EXHIBIT 10.2
EXECUTION COPY
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SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Among
CDC MORTGAGE CAPITAL INC., as Buyer
NEW CENTURY MORTGAGE CORPORATION, as Seller
and
NC CAPITAL CORPORATION, as Seller
Dated as of June 23, 2003
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TABLE OF CONTENTS
Page
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1. APPLICABILITY .......................................................... 1
2. DEFINITIONS ............................................................ 1
3. INITIATION; TERMINATION ................................................ 20
4. MARGIN AMOUNT MAINTENANCE .............................................. 27
5. INCOME PAYMENTS ........................................................ 28
6. REQUIREMENTS OF LAW .................................................... 29
7. SECURITY INTEREST ...................................................... 30
8. PAYMENT, TRANSFER AND CUSTODY .......................................... 32
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS ............................ 33
10. SELLER'S REPRESENTATIONS ............................................... 33
11. COVENANTS OF SELLER .................................................... 38
12. EVENTS OF DEFAULT ...................................................... 49
13. REMEDIES ............................................................... 51
14. INDEMNIFICATION AND EXPENSES ........................................... 54
15. RECORDING OF COMMUNICATIONS ............................................ 55
16. SINGLE AGREEMENT ....................................................... 55
17. NOTICES AND OTHER COMMUNICATIONS ....................................... 55
18. ENTIRE AGREEMENT; SEVERABILITY ......................................... 56
19. NON-ASSIGNABILITY ...................................................... 56
20. TERMINABILITY .......................................................... 56
21. GOVERNING LAW .......................................................... 57
22. SUBMISSION TO JURISDICTION; WAIVERS .................................... 57
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23. NO WAIVERS, ETC......................................................... 58
24. SERVICING .............................................................. 58
25. INTENT ................................................................. 59
26. BUYER'S REPRESENTATIONS ................................................ 60
27. NETTING ................................................................ 61
28. PERIODIC DUE DILIGENCE REVIEW .......................................... 61
29. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT ................................ 62
30. MISCELLANEOUS .......................................................... 63
31. CONFIDENTIALITY ........................................................ 64
32. CONFLICTS .............................................................. 64
33. SET-OFF ................................................................ 64
34. MOST FAVORED STATUS .................................................... 65
35. OBLIGATIONS JOINT AND SEVERAL .......................................... 65
36. WAIVER OF PREVIOUS NON-COMPLIANCE ...................................... 65
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EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
SCHEDULE 2 Subsidiaries
EXHIBIT I Transaction Request
EXHIBIT II Underwriting Guidelines
EXHIBIT III Form of Opinion Letter
EXHIBIT IV UCC Filing Jurisdictions
EXHIBIT V Form of Account Agreement
EXHIBIT VI Form of True Sale Certification
EXHIBIT VII-A Form of Seller's Release Letter
EXHIBIT VII-B Form of Warehouse Lender's Release Letter
EXHIBIT VIII Form of Servicer Notice
EXHIBIT IX Form of Request for Additional Transactions for Excess Margin
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SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
This is a SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT,
dated as of June 23, 2003, among NEW CENTURY MORTGAGE CORPORATION, a California
corporation ("NCMC"), NC CAPITAL CORPORATION, a California corporation ("NCCC",
and together with NCMC, "Seller") and CDC MORTGAGE CAPITAL INC., a New York
corporation ("Buyer").
WHEREAS, the Seller and the Buyer are parties to that certain Master
Repurchase Agreement, dated as of July 19, 2001 (the "Original Repurchase
Agreement"), between the Seller and the Buyer; and
WHEREAS, the Seller and the Buyer are parties to that certain Amended
and Restated Master Repurchase Agreement, dated as of May 10, 2002 (the "First
Amended and Restated Repurchase Agreement"), between the Seller and the Buyer;
and
WHEREAS the Seller has requested Buyer to agree to amend certain
provisions of the Original Repurchase Agreement and the First Amended and
Restated Repurchase Agreement as set forth in this Second Amended and Restated
Master Repurchase Agreement. The Buyer is willing to agree to such amendments,
but only on the terms and subject to the conditions set forth in this Second
Amended and Restated Master Repurchase Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Sellers and the Buyer hereby agree as follows:
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
Seller agrees to transfer to Buyer Mortgage Loans against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller
such Mortgage Loans at a date certain not later than 364 days after the date
of transfer, against the transfer of funds by Seller. Each such transaction
shall be referred to herein as a "Transaction" and shall be governed by this
Agreement, unless otherwise agreed in writing.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement in
the singular to have the same meanings when used in the plural and vice
versa). Terms otherwise not defined herein shall have the meanings assigned
thereto in the Custodial and Disbursement Agreement.
"Account Agreement" shall mean a letter agreement among NCCC, NCMC,
Servicer, Buyer and the Bank substantially in the form of Exhibit V attached
hereto.
"Act of Insolvency" shall mean, with respect to any Person, (i) the filing
of a petition, commencing, or authorizing the commencement of any case or
proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
law relating to the protection of creditors, or suffering any such petition
or proceeding to be commenced by another which is consented to, not timely
contested or results in entry of an order for relief which is not discharged
within thirty (30) days; (ii) the seeking or consenting to the appointment
of a receiver, trustee, custodian or similar official for such Person or any
substantial part of the property of such Person; (iii) the appointment of a
receiver, conservator, or manager for such Person by any governmental agency
or authority having the jurisdiction to do so; (iv) the making or offering
by such Person of a composition with its creditors or a general assignment
for the benefit of creditors; (v) the admission by such Person of its
inability to pay its debts or discharge its obligations as they become due
or mature; or (vi) that any governmental authority or agency or any person,
agency or entity acting or purporting to act under governmental authority
shall have taken any action to condemn, seize or appropriate, or to assume
custody or control of, all or any substantial part of the property of such
Person, or shall have taken any action to displace the management of such
Person or to curtail its authority in the conduct of the business of such
Person.
"Additional Purchased Assets" shall mean Mortgage Loans or cash provided by
Seller to Buyer or its designee pursuant to Section 4.
"Adjusted Leverage Ratio" shall mean on any date of determination, the ratio
of (a) Total Liabilities to (b) Adjusted Tangible Net Worth.
"Adjusted Tangible Net Worth" shall mean on any date of determination, the
Tangible Net Worth of Guarantor minus 25% of the amount by which the book
value of Junior Securitization Interests included in calculating Tangible
Net Worth exceeds Indebtedness of the type described in Section 11(s)(4).
"Affiliate" shall mean with respect to any Person, any "affiliate" of such
Person, as such term is defined in the Bankruptcy Code.
"Agreement" shall mean this Second Amended and Restated Master Repurchase
Agreement, as the same may be further amended, supplemented or otherwise
modified in accordance with the terms hereof.
"ALTA" shall mean the American Land Title Association.
"Appraised Value" shall mean the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Asset Schedule and Exception Report" shall have the meaning assigned
thereto in the Deutsche Custodial and Disbursement Agreement.
"Asset Value" shall mean as of any date of determination with respect to
each Eligible Asset, the lesser of (a) the Purchase Percentage multiplied by
the Market Value of such Mortgage Loan as of such date of determination, and
(b) the outstanding principal balance of such Eligible Asset as of such date
of determination; provided, that, the following additional limitations on
Asset Value shall apply:
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(1) the aggregate Asset Value of Wet-Ink Mortgage Loans may not exceed
the Wet-Ink Sub-Limit at any time;
(2) the aggregate Asset Value of Second Lien Mortgage Loans may not
exceed the Second Lien Sub-Limit at any time;
(3) the aggregate Asset Value of Manufactured Home Mortgage Loans
shall not exceed the Manufactured Home Sub-Limit at any time;
(4) the aggregate Asset Value of a single Mortgage Loan shall not
exceed the Mortgage Loan Sub-Limit;
(5) the aggregate Asset Value of Jumbo Mortgage Loans may not exceed
the Jumbo Sub-Limit at any time;
(6) the aggregate Asset Value of Jumbo(500) Mortgage Loans may not
exceed the Jumbo(500) Sub-Limit at any time;
(7) the aggregate Asset Value of Jumbo(750) Mortgage Loans may not
exceed the Jumbo(750) Sub-Limit at any time;
(8) The aggregate Asset Values of C Credit Mortgage Loans and C Minus
Credit Mortgage Loans may not exceed the C/C- Credit Sub-Limit at
any time;
(9) The aggregate Asset Value of Non-owner Occupied Mortgage Loans may
not exceed the product of 6% and the Maximum Amount;
(11) The aggregate Asset Value of Condominium Mortgage Loans and PUD
Mortgage Loans may not exceed the Condominium and PUD Sub-Limit at
any time; and
(12) the Asset Value shall be deemed to be zero with respect to each
Mortgage Loan (i) in respect of which there is a breach of a
representation and warranty set forth in Schedule 1 (assuming each
representation and warranty is made as of the date Asset Value is
determined), (ii) in respect of which there is a delinquency in
the payment of principal and/or interest which continues for a
period in excess of twenty nine (29) calendar days (without regard
to any applicable grace periods), (iii) which has not been
repurchased by Seller by the earlier to occur of (A) the
Termination Date and (B) the 180th day after the date on which it
is first purchased by Buyer, (iv) which has been released from the
possession of Custodian under the Custodial and Disbursement
Agreement to Seller for a period in excess of ten (10) calendar
days, (v) which exceed the limitations on Asset Value set forth
above or (vi) which is a Wet-Ink Mortgage Loan, for which
Custodian has failed to receive the related Mortgage Documents by
the seventh (7/th/) Business Day following the applicable
Origination Date of such Wet-Ink Mortgage Loan.
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"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the
Mortgage to Buyer.
"Bank" shall mean Deutsche Bank National Trust Company, a national banking
association, and its successors in interest, or such other depository
institution as may be acceptable to Buyer in its sole discretion, and their
respective successors in interest.
"Bank of America Financing Facility" shall mean the Master Repurchase
Agreement dated as of May 10, 2002, as may be amended from time to time, by
and between New Century Funding A and Bank of America, N.A. and all other
documents or agreements executed in connection therewith, or replacement
facilities with substantially similar terms (including, but not limited to,
amounts and rates) with financial institutions approved by Buyer.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which banks in the State of New York (or state in which any of
Custodian, Disbursement Agent, Seller or Buyer is located) is authorized or
obligated by law or executive order to be closed.
"Buyer" shall mean CDC Mortgage Capital Inc., a New York corporation, and
its successors in interest and assigns.
"C Credit Mortgage Loan" shall mean each Mortgage Loan originated in
accordance with the Underwriting Guidelines criteria for "C" credit mortgage
loans.
"C/C- Credit Sub-Limit" shall mean an amount equal to the product of 9% and
the Maximum Amount.
"C Minus Credit Mortgage Loans" shall mean each Mortgage Loan originated in
accordance with the Underwriting Guidelines criteria for "C-" credit
mortgage loans.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Cash" shall mean all cash and Cash Equivalents, as shown on the balance
sheet of Seller prepared in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government
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or any agency thereof, (b) certificates of deposit and eurodollar time
deposits with maturities of 90 days or less from the date of acquisition and
overnight bank deposits of any commercial bank having capital and surplus in
excess of $500,000,000, (c) repurchase obligations of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term
of not more than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof
by Xxxxx'x Investors Service, Inc. ("Moody's") and in either case maturing
within 90 days after the day of acquisition, (e) securities with maturities
of 90 days or less from the date of acquisition issued or fully guaranteed
by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's,
(f) securities with maturities of 90 days or less from the date of
acquisition backed by standby letters of credit issued by any commercial
bank satisfying the requirements of clause (b) of this definition or (g)
shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition.
"Change of Control" shall mean the occurrence, after the Effective Date, of
any of the following circumstances: (a) Guarantor not owning, directly or
indirectly, all of the issued and outstanding capital stock of NCMC; or (b)
any Person, or two or more Persons acting in concert, other than the
Management Shareholders, acquiring beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of securities of
Guarantor (or other securities convertible into such securities)
representing 35% or more of the combined voting power of all securities of
Guarantor entitled to vote in the election of directors; (c) any Person, or
two or more Persons acting in concert, other than the Management
Shareholders, acquiring by contract or otherwise, or entering into a
contract or arrangement which upon consummation will result in its or their
acquisition of and, control over securities of Guarantor (or other
securities convertible into such securities) representing 35% or more of the
combined voting power of all securities of Guarantor entitled to vote in the
election of directors; or (d) Xxxxxx Xxxx ceasing to be Chairman and Chief
Executive Officer of Guarantor.
"Class" shall mean with respect to a Purchased Asset, the designation of
such Purchased Asset as one or more of the following: (i) a Mortgage Loan,
(ii) a Wet-Ink Mortgage Loan, (iii) a Second Lien Mortgage Loan, (iv) a
Jumbo Mortgage Loan, (v) a Jumbo(500) Mortgage Loan, (vi) a Jumbo(750)
Mortgage Loan, (vii) a C Credit Mortgage Loan, (viii) a C Minus Credit
Mortgage Loan and/or (ix) a Non-owner Occupied Mortgage Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Collection Account" shall mean the account established by the Bank subject
to an Account Agreement, into which all Income shall be deposited.
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"Combined Loan-to-Value Ratio or CLTV" shall mean with respect to any Second
Lien Mortgage Loan, the sum of the original principal balance of such
Mortgage Loan and the outstanding principal balance of any related first
lien as of the date of origination of the Mortgage Loan, divided by the
lesser of the Appraised Value of the Mortgage Property as of the Origination
Date or the purchase price of the Mortgaged Property.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with Seller within the meaning
of Section 4001 of ERISA or is part of a group which includes Seller and
which is treated as a single employer under Section 414 of the Code.
"Company Securitization Transaction" shall mean an issuance of
Mortgage-backed Securities by NCCC, NCMC, or by SBRC, or any other
registered broker dealer, or an Affiliate of any of them, on behalf of NCCC
or NCMC, through a trust or other entity created by NCCC or NCMC, SBRC or
any other registered broker-dealer which Mortgage-backed Securities are
either secured (in whole or in part) by Mortgage Loans originated or
acquired by NCCC or NCMC or evidence the entire beneficial ownership
interest therein, and in connection with which one or more Junior
Securitization Interests are issued to NCCC or NCMC or any Affiliate.
"Condominium Mortgage Loan" shall mean an Eligible Asset secured by a
Residential Dwelling which is a unit in a condominium project.
"Condominium and PUD Sub-Limit" shall mean an amount equal to the product of
6% and the Maximum Amount.
"Confirmation" shall have the meaning specified in Section 3(c).
"Custodial and Disbursement Agreement" shall mean that custodial and
disbursement agreement, dated as of May 10, 2002, by and among Buyer, NCCC,
NCMC and Custodian, as the same shall be modified and supplemented and in
effect from time to time.
"Custodial Identification Certificate" shall have the meaning assigned
thereto in the Custodial and Disbursement Agreement.
"Custodian" shall mean Deutsche Bank National Trust Company, a national
banking association, and its successors in interest, as custodian under the
Custodial and Disbursement Agreement, and any successor Custodian under the
Custodial and Disbursement Agreement.
"Daily Leverage Ratio" shall mean on any date of determination, the ratio of
(a) Total Liabilities of Guarantor and its Subsidiaries on such date to (b)
Tangible Net Worth of Guarantor and its Subsidiaries as of the last day of
the most recently completed month.
"Default" shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
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"Disbursement Agent" shall mean Deutsche Bank National Trust Company, a
national banking association, and its successors in interest, as
disbursement agent under the Custodial and Disbursement Agreement, and any
successor Disbursement Agent under the Custodial and Disbursement Agreement.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Due Diligence Review" shall mean the performance by Buyer of any or all of
the reviews permitted under Section 27 with respect to any or all of the
Mortgage Loans, as desired by Buyer from time to time.
"Effective Date" shall mean the date upon which the conditions precedent set
forth in Section 3(a) shall have been satisfied.
"Electronic Transmission" shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof. An
Electronic Transmission shall be considered written notice for all purposes
hereof (except when a request or notice by its terms requires execution).
Any document that requires signature that is delivered by Electronic
Transmission via email that includes the sender's name shall satisfy such
signature requirement.
"Eligible Asset" shall mean a Mortgage Loan, including a Wet-Ink Mortgage
Loan, (i) as to which the representations and warranties in Schedule 1
attached hereto are true and correct, (ii) which is underwritten strictly in
accordance with the Underwriting Guidelines of Seller, and (iii) which is
secured by a Residential Dwelling.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
Seller is a member.
"Eurodollar Rate" shall mean, with respect to each day a Transaction is
outstanding, the rate per annum equal to the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR at or about 9:00 a.m., New York time, on
such date (and if such date is not a Business Day, the Eurodollar Rate in
effect on the Business Day immediately preceding such date), and if such
rate shall not be so quoted, the average rate per annum at which three
mutually acceptable banks are offered Dollar deposits at or about 9:00 a.m.,
New York City time, on such date by prime banks in the interbank eurodollar
market where the eurodollar and foreign currency exchange operations in
respect of its Transactions are then being conducted for delivery on such
day for a period of thirty (30) days and in an amount comparable to the
amount of the Transactions to be outstanding on such day. The Eurodollar
Rate shall be reset by Buyer as described above and Buyer's
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determination of Eurodollar Rate shall be conclusive upon the parties absent
manifest error on the part of Buyer
"Event of Default" has the meaning specified in Section 12.
"Excess Margin" has the meaning specified in Section 3(o).
"Existing Financing Facilities" shall mean the Bank of America Financing
Facility, the Xxxxxx Xxxxxxx Financing Facility, the Salomon Financing
Facility, the Salomon NCMC Financing Facility, the Salomon REO Financing
Facility and the UBS Financing Facility.
"Xxxxxx Mae" shall mean the Federal National Mortgage Association, and its
successors in interest.
"Foreclosed Loan" shall mean a loan the property securing which has been
foreclosed upon by Seller.
"Xxxxxxx Mac" shall mean the Federal Home Loan Mortgage Corporation, and its
successors in interest.
"GAAP" shall mean generally accepted accounting principles as in effect from
time to time in the United States.
"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 of or
pertaining to government and any court or arbitrator having jurisdiction
over NCCC, NCMC, Guarantor, any of their respective Subsidiaries or any of
their properties.
"Guarantee" shall mean, 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 or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well
another Person, to purchase assets, goods, securities or services, or to
agree to take-or-pay arrangement or otherwise); provided that the term
"Guarantee" shall not include (i) endorsements for collection or deposit in
the ordinary course of business, or (ii) obligations to make servicing
advances for delinquent taxes and insurance, or other obligations in respect
of a Mortgaged Property, or other principal and interest advances made in
the ordinary course of servicing the Mortgage Loans. The amount of any
Guarantee of a Person shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in
good faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
"Guarantor" shall mean New Century Financial Corporation, a California
corporation, and its successors in interest.
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"Guaranty" shall mean the Guaranty, dated as of the date hereof, made by
Guarantor in favor of Buyer, which shall be in form and substance
satisfactory to Buyer in all respects.
"Income" shall mean, with respect to any Mortgage Loan at any time, all
collections and proceeds on or in respect of the Mortgage Loans, including,
without limitation, any principal thereof then payable and all interest or
other distributions payable thereon less any related servicing fee(s)
charged by Servicer.
"Indebtedness" shall mean, for any Person: (a) obligations created, issued
or incurred by such Person for borrowed money (whether by loan, the issuance
and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person
to pay the deferred purchase or acquisition price of Property or services,
other than trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business so long as
such trade accounts payable are payable within 90 days of the date the
respective goods are delivered or the respective services are rendered; (c)
Indebtedness of others secured by a Lien on the Property of such Person,
whether or not the respective Indebtedness so secured has been assumed by
such Person; (d) obligations (contingent or otherwise) of such Person in
respect of letters of credit or similar instruments issued or accepted by
banks and other financial institutions for account of such Person; (e)
obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (f) Indebtedness of others Guaranteed by
such Person; (g) all obligations of such Person incurred in connection with
the acquisition or carrying of fixed assets by such Person; and (h)
Indebtedness of general partnerships of which such Person is secondarily or
contingently liable (other than by endorsement of instruments in the course
of collection), whether by reason of any agreement to acquire such
indebtedness to supply or advance sums or otherwise; and (i) Capital Lease
Obligations of such Person; provided, however, that for any period, the
aggregate Indebtedness of the Guarantor during such period maintained in
accordance with GAAP shall be calculated less the aggregate amount of any
such Indebtedness that is reflected on the balance sheet of the Guarantor in
respect of obligations incurred pursuant to a securitization transaction,
solely to the extent such obligations are secured by the assets securitized
thereby and are non-recourse to the Guarantor. In the event that any
Indebtedness would be excluded from the calculation of Indebtedness but for
the existence of recourse, the Guarantor shall be entitled nonetheless to
exclude the amount of such Indebtedness that is not subject to recourse. The
amount of any recourse shall be the stated or determinable amount thereof
or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the Guarantor in good faith.
Any calculations of Indebtedness provided pursuant to this Agreement shall
also separately set forth any Indebtedness of Guarantor excluded from such
calculation pursuant to the proviso in the definition thereof.
"Interest Rate Protection Agreement" shall mean, with respect to any or all
of the Mortgage Loans, any short sale of US Treasury securities, or futures
contract, or options related contract, or interest rate swap, cap or collar
agreement or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal
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interest obligations, either generally or under specific contingencies and
acceptable to Buyer.
"Investment" shall mean with respect to any Person, any direct or indirect
purchase or other acquisition by that Person of, or a beneficial interest
in, stock or other securities of any other Person, or any direct or indirect
loan, advance (other than advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary course
of business) or capital contribution by that Person to any other Person,
including all Indebtedness and accounts receivable from that other Person
which are not current assets or did not arise from sales to that other
Person in the ordinary course of business.
"Jumbo Mortgage Loans" shall mean each Mortgage Loan with a principal
balance as of origination of more than $275,000.
"Jumbo Sub-Limit" shall mean an amount equal to the product of 29% and the
Maximum Amount.
"Jumbo(500) Mortgage Loans" shall mean each Mortgage Loan with a principal
balance as of origination of more than $500,000 and less than or equal to
$750,000.
"Jumbo(500) Sub-Limit" shall mean an amount equal to the product of 17% and
the Maximum Amount.
"Jumbo(750) Mortgage Loans" shall mean shall mean each Mortgage Loan with a
principal balance as of origination of more than $750,000.
"Jumbo(750) Sub-Limit" shall mean an amount equal to the product of 9% and
the Maximum Amount.
"Junior Securitization Interests" shall mean a Mortgage-backed Security
created in a Company Securitization Transaction that represents a
subordinated right to receive principal or interest payments on the
underlying Mortgage Loans (whether or not such subordination arises only
under particular circumstances).
"Late Payment Fee" has the meaning specified in Section 5(b).
"Leverage Ratio" shall mean on any date of determination, the ratio of (a)
Total Liabilities to (b) Tangible Net Worth.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan at
the time of origination to the lesser of (a) the Appraised Value of the
related Mortgaged Property at origination of such Mortgage Loan and (b) if
the related Mortgaged Property was
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purchased within twelve (12) months of the origination of such Mortgage
Loan, the purchase price of the related Mortgaged Property.
"Management Shareholders" shall mean Xxxxxx X. Xxxx, Xxxx X. Xxxxxxx, and
Xxxxxx X. Xxxxxxxxx.
"Manufactured Home Mortgage Loan" shall mean an Eligible Asset secured by a
Residential Dwelling which is a manufactured home.
"Manufactured Home Sub-Limit" shall mean the product of 4% and the Maximum
Amount.
"Margin Base" shall mean the aggregate Asset Value of all Purchased Assets
which are Eligible Assets.
"Margin Deficit" has the meaning specified in Section 4.
"Market Value" shall mean, as of any date in respect of any Mortgage Loan,
the price at which such Mortgage Loan could readily be sold as determined in
Buyer's sole discretion using its reasonable business judgment, which price
may be determined to be zero. Buyer's determination of Market Value shall be
conclusive upon the parties absent manifest error on the part of Buyer.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
Property, business, operations, financial condition or prospects of NCCC,
NCMC or Guarantor, (b) the ability of NCCC or NCMC to perform its
obligations under any of the Repurchase Documents to which it is a party,
(c) the validity or enforceability of any of the Repurchase Documents, (d)
the rights and remedies of Buyer under any of the Repurchase Documents, (e)
the timely payment of any amounts payable under the Repurchase Documents,
(f) the Asset Value of the Purchased Assets or (g) the ability of Guarantor
to perform its obligations under the Guaranty.
"Maximum Amount" shall mean $570,000,000.
"Minimum Pricing Amount" means $4,754,000 less amounts received by the
Purchaser since June 23, 2003 in respect of the aggregate amount obtained by
daily application of the Pricing Spread for each outstanding Transaction to
the Purchase Price for such Transaction on a 360 day per year basis for the
actual number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding) the
Repurchase Date.
"Xxxxxx Xxxxxxx Financing Facility" shall mean the Master Loan and Security
Agreement dated June 23, 2003, as may be amended from time to time, between
NCCC, NCMC and Xxxxxx Xxxxxxx Mortgage Capital, Inc. and all other documents
or agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
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"Mortgage" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien or second lien on a fee
simple Residential Dwelling securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the Custodial and
Disbursement Agreement.
"Mortgage Loan" shall mean a mortgage loan originated in accordance with the
Underwriting Guidelines which Custodian has been instructed to hold for
Buyer pursuant to the Custodial and Disbursement Agreement including any
Wet-Ink Mortgage Loan listed on a Transaction Request, and which Mortgage
Loan includes, without limitation, (i) a Mortgage Note and related Mortgage,
and (ii) all right, title and interest of Seller in and to the Mortgaged
Property covered by such Mortgage.
"Mortgage Loan Sub-Limit" shall mean $1,000,000.
"Mortgage Note" shall mean the original executed promissory note or other
evidence of the indebtedness of a Mortgagor with respect to a Mortgage Loan.
"Mortgage-backed Security" shall mean a security (including, without
limitation, a participation certificate) that is an interest in a pool of
Mortgage Loans or is secured by such an interest.
"Mortgaged Property" shall mean a fee simple interest in the real property
(including all improvements, buildings, fixtures, building equipment and
personal property thereon and all additions, alterations and replacements
made at any time with respect to the foregoing) and all other collateral
securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagee" shall mean the record holder of a Mortgage Note secured by a
Mortgage.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note, including
any person who has assumed or guaranteed the obligations of the obligor
thereunder.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been or are required to
be made by Seller or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"NCCC" shall mean NC Capital Corporation, a California corporation, and its
successors in interest.
"NCMC" shall mean New Century Mortgage Corporation, a California
corporation, and its successors in interest.
"NCRC" shall mean NC Residual II Corporation, a Delaware corporation, and
its successors in interest.
"Net Worth" shall mean with respect to any Person, on any date of
determination, the net worth of such Person as of such date, determined in
accordance with GAAP.
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"Non-owner Occupied Mortgage Loans" shall mean each Mortgage Loan with
respect to which the improvements on the Mortgaged Property are not occupied
by the owner of such Mortgaged Property.
"Origination Date" shall mean the date a Mortgage Loan is funded by any
originator and the proceeds are disbursed to a borrower under such Mortgage
Loan.
"Payment Calculation Date" shall mean the tenth (10/th/) day of each month.
"Payment Date" shall mean two (2) Business Days after the Payment
Calculation Date.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PUD Mortgage Loan" shall mean an Eligible Asset secured by a Residential
Dwelling which is an attached single family dwelling in a planned unit
development.
"Periodic Advance Repurchase Payment" has the meaning specified in Section
5(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any day a Transaction is
outstanding or any other amount under this Agreement or any other Repurchase
Document that is not paid when due to Buyer at the stated Repurchase Date or
otherwise when due (a "Post-Default Day"), a rate per annum on a 360 day per
year basis during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 4% per
annum plus the Prime Rate on such Post-Default Day.
"Price Differential" means, with respect to any Transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Purchase Price for such Transaction on a
360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the Repurchase Date (reduced by any amount of such
Price Differential previously paid by Seller to Buyer with respect to such
Transaction).
"Pricing Rate" shall mean a rate per annum equal to the sum of (a) the
Eurodollar Rate plus (b) the Pricing Spread.
"Pricing Spread" shall mean the applicable rates per annum set forth below
for each type of Eligible Asset for each day during the related Interest
Period:
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(a) Mortgage Loans (other than Wet-Ink Mortgage Loans), 0.95% (95)
basis points; and
(b) Wet-Ink Mortgage Loans, 1.10% (110) basis points.
"Prime Rate" shall mean the prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal.
"Property" shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" shall mean any purchase agreement by and between NCCC
or NCMC and any third party, including without limitation, any Affiliate of
NCCC or NCMC, pursuant to which NCCC or NCMC has purchased assets
subsequently sold to Buyer hereunder.
"Purchase Date" shall mean the date on which Purchased Assets are
transferred by Seller to Buyer or its designee (including Custodian).
"Purchase Percentage" shall mean the applicable percentage set forth below
for each type of Eligible Assets:
(a) Mortgage Loans (other than Wet-Ink Mortgage Loans), 98%; and
(b) Wet-Ink Mortgage Loans, 98%.
"Purchase Price" shall mean on each Purchase Date, the price at which
Purchased Assets are transferred by Seller to Buyer or its designee
(including Custodian) which shall equal the Asset Value for such Purchased
Assets on the Purchase Date.
"Purchased Assets" shall mean the Mortgage Loans sold by Seller to Buyer in
a Transaction, and any Additional Purchased Assets.
"Purchased Items" has the meaning specified in Section 7.
"Qualified Originator" means NCMC, any of its subsidiaries set forth on
Schedule 2, or any other originator of Mortgage Loans acceptable to Buyer in
its sole discretion.
"Quarterly Average Leverage Ratio" shall mean for each three (3) month
period ending on March 31, June 30, September 30 or December 31 of any year
during the term of this Agreement, the ratio of (a) the average daily amount
of Total Liabilities of Guarantor and its Subsidiaries outstanding during
such three (3) month period to (b) the average of the Tangible Net Worth of
Guarantor and its Subsidiaries at the end of each month during such three
(3) month period.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may
be modified and supplemented and in effect from time to time.
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"REO Property" shall mean real property acquired by Seller, including a
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by
deed in lieu of such foreclosure.
"REO Sub" shall mean New Century REO Corp., a California corporation.
"Reportable Event" shall mean any of the events set forth in Section 4043(b)
of ERISA or a successor provision thereof, other than those events as to
which the thirty day notice period is waived under subsections .13, .14,
.16, .18, .19 or .20 of PBGC Reg. Section 2615 or one or more successor
provision thereof.
"Repurchase Date" shall mean the date on which Seller is to repurchase the
Purchased Assets from Buyer as specified in the related Confirmation,
including any date determined by application of the provisions of Sections 3
or 13; which date shall be specified as "open" unless otherwise requested by
Seller and agreed by Buyer; provided that in no event shall the Repurchase
Date be in excess of 364 days after the Purchase Date. If the Transaction is
"open", the Repurchase Date shall be one (1) Business Day after the date
upon which either Buyer (in its sole discretion) or the Seller (in its sole
discretion) provides to the other written notice of its intention to sell or
repurchase, as applicable, the applicable Mortgage Loans; provided that the
Repurchase Date shall not, in any event, exceed 364 days from the date
hereof.
"Repurchase Documents" shall mean this Agreement, the Custodial Agreement,
the Custodial and Disbursement Agreement, the Guaranty, the Account
Agreement and all other documents or agreements executed in connection
therewith.
"Repurchase Obligations" shall have the meaning specified in Section 7(b).
"Repurchase Price" means the price at which Purchased Assets are to be
transferred from Buyer or its designee (including Custodian) to Seller upon
termination of a Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase
Price and the Price Differential as of the date of such determination,
including any amounts paid pursuant to Requests for Additional Transactions
for Excess Margin under Section 3(o), decreased by all cash, Income and
Periodic Advance Repurchase Payments (including Late Payment Fees, if any)
actually received by Buyer pursuant to Sections 5(a) or 5(b), respectively.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Residential Dwelling" shall mean any one of the following: (i) a detached
single family dwelling, (ii) a two-to-four family dwelling, (iii) a unit in
a condominium project, (iv) a detached single family dwelling in a planned
unit development or (v) manufactured housing units. Mortgaged Properties
that consist of the following property types are not Residential Dwellings:
(a) co-operative units, (b) log homes, (c) earthen homes,
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(d) underground homes, (e) mobile homes, and (f) any dwelling situated on
more than ten acres of property.
"Residual Finance Subsidiaries" shall mean (a) NC Residual Corporation, a
Delaware corporation, as long as it is a wholly-owned Subsidiary of NCMC and
does not amend its Certificate of Incorporation as in effect on March 20,
1998, and (b) any other wholly-owned Subsidiary of NCMC or NCCC that,
pursuant to its Articles or Certificate of Incorporation, has a purpose
limited to the ownership of Junior Securitization Interests, the
establishment of one or more securitization trusts, issuing securities
backed by such Junior Securitization Interests, otherwise financing such
Junior Securitization Interests, and lawful activities incidental to and
necessary and convenient to the foregoing.
"Residual Financing Agreements" shall mean collectively, the Global Master
Repurchase Agreement dated as of March 29, 2001 by and between Xxxxxxx Xxxxx
Barney, Inc., as Agent for Salomon Brothers International, Inc., and NCCC,
as amended, supplemented, restated or otherwise modified and in effect from
time to time, (ii) the Global Master Repurchase Agreement dated as of March
29, 2001 by and between Xxxxxxx Xxxxx Xxxxxx, Inc., as Agent for Salomon
Brothers International, Inc., and NCRC, as amended, supplemented, restated
or otherwise modified and in effect from time to time, and (iii) any similar
agreements pursuant to which "Residual Financing" (as defined in the
Residual Security Agreement) is hereafter provided to NCMC or NCCC or any
Subsidiary of NCMC or NCCC.
"Residual Security Agreement" shall mean the Amended and Restated Security
Agreement dated as of April 30, 2000 by and among NCCC, NCRC and U.S. Bank
National Association, as collateral agent for (i) the Lenders (as defined
therein), (ii) U.S. Bancorp Leasing & Financial, successor in interest to
FBS Business Finance Corp. (the "Lessor"), as Lessor under any present or
future leases of equipment by the Lessor, as lessor, to NCCC, NCMC or
Guarantor, as lessee, or as lender under any present or future loan by the
Lessor, as lender, to NCCC, NCMC or Guarantor, as borrower, secured by
equipment and (iii) the Subordinated Noteholder (as defined therein).
"Responsible Officer" shall mean, as to any Person, the chief executive
officer, the chief financial officer, the treasurer or the chief operating
officer of such Person.
"Risk Rating" shall mean the risk rating of a Mortgage Loan, as determined
using the Underwriting Guidelines.
"Restricted Payment" shall mean, with respect to any Person, collectively,
all dividends or other distributions of any nature (cash, securities, assets
or otherwise), and all payments, by virtue of redemption or otherwise, on
any class of equity securities (including, without limitation, warrants,
options or rights therefor) issued by such Person, whether such securities
are now or may hereafter be authorized or outstanding and any distribution
in respect of any of the foregoing, whether directly or indirectly.
"Salomon Financing Facility" shall mean TBMA/ISMA Global Master Repurchase
Agreement, as may be amended from time to time, by and between Xxxxxxx Xxxxx
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Barney Inc. as agent for Salomon Brothers International Ltd. and NCCC and
Annex I thereto, dated as of March 29, 2001 and all other documents or
agreements executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"Salomon NCMC Financing Facility" shall mean the Letter Agreement, dated
December 1, 2000, as may be amended from time to time, by and among Salomon
Brothers Realty Corp., NCCC and NCMC and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"Salomon REO Financing Facility" shall mean the Master Loan and Security
Agreement dated as of April 1, 2000, as may be amended from time to time, by
and between NCMC, NCCC and SBRC, and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"SBRC" shall mean Salomon Brothers Realty Corp., a Delaware corporation.
"Second Lien Mortgage Loans" shall mean an Eligible Asset secured by a lien
on the Mortgaged Property, subject to one prior lien on such Mortgaged
Property.
"Second Lien Sub-Limit" shall mean an amount equal to the product of 9% and
the Maximum Amount.
"Security Agreement" shall mean with respect to any Mortgage Loan, any
contract, instrument or other document related to security for repayment
thereof (other than the related Mortgage and Mortgage Note), executed by the
Mortgagor and/or others in connection with such Mortgage Loan, including
without limitation, any security agreement, guaranty, title insurance
policy, hazard insurance policy, chattel mortgage, letter of credit or
certificate of deposit or other pledged accounts, and any other documents
and records relating to any of the foregoing.
"Seller" shall mean NCCC and NCMC.
"Seller Asset Schedule" shall have the meaning assigned thereto in the
Custodial and Disbursement Agreement.
"Seller-Related Obligations" shall mean any obligations of NCCC or NCMC
hereunder and under any other arrangement between NCCC, NCMC or an Affiliate
of NCCC or NCMC on the one hand and Buyer or an Affiliate of Buyer on the
other hand.
"Servicer" shall have the meaning specified in Section 24.
"Servicer Account" shall mean any account established by Servicer in
connection with the servicing of the Mortgage Loans.
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"Servicing Agreement" has the meaning specified in Section 24.
"Servicing Contract" shall mean a contract or agreement purchased by NCCC or
NCMC or entered into by NCCC or NCMC for its own account (and not as nominee
or subservicer), whether now existing or hereafter purchased or entered
into, pursuant to which NCCC or NCMC services Mortgage Loans or Mortgage
Loan pools for Persons other than itself or the other Seller.
"Servicing File" means with respect to each Mortgage Loan, the file retained
by Seller consisting of originals of all documents in the Mortgage File
which are not delivered to a Custodian and copies of all documents in the
Mortgage File set forth in Section 2 of the Custodial and Disbursement
Agreement.
"Servicing Records" has the meaning specified in Section 24.
"Settlement Agent" shall mean, with respect to any Transaction, the entity,
which may be a title company, escrow company or attorney in accordance with
local law and practice in the jurisdiction where the related Wet-Ink
Mortgage Loan is being originated, which funds such Mortgage Loan with
amounts wired pursuant to the terms of an Existing Financing Facility.
"Sub-Limit" shall mean any of the Web-Ink Sub-Limit, the Second Lien
Sub-Limit, the Manufactured Home Sub-Limit, the Condominium and PUD
Sub-Limit, the Mortgage Loan Sub-Limit, the Jumbo Sub-Limit, the Jumbo(500)
Sub-Limit, the Jumbo(750) Sub-Limit at any time, and the C/C- Credit
Sub-Limit.
"Subordinated Debt" shall mean any Indebtedness of NCCC or NCMC, now
existing or hereafter created, incurred or arising, which is subordinated in
right of payment to the payment of all obligations hereunder in a manner and
to an extent that Buyer has approved in writing prior to the creation of
such Indebtedness.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which at least a
majority of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of
whether or not at the time securities or other ownership interests of any
other class or classes of such corporation, partnership or other entity
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
"Tangible Net Worth" shall mean on any date of determination, the
consolidated Net Worth of Guarantor, NCCC or NCMC, as applicable, and its
respective Subsidiaries, minus the consolidated book value of all assets of
Guarantor, NCCC or NCMC, as applicable, and its respective Subsidiaries (to
the extent reflected as an asset in the balance sheet of Guarantor, NCCC or
NCMC, as applicable, or any such Subsidiary at such date) which are treated
as intangibles under GAAP, including, without limitation,
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such items as deferred financing expenses, net leasehold improvements, good
will, trademarks, trade names, service marks, copyrights, patents, licenses
and unamortized debt discount and expense; provided, that Junior
Securitization Interests shall not be treated as intangibles for purposes of
this definition.
"Term Purchased Asset" shall mean any Purchased Asset for which Buyer and
Seller shall have agreed that the Repurchase Date is not "open".
"Termination Date" shall mean the date which is 364 days from the date
hereof which shall be June 23, 2004 or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law, as may be extended pursuant to Section 3(n).
"Total Liabilities" shall mean on any date of determination with respect to
any Person, the amount, on a consolidated basis, of the liabilities of such
Person and its respective Subsidiaries, determined in accordance with GAAP,
minus Subordinated Debt; provided, however, that for any period, the
aggregate Total Liabilities of any Person during such period maintained in
accordance with GAAP shall be calculated less the aggregate amount of any
such Total Liabilities that are reflected on the balance sheet of such
Person in respect of obligations incurred pursuant to a securitization
transaction, solely to the extent such obligations are secured by the assets
securitized thereby and are non-recourse to such Person. In the event that
any liabilities would be excluded from the calculation of Total Liabilities
but for the existence of recourse, such Person shall be entitled nonetheless
to exclude the amount of such liabilities that are not subject to recourse.
The amount of any recourse shall be the stated or determinable amount
thereof or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in
good faith. Any calculations of Total Liabilities provided pursuant to this
Agreement shall also separately set forth any liabilities of such Person
excluded from such calculation pursuant to the proviso in the definition
thereof.
"Transaction" has the meaning specified in Section 1.
"Transaction Request" means a request from Seller to Buyer, in the form
attached as Exhibit I hereto, to enter into a Transaction, which may be
delivered via Electronic Transmission.
"True Sale Certification" shall mean a true sale certification in the form
of Exhibit VI attached hereto.
"Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
confirming Custodian's possession of certain Mortgage Files which are held
by Custodian for the benefit of Buyer or the registered holder of such trust
receipt.
"UBS Financing Facility" shall mean the Committed Note Purchase Agreement
dated as of May 10, 2002, as may be amended from time to time, by and
between New Century Funding I and UBS Real Estate Securities Inc. (formerly
known as Xxxxx Xxxxxx Real Estate Securities Inc.) and all other documents
or agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not
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limited to, amounts and rates) with financial institutions approved by
Buyer; provided that the UBS Financing Facility may be terminated or amounts
available to Seller thereunder may be reduced so long as it is a result of
the repayment of all amounts due thereunder other than as a result of an
acceleration or a default.
"Underwriting Guidelines" shall mean the underwriting guidelines delivered
by Seller to Buyer on or prior to the Effective Date and as may be modified
or supplemented from time to time thereafter as approved by Buyer in its
sole discretion attached hereto as Exhibit II.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code as
in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection, the effect of
perfection or non-perfection and the priority of the security interest in
any Purchased Items is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, "Uniform Commercial Code" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection and the priority.
"Wet-Ink Mortgage Loan" shall mean an Eligible Asset which is sold to Buyer
within 6 Business Days of, the origination thereof by Seller, which
origination is in accordance with the Underwriting Guidelines and is funded
in part or in whole with cash advanced directly to an escrow agent,
Settlement Agent, or Warehouse Lender approved by Buyer in its sole
discretion.
"Wet-Ink Sub-Limit" shall mean an amount equal to (i) with respect to the
first five (5) Business Days of each calendar month, the product of 50% and
the Maximum Amount, (ii) with respect to the last three (3) Business Days of
each calendar month, the product of 50% and the Maximum Amount and (iii) at
all other times, the product of 40% and the Maximum Amount.
"Worth Purchase Agreement" shall mean the mortgage loan purchase agreement,
dated as of July 1, 2001 between Worth Funding Incorporated and NCMC, as the
same shall be modified and supplemented and in effect from time to time,
pursuant to which NCMC buys certain of the Eligible Assets from Worth
Funding Incorporated.
3. INITIATION; TERMINATION
(a) Conditions Precedent to the Effective Date. The Effective Date hereof
is subject to the satisfaction, immediately prior to or concurrently
therewith, of the conditions precedent that Buyer shall have received
from Seller any fees and expenses payable hereunder (including, without
limitation, the fee required pursuant to Section 3(p)), and all of the
following documents, each of which shall be satisfactory in form and
substance to Buyer and its counsel:
(1) Second Amended and Restated Master Repurchase Agreement. This
Second Amended and Restated Master Repurchase Agreement duly
completed and executed by the parties thereto. In addition, Seller
shall
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have taken such other action as Buyer shall have requested in
order to perfect the security interests created pursuant to this
Agreement;
(2) Opinions of Counsel. An opinion or opinions of outside counsel to
each of NCCC, NCMC and Guarantor, substantially in the form of
Exhibit III;
(3) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent
documents) of each of NCCC, NCMC and Guarantor and of all
corporate or other authority for NCCC, NCMC or Guarantor, as
applicable, with respect to the execution, delivery and
performance of the Repurchase Documents to which it is a party and
each other document to be delivered by NCCC, NCMC or Guarantor
from time to time in connection herewith (and Buyer may
conclusively rely on such certificate until it receives notice in
writing from NCCC, NCMC or Guarantor, as applicable, to the
contrary);
(4) Underwriting Guidelines. A copy of Seller's current Underwriting
Guidelines, and any material changes to the Underwriting
Guidelines made since the Underwriting Guidelines were last
delivered to Buyer;
(5) Servicing Agreement(s). Any Servicing Agreement, certified as a
true, correct and complete copy of the original;
(6) Consents and Waivers. Any and all irrevocable consents and waivers
required under the Existing Financing Facilities;
(7) UCC Amendments and Releases. Any and all amendments or
terminations of UCC financing statements required by Buyer; and
(8) Other Documents. Such other documents as Buyer may reasonably
request, in form and substance reasonably acceptable to Buyer.
(b) Conditions Precedent to all Transactions. Buyer's obligation to enter
into each Transaction (including the initial Transaction) is subject to
the satisfaction of the following further conditions precedent, both
immediately prior to entering into such Transaction and also after
giving effect to the consummation thereof and the intended use of the
proceeds of the sale:
(1) Seller shall have delivered a Transaction Request via Electronic
Transmission in accordance with the procedures set forth in
Section 3(c);
(2) no Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents;
(3) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall
not exceed the Maximum Amount;
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(4) both immediately prior to the requested Transaction and also after
giving effect thereto and to the intended use thereof, the
representations and warranties made by Seller in Section 10, shall
be true, correct and complete on and as of such Purchase Date in
all material respects with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of
such specific date);
(5) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall
not exceed the Asset Value of all the Purchased Assets subject to
outstanding Transactions;
(6) subject to Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 28, Buyer shall have completed its due
diligence review of the Mortgage File for each Purchased Asset,
and such other documents, records, agreements, instruments,
mortgaged properties or information relating to such Purchased
Asset as Buyer in its sole discretion deems appropriate to review
and such review shall be satisfactory to Buyer in its sole
discretion;
(7) Buyer shall have received from Seller certified copies of any
Servicing Agreement relating to the Eligible Assets and Buyer
shall have reviewed and approved each such Servicing Agreement in
its sole discretion;
(8) Buyer shall have received all fees and expenses of counsel to
Buyer as contemplated by Section 14(b) which amount, at Buyer's
option, may be withheld from the sale proceeds of any Transaction
hereunder;
(9) Buyer shall have approved, in its sole discretion, all exceptions
to the Underwriting Guidelines;
(10) none of the following shall have occurred and/or be continuing:
(A) an event or events shall have occurred in the good
faith determination of Buyer resulting in the effective absence
of a "repo market" or comparable "lending market" for financing
debt obligations secured by mortgage loans or securities or an
event or events shall have occurred resulting in Buyer not being
able to finance Purchased Assets through the "repo market" or
"lending market" with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such event
or events; or
(B) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed
by mortgage loans or an event or events shall have occurred
resulting in Buyer not being able to sell securities backed by
mortgage loans at prices which would have been reasonable prior
to such event or events; or
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(C) there shall have occurred a material adverse change in
the financial condition of Buyer which affects (or can reasonably
be expected to affect) materially and adversely the ability of
Buyer to fund its obligations under this Agreement; or
(11) with respect to each Eligible Asset, Buyer shall have received
from Custodian on each Purchase Date an Asset Schedule and
Exception Report or Trust Receipt and Basic Status Report, as
applicable, dated the Purchase Date, duly completed and with
exceptions acceptable to Buyer in its sole discretion in respect
of Eligible Assets to be purchased hereunder on such Business Day;
(12) Buyer shall have received from Seller a Warehouse Lender's Release
Letter substantially in the form of Exhibit VII-B hereto (or such
other form acceptable to Buyer) or a Seller's Release Letter
substantially in the form of Exhibit VII-A hereto (or such other
form acceptable to Buyer) covering each Eligible Asset to be sold
to Buyer;
(13) The aggregate requested Purchase Price of Eligible Assets that are
not Wet-Ink Mortgage Loans that Seller has requested Buyer
purchase pursuant to the Transaction Request is equal to or in
excess of $10,000,000;
(14) Buyer shall not have determined that the introduction of, or a
change in, any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyer has
made it unlawful, and no Governmental Authority shall have
asserted that it is unlawful, for Buyer to enter into
Transactions; and
(15) The Repurchase Date for such Transaction is not later than the
Termination Date.
Each Transaction Request delivered by Seller hereunder shall constitute a
certification by each of NCCC and NCMC that all the conditions set forth in
this Section 3(b) have been satisfied (both as of the date of such notice
or request and as of the date of such purchase).
Each of NCCC and NCMC hereby request that Buyer, on each Business Day,
convert each Eligible Asset which is a Wet-Ink Mortgage Loan for which the
Mortgage File has been received by the Custodian in accordance with the
Custodial Agreement to a dry Mortgage Loan and this request shall
constitute a certification by each of NCCC and NCMC that all the conditions
set forth in this Section 3(b) have been satisfied (both as of the date
hereof and as of the date of such conversion).
(c) Seller shall request a Transaction by delivering to Custodian,
Disbursement Agent and Buyer via Electronic Transmission a request in the
form of Exhibit I attached hereto (a "Transaction Request") in accordance
with the timeframe set forth in Section 3(a) of the Custodial and
Disbursement Agreement. Such Transaction Request shall describe the
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Purchased Assets in a Seller Asset Schedule and set forth (i) the Purchase
Date, (ii) the Purchase Price, (iii) the Repurchase Date, (iv) the Pricing
Rate applicable to the Transaction, (v) the applicable Purchase Percentages
and (vi) additional terms or conditions not inconsistent with this
Agreement. Each such Transaction Request in respect of Eligible Assets that
are not Wet-Ink Mortgage Loans shall be for an aggregate Purchase Price
equal to or in excess of $10,000,000.
On each Purchase Date, Buyer shall forward to Seller a confirmation (a
"Confirmation") by Electronic Transmission setting forth with respect to
each Transaction funded on such date, (1) the mortgage loan number, (2) the
Purchase Price for such Purchased Assets, (3) the Market Value of the
related Mortgage Loans as of the date of such Confirmation, (4) the
outstanding principal amount of the related Mortgage Loans, (5) the
Repurchase Date, (6) the Pricing Rate and (7) the Class designations of such
Purchased Assets. Buyer shall forward to Seller a revised Confirmation by
Electronic Transmission notifying Seller as to any changes made by Buyer in
the Pricing Spread, Purchase Percentage or Reduction Amount pursuant to the
terms hereof.
On each date that all the documents set forth in Section 2(a)(i) of the
Custodial and Disbursement Agreement are received by the Custodian with
respect to any Wet-Ink Mortgage Loan, and Custodian delivers to Buyer a
Trust Receipt attaching an Asset Schedule and Exception Report or Basic
Status Report and Exception Report, as applicable, with respect to such
Eligible Assets, Buyer shall forward to Seller a new Confirmation by
Electronic Transmission setting forth the following information, updated to
reflect the revised Pricing Rate, and, if applicable, Market Value as a
result of the conversion of such Mortgage Loan, (1) the mortgage loan
number, (2) the Purchase Price for such Purchased Assets, (3) the Market
Value of the related Mortgage Loans, (4) the outstanding principal amount of
the related Mortgage Loans, (5) the Repurchase Date, (6) the Pricing Rate
and (7) the Class designations of such Purchased Assets.
In the event Seller disagrees with any terms of the Confirmation,
Seller shall notify Buyer in writing of such disagreement within one (1)
Business Day after receipt of such Confirmation unless a corrected
Confirmation is sent by Buyer. An objection sent by Seller must state
specifically that it is an objection, must specify the provision(s) being
objected to by Seller, must set forth such provision(s) in the manner that
Seller believes they should be stated, and must be received by Buyer no more
than one (1) Business Day after the Confirmation was received by Seller.
(d) Any Confirmation by Buyer shall be deemed to have been received by
Seller on the date actually received by Seller.
(e) Except as set forth in Section 3(c), each Confirmation, together with
this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to
which the Confirmation relates, and Seller's acceptance of the related
proceeds shall constitute Seller's agreement to the terms of such
Confirmation. It is the intention of the parties that each Confirmation
shall not be separate from this Agreement but shall be made a part of
this Agreement.
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(f) On the Repurchase Date, termination of a Transaction will be effected
by transfer to Seller or its designee of the Purchased Assets (and any
Income in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to
Section 5) which amount shall be netted against the simultaneous
receipt of the Repurchase Price by Buyer. To the extent a net amount is
owed to one party, the other party shall pay such amount to such party.
Seller is obligated to obtain the Mortgage Files from Buyer or its
designee (including Custodian) at Seller's expense on the Repurchase
Date.
(g) Subject to the terms and conditions of this Agreement, during the term
of this Agreement Seller may sell to Buyer, repurchase from Buyer and
resell to Buyer Eligible Assets hereunder.
(h) In no event shall a Transaction be entered into when any Default or
Event of Default has occurred and is continuing or when the Repurchase
Date for such Transaction would be later than the Termination Date.
(i) With respect to each Eligible Asset that is not a Wet-Ink Mortgage
Loan, Seller shall deliver to Custodian the Mortgage File pertaining to
each Eligible Asset to be purchased by Buyer no later than the time set
forth in the Custodial and Disbursement Agreement.
(j) With respect to each Eligible Asset that is not a Wet-Ink Mortgage
Loan, pursuant to the Custodial and Disbursement Agreement, Custodian
shall deliver to Buyer and Seller an Asset Schedule and Exception
Report with respect to the Eligible Assets which Seller has requested
Buyer purchase on such Purchase Date, and no later than 5 p.m., New
York City time, on each Purchase Date, Custodian shall deliver to Buyer
a Trust Receipt in respect of all such Eligible Assets purchased by
Buyer on such Purchase Date. Subject to the provisions of this Section
3 and Section 11 of the Custodial and Disbursement Agreement, the
Purchase Price for each Eligible Asset that is not a Wet-Ink Mortgage
Loan will be made available to Seller by Disbursement Agent
transferring, the aggregate amount of such Purchase Price in accordance
with the Custodial and Disbursement Agreement.
(k) With respect to each Eligible Asset that is a Wet-Ink Mortgage Loan,
Seller shall cause the Settlement Agent to send the Custodian a
facsimile of the associated Escrow Instruction Letter on each Purchase
Date. Subject to the provisions of this Section 3 and Section 11 of the
Custodial and Disbursement Agreement, the Purchase Price for each
Eligible Asset which is a Wet-Ink Mortgage Loan will then be made
available to Seller by Disbursement Agent transferring the aggregate
amount of such Purchase Price in accordance with the Custodial and
Disbursement Agreement. Seller shall deliver the Mortgage File related
thereto to Custodian, for receipt by Custodian no later than seven (7)
Business Days following the Origination Date of such Wet-Ink Mortgage
Loan.
(l) Seller may repurchase any individual Purchased Asset without penalty or
premium, but subject to the last sentence of this Section 3(l), on any
date. The
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Repurchase Price payable for the repurchase of any such Purchased
Asset shall be reduced as provided in Section 5(d). If Seller intends
to make such a repurchase, Seller shall give one (1) Business Day's
prior written notice thereof to Buyer, designating the Purchased
Assets to be repurchased. If such notice is given, the amount
specified in such notice shall be due and payable on the date
specified therein, and, on receipt, such amount shall be applied to
the Repurchase Price for the designated Purchased Assets. The amount
of the original Purchase Price of the Purchased Assets thus
repurchased shall be available for subsequent Transactions subject to
the terms of this Agreement. If any Term Purchased Asset is
repurchased on any date other than the Repurchase Date for such Term
Purchased Asset, Seller shall pay to Buyer any amount determined by
Buyer in its sole discretion, exercised in good faith, as necessary to
compensate Buyer for any additional losses, costs or expenses which it
may reasonably incur as a result of such repurchase, including,
without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by
Buyer to fund or maintain such Transaction.
(m) At the request of Seller made at least 90 days, but in no event earlier
than 360 days, prior to the then current Termination Date, Buyer may in
its sole discretion extend the Termination Date for a period of 364
additional days or such other period to be determined by Buyer in its
sole discretion by giving written notice of such extension to Seller no
later than sixty (60) days after Buyer's receipt of Seller's request.
Any failure by Buyer to deliver such notice of extension shall be
deemed to be Buyer's determination not to extend the then current
Termination Date.
(n) On the Termination Date, including but not limited to a termination
pursuant to Section 20 or otherwise hereunder, Seller shall pay to
Buyer the Minimum Pricing Amount. All such payments pursuant to this
clause (o) shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to Buyer at the account set
forth in Section 8(a) hereof
(o) On any day on which the Margin Base for such Mortgage Loans exceeds the
aggregate outstanding Purchase Price of all Transactions with respect
to such Mortgage Loans, so long as no Default or Event of Default has
occurred and is continuing:
(1) Seller may prepare a Request for Additional Transactions for
Excess Margin in the form of Exhibit IX attached hereto ("Request
for Additional Transactions for Excess Margin"), (A) specifying
(i) the increase in Purchase Price for all outstanding
Transactions and the requested Purchase Date, (ii) the Excess
Margin with respect to all outstanding Transactions before giving
effect to the requested Transaction, (iii) the remaining Excess
Margin after giving effect to the requested Transaction, and (iv)
the aggregate outstanding Purchase Price of the Transactions after
giving effect to the requested Transaction, and (B) including a
certification that, upon the consummation of the additional
Transactions, the Margin
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Base will be equal to or greater than the aggregate outstanding
Purchase Price of all Transactions, and the excess of the Margin
Base over the aggregate outstanding Purchase Price, after giving
effect to the Transaction, shall be the "Excess Margin".
(2) Seller shall transmit via Electronic Transmission the Request for
Additional Transactions for Excess Margin to Disbursement Agent
and Buyer prior to 12:00 noon, New York City time, on the
requested Purchase Date. Upon confirming that the Request for
Additional Transactions for Excess Margin correctly reflects the
information set forth in Section 3(o)(1) and that, after giving
effect to the requested Transaction, the amount of the Margin Base
would be equal to or greater than the aggregate outstanding
Purchase Prices of all Transactions, Buyer shall cause
Disbursement Agent to remit the additional Purchase Price in the
amount set forth in such Request for Additional Transactions for
Excess Margin and send a revised Confirmation with respect to such
Purchased Assets. In the event that Buyer's assessment of the
Margin Base would alter the information set forth in any Request
for Additional Transactions for Excess Margin, Buyer shall
promptly notify Seller in writing of such assessment.
(3) Buyer shall not be obligated to cause Disbursement Agent to remit
the additional Purchase Price requested pursuant to a Request for
Additional Transactions for Excess Margin which (i) Buyer
reasonably determines is based on erroneous information or would
result in a Transaction other than in accordance with the terms of
this Agreement, or (ii) does not reflect Buyer's current
determination of Market Value as provided in the definition
thereof.
(p) Upon the execution of this Agreement, the Seller shall pay a facility
fee to the Buyer equal to the product of (x) $570,000,000, and (y) 15
basis points (0.15%) less amounts paid by Seller to Buyer in respect of
the facility fee described in Section 2 of the Third Amendment to the
Amended and Restated Master Repurchase Agreement, dated as of May 10,
2002.
4. MARGIN AMOUNT MAINTENANCE
(a) If at any time the Margin Base is less than the aggregate Purchase
Price for all outstanding Transactions (a "Margin Deficit"), then Buyer
may by notice to Seller (as such notice is more particularly set forth
below, a "Margin Deficit Notice") require Seller to transfer to Buyer
or its designee (including Custodian) cash to be applied to reduce the
Purchase Price with respect to all outstanding Transactions such that
the aggregate Asset Value of the Purchased Assets will thereupon equal
or exceed the aggregate Purchase Price for all outstanding
Transactions. If Buyer delivers a Margin Deficit Notice to Seller on or
prior to 6 p.m. (New York time) on any Business Day, then Seller shall
transfer such cash to Buyer no later than 5 p.m. (New York time) the
following Business Day. In the event Buyer delivers
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a Margin Deficit Notice to Seller after 6 p.m. (New York time) on any
Business Day, then such Margin Deficit Notice shall be deemed to have
been delivered on the following Business Day and Seller shall be
required to transfer cash no later than 5 p.m. (New York time) on the
subsequent Business Day. All cash transferred to Buyer pursuant to
this Section 4(a) shall be deposited in the account set forth in
Section 8(a) hereof.
(b) Buyer's election, in its sole discretion, not to deliver a Margin
Deficit Notice at any time there is a Margin Deficit shall not in any
way limit or impair its right to deliver a Margin Deficit Notice at any
time a Margin Deficit exists.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment
date on the Purchased Assets subject to that Transaction such Income
shall be the property of Buyer. Buyer agrees that until a Default or an
Event of Default has occurred and Buyer otherwise directs as
contemplated in each Servicer Notice, each Servicer that is not Seller
shall be permitted to continue to remit Income in accordance with the
respective Servicing Agreement. In the event that Seller is the
Servicer of any Mortgage Loans, Buyer agrees that until a Default or an
Event of Default has occurred, Seller shall be permitted to continue to
remit or retain Income with respect to such Mortgage Loans in
accordance with its current existing business practice. Upon notice of
a Default or an Event of Default to Seller hereunder or to Servicer
pursuant to a Servicer Notice, Seller shall, and pursuant to the
Servicer Notice, Servicer shall be required to, deposit promptly all
Income in a deposit account (the title of which shall indicate that the
funds therein are being held in trust for Buyer) (the "Collection
Account") with the Bank and which is subject to the Account Agreement.
All funds in the Collection Account may be withdrawn by Buyer and
applied as determined by Buyer. Seller may not give any instruction
with respect to the Collection Account after a Default or an Event of
Default.
(b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Assets, Seller shall pay
to Buyer the accreted value of the Price Differential (less any amount
of such Price Differential previously paid by Seller to Buyer) of each
Transaction through but not including the Payment Calculation Date
(each such payment, a "Periodic Advance Repurchase Payment") on each
Payment Date. Buyer shall deliver to Seller, via Electronic
Transmission, notice of the required Periodic Advance Repurchase
Payment on or prior to the second Business Day preceding each Payment
Date. If Seller fails to make all or part of the Periodic Advance
Repurchase Payment by 5:00 p.m., New York City time, on the Payment
Date, Seller shall be obligated to pay to Buyer (in addition to, and
together with, the Periodic Advance Repurchase Payment) interest on the
unpaid amount of the Periodic Advance Repurchase Payment at a rate per
annum equal to the Post-Default Rate (the "Late Payment Fee") until the
overdue Periodic Advance Repurchase Payment is received in full by
Buyer.
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(c) Seller shall hold or cause to be held for the benefit of, and in trust
for, Buyer all income, including without limitation all Income received
by or on behalf of Seller with respect to such Purchased Assets. All
such Income shall be held in trust for Buyer, shall constitute the
property of Buyer and shall not be commingled with other property of
Seller, any affiliate of Seller or the applicable Servicer except as
expressly permitted above in this Section 5. Funds deposited in the
Collection Account during any month shall be held therein, in trust for
Buyer.
(d) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Advance Repurchase Payments
actually received by Buyer for such Transaction pursuant to Sections
5(a) and 5(b) as of the applicable Repurchase Date, respectively,
excluding any Late Payment Fees paid pursuant to Section 5(b); it being
understood that the Late Payment Fees are properties of Buyer that are
not subject to offset against the Repurchase Price.
6. REQUIREMENTS OF LAW
(a) If any Requirement of Law (other than with respect to any amendment
made to Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the
interpretation or application thereof or compliance by Buyer with any
request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the
date hereof:
(1) shall subject Buyer to any tax of any kind whatsoever with respect
to this Agreement or any Transaction (excluding net income taxes)
or change the basis of taxation of payments to Buyer in respect
thereof;
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, or other extensions of credit by, or any other
acquisition of funds by, any office of Buyer which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
(3) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to
Buyer, by an amount which Buyer deems to be material, of entering,
continuing or maintaining any Transaction or to reduce any amount due or
owing hereunder in respect thereof, then, in any such case, Seller shall
promptly pay Buyer such additional amount or amounts as calculated by Buyer
in good faith as will compensate Buyer for such increased cost or reduced
amount receivable.
(b) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law (other than with respect to any amendment made
to Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in
the interpretation or application
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thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the
rate of return on Buyer's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which
Buyer or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration Buyer's or such
corporation's policies with respect to capital adequacy) by an amount
deemed by Buyer to be material, then from time to time, Seller shall
promptly pay to Buyer such additional amount or amounts as will
compensate Buyer for such reduction.
(c) Any payments made by Seller to Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however,
that if Seller shall be required by law to deduct or withhold any taxes
from any sums payable to Buyer, then Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant
authority in accordance with applicable law, (B) pay to Buyer the sum
that would have been payable had such deduction or withholding not been
made, and (C) at the time the Price Differential is paid, pay to Buyer
all additional amounts as specified by Buyer to preserve the after-tax
yield Buyer would have been received had such tax not been imposed.
(d) If Buyer becomes entitled to claim any additional amounts pursuant to
this Section, (i) it shall promptly notify Seller of the event by
reason of which it has become so entitled and (ii) at the sole option
of Buyer, (x) Buyer may terminate this Agreement and Seller shall not
be required to pay any Termination Fee or (y) this Agreement shall
continue in full force and effect, but, Seller shall not be required to
pay any Non-Use Fee with respect to each Test Period during which Buyer
is entitled to such additional amounts solely under this Section. A
certificate as to any additional amounts payable pursuant to this
Section submitted by Buyer to Seller shall be conclusive in the absence
of manifest error.
7. SECURITY INTEREST
(a) Each of the following items or types of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Purchased Items": all
Mortgage Loans, all rights under each Purchase Agreement (but not the
obligations thereunder), all rights of NCMC under the Worth Purchase
Agreement with respect to Mortgage Loans originated by Worth Funding
Incorporated, all Mortgage Files, including without limitation all
promissory notes, all Servicing Records relating to the Mortgage Loans
(as defined in Section 24(c)), all Servicing Agreements relating to the
Mortgage Loans and any other collateral pledged or otherwise relating
to such Mortgage Loans, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and other
books and records relating thereto, all mortgage guaranties and
insurance (issued by governmental agencies or otherwise) and any
mortgage insurance certificate or other document evidencing such
mortgage
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guaranties or insurance relating to any Mortgage Loan, all servicing
fees to which such Seller is entitled and servicing and other rights
relating to the Mortgage Loans, all Servicer Accounts established
pursuant to any Servicing Agreement and all amounts on deposit therein,
from time to time, all Purchase Agreements or other agreements or
contracts relating to, constituting, or otherwise governing, any or all
of the foregoing to the extent they relate to the Purchased Assets
including the right to receive principal and interest payments with
respect to the Purchased Assets and the right to enforce such payments,
the Collection Account and all monies from time to time on deposit in
the Collection Account, all "general intangibles", "accounts", "chattel
paper", "deposit accounts" and "investment property" as defined in the
Uniform Commercial Code as in effect from time to time relating to or
constituting any and all of the foregoing, and any and all
replacements, substitutions, distributions on or proceeds of any and
all of the foregoing.
(b) Buyer and Seller intend that the Transactions hereunder be sales to
Buyer of the Purchased Assets and not loans from Buyer to Seller
secured by the Purchased Assets. However, in order to preserve Buyer's
rights under this Agreement in the event that a court or other forum
recharacterizes the Transactions hereunder as loans and as security for
the performance by Seller of all of Seller's obligations to Buyer
hereunder and the Transactions entered into hereunder ("Repurchase
Obligations") and the Seller-Related Obligations, each of NCCC and NCMC
hereby assigns, pledges and grants a security interest in all of its
right, title and interest in, to and under the Purchased Items and
Purchased Assets to Buyer to secure the Repurchase Obligations and
Seller-Related Obligations, including without limitation the repayment
of all amounts owing to Buyer hereunder. The assignment, pledge and
grant of security interest contained herein shall be, and each of NCCC
and NCMC hereby represents and warrants to Buyer that it is, a first
priority perfected security interest. Each of NCCC and NCMC agrees to
xxxx its computer records and tapes to evidence the interests granted
to Buyer hereunder. All Purchased Items shall secure the payment of all
obligations of Seller now or hereafter existing under this Agreement,
including, without limitation, Seller's obligation to repurchase
Purchased Assets, or if such obligation is so recharacterized as a
loan, to repay such loan, for the Repurchase Price and to pay any and
all other amounts owing to Buyer hereunder.
(c) Pursuant to the Custodial and Disbursement Agreement, Custodian shall
hold the Mortgage Files as exclusive bailee and agent for Buyer
pursuant to the terms of the Custodial and Disbursement Agreement and
shall deliver to Buyer Trust Receipts each to the effect that Custodian
has reviewed such Mortgage Files in the manner and to the extent
required by the Custodial and Disbursement Agreement and identifying
any deficiencies in such Mortgage Files as so reviewed.
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8. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds to
be made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer
at the following account maintained by Buyer; Account No. GLA 111569,
account name SER, Bank of New York, ABA No. 000000000, Attn: Xxxx
Xxxxxxx, not later than 3 p.m., New York City time, on the date on
which such payment shall become due (and each such payment made after
such time shall be deemed to have been made on the next succeeding
Business Day). Seller acknowledges that it has no rights of withdrawal
from the foregoing account.
(b) On the Purchase Date for each Transaction, ownership of the Purchased
Assets shall be transferred to Buyer or its designee (including
Custodian) against the simultaneous transfer of the Purchase Price to
or on behalf of Seller not later than 6 p.m., New York City time,
simultaneously with the delivery to Custodian of the Purchased Assets
relating to each Transaction in accordance with the terms hereof and of
the Custodial and Disbursement Agreement. Each of NCCC and NCMC hereby
sells, transfers, conveys and assigns to Buyer or its designee
(including Custodian) without recourse, but subject to the terms of
this Agreement, all the right, title and interest of NCCC and NCMC, as
applicable, in and to the Purchased Assets together with all right,
title and interest in and to the proceeds of any related Purchased
Items.
(c) In connection with such sale, transfer, conveyance and assignment, on
or prior to each Purchase Date, Seller shall deliver or cause to be
delivered and released to Buyer or its designee (including Custodian)
(i) the Custodial Identification Certificate and (ii) the documents
identified in the Custodial and Disbursement Agreement.
(d) Any Mortgage Files not delivered to Buyer or its designee (including
Custodian) are and shall be held in trust by Seller or its designee for
the benefit of Buyer as the owner thereof. Seller or its designee shall
maintain a copy of the Mortgage File and the originals of the Mortgage
File not delivered to Buyer or its designee (including Custodian). The
possession of the Mortgage File by Seller or its designee is at the
will of Buyer for the sole purpose of servicing the related Purchased
Asset, and such retention and possession by Seller or its designee is
in a custodial capacity only. Each Mortgage File retained or held by
Seller or its designee shall be segregated on Seller's books and
records from the other assets of Seller or its designee and the books
and records of Seller or its designee shall be marked appropriately to
reflect clearly the sale of the related Purchased Asset to Buyer.
Seller or its designee shall release its custody of the Mortgage File
only in accordance with written instructions from Buyer, unless such
release is required as incidental to the servicing of the Purchased
Assets or is in connection with a repurchase of any Purchased Asset by
Seller.
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9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets and Purchased Items shall pass to Buyer and
Buyer shall have free and unrestricted use of all Purchased Assets and
Purchased Items. Nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Assets and Purchased
Items or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Purchased Assets and Purchased Items, all on terms that
Buyer may determine in its sole discretion. Nothing contained in this
Agreement shall obligate Buyer to segregate any Purchased Assets and
Purchased Items delivered to Buyer by Seller.
10. SELLER'S REPRESENTATIONS
Each of NCCC and NCMC represents and warrants to Buyer that as of the
Purchase Date for the purchase of any Purchased Assets by Buyer from Seller
and as of the date of this Agreement and any Transaction hereunder and at
all times while the Repurchase Documents and any Transaction hereunder is in
full force and effect:
(a) Acting as Principal. Seller will engage in such Transactions as
principal (or, if agreed in writing in advance of any Transaction by
the other party hereto, as agent for a disclosed principal).
(b) Solvency. Neither the Repurchase Documents nor any Transaction
thereunder are entered into in contemplation of insolvency or with
intent to hinder, delay or defraud any of Seller's creditors. The
transfer of the Mortgage Loans subject hereto and the obligation to
repurchase such Mortgage Loans is not undertaken with the intent to
hinder, delay or defraud any of Seller's creditors. Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any
successor provision thereof and the transfer and sale of the Mortgage
Loans pursuant hereto and the obligation to repurchase such Mortgage
Loan (i) will not cause Seller to become insolvent, (ii) will not
result in Seller having unreasonably small capital, and (iii) will not
result in debts that would be beyond Seller's ability to pay as the
same mature. Seller received reasonably equivalent value in exchange
for the transfer and sale of the Purchased Assets and Purchased Items
subject hereto.
(c) No Broker. Seller has not dealt with any broker, investment banker,
agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased
Assets pursuant to this Agreement.
(d) Ability to Perform. Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in the Repurchase Documents applicable to it to
which it is a party.
(e) No Defaults. No Default or Event of Default has occurred and is
continuing hereunder.
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(f) Legal Name; Existence. NCMC's exact legal name is, and for the
immediately preceding four months has been, New Century Mortgage
Corporation. NCCC's exact legal name is, and for the immediately
preceding four months has been, NC Capital Corporation. Each of NCCC
and NCMC (a) is a corporation duly and exclusively organized, validly
existing and in good standing under the laws of California, (b) has all
requisite corporate or other power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted,
except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse
Effect; and (c) is qualified to do business and is in good standing in
all other jurisdictions in which the nature of the business conducted
by it makes such qualification necessary, except where failure so to
qualify could not be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect.
(g) Financial Condition. Seller has heretofore furnished to Buyer a copy of
(a) its consolidated balance sheet for the fiscal year ended December
31, 2002, and the related consolidated statements of income and
retained earnings and of cash flows for Seller and its consolidated
Subsidiaries for such fiscal year, each audited by and with the
unqualified opinion thereon of KPMG LLP and (b) its consolidated
balance sheet for the quarterly fiscal period of Seller as of March 31,
2003 and its consolidated balance sheet as of May 31, 2003 and the
related consolidated statements of income and retained earnings and of
cash flows for Seller and its consolidated Subsidiaries for such
periods, setting forth in each case in comparative form the figures for
the previous year. All such financial statements are complete and
correct and fairly present, in all material respects, the consolidated
financial position of Seller and its Subsidiaries and the consolidated
results of their operations as at such dates and for such fiscal
periods, all in accordance with GAAP applied on a consistent basis.
Since May 31, 2003, there has been no material adverse change in the
consolidated business, operations or financial condition of Seller and
its consolidated Subsidiaries taken as a whole from that set forth in
said financial statements.
(h) Litigation. There are no actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending
or threatened) or other legal or arbitrable proceedings affecting
Seller or any of its Subsidiaries or affecting any of the Property of
any of them before any Governmental Authority which (i) questions or
challenges the validity or enforceability of the Repurchase Documents
or any action to be taken in connection with the transactions
contemplated hereby or (ii) makes a claim or claims, individually or in
the aggregate in an amount greater than $1,000,000 which if determined
adversely could have a Material Adverse Effect, or (iii) individually
or in the aggregate, if adversely determined, could reasonably be
likely to have a Material Adverse Effect.
(i) No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein
contemplated to be entered
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into by Seller in compliance with the terms and provisions thereof will
conflict with or result in a breach of the organizational documents of
NCCC, NCMC or Guarantor, or any applicable law, rule or regulation, or
any order, writ, injunction or decree of any Governmental Authority, or
any Servicing Agreement or other material agreement or instrument to
which NCCC, NCMC, Guarantor or any of their respective Subsidiaries is
a party or by which any of them or any of their Property is bound or to
which any of them is subject, or constitute a default under any such
material agreement or instrument or result in the creation or
imposition of any Lien (except for the Liens created pursuant to the
Repurchase Documents) upon any Property of NCCC, NCMC or Guarantor, or
any of their respective Subsidiaries pursuant to the terms of any such
agreement or instrument, other than a breach or default for which a
consent or waiver has been obtained pursuant to Section 3(a)(6).
(j) Action. Each of NCCC, NCMC and Guarantor has all necessary corporate or
other power, authority and legal right to execute, deliver and perform
its obligations under each of the Repurchase Documents to which it is a
party, as applicable; the execution, delivery and performance by NCCC,
NCMC or Guarantor of each of the Repurchase Documents to which it is a
party have been duly authorized by all necessary corporate or other
action on its part; and each Repurchase Document to which it is a party
has been duly and validly executed and delivered by NCCC, NCMC or
Guarantor, as applicable, and constitutes a legal, valid and binding
obligation of NCCC, NCMC or Guarantor, as applicable, enforceable
against NCCC, NCMC or Guarantor, as applicable, in accordance with its
terms.
(k) Approvals. No authorizations, approvals or consents of, and no filings
or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by
NCCC, NCMC or Guarantor, as applicable, of the Repurchase Documents to
which it is a party or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens
created pursuant to the Repurchase Documents.
(l) Margin Regulations. Neither any Transaction hereunder, nor the use of
the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation T, U or X.
(m) Taxes. Each of NCCC, NCMC, Guarantor and their respective Subsidiaries
have filed all Federal income tax returns and all other material tax
returns that are required to be filed by them and have paid all taxes
due pursuant to such returns or pursuant to any assessment received by
it or any of its Subsidiaries, except for any such taxes as are being
appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have
been provided. The charges, accruals and reserves on the books of NCCC,
NCMC, Guarantor and their respective Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of NCCC, NCMC or
Guarantor, as applicable, adequate.
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(n) Investment Company Act. None of NCCC, NCMC, Guarantor nor any of their
respective Subsidiaries is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(o) Purchased Assets.
(1) Neither NCCC nor NCMC has assigned, pledged, or otherwise conveyed
or encumbered any Mortgage Loan to any other Person (except as
between any of NCCC, Worth Funding Incorporated and NCMC), and
immediately prior to the sale of such Mortgage Loan to Buyer, NCCC
and/or NCMC was the sole legal and beneficial owner of such
Mortgage Loan and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released
simultaneously with the sale to Buyer hereunder. No Mortgage Loan
sold to Buyer hereunder was acquired (by purchase or otherwise) by
NCCC or NCMC from an Affiliate of NCCC or NCMC (except as between
any of NCCC, Worth Funding Incorporated and NCMC), as applicable
unless a True Sale Certification has been delivered to Buyer.
(2) The provisions of this Agreement are effective to either
constitute a sale of Purchased Items to Buyer or to create in
favor of Buyer a valid and fully perfected security interest in
all right, title and interest of NCCC and NCMC in, to and under
the Purchased Items.
(3) Upon receipt by Custodian of each Mortgage Note, endorsed in blank
by a duly authorized officer of NCCC or NCMC, as applicable,
either a purchase shall have been completed by Buyer of each
Mortgage Note or Buyer shall have a valid and fully perfected
first priority security interest in the applicable Mortgage Note
and in such Seller's interest in the related Mortgaged Property.
(4) Upon the filing of financing statements on Form UCC-1 naming Buyer
as "Secured Party", and NCCC and NCMC as "Debtor" and describing
the Purchased Items, in the jurisdictions and recording offices
listed on Exhibit IV attached hereto, the security interests
granted hereunder in the Purchased Items will constitute valid and
fully perfected first priority security interests under the
Uniform Commercial Code in all right, title and interest of NCCC
and NCMC in, to and under such Purchased Items, which can be
perfected by filing under the Uniform Commercial Code.
(5) Upon execution and delivery of the Account Agreement, Buyer shall
either be the owner of, or have a valid and fully perfected first
priority security interest in, the investment property and all
deposit accounts comprising Purchased Items.
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(6) With respect to each Purchased Asset, each of the representations
and warranties on Schedule 1 is true and correct.
(p) Chief Executive Office/Jurisdiction of Organization. On the Effective
Date, and during the four months immediately preceding the Effective
Date, each of NCCC and NCMC's chief executive office, is, and has been
located at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000. On
the Effective Date, each of NCCC and NCMC's jurisdiction of
organization is California.
(q) Location of Books and Records. The location where each of NCCC and NCMC
keeps its books and records, including all computer tapes and records
related to the Purchased Items is its chief executive office.
(r) Reserved.
(s) Servicing Agreements. Seller has delivered to Buyer all Servicing
Agreements with respect to the Purchased Mortgage Loans and no default
or event of default exists thereunder.
(t) Existing Financing Facilities. All credit facilities, repurchase
facilities or substantially similar facilities of Seller which are
presently in effect are listed under the definition of "Existing
Financing Facilities", Seller has delivered to Buyer copies of all
Existing Financing Facilities and no defaults or events of default
exist thereunder.
(u) True and Complete Disclosure. (a) The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf
of NCCC, NCMC or Guarantor to Buyer in connection with the negotiation,
preparation or delivery of this Agreement and the other Repurchase
Documents or included herein or therein or delivered pursuant hereto or
thereto (other than with respect to the Mortgage Loans), when taken as
a whole, do not contain any untrue statement of material fact or omit
to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by
or on behalf of each of NCCC, NCMC and Guarantor to Buyer in connection
with this Agreement and the other Repurchase Documents and the
transactions contemplated hereby (other than with respect to the
Mortgage Loans) and thereby will be true, complete and accurate in
every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer of
either NCCC or NCMC, after due inquiry, that could reasonably be
expected to have a Material Adverse Effect that has not been disclosed
herein, in the other Repurchase Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing
furnished to Buyer for use in connection with the transactions
contemplated hereby or thereby.
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(v) ERISA. NCCC, NCMC, Guarantor and any of their respective ERISA
Affiliates are not and will not be in the future, required to
contribute to any Plan (including Multiemployer Plans) subject to the
applicable provisions of ERISA.
(w) Worth Purchase Agreement. Each Eligible Asset sold by Seller to Buyer,
which was originated by Worth Funding Incorporated, was purchased by
Seller pursuant to the Worth Purchase Agreement.
(x) No Reliance. Each of NCMC, NCCC and Guarantor has made its own
independent decisions to enter into the Repurchase Documents and each
Transaction and as to whether such Transaction is appropriate and
proper for it based upon its own judgment and upon advice from such
advisors (including without limitation, legal counsel and accountants)
as it has deemed necessary. None of NCMC, NCCC or Guarantor is relying
upon any advice from Buyer as to any aspect of the Transactions,
including without limitation, the legal, accounting or tax treatment of
such Transactions.
(y) Compliance with Anti-Money Laundering Laws. Seller has complied with
all applicable anti-money laundering laws and regulations, including
without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); Seller has established an adequate
anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of
the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets
used by the said Mortgagor to purchase the property in question, and
maintains, and will maintain, sufficient information to identify the
applicable Mortgagor for purposes of the Anti-Money Laundering Laws.
(z) Other Security Agreements. Seller has not become bound under Section
9-203(d) of the UCC by a Security Agreement previously entered into by
another Person.
11. COVENANTS OF SELLER
On and as of the date of this Agreement and each Purchase Date and until
this Agreement is no longer in force with respect to any Transaction, each
of NCCC and NCMC covenants that it will:
(a) Financial Statements. Seller shall deliver to Buyer:
(1) as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the unaudited
consolidated balance sheets of Guarantor, Seller and their
consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated statements of income and retained
earnings and of cash flows for Guarantor, Seller and their
consolidated Subsidiaries for such period and the portion of the
fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Guarantor and Seller, as
applicable, which
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certificate shall state that said consolidated financial
statements fairly present in all material respects the
consolidated financial condition and results of operations of
Guarantor or Seller and its consolidated Subsidiaries, as
applicable, in accordance with GAAP, consistently applied, as at
the end of, and for, such period (subject to normal year-end
adjustments);
(2) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Guarantor or Seller, the
consolidated balance sheets of Guarantor and Seller and their
respective consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor and Seller and
their respective consolidated Subsidiaries for such year, setting
forth in each case in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing,
which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of Guarantor and Seller and their respective
consolidated Subsidiaries as at the end of, and for, such fiscal
year in accordance with GAAP, and a certificate of such
accountants stating that, in making the examination necessary for
their opinion, they obtained no knowledge, except as specifically
stated, of any Default or Event of Default;
(3) prior to the end of each fiscal year, final annual budgets,
forecasts and pro-forma cash flow projections developed by
Guarantor, NCMC and NCCC for their next succeeding fiscal year;
(4) as soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of Seller, management reports
containing such information with respect to each Junior
Securitization Interest owned by any of NCCC, NCMC or their
respective Affiliates, and the related Company Securitization
Transaction, as Buyer may request, including, without limitation,
information concerning reserve account balances, cash receipts,
prepayment and credit loss experience, REO Property inventory
status and loss projections, and relevant gain on sale
assumptions;
(5) from time to time such other information regarding the financial
condition, operations, or business of Seller as Buyer may
reasonably request; and
(6) as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the balance sheet and
statement of profits and losses as at the end of such period for
Worth Funding Incorporated.
Seller shall furnish to Buyer, at the xxxx Xxxxxx furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate
of a Responsible Officer of Seller
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to the effect that, to the best of such Responsible Officer's knowledge,
Seller during such fiscal period or year has observed or performed in all
material respects all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Repurchase
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate (and, if any Default or
Event of Default has occurred and is continuing, describing the same in
reasonable detail and describing the action Seller has taken or proposes to
take with respect thereto).
(b) Litigation. Seller will promptly, and in any event within ten (10) days
after service of process on any of the following, give to Buyer notice
of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are
threatened or pending) or other legal or arbitrable proceedings
affecting Seller or any of its Subsidiaries or affecting any of the
Property of any of them before any Governmental Authority that (i)
questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim or claims
individually or in the aggregate in an amount greater than $1,000,000
which if determined adversely could have a Material Adverse Effect, or
(iii) which, individually or in the aggregate, if adversely determined,
could be reasonably likely to have a Material Adverse Effect].
(c) Existence, etc. Each of NCCC and NCMC shall:
(1) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the
operation of its business (provided that nothing in this Section
11(c)(1) shall prohibit any transaction expressly permitted under
Section 11(d));
(2) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply
with such requirements could be reasonably likely (either
individually or in the aggregate) to have a Material Adverse
Effect;
(3) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(4) not move its chief executive office from the address referred to
in Section 10(p) or change its jurisdiction of organization unless
it shall have provided Buyer thirty (30) days' prior written
notice of such change;
(5) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of
which is being contested in
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good faith and by proper proceedings and against which adequate
reserves are being maintained; and
(6) permit representatives of Buyer, upon reasonable notice (unless a
Default shall have occurred and is continuing, in which case, no
prior notice shall be required), during normal business hours, to
examine, copy and make extracts from its books and records, to
inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested
by Buyer.
(d) Restriction on Fundamental Changes. Guarantor, NCCC and NCMC will not,
and will not permit any of their Subsidiaries to, engage in any
business activities or operations substantially different from or
unrelated to those in which Guarantor, NCCC and NCMC were engaged on
the Effective Date, enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions,
any of its assets, whether now owned or hereafter acquired, or acquire
by purchase or otherwise all or substantially all the business or
Property of, or stock or other evidence of beneficial ownership of, any
Person, except:
(1) Guarantor, NCCC or NCMC may sell or otherwise dispose of property
in the ordinary course of business, provided such sales do not
include all or substantially all of the assets of Guarantor, NCCC
or NCMC;
(2) Guarantor and its Subsidiaries other than Seller may engage in any
business involving the origination, acquisition, servicing or sale
of consumer Indebtedness; and
(3) the Seller may transfer assets with a book value not to exceed an
amount equal to $10,000,000 at any time to REO Sub, provided that
Buyer's interest has been released in such assets in accordance
herewith.
(e) Margin Deficit. If at any time there exists a Margin Deficit, Seller
shall cure same in accordance with Section 4.
(f) Notices. Seller shall give notice to Buyer:
(1) promptly upon receipt of notice or knowledge of the occurrence of
any Default or Event of Default;
(2) with respect to any Purchased Asset, promptly upon receipt of any
principal prepayment (in full or partial) of such Purchased Asset;
(3) with respect to any Purchased Asset hereunder, promptly upon
receipt of notice or knowledge that the underlying Mortgaged
Property has been damaged by waste, fire, earthquake or earth
movement, flood, tornado or other casualty, or otherwise damaged
so as to affect adversely the Asset
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Value of such Purchased Asset (provided that Seller may satisfy
its obligations under this clause (3) by causing Servicer to
notify Buyer of any such damage);
(4) promptly upon receipt of notice or knowledge of (i) any material
default related to any Purchased Item, (ii) any Lien or security
interest on, or claim asserted against, any Purchased Item or
(iii) any event or change in circumstances which could reasonably
be expected to have a Material Adverse Effect;
(5) promptly upon any material change in the market value of any or
all of Seller's assets which could reasonably be expected to have
a Material Adverse Effect;
(6) no later than five Business Days after the end of each such month,
of all amounts borrowed under the Existing Financing Facilities
during such month, in the form of a daily tabulation of all such
amounts borrowed;
(7) upon any material amendment to the Existing Financing Facilities,
any decrease in the gross amount available to be borrowed
thereunder, or any change in custodian or custodial arrangements
relating thereto; and
(8) promptly upon the occurrence of any default or event of default
under the Existing Financing Facilities.
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of Seller setting forth details of the occurrence
referred to therein and stating what action Seller has taken or proposes to
take with respect thereto.
(g) Reports. Seller shall provide Buyer with a quarterly report, which
report shall include, among other items, a summary of such Seller's
delinquency and loss experience with respect to Mortgage Loans serviced
by Seller, any Servicer or any designee of either, operating statements
and the occupancy status of such Mortgaged Property and other property
level information, including internal quality control reports, plus any
such additional reports as Buyer may reasonably request with respect to
Seller or any Servicer's servicing portfolio or pending originations of
Mortgage Loans.
(h) Underwriting Guidelines. All Eligible Assets will conform with, and
will be assigned a Risk Rating in accordance with, the Underwriting
Guidelines. Seller shall not make any material change in the
Underwriting Guidelines without the prior written consent of Buyer and
shall review the Underwriting Guidelines periodically to confirm that
they are being complied with in all material respects and are adequate
to meet Seller's business objectives. In the event Seller makes any
material amendment or modification to the Underwriting Guidelines,
Seller shall promptly deliver to Buyer a complete copy of the amended
or modified Underwriting Guidelines. Seller shall deliver to Buyer a
complete copy of the
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then-current Underwriting Guidelines (i) on the 1/st/ day of each Test
Period and (ii) promptly upon Buyer's request.
(i) Affiliate Transactions. Guarantor, NCCC and NCMC will not, and will not
permit any of their Subsidiaries to, enter into any transaction with an
Affiliate of Guarantor, NCCC or NCMC, except: (a) transactions in the
ordinary course of business on terms no less favorable to Guarantor,
NCCC or NCMC than those that would be obtained in an arm's-length
transaction; (b) Indebtedness described in Sections 11(s)(5) and
11(s)(10); (c) guaranties of Indebtedness described in Section 11(k);
(d) transfers of assets by NCMC to NCCC and REO Sub as described in
Sections 11(k)(2) and 11(k)(3); and (e) transfers by NCCC and NCCC of
Junior Securitization Interests to Residual Finance Subsidiaries. In no
event shall Seller transfer to Buyer hereunder any Mortgage Loan
acquired by Seller from an Affiliate of Seller (other than each other
Seller or Worth Funding Incorporated) unless a True Sale Certification
has been delivered to Buyer prior to such sale.
(j) Liens. Guarantor, NCCC and NCMC will not, and will not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien with respect to any property now owned or
hereafter acquired by Guarantor, NCCC or NCMC, or any income or profits
therefrom, except:
(1) [Reserved];
(2) Liens in connection with deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age pensions or
other social security obligations, in the ordinary course of
business of Guarantor, NCCC or NCMC;
(3) Liens for taxes, fees, assessments and governmental charges not
delinquent or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP;
(4) encumbrances consisting of zoning regulations, easements, rights
of way, survey exceptions and other similar restrictions on the
use of real property and minor irregularities in title thereto
which do not materially impair their use in the operation of its
business;
(5) Liens on equipment arising under any capitalized lease obligation
or other purchase money Liens on equipment acquired after the
Effective Date to secure Indebtedness permitted pursuant to
Section 11(s)(3);
(6) Liens incurred in connection with gestation repurchase agreements
or similar arrangements, including, without limitation, (i)
arrangements under which Guarantor or its Subsidiaries are
required to repurchase Mortgage-backed Securities or Mortgage
Loans from any lender or other counterparty reasonably
satisfactory to Buyer, (ii) credit facilities
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structured as loan and security agreements; provided, that such
gestation repurchase agreements or similar arrangements are
entered into in the ordinary course of business in contemplation
of the subsequent non-recourse sale of such Mortgage-backed
Securities or Mortgage Loans, including without limitation, liens
granted under the Existing Financing Facilities or (iii) similar
arrangements established for the purpose of financing servicing
advances;
(7) Liens on Junior Securitization Interests which secure Indebtedness
permitted by Section 11(s)(4);
(8) Liens arising under Interest Rate Protection Agreements;
(9) a pledge of the stock of REO Sub to SBRC pursuant to the Salomon
REO Financing Facility; and
(10) a pledge of the stock of NC Residual II Corporation to Financial
Securities Assurance Corporation.
(k) Guarantees. Guarantor, NCCC and NCMC will not, and will not permit any
of their Subsidiaries to, directly or indirectly, create or become or
be liable with respect to any Guarantee, other than:
(1) Guarantees by Guarantor of Indebtedness of NCMC OR NCCC secured by
liens described in Section 11(j)(5), in an amount not to exceed
$50,000,000;
(2) Guarantees by Guarantor of NCMC's or NCCC's obligations relating
to (i) Indebtedness permitted by Sections 11(s)(4) and 11(s)(7) or
(ii) the Strategic Alliance Agreement (as defined below) described
in Section 11(t)(10);
(3) Guarantees by NCMC of the obligations of NCCC or Residual Finance
Subsidiaries in respect of Indebtedness permitted by Sections
11(s)(4) and 11(s)(7); and
(4) the Guaranty.
(l) Limitation on Distributions. After the occurrence and during the
continuation of any Default, neither NCCC nor NCMC shall make any
payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of any equity or partnership interest of NCCC or
NCMC, as applicable, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of NCCC or NCMC, as
applicable.
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(m) Net Worth. Guarantor will at all times during each fiscal year maintain
Tangible Net Worth of not less than (a) the greater of (i) $130,000,000
or (ii) eighty-five percent (85%) of the Tangible Net Worth at the end
of its most recently completed fiscal year (or, in the case of the
Tangible Net Worth at the end of any fiscal year, its prior fiscal
year) plus (b) ninety percent (90%) of capital contributions made
during such fiscal year plus (c) fifty percent (50%) of positive
year-to-date net income. NCMC will at all times during each fiscal year
maintain Tangible Net Worth of not less than (a) the greater of (i)
$85,000,000 or (ii) eighty-five percent (85%) of the Tangible Net Worth
at the end of its most recently completed fiscal year (or, in the case
of the Tangible Net Worth at the end of any fiscal year, its prior
fiscal year) plus (b) ninety percent (90%) of capital contributions
made during such fiscal year plus (c) fifty percent (50%) of positive
year-to-date net income. NCCC will at all times during each fiscal year
maintain Tangible Net Worth of not less than $1.00.
(n) Minimum Liquidity. Seller will not permit the sum of (a) Cash of the
Guarantor plus (b) the lesser of eighty percent (80%) of the
receivables related to the sale or transfer of NCMC's or NCCC's
interest in any Servicing Contract, or $5,000,000, to (i) be less than
$10,000,000 as of the end of any month or (ii) remain less than
$10,000,000 for more than ten (10) calendar days after giving effect to
any mandatory prepayment of principal (or the equivalent) under any
Residual Financing Agreement.
(o) Leverage Ratio. Guarantor will not permit (i) the Quarterly Average
Leverage Ratio for any period of measurement to be greater than 10.0 to
1.0, (ii) the Daily Leverage Ratio on any date to be greater than 15.0
to 1.0, or (iii) the Adjusted Leverage Ratio as of the last day of each
fiscal quarter to be greater than 12.0 to 1.0. NCMC will not permit the
Leverage Ratio of NCMC to be greater than 8.0 to 1.0 as of the last day
of each fiscal quarter of NCMC.
(p) Servicer; Servicing Tape. Seller shall provide to Buyer and to
Disbursement Agent via Electronic Transmission, a remittance report on
a monthly basis by no later than the 12/th/ day of each month (the
"Reporting Date") containing servicing information, including without
limitation those fields reasonably requested by Buyer from time to
time, on a loan-by-loan basis and in the aggregate, with respect to the
Purchased Assets serviced hereunder by Seller or any Servicer for the
month (or any portion thereof) prior to the Reporting Date (such
remittance report, an "Asset Tape"). Seller shall not cause the
Mortgage Loans to be serviced by any servicer other than a servicer
expressly approved in writing by Buyer, which approval shall be deemed
granted by Buyer with respect to Seller with the execution of this
Agreement.
(q) Required Filings. Seller shall promptly provide Buyer with copies of
all documents which NCCC, NCMC or any Subsidiary of NCCC or NCMC is
required to file with the Office of the Comptroller of Currency in
accordance with its regulations.
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(r) Remittance of Prepayments. Seller shall remit or cause to be remitted
to Buyer, with sufficient detail via Electronic Transmission to enable
Buyer to appropriately identify the Mortgage Loan to which any amount
remitted applies, all full or partial principal prepayments on any
Purchased Asset that Seller has received on a weekly basis, to be paid
on Thursday of the next succeeding week (or the next Business Day).
(s) Indebtedness. Guarantor, NCCC and NCMC will not, and will not permit
any of their Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
(1) The obligations of Seller hereunder and Guarantor under the
Guaranty;
(2) current liabilities not more than ninety (90) days overdue, unless
contested in good faith by appropriate proceedings and any
reserves required by GAAP have been established, incurred by
Guarantor, NCMC or NCCC in the ordinary course of business
otherwise than for money borrowed;
(3) Indebtedness incurred to finance the purchase of equipment and
secured solely by Liens on such equipment, in an aggregate amount
not to exceed $50,000,000;
(4) Indebtedness incurred to finance all Junior Securitization
Interests which Indebtedness is secured only by Junior
Securitization Interests, provided, that such Indebtedness does
not exceed 50% of the aggregate value of all Junior Securitization
Interests determined in accordance with GAAP;
(5) intercompany Indebtedness of Guarantor to NCCC or NCMC in an
aggregate amount not to exceed $1,000,000;
(6) intercompany Indebtedness of NCCC or NCMC to Guarantor incurred in
the ordinary course of business;
(7) obligations under gestation repurchase agreements or similar
arrangements of the type described in Section 11(j)(6);
(8) Subordinated Debt;
(9) Indebtedness incurred by NCCC or NCMC in connection with the
Salomon REO Financing Facility in an aggregate amount not to
exceed $50,000,000;
(10) Indebtedness with respect to each of NCCC and its respective
subsidiaries in the form of credit lines of no more than
$5,000,000, in the aggregate, with Bank of America or another
lender approved by the Buyer in its sole discretion, to the extent
such credit lines are required by the New York State Banking
Department Regulations; and
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(11) intercompany Indebtedness between NCMC and NCCC incurred in the
ordinary course of business.
(t) Investments. Guarantor, NCMC and NCCC will not, and will not permit any
of their Subsidiaries to, directly or indirectly, make or own any
Investment, except Investments in:
(1) marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof
and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition
thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either
Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.,
or Xxxxx'x Investors Service, Inc.;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's Ratings
Group, a division of McGraw Hill, Inc., or Xxxxx'x Investors
Service, Inc.;
(4) in the case of Guarantor, other consumer debt obligations
originated or acquired by Guarantor in the ordinary course of
Guarantor's business, in the case of NCMC, Mortgage Loans
originated or acquired by NCMC in the ordinary course of NCMC's
business, and in the case of NCCC, Mortgage Loans acquired from
NCMC in the ordinary course of NCCC's business;
(5) certificates of deposits or bankers acceptances issued by Buyer or
any other commercial bank organized under the laws of the United
States or any State thereof and having a combined capital and
surplus of at least $500,000,000, or by United States offices of
foreign banks having the highest rating obtainable from a
nationally recognized rating agency, in each case maturing within
one year from the date of acquisition thereof;
(6) Investments in mutual funds that invest substantially all of their
assets in Investments of the types described in subsections (1),
(2), (3) and (5) of this Section 11(t);
(7) the capital stock of any Subsidiary (subject to the limitations
set forth in Sections 11(d) and 11(u);
(8) in the case of NCMC and NCCC, loans to Guarantor in an aggregate
amount not to exceed $1,000,000;
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(9) direct equity investments made by either NCMC or NCCC, to the
extent no Event of Default or Default has occurred and is
continuing, or would occur as a result thereof, in or loans to
Persons in the mortgage origination business, in an aggregate
amount not to exceed $2,500,000;
(10) Investments made or to be made by NCMC, in an amount not to exceed
$1,250,000 in the aggregate, and a guaranty made by Guarantor,
pursuant to a Strategic Alliance Agreement (the "Strategic
Alliance Agreement") by and among NCMC, Qualified Financial
Services, Inc., a Colorado corporation, Qualified Financial
Services, Inc., a California corporation, Xxxxx Xxxxx, an
individual, and Xxxxx V.V. Thais, an individual;
(11) Investments arising under Interest Rate Protection Agreements;
(12) in the case of Guarantor, loans to NCMC and NCCC; and
(13) intercompany Indebtedness between NCMC and NCCC incurred in the
ordinary course of business.
(u) Subsidiaries. (a) Guarantor will not create or acquire any Subsidiaries
other than (i) NCCC and NCMC, (ii) the Subsidiaries listed on Schedule
2 hereto, (iii) Residual Finance Subsidiaries, and (iv) Subsidiaries
engaged solely in any business involving the origination, acquisition,
servicing and sale of consumer obligations, and (b) Seller will not
create or acquire any Subsidiaries other than (i) the Subsidiaries
listed on Schedule 2 hereto, (ii) Residual Finance Subsidiaries, and
(iii) Subsidiaries acquired as a result of Investments permitted
pursuant to Section 11(t)(10).
(v) Restricted Payments. Guarantor, NCCC and NCMC will not make any
Restricted Payments, other than (a) dividends paid by Guarantor on its
Common Stock not to exceed $0.60 per share in any calendar year, or
dividends in the form of Common Stock if such dividend is used to
accomplish a stock split, and (b) repurchases by Guarantor of up to
4,000,000 shares of its Common Stock on the open market or in
negotiated transactions; provided, that in each case both before and
after giving effect to such dividends or repurchases, Guarantor, NCCC
and NCMC are in compliance with the covenants set forth in Section 11
of this Agreement and no Event of Default or Default has occurred and
is continuing.
(w) Custodial and Disbursement Agreement and Account Agreement. Seller
shall maintain each of the Custodial and Disbursement Agreement and
Account Agreement in full force and effect and shall not amend or
modify either of the Custodial and Disbursement Agreement or the
Account Agreement or waive compliance with any provisions thereunder
without the prior written consent of Buyer.
(x) Inconsistent Agreements. Guarantor, NCMC and NCCC will not, and will
not permit any of their Subsidiaries to, directly or indirectly, enter
into any agreement containing any provision which would be violated or
breached by any Transaction
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hereunder or by the performance by either of Guarantor, NCCC or NCMC of
their respective obligations under any Repurchase Document to which it
is a party.
(y) Compliance Report. Seller shall provide Buyer no later than the 30/th/
day of each month, in a letter format acceptable to Buyer in its sole
discretion, a compliance report demonstrating therein the calculations
Seller utilized to determine its compliance with the financial
covenants set forth in clauses (m), (n) and (o) of this Section 11 as
of the end of the immediately preceding month.
(z) Sub-Limits. Seller shall not sell to Buyer any Eligible Assets if,
after giving effect to such Transaction, the aggregate principal
balance of such Purchased Assets are in excess of any applicable
Sub-Limit.
(aa) Escrow Imbalances. Seller will, no later than five (5) Business Days
after learning (from any source) of any material imbalance in any
escrow account, fully and completely correct and eliminate such
imbalance including, without limitation, depositing its own funds into
such account to eliminate any overdrawal or deficit.
(bb) Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of an Event of Default or
Default if such action is taken or condition exists.
(cc) Maintenance of Tangible Net Worth. Seller shall have at all times, on a
consolidated basis, Cash, Cash Equivalents and unused borrowing
capacity on unencumbered assets that could be drawn against (taking
into account the economic terms of committed Existing Financing
Facilities, including, without limitation, any margin or
overcollateralization requirements) under committed Existing Financing
Facilities in an amount equal to not less than $80,000,000. Seller
shall have on the last day of each fiscal quarter, on a consolidated
basis, Cash and Cash Equivalents in an amount equal to not less than
$60,000,000
12. EVENTS OF DEFAULT
If any of the following events (each, an "Event of Default") occur, Seller
and Buyer shall have the rights set forth in Section 13, as applicable:
(a) Seller shall default in the payment of any Repurchase Price due or any
amount under Section 5 when due (whether at stated maturity, upon
acceleration or at mandatory or optional prepayment); or
(b) Seller shall default in the payment of any other amount payable by it
hereunder or under any other Repurchase Document after notification by
Buyer of such default, and such default shall have continued unremedied
for one (1) Business Day; or
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(c) any representation, warranty or certification made or deemed made
herein or in any other Repurchase Document by Seller or any certificate
furnished to Buyer pursuant to the provisions hereof or thereof or any
information with respect to the Mortgage Loans furnished in writing by
on behalf of Seller shall prove to have been false or misleading in any
material respect as of the time made or furnished (other than the
representations and warranties set forth in Schedule 1, which shall be
considered solely for the purpose of determining the Asset Value of the
Purchased Assets, unless (i) Seller shall have made any such
representations and warranties with actual knowledge that they were
materially false or misleading at the time made; or (ii) any such
representations and warranties have been determined in good faith by
Buyer in its sole discretion to be materially false or misleading on a
regular basis); or
(d) Seller shall fail to comply with the requirements of 11(c), Section
11(d), Section 11(e), Section 11(f), Section 11(h) (with respect to the
Eligible Assets as a whole and not with respect to any single Eligible
Asset) or Sections 11(i) through 11(w); and such default shall continue
unremedied for a period of 5 Business Days from the earlier of (i) a
responsible officer of Seller having knowledge of such default and (ii)
Buyer giving notice to Seller of such default; or except as otherwise
set forth in Sections 12(a), 12(b), 12(c) and 12(d), Seller shall fail
to observe or perform any other covenant or agreement contained in this
Agreement or any other Repurchase Document and such failure to observe
or perform shall continue unremedied for a period of 10 Business Days
from the earlier of (i) a responsible officer of Seller having
knowledge of such default and (ii) Buyer giving notice to Seller of
such default; or
(e) a final judgment or judgments for the payment of money in excess of
$500,000 in the aggregate shall be rendered against NCCC, NCMC or any
of their Affiliates by one or more courts, administrative tribunals or
other bodies having jurisdiction and the same shall not be satisfied,
discharged (or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured, within 30
days from the date of entry thereof; or
(f) an Act of Insolvency shall have occurred with respect to NCCC, NCMC or
any of their Affiliates; or
(g) the Custodial and Disbursement Agreement, the Account Agreement or any
Repurchase Document shall for whatever reason be terminated or cease to
be in full force and effect, or the enforceability thereof shall be
contested by NCCC or NCMC; or
(h) NCCC or NCMC shall grant, or suffer to exist, any Lien on any Purchased
Item (except any Lien in favor of Buyer); or either the Purchased Items
shall not have been sold to Buyer free and clear of any Liens in favor
of any Person other than Buyer, or the Liens contemplated hereby shall
cease or fail to be first priority perfected Liens on any Purchased
Items (but not the related Mortgaged
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Properties) in favor of Buyer or shall be Liens in favor of any Person
other than Buyer; or
(i) NCCC, NCMC or any of their Affiliates shall be in default under (i) any
Indebtedness in an amount equal to $250,000 or more of NCCC or NCMC or
of such Affiliate which default (1) involves the failure to pay a
matured obligation, or (2) permits the acceleration of the maturity of
obligations by any other party to or beneficiary with respect to such
Indebtedness, (ii) any other contract to which NCCC or NCMC or such
Affiliate is a party which default (1) involves the failure to pay a
matured obligation in excess of $250,000, or (2) permits the
acceleration of the maturity of obligations in excess of $250,000 by
any other party to or beneficiary of such contract, or (iii) any
Seller-Related Obligation; or
(j) any material adverse change in the Property, business or financial
condition of NCCC or NCMC or any of their Affiliates shall occur, in
each case as determined by Buyer in its sole good faith discretion, or
any other condition shall exist which, in Buyer's sole good faith
discretion, constitutes a material impairment of Seller's ability to
perform its obligations under this Agreement or any other Repurchase
Document; or
(k) upon (i) any material adverse change in the terms of or (ii) material
reduction in amounts available to NCCC, NCMC or their Affiliates under
any of the Existing Financing Facilities; or
(l) upon any event of default or event which, with the passage of time or
expiration of any grace periods, would constitute an event of default
under any of the Existing Financing Facilities; or
(m) a Change of Control shall have occurred.
13. REMEDIES
(a) If an Event of Default occurs, the following rights and remedies are
available to Buyer; provided, that an Event of Default shall be deemed
to be continuing unless expressly waived by Buyer in writing.
(1) At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if no
notice is given, immediately upon the occurrence of an Act of
Insolvency of Seller), the Repurchase Date for each Transaction
hereunder, if it has not already occurred, shall be deemed
immediately to occur. Buyer shall (except upon the occurrence of
an Act of Insolvency of Seller) give notice to Seller of the
exercise of such option as promptly as practicable.
(2) If Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(1) of this Section 13,
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(A) (i) Seller's obligations in such Transactions to
repurchase all Purchased Assets, at the Repurchase Price therefor
on the Repurchase Date, and to pay all other amounts owed by
Seller hereunder, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed
exercise shall be retained by Buyer and applied to the aggregate
unpaid Repurchase Prices and any other amounts owed by Seller
hereunder, and (iii) Seller shall immediately deliver to Buyer any
Purchased Assets subject to such Transactions then in NCCC's or
NCMC's possession or control;
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each such Transaction shall be
increased by the aggregate amount obtained by daily application
of, on a 360 day per year basis for the actual number of days
during the period from and including the date of the exercise or
deemed exercise of such option to but excluding the date of
payment of the Repurchase Price, (x) the Post-Default Rate to (y)
the Repurchase Price for such Transaction as of the Repurchase
Date (decreased as of any day by (i) any amounts actually in the
possession of Buyer pursuant to clause (C) of this subsection,
(ii) any proceeds from the sale of Purchased Assets applied to the
Repurchase Price pursuant to subsection (a)(4) of this Section 13,
and (iii) any amounts applied to the Repurchase Price pursuant to
subsection (a)(4) of this Section 13); and
(C) all Income actually received by Buyer pursuant to
Section 5 (excluding any Late Payment Fees paid pursuant to
Section 5(b)) shall be applied to the aggregate unpaid Repurchase
Price owed by Seller.
(3) Upon the occurrence of one or more Events of Default, Buyer shall
have the right to obtain physical possession of the Servicing
Records (subject to the provisions of the Custodial and
Disbursement Agreement) and all other files of Seller relating to
the Purchased Assets and all documents relating to the Purchased
Assets which are then or may thereafter come in to the possession
of Seller or any third party acting for Seller and Seller shall
deliver to Buyer such assignments as Buyer shall request and Buyer
shall have the right to appoint any Person to act as Servicer for
the Purchased Assets. Buyer shall be entitled to specific
performance of all agreements of Seller contained in the
Repurchase Documents.
(4) At any time on the Business Day following notice to Seller (which
notice may be the notice given under subsection (a)(1) of this
Section 13), in the event Seller has not repurchased all Purchased
Assets, Buyer may (A) immediately sell, without demand or further
notice of any kind, at a public or private sale and at such price
or prices as Buyer may deem satisfactory any or all Purchased
Assets subject to such Transactions hereunder and apply the
proceeds thereof to the aggregate unpaid Repurchase Price and any
other amounts owing by Seller hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such
Purchased Assets, to give
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Seller credit for such Purchased Assets in an amount equal to the
Market Value of the Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by Seller hereunder.
The proceeds of any disposition of Purchased Assets shall be
applied first to the costs and expenses incurred by Buyer in
connection with Seller's default; second to costs of related
covering and/or related hedging transactions; third to the
Repurchase Price; and fourth to any other outstanding obligation
of Seller to Buyer or its Affiliates.
(5) Seller agrees that Buyer may obtain an injunction or an order of
specific performance to compel Seller to fulfill its obligations
as set forth in Section 24, if Seller fails or refuses to perform
its obligations as set forth therein.
(6) Seller shall be liable to Buyer, payable as and when incurred by
Buyer, for (A) the amount of all actual out-of-pocket expenses,
including legal or other expenses incurred by Buyer in connection
with or as a consequence of an Event of Default, and (B) all costs
incurred in connection with hedging or covering transactions.
(7) Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable
law.
(b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except to
the extent provided in subsections (a)(1) and (4) of this Section 13,
at any time thereafter without notice to Seller. All rights and
remedies arising under this Agreement as amended from time to time
hereunder are cumulative and not exclusive of any other rights or
remedies which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its
rights by judicial process. Seller also waives any defense (other than
a defense of payment or performance) Seller might otherwise have
arising from the use of nonjudicial process, enforcement and sale of
all or any portion of the Purchased Items, or from any other election
of remedies. Seller recognizes that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm's-length.
(d) To the extent permitted by applicable law, Seller shall be liable to
Buyer for interest on any amounts owing by Seller hereunder, from the
date Seller becomes liable for such amounts hereunder until such
amounts are (i) paid in full by Seller or (ii) satisfied in full by the
exercise of Buyer's rights hereunder. Interest on any sum payable by
Seller to Buyer under this paragraph 13(d) shall be at a rate equal to
the Post-Default Rate.
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14. INDEMNIFICATION AND EXPENSES
(a) NCCC and NCMC, jointly and severally, agree to hold Buyer and its
Affiliates and their present and former respective officers, directors,
employees, agents, advisors and other representatives (each an
"Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses
of any kind which may be imposed on, incurred by or asserted against
such Indemnified Party (including counsel's fees and disbursements)
(collectively, "Costs"), relating to or arising out of this Agreement,
any other Repurchase Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than the Indemnified Party's
gross negligence or willful misconduct. Without limiting the generality
of the foregoing, each of NCCC and NCMC, jointly and severally, agrees
to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Mortgage Loans
relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws,
including without limitation the federal Truth in Lending Act and/or
the federal Real Estate Settlement Procedures Act, that, in each case,
results from anything other than the Indemnified Party's gross
negligence or willful misconduct. In any suit, proceeding or action
brought by an Indemnified Party in connection with any Mortgage Loan
for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, each of NCCC and NCMC, jointly and severally, will save,
indemnify and hold such Indemnified Party harmless from and against all
expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by NCCC
or NCMC of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from NCCC or NCMC.
Each of NCCC and NCMC, jointly and severally, also agrees to reimburse
an Indemnified Party as and when billed by such Indemnified Party for
all the Indemnified Party's costs and expenses incurred in connection
with the enforcement or the preservation of Buyer's rights under this
Agreement, any other Repurchase Document or any transaction
contemplated hereby or thereby, including without limitation the fees
and disbursements of its counsel.
(b) Seller agrees to pay as and when billed by Buyer all of the
out-of-pocket costs and expenses (including legal fees) incurred by
Buyer in connection with the development, preparation and execution of,
and any amendment, supplement or modification to, this Agreement, any
other Repurchase Document or any other documents prepared in connection
herewith or therewith. Seller agrees to pay as and when billed by Buyer
all of the out-of-pocket costs and expenses incurred in connection with
the consummation and administration of the transactions contemplated
hereby and thereby including without limitation all fees,
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disbursements and expenses of counsel to Buyer which amount shall be
deducted from the Purchase Price paid for the first Transaction
hereunder. Subject to the limitations set forth in Section 26, Seller
agrees to pay Buyer all the out of pocket due diligence, inspection,
appraisals, testing and review costs and expenses incurred by Buyer
with respect to Mortgage Loans submitted by Seller for purchase under
this Agreement, including, but not limited to, those out of pocket
costs and expenses incurred by Buyer pursuant to Sections 24 and 26.
15. RECORDING OF COMMUNICATIONS
Buyer and Seller shall have the right (but not the obligation) from time to
time to make or cause to be made tape recordings of communications between
its employees and those of the other party with respect to Transactions upon
notice to the other party of such recording. Buyer and Seller consent to the
admissibility of such tape recordings in any court, arbitration, or other
proceedings. The parties agree that a duly authenticated transcript of such
a tape recording shall be deemed to be a writing conclusively evidencing the
parties' agreement.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and that each has been entered into in
consideration of the other Transactions. Accordingly, each of Buyer and
Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and
apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transaction hereunder;
(iii) that payments, deliveries, and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries, and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted
and (iv) to promptly provide notice to the other after any such set off or
application.
17. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Agreement, all notices,
requests and other communications provided for herein and under the
Custodial and Disbursement Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Agreement)
shall be given or made in writing (including without limitation by email,
telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or thereof);
or, as to any party, at such other address as shall be designated by such
party in a written notice to each other party. Except as otherwise provided
in this Agreement and except for notices given under Section 3 (which shall
be effective only on receipt), all such communications
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shall be deemed to have been duly given when transmitted by telecopy or
personally delivered or, in the case of a mailed notice, upon receipt.
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement together with the other Repurchase Documents constitute the
entire understanding between Buyer and Seller with respect to the subject
matter it covers and shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions
involving Purchased Assets. By acceptance of this Agreement, Buyer and
Seller acknowledge that they have not made, and are not relying upon, any
statements, representations, promises or undertakings not contained in this
Agreement. Each provision and agreement herein shall be treated as separate
and independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision
or agreement.
19. NON-ASSIGNABILITY
The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by NCCC or NCMC without the prior written
consent of Buyer, and any attempted assignment without such consent shall be
null and void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties and
their respective successors and assigns. Nothing in this Agreement express
or implied, shall give to any person, other than the parties to this
Agreement and their successors hereunder, any benefit of any legal or
equitable right, power, remedy or claim under this Agreement.
20. TERMINABILITY
Except as set forth below, this Agreement may be terminated (a) by Seller
upon giving written notice to Buyer and payment of the Minimum Pricing
Amount pursuant to Section 3(p) and (b) by Buyer upon the occurrence of any
event set forth in Section 3(b)(10) except that this Agreement shall,
notwithstanding such notice, remain applicable to any Transaction then
outstanding; provided that the Repurchase Date for any such Transaction
outstanding shall be the earlier to occur of the original Repurchase Date
pursuant to the applicable Confirmation and (ii) 20 days from the date of
such notice of termination. Each representation and warranty made or deemed
to be made by entering into a Transaction, herein or pursuant hereto shall
survive the making of such representation and warranty, and Buyer shall not
be deemed to have waived any Default that may arise because any such
representation or warranty shall have proved to be false or misleading,
notwithstanding that Buyer may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the
time the Transaction was made. Notwithstanding any such termination or the
occurrence of an Event of Default, all of the representations and warranties
and covenants hereunder shall continue and survive. The obligations of
Seller under Section 14 shall survive the termination of this Agreement.
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21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES.
22. SUBMISSION TO JURISDICTION; WAIVERS
EACH OF BUYER, NCCC AND NCMC HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM
ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER
SHALL HAVE BEEN NOTIFIED;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO XXX
IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER REPURCHASE DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
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23. NO WAIVERS, ETC.
No failure on the part of Buyer or Seller to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under any Repurchase Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege
under any Repurchase Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law. An Event of Default shall be deemed to be continuing unless expressly
waived by Buyer in writing.
24. SERVICING
(a) Each of NCCC and NCMC covenants to maintain or cause the servicing of
the Mortgage Loans to be maintained in conformity with accepted and
prudent servicing practices in the industry for the same type of
mortgage loans as the Mortgage Loans and in a manner at least equal in
quality to the servicing Seller provides for mortgage loans which it
owns. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing
contract shall terminate automatically upon the earliest of (i) an
Event of Default, (ii) the date on which this Agreement terminates or
(iii) the transfer of servicing approved by Buyer.
(b) If the Mortgage Loans are serviced by Seller, Seller agrees that Buyer
is the owner of all servicing records, including but not limited to any
and all servicing agreements, files, documents, records, data bases,
computer tapes, copies of computer tapes, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment
history records, and any other records relating to or evidencing the
servicing of the Mortgage Loans (the "Servicing Records"). Seller
covenants to safeguard such Servicing Records and to deliver them
promptly to Buyer or its designee (including Custodian) at Buyer's
request.
(c) If the Mortgage Loans are serviced by a person other than Seller (such
third party the "Servicer"), Seller (i) shall, in accordance with
Section (3)(b)(7), provide a copy of the servicing agreement to Buyer,
which shall be in form and substance acceptable to Buyer (the
"Servicing Agreement"), and shall provide a Servicer Notice to Buyer
substantially in the form of Exhibit VII hereto, fully executed by
Seller and the Servicer; and (ii) hereby irrevocably assigns to Buyer
and Buyer's successors and assigns all right, title and interest of
Seller in, to and under, and the benefits of, any Servicing Agreement
with respect to the Mortgage Loans. Seller agrees that no Person shall
assume the servicing obligations with respect to the Mortgage Loans as
successor to the Servicer unless such successor is approved in writing
by Buyer prior to such assumption of servicing obligations.
(d) If the servicer of the Mortgage Loans is Seller, upon the occurrence of
an Event of Default, Buyer shall have the right to terminate the Seller
as servicer of the Mortgage Loans and transfer servicing to Buyer's
designated Servicer, at no cost
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or expense to Buyer, at any time thereafter. If the Servicer of the
Mortgage Loans is not Seller, Buyer shall have the right, as
contemplated in the applicable Servicer Notice, upon the occurrence of
an Event of Default, to terminate any applicable Servicing Agreement
and transfer servicing to Buyer's designated Servicer, at no cost or
expense to Buyer, it being agreed that Seller will pay any and all fees
required to terminate such Servicing Agreement and to effectuate the
transfer of servicing to Buyer's designated Servicer, as well as any
servicing fees and expenses payable to such Servicer.
(e) After the Purchase Date, until the repurchase of any Mortgage Loan,
Seller will have no right to modify or alter the terms of such Mortgage
Loan and Seller will have no obligation or right to repossess such
Mortgage Loan or substitute another Mortgage Loan, in each case except
as provided in the Custodial and Disbursement Agreement.
(f) In the event Seller or its Affiliate is servicing the Mortgage Loans,
Seller shall permit Buyer to inspect Seller's or its Affiliate's
servicing facilities, as the case may be, for the purpose of satisfying
Buyer that Seller or its Affiliate, as the case may be, has the ability
to service the Mortgage Loans as provided in this Agreement.
25. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States
Code, as amended (except insofar as the type of Purchased Assets
subject to such Transaction or the term of such Transaction would
render such definition inapplicable), and a "securities contract" as
that term is defined in Section 741 of Title 11 of the United States
Code, as amended (except insofar as the type of Purchased Assets
subject to such Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate Purchased
Assets delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Section 16 hereof is a
contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is
a "qualified financial contract," as that term is defined in FDIA and
any rules, orders or policy statements thereunder (except insofar as
the type of Purchased Assets subject to such Transaction would render
such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
entitlement and
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payment obligation under any Transaction hereunder shall constitute a
"covered contractual payment entitlement" or "covered contractual
payment obligation", respectively, as defined in and subject to FDICIA
(except insofar as one or both of the parties is not a "financial
institution" as that term is defined in FDICIA or regulations
promulgated thereunder).
26. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller that as of the Effective Date
and as of the Repurchase Date for the repurchase of any Purchased Assets by
Seller from Buyer hereunder:
(a) Action. Buyer has all necessary corporate or other power, authority and
legal right to execute, deliver and perform its obligations under each
of the Repurchase Documents to which it is a party; the execution,
delivery and performance by Buyer of each of the Repurchase Documents
to which it is a party have been duly authorized by all necessary
corporate or other action on its part; and each Repurchase Document to
which it is a party has been duly and validly executed and delivered by
Buyer, and constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer, in accordance with its terms.
(b) Approvals. No authorizations, approvals or consents of, and no filings
or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by
Buyer, of the Repurchase Documents to which it is a party or for the
legality, validity or enforceability thereof, except for filings and
recordings in respect of the Liens created pursuant to the Repurchase
Documents.
(c) No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein
contemplated to be entered into by Buyer in compliance with the terms
and provisions thereof will conflict with or result in a breach of the
organizational documents of Buyer, or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any
Governmental Authority or other material agreement or instrument to
which Buyer or any of its Subsidiaries is a party or by which Buyer or
any of its Property is bound or to which Buyer is subject, or
constitute a default under any such material agreement or instrument or
result in the creation or imposition of any Lien upon any Property of
Buyer, or any of its respective Subsidiaries pursuant to the terms of
any such agreement or instrument.
(d) Purchased Assets. Immediately prior to the repurchase of any Purchased
Assets by Seller, Buyer was the sole owner of such Purchased Assets and
had good and marketable title thereto, free and clear of all Liens, in
each case except for Liens to be released simultaneously with the
repurchase by Seller hereunder.
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27. NETTING
If Buyer and Seller are "financial institutions" as now or hereinafter
defined in Section 4402 of Title 12 of the United States Code ("Section
4402") and any rules or regulations promulgated thereunder,
(a) All amounts to be paid or advanced by one party to or on behalf of the
other under this Agreement or any Transaction hereunder shall be deemed
to be "payment obligations" and all amounts to be received by or on
behalf of one party from the other under this Agreement or any
Transaction hereunder shall be deemed to be "payment entitlements"
within the meaning of Section 4402, and this Agreement shall be deemed
to be a "netting contract" as defined in Section 4402.
(b) The payment obligations and the payment entitlements of the parties
hereto pursuant to this Agreement and any Transaction hereunder shall
be netted as follows. In the event that either party (the "Defaulting
Party") shall fail to honor any payment obligation under this Agreement
or any Transaction hereunder, the other party (the "Nondefaulting
Party") shall be entitled to reduce the amount of any payment to be
made by the Nondefaulting Party to the Defaulting Party by the amount
of the payment obligation that the Defaulting Party failed to honor.
28. PERIODIC DUE DILIGENCE REVIEW
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of
verifying compliance with the representations, warranties and specifications
made hereunder, or otherwise, and Seller agrees that upon reasonable (but no
less than one (1) Business Day's) prior notice unless an Event of Default
shall have occurred, in which case no notice is required, to Seller, Buyer
or its authorized representatives will be permitted during normal business
hours to examine, inspect, and make copies and extracts of, the Mortgage
Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession or under the
control of Seller and/or Custodian. Seller also shall make available to
Buyer a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files and the Mortgage Loans.
Without limiting the generality of the foregoing, Seller acknowledges that
Buyer may purchase Mortgage Loans from Seller based solely upon the
information provided by Seller to Buyer in the Seller Asset Schedule and the
representations, warranties and covenants contained herein, and that Buyer,
at its option, has the right at any time to conduct a partial or complete
due diligence review on some or all of the Mortgage Loans purchased in a
Transaction, including without limitation ordering new credit reports and
new appraisals on the related Mortgaged Properties and otherwise
re-generating the information used to originate such Mortgage Loan. Buyer
may underwrite such Mortgage Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Seller agrees to
cooperate with Buyer and any third party underwriter in connection with such
underwriting, including, but not limited to, providing Buyer and any third
party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the
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possession, or under the control, of Seller. Buyer shall pay all
out-of-pocket costs and expenses incurred by Buyer in connection with
Buyer's activities pursuant to this Section 28 ("Due Diligence Costs");
provided that, (i) in the event that a Default or an Event of Default shall
have occurred or (ii) in the event that Buyer shall determine the need to
confirm compliance with local, state or federal laws concerning the
regulation of predatory lending practices, Seller shall reimburse Buyer for
all Due Diligence Costs for any and all reasonable out-of-pocket costs and
expenses incurred by Buyer in connection with Buyer's activities pursuant to
this Section 28.
29. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) Each of NCCC and NCMC hereby irrevocably constitutes and appoints Buyer
and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Seller and in the name of Seller or
in its own name, from time to time in Buyer's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and
all appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, Seller hereby gives Buyer the power and
right, on behalf of Seller, without assent by, but with notice to,
Seller, to do the following:
(1) in the name of Seller, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due
under any mortgage insurance with respect to a Purchased Item or
with respect to any other Purchased Items and to file any claim or
to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Buyer for the purpose of
collecting any and all such moneys due under any such mortgage
insurance with respect to a Purchased Item or with respect to any
other Purchased Items whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(3) (A) to direct any party liable for any payment under any Purchased
Items to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Purchased Items; (C)
to sign and endorse any invoices, assignments, verifications,
notices and other documents in connection with any Purchased
Items; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Purchased Items or any proceeds
thereof and to enforce any other right in respect of any Purchased
Items; (E) to defend any suit, action or proceeding brought
against Seller with respect to any Purchased
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Items; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as Buyer may deem
appropriate; and (G) generally, to sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any Purchased
Items as fully and completely as though Buyer were the absolute
owner thereof for all purposes, and to do, at Buyer's option and
Seller's expense, at any time, and from time to time, all acts and
things which Buyer deems necessary to protect, preserve or realize
upon the Purchased Items and Buyer's Liens thereon and to effect
the intent of this Agreement, all as fully and effectively as such
Seller might do;
(4) after a Default or an Event of Default, to direct the actions of
Custodian with respect to the Purchased Items under the Custodial
and Disbursement Agreement; and
(5) to execute, from time to time, in connection with any sale
provided for in Section 13, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the
Purchased Items.
Each of NCCC and NCMC hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable. Until the occurrence of a
Default or Event of Default, Buyer shall not direct a Servicer in its
servicing of the Purchased Assets or commence any servicing actions with
respect to the Mortgage Loans pursuant to this Section 28(a). Neither Buyer
nor any of its officers, directors, employers or agents shall be responsible
to Seller for any failure to act hereunder prior to a Default or Event of
Default.
(b) The powers conferred on Buyer hereunder are solely to protect Buyer's
interests in the Purchased Items and Purchased Assets and shall not
impose any duty upon it to exercise any such powers. Buyer shall be
accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to Seller for any
act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.
30. MISCELLANEOUS
(a) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial and Disbursement
Agreement, this Agreement shall prevail.
(b) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any
such counterpart.
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(c) The captions and headings appearing herein are for included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(d) Each of NCCC and NCMC hereby acknowledges that:
(1) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Repurchase Documents;
(2) Buyer has no fiduciary relationship to Seller; and
(3) no joint venture exists between Buyer and Seller.
31. CONFIDENTIALITY
Seller hereby acknowledges and agrees that all information regarding the
terms set forth in any of the Repurchase Documents or the Transactions
contemplated thereby (the "Confidential Terms") shall be kept confidential
and shall not be divulged to any party without the prior written consent of
such other party except to the extent that (i) it is necessary to do so in
working with legal counsel, auditors, taxing authorities or other
governmental agencies or regulatory bodies or in order to comply with any
applicable federal or state laws, (ii) any of the Confidential Terms are in
the public domain other than due to a breach of this covenant, or (iii) in
the event of a Default or an Event of Default Buyer determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Assets or otherwise to enforce or
exercise Buyer's rights hereunder. The provisions set forth in this Section
30 shall survive the termination of this Agreement for a period of one year
following such termination.
32. CONFLICTS
In the event of any conflict between the terms of this Agreement, any other
Repurchase Document and any Confirmation, the documents shall control in the
following order of priority: first, the terms of the Confirmation shall
prevail, then the terms of this Agreement shall prevail, and then the terms
of the other Repurchase Documents shall prevail.
33. SET-OFF
In addition to any rights and remedies of Buyer provided by this Agreement
and by law, Buyer shall have the right, without prior notice to Seller, any
such notice being expressly waived by Seller to the extent permitted by
applicable law, upon any amount becoming due and payable by Seller to Buyer
hereunder or otherwise (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and
all monies and other property of Seller, any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any and
all other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured,
and in each case at any time held or owing
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by Buyer or any Affiliate thereof to or for the credit or the account of
Seller. Buyer agrees promptly to notify Seller after any such set-off and
application made by Buyer; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
34. MOST FAVORED STATUS
The Sellers and the Buyer each agree that should either Seller enter into a
repurchase agreement or credit facility with any Person other than the Buyer
or an Affiliate of the
Buyer which by its terms is more favorable to such other Person in respect
of any of its provisions described in the following sentence (a "More
Favorable Credit Agreement"), the terms of this Agreement shall be deemed
automatically amended to include each additional more favorable provision
contained in such More Favorable Credit Agreement; provided, that in the
event that such More Favorable Credit Agreement is terminated, upon notice
by the Sellers to the Buyer of such termination, the original terms of this
Agreement shall be deemed to be automatically reinstated. The provisions to
which this paragraph pertains are: (i) representations and warranties of
either Seller with respect to itself (but not with respect to the Mortgage
Loans), (ii) covenants of either Seller regarding the conduct of its
business in general and its financial condition, and (iii) events defined as
"events of default," or giving rise to substantially the same remedies as
Events of Default hereunder. The Buyer and the Sellers further agree to
execute and deliver an amendment to this Agreement evidencing such
provisions, provided that the execution of such amendment shall not be a
precondition to the effectiveness of such amendment, but shall merely be for
the convenience of the parties hereto. Promptly upon either Seller entering
into a repurchase agreement, loan agreement or other credit facility with
any Person other than the Buyer, the Sellers shall deliver to the Buyer a
true, correct and complete copy of such repurchase agreement, loan agreement
or other financing documentation.
35. OBLIGATIONS JOINT AND SEVERAL
Each of NCCC and NCMC hereby acknowledges and agrees that it shall be
jointly and severally liable to Buyer for all representations, warranties,
covenants, obligations and indemnities of Seller hereunder.
36. WAIVER OF PREVIOUS NON-COMPLIANCE
In connection with compliance failure prior to the date hereof with
respect to Section 11(b), 11(j)(5), 11(k)(2), 11(s)(3), 11(s)(9) or 11(v) in the
Amended and Restated Master Repurchase Agreement, dated as of May 10, 2003 (the
"Original Agreement"), Buyer hereby waives the conditions set forth in clauses
(i) set forth in Section 12(d) of the Original Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date set forth above.
BUYER:
-----
CDC MORTGAGE CAPITAL INC.
By: /s/ Xxx Piscina
-------------------------------------
Name: Xxx Piscina
Title: Managing Director
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address for Notices: with a copy to:
-------------------
9 West 00/xx/ Xxxxxx 0 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx Attn: Xx Xxxxx, Esq., General Counsel
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
Email: x.xxxxxxxx@xxxxxxx-xxxx.xxx Email: xxxxxx.zakes@cdcixis- xxxx.xxx
Exh.IX-1
SELLER:
------
NEW CENTURY MORTGAGE CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
Address for Notices:
-------------------
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
NC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
Address for Notices:
-------------------
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
The undersigned guarantor hereby consents and agrees to the foregoing
Second Amended and Restated Master Repurchase Agreement, dated as of June____,
2003:
NEW CENTURY FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
