NONRECOURSE COMMITTED FACILITY
MASTER REPURCHASE AGREEMENT
Dated as of March 24, 1998
BETWEEN:
NationsBanc Mortgage Capital Corporation, as buyer ("Buyer", which term shall
include any "Principal" as defined and provided for in Annex I), or as agent
pursuant hereto ("Agent")
and
Metropolitan Mortgage & Securities Co., Inc. and its subsidiary named on the
signature page hereof, each, and jointly and severally, as seller (each, and
jointly and severally, "Seller").
1. APPLICABILITY
Buyer shall, from time to time, upon the terms and subject to the
conditions set forth herein, agree to enter into transactions in which Seller
transfers to Buyer Purchased Securities against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Purchased Securities at a date certain (not more than one year later), against
the transfer of funds by Seller. Each such transaction shall be referred to
herein as a "Transaction", and, unless otherwise agreed in writing, shall be
governed by this Agreement.
2. DEFINITIONS
"Additional Purchased Securities" shall have the meaning assigned
thereto in Paragraph 6(a) hereof.
"Adjusted LIBOR" shall mean with respect to any period a rate per annum
determined by Buyer in accordance with the following formula:
LIBOR
1.00 - Eurocurrency Reserve Requirement
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting equity, by
contract or otherwise.
"Agent" means NationsBanc Mortgage Capital Corporation or any successor.
"Agreement" means this Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"Authorized Purchaser" means any bona fide purchaser acceptable to Buyer
in its sole discretion..
"Blocked Account Bank" means each entity acting as a blocked account
bank maintaining an account on behalf of the Buyer pursuant to the
Blocked Account Agreement.
"Blocked Account Agreement" means the agreement so named between the
Sellers and the Blocked Account Bank to be entered into on the Effective
Date and in form and substance satisfactory to Buyer in its reasonable
discretion.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii)
a public or bank holiday in New York City, Charlotte, North Carolina or
Spokane, Washington.
"Buyer's Margin Amount" means, with respect to any Transaction as of any
date of determination, the amount obtained by application of the Buyer's
Margin Percentage to the Repurchase Price for such Transaction as of
such date.
"Buyer's Margin Percentage" means, with respect to any Transaction as of
any date of determination, a percentage agreed to by Buyer and Seller as
set forth in the related Confirmation, or, in the absence of any such
agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned thereto in Paragraph 8
hereof.
"Collateral Receipt" means a document duly executed by Seller with
respect to each delivery of documents relating to the Purchased
Securities to Custodian in the form attached to the Custody Agreement.
"Commodity Account Control Agreement" means the agreement so named among
the Sellers and the Agent to be entered into on the Effective Date and
in form and substance satisfactory to Buyer in its reasonable
discretion.
"Computer Tape" means a computer tape or other electronic medium
generated by Seller and delivered to Buyer and Custodian which provides
information relating to the Purchased Securities, including the
information set forth in the Loan Schedule, in a format acceptable to
Buyer.
"Confirmation" shall have the meaning assigned thereto in Paragraph 4(b)
hereof.
"Custodian" means each entity acting as bailee of or agent for Buyer
with respect to any item of a Purchased Security.
"Custody Agreement" means each Tri-Party Custody Agreement, as amended,
supplemented or otherwise modified from time to time, among Seller,
Buyer and a Custodian, with respect to any Purchased Security.
"Custodian's Loan File" shall have the meaning assigned thereto or to
"Custodian's Loan File" in the Custody Agreement.
"Default" means any event, that, with the giving of notice or the lapse
of time or both, would constitute an Event of Default..
"Default Rate" means the Prime Rate as quoted in the Wall Street Journal
plus 5%..
"Effective Date" means a date which is the earlier of (i) May 1, 1998 or
(ii) the date following the first securitization of the Loans by Seller.
"Eurocurrency Reserve Requirement" shall mean, for any day as applied to
a Transaction, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements applicable to
the Buyer and in effect on such day (including without limitation basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto),
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such Governmental Authority.
"Event of Default" shall have the meaning assigned thereto in Paragraph
18 hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions over
Seller.
"Guarantee" means, as to any Person, any obligation of such Person
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.
"Income" means, with respect to any Purchased Security at any time, any
principal thereof then payable and all interest, dividends or other
distributions thereon.
"Indebtedness" shall mean, for any Person: (a) all obligations for
borrowed money; (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 ninety (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 for account of such Person; (e) capital lease
obligations of such Person; (f) obligations of such Person under
repurchase agreements or like arrangements; (g) Indebtedness of others
Guaranteed by such Person; (h) all obligations of such Person incurred
in connection with the acquisition or carrying of fixed assets by such
Person; and (i) Indebtedness of general partnerships of which such
Person is a general partner.
"Land Sale Contract" means a contract, together with all amendments and
modifications thereto, for the sale of real estate and the improvements
thereon pursuant to which the mortgagor promises to pay the amount due
thereon to the holder thereof and pursuant to which fee title to the
related mortgaged property is held by such holder until the mortgagor
has made all of the payments required pursuant to such contract, at
which time fee title is conveyed to the mortgagor.
"LIBOR" shall mean the applicable London Inter-Bank Offered Rate for
United States dollars as determined by Buyer from time to time.
"Loan" means either (i) a 1-to-4 family residential mortgage loan or
Land Sale Contract described in Appendix A to the Custody Agreement,
(ii) such other type of loan, lease or other receivable as shall be
agreed upon by the parties as evidenced by Appendix A to the Custody
Agreement, as amended or supplemented by mutual agreement of the
parties, or (iii) any interest in, or secured by, any such loan, lease
or other receivable.
"Loan Note" means, with respect to any Loan, the note together with all
riders thereto and amendments thereof or other evidence of indebtedness,
including in the case of a Land Sale Contract, a promise to pay which is
the integral part of a Land Sale Contract.
"Loan Schedule" means a list of Loans by Loan Type attached to the Trust
Receipt and setting forth as to each Loan the information specified by
Buyer.
"Loan Type" means the categorization of a Loan, based on information on
a Computer Tape, under one or more of the headings set forth on Appendix
A to the Custody Agreement.
"LTV" means the ratio of the outstanding principal balance of a Loan to
the appraised value of the related secured property or collateral, if
applicable, on the date of determination.
"Margin Deficit" shall have the meaning assigned thereto in Paragraph
6(a) hereof.
"Market Value" means, with respect to any Purchased Security, as of any
date of determination, the market price as determined by Buyer in good
faith without credit for any interest accrued and unpaid thereon.
Buyer's determination of Market Value shall be conclusive upon the
parties, absent manifest error. In no event shall Market Value exceed
102% of par for any Purchased Security.
"Metwest Subprime Program" shall have the meaning assigned thereto in
Paragraph 9(b).
"Mortgage" means a mortgage, deed of trust, or other instrument which
creates a lien on a fee simple or leasehold interest in real property
and secures a Loan Note.
"Notice Date" shall have the meaning assigned thereto in Section 4
hereof.
"Obligations" means (a) all of Seller's indebtedness, obligation to pay
the Repurchase Price on the Repurchase Date, and other obligations and
liabilities, to Buyer, its affiliates or Custodian arising under, or in
connection with, the Program Documents or otherwise, whether now
existing or hereafter arising; (b) any and all sums paid by Buyer or on
behalf of Buyer in order to preserve any Purchased Security or its
interest therein; (c) in the event of any proceeding for the collection
or enforcement of any of Seller's indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Security, or of any exercise
by Buyer of its rights under the Program Documents, including without
limitation, attorneys' fees and disbursements and court costs; and
(d) all of Seller's indemnity obligations to Buyer or Custodian or both
pursuant to the Program Documents.
"Obligor" means the obligor on a Loan.
"Person" shall mean any legal person, including any individual,
corporation, partnership, association, joint-stock company, trust,
limited liability company, unincorporated organization, governmental
entity or other entity of similar nature.
"Position Report" means the report defined as such in the related
Custody Agreement.
"Price Differential" means, with respect to each Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing
Rate to the Purchase Price on a 360-day-per-year basis for the actual
number of days during the period commencing on (and including) the
Purchase Date and ending on (but excluding) the date of determination
(reduced by any amount of such Price Differential in respect of such
period previously paid by Seller to Buyer).
"Pricing Rate" means the per annum percentage rate for determination of
the Price Differential.
"Prime Rate" means the daily prime loan rate as reported in The Wall
Street Journal.
"Principal" shall have the meaning given to it in Annex I,
"Program Documents" means this Agreement, each Custody Agreement, any
Servicing Agreement, any lockbox, blocked account or similar agreement,
the Commodity Account Control Agreement, and any other agreement entered
into by Seller and Buyer in connection therewith.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Date" means the date on which Purchased Securities are to be
transferred by Seller to Buyer.
"Purchase Price" means the price (calculated as provided in Paragraph
3(b)) at which Purchased Securities are transferred by Seller to Buyer
in a Transaction.
"Purchased Securities" means, with respect to a Transaction, the related
Loans, together with the related Records, Servicing Rights, Take-Out
Commitments, if any, and other Collateral, and such other property,
rights, titles or interests as are specified on a related Transaction
Notice or Position Report. The term "Purchased Securities" with respect
to any Transaction at any time also shall include Additional Purchased
Securities delivered pursuant to Paragraph 6(a) hereof.
"Records" means all instruments, agreements and other books, records,
and other media for the storage of information maintained by Seller or
any other person or entity with respect to a Purchased Security.
Records shall include the Loan Notes, any Mortgages and any other
instruments necessary to document or service a Loan.
"REO Property" means a Mortgaged Property that is acquired by a servicer
by foreclosure or by deed in lieu of foreclosure.
"Repurchase Date" shall have the meaning assigned thereto in Paragraph
3(b) and shall also include the date determined by application of
Paragraph 19.
"Repurchase Price" means the price at which Purchased Securities are to
be transferred from Buyer 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.
"Servicing Agreement" means any agreement (other than a Custody
Agreement) giving rise or relating to Servicing Rights with respect to a
Purchased Security, including any assignment or other agreement relating
to such agreement.
"Servicing Rights" means contractual, possessory or other rights of
Seller or any other Person arising under a Servicing Agreement, Custody
Agreement or otherwise, to administer or service a Purchased Security or
to possess related Records.
"Subsidiary" means, with respect to any Person, any corporation,
partnership 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 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.
"Substitute Securities" has the meaning given to it in Paragraph 16(a).
"Take-out Commitment" means, with respect to any Loan, an irrevocable
commitment issued by an Authorized Purchaser in favor of the applicable
originator, pursuant to which such Authorized Purchaser agrees to
purchase such Loan at a specific price.
"Termination Date" has the meaning given to it in Paragraph 3(b).
"Transaction Notice" have the meaning assigned thereto in Paragraph 4
hereof.
"Trust Receipt" means a Trust Receipt as defined in the related Custody
Agreement.
"Underwriting Guidelines" means the standards, procedures and guidelines
of Seller for underwriting or originating Loans of the applicable
previously submitted by Seller to, and approved by, Buyer.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
on the date hereof in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.
3. THE TRANSACTIONS
a) Intentionally omitted.
b) Provided that the applicable conditions in Paragraphs 9(a) and
9(b) have been satisfied, (i) each Purchased Security repurchased by Seller on
the tenth day of a month (or the following Business Day if such day is not a
Business Day) following the initial Purchase Date (each, a "Repurchase Date")
shall automatically become subject to a new Transaction unless Buyer is
notified by Seller at least two (2) Business Days prior to any Repurchase
Date, and (ii) the Buyer shall from time to time, but in no event more
frequently than once per month (unless otherwise agreed), enter into new
Transactions with respect to additional Loans and in each case the Repurchase
Date therefor shall be the date which is the same calendar day of the month as
the Purchase Date for the initial Transaction hereunder (or the following
Business Day if such day is not a Business Day), provided that if the
Repurchase Date so determined is later than the one-year anniversary of the
initial Purchase Date (the "Termination Date"), the Repurchase Date for such
Transaction shall automatically reset to such anniversary date, and the
provisions of this sentence as it might relate to a new Transaction shall
expire on such date. For each new Transaction, unless otherwise agreed, (i)
the Purchase Price shall be equal to 95% ("Purchase Price Percentage") of the
related Market Value, (ii) the percentage used in determining the Buyer's
Margin Amount shall be the percentage equivalent of the fraction 1/Purchase
Price Percentage, (iii) the Pricing Rate shall be equal to Adjusted LIBOR plus
one hundred basis points (1.00%), and (iv) the accrued and unpaid Price
Differential shall be settled in cash on each related Repurchase Date.
4. ENTERING INTO TRANSACTIONS; TRANSACTION NOTICE, CONFIRMATIONS
a) Unless otherwise agreed, Seller shall give Buyer at least
five(5) Business Days' prior notice of any proposed Purchase Date other than
the initial Purchase Date (the date on which such notice is given, the "Notice
Date"). On the Notice Date, Seller shall (i) request that Buyer enter into a
Transaction by furnishing to Buyer (either orally or in writing) the
information specified in the form of Exhibit A hereto (each, a "Transaction
Notice"), or by delivering a Position Report as such, (ii) deliver to Buyer
and Custodian a Loan Schedule and Computer Tape and (iii) deliver to Custodian
(a) the Custodian's Loan File and (b) the related Collateral Receipt for each
Loan subject to such Transaction. Unless otherwise agreed, the Purchase Price
for a Transaction shall at least be equal to $5,000,000.
b) Unless otherwise agreed, upon receipt of the Transaction
Notice, Buyer shall, upon the terms and subject to the conditions herein, make
an offer to Seller specifying the terms for such Transaction, including the
Purchase Price, the Pricing Rate and the Repurchase Date in respect of such
Transaction. Upon Seller agreeing to enter into a Transaction hereunder,
Buyer shall promptly deliver to Seller a confirmation of such Transaction (a
"Confirmation"). The terms of any Transaction Notice, if any, signed by Seller
shall be deemed incorporated by reference into the Confirmation and if the
terms of the Transaction Notice conflicts with the Confirmation, the terms of
the Confirmation shall prevail.
c) Each Confirmation and Transaction Notice, 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 and Transaction Notice shall not be
separate from this Agreement but shall be made a part of this Agreement.
5. PAYMENT AND TRANSFER
Unless otherwise agreed, all transfers of funds hereunder shall be
immediately available funds and all Purchased Securities transferred shall be
transferred to the Custodian pursuant to the Custody Agreement. Any
Repurchase Price received by Buyer after 3:00 p.m. New York City time
("Funding Deadline") shall be applied on the next succeeding Business Day, but
such funds (absent a Default) shall earn overnight interest at a rate
established by Buyer. Unless otherwise agreed, Buyer shall not wire Purchase
Prices to Seller after the Funding Deadline.
6. MARGIN MAINTENANCE
a) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions is less than the aggregate Buyer's
Margin Amount for all such Transactions (a "Margin Deficit"), then Buyer may
by notice to Seller require Seller in such Transactions, at Buyer's option, to
transfer to Buyer cash or additional Purchased Securities acceptable to Buyer
and (in the case of Loans) which conform in all respects to the applicable
representations and warranties set forth in Appendix A to the Custody
Agreement ("Additional Purchased Securities"), so that the cash and aggregate
Market Value of the Purchased Securities, including any such Additional
Purchased Securities, will thereupon equal or exceed such aggregate Buyer's
Margin Amount.
b) Notice required pursuant to Paragraph 6(a) may be given by any
means. A notice for the payment or delivery in respect of the Margin Deficit
received before 5:00 p.m. New York City time on a Business Day shall be met no
later than 4:00 p.m. on the following Business Day. Any notice given on a
Business Day after 5:00 p.m., New York City time, shall be met no later than
4:00 p.m. on the second following Business Day. The failure of Buyer, on any
one or more occasions, to exercise its rights hereunder, shall not change or
alter the terms and conditions to which this Agreement is subject or limit the
right of Buyer to do so at a later date. Seller and Buyer each agree that a
failure or delay by Buyer to exercise its rights hereunder shall not limit or
waive Buyer's rights under this Agreement or otherwise existing by law or in
any way create additional rights for Seller.
7. INCOME PAYMENTS
Subject to Paragraph 14, where a particular term of a Transaction
extends over an Income payment date on the Purchased Securities subject to
that Transaction, such Income shall be the property of Buyer. Notwithstanding
the foregoing, and provided no Default has occurred, Buyer agrees that Seller
shall be entitled to receive an amount equal to all Income paid on the
Purchased Securities that is not otherwise received by Seller, to the full
extent it would be so entitled if the Purchased Securities had not been sold
to Buyer. Provided no Default has occurred, Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its sole discretion), on the
date such Income is paid either (i) transfer to Seller such Income with
respect to any Purchased Securities subject to such Transaction or (ii) apply
the Income payment to reduce the amount, if any, to be transferred to Buyer by
Seller upon termination of such Transaction. Furthermore, provided no Default
has occurred, Seller shall be entitled to any proceeds resulting from
investments made by the Blocked Account Bank pursuant to the Blocked Account
Agreement. Buyer shall not be obligated to take any action pursuant to the
preceding sentences to the extent that such action would result in the
creation of a Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities sufficient
to eliminate such Margin Deficit.
8. SECURITY INTEREST
Seller and Buyer intend that the Transactions hereunder be sales to
Buyer of the Purchased Securities and not loans from Buyer to Seller secured
by the Purchased Securities. However, in order to preserve Buyer's rights
under this Agreement in the event that a court or other forum recharacterizes
the Transactions hereunder as other than sales, and as security for Seller's
performance of all of its Obligations, Seller hereby grants Buyer a fully
perfected first priority security interest in the Purchased Securities, the
Records, and all related Servicing Rights, insurance, Income, accounts
(including any interest of Seller in escrow accounts) and any other contract
rights, payments, rights to payment (including payments of interest or finance
charges) general intangibles and other assets relating to the Purchased
Securities or any interest in the Purchased Securities, the servicing of the
Purchased Securities, and any proceeds and distributions with respect to any
of the foregoing and any other property, rights, titles or interests as are
specified on a Transaction Notice or Position Report (collectively, the
"Collateral").
9. CONDITIONS PRECEDENT
a) As conditions precedent to the initial Transaction, Buyer shall
have received on or before the day of such initial Transaction the following,
in form and substance satisfactory to Buyer and duly executed by Seller:
i) The Program Documents duly executed and delivered by the
parties hereto;
ii) Evidence that all other actions necessary or, in the opinion
of Buyer, desirable to perfect and protect Buyer's interest in the Purchased
Securities and other Collateral have been taken, including, without
limitation, duly executed and filed Uniform Commercial Code financing
statements on Form UCC-1;
iii) A certified copy of Seller's corporate resolutions approving
the Program Documents and Transactions thereunder (either specifically or by
general resolution), and all documents evidencing other necessary corporate
action or governmental approvals as may be required in connection with the
Program Documents;
iv) An incumbency certificate of Seller's corporate secretary
certifying the names, true signatures and titles of Seller's officers and
employees duly authorized to request Transactions hereunder and sign the
Program Documents and the other documents to be delivered thereunder, and a
certificate of an officer of Seller, both of which shall be in form and
substance acceptable to Buyer;
v) An opinion of Seller's counsel as to such matters as Buyer
may reasonably request and in form and substance acceptable to Buyer;
vi) A copy of the Underwriting Guidelines certified
by an officer of a Seller; and
vii) Any other documents reasonably requested by Buyer.
b) The obligation of Buyer to enter into each Transaction pursuant to
this Agreement is subject to the following conditions precedent:
i) Buyer or its designee shall have received on or before the
day of such Transaction (unless otherwise specified in this Agreement) the
following, in form and substance satisfactory to Buyer and (if applicable)
duly executed:
A) A Transaction Notice delivered
pursuant to Paragraph 4(a);
B) The related Custodian's Loan File
with respect to each Purchased Security subject to a
Transaction and the related Trust Receipt; and
C) Such certificates, opinions of
counsel or other documents as Buyer may request (i)
not more frequently (absent special circumstances
regarding Seller) than once every six (6) months and
(ii) upon at least ten (10) Business Days' notice;
however (absent such circumstances), the failure of
Seller to provide such documents, during such ten (10)
Business Day period shall not preclude Buyer from
entering into a Transaction during such period.
ii) No Default shall have occurred and be continuing.
iii) No catastropic event or events shall have been determined by
Buyer to have occurred resulting in the effective absence of a "repo market"
for a period of at least ten (10) consecutive days respecting loans or
mortgage- or asset-backed securities such that Buyer is or was unable to
finance or fund purchases under this Agreement through the "repo market" or
Buyer's customers.
iv) All representations and warranties in the Program Documents
hereof shall be true and correct on the date of such Transaction.
v) The then aggregate outstanding Purchase Price, when added to
the Purchase Price for the requested Transaction, shall not exceed ONE HUNDRED
MILLION DOLLARS ($100,000,000); provided, however, that at no time shall the
portion of the aggregate outstanding Purchase Price attributable to Loans
originated under Metwest Mortgage Services, Inc.'s origination program for
subprime mortgages (the "Metwest Subprime Program") without income, asset or
employment verification exceed fifteen percent (15%) of such aggregate
outstanding Purchase Price. Seller agrees that the Market Value used in
determining such portion of the outstanding aggregate Purchase Price is at
Buyer's sole discretion.
10. RELEASE OF COLLATERAL
Upon timely payment in full of the Repurchase Price and all other
Obligations owing with respect to the Purchased Securities, if no Default or
Event of Default has occurred and is continuing, Buyer shall, and shall direct
Custodian to, release such Purchased Security unless such release would give
rise to a Margin Deficit. Except as set forth in Paragraph 16, Seller shall
give at least five (5) Business Days' prior notice to Buyer if such repurchase
shall occur on other than a Repurchase Date, provided, however, that Seller
shall give at least one (1) day's prior notice to Buyer if such repurchase is
in connection with a securitization underwritten by Buyer or any of its
Affiliates.
11. RELIANCE
With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to Seller in acting upon, any request or other
communication that Buyer believes to have been given or made by a person
authorized to enter into a Transaction on Seller's behalf, whether or not such
person is listed on the certificate delivered pursuant to subparagraph
9(a)(iv) hereof. In each such case, Seller hereby waives the right to dispute
Buyer's record of the terms of the Confirmation, request or other
communication.
12. REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants, and shall on and as of the
Purchase Date for any Transaction and on and as of each date thereafter
through and including the related Repurchase Date be deemed to represent and
warrant, that:
a) Due Organization and Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of Seller's incorporation. Seller is duly qualified to do
business, is in good standing and has obtained all necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted (except where
the failure to be so qualified would not have a material adverse effect on the
Seller, on the Loans or on the ability of Seller or its assigns to enforce the
Loans), and the performance of its obligations under the Program Documents.
b) Power and Authority. Seller has all necessary power and
authority to conduct its business as currently conducted, to execute, deliver
and perform its obligations under the Program Documents and to consummate the
Transactions.
c) Due Authorization. The execution, delivery and performance
of the Program Documents by Seller have been duly authorized by all necessary
corporate action and do not require any additional approvals or consents or
other action by or any notice to or filing with any Person.
d) Noncontravention. None of the execution and delivery of the
Program Documents by Seller or the consummation of the Transactions and
transactions thereunder:
i) conflicts with, breaches or violates any provision of
the articles or certificate of incorporation or by-laws of Seller
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to Seller, or its properties;
ii) constitutes a material default by Seller under any
loan or repurchase agreement, mortgage, indenture or other
agreement or instrument to which Seller is a party or by which it
or any of its properties is or may be bound or affected; or
iii) results in or requires the creation of any lien upon
or in respect of any of the assets of Seller except the lien
relating to the Program Documents.
a) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative agency or
arbitrator affecting any of the Purchased Securities, Seller or any of its
Affiliates, pending or threatened, which, if decided adversely, would have a
material adverse effect with respect to Seller or any Purchased Security.
b) Valid and Binding Obligations. Each of the Program
Documents to which Seller is a party when executed and delivered by Seller
will constitute the legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles.
c) Financial Statements. The financial statements of Seller,
copies of which have been furnished to Buyer, (i) are, as of the dates and for
the periods referred to therein, complete and correct in all material
respects, (ii) present fairly the financial condition and results of
operations of Seller as of the dates and for the periods indicated and (iii)
have been prepared in accordance with GAAP consistently applied, except as
noted therein (subject as to interim statements to normal year-end
adjustments). Since the date of the most recent financial statements, there
has been no material adverse change in such financial condition or results of
operations. Except as disclosed in such financial statements, Seller is not
subject to any contingent liabilities or commitments that, individually or in
the aggregate, have a material possibility of causing a material adverse
change in the business or operations of Seller.
d) Accuracy of Information. None of the documents or
information prepared by or on behalf of Seller and provided by Seller to Buyer
relating to Seller or its financial condition contain any statement of a
material fact with respect to Seller or the Transactions that was untrue or
misleading in any material respect when made. Since the furnishing of such
documents or information, there has been no change, nor any development or
event involving a prospective change known to Seller, that would render any of
such documents or information untrue or misleading in any material respect.
e) No Consents. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
nongovernmental person, is required in connection with the execution, delivery
and performance by Seller of this Agreement or the consummation of any other
Program Document.
f) Compliance With Law. Etc. No practice, procedure or policy
employed or proposed to be employed by Seller in the conduct of its businesses
violates any law, regulation, judgment, agreement, order or decree applicable
to it which, if enforced, would result in a material adverse effect upon
Seller.
g) Solvency: Fraudulent Conveyance. Seller is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to such
Transaction, Seller will not be left with an unreasonably small amount of
capital with which to engage in its business. Seller does not intend to incur,
or believe that it has incurred, debts beyond its ability to pay such debts as
they mature. Seller is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Seller or any of its assets. The amount of consideration being received by the
Seller upon the sale of the Purchased Securities to Buyer and thereafter upon
the sale of any Purchased Securities by the Seller to Buyer constitutes
reasonably equivalent value and fair consideration for such Purchased
Securities. Seller is not transferring any Purchased Securities with any
intent to hinder, delay or defraud any of its creditors.
h) Investment Company Act Compliance. Seller is neither
required to be registered as an "investment company" as defined under the
Investment Company Act nor under the control of an "investment company" as
defined under the Investment Company Act.
i) Taxes. Seller has filed all federal and state tax returns
which are required to be filed and paid all taxes, including any assessments
received by it, to the extent that such taxes have become due (other than for
taxes that are being contested in good faith or for which it has established
adequate reserves). Any taxes, fees and other governmental charges payable by
Seller in connection with a Transaction and the execution and delivery of the
Program Documents have been paid (other than for taxes that are being
contested in good faith or for which it has established adequate reserves).
j) Additional Representations. With respect to each Loan,
Seller makes all of the applicable representations and warranties set forth on
Appendix A of the Custody Agreement for the related Loan Type, as of the date
the documents related to such Loan are delivered to the Custodian,
continuously while such Loan is part of the Collateral and is subject to a
Transaction.
k) Hedging. Effective as of the Effective Date, Seller has
entered into interest rate futures contracts which are fully subject to the
Commodity Account Control Agreement, having a notional amount at least equal
to 50% of the aggregate outstanding Purchase Price. Effective as of the
Effective Date, all hedging for the Loans shall be subject to the Commodity
Account Control Agreement.
In the event Buyer engages in a repurchase transaction with any of the
Purchased Securities or otherwise pledges or hypothecates any of the Purchased
Securities, Buyer shall have the right to assign to Buyer's counterparty any
of the applicable representations or warranties in Appendix A of the Custody
Agreement, and the remedies for breach thereof as they relate to the Purchased
Securities that are subject to such repurchase transaction.
The representations and warranties set forth in this Agreement shall
survive transfer of the Purchased Securities to Buyer and shall continue for
so long as the Purchased Securities are subject to this Agreement.
13. COVENANTS OF SELLER
Seller hereby covenants with Buyer as follows:
a) Defense of Title. Seller warrants and will defend the
right, title and interest of Buyer in and to all Collateral against all
adverse claims and demands.
b) No Amendment or Compromise. Without Buyer's prior consent,
Seller and those acting on Seller's behalf shall not amend or modify, or
waive any term or condition of, or settle or compromise any claim in
respect of, any item of the Purchased Securities or any related rights,
provided, however, Seller may waive late charges, approve assumptions
and changes in payment due dates, and establish escrow accounts and
"ACH" payment plans with respect to the Purchased Securities without
Buyer's prior consent.
c) No Assignment. Seller shall not sell, assign, transfer or
otherwise dispose of, or grant any option with respect to, or pledge,
hypothecate or grant a security interest in or lien on or otherwise
encumber (except pursuant to the Program Documents), any of the
Purchased Securities or any interest therein, provided that this
paragraph shall not prevent any transfer of Purchased Securities in
accordance with the Program Documents.
a) Servicing of Loans. Seller shall service, or cause to be
serviced, all Loans that are part of the Purchased Securities in accordance
with the standard industry practices, employing at least the same procedures
and exercising the same care that Seller customarily employs in servicing
Loans for its own account, and in accordance with all applicable requirements
of the relevant Agency or Authorized Purchaser. Seller shall notify servicers
of Buyer's interest hereunder. Seller shall notify Buyer of the name and
address of all servicers. Buyer shall have the right to approve each servicer
and the form of all servicing agreements. Seller shall hold or cause to be
held all escrow funds collected with respect to such Loans in trust accounts
and shall apply the same for the purposes for which such funds were collected.
Upon Buyer's request, Seller shall provide to Buyer a letter addressed to and
agreed to by each servicer of Loans, in form and substance reasonably
satisfactory to Buyer, advising such servicer of such matters as Buyer may
reasonably request. If Seller should discover that, for any reason
whatsoever, Seller or any entity responsible to Seller by contract for
managing or servicing any such Loan has failed to perform fully Seller's
obligations under the Program Documents or any of the obligations of such
entities with respect to the Purchased Securities, Seller shall promptly
notify Buyer.
b) Preservation of Collateral; Collateral Value. Seller shall
do all things necessary to preserve the Collateral so that it remains
effective security hereunder. Without limiting the foregoing, Seller will
comply with all rules, regulations and other laws of any governmental
authority and cause the Collateral to comply with all applicable rules,
regulations and other laws. Seller will not allow any default for which
Seller is responsible to occur under any Collateral, and Seller shall fully
perform or cause to be performed when due all of its obligations under any
Collateral or the Program Documents.
c) Maintenance of Papers, Records and Files. Seller shall
acquire and Seller or servicer of the Purchased Securities shall build,
maintain and have available a complete file in accordance with industry custom
and practice for each Purchased Security. Seller or the servicer of the
Purchased Securities will maintain all such Records not in the possession of
Custodian in good and complete condition in accordance with industry practices
and preserve them against loss.
i) Seller shall collect and maintain or cause to be
collected and maintained all Records relating to the Purchased
Securities in accordance with industry custom and practice,
including those maintained pursuant to the preceding subparagraph,
and all such Records shall be in Custodian's or Seller's
possession unless Buyer otherwise approves. Seller will not allow
any such papers, records or files that are an original or an only
copy to leave Seller's or Custodian's possession, except for
individual items removed in connection with servicing a specific
Loan, in which event Seller will obtain or cause to be obtained a
receipt from a financially responsible person for any such paper,
record or file.
ii) For so long as Buyer has an interest in or lien on any
Purchased Security, Seller will hold or cause to be held all
Records in trust for Buyer. Seller shall notify every other party
holding any such Records of the interests and liens granted
hereby.
iii) Upon reasonable advance notice from Custodian or
Buyer, Seller shall (x) make any and all such Records available to
Custodian or Buyer to examine any such Records, either by its own
officers or employees, or by agents or contractors, or both, and
make copies of all or any portion thereof, (y) permit Buyer or its
authorized agents to discuss the affairs, finances and accounts of
Seller with its respective chief operating officer and chief
financial officer and to discuss the affairs, finances and
accounts of Seller with its independent accountants.
a) Financial Statements: Accountants' Reports: Other
Information. Seller shall keep or cause to be kept in reasonable detail books
and records of account of its assets and business and shall clearly reflect
therein the transfer of Purchased Securities to the Buyer. Seller shall
furnish or cause to be furnished to Buyer promptly upon Buyer's request the
following:
i) Financial Statements. (x) As soon as available and in
any event within 105 days after the end of each fiscal year, the
consolidated, audited balance sheets of Seller as of the end of
each fiscal year of Seller and the audited financial statements of
income and changes in equity of Seller for such fiscal year; (y)
As soon as available and in any event within 50 days after the end
of each quarter, the consolidated, unaudited balance sheets of
Seller as of the end of each quarter and the unaudited financial
statements of income and changes in equity of Seller for the
portion of the fiscal year then ended; and (z) As soon as
available and in any event within 20 days after the end of each
quarter, the consolidated, unaudited balance sheets, without
quarter end and year end adjustments in accordance with GAAP, of
Seller as of the end of such calendar month and the unaudited
financial statements of income and changes in equity of Seller for
the portion of the fiscal year then ended, all of which were
prepared in accordance with GAAP.
ii) Loan Performance Data. Upon request of Buyer, monthly
reports in form and scope satisfactory to Buyer, setting forth
data regarding the performance of the Purchased Securities, and
such other information as Buyer may reasonably request.
iii) Monthly Servicing Diskettes. Upon request of Buyer
and on the fifth day of each month (or the following Business Day
if such day is not a Business Day), a computer tape (which tape
may be the Computer Tape referenced in Paragraph 4(a)) and a
diskette (or any other electronic transmission acceptable to
Buyer) in a format acceptable to Buyer containing such information
with respect to the Purchased Securities as Buyer may reasonably
request.
iv) Annual Budgets; Business Plans. Such annual budgets,
monthly and annual comparisons of conformity of operations with
annual budgets, annual projections of financial and operations
results, strategic business plans and other internal reports
prepared or reviewed by executive management as Buyer may
reasonably request from time to time.
a) Notice of Material Events. Seller shall promptly inform
Buyer in writing of any event, circumstance or condition that has resulted, or
has a possibility of resulting, in a material adverse effect upon Seller.
b) Maintenance of Licenses. Seller shall maintain all
licenses, permits or other approvals necessary for Seller to conduct its
business (except where the failure to be so qualified would not have a
material adverse effect on the Seller, on the Loans or on the ability of
Seller or its assigns to enforce the Loans) and to perform its obligations
under the Program Documents.
14. P&I COLLECTIONS
Commencing the Effective Date, Seller shall cause all Income on the
Purchased Securities to be deposited, within one Business Day after receipt by
Seller, into the deposit account specified in, and with the depository
institution that is party to, the Blocked Account Agreement between Seller and
Buyer, provided, however, that absent a Default, Seller need not cause such
Income to be deposited during a month in which a securitization occurs.
Absent an Event of Default, Buyer shall not terminate the Blocked Account
Agreement without the written consent of Seller.
15. REPURCHASE OF PURCHASED SECURITIES
Upon discovery by Seller of a breach of any of the representations and
warranties set forth in Appendix A to the Custody Agreement, Seller shall give
prompt written notice thereof to Buyer. Upon any such discovery by Buyer,
Buyer will notify Seller. If Seller does not cure such breach on or before
the 15th day following receipt of notice of such breach, then Seller shall
repurchase the affected Purchased Security on the next succeeding Business
Day.
16. SUBSTITUTION
a) Seller may, subject to agreement with and acceptance by
Buyer, substitute other securities which are substantially the same as
the Purchased Securities (the "Substitute Securities") for any Purchased
Securities. Such substitution shall be made by transfer to Buyer of
such other Securities and transfer to Seller of such Purchased
Securities. After substitution, the Substitute Securities shall be
deemed to be Purchased Securities.
b) In the case of any Transaction for which the Repurchase Date
is other than the Business Day immediately following the Purchase Date
and with respect to which Seller does not have any existing right to
substitute Substitute Securities for the Purchased Securities, Seller
shall have the right, subject to the proviso to this sentence, upon
notice to Buyer, which notice shall be given at or prior to 10 a.m. (New
York time) on the second preceding Business Day, to substitute
Substitute Securities for any Purchased Securities; provided, however,
that Buyer may elect, by the close of business on the Business Day
following which such notice is received, or by the close of the next
Business Day if notice is given after 10 a.m. (New York time) on such
day, not to accept such substitution. In the event such substitution is
accepted by Buyer, such substitution shall be made by Seller's transfer
to Buyer of such Substitute Securities and Buyer's transfer to Seller of
such Purchased Securities, and after such substitution, the Substitute
Securities shall be deemed to be Purchased Securities. In the event
Buyer elects not to accept such substitution, Buyer shall offer Seller
the right to terminate the Transaction.
c) In the event Seller exercises its right to substitute or
terminate under subparagraph (b), Seller shall be obligated to pay to
Buyer, by the close of the Business Day of such substitution, as the
case may be, an amount equal to (A) Buyer's actual cost in bona fide
third party transactions (including all fees, expenses and commissions)
of (i) entering into replacement transactions; (ii) entering into or
terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like transactions with third parties in
connection with or as a result of such substitution or termination, and
(B) to the extent Buyer determines not to enter into replacement
transactions, the loss incurred by Buyer directly arising or resulting
from such substitution or termination. The foregoing amounts shall be
solely determined and calculated by Buyer in good faith.
17. REPURCHASE TRANSACTIONS
Buyer may, in its sole election, engage in repurchase transactions with
the Purchased Securities or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Purchased Securities with a counterparty of Buyer's
choice.
18. EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this
Agreement, the occurrence of any of the following events shall constitute an
"Event of Default":
a) Seller fails to transfer the Purchased Securities to Buyer
on the applicable Purchase Date;
b) Seller fails to repurchase the Purchased Securities on the
applicable Repurchase Date;
c) Seller shall fail to perform, observe or comply with any
other material term, covenant or agreement contained in the Program Documents;
d) Any representation or warranty made by Seller (or any of
Seller's officers) in the Program Documents or in any other document (other
than the representations or warranties in Appendix A to the Custody Agreement)
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated;
e) Seller or any of Seller's Subsidiaries shall fail to pay any
of Seller's or Seller's Subsidiaries Indebtedness for borrowed money
(including non-recourse Indebtedness), or any interest or premium thereon when
due (whether by scheduled maturity, requirement prepayment, acceleration,
demand or otherwise), or shall fail to make any payment when due under
Seller's or Seller's Subsidiaries' Guarantee of another person's Indebtedness
for borrowed money, and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness or Guarantee; or any other default under any agreement or
instrument relating to any such Indebtedness or Guarantee, or any other event,
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement, instrument or Guarantee, if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness or Guarantee; or if any such Indebtedness or
Guarantee shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;
f) a custodian, receiver, conservator, liquidator, trustee,
sequestrator or similar official for Seller or any of Seller's Subsidiaries,
or of any of Seller's or their Property, is appointed or takes possession of
such property; or Seller or any of Seller's Subsidiaries generally fails to
pay Seller's or Seller's Subsidiaries' debts as they become due; or Seller or
any of Seller's Subsidiaries is adjudicated bankrupt or insolvent; or an order
for relief is entered under the Federal Bankruptcy Code, or any successor or
similar applicable statute, or any administrative insolvency scheme, against
Seller or any of Sellers Subsidiaries; or any of Seller's or Seller's
Subsidiaries' Property is sequestered by court or administrative order; or a
petition is filed against Seller or any of Seller's Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, moratorium, delinquency or liquidation law of any jurisdiction,
whether now or subsequently in effect;
g) Seller or any of Seller's Subsidiaries files a voluntary
petition in bankruptcy or seeks relief under any provision of any bankruptcy,
reorganization, moratorium, delinquency, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction whether now or
subsequently in effect; or consents to the filing of any petition against it
under any such law; or consents to the appointment of or taking possession by
a custodian, receiver, conservator, trustee, liquidator, sequestrator or
similar official for Seller or any of Seller's Subsidiaries, or of all or any
part of Seller's or Seller's Subsidiaries' Property; or makes an assignment
for the benefit of Seller's or Seller's Subsidiaries' creditors;
h) any judgment or order for the payment of money, not covered
by an insurance policy, in excess of $500,000 is rendered against Seller or
any of Seller's Subsidiaries;
i) any Governmental Authority 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 Seller or of any of Seller's
Subsidiaries, or shall have taken any action to displace the management of
Seller or of any of Seller's Subsidiaries or to curtail its authority in the
conduct of the business of Seller or of any of Seller's Subsidiaries, or
Governmental Authority takes any action to remove, limit or restrict the
approval of Seller as an issuer, lender or a seller/servicer of Loans;
j) Seller or any of Seller's Subsidiaries shall default under,
or fail to perform as requested under, or shall otherwise breach the terms of
any instrument, agreement or contract between Seller and Buyer or any of
Buyer's Affiliates;
k) in the good faith judgment of Buyer any material adverse
change shall have occurred in the financial condition, operations, business
prospects or corporate structure of Seller or any of Seller's Subsidiaries;
l) Seller shall admit its inability to, or Seller's intention
not to, perform any of Seller's Obligations hereunder;
m) Seller dissolves, merges or consolidates with another entity
unless Seller is the surviving party, or sells, transfers, or otherwise
disposes of a material portion of Seller's business or assets;
n) this Agreement shall for any reason cease to create a valid,
first priority security interest in any of the Purchased Securities purported
to be covered hereby;
o) Seller's audited annual financial statements or the notes
thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of Seller, as a "going concern" or a
reference of similar import;
p) any material amendment to the Underwriting Guidelines which
was not previously approved in writing by Buyer and a Loan underwritten
pursuant to such amended Underwriting Guidelines is a Purchased Security;
q) a change in Control (as such term is defined in Rule 12b-2
of the Securities Exchange Act of 1934, as amended) of Seller shall have
occurred other than in connection with and as a result of the issuance and
sale by Seller of common stock;
r) either (A) 10% or more of the aggregate number of Purchased
Securities, by outstanding principal balance, then subject to Transactions are
more than 30 days delinquent in payment, and Seller shall fail to finally
repurchase all Purchased Securities then subject to Transactions within thirty
days of such occurrence (such Loans shall be eligible for subsequent
Transactions hereunder only with the specific approval of Buyer (which
approval shall not be unreasonably withheld) on and after the date which is
five Business Days following delivery to Buyer of reasonable evidence that the
Purchased Securities are current and not susceptible to similar delinquency
experience) or (B) the delinquencies described in clause (A) are 12% or more,
and such repurchase shall fail to occur within 15 days of such occurrence
(such Loans shall be eligible for subsequent Transactions hereunder only with
the specific approval of Buyer (which approval shall not be unreasonably
withheld) on and after the date which is five Business Days following delivery
to Buyer of reasonable evidence that the Purchased Securities are current and
not susceptible to similar delinquency experience). However, if Seller
provides sufficient evidence that a sale of the Purchased Securities is
pending, Buyer may grant an extension in accordance with the terms and
conditions set forth herein, which extension may not be unreasonably withheld;
or
s) Metropolitan Mortgage & Securities Co., Inc. shall fail to
maintain (A) GAAP net worth of at least $45 million, (B) a ratio of
Indebtedness to GAAP net worth of 24:1 or less, or (C) at least $40,000,000 of
liquid assets (cash equivalents and market value of U.S. Treasury securities).
19. REMEDIES
Upon the occurrence of an Event of Default, Buyer, at its option (which
option shall be deemed to have been exercised immediately upon the occurrence
of an Event of Default pursuant to Paragraph 18 (f) or (g) hereof), shall have
any or all of the following rights and remedies, which may be exercised by
Buyer:
a) The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
b) Seller's obligations hereunder to repurchase all Purchased
Securities at the Repurchase Price therefor on the Repurchase Date in such
Transactions shall thereupon become immediately due and payable; all Income
paid after such exercise or deemed exercise shall be retained by Buyer and
applied to the aggregate Repurchase Prices and any other amounts owing by
Seller hereunder; Seller shall immediately deliver to Buyer or its designee
any and all original papers, records and files relating to the Purchased
Securities subject to such Transaction then in Seller's possession and/or
control; and all right, title and interest in and entitlement to such
Purchased Securities and Servicing Rights thereon shall be deemed transferred
to Buyer.
Buyer may (A) immediately sell, without notice or demand of any kind, at
a public or private sale and at such price or prices as Buyer may reasonably
deem satisfactory any or all Purchased Securities or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give Seller credit for such Purchased Securities in an amount
equal to the Market Value of the Purchased Securities against the aggregate
unpaid Repurchase Price and any other amounts owing by Seller hereunder. The
proceeds of any disposition of Purchased Securities shall be applied first to
the costs and expenses incurred by Buyer in connection with or as a result of
an Event of Default; second to consequential damages, including, but not
limited to, costs of cover and/or related hedging transactions; third to the
aggregate Repurchase Prices; and fourth to all other Obligations.
The parties recognize that it may not be possible to purchase or sell
all of the Purchased Securities on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner because the market
for such Purchased Securities may not be liquid. In view of the nature of the
Purchased Securities, the parties agree that liquidation of a Transaction or
the underlying Purchased Securities does not require a public purchase or sale
and that a good faith private purchase or sale shall be deemed to have been
made in a commercially reasonable manner. Accordingly, Buyer may elect the
time and manner of liquidating any Purchased Security and nothing contained
herein shall obligate Buyer to liquidate any Purchased Security on the
occurrence of an Event of Default or to liquidate all Purchased Securities in
the same manner or on the same Business Day or constitute a waiver of any
right or remedy of Buyer.
Except as provided in Paragraph 23, in addition to its rights hereunder,
Buyer shall have the right to proceed against any of Seller's assets which may
be in the possession of Buyer or its designee (including the Custodian),
including the right to liquidate such assets and to set-off the proceeds
against monies owed by Seller to Buyer pursuant to this Agreement. Except as
provided in Paragraph 23, Buyer may set off cash, the proceeds of the
liquidation of the Purchased Securities and Additional Purchased Securities,
any other Collateral or its proceeds and all other sums or obligations owed by
Buyer to Seller hereunder against all of Seller's Obligations to Buyer,
whether under this Agreement, under a Transaction, or under any other
agreement between the parties, or otherwise, whether or not such Obligations
are then due, without prejudice to Buyer's right to recover any deficiency.
Buyer may direct all Persons servicing the Purchased Securities to take
such action with respect to the Purchased Securities as Buyer determines
appropriate.
Except as provided in Paragraph 23, Seller shall be liable to Buyer for
the amount of all expenses (plus interest thereon at a rate equal to the
Default Rate), and consequential damages, including, without limitation, all
costs and expenses incurred in connection with hedging or covering
transactions.
Seller shall cause all sums received by it with respect to the Purchased
Securities to be deposited pursuant to the Blocked Account Agreement after
receipt thereof.
Buyer shall without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Securities and any other Collateral
or any portion thereof, collect the payments due with respect to the Purchased
Securities and any other Collateral or any portion thereof, and do anything
that Buyer is authorized hereunder to do. Subject to Paragraph 23, Seller
shall pay all costs and expenses incurred by Buyer in connection with the
appointment and activities of such receiver.
Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives, to the extent
permitted by law, any right Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives, to the extent
permitted by law, any defense Seller might otherwise have to the Obligations,
arising from use of nonjudicial process, enforcement and sale of all or any
portion of the Collateral or Purchased Securities and any other Collateral 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.
Except as provided in Paragraph 23, Buyer shall have all the rights and
remedies provided herein, provided by applicable federal, state, foreign, and
local laws in equity, and under any other agreement between Seller and Buyer.
Except as provided in Paragraph 23, upon the occurrence of an Event of
Default, Buyer shall have the right to exercise any of its rights and/or
remedies without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Seller.
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Buyer to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver hereof, nor
shall any single or partial exercise by Buyer of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. Except as provided in Paragraph 23, all
rights and remedies of Buyer provided for herein are cumulative and in
addition to any and all other rights and remedies provided by law, the Program
Documents and the other instruments and agreements contemplated hereby and
thereby. Except as provided in Paragraph 23, Buyer may exercise at any time
after the occurrence of an Event of Default one or more remedies, as it so
desires, and may thereafter at any time and from time to time exercise any
other remedy or remedies.
21. USE OF EMPLOYEE PLAN ASSETS
If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan Party") in a Transaction, the Plan
Party shall so notify the other party prior to the Transaction. The Plan Party
shall represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not
be required so to proceed.
22. INDEMNITY
The powers conferred on Buyer hereunder are solely for its protection
and do not impose any duty on it to exercise any such powers. Following the
occurrence of an Event of Default, Buyer shall have no duty of care to Seller
as to any Purchased Security or any other Collateral or with respect to the
taking of any necessary steps to preserve rights against other parties, or any
other obligation pertaining to such Purchased Security or Collateral. Except
to the extent of any loss, expense, liability or damage caused by Buyer's
breach of the Program Documents, Seller and Seller's successors and assigns
waive all rights whatsoever against Buyer for any loss, expense, liability or
damage Seller may suffer as a result of actions taken pursuant to the Program
Documents, including those arising under any "mortgagee in possession" or
similar doctrine. Seller agrees to, and shall, indemnify Buyer, Agent, their
respective Affiliates and their respective officers, directors, partners,
employees, representatives and agents (collectively, the "Indemnified
Parties", each an "Indemnified Party") from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages, judgments,
penalties, suits, actions, costs, disbursements or expenses (including, but
not limited to, attorneys' fees, legal expenses and the allocated cost of
internal counsel) whether or not suit is brought and settlement costs imposed
on, asserted against or incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation, litigation
or other proceeding (whether or not such Indemnified Party is a party thereto)
relating to, resulting from or arising out of any of the Program Documents and
all other documents related thereto, any breach of a representation, warranty
or covenant of Seller or Seller's officer in this Agreement or any other
Program Document, and all actions taken pursuant thereto (but excluding any
such costs to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Indemnified Party to be indemnified). In
addition, Seller shall compensate and indemnify Buyer and Agent for all
reasonable costs and expenses that Buyer may sustain in connection with the
protection of Buyer's rights under or the enforcement of the Program Documents
or any other documents received by Buyer or Custodian in connection therewith.
Seller agrees to pay, and reimburse Buyer, Agent and Custodian for, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or liens upon
or in respect of the Purchased Securities and all other fees, costs and other
expenses in connection with protecting, maintaining or preserving the
Purchased Securities and Buyer's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Purchased Securities. Seller's
indemnity obligations contained in this Paragraph 22 shall continue in full
force and effect notwithstanding the full payment of all Obligations and
notwithstanding the discharge thereof or termination of this Agreement.
23. LIMITATION ON RECOURSE.
Notwithstanding any provision of this Agreement, except as provided in
this Paragraph 23, and except with respect to the indemnification provided in
Paragraph 22 and in Section 6 of the Custody Agreement, Buyer shall not
enforce the liability and obligation of Seller to perform and observe the
obligations contained in this Agreement by any action or proceeding wherein a
money judgment shall be sought against Seller, except that Buyer may bring a
foreclosure action, action for specific performance or other appropriate
action or proceeding to enable Buyer to enforce and realize upon its interest
under this Agreement, and its interest in the Purchased Securities, and any
other Collateral given to Buyer under the Program Documents (including,
without limitation, any Income held in a deposit account pursuant to Paragraph
14); provided, however, that any judgment in any such action or proceeding
shall be enforceable against Seller only to the extent of Seller's interest in
the Purchased Securities and in any other Collateral given to Buyer. Buyer
agrees that it shall not xxx for, seek or demand any deficiency judgment
against Seller in any such action or proceeding, under or by reason of or
under or in connection with this Agreement. The provisions of this Paragraph
23 shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Program Documents except to the extent
of the limitations in money judgments and deficiency judgments set forth in
this Paragraph 23; (ii) impair the right of Buyer to name Seller as a party
defendant in any action or suit for judicial foreclosure and sale under the
Program Documents; (iii) impair the right of Buyer to obtain the appointment
of a receiver; (iv) impair the right of Buyer to bring suit (and seek a money
judgment therein) with respect to fraud or intentional misrepresentation by
Seller or any other person or entity in connection with the Program Documents;
(v) impair the right of Buyer to obtain payments on the Purchased Securities
received by Seller after the occurrence of an Event of Default; (vi) impair
the right of Buyer to bring suit (and seek a money judgment therein) with
respect to any misappropriation by Seller of Loan payments collected in
advance; (vii) impair the right of Buyer to obtain insurance proceeds or
condemnation awards due to Buyer under this Agreement; or (viii) apply to
losses arising out of any misrepresentation, wilful misconduct or fraud by
Seller or its agents or employees or to any suit or money judgment related
thereto.
24. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
Except as provided in Paragraph 23, Seller hereby expressly waives, to
the fullest extent permitted by law, every statute of limitation on a
deficiency judgment, any reduction in the proceeds of any Purchased Securities
as a result of restrictions upon Buyer or Custodian contained in the Program
Documents or any other instrument delivered in connection therewith, and any
right that it may have to direct the order in which any of the Purchased
Securities shall be disposed of in the event of any disposition pursuant
hereto.
25. REIMBURSEMENT
All sums expended by Buyer in connection with the exercise of any right
or remedy provided for herein shall be and remain Seller's obligation. Seller
agrees to pay, with interest at the Default Rate, which interest shall accrue
30 days after receipt by Seller of a written request (including all related
invoices) from Buyer for payment, the reasonable out-of-pocket expenses and
reasonable attorneys' fees incurred by Buyer, Agent and/or Custodian in
connection with the preparation, negotiation, administration and enforcement
of the Program Documents, the taking of any action, including legal action,
required or permitted to be taken by Buyer, Agent and/or Custodian pursuant
thereto, any "due diligence" or Loan Agent reviews conducted by Agent or on
its behalf or any refinancing or restructuring in the nature of a "workout";
provided, however, that (i) the fees of Buyer's counsel in connection with the
negotiation of this Agreement prior to the date hereof shall not exceed
$30,000, and (ii) the Agent's initial "due diligence" fees shall not exceed
$15,000, and subsequent "due diligence" fees shall not exceed $30,000 per
annum (absent a Default).
26. UNDERWRITING GUIDELINE AMENDMENTS
Buyer shall review any proposed changes to the Underwriting Guidelines
submitted by Seller within ten (10) business days of receipt of such proposed
change. Seller may assume that any such proposed change is acceptable to
Buyer if Seller has not received notice stating otherwise from Buyer at the
end of such period.
27. FURTHER ASSURANCES
Seller agrees to do such further acts and things and to execute and
deliver to Buyer such additional assignments, acknowledgments, agreements,
powers and instruments as are reasonably required by Buyer to carry into
effect the purposes of the Agreement, to perfect the interests of Buyer in the
Purchased Securities or to better assure and confirm unto Buyer its rights,
powers and remedies hereunder.
28. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a
sale and repurchase of Purchased Securities and Additional Purchased
Securities thereto, and it, together with the other Program Documents, each
Confirmation, and the other documents delivered pursuant hereto or thereto,
contains the entire final agreement of the parties. No prior negotiation,
agreement, understanding or prior contract shall have any validity hereafter.
This Agreement and the other Program Agreements are the result of negotiations
among and have been reviewed by counsel to the Agent, the Seller and the other
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Buyer or the Agent merely because of the Agent's or
Buyer's involvement in their preparation.
29. TERMINATION
This Agreement shall remain in effect until the earlier of (i) the
Termination Date and (ii) the occurrence of a Default. However, no such
termination shall affect Seller's outstanding obligations to Buyer at the time
of such termination. Seller's obligations to indemnify Buyer pursuant to this
Agreement shall survive the termination hereof.
30. ASSIGNMENT
The Program Documents are not assignable by Seller. Buyer may from time
to time assign all or a portion of its rights and obligations under this
Agreement and the Program Documents; provided, however that Buyer shall
maintain, for review by Seller upon written request, a register of assignees
and a copy of an executed assignment and acceptance by Buyer and assignee
("Assignment and Acceptance"), specifying the percentage or portion of such
rights and obligations assigned. Upon such assignment, (a) such assignee
shall be a party hereto and to each Program Document to the extent of the
percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and (b)
Buyer shall, to the extent that such rights and obligations have been so
assigned by it, be released from its obligations hereunder and under the
Program Documents. Unless otherwise stated in the Assignment and Acceptance,
Seller shall continue to take directions solely from Buyer unless otherwise
notified by Buyer in writing. Buyer may distribute to any prospective
assignee any document or other information delivered to Buyer by Seller.
31. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any
consent to any failure to comply herewith or therewith shall in any event be
effective unless the same shall be in writing and signed by Seller and Buyer,
and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
32. SEVERABILITY
If any provision of Program Document is declared invalid by any court of
competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
33. BINDING EFFECT; GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Seller may not
assign or transfer any of its rights or obligations under this Agreement,
Confirmation or any other Program Document without the prior written consent
of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.
34. CONSENT TO JURISDICTION
SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENTS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR
PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION SELLER MAY
HAVE TO, PERSONAL JURISDICTION AND VENUE IN XXX XXXXXX XX XXX XXXXX XX XXX
XXXX AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM
DOCUMENTS.
35. SINGLE AGREEMENT
Seller and Buyer 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 have been made in consideration of each other.
Accordingly, Seller and Buyer each agree (i) to perform all of its obligations
in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, and (ii) that payments, deliveries and
other transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfer in respect of any other Transaction hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied against
each other and netted.
36. INTENT
Seller and Buyer 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 ("USC") (except insofar as the Loans 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 USC (except insofar as the Loans subject to such
Transaction or the term of such Transaction would render such definition
inapplicable).
It is understood that Buyer's right to liquidate the Purchased
Securities delivered to it in connection with the Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 19 hereof is a contractual
right to liquidate such Transaction as described in Sections 555 and 559 of
Title 112 of the USC.
Seller and Buyer agree and acknowledge that if Seller is an "insured
deposit institution," as such term is defined in the Federal Deposit Insurance
Act, as amended ("FDIA"), then each Transaction hereunder is a "qualified
financial contract," as that term is defined in FDIA and any rules, order or
policy statements thereunder (except insofar as the Loans subject such to such
Transaction would render such definition inapplicable).
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).
37. INTERPRETATION
The paragraph headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of
any provision of this Agreement.
38. NOTICES AND OTHER COMMUNICATIONS
Any notice required or permitted by this Agreement shall be in writing
and shall be effective and deemed delivered only when received by the party to
which it is sent; provided, however, that a facsimile transmission shall be
deemed to be received when transmitted so long as the transmitting machine has
provided an electronic confirmation of such transmission. Any such notice
shall be sent to a party at the address or facsimile transmission number set
forth in the signature page of the Custody Agreement, as such address or
number may be changed by such party.
IN WITNESS WHEREOF, Seller and Buyer have caused their names to be
signed to this Master Repurchase Agreement by their respective officers
thereunto duly authorized as of the date first above written.
METROPOLITAN MORTGAGE & SECURITIES CO., INC., as Seller (jointly and
severally)
By:
Name:
Title:
METWEST MORTGAGE SERVICES, INC., as Seller
(jointly and severally)
By:
Name:
Title:
NATIONSBANC MORTGAGE CAPITAL CORPORATION,
as Buyer and Agent, as applicable
By:
Name:
Title:
EXHIBIT A
TRANSACTION NOTICE
DATE:
[Name and Address of Buyer]
The undersigned executes and delivers this notice ("Transaction Notice")
pursuant to the requirements of the Master Repurchase Agreement, dated as of
March 24, 1998 (the "Repurchase Agreement") between NationsBanc Mortgage
Capital Corporation ("Buyer") and Metropolitan Mortgage & Securities Co., Inc.
("Seller"), as such Agreement may be modified from time to time, in connection
with the submission for sale thereunder of the Purchased Securities identified
on the Loan Schedule delivered herewith (together with any other Collateral
related thereto) and the delivery of the related Custodian's Loan Files to
Custodian. All capitalized terms used in this Transaction Notice shall have
the same meanings herein as they have in the Repurchase Agreement.
Seller hereby represents and certifies to Buyer that:
1. As of this date, Seller is in compliance with all of the
terms and conditions of the Repurchase Agreement.
2. Except as otherwise previously disclosed in writing to
Buyer, Seller's representations and warranties set forth in the Program
Documents and any other related document are true and accurate as of the
date of this Transaction Notice.
3. The Purchased Securities, which are identified on such Loan
Schedule satisfy the requirements of the eligibility set forth in the
Program Documents between Buyer and Seller.
4. Upon payment to Seller by Buyer of the Purchase Price in
respect of the Transaction involving the Purchased Securities, all of
Seller's right (including the power to convey title thereto), title and
interest in and to each document constituting the Custodian's Loan Files
delivered to Custodian or held by or on behalf of Seller with respect to
each Purchased Security shall be transferred, assigned, set over and
otherwise conveyed to Buyer.
5. The proposed general terms of the sale for the Purchased
Securities as of the Purchase Date shall be:
A. Outstanding Principal Balance: $______________
B. Number of Loans: _______________
C. Loan Type: _______________
D. Repurchase Date: _______________
X. Xxxx Payoff required: No ____ Yes____
$______ to ________
F. Buyer's Margin Percentage _______________%
6. Other items transferred (see definition of Purchased Assets)
___________________, as Seller
By:
Title:
Annex I
Buyer Acting as Agent
This Annex I forms a part of the Master Repurchase Agreement dated as of
March 24, 1998 (the "Agreement") between NationsBanc Mortgage Capital
Corporation and Metropolitan Mortgage & Securities Co., Inc. This Annex I
sets forth the terms and conditions governing all transactions in which a
party selling securities or buying securities, as the case may be ("Agent"),
in a Transaction is acting as agent for one or more third parties (each, a
"Principal"). Capitalized terms used but not defined in this Annex I shall
have the meanings ascribed to them in the Agreement.
1. Additional Representations. Agent hereby makes the following
representations, which shall continue during the term of any
Transaction: Principal has duly authorized Agent to execute and deliver
the Agreement on its behalf, has the power to so authorize Agent and to
enter into the Transactions contemplated by the Agreement and to perform
the obligations of Seller or Buyer, as the case may be, under such
Transactions, and has taken all necessary action to authorize such
execution and delivery by Agent and such performance by it.
2. Identification of Principals. Agent agrees (a) to provide the other
party, prior to the date on which the parties agree to enter into any
Transaction under the Agreement, with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing
from time to time with the consent of the other party), and (b) to
provide the other party, before the close of business on the next
Business Day after orally agreeing to enter into a Transaction, with
notice of the specific Principal or Principals for whom it is acting in
connection with such Transaction. If (i) Agent fails to identify such
Principal or Principals prior to the close of business on such next
Business Day or (ii) the other party shall determine in its sole
discretion that any Principal or Principals identified by Agent are not
acceptable to it, the other party may reject and rescind any Transaction
with such Principal or Principals, return to Agent any Purchased
Securities or portion of the Purchase Price, as the case may be,
previously transferred to the other party and refuse any further
performance under such Transaction, and Agent shall immediately return
to the other party any portion of the Purchase Price or Purchased
Securities, as the case may be, previously transferred to Agent in
connection with such Transaction; provided, however, that (A) the other
party shall promptly (and in any event within one Business Day) notify
Agent of its determination to reject and rescind such Transaction and
(B) to the extent that any performance was rendered by any party under
any Transaction rejected by the other party, such party shall remain
entitled to any Price Differential or other amounts that would have been
payable to it with respect to such performance if such Transaction had
not been rejected. The other party acknowledges that Agent shall not
have any obligation to provide it with confidential information
regarding the financial status of its Principals; Agent agrees, however,
that it will assist the other party in obtaining from Agent's Principals
such information regarding the financial status of such Principals as
the other party may reasonably request.
3. Limitation of Agent's Liability. The parties expressly acknowledge that
if the representations of Agent under the Agreement, including this
Annex I, are true and correct in all material respects during the term
of any Transaction and Agent otherwise complies with the provisions of
this Annex I, then (a) Agent's obligations under the Agreement shall not
include a guarantee of performance by its Principal or Principals and
(b) the other party's remedies shall not include a right of setoff in
respect of rights or obligations, if any, of Agent arising in other
transactions in which Agent is acting as principal.
4. Multiple Principals.
(a) In the event that Agent proposes to act for more than one
Principal hereunder, Agent and the other party shall elect whether
(i) to treat Transactions under the Agreement as transactions
entered into on behalf of separate Principals or (ii) to aggregate
such Transactions as if they were transactions by a single
Principal. Failure to make such an election in writing shall be
deemed an election to treat Transactions under the Agreement as
transactions on behalf of separate Principals.
(b) In the event that Agent and the other party elect (or are deemed
to elect) to treat Transactions under the Agreement as
transactions on behalf of separate Principals, the parties agree
that (i) Agent will provide the other party, together with the
notice described in Paragraph 2(b) of this Annex I, notice
specifying the portion of each Transaction allocable to the
account of each of the Principals for which it is acting (to the
extent that any such Transaction is allocable to the account of
more than one Principal); (ii) the portion of any individual
Transaction allocable to each Principal shall be deemed a separate
Transaction under the Agreement; (iii) the margin maintenance
obligations of Seller under Paragraph 6(a) of the Agreement shall
be determined on a Transaction-by-Transaction basis (unless the
parties agree to determine such obligations on a Principal-by-
Principal basis); and (iv) Buyer's and Seller's remedies under the
Agreement upon the occurrence of an Event of Default shall be
determined as if Agent had entered into a separate Agreement with
the other party on behalf of each of its Principals.
(c) In the event that Agent and the other party elect to treat
Transactions under the Agreement as if they were transactions by a
single Principal, the parties agree that (i) Agent's notice under
Paragraph 2(b) of this Annex I need only identify the names of its
Principals but not the portion of each Transaction allocable to
each Principal's account; (ii) the margin maintenance obligations
of Seller under Paragraph 6(a) of the Agreement shall, subject to
any greater requirement imposed by applicable law, be determined
on an aggregate basis for all Transactions entered into by Agent
on behalf of any Principal; and (iii) Buyer's and Seller's
remedies upon the occurrence of an Event of Default shall be
determined as if all Principals were a single Seller or Buyer, as
the case may be.
(d) Notwithstanding any other provision of the Agreement (including,
without limitation, this Annex I), the parties agree that any
Transactions by Agent on behalf of an employee benefit plan under
ERISA shall be treated as Transactions on behalf of separate
Principals in accordance with Paragraph 4(b) of this Annex I (and
all margin maintenance obligations of the parties shall be
determined on a Transaction-by-Transaction basis).
5. Interpretation of Terms. All references to "Seller" or "Buyer", as the
case may be, in the Agreement shall, subject to the provisions of this
Annex I (including, among other provisions, the limitations on Agent's
liability in Paragraph 3 of this Annex I), be construed to reflect that
(i) each Principal shall have, in connection with any Transaction or
Transactions entered into by Agent on its behalf, the rights,
responsibilities, privileges and obligations of a "Seller" or "Buyer",
as the case may be, directly entering into such Transaction or
Transactions with the other party under the Agreement, and (ii) Agent's
Principal or Principals have designated Agent as their sole agent for
performance of Seller's obligations to Buyer or Buyer's obligations to
Seller, as the case may be, and for receipt of performance by Buyer of
its obligations to Seller or Seller of its obligations to Buyer, as the
case may be, in connection with any Transaction or Transactions under
the Agreement (including, among other things, as Agent for each
Principal in connection with transfers of Securities, cash or other
property and as agent for giving and receiving all notices under the
Agreement). Both Agent and its Principal or Principals shall be deemed
"parties" to the Agreement and all references to a "party" or "either
party" in the Agreement shall be deemed revised accordingly.
