtedness permitted by Section 11(s)(4);
(8) Liens arising under Interest Rate Protection Agreements;
(9) a pledge of the stock of REO Sub to SBRC pursuant to the Salomon
REO Financing Facility; and
(10) a pledge of the stock of NC Residual II Corporation to Financial
Securities Assurance Corporation.
(k) Guarantees. Guarantor, NCCC and NCMC will not, and will not permit any
----------
of their Subsidiaries to, directly or indirectly, create or become or
be liable with respect to any Guarantee, other than:
(1) the Guarantee pursuant to the USB Financing Facility;
(2) Guarantees by Guarantor of Indebtedness of NCMC OR NCCC secured
by liens described in Section 11(j)(5), in an amount not to
exceed $7,500,000;
(3) Guarantees by Guarantor of NCMC's or NCCC's obligations relating
to (i) Indebtednes7s permitted by Sections 11(s)(4) and 11(s)(7)
or (ii) the Strategic Alliance Agreement (as defined below)
described in Section 11(t)(10);
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(4) Guarantees by NCMC of the obligations of NCCC or Residual Finance
Subsidiaries in respect of Indebtedness permitted by Sections
11(s)(4) and 11(s)(7); and
(5) the Guaranty.
(l) Limitation on Distributions. After the occurrence and during the
---------------------------
continuation of any Default, neither NCCC nor NCMC shall make any
payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of any equity or partnership interest of NCCC or
NCMC, as applicable, 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 NCCC or NCMC, as
applicable.
(m) Net Worth. Guarantor will at all times during each fiscal year
---------
maintain Tangible Net Worth of not less than (a) the greater of (i)
$130,000,000 or (ii) eighty-five percent (85%) of the Tangible Net
Worth at the end of its most recently completed fiscal year (or, in
the case of the Tangible Net Worth at the end of any fiscal year, its
prior fiscal year) plus (b) ninety percent (90%) of capital
contributions made during such fiscal year plus (c) fifty percent
(50%) of positive year-to-date net income. NCMC will at all times
during each fiscal year maintain Tangible Net Worth of not less than
(a) the greater of (i) $85,000,000 or (ii) eighty-five percent (85%)
of the Tangible Net Worth at the end of its most recently completed
fiscal year (or, in the case of the Tangible Net Worth at the end of
any fiscal year, its prior fiscal year) plus (b) ninety percent (90%)
of capital contributions made during such fiscal year plus (c) fifty
percent (50%) of positive year-to-date net income. NCCC will at all
times during each fiscal year maintain Tangible Net Worth of not less
than $1.00.
(n) Minimum Liquidity. Seller will not permit the sum of (a) Cash of the
-----------------
Guarantor plus (b) the lesser of the Borrowing Base (as defined
therein) of the USB Financing Facility and the Commitment Amounts (as
defined therein) of the USB Financing Facility minus, in either case,
the outstanding principal balance of all Loans thereunder (as defined
therein), plus (c) the lesser of eighty percent (80%) of the
receivables related to the sale or transfer of NCMC's or NCCC's
interest in any Servicing Contract, or $5,000,000, to (i) be less than
$10,000,000 as of the end of any month or (ii) remain less than
$10,000,000 for more than ten (10) calendar days after giving effect
to any mandatory prepayment of principal (or the equivalent) under any
Residual Financing Agreement.
(o) Leverage Ratio. Guarantor will not permit (i) the Quarterly Average
--------------
Leverage Ratio for any period of measurement to be greater than 10.0
to 1.0, (ii) the Daily Leverage Ratio on any date to be greater than
15.0 to 1.0, or (iii) the Adjusted Leverage Ratio as of the last day
of each fiscal quarter to be greater than 12.0 to 1.0. NCMC will not
permit the Leverage Ratio of NCMC to be greater than 8.0 to 1.0 as of
the last day of each fiscal quarter of NCMC.
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(p) Servicer; Servicing Tape. Seller shall provide to Buyer and to
------------------------
Disbursement Agent via Electronic Transmission, a remittance report on
a monthly basis by no later than the 12/th/ day of each month (the
"Reporting Date") containing servicing information, including without
--------------
limitation those fields reasonably requested by Buyer from time to
time, on a loan-by-loan basis and in the aggregate, with respect to
the Purchased Assets serviced hereunder by Seller or any Servicer for
the month (or any portion thereof) prior to the Reporting Date (such
remittance report, an "Asset Tape"). Seller shall not cause the
----------
Mortgage Loans to be serviced by any servicer other than a servicer
expressly approved in writing by Buyer, which approval shall be deemed
granted by Buyer with respect to Seller with the execution of this
Agreement.
(q) Required Filings. Seller shall promptly provide Buyer with copies of
----------------
all documents which NCCC, NCMC or any Subsidiary of NCCC or NCMC is
required to file with the Office of the Comptroller of Currency in
accordance with its regulations.
(r) Remittance of Prepayments. Seller shall remit or cause to be remitted
-------------------------
to Buyer, with sufficient detail via Electronic Transmission to enable
Buyer to appropriately identify the Mortgage Loan to which any amount
remitted applies, all full or partial principal prepayments on any
Purchased Asset that Seller has received on a weekly basis, to be paid
on Thursday of the next succeeding week (or the next Business Day).
(s) Indebtedness. Guarantor, NCCC and NCMC will not, and will not permit
------------
any of their Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:
(1) The obligations of Seller hereunder and Guarantor under the
Guaranty;
(2) current liabilities not more than ninety (90) days overdue,
unless contested in good faith by appropriate proceedings and any
reserves required by GAAP have been established, incurred by
Guarantor, NCMC or NCCC in the ordinary course of business
otherwise than for money borrowed;
(3) Indebtedness incurred to finance the purchase of equipment and
secured solely by Liens on such equipment, in an aggregate amount
not to exceed $10,000,000;
(4) Indebtedness incurred to finance all Junior Securitization
Interests which Indebtedness is secured only by Junior
Securitization Interests, provided, that such Indebtedness does
not exceed 50% of the aggregate value of all Junior
Securitization Interests determined in accordance with GAAP;
(5) intercompany Indebtedness of Guarantor to NCCC or NCMC in an
aggregate amount not to exceed $1,000,000;
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(6) intercompany Indebtedness of NCCC or NCMC to Guarantor incurred
in the ordinary course of business;
(7) obligations under gestation repurchase agreements or similar
arrangements of the type described in Section 11(j)(6);
(8) Subordinated Debt;
(9) Indebtedness incurred by NCCC or NCMC in connection with the
Salomon REO Financing Facility in an aggregate amount not to
exceed $3,000,000; and
(10) intercompany Indebtedness between NCMC and NCCC incurred in the
ordinary course of business.
(t) Investments. Guarantor, NCMC and NCCC will not, and will not permit
-----------
any of their Subsidiaries to, directly or indirectly, make or own any
Investment, except Investments in:
(1) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the
date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either
Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.,
or Xxxxx'x Investors Service, Inc.;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc., or Xxxxx'x Investors
Service, Inc.;
(4) in the case of Guarantor, other consumer debt obligations
originated or acquired by Guarantor in the ordinary course of
Guarantor's business, in the case of NCMC, Mortgage Loans
originated or acquired by NCMC in the ordinary course of NCMC's
business, and in the case of NCCC, Mortgage Loans acquired from
NCMC in the ordinary course of NCCC's business;
(5) certificates of deposits or bankers acceptances issued by Buyer
or any other commercial bank organized under the laws of the
United States or any State thereof and having a combined capital
and surplus of at least $500,000,000, or by United States offices
of foreign banks having the
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highest rating obtainable from a nationally recognized rating
agency, in each case maturing within one year from the date of
acquisition thereof;
(6) Investments in mutual funds that invest substantially all of
their assets in Investments of the types described in subsections
(1), (2), (3) and (5) of this Section 11(t);
(7) the capital stock of any Subsidiary (subject to the limitations
set forth in Sections 11(d) and 11(u);
(8) in the case of NCMC and NCCC, loans to Guarantor in an aggregate
amount not to exceed $1,000,000;
(9) direct equity investments made by either NCMC or NCCC, to the
extent no Event of Default or Default has occurred and is
continuing, or would occur as a result thereof, in or loans to
Persons in the mortgage origination business, in an aggregate
amount not to exceed $2,500,000;
(10) Investments made or to be made by NCMC, in an amount not to
exceed $1,250,000 in the aggregate, and a guaranty made by
Guarantor, pursuant to a Strategic Alliance Agreement (the
"Strategic Alliance Agreement") by and among NCMC, Qualified
----------------------------
Financial Services, Inc., a Colorado corporation, Qualified
Financial Services, Inc., a California corporation, Xxxxx Xxxxx,
an individual, and Xxxxx V.V. Thais, an individual;
(11) Investments arising under Interest Rate Protection Agreements;
(12) in the case of Guarantor, loans to NCMC and NCCC; and
(13) intercompany Indebtedness between NCMC and NCCC incurred in the
ordinary course of business.
(u) Subsidiaries. (a) Guarantor will not create or acquire any
------------
Subsidiaries other than (i) NCCC and NCMC, (ii) the Subsidiaries
listed on Schedule 2 hereto, (iii) Residual Finance Subsidiaries, and
(iv) Subsidiaries engaged solely in any business involving the
origination, acquisition, servicing and sale of consumer obligations,
and (b) Seller will not create or acquire any Subsidiaries other than
(i) the Subsidiaries listed on Schedule 2 hereto, (ii) Residual
Finance Subsidiaries, and (iii) Subsidiaries acquired as a result of
Investments permitted pursuant to Section 11(t)(10).
(v) Restricted Payments. Guarantor, NCCC and NCMC will not make any
-------------------
Restricted Payments, other than (a) dividends paid by Guarantor on its
Series 1998A Convertible Preferred Stock and its Series 1999A
Convertible Preferred Stock in an aggregate amount not to exceed
$3,000,000 per annum, (b) dividends paid by Guarantor on its Common
Stock not to exceed $0.20 per share in any calendar year, and (c)
dividends paid by NCMC to Guarantor to enable Guarantor to pay
dividends as provided in clauses (a) and (b) above; provided, that in
each case
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both before and after giving effect to such dividends,
Guarantor, NCCC and NCMC are in compliance with the covenants
set forth in Section 11 of this Agreement and no Event of
Default or Default has occurred and is continuing."
(w) Custodial and Disbursement Agreement and Account Agreement.
----------------------------------------------------------
Seller shall maintain each of the Custodial and Disbursement
Agreement and Account Agreement in full force and effect and
shall not amend or modify either of the Custodial and
Disbursement Agreement or the Account Agreement or waive
compliance with any provisions thereunder without the prior
written consent of Buyer.
(x) Inconsistent Agreements. Guarantor, NCMC and NCCC will not,
-----------------------
and will not permit any of their Subsidiaries to, directly or
indirectly, enter into any agreement containing any provision
which would be violated or breached by any Transaction
hereunder or by the performance by either of Guarantor, NCCC
or NCMC of their respective obligations under any Repurchase
Document to which it is a party.
(y) Compliance Report. Seller shall provide Buyer no later than
-----------------
the 30th day of each month, in a letter format acceptable to
Buyer in its sole discretion, a compliance report
demonstrating therein the calculations Seller utilized to
determine its compliance with the financial covenants set
forth in clauses (m), (n) and (o) of this Section 11 as of the
end of the immediately preceding month.
(z) Sub-Limits. Seller shall not sell to Buyer any Eligible Assets
----------
if, after giving effect to such Transaction, the aggregate
principal balance of such Purchased Assets are in excess of
any applicable Sub-Limit.
(aa) Escrow Imbalances. Seller will, no later than five (5)
-----------------
Business Days after learning (from any source) of any material
imbalance in any escrow account, fully and completely correct
and eliminate such imbalance including, without limitation,
depositing its own funds into such account to eliminate any
overdrawal or deficit.
(bb) Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Default if such
action is taken or condition exists.
12. EVENTS OF DEFAULT
If any of the following events (each, an "Event of Default") occur,
----------------
Seller and Buyer shall have the rights set forth in Section 13, as
applicable:
(a) Seller shall default in the payment of any Repurchase Price
due or any amount under Section 5 when due (whether at stated
maturity, upon acceleration or at mandatory or optional
prepayment); or
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(b) Seller shall default in the payment of any other amount
payable by it hereunder or under any other Repurchase Document
after notification by Buyer of such default, and such default
shall have continued unremedied for one (1) Business Day; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Repurchase Document by Seller or
any certificate furnished to Buyer pursuant to the provisions
hereof or thereof or any information with respect to the
Mortgage Loans furnished in writing by on behalf of Seller
shall prove to have been false or misleading in any material
respect as of the time made or furnished (other than the
representations and warranties set forth in Schedule 1, which
----------
shall be considered solely for the purpose of determining the
Asset Value of the Purchased Assets, unless (i) Seller shall
have made any such representations and warranties with actual
knowledge that they were materially false or misleading at the
time made; or (ii) any such representations and warranties
have been determined in good faith by Buyer in its sole
discretion to be materially false or misleading on a regular
basis); or
(d) Seller shall fail to comply with the requirements of 11(c),
Section 11(d), Section 11(e), Section 11(f), Section 11(h)
(with respect to the Eligible Assets as a whole and not with
respect to any single Eligible Asset) or Sections 11(i)
through 11(w); and such default shall continue unremedied for
a period of 5 Business Days from the earlier of (i) a
responsible officer of Seller having knowledge of such default
and (ii) Buyer giving notice to Seller of such default; or
except as otherwise set forth in Sections 12(a), 12(b), 12(c)
and 12(d), Seller shall fail to observe or perform any other
covenant or agreement contained in this Agreement or any other
Repurchase Document and such failure to observe or perform
shall continue unremedied for a period of 10 Business Days
from the earlier of (i) a responsible officer of Seller having
knowledge of such default and (ii) Buyer giving notice to
Seller of such default; or
(e) a final judgment or judgments for the payment of money in
excess of $500,000 in the aggregate shall be rendered against
NCCC, NCMC or any of their Affiliates by one or more courts,
administrative tribunals or other bodies having jurisdiction
and the same shall not be satisfied, discharged (or provision
shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from
the date of entry thereof; or
(f) an Act of Insolvency shall have occurred with respect to NCCC,
NCMC or any of their Affiliates; or
(g) the Custodial and Disbursement Agreement, the Account
Agreement or any Repurchase Document shall for whatever reason
be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by NCCC or NCMC; or
(h) NCCC or NCMC shall grant, or suffer to exist, any Lien on any
Purchased Item (except any Lien in favor of Buyer); or either
the Purchased Items shall not have
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been sold to Buyer, or the Liens contemplated hereby shall
cease or fail to be first priority perfected Liens on any
Purchased Items (but not the related Mortgaged Properties) in
favor of Buyer or shall be Liens in favor of any Person other
than Buyer; or
(i) NCCC, NCMC or any of their Affiliates shall be in default
under (i) any Indebtedness in an amount equal to $250,000 or
more of NCCC or NCMC or of such Affiliate which default (1)
involves the failure to pay a matured obligation, or (2)
permits the acceleration of the maturity of obligations by any
other party to or beneficiary with respect to such
Indebtedness, (ii) any other contract to which NCCC or NCMC or
such Affiliate is a party which default (1) involves the
failure to pay a matured obligation in excess of $250,000, or
(2) permits the acceleration of the maturity of obligations in
excess of $250,000 by any other party to or beneficiary of
such contract, or (iii) any Seller-Related Obligation; or
(j) any material adverse change in the Property, business or
financial condition of NCCC or NCMC or any of their Affiliates
shall occur, in each case as determined by Buyer in its sole
good faith discretion, or any other condition shall exist
which, in Buyer's sole good faith discretion, constitutes a
material impairment of Seller's ability to perform its
obligations under this Agreement or any other Repurchase
Document; or
(k) the Initial Funding does not occur on or prior to August 1,
2001; or
(l) upon (i) any material adverse change in the terms of or (ii)
material reduction in amounts available to NCCC, NCMC or their
Affiliates under any of the Existing Financing Facilities; or
(m) upon any event of default or event which, with the passage of
time or expiration of any grace periods, would constitute an
event of default under any of the Existing Financing
Facilities; or
(n) a Change of Control shall have occurred.
13. REMEDIES
(a) If an Event of Default occurs, the following rights and
remedies are available to Buyer; provided, that an Event of
Default shall be deemed to be continuing unless expressly
waived by Buyer in writing.
(1) 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 of
Seller), the Repurchase Date for each Transaction
hereunder, if it has not already occurred, shall be
deemed immediately to occur. Buyer shall (except upon
the occurrence of an Act of Insolvency of Seller)
give notice to Seller of the exercise of such option
as promptly as practicable.
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(2) If Buyer exercises or is deemed to have exercised the
option referred to in subsection (a)(1) of this
Section 13,
(A) (i) Seller's obligations in such
Transactions to repurchase all Purchased Assets, at
the Repurchase Price therefor on the Repurchase Date,
and to pay all other amounts owed by Seller
hereunder, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or
deemed exercise shall be retained by Buyer and
applied to the aggregate unpaid Repurchase Prices and
any other amounts owed by Seller hereunder, and (iii)
Seller shall immediately deliver to Buyer any
Purchased Assets subject to such Transactions then in
NCCC's or NCMC's possession or control;
(B) to the extent permitted by applicable law,
the Repurchase Price with respect to each such
Transaction 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 date of the
exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase
Price, (x) the Post-Default Rate to (y) the
Repurchase Price for such Transaction as of the
Repurchase Date (decreased as of any day by (i) any
amounts actually in the possession of Buyer pursuant
to clause (C) of this subsection, (ii) any proceeds
from the sale of Purchased Assets applied to the
Repurchase Price pursuant to subsection (a)(4) of
this Section 13, and (iii) any amounts applied to the
Repurchase Price pursuant to subsection (a)(4) of
this Section 13); and
(C) all Income actually received by Buyer
pursuant to Section 5 (excluding any Late Payment
Fees paid pursuant to Section 5(b)) shall be applied
to the aggregate unpaid Repurchase Price owed by
Seller.
(3) Upon the occurrence of one or more Events of Default,
Buyer shall have the right to obtain physical
possession of the Servicing Records (subject to the
provisions of the Custodial and Disbursement
Agreement) and all other files of Seller relating to
the Purchased Assets and all documents relating to
the Purchased Assets which are then or may thereafter
come in to the possession of Seller or any third
party acting for Seller and Seller shall deliver to
Buyer such assignments as Buyer shall request and
Buyer shall have the right to appoint any Person to
act as Servicer for the Purchased Assets. Buyer shall
be entitled to specific performance of all agreements
of Seller contained in the Repurchase Documents.
(4) At any time on the Business Day following notice to
Seller (which notice may be the notice given under
subsection (a)(1) of this Section 13), in the event
Seller has not repurchased all Purchased Assets,
Buyer may (A) immediately sell, without demand or
further notice of any kind, at a public or private
sale and at such price or prices as Buyer may deem
satisfactory any or all Purchased Assets subject to
such Transactions hereunder and
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apply the proceeds thereof to the aggregate unpaid
Repurchase Price and any other amounts owing by
Seller hereunder or (B) in its sole discretion elect,
in lieu of selling all or a portion of such Purchased
Assets, to give Seller credit for such Purchased
Assets in an amount equal to the Market Value of the
Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by
Seller hereunder. The proceeds of any disposition of
Purchased Assets shall be applied first to the costs
and expenses incurred by Buyer in connection with
Seller's default; second to costs of related covering
and/or related hedging transactions; third to the
Repurchase Price; and fourth to any other outstanding
obligation of Seller to Buyer or its Affiliates.
(5) Seller agrees that Buyer may obtain an injunction or
an order of specific performance to compel Seller to
fulfill its obligations as set forth in Section 24,
if Seller fails or refuses to perform its obligations
as set forth therein.
(6) Seller shall be liable to Buyer, payable as and when
incurred by Buyer, for (A) the amount of all actual
out-of-pocket expenses, including legal or other
expenses incurred by Buyer in connection with or as a
consequence of an Event of Default, and (B) all costs
incurred in connection with hedging or covering
transactions.
(7) Buyer shall have, in addition to its rights
hereunder, any rights otherwise available to it under
any other agreement or applicable law.
(b) Buyer may exercise one or more of the remedies available to
Buyer immediately upon the occurrence of an Event of Default
and, except to the extent provided in subsections (a)(1) and
(4) of this Section 13, at any time thereafter without notice
to Seller. All rights and remedies arising under this
Agreement as amended from time to time hereunder are
cumulative and not exclusive of any other rights or remedies
which Buyer may have.
(c) 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 (other than a defense of payment or
performance) Seller might otherwise have arising from the use
of nonjudicial process, enforcement and sale of all or any
portion of the Purchased Items, or from any other election of
remedies. Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at
arm's-length.
(d) To the extent permitted by applicable law, Seller shall be
liable to Buyer for interest on any amounts owing by Seller
hereunder, from the date Seller becomes liable for such
amounts hereunder until such amounts are (i) paid in full by
Seller or (ii) satisfied in full by the exercise of Buyer's
rights hereunder. Interest on any
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sum payable by Seller to Buyer under this paragraph 13(d) shall be at a
rate equal to the Post-Default Rate.
14. INDEMNIFICATION AND EXPENSES
(a) NCCC and NCMC, jointly and severally, agree to hold Buyer and its
Affiliates and their present and former respective officers, directors,
employees, agents, advisors and other representatives (each an
"Indemnified Party") harmless from and indemnify any Indemnified Party
-----------------
against all liabilities, losses, damages, judgments, costs and expenses
of any kind which may be imposed on, incurred by or asserted against
such Indemnified Party (including counsel's fees and disbursements)
(collectively, "Costs"), relating to or arising out of this Agreement,
-----
any other Repurchase Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than the Indemnified Party's
gross negligence or willful misconduct. Without limiting the generality
of the foregoing, each of NCCC and NCMC, jointly and severally, agrees
to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Mortgage 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 the federal Truth in Lending Act and/or
the federal Real Estate Settlement Procedures Act, that, in each case,
results from anything other than the Indemnified Party's gross
negligence or willful misconduct. In any suit, proceeding or action
brought by an Indemnified Party in connection with any Mortgage Loan
for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, each of NCCC and NCMC, jointly and severally, will save,
indemnify and hold such Indemnified Party harmless from and against all
expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by NCCC
or NCMC 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 NCCC or NCMC.
Each of NCCC and NCMC, jointly and severally, also agrees to reimburse
an Indemnified Party as and when billed by such Indemnified Party for
all the Indemnified Party's costs and expenses incurred in connection
with the enforcement or the preservation of Buyer's rights under this
Agreement, any other Repurchase Document or any transaction
contemplated hereby or thereby, including without limitation the fees
and disbursements of its counsel.
(b) Subject to the second succeeding sentence, Seller agrees to pay as and
when billed by Buyer all of the out-of-pocket costs and expenses
(including legal fees) incurred by Buyer in connection with the
development, preparation and execution of, any other Repurchase
Document or any other documents prepared in connection herewith (the
"Initial Costs"). Seller agrees to pay as and when billed
-------------
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by Buyer all of the out-of-pocket costs and expenses (including legal
fees) incurred by Buyer in connection with any amendment, supplement
or modification to, this Agreement or any other Repurchase Document
or any other documents prepared in connection therewith. Seller
agrees to pay as and when billed by Buyer all of the out-of-pocket
costs and expenses incurred in connection with the consummation and
administration of the transactions contemplated hereby and thereby
including without limitation all fees, disbursements and expenses of
counsel to Buyer which amount shall be deducted from the Purchase
Price paid for the first Transaction hereunder; provided that such
expenses, together with the Initial Costs, shall not exceed $65,000
without the prior written consent of Seller which consent shall not
be unreasonably withheld. Subject to the limitations set forth in
Section 27, Seller agrees to pay Buyer all the out-of-pocket due
diligence, inspection, testing and review costs and expenses incurred
by Buyer with respect to Mortgage Loans submitted by Seller for
purchase under this Agreement, including, but not limited to, those
out of pocket costs and expenses incurred by Buyer pursuant to
Sections 24 and 27.
15. RECORDING OF COMMUNICATIONS
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 upon notice to the other party of such recording. Buyer and
Seller consent to the admissibility of such tape recordings in any court,
arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and that each has been entered into
in consideration of the other Transactions. Accordingly, each of Buyer and
Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transaction
hereunder; (iii) that payments, deliveries, and other transfers made by
either of them in respect of any Transaction shall be deemed to have been
made in consideration of payments, deliveries, and other transfers in
respect of any other Transactions hereunder, and the obligations to make
any such payments, deliveries, and other transfers may be applied against
each other and netted and (iv) to promptly provide notice to the other
after any such set off or application.
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17. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Agreement, all notices,
requests and other communications provided for herein and under the
Custodial and Disbursement Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including without
limitation by email, telex or telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof or thereof); or, as to any party, at such other
address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Agreement and
except for notices given under Section 3 (which shall be effective only
on receipt), all such communications shall be deemed to have been duly
given when transmitted by telecopy or personally delivered or, in the
case of a mailed notice, upon receipt.
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement together with the other Repurchase Documents constitute
the entire understanding between Buyer and Seller with respect to the
subject matter it covers and shall supersede any existing agreements
between the parties containing general terms and conditions for
repurchase transactions involving Purchased Assets. By acceptance of
this Agreement, Buyer and Seller acknowledge that they have not made,
and are not relying upon, any statements, representations, promises or
undertakings not contained in this Agreement. Each provision and
agreement herein shall be treated as separate and independent from any
other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
19. NON-ASSIGNABILITY
The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by NCCC or NCMC without the
prior written consent of Buyer, and any attempted assignment without
such consent shall be null and void. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall inure to
the benefit of the parties and their respective successors and assigns.
Nothing in this Agreement express or implied, shall give to any person,
other than the parties to this Agreement and their successors
hereunder, any benefit of any legal or equitable right, power, remedy
or claim under this Agreement.
20. TERMINABILITY
Except as set forth below, this Agreement may be terminated (a) by
Seller upon giving written notice to Buyer and (b) by Buyer upon the
occurrence of any event set forth in Section 3(b)(10) except that this
Agreement shall, notwithstanding such notice, remain applicable to any
Transaction then outstanding; provided that the Repurchase Date for any
such Transaction outstanding shall be the earlier to occur of the
original Repurchase Date pursuant to the applicable Confirmation and
(ii) 20 days from the date of such notice of termination. Each
representation and warranty made or deemed to be made by entering into
a Transaction, herein or pursuant hereto shall survive the making of
such
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representation and warranty, and Buyer shall not be deemed to have
waived any Default that may arise because any such representation or
warranty shall have proved to be false or misleading, notwithstanding
that Buyer may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading at the time the
Transaction was made. Notwithstanding any such termination or the
occurrence of an Event of Default, all of the representations and
warranties and covenants hereunder shall continue and survive. The
obligations of Seller under Section 14 shall survive the termination of
this Agreement.
21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES.
22. Submission To Jurisdiction; Waivers
EACH OF BUYER, NCCC AND NCMC HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN, THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
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PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO XXX IN ANY OTHER
JURISDICTION; AND
(E) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER REPURCHASE
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
23. NO WAIVERS, ETC.
No failure on the part of Buyer or Seller to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power
or privilege under any Repurchase Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power
or privilege under any Repurchase Document preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. An Event of Default shall be
deemed to be continuing unless expressly waived by Buyer in writing.
24. SERVICING
(a) Each of NCCC and NCMC covenants to maintain or cause the
servicing of the Mortgage Loans to be maintained in conformity
with accepted and prudent servicing practices in the industry
for the same type of mortgage loans as the Mortgage Loans and
in a manner at least equal in quality to the servicing Seller
provides for mortgage loans which it owns. In the event that
the preceding language is interpreted as constituting one or
more servicing contracts, each such servicing contract shall
terminate automatically upon the earliest of (i) an Event of
Default, (ii) the date on which this Agreement terminates or
(iii) the transfer of servicing approved by Buyer.
(b) If the Mortgage Loans are serviced by Seller, Seller agrees
that Buyer is the owner of all servicing records, including
but not limited to any and all 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 the Mortgage Loans (the "Servicing
---------
Records"). Seller covenants to safeguard such Servicing
-------
Records and to deliver them promptly to Buyer or its designee
(including Custodian) at Buyer's request.
(c) If the Mortgage Loans are serviced by a person other than
Seller (such third party the "Servicer"), Seller (i) shall, in
--------
accordance with Section (3)(b)(7), provide a copy of the
servicing agreement to Buyer, which shall be in form and
substance acceptable to Buyer (the "Servicing Agreement"), and
-------------------
shall provide a Servicer Notice to the Buyer substantially in
the form of Exhibit VIII hereto, fully executed by Seller and
------------
the Servicer; and (ii) hereby irrevocably assigns to Buyer
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and Buyer's successors and assigns all right, title and
interest of Seller in, to and under, and the benefits of, any
Servicing Agreement with respect to the Mortgage Loans. Seller
agrees that no Person shall assume the servicing obligations
with respect to the Mortgage Loans as successor to the
Servicer unless such successor is approved in writing by Buyer
prior to such assumption of servicing obligations.
(d) If the servicer of the Mortgage Loans is Seller, upon the
occurrence of an Event of Default, Buyer shall have the right
to terminate the Seller as servicer of the Mortgage Loans and
transfer servicing to its designee, at no cost or expense to
Buyer, at any time thereafter. If the servicer of the Mortgage
Loans is not Seller, Buyer shall have the right, as
contemplated in the applicable Servicer Notice, upon the
occurrence of an Event of Default, to terminate any applicable
Servicing Agreement and transfer servicing to its designee, at
no cost or expense to Buyer, it being agreed that Seller will
pay any and all fees required to terminate such Servicing
Agreement and to effectuate the transfer of servicing to the
designee of Buyer.
(e) After the Purchase Date, until the repurchase of any Mortgage
Loan, Seller will have no right to modify or alter the terms
of such Mortgage Loan and Seller will have no obligation or
right to repossess such Mortgage Loan or substitute another
Mortgage Loan, in each case except as provided in the
Custodial and Disbursement Agreement.
(f) In the event Seller or its Affiliate is servicing the Mortgage
Loans, Seller shall permit Buyer to inspect Seller's or its
Affiliate's servicing facilities, as the case may be, for the
purpose of satisfying Buyer that Seller or its Affiliate, as
the case may be, has the ability to service the Mortgage Loans
as provided in this Agreement.
25. INTENT
(a) The parties recognize that each Transaction is a "repurchase
----------
agreement" as that term is defined in Section 101 of Title 11
---------
of the United States Code, as amended (except insofar as the
type of Purchased Assets subject to such Transaction or the
term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is
-------------------
defined in Section 741 of Title 11 of the United States Code,
as amended (except insofar as the type of Purchased Assets
subject to such Transaction would render such definition
inapplicable).
(b) It is understood that either party's right to liquidate
Purchased Assets delivered to it in connection with
Transactions hereunder or to exercise any other remedies
pursuant to Section 16 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and
559 of Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in
------------------------------
the Federal Deposit Insurance Act, as
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amended ("FDIA"), then each Transaction hereunder is a
----
"qualified financial contract," as that term is defined in
----------------------------
FDIA and any rules, orders or policy statements thereunder
(except insofar as the type of Purchased Assets subject to
such Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting
-------
contract" as defined in and subject to Title IV of the Federal
--------
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") and each payment entitlement and payment obligation
------
under any Transaction hereunder shall constitute a "covered
-------
contractual payment entitlement" or "covered contractual
------------------------------- -------------------
payment obligation", respectively, as defined in and subject
------------------
to FDICIA (except insofar as one or both of the parties is not
a "financial institution" as that term is defined in FDICIA or
---------------------
regulations promulgated thereunder).
26. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller that as of the
Effective Date and as of the Repurchase Date for the repurchase of any Purchased
Assets by Seller from Buyer hereunder:
(a) Action. Buyer has all necessary corporate or other power,
------
authority and legal right to execute, deliver and perform its
obligations under each of the Repurchase Documents to which it
is a party; the execution, delivery and performance by Buyer
of each of the Repurchase Documents to which it is a party
have been duly authorized by all necessary corporate or other
action on its part; and each Repurchase Document to which it
is a party has been duly and validly executed and delivered by
Buyer, and constitutes a legal, valid and binding obligation
of Buyer, enforceable against Buyer, in accordance with its
terms.
(b) Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any Governmental Authority or
any securities exchange are necessary for the execution,
delivery or performance by Buyer, of the Repurchase Documents
to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in
respect of the Liens created pursuant to the Repurchase
Documents.
(c) No Breach. Neither (a) the execution and delivery of the
---------
Repurchase Documents nor (b) the consummation of the
transactions therein contemplated to be entered into by Buyer
in compliance with the terms and provisions thereof will
conflict with or result in a breach of the organizational
documents of Buyer, or any applicable law, rule or regulation,
or any order, writ, injunction or decree of any Governmental
Authority or other material agreement or instrument to which
Buyer or any of its Subsidiaries is a party or by which Buyer
or any of its Property is bound or to which Buyer is subject,
or constitute a default under any such material agreement or
instrument or result in the creation or imposition of any Lien
upon any Property of Buyer, or any of its respective
Subsidiaries pursuant to the terms of any such agreement or
instrument.
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(d) Purchased Assets. Immediately prior to the repurchase of any Purchased
----------------
Assets by Seller, Buyer was the sole owner of such Purchased Assets
and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released simultaneously
with the repurchase by Seller hereunder.
27. NETTING
If Buyer and Seller are "financial institutions" as now or hereinafter
defined in Section 4402 of Title 12 of the United States Code ("Section
4402") and any rules or regulations promulgated thereunder,
(a) All amounts to be paid or advanced by one party to or on behalf of the
other under this Agreement or any Transaction hereunder shall be
deemed to be "payment obligations" and all amounts to be received by
or on behalf of one party from the other under this Agreement or any
Transaction hereunder shall be deemed to be "payment entitlements"
within the meaning of Section 4402, and this Agreement shall be deemed
to be a "netting contract" as defined in Section 4402.
(b) The payment obligations and the payment entitlements of the parties
hereto pursuant to this Agreement and any Transaction hereunder shall
be netted as follows. In the event that either party (the "Defaulting
----------
Party") shall fail to honor any payment obligation under this
-----
Agreement or any Transaction hereunder, the other party (the
"Nondefaulting Party") shall be entitled to reduce the amount of any
-------------------
payment to be made by the Nondefaulting Party to the Defaulting Party
by the amount of the payment obligation that the Defaulting Party
failed to honor.
28. PERIODIC DUE DILIGENCE REVIEW
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of
verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice unless an
Event of Default shall have occurred, in which case no notice is required,
to Seller, Buyer or its authorized representatives will be permitted during
normal business hours to examine, inspect, and make copies and extracts of,
the Mortgage Files and any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the
possession or under the control of Seller and/or Custodian. Seller also
shall make available to Buyer a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Mortgage
Files and the Mortgage Loans. Without limiting the generality of the
foregoing, Seller acknowledges that Buyer may purchase Mortgage Loans from
Seller based solely upon the information provided by Seller to Buyer in the
Seller Asset Schedule 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
Mortgage Loans purchased in a Transaction, including without limitation
ordering new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate
such Mortgage Loan. Buyer may underwrite such
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Mortgage Loans itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. Seller agrees to 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 Mortgage Loans in the
possession, or under the control, of Seller. Buyer shall pay all
out-of-pocket costs and expenses incurred by Buyer in connection with
Buyer's activities pursuant to this Section 28 ("Due Diligence Costs");
-------------------
provided that, in the event that a Default or an Event of Default shall
have occurred, Seller shall reimburse Buyer for all Due Diligence Costs for
any and all reasonable out-of-pocket costs and expenses incurred by Buyer
in connection with Buyer's activities pursuant to this Section 28.
29. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) Each of NCCC and NCMC hereby irrevocably constitutes and appoints
Buyer and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Seller and
in the name of Seller or in its own name, from time to time in Buyer's
discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any
and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, Seller hereby gives Buyer
the power and right, on behalf of Seller, without assent by, but with
notice to, Seller, to do the following:
(1) in the name of Seller, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due
under any mortgage insurance with respect to a Purchased Item or
with respect to any other Purchased Items and to file any claim
or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Buyer for the purpose
of collecting any and all such moneys due under any such mortgage
insurance with respect to a Purchased Item or with respect to any
other Purchased Items whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(3) (A) to direct any party liable for any payment under any
Purchased Items to make payment of any and all moneys due or to
become due thereunder directly to Buyer or as Buyer shall direct;
(B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any
Purchased Items; (C) to sign and endorse any invoices,
assignments, verifications, notices and other documents in
connection with any Purchased Items; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to
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collect the Purchased Items or any proceeds thereof and to
enforce any other right in respect of any Purchased Items; (E) to
defend any suit, action or proceeding brought against Seller with
respect to any Purchased Items; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or
releases as Buyer may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any Purchased Items as fully and completely
as though Buyer were the absolute owner thereof for all purposes,
and to do, at Buyer's option and Seller's expense, at any time,
and from time to time, all acts and things which Buyer deems
necessary to protect, preserve or realize upon the Purchased
Items and Buyer's Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as such Seller might do;
(4) after a Default or an Event of Default, to direct the actions of
Custodian with respect to the Purchased Items under the Custodial
and Disbursement Agreement; and
(5) to execute, from time to time, in connection with any sale
provided for in Section 13, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the
Purchased Items.
Each of NCCC and NCMC hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
a power coupled with an interest and shall be irrevocable. Until the
occurrence of a Default or Event of Default, Buyer shall not direct a
Servicer in its servicing of the Purchased Assets or commence any servicing
actions with respect to the Mortgage Loans pursuant to this Section 28(a).
Neither Buyer nor any of its officers, directors, employers or agents shall
be responsible to Seller for any failure to act hereunder prior to a
Default or Event of Default.
(b) The powers conferred on Buyer hereunder are solely to protect Buyer's
interests in the Purchased Items and Purchased Assets and shall not
impose any duty upon it to exercise any such powers. Buyer shall be
accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to Seller for any
act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.
30. MISCELLANEOUS
(a) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial and Disbursement
Agreement, this Agreement shall prevail.
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(b) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any
such counterpart.
(c) The captions and headings appearing herein are for included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(d) Each of NCCC and NCMC hereby acknowledges that:
(1) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Repurchase Documents;
(2) Buyer has no fiduciary relationship to Seller; and
(3) no joint venture exists between Buyer and Seller.
31. CONFIDENTIALITY
Seller hereby acknowledges and agrees that all information regarding the
terms set forth in any of the Repurchase Documents or the Transactions
contemplated thereby (the "Confidential Terms") shall be kept confidential
------------------
and shall not be divulged to any party without the prior written consent of
such other party except to the extent that (i) it is necessary to do so in
working with legal counsel, auditors, taxing authorities or other
governmental agencies or regulatory bodies or in order to comply with any
applicable federal or state laws, (ii) any of the Confidential Terms are in
the public domain other than due to a breach of this covenant, or (iii) in
the event of a Default or an Event of Default Buyer determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Assets or otherwise to enforce or
exercise Buyer's rights hereunder. The provisions set forth in this Section
30 shall survive the termination of this Agreement for a period of one year
following such termination.
32. CONFLICTS
In the event of any conflict between the terms of this Agreement, any other
Repurchase Document and any Confirmation, the documents shall control in
the following order of priority: first, the terms of the Confirmation shall
-----
prevail, then the terms of this Agreement shall prevail, and then the terms
of the other Repurchase Documents shall prevail.
33. SET-OFF.
In addition to any rights and remedies of Buyer provided by this Agreement
and by law, Buyer shall have the right, without prior notice to Seller, any
such notice being expressly waived by Seller to the extent permitted by
applicable law, upon any amount becoming due and payable by Seller to Buyer
hereunder or otherwise (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such
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amount any and all monies and other property of Seller, any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any and all other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, and in each case at any time held or owing by Buyer
or any Affiliate thereof to or for the credit or the account of Seller.
Buyer agrees promptly to notify Seller after any such set-off and
application made by Buyer; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
34. MOST FAVORED STATUS.
-------------------
The Sellers and the Buyer each agree that should either Seller enter into a
repurchase agreement or credit facility with any Person other than the
Buyer or an Affiliate of the
Buyer which by its terms is more favorable to such other Person in respect
of any of its provisions described in the following sentence (a "More
----
Favorable Credit Agreement"), the terms of this Agreement shall be deemed
--------------------------
automatically amended to include each additional more favorable provision
contained in such More Favorable Credit Agreement; provided, that in the
--------
event that such More Favorable Credit Agreement is terminated, upon notice
by the Sellers to the Buyer of such termination, the original terms of this
Agreement shall be deemed to be automatically reinstated. The provisions to
which this paragraph pertains are: (i) representations and warranties of
either Seller with respect to itself (but not with respect to the Mortgage
Loans), (ii) covenants of either Seller regarding the conduct of its
business in general and its financial condition, and (iii) events defined
as "events of default," or giving rise to substantially the same remedies
as Events of Default hereunder. The Buyer and the Sellers further agree to
execute and deliver an amendment to this Agreement evidencing such
provisions, provided that the execution of such amendment shall not be a
precondition to the effectiveness of such amendment, but shall merely be
for the convenience of the parties hereto. Promptly upon either Seller
entering into a repurchase agreement, loan agreement or other credit
facility with any Person other than the Buyer, the Sellers shall deliver to
the Buyer a true, correct and complete copy of such repurchase agreement,
loan agreement or other financing documentation.
35. OBLIGATIONS JOINT AND SEVERAL.
Each of NCCC and NCMC hereby acknowledges and agrees that it shall be
jointly and severally liable to Buyer for all representations, warranties,
covenants, obligations and indemnities of Seller hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date set forth above.
BUYER:
-----
CDC MORTGAGE CAPITAL INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Managing Director
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Address for Notices: with a copy to:
-------------------
9 West 00/xx/ Xxxxxx 0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx Attn: Xx Xxxxx, Esq., General Counsel
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Email: x.xxxxxxxx@xxxxxxx-xxxx.xxx Email: xxxxxx.zakes@cdcixis- xxxx.xxx
Exh.IX-1
SELLER:
------
NEW CENTURY MORTGAGE CORPORATION
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name:
Title: Senior Vice President
Address for Notices:
-------------------
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
NC CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxx
---------------------------------------
Name:
Title: President
Address for Notices:
-------------------
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
Exh.IX-2
The undersigned guarantor hereby consents and agrees to the foregoing
Amended and Restated Master Repurchase Agreement, dated as of May __, 2002:
NEW CENTURY FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name:
Title: Executive Vice President
Exh.IX-3
