Contract
THIS MASTER REPURCHASE AND SECURITIES
CONTRACT, dated as of August 4, 2010 (this “Agreement”), is made
by and between TWO HARBORS
ASSET I, LLC, a Delaware limited liability company (“Seller”), and XXXXX FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (as more specifically defined
below, “Buyer”). Seller
and Buyer (each also a “Party”) hereby agree
as follows:
ARTICLE 1
APPLICABILITY
Section
1.01 Applicability. Subject
to the terms and conditions of the Repurchase Documents, from time to time and
at the request of Seller, the Parties may enter into transactions in which
Seller agrees to transfer to Buyer certain Assets against the transfer of funds
by Buyer representing the Purchase Price for such Assets, with a simultaneous
agreement by Buyer to transfer to Seller and Seller to repurchase such Assets in
a repurchase transaction at a date not later than the Maturity Date, against the
transfer of funds by Seller representing the Repurchase Price for such
Assets.
ARTICLE 2
DEFINITIONS
AND INTERPRETATION
Section 2.01 Definitions.
“Accelerated Repurchase
Date”: Defined in Section 10.02.
“Additional Purchased
Assets”: The meaning specified in Section 4.01.
“Advisers”: PRCM
Advisers, LLC.
“Affiliate”: With
respect to (i) Seller and Guarantor, any other Person directly or indirectly
Controlling or Controlled by such Person and (ii) any Person other than Seller
and Guarantor, any other Person directly or indirectly Controlling, Controlled
by, or under common Control with, such Person. For the avoidance of
doubt, with respect to Seller and Guarantor, “Affiliate” shall not include
(i) PRCMLP, PRCMLLC, Advisers, any subsidiary of PRCMLP, PRCMLLC or
Advisers, or any fund that PRCMLP or Advisers from time to time may manage,
other than Guarantor or (ii) any officer or director of Guarantor or
Guarantor’s subsidiaries.
“Alternative
Rate”: A per annum rate based on an index approximating the
behavior of LIBOR, as determined by Buyer in its discretion.
“Anti–Terrorism
Laws”: Any Requirements of Law relating to money laundering or
terrorism, including Executive Order 13224 signed into law on September 23,
2001, the regulations promulgated by the Office of Foreign Assets Control of the
Treasury Department, and the Patriot Act.
“Applicable
Percentage”: For each Purchased Asset, the applicable
percentage initially determined by Buyer in its discretion for such Purchased
Asset on the Purchase Date therefor as set forth in the related Confirmation, as
such percentage may be further reduced or modified as provided herein; provided, that the
Applicable Percentage shall be zero for any Purchased Asset with respect to
which:
(a) the
requirements of the definition of Eligible Asset are not satisfied, as
determined by Buyer in its discretion;
(b) a
Representation Breach exists, as determined by Buyer in its
discretion;
(c) any
statement, affirmation or certification made or information, document,
agreement, report or notice delivered by Seller to Buyer is untrue in any
material respect;
(d) Seller
fails to repurchase such Purchased Asset by the Repurchase Date
therefor;
(e) Buyer
determines in its discretion that a Material Adverse Effect has occurred with
respect to such Purchased Asset; or
(f) Seller
fails to deliver any reports required hereunder with respect to any Purchased
Asset, to the extent that such failure may adversely affect the Market Value
thereof as determined by Buyer in its discretion, and to the extent that such
failure causes Buyer to determine in its discretion that it is unable to
accurately determine the Market Value thereof.
“Asset”: Any
RMBS.
“Bankruptcy
Code”: Title 11 of the United States Code.
“Business
Day”: Any day other than a Saturday or a Sunday (a) on
which the New York Stock Exchange or the Federal Reserve Bank of New York
are not authorized or obligated by law or executive order to be closed, or
(b) if the term “Business Day” is used in connection with the determination
of LIBOR, on which dealings in Dollar deposits are carried on in the London
interbank market.
“Buyer”: Xxxxx
Fargo Bank, National Association, in its capacity as Buyer under this Agreement
and the other Repurchase Documents.
“Buyer’s Margin
Percentage”: For any Purchased Asset as of any date, the
percentage equivalent of the quotient obtained by dividing one (1) by the
Applicable Percentage for such Purchased Asset as of the Purchase
Date.
“Capital Lease
Obligations”: With respect to any Person, the amount of all
obligations of such Person to pay rent or other amounts under a lease of
property to the extent and in the amount that such obligations are required to
be classified and accounted for as a capital lease on a balance sheet of such
Person.
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“Closing
Date”: August 4, 2010.
“Code”: The
Internal Revenue Code of 1986.
“Collection
Account”: A segregated account established at the Collection
Account Bank, in the name of, and for the benefit of, Buyer.
“Collection Account
Bank”: Xxxxx Fargo Bank, National Association, or any other
bank approved by Buyer in its discretion.
“Compliance
Certificate”: A true and correct certificate in the form of
Exhibit D,
executed by a Responsible Officer of Guarantor.
“Confirmation”: A
purchase confirmation in the form of Exhibit B, duly
completed, executed and delivered by Seller and Buyer in accordance with Section 3.01.
“Contingent
Liabilities”: With respect to any Person as of any date, all
of the following as of such date: (a) liabilities and obligations
(including any Guarantee Obligations) of such Person in respect of “off–balance
sheet arrangements” (as defined in the Off–Balance Sheet Rules defined below),
(b) obligations, including Guarantee Obligations, whether or not required
to be disclosed in the footnotes to such Person’s financial statements,
guaranteeing in whole or in part any Non–Recourse Indebtedness, lease, dividend
or other obligation, exclusive of contractual indemnities (including any
indemnity or price–adjustment provision relating to the purchase or sale of
securities or other assets) and guarantees of non–monetary obligations (other
than guarantees of completion, environmental indemnities and guarantees of
customary carve–out matters made in connection with Non–Recourse Indebtedness,
such as fraud, misappropriation, bankruptcy and misapplication) which have not
yet been called on or quantified, of such Person or any other Person, and
(c) forward commitments or obligations to fund or provide proceeds with
respect to any loan or other financing which is obligatory and non–discretionary
on the part of the lender. The amount of any Contingent Liabilities
described in the preceding clause (b) shall
be deemed to be (i) with respect to a guarantee of interest or interest and
principal, or operating income guarantee, the sum of all payments required to be
made thereunder (which, in the case of an operating income guarantee, shall be
deemed to be equal to the debt service for the note secured thereby), through
(x) in the case of an interest or interest and principal guarantee, the
stated date of maturity of the obligation (and commencing on the date interest
could first be payable thereunder), or (y) in the case of an operating
income guarantee, the date through which such guarantee will remain in effect,
and (ii) with respect to all guarantees not covered by the preceding clause (i), 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 (assuming such
Person is required to perform thereunder) as recorded on the balance sheet and
in the footnotes to the most recent financial statements of such
Person. “Off–Balance Sheet Rules” means the Disclosure in
Management’s Discussion and Analysis About Off–Balance Sheet Arrangements and
Aggregate Contractual Obligations, Securities Act Release Nos. 33–8182;
34–47264; FR–67 International Series Release No. 1266 File
No. S7–42–02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at
17 CFR Parts 228, 229 and 249).
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“Contractual
Obligation”: With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust, deed
to secure debt, contract, undertaking, agreement, instrument or other document
to which such Person is a party or by which it or any of its property or assets
are bound or are subject which in any such case requires the payment of more
than $1,000,000 in any twelve month period. Contractual Obligations
do not include obligations arising from the purchase and sale of any asset,
including RMBS.
“Control”: With
respect to any Person, the direct or indirect possession of the power to direct
or cause the direction of the management or policies of such Person, whether
through the ability to exercise voting power, by contract or
otherwise. “Controlling,” “Controlled” and “under common Control”
have correlative meanings.
“Custodial
Agreement”: The Custodial Agreement, dated as of the date
hereof, among Buyer, Seller and Custodian.
“Custodian”: Xxxxx
Fargo Bank, National Association, or any successor permitted by the Custodial
Agreement.
“Default”: Any
event which, with the giving of notice or the lapse of time, or both, would
become an Event of Default.
“Default
Rate”: As defined in the Fee Letter.
“Derivatives
Contract”: Any rate swap transaction, basis swap, credit
derivative transaction, forward rate transaction, commodity swap, commodity
option, forward commodity contract, equity or equity index swap or option, bond
or bond price or bond index swap or option or forward bond or forward bond price
or forward bond index transaction, interest rate option, forward foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross–currency rate swap transaction, currency
option, spot contract, or any other similar transaction or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, including any obligations or liabilities thereunder.
“Derivatives Termination
Value”: With respect to any one or more Derivatives Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Derivatives Contracts, (a) for any date on or
after the date such Derivatives Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in the preceding clause (a), the
amount(s) determined as the xxxx–to–market value(s) for such Derivatives
Contracts, as determined based on one or more mid–market or other readily
available quotations provided by any recognized dealer in such Derivatives
Contracts (which may include Buyer).
“Dollars” and “$”: Lawful
money of the United States of America.
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“DTC”: The
Depository Trust Company, and its successors and assigns.
“Early Repurchase
Date”: Defined in Section 3.05.
“Eligible
Asset”: An Asset:
(a) that
has been approved as a Purchased Asset by Buyer in its discretion;
(b) with
respect to which no Representation Breach exists;
(c) with
respect to which there are no future funding obligations on the part of Seller
or Buyer; and
(d) whose
Underlying Mortgaged Property is located in the United States, whose Underlying
Obligors are domiciled in the United States, and all obligations thereunder and
under the Underlying Mortgage Documents are denominated and payable in
Dollars;
provided, that
notwithstanding the failure of an Asset or Purchased Asset to conform to the
requirements of this definition, Buyer may, in its discretion and subject to
such terms, conditions and requirements and Applicable Percentage adjustments as
Buyer may require in its discretion, designate in writing any such
non–conforming Asset or Purchased Asset as an Eligible Asset, which designation
(1) may include a temporary or permanent waiver of one or more Eligible
Asset requirements, and (2) shall not be deemed a waiver of the requirement
that all other Assets and Purchased Assets must be Eligible Assets (including
any Assets that are similar or identical to the Asset or Purchased Asset subject
to the waiver).
“Eligible
Assignee”: Any of the following Persons designated by Buyer
for purposes of Section 18.08(c): (a) a
bank, financial institution, pension fund, insurance company or similar Person,
an Affiliate of any of the foregoing, and an Affiliate of Buyer, and
(b) any other Person to which Seller has consented; provided, that such
consent of Seller shall not be unreasonably withheld, delayed or conditioned,
and shall not be required at any time when an Event of Default
exists. Such Person shall provide to Seller such duly executed IRS
forms as Seller reasonably requests.
“Environmental
Laws”: Any federal, state, foreign or local statute, law,
rule, regulation, ordinance, code, guideline, written policy and rule of common
law now or hereafter in effect, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, employee health and safety or
hazardous materials, including CERCLA, RCRA, the Federal Water Pollution Control
Act, the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking
Water Act, the Oil Pollution Act of 1990, the Emergency Planning and the
Community Right-to-Know Act of 1986, the Hazardous Material Transportation Act,
the Occupational Safety and Health Act, and any state and local or foreign
counterparts or equivalents.
“Equity
Interests”: With respect to any Person, (a) any share,
interest, participation and other equivalent (however denominated) of capital
stock of (or other ownership, equity or profit interests in) such Person,
(b) any warrant, option or other right for the purchase or other
acquisition from such Person of any of the foregoing, (c) any security
convertible into or exchangeable for any of the foregoing, and (d) any
other ownership or profit interest in such Person (including partnership, member
or trust interests therein), whether voting or nonvoting, and whether or not
such share, warrant, option, right or other interest is authorized or otherwise
existing on any date.
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“ERISA”: The
Employee Retirement Income Security Act of 1974.
“Event of
Default”: Defined in Section 10.01.
“Extension
Fee”: Defined in the Fee Letter.
“Fee
Letter”: The fee letter, dated as of the date hereof, between
Buyer and Seller and acknowledged by the Guarantor.
“GAAP”: Generally
accepted accounting principles as in effect from time to time in the United
States, consistently applied.
“Governing
Documents”: With respect to any Person, its articles or
certificate of incorporation or formation, by-laws, partnership, limited
liability company, operating or trust agreement and/or other organizational,
charter or governing documents.
“Governmental
Authority”: Any (a) nation or government, (b) state
or local or other political subdivision thereof, (c) central bank or
similar monetary or regulatory authority, (d) Person, agency, authority,
instrumentality, court, regulatory body, central bank or other body or entity
exercising executive, legislative, judicial, taxing, quasi–judicial,
quasi–legislative, regulatory or administrative functions or powers of or
pertaining to government, (e) court or arbitrator having jurisdiction over
such Person, its Affiliates or its assets or properties, (f) stock exchange
on which shares of stock of such Person are listed or admitted for trading,
(g) accounting board or authority that is responsible for the establishment
or interpretation of national or international accounting principles, and
(h) supra-national body such as the European Union or the European Central
Bank.
“Guarantee
Obligation”: With respect to any Person (the “guaranteeing
person”), any obligation of (a) the guaranteeing person or
(b) another Person (including any bank under any letter of credit) to
induce the creation of the obligations for which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends,
Contractual Obligation, Derivatives Contract or other obligations or
indebtedness (the “primary obligations”)
of any other third Person (the “primary obligor”) in
any manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation, or (2) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (iii) to purchase property, securities
or services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof; provided, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to be the
maximum stated amount of the primary obligation relating to such Guarantee
Obligation (or, if less, the maximum stated liability set forth in the
instrument embodying such Guarantee Obligation); provided, that in the
absence of any such stated amount or stated liability, the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum anticipated
liability in respect thereof as reasonably determined by such Person in good
faith.
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“Guarantor”: Two
Harbors Investment Corp., as named in the Guaranty Agreement.
“Guaranty Agreement”:
The Guaranty Agreement, dated as of the date hereof, made by the Guarantor in
favor of Buyer.
“Guaranty
Default”: Defined in Section 8.13.
“Income”: With
respect to any Purchased Asset, all of the following (in each case with respect
to the entire par amount of the Asset represented by such Purchased Asset and
not just with respect to the portion of the par amount represented by the
Purchase Price advanced against such Asset): (a) all Principal
Payments, (b) all Interest Payments, (c) all other income,
distributions, receipts, payments, collections, prepayments, recoveries,
proceeds (including insurance and condemnation proceeds) and other payments or
amounts of any kind paid, received, collected, recovered or distributed on, in
connection with or in respect of such Purchased Asset, including amounts
received upon a sale of a Purchased Asset pursuant to Section 5.05,
principal payments, interest payments, principal and interest payments,
prepayment fees, extension fees, exit fees, defeasance fees, transfer fees, make
whole fees, late charges, late fees and all other fees or charges of any kind or
nature, premiums, yield maintenance charges, penalties, default interest,
dividends, gains, receipts, allocations, rents, interests, profits, payments in
kind, returns or repayment of contributions, net sale, foreclosure, liquidation,
securitization or other disposition proceeds, insurance payments, settlements
and proceeds.
“Indebtedness”: With
respect to any Person and any date, all of the following with respect to such
Person as of such date: (a) obligations in respect of money
borrowed (including principal, interest, assumption fees, prepayment fees, yield
maintenance charges, penalties, exit fees, contingent interest and other
monetary obligations whether xxxxxx or inchoate and whether by loan, the
issuance and sale of debt securities or the sale of property or assets to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets, or otherwise), excluding (i)
short positions in to-be-announced securities and U.S. Treasuries and (ii) debt
associated with the funding of long positions in U.S. Treasuries
(b) obligations, whether or not for money borrowed (i) represented by
notes payable, letters of credit or drafts accepted, in each case representing
extensions of credit, (ii) evidenced by bonds, debentures, notes or similar
instruments, (iii) constituting purchase money indebtedness, conditional
sales contracts, title retention debt instruments or other similar instruments,
upon which interest charges are customarily paid or that are issued or assumed
as full or partial payment for property or services rendered, or (iv) in
connection with the issuance of preferred equity or trust preferred securities,
(c) Capital Lease Obligations, (d) reimbursement obligations under any
letters of credit or acceptances (whether or not the same have been presented
for payment), (e) Off–Balance Sheet Obligations, (f) obligations to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any mandatory redeemable stock issued by such Person or any other Person
(inclusive of forward equity contracts), valued at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends,
(g) as applicable, all obligations of such Person (but not the obligation
of others) in respect of any keep well arrangements, credit enhancements,
contingent or future funding obligations under any Purchased Asset or any
obligation senior to any Purchased Asset, unfunded interest reserve amount under
any Purchased Asset or any obligation that is senior to any Purchased Asset,
purchase obligation, repurchase obligation, sale/buy–back agreement, takeout
commitment or forward equity commitment, in each case evidenced by a binding
agreement (excluding any such obligation to the extent the obligation can be
satisfied by the issuance of Equity Interests (other than mandatory redeemable
stock)), (h) net obligations under any Derivatives Contract not entered into as
a hedge against existing indebtedness, in an amount equal to the Derivatives
Termination Value thereof, (i) all Non–Recourse Indebtedness, recourse
indebtedness and all indebtedness of other Persons which such Person has
guaranteed or is otherwise recourse to such Person, (j) all indebtedness of
another Person secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien (other than
certain Permitted Liens) on property or assets owned by such Person, even though
such Person has not assumed or become liable for the payment of such
indebtedness or other payment obligation; provided, that if
such Person has not assumed or become liable for the payment of such
indebtedness, then for the purposes of this definition the amount of such
indebtedness shall not exceed the market value of the property subject to such
Lien, (k) all Contingent Liabilities, (l) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person or obligations of such Person to pay the deferred purchase or
acquisition price of property or assets, including contracts for the deferred
purchase price of property or assets that include the procurement of services,
(m) indebtedness of general partnerships of which such Person is liable as
a general partner (whether secondarily or contingently liable or otherwise), and
(n) obligations to fund capital commitments under any Governing Document,
subscription agreement or otherwise. Indebtedness (A) shall include
the aggregate of the net economic positions (if out of the money) of (i) short
or long positions in to-be-announced securities hedged with either U.S.
Treasuries and/or interest rate swaps and (ii) U.S. Treasuries that are hedged
by interest rate swaps, including the associated repurchase agreements and (B)
to the extent any component of the items included in clause (A) hereof are
otherwise included in clauses (a) through (n) of the foregoing sentence, the
aggregate amount of the Indebtedness shall not exceed that set forth in clause
(A).
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“Indemnified
Amount”: Defined in Section 13.01.
“Indemnified
Person”: Defined in Section 13.01.
“Insolvency
Action”: With respect to any Person, the taking by such Person
of any action resulting in an Insolvency Event, other than solely under clause (g) of
the definition thereof.
“Insolvency
Event”: With respect to any Person, (a) the filing of a
decree or order for relief by a court having jurisdiction in the premises with
respect to such Person or any substantial part of its assets or property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its assets or
property, or ordering the winding–up or liquidation of such Person’s affairs,
and such decree or order shall remain unstayed and in effect for a period of
thirty (30) days, (b) the commencement by such Person of a voluntary
case under any applicable Insolvency Law now or hereafter in effect,
(c) the consent by such Person to the entry of an order for relief in an
involuntary case under any Insolvency Law, (d) the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its assets or property, (e) the making by such Person
of any general assignment for the benefit of creditors, (f) the admission
in a legal proceeding of the inability of such Person to pay its debts generally
as they become due, (g) the failure by such Person generally to pay its
debts as they become due, or (h) the taking of action by such Person in
furtherance of any of the foregoing.
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“Insolvency
Proceeding”: Any case, action or proceeding before any court
or other Governmental Authority relating to any Insolvency Event.
“Insolvency
Laws”: The Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments and similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
“Interest
Payments”: With respect to any Purchased Asset, all payments
of interest, income, receipts, dividends, and any other collections and
distributions received from time to time in connection with such Purchased
Asset.
“Internal Control
Event”: Fraud that involves management or other employees of
Seller, Guarantor, PRCMLP, PRCMLLC, Advisers or any of their Affiliates who have
a significant role in the internal control environment (as understood by the
pronouncements of the Commission on Sponsoring Organizations, or COSO) of the
Guarantor and/or Seller.
“Investment”: With
respect to any Person, any acquisition or investment (whether or not of a
controlling interest) by such Person, whether by means of (a) the purchase or
other acquisition of any Equity Interest in another Person, (b) a loan, advance
or extension of credit to, capital contribution to, guaranty or credit
enhancement of Indebtedness of, or purchase or other acquisition of any
Indebtedness of, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute the business or a division or operating unit of another
Person. Any binding commitment or option to make an Investment in any
other Person shall constitute an Investment. Except as expressly
provided otherwise, for purposes of determining compliance with any covenant
contained in this Agreement, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment.
“Irrevocable Redirection
Notice”: A notice in form and substance satisfactory to the
Buyer sent by Seller, if necessary, to the applicable trustee, master servicer
or servicer of the RMBS directing the remittance of Income with respect to a
Purchased Asset to the Collection Account.
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“Investment Company
Act”: The Investment Company Act of 1940, as amended,
including all rules and regulations promulgated thereunder.
“Investment
Manager”: PRCM Advisers, LLC or any successor investment
manager of the Seller appointed in accordance with Section
10.01(r).
“LIBOR”: For
any Pricing Period, the rate (expressed as a percentage per annum and rounded
upward, if necessary, to the next nearest 1/100 of 1%) for deposits in Dollars,
for a one-month period, that appears on Reuters Screen LIBOR01 (or the successor
thereto) as the London interbank offered rate for deposits in Dollars as of
11:00 a.m., London time, on the Pricing Rate Reset Date for such Pricing
Period. If such rate does not appear on Reuters Screen LIBOR01 as of
11:00 a.m., London time, on such Pricing Rate Reset Date, Buyer shall
request the principal London office of any four major reference banks in the
London interbank market selected by Buyer to provide such banks’ offered
quotation (expressed as a percentage per annum) to leading banks in the
international Eurocurrency market for deposits in Dollars for a one-month period
as of 11:00 a.m., London time, on such Pricing Rate Reset Date for amounts
of not less than the aggregate Repurchase Price of all Purchased
Assets. If at least two such offered quotations are so provided,
LIBOR shall be the arithmetic mean of such quotations. If fewer than
two such quotations are so provided, Buyer shall request any three major banks
in New York City selected by Buyer to provide such banks’ rate (expressed
as a percentage per annum) for loans in Dollars to leading banks in the
international Eurocurrency market for a one-month period as of approximately
11:00 a.m., New York City time on the applicable Pricing Rate Reset
Date for amounts of not less than the aggregate Repurchase Price of all
Purchased Assets. If at least two such rates are so provided, LIBOR
shall be the arithmetic mean of such rates.
“LIBO
Rate”: For any Pricing Period, the rate (expressed as a
percentage per annum and rounded upward, if necessary, to the next nearest 1/100
of 1%) determined for such Pricing Period in accordance with the following
formula:
|
LIBOR
for such Pricing Period
|
|
1 –
Reserve Requirement
|
“Lien”: Any
mortgage, statutory or other lien, pledge, charge, right, claim, adverse claim,
attachment, levy, hypothecation, assignment, deposit arrangement, security
interest, UCC financing statement or encumbrance of any kind on or otherwise
relating to any Person’s assets or properties in favor of any other Person or
any preference, priority or other security agreement or preferential arrangement
of any kind.
“Margin
Call”: Defined in Section 4.01.
“Margin
Deficit”: Defined in Section 4.01.
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“Market Disruption
Event”: Any event or events which, in the good faith
determination of Buyer, results in (a) the effective absence of a “repo
market” or related “lending market” for purchasing (subject to repurchase) or
financing debt obligations secured by residential mortgage loans or securities,
(b) Buyer’s 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,
(c) the effective absence or material change since the Closing Date of a
“securities market” for securities backed by Purchased Assets, or
(d) Buyer’s not being able to sell securities backed by Purchased Assets at
prices which would have been reasonable prior to the occurrence of such event or
events.
“Market
Value”: For any Purchased Asset as of any date, the market
value for such Purchased Asset as of such date as determined by Buyer in its
discretion.
“Material Adverse
Effect”: A material adverse effect on or change in or to
(a) the property, assets, business, operations, financial condition, credit
quality or prospects of Seller, Guarantor or any of their respective Affiliates,
(b) the ability of Seller to pay and perform the Repurchase Obligations,
(c) the validity, legality, binding effect or enforceability of any Repurchase
Document, Record, Purchased Asset or security interest granted hereunder or
thereunder, (d) the rights and remedies of Buyer or any Indemnified Person
under any Repurchase Document, or Purchased Asset, (e) rating (if applicable),
liquidity or other aspect of a material portion of the Purchased Assets, as
determined by Buyer in its discretion, or (f) the perfection or priority of
any Lien granted under any Repurchase Document.
“Maturity
Date”: The earliest of (a) August 3, 2011, as such date
may be extended pursuant to Section 3.07,
(b) any Accelerated Repurchase Date and (c) any date on which the
Maturity Date shall otherwise occur in accordance with the Repurchase Documents
or Requirements of Law.
“Maximum
Amount”: The amount set forth in the Fee Letter, which shall
not be reduced upon the repurchase of any Purchased Assets; provided, that on and
after the Maturity Date, the Maximum Amount on any date shall be the aggregate
Repurchase Price outstanding for all Transactions as of such earlier
date.
“MBS
File”: The documents required to be delivered or otherwise
provided to Buyer or the Custodian, as applicable, as set forth in Schedule
2. Where this Agreement provides for the Seller to provide
Buyer with all or any part of any MBS File, to the extent information is not
publicly available through Bloomberg, Intex or XXXXX, Seller shall provide Buyer
with a copy of each item in any MBS File or provide the Buyer with a URL address
to any service, internet website or other system where the Buyer can obtain such
information.
“Minimum Margin Call
Amount”: $100,000.
“Moody’s”: Xxxxx’x
Investors Service, Inc. or, if Xxxxx’x Investors Service, Inc. is no
longer issuing ratings, another nationally recognized rating agency reasonably
acceptable to Buyer.
-11-
“Mortgage”: Any
mortgage, deed of trust, assignment of rents, security agreement and fixture
filing, or other instruments creating and evidencing a lien on real property and
other property and rights incidental thereto.
“Mortgage
Assets”: First lien residential mortgage loans and closed-end
second lien residential mortgage loans.
“Mortgage-Backed
Security”: Either (i) a certificate issued under a trust
agreement representing 100% ownership of a Delaware business trust that has
issued bonds secured by a pool of Mortgage Assets; (ii) a subordinated bond
issued by a Delaware business trust that has issued bonds under an indenture
secured by a pool of Mortgage Assets; or (iii) a certificate issued
under a pooling and servicing agreement or note issued under an indenture in
each case secured by a pool of Mortgage Assets.
“Mortgaged Property”:
The real property (including all improvements, buildings, fixtures, building
equipment and personal property thereon and all additions, alterations and
replacements made any time with respect to the foregoing) and all other
collateral securing repayment of the underlying mortgage note.
“Mortgagor”: The
obligor on a mortgage note, including any Person who has assumed or guaranteed
the obligations of the obligor thereunder.
“Net Asset
Value”: With respect to any Person, the difference of (i) the
gross assets of such Person minus (ii) all
liabilities (including Indebtedness) of such Person, each determined in
accordance with GAAP.
“Non–Recourse
Indebtedness”: With respect to any Person and any date,
indebtedness of such Person as of such date for borrowed money in respect of
which recourse for payment (except for customary exceptions for fraud,
misapplication of funds, environmental indemnities, Insolvency Events,
non-approved transfers or other events) is contractually limited to specific
assets of such Person encumbered by a Lien securing such
Indebtedness.
“Non−U.S.
Person”: Defined in Section
12.06(b).
“Notice
Date”: Defined in Section
3.01(a).
“Off–Balance Sheet
Obligations”: With respect to any Person and any date, to the
extent not included as a liability on the balance sheet of such Person, all of
the following with respect to such Person as of such date: (a) monetary
obligations under any financing lease or so–called “synthetic,” tax retention or
off–balance sheet lease transaction which, upon the application of any
Insolvency Laws, would be characterized as indebtedness, (b) monetary
obligations under any sale and leaseback transaction which does not create a
liability on the balance sheet of such Person, or (c) any other monetary
obligation arising with respect to any other transaction which (i) is
characterized as indebtedness for tax purposes but not for accounting purposes,
or (ii) is the functional equivalent of or takes the place of borrowing but
which does not constitute a liability on the balance sheet of such Person (for
purposes of this clause (c), any
transaction structured to provide tax deductibility as interest expense of any
dividend, coupon or other periodic payment will be deemed to be the functional
equivalent of a borrowing).
-12-
“Participant”: Defined
in Section 18.08(b).
“Patriot
Act”: The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001.
“Permitted
Liens”: Any of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding has been
commenced: (a) Liens for state, municipal, local or other local
taxes not yet due and payable, (b) Liens imposed by Requirements of Law,
such as materialmen’s, mechanics’, carriers’, workmen’s, repairmen’s and similar
Liens, arising in the ordinary course of business securing obligations that are
not overdue for more than thirty (30) days, and (c) Liens granted
pursuant to or by the Repurchase Documents.
“Person”: An
individual, corporation, limited liability company, business trust, partnership,
trust, unincorporated organization, joint stock company, sole proprietorship,
joint venture, Governmental Authority or any other form of entity.
“PRCMLP”: Pine
River Capital Management L.P.
“PRCMLLC”: Pine
River Capital Management LLC.
“Price
Differential”: (a) For any Pricing Period or portion
thereof and any Transaction outstanding, the sum of the products, for each day
during such Pricing Period or portion thereof, of (i) 1/360th of the
Pricing Rate in effect for such Pricing Period during which such day occurs,
times (ii) the Purchase Price for such Purchased Asset as of such day, and
(b) for any Pricing Period or portion thereof and all Transactions
outstanding, the sum of the amounts calculated in accordance with the preceding
clause (a)
for all Transactions.
“Pricing
Margin”: As defined in the Fee Letter.
“Pricing
Period”: For any Purchased Asset, (a) in the case of the
first Pricing Period, the period from the Purchase Date for such Purchased Asset
to but excluding the next following Remittance Date, and (b) in the case of
any subsequent Pricing Period, the one-month period from the immediately
preceding Remittance Date to but excluding the next following Remittance Date;
provided, that
no Pricing Period for a Purchased Asset shall end after the Repurchase Date for
such Purchased Asset.
“Pricing
Rate”: For any Pricing Period, the LIBO Rate for such Pricing
Period plus the Pricing Margin, which shall be subject to adjustment and/or
conversion as provided in Sections 12.01 and 12.02; provided, that while
an Event of Default exists, the Pricing Rate shall be the Default
Rate.
“Pricing Rate Reset
Date”: (a) In the case of the first Pricing Period for
any Purchased Asset, the Purchase Date for such Purchased Asset, and (b) in
the case of any subsequent Pricing Period, the Business Day immediately
preceding the Remittance Date on which such Pricing Period begins.
-13-
“Principal
Payments”: For any Purchased Asset, all payments and
prepayments of principal received and applied toward the Purchase Price for such
Purchased Asset, including insurance and condemnation proceeds and recoveries
from liquidation or foreclosure.
“Purchase
Agreement”: Any written purchase agreement between Seller and
any Transferor pursuant to which Seller purchased or acquired an Asset which is
subsequently sold to Buyer hereunder, which Purchase Agreement may
contain a grant of a security interest in favor of Seller and authorize the
filing of UCC financing statements against the Transferor with respect to such
Asset.
“Purchase
Date”: For any Purchased Asset, the date on which such
Purchased Asset is transferred by Seller to Buyer or, as applicable, the date on
which Buyer pays an amount of additional Purchase Price to Seller in accordance
with this Agreement.
“Purchase
Price”: For any Purchased Asset, (a) as of the Purchase
Date for such Purchased Asset, an amount equal to the product of the Market
Value of such Purchased Asset, times the Applicable Percentage for such
Purchased Asset, and (b) as of any other date, the amount described in the
preceding clause (a),
(i) reduced by any amount of Margin Deficit transferred by Seller to Buyer
pursuant to Section 4.01 and applied to
the Purchase Price of such Purchased Asset, (ii) reduced by any Principal
Payments remitted to the Collection Account and applied to the Purchase Price of
such Purchased Asset by Buyer pursuant to Section 5.02, and
(iii) reduced by any payments made by Seller in reduction of the
outstanding Purchase Price in each case before or as of such determination date
with respect to such Purchased Asset.
“Purchased
Assets”: (a) For any Transaction, each Asset sold by Seller to
Buyer in such Transaction, (b) for the Transactions in general, all Assets sold
by Seller to Buyer, and (c) any Additional Purchased Assets transferred to Buyer
pursuant to Section
4.01, in
each case including, to the extent relating to such Asset or Assets, all (i)
amounts and property from time to time on deposit in the Collection Account and
the Collection Account itself, (ii) Income, (iii) supporting obligations of
any kind, and (iv) any Records owned by Seller related to all Assets sold and
for purposes of the grant of security interest by Seller to Buyer and the other
provisions of Article 11, Purchased Assets
shall also include all of the following: general intangibles, accounts, chattel
paper, deposit accounts, securities accounts, instruments, securities, financial
assets, uncertificated securities, security entitlements and investment property
(as such terms are defined in the UCC) and replacements, substitutions,
conversions, distributions or proceeds relating to or constituting any of the
items described in the preceding clauses (i)
through (iv).
“Rating
Agencies”: Each of Fitch, Inc., Moody’s and
S&P.
“Records”: All
instruments, agreements and other books, records, and reports and data generated
by other media for the storage of information maintained by the Seller or any
other person or entity with respect to a Purchased Asset. Records
shall include the certificates, if any, with respect to any Purchased Asset and
any other instruments necessary to document or service a Purchased
Asset. Records shall not include information in PRCMLP’s and its
Affiliates proprietary data bases or information and data in Seller’s or
Guarantor’s or their Affiliates internal financial accounting and tax
records.
-14-
“Reference
Banks”: Banks each of which shall (a) be a leading bank
in the international Eurocurrency market, and (b) have an established place
of business in London. Initially, the Reference Banks shall be
JPMorgan Chase Bank, Barclays Bank, PLC and Deutsche Bank AG. If any
such Reference Bank should be unwilling or unable to act as such or if Buyer
shall terminate the appointment of any such Reference Bank or if any of the
Reference Banks should be removed from the Reuters Monitor Money Rates Service
or in any other way fail to meet the qualifications of a Reference Bank, Buyer
may designate alternative banks meeting the criteria specified in the preceding
clauses (a)
and (b).
“Relevant
System”: (i) The Depository Trust Company in New York, New
York, or (ii) such other clearing organization or book-entry system as is
designated in writing by Buyer.
“Remittance
Date”: The third (3rd)
Business Day following the 25th day of
each month (or if the 25th is not
a Business Day, the next succeeding Business Day), or such other day as is
mutually agreed to by Seller and Buyer, but in no event later than the last
Business Day of the month if such month end is also the end of the Seller’s
fiscal quarter.
“Representation
Breach”: Any representation, warranty, certification,
statement or affirmation made or deemed made by Seller in any Repurchase
Document (including in Schedule 1) or
in any certificate, notice, report or other document delivered pursuant to any
Repurchase Document proves to be incorrect, false or misleading in any material
respect when made or deemed made, without regard to any knowledge or lack of
knowledge thereof by Seller or Buyer or qualification, representation or
warranty relating to such knowledge or lack of knowledge.
“Repurchase
Date”: For any Purchased Asset, the earliest of (a) the
Maturity Date, (b) any Early Repurchase Date therefor, and (c) the
Business Day on which Seller is to repurchase such Purchased Asset as specified
by Seller and agreed to by Buyer in the related Confirmation.
“Repurchase
Documents”: Collectively, this Agreement, the Custodial
Agreement, the Fee Letter, the Guaranty Agreement, all Confirmations, all UCC
financing statements, amendments and continuation statements filed pursuant to
any other Repurchase Document, and all additional documents, certificates,
agreements or instruments, the execution of which is required, necessary or
incidental to or desirable for performing or carrying out any other Repurchase
Document.
“Repurchase
Obligations”: All obligations of Seller to pay the Repurchase
Price on the Repurchase Date and all other obligations and liabilities of Seller
to Buyer arising under or in connection with the Repurchase Documents, whether
now existing or hereafter arising, and all interest and fees that accrue after
the commencement by or against Seller, Guarantor or any of their respective
Affiliates of any Insolvency Proceeding naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding (in each case, whether due or accrued).
-15-
“Repurchase
Price”: For any Purchased Asset as of any date, an amount
equal to the sum of (a) the outstanding Purchase Price as of such date,
(b) the accrued and unpaid Price Differential for such Purchased Asset as
of such date and (c) all other amounts due and payable as of such date by
Seller to Buyer under this Agreement or any Repurchase Document, including,
without limitation all fees, expenses and Indemnified Amounts due
hereunder.
“Requirements of
Law”: With respect to any Person or property or assets of such
Person and as of any date, all of the following applicable thereto as of such
date: all Governing Documents and existing and future laws, statutes, rules,
regulations, treaties, codes, ordinances, permits, certificates, orders and
licenses of and interpretations by any Governmental Authority (including
Environmental Laws, ERISA, regulations of the Board of Governors of the Federal
Reserve System, and laws, rules and regulations relating to usury, licensing,
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy), judgments, decrees,
injunctions, writs, awards or orders of any court, arbitrator or other
Governmental Authority.
“Reserve
Requirement”: For any Pricing Period, the aggregate of the
rates (expressed as a decimal fraction) of reserve requirements in effect during
such Pricing Period (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for Eurocurrency funding (currently
referred to as “Eurocurrency
Liabilities” in Regulation D of such Board of Governors) maintained by
Buyer. As of the Closing Date, the Reserve Requirement is
zero. The Buyer will provide the Seller with no less than thirty (30)
days prior notice of the implementation of any change in the Reserve
Requirement.
“Responsible
Officer”: With respect to any Person, the chief executive
officer, the chief financial officer, the chief accounting officer, the
treasurer or the chief operating officer of such Person or such other officer
designated as an authorized signatory in such Person’s Governing
Documents.
“RMBS”: Publicly
offered, registered Mortgage-Backed Securities representing beneficial ownership
interests in one or more first or second lien mortgage loans secured by
residential properties.
“S&P”: Standard
and Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc.
or, if Standard & Poor’s Ratings Services is no longer issuing ratings,
another nationally recognized rating agency reasonably acceptable to
Buyer.
“Sanctioned
Entity”: (a) A country or a government of a country,
(b) an agency of the government of a country, (c) an organization
directly or indirectly controlled by a country or its government, (d) a
Person resident in or determined to be resident in a country, that in each case
is subject to a country sanctions program administered and enforced by the
Office of Foreign Assets Control, or (e) a Person named on the list of Specially
Designated Nationals maintained by the Office of Foreign Assets
Control.
-16-
“Securities
Laws”: The Securities Act of 1933, the Securities Exchange Act
of 1934, the Xxxxxxxx-Xxxxx Act of 2002 and the applicable accounting and
auditing principles, rules, standards and practices promulgated, approved or
incorporated by the Securities and Exchange Commission or the Public Company
Accounting Oversight Board.
“Seller”: The
Seller named in the preamble of this Agreement.
“Servicer”: One
or more servicers appointed pursuant to the securitization documentation for
each such RMBS.
“Servicing
Agreement”: The underlying pooling and servicing agreement,
servicing agreement or other similar agreement that governs and provides for,
among other things, the servicing of the Mortgage Assets by the
Servicer.
“Solvent”: With
respect to any Person at any time, having a state of affairs such that all of
the following conditions are met at such time: (a) the fair
value of the assets and property of such Person is greater than the amount of
such Person’s liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section 91(32) of the Bankruptcy Code, (b) the present fair salable
value of the assets and property of such Person in an orderly liquidation of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and property
and pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business,
(d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature, and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person’s assets and property would constitute unreasonably small
capital.
“Subsidiary”: With
respect to any Person, any corporation, partnership, limited liability company
or other entity (heretofore, now or hereafter established) 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 (without regard to the occurrence 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, and shall include all Persons the accounts
of which are with those of such Person pursuant to GAAP.
“Term
Sheet”: The letter and/or summary of terms and conditions
dated June 8, 2010 between Buyer and Seller.
“Total
Indebtedness”: With respect to any Person and any date, all
amounts of Indebtedness of such Person plus the proportionate share of such
Person of all Indebtedness of Affiliates of such Person, on or as of such
date.
-17-
“Trade
Ticket”: Any third party trade ticket entered into by Seller
or its Affiliates with respect to a RMBS to be purchased by, or repurchased
from, Buyer in connection with a simultaneous acquisition or sale of such RMBS
by Seller.
“Transaction”: With
respect to any Asset, the sale and transfer of such Asset from Seller to Buyer
pursuant to the Repurchase Documents against the transfer of funds from Buyer to
Seller representing the Purchase Price or any additional Purchase Price for such
Asset.
“Transferor”: The
seller of an Asset under a Purchase Agreement.
“UCC”: The
Uniform Commercial Code as in effect in the State of New York; provided, that, if,
by reason of Requirements of Law, the perfection or priority of the security
interest in any Purchased Asset is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than New York, “Uniform Commercial Code”
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or
priority.
“Underlying Mortgage
Loan”: A mortgage loan made in respect of the related
Underlying Mortgaged Property that is a Mortgage Asset.
“Underlying Mortgaged
Property”: The Mortgaged Property securing the Underlying
Mortgage Loans.
“Underlying
Obligor”: Individually and collectively, as the context may
require, the Mortgagor and other obligor or obligors under an
Asset.
Section
2.02 Rules of
Interpretation. Headings are for convenience only and do not
affect interpretation. The following rules of this Section 2.02 apply unless the
context requires otherwise. The singular includes the plural and conversely. A
gender includes all genders. Where a word or phrase is defined, its
other grammatical forms have a corresponding meaning. A reference to
an Article, Section, Subsection, Paragraph, Subparagraph, Clause, Annex,
Schedule, Appendix, Attachment, Rider or Exhibit is, unless otherwise specified,
a reference to an Article, Section, Subsection, Paragraph, Subparagraph or
Clause of, or Annex, Schedule, Appendix, Attachment, Rider or Exhibit to, this
Agreement, all of which are hereby incorporated herein by this reference and
made a part hereof. A reference to a party to this Agreement or
another agreement or document includes the party’s permitted successors,
substitutes or assigns. A reference to an agreement or document is to
the agreement or document as amended, modified, novated, supplemented or
replaced, except to the extent prohibited by any Repurchase
Document. A reference to legislation or to a provision of legislation
includes a modification, codification, replacement, amendment or re-enactment of
it, a legislative provision substituted for it and a rule, regulation or
statutory instrument issued under it. A reference to writing includes
a facsimile or electronic transmission and any means of reproducing words in a
tangible and permanently visible form. A reference to conduct
includes an omission, statement or undertaking, whether or not in
writing. An Event of Default exists until it has been cured or waived
in writing by Buyer. The words “hereof,” “herein,” “hereunder” and
similar words refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context clearly requires or the language
provides otherwise. The word “including” is not limiting and means
“including without limitation.” The word “any” is not limiting and
means “any and all” unless the context clearly requires or the language provides
otherwise. In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including,” the
words “to” and “until” each mean “to but excluding,” and the word “through”
means “to and including.” The words “will” and “shall” have the same
meaning and effect. A reference to day or days without further
qualification means calendar days. A reference to any time means
New York time. This Agreement may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their respective terms. Unless the
context otherwise clearly requires, all accounting terms not expressly defined
herein shall be construed in accordance with GAAP, and all accounting
determinations, financial computations and financial statements required
hereunder shall be made in accordance with GAAP, without duplication of amounts,
and on a consolidated basis with all Subsidiaries. All terms used in
Articles 8 and 9 of the UCC, and used but not specifically defined
herein, are used herein as defined in such Articles 8
and 9. A reference to “fiscal year” and “fiscal quarter” means
such fiscal periods of Seller. A reference to an agreement includes a
security interest, guarantee, agreement or legally enforceable arrangement
whether or not in writing. A reference to a document includes an
agreement (as so defined) in writing or a certificate, notice, instrument or
document, or any information recorded in computer disk form. Whenever
Seller is required to provide any document to Buyer under the Repurchase
Documents, the relevant document shall be provided in writing or printed form
unless Buyer requests otherwise. At the request of Buyer, the
document shall be provided in computer disk form or both printed and computer
disk form. The Repurchase Documents are the result of negotiations
between the Parties, have been reviewed by counsel to Buyer and counsel to
Seller, and are the product of both Parties. No rule of construction
shall apply to disadvantage one Party on the ground that such Party proposed or
was involved in the preparation of any particular provision of the Repurchase
Documents or the Repurchase Documents themselves. Except where
otherwise expressly stated, Buyer may give or withhold, or give conditionally,
approvals and consents, and may form opinions and make determinations, in its
sole and absolute discretion. Reference in any Repurchase Document to
Buyer’s discretion shall mean, unless otherwise expressly stated herein or
therein, Buyer’s sole and absolute discretion, and the exercise of such
discretion shall be final and conclusive subject in all cases to the implied
covenant of good faith and fair dealing. In addition, in any
Repurchase Document whenever Buyer has a decision or right of determination,
opinion or request, exercises any right given to it to agree, disagree, accept,
consent, grant waivers, take action or no action or to approve or disapprove, or
any arrangement or term is to be satisfactory or acceptable to or approved by
(or any similar language or terms) Buyer, the decision of Buyer with respect
thereto shall be in the sole and absolute discretion of Buyer, and such decision
shall be final and conclusive subject in all cases to the implied covenant of
good faith and fair dealing. Any requirement of good faith,
discretion or judgment by Buyer shall not be construed to require Buyer to
request or await receipt of information or documentation not immediately
available from or with respect to Seller or the Purchased Assets.
-18-
ARTICLE 3
THE
TRANSACTIONS
Section 3.01 Procedures.
(a) From
time to time prior to the Maturity Date Seller may request Buyer to enter into a
proposed Transaction by sending Buyer a notice (each such date a “Notice Date” and each
such notice, a “Transaction Request”)
describing the Transaction and each proposed Asset, including, but not limited
to, the CUSIP, notional amount and any Trade Ticket related to each proposed
Asset. Seller shall promptly transmit to Buyer a complete MBS File
for each proposed Asset and promptly deliver to Buyer any supplemental materials
requested at any time by Buyer in its discretion. When a Transaction
Request is submitted by Seller subject to Seller’s acquisition of a proposed
Asset from a third-party, Seller shall deliver such Transaction Request no later
than 10:00 a.m. New York time on the Business Day following the related trade
date. Buyer shall conduct a review of the MBS File and each such
Asset as Buyer determines appropriate in its discretion. Buyer shall
determine in its discretion whether or not it is willing to purchase any or all
of the proposed Assets, and if so, on what terms and conditions as set forth in
the Confirmation.
(b)
Buyer shall endeavor to communicate to Seller a preliminary non-binding
determination of whether or not it is willing to purchase any or all of such
Assets, and if so, on what terms and conditions, within two (2) Business Days
after each Notice Date or, with respect to a Transaction Request subject to
Seller’s acquisition of any of the proposed Assets from a third-party, within
one (1) Business Day after the related Notice Date, and if its preliminary
determination is favorable, by what date Buyer expects to communicate to Seller
a final non-binding indication of its determination. If Buyer has not
communicated its final non-binding indication to Seller by such date, Buyer
shall automatically and without further action be deemed to have determined not
to purchase any such Asset.
(c) If
Buyer communicates to Seller a final non-binding determination that it is
willing to purchase any or all of such Assets, Buyer and Seller shall cooperate
to prepare and execute a Confirmation containing such terms as agreed upon by
Buyer and Seller including, but not limited to, a description of each of the
Assets and its Purchase Date, Market Value, Applicable Percentage, Purchase
Price and such other terms and conditions as Buyer and Seller may
agree. For the avoidance of doubt, Buyer shall not (i) be bound
by any preliminary or final non-binding determination referred to above,
(ii) be deemed to have approved the purchase of an Asset by virtue of any
other agreement with respect to such Asset, or (iii) be obligated to
purchase an Asset notwithstanding a Confirmation executed by the Parties unless
and until all applicable conditions precedent in Article 6 have been
satisfied or waived by Buyer in its discretion.
(d) Each
Confirmation, together with this Agreement, shall be conclusive evidence of the
terms of the Transaction covered thereby, and shall be construed to be
cumulative to the extent possible. If terms in a Confirmation are
inconsistent with terms in this Agreement with respect to a particular
Transaction, the Confirmation shall prevail. Whenever the Applicable
Percentage, or any other term of a Transaction (other than the Pricing Rate,
Market Value and outstanding Purchase Price) with respect to an Asset is revised
or adjusted in accordance with this Agreement, an amended and restated
Confirmation reflecting such revision or adjustment and that is otherwise
acceptable to the Parties shall be prepared by Seller and executed by the
Parties.
-19-
(e) The
fact that Buyer has conducted or has failed to conduct any partial or complete
examination or any other due diligence review of any Asset or Purchased Asset
shall in no way affect any rights Buyer may have under the Repurchase Documents
or otherwise with respect to any representations or warranties or other rights
or remedies thereunder or otherwise, including the right to determine at any
time that such Asset or Purchased Asset is not an Eligible Asset.
(f) No
Transaction shall be entered into if (i) any Margin Deficit, Default or
Event of Default exists or would exist as a result of such Transaction,
(ii) the Repurchase Date for the Purchased Assets subject to such
Transaction would be later than the Maturity Date, or (iii) after giving
effect to such Transaction, the aggregate Repurchase Price of all Purchased
Assets subject to Transactions then outstanding would exceed the Maximum
Amount.
(g) On
each Purchase Date, (I) the Seller shall, with respect to Eligible Assets that
will be delivered or held in definitive, certificated form, deliver to Buyer or
the Custodian the original of the relevant certificate with respect to the
related Eligible Assets either (i) registered in the name of Buyer or
(ii) if the Buyer consents thereto in its discretion, in form suitable for
transfer, with accompanying duly executed (with a medallion guarantee with
respect to the signatures thereon) instruments of transfer or appropriate
instruments of assignment executed in blank, transfer tax stamps, and any other
documents or instruments necessary in the opinion of the Buyer to effect and
perfect a legally valid delivery of such security or other item of investment
property to Buyer, (II) with respect to Eligible Assets that will be delivered
or held in uncertificated form and the ownership of which is registered on books
maintained by the issuer thereof or its transfer agent, the Seller shall cause
the registration of such security or other item of investment property in the
name of Buyer and, at the request of the Buyer, shall take such other and
further steps, and shall execute and deliver such documents or instruments
necessary in the opinion of the Buyer, to effect and perfect a legally valid
delivery of the relevant interest granted therein to Buyer hereunder and (III)
with respect to Eligible Assets that will be delivered through a Relevant System
in book entry form and credited to or otherwise held in an account, (i) the
Seller shall cause the giving of written instructions to the relevant financial
institution or other entity, and shall provide a copy thereof to the Buyer,
sufficient if complied with to effect and perfect a legally valid delivery of
the relevant interest granted therein to Buyer hereunder, (ii) in connection
with any account to which the Eligible Assets are credited or otherwise held,
the Seller shall execute and deliver such other and further documents or
instruments necessary to effect and perfect a legally valid delivery of the
relevant interest granted therein to Buyer hereunder and (iii) any account to
which the Eligible Assets are credited or otherwise held shall be designated in
accordance with the Custodial Agreement or such variation thereof as Buyer may
direct. Unless otherwise instructed by the Buyer, any delivery of a
security or other item of investment property in definitive, certificated form
shall be made to Buyer or the Custodian in accordance with the Custodial
Agreement or as Buyer otherwise instructs. Any delivery of a
Purchased Asset in accordance with this subsection, or any other method
acceptable to the Buyer in its discretion, shall be sufficient to cause Buyer to
be the “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC) with
respect to the Purchased Assets and, if the Transaction is recharacterized as a
secured financing, to have a perfected first priority security interest
therein. No Purchased Assets, whether certificated or uncertificated,
shall (i) remain in the possession of the Seller, or (ii) remain in the name of
the Seller or any of its agents, or in any account in the name of the Seller or
any of its agents. In the event Buyer consents to delivery of any
certificate representing one or more of the Eligible Assets not registered in
the name of Buyer, concurrently with the delivery thereof, (A) the Seller
shall have (1) notified the applicable trustee in connection with the related
securitization transaction of the pledge of the related Eligible Assets
hereunder, and (2) instructed the related trustee to pay all amounts
payable to the holders of the Eligible Assets to an account specified by the
Buyer, in the form of Irrevocable Redirection Notice and (B) the related trustee
shall have acknowledged in writing the instructions set forth in clause (A) above, and
a copy of the fully executed Irrevocable Redirection Notice shall be delivered
to the Buyer.
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(h) Buyer
may request that as a condition to Buyer’s acceptance of any Purchased Asset, to
the extent the information is not publicly available through Bloomberg, Intex or
XXXXX, Seller shall deliver to Buyer, or provide the Buyer with a URL address to
any service, internet website or other system where the Buyer can obtain, on or
prior to the related Purchase Date:
(i) copies
of the final MBS File governing such Purchased Asset, the offering documents
related to such Purchased Asset, and any ancillary documents required to be
delivered to holders of the securities under such MBS File;
(ii) copies
of all distribution statements, if any, received by Seller pursuant to such MBS
File since Seller’s acquisition of such Purchased Asset; and
(iii) any
other documents or instruments necessary in the reasonable opinion of Buyer to
facilitate the delivery of such MBS File to Buyer or, if the Transaction is
recharacterized as a secured financing, to create and perfect in favor of Buyer
a valid perfected first priority security interest in such Purchased
Asset.
(i) Buyer
shall exercise any and all voting and corporate rights with respect to the
Purchased Assets, including without limitation the right to direct any servicer
of, or related trustee under a Servicing Agreement, relating to, any Purchased
Asset; provided, however, that Buyer
hereby grants Seller a revocable license (during the occurrence and continuance
of a Default or Event of Default) to (i) direct any Servicer of, or related
trustee under a Servicing Agreement relating to, any Purchased Asset or
(ii) vote on any matter, subject however to the terms and conditions of
this Agreement; provided, further, that such
license shall be automatically revoked upon the occurrence and continuance of
any Default or Event of Default hereunder. For so long as Seller’s license to
(i) direct any Servicer or related trustee or (ii) vote on any matter
has not been revoked pursuant to the preceding sentence, in the event that
Buyer, as holder of a Purchased Asset, is requested to respond to any request,
waiver, consent or amendment with respect to such Purchased Asset, Buyer shall
consult with Seller as to how to respond and shall act in accordance with the
directions of Seller; provided, however, that no vote
shall be cast or corporate right exercised or other action taken that would, as
determined by Buyer in its discretion, impair, reduce the value of or otherwise
adversely affect the Purchased Assets or that would be inconsistent with or
result in any violation of any provision of this Agreement, any other Repurchase
Document or the Guaranty Agreement.
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(j) Seller
hereby agrees to pay all costs and expenses incurred by any party (including
reasonable attorney’s fees and expenses) in connection with any registration of
a Purchased Asset in the name of Buyer and any ultimate re-registration of a
Purchased Asset in the name of Seller, if applicable.
Section
3.02 Transfer of Purchased
Assets. On the Purchase Date for each Purchased Asset, and
subject to the satisfaction of all applicable conditions precedent in Article 6, (a) ownership
of and title to such Purchased Asset shall be transferred to and vest in Buyer
or its designee against the simultaneous transfer of the Purchase Price to the
account of Seller specified in Annex 1 (or if
not specified therein, in the related Confirmation or as directed by Seller),
and (b) Seller hereby sells, transfers, conveys and assigns to Buyer all of
Seller’s right, title and interest in and to such Purchased
Asset. Subject to this Agreement, prior to the Maturity Date, Seller
may sell to Buyer, repurchase from Buyer and re-sell Eligible Assets to Buyer,
but may not substitute other Eligible Assets for Purchased Assets.
Section 3.03 [Reserved].
Section
3.04 Maximum
Amount. The aggregate outstanding Purchase Price for all
Purchased Assets as of any date shall not exceed the Maximum
Amount. If such aggregate outstanding Purchase Price exceeds the
Maximum Amount, Seller shall immediately pay to Buyer an amount necessary to
reduce such aggregate outstanding Purchase Price to an amount equal to or less
than the Maximum Amount.
Section
3.05 Early Repurchase Date;
Mandatory Repurchases. Seller may terminate any Transaction
with respect to any or all Purchased Assets and repurchase such Purchased Assets
on any date prior to the Repurchase Date (an “Early Repurchase
Date”); provided, that
(a) Seller irrevocably notifies Buyer (x) with respect to a repurchase
notice submitted subject to Seller’s sale of the related Purchase Assets to a
third party, by 10:00 a.m. New York time on the next Business Day following the
related trade date of such sale or (y) by 10:00 a.m. New York time at least
three (3) Business Days before the proposed Early Repurchase Date, in each
case identifying the Purchased Asset(s) to be repurchased and the Repurchase
Price thereof, and providing the CUSIP, notional amount, and any Trade Tickets
related to each such Purchased Asset, (b) no Margin Deficit, Default or
Event of Default exists or would exist as a result of such repurchase,
(c) if the Early Repurchase Date is not a Remittance Date, Seller pays to
Buyer any amount due under Section 12.03, and
(d) Seller thereafter complies with Section 3.06.
In
addition to other rights and remedies of Buyer under any Repurchase Document,
upon notice from Buyer, Seller shall repurchase any Purchased Asset in
accordance with the provisions of Section 4.01 that no
longer qualifies as an Eligible Asset, as determined by Buyer in its
discretion. For the avoidance of doubt, notice that any Purchased
Asset no longer qualifies as an Eligible Asset may be given by any means
provided in this Agreement and with respect to any notice given under this Section 3.05, (i)
received before 11:00 a.m. on a Business Day, Seller shall repurchase the
related Purchased Asset no later than 5:00 p.m. on the following Business Day
and (ii) received after 11:00 a.m. on a Business Day, Seller shall repurchase
the related Purchase Asset no later than 11:00 a.m. two (2) Business Days
following the date of such notice. For the avoidance of doubt, the
Repurchase Price for any Purchased Asset shall include only the accrued and
unpaid Price Differential for such Purchased Asset and not the Price
Differential for all Purchased Assets.
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Section
3.06 Repurchase. On
the Repurchase Date for each Purchased Asset, Seller shall transfer to Buyer the
Repurchase Price for such Purchased Asset as of the Repurchase Date, and Buyer
shall transfer to Seller such Purchased Asset, whereupon the Transaction with
respect to such Purchased Asset shall terminate. Buyer shall be deemed to have
simultaneously released its security interest in such Purchased Asset and, to
the extent any UCC financing statement filed against Seller specifically
identifies such Purchased Asset, Buyer shall promptly deliver an amendment
thereto or termination thereof evidencing the release of such Purchased Asset
from Buyer’s security interest therein. Any such transfer or release
shall be without recourse to Buyer and without representation or warranty by
Buyer except that Buyer shall be deemed to have represented that such Purchased
Asset is being transferred free and clear of any encumbrance created by Buyer
without the necessity for any further documentation. Any Income with respect to
such Purchased Asset received by Buyer or Collection Account Bank after payment
of the Repurchase Price therefor shall be promptly remitted to Seller, but in no
event later than the next Remittance Date, without any set-off, deduction or
other application of Income pursuant to Sections 5.02 and
5.03 and, until
so paid or delivered, Buyer shall hold such Income in the Collection Account in
trust for the sole benefit of Seller. Notwithstanding the foregoing,
on or before the Maturity Date, Seller shall repurchase all Purchased Assets by
paying to Buyer the outstanding Repurchase Price therefor and all other
outstanding Repurchase Obligations. For the avoidance of doubt, the
Repurchase Price for any Purchased Asset shall include only the accrued and
unpaid Price Differential for such Purchased Asset and not the Price
Differential for all Purchased Assets.
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Section
3.07 Extension of the Maturity
Date. At the request of Seller delivered to Buyer no earlier
than ninety (90) or later than forty-five (45) days before the
Maturity Date, Buyer may in its discretion grant one or more extensions of the
Maturity Date by giving notice approving such extension and the extended
Maturity Date to Seller no later than thirty (30) days before the Maturity
Date. The failure of Buyer to so deliver such notice approving the
extension shall be deemed to be Buyer’s determination not to extend the Maturity
Date unless Buyer thereafter gives notice to the contrary. Any
extension of the Maturity Date shall be subject to the
following: (i) no Default or Event of Default exists on the date
of the request to extend or the current Maturity Date, (ii) no Margin
Deficit shall be outstanding, and (iii) Seller shall pay to Buyer the
Extension Fee, if any, or such other fee agreed to by the Parties on or before
the current Maturity Date. Seller may request one or more further
extensions of the Maturity Date under the same terms and conditions as the
request to extend the original Maturity Date. For the avoidance of
doubt, the provisions set forth in this Section 3.07 shall
not create any additional rights or obligations for either Party
hereunder.
Section
3.08 Payment of Price
Differential and Fees.
(a) Notwithstanding
that Buyer and Seller intend that the Transactions hereunder be sales to Buyer
of the Purchased Assets for all purposes other than U.S. federal income tax
purposes, Seller shall pay to Buyer the accrued value of the Price Differential
for each Purchased Asset on each Remittance Date. Buyer shall give
Seller notice of the Price Differential and any fees and other amounts due under
the Repurchase Documents on or prior to the second (2nd) Business Day
preceding each Remittance Date; provided, that
Buyer’s failure to deliver such notice shall not affect Seller’s obligation to
pay such amounts. If the Price Differential includes any estimated
Price Differential, Buyer shall recalculate such Price Differential after the
Remittance Date and, if necessary, make adjustments to the Price Differential
amount due on the following Remittance Date.
(b) Seller
shall pay to Buyer all fees and other amounts as and when due as set forth in
the Fee Letter.
Section
3.09 Payment, Transfer and
Custody.
(a) Unless
otherwise expressly provided herein, all amounts required to be paid or
deposited by Seller hereunder shall be paid or deposited in accordance with the
terms hereof no later than 3:00 p.m. on the day when due, in immediately
available Dollars and without deduction, setoff or counterclaim, and if not
received before such time shall be deemed to be received on the next Business
Day. Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next following
Business Day, and such extension of time shall in such case be included in the
computation of such payment. Seller shall, to the extent permitted by
Requirements of Law, pay to Buyer on demand a late payment fee reasonably
specified by Buyer in connection with any amounts not paid when due under the
Repurchase Documents, plus interest on such amounts as provided in Section 18.16. Amounts
payable to Buyer and not otherwise required to be deposited into the Collection
Account shall be deposited into an account of Buyer. Seller shall
have no rights in, rights of withdrawal from, or rights to give notices or
instructions regarding Buyer’s account or the Collection
Account. Amounts in the Collection Account may be invested at the
direction and in the discretion of Buyer in cash equivalents before they are
distributed in accordance with Article 5.
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(b) Seller
will maintain Records in its possession, if any, not delivered to Buyer or
Custodian, in a manner consistent with industry practice. Such
Records, if any, are and shall be held in trust by Seller or its agent for the
benefit of Buyer as the owner thereof. Seller or its agent shall
maintain a copy of the Records and the originals of the Records, if any, not
delivered to Buyer or Custodian. The possession of Records, if any,
by Seller or its agent is in a custodial capacity only at the will of Buyer for
the sole purpose of servicing the related Purchased Asset. Each
Record retained or held by Seller or its agent, if any, shall be segregated on
Seller’s books and records from the other assets of Seller or its agent (or
shall contain an electronic notation to reflect the sale to Buyer), and the
books and records of Seller or its agent shall be marked to reflect clearly the
sale of the related Purchased Asset to Buyer. Seller or its agent
shall release its custody of the Records, if any, only in accordance with
written instructions from Buyer, unless such release is required in connection
with a repurchase of any Purchased Asset by Seller, in each case in accordance
with the Custodial Agreement.
Section
3.10 Repurchase Obligations
Absolute. All amounts payable by Seller under the Repurchase
Documents shall be paid without notice, demand, counterclaim, setoff, deduction
or defense (as to any Person and for any reason whatsoever) and without
abatement, suspension, deferment, diminution or reduction (as to any Person and
for any reason whatsoever), and the Repurchase Obligations shall not be
released, discharged or otherwise affected, except as expressly provided herein,
by reason of: (a) any damage to, destruction of, taking of,
restriction or prevention of the use of, interference with the use of, title
defect in, encumbrance on or eviction from, any Purchased Asset or related
Underlying Mortgaged Property, (b) any Insolvency Proceeding relating to
Seller or any Underlying Obligor, or any action taken with respect to any
Repurchase Document or Record by any trustee or receiver of Seller or any
Underlying Obligor or by any court in any such proceeding, (c) any claim
that Seller has or might have against Buyer under any Repurchase Document or
otherwise, (d) any default or failure on the part of Buyer to perform or
comply with any Repurchase Document or other agreement with Seller, (e) the
invalidity or unenforceability of any Purchased Asset, Repurchase Document or
Record, or (f) any other occurrence whatsoever, whether or not similar to
any of the foregoing, and whether or not Seller has notice or knowledge of any
of the foregoing. The Repurchase Obligations shall be full recourse
to Seller. This Section 3.10 shall survive
the termination of the Repurchase Documents and the payment in full of the
Repurchase Obligations. Notwithstanding this Section 3.10, nothing
in this Agreement shall be construed as limiting or otherwise restricting Seller
from asserting a compulsory counterclaim or bringing a separate action to
enforce the obligations of Buyer under this Agreement.
ARTICLE 4
MARGIN
MAINTENANCE
Section
4.01 Margin
Deficit.
(a) If
on any date the Market Value of all Purchased Assets is less than Buyer’s Margin
Percentage times the outstanding Purchase Price for all Purchased Assets as of
such date (such difference, a “Margin Deficit”) and
the Margin Deficit is greater than the Minimum Margin Call Amount, the Seller
shall, upon notice from Buyer (such notice, a “Margin Call”)
transfer to Buyer cash, or if Seller and Buyer (subject to its discretion)
mutually agree, transfer to Buyer or Custodian for no additional consideration
additional Eligible Assets (“Additional Purchased
Assets”), so that in each case, after giving effect to such transfers and
payments, the aggregate Purchase Price for all Purchased Assets does not exceed
the aggregate Market Value thereof multiplied by the Applicable
Percentage. Buyer shall apply the funds or Additional Purchased
Assets received in satisfaction of a Margin Deficit to the Repurchase
Obligations in such manner as Buyer determines in its
discretion. Notice of a Margin Deficit may be given by any means
provided in this Agreement. Any notice received before 11:00 a.m. New York City
time on a Business Day shall be met with payment of cash or transfer of
Additional Purchased Assets, and the related Margin Call satisfied, no later
than 5:00 p.m. New York City time on the following Business Day; notice
received after 11:00 a.m. New York City time on a Business Day shall be met
with payment of cash or transfer of Additional Purchased Assets, and the related
Margin Call satisfied, no later than 5:00 p.m. New York City time two (2)
Business Days following the date of such notice.
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(b) Buyer’s
election in its discretion not to deliver a Margin Call at any time there is a
Margin Deficit shall not waive the Margin Deficit or in any way limit or impair
Buyer’s right to deliver a Margin Call at any time when the same or any other
Margin Deficit exists. Buyer’s rights under this Section 4.01 are in
addition to and not in lieu of any other rights of Buyer under the Repurchase
Documents or Requirements of Law.
(c) All
cash transferred to Buyer pursuant to this Section 4.01 with respect to
a Purchased Asset shall be deposited into the Collection Account, except as
directed by Buyer in its discretion, and notwithstanding any provision in Section 5.02 to the contrary,
shall be applied to reduce the Purchase Price of such Purchased
Asset.
ARTICLE 5
APPLICATION
OF INCOME
Section
5.01 Collection
Account. The Collection Account shall be established at
Collection Account Bank. Buyer shall have sole dominion and control
(including, without limitation, “control” within the meaning of Section 9-104(a)
of the UCC) over the Collection Account. Neither Seller nor any
Person claiming through or under Seller shall have any claim to or interest in
the Collection Account. All Income received by Seller, Buyer or
Collection Account Bank in respect of the Purchased Assets, as well as any
interest received from the reinvestment of such Income, shall be deposited
directly into the Collection Account and shall be applied to and remitted by
Collection Account Bank in accordance with this Article 5.
Section
5.02 Before Event of
Default. If no Event of Default exists, all Income described
in Section 5.01 and received
during each Pricing Period shall be applied by Collection Account Bank at the
Buyer’s discretion by no later than the next following Remittance Date in the
following order of priority:
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first, to pay to Buyer an
amount equal to the Price Differential accrued with respect to all Purchased
Assets as of such Remittance Date;
second, to pay to Buyer an
amount equal to all default interest, late fees, fees, expenses and Indemnified
Amounts then due and payable from Seller and other applicable Persons to Buyer
under the Repurchase Documents;
third, to pay to Buyer an
amount sufficient to eliminate any outstanding Margin Deficit (without limiting
Seller’s obligation to satisfy a Margin Deficit in a timely manner as required
by Section 4.01);
fourth, to pay any custodial
fees and expenses due and payable under the Custodial Agreement;
and
fifth, to pay to the Seller
for its own account all remaining Income related to such Pricing
Period.
Section
5.03 After Event of
Default. If an Event of Default exists, all Income deposited
into the Collection Account in respect of the Purchased Assets shall be applied
by Collection Account Bank, on the Business Day next following the Business Day
on which each amount of Income is so deposited, in the following order of
priority:
first, to pay to Buyer an
amount equal to the Price Differential accrued with respect to all Purchased
Assets as of such date;
second, to pay to Buyer an
amount equal to all default interest, late fees, fees, expenses and Indemnified
Amounts then due and payable from Seller and other applicable Persons to Buyer
under the Repurchase Documents;
third, to pay any custodial
fees and expenses due and payable under the Custodial Agreement;
fourth, to pay to Buyer an
amount equal to the aggregate Repurchase Price of all Purchased Assets (to be
applied in such order and in such amounts as determined by Buyer in its
discretion, until such Purchase Price has been reduced to zero);
fifth, to pay to Buyer all
other Repurchase Obligations due to Buyer; and
sixth, to pay to Seller any
remainder for its own account.
Section
5.04 Seller to Remain
Liable. If the amounts remitted to Buyer as provided in Sections 5.02 and 5.03 are insufficient
to pay all amounts due and payable from Seller to Buyer under this Agreement or
any Repurchase Document on a Remittance Date or a Repurchase Date, the Seller
shall pay such amounts to Buyer as otherwise provided herein and upon the
occurrence of an Event of Default or otherwise, Seller shall nevertheless remain
liable for and shall pay to Buyer when due all such amounts.
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Section
5.05 Additional Remittance
Date. So long as no Event of Default has occurred and is
continuing, Seller, in connection with the termination of a Transaction pursuant
to Section
3.05, may enter into a transaction to sell the related repurchased
Purchased Assets on such Early Repurchase Date to a third-party. The
Seller shall direct the third-party to pay the proceeds of such sale directly
into the Collection Account and in the event that the proceeds are in excess of
the Repurchase Price, the Buyer shall direct the Custodian to transfer such
repurchased Purchased Assets to such third-party buyer upon receipt of the
proceeds of such sale in the Collection Account. If such Early
Repurchase Date is not a Remittance Date, Buyer shall, upon written request from
Seller, remit to Seller an amount equal to the difference between the proceeds
received from the third-party and the Repurchase Price for the related Purchased
Assets on such date; provided that (i) there is more than $5,000,000 in the
Collection Account on such Early Repurchase Date, (ii) no Margin Deficit,
Default or Event of Default exists or would exist as a result of such repurchase
or payment to Seller and (iii) Seller shall not request Buyer remit funds to
Seller pursuant to this Section 5.05 more
than one (1) time in any three month period.
Section
5.06 Additional Remittance
Reporting. On each Remittance Date, Buyer or Custodian shall
provide to Seller a report in electronic format acceptable to Seller and Buyer
(e.g., Microsoft Excel format), which sets forth for each Purchased Asset
(identified by CUSIP) (a) all Income received during the related Pricing Period
and (b) an itemization of each deduction from Income as allocated in accordance
with Sections
5.02, 5.03 or 5.05, as applicable,
made during the related Pricing Period.
ARTICLE 6
CONDITIONS
PRECEDENT
Section
6.01 Conditions Precedent to
Initial Transaction. Buyer shall not be obligated to enter
into any Transaction or purchase any Asset until the following conditions have
been satisfied in the discretion of Buyer, or waived by Buyer in its discretion,
on and as of the Closing Date and the initial Purchase Date:
(a) Buyer
has received the following documents, each dated the Closing Date or as of the
Closing Date unless otherwise specified: (i) each Repurchase
Document duly executed and delivered by the parties thereto, (ii) an
official good standing certificate dated a recent date with respect to Seller
(iii) certificates of the secretary or an assistant secretary of Seller
with respect to attached copies of the Governing Documents and applicable
resolutions of Seller, and the incumbencies and signatures of officers of Seller
executing the Repurchase Documents to which it is a party, evidencing the
authority of Seller with respect to the execution, delivery and performance
thereof, (iv) [reserved], (v) an executed power of attorney of Seller in
form and substance satisfactory to the Buyer, (vi) such opinions from
counsel to Seller as Buyer may require in its discretion, including with respect
to corporate, enforceability, non-contravention, perfection of security
interests, Investment Company Act matters, and the applicability of Bankruptcy
Code safe harbors, (vii) such opinions from counsel to Custodian as Buyer
may require in its discretion, and (viii) all other documents,
certificates, information, financial statements, reports, approvals and opinions
of counsel as it may require in its discretion;
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(b) (i) UCC
financing statements have been filed against Seller in all filing offices
required by Buyer, (ii) Buyer has received such searches of UCC filings,
tax liens, judgments, pending litigation and other matters relating to Seller
and the Purchased Assets as Buyer may require in its discretion, and
(iii) the results of such searches are satisfactory to Buyer in its
discretion;
(c) Buyer
has received payment from Seller of all fees and expenses then payable under the
Fee Letter and the other Repurchase Documents, as contemplated by Section 13.02;
(d) Guarantor
or its Subsidiaries shall have deposited unrestricted cash or cash equivalents
in an amount equal to $15,000,000 into an account or accounts maintained by
Guarantor or its Subsidiaries in one or more accounts at Buyer or any other
financial institution where such account or accounts are not subject to control
by a financial institution where Guarantor or its Subsidiaries have aggregate
Indebtedness of more than $1,000,000; and
(e) Buyer
has completed to its satisfaction such due diligence and modeling as it may
require in its discretion.
Section
6.02 Conditions Precedent to All
Transactions. Buyer shall not be obligated to enter into any
Transaction, purchase any Asset, or be obligated to take, fulfill or perform any
other action hereunder, until the following additional conditions have been
satisfied in the discretion of Buyer, or waived by Buyer in its discretion, with
respect to each Asset on and as of the Purchase Date therefor:
(a) Buyer
has received the following documents: (i) a Transaction Request,
(ii) an MBS File, (iii) a Confirmation executed by Buyer and Seller,
(iv) Irrevocable Redirection Notices, if any, (v) any Trade Tickets related to
such Asset and (vi) all other documents, certificates, information,
financial statements, reports, approvals and opinions of counsel as Buyer may
require in its discretion;
(b) immediately
before such Transaction and after giving effect thereto and to the intended use
thereof, no Representation Breach (including with respect to any Purchased
Asset), Default, Event of Default, Margin Deficit, Material Adverse Effect or
Market Disruption Event exists;
(c) Buyer
has completed its due diligence review of the MBS File, Records (if any) and
such other documents, records and information as Buyer in its discretion deems
appropriate, and the results of such reviews are satisfactory to Buyer in its
discretion;
(d) Buyer
has in its discretion (i) determined that such Asset is an Eligible Asset,
(ii) approved the purchase of such Asset, (iii) obtained all necessary
internal credit and other approvals for such Transaction, and (iv) executed
the Confirmation;
(e) the
aggregate outstanding Purchase Price of all Transactions does not exceed the
Maximum Amount after giving effect to such Transaction;
(f) the
Repurchase Date is not later than the Maturity Date;
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(g) Seller
and Custodian have satisfied all requirements and conditions and have performed
all covenants, duties, obligations and agreements contained in the Repurchase
Documents to be performed by such Person on or before the Purchase
Date;
(h) The
definitive certificate representing ownership of such Purchased Assets that are
subject to such Transaction in the name of Buyer or, if such Purchased Assets
that are subject to such Transaction are registered on DTC or similar
depository, evidence satisfactory to Buyer that the records of DTC or such
depository show Buyer as the beneficial owner of such Purchased Assets that are
subject to such Transaction; and
(i) Satisfaction
of any conditions precedent to the initial Transaction as set forth in Section 6.01 (other
than Section
6.01(d)) that were not satisfied prior to the initial Purchase
Date.
Each
Confirmation delivered by Seller shall constitute a certification by Seller that
all of the conditions precedent in this Article 6 (excluding
clauses (c),
(d) and,
insofar as it relates to Custodian, (g) above) have been
satisfied.
The
failure of Seller to satisfy any of the conditions precedent in this Article 6 (excluding
clauses (c), (d) and, insofar as it relates to Custodian, (g) above) with
respect to any Transaction or Purchased Asset shall, unless such failure was
waived in writing by Buyer in its discretion on or before the related Purchase
Date, give rise to the right of Buyer at any time to rescind the related
Transaction, whereupon Seller shall immediately repay to Buyer the Repurchase
Price of such Purchased Asset to the extent Buyer has advanced funds for such
Purchased Asset.
ARTICLE 7
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants, on and as of the date of this Agreement, each Purchase
Date, and at all times when any Repurchase Document or Transaction is in full
force and effect:
Section
7.01 Seller. Seller
has been duly organized and validly exists in good standing as a corporation,
limited liability company or limited partnership, as applicable, under the laws
of the jurisdiction of its incorporation, organization or
formation. Seller (a) has all requisite power, authority, legal
right, licenses and franchises, (b) is duly qualified to do business in all
jurisdictions necessary, and (c) has been duly authorized by all necessary
action, to (w) own, lease and operate its properties and assets,
(x) conduct its business as presently conducted, (y) execute, deliver
and perform its obligations under the Repurchase Documents to which it is a
party, and (z) acquire, own, sell, assign, pledge and repurchase the
Purchased Assets. Seller’s exact legal name is set forth in the
preamble and signature pages of this Agreement. Seller’s location
(within the meaning of Article 9 of the UCC), and the office where Seller
keeps all records (within the meaning of Article 9 of the UCC) relating to
the Purchased Assets is at the address of Seller referred to in Annex 1. Seller
has not changed its name or location within the past twelve (12)
months. Seller’s organizational file number is 4720451 and its tax
identification number is 00-0000000. Seller has no
subsidiaries. Seller shall not create any new Subsidiaries, without
prior written consent of Buyer, such consent not to be unreasonably
withheld Seller is an indirect wholly-owned Subsidiary of Two Harbors
Investment Corp. Seller has one (1) Guarantee Obligation, as set
forth on Schedule
7.01. Seller shall not create any new Guarantee Obligations,
without prior written consent of Buyer, such consent not to be unreasonably
withheld.
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Section
7.02 Repurchase
Documents. Each Repurchase Document to which Seller is a party
has been duly executed and delivered by Seller and constitutes the legal, valid
and binding obligation of Seller enforceable against Seller in accordance with
its terms, except as such enforceability may be limited by Insolvency Laws and
general principles of equity. The execution, delivery and performance by Seller
of each Repurchase Document to which it is a party do not and will not
(a) conflict with, result in a breach of, or constitute (with or without
notice or lapse of time or both) a default under, any (i) Governing
Document, Indebtedness, Guarantee Obligation or Contractual Obligation
applicable to Seller or any of its properties or assets, (ii) Requirements
of Law, or (iii) approval, consent, judgment, decree, order or demand of
any Governmental Authority, or (b) result in the creation of any Lien
(other than Permitted Liens) on any of the properties or assets of
Seller. All approvals, authorizations, consents, orders, filings,
notices or other actions of any Person or Governmental Authority required for
the execution, delivery and performance by Seller of the Repurchase Documents to
which it is a party and the sale of and grant of a security interest in each
Purchased Asset to Buyer, have been obtained, effected, waived or given and are
in full force and effect. The execution, delivery and performance of
the Repurchase Documents do not require compliance by Seller with any “bulk
sales” or similar law. There is no material litigation, proceeding or
investigation pending or, to the knowledge of Seller threatened, against Seller,
Guarantor or any of their respective Affiliates before any Governmental
Authority (a) asserting the invalidity of any Repurchase Document,
(b) seeking to prevent the consummation of any Transaction, or
(c) seeking any determination or ruling that could reasonably be expected
to have a Material Adverse Effect.
Section
7.03 Solvency. None
of Seller, Guarantor or any of their respective Affiliates is or has ever been
the subject of an Insolvency Proceeding. Each of Seller, Guarantor
and each of their respective Affiliates is Solvent and the Transactions do not
and will not render Seller, Guarantor or any of their respective Affiliates not
Solvent. Seller is not entering into the Repurchase Documents or any
Transaction with the intent to hinder, delay or defraud any creditor of Seller
or any Affiliate of Seller. Seller has received or will receive
reasonably equivalent value for the Repurchase Documents and each
Transaction. Seller has adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations. Seller is generally able to
pay, and as of the date hereof is paying, its debts as they come
due.
Section
7.04 Taxes. Seller.
Guarantor and each Affiliate of Seller or Guarantor have filed all required
federal income tax returns (after giving effect to any permissible extensions)
and all other material tax returns, domestic and foreign, required to be filed
by them and have paid all material taxes (including mortgage recording taxes),
assessments, fees, and other governmental charges payable by them, or with
respect to any of their properties or assets, which have become due, and income
or franchise taxes have been paid or are being contested in good faith by
appropriate proceedings diligently conducted and for which appropriate reserves
have been established in accordance with GAAP. Seller, Guarantor and
each of their respective Affiliates have paid, or have provided adequate
reserves for the payment of, all such taxes for all prior fiscal years and for
the current fiscal year to date. There is no material action, suit,
proceeding, investigation, audit or claim relating to any such taxes now pending
or, to the knowledge of Seller, threatened by any Governmental Authority which
is not being contested in good faith as provided above. None of
Seller, Guarantor or any of their respective Affiliates has entered into any
agreement or waiver or been requested to enter into any agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes, or is aware of any circumstances that would cause the taxable years or
other taxable periods of Seller, Guarantor or any of their respective Affiliates
not to be subject to the normally applicable statute of
limitations. No tax liens have been filed against any assets of
Seller, Guarantor or any of their respective Affiliates. Seller does
not intend to treat any Transaction as being a “reportable transaction” as
defined in Treasury Regulation Section 1.6011–4. If Seller
determines to take any action inconsistent with such intention, it will promptly
notify Buyer, in which case Buyer may treat each Transaction as subject to
Treasury Regulation Section 301.6112–1 and will maintain the lists and
other records required thereunder.
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Section
7.05 Financial
Condition. The (i) audited consolidated financial statements
of Guarantor as at the fiscal year most recently ended, including, but not
limited to, the related audited balance sheet, the related audited statements of
income, stockholders equity and cash flows, setting forth in each case in
comparative form the figures for the previous year, reported on without a “going
concern” or like qualification arising out of the audit conducted by Guarantor’s
independent certified public accountants, and (ii) unaudited balance sheet of
Seller as at the fiscal year most recently ended for which such unaudited
balance sheet is available and the related unaudited statements of income and
retained earnings and of cash flows for the fiscal year then ended, setting
forth in each case in comparative form the figures for the previous year, copies
of which have been delivered to Buyer, in each case, are complete and correct
and present fairly the financial condition of Guarantor and Seller as of such
date and the results of its operations and cash flows for the fiscal year then
ended. All such financial statements, including related schedules and
notes, were prepared in accordance with GAAP except as disclosed therein, and
other than the omission of footnotes from Seller’s financial
statements. Seller does not have any material contingent liability or
liability for taxes or any long term lease or unusual forward or long term
commitment, including any Derivative Contract, which is not reflected in the
foregoing statements or notes or incurred in the ordinary course of business
since year end. Since the date of the financial statements and other
information delivered to Buyer prior to the Closing Date and other than in the
ordinary course of Seller’s business, Seller has not sold, transferred or
otherwise disposed of any material part of its property or assets (except
pursuant to the Repurchase Documents) or acquired any property or assets
(including Equity Interests of any other Person) that are material in relation
to the financial condition of Seller.
Section
7.06 True and Complete
Disclosure. The information, reports, certificates, documents,
financial statements, operating statements, forecasts, books, records, files,
exhibits and schedules furnished by or on behalf of Seller to Buyer in
connection with the Repurchase Documents and the Transactions, 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 Seller to
Buyer in connection with the Repurchase Documents and the Transactions will be
true, correct and complete in all material respects.
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Section
7.07 Compliance with
Laws. Seller has complied in all respects with all
Requirements of Laws, and no Purchased Asset contravenes any Requirements of
Laws. None of Seller, Guarantor or any of their respective Affiliates
(a) is an “enemy” or an “ally of the enemy” as defined in the Trading with
the Enemy Act of 1917, (b) is in violation of any Anti-Terrorism Laws,
(c) is a blocked person described in Section 1 of Executive Order
13224 or to its knowledge engages in any dealings or transactions or is
otherwise associated with any such blocked person, (d) is in violation of
any country or list based economic and trade sanction administered and enforced
by the Office of Foreign Assets Control, (e) is a Sanctioned Entity,
(f) has more than 10% of its assets located in Sanctioned Entities, or
(g) derives more than 10% of its operating income from investments in or
transactions with Sanctioned Entities. The proceeds of any
Transaction have not been and will not be used to fund any operations in,
finance any investments or activities in or make any payments to a Sanctioned
Entity. None of Seller, Guarantor or any of their
respective Affiliates (a) is (i) required to register as an investment
company as defined in the Investment Company Act or (ii) is controlled by an
“investment company” as defined in the Investment Company Act, (b) is a
“broker” or “dealer” as defined in, or could be subject to a liquidation
proceeding under, the Securities Investor Protection Act of 1970, or (c) is
subject to regulation by any Governmental Authority limiting its ability to
incur the Repurchase Obligations. Seller, Guarantor and all of their
respective Affiliates are in compliance with the Foreign Corrupt Practices Act
of 1977 and any foreign counterpart thereto. None of Seller,
Guarantor or any of their respective Affiliates has made, offered, promised or
authorized a payment of money or anything else of value (a) in order to
assist in obtaining or retaining business for or with, or directing business to,
any foreign official, foreign political party, party official or candidate for
foreign political office, (b) to any foreign official, foreign political
party, party official or candidate for foreign political office, or
(c) with the intent to induce the recipient to misuse his or her official
position to direct business wrongfully to Seller, Guarantor, any of their
respective Affiliates or any other Person, in violation of the Foreign Corrupt
Practices Act.
Section
7.08 Compliance with
ERISA. The Seller does not sponsor, participate in or have any
liability with respect to (and, during the five (5) years preceding the date
hereof, has not sponsored or participated in or had any liability with respect
to) an employee pension benefit plan as defined in Section 3(2)(A) of ERISA,
including a multiemployer plan as defined under Section 3(37)(A) of ERISA, or
any other plan or arrangement that is intended to be qualified under Section
401(a) of the Code.
Section
7.09 No Default or Material
Adverse Effect. No Default or Event of Default exists. No
default or event of default (however defined) exists under any Indebtedness,
Guarantee Obligations or Contractual Obligations of Seller. Seller
believes that it is and will be able to pay and perform each agreement, duty,
obligation and covenant contained in the Repurchase Documents to which it is a
party, and that it is not subject to any agreement, obligation, restriction or
Requirements of Law which would unduly burden its ability to do so or could
reasonably be expected to have a Material Adverse Effect. Seller has
no knowledge of any actual or prospective development, event or other fact that
could reasonably be expected to have a Material Adverse Effect. No
Internal Control Event has occurred.
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Section
7.10 Purchased
Assets. Each Purchased Asset is an Eligible
Asset. Each representation and warranty set forth in the Repurchase
Documents (including in Schedule 1 with
respect to each Purchased Asset is true and correct. The review and
inquiries made on behalf of Seller in connection with the next preceding
sentence have been made by Persons having the requisite expertise, knowledge and
background to verify such representations and warranties. Seller has
complied with all requirements of the Custodial Agreement with respect to each
Purchased Asset. No procedures believed by Seller to be adverse to
Buyer were utilized by Seller in identifying or selecting the proposed Purchased
Assets for sale to Buyer. Each proposed Purchased Asset was acquired
in accordance with and satisfies applicable standards established by Seller or
any Affiliate of Seller.
Section
7.11 Purchased Assets Acquired
from Transferors. With respect to each Purchased Asset
purchased by Seller from a Transferor, if any, (a) such Purchased Asset was
acquired and transferred pursuant to a Purchase Agreement, (b) such
Transferor received reasonably equivalent value in consideration for the
transfer of such Purchased Asset, (c) no such transfer was made for or on
account of an antecedent debt owed by such Transferor to Seller or an Affiliate
of Seller, and (d) no such transfer is or may be voidable or subject to
avoidance under the Bankruptcy Code except under Section 548(a)(1)(A) of
the Bankruptcy Code.
Section
7.12 Transfer and Security
Interest. The Repurchase Documents constitute a valid and
effective transfer to Buyer of all right, title and interest of Seller in, to
and under all Purchased Assets, free and clear of any Liens (other than
Permitted Liens). With respect to the protective security interest granted by
Seller in Section 11.01, and the
filing of the UCC financing statements as provided herein, such security
interest shall be a valid first priority perfected security interest to the
extent such security interest can be perfected by possession, filing or control,
subject only to Permitted Liens. The Purchased Assets constitute the
following, as defined in the UCC: a general intangible, instrument, account,
investment property, security, deposit account, financial asset, uncertificated
security, securities account, security entitlements or chattel
paper. Seller has not sold, assigned, pledged, encumbered or
otherwise conveyed any of the Purchased Assets to any Person other than pursuant
to the Repurchase Documents. Seller has not authorized the filing of
and is not aware of any UCC financing statements filed against Seller as debtor
that include the Purchased Assets, other than any financing statement that has
been terminated or filed pursuant to this Agreement.
Section
7.13 No
Broker. Neither Seller nor any Affiliate of Seller has dealt
with any broker, investment banker, agent or other Person, except for Buyer or
an Affiliate of Buyer, who may be entitled to any commission or compensation in
connection with any Transaction under the Repurchase Documents between Buyer and
Seller.
ARTICLE 8
COVENANTS
OF SELLER
From the
date hereof until the Repurchase Obligations are paid in full and the Repurchase
Documents are terminated, Seller shall perform and observe the following
covenants, which shall (a) be given independent effect (so that if a
particular action or condition is prohibited by any covenant, 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 a Default or an Event of
Default if such action is taken or condition exists), and (b) shall also
apply to all subsidiaries of Seller:
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Section
8.01 Existence; Governing
Documents; Conduct of Business. Seller shall (a) preserve
and maintain its legal existence, (b) qualify and remain qualified in good
standing in each jurisdiction where the failure to be so qualified would have a
Material Adverse Effect, (c) comply with its Governing Documents, and
(d) not modify or amend in a manner which would have a Material Adverse
Effect or terminate its Governing Documents. Seller shall
(a) continue to engage in the same (and no other) general lines of business
as presently conducted by it, and (b) maintain and preserve all of its
material rights, privileges, licenses and franchises necessary for the operation
of its business. Seller shall not change its name,
organizational number, tax identification number, fiscal year, method of
accounting, identity, structure or jurisdiction of organization (or have more
than one such jurisdiction), move the location of its principal place of
business and chief executive office, as defined in the UCC) from the location
referred to in Section 7.01, unless in each
case Seller has given at least thirty (30) days prior notice to Buyer and
has taken all actions required under the UCC to continue the first priority
perfected security interest of Buyer in the Purchased Assets. Seller
shall enter into each Transaction as principal, unless Buyer in its discretion
agrees before a Transaction that Seller may enter into such Transaction as agent
for a principal and under terms and conditions disclosed to Buyer.
Section
8.02 Compliance with Laws and
Repurchase Documents. Seller shall comply in all material
respects with all Requirements of Laws, including those relating to any
Purchased Asset and to the reporting and payment of taxes. No part of
the proceeds of any Transaction shall be used for any purpose that violates
Regulation T, U or X of the Board of Governors of the Federal Reserve
System. Seller shall maintain the Custodial Agreement in full force
and effect. Seller shall not directly or indirectly enter into any
agreement that would be violated or breached by any Transaction or the
performance by Seller of any Repurchase Document.
Section
8.03 Structural
Changes. Seller shall not enter into merger or consolidation,
or liquidate, wind up or dissolve, or sell all or substantially all of its
assets or properties in one transaction or a series of related transactions, or
permit any changes in the ownership of its Equity Interests, without the consent
of Buyer in its discretion. Seller shall ensure that all Equity
Interests of Seller shall continue to be owned by the owner or owners thereof as
of the date hereof. Seller shall ensure that neither the Equity
Interests of Seller nor any property or assets of Seller shall be pledged to any
Person other than Buyer other than pursuant to transactions conducted in the
ordinary course of Seller’s business. Seller and Guarantor shall
comply in all material respects with (i) the Audit Committee Charter of
Guarantor, as approved by the Board of Directors of Guarantor on November 16,
2009, as such charter may be amended from time to time; provided that Seller
or Guarantor shall provide Buyer with notice of such amendments and no such
amendment shall have a Material Adverse Effect and (ii) the rules and
regulations of the NYSE Amex or any other stock exchange on which Guarantor’s
Equity Interests are listed.
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Section
8.04 Protection of Buyer’s
Interest in Purchased Assets. With respect to each Purchased
Asset, Seller shall take all action necessary or required by the Repurchase
Documents, Records (which it has sufficient rights to grant a security interest
or transferred to Buyer or Custodian) or Requirements of Law, or reasonably
requested by Buyer, to perfect, protect and more fully evidence the security
interest granted in the Purchase Agreements and Buyer’s ownership of and first
priority perfected security interest in such Purchased Asset, including
executing or causing to be executed such other instruments or notices as may be
necessary or appropriate and filing and maintaining effective UCC financing
statements, continuation statements and assignments and amendments thereto, it
being understood Buyer shall file the initial UCC filing. Seller
shall (a) not assign, sell, transfer, pledge, hypothecate, grant, create,
incur, assume or suffer or permit to exist any security interest in or Lien
(other than Permitted Liens) on any Purchased Asset to or in favor of any Person
other than Buyer, (b) defend such Purchased Asset against, and take such
action as is necessary to remove, any such Lien, and (c) defend the right,
title and interest of Buyer in and to all Purchased Assets against the claims
and demands of all Persons whomsoever. Notwithstanding the foregoing,
if Seller grants a Lien on any Purchased Asset in violation of this Section 8.04 or any other
Repurchase Document, Seller shall be deemed to have simultaneously granted an
equal and ratable Lien on such Purchased Asset in favor of Buyer to the extent
such Lien has not already been granted to Buyer; provided, that such
equal and ratable Lien shall not cure any resulting Event of
Default. Seller shall not materially amend, modify, waive or
terminate any provision of any Purchase Agreement, if any. Seller
shall xxxx its computer records and tapes to evidence the interests granted to
Buyer hereunder. Seller shall not take any action to cause any
Purchased Asset that is not evidenced by an instrument or chattel paper (as
defined in the UCC) to be so evidenced. If a Purchased Asset becomes
evidenced by an instrument or chattel paper, the same shall be immediately
delivered to Custodian on behalf of Buyer, together with endorsements required
by Buyer in its discretion.
Section
8.05 Actions of Seller Relating
to Distributions, Indebtedness, Guarantee Obligations, Contractual Obligations,
Investments and Liens. Upon the occurrence and continuance of
an Event of Default, Seller shall not declare or make any payment on account of,
or set apart assets for, a sinking or similar fund for the purchase, redemption,
defeasance, retirement or other acquisition of any Equity Interest of Seller,
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 Seller; provided, however, that nothing
in this Section 8.05 shall prevent or otherwise limit Seller from declaring
dividends or paying distributions on its Equity Interests necessary or required
for Guarantor to pay its expenses and so that Guarantor can declare dividends to
qualify as a “real estate investment trust” under Section 856 of the
Code. Upon the occurrence and continuance of an Event of Default,
Seller shall not incur, assume or permit further Indebtedness, Guarantee
Obligations, Contractual Obligations or Investments. Seller shall not
(a) contract, create, incur, assume or permit to exist any Lien on or with
respect to any of the Purchased Assets, whether now owned or hereafter acquired,
except for Permitted Liens, or (b) except as provided in the preceding clause
(a), grant, allow or enter into any agreement or arrangement with any Person
that prohibits or restricts or purports to prohibit or restrict the granting of
any Lien on any of the Purchased Assets.
Section
8.06 Maintenance of Property,
Insurance and Records. Seller shall (a) keep all property
useful and necessary in its business in good working order and condition,
(b) maintain insurance (or shall be covered by policies maintained by
PRCMLP and its Affiliates) on all its properties in accordance with customary
and prudent practices of companies engaged in the same or a similar business,
and (c) furnish to Buyer upon request information and certificates with
respect to such insurance. Seller shall maintain and implement
administrative and operating procedures (including the ability to recreate
records evidencing the Purchased Assets if the original records are destroyed)
and shall keep and maintain all documents, books, records and other information
(including with respect to the Purchased Assets) that are reasonably necessary
or advisable in the conduct of its business.
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Section 8.07 [Reserved].
Section
8.08 Delivery of
Income. Seller shall cause all other applicable Persons to
deposit all Income in respect of the Purchased Assets into the Collection
Account on the day the related payments are due. Seller
(a) shall comply with and enforce each Irrevocable Redirection Notice,
(b) shall not amend, modify, waive, terminate or revoke any Irrevocable
Redirection Notice without Buyer’s consent in its discretion, and (c) shall
take all reasonable steps to enforce each Irrevocable Redirection
Notice. In connection with each principal payment or prepayment under
a Purchased Asset, Seller shall provide or cause to be provided to Buyer and
Custodian sufficient detail to enable Buyer and Custodian to identify the
Purchased Asset to which such payment applies. If Seller receives any
rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any Purchased Assets, or otherwise in respect thereof, Seller shall
accept the same as Buyer’s agent, hold the same in trust for Buyer and
immediately deliver the same to Buyer or its designee in the exact form
received, together with duly executed instruments of transfer, stock powers or
assignment in blank and such other documentation as Buyer shall reasonably
request. If any Income is received by Seller, Guarantor or any of
their respective Affiliates, Seller shall pay or deliver such Income to Buyer or
Custodian on behalf of Buyer within two (2) Business Days after receipt,
and, until so paid or delivered, hold such Income in trust for Buyer, segregated
from other funds of Seller.
Section
8.09 Delivery of Financial
Statements and Other Information. Seller shall deliver the
following to Buyer, as soon as available and in any event within the time
periods specified:
(a) within
forty-five (45) days after the end of each fiscal quarter and each fiscal year
of Seller and Guarantor, (i) the unaudited consolidated balance sheet of
Guarantor and the unaudited balance sheet of Seller, each as at the end of such
period, (ii) the related unaudited consolidated statements of income,
stockholders’ equity and cash flows for such period and the portion of the
fiscal year through the end of such period, setting forth in each case in
comparative form the figures for the previous year (such unaudited financial
statements may omit footnotes in the case of Guarantor’s fourth fiscal quarter)
(and the same unconsolidated information with respect to Seller which may also
omit footnotes for all quarters), and (iii) a Compliance
Certificate;
(b) within
ninety (90) days after the end of each fiscal year of Guarantor, (i) the
audited consolidated balance sheets of Guarantor as at the end of such fiscal
year, (ii) the related consolidated statements of income, stockholders’
equity and cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, (iii) 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 financial
condition and results of operations of Guarantor as at the end of and for such
fiscal year in accordance with GAAP, (iv) [reserved] and (v) a
Compliance Certificate;
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(c) all
reports submitted to Seller or Guarantor by independent certified public
accountants in connection with each annual, interim or special audit of the
books and records of Seller made by such accountants, including any management
letter commenting on Seller’s or Guarantor’s internal
controls;
(d) [Reserved];
(e) all
reports, filings and other documents that Guarantor sends to parties on
Guarantor’s electronic distribution list for filings with the Securities and
Exchange Commission which shall be transmitted to Buyer by e-mail to the
following address: XXX-XxxxxxxxXxxxxxx-Xxxxxxx@xxxx.xxx or such other
address as Buyer may provide Seller from time to time;
(f) within
fifteen (15) days after the end of each month, a report containing
Guarantor’s estimated Net Asset Value and estimated Net Asset Value per share,
including the calculation thereof, and its most recent monthly report of
performance, in each case for the immediately preceding calendar
month;
(g) [Reserved];
(h)
[Reserved];
(i) [Reserved];
(j) promptly
upon reasonable request by Buyer, information regarding Seller’s portfolio
including information regarding asset allocation, leverage, liquidity and
measure of portfolio risk and such other information respecting the condition or
operation (financial or otherwise) of Seller; and
(k) such
other information regarding the financial condition, operations or business of
Seller as Buyer may reasonably request.
Section
8.10 Delivery of
Notices. Seller shall immediately notify Buyer of the
occurrence of any of the following of which Seller has knowledge, and, other
than with respect to clauses (d) and (e) below, provide a
certificate of a Responsible Officer of Seller setting forth details of such
occurrence and any action Seller has taken or proposes to take with respect
thereto:
(a) a
Representation Breach;
(b) any
of the following: (i) with respect to any Purchased Asset: material loss,
violation of Requirements of Law, or any other actual or expected event or
change in circumstances that could reasonably be expected to result in a
material decline in value or cash flow, and (ii) with respect to Seller:
violation of Requirements of Law, material decline in the value of Seller’s
assets or properties, in the aggregate, an Internal Control Event or other event
or circumstance that could reasonably be expected to have a Material Adverse
Effect;
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(c) the
existence of any Default or Event of Default, Indebtedness, Guarantee Obligation
or Contractual Obligation of Seller;
(d) the
resignation or termination of any Servicer, of which Seller has knowledge, under
any Servicing Agreement with respect to any Purchased Asset;
(e) the
establishment of a rating by any Rating Agency applicable to Seller or any
Affiliate of Seller and any downgrade in or withdrawal of such rating once
established;
(f) the
commencement of, settlement of or material judgment in any litigation, action,
suit, arbitration, investigation or other legal or arbitrable proceedings before
any Governmental Authority that (i) affects Seller or any Affiliate of
Seller or Purchased Asset (but not with respect to underlying mortgage loans
associated with a Purchased Asset), (ii) questions or challenges the
validity or enforceability of any Repurchase Document, Transaction or Purchased
Asset, or (iii) individually or in the aggregate, if adversely determined,
could reasonably be likely to have a Material Adverse Effect.
Section 8.11 [Reserved].
Section 8.12 [Reserved].
Section
8.13 Guaranty
Agreement. If at any time (a) the obligations of the Guarantor
under the Guaranty Agreement shall cease to be in effect, (b) any Insolvency
Event has occurred with respect to the Guarantor, or (c) any breach of a
representation, warranty or covenant, under the Guaranty Agreement (any of the
foregoing events, a “Guaranty Default”),
then, within one (1) Business Day after the occurrence of any such Guaranty
Default, Seller shall cause a replacement guarantor acceptable to Buyer in its
discretion assume in writing all obligations of Guarantor under the Guaranty
Agreement.
Section
8.14 Margin Calls under other
Agreements. In the event of a margin call (however defined or
described in the applicable underlying Indebtedness documents) or other similar
request is made by a lender or buyer upon the Seller or Guarantor pursuant to
another facility to post additional cash or assets in connection with any
Indebtedness and the sum of all such margin calls or other similar requests made
or outstanding on (i) such day is equal to or greater than eight percent (8%) of
the Net Asset Value of Guarantor or (ii) such day or during the previous five
(5) Business Day period in the aggregate (such period to include such date of
determination) is equal to or greater than twenty-four percent (24%) of the Net
Asset Value of Guarantor, the Seller shall promptly (and in no event later than
two (2) Business Days after any such margin call or request) provide the Buyer
notice of any such margin call or request which details (A) the amount of such
margin call, (B) the time period for such margin call to be satisfied, (C)
whether cash or other assets were used to satisfy the margin call and (D) the
name of the facility.
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Section
8.15 Unrestricted
Cash. At all times on and after the initial Transaction,
Guarantor shall maintain at least $15,000,000 in unrestricted cash or cash
equivalents in an account or accounts maintained by Guarantor or its
Subsidiaries at Buyer or any other financial institution where such account or
accounts are not subject to control by a financial institution where Guarantor
or its Subsidiaries have aggregate Indebtedness of more than
$1,000,000.
ARTICLE 9
[RESERVED]
ARTICLE 10
EVENTS
OF DEFAULT AND REMEDIES
Section
10.01 Events of
Default. Each of the following events shall be an “Event of
Default”:
(a) Seller
fails to make a payment of (i) Margin Deficit or Repurchase Price (other
than Price Differential) when due, whether by acceleration or otherwise,
(ii) Price Differential within one (1) Business Day of when due, or
(iii) any other amount within two (2) Business Days of when due, in
each case under the Repurchase Documents;
(b) Seller
fails to observe or perform in any material respect any other Repurchase
Obligation of Seller under the Repurchase Documents to which Seller is a party,
and (except in the case of a failure to perform or observe the Repurchase
Obligations of Seller under Section 8.04 and 18.08(a)) such
failure continues unremedied for five (5) Business Days after the earlier
of receipt of notice thereof from Buyer or the discovery of such failure by
Seller;
(c) (i)
a breach of Sections
7.03, 7.04, 7.05, 7.06, 7.07, 7.08, 8.02, 8.03, 8.09 (other than
Sections
8.09(a) and (b)), 8.13 or 8.14 exists and
continues unremedied for (1) Business Day after the earlier of receipt of notice
thereof from Buyer or the discovery of such failure by Seller, (ii) a breach of
Sections
8.09(a) or (b) exists and
continues unremedied for two (2) Business Days, or (iii) any other
Representation Breach (excluding the representation and warranties set forth on
Schedule 1) or covenant breach exists and continues unremedied for five (5)
Business Days after the earlier of receipt of notice thereof from Buyer or the
discovery of such failure by Seller;
(d) Seller
defaults beyond any applicable grace period in paying any amount or performing
any obligation under any Indebtedness, Guarantee Obligation or Contractual
Obligation with an outstanding amount of at least $2,500,000 in the aggregate,
and the effect of such default is to permit the acceleration thereof (regardless
of whether such default is waived or such acceleration occurs);
(e) Seller
or any Affiliate of Seller defaults beyond any applicable grace period in paying
any amount or performing any obligation due to Buyer or any Affiliate of Buyer
under any other financing, hedging, security or other agreement between Seller
or any Affiliate of Seller and Buyer or any Affiliate of Buyer;
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(f) an
Insolvency Event occurs with respect to Seller;
(g) an
Insolvency Event occurs with respect to an Affiliate of Seller;
(h) Guarantor
ceases to beneficially own 100% of the Equity Interests of Seller;
(i) a
final judgment or judgments for the payment of money in excess of $2,500,000 in
the aggregate that is not insured against is entered against Seller by one or
more Governmental Authorities and the same is not satisfied, discharged (or
provision has not been made for such discharge) or bonded, or a stay of
execution thereof has not been procured, within thirty (30) days from the
date of entry thereof;
(j) a
Governmental Authority takes any action to (i) condemn, seize or
appropriate, or assume custody or control of, all or any substantial part of the
property of Seller, (ii) displace the management of Seller or curtail its
authority in the conduct of the business of Seller, (iii) terminate the
activities of Seller as contemplated by the Repurchase Documents, or
(iv) remove, limit or restrict the approval of Seller of the foregoing as
an issuer, buyer or a seller of securities, and in each case such action is not
discontinued or stayed within thirty (30) days;
(k) Seller
admits that it is not Solvent or is not able or not willing to perform any of
its Repurchase Obligations, Contractual Obligations, Guarantee Obligations,
Capital Lease Obligations or Off-Balance Sheet Obligations;
(l) any
provision of the Repurchase Documents, any right or remedy of Buyer or
obligation, covenant, agreement or duty of Seller thereunder, or any Lien,
security interest or control granted under or in connection with the Repurchase
Documents or Purchased Assets terminates (other than by its terms), is declared
null and void, ceases to be valid and effective, ceases to be the legal, valid,
binding and enforceable obligation of Seller or any other Person, or the
validity, effectiveness, binding nature or enforceability thereof is contested,
challenged, denied or repudiated by Seller or any other Person, in each case
directly, indirectly, in whole or in part;
(m) Buyer
ceases for any reason to have a valid and perfected first priority security
interest in any Purchased Asset;
(n) Seller
is required to register as an “investment company” (as defined in the Investment
Company Act) or the arrangements contemplated by the Repurchase Documents shall
require registration of Seller as an “investment company”;
(o) [Reserved];
(p) Seller
fails to deposit, or fails to direct a third-party to deposit, to the Collection
Account all Income and other amounts as required by Section 5.01 and other
provisions of this Agreement within two (2) Business Days of when
due;
(q) Guarantor’s
audited annual financial statements or the notes thereto or other opinions or
conclusions stated therein are qualified or limited by reference to the status
of Guarantor or Seller as a “going concern” or a reference of similar import,
other than a qualification or limitation expressly related to Buyer’s rights in
the Purchased Assets;
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(r) if
either (A) the Investment Manager ceases to be the investment manager of Seller,
(B) the Investment Manager becomes, in the reasonable opinion of Buyer,
incapable of performing its duties as investment manager of Seller, (C) Seller
appoints a new investment manager or the investment manager otherwise fails to
act on behalf of Seller in principally the same or similar capacity as that held
as of Closing Date or (D) an Insolvency Event occurs with respect to the
Investment Manager and, in each case, Seller fails to (i) immediately notify the
Buyer in writing and (ii) appoint within ten (10) Business Days another
investment manager reasonably satisfactory to Buyer;
(s) a
Guaranty Default;
(t) any
condition or circumstance exists which causes, constitutes or is reasonably
likely to cause or constitute a Material Adverse Effect, as determined by Buyer
in its discretion;
(u) any
of the Seller’s Governing Documents are terminated or cease to be in full force
and effect, or there is a change to or modification of Seller’s Governing
Documents, investment policies or guidelines or the nature of Seller’s business
and, in each case, such event has had or will have, a Material Adverse Effect on
Seller, the creditworthiness of Seller or the ability of Seller to perform its
obligations under the Repurchase Documents, as determined by Buyer in its
discretion; or
(v) Two
Harbors Investment Corp. ceases to be the Guarantor.
Section
10.02 Remedies of Buyer as Owner
of the Purchased Assets. If an Event of Default exists, at the
option of Buyer, exercised by notice to Seller, the Repurchase Date for all
Purchased Assets shall be deemed automatically and immediately to occur (the
date on which such option is exercised or deemed to be exercised, the “Accelerated Repurchase
Date”). If Buyer exercises or is deemed to have exercised the
foregoing option:
(a) All
Repurchase Obligations shall become immediately due and payable on and as of the
Accelerated Repurchase Date.
(b) All
amounts in the Collection Account and all Income paid after the Accelerated
Repurchase Date shall be retained by Buyer and applied in accordance with Article 5.
(c) Buyer
may complete any assignments, allonges, endorsements, powers or other documents
or instruments executed in blank and otherwise obtain physical possession of all
Records then held by Custodian under the Custodial Agreement. Buyer
may obtain physical possession of all Records of Seller. Seller shall
deliver to Buyer such assignments and other documents with respect thereto as
Buyer shall request.
(d) Buyer
may in its discretion immediately, at any time and from time to time, exercise
either of the following remedies with respect to any or all of the Purchased
Assets: (i) sell such Purchased Assets without providing any
representations and warranties on an “as-is where is” basis in a recognized
market and by means of a public or private sale at such price or prices as Buyer
accepts in its discretion, and apply the net proceeds thereof in accordance with
Article 5, or (ii) retain
such Purchased Assets and give Seller credit against the Repurchase Price for
such Purchased Assets (or if the amount of such credit exceeds the Repurchase
Price for such Purchased Assets, credit against other Repurchase Obligations due
and any other amounts then owing to Buyer by any other Person pursuant to any
Repurchase Document, in such order and in such amounts as determined by Buyer in
its discretion), in an amount equal to the Market Value of such Purchased
Assets. Until such time as Buyer exercises either such remedy with
respect to a Purchased Asset, Buyer may hold such Purchased Asset for its own
account and retain all Income with respect thereto.
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(e) Buyer
shall not be required to sell more than one Purchased Asset on a particular
Business Day, to the same purchaser or in the same manner. Buyer may
determine in its discretion whether, when and in what manner a Purchased Asset
shall be sold, it being agreed that both a good faith public and a good faith
private sale shall be deemed to be commercially reasonable. Buyer
shall not be required to give notice to Seller or any other Person prior to
exercising any remedy in respect of an Event of Default. If no prior
notice is given, Buyer shall give notice to Seller of the remedies exercised by
Buyer promptly thereafter. Buyer shall act in good faith in
exercising its rights and remedies under this Article 10.
(f) Seller
shall be liable to Buyer for (i) any amount by which the Repurchase Obligations
due to Buyer exceed the aggregate of the net proceeds and credits referred to in
the preceding clause
(d), (ii) the amount of all actual out-of-pocket expenses, including
reasonable legal fees and expenses, actually incurred by Buyer in connection
with or as a consequence of an Event of Default, (iii) any costs and losses
incurred in connection with terminating, liquidating, obtaining or
reestablishing any hedging, trading or covering transactions, and (iv) any other
actual loss, damage, cost or expense resulting from the occurrence of an Event
of Default.
(g) Buyer
shall be entitled to seek an injunction, an order of specific performance or
other equitable relief to compel Seller to fulfill any of its obligations as set
forth in the Repurchase Documents, including this Article 10, if Seller fails
or refuses to perform its obligations as set forth herein or
therein.
(h) Seller
hereby appoints Buyer as attorney-in-fact of Seller for purposes of carrying out
the Repurchase Documents, including executing, endorsing and recording any
instruments or documents and taking any other actions that Buyer deems necessary
or advisable to accomplish such purposes, which appointment is coupled with an
interest and is irrevocable.
(i) Buyer
may, without prior notice to Seller, (i) terminate this Agreement and (ii)
exercise any or all of its set-off rights including those set forth in Section 18.17. This
Section 10.02(i) shall be
without prejudice and in addition to any right of set-off, combination of
accounts, Lien or other rights to which any Party is at any time otherwise
entitled.
(j) All
rights and remedies of Buyer under the Repurchase Documents, including those set
forth in Section 18.17, are cumulative
and not exclusive of any other rights or remedies which Buyer may have and may
be exercised at any time when an Event of Default exists. Such rights
and remedies may be enforced without prior judicial process or
hearing. Seller agrees 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. Seller hereby expressly waives
any defenses Seller might have to require Buyer to enforce its rights by
judicial process or otherwise arising from the use of nonjudicial process,
disposition of any or all of the Purchased Assets, or any other election of
remedies.
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ARTICLE 11
SECURITY
INTEREST
Section
11.01 Grant. Buyer
and Seller intend that all Transactions shall be sales to Buyer of the Purchased
Assets and not loans from Buyer to Seller secured by the Purchased Assets for
all purposes other than U.S. federal income tax purposes. However, to
preserve and protect Buyer’s rights with respect to the Purchased Assets and
under the Repurchase Documents in the event that any Governmental Authority
recharacterizes the Transactions as other than sales, and as security for
Seller’s performance of the Repurchase Obligations, Seller hereby grants to
Buyer a Lien on and security interest in all of the right, title and interest of
Seller in, to and under the Purchased Assets (which for this purpose shall be
deemed to include the items described in the proviso in the
definition thereof), and the transfers of the Purchased Assets to Buyer shall be
deemed to constitute and confirm such grant, to secure the payment and
performance of the Repurchase Obligations (including the obligation of Seller to
pay the Repurchase Price, or if the Transactions are recharacterized as loans,
to repay such loans for the Repurchase Price).
Section
11.02 Effect of
Grant. If a recharacterization described in Section 11.01 occurs,
(a) this Agreement shall also be deemed to be a security agreement as
defined in the UCC, (b) Buyer shall have all of the rights and remedies
provided to a secured party by Requirements of Law (including the rights and
remedies of a secured party under the UCC and the right to set off any mutual
debt and claim) and under any other agreement between Buyer and Seller,
(c) without limiting the generality of the foregoing, Buyer shall be
entitled to set off the proceeds of the liquidation of the Purchased Assets
against all of the Repurchase Obligations, without prejudice to Buyer’s right to
recover any deficiency, (d) the possession by Buyer or any of its agents,
including Custodian, of the Records in which Seller has sufficient rights to
grant a security interest, the Purchased Assets and such other items of property
as constitute instruments, money, negotiable documents, securities or chattel
paper shall be deemed to be possession by the secured party for purposes of
perfecting such security interest under the UCC and Requirements of Law, and
(e) notifications to Persons (other than Buyer) holding such property, and
acknowledgments, receipts or confirmations from Persons (other than Buyer)
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, securities intermediaries, bailees or agents (as
applicable) of the secured party for the purpose of perfecting such security
interest under the UCC and Requirements of Law. The security interest
of Buyer granted herein shall be, and Seller hereby represents and warrants to
Buyer that it is, a first priority perfected security interest. For
the avoidance of doubt, (i) each Purchased Asset secures the Repurchase
Obligations of Seller with respect to all other Transactions and all other
Purchased Assets, including any Purchased Assets that are junior in priority to
the Purchased Asset in question, and (ii) if an Event of Default exists, no
Purchased Asset relating to a Purchased Asset will be released from Buyer’s Lien
or transferred to Seller until the Repurchase Obligations are indefeasibly paid
in full. Notwithstanding the foregoing, the Repurchase Obligations
shall be full recourse to Seller.
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Section
11.03 Seller to Remain
Liable. The grant of a security interest under this Article 11 shall not
constitute or result in the creation or assumption by Buyer of obligation of
Seller or any other Person in connection with any Purchased Asset whether or not
Buyer exercises any right with respect thereto. Seller shall remain
liable under the Purchased Assets to perform all of Seller’s duties and
obligations thereunder to the same extent as if the Repurchase Documents had not
been executed.
Section
11.04 Waiver of Certain
Laws. Seller agrees, to the extent permitted
by Requirements of Law, that neither it nor anyone claiming through
or under it will set up, claim or seek to take advantage of any appraisement,
valuation, stay, extension or redemption law now or hereafter in force in any
locality where any Purchased Assets may be situated in order to prevent, hinder
or delay the enforcement or foreclosure of this Agreement, or the absolute sale
of any of the Purchased Assets the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and Seller, for
itself and all who may at any time claim through or under it, hereby waives, to
the full extent that it may be lawful so to do, the benefit of all such laws and
any and all right to have any of the properties or assets constituting the
Purchased Assets marshaled upon any such sale, and agrees that Buyer or any
court having jurisdiction to foreclose the security interests granted in this
Agreement may sell the Purchased Assets as an entirety or in such parcels as
Buyer or such court may determine.
ARTICLE 12
INCREASED
COSTS; CAPITAL ADEQUACY
Section
12.01 Market
Disruption. If prior to any Pricing Period, Buyer determines
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such Pricing
Period, Buyer shall give prompt notice thereof to Seller, whereupon the Pricing
Rate for such Pricing Period, and for all subsequent Pricing Periods until such
notice has been withdrawn by Buyer, shall be the Alternative Rate.
Section
12.02 Illegality. If
the adoption of or any change in any Requirements of Law or in the
interpretation or application thereof after the date hereof shall make it
unlawful for Buyer to effect or continue Transactions as contemplated by the
Repurchase Documents, (a) any commitment of Buyer hereunder to enter into
new Transactions shall be terminated, (b) the Pricing Rate shall be
converted automatically to the Alternative Rate on the last day of the then
current Pricing Period or within such earlier period as may be required by
Requirements of Law, and (c) if required by such adoption or change, the
Maturity Date shall be deemed to have occurred.
Section
12.03 Breakfunding. Seller
shall indemnify Buyer and hold Buyer harmless from any loss, cost or expense
(including legal fees and expenses) which Buyer may sustain or incur arising
from (a) the failure by Seller to terminate any Transaction after Seller
has given a notice of termination pursuant to Section 3.05, (b) any
payment to Buyer on account of the outstanding Repurchase Price, including a
payment made pursuant to Section 3.05 but excluding a
payment made pursuant to Section 5.02, on any day
other than a Remittance Date (based on the assumption that Buyer funded its
commitment with respect to the Transaction in the London Interbank Eurodollar
market and using any reasonable attribution or averaging methods in Buyer’s
discretion and, upon request by Seller, Buyer shall provide Seller with the
underlying calculation method used for such attribution or averaging),
(c) any failure by Seller to sell Eligible Assets to Buyer after Seller and
Buyer have agreed to the definitive terms of the applicable Transaction in
accordance with this Agreement, or (d) any conversion of the Pricing Rate
to the Alternative Rate because the LIBO Rate is not available for any reason on
a day which is not the last day of the then current Pricing
Period. Notwithstanding the foregoing, in no event shall any amounts
be payable under this Section 12.03 in
connection with any voluntary and contractually permissible repurchase by Seller
of a Purchased Asset from Buyer.
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Section
12.04 Increased
Costs. If the adoption of or any change in any Requirements of
Law or in the interpretation or application thereof by any Governmental
Authority 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
having jurisdiction over Buyer made after the date of this Agreement
(a) shall subject Buyer to any tax of any kind whatsoever with respect to
the Repurchase Documents, any Purchased Asset or any Transaction, or change the
basis of taxation of payments to Buyer in respect thereof (except for income
taxes and any changes in the rate of tax on Buyer’s overall net income),
(b) shall impose, modify or hold applicable any increase in reserve,
special deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
Buyer, or (c) shall impose on Buyer any other condition; and the result of
any of the preceding clauses (a),
(b)
and (c) is
to increase the cost to Buyer, by an amount which Buyer deems to be material, of
entering into, continuing or maintaining Transactions, or to reduce any amount
receivable under the Repurchase Documents in respect thereof, then, in any such
case, Seller shall pay to Buyer such additional amount or amounts as reasonably
necessary to fully compensate Buyer for such increased cost or reduced amount
receivable. Upon written notice to Seller of any change or event
pursuant to which additional amounts are due or to become due under this Section 12.04, Seller
shall (a) pay all additional amounts due under this Section 12.04 which
are incurred or accrue beginning thirty (30) days following such written notice
or (b) repurchase all of the Purchased Assets in accordance with Section 3.06 prior to
thirty (30) days following such written notice.
Section
12.05 Capital
Adequacy. If Buyer determines that the adoption of or any
change in any Requirements of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Buyer or any corporation
Controlling Buyer with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
after the date of this Agreement has or 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 in its discretion to be material, then,
in any such case, Seller shall pay to Buyer such additional amount or amounts as
reasonably necessary to fully compensate Buyer for such
reduction. Upon written notice to Seller of any change or event
pursuant to which additional amounts are due or to become due under this Section 12.05, Seller
shall (a) pay all additional amounts due under this Section 12.05 which
are incurred or accrue beginning thirty (30) days following such written notice
or (b) repurchase all of the Purchased Assets in accordance with Section 3.06 prior to
thirty (30) days following such written notice.
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Section
12.06 Withholding
Taxes.
(a) All
payments made by Seller to Buyer or any other Indemnified Person under the
Repurchase Documents and by Underlying Obligors with respect to the Purchased
Assets shall be made free and clear of and without deduction or withholding for
or on account of any taxes. If any taxes are required to be withheld
from any amounts payable to Buyer and/or any other Indemnified Person, then the
amount payable to such Person will be increased (such increase, the “Additional Amount”)
such that every net payment made under this Agreement after withholding for or
on account of any taxes (including any taxes on such increase) is not less than
the amount that would have been paid absent such deduction or withholding; provided, however, that Seller
shall not be required to pay any Additional Amount to any Eligible Assignee that
is a Non-U.S. Person (as defined in Section 12.06(b)
below) if Buyer or such Person fails to comply with Section
12.06(b). The foregoing obligation to pay Additional Amounts,
however, will not apply with respect to net income or franchise taxes imposed on
Buyer and/or any other Indemnified Person, with respect to payments required to
be made by Seller under the Repurchase Documents, by a taxing jurisdiction in
which Buyer and/or any other Indemnified Person is organized, conducts business
or is paying taxes (as the case may be). Promptly after Seller pays
any taxes referred to in this Section 12.06, Seller will
send Buyer appropriate evidence of such payment.
(b) If
a Person acquires any of the rights and obligations of Buyer as an Eligible
Assignee under this Agreement, and such Person is not organized under the laws
of the United States, any state thereof or the District of Columbia (a “Non−U.S.
Person”), such Non−U.S. Person shall deliver to Seller on or before the date on
which such Person becomes a party to this Agreement, two duly completed and
executed copies of, as applicable, IRS Form W−8BEN, IRS Form W-8IMY or IRS Form
W−8ECI or substitute statement or any successor forms thereto. If the
Non−U.S. Person is eligible for and for and wishes to claim an exemption for or
reduction in U.S. federal withholding tax through the benefit of a treaty, such
Person shall deliver a Form W−8BEN with Part II completed. If the
Non−U.S. Person is eligible for and wishes to claim exemption from U.S. federal
withholding tax under Section 871(h) or Section 881(c) of the Code with respect
to payments of “portfolio interest,” such Person shall deliver both the Form
W−8BEN and a statement certifying that such Person is not a bank, a “10 percent
shareholder” or a “controlled foreign corporation” within the meaning of Section
881(c)(3) of the Code. If any previously delivered form or statement
becomes inaccurate with respect to such Non−U.S. Person, the Non−U.S. Person
shall promptly notify Seller.
Section
12.07 Payment and Survival of
Obligations. Buyer may at any time send Seller a notice
showing the calculation of any amounts payable pursuant to this Article 12, and Seller shall
pay such amounts to Buyer within ten (10) Business Days after Seller
receives such notice. The obligations of Seller under this Article 12 shall apply to
Eligible Assignees and Participants and survive the termination of the
Repurchase Documents.
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ARTICLE 13
INDEMNITY
AND EXPENSES
Section 13.01 Indemnity.
(a) Seller
shall release, defend, indemnify and hold harmless Buyer, Affiliates of Buyer
and its and their respective officers, directors, shareholders, partners,
members, owners, employees, agents, attorneys, Affiliates and advisors (each an
“Indemnified
Person” and collectively the “Indemnified
Persons”), on a net after-tax basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
taxes (other than income taxes of Buyer), fees, costs, expenses (including legal
fees and expenses), penalties or fines of any kind that may be imposed on,
incurred by or asserted against such Indemnified Person (collectively, the
“Indemnified
Amounts”) in any way relating to, arising out of or resulting from or in
connection with (i) the Repurchase Documents, the Records sold by Seller,
the Purchased Assets, the Transactions, or related property, or any action taken
or omitted to be taken by any Indemnified Person in connection with or under any
of the foregoing, or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of any Repurchase Document or Transaction, (ii) any claims, actions
or damages by an Underlying Obligor or lessee with respect to a Purchased Asset,
(iii) any violation or alleged violation of, non–compliance with or
liability under any Requirements of Law, (iv) ownership of, Liens on,
security interests in or the exercise of rights or remedies under any of the
items referred to in the preceding clause (i),
(v) any accident, injury to or death of any person or loss of or damage to
property occurring in, on or about any Underlying Mortgaged Property or on the
adjoining sidewalks, curbs, parking areas, streets or ways, (vi) any failure by
Seller to perform or comply with any Repurchase Document, Record or Purchased
Asset, (vii) any claim by brokers, finders or similar Persons claiming to
be entitled to a commission in connection with any lease or other transaction
involving any Repurchase Document, Purchased Asset or Underlying Mortgaged
Property, (viii) any taxes attributable to the execution, delivery, filing
or recording of any Repurchase Document, Record or any memorandum of any of the
foregoing, (ix) any Lien or claim arising on or against any Purchased Asset
or related Underlying Mortgaged Property under any Requirements of Law or any
liability asserted against Buyer or any Indemnified Person with respect thereto,
(x) the Term Sheet or any business communications or dealings between the
Parties relating thereto, or (xi) Seller’s conduct, activities, actions and/or
inactions in connection with, relating to or arising out of any of the foregoing
clauses of this Section 13.01, that, in each
case, results from anything whatsoever other than any Indemnified Person’s gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction pursuant to a final, non–appealable judgment. In any
suit, proceeding or action brought by an Indemnified Person in connection with
any Purchased Asset for any sum owing thereunder, or to enforce any provisions
of any Purchased Asset, Seller shall defend, indemnify and hold such Indemnified
Person harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the account debtor or Underlying Obligor arising out of a breach
by Seller 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 Underlying Obligor from Seller. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 13.01 applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by Seller, an Indemnified Person or any other Person or
any Indemnified Person is otherwise a party thereto and whether or not any
Transaction is entered into.
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(b) If
for any reason the indemnification provided in this Section 13.01 is unavailable
to the Indemnified Person or is insufficient to hold an Indemnified Person
harmless, even though such Indemnified Person is entitled to indemnification
under the express terms thereof, then Seller shall contribute to the amount paid
or payable by such Indemnified Person as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative benefits
received by such Indemnified Person on the one hand and Seller on the other
hand, the relative fault of such Indemnified Person, and any other
relevant equitable considerations.
(c) An
Indemnified Person may at any time send Seller a notice showing the calculation
of Indemnified Amounts, and Seller shall pay such Indemnified Amounts to such
Indemnified Person within ten (10) Business Days after Seller receives such
notice. The obligations of Seller under this Section 13.01 shall apply to
Eligible Assignees and Participants and survive the termination of this
Agreement.
Section
13.02 Expenses. Seller
shall promptly on demand pay to or as directed by Buyer all reasonable
third-party out-of-pocket costs and expenses (including legal, accounting and
advisory fees and expenses) incurred by Buyer in connection with (a) the
development, evaluation, preparation, negotiation, execution, consummation,
delivery and administration of, and any amendment, supplement or modification
to, or extension, renewal or waiver of, the Repurchase Documents and the
Transactions; provided, however, Buyer’s
legal fees incurred solely in connection with the initial drafting and
negotiation of the Repurchase Documents on or prior to the Closing Date shall be
capped at SEVENTY-FIVE THOUSAND DOLLARS ($75,000), (b) any Asset or
Purchased Asset, including due diligence (including travel expenses), recording,
registration, custody, insurance or preservation, with the total amount of such
reimbursable costs not to exceed $5,000 per calendar year, (c) the
enforcement of the Repurchase Documents or the payment or performance by Seller
of any Repurchase Obligations, and (d) any actual or attempted sale,
exchange, enforcement, collection, compromise or settlement relating to the
Purchased Assets.
ARTICLE 14
INTENT
Section
14.01 Intention of Parties with
respect to Transactions. The Parties intend (a) for each
Transaction to qualify for the safe harbor treatment provided by the Bankruptcy
Code and for Buyer to be entitled to all of the rights, benefits and protections
afforded to Persons under the Bankruptcy Code with respect to a “repurchase
agreement” as defined in Section 91(47) of the Bankruptcy Code and a
“securities contract” as defined in Section 741(7) of the Bankruptcy Code
and that payments under this Agreement are deemed “margin payments” or
“settlement payments,” as defined in Section 91 of the Bankruptcy Code,
(b) for the grant of a security interest set forth in Article 11 to also be a
“securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy
Code and a “repurchase agreement” as that term is defined in
Section 91(47)(A)(v) of the Bankruptcy Code, and (c) that Buyer (for
so long as Buyer is a “financial institution,” “financial participant” or other
entity listed in Section 555, 559 or 362(b)(6) of the Bankruptcy Code)
shall be entitled to the “safe harbor” benefits and protections afforded under
the Bankruptcy Code with respect to a “repurchase agreement” and a “securities
contract,” including (x) the rights, set forth in Article 10 and in
Section 555, 559 and 561 of the Bankruptcy Code, to liquidate the
Purchased Assets and terminate this Agreement, and (y) the right to offset
or net out as set forth in Article 10 and Section 18.17 and in
Section 362(b)(6) of the Bankruptcy Code.
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Section
14.02 Liquidation of Purchased
Assets. The Parties acknowledge and agree that
(a) Buyer’s right to liquidate Purchased Assets delivered to it in
connection with Transactions hereunder or to exercise any other remedies
pursuant to Articles 10 and 11 and as otherwise
provided in the Repurchase Documents is a contractual right to liquidate such
Transactions as described in Section 555, 559 and 561 of the Bankruptcy
Code.
Section
14.03 Insured Depository
Institution. The Parties acknowledge and agree that if a Party
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 assets subject to such Transaction would render such
definition inapplicable).
Section
14.04 Netting
Contract. The Parties acknowledge and agree that this
Agreement constitutes a “netting contract” as defined in and subject to
Title IV of the Federal Deposit Insurance Corporation Improvement Act of
1991 (“FDICIA”)
and each payment entitlement and payment obligation under any Transaction 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).
Section
14.05 Master Netting
Agreement. The Parties expressly represent, warrant,
acknowledge and agree that this Agreement constitutes a “master netting
agreement” as defined in Section 91(38A) of the Bankruptcy
Code.
Section
14.06 Tax Treatment of
Transactions. The Parties have entered into this Agreement
with the intention, and hereby agree, that solely for federal, state and local
income and franchise tax purposes, (i) the Transactions will be treated as
indebtedness of the Seller that is secured by the Purchased Assets and (ii)
prior to an Event of Default, the Purchased Assets will be treated as being
owned by the Seller. The Parties further agree not to take any action
inconsistent with the tax treatment provided in this Section 14.06 unless
otherwise required by applicable law in a proceeding of final
determination.
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ARTICLE 15
DISCLOSURE
RELATING TO CERTAIN FEDERAL PROTECTIONS
The
Parties acknowledge that they have been advised and understand
that:
(a) in
the case of Transactions in which one of the Parties is a broker or dealer
registered with the Securities and Exchange Commission under Section 14 of
the Securities Exchange Act of 1934, the Securities Investor Protection
Corporation has taken the position that the provisions of the Securities
Investor Protection Act of 1970 do not protect the other Party with respect to
any Transaction;
(b) in
the case of Transactions in which one of the Parties is a government securities
broker or a government securities dealer registered with the Securities and
Exchange Commission under Section 14C of the Securities Exchange Act of
1934, the Securities Investor Protection Act of 1970 will not provide protection
to the other Party with respect to any Transaction;
(c) in
the case of Transactions in which one of the Parties is a financial institution,
funds held by the financial institution pursuant to a Transaction are not a
deposit and therefore are not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Share Insurance Fund, as applicable;
and
(d) in
the case of Transactions in which one of the Parties is an “insured depository
institution” as that term is defined in Section 1813(c)(2) of Title 12
of the United States Code, funds held by the financial institution pursuant to a
Transaction are not a deposit and therefore are not insured by the Federal
Deposit Insurance Corporation, the Savings Association Insurance Fund or the
Bank Insurance Fund, as applicable.
ARTICLE 16
NO
RELIANCE
Each
Party acknowledges, represents and warrants to the other Party that, in
connection with the negotiation of, entering into, and performance under, the
Repurchase Documents and each Transaction:
(a) It
is not relying (for purposes of making any investment decision or otherwise) on
any advice, counsel or representations (whether written or oral) of the other
Party, other than the representations expressly set forth in the Repurchase
Documents;
(b) It
has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and it has made its own investment, hedging and trading decisions (including
decisions regarding the suitability of any Transaction) based on its own
judgment and on any advice from such advisors as it has deemed necessary and not
on any view expressed by the other Party;
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(c) It
is a sophisticated and informed Person that has a full understanding of all the
terms, conditions and risks (economic and otherwise) of the Repurchase Documents
and each Transaction and is capable of assuming and willing to assume
(financially and otherwise) those risks;
(d) It
is entering into the Repurchase Documents and each Transaction for the purposes
of managing its borrowings or investments or hedging its underlying assets or
liabilities and not for purposes of speculation;
(e) It
is not acting as a fiduciary or financial, investment or commodity trading
advisor for the other Party and has not given the other Party (directly or
indirectly through any other Person) any assurance, guaranty or representation
whatsoever as to the merits (either legal, regulatory, tax, business,
investment, financial accounting or otherwise) of the Repurchase Documents or
any Transaction; and
(f) No
partnership or joint venture exists or will exist as a result of the
Transactions or entering into and performing the Repurchase
Documents.
ARTICLE 17
[RESERVED]
ARTICLE 18
MISCELLANEOUS
Section
18.01 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Section
18.02 Submission to Jurisdiction;
Service of Process. Buyer irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the State of New York sitting in the Borough of Manhattan and of
the United States District Court of the Southern District of New York, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to the Repurchase Documents, or for recognition or enforcement of
any judgment, and each Party irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such State court or, to the fullest extent permitted by applicable law, in
such Federal court. Each Party agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement or the other Repurchase Documents
shall affect any right that Buyer may otherwise have to bring any action or
proceeding arising out of or relating to the Repurchase Documents against Buyer
or its properties in the courts of any jurisdiction. Buyer
irrevocably and unconditionally waives, to the fullest extent permitted by
Requirements of Law, any objection that it may now or hereafter have to the
laying of venue of any action or proceeding arising out of or relating to the
Repurchase Documents in any court referred to above, and the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. Each Party irrevocably consents to service of process in the
manner provided for notices in Section 18.12. Nothing
in this Agreement will affect the right of any party hereto to serve process in
any other manner permitted by applicable law.
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Section
18.03 IMPORTANT
WAIVERS.
(a) SELLER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO ASSERT A
COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING
BROUGHT AGAINST IT BY BUYER OR ANY INDEMNIFIED PERSON.
(b) TO
THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE BETWEEN THEM, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH OR RELATED TO THE REPURCHASE
DOCUMENTS, THE PURCHASED ASSETS, THE TRANSACTIONS, ANY DEALINGS OR COURSE OF
CONDUCT BETWEEN THEM, OR ANY STATEMENTS (WRITTEN OR ORAL) OR OTHER ACTIONS OF
EITHER PARTY. NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
(c) TO
THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, SELLER HEREBY WAIVES ANY RIGHT TO
CLAIM OR RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING ANY INDEMNIFIED PERSON,
ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED ON STATUTE, CONTRACT,
TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE LIKELIHOOD OF SUCH
DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION, INCLUDING
ANY CLAIM OR ACTION ALLEGING GROSS NEGLIGENCE, RECKLESS DISREGARD, WILLFUL OR
WONTON MISCONDUCT, FAILURE TO EXERCISE REASONABLE CARE OR FAILURE TO ACT IN GOOD
FAITH.
(d) SELLER
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BUYER OR AN INDEMNIFIED
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BUYER OR AN INDEMNIFIED
PERSON WOULD NOT SEEK TO ENFORCE ANY OF THE WAIVERS IN THIS SECTION 18.03 IN THE EVENT OF
LITIGATION OR OTHER CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS
INTENDED TO BE ALL–ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE REPURCHASE DOCUMENTS,
REGARDLESS OF THEIR LEGAL THEORY.
(e) EACH
PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 18.03 ARE A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS ALREADY
RELIED ON SUCH WAIVERS IN ENTERING INTO THE REPURCHASE DOCUMENTS, AND THAT SUCH
PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE DEALINGS
UNDER THE REPURCHASE DOCUMENTS. EACH PARTY FURTHER REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL AND OTHER RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
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(f) THE
WAIVERS IN THIS SECTION 18.03 ARE
IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY
OF THE REPURCHASE DOCUMENTS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(g) THE
PROVISIONS OF THIS SECTION 18.03 SHALL SURVIVE
TERMINATION OF THE REPURCHASE DOCUMENTS AND THE PAYMENT IN FULL OF THE
OBLIGATIONS.
Section
18.04 Integration. The
Repurchase Documents supersede and integrate all previous negotiations,
contracts, agreements and understandings (whether written or oral) between the
Parties relating to a sale and repurchase of Purchased Assets and the other
matters addressed by the Repurchase Documents, and contain the entire final
agreement of the Parties relating to the subject matter thereof.
Section
18.05 Single
Agreement. Seller agrees that (a) each Transaction is in
consideration of and in reliance on the fact that all Transactions constitute a
single business and contractual relationship, and that each Transaction has been
entered into in consideration of the other Transactions, (b) a default by
it in the payment or performance of any its obligations under a Transaction
shall constitute a default by it with respect to all Transactions,
(c) Buyer may set off claims and apply properties and assets held by or on
behalf of Buyer with respect to any Transaction against the Repurchase
Obligations owing to Buyer with respect to other Transactions, and
(d) payments, deliveries and other transfers made by or on behalf of Seller
with respect to any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfers with respect to all
Transactions, and the obligations of Seller to make any such payments,
deliveries and other transfers may be applied against each other and
netted.
Section
18.06 Use of Employee Plan
Assets. No assets of an employee benefit plan subject to any
provision of ERISA shall be used by either Party in a Transaction.
Section
18.07 Survival and Benefit of
Seller’s Agreements. The Repurchase Documents and all
Transactions shall be binding on and shall inure to the benefit of the Parties
and their successors and permitted assigns. All of Seller’s
representations, warranties, agreements and indemnities in the Repurchase
Documents shall survive the termination of the Repurchase Documents and the
payment in full of the Repurchase Obligations, and shall apply to and benefit
Eligible Assignees and Participants. No other Person shall be
entitled to any benefit, right, power, remedy or claim under the Repurchase
Documents.
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Section
18.08 Assignments and
Participations.
(a) Seller
shall not sell, assign or transfer any of its rights or the Repurchase
Obligations under this Agreement without the prior written consent of Buyer in
its discretion, and any attempt by Seller to do so without such consent shall be
null and void.
(b) Buyer
may at any time, without the consent of or notice to Seller, sell participations
to any Person (other than a natural person or Seller or any Affiliate of Seller)
(a “Participant”) in all
or any portion of Buyer’s rights and/or obligations under the Repurchase
Documents; provided, that
(i) Buyer’s obligations under the Repurchase Documents shall remain
unchanged, (ii) Buyer shall remain solely responsible to Seller for the
performance of such obligations, and (iii) Seller shall continue to deal
solely and directly with Buyer in connection with Buyer’s rights and obligations
under the Repurchase Documents. No Participant shall have any right
to approve any amendment, waiver or consent with respect to any Repurchase
Document, except to the extent that the Repurchase Price or Price Differential
of any Purchased Asset would be reduced or the Repurchase Date of any Purchased
Asset would be postponed. Each Participant shall be entitled to the
benefits of Article 12 to the same extent
as if it had acquired its interest by assignment pursuant to Section 18.08(c), but shall
not be entitled to receive any greater payment thereunder than Buyer would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with Seller’s prior written consent. To the extent permitted by
Requirements of Law, each Participant shall be entitled to the benefits of Sections 10.02(j) and 18.17 to the same
extent as if it had acquired its interest by assignment pursuant to Section 18.08(c).
(c) Buyer
may at any time, upon notice to Seller, sell and assign to any Eligible Assignee
all or any portion of all of the rights and obligations of Buyer under the
Repurchase Documents; provided that, so
long as no Event of Default has occurred and is continuing, Buyer shall give
Seller no less than thirty (30) calendar days prior notice of any sale or
assignment to any Eligible Assignee which is not an Affiliate of Buyer and has
not previously been consented to by Seller. Each such assignment
shall be made pursuant to an Assignment and Acceptance substantially in the form
of Exhibit F (an
“Assignment and
Acceptance”). From and after the effective date of such Assignment and
Acceptance, (i) such Eligible Assignee shall be a Party and, to the extent
provided therein, have the rights and obligations of Buyer under the Repurchase
Documents with respect to the percentage and amount of the Repurchase Price
allocated to it, (ii) Buyer shall, to the extent provided therein, be
released from such obligations (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of Buyer’s rights and obligations under
the Repurchase Documents, Buyer shall cease to be a Party), (iii) the
obligations of Buyer shall be deemed to be so reduced, and (iv) Buyer will
give prompt written notice thereof (including identification of the Eligible
Assignee and the amount of Repurchase Price allocated to it) to each Party (but
Buyer shall not have any liability for any failure to timely provide such
notice). Any sale or assignment by Buyer of rights or obligations
under the Repurchase Documents that does not comply with this Section 18.08(c) shall be
treated for purposes of the Repurchase Documents as a sale by such Buyer of a
participation in such rights and obligations in accordance with Section 18.08(b).
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(d) Seller
shall cooperate with Buyer in connection with any such sale and assignment of
participations or assignments and shall enter into such restatements of, and
amendments, supplements and other modifications to, the Repurchase Documents to
give effect to any such sale or assignment; provided, that none
of the foregoing shall change any economic or other material term of the
Repurchase Documents in a manner adverse to Seller without the consent of Seller
in its discretion.
Section
18.09 Ownership and Hypothecation
of Purchased Assets. Notwithstanding the intentions of Buyer
and Seller to treat all Transactions as secured financings for U.S. federal
income tax purposes, title to all Purchased Assets shall pass to and vest in
Buyer on the applicable Purchase Dates and, subject to the terms of the
Repurchase Documents, Buyer or its designee shall have free and unrestricted use
of all Purchased Assets and be entitled to exercise all rights, privileges and
options relating to the Purchased Assets as the owner thereof, including rights
of subscription, conversion, exchange, substitution, voting, consent and
approval, and to direct any servicer or trustee. Buyer or its
designee may engage in repurchase transactions with the Purchased Assets or
otherwise sell, pledge, repledge, transfer, hypothecate, or rehypothecate the
Purchased Assets, all on terms that Buyer may determine in its discretion; provided, that no
such transaction shall affect the obligations of Buyer to transfer the Purchased
Assets to Seller on the applicable Repurchase Dates free and clear of any
pledge, Lien, security interest, encumbrance, charge or other adverse
claim.
Section
18.10 Confidentiality. All
information regarding the terms set forth in any of the Repurchase Documents or
the Transactions, and the identities of the parties hereto, shall be kept
confidential and shall not be disclosed by either Party to any Person except
(a) to the Affiliates of such Party or its or their respective directors,
officers, employees, agents, advisors, underwriters, financing sources and other
representatives who are informed of the confidential nature of such information
and instructed to keep it confidential, (b) to the extent requested by any
regulatory authority or required by Requirements of Law, (c) to the extent
required to be included in the financial statements or filings with the
Securities and Exchange Commission of either Party or an Affiliate thereof;
provided, that
Guarantor shall (i) in connection with the closing of this Agreement provide
Buyer with copies of any such filing with the Securities and Exchange Commission
on Form 8-K at least three (3) days prior to filing such statement and (ii) use
its commercially reasonable efforts to provide Buyer with copies of any other
filings (other than Form 10-Q and Form 10-K) to be made with the Securities and
Exchange Commission at least one (1) day prior to filing such
statements, and in each case, Buyer shall have the right to provide comments in
its discretion, (d) to the extent required to exercise any rights or
remedies under the Repurchase Documents, Purchased Assets or Underlying
Mortgaged Properties, (e) to the extent required to consummate and
administer a Transaction, (f) to any actual or prospective Participant or
Eligible Assignee which agrees to comply with this Section 18.10; provided, that no
such disclosure made with respect to any Repurchase Document shall include a
copy of such Repurchase Document to the extent that a summary would suffice, but
if it is necessary for a copy of any Repurchase Document to be disclosed, all
pricing and other economic terms set forth therein shall be redacted before
disclosure. Notwithstanding the generality of the foregoing, Seller,
Guarantor, PRCMLP, PRCMLLC, Advisers and any of their respective Affiliates
shall maintain the confidentiality of the sensitive economic terms (i.e.,
Applicable Percentage, Pricing Margin and the like) set forth in any of the
Repurchase Documents or the Transactions in negotiations, discussions,
agreements or due diligence in connection with any financing, repurchase, credit
or similar transactions with any third-party (including any credit facility or
any similar structure with respect to mortgage related assets including mortgage
loans, RMBS or any similar assets).
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Section
18.11 No Implied
Waivers. No failure on the part of Buyer to exercise, or delay
in exercising, any right or remedy under the Repurchase Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any right or
remedy thereunder preclude any further exercise thereof or the exercise of any
other right. The rights and remedies in the Repurchase Documents are
cumulative and not exclusive of any rights and remedies provided by
law. Application of the Default Rate after an Event of Default shall
not be deemed to constitute a waiver of any Event of Default or Buyer’s rights
and remedies with respect thereto, or a consent to any extension of time for the
payment or performance of any obligation with respect to which the Default Rate
is applied. Except as otherwise expressly provided in the Repurchase
Documents, no amendment, waiver or other modification of any provision of the
Repurchase Documents shall be effective without the signed agreement of Seller
and Buyer. Any waiver or consent under the Repurchase Documents shall
be effective only if it is in writing and only in the specific instance and for
the specific purpose for which given.
Section
18.12 Notices and Other
Communications. Unless otherwise provided in this Agreement,
all notices, consents, approvals, requests and other communications required or
permitted to be given to a Party hereunder shall be in writing and sent prepaid
by hand delivery, by certified or registered mail, by expedited commercial or
postal delivery service, or by facsimile or email if also sent by one of the
foregoing, to the address for such Party specified in Annex 1 or such
other address as such Party shall specify from time to time in a notice to the
other Party. Any of the foregoing communications shall be effective
when delivered or upon the first attempted delivery on a Business
Day. A Party receiving a notice that does not comply with the
technical requirements of this Section 18.12 may elect to
waive any deficiencies and treat the notice as having been properly
given.
Section
18.13 Counterparts; Electronic
Transmission. Any Repurchase Document may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall together constitute but one and the same instrument.
Section
18.14 No Personal
Liability. No administrator, incorporator, Affiliate, owner,
member, partner, stockholder, officer, director, employee, agent or attorney of
Buyer, any Indemnified Person or Seller, as such, shall be subject to any
recourse or personal liability under or with respect to any obligation of Buyer
or Seller under the Repurchase Documents, whether by the enforcement of any
assessment, by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed that the obligations of Buyer and Seller
under the Repurchase Documents are solely their respective corporate, limited
liability company or partnership obligations, as applicable, and that any such
recourse or personal liability is hereby expressly waived. This Section 18.14 shall survive
the termination of the Repurchase Documents.
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Section
18.15 Protection of Buyer’s
Interests in the Purchased Assets; Further Assurances.
(a) Seller
shall take such action as requested by Buyer or as necessary to cause the
Repurchase Documents and/or all financing statements and continuation statements
and any other necessary documents covering the right, title and interest of
Buyer to the Purchased Assets to be promptly recorded, registered and filed, and
at all times to be kept recorded, registered and filed, all in such manner and
in such places as may be required by law fully to preserve and protect such
right, title and interest, it being understood Buyer shall file the initial
UCC-1 filing and any continuation statements. Seller shall deliver to
Buyer file–stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. Seller shall execute any and all
documents reasonably required to fulfill the intent of this Section 18.15.
(b) Seller
will promptly at its expense execute and deliver such instruments and documents
and take such other actions as Buyer may reasonably request from time to time in
order to perfect, protect, evidence, exercise and enforce Buyer’s rights and
remedies under and with respect to the Repurchase Documents, the Transactions
and the Purchased Assets.
(c) If
Seller fails to perform any of its Repurchase Obligations, Buyer may (but shall
not be required to) perform or cause to be performed such Repurchase Obligation,
and the costs and expenses incurred by Buyer in connection therewith shall be
payable by Seller. Without limiting the generality of the foregoing,
Seller authorizes Buyer, at the option of Buyer and the expense of Seller, at
any time and from time to time, to take all actions and pay all amounts that
Buyer deems necessary or appropriate to protect, enforce, preserve, insure,
service, administer, manage, perform, maintain, safeguard, collect or realize on
the Purchased Assets and Buyer’s Liens and interests therein or thereon and to
give effect to the intent of the Repurchase Documents. No Event of
Default shall be cured by the payment or performance of any Repurchase
Obligation by Buyer on behalf of Seller. Buyer may make any such
payment in accordance with any xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such xxxx, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax Lien, title or claim
except to the extent such payment is being contested in good faith by Seller in
appropriate proceedings and against which adequate reserves are being maintained
in accordance with GAAP.
(d) Without
limiting the generality of the foregoing, Seller will at the request of Buyer no
earlier than six (6) or later than three (3) months before the
fifth (5th)
anniversary of the date of filing of each UCC financing statement filed in
connection with to any Repurchase Document or any Transaction, deliver or cause
to be delivered to Buyer an opinion of counsel, in form and substance reasonably
satisfactory to Buyer, confirming and updating the opinion delivered pursuant to
Section 6.01(a) with respect
to perfection and otherwise to the effect that the security interests hereunder
continue to be enforceable and perfected security interests, subject to no other
Liens of record except as provided herein or otherwise permitted hereunder,
which opinion may contain usual and customary assumptions, limitations and
exceptions; provided, however, that this
Section
18.15(d) shall not survive the expiration or termination of this
Agreement for any reason and all obligations of Seller under this section shall
immediately cease upon such expiration or termination.
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(e) Except
as provided in the Repurchase Documents, the sole duty of Buyer, Custodian or
any other designee or agent of Buyer with respect to the Purchased Assets shall
be to use reasonable care in the custody, use, operation and preservation of the
Purchased Assets in its possession or control. Buyer shall incur no
liability to Seller or any other Person for any act of Governmental Authority,
act of God or other destruction in whole or in part or negligence or wrongful
act of custodians or agents selected by Buyer with reasonable care, or Buyer’s
failure to provide adequate protection or insurance for the Purchased
Assets. Buyer shall have no obligation to take any action to preserve
any rights of Seller in any Purchased Asset against prior parties, and Seller
hereby agrees to take such action. Buyer shall have no obligation to
realize upon any Purchased Asset except through proper application of any
distributions with respect to the Purchased Assets made directly to Buyer or its
agent(s). So long as Buyer and Custodian shall act in good faith in
their handling of the Purchased Assets, Seller waives or is deemed to have
waived the defense of impairment of the Purchased Assets by Buyer and
Custodian.
Section
18.16 Default
Rate. To the extent permitted by Requirements of Law, Seller
shall pay interest at the Default Rate on the amount of all Repurchase
Obligations not paid when due under the Repurchase Documents until such
Repurchase Obligations are paid or satisfied in full.
Section
18.17 Set–off. In
addition to any rights now or hereafter granted under the Repurchase Documents,
Requirements of Law or otherwise, Seller, on behalf of itself and Guarantor and
each of their respective Affiliates, hereby grants to Buyer and each Indemnified
Person, to secure repayment of the Repurchase Obligations, a right of set-off
upon any and all of the following: monies, securities, collateral or other
property of Seller, Guarantor and each of their respective Affiliates and any
proceeds from the foregoing, now or hereafter held or received by Buyer, any
Affiliate of Buyer or any Indemnified Person, for the account of Seller,
Guarantor or such Affiliate of Seller or Guarantor, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general, specified, special, time, demand, provisional or final)
and credits, claims or Indebtedness of Seller, Guarantor or any Affiliate of
Seller or Guarantor at any time existing, and any obligation owed by Buyer or
any Affiliate of Buyer to Seller, Guarantor or any Affiliate of Seller or
Guarantor and to set–off against any Repurchase Obligations or Indebtedness owed
by Seller, Guarantor or any Affiliate of Seller or Guarantor and any
Indebtedness owed by Buyer or any Affiliate of Buyer to Seller, Guarantor or any
Affiliate of Seller or Guarantor, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, whether or not arising under the
Repurchase Documents and irrespective of the currency, place of payment or
booking office of the amount or obligation and in each case at any time held or
owing by Buyer, any Affiliate of Buyer or any Indemnified Person to or for the
credit of any of Seller, Guarantor or any Affiliate of Seller or Guarantor,
without prejudice to Buyer’s right to recover any deficiency. Each of
Buyer, each Affiliate of Buyer and each Indemnified Person is hereby authorized
upon any amount becoming due and payable by Seller, Guarantor or any Affiliate
of Seller or Guarantor to Buyer or any Indemnified Person under the Repurchase
Documents, the Repurchase Obligations or otherwise or upon the occurrence of an
Event of Default, without notice to Seller, Guarantor or any Affiliate of Seller
or Guarantor, any such notice being expressly waived by Seller, Guarantor and
each Affiliate of Seller or Guarantor to the extent permitted by any
Requirements of Law, to set–off, appropriate, apply and enforce such right of
set–off against any and all items hereinabove referred to against any amounts
owing to Buyer or any Indemnified Person by Seller, Guarantor or any Affiliate
of Seller under the Repurchase Documents and the Repurchase Obligations,
irrespective of whether Buyer, any Affiliate of Buyer or any Indemnified Person
shall have made any demand under the Repurchase Documents and regardless of any
other collateral securing such amounts, and in all cases without waiver or
prejudice of Buyer’s rights to recover a deficiency. Seller,
Guarantor and all Affiliates of Seller or Guarantor shall be deemed directly
indebted to Buyer and the other Indemnified Persons in the full amount of all
amounts owing to Buyer and the other Indemnified Parties by Seller, Guarantor
and all Affiliate of Seller or Guarantor under the Transaction Documents and the
Repurchase Obligations, and Buyer and the other Indemnified Persons shall be
entitled to exercise the rights of set–off provided for above. ANY
AND ALL RIGHTS TO REQUIRE BUYER OR OTHER INDEMNIFIED PERSONS TO EXERCISE THEIR
RIGHTS OR REMEDIES WITH RESPECT TO THE PURCHASED ASSETS OR OTHER INDEMNIFIED
PERSONS UNDER THE REPURCHASE DOCUMENTS, PRIOR TO EXERCISING THE FOREGOING RIGHT
OF SET–OFF, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER
AND EACH AFFILIATE OF SELLER.
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Buyer or
any Indemnified Person shall promptly notify the affected Seller, Guarantor or
any Affiliate of Seller or Guarantor, as appropriate, after any such set–off and
application made by Buyer or such Indemnified Person, provided that the
failure to give such notice shall not affect the validity of such set–off and
application. If an amount or obligation is unascertained, Buyer may
in good faith estimate that obligation and set-off in respect of the estimate,
subject to the relevant Party accounting to the other Party when the amount or
obligation is ascertained. Nothing in this Section 18.17 shall be
effective to create a charge or other security interest. This Section 18.17 shall be
without prejudice and in addition to any right of set-off, combination of
accounts, Lien or other rights to which any Party is at any time otherwise
entitled.
Section
18.18 Seller’s Waiver of
Setoff. Seller hereby waives any right of setoff it may have
or to which it may be or become entitled under the Repurchase Documents or
otherwise against Buyer, any Affiliate of Buyer, any Indemnified Person or their
respective assets or properties.
Section
18.19 Periodic Due Diligence
Review. At Seller’s expense, Buyer may perform continuing due
diligence reviews with respect to the Purchased Assets, Seller, Guarantor or any
Affiliate of Seller or Guarantor, including ordering new third party reports,
for purposes of, among other things, verifying compliance with the
representations, warranties, covenants, agreements, duties, obligations and
specifications made under the Repurchase Documents or otherwise. Upon reasonable
prior notice to Seller, unless an Event of Default exists, in which case no
notice is required, Buyer or its representatives may during normal business
hours inspect any properties and examine, inspect and make copies of the books
and records of Seller, Guarantor or any Affiliate of Seller or Guarantor, and
the Records in the possession of Seller, Guarantor or any Affiliate of Seller or
Guarantor. Seller shall make available to Buyer one or more
knowledgeable financial or accounting officers and representatives of the
independent certified public accountants of Seller and Guarantor for the purpose
of answering questions of Buyer concerning any of the
foregoing. Buyer may purchase Purchased Assets from Seller based
solely on the information provided by Seller to Buyer in the MBS File and the
representations, warranties, duties, obligations and covenants contained herein,
and Buyer may at any time conduct a partial or complete due diligence review on
some or all of the Purchased Assets and otherwise re-generating the information
used to originate and underwrite such Purchased Assets. Buyer may
underwrite such Purchased Assets itself or engage a mutually acceptable
third-party underwriter to do so.
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Section
18.20 Time of the
Essence. Time is of the essence with respect to all
obligations, duties, covenants, agreements, notices or actions or inactions of
Seller under the Repurchase Documents.
Section
18.21 Patriot Act
Notice. Buyer hereby notifies Seller that Buyer is required by
the Patriot Act to obtain, verify and record information that identifies
Seller.
Section
18.22 Successors and Assigns; No
Third Party Beneficiaries. Subject to the foregoing, the
Repurchase Documents and any Transactions shall be binding upon and shall inure
to the benefit of the Parties and their successors and permitted
assigns. Nothing in the Repurchase Documents, express or implied,
shall give to any Person other than the Parties any benefit or any legal or
equitable right, power, remedy or claim under the Repurchase
Documents.
[ONE OR
MORE UNNUMBERED SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the
Parties have caused this Agreement to be duly executed as of the date first
above written.
| SELLER: | |||
| TWO HARBORS ASSET I, LLC | |||
|
|
By:
|
/s/Xxxx Xxxxx | |
| Its: Xxxx Xxxxx | |||
| Title: Chief Financial Officer | |||
| BUYER: | |||
| XXXXX FARGO BANK, NATIONAL ASSOCIATION | |||
|
|
By:
|
/s/Xxxxx Xxxxxx | |
| Its: Xxxxx Xxxxxx | |||
| Title: Vice President | |||
[Signatures
continue]
[Signature
page to Master Repurchase and Securities Contract - Xxxxx/Two
Harbors]
|
ACKNOWLEDGED
AND AGREED
|
|||||
|
GUARANTOR:
|
|||||
| By: |
/s/Xxxx Xxxxx
|
|
|||
|
Its: Xxxx
Xxxxx
|
|
||||
|
Title:
Chief Financial Officer
|
|
||||
[End of
signatures]
