Exhibit 10.21
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EXECUTION COPY
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COMMERCIAL LOAN SALE AGREEMENT
between
MCG CAPITAL CORPORATION,
as the Originator
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and
MCG FINANCE III, LLC,
as the Trust Depositor
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Dated as of December 1, 2001
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MCG Commercial Loan Trust Notes, Series 2001-1
Class A, Class B and Class C Notes
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS............................................................................................1
Section 1.01 Definitions............................................................................1
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Section 1.02 Other Terms............................................................................2
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Section 1.03 Computation of Time Periods............................................................2
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Section 1.04 Interpretation.........................................................................2
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Section 1.05 References.............................................................................3
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Section 1.06 Calculations...........................................................................3
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ARTICLE II TRANSFER OF LOAN ASSETS...............................................................................3
Section 2.01 Transfer of Loan Assets................................................................3
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Section 2.02 Conditions to Transfer of Loan Assets to the Trust Depositor...........................5
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Section 2.03 Acceptance by the Trust Depositor......................................................6
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Section 2.04 Conveyance of Substitute Loans.........................................................6
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Section 2.05 Release of Released Amounts............................................................8
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Section 2.06 Delivery of Documents in the Loan File; Recording of Assignments of Mortgage...........9
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ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................9
Section 3.01 Representations and Warranties Regarding the Originator...............................10
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Section 3.02 Representations and Warranties Regarding Each Loan and as to Certain Loans in the
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Aggregate.............................................................................13
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Section 3.03 Representations and Warranties Regarding the Initial Loans in the Aggregate...........14
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Section 3.04 Representations and Warranties Regarding the Loan Files...............................14
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Section 3.05 Representations and Warranties Regarding Concentrations of Initial Loans..............14
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Section 3.06 Representations and Warranties Regarding the Trust Depositor..........................15
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ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.........................................17
Section 4.01 Custody of Loans......................................................................17
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Section 4.02 Filing................................................................................17
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Section 4.03 Changes in Name, Corporate Structure or Location......................................17
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Section 4.04 [Reserved]............................................................................17
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Section 4.05 Costs and Expenses....................................................................18
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Section 4.06 Sale Treatment........................................................................18
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Section 4.07 Separateness from Trust Depositor.....................................................18
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ARTICLE V COVENANTS OF THE ORIGINATOR...........................................................................18
Section 5.01 Corporate Existence...................................................................18
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Section 5.02 Loans Not to Be Evidenced by Promissory Notes.........................................18
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Section 5.03 Security Interests....................................................................19
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Section 5.04 Compliance with Law...................................................................19
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Section 5.05 Liability of Originator...............................................................19
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Section 5.06 Limitation on Liability of Originator and Others......................................19
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Section 5.07 Location; Records.....................................................................19
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Section 5.08 Merger or Consolidation of Originator or Servicer.....................................20
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Section 5.09 Delivery of Collections...............................................................20
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ARTICLE VI REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION...................................................20
Section 6.01 Repurchases of, or Substitution for, Loans for Breach of Representations and
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Warranties............................................................................20
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Section 6.02 Reassignment of Repurchased or Substituted Loans......................................21
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ARTICLE VII INDEMNIFICATION BY THE ORIGINATOR...................................................................21
Section 7.01 Indemnification.......................................................................21
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Section 7.02 Liabilities to Obligors...............................................................22
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Section 7.03 Operation of Indemnities..............................................................22
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ARTICLE VIII MISCELLANEOUS......................................................................................22
Section 8.01 Amendment.............................................................................22
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Section 8.02 Governing Law.........................................................................23
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Section 8.03 Notices...............................................................................23
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Section 8.04 Severability of Provisions............................................................26
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Section 8.05 Third Party Beneficiaries.............................................................26
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Section 8.06 Counterparts..........................................................................26
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Section 8.07 Headings..............................................................................27
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Section 8.08 No Bankruptcy Petition; Disclaimer....................................................27
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Section 8.09 Jurisdiction..........................................................................27
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Section 8.10 Prohibited Transactions with Respect to the Trust.....................................27
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Section 8.11 No Partnership........................................................................27
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Section 8.12 Successors and Assigns................................................................28
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Section 8.13 Duration of Agreement.................................................................28
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Section 8.14 Limited Recourse......................................................................28
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EXHIBITS
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Exhibit A Form of Assignment
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THIS COMMERCIAL LOAN SALE AGREEMENT, dated as of December 1, 2001 (as
amended, modified, restated, replaced, waived, substituted, supplemented or
extended from time to time, the "Agreement"), is between MCG CAPITAL
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CORPORATION, a Delaware corporation (together with its successors and assigns,
"MCG", and in its capacity as originator, together with its successors and
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assigns, the "Originator") and MCG FINANCE III, LLC, a Delaware limited
liability company (together with its successors and assigns, the "Trust
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Depositor").
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WHEREAS, in the regular course of its business, the Originator originates
and/or otherwise acquires Loans;
WHEREAS, the Trust Depositor desires to acquire the Initial Loans from the
Originator and may acquire from time to time thereafter certain Substitute Loans
(such Initial Loans and Substitute Loans, together with certain related property
as more fully described in the Sale and Servicing Agreement, being the Loan
Assets as defined herein);
WHEREAS, it is a condition to the Trust Depositor's acquisition of the
Initial Loans from the Originator that the Originator make certain
representations and warranties regarding the Loan Assets for the benefit of the
Trust Depositor as well as the Trust;
WHEREAS, the Trust Depositor is willing to purchase and accept assignment
of the Loan Assets from the Originator pursuant to the terms hereof; and
WHEREAS, on the Closing Date, the Trust Depositor will sell, convey and
assign all its right, title and interest in the Loan Assets to MCG Commercial
Loan Trust 2001-1, a Delaware business trust (the "Trust"), pursuant to a Sale
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and Servicing Agreement, dated as of the date hereof (as amended, modified,
restated, replaced, waived, substituted, supplemented or extended from time to
time, the "Sale and Servicing Agreement"), among MCG, as the originator and the
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servicer, the Trust Depositor, as the trust depositor, the Trust, as the issuer,
and Xxxxx Fargo Bank Minnesota, National Association, as the indenture trustee
and the backup servicer.
NOW, THEREFORE, based upon the above recitals, the mutual promises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
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Whenever capitalized terms are used but not defined in this Agreement, such
terms shall have the meanings attributed to such terms in the Sale and Servicing
Agreement, unless the context otherwise requires.
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Section 1.02 Other Terms.
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All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. The
symbol "$" shall mean the lawful currency of the United States of America. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
Section 1.03 Computation of Time Periods.
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Unless otherwise stated in this Agreement, in the computation of a period
of time from a specified date to a later specified date, the word "from" means
"from and including", the words "to" and "until" each mean "to but excluding",
and the word "within" means "from and excluding a specified date and to and
including a later specified date".
Section 1.04 Interpretation.
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In this Agreement, unless a contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by the Transaction Documents;
(iii) reference to any gender includes each other gender;
(iv) reference to day or days without further qualification means
calendar days;
(v) unless otherwise stated, reference to any time means New York, New
York time;
(vi) references to "writing" include printing, typing, lithography,
electronic or other means of reproducing words in a visible form;
(vii) reference to any agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as
amended, modified, supplemented, replaced, restated, waived or extended and
in effect from time to time in accordance with the terms thereof and, if
applicable, the terms of the other Transaction Documents, and reference to
any promissory note includes any promissory note that is an extension or
renewal thereof or a substitute or replacement therefor; and
(viii) reference to any Requirement of Law means such Requirement of
Law as amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder and reference
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to any Section or other provision of any Requirement of Law means that
provision of such Requirement of Law from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such Section or other provision.
Section 1.05 References.
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All section references (including references to the Preamble), unless
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otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.
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Section 1.06 Calculations.
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Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360-day year and the
actual days elapsed in the relevant period and will be carried out to at least
three decimal places.
ARTICLE II
TRANSFER OF LOAN ASSETS
Section 2.01 Transfer of Loan Assets.
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(a) The Originator shall sell, assign and convey assets to the Trust
Depositor pursuant to the terms and provisions hereof.
(b) Subject to and upon the terms and conditions set forth herein, the
Originator hereby sells, transfers, assigns, sets over and otherwise conveys to
the Trust Depositor, for a purchase price consisting of $262,637,072.84 in cash,
all the right, title and interest of the Originator in and to (the Originator's
interest in items (i)-(vi) below, being collectively referred to herein as the
"Loan Assets" but in each case shall exclude any Retained Interest):
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(i) the Initial Loans, all payments paid in respect thereof and all
monies due, to become due or paid in respect thereof accruing on and after
the Initial Cutoff Date and all Liquidation Proceeds and recoveries
thereon, in each case as they arise after the Initial Cutoff Date, but not
including the Retained Interest or Interest Collections received prior to
December 1, 2001;
(ii) all security interests and liens and Collateral subject thereto
from time to time purporting to secure payment by Obligors under such
Loans;
(iii) all guaranties, indemnities and warranties, and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of such Loans;
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(iv) all collections and records (including computer records) with
respect to the foregoing;
(v) all documents relating to the Loan Files; and
(vi) all income, payments, proceeds and other benefits of any and all
of the foregoing.
To the extent the purchase price paid to the Originator for any Loan is less
than the fair market value of such Loan, the difference between such fair market
value and the purchase price shall be deemed to be a capital contribution made
by the Originator to the Trust Depositor on the relevant Transfer Date.
(c) The Originator and the Trust Depositor acknowledge that the
representations and warranties of the Originator in Sections 3.01, 3.02, 3.03,
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3.04 and 3.05 will run to and be for the benefit of the Trust and the Trustees
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and the Trust and the Trustees may enforce, directly without joinder of the
Trust Depositor, the repurchase obligations of the Originator with respect to
breaches of such representations and warranties as set forth herein and in
Section 6.01.
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(d) The sale, transfer, assignment, set-over and conveyance of the Loan
Assets by the Originator to the Trust Depositor pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Trust of any obligation of the Originator in
connection with the Loan Assets, or any agreement or instrument relating
thereto, including, without limitation, (i) any obligation to any Obligor, if
any, not financed by the Originator, (ii) any taxes, fees, or other charges
imposed by any Governmental Authority or (iii) any insurance premiums that
remain owing with respect to any Loan at the time such Loan is sold hereunder.
(e) The Originator and the Trust Depositor intend and agree that (i) the
transfer of the Loan Assets to the Trust Depositor and the transfer of the Loan
Assets to the Trust are intended to be a sale, conveyance and transfer of
ownership of the Loan Assets, as the case may be, rather than the mere granting
of a security interest to secure a borrowing and (ii) such Loan Assets shall not
be part of the Originator's or the Trust Depositor's estate in the event of a
filing of a bankruptcy petition or other action by or against such Person under
any Insolvency Law. In the event, however, that notwithstanding such intent and
agreement, such transfers are deemed to be of a mere security interest to secure
indebtedness, the Originator shall be deemed to have granted the Trust Depositor
and the Trust Depositor shall be deemed to have granted the Trust, as the case
may be, a perfected first priority security interest in such Loan Assets
respectively and this Agreement shall constitute a security agreement under
Requirements of Law, securing the repayment of the purchase price paid hereunder
and the obligations and/or interests represented by the Securities, in the order
and priorities, and subject to the other terms and conditions of, this
Agreement, the Sale and Servicing Agreement, the Indenture and the Trust
Agreement, together with such other obligations or interests as may arise
hereunder and thereunder in favor of the parties hereto and thereto.
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(f) If any such transfer of the Loan Assets is deemed to be the mere
granting of a security interest to secure a borrowing, the Trust Depositor may,
to secure the Trust Depositor's own borrowing under the Sale and Servicing
Agreement (to the extent that the transfer of the Loan Assets thereunder is
deemed to be a mere granting of a security interest to secure a borrowing),
repledge and reassign (i) all or a portion of the Loan Assets pledged to the
Trust Depositor by the Originator and with respect to which the Trust Depositor
has not released its security interest at the time of such pledge and
assignment, and (ii) all proceeds thereof. Such repledge and reassignment may be
made by the Trust Depositor with or without a repledge and reassignment by the
Trust Depositor of its rights under any agreement with the Originator, and
without further notice to or acknowledgment from the Originator. The Originator
waives, to the extent permitted by applicable law, all claims, causes of action
and remedies, whether legal or equitable (including any right of setoff),
against the Trust Depositor or any assignee of the Trust Depositor relating to
such action by the Trust Depositor in connection with the transactions
contemplated by this Agreement and the Transaction Documents.
Section 2.02 Conditions to Transfer of Loan Assets to the Trust Depositor.
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On or before the Closing Date, the Originator shall deliver or cause to be
delivered to the Trust Depositor, the Owner Trustee and the Indenture Trustee
each of the documents, certificates and other items as follows:
(i) a certificate of an officer of the Originator substantially in the
form of Exhibit C to the Sale and Servicing Agreement;
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(ii) copies of resolutions of the Board of Directors of the Originator
and the Servicer or of the Executive Committee of the Board of Directors of
the Originator and the Servicer approving the execution, delivery and
performance of this Agreement, the Transaction Documents to which it is a
party and the transactions contemplated hereunder, certified in each case
by the Secretary or an Assistant Secretary of the Originator and the
Servicer;
(iii) officially certified recent evidence of due incorporation and
good standing of the Originator under the laws of the State of Delaware;
(iv) the initial List of Loans, certified by an officer of the
Originator, together with an Assignment substantially in the form of
Exhibit A (along with the delivery of any instruments and Loan Documents as
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required under Section 2.06);
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(v) a letter from Ernst & Young LLP or another nationally recognized
accounting firm, addressed to the Originator and the Trust Depositor,
stating that such firm has reviewed a sample of the Initial Loans and
performed specific procedures for such sample with respect to certain loan
terms and that identifies those Initial Loans that do not conform;
(vi) [Reserved];
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(vii) evidence of proper filing with appropriate offices in the State
of Delaware of UCC financing statements executed by the Originator, as
debtor, naming the Trust Depositor as secured party (and the Indenture
Trustee as assignee) and identifying the Loan Assets as collateral;
(viii) an Officer's Certificate listing the Servicer's Servicing
Officers;
(ix) evidence of deposit in the Principal and Interest Account of all
funds received with respect to the Initial Loans on and after the Initial
Cutoff Date to the date two (2) days preceding the Closing Date, together
with an Officer's Certificate from the Servicer to the effect that such
amount is correct; and
(x) a fully executed copy of each of the Transaction Documents.
Section 2.03 Acceptance by the Trust Depositor.
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Within three (3) Business Days of the Closing Date, if the conditions set
forth in Section 2.02 have been satisfied, the Originator shall deliver, on
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behalf of the Trust Depositor, to the Trust the Loan Assets and such delivery to
and acceptance by the Trust shall be deemed to be delivery to and acceptance by
the Trust Depositor.
Section 2.04 Conveyance of Substitute Loans.
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(a) Subject to subsections 2.01(d) and (e) and the satisfaction of the
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conditions set forth in subsection 2.04(c), the Originator may at its option
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(but shall not be obligated to) sell, transfer, assign, set over and otherwise
convey to the Trust Depositor (by delivery of an executed Subsequent Purchase
Agreement substantially in the form attached as Exhibit J to the Sale and
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Servicing Agreement), without recourse other than as expressly provided herein
and therein (and the Trust Depositor shall be required to purchase through cash
payment or by exchange of one or more related Loans released by the Trust to the
Trust Depositor on the Subsequent Transfer Date), all the right, title and
interest of the Originator in and to the following (the Originator's interest in
the property in clauses (i) - (vi) below, but in each case shall exclude any
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Retained Interest, upon such transfer, becoming part of the "Loan Assets"):
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(i) the Substitute Loans listed in the related Addition Notice, all
payments paid in respect thereof and all monies due, to become due or paid
in respect thereof accruing on and after the related Subsequent Cutoff
Dates and all Liquidation Proceeds and recoveries thereon, in each case as
they arise after the related Subsequent Cutoff Dates, but not including the
Retained Interest or Interest Collections received prior to December 1,
2001;
(ii) all security interests and liens and Collateral subject thereto
from time to time purporting to secure payment by Obligors under such
Loans;
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(iii) all guaranties, indemnities and warranties, and other agreements
or arrangements of whatever character from time to time supporting or
securing payment of such Loans;
(iv) all collections and records (including computer records) with
respect to the foregoing;
(v) all documents relating to the Loan Files; and
(vi) all income, payments, proceeds and other benefits of any and all
of the foregoing.
(b) Subject to subsections 2.01(d) and (e) and the conditions set forth in
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subsection 2.04(c), the Originator shall sell, transfer, assign, set over and
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otherwise convey to the Trust Depositor, without recourse other than as
expressly provided herein and therein, (i) all the right, title and interest of
the Originator in and to the Substitute Loans sold pursuant to subsection
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2.04(a), and (ii) all other rights and property interests consisting of Loan
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Assets related to such Substitute Loans (the property in clauses (i) - (ii)
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above, upon such transfer, becoming part of the "Loan Assets").
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(c) The Originator shall transfer to the Trust Depositor and the Trust
Depositor shall transfer to the Trust the Substitute Loans and the other
property and rights related thereto described in subsection 2.04(a) only upon
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the satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originator, that such conditions have been or will be, as
of the related Subsequent Transfer Date, satisfied):
(i) the Trust Depositor shall have provided the Owner Trustee and the
Indenture Trustee with a timely Addition Notice complying with the
definition thereof, which Addition Notice shall in any event be no later
than ten (10) days prior to the date of addition;
(ii) there shall have occurred, with respect to each such Substitute
Loan, a corresponding Substitution Event with respect to one or more Loans
then in the Loan Pool;
(iii) the Substitute Loan(s) being conveyed to the Trust Depositor and
in turn to the Trust satisfy the Substitute Loan Qualification Conditions;
(iv) the Originator shall have delivered to the Trust Depositor a duly
executed written assignment in substantially the form of Exhibit J to the
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Sale and Servicing Agreement (the "Subsequent Purchase Agreement"), which
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shall include a Subsequent List of Loans listing the Substitute Loans;
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(v) the Trust Depositor shall have delivered to the Owner Trustee a
duly executed written assignment (including an acceptance by the Owner
Trustee) in substantially the form of Exhibit I to the Sale and Servicing
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Agreement (the "Subsequent Transfer Agreement"), which shall include a
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Subsequent List of Loans listing the Substitute Loans;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Principal and Interest Account all Principal Collections
and Interest Collections received with respect to the Substitute Loans on
and after the related Subsequent Cutoff Date;
(vii) each of the representations and warranties made by the
Originator pursuant to Sections 3.02, 3.03(i), (ii) and (iv), 3.04 and 3.05
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applicable to the Substitute Loans shall be true and correct as of the
related Subsequent Transfer Date; provided, however, that, (a) with respect
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to the representation and warranty made by the Originator in subsection
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3.05(a), such representation and warranty shall only apply to a Loan that
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is being substituted for a Loan that is not an Eligible Loan and (b) with
respect to the representations and warranties made by the Originator in
subsections 3.03(iv) and 3.05, such representations and warranties shall be
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determined based upon the Outstanding Loan Balances of the Substitute Loans
as of the applicable Subsequent Transfer Date over the Initial Aggregate
Outstanding Loan Balance;
(viii) the Originator shall, at its own expense, on or prior to the
Subsequent Transfer Date, indicate in its Computer Records that ownership
of the Substitute Loans identified on the Subsequent List of Loans in the
Subsequent Transfer Agreement has been sold to the Trust through the Trust
Depositor pursuant to this Agreement; and
(ix) prior to such substitution the Originator has received written
confirmation from the Rating Agencies (which shall respond to the
Originator within ten (10) Business Days after receiving written notice
from the Originator of its intention to substitute a Loan) that the
proposed substitution will not result in a reduction or withdrawal of the
rating on the Class A Notes or Class B Notes; provided, however, that any
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failure by each of the Rating Agencies to respond to the Originator shall
be deemed a non-approval by the Rating Agencies.
Section 2.05 Release of Released Amounts.
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The parties acknowledge and agree that the Trust Depositor has no interest
in the Retained Interest and the Released Amounts. Immediately upon the release
to the Trust Depositor by the Indenture Trustee of the Released Amounts, the
Trust Depositor hereby irrevocably agrees to release to the Originator such
Released Amounts, which release shall be automatic and shall require no further
act by the Trust Depositor; provided, that, the Trust Depositor shall execute
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and deliver such instruments of release and assignment, or otherwise confirming
the foregoing release of any Released Amounts, as may be reasonably requested by
the Originator.
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Section 2.06 Delivery of Documents in the Loan File; Recording of
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Assignments of Mortgage.
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(a) Subject to the delivery requirements set forth in subsection 2.06(b),
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the Originator shall deliver, on behalf of the Trust Depositor, possession of
all the Loan Files to the Indenture Trustee on behalf of and for the account of
the Noteholders. The Originator shall also identify on the List of Loans
(including any deemed amendment thereof associated with any Substitute Loans),
whether by attached schedule or marking or other effective identifying
designation, all Loans that are or are evidenced by such instruments.
(b) With respect to each Loan in the Loan Pool on or before the related
Transfer Date, the Originator, on behalf of the Trust Depositor, will deliver or
cause to be delivered to the Indenture Trustee, to the extent not previously
delivered, each of the documents in the Loan File with respect to such Loan,
except that (i) the original recorded Mortgage in those instances where a copy
thereof certified by the Originator was delivered to the Indenture Trustee will
be delivered or caused to be delivered within ten (10) Business Days after
receipt thereof, and in any event within one (1) year after the related Transfer
Date, (ii) any intervening Assignments of Mortgage in those instances where
copies thereof certified by the Originator were delivered to the Indenture
Trustee, will be delivered or caused to be delivered within ten (10) Business
Days after the receipt thereof, and in any event, within one (1) year of the
related Transfer Date and (iii) the items described in clause (ii)(i) of the
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Loan File definition will be delivered or caused to be delivered within one
hundred twenty (120) days after the related Transfer Date. Notwithstanding the
foregoing in clauses (i) and (ii) of this subsection 2.06(b), in those instances
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where the public recording office retains the original Mortgage or the
intervening assignments of the Mortgage after it has been recorded, the
Originator shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Originator makes, and upon execution of each Subsequent Purchase
Agreement is deemed to make, the following representations and warranties, on
which the Trust Depositor will rely in conveying the Loan Assets on the Closing
Date (and on any Subsequent Transfer Date) to the Trust, and on which the Trust,
the Noteholders and Certificateholders will rely. The Trust Depositor
acknowledges that such representations and warranties are being made by the
Originator for the benefit of the Trust, the Noteholders and the
Certificateholders.
Such representations and warranties are given as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Loan Assets to the Trust. The repurchase obligation or substitution obligation
of the Originator set forth in Section 6.01 constitutes the sole remedy
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available for a breach of a representation or warranty of the Originator set
forth in
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Sections 3.01, 3.02, 3.03, 3.04 or 3.05 of this Agreement. Except as
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otherwise provided in subsection 2.04(c)(vii), the Originator shall not be
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deemed to be remaking any of the representations set forth in Section 3.03 on a
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Subsequent Transfer Date with respect to the Substitute Loans, as such
representations relate solely to the composition of the Initial Loans conveyed
on the Closing Date.
Section 3.01 Representations and Warranties Regarding the Originator.
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By its execution of this Agreement and each Subsequent Purchase
Agreement, the Originator represents and warrants that:
(a) Organization and Good Standing. The Originator is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and has the power to own its assets and to transact the business in
which it is currently engaged. The Originator is duly qualified to do business
as a foreign entity and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of the Originator.
(b) Authorization; Valid Sale; Binding Obligations. The Originator has the
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power and authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which it is a party and all of the transactions
contemplated under this Agreement and the other Transaction Documents to which
it is a party, and to create the Trust Depositor and cause it to make, execute,
deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust Depositor to be created. This Agreement and each Subsequent
Transfer Agreement, if any, shall effect a valid sale, transfer and assignment
of or grant of a security interest in the Loan Assets from the Originator to the
Trust Depositor, enforceable against the Originator and creditors of and
purchasers from the Originator. This Agreement and the other Transaction
Documents to which the Originator is a party constitute the legal, valid and
binding obligation of the Originator enforceable in accordance with their terms,
except as enforcement of such terms may be limited by applicable Insolvency Laws
and general principles of equity, whether considered in a suit at law or in
equity.
(c) No Consent Required. The Originator is not required to obtain the
-------------------
consent of any other party (other than those that it has already obtained) or
any consent, license, approval or authorization from, or registration or
declaration with, any Governmental Authority (other than those that it has
already obtained) in connection with the execution, delivery, performance,
validity or enforceability of this Agreement or the other Transaction Documents
to which it is a party.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement and the other Transaction Documents to which it is a party by the
Originator, and the consummation of the transactions contemplated hereby and
thereby, will not violate any material Requirement
10
of Law applicable to the Originator, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Originator is a
party or by which the Originator or any of the Originator's properties may be
bound, or result in the creation or imposition of any security interest, lien,
charge, pledge, preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture, contract or
other agreement, other than as contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative proceeding of or before
----------
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Originator threatened, against the Originator or any of its
properties or with respect to this Agreement, the other Transaction Documents to
which it is a party or the Securities (1) that, if adversely determined, would
in the reasonable judgment of the Originator be expected to have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Originator or the transactions contemplated by this Agreement
or the other Transaction Documents to which the Originator is a party or (2)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Certificate or Notes.
(f) Solvency. The Originator, at the time of and after giving effect to
---------
each conveyance of Loan Assets hereunder, is Solvent on and as of the date
thereof.
(g) Taxes. The Originator has filed or caused to be filed all tax returns
------
which, to its knowledge, are required to be filed and has put all taxes shown to
be due and payable on such returns or on any assessments made against it or any
of its property and all other taxes, fees or other charges imposed on it or any
of its property by any Governmental Authority (other than any amount of tax due,
the validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with generally
accepted accounting principles have been provided on the books of the
Originator); no tax lien has been filed and, to the Originator's knowledge, no
claim is being asserted, with respect to any such tax, fee or other charge.
(h) Place of Business; No Changes. The Originator's location (within the
-----------------------------
meaning of Article 9 of the UCC) is as set forth in Section 8.03. The Originator
------------
has not changed its name, whether by amendment of its Certificate of
Incorporation, by reorganization or otherwise, and has not changed its location
within the four (4) months preceding the Closing Date.
(i) Reserved.
---------
(j) Sale Treatment. Other than for tax and accounting purposes, the
--------------
Originator has treated the transfer of Loan Assets to the Trust Depositor for
all purposes as a sale and purchase on all of its relevant books and records.
(k) Security Interest.
------------------
(i) This Agreement creates a valid and continuing security interest
(as defined in the applicable UCC) in the Loan Assets in favor of the Trust
Depositor, which security
11
interest is prior to all other Liens (except for Permitted Liens), and is
enforceable as such against creditors of and purchasers from the
Originator;
(ii) such Loans, along with the related Loan Files, constitute either
a "general intangible," an "instrument," an "account," "investment
property," or "chattel paper," within the meaning of the applicable UCC;
(iii) the Originator owns and has good and marketable title to such
Loan Assets free and clear of any Lien (other than Permitted Liens), claim
or encumbrance of any Person;
(iv) the Originator has received all consents and approvals required
by the terms of the Loan Assets to the sale of the Loan Assets hereunder to
the Trust Depositor;
(v) the Originator has caused the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions
under applicable law in order to perfect the security interest in such Loan
Assets granted to the Trust Depositor under this Agreement;
(vi) other than the security interest granted to the Trust Depositor
pursuant to this Agreement, the Originator has not pledged, assigned, sold,
granted a security interest in or otherwise conveyed any of such Loan
Assets. The Originator has not authorized the filing of and is not aware of
any financing statements against the Originator that include a description
of collateral covering such Loan Assets other than any financing statement
(A) relating to the security interest granted to the Trust Depositor under
this Agreement, or (B) that has been terminated. The Originator is not
aware of the filing of any judgment or tax lien filings against the
Originator;
(vii) all original executed copies of each Underlying Note that
constitute or evidence the Loan Assets have been delivered to the Indenture
Trustee;
(viii) the Originator has received a written acknowledgment from the
Indenture Trustee that the Indenture Trustee or its bailee is holding the
Underlying Notes that constitute or evidence the Loan Assets solely on
behalf of and for the benefit of the Trust Depositor; and
(ix) none of the Underlying Notes that constitute or evidence the Loan
Assets has any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Trust
Depositor.
(l) Value Given. The cash payments received by the Originator in respect of
-----------
the purchase price of each Loan sold hereunder constitutes reasonably equivalent
value in consideration for the transfer to the Trust Depositor of such Loan
under this Agreement, such transfer was not made for or on account of an
antecedent debt owed by the Originator to the Trust Depositor, and such transfer
was not and is not voidable or subject to avoidance under any Insolvency Law.
12
(m) Reserved.
---------
(n) No Defaults. The Originator is not default with respect to any order or
-----------
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or otherwise) or
operations of the Originator or its respective properties or might have
consequences that would materially and adversely affect its performance
hereunder.
(o) Bulk Transfer Laws. The transfer, assignment and conveyance of the
------------------
Loans by the Originator pursuant to this Agreement are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(p) Origination and Collection Practices. The origination and collection
------------------------------------
practices used with respect to each Loan have been in all material respects
legal, proper, prudent and customary in the Loan origination and servicing
business and comply with the Credit and Collection Policy.
(q) Adequacy of Consideration. The Originator will receive fair
-------------------------
consideration and reasonably equivalent value in exchange for the sale of the
Loans.
(r) Lack of Intent to Hinder, Delay or Defraud. Neither the Originator nor
------------------------------------------
any of its Affiliates sold, or will sell, any interest in any Loan with any
intent to hinder, delay or defraud any of their respective creditors.
(s) Nonconsolidation. The Originator conducts its affairs such that the
----------------
Trust Depositor would not be substantively consolidated in the estate of the
Originator and their respective separate existences would not be disregarded in
the event of the Originator's bankruptcy.
(t) Accuracy of Information. All written factual information heretofore
-----------------------
furnished by the Originator for purposes of or in connection with this Agreement
or the other Transaction Documents to which Originator is a party, or any
transaction contemplated hereby or thereby is, and all such written factual
information hereafter furnished by the Originator to any such party will be,
true and accurate in every material respect, on the date such information is
stated or certified.
The representations and warranties set forth in subsection 3.01(k) may not be
-----------------
waived by any Person and shall survive the termination of this Agreement.
Section 3.02 Representations and Warranties Regarding Each Loan and as to
------------------------------------------------------------
Certain Loans in the Aggregate.
-------------------------------
The Originator represents and warrants (x) with respect to subsections
-----------
3.02(a) and (b), as to each Loan as of the execution and delivery of this
------ ---
Agreement and on the Closing Date, and as of each Subsequent Transfer Date with
respect to each Substitute Loan, and (y) with respect to
13
subsection 3.02(c), as to the Loan Pool in the aggregate as of the Closing Date,
-----------------
and as of each Subsequent Transfer Date with respect to Substitute Loans (after
giving effect to the addition of such Substitute Loans to the Loan Pool), that:
(a) List of Loans. The information set forth in the List of Loans attached
-------------
to the Sale and Servicing Agreement as Exhibit G (as the same may be amended or
---------
deemed amended in respect of a conveyance of Substitute Loans on a Subsequent
Transfer Date) is true, complete and correct as of the applicable Cutoff Date.
(b) Eligible Loan. Such Loan satisfies the criteria for the definition of
-------------
Eligible Loan as of the date of its conveyance hereunder.
(c) Loans Secured by Real Property. Less than 2% of the Aggregate
------------------------------
Outstanding Loan Balance of the Loan Pool as of the Closing Date consists of
Loans principally secured by real property, and less than 50% of the Aggregate
Outstanding Loan Balance of the Loan Pool as of each Subsequent Transfer Date
shall consist of Loans principally secured by real property.
Section 3.03 Representations and Warranties Regarding the Initial Loans in
-------------------------------------------------------------
the Aggregate.
--------------
The Originator represents and warrants, on the Closing Date, that:
Characteristics. As of the Initial Cutoff Date, the Initial Loans have the
---------------
following additional characteristics: (i) no Loan has a remaining maturity of
more than 122 months; (ii) the date of the final Scheduled Payment on the Loan
with the latest maturity is not later than January 20, 2012; (iii) other than
the Loan to Media Central LLC, no Loan was originated after the Initial Cutoff
Date; and (iv) none of the Initial Loans provide for Scheduled Payments due on a
basis other than monthly or quarterly.
Section 3.04 Representations and Warranties Regarding the Loan Files.
--------------------------------------------------------
The Originator represents and warrants on the Closing Date with respect to
the Initial Loans (or as of the Subsequent Transfer Date, with respect to
Substitute Loans), that (i) immediately prior to such date (as applicable), the
Originator and/or a collateral custodian under the Prior Transactions had
possession of each original Underlying Note and the related complete Loan File,
and there were no other custodial agreements relating to the same in effect and
(ii) except as otherwise provided in Section 2.06, the complete Loan File for
------------
each Loan is in the possession of the Indenture Trustee.
Section 3.05 Representations and Warranties Regarding Concentrations of
----------------------------------------------------------
Initial Loans.
--------------
The Originator represents and warrants on the Closing Date, as to the
composition of the Initial Loans in the Loan Pool as of the Initial Cutoff Date,
that:
14
(a) the sum of the Outstanding Loan Balances of Obligors that are in the
same industry (by SIC code) shall not exceed 35%;
(b) the sum of the Outstanding Loan Balances of the ten (10) largest
Obligors shall not exceed 38%; and
(c) the sum of the Outstanding Loan Balances of Obligors that have their
principal executive offices in the same State of the United States shall not
exceed 16%.
Section 3.06 Representations and Warranties Regarding the Trust Depositor.
------------------------------------------------------------
By its execution of this Agreement and each Subsequent Transfer Agreement,
the Trust Depositor represents and warrants to the Originator that:
(a) Organization and Good Standing. The Trust Depositor is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of Delaware
and has the power to own its assets and to transact the business in which it is
currently engaged. The Trust Depositor is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of the Trust Depositor.
(b) Authorization; Valid Sale; Binding Obligations. The Trust Depositor has
----------------------------------------------
the power and authority to make, execute, deliver and perform this Agreement and
the other Transaction Documents to which it is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Trust and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. This Agreement and each Subsequent Transfer
Agreement, if any, shall effect a valid sale, transfer and assignment of the
Loan Assets from the Trust Depositor to the Trust, enforceable against the Trust
Depositor and creditors of and purchasers from the Trust Depositor. This
Agreement and the other Transaction Documents to which the Trust Depositor is a
party constitute the legal, valid and binding obligation of the Trust Depositor
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by applicable Insolvency Laws and general principles of equity,
whether considered in a suit at law or in equity.
(c) No Consent Required. The Trust Depositor is not required to obtain the
-------------------
consent of any other party (other than those that it has already obtained) or
any consent, license, approval or authorization from, or registration or
declaration with, any Governmental Authority (other than those that it has
already obtained) in connection with the execution, delivery, performance,
validity or enforceability of this Agreement or the other Transaction Documents
to which it is a party.
15
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any material Requirement of Law applicable to the
Trust Depositor, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Trust Depositor is a party or by which
the Trust Depositor or any of the Trust Depositor's properties may be bound, or
result in the creation or imposition of any security interest, lien, charge,
pledge, preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative proceeding of or before any
----------
court, tribunal or governmental body is currently pending, or to the knowledge
of the Trust Depositor threatened, against the Trust Depositor or any of its
properties or with respect to this Agreement, the other Transaction Documents to
which it is a party or the Securities (i) that, if adversely determined, would
in the reasonable judgment of the Trust Depositor be expected to have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Trust Depositor or the Trust or the transactions contemplated
by this Agreement or the other Transaction Documents to which the Trust
Depositor is a party or (ii) seeking to adversely affect the federal income tax
or other federal, state or local tax attributes of the Securities.
(f) Solvency. The Trust Depositor, at the time of, and after giving effect
--------
to each conveyance of Loan Assets under the Sale and Servicing Agreement, is
Solvent.
(g) Taxes. The Trust Depositor has filed or caused to be filed all tax
-----
returns which, to its knowledge, are required to be filed and has put all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any amount
of tax due, the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Trust Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.
(h) Place of Business; No Changes. The Trust Depositor's location (within
-----------------------------
the meaning of Article 9 of the UCC) is as set forth in Section 8.03. The Trust
------------
Depositor has not changed its name, whether by amendment of its certificate of
organization, by reorganization or otherwise, and has not changed its location,
within the four (4) months preceding the Closing Date.
(i) Not an Investment Company. The Trust Depositor is not required to be
-------------------------
registered as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
16
(j) Sale Treatment. Other than for tax and accounting purposes, the Trust
--------------
Depositor has treated the transfer of Loan Assets to the Trust Depositor for all
purposes as a sale and purchase on all of its relevant books and records.
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
Section 4.01 Custody of Loans.
----------------
The contents of each Loan File shall be held in the custody of the
Indenture Trustee under the terms of the Sale and Servicing Agreement for the
benefit of, and as agent for, the Noteholders.
Section 4.02 Filing.
------
On or prior to the Closing Date, the Originator shall cause the UCC
financing statement(s) referred to in subsection 2.02(vii) hereof to be filed.
--------------------
Notwithstanding the obligations of the Originator set forth in the preceding
sentence, the Originator hereby authorizes the Servicer to prepare and file, at
the expense of the Servicer, UCC financing statements (including but not limited
to renewal, continuation or in lieu statements) and amendments or supplements
thereto or other instruments as the Servicer may from time to time deem
necessary or appropriate in order to perfect and maintain the security interest
granted hereunder in accordance with the UCC.
Section 4.03 Changes in Name, Corporate Structure or Location.
------------------------------------------------
(a) During the term of this Agreement, the Originator shall not change its
name, identity, structure, existence, state of formation or location without
first giving at least thirty (30) days' prior written notice to the Trust
Depositor and Servicer.
(b) If any change in the Originator's name, identity, structure, existence,
state of formation, location or other action would make any financing or
continuation statement or notice of ownership interest or lien relating to any
Trust Asset seriously misleading within the meaning of applicable provisions of
the UCC or any title statute, the Originator, or the Servicer on its behalf, no
later than five (5) Business Days after the effective date of such change, shall
file such amendments as may be required to preserve and protect the Trust
Depositor's and the Trust's interests in the Loan Assets and the proceeds
thereof.
Section 4.04 [Reserved].
--------
17
Section 4.05 Costs and Expenses.
------------------
The Servicer will be obligated to pay all reasonable costs and
disbursements in connection with the perfection and the maintenance of
perfection, as against all third parties, of the Trust Depositor's and Trust's
right, title and interest in and to the Loan Assets (including, without
limitation, the security interest in the Collateral related thereto and the
security interests provided for in the Indenture); provided, however, to the
-------- -------
extent permitted by the Loan Documents, the Servicer may seek reimbursement for
such costs and disbursements from the related Obligors.
Section 4.06 Sale Treatment.
--------------
Other than for tax and accounting purposes, the Originator shall treat the
transfer of Loan Assets made hereunder for all purposes as a sale and purchase
on all of its relevant books and records.
Section 4.07 Separateness from Trust Depositor.
---------------------------------
The Originator agrees to take or refrain from taking or engaging in with
respect to the Trust Depositor, each of the actions or activities specified in
the "substantive consolidation" opinion of Xxxxx & Xxx Xxxxx PLLC (including any
certificates of the Originator attached thereto) delivered on the Closing Date,
upon which the conclusions therein are based.
ARTICLE V
COVENANTS OF THE ORIGINATOR
Section 5.01 Corporate Existence.
-------------------
During the term of this Agreement, the Originator will keep in full force
and effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the other Transaction Documents and each other instrument or
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Originator and the Trust Depositor will be
conducted on an arm's-length basis.
Section 5.02 Loans Not to Be Evidenced by Promissory Notes.
---------------------------------------------
The Originator will take no action to cause any Loan not originally
evidenced by an Underlying Note to be evidenced by an instrument (as defined in
the UCC), except in connection with the enforcement or collection of such Loan.
18
Section 5.03 Security Interests.
------------------
The Originator will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any Loan
in the Loan Pool or its interest in any related Collateral, whether now existing
or hereafter transferred to the Trust Depositor, or any interest therein. The
Originator will immediately notify the Trust Depositor of the existence of any
Lien on any Loan in the Loan Pool or its interest in any related Collateral; and
the Originator shall defend the right, title and interest of the Trust Depositor
in, to and under the Loans in the Loan Pool and its interest in any related
Collateral, against all claims of third parties; provided, however, that nothing
-------- -------
in this Section 5.03 shall prevent or be deemed to prohibit the Originator from
------------
suffering to exist Permitted Liens upon any of the Loans in the Loan Pool or its
interest in any related Collateral.
Section 5.04 Compliance with Law.
-------------------
The Originator hereby agrees to comply in all material respects with all
Requirements of Law applicable to the Originator except where the failure to do
so would not have a material adverse effect on the Holders.
Section 5.05 Liability of Originator.
-----------------------
The Originator shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Originator under this Agreement.
Section 5.06 Limitation on Liability of Originator and Others.
------------------------------------------------
The Originator and any director, officer, employee or agent of the
Originator may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Originator and any director, officer, employee or agent of the
Originator shall be reimbursed by the Trust Depositor for any liability or
expense incurred by reason of the Trust Depositor's willful misfeasance, bad
faith or negligence (except errors in judgment) in the performance of its
respective duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. The Originator shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.
Section 5.07 Location; Records.
-----------------
The Originator (y) shall not move its location outside the Commonwealth of
Virginia or its jurisdiction of formation outside the State of Delaware without
thirty (30) days' prior written notice to the Trust Depositor and (z) will
promptly take all actions required (including, but not limited to, all filings
and other acts necessary or advisable under the UCC of each relevant
jurisdiction) in order to continue the first priority perfected security
interest of the Trust Depositor in all Loans.
19
Section 5.08 Merger or Consolidation of Originator or Servicer.
-------------------------------------------------
(a) The Originator will keep in full force and effect its existence, rights
and franchise as a Delaware corporation, and the Originator will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Loans and to
perform its duties under this Agreement.
(b) Any person into which the Originator may be merged or consolidated, or
any corporation resulting from such merger or consolidation to which the
Originator is a party, or any person succeeding by acquisition or transfer to
substantially all of the assets and the business of the Originator shall be the
successor to the Originator hereunder, without execution or filing of any paper
or any further act on the part of any of the parties hereto, notwithstanding
anything herein to the contrary; provided, however, no such merger or
-------- -------
consolidation of the Originator or transfer of substantially all of its assets
and its business shall be permitted hereunder unless the Rating Agency Condition
is satisfied with respect thereto.
(c) Upon the merger or consolidation of the Originator or transfer of
substantially all of its assets and its business as described in this Section
-------
5.08, the Originator shall provide the Trust Depositor, the Indenture Trustee
----
and the Rating Agencies notice of such merger, consolidation or transfer of
substantially all of the assets and business within thirty (30) days after
completion of the same.
Section 5.09 Delivery of Collections.
-----------------------
The Originator agrees to deliver to the Servicer promptly (but in no event
later than two (2) Business Days after receipt) all Collections received by the
Originator in respect of the Loans, for application in accordance with Section
-------
7.01 of the Sale and Servicing Agreement.
----
ARTICLE VI
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
Section 6.01 Repurchases of, or Substitution for, Loans for Breach of
--------------------------------------------------------
Representations and Warranties.
------------------------------
Upon a discovery by a Responsible Officer of the Servicer or any
subservicer, a Responsible Officer of the Owner Trustee or the Indenture Trustee
of a breach of a representation or warranty as set forth in Section 3.01,
------------
Section 3.02, Section 3.03, Section 3.04 or Section 3.05 or as made or deemed
------------ ------------ ------------ ------------
made in any Addition Notice or any Subsequent Purchase Agreement relating to
Substitute Loans that materially and adversely affects the value of the Loans or
the interests of the Noteholders or the Certificateholders therein or which
materially and adversely affects the interests of the Noteholders or the
Certificateholders in the related Loan in the case of a representation or
warranty relating to a particular Loan (notwithstanding that such representation
or warranty was made to the Originator's best knowledge) (an "Ineligible
----------
20
Loan"), the party discovering the breach shall give prompt written notice to the
----
other parties; provided, that, the Indenture Trustee shall have no duty or
-------- ----
obligation to inquire or to investigate the breach of any of such
representations or warranties. Within thirty (30) days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, the Originator shall (a) promptly cure such breach in all material
respects, (b) repurchase each such Ineligible Loan by depositing on behalf of
the Trust Depositor in the Principal and Interest Account, within such thirty
(30) day period, an amount equal to the Transfer Deposit Amount, or (c) remove
such Loan from the Trust and effect a substitution for such affected Loan with a
Substitute Loan in accordance with the substitution requirements set forth in
Section 2.04 not later than the date a repurchase of such affected Loan would be
------------
required hereunder; provided, however, that with respect to a breach of a
-------- -------
representation or warranty relating to the Loans in the aggregate and not to any
particular Loan, the Originator may select Loans (without adverse selection) to
repurchase (or substitute for) such that had such Loans not been included as
part of the Trust (and, in the case of a substitution, had such Substitute Loan
been included as part of the Loan Assets instead of the selected Loan) there
would have been no breach of such representation or warranty.
Section 6.02 Reassignment of Repurchased or Substituted Loans.
------------------------------------------------
Upon receipt by the Indenture Trustee for deposit in the Principal and
Interest Account of the amounts described in Section 6.01 (or upon the
------------
Subsequent Transfer Date related to a Substitute Loan described in Section
-------
6.01), and upon receipt of an Officer's Certificate of the Servicer in the form
----
attached as Exhibit F to the Sale and Servicing Agreement, the Indenture Trustee
---------
shall assign to the Trust Depositor and the Trust Depositor shall assign to the
Originator all of the Trust's (or Trust Depositor's, as applicable) right, title
and interest in the repurchased or substituted Loan and related Loan Assets
without recourse, representation or warranty. Such reassigned Loan shall no
longer thereafter be included in any calculations of Outstanding Loan Balances
or otherwise be deemed a part of the Trust.
ARTICLE VII
INDEMNIFICATION BY THE ORIGINATOR
Section 7.01 Indemnification.
---------------
The Originator agrees to indemnify, defend and hold the Trust Depositor,
its officers, directors, employees and agents (any one of which is an
"Indemnified Party") harmless from and against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any other reasonable costs, fees and expenses that such Person may
sustain as a result of the material failure of the Originator to perform its
duties in compliance with the terms of this Agreement and in the best interests
of the Noteholders and the Certificateholders, except to the extent arising from
(a) the gross negligence, willful misconduct or fraud by the Person claiming
indemnification and (b) an Obligor's financial difficulty. An Indemnified Party
shall immediately notify the Originator if a claim is made by a third party with
respect to this Agreement, and the Originator shall assume (with the consent of
the Indemnified Party) the defense and any settlement of any such claim and pay
all expenses in connection therewith,
21
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Indemnified Party in respect
of such claim.
Section 7.02 Liabilities to Obligors.
-----------------------
No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Trustees, the Trust, the Noteholders or the
Certificateholder under or as a result of this Agreement and the transactions
contemplated hereby.
Section 7.03 Operation of Indemnities.
------------------------
If the Originator has made any indemnity payments to the Trust Depositor
pursuant to this Article VII and the Trust Depositor thereafter collects any
-----------
such amounts from others, the Trust Depositor will repay such amounts collected
to the Originator, except that any payments received by the Trust Depositor from
an insurance provider as a result of the events under which the Originator's
indemnity payments arose shall be repaid prior to any repayment of the
Originator's indemnity payment.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Amendment.
---------
(a) This Agreement may be amended from time to time by the parties hereto
by written agreement, with the prior written consent of the Indenture Trustee
but without notice to or consent of the Noteholders or Certificateholder, to
cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
-------- -------
action shall not, as evidenced by an Opinion of Counsel delivered to the
Indenture Trustee, adversely affect the interests of any Noteholder or
Certificateholder; and further, provided, that no such amendment shall reduce in
------- --------
any manner the amount of, or delay the timing of, any amounts received on Loans
which are required to be distributed on any Note or Certificate without the
consent of the Holder of such Note or Certificate, or change the rights or
obligations of any other party hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the parties hereto
by written agreement, with the prior written consent of the Indenture Trustee
and with the consent of the Majority Noteholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of the
Notes or Certificates; provided, however, that no such amendment shall reduce in
-------- -------
any manner the amount of, or delay the timing of, any amounts which are required
to be distributed on any Note or Certificate without the consent of the Holder
of such Note or Certificate or reduce the percentage of Holders of any Note or
Certificate which are
22
required to consent to any such amendment without the consent of the Holders of
100% of the Notes affected thereby; and provided, further, that no amendment
-------- -------
affecting only one (1) Class shall require the approval of the Holders of any
other Class.
(c) Prior to the execution of any such amendment or consent, the Originator
shall cause the Indenture Trustee to furnish written notification of the
substance of such amendment or consent, together with a copy thereof, to each
Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Originator shall cause the Owner Trustee and the Indenture Trustee, as the case
may be, to furnish written notification of the substance of such amendment or
consent to each Certificateholder and Noteholder, respectively. It shall not be
necessary for the consent of Noteholders and Certificateholder pursuant to
subsection 8.01(b) to approve the particular form of any proposed amendment or
------------------
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization by Noteholders and Certificateholder of the execution thereof
shall be subject to such reasonable requirements as the Owner Trustee or the
Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. Such Trustee may, but shall not be obligated to,
consent to any such amendment that affects such Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 8.02 Governing Law.
-------------
(a) This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights, and remedies of the parties under
the Agreement shall be determined in accordance with such laws.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. Each party hereto (i) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this subsection 8.02(b).
------------------
Section 8.03 Notices.
-------
All notices, demands, certificates, requests and communications hereunder
("notices") shall be in writing and shall be effective (a) upon receipt when
sent through the U.S. mails, registered or certified mail, return receipt
requested, postage prepaid, with such receipt to be effective the date of
delivery indicated on the return receipt, (b) one (1) Business Day after
23
delivery to an overnight courier, (c) on the date personally delivered to a
Responsible Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) if to the Servicer and Originator:
MCG Capital Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
and
MCG Capital Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
(ii) if to the Trust Depositor:
MCG Finance III, LLC
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
and
MCG Finance III, LLC
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
(iii) if to the Indenture Trustee:
Xxxxx Fargo Bank Minnesota, National Association
Sixth Street and Marquette Avenue
MAC N9311-161
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services/Asset Backed
Administration
Facsimile No.: (000) 000-0000
24
(iv) if to the Owner Trustee:
Wilmington Trust Company
Xxx Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Facsimile No.: (000) 000-0000
with a copy to:
the Originator and the Servicer as provided in clause (i) above
---------
(v) if to the Trust:
MCG Commercial Loan Trust 2001-1
c/o Wilmington Trust Company
Xxx Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Facsimile No.: (000) 000-0000
with a copy to:
the Originator and the Servicer as provided in clause (i) above
---------
(vi) if to S&P
Standard and Poor's Rating Service
00 Xxxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance: Asset-Backed Services
Facsimile No.: (000) 000-0000
(vii) if to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Facsimile No.: (000) 000-0000
25
(viii) if to Fitch:
Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CDO Surveillance
Facsimile No.: (000) 000-0000
(ix) if to the Placement Agent:
First Union Securities, Inc.
One First Union Center, Mail Code: NC0610
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Asset Securitization Division
Facsimile No.: (000) 000-0000
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 8.04 Severability of Provisions.
--------------------------
If one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever prohibited or held invalid or
unenforceable, then such covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Agreement or of the Notes or Certificates or the
rights of the Holders thereof, and any such prohibition, invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such covenant, agreement, provision or term in any other
jurisdiction.
Section 8.05 Third Party Beneficiaries.
-------------------------
Except as otherwise specifically provided herein, the parties hereto hereby
manifest their intent that no third party shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not third
party beneficiaries of this Agreement.
Section 8.06 Counterparts.
------------
This Agreement may be executed by facsimile signature and in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
26
Section 8.07 Headings.
--------
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 8.08 No Bankruptcy Petition; Disclaimer.
----------------------------------
(a) Each of the Originator and the Trust Depositor covenants and agrees
that, prior to the date that is one (1) year and one (1) day after the payment
in full of all amounts owing in respect of all outstanding Securities, it will
not institute against the Trust Depositor (in the case of the Originator), or
the Trust, or join any other Person in instituting against the Trust Depositor
or the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 8.08 will survive
------------
the termination of this Agreement.
(b) The provisions of this Section 8.08 shall be for the third party
------------
benefit of those entitled to rely thereon, including the Holders of the Notes,
and shall survive the termination of this Agreement.
Section 8.09 Jurisdiction.
------------
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the United States for the Southern District of New
York, and by execution and delivery of this Agreement, each party hereto
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each such party irrevocably waives any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
Section 8.10 Prohibited Transactions with Respect to the Trust.
-------------------------------------------------
The Originator shall not:
(a) Provide credit to any Noteholder or Certificateholder for the purpose
of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee capacity; or
(c) Except in its capacity as Servicer as provided in the Sale and
Servicing Agreement, lend any money to the Trust.
Section 8.11 No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto.
27
Section 8.12 Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
Section 8.13 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until the termination
of the Sale and Servicing Agreement.
Section 8.14 Limited Recourse.
----------------
The obligations of the Trust Depositor and the Originator under this
Agreement are solely the corporate obligations of the Trust Depositor and the
Originator. No recourse shall be had for the payment of any amount owing by the
Trust Depositor or the Originator under this Agreement, any Transaction Document
or for the payment by the Trust Depositor or the Originator of any fee in
respect hereof or any other obligation or claim of or against the Trust
Depositor or the Originator arising out of or based upon this Agreement or any
Transaction Document, against any employee, officer, director, Affiliate,
shareholder, partner or member of the Trust Depositor or the Originator or
against any employee, officer, director, shareholder, partner, member or any
Affiliate of such Person. The provisions of this Section 8.14 shall survive the
------------
termination of this Agreement.
[Remainder of Page Intentionally Left Blank.]
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
MCG CAPITAL CORPORATION,
as Originator
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Title: General Counsel and Executive
Vice President
----------------------------------
MCG FINANCE III, LLC, as Trust Depositor
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Title: General Counsel and Executive
Vice President
----------------------------------
S-1
Exhibit A
Form of Assignment
------------------
In accordance with the Commercial Loan Sale Agreement (the "Agreement"),
---------
dated as of December 1, 2001, made by and between the undersigned, MCG Capital
Corporation, as Originator, and MCG Finance III, LLC, as Trust Depositor (the
"Trust Depositor"), as assignee thereunder, the undersigned does hereby sell,
---------------
transfer, convey and assign, set over and otherwise convey to the Trust, on
behalf of the Trust Depositor, (i) all the right, title and interest of the
Originator in and to the Initial Loans listed on the initial List of Loans
delivered on the Closing Date (including, without limitation, all rights to
receive Collections with respect thereto on or after the Initial Cutoff Date,
but excluding any rights to receive payments that were collected pursuant
thereto prior to the Initial Cutoff Date), and (ii) all other Loan Assets
relating to the foregoing.
Capitalized terms used herein have the meaning given such terms in the
Agreement.
This Assignment is made pursuant to and in reliance upon the representation
and warranties on the part of the undersigned contained in Article III of the
-----------
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this day of December, 2001.
----
MCG CAPITAL CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
A-1
