EXECUTION VERSION
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MASTER REPURCHASE AGREEMENT
AMONG
CDC MORTGAGE CAPITAL INC., AS BUYER
NEW CENTURY MORTGAGE CORPORATION, AS SELLER
AND
NC CAPITAL CORPORATION, AS SELLER
Dated as of July 19, 2001
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TABLE OF CONTENTS
PAGE
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1. APPLICABILITY..............................................................1
2. DEFINITIONS................................................................1
3. INITIATION; TERMINATION...................................................19
4. MARGIN AMOUNT MAINTENANCE.................................................28
5. INCOME PAYMENTS...........................................................29
6. REQUIREMENTS OF LAW.......................................................29
7. SECURITY INTEREST.........................................................31
8. PAYMENT, TRANSFER AND CUSTODY.............................................32
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS...............................33
10. SELLER'S REPRESENTATIONS..................................................33
11. COVENANTS OF SELLER.......................................................38
12. EVENTS OF DEFAULT.........................................................49
13. REMEDIES..................................................................51
14. INDEMNIFICATION AND EXPENSES..............................................53
15. RECORDING OF COMMUNICATIONS...............................................54
16. SINGLE AGREEMENT..........................................................55
17. NOTICES AND OTHER COMMUNICATIONS..........................................55
18. ENTIRE AGREEMENT; SEVERABILITY............................................55
19. NON-ASSIGNABILITY.........................................................56
20. TERMINABILITY.............................................................56
21. GOVERNING LAW.............................................................56
22. SUBMISSION TO JURISDICTION; WAIVERS.......................................56
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23. NO WAIVERS, ETC...........................................................57
24. SERVICING.................................................................57
25. BUYER'S REPRESENTATIONS...................................................59
26. NETTING...................................................................59
27. PERIODIC DUE DILIGENCE REVIEW.............................................60
28. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT...................................61
29. MISCELLANEOUS.............................................................62
30. CONFIDENTIALITY...........................................................63
31. CONFLICTS.................................................................63
32. SET-OFF...................................................................63
33. OBLIGATIONS JOINT AND SEVERAL.............................................63
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EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
SCHEDULE 2 Subsidiaries
SCHEDULE 3 Litigation
EXHIBIT I Transaction Request
EXHIBIT II Underwriting Guidelines
EXHIBIT III Form of Opinion Letter
EXHIBIT IV UCC Filing Jurisdictions
EXHIBIT V Form of Account Agreement
EXHIBIT VI Form of True Sale Certification
EXHIBIT VII-A Form of Seller's Release Letter
EXHIBIT VII-B Form of Warehouse Lender's Release Letter
EXHIBIT VIII Form of Servicer Notice
EXHIBIT IX Form of Request for Additional Transactions for
Excess Margin
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MASTER REPURCHASE AGREEMENT
This is a MASTER REPURCHASE AGREEMENT, dated as of July 19, 2001,
among NEW CENTURY MORTGAGE CORPORATION, a California corporation ("NCMC"), NC
CAPITAL CORPORATION, a California corporation ("NCCC", and together with NCMC,
"SELLER") and CDC MORTGAGE CAPITAL INC., a New York corporation ("BUYER").
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
Seller agrees to transfer to Buyer Mortgage Loans against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to
Seller such Mortgage Loans at a date certain not later than 364 days after
the date of transfer, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "TRANSACTION" and shall be
governed by this Agreement, unless otherwise agreed in writing.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement
in the singular to have the same meanings when used in the plural and VICE
VERSA). Terms otherwise not defined herein shall have the meanings set
forth in the Custodial Agreement.
"ACCOUNT AGREEMENT" shall mean a letter agreement among NCCC, NCMC,
Servicer, Buyer and the Bank substantially in the form of EXHIBIT V
attached hereto.
"ACT OF INSOLVENCY" shall mean, with respect to any Person, (i) the filing
of a petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or
suffering any such petition or proceeding to be commenced by another which
is consented to, not timely contested or results in entry of an order for
relief which is not discharged within thirty (30) days; (ii) the seeking
or consenting to the appointment of a receiver, trustee, custodian or
similar official for such Person or any substantial part of the property
of such Person; (iii) the appointment of a receiver, conservator, or
manager for such Person by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by such Person of a
composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such Person of its inability to pay its
debts or discharge its obligations as they become due or mature; or (vi)
that any governmental authority or agency or any person, agency or entity
acting or purporting to act under governmental authority shall have taken
any action to condemn, seize or appropriate, or to assume custody or
control of, all or any substantial part of the property of such Person, or
shall have taken any action to displace the management of such Person or
to curtail its authority in the conduct of the business of such Person.
"ADDITIONAL PURCHASED ASSETS" shall mean Mortgage Loans or cash provided
by Seller to Buyer or its designee pursuant to Section 4.
"ADJUSTED LEVERAGE RATIO" shall mean on any date of determination, the
ratio of (a) Total Liabilities to (b) Adjusted Tangible Net Worth.
"ADJUSTED TANGIBLE NET WORTH" shall mean on any date of determination, the
Tangible Net Worth of Guarantor minus 25% of the amount by which the book
value of Junior Securitization Interests included in calculating Tangible
Net Worth exceeds Indebtedness of the type described in Section 11(s)(4).
"AFFILIATE" shall mean with respect to any Person, any "affiliate" of such
Person, as such term is defined in the Bankruptcy Code.
"AGREEMENT" shall mean this Master Repurchase Agreement, as the same may
be further amended, supplemented or otherwise modified in accordance with
the terms hereof.
"ALTA" shall mean the American Land Title Association.
"APPRAISED VALUE" shall mean the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value
of the Mortgaged Property.
"ASSET VALUE" shall mean with respect to each Eligible Asset as of any
date of determination, the lesser of (a) the Purchase Percentage
multiplied by the Market Value of such Mortgage Loan as of such date of
determination, and (b) the outstanding principal balance of such Eligible
Asset as of such date of determination; provided, that, the following
additional limitations on Asset Value shall apply:
(1) the aggregate Asset Value of Wet-Ink Mortgage Loans may not
exceed the Wet-Ink Sub-Limit at any time;
(2) the aggregate Asset Value of Second Lien Mortgage Loans may
not exceed the Second Lien Sub-Limit at any time;
(3) the aggregate Asset Value of Second Lien Mortgage Loans with a
CLTV in excess of 100% shall not exceed the Second Lien CLTV
Sub-Limit at any time;
(4) the aggregate Asset Value of a single Mortgage Loan shall not
exceed the Mortgage Loan Sub-Limit;
(5) the aggregate Asset Value of Jumbo Mortgage Loans may not
exceed the Jumbo Sub-Limit at any time;
(6) the aggregate Asset Value of Jumbo(500) Mortgage Loans may not
exceed the Jumbo(500) Sub-Limit at any time;
(7) the aggregate Asset Value of Jumbo(750) Mortgage Loans may not
exceed the Jumbo(750) Sub-Limit at any time;
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(8) the aggregate Asset Value of C Credit Mortgage Loans may not
exceed the C Credit Sub-Limit at any time;
(9) the aggregate Asset Value of C Minus Credit Mortgage Loans may
not exceed the C Minus Credit Sub-Limit at any time;
(10) The aggregate Asset Value of Non-owner Occupied Mortgage Loans
may not exceed $12,500,000;
(11) The aggregate Asset Value of High Cost Mortgage Loans may not
exceed $5,000,000; and
(12) the Asset Value shall be deemed to be zero with respect to
each Mortgage Loan (i) in respect of which there is a breach
of a representation and warranty set forth in SCHEDULE 1
(assuming each representation and warranty is made as of the
date Asset Value is determined), (ii) in respect of which
there is a delinquency in the payment of principal and/or
interest which continues for a period in excess of twenty nine
(29) calendar days (without regard to any applicable grace
periods), (iii) which has not been repurchased by Seller by
the earlier to occur of (A) the Termination Date and (B) the
180th day after the date on which it is first purchased by
Buyer, (iv) which has been released from the possession of
Custodian under the Custodial Agreement to Seller for a period
in excess of ten (10) calendar days, (v) which exceed the
limitations on Asset Value set forth above or (vi) which is a
Wet-Ink Mortgage Loan, for which Custodian has failed to
receive the related Mortgage Documents by the seventh (7th)
Business Day following the applicable Origination Date of such
Wet-Ink Mortgage Loan.
"ASSIGNMENT OF MORTGAGE" shall mean, with respect to any Mortgage, an
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the
Mortgage to Buyer.
"BANK" shall mean U.S. Bank National Association, a national banking
association, and its successors in interest, or such other depository
institution as may be acceptable to Buyer in its sole discretion, and
their respective successors in interest.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"BASIC STATUS REPORT AND EXCEPTION REPORT" shall have the meaning assigned
thereto in the Custodial Agreement.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank
of New York or any of Custodian, Seller or Buyer is authorized or
obligated by law or executive order to be closed.
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"BUYER" shall mean CDC Mortgage Capital Inc., a New York corporation, and
its successors in interest and assigns.
"C CREDIT MORTGAGE LOAN" shall mean each Mortgage Loan originated in
accordance with the Underwriting Guidelines criteria for "C" credit
mortgage loans.
"C CREDIT SUB-LIMIT" shall mean an amount equal to $30,000,000.
"C MINUS CREDIT MORTGAGE LOANS" shall mean each Mortgage Loan originated
in accordance with the Underwriting Guidelines criteria for "C-" credit
mortgage loans.
"C MINUS CREDIT SUB-LIMIT" shall mean an amount equal to $20,000,000.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"COLLECTION ACCOUNT" shall mean the account established by the Bank
subject to an Account Agreement, into which all Income shall be deposited.
"COMBINED LOAN-TO-VALUE RATIO OR CLTV" shall mean with respect to any
Second Lien Mortgage Loan, the sum of the original principal balance of
such Mortgage Loan and the outstanding principal balance of any related
first lien as of the date of origination of the Mortgage Loan, divided by
the lesser of the Appraised Value of the Mortgage Property as of the
Origination Date or the purchase price of the Mortgaged Property.
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or not
incorporated, which is under common control with Seller within the meaning
of Section 4001 of ERISA or is part of a group which includes Seller and
which is treated as a single employer under Section 414 of the Code.
"COMPANY SECURITIZATION TRANSACTION" shall mean an issuance of
Mortgage-backed Securities by NCCC, NCMC, or by SBRC, or any other
registered broker dealer, or an Affiliate of any of them, on behalf of
NCCC or NCMC, through a trust or other entity created by NCCC or NCMC,
SBRC or any other registered broker-dealer which Mortgage-backed
Securities are either secured (in whole or in part) by Mortgage Loans
originated or acquired by NCCC or NCMC or evidence the entire beneficial
ownership interest therein, and in connection with which one or more
Junior Securitization Interests are issued to NCCC or NCMC or any
Affiliate.
"CHANGE OF CONTROL" shall mean the occurrence, after the Effective Date,
of any of the following circumstances: (a) Guarantor not owning, directly
or indirectly, all of the issued and outstanding capital stock of NCMC; or
(b) any Person, or two or more Persons
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acting in concert, other than the Management Shareholders, acquiring
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of Guarantor (or other
securities convertible into such securities) representing 35% or more of
the combined voting power of all securities of Guarantor entitled to vote
in the election of directors; (c) any Person, or two or more Persons
acting in concert, other than the Management Shareholders, acquiring by
contract or otherwise, or entering into a contract or arrangement which
upon consummation will result in its or their acquisition of and, control
over securities of Guarantor (or other securities convertible into such
securities) representing 35% or more of the combined voting power of all
securities of Guarantor entitled to vote in the election of directors; (d)
Xxxxxx Xxxx ceasing to be Chairman and Chief Executive Officer of
Guarantor or (e) U.S. Bancorp's direct or indirect equity interest in
Guarantor is reduced below 17.5%.
"CONFIRMATION" shall have the meaning specified in Section 3(c).
"COUNTRYWIDE FINANCING FACILITY" shall mean the Master Repurchase
Agreement, dated as of July 28, 2000, and Annex I thereto, as may be
amended from time to time, among between Countrywide Warehouse Lending and
NC Residual Corporation II, and all other documents or agreements executed
in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with
financial institutions approved by Buyer.
"CUSTODIAL AGREEMENT" shall mean that custodial agreement, dated as of
July 19, 2001 by and among Buyer, NCCC, NCMC and Custodian, as the same
shall be modified and supplemented and in effect from time to time.
"CUSTODIAL IDENTIFICATION CERTIFICATE" shall have the meaning specified in
the Custodial Agreement.
"CUSTODIAN" shall mean U.S. Bank National Association, a national banking
association, and its successors in interest, as custodian under the
Custodial Agreement, and any successor Custodian under the Custodial
Agreement.
"DAILY LEVERAGE RATIO" shall mean on any date of determination, the ratio
of (a) Total Liabilities of Guarantor and its Subsidiaries on such date to
(b) Tangible Net Worth of Guarantor and its Subsidiaries as of the last
day of the most recently completed month.
"DEFAULT" shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
"DOLLARS" and "$" shall mean lawful money of the United States of America.
"DUE DILIGENCE REVIEW" shall mean the performance by Buyer of any or all
of the reviews permitted under Section 27 with respect to any or all of
the Mortgage Loans, as desired by Buyer from time to time.
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"EARLY TERMINATION PERCENTAGE" shall mean 25 basis points (0.25%) less
0.02 basis points (0.02%) for each full calendar month that has elapsed
since the Effective Date.
"EFFECTIVE DATE" shall mean the date upon which the conditions precedent
set forth in Section 3(a)(1) shall have been satisfied.
"ELECTRONIC TRANSMISSION" shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof.
"ELIGIBLE ASSET" shall mean a Mortgage Loan, including a Wet-Ink Mortgage
Loan, (i) as to which the representations and warranties in SCHEDULE 1
attached hereto are true and correct, (ii) which is underwritten strictly
in accordance with the Underwriting Guidelines of Seller, and (iii) which
is secured by a Residential Dwelling.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that is
a member of any group of organizations (i) described in Section 414(b) or
(c) of the Code of which Seller is a member and (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA
and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Seller is a member.
"EURODOLLAR RATE" shall mean, with respect to each day a Transaction is
outstanding, the rate per annum equal to the rate appearing at page 5 of
the Telerate Screen as one-month LIBOR at or about 9:00 a.m., New York
time, on such date (and if such date is not a Business Day, the Eurodollar
Rate in effect on the Business Day immediately preceding such date), and
if such rate shall not be so quoted, the average rate per annum at which
three mutually acceptable banks are offered Dollar deposits at or about
9:00 a.m., New York time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange
operations in respect of its Transactions are then being conducted for
delivery on such day for a period of thirty (30) days and in an amount
comparable to the amount of the Transactions to be outstanding on such
day. The Eurodollar Rate shall be reset by Buyer as described above and
Buyer's determination of Eurodollar Rate shall be conclusive upon the
parties absent manifest error on the part of Buyer
"EVENT OF DEFAULT" has the meaning specified in Section 12.
"EXCESS MARGIN" has the meaning specified in Section 3(r).
"EXISTING FINANCING FACILITIES" shall mean the Countrywide Financing
Facility, the Greenwich Financing Facility, the Xxxxxx Xxxxxxx Financing
Facility, the Salomon Financing Facility, the Salomon NCMC Financing
Facility, the Salomon REO Financing Facility, the Salomon Residual
Financing Facility, the US Bank Financing Facility, the UBS Financing
Facility and the USB Financing Facility.
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"XXXXXX MAE" shall mean the Federal National Mortgage Association, and its
successors in interest.
"FORECLOSED LOAN" shall mean a loan the property securing which has been
foreclosed upon by Seller.
"XXXXXXX MAC" shall mean the Federal Home Loan Mortgage Corporation, and
its successors in interest.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction
over NCCC, NCMC, Guarantor, any of their respective Subsidiaries or any of
their properties.
"GREENWICH FINANCING FACILITY" shall mean the Residual Financing Facility
Agreement dated as of June 23, 1999, as may be amended from time to time,
by and between NCCC and Greenwich Capital Financial Products, Inc. and all
other documents or agreements executed in connection therewith, or
replacement facilities with substantially similar terms (including, but
not limited to, amounts and rates) with financial institutions approved by
Buyer.
"GUARANTEE" shall mean, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness
against loss (whether by virtue of partnership arrangements, by agreement
to keep-well another Person, to purchase assets, goods, securities or
services, or to agree to take-or-pay arrangement or otherwise); provided
that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii)
obligations to make servicing advances for delinquent taxes and insurance,
or other obligations in respect of a Mortgaged Property, or other
principal and interest advances made in the ordinary course of servicing
the Mortgage Loans. The amount of any Guarantee of a Person shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"GUARANTEE" and "GUARANTEED" used as verbs shall have correlative
meanings.
"GUARANTOR" shall mean New Century Financial Corporation, a California
corporation, and its successors in interest.
"GUARANTY" shall mean the Guaranty, dated as of the date hereof, made by
Guarantor in favor of Buyer, which shall be in form and substance
satisfactory to Buyer in all respects.
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"INCOME" shall mean, with respect to any Mortgage Loan at any time, all
collections and proceeds on or in respect of the Mortgage Loans,
including, without limitation, any principal thereof then payable and all
interest or other distributions payable thereon less any related servicing
fee(s) charged by Servicer.
"INDEBTEDNESS" shall mean, for any Person: (a) obligations created, issued
or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise,
to repurchase such Property from such Person); (b) obligations of such
Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within 90 days
of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the Property
of such Person, whether or not the respective Indebtedness so secured has
been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued
or accepted by banks and other financial institutions for account of such
Person; (e) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (f) Indebtedness of others
Guaranteed by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such
Person; and (h) Indebtedness of general partnerships of which such Person
is secondarily or contingently liable (other than by endorsement of
instruments in the course of collection), whether by reason of any
agreement to acquire such indebtedness to supply or advance sums or
otherwise; and (i) Capital Lease Obligations of such Person.
"INITIAL FUNDING" shall mean the date upon which the conditions precedent
set forth in Section 3(a)(2) shall have been satisfied.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, with respect to any or
all of the Mortgage Loans, any short sale of US Treasury securities, or
futures contract, or options related contract, or interest rate swap, cap
or collar agreement or similar arrangement providing for protection
against fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies and
acceptable to Buyer.
"INVESTMENT" shall mean with respect to any Person, any direct or indirect
purchase or other acquisition by that Person of, or a beneficial interest
in, stock or other securities of any other Person, or any direct or
indirect loan, advance (other than advances to employees for moving and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by that Person to any other
Person, including all Indebtedness and accounts receivable from that other
Person which are not current assets or did not arise from sales to that
other Person in the ordinary course of business.
"JUMBO MORTGAGE LOANS" shall mean each Mortgage Loan with a principal
balance as of origination of more than $275,000.
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"JUMBO SUB-LIMIT" shall mean an amount equal to $70,000,000
"JUMBO(500) MORTGAGE LOANS" shall mean each Mortgage Loan with a principal
balance as of origination of more than $500,000 and less than or equal to
$750,000.
"JUMBO(500) SUB-LIMIT" shall mean an amount equal to $40,000,000.
"JUMBO(750) MORTGAGE LOANS" shall mean shall mean each Mortgage Loan with
a principal balance as of origination of more than $750,000.
"JUMBO(750) SUB-LIMIT" shall mean an amount equal to $20,000,000.
"JUNIOR SECURITIZATION INTERESTS" shall mean a Mortgage-backed Security
created in a Company Securitization Transaction that represents a
subordinated right to receive principal or interest payments on the
underlying Mortgage Loans (whether or not such subordination arises only
under particular circumstances).
"LATE PAYMENT FEE" has the meaning specified in Section 5(b).
"LEVERAGE RATIO" shall mean on any date of determination, the ratio of (a)
Total Liabilities to (b) Tangible Net Worth.
"LIEN" shall mean any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
"LOAN-TO-VALUE RATIO" or "LTV" means with respect to any Mortgage Loan,
the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination of each Mortgage Loan and (b) if the Mortgaged Property was
purchased within twelve (12) months of the origination of the Mortgage
Loan, the purchase price of the Mortgaged Property.
"MANAGEMENT SHAREHOLDERS" shall mean Xxxxxx X. Xxxx, Xxxx X. Xxxxxxx, and
Xxxxxx X. Xxxxxxxxx.
"MARGIN BASE" shall mean the aggregate Asset Value of all Purchased Assets
which are Eligible Assets.
"MARGIN DEFICIT" has the meaning specified in Section 4.
"MARKET VALUE" shall mean, as of any date in respect of any Mortgage Loan,
the price at which such Mortgage Loan could readily be sold as determined
in Buyer's sole discretion using its reasonable business judgment, which
price may be determined to be zero. Buyer's determination of Market Value
shall be conclusive upon the parties absent manifest error on the part of
Buyer.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the
Property, business, operations, financial condition or prospects of NCCC,
NCMC or Guarantor, (b) the ability of NCCC or NCMC to perform its
obligations under any of the Repurchase
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Documents to which it is a party, (c) the validity or enforceability of
any of the Repurchase Documents, (d) the rights and remedies of Buyer
under any of the Repurchase Documents, (e) the timely payment of any
amounts payable under the Repurchase Documents, (f) the Asset Value of the
Purchased Assets or (g) the ability of Guarantor to perform its
obligations under the Guaranty.
"MAXIMUM AMOUNT" shall mean $200,000,000.
"XXXXXX XXXXXXX FINANCING FACILITY" shall mean the Master Loan and
Security Agreement dated December 1, 2000, as may be amended from time to
time, between NCCC and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital, Inc.
and all other documents or agreements executed in connection therewith, or
replacement facilities with substantially similar terms (including, but
not limited to, amounts and rates) with financial institutions approved by
Buyer.
"MORTGAGE" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien or second lien on a
fee simple Residential Dwelling securing the Mortgage Note.
"MORTGAGE FILE" shall have the meaning assigned thereto in the Custodial
Agreement.
"MORTGAGE LOAN" shall mean a mortgage loan originated in accordance with
the Underwriting Guidelines which Custodian has been instructed to hold
for Buyer pursuant to the Custodial Agreement, and which Mortgage Loan
includes, without limitation, (i) a Mortgage Note and related Mortgage,
and (ii) all right, title and interest of Seller in and to the Mortgaged
Property covered by such Mortgage.
"MORTGAGE LOAN SUB-LIMIT" shall mean $1,000,000.
"MORTGAGE NOTE" shall mean the original executed promissory note or other
evidence of the indebtedness of a Mortgagor with respect to a Mortgage
Loan.
"MORTGAGE-BACKED SECURITY" shall mean a security (including, without
limitation, a participation certificate) that is an interest in a pool of
Mortgage Loans or is secured by such an interest.
"MORTGAGED PROPERTY" shall mean a fee simple interest in the real property
(including all improvements, buildings, fixtures, building equipment and
personal property thereon and all additions, alterations and replacements
made at any time with respect to the foregoing) and all other collateral
securing repayment of the debt evidenced by a Mortgage Note.
"MORTGAGEE" shall mean the record holder of a Mortgage Note secured by a
Mortgage.
"MORTGAGOR" shall mean the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
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"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been or are required to
be made by Seller or any ERISA Affiliate and that is covered by Title IV
of ERISA.
"NCCC" shall mean NC Capital Corporation, a California corporation, and
its successors in interest.
"NCMC" shall mean New Century Mortgage Corporation, a California
corporation, and its successors in interest.
"NCRC" shall mean NC Residual II Corporation, a Delaware corporation, and
its successors in interest.
"NET WORTH" shall mean with respect to any Person, on any date of
determination, the net worth of such Person as of such date, determined in
accordance with GAAP.
"NON-OWNER OCCUPIED MORTGAGE LOANS" shall mean each Mortgage Loan with
respect to which the improvements on the Mortgaged Property are not
occupied by the owner of such Mortgaged Property.
"NON-USE FEE" has the meaning specified in Section 3(p).
"ORIGINATION DATE" shall mean the date a Mortgage Loan is funded by any
originator and the proceeds are disbursed to a borrower under such
Mortgage Loan.
"PAYMENT DATE" shall mean the tenth (10th) Business Day of each month.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERIODIC ADVANCE REPURCHASE PAYMENT" has the meaning specified in Section
5(b).
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"PLAN" shall mean an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA.
"POST-DEFAULT RATE" shall mean, in respect of any day a Transaction is
outstanding or any other amount under this Agreement or any other
Repurchase Document that is not paid when due to Buyer at the stated
Repurchase Date or otherwise when due (a "POST-DEFAULT DAY"), a rate per
annum on a 360 day per year basis during the period from and including the
due date to but excluding the date on which such amount is paid in full
equal to 4% per annum PLUS the Prime Rate on such Post-Default Day.
"PRICE DIFFERENTIAL" means, with respect to any Transaction hereunder as
of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such Transaction
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to the Purchase Price for such Transaction on a 360 day per year basis for
the actual number of days during the period commencing on (and including)
the Purchase Date for such Transaction and ending on (but excluding) the
Repurchase Date (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction).
"PRICING RATE" shall mean a rate per annum equal to the sum of (a) the
Eurodollar Rate plus (b) the Pricing Spread.
"PRICING SPREAD" shall mean the applicable rates per annum set forth below
for each type of Eligible Asset for each day during the related Interest
Period:
(b) Mortgage Loans (other than Wet-Ink Mortgage Loans), 0.95% (95)
basis points; and
(c) Wet-Ink Mortgage Loans, 1.25% (125) basis points.
"PRIME RATE" shall mean the prime rate announced to be in effect from time
to time, as published as the average rate in THE WALL STREET JOURNAL.
"PROPERTY" shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PURCHASE AGREEMENT" shall mean any purchase agreement by and between NCCC
or NCMC and any third party, including without limitation, any Affiliate
of NCCC or NCMC, pursuant to which NCCC or NCMC has purchased assets
subsequently sold to Buyer hereunder.
"PURCHASE DATE" shall mean the date on which Purchased Assets are
transferred by Seller to Buyer or its designee (including Custodian).
"PURCHASE PERCENTAGE" shall mean the applicable percentage set forth below
for each type of Eligible Assets:
(a) Mortgage Loans (other than Wet-Ink Mortgage Loans), 98%; and
(b) Wet-Ink Mortgage Loans, 98%.
"PURCHASE PRICE" shall mean on each Purchase Date, the price at which
Purchased Assets are transferred by Seller to Buyer or its designee
(including Custodian) which shall equal the Asset Value for such Purchased
Assets on the Purchase Date.
"PURCHASED ASSETS" shall mean the Mortgage Loans sold by Seller to Buyer
in a Transaction, and any Additional Purchased Assets.
"PURCHASED ITEMS" has the meaning specified in Section 7.
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"QUALIFIED ORIGINATOR" means NCMC, any of its subsidiaries set forth on
Schedule 2, or any other originator of Mortgage Loans acceptable to Buyer
in its sole discretion.
"QUARTERLY AVERAGE LEVERAGE RATIO" shall mean for each three (3) month
period ending on March 31, June 30, September 30 or December 31 of any
year during the term of this Agreement, the ratio of (a) the average daily
amount of Total Liabilities of Guarantor and its Subsidiaries outstanding
during such three (3) month period to (b) the average of the Tangible Net
Worth of Guarantor and its Subsidiaries at the end of each month during
such three (3) month period.
"REGULATIONS T, U AND X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"REO PROPERTY" shall mean real property acquired by Seller, including a
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by
deed in lieu of such foreclosure.
"REO SUB" shall mean New Century REO Corp., a California corporation.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA or a successor provision thereof, other than those events
as to which the thirty day notice period is waived under subsections .13,
.14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615 or one or more successor
provision thereof.
"REPURCHASE DATE" shall mean the date on which Seller is to repurchase the
Purchased Assets from Buyer as specified in the related Confirmation,
including any date determined by application of the provisions of Sections
3 or 13; which date shall be specified as "open" unless otherwise
requested by Seller and agreed by Buyer; provided that in no event shall
the Repurchase Date be in excess of 364 days after the Purchase Date.
"REPURCHASE DOCUMENTS" shall mean this Agreement, the Custodial Agreement,
the Guaranty, the Account Agreement, the Side Letter, among New Century
Financial Corporation and CDC Capital Markets, Inc., dated May 17, 2001
and the Side Letter, among Buyer, NCMC, NCCC and Guarantor, dated July 19,
2001.
"REPURCHASE OBLIGATIONS" shall have the meaning provided in Section 7(b).
"REPURCHASE PRICE" means the price at which Purchased Assets are to be
transferred from Buyer or its designee (including Custodian) to Seller
upon termination of a Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase
Price and the Price Differential as of the date of such determination
decreased by all cash, Income and Periodic Advance Repurchase Payments
(including Late Payment Fees, if any) actually received by Buyer pursuant
to Sections 5(a) or 5(b), respectively.
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"REQUIRED AMENDMENTS" shall mean the amendment, in form and substance
satisfactory to Buyer in its sole discretion, to the USB Financing
Facility and the Salomon Financing Facility to amend the covenants set
forth in Sections 4.14, 4.15 and 4.16 and in Annex 1, Sections
2(i)(v)(A)(B) and (C), respectively, thereof such that such covenants are
satisfactory to the Buyer in all respects and substantially conform to the
covenants set forth in Sections 11(m), 11(n) and 11(o), duly executed and
delivered by the parties to such Existing Financing Facilities.
"REQUIRED SECONDARY AMENDMENTS" shall mean the amendments, each in form
and substance satisfactory to Buyer in its sole discretion, to the Xxxxxx
Xxxxxxx Financing Facility to amend the representations and warranties
with respect to mortgage loans such that such representations and
warranties are satisfactory to the Buyer in all respects and substantially
conform to the representations and warranties set forth in clauses 9, 16,
20 and 41 of Schedule 1 and to delete the representation which requires
that no mortgage loan has been refinanced by Seller if such original
mortgage loan was originated by Seller or an Affiliate, duly executed and
delivered by the parties to the Xxxxxx Xxxxxxx Financing Facility.
"REQUIREMENT OF LAW" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESIDENTIAL DWELLING" shall mean any one of the following: (i) a detached
single family dwelling, (ii) a two-to-four family dwelling, (iii) a unit
in a condominium project, (iv) a detached single family dwelling in a
planned unit development or (v) manufactured housing units. Mortgaged
Properties that consist of the following property types are not
Residential Dwellings: (a) co-operative units, (b) log homes, (c) earthen
homes, (d) underground homes, (e) mobile homes, and (f) any dwelling
situated on more than ten acres of property.
"RESIDUAL FINANCE SUBSIDIARIES" shall mean (a) NC Residual Corporation, a
Delaware corporation, as long as it is a wholly-owned Subsidiary of NCMC
and does not amend its Certificate of Incorporation as in effect on March
20, 1998, and (b) any other wholly-owned Subsidiary of NCMC or NCCC that,
pursuant to its Articles or Certificate of Incorporation, has a purpose
limited to the ownership of Junior Securitization Interests, the
establishment of one or more securitization trusts, issuing securities
backed by such Junior Securitization Interests, otherwise financing such
Junior Securitization Interests, and lawful activities incidental to and
necessary and convenient to the foregoing.
"RESIDUAL FINANCING AGREEMENTS" shall mean collectively, the Global Master
Repurchase Agreement dated as of March 29, 2001 by and between Xxxxxxx
Xxxxx Barney, Inc., as Agent for Salomon Brothers International, Inc., and
NCCC, as amended, supplemented, restated or otherwise modified and in
effect from time to time, (ii) the Global Master Repurchase Agreement
dated as of March 29, 2001 by and between Xxxxxxx Xxxxx Xxxxxx, Inc., as
Agent for Salomon Brothers International, Inc., and NCRC, as amended,
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supplemented, restated or otherwise modified and in effect from time to
time, (iii) the Master Loan and Security Agreement dated as of July 20,
1999 by and among Seller, NC Capital Corporation and UBS Real Estate
Securities Inc. (formerly known as Xxxxx Xxxxxx Real Estate Securities
Inc.), as amended, supplemented, restated or otherwise modified and in
effect from time to time, (iv) the Residual Financing Facility Agreement
dated as of June 23, 1999 by and between NCCC and Greenwich Capital
Financial Products, Inc., as amended, supplemented, restated or otherwise
modified and in effect from time to time, and (v) any similar agreements
pursuant to which "Residual Financing" (as defined in the Residual
Security Agreement) is hereafter provided to NCMC or NCCC or any
Subsidiary of NCMC or NCCC.
"RESIDUAL SECURITY AGREEMENT" shall mean the Amended and Restated Security
Agreement dated as of April 30, 2000 by and among NCCC, NCRC and U.S. Bank
National Association, as collateral agent for (i) the Lenders (as defined
therein), (ii) U.S. Bancorp Leasing & Financial, successor in interest to
FBS Business Finance Corp. (the "Lessor"), as Lessor under any present or
future leases of equipment by the Lessor, as lessor, to NCCC, NCMC or
Guarantor, as lessee, or as lender under any present or future loan by the
Lessor, as lender, to NCCC, NCMC or Guarantor, as borrower, secured by
equipment and (iii) the Subordinated Noteholder (as defined therein).
"RESPONSIBLE OFFICER" shall mean, as to any Person, the chief executive
officer, the chief financial officer, the treasurer or the chief operating
officer of such Person.
"RISK RATING" shall mean the risk rating of a Mortgage Loan, as determined
using the Underwriting Guidelines.
"SALOMON FINANCING FACILITY" shall mean TBMA/ISMA Global Master Repurchase
Agreement, as may be amended from time to time, by and between Xxxxxxx
Xxxxx Barney Inc. as agent for Salomon Brothers International Ltd. and
NCCC and Annex I thereto, dated as of March 29, 2001 and all other
documents or agreements executed in connection therewith, or replacement
facilities with substantially similar terms (including, but not limited
to, amounts and rates) with financial institutions approved by Buyer.
"SALOMON NCMC FINANCING FACILITY" shall mean the Letter Agreement, dated
December 1, 2000, as may be amended from time to time, by and among
Salomon Brothers Realty Corp., NCCC and NCMC and all other documents or
agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts
and rates) with financial institutions approved by Buyer.
"SALOMON REO FINANCING FACILITY" shall mean the Master Loan and Security
Agreement dated as of April 1, 2000, as may be amended from time to time,
by and between NCMC, NCCC and SBRC, and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
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"SALOMON RESIDUAL FINANCING FACILITY" shall mean TBMA/ISMA Global Master
Repurchase Agreement, as may be amended from time to time, by and between
Xxxxxxx Xxxxx Xxxxxx Inc as Agent for Salomon Brothers International Ltd.
and NC Residual II Corporation and Annex I thereto, dated as of March 29,
2001 and all other documents or agreements executed in connection
therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial
institutions approved by Buyer; provided that amounts available under the
Salomon Residual Financing Facility may be reduced by up to $2,000,000 per
month and $9,000,000 per quarter in accordance with its terms.
"SBRC" shall mean Salomon Brothers Realty Corp., a Delaware corporation.
"SECOND LIEN MORTGAGE LOANS" shall mean an Eligible Asset secured by a
lien on the Mortgaged Property, subject to one prior lien on such
Mortgaged Property.
"SECOND LIEN SUB-LIMIT" shall mean an amount equal to $20,000,000.
"SECOND LIEN CLTV SUB-LIMIT" shall mean with respect to Second Lien
Mortgage Loans with a Combined Loan to Value Ratio of greater than 100%,
$10,000,000.
"SECURITY AGREEMENT" shall mean with respect to any Mortgage Loan, any
contract, instrument or other document related to security for repayment
thereof (other than the related Mortgage and Mortgage Note), executed by
the Mortgagor and/or others in connection with such Mortgage Loan,
including without limitation, any security agreement, guaranty, title
insurance policy, hazard insurance policy, chattel mortgage, letter of
credit or certificate of deposit or other pledged accounts, and any other
documents and records relating to any of the foregoing.
"SELLER" shall mean NCCC and NCMC.
"SELLER ASSET SCHEDULE" shall have the meaning assigned thereto in the
Custodial Agreement.
"SELLER-RELATED OBLIGATIONS" shall mean any obligations of NCCC or NCMC
hereunder and under any other arrangement between NCCC, NCMC or an
Affiliate of NCCC or NCMC on the one hand and Buyer or an Affiliate of
Buyer on the other hand.
"SERVICER" shall have the meaning provided in Section 24.
"SERVICER ACCOUNT" shall mean any account established by Servicer in
connection with the servicing of the Mortgage Loans.
"SERVICING AGREEMENT" has the meaning specified in Section 24.
"SERVICING CONTRACT" shall mean a contract or agreement purchased by NCCC
or NCMC or entered into by NCCC or NCMC for its own account (and not as
nominee or subservicer), whether now existing or hereafter purchased or
entered into, pursuant to
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which NCCC or NCMC services Mortgage Loans or Mortgage Loan pools for
Persons other than itself or the other Seller.
"SERVICING FILE" means with respect to each Mortgage Loan, the file
retained by Seller consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of all
documents in the Mortgage File set forth in Section 2 of the Custodial
Agreement.
"SERVICING RECORDS" has the meaning specified in Section 24.
"SETTLEMENT AGENT" shall mean, with respect to any Transaction, the
entity, which may be a title company, escrow company or attorney in
accordance with local law and practice in the jurisdiction where the
related Wet-Ink Mortgage Loan is being originated, which funds such
Mortgage Loan with amounts wired pursuant to the terms of an Existing
Financing Facility.
"SUB-LIMIT" shall mean any of the Web-Ink Sub-Limit, the Second Lien
Sub-Limit, the Second Lien CLTV Sub-Limit, the Mortgage Loan Sub-Limit,
the Jumbo Sub-Limit, the Jumbo(500) Sub-Limit, the Jumbo(750) Sub-Limit at
any time, the C Credit Sub-Limit and the C Minus Credit Sub-Limit.
"SUBORDINATED DEBT" shall mean any Indebtedness of NCCC or NCMC, now
existing or hereafter created, incurred or arising, which is subordinated
in right of payment to the payment of all obligations hereunder in a
manner and to an extent that Buyer has approved in writing prior to the
creation of such Indebtedness.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which at least a
majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such
corporation, partnership, limited liability company or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership
or other entity shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned
or controlled by such Person or one or more Subsidiaries of such Person or
by such Person and one or more Subsidiaries of such Person.
"TANGIBLE NET WORTH" shall mean on any date of determination, the
consolidated Net Worth of Guarantor, NCCC or NCMC, as applicable, and its
respective Subsidiaries, minus the consolidated book value of all assets
of Guarantor, NCCC or NCMC, as applicable, and its respective Subsidiaries
(to the extent reflected as an asset in the balance sheet of Guarantor,
NCCC or NCMC, as applicable, or any such Subsidiary at such date) which
are treated as intangibles under GAAP, including, without limitation, such
items as deferred financing expenses, net leasehold improvements, good
will, trademarks, trade names, service marks, copyrights, patents,
licenses and unamortized debt discount and expense; provided, that Junior
Securitization Interests shall not be treated as intangibles for purposes
of this definition.
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"TERM PURCHASED ASSET" shall mean any Purchased Asset for which Buyer and
Seller shall have agreed that the Repurchase Date is not "open".
"TERMINATION DATE" shall mean the date which is 364 days from the date
hereof which shall be July 18, 2002 or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law, as may be extended pursuant to Section 3(n).
"TERMINATION FEE" has the meaning specified in Section 3(p).
"TEST PERIOD" shall mean each consecutive three-month period commencing
with the three-month period from the Effective Date to the date that is
three months after the Effective Date, provided that with respect to the
first Test Period, for purposes of determining if a Non-Use Fee is
payable, the first Test Period shall begin on August 1, 2001 and end on
the date that is 3 months after the Effective Date.
"TOTAL LIABILITIES" shall mean on any date of determination, the amount,
on a consolidated basis, of the liabilities of Guarantor, NCCC or NCMC, as
applicable, and its respective Subsidiaries, determined in accordance with
GAAP, minus Subordinated Debt.
"TRANSACTION" has the meaning specified in Section 1.
"TRANSACTION REQUEST" means a request from Seller to Buyer, in the form
attached as EXHIBIT I hereto, to enter into a Transaction.
"TRUE SALE CERTIFICATION" shall mean a true sale certification in the form
of EXHIBIT VI attached hereto.
"TRUST RECEIPT" shall mean a trust receipt issued by Custodian to Buyer
confirming Custodian's possession of certain Mortgage Files which are held
by Custodian for the benefit of Buyer or the registered holder of such
trust receipt.
"UBS FINANCING FACILITY" shall mean the Master Loan and Security Agreement
dated as of July 20, 1999, as may be amended from time to time, by and
among Seller, NCCC and UBS Real Estate Securities Inc. (formerly known as
Xxxxx Xxxxxx Real Estate Securities Inc.) and all other documents or
agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts
and rates) with financial institutions approved by Buyer; provided that
the UBS Financing Facility may be terminated or amounts available to
Seller thereunder may be reduced so long as it is a result of the
repayment of all amounts due thereunder other than as a result of an
acceleration or a default.
"UNDERWRITING GUIDELINES" shall mean the underwriting guidelines delivered
by Seller to Buyer on or prior to the Effective Date and as may be
modified or supplemented from time to time thereafter as approved by Buyer
in its sole discretion attached hereto as EXHIBIT II.
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"UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Purchased
Items is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "Uniform Commercial Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"US BANK FINANCING FACILITY" shall mean the Subordinated Loan Agreement by
and among NCMC and US Bank National Association, dated April 28, 2000, as
may be amended from time to time, and all other documents or agreements
executed in connection therewith, or replacement facilities with
substantially similar terms (including, but not limited to, amounts and
rates) with financial institutions approved by Buyer.
"USB FINANCING FACILITY" shall mean the Fifth Amended and Restated Credit
Agreement dated as of May 23, 2001, as may be amended from time to time,
by and among NCCC, NCMC and U.S. Bank National Association as agent for
the lenders thereunder and all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar
terms (including, but not limited to, amounts and rates) with financial
institutions approved by Buyer; provided that on or prior to July 31, 2001
Bank United may cease being a lender thereunder and the commitment may be
reduced by the amount of Bank United's commitment amount.
"USB SETTLEMENT ACCOUNT" shall mean the following account of U.S. Bank
National Association as agent for the lenders under the USB Financing
Facility, U.S. Bank National Association, Minneapolis, Minnesota, ABA #
0000-0000-0 for credit to New Century Mortgage Corporation, Collateral
Account #1731-0097-1378.
"WET-INK MORTGAGE LOAN" shall mean an Eligible Asset which is sold to
Buyer within 6 Business Days of, the origination thereof by Seller, which
origination is in accordance with the Underwriting Guidelines and is
funded in part or in whole with cash advanced directly to the USB
Settlement Account.
"WET-INK SUB-LIMIT" shall mean an amount equal to (i) with respect to the
first five (5) Business Days of each calendar month, $100,000,000, (ii)
with respect to the last three (3) Business Days of each calendar month,
$100,000,000 and (iii) at all other times, $80,000,000.
"WORTH PURCHASE AGREEMENT" shall mean the mortgage loan purchase
agreement, dated as of July 1, 2001 between Worth Funding Incorporated and
NCMC, as the same shall be modified and supplemented and in effect from
time to time, pursuant to which NCMC buys certain of the Eligible Assets
from Worth Funding Incorporated.
3. INITIATION; TERMINATION
(a) CONDITIONS PRECEDENT TO INITIAL TRANSACTION AND INITIAL FUNDING.
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(1) Buyer's obligation to enter into the initial Transaction
hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Transaction, of the
condition precedent that Buyer shall have received from Seller
any fees and expenses payable hereunder (including, without
limitation, the fee required pursuant to Section 3(q)), and
all of the following documents, each of which shall be
satisfactory in form and substance to Buyer and its counsel:
(A) The following Repurchase Documents delivered to
Buyer:
(1) MASTER REPURCHASE AGREEMENT. This Master
Repurchase Agreement duly completed and executed by the
parties thereto. In addition, Seller shall have taken
such other action as Buyer shall have requested in order
to perfect the security interests created pursuant to
this Agreement;
(2) CUSTODIAL AGREEMENT. The Custodial Agreement,
duly executed and delivered by NCMC, NCCC, Buyer and
Custodian. In addition, Seller shall have taken such
other action as Buyer shall have requested in order to
transfer the Purchased Assets pursuant to this
Agreement;
(3) GUARANTY. The Guaranty, duly executed and
delivered by the parties thereto; and
(4) UCC FINANCING STATEMENTS. UCC Financing
Statements naming each of NCCC and NCMC as Debtor and
Buyer as Secured Party and describing the Purchased
Items;
(5) OPINIONS OF COUNSEL. An opinion or opinions of
outside counsel to each of NCCC, NCMC and Guarantor,
substantially in the form of EXHIBIT III;
(6) ORGANIZATIONAL DOCUMENTS. A good standing
certificate and certified copies of the charter and
by-laws (or equivalent documents) of each of NCCC, NCMC
and Guarantor and of all corporate or other authority
for NCCC, NCMC or Guarantor, as applicable, with respect
to the execution, delivery and performance of the
Repurchase Documents to which it is a party and each
other document to be delivered by NCCC, NCMC or
Guarantor from time to time in connection herewith (and
Buyer may conclusively rely on such certificate until it
receives notice in writing from NCCC, NCMC or Guarantor,
as applicable, to the contrary);
(7) UNDERWRITING GUIDELINES. A copy of Seller's
current Underwriting Guidelines, and any material
changes to the Underwriting Guidelines made since the
Underwriting Guidelines were last delivered to Buyer;
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(8) SERVICING AGREEMENT(S). Any Servicing
Agreement, certified as a true, correct and complete
copy of the original; and
(9) OTHER DOCUMENTS. Such other documents as Buyer
may reasonably request, in form and substance reasonably
acceptable to Buyer.
(2) Buyer's obligation to enter into the initial purchase of
Eligible Assets hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such
Transaction, of the condition precedent that Buyer shall have
received from Seller any fees and expenses payable hereunder,
and all of the following documents, each of which shall be
satisfactory in form and substance to Buyer and its counsel:
(A) The following Repurchase Documents delivered to
Buyer:
(1) ACCOUNT AGREEMENT. An Account Agreement, duly
executed and delivered by the parties thereto;
(2) CONSENTS AND WAIVERS. Any and all irrevocable
consents and waivers required under the Existing
Financing Facilities;
(3) UCC AMENDMENTS AND RELEASES. Any and all
amendments or terminations of UCC financing statements
required by Buyer; and
(4) WORTH PURCHASE AGREEMENT. A certified copy of
the Worth Purchase Agreement;
(5) WORTH UCC FINANCING STATEMENTS. A UCC-1
Financing Statement naming Worth Funding Incorporated as
Debtor and NCMC as Secured Party under the Worth
Purchase Agreement and a UCC-3 assignment of such
Financing Statement naming Buyer as assignee;
(6) SERVICER NOTICE. The Servicer Notice, duly
executed and delivered by the parties thereto.
(b) CONDITIONS PRECEDENT TO ALL TRANSACTIONS. Buyer's obligation to
enter into each Transaction (including the initial Transaction) is
subject to the satisfaction of the following further conditions
precedent, both immediately prior to entering into such Transaction
and also after giving effect to the consummation thereof and the
intended use of the proceeds of the sale:
(1) Seller shall have delivered a Transaction Request via
Electronic Transmission in accordance with the procedures set
forth in Section 3(c);
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(2) no Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents;
(3) after giving effect to the requested Transaction, the
aggregate outstanding Purchase Price of the Transactions
outstanding shall not exceed the Maximum Amount;
(4) both immediately prior to the requested Transaction and also
after giving effect thereto and to the intended use thereof,
the representations and warranties made by Seller in Section
10, shall be true, correct and complete on and as of such
Purchase Date in all material respects with the same force and
effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date);
(5) after giving effect to the requested Transaction, the
aggregate outstanding Purchase Price of the Transactions
outstanding shall not exceed the Asset Value of all the
Purchased Assets subject to outstanding Transactions;
(6) subject to Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 27, Buyer shall have completed its
due diligence review of the Mortgage File for each Purchased
Asset, and such other documents, records, agreements,
instruments, mortgaged properties or information relating to
such Purchased Asset as Buyer in its sole discretion deems
appropriate to review and such review shall be satisfactory to
Buyer in its sole discretion;
(7) Buyer shall have received from Seller certified copies of any
Servicing Agreement relating to the Eligible Assets and Buyer
shall have reviewed and approved each such Servicing Agreement
in its sole discretion;
(8) Buyer shall have received all fees and expenses of counsel to
Buyer as contemplated by Section 14(b) which amount, at
Buyer's option, may be withheld from the sale proceeds of any
Transaction hereunder;
(9) Buyer shall have approved, in its sole discretion, all
exceptions to the Underwriting Guidelines;
(10) none of the following shall have occurred and/or be
continuing:
(A) an event or events shall have occurred in the good
faith determination of Buyer resulting in the effective
absence of a "repo market" or comparable "lending market" for
financing debt obligations secured by mortgage loans or
securities or an event or events shall have occurred resulting
in Buyer not being able to finance Purchased Assets through
the "repo market" or "lending market" with traditional
counterparties at rates which would have been reasonable prior
to the occurrence of such event or events; or
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(B) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
(C) there shall have occurred a material adverse change
in the financial condition of Buyer which affects (or can
reasonably be expected to affect) materially and adversely the
ability of Buyer to fund its obligations under this Agreement;
or
(11) with respect to each Eligible Asset, Buyer shall have received
from Custodian a Trust Receipt and a Basic Status Report and
Exception Report with exceptions acceptable to Buyer in its
sole discretion in respect of Eligible Assets to be purchased
hereunder on such Business Day;
(12) Buyer shall have received from Seller a Warehouse Lender's
Release Letter substantially in the form of EXHIBIT VII-B
hereto (or such other form acceptable to Buyer) or a Seller's
Release Letter substantially in the form of EXHIBIT VII-A
hereto (or such other form acceptable to Buyer) covering each
Eligible Asset to be sold to Buyer;
(13) The aggregate requested Purchase Price of Eligible Assets that
are not Wet-Ink Mortgage Loans that Seller has requested Buyer
purchase pursuant to the Transaction Request is equal to or in
excess of $10,000,000; and
(14) the Repurchase Date for such Transaction is not later than the
Termination Date.
Each Transaction Request delivered by Seller hereunder shall constitute a
certification by each of NCCC and NCMC that all the conditions set forth
in this Section 3(b) have been satisfied (both as of the date of such
notice or request and as of the date of such purchase).
Each of NCCC and NCMC hereby request that Buyer, on each Business Day,
convert each Eligible Asset which is a Wet-Ink Mortgage Loan for which
the Mortgage File has been received by the Custodian in accordance with
the Custodial Agreement to a dry Mortgage Loan and this request shall
constitute a certification by each of NCCC and NCMC that all the
conditions set forth in this Section 3(b) have been satisfied (both as
of the date hereof and as of the date of such conversion).
(c) Seller shall request a Transaction by delivering to Custodian and
Buyer via Electronic Transmission a request in the form of EXHIBIT I
attached hereto (a "TRANSACTION REQUEST") no later than (i) 9:00
a.m. New York time on the requested Purchase Date with respect to
the initial purchase of each Eligible Asset that is not a Wet-Ink
Mortgage Loan and with respect to each Wet-Ink Mortgage Loan
anticipated to be purchased on such Purchase Date (with a final
Seller Asset
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Schedule to be delivered no later than 11:30 a.m. New York time on
the related Purchase Date) and (ii) 4:00 p.m. New York time on the
Business Day prior to the date a Wet-Ink Mortgage Loan converts with
respect to each Wet-Ink Mortgage Loan for which Custodian has
received the related Mortgage File and there are no Fatal Exceptions
with respect thereto and such Wet-Ink Mortgage Loan is converting to
a dry Mortgage Loan on the Purchase Date. Such Transaction Request
shall describe the Purchased Assets in a Seller Asset Schedule and
set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the
Repurchase Date, (iv) the Pricing Rate applicable to the
Transaction, (v) the applicable Purchase Percentages and (vi)
additional terms or conditions not inconsistent with this Agreement.
Each such Transaction Request in respect of Eligible Assets that are
not Wet-Ink Mortgage Loans shall be for an aggregate Purchase Price
equal to or in excess of $10,000,000.
On each Purchase Date, Buyer shall forward to Seller a confirmation
(a "CONFIRMATION") by Electronic Transmission setting forth with respect
to each Transaction funded on such date, (1) the mortgage loan number, (2)
the Purchase Price for such Purchased Assets, (3) the Market Value of the
related Mortgage Loans as of the date of such Confirmation, (4) the
outstanding principal amount of the related Mortgage Loans, (5) the
Repurchase Date and (6) the Pricing Rate.
On each date that all the documents set forth in Section 2(a)(i) of
the Custodial Agreement are received by the Custodian with respect to a
Wet-Ink Mortgage Loan, and Custodian delivers to Buyer a Trust Receipt
attaching a Basic Status Report and Exception Report with respect to such
Eligible Assets, Seller shall forward to Buyer a new Confirmation by
Electronic Transmission setting forth the following information, updated
to reflect the revised Pricing Rate, and, if applicable, Market Value as a
result of the conversion of such Mortgage Loan, (1) the mortgage loan
number, (2) the Purchase Price for such Purchased Assets, (3) the Market
Value of the related Mortgage Loans, (4) the outstanding principal amount
of the related Mortgage Loans, (5) the Repurchase Date and (6) the Pricing
Rate.
In the event Seller disagrees with any terms of the Confirmation and
Seller shall notify Buyer in writing of such disagreement within one (1)
Business Day after receipt of such Confirmation unless a corrected
Confirmation is sent by Buyer. An objection sent by Seller must state
specifically that it is an objection, must specify the provision(s) being
objected to by Seller, must set forth such provision(s) in the manner that
Seller believes they should be stated, and must be received by Buyer no
more than one (1) Business Day after the Confirmation was received by
Seller.
(d) Any Confirmation by Buyer shall be deemed to have been received by
Seller on the date actually received by Seller.
(e) Except as set forth in Section 3(c), each Confirmation, together
with this Agreement, shall constitute conclusive evidence of the
terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates, and Seller's
acceptance of the related proceeds shall constitute Seller's
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agreement to the terms of such Confirmation. It is the intention of
the parties that each Confirmation shall not be separate from this
Agreement but shall be made a part of this Agreement.
(f) On the Repurchase Date, termination of a Transaction will be
effected by transfer to Seller or its designee of the Purchased
Assets (and any Income in respect thereof received by Buyer not
previously credited or transferred to, or applied to the obligations
of, Seller pursuant to Section 5) which amount shall be netted
against the simultaneous receipt of the Repurchase Price by Buyer.
To the extent a net amount is owed to one party, the other party
shall pay such amount to the party. Seller is obligated to obtain
the Mortgage Files from Buyer or its designee (including Custodian)
at Seller's expense on the Repurchase Date.
(g) Subject to the terms and conditions of this Agreement, during the
term of this Agreement Seller may sell to Buyer, repurchase from
Buyer and resell to Buyer Eligible Assets hereunder.
(h) In no event shall a Transaction be entered into when any Default or
Event of Default has occurred and is continuing or when the
Repurchase Date for such Transaction would be later than the
Termination Date.
(i) With respect to each Eligible Asset that is not a Wet-Ink Mortgage
Loan, no later than 12:00 noon, New York time, two (2) Business Days
prior to the requested Purchase Date (or such lesser time as
Custodian and Seller may agree), Seller shall deliver to Custodian
the Mortgage File, as applicable, pertaining to each Eligible Asset
to be purchased by Buyer.
(j) With respect to each Eligible Asset that is not a Wet-Ink Mortgage
Loan, pursuant to the Custodial Agreement, Custodian shall deliver
to Buyer and Seller, by no later than 11:30 a.m., New York time on a
Purchase Date, a Trust Receipt in respect of all such Eligible
Assets purchased by Buyer on such Purchase Date. Subject to the
provisions of this Section 3, the Purchase Price for each Eligible
Asset which is not a Wet-Ink Mortgage Loan will then be made
available to Seller by Buyer transferring via wire transfer, in the
aggregate amount of such Purchase Price in funds immediately
available pursuant to wire instructions set forth in the Transaction
Request (subject to the purchase limits set forth herein). Pursuant
to the Custodial Agreement, Custodian shall deliver to Buyer a Basic
Status Report and Exception Report no later than 11:00 a.m. New York
time on each Purchase Date.
(k) With respect to each Eligible Asset that is a Wet-Ink Mortgage Loan,
pursuant to the Custodial Agreement, Custodian shall deliver to
Buyer and Seller, by no later than 11:30 a.m., New York time on a
Purchase Date, a Trust Receipt in respect of all such Wet-Ink
Mortgage Loans purchased by Buyer on such Purchase Date. Subject to
the provisions of this Section 3, the Purchase Price for each
Eligible Asset which is a Wet-Ink Mortgage Loan will then be made
available to Seller by Buyer transferring, via wire transfer, to the
USB Settlement Account, in the
-25-
aggregate amount of such Purchase Price in funds immediately
available to the USB Account. Seller shall deliver the Mortgage File
related thereto to Custodian, for receipt by Custodian no later than
seven (7) Business Days following the Origination Date of such
Wet-Ink Mortgage Loan.
(l) Seller may repurchase any individual Purchased Asset without penalty
or premium, but subject to the last sentence of this Section 3(l),
on any date. The Repurchase Price payable for the repurchase of any
such Purchased Asset shall be reduced as provided in Section 5(e).
If Seller intends to make such a repurchase, Seller shall give one
(1) Business Day's prior written notice thereof to Buyer,
designating the Purchased Assets to be repurchased. If such notice
is given, the amount specified in such notice shall be due and
payable on the date specified therein, and, on receipt, such amount
shall be applied to the Repurchase Price for the designated
Purchased Assets. The amount of the original Purchase Price of the
Purchased Assets thus repurchased shall be available for subsequent
Transactions subject to the terms of this Agreement. If any Term
Purchased Asset is repurchased on any date other than the Repurchase
Date for such Term Purchased Asset, Seller shall pay to Buyer any
amount determined by Buyer in its sole discretion, exercised in good
faith, as necessary to compensate Buyer for any additional losses,
costs or expenses which it may reasonably incur as a result of such
repurchase, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by Buyer to fund or maintain such Transaction.
(m) [Reserved]
(n) At the request of Seller made at least 90 days, but in no event
earlier than 360 days, prior to the then current Termination Date,
Buyer may in its sole discretion extend the Termination Date for a
period of 364 additional days or such other period to be determined
by Buyer in its sole discretion by giving written notice of such
extension to Seller no later than sixty (60) days after Buyer's
receipt of Seller's request. Any failure by Buyer to deliver such
notice of extension shall be deemed to be Buyer's determination not
to extend the then current Termination Date.
(o) [Reserved]
(p) In the event Seller fails to maintain the average aggregate
principal balance of Transactions outstanding hereunder for any Test
Period equal to at least $120,000,000, Seller agrees to pay to Buyer
on the fifth (5th) Business Day of the next succeeding calendar
month a non-use fee (the "NON-USE FEE") equal to 25 basis points
(0.25%) per annum of the amount equal to the Maximum Amount less the
average aggregate principal balance of Transactions outstanding
hereunder over such Test Period; provided that the Seller shall not
be required to pay such Non-Use Fee if, during the applicable Test
Period, the Buyer's determination of Market Value resulted in
Purchase Prices with respect to a requested Transaction during such
Test Period equal to less than 99% of the
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outstanding principal balance of the Eligible Assets Seller
requested Buyer purchase during such Test Period. No Non-Use Fee
shall be payable by Seller if Buyer does not purchase any Eligible
Assets during such Test Period due to the occurrence of any event
set forth in Section 3(b)(10). In addition, in the event Seller
terminates this Agreement in accordance with Section 20, Seller
shall pay to Buyer on the fifth (5th) Business Day of the next
succeeding calendar month a termination fee (the "TERMINATION FEE")
equal to a percentage per annum equal to the Early Termination
Percentage, calculated based on the actual number of days remaining
and assuming a 360 day year, of the Maximum Amount for the period
commencing on the date of such termination and ending on the
original Termination Date, as may have been extended pursuant to
Section 3(n); provided, however, that if Buyer assigns its
obligation to purchase Eligible Assets from Seller under this
Agreement, no Termination Fee will be payable by Seller in the event
Seller terminates this Agreement in accordance with Section 20. All
such payments pursuant to this clause (p) shall be made in Dollars,
in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at the account set forth in Section 8(a)
hereof.
(q) Seller agrees to pay to Buyer on or prior to the Effective Date a
facility fee equal to 12.5 basis points (0.125%) per annum of the
Maximum Amount, such payment to be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to
Buyer at the account set forth in Section 8(a) hereof.
(r) On any day on which the Margin Base exceeds the aggregate
outstanding Purchase Price of all Transactions, so long as no
Default or Event of Default has occurred and is continuing:
(1) Seller may prepare a Request for Additional Transactions for
Excess Margin in the form of EXHIBIT IX attached hereto
("REQUEST FOR ADDITIONAL TRANSACTIONS FOR EXCESS MARGIN"),
specifying (i) the Eligible Assets and increase in Purchase
Price for which a Transaction is sought and the requested
Purchase Date, (ii) the Margin Base with respect to such
Eligible Assets sold hereunder before giving effect to the
requested Transaction, (iii) the Margin Base after giving
effect to the additional Transactions for such Eligible
Assets, (iv) the aggregate outstanding Purchase Price of the
Transactions prior to giving effect to the requested
Transaction, and (v) an officer's certificate from Seller
certifying that, upon the consummation of the additional
Transactions, the Margin Base would be equal to or greater
than the aggregate outstanding Purchase Price of all
Transactions, and the excess of the Margin Base over the
aggregate outstanding Purchase Price, after giving effect to
the Transaction, shall be the "EXCESS MARGIN".
(2) Seller shall transmit via Electronic Transmission the Request
for Additional Transactions for Excess Margin to Buyer prior
to 12:00 noon New York time on the requested Purchase Date.
Upon confirming that the Request for Additional Transactions
for Excess Margin correctly reflects
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the information set forth in Section 3(r)(1) and that, after
giving effect to the requested Transaction, the amount of the
Margin Base would be equal to or greater than the aggregate
outstanding Purchase Prices of all Transactions, Buyer shall
remit the additional Purchase Price in the amount set forth in
such Request for Additional Transactions for Excess Margin and
send a revised Confirmation with respect to such Purchased
Assets. In the event that Buyer's assessment of the Margin
Base would alter the information set forth in any Request for
Additional Transactions for Excess Margin, Buyer shall
promptly notify Seller in writing of such assessment.
(3) Buyer shall not be obligated to remit the additional Purchase
Price requested pursuant to a Request for Additional
Transactions for Excess Margin which (i) Buyer reasonably
determines is based on erroneous information or would result
in a Transaction not in accordance with the terms of this
Agreement, or (ii) does not reflect Buyer's current
determination of Market Value as provided in the definition
thereof.
4. MARGIN AMOUNT MAINTENANCE
(a) If at any time the Margin Base is less than the aggregate Purchase
Price for all outstanding Transactions (a "MARGIN DEFICIT"), then
Buyer may by notice to Seller (as such notice is more particularly
set forth below, a "MARGIN DEFICIT NOTICE"), require Seller to
transfer to Buyer or its designee (including Custodian) cash or
Eligible Assets ("ADDITIONAL PURCHASED ASSETS") so that the
aggregate Asset Value of the Purchased Assets, including any such
Additional Purchased Assets, will thereupon equal or exceed the
aggregate Purchase Prices for such Purchased Assets. If Buyer
delivers a Margin Deficit Notice to Seller on or prior to 6 p.m.
(New York time) on any Business Day, then Seller shall transfer
Additional Purchased Assets to Buyer no later than 5 p.m. (New York
time) the following Business Day. In the event Buyer delivers a
Margin Deficit Notice to Seller after 6 p.m. (New York time) on any
Business Day, then such Margin Deficit Notice shall be deemed to
have been delivered on the following Business Day and Seller shall
be required to transfer Additional Purchased Assets no later than 5
p.m. (New York time) on the subsequent Business Day. All cash
transferred to Buyer pursuant to this Section 4(a) shall be
deposited in the account set forth in Section 8(a) hereof and shall
be deemed to reduce the aggregate Purchase Price with respect to all
outstanding Transactions.
(b) Buyer's election, in its sole and absolute discretion, not to
deliver a Margin Deficit Notice at any time there is a Margin
Deficit shall not in any way limit or impair its right to deliver a
Margin Deficit Notice at any time a Margin Deficit exists.
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5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment
date on the Purchased Assets subject to that Transaction such Income
shall be the property of Buyer. Notwithstanding the foregoing, Buyer
agrees that until an Event of Default has occurred and is continuing
and Buyer otherwise directs, Servicer shall continue to remit Income
in accordance with the Servicer Notice and Account Agreement.
(b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Assets, Seller shall
pay to Buyer the accreted value of the Price Differential (less any
amount of such Price Differential previously paid by Seller to
Buyer) of each Transaction (each such payment, a "PERIODIC ADVANCE
REPURCHASE PAYMENT") on each Payment Date. If Seller fails to make
all or part of the Periodic Advance Repurchase Payment by 5:00 p.m.
(New York time) on the Payment Date, Seller shall be obligated to
pay to Buyer (in addition to, and together with, the Periodic
Advance Repurchase Payment) interest on the unpaid amount of the
Periodic Advance Repurchase Payment at a rate per annum equal to the
Post-Default Rate (the "LATE PAYMENT FEE") until the overdue
Periodic Advance Repurchase Payment is received in full by Buyer.
(c) Seller shall hold for the benefit of, and in trust for, Buyer all
income, including without limitation all Income received by or on
behalf of Seller with respect to such Purchased Assets. Seller shall
instruct Servicer to deposit such Income in a deposit account (the
title of which shall indicate that the funds therein are being held
in trust for Buyer) (the "COLLECTION ACCOUNT") with the Bank and
which is subject to the Account Agreement. All such Income shall be
held in trust for Buyer, shall constitute the property of Buyer and
shall not be commingled with other property of Seller, any affiliate
of Seller or the applicable Servicer except as expressly permitted
above. Funds deposited in the Collection Account during any month
shall be held therein, in trust for Buyer.
(d) Notwithstanding the preceding provisions, if an Event of Default has
occurred, all funds in the Collection Account shall be withdrawn and
applied as determined by Buyer.
(e) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Advance Repurchase Payments
actually received by Buyer for such Transaction pursuant to Sections
5(a) and (b) as of the applicable Repurchase Date, respectively,
excluding any Late Payment Fees paid pursuant to Section 5(b); it
being understood that the Late Payment Fees are properties of Buyer
that are not subject to offset against the Repurchase Price.
6. REQUIREMENTS OF LAW
(a) If any Requirement of Law (other than with respect to any amendment
made to Buyer's certificate of incorporation and by-laws or other
organizational or
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governing documents) or any change in the interpretation or
application thereof or compliance by Buyer with any request or
directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date
hereof:
(1) shall subject Buyer to any tax of any kind whatsoever with
respect to this Agreement or any Transaction (excluding net
income taxes) or change the basis of taxation of payments to
Buyer in respect thereof;
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account
of, advances, or other extensions of credit by, or any other
acquisition of funds by, any office of Buyer which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
(3) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to
Buyer, by an amount which Buyer deems to be material, of entering,
continuing or maintaining any Transaction or to reduce any amount due or
owing hereunder in respect thereof, then, in any such case, Seller shall
promptly pay Buyer such additional amount or amounts as calculated by
Buyer in good faith as will compensate Buyer for such increased cost or
reduced amount receivable.
(b) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law (other than with respect to any amendment
made to Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or
in the interpretation or application thereof or compliance by Buyer
or any corporation controlling Buyer with any request or directive
regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority made subsequent to the date hereof
shall have the effect of reducing the rate of return on Buyer's or
such corporation's capital as a consequence of its obligations
hereunder to a level below that which Buyer or such corporation
could have achieved but for such adoption, change or compliance
(taking into consideration Buyer's or such corporation's policies
with respect to capital adequacy) by an amount deemed by Buyer to be
material, then from time to time, Seller shall promptly pay to Buyer
such additional amount or amounts as will compensate Buyer for such
reduction.
(c) If Buyer becomes entitled to claim any additional amounts pursuant
to this Section, (i) it shall promptly notify Seller of the event by
reason of which it has become so entitled and (ii) at the sole
option of Buyer, (x) Buyer may terminate this Agreement and Seller
shall not be required to pay any Termination Fee or (y) this
Agreement shall continue in full force and effect, but, Seller shall
not be required to pay any Non-Use Fee with respect to each Test
Period during which Buyer is entitled to such additional amounts
solely under this Section. A
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certificate as to any additional amounts payable pursuant to this
Section submitted by Buyer to Seller shall be conclusive in the
absence of manifest error.
7. SECURITY INTEREST
(a) Each of the following items or types of property, whether now owned
or hereafter acquired, now existing or hereafter created and
wherever located, is hereinafter referred to as the "PURCHASED
ITEMS": all Mortgage Loans, all rights under each Purchase Agreement
(but not the obligations thereunder), all rights of NCMC under the
Worth Purchase Agreement with respect to Mortgage Loans originated
by Worth Funding Incorporated, all Mortgage Files, including without
limitation all promissory notes, all Servicing Records relating to
the Mortgage Loans (as defined in Section 24(c)), all Servicing
Agreements relating to the Mortgage Loans and any other collateral
pledged or otherwise relating to such Mortgage Loans, together with
all files, documents, instruments, surveys, certificates,
correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating
thereto, all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loan, all servicing fees to which
such Seller is entitled and servicing and other rights relating to
the Mortgage Loans, all Servicer Accounts established pursuant to
any Servicing Agreement and all amounts on deposit therein, from
time to time, all Purchase Agreements or other agreements or
contracts relating to, constituting, or otherwise governing, any or
all of the foregoing to the extent they relate to the Purchased
Assets including the right to receive principal and interest
payments with respect to the Purchased Assets and the right to
enforce such payments, the Collection Account and all monies from
time to time on deposit in the Collection Account, all "general
intangibles", "accounts", "chattel paper", "deposit accounts" and
"investment property" as defined in the Uniform Commercial Code as
in effect from time to time relating to or constituting any and all
of the foregoing, and any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(b) Buyer and Seller intend that the Transactions hereunder be sales to
Buyer of the Purchased Assets and not loans from Buyer to Seller
secured by the Purchased Assets. However, in order to preserve
Buyer's rights under this Agreement in the event that a court or
other forum recharacterizes the Transactions hereunder as loans and
as security for the performance by Seller of all of Seller's
obligations to Buyer hereunder and the Transactions entered into
hereunder ("REPURCHASE OBLIGATIONS") and the Seller-Related
Obligations, each of NCCC and NCMC hereby assigns, pledges and
grants a security interest in all of its right, title and interest
in, to and under the Purchased Items and Purchased Assets to Buyer
to secure the Repurchase Obligations and Seller-Related Obligations,
including without limitation the repayment of all amounts owing to
Buyer hereunder. The assignment, pledge and grant of security
interest contained herein shall be, and each of NCCC and NCMC hereby
represents and warrants to Buyer that it is, a
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first priority perfected security interest. Each of NCCC and NCMC
agrees to xxxx its computer records and tapes to evidence the
interests granted to Buyer hereunder. All Purchased Items shall
secure the payment of all obligations of Seller now or hereafter
existing under this Agreement, including, without limitation,
Seller's obligation to repurchase Purchased Assets, or if such
obligation is so recharacterized as a loan, to repay such loan, for
the Repurchase Price and to pay any and all other amounts owing to
Buyer hereunder.
(c) Pursuant to the Custodial Agreement, Custodian shall hold the
Mortgage Files as exclusive bailee and agent for Buyer pursuant to
the terms of the Custodial Agreement and shall deliver to Buyer
Trust Receipts each to the effect that it has reviewed such Mortgage
Files in the manner and to the extent required by the Custodial
Agreement and identifying any deficiencies in such Mortgage Files as
so reviewed.
8. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds
to be made by Seller hereunder shall be made in Dollars, in
immediately available funds, without deduction, set-off or
counterclaim, to Buyer at the following account maintained by Buyer;
Account No. GLA 111569 SER, for the account of CDC Mortgage Capital,
Inc., Bank of New York, ABA No. 000000000, Attn: Chin-Xxxx Xxxx not
later than 3 p.m. New York time, on the date on which such payment
shall become due (and each such payment made after such time shall
be deemed to have been made on the next succeeding Business Day).
Notwithstanding the preceding sentence, on each Repurchase Date,
Seller shall remit payment of the Repurchase Price to the Settlement
Account in accordance with Section 11 of the Custodial Agreement.
Seller acknowledges that it has no rights of withdrawal from the
foregoing account.
(b) On the Purchase Date for each Transaction, ownership of the
Purchased Assets shall be transferred to Buyer or its designee
(including Custodian) against the simultaneous transfer of the
Purchase Price to the account designated pursuant to the wire
instructions in the related Seller Asset Schedule, not later than 6
p.m. New York time, simultaneously with the delivery to Custodian of
the Purchased Assets relating to each Transaction. Each of NCCC and
NCMC hereby sells, transfers, conveys and assigns to Buyer or its
designee (including Custodian) without recourse, but subject to the
terms of this Agreement, all the right, title and interest of NCCC
and NCMC, as applicable, in and to the Purchased Assets together
with all right, title and interest in and to the proceeds of any
related Purchased Items.
(c) In connection with such sale, transfer, conveyance and assignment,
on or prior to each Purchase Date, Seller shall deliver or cause to
be delivered and released to Buyer or its designee (including
Custodian) (i) the Custodial Identification Certificate and (ii) the
documents identified in the Custodial Agreement.
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(d) Any Mortgage Files not delivered to Buyer or its designee (including
Custodian) are and shall be held in trust by Seller or its designee
for the benefit of Buyer as the owner thereof. Seller or its
designee shall maintain a copy of the Mortgage File and the
originals of the Mortgage File not delivered to Buyer or its
designee (including Custodian). The possession of the Mortgage File
by Seller or its designee is at the will of Buyer for the sole
purpose of servicing the related Purchased Mortgage Loan, and such
retention and possession by Seller or its designee is in a custodial
capacity only. Each Mortgage File retained or held by Seller or its
designee shall be segregated on Seller's books and records from the
other assets of Seller or its designee and the books and records of
Seller or its designee shall be marked appropriately to reflect
clearly the sale of the related Purchased Mortgage Loan to Buyer.
Seller or its designee shall release its custody of the Mortgage
File only in accordance with written instructions from Buyer, unless
such release is required as incidental to the servicing of the
Purchased Assets or is in connection with a repurchase of any
Purchased Asset by Seller.
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets and Purchased Items shall pass to Buyer and
Buyer shall have free and unrestricted use of all Purchased Assets and
Purchased Items. Nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Assets and
Purchased Items or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Purchased Assets and Purchased
Items, all on terms that Buyer may determine in its sole discretion.
Nothing contained in this Agreement shall obligate Buyer to segregate any
Purchased Assets or Purchased Items delivered to Buyer by Seller.
10. SELLER'S REPRESENTATIONS
Each of NCCC and NCMC represents and warrants to Buyer that as of the
Purchase Date for the purchase of any Purchased Assets by Buyer from
Seller and as of the date of this Agreement and any Transaction hereunder
and at all times while the Repurchase Documents and any Transaction
hereunder is in full force and effect:
(a) ACTING AS PRINCIPAL. Seller will engage in such Transactions as
principal (or, if agreed in writing in advance of any Transaction by
the other party hereto, as agent for a disclosed principal).
(b) SOLVENCY. Neither the Repurchase Documents nor any Transaction
thereunder are entered into in contemplation of insolvency or with
intent to hinder, delay or defraud any of Seller's creditors. The
transfer of the Mortgage Loans subject hereto and the obligation to
repurchase such Mortgage Loans is not undertaken with the intent to
hinder, delay or defraud any of Seller's creditors. Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any
successor provision thereof and the transfer and sale of the
Mortgage Loans pursuant hereto and the obligation to repurchase such
Mortgage Loan (i) will not cause Seller to
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become insolvent, (ii) will not result in Seller having unreasonably
small capital, and (iii) will not result in debts that would be
beyond Seller's ability to pay as the same mature. Seller received
reasonably equivalent value in exchange for the transfer and sale of
the Purchased Assets and Purchased Items subject hereto.
(c) NO BROKER. Seller has not dealt with any broker, investment banker,
agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased
Assets pursuant to this Agreement.
(d) ABILITY TO PERFORM. Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in the Repurchase Documents applicable to it to
which it is a party.
(e) NO DEFAULTS. No Default or Event of Default has occurred and is
continuing hereunder.
(f) LEGAL NAME; EXISTENCE. NCMC's exact legal name is New Century
Mortgage Corporation. NCCC's exact legal name is NC Capital
Corporation. Each of NCCC and NCMC (a) is a corporation duly
organized, validly existing and in good standing under the laws of
California, (b) has all requisite corporate or other power, and has
all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being
or as proposed to be conducted, except where the lack of such
licenses, authorizations, consents and approvals would not be
reasonably likely to have a Material Adverse Effect; and (c) is
qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary, except where failure so to
qualify could not be reasonably likely (either individually or in
the aggregate) to have a Material Adverse Effect.
(g) FINANCIAL CONDITION. Seller has heretofore furnished to Buyer a copy
of (a) its consolidated balance sheet for the fiscal year ended
December 31, 2000, and the related consolidated statements of income
and retained earnings and of cash flows for Seller and its
consolidated Subsidiaries for such fiscal year, each audited by and
with the unqualified opinion thereon of KPMG LLP and (b) its
consolidated balance sheet for the quarterly fiscal period of Seller
as of March 31, 2001 and its consolidated balance sheet as of May
31, 2001 and the related consolidated statements of income and
retained earnings and of cash flows for Seller and its consolidated
Subsidiaries for such periods, setting forth in each case in
comparative form the figures for the previous year. All such
financial statements are complete and correct and fairly present, in
all material respects, the consolidated financial position of Seller
and its Subsidiaries and the consolidated results of their
operations as at such dates and for such fiscal periods, all in
accordance with GAAP applied on a consistent basis. Since May 31,
2001, there has been no material adverse change in the consolidated
business, operations or financial condition of Seller and its
consolidated Subsidiaries taken as a whole from that set forth in
said financial statements.
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(h) LITIGATION. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing
which are pending or threatened) or other legal or arbitrable
proceedings affecting Seller or any of its Subsidiaries or affecting
any of the Property of any of them before any Governmental Authority
which (i) questions or challenges the validity or enforceability of
the Repurchase Documents or any action to be taken in connection
with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $500,000 except as set
forth on Schedule 3, or (iii) individually or in the aggregate, if
adversely determined, could reasonably be likely to have a Material
Adverse Effect.
(i) NO BREACH. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein
contemplated to be entered into by Seller in compliance with the
terms and provisions thereof will conflict with or result in a
breach of the organizational documents of NCCC, NCMC or Guarantor,
or any applicable law, rule or regulation, or any order, writ,
injunction or decree of any Governmental Authority, or any Servicing
Agreement or other material agreement or instrument to which NCCC,
NCMC, Guarantor or any of their respective Subsidiaries is a party
or by which any of them or any of their Property is bound or to
which any of them is subject, or constitute a default under any such
material agreement or instrument or result in the creation or
imposition of any Lien (except for the Liens created pursuant to the
Repurchase Documents) upon any Property of NCCC, NCMC or Guarantor,
or any of their respective Subsidiaries pursuant to the terms of any
such agreement or instrument, other than a breach or default for
which a consent or waiver has been obtained pursuant to Section
3(a)(1)(F).
(j) ACTION. Each of NCCC, NCMC and Guarantor has all necessary corporate
or other power, authority and legal right to execute, deliver and
perform its obligations under each of the Repurchase Documents to
which it is a party, as applicable; the execution, delivery and
performance by NCCC, NCMC or Guarantor of each of the Repurchase
Documents to which it is a party have been duly authorized by all
necessary corporate or other action on its part; and each Repurchase
Document to which it is a party has been duly and validly executed
and delivered by NCCC, NCMC or Guarantor, as applicable, and
constitutes a legal, valid and binding obligation of NCCC, NCMC or
Guarantor, as applicable, enforceable against NCCC, NCMC or
Guarantor, as applicable, in accordance with its terms.
(k) APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or
performance by NCCC, NCMC or Guarantor, as applicable, of the
Repurchase Documents to which it is a party or for the legality,
validity or enforceability thereof, except for filings and
recordings in respect of the Liens created pursuant to the
Repurchase Documents.
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(l) MARGIN REGULATIONS. Neither any Transaction hereunder, nor the use
of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation T, U or X.
(m) TAXES. Each of NCCC, NCMC, Guarantor and their respective
Subsidiaries have filed all Federal income tax returns and all other
material tax returns that are required to be filed by them and have
paid all taxes due pursuant to such returns or pursuant to any
assessment received by it or any of its Subsidiaries, except for any
such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided. The charges, accruals
and reserves on the books of NCCC, NCMC, Guarantor and their
respective Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of NCCC, NCMC or Guarantor, as
applicable, adequate.
(n) INVESTMENT COMPANY ACT. None of NCCC, NCMC, Guarantor nor any of
their respective Subsidiaries is an "investment company", or a
company "controlled" by an "investment company," within the meaning
of the Investment Company Act of 1940, as amended.
(o) PURCHASED ASSETS.
(1) Neither NCCC nor NCMC has assigned, pledged, or otherwise
conveyed or encumbered any Mortgage Loan to any other Person
(except as between any of NCCC, Worth Funding Incorporated and
NCMC), and immediately prior to the sale of such Mortgage Loan
to Buyer, NCCC and/or NCMC was the sole owner of such Mortgage
Loan and had good and marketable title thereto, free and clear
of all Liens, in each case except for Liens to be released
simultaneously with the sale to Buyer hereunder. No Mortgage
Loan sold to Buyer hereunder was acquired (by purchase or
otherwise) by NCCC or NCMC from an Affiliate of NCCC or NCMC
(except as between any of NCCC, Worth Funding Incorporated and
NCMC), as applicable unless a True Sale Certification has been
delivered to Buyer.
(2) The provisions of this Agreement are effective to either
constitute a sale of Purchased Items to Buyer or to create in
favor of Buyer a valid security interest in all right, title
and interest of NCCC and NCMC in, to and under the Purchased
Items.
(3) Upon receipt by Custodian of each Mortgage Note, endorsed in
blank by a duly authorized officer of NCCC or NCMC, as
applicable, either a purchase shall have been completed by
Buyer of each Mortgage Note or Buyer shall have a valid and
fully perfected first priority security interest in the
applicable Mortgage Note and in such Seller's interest in the
related Mortgaged Property.
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(4) Upon the filing of financing statements on Form UCC-1 naming
Buyer as "Secured Party", and NCCC and NCMC as "Debtor" and
describing the Purchased Items, in the jurisdictions and
recording offices listed on EXHIBIT IV attached hereto, the
security interests granted hereunder in the Purchased Items
will constitute fully perfected first priority security
interests under the Uniform Commercial Code in all right,
title and interest of NCCC and NCMC in, to and under such
Purchased Items, which can be perfected by filing under the
Uniform Commercial Code.
(5) Upon execution and delivery of the Account Agreement, Buyer
shall either be the owner of, or have a valid and fully
perfected first priority security interest in, the investment
property and all deposit accounts comprising Purchased Items.
(6) With respect to each Purchased Asset, each of the
representations and warranties on Schedule 1 is true and
correct.
(p) CHIEF EXECUTIVE OFFICE/JURISDICTION OF ORGANIZATION. On the
Effective Date, and during the four months immediately preceding the
Effective Date, each of NCCC and NCMC's chief executive office, is,
and has been located at 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000. On the Effective Date, each of NCCC and NCMC's
jurisdiction of organization is California.
(q) LOCATION OF BOOKS AND RECORDS. The location where each of NCCC and
NCMC keeps its books and records, including all computer tapes and
records related to the Purchased Items is its chief executive
office.
(r) RESERVED.
(s) SERVICING AGREEMENTS. Seller has delivered to Buyer all Servicing
Agreements with respect to the Purchased Mortgage Loans and no
default or event of default exists thereunder.
(t) EXISTING FINANCING FACILITIES. Seller has delivered to Buyer copies
of all Existing Financing Facilities and no defaults or events of
default exist thereunder.
(u) TRUE AND COMPLETE DISCLOSURE. (a) The information, reports,
financial statements, exhibits and schedules furnished in writing by
or on behalf of NCCC, NCMC or Guarantor to Buyer in connection with
the negotiation, preparation or delivery of this Agreement and the
other Repurchase Documents or included herein or therein or
delivered pursuant hereto or thereto (other than with respect to the
Mortgage Loans), when taken as a whole, do not contain any untrue
statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf
of each of NCCC, NCMC and Guarantor to Buyer in connection with this
Agreement and the other Repurchase Documents and the transactions
contemplated hereby (other than with respect to the Mortgage Loans)
and thereby
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will be true, complete and accurate in every material respect, or
(in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is
no fact known to a Responsible Officer of either NCCC or NCMC, after
due inquiry, that could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other
Repurchase Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to Buyer for
use in connection with the transactions contemplated hereby or
thereby.
(v) ERISA. NCCC, NCMC, Guarantor and any of their respective ERISA
Affiliates are not and will not be in the future, required to
contribute to any Plan (including Multiemployer Plans) subject to
the applicable provisions of ERISA.
(w) WORTH PURCHASE AGREEMENT. Each Eligible Asset sold by Seller to
Buyer, which was originated by Worth Funding Incorporated, was
purchased by Seller pursuant to the Worth Purchase Agreement.
11. COVENANTS OF SELLER
On and as of the date of this Agreement and each Purchase Date and until
this Agreement is no longer in force with respect to any Transaction, each
of NCCC and NCMC covenants that it will:
(a) FINANCIAL STATEMENTS. Seller shall deliver to Buyer:
(1) as soon as available and in any event within thirty (30)
calendar days after the end of each calendar month, the
unaudited consolidated balance sheets of Guarantor, Seller and
their consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of income
and retained earnings and of cash flows for Guarantor, Seller
and their consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period,
accompanied by a certificate of a Responsible Officer of
Guarantor and Seller, as applicable, which certificate shall
state that said consolidated financial statements fairly
present in all material respects the consolidated financial
condition and results of operations of Guarantor or Seller and
its consolidated Subsidiaries, as applicable, in accordance
with GAAP, consistently applied, as at the end of, and for,
such period (subject to normal year-end adjustments);
(2) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Guarantor or Seller, the
consolidated balance sheets of Guarantor and Seller and their
respective consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income
and retained earnings and of cash flows for Guarantor and
Seller and their respective consolidated Subsidiaries for such
year, setting forth in each case in comparative form the
figures for the previous year,
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accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial
statements fairly present the consolidated financial condition
and results of operations of Guarantor and Seller and their
respective consolidated Subsidiaries as at the end of, and
for, such fiscal year in accordance with GAAP, and a
certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default or
Event of Default;
(3) prior to the end of each fiscal year, final annual budgets,
forecasts and pro-forma cash flow projections developed by
Guarantor, NCMC and NCCC for their next succeeding fiscal
year;
(4) as soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of Seller, management
reports containing such information with respect to each
Junior Securitization Interest owned by any of NCCC, NCMC or
their respective Affiliates, and the related Company
Securitization Transaction, as Buyer may request, including,
without limitation, information concerning reserve account
balances, cash receipts, prepayment and credit loss
experience, REO Property inventory status and loss
projections, and relevant gain on sale assumptions;
(5) from time to time such other information regarding the
financial condition, operations, or business of Seller as
Buyer may reasonably request; and
(6) as soon as available and in any event within thirty (30)
calendar days after the end of each calendar month, the
balance sheet and statement of profits and losses as at the
end of such period for Worth Funding Incorporated.
Seller will furnish to Buyer, at the xxxx Xxxxxx furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a
certificate of a Responsible Officer of Seller to the effect that, to the
best of such Responsible Officer's knowledge, Seller during such fiscal
period or year has observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Repurchase Documents to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate (and, if any Default or Event of Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action Seller has taken or proposes to take with respect
thereto).
(b) LITIGATION. Seller will promptly, and in any event within ten (10)
days after service of process on any of the following, give to Buyer
notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing
which are threatened or pending) or other legal or arbitrable
proceedings affecting Seller or any of its Subsidiaries or affecting
any of the
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Property of any of them before any Governmental Authority that (i)
questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with
the transactions contemplated hereby, (ii) makes a claim or claims
in an aggregate amount greater than $500,000, or (iii) which,
individually or in the aggregate, if adversely determined, could be
reasonably likely to have a Material Adverse Effect.
(c) EXISTENCE, ETC. Each of NCCC and NCMC will:
(1) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises necessary
for the operation of its business (provided that nothing in
this Section 11(c)(1) shall prohibit any transaction expressly
permitted under Section 11(d));
(2) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to
comply with such requirements could be reasonably likely
(either individually or in the aggregate) to have a Material
Adverse Effect;
(3) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied;
(4) not move its chief executive office from the address referred
to in Section 10(p) or change its jurisdiction of organization
unless it shall have provided Buyer thirty (30) days' prior
written notice of such change;
(5) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or
on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and
by proper proceedings and against which adequate reserves are
being maintained; and
(6) permit representatives of Buyer, upon reasonable notice
(unless a Default shall have occurred and is continuing, in
which case, no prior notice shall be required), during normal
business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the
extent reasonably requested by Buyer.
(d) RESTRICTION ON FUNDAMENTAL CHANGES. Guarantor, NCCC and NCMC will
not, and will not permit any of their Subsidiaries to, engage in any
business activities or operations substantially different from or
unrelated to those in which Guarantor, NCCC and NCMC were engaged on
the Effective Date, enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of
transactions, any of its assets, whether now owned
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or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business or Property of, or stock or other
evidence of beneficial ownership of, any Person, except:
(1) Guarantor, NCCC or NCMC may sell or otherwise dispose of
property in the ordinary course of business, provided such
sales do not include all or substantially all of the assets of
Guarantor, NCCC or NCMC;
(2) Guarantor and its Subsidiaries other than Seller may engage in
any business involving the origination, acquisition, servicing
or sale of consumer Indebtedness; and
(3) the Seller may transfer assets with a book value not to exceed
$6,000,000 at any time to REO Sub, provided that Buyer's
interest has been released in such assets in accordance
herewith.
(e) MARGIN DEFICIT. If at any time there exists a Margin Deficit, Seller
shall cure same in accordance with Section 4.
(f) NOTICES. Seller shall give notice to Buyer:
(1) promptly upon receipt of notice or knowledge of the occurrence
of any Default or Event of Default;
(2) with respect to any Purchased Asset, promptly upon receipt of
any principal prepayment (in full or partial) of such
Purchased Asset;
(3) with respect to any Purchased Asset hereunder, promptly upon
receipt of notice or knowledge that the underlying Mortgaged
Property has been damaged by waste, fire, earthquake or earth
movement, flood, tornado or other casualty, or otherwise
damaged so as to affect adversely the Asset Value of such
Purchased Asset (provided that Seller may satisfy its
obligations under this clause (3) by causing Servicer to
notify Buyer of any such damage);
(4) promptly upon receipt of notice or knowledge of (i) any
material default related to any Purchased Item, (ii) any Lien
or security interest on, or claim asserted against, any
Purchased Item or (iii) any event or change in circumstances
which could reasonably be expected to have a Material Adverse
Effect;
(5) promptly upon any material change in the market value of any
or all of Seller's assets which could reasonably be expected
to have a Material Adverse Effect;
(6) no later than five Business Days after the end of each such
month, of all amounts borrowed under the Existing Financing
Facilities during such month, in the form of a daily
tabulation of all such amounts borrowed;
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(7) upon any material amendment to the Existing Financing
Facilities, any decrease in the gross amount available to be
borrowed thereunder, or any change in custodian or custodial
arrangements relating thereto; and
(8) promptly upon the occurrence of any default or event of
default under the Existing Financing Facilities.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of Seller setting forth details of the occurrence
referred to therein and stating what action Seller has taken or proposes
to take with respect thereto.
(g) REPORTS. Seller shall provide Buyer with a quarterly report, which
report shall include, among other items, a summary of such Seller's
delinquency and loss experience with respect to Mortgage Loans
serviced by Seller, any Servicer or any designee of either,
operating statements and the occupancy status of such Mortgaged
Property and other property level information, plus any such
additional reports as Buyer may reasonably request with respect to
Seller or any Servicer's servicing portfolio or pending originations
of Mortgage Loans.
(h) UNDERWRITING GUIDELINES. All Eligible Assets will conform with, and
will be assigned a Risk Rating in accordance with, the Underwriting
Guidelines. Seller shall not make any material change in the
Underwriting Guidelines without the prior consent of Buyer and shall
review the Underwriting Guidelines periodically to confirm that they
are being complied with in all material respects and are adequate to
meet Seller's business objectives. In the event Seller makes any
material amendment or modification to the Underwriting Guidelines,
Seller shall promptly deliver to Buyer a complete copy of the
amended or modified Underwriting Guidelines. Seller shall deliver to
Buyer a complete copy of the then-current Underwriting Guidelines
(i) on the 1st day of each Test Period and (ii) promptly upon
Buyer's request.
(i) AFFILIATE TRANSACTIONS. Guarantor, NCCC and NCMC will not, and will
not permit any of their Subsidiaries to, enter into any transaction
with an Affiliate of Guarantor, NCCC or NCMC, except: (a)
transactions in the ordinary course of business on terms no less
favorable to Guarantor, NCCC or NCMC than those that would be
obtained in an arm's-length transaction; (b) Indebtedness described
in Sections 11(s)(5) and 11(s)(10); (c) guaranties of Indebtedness
described in Section 11(k); (d) transfers of assets by NCMC to NCCC
and REO Sub as described in Sections 11(k)(3) and 11(k)(4); and (e)
transfers by NCCC and NCCC of Junior Securitization Interests to
Residual Finance Subsidiaries. In no event shall Seller transfer to
Buyer hereunder any Mortgage Loan acquired by Seller from an
Affiliate of Seller (other than each other Seller or Worth Funding
Incorporated) unless a True Sale Certification has been delivered to
Buyer prior to such sale.
(j) LIENS. Guarantor, NCCC and NCMC will not, and will not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any
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Lien with respect to any property now owned or hereafter acquired by
Guarantor, NCCC or NCMC, or any income or profits therefrom, except:
(1) [Reserved];
(2) Liens in connection with deposits or pledges to secure payment
of workers' compensation, unemployment insurance, old age
pensions or other social security obligations, in the ordinary
course of business of Guarantor, NCCC or NCMC;
(3) Liens for taxes, fees, assessments and governmental charges
not delinquent or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves
have been established in accordance with GAAP;
(4) encumbrances consisting of zoning regulations, easements,
rights of way, survey exceptions and other similar
restrictions on the use of real property and minor
irregularities in title thereto which do not materially impair
their use in the operation of its business;
(5) Liens on equipment arising under any capitalized lease
obligation or other purchase money Liens on equipment acquired
after the Effective Date to secure Indebtedness permitted
pursuant to Section 11(s)(3);
(6) Liens incurred in connection with gestation repurchase
agreements or similar arrangements, including, without
limitation, (i) arrangements under which Guarantor or its
Subsidiaries are required to repurchase Mortgage-backed
Securities or Mortgage Loans from any lender or other
counterparty reasonably satisfactory to Buyer, or (ii) credit
facilities structured as loan and security agreements;
provided, that such gestation repurchase agreements or similar
arrangements are entered into in the ordinary course of
business in contemplation of the subsequent non-recourse sale
of such Mortgage-backed Securities or Mortgage Loans,
including without limitation, liens granted under the Existing
Financing Facilities;
(7) Liens on Junior Securitization Interests which secure
Indebtedness permitted by Section 11(s)(4);
(8) Liens arising under Interest Rate Protection Agreements;
(9) a pledge of the stock of REO Sub to SBRC pursuant to the
Salomon REO Financing Facility; and
(10) a pledge of the stock of NC Residual II Corporation to
Financial Securities Assurance Corporation.
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(k) GUARANTEES. Guarantor, NCCC and NCMC will not, and will not permit
any of their Subsidiaries to, directly or indirectly, create or
become or be liable with respect to any Guarantee, other than:
(1) the Guarantee pursuant to the USB Financing Facility;
(2) Guarantees by Guarantor of Indebtedness of NCMC OR NCCC
secured by liens described in Section 11(j)(5), in an amount
not to exceed $7,500,000;
(3) Guarantees by Guarantor of NCMC's or NCCC's obligations
relating to (i) Indebtedness permitted by Sections 11(s)(4)
and 11(s)(7) or (ii) the Strategic Alliance Agreement (as
defined below) described in Section 11(t)(10);
(4) Guarantees by NCMC of the obligations of NCCC or Residual
Finance Subsidiaries in respect of Indebtedness permitted by
Sections 11(s)(4) and 11(s)(7); and
(5) the Guaranty.
(l) LIMITATION ON DISTRIBUTIONS. After the occurrence and during the
continuation of any Default, neither NCCC nor NCMC shall make any
payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement
or other acquisition of any equity or partnership interest of NCCC
or NCMC, as applicable, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of NCCC or
NCMC, as applicable.
(m) NET WORTH. Guarantor will at all times during each fiscal year
maintain Tangible Net Worth of not less than (a) the greater of (i)
$130,000,000 or (ii) eighty-five percent (85%) of the Tangible Net
Worth at the end of its most recently completed fiscal year (or, in
the case of the Tangible Net Worth at the end of any fiscal year,
its prior fiscal year) plus (b) ninety percent (90%) of capital
contributions made during such fiscal year plus (c) fifty percent
(50%) of positive year-to-date net income. NCMC will at all times
during each fiscal year maintain Tangible Net Worth of not less than
(a) the greater of (i) $85,000,000 or (ii) eighty-five percent (85%)
of the Tangible Net Worth at the end of its most recently completed
fiscal year (or, in the case of the Tangible Net Worth at the end of
any fiscal year, its prior fiscal year) plus (b) ninety percent
(90%) of capital contributions made during such fiscal year plus (c)
fifty percent (50%) of positive year-to-date net income. NCCC will
at all times during each fiscal year maintain Tangible Net Worth of
not less than $1.00.
(n) MINIMUM LIQUIDITY. Seller will not permit the sum of (a) Cash of the
Guarantor plus (b) the lesser of the Borrowing Base (as defined
therein) of the USB Financing Facility and the Commitment Amounts
(as defined therein) of the USB
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Financing Facility minus, in either case, the outstanding principal
balance of all Loans thereunder (as defined therein), plus (c) the
lesser of eighty percent (80%) of the receivables related to the
sale or transfer of NCMC's or NCCC's interest in any Servicing
Contract, or $5,000,000, to (i) be less than $10,000,000 as of the
end of any month or (ii) remain less than $10,000,000 for more than
ten (10) calendar days after giving effect to any mandatory
prepayment of principal (or the equivalent) under any Residual
Financing Agreement.
(o) LEVERAGE RATIO. Guarantor will not permit (i) the Quarterly Average
Leverage Ratio for any period of measurement to be greater than 10.0
to 1.0, (ii) the Daily Leverage Ratio on any date to be greater than
15.0 to 1.0, or (iii) the Adjusted Leverage Ratio as of the last day
of each fiscal quarter to be greater than 12.0 to 1.0. NCMC will not
permit the Leverage Ratio of NCMC to be greater than 8.0 to 1.0 as
of the last day of each fiscal quarter of NCMC.
(p) SERVICER; SERVICING TAPE. Seller shall provide to Buyer, via
Electronic Transmission, a remittance report on a monthly basis by
no later than the 12th day of each month (the "REPORTING DATE")
containing servicing information, including without limitation those
fields reasonably requested by Buyer from time to time, on a
loan-by-loan basis and in the aggregate, with respect to the
Purchased Mortgage Loans serviced hereunder by Seller or any
Servicer for the month (or any portion thereof) prior to the
Reporting Date (such remittance report, an "ASSET TAPE"). Seller
shall not cause the Mortgage Loans to be serviced by any servicer
other than a servicer expressly approved in writing by Buyer, which
approval shall be deemed granted by Buyer with respect to Seller
with the execution of this Agreement.
(q) REQUIRED FILINGS. Seller shall promptly provide Buyer with copies of
all documents which NCCC, NCMC or any Subsidiary of NCCC or NCMC is
required to file with the Office of the Comptroller of Currency in
accordance with its regulations.
(r) REMITTANCE OF PREPAYMENTS. Seller shall remit or cause to be
remitted to Buyer, with sufficient detail via Electronic
Transmission to enable Buyer to appropriately identify the Mortgage
Loan to which any amount remitted applies, all full or partial
principal prepayments on any Purchased Asset that Seller has
received on a weekly basis, to be paid on Thursday of the next
succeeding week (or the next Business Day).
(s) INDEBTEDNESS. Guarantor, NCCC and NCMC will not, and will not permit
any of their Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:
(1) The obligations of Seller hereunder and Guarantor under the
Guaranty;
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(2) current liabilities not more than ninety (90) days overdue,
unless contested in good faith by appropriate proceedings and
any reserves required by GAAP have been established, incurred
by Guarantor, NCMC or NCCC in the ordinary course of business
otherwise than for money borrowed;
(3) Indebtedness incurred to finance the purchase of equipment and
secured solely by Liens on such equipment, in an aggregate
amount not to exceed $10,000,000;
(4) Indebtedness incurred to finance all Junior Securitization
Interests which Indebtedness is secured only by Junior
Securitization Interests, provided, that such Indebtedness
does not exceed 50% of the aggregate value of all Junior
Securitization Interests determined in accordance with GAAP;
(5) intercompany Indebtedness of Guarantor to NCCC or NCMC in an
aggregate amount not to exceed $1,000,000;
(6) intercompany Indebtedness of NCCC or NCMC to Guarantor
incurred in the ordinary course of business;
(7) obligations under gestation repurchase agreements or similar
arrangements of the type described in Section 11(j)(6);
(8) Subordinated Debt;
(9) Indebtedness incurred by NCCC or NCMC in connection with the
Salomon REO Financing Facility in an aggregate amount not to
exceed $3,000,000; and
(10) intercompany Indebtedness between NCMC and NCCC incurred in
the ordinary course of business.
(t) INVESTMENTS. Guarantor, NCMC and NCCC will not, and will not permit
any of their Subsidiaries to, directly or indirectly, make or own
any Investment, except Investments in:
(1) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the
date of acquisition thereof;
(2) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at
the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or Xxxxx'x Investors Service, Inc.;
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(3) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having
the highest rating obtainable from either Standard & Poor's
Ratings Group, a division of McGraw Hill, Inc., or Xxxxx'x
Investors Service, Inc.;
(4) in the case of Guarantor, other consumer debt obligations
originated or acquired by Guarantor in the ordinary course of
Guarantor's business, in the case of NCMC, Mortgage Loans
originated or acquired by NCMC in the ordinary course of
NCMC's business, and in the case of NCCC, Mortgage Loans
acquired from NCMC in the ordinary course of NCCC's business;
(5) certificates of deposits or bankers acceptances issued by
Buyer or any other commercial bank organized under the laws of
the United States or any State thereof and having a combined
capital and surplus of at least $500,000,000, or by United
States offices of foreign banks having the highest rating
obtainable from a nationally recognized rating agency, in each
case maturing within one year from the date of acquisition
thereof;
(6) Investments in mutual funds that invest substantially all of
their assets in Investments of the types described in
subsections (1), (2), (3) and (5) of this Section 11(t);
(7) the capital stock of any Subsidiary (subject to the
limitations set forth in Sections 11(d) and 11(u);
(8) in the case of NCMC and NCCC, loans to Guarantor in an
aggregate amount not to exceed $1,000,000;
(9) direct equity investments made by either NCMC or NCCC, to the
extent no Event of Default or Default has occurred and is
continuing, or would occur as a result thereof, in or loans to
Persons in the mortgage origination business, in an aggregate
amount not to exceed $2,500,000;
(10) Investments made or to be made by NCMC, in an amount not to
exceed $1,250,000 in the aggregate, and a guaranty made by
Guarantor, pursuant to a Strategic Alliance Agreement (the
"STRATEGIC ALLIANCE AGREEMENT") by and among NCMC, Qualified
Financial Services, Inc., a Colorado corporation, Qualified
Financial Services, Inc., a California corporation, Xxxxx
Xxxxx, an individual, and Xxxxx V.V. Thais, an individual;
(11) Investments arising under Interest Rate Protection Agreements;
(12) in the case of Guarantor, loans to NCMC and NCCC; and
(13) intercompany Indebtedness between NCMC and NCCC incurred in
the ordinary course of business.
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(u) SUBSIDIARIES. (a) Guarantor will not create or acquire any
Subsidiaries other than (i) NCCC and NCMC, (ii) the Subsidiaries
listed on Schedule 2 hereto, (iii) Residual Finance Subsidiaries,
and (iv) Subsidiaries engaged solely in any business involving the
origination, acquisition, servicing and sale of consumer
obligations, and (b) Seller will not create or acquire any
Subsidiaries other than (i) the Subsidiaries listed on Schedule 2
hereto, (ii) Residual Finance Subsidiaries, and (iii) Subsidiaries
acquired as a result of Investments permitted pursuant to Section
11(t)(10).
(v) RESTRICTED PAYMENTS. Guarantor, NCCC and NCMC will not make any
Restricted Payments, other than (a) dividends paid by Guarantor on
its Series 1998A Convertible Preferred Stock and its Series 1999A
Convertible Preferred Stock in an aggregate amount not to exceed
$3,000,000 per annum, and (b) dividends paid by NCMC to Guarantor to
enable Guarantor to pay such dividends in an amount not to exceed
$3,000,000 per annum; provided, that in each case both before and
after giving effect to such dividends, Guarantor, NCCC and NCMC are
in compliance with the covenants set forth in Section 11 of this
Agreement and no Event of Default or Default has occurred and is
continuing.
(w) CUSTODIAL AGREEMENT AND ACCOUNT AGREEMENT. Seller shall maintain
each of the Custodial Agreement and Account Agreement in full force
and effect and shall not amend or modify either of the Custodial
Agreement or the Account Agreement or waive compliance with any
provisions thereunder without the prior written consent of Buyer.
(x) INCONSISTENT AGREEMENTS. Guarantor, NCMC and NCCC will not, and will
not permit any of their Subsidiaries to, directly or indirectly,
enter into any agreement containing any provision which would be
violated or breached by any Transaction hereunder or by the
performance by either of Guarantor, NCCC or NCMC of their respective
obligations under any Repurchase Document to which it is a party.
(y) COMPLIANCE REPORT. Seller shall provide Buyer no later than the 30th
day of each month, in a letter format acceptable to Buyer in its
sole discretion, a compliance report demonstrating therein the
calculations Seller utilized to determine its compliance with the
financial covenants set forth in clauses (m), (n) and (o) of this
Section 11 as of the end of the immediately preceding month.
(z) SUB-LIMITS. Seller shall not sell to Buyer any Eligible Assets if,
after giving effect to such Transaction, the aggregate principal
balance of such Purchased Assets are in excess of any applicable
Sub-Limit.
(aa) ESCROW IMBALANCES. Seller will, no later than five (5) Business Days
after learning (from any source) of any material imbalance in any
escrow account, fully and completely correct and eliminate such
imbalance including, without limitation, depositing its own funds
into such account to eliminate any overdrawal or deficit.
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(bb) INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of
Default or Default if such action is taken or condition exists.
12. EVENTS OF DEFAULT
If any of the following events (each an "EVENT OF DEFAULT") occur, Seller
and Buyer shall have the rights set forth in Section 13, as applicable:
(a) Seller shall default in the payment of any Repurchase Price due or
any amount under Section 5 when due (whether at stated maturity,
upon acceleration or at mandatory or optional prepayment); or
(b) Seller shall default in the payment of any other amount payable by
it hereunder or under any other Repurchase Document after
notification by Buyer of such default, and such default shall have
continued unremedied for one (1) Business Day; or
(c) any representation, warranty or certification made or deemed made
herein or in any other Repurchase Document by Seller or any
certificate furnished to Buyer pursuant to the provisions hereof or
thereof or any information with respect to the Mortgage Loans
furnished in writing by on behalf of Seller shall prove to have been
false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth
in SCHEDULE 1, which shall be considered solely for the purpose of
determining the Asset Value of the Purchased Assets, unless (i)
Seller shall have made any such representations and warranties with
actual knowledge that they were materially false or misleading at
the time made; or (ii) any such representations and warranties have
been determined in good faith by Buyer in its sole discretion to be
materially false or misleading on a regular basis); or
(d) Seller shall fail to comply with the requirements of 11(c), Section
11(d), Section 11(e), Section 11(f), Section 11(h) (with respect to
the Eligible Assets as a whole and not with respect to any single
Eligible Asset) or Sections 11(i) through 11(w); and such default
shall continue unremedied for a period of 5 Business Days from the
earlier of (i) a responsible officer of Seller having knowledge of
such default and (ii) Buyer giving notice to Seller of such default;
or except as otherwise set forth in Sections 12(a), 12(b), 12(c) and
12(d), Seller shall fail to observe or perform any other covenant or
agreement contained in this Agreement or any other Repurchase
Document and such failure to observe or perform shall continue
unremedied for a period of 10 Business Days from the earlier of (i)
a responsible officer of Seller having knowledge of such default and
(ii) Buyer giving notice to Seller of such default; or
(e) a final judgment or judgments for the payment of money in excess of
$500,000 in the aggregate shall be rendered against NCCC, NCMC or
any of their Affiliates
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by one or more courts, administrative tribunals or other bodies
having jurisdiction and the same shall not be satisfied, discharged
(or provision shall not be made for such discharge) or bonded, or a
stay of execution thereof shall not be procured, within 30 days from
the date of entry thereof; or
(f) an Act of Insolvency shall have occurred with respect to NCCC, NCMC
or any of their Affiliates; or
(g) the Custodial Agreement, the Account Agreement or any Repurchase
Document shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be
contested by NCCC or NCMC; or
(h) NCCC or NCMC shall grant, or suffer to exist, any Lien on any
Purchased Item (except any Lien in favor of Buyer); or either the
Purchased Items shall not have been sold to Buyer, or the Liens
contemplated hereby shall cease or fail to be first priority
perfected Liens on any Purchased Items (but not the related
Mortgaged Properties) in favor of Buyer or shall be Liens in favor
of any Person other than Buyer; or
(i) NCCC, NCMC or any of their Affiliates shall be in default under (i)
any Indebtedness in an amount equal to $250,000 or more of NCCC or
NCMC or of such Affiliate which default (1) involves the failure to
pay a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary with
respect to such Indebtedness, (ii) any other contract to which NCCC
or NCMC or such Affiliate is a party which default (1) involves the
failure to pay a matured obligation in excess of $250,000, or (2)
permits the acceleration of the maturity of obligations in excess of
$250,000 by any other party to or beneficiary of such contract, or
(iii) any Seller-Related Obligation; or
(j) any material adverse change in the Property, business or financial
condition of NCCC or NCMC or any of their Affiliates shall occur, in
each case as determined by Buyer in its sole good faith discretion,
or any other condition shall exist which, in Buyer's sole good faith
discretion, constitutes a material impairment of Seller's ability to
perform its obligations under this Agreement or any other Repurchase
Document; or
(k) the Initial Funding does not occur on or prior to August 1, 2001; or
(l) upon (i) any material adverse change in the terms of or (ii)
material reduction in amounts available to NCCC, NCMC or their
Affiliates under any of the Existing Financing Facilities; or
(m) upon any event of default or event which, with the passage of time
or expiration of any grace periods, would constitute an event of
default under any of the Existing Financing Facilities; or
(n) a Change of Control shall have occurred; or
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(o) Seller shall not complete the Required Secondary Amendments within
sixty (60) days of the date hereof; or
(p) Seller shall not complete the Required Amendments within thirty (30)
days of the date hereof.
13. REMEDIES
(a) If an Event of Default occurs, the following rights and remedies are
available to Buyer; provided, that an Event of Default shall be
deemed to be continuing unless expressly waived by Buyer in writing.
(1) At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if
no notice is given, immediately upon the occurrence of an Act
of Insolvency of Seller), the Repurchase Date for each
Transaction hereunder, if it has not already occurred, shall
be deemed immediately to occur. Buyer shall (except upon the
occurrence of an Act of Insolvency of Seller) give notice to
Seller of the exercise of such option as promptly as
practicable.
(2) If Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(1) of this Section,
(A) Seller's obligations in such Transactions to
repurchase all Purchased Assets, at the Repurchase Price
therefor on the Repurchase Date, (1) shall thereupon become
immediately due and payable, (2) all Income paid after such
exercise or deemed exercise shall be retained by Buyer and
applied to the aggregate unpaid Repurchase Prices and any
other amounts owed by Seller hereunder, and (3) Seller shall
immediately deliver to Buyer any Purchased Assets subject to
such Transactions then in NCCC's or NCMC's possession or
control;
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each such Transaction shall
be increased by the aggregate amount obtained by daily
application of, on a 360 day per year basis for the actual
number of days during the period from and including the date
of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price, (x) the
Post-Default Rate to (y) the Repurchase Price for such
Transaction as of the Repurchase Date (decreased as of any day
by (i) any amounts actually in the possession of Buyer
pursuant to clause (C) of this subsection, (ii) any proceeds
from the sale of Purchased Assets applied to the Repurchase
Price pursuant to subsection (a)(4) of this Section, and (iii)
any amounts applied to the Repurchase Price pursuant to
subsection (a)(4) of this Section); and
(C) all Income actually received by Buyer pursuant to
Section 5 (excluding any Late Payment Fees paid pursuant to
Section 5(b)) shall be applied to the aggregate unpaid
Repurchase Price owed by Seller.
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(3) Upon the occurrence of one or more Events of Default, Buyer
shall have the right to obtain physical possession of the
Servicing Records (subject to the provisions of the Custodial
Agreement) and all other files of Seller relating to the
Purchased Assets and all documents relating to the Purchased
Assets which are then or may thereafter come in to the
possession of Seller or any third party acting for Seller and
Seller shall deliver to Buyer such assignments as Buyer shall
request and Buyer shall have the right to appoint any Person
to act as Servicer for the Purchased Assets. Buyer shall be
entitled to specific performance of all agreements of Seller
contained in the Repurchase Documents.
(4) At any time on the Business Day following notice to Seller
(which notice may be the notice given under subsection (a)(1)
of this Section), in the event Seller has not repurchased all
Purchased Assets, Buyer may (A) immediately sell, without
demand or further notice of any kind, at a public or private
sale and at such price or prices as Buyer may deem
satisfactory any or all Purchased Assets subject to such
Transactions hereunder and apply the proceeds thereof to the
aggregate unpaid Repurchase Price and any other amounts owing
by Seller hereunder or (B) in its sole discretion elect, in
lieu of selling all or a portion of such Purchased Assets, to
give Seller credit for such Purchased Assets in an amount
equal to the Market Value of the Purchased Assets against the
aggregate unpaid Repurchase Price and any other amounts owing
by Seller hereunder. The proceeds of any disposition of
Purchased Assets shall be applied first to the costs and
expenses incurred by Buyer in connection with Seller's
default; second to costs of relating covering and/or related
hedging transactions; third to the Repurchase Price; and
fourth to any other outstanding obligation of Seller to Buyer
or its Affiliates.
(5) Seller agrees that Buyer may obtain an injunction or an order
of specific performance to compel Seller to fulfill its
obligations as set forth in Section 24, if Seller fails or
refuses to perform its obligations as set forth therein.
(6) Seller shall be liable to Buyer, payable as and when incurred
by Buyer, for (A) the amount of all actual out-of-pocket
expenses, including legal or other expenses incurred by Buyer
in connection with or as a consequence of an Event of Default,
and (B) all costs incurred in connection with hedging or
covering transactions.
(7) Buyer shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or
applicable law.
(b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except
to the extent provided in subsections (a)(1) and (4) of this
Section, at any time thereafter without notice to Seller. All rights
and remedies arising under this Agreement as amended from
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time to time hereunder are cumulative and not exclusive of any other
rights or remedies which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its
rights by judicial process. Seller also waives any defense (other
than a defense of payment or performance) Seller might otherwise
have arising from the use of nonjudicial process, enforcement and
sale of all or any portion of the Purchased Items, or from any other
election of remedies. Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at
arm's-length.
(d) To the extent permitted by applicable law, Seller shall be liable to
Buyer for interest on any amounts owing by Seller hereunder, from
the date Seller becomes liable for such amounts hereunder until such
amounts are (i) paid in full by Seller or (ii) satisfied in full by
the exercise of Buyer's rights hereunder. Interest on any sum
payable by Seller to Buyer under this paragraph 13(d) shall be at a
rate equal to the Post-Default Rate.
14. INDEMNIFICATION AND EXPENSES
(a) NCCC and NCMC, jointly and severally, agree to hold Buyer and its
Affiliates and their present and former respective officers,
directors, employees, agents, advisors and other representatives
(each an "INDEMNIFIED PARTY") harmless from and indemnify any
Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on,
incurred by or asserted against such Indemnified Party (including
counsel's fees and disbursements) (collectively, "COSTS"), relating
to or arising out of this Agreement, any other Repurchase Document
or any transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in
respect of, this Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, that, in each case,
results from anything other than the Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of
the foregoing, each of NCCC and NCMC, jointly and severally, agrees
to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Mortgage
Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any
consumer credit laws, including without limitation the federal Truth
in Lending Act and/or the federal Real Estate Settlement Procedures
Act, that, in each case, results from anything other than the
Indemnified Party's gross negligence or willful misconduct. In any
suit, proceeding or action brought by an Indemnified Party in
connection with any Mortgage Loan for any sum owing thereunder, or
to enforce any provisions of any Mortgage Loan, each of NCCC and
NCMC, jointly and severally, will save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off,
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counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by
NCCC or NCMC of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or
in favor of such account debtor or obligor or its successors from
NCCC or NCMC. Each of NCCC and NCMC, jointly and severally, also
agrees to reimburse an Indemnified Party as and when billed by such
Indemnified Party for all the Indemnified Party's costs and expenses
incurred in connection with the enforcement or the preservation of
Buyer's rights under this Agreement, any other Repurchase Document
or any transaction contemplated hereby or thereby, including without
limitation the fees and disbursements of its counsel.
(b) Subject to the second succeeding sentence, Seller agrees to pay as
and when billed by Buyer all of the out-of-pocket costs and expenses
(including legal fees) incurred by Buyer in connection with the
development, preparation and execution of, any other Repurchase
Document or any other documents prepared in connection herewith (the
"INITIAL COSTS"). Seller agrees to pay as and when billed by Buyer
all of the out-of-pocket costs and expenses (including legal fees)
incurred by Buyer in connection with any amendment, supplement or
modification to, this Agreement or any other Repurchase Document or
any other documents prepared in connection therewith. Seller agrees
to pay as and when billed by Buyer all of the out-of-pocket costs
and expenses incurred in connection with the consummation and
administration of the transactions contemplated hereby and thereby
including without limitation all fees, disbursements and expenses of
counsel to Buyer which amount shall be deducted from the Purchase
Price paid for the first Transaction hereunder; provided that such
expenses, together with the Initial Costs, shall not exceed $65,000
without the prior written consent of Seller which consent shall not
be unreasonably withheld. Subject to the limitations set forth in
Section 27, Seller agrees to pay Buyer all the out-of-pocket due
diligence, inspection, testing and review costs and expenses
incurred by Buyer with respect to Mortgage Loans submitted by Seller
for purchase under this Agreement, including, but not limited to,
those out of pocket costs and expenses incurred by Buyer pursuant to
Sections 24 and 27.
15. RECORDING OF COMMUNICATIONS
Buyer and Seller shall have the right (but not the obligation) from time
to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to
Transactions upon notice to the other party of such recording. Buyer and
Seller consent to the admissibility of such tape recordings in any court,
arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.
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16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and that each has been entered into
in consideration of the other Transactions. Accordingly, each of Buyer and
Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transaction
hereunder; (iii) that payments, deliveries, and other transfers made by
either of them in respect of any Transaction shall be deemed to have been
made in consideration of payments, deliveries, and other transfers in
respect of any other Transactions hereunder, and the obligations to make
any such payments, deliveries, and other transfers may be applied against
each other and netted and (iv) to promptly provide notice to the other
after any such set off or application.
17. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Agreement, all notices,
requests and other communications provided for herein and under the
Custodial Agreement (including without limitation any modifications of, or
waivers, requests or consents under, this Agreement) shall be given or
made in writing (including without limitation by email, telex or telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or thereof); or, as to any
party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this
Agreement and except for notices given under Section 3 (which shall be
effective only on receipt), all such communications shall be deemed to
have been duly given when transmitted by telecopy or personally delivered
or, in the case of a mailed notice, upon receipt.
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement together with the other Repurchase Documents constitute the
entire understanding between Buyer and Seller with respect to the subject
matter it covers and shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase
transactions involving Purchased Assets. By acceptance of this Agreement,
Buyer and Seller acknowledge that they have not made, and are not relying
upon, any statements, representations, promises or undertakings not
contained in this Agreement. Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability of
any such other provision or agreement.
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19. NON-ASSIGNABILITY
The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by NCCC or NCMC without the prior
written consent of Buyer, and any attempted assignment without such
consent shall be null and void. Subject to the foregoing, this Agreement
and any Transactions shall be binding upon and shall inure to the benefit
of the parties and their respective successors and assigns. Nothing in
this Agreement express or implied, shall give to any person, other than
the parties to this Agreement and their successors hereunder, any benefit
of any legal or equitable right, power, remedy or claim under this
Agreement.
20. TERMINABILITY
Except as set forth below, this Agreement may be terminated (a) by Seller
upon giving written notice to Buyer and (b) by Buyer upon the occurrence
of any event set forth in Section 3(b)(10) except that this Agreement
shall, notwithstanding such notice, remain applicable to any Transaction
then outstanding; provided that the Repurchase Date for any such
Transaction outstanding shall be the earlier to occur of the original
Repurchase Date pursuant to the applicable Confirmation and (ii) 20 days
from the date of such notice of termination. Each representation and
warranty made or deemed to be made by entering into a Transaction, herein
or pursuant hereto shall survive the making of such representation and
warranty, and Buyer shall not be deemed to have waived any Default that
may arise because any such representation or warranty shall have proved to
be false or misleading, notwithstanding that Buyer may have had notice or
knowledge or reason to believe that such representation or warranty was
false or misleading at the time the Transaction was made. Notwithstanding
any such termination or the occurrence of an Event of Default, all of the
representations and warranties and covenants hereunder shall continue and
survive. The obligations of Seller under Section 14 shall survive the
termination of this Agreement.
21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
22. SUBMISSION TO JURISDICTION; WAIVERS
EACH OF BUYER, NCCC AND NCMC HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
FEDERAL COURTS OF THE UNITED STATES OF
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AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM
ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER
SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO
XXX IN ANY OTHER JURISDICTION.
(E) BUYER, NCCC AND NCMC HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
REPURCHASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
23. NO WAIVERS, ETC.
No failure on the part of Buyer or Seller to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under any Repurchase Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege
under any Repurchase Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law. An Event of Default shall be deemed to be continuing
unless expressly waived by Buyer in writing.
24. SERVICING
(a) Each of NCCC and NCMC covenants to maintain or cause the servicing
of the Mortgage Loans to be maintained in conformity with accepted
and prudent servicing practices in the industry for the same type of
mortgage loans as the Mortgage Loans and in a manner at least equal
in quality to the servicing Seller provides for mortgage loans which
it owns. In the event that the preceding
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language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate
automatically upon the earliest of (i) an Event of Default, (ii) the
date on which this Agreement terminates or (iii) the transfer of
servicing approved by Buyer.
(b) If the Mortgage Loans are serviced by Seller, Seller agrees that
Buyer is the owner of all servicing records, including but not
limited to any and all servicing agreements, files, documents,
records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records
relating to or evidencing the servicing of the Mortgage Loans (the
"SERVICING RECORDS"). Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee
(including Custodian) at Buyer's request.
(c) If the Mortgage Loans are serviced by a third party servicer (such
third party servicer, the "SERVICER"), Seller (i) shall provide a
copy of the servicing agreement to Buyer, which shall be in form and
substance acceptable to Buyer (the "SERVICING AGREEMENT"); (ii)
shall provide a Servicer Notice to the Servicer substantially in the
form of EXHIBIT VIII hereto; and (iii) hereby irrevocably assigns to
Buyer and Buyer's successors and assigns all right, title, interest
of Seller in, to and under, and the benefits of, any Servicing
Agreement with respect to the Mortgage Loans. Any successor to the
Servicer shall be approved in writing by Buyer prior to such
successor's assumption of servicing obligations with respect to the
Mortgage Loans.
(d) If the servicer of the Mortgage Loans is Seller or Servicer is an
Affiliate of Seller, Seller shall provide to Buyer a letter from
Seller or Servicer, as the case may be, to the effect that upon the
occurrence of an Event of Default, Buyer may terminate any Servicing
Agreement and transfer servicing to its designee, at no cost or
expense to Buyer, it being agreed that Seller will pay any and all
fees required to terminate the Servicing Agreement and to effectuate
the transfer of servicing to the designee of Buyer.
(e) After the Purchase Date, until the repurchase of any Mortgage Loan,
Seller will have no right to modify or alter the terms of such
Mortgage Loan and Seller will have no obligation or right to
repossess such Mortgage Loan or substitute another Mortgage Loan, in
each case except as provided in the Custodial Agreement.
(f) In the event Seller or its Affiliate is servicing the Mortgage
Loans, Seller shall permit Buyer to inspect Seller's or its
Affiliate's servicing facilities, as the case may be, for the
purpose of satisfying Buyer that Seller or its Affiliate, as the
case may be, has the ability to service the Mortgage Loans as
provided in this Agreement.
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25. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller that as of the Effective
Date and as of the Repurchase Date for the repurchase of any Purchased Assets by
Seller from Buyer hereunder:
(a) ACTION. Buyer has all necessary corporate or other power, authority
and legal right to execute, deliver and perform its obligations
under each of the Repurchase Documents to which it is a party; the
execution, delivery and performance by Buyer of each of the
Repurchase Documents to which it is a party have been duly
authorized by all necessary corporate or other action on its part;
and each Repurchase Document to which it is a party has been duly
and validly executed and delivered by Buyer, and constitutes a
legal, valid and binding obligation of Buyer, enforceable against
Buyer, in accordance with its terms.
(b) APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or
performance by Buyer, of the Repurchase Documents to which it is a
party or for the legality, validity or enforceability thereof,
except for filings and recordings in respect of the Liens created
pursuant to the Repurchase Documents.
(c) NO BREACH. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein
contemplated to be entered into by Buyer in compliance with the
terms and provisions thereof will conflict with or result in a
breach of the organizational documents of Buyer, or any applicable
law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority or other material agreement or instrument
to which Buyer or any of its Subsidiaries is a party or by which
Buyer or any of its Property is bound or to which Buyer is subject,
or constitute a default under any such material agreement or
instrument or result in the creation or imposition of any Lien upon
any Property of Buyer, or any of its respective Subsidiaries
pursuant to the terms of any such agreement or instrument.
(d) PURCHASED ASSETS. Immediately prior to the repurchase of any
Purchased Assets by Seller, Buyer was the sole owner of such
Purchased Assets and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released
simultaneously with the repurchase by Seller hereunder.
26. NETTING
If Buyer and Seller are "financial institutions" as now or hereinafter
defined in Section 4402 of Title 12 of the United States Code ("Section
4402") and any rules or regulations promulgated thereunder,
(a) All amounts to be paid or advanced by one party to or on behalf of
the other under this Agreement or any Transaction hereunder shall be
deemed to be "payment obligations" and all amounts to be received by
or on behalf of one party from the other under this Agreement or any
Transaction hereunder shall be deemed to be
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"payment entitlements" within the meaning of Section 4402, and this
Agreement shall be deemed to be a "netting contract" as defined in
Section 4402.
(b) The payment obligations and the payment entitlements of the parties
hereto pursuant to this Agreement and any Transaction hereunder
shall be netted as follows. In the event that either party (the
"DEFAULTING PARTY") shall fail to honor any payment obligation under
this Agreement or any Transaction hereunder, the other party (the
"NONDEFAULTING PARTY") shall be entitled to reduce the amount of any
payment to be made by the Nondefaulting Party to the Defaulting
Party by the amount of the payment obligation that the Defaulting
Party failed to honor.
27. PERIODIC DUE DILIGENCE REVIEW
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of
verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice unless
an Event of Default shall have occurred, in which case no notice is
required, to Seller, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make
copies and extracts of, the Mortgage Files and any and all documents,
records, agreements, instruments or information relating to such Mortgage
Loans in the possession or under the control of Seller and/or Custodian.
Seller also shall make available to Buyer a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
Mortgage Files and the Mortgage Loans. Without limiting the generality of
the foregoing, Seller acknowledges that Buyer may purchase Mortgage Loans
from Seller based solely upon the information provided by Seller to Buyer
in the Seller Asset Schedule and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right
at any time to conduct a partial or complete due diligence review on some
or all of the Mortgage Loans purchased in a Transaction, including without
limitation ordering new credit reports and new appraisals on the related
Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans
itself or engage a mutually agreed upon third party underwriter to perform
such underwriting. Seller agrees to cooperate with Buyer and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to
any and all documents, records, agreements, instruments or information
relating to such Mortgage Loans in the possession, or under the control,
of Seller. Buyer shall pay all out-of-pocket costs and expenses incurred
by Buyer in connection with Buyer's activities pursuant to this Section 27
("DUE DILIGENCE COSTS"); provided that, in the event that a Default or an
Event of Default shall have occurred, Seller shall reimburse Buyer for all
Due Diligence Costs for any and all reasonable out-of-pocket costs and
expenses incurred by Buyer in connection with Buyer's activities pursuant
to this Section 27.
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28. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) Each of NCCC and NCMC hereby irrevocably constitutes and appoints
Buyer and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Seller and
in the name of Seller or in its own name, from time to time in
Buyer's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be
reasonably necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing,
Seller hereby gives Buyer the power and right, on behalf of Seller,
without assent by, but with notice to, Seller, to do the following:
(1) in the name of Seller, or in its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of
moneys due under any mortgage insurance with respect to a
Purchased Item or with respect to any other Purchased Items
and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by Buyer for the purpose of collecting any and all
such moneys due under any such mortgage insurance with respect
to a Purchased Item or with respect to any other Purchased
Items whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(3) (A) to direct any party liable for any payment under any
Purchased Items to make payment of any and all moneys due or
to become due thereunder directly to Buyer or as Buyer shall
direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out
of any Purchased Items; (C) to sign and endorse any invoices,
assignments, verifications, notices and other documents in
connection with any Purchased Items; (D) to commence and
prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Purchased Items or any proceeds thereof and to enforce any
other right in respect of any Purchased Items; (E) to defend
any suit, action or proceeding brought against Seller with
respect to any Purchased Items; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or
releases as Buyer may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any Purchased Items as fully and
completely as though Buyer were the absolute owner thereof for
all purposes, and to do, at Buyer's option and Seller's
expense, at any time, and from time to time, all acts and
things which Buyer deems necessary to protect, preserve or
realize upon the Purchased Items and Buyer's Liens thereon and
to effect
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the intent of this Agreement, all as fully and effectively as
such Seller might do;
(4) after a Default or an Event of Default, to direct the actions
of Custodian with respect to the Purchased Items under the
Custodial Agreement; and
(5) to execute, from time to time, in connection with any sale
provided for in Section 13, any endorsements, assignments or
other instruments of conveyance or transfer with respect to
the Purchased Items.
Each of NCCC and NCMC hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable. Until the
occurrence of a Default or Event of Default, Buyer shall not direct a
Servicer in its servicing of the Purchased Assets or commence any
servicing actions with respect to the Mortgage Loans pursuant to this
Section 28(a). Neither Buyer nor any of its officers, directors, employers
or agents shall be responsible to Seller for any failure to act hereunder
prior to a Default or Event of Default.
(b) The powers conferred on Buyer hereunder are solely to protect
Buyer's interests in the Purchased Items and Purchased Assets and
shall not impose any duty upon it to exercise any such powers. Buyer
shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its
officers, directors, employees or agents shall be responsible to
Seller for any act or failure to act hereunder, except for its or
their own gross negligence or willful misconduct.
29. MISCELLANEOUS
(a) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial Agreement, this
Agreement shall prevail.
(b) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument,
and any of the parties hereto may execute this Agreement by signing
any such counterpart.
(c) The captions and headings appearing herein are for included solely
for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(d) Each of NCCC and NCMC hereby acknowledges that:
(1) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Repurchase
Documents;
(2) Buyer has no fiduciary relationship to Seller; and
(3) no joint venture exists between Buyer and Seller.
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30. CONFIDENTIALITY
Seller hereby acknowledges and agrees that all information regarding the
terms set forth in any of the Repurchase Documents or the Transactions
contemplated thereby (the "CONFIDENTIAL TERMS") shall be kept confidential
and shall not be divulged to any party without the prior written consent
of such other party except to the extent that (i) it is necessary to do so
in working with legal counsel, auditors, taxing authorities or other
governmental agencies or regulatory bodies or in order to comply with any
applicable federal or state laws, (ii) any of the Confidential Terms are
in the public domain other than due to a breach of this covenant, or (iii)
in the event of a Default or an Event of Default Buyer determines such
information to be necessary or desirable to disclose in connection with
the marketing and sales of the Purchased Assets or otherwise to enforce or
exercise Buyer's rights hereunder. The provisions set forth in this
Section 30 shall survive the termination of this Agreement for a period of
one year following such termination.
31. CONFLICTS
In the event of any conflict between the terms of this Agreement, any
other Repurchase Document and any Confirmation, the documents shall
control in the following order of priority: FIRST, the terms of the
Confirmation shall prevail, then the terms of this Agreement shall
prevail, and then the terms of the other Repurchase Documents shall
prevail.
32. SET-OFF.
In addition to any rights and remedies of Buyer provided by this Agreement
and by law, Buyer shall have the right, without prior notice to Seller,
any such notice being expressly waived by Seller to the extent permitted
by applicable law, upon any amount becoming due and payable by Seller to
Buyer hereunder or otherwise (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against
such amount any and all monies and other property of Seller, any and all
deposits (general or special, time or demand, provisional or final), in
any currency, and any and all other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, and in each case at any time held or
owing by Buyer or any Affiliate thereof to or for the credit or the
account of Seller. Buyer agrees promptly to notify Seller after any such
set-off and application made by Buyer; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
33. OBLIGATIONS JOINT AND SEVERAL.
Each of NCCC and NCMC hereby acknowledges and agrees that it shall be
jointly and severally liable to Buyer for all representations, warranties,
covenants, obligations and indemnities of Seller hereunder.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date set forth above.
BUYER:
CDC MORTGAGE CAPITAL INC.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: XXXX XXXXXXX
Title: MANAGING DIRECTOR
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Director
ADDRESS FOR NOTICES: With a copy to:
0 Xxxx 00xx Xxxxxx 0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxx Attention: Xx Xxxxx, Esq.,
Telecopier No.: General Counsel
(000) 000-0000 Telecopier No.: (000) 000-0000
Telephone No.: Telephone No.: (000) 000-0000
(000) 000-0000 Email address:
Email address: xxxxxx.xxxxx@xxxxxxx-xxxx.xxx
xxxxxxx@xxxxx.xxx
SELLER:
NEW CENTURY MORTGAGE
CORPORATION
By: /s/ XXXXXXX XXXXXXXX
------------------------------------
Name: XXXXXXX XXXXXXXX
Title: EXECUTIVE VICE PRESIDENT
ADDRESS FOR NOTICES:
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
NC CAPITAL CORPORATION
By: /s/ XXXXXXX XXXXXXXX
------------------------------------
Name: XXXXXXX XXXXXXXX
Title: PRESIDENT
ADDRESS FOR NOTICES:
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
