EXHIBIT 10.1
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MASTER REPURCHASE AGREEMENT
BETWEEN
MARATHON STRUCTURED FINANCE FUND, LP, AS BUYER
AND
WINSTON FINANCE PARTNERS LLC, AS SELLER
Dated as of October 5, 2004
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TABLE OF CONTENTS
PAGE
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ARTICLE I
APPLICABILITY
Section 1.01 Purchase and Sale......................................... 1
ARTICLE II
DEFINITIONAL PROVISIONS
Section 2.01 Definitions............................................... 1
Section 2.02 Other Definitional Provisions; Determinations by Buyer.... 23
ARTICLE III
INITIATION; REPURCHASE; TERMINATION
Section 3.01 Conditions Precedent to Initial Transaction............... 24
Section 3.02 Conditions Precedent to all Transactions.................. 25
Section 3.03 Transaction Mechanics; Related Matters.................... 29
Section 3.04 Repurchase................................................ 31
Section 3.05 Extension of Facility Termination Date.................... 32
Section 3.06 Payment of Price Differential............................. 32
ARTICLE IV
MARGIN AMOUNT MAINTENANCE
Section 4.01 Margin Account Maintenance................................ 33
Section 4.02 Margin Account............................................ 34
Section 4.03 Reserved.................................................. 34
Section 4.04 Additional Assets as Margin Collateral.................... 34
Section 4.05 Margin Surplus After Cure of Breach....................... 35
ARTICLE V
INCOME PAYMENTS; REQUIREMENTS OF LAW
Section 5.01 Establishment of Collection Account....................... 35
Section 5.02 Deposits into Collection Account.......................... 35
Section 5.03 Distributions From Collection Account..................... 36
Section 5.04 Requirements of Law....................................... 37
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ARTICLE VI
SECURITY INTEREST
Section 6.01 Security Interest......................................... 38
ARTICLE VII
PAYMENT, TRANSFER AND CUSTODY
Section 7.01 Payment, Transfer and Custody............................. 41
ARTICLE VIII
ASSIGNMENT AND TRANSFER; HYPOTHECATION OR
PLEDGE OF PURCHASED ASSETS
Section 8.01 Assignment; Hypothecation or Pledge of Purchased Assets... 42
ARTICLE IX
SELLER REPRESENTATIONS
Section 9.01 Seller Representations.................................... 43
Section 9.02 Remedy.................................................... 49
ARTICLE X
COVENANTS OF SELLER
Section 10.01 Covenants of Seller....................................... 49
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
Section 11.01 Events of Default......................................... 61
Section 11.02 Remedies.................................................. 64
Section 11.03 Continuing Event of Default............................... 68
ARTICLE XII
SERVICING
Section 12.01 Servicing Agreement....................................... 68
Section 12.02 Servicing Records......................................... 68
Section 12.03 Servicing Transfer........................................ 68
Section 12.04 Modification.............................................. 69
Section 12.05 Inspection................................................ 69
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ARTICLE XIII
MISCELLANEOUS
Section 13.01 Indemnification and Expenses.............................. 69
Section 13.02 Fees...................................................... 70
Section 13.03 Single Agreements......................................... 70
Section 13.04 Notices and Other Communications.......................... 70
Section 13.05 Entire Agreement; Severability............................ 71
Section 13.06 Terminability............................................. 72
Section 13.07 Governing Law............................................. 72
Section 13.08 Submission to Jurisdiction; Waivers....................... 72
Section 13.09 No Waivers, Etc. ......................................... 73
Section 13.10 Intent.................................................... 73
Section 13.11 Periodic Due Diligence Review............................. 74
Section 13.12 Buyer's Appointment as Attorney-in-Fact................... 74
Section 13.13 Legal Matters............................................. 76
Section 13.14 Confidentiality........................................... 76
Section 13.15 Set-offs.................................................. 76
Section 13.16 Treatment of Certain Information.......................... 77
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[The following have been omitted in part. Any omitted Schedule or Exhibit
will be provided to the Commission upon request of the Company.]
SCHEDULES
Schedule 1 Representations and Warranties Re: Mortgage Assets
Schedule 2 Asset Pricing
Schedule 3 Accounts
Schedule 4 Insurance
Schedule 5 Excluded Transferees
EXHIBITS
Exhibit I Form of Transaction Request
Exhibit II Form of Confirmation
Exhibit III Form of Corporate Opinion
Exhibit IV UCC Filing Jurisdictions
Exhibit V RESERVED
Exhibit VI-A Form of Seller's Release Letter
Exhibit VI-B Form of Warehouse Lender's Release Letter
Exhibit VII Form of Election Notice
Exhibit VIII Form of Purchased Asset Data Summary
Exhibit IX Form of Margin Deficit Notice
Exhibit X Form of Purchase Agreement
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MASTER REPURCHASE AGREEMENT
MASTER REPURCHASE AGREEMENT, dated as of October 5, 2004 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, this "Agreement"), between WINSTON FINANCE PARTNERS LLC ("Seller"), and
MARATHON STRUCTURED FINANCE FUND, LP ("Buyer").
ARTICLE I
APPLICABILITY
Section 1.01 Purchase and Sale. Subject to the terms and conditions
hereof, from time to time during the Facility Period at the request of Seller,
the parties hereto may enter into transactions (or one or more series of sales
transactions) in which Seller transfers Eligible Assets to Buyer in a sales
transaction against the transfer of funds by Buyer representing the purchase
price for such Eligible Assets, with a simultaneous agreement by Buyer to
transfer to Seller the corresponding Purchased Assets in a repurchase
transaction at a date certain not later than the Facility Termination Date (as
defined below), against the transfer of funds by Seller representing the
repurchase price for such Purchased Assets. Each such transaction shall be
referred to herein as a "Transaction" and shall be governed by this Agreement,
unless otherwise agreed in writing.
ARTICLE II
DEFINITIONAL PROVISIONS
Section 2.01 Definitions.
(a) As used herein, the following terms shall have the following
meanings. All terms defined in this Section 2.01 or in other provisions of this
Agreement in the singular to have the same meanings when used in the plural and
vice versa.
"Accepted Servicing Practices": With respect to any Mortgage Asset,
those mortgage servicing practices of prudent mortgage lending institutions
which service Mortgage Assets of the same type as such Mortgage Asset in the
jurisdiction where the related Underlying Property is located.
"Acquired Asset": Any Mortgage Asset acquired from any Person other
than Winston or its Affiliates.
"Act of Insolvency": 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; (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 of 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.
"Actual Knowledge": Subject to Section 2.02(e) of this Agreement,
with respect to any of Winston, Parent, or Seller, the actual knowledge, after
due inquiry and reasonable due diligence, of any of the President, Chief
Financial Officer, any executive vice president of such Person, or of any
employee of such Person that deals with information of the type in question in
the ordinary course.
"Additional Assets": The meaning specified in Section 4.01(a).
"Affiliate": When used with respect to any specified Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with, such Person. "Control" of a Person shall mean the ownership,
beneficially or of record, or both (A) more than 50% of the outstanding stock
of, and (B) 50% or more of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of,
such Person, and "controlling" and "controlled" shall have meanings correlative
thereto.
"Agreement": The meaning assigned thereto in the introductory
paragraph hereof.
"ALTA": The American Land Title Association.
"Allocated Underlying Debt": With respect to any Underlying Property
(i) in the case of a Junior Interest, any Indebtedness secured by such
Underlying Property that is senior to or pari passu with the interest
represented by the Junior Interest and (ii) in the case of a Mezzanine Loan,
Indebtedness that is secured by such Underlying Property or that is otherwise
senior to or pari passu with the Mezzanine Loan.
"Anti-Money Laundering Laws": The meaning specified in Section
9.01(y).
"Asset Schedule and Exception Report": The meaning assigned thereto
in the Custodial Agreement.
"Asset Seller": Any Person, including any Affiliate of Seller, from
whom Seller acquired an Eligible Asset.
"Asset Tape": The meaning specified in Section 10.01(u)
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"Asset Value": As of any date of determination for each Eligible
Asset of a certain Class and the applicable Type of Underlying Property, the
least of (x) the Book Value of such Mortgage Asset, (y) the Market Value of such
Mortgage Asset, and (z) if the LTV for an Underlying Property is greater than
the Maximum LTV for such Underlying Property, that portion of the principal
amount of such Mortgage Asset, which when added to the Allocated Underlying Debt
for such Underlying Property, would result in an LTV for such Underlying
Property that would equal the Maximum LTV for such Underlying Property. The
following additional limitations on Asset Value shall apply:
(a) the aggregate Asset Value of the Mortgage Assets shall be
reduced (and Buyer shall notify Seller of such reduction) to the extent
that application of the Concentration Parameters to the Underlying
Properties securing Mortgage Assets at any time results in breach of the
Concentration Parameters (such reduction to be determined by Buyer by
reference to, and allocated among, the Mortgage Assets secured by the
Underlying Properties that give rise to breach of the Concentration
Parameters), unless Buyer waives the applicable Concentration Parameter in
writing in its sole and absolute discretion; and
(b) the Asset Value of each Mortgage Asset (i) in respect of which
there is a material breach of a representation and warranty set forth in
Schedule 1 (assuming each representation and warranty is made as of the
date the Asset Value is determined), (ii) in respect of which the Mortgage
Asset File, complete in all material respects, has not been delivered to
the Custodian within five (5) Business Days following the Purchase Date
(with respect to any Acquired Asset or with respect to any other Eligible
Asset for which delivery of the complete Mortgage Asset File on the
Purchase Date was waived by Buyer), (iii) that becomes a Defaulted
Mortgage Asset or a Delinquent Mortgage Asset, or (iv) that has been
released from the possession of Custodian under the Custodial Agreement to
Seller for a period in excess of twenty (20) calendar days, may, at the
sole discretion of Buyer, be deemed to be zero; provided that, in the
event that the Asset Value of a Mortgage Asset is reduced, including if it
is deemed to be reduced to zero, due to a breach of a representation and
warranty set forth in Schedule 1, Buyer shall, if Seller cures such breach
within thirty (30) Business Days after notice of such breach to Seller,
increase the Asset Value of such Mortgage Asset to reflect the cure of
such breach as provided in Section 4.05.
If Seller shall have waived a Concentration Parameter in connection with the
purchase of an Eligible Asset as provided in (a) above, then Seller shall not
thereafter assert that the Asset Value of such Purchased Asset must be reduced
in order to comply with the same Concentration Parameter, unless changes in the
aggregate pool composition of Purchased Assets shall have increased the extent
to which the specified Purchased Asset fails such Concentration Parameter.
"Assignment of Leases": With respect to any Underlying Property, an
assignment of the property owner's rights under all leases of such Underlying
Property or portions thereof or a notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
Underlying Property is located to reflect the assignment of leases.
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"Assignment of Mortgage": 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 Underlying Property is located to reflect the assignment of the Mortgage
to Buyer.
"Balloon Payment": For any Mezzanine Loan or Underlying Mortgage
Loan for which the final principal payment is substantially greater than
periodic Scheduled Principal Payments due thereunder, the payment due on its
maturity date (or in the case of an "anticipated repayment date" loan, the
payment expected to be made on the "anticipated repayment date" thereof).
"Bankruptcy Code": The United States Bankruptcy Code of 1978, as
amended from time to time.
"Basic Mortgage Asset Documents": With respect to any Mortgage Asset
that is a Mezzanine Loan, the original Mezzanine Note, the original of the
related pledge agreement, the original stock certificate, if any, and the
original assignment of pledge agreement contemplated by the Custodial Agreement.
With respect to any Mortgage Asset that is a Junior Interest, the original
Junior Interest Note or Junior Participation Interest Certificate, as the case
may be, and the related Noteholders' Agreement or Participation Agreement.
"Book Value": With respect to any Mortgage Asset at any time, an
amount, as certified by Seller, equal to the price that Seller paid for such
Mortgage Asset (if Seller purchased such Mortgage Asset) or the principal amount
of such Mortgage Asset (if Seller originated such Mortgage Asset) plus all other
outstanding advances for or in respect of such Mortgage Asset, as it may be
reasonably marked down by Seller from time to time, including any loss or price
adjustments, less the amount of all principal paydowns paid and realized losses
recognized relating to such Mortgage Asset; provided that in no event shall the
"Book Value" of any Mortgage Asset include any interest or other charges accrued
thereon.
"Borrower": The obligor or obligors on any Mezzanine Loan or
Mortgage Loan (including a Junior Interest Note), including any person who has
assumed or guaranteed the obligations of the obligor thereunder.
"Breakage Costs": The meaning specified in Section 3.06(b).
"Business Day": Any day other than (i) a Saturday or Sunday or (ii)
a day on which banks in the State of North Carolina, the State of New York, the
District of Columbia, or the state in which any of Custodian, Seller, any Asset
Seller or Buyer is located is authorized or obligated by law or executive order
to be closed.
"Buyer": The meaning assigned thereto in the introductory paragraph
hereof, together with its permitted successors and assigns.
"Buyer Participants": The meaning specified in Section 8.01(a).
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"Capital Lease Obligations": 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.
"Capital Stock": Any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent equity ownership interests in a Person which is not a
corporation, including, without limitation, any and all member or other
equivalent interests in any limited liability company, and any and all warrants
or options to purchase any of the foregoing.
"Change in Control":
(a) Any transaction or event as a result of which (i) Winston ceases
to own, beneficially or of record (either directly or indirectly), both (A) more
than 50% of the outstanding stock of, and (B) 50% or more of the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of, Seller and Parent, other than any transaction,
event or transfer to or with any Affiliate of Winston;
(b) the sale, transfer, or other disposition of all or substantially
all of Seller's, Parent's or Winston's assets (excluding any such action taken
in connection with any securitization transaction) other than to an Affiliate of
Seller, Parent or Winston, as the case may be; or
(c) the consummation of a merger or consolidation of Seller, Parent
or Winston with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or surviving
entity's securities entitled to vote generally in the election of directors,
immediately after such merger, consolidation or such other reorganization is
owned by Persons who were not stockholders of Seller , Parent or Winston, as the
case may be, immediately prior to such merger, consolidation or other
reorganization, other than a merger or consolidation of Seller, Parent or
Winston with or into any Affiliate of Seller, Parent or Winston, as the case may
be.
"Class": With respect to a Mortgage Asset, such Mortgage Asset's
classification as a Junior Interest, a Mezzanine Loan or a Construction Loan.
"Code": The Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": The meaning specified in Section 6.01(a).
"Collection Account": The account set forth on Schedule 3
established on behalf of Buyer, into which all Income (other than amounts
deposited in escrow accounts for taxes and certain expenses related to
furniture, fixtures and equipment pursuant to the Servicing Agreement) shall be
deposited.
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"Concentration Parameters:" Provisions that limit the portion of the
total Purchase Price of the Facility that may consist of Eligible Assets having
certain characteristics, and which are:
(a) at any time, not more than 15% of the aggregate Purchase Price
of all Transactions then outstanding shall be allocable to Mortgage Assets
that are subject to Ground Leases;
(b) at all times that the aggregate Repurchase Price of Transactions
hereunder is greater than or equal to Thirty Five Million and No/100
Dollars ($35,000,000.00), the Underlying Properties securing or relating
to Mortgage Assets transferred to Buyer shall have a reasonable
diversification within the Hilton, Marriott, Starwood, Intercontinental
and Choice family flags, as approved by Buyer in its sole discretion;
(c) at all times that the aggregate Repurchase Price of Transactions
hereunder is greater than or equal to Thirty Five Million and No/100
Dollars ($35,000,000.00), the Underlying Properties securing or relating
to Mortgage Assets transferred to Buyer shall consist of Mortgage Assets
that are a reasonable mix of applicable Types and Classes, as determined
by Buyer in its sole discretion;
(d) at any time, not more than 40% of the aggregate Purchase Price
of all Transactions then outstanding shall be allocable to Mortgage Assets
located at or near an airport, commonly known as "fly-to" locations, as
determined by Buyer in its sole discretion;
(e) at all times that the aggregate Repurchase Price of Transactions
hereunder is greater than or equal to Thirty Five Million and No/100
Dollars ($35,000,000.00), not more than 20% of the aggregate Purchase
Price of all Transactions then outstanding shall be allocable to Mortgage
Assets the Underlying Properties of which consist of seasonal or beach
properties, commonly known as "destination" properties, as determined by
Buyer in its sole discretion; and
(f) at all times that the aggregate Repurchase Price of Transactions
hereunder is greater than or equal to Thirty Five Million and No/100
Dollars ($35,000,000.00), the portfolio of Underlying Properties
associated with the Mortgage Assets transferred to Buyer shall contain
reasonable geographic diversification, as determined by Buyer in its sole
discretion.
"Confirmation": The meaning specified in Section 3.03(d).
"Construction Loan": Any Mortgage Asset (i) for which 15% or more of
the proceeds will be used for construction or renovation of the Underlying
Property, (ii) that does not have a DSCR of at least 1.25 (provided, however,
that Seller may reduce the Purchase Price so that the DSCR does not exceed 1.25
at the time of the purchase), (iii) for which projections show that construction
will reduce the DSCR below 1.25, or (iv) that does not have DSCR information for
at least the 12 consecutive calendar months immediately preceding the month of
the proposed sale to Buyer.
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"Custodial Agreement": That custodial agreement, dated as of the
date hereof, by and among Buyer, Seller and Custodian, as the same shall be
modified and supplemented and in effect from time to time.
"Custodian": Branch Banking and Trust Company, a national banking
association, and its successors in interest, as custodian under the Custodial
Agreement, and any successor Custodian under the Custodial Agreement.
"Debt Service Coverage Ratio" or "DSCR": With respect to any
Mortgage Asset, as of any date of determination, for the period of twelve (12)
consecutive complete calendar months preceding such date, the ratio of (a) the
aggregate Net Cash Flow in respect of the Underlying Properties relating to such
Mortgage Asset for such period to (b) the sum of (i) the aggregate amount of all
amounts due for such period in respect of all Indebtedness that was outstanding
from time to time during such period that is secured, directly or indirectly, by
or payable from such Underlying Properties (including, without limitation, by
way of a pledge of the equity of the owner(s) of such Underlying Properties) or
that is otherwise owing by the owner(s) of such Underlying Properties,
including, without limitation, all scheduled principal and/or interest payments
due for such period in respect of each Mortgage Asset that is secured or
supported by such Underlying Properties and (ii) the amount of all ground lease
payments to be made in respect of such Underlying Properties during such period,
as any of the foregoing elements of DSCR may be adjusted by Buyer in its sole
discretion.
"Default": An event that with notice or lapse of time or both would
become an Event of Default.
"Defaulted Mortgage Asset": Any Mortgage Asset (a) which is ninety
(90) days or more delinquent in the payment of principal, interest, fees, or
other amounts due to the lender thereunder, or (b) for which there is a material
breach of the representations and warranties set forth on Schedule 1 hereto, or
(c) for which there is a non-monetary default under the related Mortgage Asset
documents.
"Deficit Cure Amount": The meaning specified in Section 4.01.
"Delinquent Mortgage Asset": A Mortgage Asset which is thirty (30)
or more days, but less than ninety (90) days, delinquent in the payment of
principal, interest, fees or other amounts then due.
"Determination Date": With respect to any Pricing Rate Period, the
date that is two (2) London Business Days prior to the date on which such
Pricing Rate Period commences; provided that the first Determination Date for
any Transaction shall be the Purchase Date thereof.
"Dollars" and "$": The lawful currency of the United States of
America.
"Due Diligence Review": The performance by Buyer of any or all of
the reviews permitted under Section 13.11 with respect to any or all of the
Mortgage Assets, as reasonably desired by Buyer from time to time.
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"E&O Insurance": Insurance coverage with respect to employee
dishonesty, forgery or alteration, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and computer fraud
in an aggregate amount reasonably acceptable to Buyer.
"Effective Date": The date upon which the conditions precedent set
forth in Section 3.01 shall have been satisfied.
"Electronic Transmission": The delivery of information in an
electronic format acceptable to the applicable recipient thereof.
"Eligible Asset": A Mortgage Asset which as of any date of
determination:
(a) is not a Defaulted Mortgage Asset or Delinquent Mortgage Asset;
(b) the Underlying Property of which serves a market population of
at least 100,000;
(c) the Underlying Property of which has an operating history of not
less than two (2) years (except for Construction Loans and those
specifically approved in advance by Buyer);
(d) the Underlying Property of which, if not under a Hilton,
Marriott, Starwood, Intercontinental or Choice flag, is associated with
another national hotel franchise acceptable to Buyer consisting of not
less than seventy-five (75) hotel properties;
(e) has been approved by Buyer in its sole discretion;
(f) constitutes an interest representing not less than five percent
(5%) of the total debt secured by the applicable Underlying Property; and
(g) any Ground Lease for which has a minimum remaining term of not
less than twenty (20) years;
provided, that notwithstanding a Mortgage Asset's failure to conform to the
criteria set forth above, Buyer may, in its sole discretion, designate in
writing any such non-compliant Mortgage Asset an Eligible Asset.
"Environmental Laws": Any and all federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions, now or hereafter in effect, relating to health or the
environmental or to emissions, discharges or releases of chemical substances,
including, without limitation, any and all pollutants, contaminants, petroleum
or petroleum products, asbestos or asbestos-containing materials,
polychlorinated biphenyls, urea-formaldehyde insulation, radon, industrial,
toxic or hazardous substances or wastes, into the environment, including,
without limitation, ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use, labeling,
registration,
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treatment, storage, disposal, transport or handling of any of the foregoing
substances or wastes or the clean-up or other remediation thereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate": 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 Period": With respect to any Purchased Asset, (i)
initially, the period commencing on the Purchase Date of such Purchased Asset
and ending on the earlier of (x) the date that is one-month, two-months,
three-months, four-months, or six-months thereafter, in each case as selected by
Seller in the applicable Confirmation or by irrevocable notice in the form of
Exhibit VII (an "Election Notice"), as the case may be, given with respect
thereto or (y) the related Repurchase Date, and (ii) thereafter, each period
commencing on the last day of the preceding Eurodollar Period applicable to such
Transaction and ending on the earliest of (x) the date that is one-month,
two-months, three-months, four-months or six-months thereafter, as selected by
Seller by Election Notice to Buyer not less than three (3) Business Days prior
to the last day of the then-current Eurodollar Period with respect thereto or
(x) the related Repurchase Date; provided, that if Buyer has not received an
Election Notice by the close of business, New York time, on the day preceding
the day on which the Eurodollar Rate for the next Eurodollar Period is to be
determined, Seller shall be deemed to have selected a one-month Eurodollar
Period, or (z) the Facility Termination Date.
"Eurodollar Rate": With respect to each Eurodollar Period during
which a Transaction is outstanding, the rate per annum equal to the rate
appearing at page 3750 of the Telerate Screen as LIBOR for the applicable
Eurodollar Period selected by Seller in accordance with this Agreement, at or
about 9:00 a.m., New York time, three (3) Business Days prior to the beginning
of such Eurodollar Period (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 (3) mutually acceptable banks are offered Dollar deposits at or about 8:00
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": The meaning specified in Section 11.01.
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"Facility Agreements": This Agreement, the Custodial Agreement, any
Servicing Agreement, any Purchase Agreement, and all Confirmations executed
pursuant to this Agreement in connection with specific Transactions, together
with all documents the forms of which are included as schedules or exhibits to
any of the foregoing and any other documents contemplated hereby.
"Facility Period": The period commencing on the Effective Date and
terminating on the Facility Termination Date.
"Facility Termination Date": The date that is one day prior to the
one year anniversary of the Effective Date, or such later date as may be
determined from time to time in accordance with Section 3.05(a).
"Foreclosed Loan": A Mortgage Asset as to which the Underlying
Property has been foreclosed upon by a lender.
"FPS Hotel": A full service hotel or a premium limited service
hotel, such as Courtyard by Marriott, Embassy Suites, Hilton Garden Inn,
Homewood Suites, Residence Inn, Fairfield Inn, Fairfield Inn & Suites, Hampton
Inn, Hampton Inn & Suites, Holiday Inn Express, Holiday Inn Express & Suites,
Springhill Suites, Staybridge Suites and Towneplace Suites.
"GAAP": Generally accepted accounting principles as in effect from
time to time in the United States.
"Governmental Authority": 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 Seller or any
of its properties.
"Ground Lease": With respect to any commercial mortgage loan for
which the Borrower has a leasehold interest in the related Underlying Property
or space lease within such Underlying Property, the lease agreement creating
such leasehold interest.
"Guarantee": 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 an Underlying Property, or other principal
and interest advances made in the ordinary course of servicing the Mortgage
Assets. 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.
-10-
"Hedging Transaction": Any short sale of U.S. Treasury Securities or
mortgage related securities, futures contract (including eurodollar futures) or
options contract or any interest rate swap, cap or collar agreement or other
derivative security or similar arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies to hedge the return on a
Purchased Asset, and which is entered into by Seller or any of its predecessors
in interest, with one or more counterparties with a credit rating from a
nationally recognized rating agency of not less than AA- or its equivalent.
"Income": With respect to any Mortgage Asset at any time, all
collections and proceeds on or in respect of such Mortgage Asset including,
without limitation, any principal thereof then payable and all interest or other
distributions payable thereon less any related servicing fee(s) charged by any
servicer or such Mortgage Asset after payment of amounts due under the Allocated
Underlying Debt with respect to such Mortgage Asset.
"Indebtedness": 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 ninety (90) days of the date the respective goods are delivered or the
respective services are rendered; (c) Indebtedness of others secured by a Lien
on the Property of such Person, whether or not the respective Indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar instruments
issued 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; (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.
"Independent Director" or "Independent Manager": means a natural
Person who is not at the time of initial appointment as an Independent Director
or Independent Manager, and may not have been at any time during the five (5)
years preceding such initial appointment or at any time while serving as
Independent Director or Independent Manager, (i) a director (other than
Independent Director of Seller), manager (other than Independent Manager of
Seller), officer, trustee, employee, partner, member, attorney or counsel of
Seller or any of its Affiliates; (ii) a creditor, customer, supplier or other
person who derives any of its purchases or revenues from its activities with
Seller or any of its Affiliates; (iii) a natural Person controlling or under
common control with any Person that would be excluded from serving as an
Independent Director or Independent Manager under (i) or (ii), above; or (iv) a
member of the immediate family of a natural Person excluded from serving as an
Independent Director or Independent Manager under (i) or (ii), above.
-11-
"Junior Interest": (a) A participation interest in a performing
commercial real estate loan that is junior to another participation interest or
other interest in the related whole loan or (b) a "B note" in an "A/B structure"
in a performing commercial real estate loan for which, in each case, the
combined DSCR is not less than that set forth in Schedule 2, taking into
account, in the calculation of the LTV and the DSCR of such Junior Interest, any
senior or pari passu debt secured directly or indirectly by, or expected to be
paid from the income from or proceeds of, the applicable Underlying Property.
"Junior Interest Note": The original executed promissory note
evidencing any Junior Interest (as described in clause (b) of the definition
thereof).
"Junior Participation Interest Certificate": The original
certificate or other instrument evidencing any Junior Interest (as described in
clause (a) of the definition thereof).
"Late Payment Fee": The meaning specified in Section 3.06(a).
"Letter of Credit": An irrevocable, unconditional, transferable,
clean sight draft letter of credit (a) reasonably acceptable to Buyer and the
Rating Agencies in favor of Buyer and entitling Buyer to draw thereon in New
York, New York, issued by a domestic institution which has a long term unsecured
debt rating from the Rating Agencies of at least A- or its equivalent; and (b)
that shall provide by its terms that Buyer may draw upon the full amount of the
Letter of Credit immediately upon the delivery to the issuing bank of a
certification by the Buyer that it is entitled to draw thereunder by virtue of
the terms of this Agreement. The Letter of Credit shall remain in full force and
effect until the repayment in full of the Obligations.
"Lien": Any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
"Liquidity Amount": The meaning specified in Section 10.01(t).
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Asset,
at the time of determination, the ratio of (a) the outstanding principal amount
of such Mortgage Asset at such time plus the amount of any Allocated Underlying
Debt for such Mortgage Asset at such time to (b) the market value of the related
Underlying Property at such time, as determined by reference to a third-party
appraisal of such Underlying Property (which appraisal may, at the election of
Buyer, be the appraisal in place at the time such Mortgage Asset is sold to
Buyer hereunder), as such determination of market value may be adjusted by Buyer
in its sole discretion exercised in good faith.
"London Business Day": Any day other than a Saturday, Sunday or any
other day on which commercial banks in London, England are not open for
business.
"LS Hotel": A limited service hotel, generally constructed after
1980, which generally offers rates lower than a full service hotel and provides
more limited services and amenities than a full service hotel.
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"Margin Account": A deposit account or a securities account, in the
name of Buyer, into which Buyer shall deposit cash received by Buyer from Seller
in accordance with Section 4.01.
"Margin Amount": With respect to any Purchased Asset as of any date,
the product of (A) the Margin Percentage, expressed as a decimal, and (B) the
Purchase Price for such Purchased Asset.
"Margin Collateral": Any cash or Additional Assets transferred to
Buyer under Section 4.01 or delivered to Buyer in satisfaction of the Liquidity
Amount pursuant to Section 10.01(t) of this Agreement, including any Letter of
Credit or any proceeds thereof.
"Margin Deficit": The meaning specified in Section 4.01(a).
"Margin Deficit Notice": The meaning specified in Section 4.01(a).
"Margin Depositary": The meaning specified in Section 4.02.
"Margin Percentage": With respect to any Purchased Asset as of any
date, the percentage obtained by (A) dividing (i) the Market Value of such
Purchased Asset on the Purchase Date for such Transaction by (ii) the Purchase
Price of such Purchased Asset on the Purchase Date for such Transaction and (B)
multiplying the resulting quotient by 100.
"Market Value": As of any date in respect of any Mortgage Asset, the
price at which such Mortgage Asset could readily be sold, as determined by Buyer
in its sole discretion exercised in good faith by (i) reference to the market
value of the Underlying Property, which may be determined by a third-party
appraisal of the Underlying Property (which appraisal may, at the election of
Buyer, be the appraisal in place at the time such Mortgage Asset is sold to
Buyer hereunder), as such determination of the market value of the Underlying
Property may be adjusted by Buyer in its sole discretion exercised in good
faith, and (ii) taking into account such other criteria as Buyer deems
appropriate in its good faith, including, without limitation, current market
conditions (including, without limitation, current interest rates), credit
quality, delinquency status and aging, which price, in each case, may be
determined to be zero. Buyer may adjust the "Market Value" of any Purchased
Asset after the Purchase Date for such Purchased Asset based on changes in
prevailing market interest rates on newly originated assets of the same Type or
Class if such Purchased Asset is a fixed rate loan and Buyer is not also holding
a related Hedging Transaction, but Buyer shall not adjust the Market Value of
any Purchased Asset after the Purchase Date thereof based on "trading spreads"
in the subordinate loan market.
"Material Adverse Change": With respect to any Person, a material
adverse change in the Property, business, operations, or financial condition of
such Person as determined by Buyer.
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"Material Adverse Effect": A material adverse effect on (a) the
Property, business, operations, financial condition or prospects of Seller, (b)
the ability of Seller to perform its obligations under any of the Facility
Agreements to which it is a party, (c) the validity or enforceability of any of
the Facility Agreements, (d) the rights and remedies of Buyer under any of the
Facility Agreements, (e) the timely payment of any amounts payable under the
Facility Agreements, or (f) the Asset Value of any Purchased Asset.
"Materials of Environmental Concern": any toxic mold, any petroleum
(including, without limitation, crude oil or any fraction thereof) or petroleum
products (including, without limitation, gasoline) or any hazardous or toxic
substances, materials or wastes, defined as such in or regulated under any
Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls, and urea-formaldehyde insulation.
"Maximum Amount": Fifty Million and No/100 Dollars ($50,000,000.00).
"Maximum LTV": with respect to any Purchased Asset at any time, the
Loan-to-Value Ratio for the related Underlying Property set forth on Schedule 2
under the heading "Maximum LTV" and for the Class and Type of such Mortgage
Asset.
"Maximum Legal Rate": The maximum nonusurious Price Differential or
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the aggregate Purchase Price as
provided for herein or the other Facility Agreements, under the laws of such
state or states whose laws are held by any court of competent jurisdiction to
govern the Price Differential or interest rate provisions of any such
Transaction.
"Mezzanine Loan": A performing mezzanine loan secured by pledges of
all the Capital Stock of the Person that owns income producing commercial real
estate and for which the combined DSCR is not less than that set forth in
Schedule 2.
"Mezzanine Note": The original executed promissory note or other
evidence of Mezzanine Loan indebtedness.
"Mortgage": Each mortgage, assignment of rents, security agreement
and fixture filing, or deed of trust, assignment of rents, security agreement
and fixture filing, or similar instrument creating and evidencing a lien on real
property and other property and rights incidental thereto. When used (i) in
connection with a Junior Interest Note, "Mortgage" shall mean the Mortgage
securing that Junior Interest Note; and (ii) when used in connection with a
junior interest that is a participation, shall mean the Mortgage securing the
Mortgage Loan that is the subject of the participation.
"Mortgage Asset": A Junior Interest or Mezzanine Loan, the
Underlying Property for which is an FPS Hotel or an LS Hotel.
"Mortgage Asset File": The meaning assigned thereto in the Custodial
Agreement.
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"Mortgage Loan": A debt obligation secured by a Mortgage on an
Underlying Property.
"Mortgaged Property": 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/or all other collateral securing repayment of a loan.
"Multiemployer Plan": 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.
"Net Cash Flow": means, with respect to each Mortgage Asset, for any
period, Net Operating Income, less reserve amounts (up to 4% of gross revenues)
for furniture, fixtures and equipment.
"Net Operating Income" means, with respect to each Underlying
Property, for any period, the total cash flow derived from the property that was
available for debt service on the related Mortgage Asset, calculated as
Underlying Revenues less Underlying Expenses for that Underlying Property.
"Nonconsolidation Opinion": A "nonconsolidation" opinion of outside
counsel to Seller in form and substance satisfactory to Buyer.
"Obligations": (a) All of Seller's indebtedness hereunder, including
but not limited to, Seller's obligations to pay (i) the Total Repurchase Price,
(ii) the Repurchase Price on each Repurchase Date, (iii) the Price Differential
on each Payment Date, and other obligations and liabilities, to Buyer, its
Affiliates or Custodian arising under, or in connection with, the Facility
Agreements, whether now existing or hereafter arising; (b) any and all sums paid
by Buyer or on behalf of Buyer in order to preserve any Purchased Asset or its
interest therein including, but not limited to any amounts paid to any Servicer;
(c) in the event of any proceeding for the collection or enforcement of any of
Seller's indebtedness, obligations or liabilities referred to in clause (a), the
reasonable expenses of retaking, holding, collecting, preparing for sale,
selling or otherwise disposing of or realizing on any Purchased Asset, or of any
exercise by Buyer of its rights under the Facility Agreements, including,
without limitation, attorneys' fees and disbursements and court costs; and (d)
all of Seller's indemnity obligations to Buyer or Custodian or both pursuant to
the Facility Agreements.
"Parent": XXXX Limited Partnership, a North Carolina limited
partnership.
"Payment Date": The first (1st) Business Day of each month, or if
such day is not a Business Day, the preceding Business Day; provided that, with
respect to any Purchased Asset, the final Payment Date shall be the later of the
related Repurchase Date or the date on which all of Seller's Obligations with
respect thereto arising under this Agreement, including the payment in full to
Buyer of the Repurchase Price therefor, shall have been paid in full and
discharged.
"PBGC": The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"Permitted Assignee": Any bank, financial institution or similar
Person having a rating assigned by Standard and Poor's Ratings Services, a
division of the XxXxxx-Xxxx Companies, Inc., of BBB or better (or an equivalent
rating assigned by another Rating Agency) or a special purpose vehicle, unless
such bank, financial institution or similar Person is listed on Schedule 5 to
this Agreement. Any warehouse or other lender for Buyer shall be a Permitted
Assignee.
"Person": 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": An employee benefit or other plan established or maintained
by any Seller or any ERISA Affiliate and covered by Title IV of ERISA, other
than a Multiemployer Plan.
"Post-Default Rate": In the case of any amount under this Agreement
or any other Facility Agreement 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
based on a 360 day year, during the period from and including the due date to
but excluding the date on which such amount is paid in full equal to the lesser
of (x) the Pricing Rate plus 500 basis points on such Post-Default Day or (y)
the Maximum Legal Rate permitted by applicable law.
"Preconfirmation": The meaning specified in Section 3.03(a).
"Preconfirmation Request": The meaning specified in Section 3.03(a).
"Price Differential": With respect to any Transaction hereunder as
of any date during any Pricing Rate Period, an amount equal to the product of
(A) the Pricing Rate for such Transaction and (B) the Purchase Price for such
Transaction, calculated on the basis of a 360 day year for the actual number of
days that have elapsed during each Pricing Rate Period commencing on (and
including) the first day of such Pricing Rate Period (or the Purchase Date in
the case of the first Pricing Rate Period) for such Purchased Asset and ending
on and including the last day of such Pricing Rate Period, plus any unpaid Price
Differential accrued during any prior Pricing Rate Period.
"Pricing Rate": With respect to a Mortgage Asset of a certain Class
and Type, for any Pricing Rate Period, a rate per annum, determined as of the
applicable Determination Date, equal to the sum of (a) the Eurodollar Rate
applicable to such Pricing Rate Period plus (b) the Pricing Spread for such
Mortgage Asset applicable on such date as set forth on Schedule 2.
"Pricing Rate Period": With respect to any Payment Date, the period
commencing on the preceding Payment Date and terminating on and including the
day preceding such Payment Date. With respect to each Transaction, the initial
Pricing Rate Period shall begin on and include the Purchase Date and shall end
on and include the day preceding the first Payment Date with respect to such
Transaction.
"Pricing Spread": The point spreads set forth on Schedule 2 hereto
corresponding to the Classes of Mortgage Assets and to the Types of Underlying
Property set forth therein;
-16-
"Primary Servicer" Any servicer (including a "special servicer") of
a Mortgage Loan.
"Primary Servicing Agreement": Any agreement pursuant to which a
Primary Servicer services a Mortgage Asset.
"Prime Rate": The prime rate announced to be in effect from time to
time by Citibank, N.A., as its prime rate. The prime rate is not intended to be
the lowest general rate of interest charged by Citibank, N.A., to its customers.
"Principal Payment": With respect to any Purchased Asset, any
payment or prepayment of principal in respect thereof.
"Property": Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Agreement": Any purchase agreement or contribution
agreement, substantially in the form of Exhibit X hereto, by and between Seller
and any Asset Seller pursuant to which Seller has purchased assets subsequently
sold to Buyer hereunder.
"Purchase Date": Each date on which an Eligible Asset is sold by
Seller to Buyer hereunder.
"Purchase Price": On each Purchase Date, the price at which Eligible
Assets are transferred by Seller to Buyer, which shall equal the product of the
Asset Value for such Eligible Assets on the Purchase Date and the applicable
Purchase Rate.
"Purchase Rate": With respect to an Eligible Asset of a certain
Class and the applicable Type of Underlying Property, the "Purchase Rate" set
forth in the applicable column on Schedule 2.
"Purchased Asset": Each Eligible Asset sold by Seller to Buyer in a
Transaction hereunder. The term "Purchased Assets" shall include Additional
Assets delivered pursuant to Section 4.01 hereof.
"Rating Agencies": Each of Fitch Ratings, Inc., Xxxxx'x Investors
Services, Inc. or Standard and Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies, Inc., or their successors in interest, and such other
nationally recognized statistical rating agencies as may be designated by Buyer
from time to time.
"Records": All instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by or on behalf of Seller, Servicer, any Asset Seller or any other
Person (but only to the extent available to Seller, Servicer, or any Asset
Seller) with respect to a Purchased Asset a related Mortgage Loan, or any
Underlying Property. Records shall include, without limitation, all Mezzanine
Notes, all Junior Interest Notes, all Junior Participation Interest
Certificates, any Mortgages, the Mortgage Asset Files, the credit files (if any)
related to the Purchased Asset, all financial information provided to Seller or
Servicer by any Primary Servicer, trustee, or senior lender and any and all
other
-17-
instruments necessary to document or service such Purchased Asset or any
transfer or conveyance thereof (including, without limitation, any Purchase
Agreement and any related assignments and/or financing statements, if
applicable).
"Regulations T, U and X": 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.
"REIT": A "real estate investment trust" within the meaning of the
Code.
"REO Property": Real property acquired by a mortgagee of a Mortgage
Loan, including an Underlying Property acquired through foreclosure of a
Mortgage Asset or by deed in lieu of such foreclosure.
"Reportable Event": Any of the events set forth in Section 4043(b)
of ERISA or a successor provision thereof, other than those events as to which
the thirty day notice period is waived under subsections 13, 14, 16, 18, 19 or
20 of PBGC Reg. Section 2615 or one or more successor provision thereof.
"Reporting Date": The meaning specified in Section 10.01(u).
"Repurchase Date": The date on which Seller is to repurchase the
Purchased Assets from Buyer which shall be the earliest of (i) the date
specified in the related Confirmation, (ii) any date determined by application
of the provisions of Articles III or XIII (iii) the third (3rd) Business Day
following the day on which any of the representations set forth in Section 9.01
shall be determined to be breached (which breach shall occur if the
representation is false or misleading in any material respect, regardless of any
qualification in the representation relating to the Actual Knowledge of any
Person), unless Buyer shall have waived such breach in writing or (iv) the
Facility Termination Date.
"Repurchase Price": The price at which Purchased Assets are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential, plus all other
amounts, including Late Payment Fees and other fees or obligations owing to
Buyer with respect to, or allocable to, such Purchased Asset, as of the date of
such determination decreased by all cash, Income and Price Differential payments
(including Late Payment Fees, if any) actually received by Buyer.
"Requirement of Law": 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.
"Responsible Officer": As to any Person, the chief executive
officer, the chief financial officer, the chief accounting officer, the
treasurer or the chief operating officer of such Person.
-18-
"Scheduled Principal Payment": Any payment of principal on a
Purchased Asset that is required, pursuant to the documents constituting the
Mortgage Asset File for such Purchased Asset, as modified by any amendments
thereto, to be made at a specific time or upon the happening of a specific
event, other than a Balloon Payment.
"Security Agreement": With respect to any Mortgage Asset, any
contract, instrument or other document related to security for repayment thereof
(other than the related Mortgage and any Mezzanine Note), executed by the
Borrower and/or others in connection with such Mortgage Asset, including without
limitation, any security agreement, assignment, 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": Winston Finance Partners LLC, a Delaware limited liability
company.
"Seller Asset Schedule": The meaning assigned thereto in the
Custodial Agreement.
"Servicer": XXXX Limited Partnership, a North Carolina limited
partnership, in its capacity as servicer of the Mortgage Assets pursuant to the
Servicing Agreement.
"Servicing Account": Any account established by Servicer in
connection with the servicing of the Mortgage Assets.
"Servicing Agreement": That certain Servicing Agreement, dated as of
the date hereof, by and between Buyer, Seller and Servicer, relating to the
servicing of the Purchased Assets.
"Servicing Fee:" The fee payable to the servicer for servicing the
assets pursuant to the Servicing Agreement.
"Servicing File": With respect to each Mortgage Asset, the file
retained by any Servicer consisting of originals of all documents in the
Mortgage Asset File which are not delivered to a Custodian and copies of all
documents in the Mortgage Asset File set forth in Section 2.01 of the Custodial
Agreement.
"Servicing Records": The meaning specified in Section 12.02.
"Single Purpose Entity": A Person, other than an individual, (i)
which is formed or organized solely for the purpose of holding, directly and
subject to this Agreement, the Purchased Assets and (ii) which is in compliance
with all of the covenants set forth in Section 10.01(z). If the foregoing entity
is a limited partnership or limited liability company, the partnership agreement
or limited liability company agreement (as applicable) shall provide that the
dissolution and winding up or bankruptcy or insolvency filing of such
partnership or limited liability company shall require the unanimous consent of
all partners or members. In addition, such entity shall at all times have at
least one Independent Director or Independent Manager.
"Situs": The Situs Companies, which act as servicer for Buyer.
-19-
"Subject Properties": The meaning in Section 9.01(aa).
"Subsidiary": 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.
"Total Repurchase Price": The aggregate outstanding Repurchase Price
of all Purchased Assets under this Agreement together with all other amounts
payable by Seller to Buyer with respect to Seller's Obligations under the
Facility Agreements.
"Transaction": The meaning specified in Section 1.01.
"Transaction Request": The meaning specified in Section 3.03(b).
"True Sale Opinion": A "true sale" opinion of outside counsel to
Seller in form and substance satisfactory to Buyer.
"Trust Receipt": A trust receipt issued by Custodian to Buyer
confirming Custodian's possession of certain Mortgage Asset Files which are held
by Custodian for the benefit of Buyer or the registered holder of such trust
receipt.
"Type": With respect to an Underlying Property, such Underlying
Property's classification as one of the following: (a) an FPS Hotel or (b) an LS
Hotel.
"Underlying Expenses" means, for any Underlying Property, the
expenses incurred, or annualized or estimated in some cases, for the property
for any period, based upon the latest available operating statement and other
information for such period furnished by the related Borrower. For purposes of
the foregoing, expenses generally consist of all expenses incurred in respect of
the property, including (a) salaries and wages, (b) costs or fees of utilities,
repairs and maintenance, marketing, insurance, management, landscaping and
security, (c) the amount of real estate taxes, general and administrative
expenses, ground lease payments and other costs, and (d) expenses related to
guest rooms, food and beverage costs, telephone bills and rental and other
expenses, as well as general administrative expenses, marketing expenses and
franchise fees. For purposes of the foregoing, expenses do not reflect, however,
any deductions for debt service, depreciation, amortization, capital expenses,
leasing commissions and tenant improvements or furniture, fixtures and
equipment.
"Underlying Property": (a) In the case of a Junior Interest, the
Mortgaged Property securing the commercial real estate loan in which such Junior
Interest represents a junior participation (if the Junior Interest is of the
type described in clause (a) of the definition thereof), or the Mortgaged
Property securing such Junior Interest (if the Junior Interest is of the type
described in clause (b) of the definition thereof) and (b) in the case of a
Mezzanine Loan,
-20-
the Mortgaged Property that is held by the Person the Capital Stock of which is
pledged as collateral security for such Mezzanine Loan.
"Underlying Revenues" means, for any Underlying Property, the
revenues received, or annualized or estimated in some cases, in respect of the
Underlying Property for any period, based upon the latest available operating
statement and other information for such period furnished by the related
Borrower. For purposes of the foregoing, revenues generally consist of all
revenues received in respect of the property, including guest room rates, food
and beverage charges, telephone charges and other revenues, as well as any
management fees in excess of 3% of gross revenue.
"Underwriting Package": Any material internal document prepared by
Seller, or by or on behalf of the originator of the Mortgage Asset, if such
originator is not Seller, for its evaluation of a Mortgage Asset, to include at
a minimum the data required in the relevant Confirmation. In addition, with
respect to any Mortgage Asset, the Underwriting Package shall include a copy of
the complete Mortgage Asset File, together with copies of the following, to the
extent available:
(i) any third party market study,
(ii) any third party appraisal of the Underlying Property,
(iii) any engineering study regarding the physical plant of the
Underlying Property,
(iv) any product improvement plans of any applicable franchisor and
any related franchise license agreement and standstill agreement,
(v) historical and prospective operating statements, capital
expenditures and budgets, including a minimum of two (2) years of property level
financial statements, to the extent available, and current financial statements
of the obligor on the commercial mortgage loan,
(vi) any applicable management agreement and a description of any
management company,
(vii) any Xxxxx Travel Research "STAR" reports for the Underlying
Property,
(viii) Seller's, Parent's and/or Winston's internal market analysis
and analysis of the principal competitors of the Underlying Property,
(ix) a comparative "benchmark" analysis of the Underlying Property
that compares the operating statements of the Underlying Property to those of
selected comparable properties,
(x) the marketing program and business plan for the Underlying
Property,
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(xi) a summary of the background and operational experience of each
member of senior management at the Underlying Property,
(xii) Seller's operating model and projections for the Underlying
Property, including a DSCR sensitivity analysis that addresses the impact of
revenue per average room (RevPAR) and interest rate fluctuations on debt service
capability,
(xiii) copies of all senior loan documents relating to the
Underlying Property,
(xiv) copies of any brand affiliation and/or franchise agreements,
including any agreements containing cure and/or standstill provisions,
(xv) a summary of traditional real estate parameters, such as
location, access, visibility and the like,
(xvi) a summary of existing and projected competition for the
Underlying Property, and
(xvii) such further documents or information as Buyer may reasonably
request.
With respect to any Mortgage Asset that is a Construction Loan, the
Underwriting Package shall include a copy, to the extent relevant, of each of
the foregoing items, as well as copies of each of the following, to the extent
available:
(i) a summary of Seller or Asset Seller's overall review of the
proposed construction site,
(ii) any proposed acquisition agreement relating to the proposed
construction site, together with Seller and/or Asset Seller's analysis of same,
(iii) any third party feasibility, environmental, geotechnical,
title and design studies relating to the proposed construction site,
(iv) a five (5) year operations budget and construction budget for
the proposed construction site,
(v) copies of any preliminary drawings for the construction project
and any entitlement analysis conducted by Seller and/or Asset Seller,
(vi) the names of all proposed architects, engineers and contractors
for the construction project, together with any analysis or evaluation of any
such Persons by Seller and/or Asset Seller,
(vii) any franchise license relating to the construction project,
(viii) any material information regarding the bidding process for
the contractor of the construction project,
(ix) a schedule for all phases of the construction project,
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(x) any agreements relating to construction project management
services, (xi) any material information regarding the pre-opening process,
(xii) any certificates of occupancy for the completed project,
(xiii) any plans and/or specifications for completeness, clarity and
constructability, and
(xiv) such further documents or information as Buyer may reasonably
request.
"Uniform Commercial Code" or "UCC": 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 Collateral 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.
"Winston": Winston Hotels, Inc. and its permitted successors and
assigns.
Section 2.02 Other Definitional Provisions; Determinations by Buyer.
(a) As used herein, and any certificate or other document made or
delivered pursuant hereto, accounting terms relating to Seller not defined in
Section 2.01, and accounting terms partly defined in Section 2.01, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) All matters to be determined by Buyer in its sole discretion
hereunder shall be determined by Buyer in its sole discretion exercised in good
faith.
(e) Buyer and Seller agree that any representation or warranty
(including, without limitation, any representation or warranty set forth in
Article IX hereof or Schedule 1 attached hereto) made by Seller to the "Actual
Knowledge" of Seller or any other Person is so qualified for purposes of
accuracy, but that Buyer shall be entitled to exercise all remedies for breach
of any such representation or warranty as if no such "Actual Knowledge"
qualifier were included therein.
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ARTICLE III
INITIATION; REPURCHASE; TERMINATION
Section 3.01 Conditions Precedent to Initial Transaction. Buyer's
agreement 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, and satisfaction of all of the
following conditions, each of which shall be satisfactory in form and substance
to Buyer and its counsel:
(a) The following Facility Agreements, as well as certain other
documents, shall be delivered to Buyer:
(i) Master Repurchase Agreement. This Master Repurchase Agreement
duly completed and executed by the parties thereto;
(ii) Custodial Agreement. The Custodial Agreement, duly executed and
delivered by each party thereto. 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;
(iii) Collection Account. Evidence satisfactory to Buyer of the
existence of the Collection Account; and
(iv) Consents and Waivers. Any and all consents and waivers
applicable to Seller or to the Mortgage Assets.
(b) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of Seller
and of all corporate or other authority for Seller with respect to the
execution, delivery and performance of the Facility Agreements and each other
document to be delivered by Seller from time to time in connection herewith (and
Buyer may conclusively rely on such certificate until it receives notice in
writing from Seller to the contrary);
(c) Servicing Agreement. The Servicing Agreement certified as a
true, correct and complete copy of the original;
(d) Fees and Expenses. Buyer shall have received payment from Seller
of an amount equal to the amount of actual costs and expenses incurred by Buyer
in connection with the development, preparation and execution of this Agreement,
the other Facility Agreements and any other documents prepared in connection
herewith or therewith, including, without limitation, due diligence costs of Two
Thousand Five Hundred and No/100 Dollars ($2,500.00) for each Mortgage Asset,
and the reasonable fees and expenses of counsel to Buyer;
(e) Incumbency Certificate. An incumbency certificate of the
corporate secretary or assistant secretary or similar officer of Seller,
certifying the names, true signatures
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and titles of the representatives duly authorized to request transactions
hereunder and to execute the Facility Agreements;
(f) Insurance. Evidence that Seller and Servicer have adequate E&O
Insurance;
(g) Margin Account Control Agreement. Buyer shall have received an
account and securities control agreement acceptable to Buyer pursuant to which
Buyer shall control (within the meaning of the UCC) all monies and/or securities
from time to time on deposit in the Margin Account; and
(h) Other Documents. Buyer shall have received all such other and
further documents, documentation and legal opinions as Buyer in its sole
discretion shall reasonably require.
Section 3.02 Conditions Precedent to all Transactions. Buyer's
agreement 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:
(a) Confirmation and Approval. Seller shall have delivered a
Confirmation via Electronic Transmission in accordance with the procedures set
forth in Section 3.03, and Buyer shall have determined that the Mortgage Asset
described in such Confirmation is an Eligible Asset, shall have approved the
purchase of the Eligible Asset to be included in such Transaction in its sole
and absolute discretion and shall have obtained all necessary internal credit
approvals for such Transaction;
(b) Facility Agreements. The Facility Agreements shall be in full
force and effect, free of any modification, breach or waiver;
(c) Assignment Documents and Security Interest. With respect to each
Purchased Asset that is the subject of any Transaction, evidence that all
actions necessary or, in the opinion of Buyer, desirable to properly transfer,
assign and convey Seller's interest in such Purchased Asset and other related
Collateral to Buyer and to protect Buyer's interest therein have been taken,
including, without limitation, delivery by Seller to Buyer or Custodian of each
of the following:
(i) a copy of the relevant Purchase Agreement, certified as true and
correct by a Responsible Officer of any Asset Seller pursuant to which
such Purchased Asset and/or Collateral was transferred and conveyed from
such Asset Seller to Seller;
(ii) if applicable, an Assignment of Mortgage relating to such
Purchased Asset assigning the Mortgage for such Purchased Asset from any
Asset Seller to Seller;
(iii) if applicable, an assignment of any Assignment of Leases from
any Asset Seller to Seller relating to such Purchased Asset;
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(iv) the original omnibus assignment for such Purchased Asset in
form and substance reasonably acceptable to Buyer pursuant to which all of
any Asset Seller's right, title and interest in and to such Purchased
Asset have been assigned to Seller;
(v) if applicable, an Assignment of Mortgage from Seller but
otherwise in blank relating to such Purchased Asset;
(vi) an omnibus assignment in blank for such Purchased Asset in form
and substance reasonably acceptable to Buyer and sufficient to transfer to
Buyer all of Seller's rights, title and interest in and to the Purchased
Asset, signed in the name of Seller;
(vii) UCC-1 financing statements prepared by Seller for the purpose
of perfecting Seller's security interest in such Purchased Asset, which
such UCC-1 financing statements shall be reasonably acceptable to Buyer
and in form and substance acceptable for filing;
(viii) UCC-3 assignments for the purpose of assigning Seller's
security interest in such Purchased Asset to Buyer, which such UCC-3
assignments shall be in form and substance acceptable for filing; and
(ix) UCC-1 financing statements prepared by Seller for the purpose
of perfecting Buyer's security interest in such Purchased Asset, which
such UCC-1 financing statements shall be reasonably acceptable to Buyer
and in form and substance acceptable for filing.
(d) No Default. No Default or Event of Default shall have occurred
and be continuing under any of the Facility Agreements;
(e) Officer's Certificate. Buyer shall have received a certificate
of a Responsible Officer of Seller (i) certifying and showing in detail the
calculations demonstrating that, after giving effect to the requested
Transaction, the aggregate Repurchase Price of the Transactions outstanding
shall not exceed the Maximum Amount, and (ii) stating that, to the best of such
Responsible Officer's knowledge, Seller has observed or performed all of its
covenants and other agreements in all material respects, and satisfied in all
material respects, every condition contained in this Agreement and the related
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;
(f) Confirmation of Representations and Warranties. 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 9.01 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);
(g) No Margin Deficit. There shall be no Margin Deficit outstanding.
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(h) Diligence. Subject to Buyer's right to perform one or more Due
Diligence Reviews pursuant to Section 13.11, Buyer shall have completed its due
diligence review of the Mortgage Asset File and the Underwriting Package 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;
(i) Requested Information. Buyer shall have received all requested
information pertaining to the Mortgage Assets to be purchased or the related
Underlying Property;
(j) Servicing Agreements. With respect to any Eligible Asset to be
purchased hereunder on the related Purchase Date which is not serviced by
Seller, Seller shall have provided to Buyer a copy of the related Servicing
Agreement, certified as a true, correct and complete copy of the original at
least ten (10) days prior to the Purchase Date, together with a copy of a
written notice to such servicer, fully executed by Seller and such servicer, of
the sale of the Eligible Asset to Buyer, and acknowledgement by such servicer of
the rights of Buyer thereunder in place and stead of Seller or any predecessor
in interest;
(k) Expenses. Buyer shall have received all fees and expenses of
counsel to Buyer as required by Sections 13.01 and 13.02 and, to the extent
Seller is required hereunder to reimburse Buyer for such amounts, Buyer shall
have received the reasonable costs and expenses incurred by it in connection
with the entering into of any Transaction hereunder, including, without
limitation, costs associated with due diligence, recording or other
administrative expenses necessary or incidental to the execution of any
Transaction hereunder, which amounts, at Buyer's option, may be withheld from
the sale proceeds of any Transaction hereunder;
(l) Market and Financial Changes. None of the following shall have
occurred and/or be continuing:
(i) an event or events shall have occurred in the good faith
determination of Buyer resulting in the effective absence of a "repo
market" or related "lending market" for purchasing (subject to repurchase)
or financing debt obligations secured by commercial mortgage loans or
securities or an event or events shall have occurred resulting in Buyer
not being able to finance Mortgage 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
(ii) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
Mortgage Assets or an event or events shall have occurred resulting in
Buyer not being able to sell securities backed by Mortgage Assets at
prices which would have been reasonable prior to such event or events; or
(iii) there shall have occurred a Material Adverse Change with
respect to 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
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(iv) there shall have occurred a Material Adverse Change with
respect to Servicer which affects (or can reasonably be expected to
affect) materially and adversely the ability of Servicer to perform its
obligations under the Servicing Agreement; or
(v) there shall have occurred a Material Adverse Change with respect
to Winston;
(m) Asset Schedule and Exception Report. Buyer shall have received
from Custodian on each Purchase Date an Asset Schedule and Exception Report with
respect to each Purchased Asset, dated the Purchase Date, duly completed and
with exceptions acceptable to Buyer in its sole discretion in respect of
Eligible Assets to be purchased hereunder on such Business Day;
(n) Warehouse Lender's Release; Seller's Release. Buyer shall have
received from Seller a Warehouse Lender's Release Letter substantially in the
form of Exhibit VI-B hereto (or such other form reasonably acceptable to Buyer),
if applicable, or a Seller's Release Letter substantially in the form of Exhibit
VI-A hereto (or such other form acceptable to Buyer) covering each Eligible
Asset to be sold to Buyer;
(o) Opinions. Buyer shall have received an opinion or opinions of
outside counsel to Seller, substantially in the form of Exhibit III, and a
Nonconsolidation Opinion. In addition, prior to the purchase of any Mortgage
Asset acquired (by purchase or otherwise) by Seller from any Asset Seller, Buyer
shall have received a True Sale Opinion;
(p) No Change In Law. Buyer shall not have determined that the
introduction of, or a change in, any Requirement of Law or in the interpretation
or administration of any Requirement of Law applicable to Buyer has made it
unlawful, and no Governmental Authority shall have asserted that it is unlawful,
for Buyer to enter into Transactions;
(q) Minimum and Maximum Purchase Price. The Purchase Price specified
in a Confirmation for a Mortgage Asset shall not be less than One Million and
No/100 Dollars ($1,000,000.00) nor shall it be more than Nine Million and No/100
Dollars ($9,000,000.00);
(r) Repurchase Date. The Repurchase Date for such Transaction shall
be not later than the Facility Termination Date;
(s) Amendments. Buyer shall have received copies of any amendments
to the documents referred to in Section 3.01 that could reasonably be deemed to
be material to the application of the terms and conditions of this Agreement;
(t) Hedging Transactions. If any Mortgage Asset that is the subject
of such Transaction is a fixed rate loan, Buyer shall have received a Hedging
Transaction reasonably acceptable to Buyer; and
(u) Other. Buyer shall have received all such other and further
documents, documentation and legal opinions as Buyer in its sole discretion
shall reasonably require, including evidence that Seller shall have instructed
the any relevant servicer, trustee, or senior
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lender having custody of collections on the Underlying Property to distribute
funds allocable to the Purchased Loan directly to Buyer.
Each Confirmation delivered by Seller hereunder shall constitute a
certification by Seller that all the conditions set forth in this Section 3.02
have been satisfied (both as of the date of such notice or request and as of the
date of such purchase).
Section 3.03 Transaction Mechanics; Related Matters. (a) From time
to time, in the sole discretion of Buyer, Buyer may purchase from Seller certain
Eligible Assets that have either been originated by Seller or purchased by
Seller from other originators; provided that at no time shall Buyer and Seller
have more than seven (7) different Eurodollar Rates outstanding under this
Agreement and at no time shall the aggregate Repurchase Price of the Purchased
Assets exceed the Maximum Amount. This Agreement is not a commitment by Buyer to
enter into Transactions with Seller but rather sets forth the procedures to be
used in connection with periodic requests for Buyer to enter into Transactions
with Seller. Seller hereby acknowledges that Buyer is under no obligation to
agree to enter into, or to enter into, any Transaction pursuant to this
Agreement. Seller may request preliminary review of the eligibility of any
Mortgage Asset by delivering to Buyer via Electronic Transmission a request
(each a "Preconfirmation Request") with respect to the proposed acquisition by
Seller of the applicable Mortgage Asset(s). Such Preconfirmation Request shall
describe each proposed Mortgage Asset and include summaries of the related
historical operating statements, historical occupancy reports and other
customary market information. Buyer agrees that it shall provide Seller, within
three (3) Business Days of receipt of the Preconfirmation Request, with a
preliminary indication, based upon such information provided, whether or not the
proposed Mortgage Asset would be accepted as an Eligible Asset hereunder (a
"Preconfirmation"); provided that, with respect to any Mortgage Asset that is an
Acquired Asset, Seller shall, in addition to the foregoing information and
summaries, provide Buyer with drafts of all proposed agreements, instruments and
documents relating to the purchase of such Mortgage Asset by Seller or one of
its Affiliates from a third party, and Buyer shall provide Seller, within seven
(7) Business Days of receipt of the Preconfirmation Request, with a
Preconfirmation, based upon the information and draft documents provided, with
respect to such Acquired Asset. Buyer's issuance of a Preconfirmation pursuant
to this Section 3.03(a) shall not constitute Buyer's agreement to enter into a
Transaction with respect to such Mortgage Asset, it being understood that
Buyer's entering into such a Transaction shall be subject to Buyer's review of
the complete Underwriting Package and satisfaction of all other conditions
thereto; provided, that Buyer acknowledges that it is aware that Seller will be
relying on Preconfirmations in making its business judgment to acquire such
Mortgage Assets.
(b) Seller shall request a Transaction by delivering to Buyer (with
a copy to the Custodian) via Electronic Transmission a request in the form of
Exhibit I attached hereto (a "Transaction Request"). Such Transaction Request
shall describe the Purchased Assets in a Seller Asset Schedule and set forth (i)
the proposed Purchase Date, (ii) the proposed Purchase Price, (iii) the proposed
Repurchase Date, (iv) the Pricing Rate and initial Eurodollar Period applicable
to the Transaction, (v) each Class of Mortgage Asset and each Type of Underlying
Property for which Seller is requesting the Transaction and (vi) any additional
terms or conditions not inconsistent with this Agreement and shall be
accompanied by the Underwriting
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Package for each Mortgage Asset. In the event of any conflict between the terms
of such Transaction Request and this Agreement, the terms of this Agreement
shall prevail.
(c) Buyer agrees that it shall notify Seller of its approval or
disapproval of each proposed Mortgage Asset within seven (7) Business Days (in
the case of each individual Mortgage Asset delivered in connection with any
Purchase Date, plus seven (7) additional Business Days for each additional
Mortgage Asset delivered in connection with any Purchase Date) after its receipt
of the complete Underwriting Package and any supplemental requests (requested
orally or in writing) relating to such proposed Mortgage Asset; provided that,
with respect to any Mortgage Asset that is an Acquired Asset, Buyer shall notify
Seller of its approval or disapproval of such Acquired Asset within ten (10)
Business Days (in the case of each individual Acquired Asset delivered in
connection with any Purchase Date, plus ten (10) additional Business Days for
each additional Acquired Asset delivered in connection with any Purchase Date)
after its receipt of the complete Underwriting Package and any supplemental
requests (requested orally or in writing) relating to such proposed Mortgage
Asset. Unless Buyer notifies Seller of its approval of such proposed Mortgage
Asset within such period, as provided herein, Buyer shall be deemed not to have
approved such proposed Mortgage Asset.
(d) On each Purchase Date, Seller shall forward to Buyer via
Electronic Transmission, a confirmation of each Transaction, substantially in
the form of Exhibit II attached hereto (a "Confirmation"). The Confirmation
shall specify any additional terms or conditions of the Transaction not
inconsistent with this Agreement. Unless otherwise agreed in writing, upon
receipt of the Confirmation, Buyer may, in its sole discretion, agree to enter
into the requested Transaction with respect to an Eligible Asset and such
agreement shall be evidenced by Buyer's signature on the Confirmation. Any
Confirmation by Buyer shall be deemed to have been received by Seller on the
date actually received by Seller.
(e) Upon receipt of the Confirmation executed by Buyer, Seller shall
release to the Custodian no later than 11:00 a.m., New York, New York time, on
the requested Purchase Date, the Mortgage Asset File pertaining to each Eligible
Asset to be purchased by Buyer, in accordance with the Custodial Agreement;
provided that, with respect to any Mortgage Asset that is an Acquired Asset,
Seller shall deliver the Basic Mortgage Asset Documents to the Custodian on the
requested Purchase Date and shall deliver the balance of the Mortgage Asset File
pertaining to such Acquired Asset to the Custodian within five (5) Business Days
following the Purchase Date.
(f) Except as set forth in Section 3.04(c), each Confirmation,
together with this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to which the
Confirmation relates, and Seller's acceptance of the related proceeds shall
constitute Seller's agreement to the terms of such Confirmation. It is the
intention of the parties that each Confirmation shall not be separate from this
Agreement but shall be made a part of this Agreement. In the event of any
conflict between this Agreement and any Confirmation, the terms of this
Agreement shall control, except to the extent that any Confirmation expressly
amends, or waives compliance with, any representation or warranty concerning,
description of, or condition with respect to, any Purchased Asset or expressly
provides for the amendment, modification or waiver of any term or condition of
this Agreement.
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(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 Facility Termination Date.
(i) Pursuant to the Custodial Agreement, Custodian shall deliver to
Buyer and Seller an Asset Schedule and Exception Report with respect to the
Eligible Assets which Seller has requested Buyer purchase on such Purchase Date,
and no later than 5:00 p.m., New York time, on each Purchase Date, Custodian
shall deliver to Buyer a Trust Receipt in respect of all such Eligible Assets
purchased by Buyer on such Purchase Date; provided that, with respect to any
such Eligible Asset that is an Acquired Asset, Custodian shall deliver to Buyer
a Trust Receipt in respect of such Eligible Asset within five (5) Business Days
following such Purchase Date.
Section 3.04 Repurchase.
(a) Repurchase Date. Seller shall repurchase each Purchased Asset
from Buyer for the Repurchase Price thereof on the related Repurchase Date.
(b) Termination of Transaction on Repurchase Date. 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 Article V which amount shall be netted against the
simultaneous receipt of the Repurchase Price by Buyer). To the extent a net
amount is owed to one party, the other party shall pay such amount to such
party. Any payments received by Buyer with respect to an Eligible Asset that has
been repurchased in accordance with the terms and conditions of this Agreement
will be remitted promptly by Buyer to Seller.
(c) Optional Repurchase. Seller may repurchase Purchased Assets
without penalty or premium, on any date. 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.
(d) Reports upon Payment in Full. If any Purchased Asset is paid in
full, Seller agrees to provide Buyer with (i) a copy of a report from Seller or
any Servicer indicating that such Purchased Asset has been paid in full and (ii)
provide Buyer a notice specifying each Purchased Asset that has been prepaid in
full. Buyer agrees to release its ownership interest in Purchased Assets which
have been prepaid in full after receipt of evidence of Seller's compliance with
the immediately preceding sentence and the terms and conditions of Sections
5.03(a) and (b) hereof.
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(e) Release and Redelivery. On any Repurchase Date provided that:
(i) no Default and no Event of Default shall have occurred and be
continuing;
(ii) Seller pays to Buyer the sum of the Repurchase Price for the
Purchased Assets to be repurchased and any other amounts payable under
this Agreement which are then due and payable with respect to the
Obligations and such Transaction, against transfer to Seller or its agent
of such Purchased Assets; and
(iii) Seller pays to Buyer the Deficit Cure Amount to be applied in
accordance with Section 4.01 if a Margin Deficit will exist following such
repurchase,
then Buyer shall transfer to Seller, its agent or designee, the Purchased Assets
(including, without limitation, any and all documentation necessary to evidence
the transfer of title to Seller, its agent or designee and the release of the
security interest of Buyer) and any Income in respect thereof received by Buyer
(and not previously credited or transferred to, or applied to the obligations
of, Seller pursuant to Article V of this Agreement) against the simultaneous
transfer of the Repurchase Price to an account of Buyer. Seller is obligated to
take physical possession of the Purchased Assets from Buyer or its designee
(including the Custodian) at Seller's expense on the related Repurchase Date.
Any Repurchase Price received by Buyer after 3:00 p.m. (New York time) shall be
deemed received on the next succeeding Business Day. In connection with any
repurchase of a Purchased Asset pursuant to this Section 3.04, Buyer shall
deliver to Seller UCC-3 termination statements terminating Seller's security
interest in such Purchased Asset and other release documents as may be
reasonably requested by Seller.
Section 3.05 Extension of Facility Termination Date. Seller may
seek two extensions of the Facility Termination Date by submitting a written
request to Buyer not later than (a) thirty (30) days prior to the Facility
Termination Date then in effect. Each requested extension shall be accepted by
Buyer, and the Facility Termination Date shall be extended to the date that is
one day prior to the one (1) year anniversary of such expiring Facility
Termination Date so long as no Default or Event of Default shall have occurred
and be continuing; provided that the Facility Termination Date shall in no event
be extended beyond the date that is one day prior to the third anniversary of
the Effective Date.
Section 3.06 Payment of Price Differential.
(a) Price Differential Payments. For each Pricing Rate Period for
which any Transaction is outstanding, the accrued and unpaid Price Differential
shall be settled in cash by Seller on each related Payment Date. The Pricing
Rate for each Pricing Rate Period shall be reset on the related Determination
Date. Buyer shall deliver to Seller, via Electronic Transmission, notice of the
required Price Differential payment, and a detailed calculation thereof, on or
prior to the fifth (5th) Business Day preceding each Payment Date. On the
Payment Date, Seller shall pay to Buyer the accrued and unpaid Price
Differential for such Payment Date by wire transfer of immediately available
funds. If Seller fails to make all or part of the Price Differential 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 Price Differential payment)
interest on the unpaid amount of the Price Differential payment at a rate per
annum equal to the
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Post-Default Rate (the "Late Payment Fee") until the overdue Price Differential
payment is received in full by Buyer.
(b) Breakage Costs. If Seller repurchases Purchased Assets on a day
other than the last day of any Eurodollar Period applicable to the related
Transaction, Seller shall indemnify Buyer and hold Buyer harmless from any
losses, costs and/or expenses which Buyer sustains or incurs arising from the
reemployment of funds obtained by Buyer hereunder or from fees payable to
terminate the deposits from which such funds were obtained (or any hedging
arrangements)("Breakage Costs"), in each case for the remainder of the
applicable Eurodollar Period. Buyer shall deliver to Seller a statement setting
forth the amount and basis of determination of any Breakage Costs in such detail
as determined in good faith by Buyer to be adequate, it being agreed that such
statement and the method of its calculation shall be conclusive and binding upon
Seller absent manifest error. This Section 3.06(b) shall survive termination of
this Agreement and repurchase of all Purchased Assets subject to Transactions
hereunder.
(c) Maximum Legal Rate. This Agreement and the other Facility
Agreements are subject to the express condition that at no time shall Seller be
obligated or required to pay a Price Differential on the aggregate Purchase
Price at a rate which could subject Buyer to either civil or criminal liability
as a result of such Price Differential being in excess of the Maximum Legal
Rate. If, by the terms of this Agreement or the other Facility Agreements,
Seller is at any time required or obligated to pay a Price Differential on the
aggregate Purchase Price at a rate in excess of the Maximum Legal Rate, the
Price Differential or the Post Default Rate, as the case may be, shall be deemed
to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction in the principal portion of the Repurchase Price and not on account of
the Price Differential due hereunder. All sums paid or agreed to be paid to
Buyer for the use, forbearance, or detention of the sums due hereunder, shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of this Agreement until payment in
full so that the rate or amount of the Price Differential on account of the
Purchase Price does not exceed the Maximum Legal Rate from time to time in
effect and applicable to the aggregate Purchase Price for so long as the same is
outstanding.
ARTICLE IV
MARGIN AMOUNT MAINTENANCE
Section 4.01 Margin Account Maintenance.
(a) Margin Deficit. If at any time the Asset Value of a Purchased
Asset, plus any previously tendered Deficit Cure Amount (or, if a Deficit Cure
Amount was provided by an Additional Asset, the lesser of such Deficit Cure
Amount and the product of (x) the Market Value of such Additional Asset and (y)
the Purchase Rate for such Additional Asset), is less than the Margin Amount for
such Purchased Asset (a "Margin Deficit"), then Buyer may by notice to Seller in
the form of Exhibit IX (as such notice is more particularly set forth below, a
"Margin Deficit Notice") require Seller to, no later than 5:00 p.m. on the third
Business Day following the receipt of a Margin Deficit Notice, (or if such time
falls on a day that is not a Business Day, no later than the corresponding time
on the first Business Day following the receipt of such notice), at Seller's
option, (i) sell to Buyer for no
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additional consideration (by transfer to Buyer or its designee) additional
Eligible Assets with respect to which information has been furnished to Buyer in
accordance with the procedures set forth in Article III and which have been
approved by Buyer in its sole discretion ("Additional Assets"), (ii) repurchase,
in whole, the Purchased Asset giving rise to such Margin Deficit, (iii) make a
payment in reduction of the Repurchase Price of such Purchased Asset, (iv)
deposit cash in the Margin Account, or (v) choose any combination of the
foregoing, in each case in an amount (or, in the case of Additional Assets,
having a deemed Purchase Price in an amount)(such amount, in each case, a
"Deficit Cure Amount") such that, after giving effect to such transfers,
repurchases and payments, no Margin Deficit shall then exist. All cash
transferred to Buyer pursuant to this Section 4.01 shall be deposited in the
Margin Account and shall be applied by Buyer to reduce the Repurchase Price of
the Purchased Asset giving rise to the Margin Deficit on the next Payment Date.
(b) No Waiver. 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.
Section 4.02 Margin Account.
(a) The Margin Account will be established by and in the name of
Buyer with Xxxxx Fargo Bank, N.A. (the "Margin Depositary"), but under and
subject to this Agreement.
(b) Seller will report all income earned on the Margin Account as
Seller's income for United States federal, state, and local tax purposes.
Seller's federal employer identification number, and the account to which all
income and earnings in respect of Margin Collateral shall be reported for U.S.
federal income tax purposes is 00-0000000. Seller shall provide the Margin
Depositary with appropriate Internal Revenue Service forms W-9 for taxpayer
identification number certification and related certificates of exemption from
backup withholding.
(c) Cash from time to time on deposit in the Margin Account shall
not be required to be invested, but Seller shall be entitled to any interest or
other earnings on such cash in accordance with the terms of the Margin Account.
Subject to Section 4.05, on each Payment Date, any cash on deposit in the Margin
Account in excess of the Liquidity Amount shall be applied to reduce the
Repurchase Price of the Purchased Asset for which it provided a Deficit Cure
Amount.
Section 4.03 Reserved.
Section 4.04 Additional Assets as Margin Collateral. In the event
that Additional Assets are to be transferred to Buyer as Margin Collateral
pursuant to Section 4.01(a) hereof, Seller shall, in connection with such
transfer, comply with the conditions of Sections 3.01 and 3.02 hereof as if such
Additional Assets were proposed to be Purchased Assets under this Agreement.
With respect to each Additional Asset to be so transferred as Margin Collateral,
Seller shall, as a condition to Buyer's acceptance of such Additional Asset as
Margin Collateral, deliver (a) to Buyer, (i) due diligence materials of the type
that would have been supplied to Buyer for any other Purchased Asset and (ii) a
schedule containing substantially the same
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information as a Seller Asset Schedule and (b) to the Custodian, a Mortgage
Asset File with respect to such Additional Asset meeting the requirements of the
Custodial Agreement. Upon transfer of Additional Assets as Margin Collateral in
accordance with this Section 4.01, such Additional Assets shall become Purchased
Assets and shall be treated thereafter in the same manner as other Purchased
Assets; provided that the portion of the Purchase Price thereof equal to any
Margin Deficit determined in accordance with Section 4.01(a) shall be deposited
in the Margin Account and held and applied as provided in this Section 4.01.
Section 4.05 Margin Surplus After Cure of Breach. If, at any time,
Seller (a) delivers a Deficit Cure Amount (in cash) to Buyer to cure a Margin
Deficit arising from the breach by Seller of a representation or warranty set
forth in Schedule 1 hereto (and the consequent reduction of the Asset Value of
such Purchased Asset to zero as provided in the definition of "Asset Value") and
(b) Seller simultaneously notifies Buyer in writing that Seller is attempting to
cure such breach, then Buyer shall hold such Deficit Cure Amount in the Margin
Account (and shall not apply such Deficit Cure Amount to the reduction of the
Purchase Price of the related Purchased Asset) pending the cure of such breach
by Seller. If, within thirty (30) Business Days after the delivery of such
notice by Seller to Buyer, Seller is able to cure such breach, then Buyer shall
increase the Asset Value of such Purchased Asset to reflect the cure of the
breach. To the extent that, as a result of the foregoing, the Asset Value of
such Purchased Asset, as of the next Payment Date, taken together with the
related Deficit Cure Amount on deposit in the Margin Account, is greater than
the Margin Amount for such Purchased Asset (such excess, a "Margin Surplus"),
then, to the extent that no Margin Deficit shall exist after making such
distribution and provided that no Default or Event of Default shall have
occurred and be continuing, Buyer shall, on such Payment Date, remit directly to
Seller the amount of such Margin Surplus, but in no event shall such amount be
greater than any amount then on deposit in the Margin Account in excess of the
Liquidity Amount.
ARTICLE V
INCOME PAYMENTS; REQUIREMENTS OF LAW
Section 5.01 Establishment of Collection Account. The Collection
Account shall be established in accordance with the terms and conditions of this
Agreement concurrently with the execution and delivery of this Agreement by
Seller and Buyer. Buyer shall have sole dominion and control over the Collection
Account in accordance with Sections 9-104 and 9-314 of the UCC.
Section 5.02 Deposits into Collection Account. Seller hereby agrees
to instruct each Borrower or Primary Servicer or other Person that is the debtor
under or that has control or possession of receipts related to any Purchased
Asset to transfer all Income (other than amounts deposited in escrow accounts
for taxes and certain expenses related to furniture, fixtures and equipment
pursuant to the Servicing Agreement) with respect to the Purchased Assets,
whether constituting collections thereon or proceeds of sale thereof, as well as
any interest received from the reinvestment of such Income and any payments in
respect of associated Hedging Transactions, directly to Buyer for deposit into
the Collection Account within two (2) Business Days of receipt by such Person.
All such Income shall be held in trust for Buyer, shall constitute
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the property of Buyer and once deposited into the Collection Account shall not
be commingled with other property of Seller, any Affiliate of Seller, or any
Servicer.
Section 5.03 Distributions From Collection Account.
(a) Unless an Event of Default shall have occurred, all Balloon
Payments and Principal Prepayments (other than any portion thereof consisting of
interest) deposited into the Collection Account shall be applied by Buyer on the
date of such deposit or, if such deposit is made after 3:00 p.m. (New York
time), on the following Business Day, to reduce the Purchase Price of the
related Purchased Asset by an amount equal to the lesser of (i) the amount of
such payment and (ii) the Purchase Price of the related Purchased Asset. The
balance of such Balloon Payments and Principal Prepayments in excess of the
Repurchase Price of the related Purchased Asset shall be paid to Seller on such
date.
(b) Funds deposited in the Collection Account during any Pricing
Rate Period (except as provided in Section 5.03(a) above) shall be held therein
until the next Payment Date. On each Payment Date, any amounts on deposit in the
Collection Account shall be applied as follows:
(i) first, to the payment of all fees, expenses, and other
obligations then due to Buyer pursuant to this Agreement, other than the
Price Differential and Repurchase Price on the Purchased Assets;
(ii) second, to the payment of accrued and unpaid Price Differential
on the Purchased Assets;
(iii) third, without limiting the rights of Buyer under Article IV
of this Agreement, to Buyer, in the amount of any unpaid Margin Deficit;
(iv) fourth, to pay the Repurchase Price for Purchased Assets then
subject to a request to repurchase in accordance with the terms of Section
3.04;
(v) fifth, to the extent that such amounts have not previously been
paid, to pay to Servicer the Servicing Fees and any other amounts that
Servicer is entitled to receive pursuant to the Servicing Agreement and to
pay the fees and other amounts due and payable to the Custodian under the
Custodial Agreement; and
(vi) sixth, to Seller, for such purposes as Seller shall determine
in its sole discretion.
(c) Notwithstanding the preceding provisions, if an Event of Default
shall have occurred hereunder, all funds in the Collection Account and the
Margin Account shall be withdrawn and applied:
(i) first, in the same order of priority as Sections (b)(i), (ii),
and (iii) above;
(ii) second, to reduction of the Total Repurchase Price;
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(iii) third, to payment of all costs and fees and any other
Obligations payable to Buyer pursuant to this Agreement; and
(iv) fourth, any remainder shall be paid to Seller, for such
purposes as Seller shall determine in its sole discretion.
(d) Buyer shall offset against the accrued and outstanding Price
Differential all Price Differential payments actually received by Buyer pursuant
to Section 3.06, excluding any amounts paid pursuant to any Price Differential
payments made at the Post Default Rate and any Late Payment Fees.
Section 5.04 Requirements of Law.(a) If any Requirement of Law
(other than with respect to any amendment made to Buyer's certificate of
incorporation and by-laws or other organizational or governing documents) or any
change in the interpretation or application thereof or compliance by Buyer with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:
(i) 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;
(ii) 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;
(iii) 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 in good faith to be material, of entering, continuing
or maintaining any Transaction or to reduce any amount due or owing hereunder in
respect thereof by an amount which Buyer determines in good faith to be
material, 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, or changes in taxes on Buyer measured by net income)
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 in good
faith to be
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material, then from time to time, Seller shall promptly pay to Buyer such
additional amount or amounts as will compensate Buyer for such reduction.
(c) Any payments made by Seller to Buyer shall be free and clear of,
and without deduction or withholding for, any taxes; provided, however, that if
Seller shall be required by law to deduct or withhold any taxes from any sums
payable to Buyer, then Seller shall (A) make such deductions or withholdings and
pay such amounts to the relevant authority in accordance with applicable law,
(B) pay to Buyer the sum that would have been payable had such deduction or
withholding not been made, and (C) at the time the Price Differential is paid,
pay to Buyer all additional amounts as specified by Buyer to preserve the
after-tax yield Buyer would have been received had such tax not been imposed.
(d) If Buyer becomes entitled to claim any additional amounts
pursuant to this Section 5.04, it shall promptly notify Seller of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section 5.04 submitted by Buyer to Seller shall
be conclusive in the absence of manifest error.
ARTICLE VI
SECURITY INTEREST
Section 6.01 Security Interest.
(a) Grant. Buyer and Seller intend that all Transactions hereunder
be sales to Buyer of the Purchased Assets and not loans from Buyer to Seller
secured by the Purchased Assets. However, in the event that any such Transaction
shall be recharacterized as a financing or a loan (and, with respect to Margin
Collateral and the Margin Account, without regard to whether any Transaction is
deemed to be a loan), Seller hereby pledges all of its right, title, and
interest in, to and under and grants a first priority lien on, and security
interest in, all of its right, title and interest in and to all of the following
property, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located (collectively, the "Collateral") to Buyer to secure
the payment and performance of all amounts and Obligations owing to Buyer
pursuant to this Agreement, the related documents described herein and the other
Facility Agreements:
(i) The Purchased Assets, the Margin Collateral and all Records
relating thereto, including, without limitation, each Mortgage Asset File,
all Servicing Agreements, all Servicing Accounts and all amounts from time
to time on deposit therein, all Servicing Files and all Servicing Records
relating to the Purchased Assets, and any and all other interests in the
Purchased Assets or the servicing thereof, including all servicing fees to
which Seller is entitled and any servicing and other rights relating to
the Purchased Assets;
(ii) All rights under all Purchase Agreements (but not the
obligations thereunder) relating to the Purchased Assets or any other
agreements or contracts relating to, constituting, or otherwise governing
the Purchased Assets, including the right to
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receive principal and interest payments with respect to the Purchased
Assets and the right to enforce such payments;
(iii) Any Property relating to the Purchased Assets, or the Margin
Collateral and any other collateral pledged or otherwise relating thereto;
(iv) All insurance policies and insurance proceeds and condemnation
proceeds relating to any Purchased Asset, any Margin Collateral or any
Underlying Property, including, but not limited to, any payments or
proceeds under any primary insurance or hazard insurance;
(v) All Income;
(vi) The Collection Account and all monies from time to time on
deposit therein and all rights with respect thereto;
(vii) The Margin Account and all monies from time to time on deposit
therein and all rights with respect thereto;
(viii) All other accounts, including but not limited to escrow and
reserve accounts (but only to the extent of Seller's interest in such
accounts and to the extent they may be pledged under applicable law),
relating to the Purchased Assets, including accounts created under any
documents constituting any Mortgage Asset File and the balances from time
to time standing to the credit of such accounts and all rights with
respect thereto;
(ix) Any guarantees and insurance (issued by any Governmental
Authority or otherwise) relating to any Purchased Asset, any Margin
Collateral and any Security Agreement;
(x) All distributions with respect to any of the foregoing and any
other property, rights, title or interests specified on a Transaction
Request and/or Trust Receipt, in all instances, whether now owned or
hereafter acquired, now existing or hereafter created;
(xi) Any other collateral pledged or otherwise relating to the
Purchased Assets, together with all files, documents, instruments,
surveys, certificates, correspondence, appraisals, computer programs,
computer storage media, accounting records and other books and records
relating thereto;
(xii) 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
Purchased Asset;
(xiii) All Hedging Transactions, if any;
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(xiv) 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;
(xv) Any proceeds (including proceeds of sales (including
securitizations)) of any of the foregoing and any other property, rights,
title or interests as are specified on a Transaction Request and/or Trust
Receipt; and
(xvi) All replacements, substitutions or distributions on or
proceeds, payments, Income and profits of, and records and files relating
to any and all of any of the foregoing.
Furthermore, Seller hereby authorizes Buyer to file financing
statements relating to the Purchased Assets and other Collateral without the
signature of Seller, as Buyer, at its option, may deem appropriate. Seller shall
pay the filing costs for any financing statement or statements prepared pursuant
to this Article VI.
(b) Release. Buyer's security interest in any Purchased Asset and
all other Collateral relating to such Purchased Asset shall terminate only as
provided in Section 3.04(b) upon payment of the Repurchase Price thereof and, in
all other instances (other than release under Section 3.04(b)) upon termination
and satisfaction of all of Seller's Obligations to Buyer under this Agreement
and the other Facility Agreements and payment of the Total Repurchase Price and
all other amounts due to Buyer under this Agreement and the documents delivered
in connection herewith. Upon payment of the Total Repurchase Price and all other
amounts due to Buyer under this Agreement and the documents delivered in
connection herewith and therewith, Buyer shall deliver to Seller all monies on
deposit in the Collection Account and such UCC termination statements and other
release documents as may be reasonably requested by Seller and shall return the
Purchased Assets to Seller or its designee.
(c) Security Agreement; Financing Statements. For purposes of the
grant of the security interest pursuant to this Article VI, this Agreement shall
be deemed to constitute a security agreement under the UCC. Buyer shall have all
of the rights and may exercise all of the remedies of a secured creditor under
the UCC and the other laws of the State of New York. In furtherance of the
foregoing, (a) Seller, at its sole cost and expense, shall cause to be filed in
such locations as may be necessary to perfect and maintain perfection and
priority of the security interest granted hereby, UCC financing statements and
continuation statements (collectively, the "Filings"), and shall forward copies
of such Filings to Buyer upon completion thereof, and (b) Seller shall from time
to time take such further actions as may be reasonably requested by Buyer to
maintain and continue the perfection and priority of the security interest
granted hereby under the laws of any applicable jurisdiction (including marking
its records and files to evidence the interests granted to Buyer hereunder).
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(d) Custodian as Bailee and Agent. Pursuant to the Custodial
Agreement, Custodian shall hold the Mortgage Asset 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 Custodian has reviewed
such Mortgage Asset Files in the manner and to the extent required by the
Custodial Agreement and identifying any deficiencies in such Mortgage Asset
Files as so reviewed.
ARTICLE VII
PAYMENT, TRANSFER AND CUSTODY
Section 7.01 Payment, Transfer and Custody.(a) Unless otherwise
mutually agreed in writing, all transfers of funds to be made by Seller to Buyer
hereunder shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to Buyer at the following account maintained
by and in the name of Buyer: Xxxxx Fargo Bank, San Francisco, California,
Account No. 632-0000000, ABA No. 000-000-000, Reference: Situsserv L.P. P&I
Marathon, not later than 3:00 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). 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 not later
than 4:00 p.m., New York time, with the delivery to Custodian of the Purchased
Assets relating to each Transaction. Seller hereby sells, transfers, conveys and
assigns to Buyer in accordance with the preceding sentence, without recourse,
but subject to the terms of this Agreement, all the right, title and interest of
Seller in and to the Purchased Assets together with all right, title and
interest in and to the proceeds of any related Collateral.
(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) the
documents identified in the Custodial Agreement.
(d) Any documents or instruments forming any part of the Mortgage
Asset File that are 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 Servicer shall maintain a copy of such
documents and instruments and the originals of the Mortgage Asset File not
delivered to Buyer or its designee. The possession of any portion of the
Mortgage Asset File by Seller or its designee is at the will of Buyer for the
sole purpose of servicing the related Purchased Asset, and such retention and
possession by Seller or its designee is in a custodial capacity only. Any
portion of any Mortgage Asset File retained or held by Seller or its designee
shall be segregated on Seller's books and records, to the extent possible, from
the other assets of Seller or its designee and the books and records of Seller
or its designee shall be marked appropriately to reflect clearly the sale of the
related Purchased Asset to Buyer. Seller or its designee shall release its
custody of the Mortgage Asset File only in accordance with written
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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.
ARTICLE VIII
ASSIGNMENT AND TRANSFER; HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Section 8.01 Assignment; Hypothecation or Pledge of Purchased
Assets.
(a) Buyer may upon notice to Seller and without consent of Seller,
sell to one or more banks, financial institutions, or other entities ("Buyer
Participants") participating interests in any Purchased Assets, or any other
interest of Buyer under this Agreement. Buyer may at any time upon notice to
Seller assign any of its rights and/or obligations under this Agreement, other
than any portion of its right to evaluate and accept or reject any Eligible
Asset for purchase hereunder, to any Affiliate of Buyer or to any Permitted
Assignee. Any assignment that purports to transfer to an Assignee any obligation
for funding any amount hereunder shall explicitly acknowledge such obligation
and the sole right of Buyer to accept or reject any Eligible Asset. Any transfer
effected pursuant to this Section 8.01(a) shall be in respect of one or more
Purchased Assets having a minimum aggregate Repurchase Price of Five Million and
No/100 Dollars ($5,000,000.00) (other than in the case of a transfer of all of
the interests then held by Buyer). Seller agrees to cooperate with Buyer in
connection with any such assignment, transfer or sale of participating interest
and to enter into such restatements of, and amendments, supplements and other
modifications to, this Agreement in order to give effect to such assignment,
transfer or sale.
(b) Seller may not assign any of its rights or obligations under
this Agreement.
(c) Any sale, participation or other transfer by Buyer of interests
in Purchased Assets with an aggregate Repurchase Price representing more than
fifty percent (50%) of the aggregate Repurchase Price of all Transactions then
outstanding shall, if Buyer does not retain substantially all of its rights
under this Agreement, be to a Transferee qualified as a Permitted Assignee or,
upon the consent of Seller (which such consent shall not to be unreasonably
withheld, delayed or conditioned) to another Person; provided, that no such
consent of Seller shall be necessary if any Default or Event of Default shall
have occurred and then be continuing.
(d) Notwithstanding anything to the contrary contained in this
Agreement, Buyer shall have free and unrestricted use of all Purchased Assets
and nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Assets or otherwise pledging, transferring,
hypothecating, or rehypothecating the Purchased Assets, without notice to
Seller; provided that Buyer shall not rehypothecate any Purchased Asset for any
amount greater than the Purchase Price thereof; and provided, further, that
Buyer shall transfer the Purchased Assets to Seller on the applicable Repurchase
Date free and clear of any pledge, Lien, security interest, encumbrance, charge
or other adverse claim on any of the Purchased Assets. Nothing contained in this
Agreement shall obligate Buyer to segregate any Purchased Assets transferred to
Buyer by Seller.
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ARTICLE IX
SELLER REPRESENTATIONS
Section 9.01 Seller Representations.Seller represents and warrants
to Buyer that as of the Purchase Date for the purchase of any Purchased Assets
by Buyer from Seller and any Transaction with respect thereto and as of the date
of this Agreement and at all times while the Facility Agreements and any
Transactions hereunder are in full force and effect:
(a) Organization. Seller is duly organized, validly existing and in
good standing under the laws and regulations of the state of Seller's
organization.
(b) Due Authorization. Seller has all necessary limited liability
company or other power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and each of the Facility Agreements
to which it is a party and any Transaction Request or, if applicable,
Confirmation, and has taken or will take (in the case of future purchases) all
necessary action to authorize such execution, delivery and performance.
(c) Due Execution; Enforceability. Each of the Facility Agreements
to which Seller is a party has been or will be (in the case of future purchases)
duly executed and delivered by Seller, for good and valuable consideration. Each
of the Facility Agreements to which Seller is a party constitutes the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its respective terms, except as such enforcement may be affected by
bankruptcy, insolvency, and other limitations on creditors' rights generally and
equitable principles.
(d) Licenses and Consents. Seller, to the extent required by law, is
duly licensed or is otherwise qualified to do business in each jurisdiction in
which it transacts business 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 (including, without limitation, to
hold, maintain, convey and repurchase any Purchased Assets as contemplated
hereby). Each of Seller and any Asset Seller has the legal right to purchase or
own assets of each type included in the Eligible Assets and to own, sell and
xxxxx x xxxx on all of its right, title and interest in and to the Eligible
Assets. No consent, approval or other action of, or filing by Seller with, any
Governmental Authority or any other Person is required to authorize, or is
otherwise required in connection with, the execution, delivery and performance
of this Agreement or any other Facility Agreement, other than consents,
approvals and filings that have been obtained or made and remain in full force
and effect and except for filings and recordings to be made in connection with
the Liens created pursuant to the Facility Agreements.
(e) No Breach. Neither (a) the execution and delivery of the
Facility Agreements 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 Seller, 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 Seller is
a party or by which it or any of its Property is bound or to which it is
subject, or constitute a default under any such
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material agreement or instrument or result in the creation or imposition of any
Lien (except for the Liens created pursuant to the Facility Agreements) upon any
Property of Seller, pursuant to the terms of any such agreement or instrument.
(f) Agreements. Seller is not a party to any agreement, instrument,
or indenture or subject to any restriction materially and adversely affecting
its business, operations, assets or financial condition. Seller is not in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or indenture to
which Seller is a party or by which Seller or its assets or property is bound,
which default could have a material adverse effect on the business, operations,
properties, or financial condition of Seller, taken as a whole. No holder of any
indebtedness of Seller has given notice of any asserted default thereunder.
(g) Acting as Principal. Seller will engage in all Transactions
hereunder as principal (or, if agreed in writing in advance of any Transaction
by the other party hereto, as agent for a disclosed principal).
(h) Solvency. Neither the Facility Agreements 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
Assets subject hereto and the obligation to repurchase such Mortgage Assets is
not undertaken with the intent to hinder, delay or defraud any of Seller's
creditors. As of the Repurchase Date, 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 Assets pursuant hereto and the obligation to repurchase
such Mortgage Asset (i) will not cause Seller to become insolvent, (ii) will not
result in Seller having unreasonably small capital, and (iii) will not result in
debts that would be beyond Seller's ability to pay as the same mature. Seller
received reasonably equivalent value and fair consideration in exchange for the
transfer and sale of the Purchased Assets and Collateral subject hereto.
(i) No Broker. Seller has not dealt with any broker, investment
banker, agent, or other Person (other than Buyer or an Affiliate of Buyer) who
may be entitled to any commission or compensation in connection with the sale of
Purchased Assets pursuant to any of the Facility Agreements.
(j) 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 Facility Agreements applicable to it to which it is a party.
(k) No Defaults. No Default or Event of Default has occurred and is
continuing hereunder.
(l) Legal Name; Organizational Identification Number; Notice
Address; Jurisdiction of Organization; Location of Books and Records. Seller's
exact legal name is Winston Finance Partners LLC. Seller's tax identification
number is 00-0000000. Seller will promptly notify Buyer of any change in such
organizational number. On the date of this Agreement, Seller's principal place
of business is located at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
Seller's jurisdiction of incorporation is the State of Delaware. The
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location where Seller keeps its books and records, including all computer tapes
and records relating to the Collateral, is its principal place of business.
Seller has no trade name. During the preceding five years, Seller has not been
known by or done business under any other name, corporate or fictitious, and has
not filed or had filed against it any bankruptcy receivership or similar
petitions nor has it made any assignments for the benefit of creditors.
(m) Financial Statements. Seller has heretofore furnished to Buyer a
true, correct and complete copy of (a) the audited consolidated statements of
income and statements of changes in cash flow of Winston and its consolidated
Subsidiaries for the year ended December 31, 2003 and balance sheets as of the
end of such year, (b) unaudited consolidated statements of income and statements
of changes in cash flow for Winston and its consolidated Subsidiaries for the
quarter ended June 30, 2004 and balance sheets as of the end of such quarter.
Such financial statement fairly presents, in all material respects, the
financial position of Winston and its consolidated Subsidiaries, as of such date
in accordance with GAAP applied on a consistent basis.
(n) Single Purpose Entity; Organizational Documents. Seller has
delivered to Buyer certified copies of its organizational documents, together
with all amendments thereto, if any. Seller is a Single Purpose Entity and has
conducted no business prior to the date hereof.
(o) No Act of Insolvency. No Act of Insolvency has ever occurred
with respect to Seller or any Asset Seller.
(p) Litigation. There is no action, suit, arbitration, investigation
(including, without limitation, any of the foregoing which is pending or to the
best of Seller's knowledge threatened) affecting Seller or affecting any of the
Property of Seller before any Governmental Authority which (i) questions or
challenges the validity or enforceability of this Agreement, any Transaction,
Transaction Request, Confirmation or other Facility Agreement or any action to
be taken in connection with Seller's obligations under the Facility Agreements,
(ii) makes a claim or claims in an aggregate amount greater than Two Hundred
Fifty Thousand and No/100 ($250,000.00), or (iii) individually or in the
aggregate, if adversely determined, could reasonably be likely to have a
Material Adverse Effect.
(q) Margin Regulations. Neither any Transaction hereunder, nor the
use of the proceeds thereof, will violate the provisions of Regulation T, U or
X.
(r) Taxes. Seller and the parent of any consolidated tax filing
group of which Seller is a member has 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, except for any such taxes or assessments 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 Seller in respect of taxes and
other governmental charges are, in the opinion of Seller, adequate.
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(s) Investment Company Act. Seller is not an "investment company",
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(t) Servicing Agreements. Seller has delivered to Buyer all
Servicing Agreements, if any, under which Purchased Assets are serviced and to
the Actual Knowledge of Seller, as of the date of this Agreement and as of the
Purchase Date for the purchase of any Purchased Assets hereunder, no default or
event of default exists thereunder.
(u) True and Complete Disclosure. To the Actual Knowledge of Seller,
the information, reports, financial statements, exhibits and schedules furnished
in writing by or on behalf of Seller to Buyer in connection with the
negotiation, preparation or delivery of this Agreement and the other Facility
Agreements or included herein or therein or delivered pursuant hereto or thereto
(other than with respect to the Mortgage Assets), when taken as a whole, do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of Seller to Buyer
in connection with this Agreement and the other Facility Agreements and the
transactions contemplated hereby (other than with respect to the Mortgage
Assets) and thereby will, to the Actual Knowledge of Seller, be true, complete
and accurate in all material respects, 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 Seller, after due
inquiry, that would reasonably be expected to have a Material Adverse Effect
that has not been disclosed herein, in the other Facility Agreements 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. Each Plan to which Seller makes direct contributions,
and, to the knowledge of Seller, each other Plan, is in compliance in all
material respects with, and has been administered in all material respects in
compliance with, the applicable provisions of ERISA, the Code and any other
Federal or State law. The Seller has not established any Multiemployer Plan
pursuant to ERISA, the Code or any other Federal or State Law.
(w) Plan Assets. Seller is not an employee benefit plan as defined
in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of
the Code, and the Purchased Assets are not "plan assets" within the meaning of
29 CFR Section 2510.3-101 in Seller's hands.
(x) No Reliance. Seller has made its own independent decisions to
enter into the Facility Agreements and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. Seller is not relying upon any advice
from Buyer as to any aspect of the Transactions, including without limitation,
the legal, accounting or tax treatment of such Transactions.
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(y) Compliance with Anti-Money Laundering Laws. To the Actual
Knowledge of Seller, Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA Patriot
Act of 2001 (collectively, the "Anti-Money Laundering Laws"); Seller has
established an adequate anti-money laundering compliance program as required by
the Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Asset for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable Borrower and the origin of the assets used by the said Borrower to
purchase the property in question, and maintains, and will maintain, sufficient
information to identify the applicable Borrower for purposes of the Anti-Money
Laundering Laws.
(z) Insurance. As of the date of this Agreement and as of the
Purchase Date for the purchase of any Purchased Assets hereunder, Seller has,
with respect to its properties and business, insurance covering the risks, in
the amounts, with the deductible or other retention amounts, and with the
carriers, listed on Schedule 4, which insurance meets the requirements of
Section 10.01(aa) of this Agreement.
(aa) Environmental Matters. As of the date of this Agreement and as
of the Purchase Date for the purchase of any Purchased Assets hereunder, to the
Actual Knowledge of Seller:
(i) No properties owned or leased by Seller and no properties
formerly owned or leased by Seller, its predecessors, or any former
subsidiaries or predecessors thereof (the "Subject Properties"), contain,
or have previously contained, any Materials of Environmental Concern in
amounts or concentrations which constitute or constituted a violation of,
or reasonably could be expected to give rise to liability to Seller under,
Environmental Laws;
(ii) Seller is in compliance with all applicable Environmental Laws,
and there is no violation of any Environmental Laws which reasonably would
be expected to interfere with the continued operations of Seller;
(iii) Seller has not received any notice of violation, alleged
violation, non-compliance, liability or potential liability under any
Environmental Law, nor is any such notice being threatened or will any
such notice be received.
(iv) Materials of Environmental Concern have not been transported or
disposed by Seller in violation of, or in a manner or to a location which
reasonably would be expected to give rise to liability under, any
applicable Environmental Law, nor has any of them generated, treated,
stored or disposed of at, on or under any of the Subject Properties in
violation of, or in a manner that reasonably would be expected to give
rise to liability under, any applicable Environmental Law;
(v) No judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of Seller, threatened, under any
Environmental Law which Seller is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
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requirements arising out of judicial proceedings or governmental or
administrative actions, outstanding under any Environmental Law to which
Seller is a party;
(vi) There has been no release or threat of release of Materials of
Environmental Concern in violation of or in amounts or in a manner that
reasonably could be expected to give rise to liability under any
Environmental Law for which Seller may become liable; and
(vii) Each of the representations and warranties set forth in the
preceding clauses (i) through (vi) is true and correct with respect to
each parcel of real property owned or operated by Seller.
(bb) Purchased Assets.
(i) Each Purchased Asset conforms to the applicable representations
and warranties set forth in Schedule 1 attached hereto, except as may
otherwise be acknowledged and agreed to in writing by Buyer in the
relevant Confirmation. It is understood and agreed that the
representations and warranties set forth in Schedule 1 hereto shall
survive delivery of the respective Mortgage Asset File to Buyer or its
designee (including the Custodian). With respect to each Purchased Asset,
all of the documents required to be delivered under this Agreement and the
Custodial Agreement for such Purchased Asset have been delivered to Buyer
or the Custodian on its behalf. Except as otherwise acknowledged and
agreed to in writing by Buyer, Seller has delivered to the Custodian a
complete, true and accurate Mortgage Asset File with respect to each
Purchased Asset.
(ii) Immediately prior to the purchase of any Purchased Assets by
Buyer from Seller, such Purchased Assets were free and clear of any Lien,
encumbrance or impediment to transfer (including any "adverse claim" as
defined in Section 8-102(a)(1) of the UCC), and Seller is the sole record
and beneficial owner of and has good and marketable title to, and the
right to sell and transfer, and has satisfied any and all conditions to
transfer, such Purchased Assets to Buyer. Upon payment of the Purchase
Price and the filing of the financing statements and delivery of the
Purchased Asset Files to the Custodian, Buyer shall be the owner of such
Purchased Assets free of any adverse claims, except those arising under
any of the Facility Agreements. In the event the related Transaction is
recharacterized as a secured financing of the Purchased Assets, the
provisions of this Agreement are effective to create in favor of Buyer a
valid security interest in all rights, title and interest of Seller in, to
and under the Purchased Assets and all of the other Collateral and Buyer
shall have a valid, perfected first priority security interest in the
Purchased Assets and all of Seller's rights in the other Collateral.
(iii) Except as a result of entry into this Agreement or as may be
contemplated by the Facility Agreements, there are (i) no outstanding
rights, options, warrants or agreements on the part of Seller or any of
its Affiliates for a purchase, sale or issuance, in connection with the
Purchased Assets, (i) no agreements on the part of Seller to issue, sell
or distribute the Purchased Assets, and (iii) no obligations on the part
of Seller or Asset
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Seller (contingent or otherwise) to purchase, redeem, make further
advances or otherwise acquire any securities or any interest therein or to
pay any dividend.
(iv) Each Mortgage Asset File delivered by Seller represents a true
and correct copy of the documents contained therein and each Seller Asset
Schedule, together with all other information contained therein prepared
by Seller or its Affiliates and delivered by Seller to Buyer immediately
prior to the Purchase Date, is true and correct and conforms in all
material respects to the preliminary diligence materials previously
provided to Buyer and pursuant to which Buyer has elected to enter into
the Transaction.
(v) Upon receipt by Custodian of each Mezzanine Note, Junior
Interest Note or Junior Participation Interest Certificate endorsed in
blank by a duly authorized officer of Seller and payment of the purchase
price for the Purchased Asset either a purchase shall have been completed
by Buyer of such Mezzanine Note, Junior Interest Note or Junior
Participation Interest Certificate, as applicable, or Buyer shall have a
valid and fully perfected first priority security interest in all right,
title and interest of Seller in the Collateral described therein.
(vi) 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" (each as defined in the Uniform Commercial
Code) comprising Collateral; provided that, except with respect to the
Collection Account or the Margin Account, Buyer's security interest shall
be junior in priority to, or pari passu with, any Lien in any deposit
account granted to the lender(s) of the Allocated Underlying Debt.
Section 9.02 Remedy. Upon a determination that any of the foregoing
representations has been breached (which breach shall occur regardless of any
qualification in the particular representation relating to the Actual Knowledge
of any Person), a Repurchase Date for all affected Purchased Assets shall occur.
ARTICLE X
COVENANTS OF SELLER
Section 10.01 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, Seller covenants that:
(a) Financial Statements. Seller shall deliver to Buyer, with a copy
to Situs:
(i) as soon as available and in any event within fifty (50) days
after the end of each fiscal quarter of Winston and Seller, (A) the
unaudited consolidated balance sheets of Winston and its 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 Winston and its consolidated Subsidiaries for such period and the
portion of the fiscal
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year through the end of such period, and (B) the unaudited balance sheet
of Seller as at the end of such period and the related unaudited
statements of income and retained earnings and of cash flows for Seller
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 Seller,
which certificate shall state that said financial statements fairly
present in all material respects the consolidated financial condition and
results of operations of Winston and its consolidated Subsidiaries and the
financial condition and results of operations of Seller, each in
accordance with GAAP, consistently applied, as at the end of, and for,
such period (subject to normal year-end adjustments);
(ii) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of Winston and Seller, (A)
the audited consolidated balance sheets of Winston and its 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 Winston and its consolidated Subsidiaries for such year, and (B) the
audited consolidated balance sheet of Seller as at the end of such fiscal
year and the related statements of income and retained earnings and of
cash flows for Seller for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of
audit or going concern and shall state that said consolidated financial
statements fairly present the consolidated financial condition and results
of operations of Winston and its consolidated Subsidiaries and the
financial condition and results of operations of Seller as at the end of,
and for, such fiscal year in accordance with GAAP;
(iii) with respect to each Purchased Asset, as soon as available,
but in any event not later than (60) days after the end of each fiscal
quarter of Seller, the occupancy statement for each Underlying Property
and a report detailing projections of Seller of the protective advances
with respect to such Purchased Asset for the following six (6) month
period;
(iv) with respect to each Purchased Asset to the extent received by
Seller from the obligor under any Purchased Asset, as soon as available,
but in any event not later than thirty (30) days after receipt thereof,
(A) the annual balance sheet of such obligor and (B) a copy of any asset
reports and/or projections with respect to the Underlying Property
prepared by such obligor for any of its lenders;
(v) with respect to each Purchased Asset, as soon as available but
in any event not later than thirty (30) days after receipt thereof, (i)
the related monthly securitization report, if any, and (ii) within thirty
(30) days after the end of each month, a copy of the standard monthly
exception report, prepared by Seller in the ordinary course of its
business in respect of the related Purchased Asset or Underlying Property;
(vi) from time to time such other information regarding the
financial condition, operations, or business of Seller as Buyer may
reasonably request; and
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(vii) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer of Seller knows, or with respect to
any Plan to which Seller makes direct contributions, has reason to
believe, that any of the events or conditions specified below with respect
to any Plan has occurred or exists, a statement signed by a senior
financial officer of Seller setting forth details respecting such event or
condition and the action, if any, that Seller or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by Seller or an ERISA Affiliate
with respect to such event or condition):
(A) any Reportable Event, or and any request for a waiver
under Section 412(d) of the Code or any successor provision thereof
for any Plan;
(B) the distribution under Section 4041(c) of ERISA or any
successor provision thereof of a notice of intent to terminate any
Plan or any action taken by Seller or an ERISA Affiliate to
terminate any Plan;
(C) the institution by PBGC of proceedings under Section 4042
of ERISA or any successor provision thereof for the termination of,
or the appointment of a trustee to administer, any Plan; and
(D) the adoption of an amendment to any Plan that would result
in the loss of tax exempt status of the trust of which such Plan is
a part if Seller or an ERISA Affiliate fails to provide timely
security to such Plan in accordance with the provisions of Section
401(a)(29) of the Code or Section 307 of ERISA or any successor
provision thereof.
(b) Certificates; Other Information. Seller shall furnish to Buyer,
with a copy to Situs:
(i) concurrently with the delivery of the financial statements
referred to in Section 10.01(a) above and with the delivery of each
Confirmation, a certificate of a Responsible Officer stating that, to the
actual knowledge of such Responsible Officer, after due inquiry, Seller
during such period has observed or performed all of its covenants and
other agreements in all material respects, and satisfied every material
condition, contained in this Agreement and the related documents to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no actual knowledge of any Default or Event of Default except
as specified in such certificate;
(ii) as soon as available, but in any event not later than one
hundred twenty (120) days after the end of each fiscal year of Seller, a
copy of the projections of Seller of the operating budget and cash flow
budget of Seller for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer certifying that such
projections have been prepared in good faith based upon reasonable
assumptions;
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(iii) promptly upon receipt thereof, copies of all reports submitted
to Seller by independent certified public accountants in connection with
each annual, interim or special audit of the books and record of Seller
made by such accountants, including, without limitation, any management
letter commenting on Seller's internal controls submitted by such
accountants to management in connection with their annual audit;
(iv) within fifty (50) days of the end of each calendar quarter,
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 Assets owned by Seller or its
Affiliates, operating statements and the occupancy status of each
Underlying Property, rent rolls 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 Assets;
(v) within fifteen (15) days after the same are sent, copies of all
financial statements and reports which Winston sends to its stockholders,
and within fifteen (15) days after the same are filed, copies of all
financial statements and reports which Winston may make to, or file with,
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(vi) no later than the 20th day of each month, with respect to each
Purchased Asset, a Purchased Asset Data Summary, substantially in the form
of Exhibit VIII, properly completed;
(vii) with respect to any Purchased Asset, as soon as available but
in any event not later than fifteen (15) days after receipt thereof by
Buyer, copies of all franchise inspection reports and property improvement
plans for the Underlying Property;
(viii) as soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of Seller, a Xxxxx Travel Research
Report for each Underlying Property relating to any Purchased Asset;
(ix) Asset Seller's or Seller's internal risk rating or surveillance
results for the Purchased Asset and Underlying Property; and
(x) promptly, such additional financial and other information as
Buyer may from time to time reasonably request.
(c) Litigation. Seller will promptly, and in any event within ten
(10) Business 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 pending or
threatened) or other legal or arbitrable proceedings affecting Seller or any of
its Affiliates or affecting any of the Property of any of them before any
Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Facility Agreements 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 Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00), or (iii) which, individually or in the aggregate, if
adversely determined, could be reasonably likely to have a Material Adverse
Effect.
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(d) Security Interest. Seller (1) shall defend the right, title and
interest of Buyer in and to the Purchased Assets, and other Collateral against,
and take such other action as is reasonably necessary to remove, the Liens,
security interests, claims and demands of all Persons (other than security
interests by or through Buyer) and (2) shall, at Buyer's reasonable request,
take all action necessary to ensure that Buyer will have a first priority
security interest under the laws of any applicable jurisdiction in the Purchased
Assets and other Collateral if such Transactions are recharacterized as secured
financings.
(e) Preservation of Purchased Assets. Seller shall do all things
necessary to preserve the Purchased Assets and the other Collateral so that they
remain subject to a first priority perfected security interest of Buyer
hereunder; provided that any such security interest shall be junior in priority
to, or pari passu with, any Liens granted to the senior lender(s) of the
Allocated Underlying Debt. Without limiting the foregoing, Seller will cause the
Purchased Assets and the related Collateral to comply with all applicable rules,
regulations and other laws. Notwithstanding the assignment of the Mortgage Asset
File with respect to each Purchased Asset to Buyer, Seller agrees and covenants
with Buyer to enforce diligently on Seller's behalf Seller's rights and remedies
set forth in the documents constituting the Mortgage Asset File. Neither Seller
nor Servicer will allow any default for which it is responsible to occur under
any Purchased Assets or the related Collateral or any Facility Agreement and
each of them shall fully perform or cause to be performed when due all of its
obligations under any Purchased Assets or the related Collateral and any
Facility Agreement.
(f) Further Assurances. At any time from time to time upon the
request of Buyer, at the sole expense of Seller, Seller will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as Buyer may reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement including the first priority
security interest granted hereunder under the laws of any applicable
jurisdiction and of the rights and powers herein granted (including, among other
things, filing such UCC financing statements as Buyer may reasonably request).
If any amount payable under or in connection with any of the Purchased Assets
and/or other Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper shall
be promptly delivered to Buyer, duly endorsed in a manner reasonably
satisfactory to Buyer, to be held as Collateral pursuant to this Agreement, and
the documents delivered in connection herewith.
(g) Mortgage Asset File; Seller Asset Schedule. In the event that,
after the date of delivery of any Mortgage Asset File or Seller Asset Schedule
by Seller to Buyer under this Agreement, Seller shall discover that such
Mortgage Asset File or Seller Asset Schedule or any information contained
therein is not true, correct and complete in any material respect, Seller shall
promptly notify Buyer in writing, specifying the nature of such false, incorrect
or incomplete information and supplying Buyer and Custodian with any missing or
corrected information.
(h) Records. Seller shall, or shall cause a Servicer on behalf of
Seller to, collect and maintain or cause to be collected and maintained all
Records relating to the Purchased Assets and other Collateral in accordance with
industry custom and practice for assets similar to the Purchased Assets and all
such Records shall be in Custodian's possession unless
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Buyer otherwise approves. Seller will not allow any such papers, records or
files that are an original or an only copy to leave Custodian's possession,
except for individual items removed in connection with servicing a specific
Purchased Asset, in which event Seller will obtain or cause to be obtained a
receipt from a financially responsible person for any such paper, record or
file. Seller or a Servicer on behalf of Seller will maintain any such Records
not in the possession of Custodian in good and complete condition in accordance
with industry practices for assets similar to the Purchased Assets and preserve
them against loss.
(i) Existence, etc. Seller will:
(i) continue to engage in business of the same general type as now
conducted by it and maintain and preserve its legal existence and all of
its material rights, privileges, licenses and franchises necessary for the
operation of its business;
(ii) keep adequate records and books of account concerning the
Purchased Assets, in which full, true and complete entries will be made in
accordance with GAAP consistently applied and which shall clearly reflect
the transfer of the Purchased Assets to Buyer;
(iii) not (i) cause or permit any change to be made in its name,
organizational identification number, identity or corporate structure,
each as described in Section 9.01(l) or (ii) change its jurisdiction of
organization, unless it shall have provided Buyer twenty (20) days' prior
written notice of such change and shall have first taken all action
required by Buyer for the purpose of perfecting or protecting the lien and
security interest of Buyer established hereunder; and
(iv) permit representatives of Buyer, upon reasonable notice (unless
a Default shall have occurred and be continuing, in which case, no prior
notice shall be required), during normal business hours, to examine, copy
(at Buyer's expense) and make extracts from its books and records, to
inspect any of its Property, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by Buyer.
(j) Prohibition of Fundamental Changes. Seller shall not enter into
any transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or dissolution),
sell all or substantially all of its assets or acquire or form any Subsidiaries.
(k) Taxes. Seller shall 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.
(l) Reserved.
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(m) Delivery of Annual Good Standing Certificate. Seller shall
deliver to Buyer on or before each anniversary of the date of this Agreement, a
certified copy of a good standing certificate of Seller, dated as of no earlier
than the date ten (10) Business Days prior to such anniversary date.
(n) Margin Deficit. If at any time there exists a Margin Deficit
Seller shall cure same in accordance with Section 4.01.
(o) Notices. Seller shall notify Buyer in writing:
(i) promptly upon receipt by Seller of notice or knowledge of the
occurrence of any Default or Event of Default;
(ii) with respect to any Purchased Asset, promptly upon receipt by
Seller, of any principal prepayment (in full or partial) of such Purchased
Asset;
(iii) with respect to any Purchased Asset, promptly upon receipt of
notice or knowledge by or of Seller, that the Underlying Property has been
damaged by waste, fire, earthquake or earth movement, flood, tornado or
other casualty, or otherwise damaged so as to materially and adversely
affect the Asset Value of such Purchased Asset;
(iv) promptly upon receipt of notice or knowledge by or of Seller,
of (i) any material default related to any Collateral, (ii) any Lien or
security interest on, or claim asserted against, any Collateral or (iii)
any event or change in circumstances that would reasonably be expected to
have a Material Adverse Effect;
(v) promptly upon any material change in the market value of any or
all of Seller's assets that could reasonably be expected to have a
Material Adverse Effect; and
(vi) promptly upon the occurrence of any event or change in
circumstances which would reasonably be expected to result in a Material
Adverse Change with respect to Servicer or Winston.
Each notice delivered pursuant to this Section shall include 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.
(p) Transactions with Affiliates. Seller may enter into any
transaction with an Affiliate; provided that such transaction is upon fair and
reasonable terms no less favorable to Seller than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate;
provided, further, that in no event shall Seller transfer to Buyer hereunder any
Mortgage Asset acquired by Seller from any Asset Seller unless a True Sale
Opinion has been delivered to Buyer prior to such sale.
(q) Limitation on Liens. Immediately upon notice to Seller of a Lien
or any circumstance which could give rise to a Lien (other than in favor of
Buyer) on the Collateral, Seller will defend the Collateral against, and will
take such other action as is necessary to remove, any Lien, security interest or
claim on or to the Collateral (other than any security
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interest created under this Agreement), and Seller will defend the right, title
and interest of Buyer in and to any of the Collateral against the claims and
demands of all persons whomsoever.
(r) Limitations on Guarantees. Seller shall not create, incur,
assume or suffer to exist any Guarantees.
(s) Limitation on Distributions. Seller shall not declare or 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 Seller, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Seller.
(t) Maintenance of Liquidity.
(i) Seller shall not permit the sum of (x) the amount of cash from
time to time on deposit in the Margin Account (in addition to any amounts
necessary to cure any Margin Deficit) plus (y) the aggregate deemed
Purchase Price of all Additional Assets delivered as Margin Collateral
pursuant to Section 4.01 (in addition to any amounts necessary to cure any
Margin Deficit) plus (z) subject to clause (ii) below, funds available to
be drawn by Buyer under a Letter of Credit to be less than the greater of
(A) Five Million and No/100 Dollars ($5,000,000.00) or (B) an amount equal
to the amount necessary to pay the Price Differential under this Agreement
and any required protective advances on the Mortgage Assets for a period
of not less than six (6) months, as reasonably determined by Seller in
good faith (such greater amount, the "Liquidity Amount").
(ii) If Seller elects to satisfy the Liquidity Amount through the
delivery to Buyer of a Letter of Credit, such Letter of Credit must
satisfy each of the conditions described in the definition thereof in this
Agreement. If at any time the expiry date of any Letter of Credit used to
satisfy the Liquidity Amount is within thirty (30) days and Seller has
failed to extend, renew or replace same or if at any time the bank issuing
such Letter of Credit shall provide any notice that such Letter of Credit
will not be renewed or extended, Buyer shall have the right to immediately
draw down the same in part or in full and deposit such drawn funds into
the Margin Account to be held as the Liquidity Amount. If at any time the
long term unsecured debt rating from the Rating Agencies for the bank
issuing any Letter of Credit is downgraded below A- or its equivalent,
then Buyer shall have the right, after ten (10) Business Days notice to
Seller of such downgrade, to draw down such Letter of Credit in part or in
full and deposit such drawn funds into the Margin Account, to be held as
the Liquidity Amount. Seller shall have the right, from time to time, to
(A) provide Buyer with a replacement Letter of Credit satisfying the
requirements of the definition thereof in this Agreement, or (B)
substitute cash or Additional Assets to satisfy the Liquidity Amount as
provided in the foregoing clause (i) and, in each such case, Buyer shall
promptly return to Seller (A) the applicable original Letter of Credit
being so replaced and held by Buyer, or (B) if any funds have been drawn
against such Letter of Credit by Buyer and are then held in the Margin
Account, all funds so drawn, to the extent not applied to satisfy
obligations of Seller.
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(u) Servicer; Servicing Tape. Seller shall cause each Servicer and
Primary Servicer to provide to Buyer and to Custodian via Electronic
Transmission (with a copy to Situs), 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 Assets serviced hereunder by Seller or
any Servicer or by any Primary 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 Assets to be serviced by any servicer other than a
servicer expressly approved in writing by Buyer.
(v) Required Filings. Seller shall promptly provide Buyer with
copies of all material documents which Seller or any Subsidiary of Seller is
required to file with any regulatory body in accordance with its regulations.
(w) 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 Asset to which any amount remitted
applies, all full or partial principal prepayments on any Purchased Asset that
Seller or Servicer has received no later than one (1) Business Day following the
date such prepayment was received.
(x) Performance of Facility Agreements. Each of Seller shall
observe, perform and satisfy in all material respects all the terms, provisions,
covenants and conditions required to be observed, performed or satisfied by it,
and shall pay when due all costs, fees and expenses required to be paid by it,
under the Facility Agreements. Seller shall pay and discharge all taxes, levies,
liens and other charges on its assets, the Purchased Assets and the other
Collateral that, in each case, in any manner would create any lien or charge
upon the Purchased Assets and other Collateral, 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 in accordance with GAAP.
(y) Inconsistent Agreements. Seller shall not directly or
indirectly, enter into any material agreement containing any material provision
which would be violated or breached by any Transaction hereunder or by the
performance by Seller of its obligations under any Facility Agreement.
(z) Separateness; Single Purpose. Seller hereby represents, warrants
and covenants to and with Buyer that as of any Purchase Date of any Purchased
Assets by Buyer from Seller and any Transaction with respect thereto and as of
the date of this Agreement and at all times while this Agreement is in full
force and effect and any Transaction shall remain outstanding as between Buyer
and Seller:
(i) it is and intends to remain solvent and it has paid and will pay
its debts and liabilities (including employment and overhead expenses)
from its own assets as the same shall become due;
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(ii) it has complied and will comply with the provisions of its
organizational documents and will not amend, alter or modify the
definition of "Independent Manager" as set forth in Seller's Limited
Liability Company Agreement (which shall be the same as the definition of
such term in this Agreement) and will not amend, alter or modify the
provisions of Sections 2, 5, 10, 11, 14, 17, 18 or 19 of such Limited
Liability Company Agreement without the prior written consent of Buyer;
(iii) it has done or caused to be done and will, to the extent under
its control, do all things necessary to observe limited liability company
formalities and to preserve its separate existence;
(iv) it has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its
Affiliates, its members and any other Person, and it will file its own
federal and state tax returns, if any, which are required by applicable
law (except that, for accounting and reporting purposes, Seller may be
included in the consolidated financial statements of an equity owner of
Seller in accordance with GAAP provided that (A) appropriate notation
shall be made on such consolidated financial statements to indicate the
separateness of Seller from such Affiliate and to indicate that Seller's
assets and credit are not available to satisfy the debts and other
obligations of such Affiliate or any other Person and (B) such assets
shall also be listed on Seller's own separate balance sheet), except to
the extent that Seller, Parent and/or Winston file consolidated tax
returns or to the extent Seller is treated as a division of another
taxpayer or a disregarded entity for tax purposes, and Seller will pay any
taxes so required to be paid under applicable law;
(v) it has been, is and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other
entity (including any Affiliate) (except for consolidated financial
statements and tax returns as set forth in (iv) above), shall correct any
known misunderstanding regarding its status as a separate entity, shall
conduct business in its own name (or any trade name that will not be
reasonably likely to cause confusion as to its separate existence), and
shall not identify itself or any of its Affiliates as a division or part
of the other (except for consolidated financial statements and tax returns
as set forth in (iv) above);
(vi) at all times it will have a Board of Managers composed
differently than any other Person and will have at least one (1)
Independent Manager;
(vii) it has not owned, does not own and will not own any property
or any other assets other than the Purchased Assets, cash and its interest
under any associated Hedging Transactions and any proceeds of the
foregoing or any other property contemplated by this Agreement and has and
will hold title to its assets in its own name;
(viii) it has not engaged and will not engage, directly or
indirectly, in any business other than the acquisition, ownership,
financing and disposition of the Purchased Assets in accordance with the
applicable provisions of the Facility Agreements or any other transactions
contemplated by this Agreement or the other Facility Agreements;
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(ix) other than any Purchase Agreement, it has not entered into, and
will not enter into, any contract, agreement or other arrangement with any
of its Affiliates, except upon terms and conditions that are substantially
similar to those that would be available on an arm's length basis with
Persons other than such Affiliate and it will maintain an arm's length
relationship with its Affiliates and any party furnishing services to it;
(x) it has not incurred and will not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or
contingent (including guaranteeing any obligation), other than (A)
obligations under the Facility Agreements and (B) unsecured trade
payables, in an aggregate amount not to exceed Five Hundred Thousand and
No/100 Dollars ($500,000.00) at any one time outstanding, not evidenced by
a promissory note or other instrument and incurred in the ordinary course
of acquiring, owning, financing and disposing of the Purchased Assets;
provided that any such trade payables incurred by Seller shall be paid
within 120 days of the date incurred;
(xi) it has not made and will not make any loans or advances to any
other Person, has not and will not incur, create or assume any
indebtedness other than as expressly permitted by the Facility Agreements,
and shall not acquire obligations or securities of any member or any
Affiliate of any member (other than as contemplated by the Facility
Agreements) or any other Person;
(xii) to the fullest extent permitted by law, it will not engage in
or seek or consent to any dissolution, winding up, liquidation,
consolidation, merger or sale or transfer of all or substantially all of
its assets except as expressly permitted pursuant to any provision of the
Facility Agreements, and it will not seek its dissolution, liquidation or
winding up, in whole or in part;
(xiii) it will not commingle its funds or other assets with those of
any of its Affiliates or any other Person and has paid and will pay its
own liabilities only out of its own funds;
(xiv) it has maintained and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any of its Affiliates or any
other Person;
(xv) it has not held and will not hold itself out to be responsible
for the debts or obligations of any other Person, has not assumed or
guaranteed and will not assume or guarantee and has not become and will
not become obligated for the debts of any other Person and has not held
out and will not hold out its credit as being available to satisfy the
obligations of any other Person; provided that this provision shall not be
deemed to prohibit indemnification and contribution agreements by Seller
and its Affiliates entered into under this Agreement or any other Facility
Agreement;
(xvi) it will not take any of the following actions: (A) permit its
member to dissolve or liquidate Seller, in whole or in part; (B)
consolidate or merge with or into any other entity (where such member is
not the surviving entity) or convey or transfer all or substantially all
of its properties and assets to any entity; or (C) institute any
proceeding
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to be adjudicated as bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition or
answer or consent seeking reorganization or relief under the Bankruptcy
Code, or effect any similar procedure under any similar law, or consent to
the filing of any such petition or to the appointment of a receiver,
rehabilitator, conservator, liquidator, assignee, trustee or sequestrator
(or other similar official) of Seller or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, or
make an assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take any
action in furtherance of any of the foregoing;
(xvii) it has no liabilities, contingent or otherwise, other than
those normal and incidental to the acquisition, ownership, financing and
disposition of the Purchased Assets or as may be contemplated by the
Facility Agreements;
(xviii) it has conducted and shall conduct its business, in all
material respects, consistent with the requirements of being a Single
Purpose Entity;
(xix) it shall maintain a sufficient number of employees (which may
be zero) for its contemplated business and pay the salaries of its own
employees, if any;
(xx) it has allocated and will allocate fairly and reasonably, and
has paid and will pay its share of, any overhead expenses and other common
expenses for shared office space and facilities, goods or services
provided to multiple entities;
(xxi) it has and will maintain adequate capital in light of its
contemplated business purpose, transactions and liabilities;
(xxii) it will not pledge any of its assets for the benefit of any
other Person, except as otherwise contemplated or permitted by the
Facility Agreements;
(xxiii) it will not engage in any transaction with any Affiliate
involving any intent to hinder, delay or defraud any entity;
(xxiv) except as provided in the Facility Agreements, it will
deposit all of its funds in checking accounts, savings accounts, time
deposits or certificates of deposit in its own name; and
(xxv) it will not form, acquire or hold any subsidiary (whether
corporate, partnership, limited liability company or other).
(aa) Maintenance of Property; Insurance. Seller shall keep all
property useful and necessary in its business in good working order and
condition; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business, and furnish to Buyer, upon written
request, full information as to the insurance carried.
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(bb) Compliance with Laws. Seller shall comply in all material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws, and all federal securities laws) except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings.
(cc) ERISA. Seller shall comply in all material respects with all
requirements of ERISA applicable with respect to each Plan.
(dd) Investments. Neither Seller nor any of its Affiliates shall
acquire or maintain any right or interest in any Purchased Asset or Underlying
Property that is senior to the rights and interests of Buyer therein under this
Agreement and the other Facility Agreements.
(ee) REIT Status. Winston shall at all times maintain its status as
a REIT and Seller shall at all times qualify as either a "qualified REIT
subsidiary" or as a "disregarded entity" under Treas. Reg. section 301.7701-4.
(ff) 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.
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
Section 11.01 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 11.02, as applicable:
(a) Seller shall default in the payment of any Repurchase Price when
due or any Price Differential or other amount under Section 5.03 when due
(whether on any Payment Date, Repurchase Date, upon acceleration, at mandatory
or optional prepayment, or otherwise); or
(b) Seller shall fail to cure any Margin Deficit in accordance with
the provisions of, and within the timeframes specified in, Section 4.01 or shall
fail to maintain the Liquidity Amount as provided in Section 10.01(t); or
(c) Seller shall default in the payment of any other amount payable
by it hereunder or under any other Facility Agreement after written notification
by Buyer of such default, and such default shall have continued unremedied for
two (2) Business Days after receipt of written notice thereof from Buyer; or
(d) any representation, warranty or certification made or deemed
made herein or in any other Facility Agreement by Seller or any certificate
furnished to Buyer pursuant to the provisions hereof or thereof or any material
information with respect to the Mortgage Assets
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furnished in writing by or on behalf of Seller shall (without regard to any
qualification limiting such representation to a Person's Actual Knowledge) prove
to have been false or misleading as of the time made or deemed to be made in any
material respect (other than the representations and warranties set forth in
Schedule 1, which shall be considered solely for the purpose of determining
whether any Mortgage Asset is an Eligible Asset, the existence of any Margin
Deficit, and the Asset Value of any Purchased Asset, 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
(e) Seller shall fail to comply with the requirements of Sections
10.01(c) through 10.01(ff), or (except as otherwise set forth in Sections
11.01(a), 11.01(b), 11.01(c) or 11.01(d)) Seller shall fail to observe or
perform any other covenant or agreement contained in this Agreement or any other
Facility Agreement and such failure to observe or perform shall continue
unremedied for a period of five (5) Business Days after Actual Knowledge by
Seller or receipt of written notice from Buyer; or
(f) a final judgment or judgments for the payment of money in excess
of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in the aggregate
shall be rendered against Seller, Parent or Winston 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 thirty
(30) days from the date of entry thereof ; or
(g) any Governmental Authority or any person, agency or entity
acting or purporting to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume custody or control of, all
or any substantial part of the Property of Seller, Parent or Servicer (but only
if Servicer is an Affiliate of Winston), or shall have taken any action to
displace the management of Seller, Parent or Servicer (but only if Servicer is
an Affiliate of Winston) or to curtail its authority in any material respect in
the conduct of the business of Seller, Parent or Servicer (but only if Servicer
is an Affiliate of Winston), or takes any action in the nature of enforcement to
remove, limit or restrict the approval of Seller, Parent or Servicer (but only
if Servicer is an Affiliate of Winston) thereof as an issuer, buyer or a
seller/servicer of Purchased Assets or securities backed thereby, and such
action provided for in this subparagraph (g) shall not have been discontinued or
stayed within thirty (30) days; or
(h) Seller's and/or Winston's audited annual financial statements or
the notes thereto or other opinions or conclusions stated therein shall be
qualified or limited by reference to the status of Seller or Winston (or any of
its consolidated Subsidiaries) as a "going concern" or a reference of similar
import; or
(i) an Act of Insolvency shall have occurred with respect to Seller,
Parent or Winston; or
(j) an officer of Seller shall admit its inability to, or its
intention not to, perform any of Seller's obligations hereunder or under any
other Facility Agreement; or
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(k) Seller shall fail to transfer any Purchased Assets to Buyer on
the applicable Purchase Date (provided that Buyer has tendered the related
Purchase Price); or
(l) any assignment or attempted assignment by Seller of this
Agreement or any rights hereunder without first obtaining the specific written
consent of Buyer; or
(m) the occurrence of an "Event of Default" under, and as defined
in, any Servicing Agreement; or
(n) the Custodial Agreement or any other Facility Agreement or a
replacement therefor acceptable to Buyer shall for whatever reason be terminated
or cease to be in full force and effect, or the enforceability thereof shall be
contested by Seller; or
(o) Seller shall grant, or suffer to exist, any Lien on any item of
Collateral (except any Lien in favor of Buyer); or the Collateral shall not have
been sold to Buyer, or the Liens contemplated hereby shall cease or fail to be
first priority perfected Liens on any Collateral in favor of Buyer or shall be
Liens in favor of any Person other than Buyer; provided that, to the extent any
Lien relates to any Underlying Property, such Lien shall be junior in priority
to, or pari passu with, any Liens granted to the senior lender(s) of the
Allocated Underlying Debt; or
(p) Seller shall be in default under (i) any Indebtedness of Seller
which default (A) involves the failure to pay a matured obligation, or (B)
permits the acceleration of the maturity of obligations by any other party to or
beneficiary with respect to such Indebtedness, if the aggregate amount of the
Indebtedness in respect of which such default or defaults shall have occurred is
at least Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00); (ii) any
other material contract to which Seller is a party which default (A) involves
the failure to pay a matured obligation, or (B) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such contract if
the aggregate amount of such obligations is at least Two Hundred Fifty Thousand
and No/100 Dollars ($250,000.00), or (iii) at any time that Seller is a directly
or indirectly wholly-owned or majority-controlled Subsidiary of Winston, any
arrangement between Winston or an Affiliate of Winston on the one hand and Buyer
or an Affiliate of Buyer on the other hand; or
(q) any Material Adverse Change shall occur with respect to Seller,
in each case as determined by Buyer in its sole discretion, or any other
condition shall exist which, in Buyer's sole discretion, constitutes a material
impairment of Seller's ability to perform its obligations under this Agreement
or any other Facility Agreement; or
(r) (i) Seller or an ERISA Affiliate shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any material "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of Seller or any ERISA Affiliate, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of Buyer, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
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Plan shall terminate for purposes of Title IV of ERISA, (v) Seller or any ERISA
Affiliate shall, or in the reasonable opinion of Buyer is likely to, incur any
liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(s) the occurrence of a Change in Control; or
(t) if Seller shall breach or fail to perform in any material
respect any of the terms, covenants, obligations or conditions of this
Agreement, other than as specifically otherwise referred to in this definition
of "Event of Default", and such breach or failure to perform is not remedied
within thirty (30) days after notice thereof to Seller.
Section 11.02 Remedies. (a) If an Event of Default shall have
occurred and be continuing, the following rights and remedies are available to
Buyer.
(i) 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.
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in Section 11.02(a)(i),
(A) (i) Seller's obligations in such Transactions to
repurchase all Purchased Assets, at the Total Repurchase Price
therefor on the Repurchase Date, and to pay all other amounts owed
by Seller hereunder, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise
shall be retained by Buyer and applied, in Buyer's sole discretion,
to the aggregate unpaid Repurchase Prices for all outstanding
Transactions and any other amounts owed by Seller hereunder, and
(iii) Seller shall immediately deliver to Buyer any Mortgage Asset
Files that relate to any Purchased Assets then in Seller's
possession or control;
(B) from and after the exercise or deemed exercise of such
option, to the extent permitted by applicable law, the Repurchase
Price with respect to each such Transaction shall be determined 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
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Repurchase Price pursuant to Section 11.02(a)(v), and (iii) any
amounts applied to the Repurchase Price pursuant to Section
11.02(a));
(C) all Income actually received by Buyer pursuant to Section
5.01 (excluding any Late Payment Fees paid pursuant to Section
3.06(a)) shall be applied to the aggregate unpaid Repurchase Price
owed by Seller; and
(iii) Buyer shall be entitled to retain any cash or Additional
Assets delivered by Seller to Buyer in satisfaction of the Liquidity
Amount or, if a Letter of Credit has been delivered to Buyer in
satisfaction of the Liquidity Amount, to immediately draw upon the full
amount of such Letter of Credit and to immediately apply such cash,
Additional Assets or Letter of Credit proceeds to any outstanding
Obligations hereunder.
(iv) Upon the occurrence and during the continuance of one or more
Events of Default, Buyer shall have the right to obtain physical
possession, and to commence an action to obtain physical possession, of
the Servicing Records (subject to the provisions of the Custodial
Agreement) and any and all Records and files of Seller relating to the
Purchased Assets and all documents relating to the Purchased Assets
(including, without limitation, any legal, credit or servicing files
relating to the Purchased Assets) which are then or may thereafter come
into 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 Facility Agreements.
(v) At any time on the Business Day following written notice to
Seller (which notice may be the written notice given under Section
11.02(a)(i)), 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. Any disposition of Purchased Assets and/or other Collateral as
described above may be, at Buyer's option, on either a servicing released
or a servicing retained basis. Buyer shall not be required to give any
warranties as to the Purchased Assets and/or other Collateral with respect
to any such disposition thereof. Buyer may specifically disclaim or modify
any warranties of title or the like relating to the Purchased Assets
and/or other Collateral. The foregoing procedure for disposition of the
Purchased Assets and liquidation of the Collateral shall not be considered
to adversely affect the commercial reasonableness of any sale thereof.
Seller agrees that it would not be commercially unreasonable for Buyer to
dispose of the Purchased Assets or other Collateral or any portion thereof
by using Internet sites that provide for the auction of assets similar to
the Purchased Assets and/or other Collateral, or that have the reasonable
capability of doing so, or that match buyers and sellers of assets. Buyer
shall be entitled to place the Purchased Assets in one or more
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pools for issuance of securities at the then prevailing price for such
securities and to sell such securities for such prevailing price in the
open market. Buyer shall also be entitled to sell any or all of such
Purchased Assets individually for the prevailing price.
(vi) Buyer shall apply any proceeds from the liquidation of the
Purchased Assets and other Collateral to the Repurchase Prices hereunder
and all other Obligations in the manner Buyer deems appropriate in its
sole discretion.
(vii) The parties recognize that it may not be possible to sell all
of the Purchased Assets on a particular Business Day, or in a transaction
with the same purchaser, or in the same manner, because the market for
such Purchased Assets may not be liquid. In view of the nature of the
Purchased Assets, the parties agree that, upon five (5) Business Days
prior written notice to Seller, liquidation of the Purchased Assets does
not require a public purchase or sale and that a private purchase or sale
shall be deemed to have been made in a commercially reasonable manner.
(viii) Seller agrees that Buyer may seek to obtain an injunction or
an order of specific performance to compel Seller to fulfill any of its
obligations as set forth in Article XII, if Seller fails or refuses to
perform its obligations as set forth therein.
(ix) Seller shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses, including, without limitation, all
costs and expenses of Buyer in connection with the enforcement of this
Agreement or any other agreement evidencing a Transaction, whether in
action, suit or litigation or bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally, further including,
without limitation, the reasonable fees and expenses of counsel (including
the costs of internal counsel of Buyer) incurred in connection with or as
a result of an Event of Default, (ii) damages in an amount equal to the
cost (including all fees, expenses and commissions) of entering into
replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and
(iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a
Transaction.
(x) Buyer shall have, in addition to its rights and remedies under
the Facility Agreements, all of the rights and remedies provided by
applicable federal, state, foreign, and local laws (including, without
limitation, if the Transactions are recharacterized as secured financings,
the rights and remedies of a secured party under the UCC of the State of
New York, to the extent that the UCC is applicable, and the right to
offset any mutual debt and claim), in equity, and under any other
agreement between Buyer and Seller or any of their Affiliates. Without
limiting the generality of the foregoing, Buyer shall be entitled to set
off the proceeds of the liquidation of the Purchased Assets against all of
Seller's obligations to Buyer without prejudice to Buyer's right to
recover any deficiency.
(b) Buyer may exercise one or more of the remedies available to
Buyer immediately upon and during the continuance of an Event of Default and,
except to the extent provided in Sections 11.02(a)(i) and 11.02(a)(v), at any
time thereafter without notice to Seller.
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All rights and remedies arising under this Agreement as amended from time to
time hereunder are cumulative and not exclusive of any other rights or remedies
which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its rights by
judicial process. Seller also waives any defense (other than a defense of
payment or performance) Seller might otherwise have arising from the use of
nonjudicial process, enforcement and sale of all or any portion of the
Collateral, or from any other election of remedies. Seller recognizes that
nonjudicial remedies are consistent with the usages of the trade, are responsive
to commercial necessity and are the result of a bargain at arm's-length.
(d) Subject to the notice and grace periods set forth herein, each
party to this Agreement may exercise any or all of the remedies available to
such party immediately upon the occurrence of an Event of Default and at any
time during the continuance thereof without prior notice to the other parties
hereto. Except as expressly provided herein, all rights and remedies arising
under the Facility Agreements, as amended from time to time, are cumulative and
not exclusive of any other rights or remedies which each party to this Agreement
may have. Except as expressly provided herein, no modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Facility Agreement, nor consent to any departure by any party to
this Agreement therefrom, shall in any event be effective unless the same shall
be in a writing signed by the party against whom enforcement is sought, and then
such waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on any party to this Agreement, shall entitle such party to
any other or future notice or demand in the same, similar or other
circumstances. Neither any failure nor any delay on the part of any party to
this Agreement in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under any other Facility Agreement shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by purchasing any
Purchased Asset under this Agreement on any Purchase Date, Buyer shall not be
deemed to have waived any right to assert any Default, Event of Default or
breach by Seller of any term, condition, covenant, representation or warranty
under this Agreement or any Facility Agreement, notwithstanding that such
Default, Event of Default or breach may have arisen prior to such Purchase Date.
(e) 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
Section 11.02(d) shall be at a rate equal to the Post-Default Rate.
(f) Upon the occurrence of an Event of Default, Buyer shall without
regard to the adequacy of the security for the Obligations, be entitled to the
appointment of a receiver by any court having jurisdiction, without notice, to
take possession of and protect, collect, manage, liquidate, and sell the
Purchased Assets and any other Collateral or any portion thereof, collect
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the payments due with respect to the Purchased Assets and any other Collateral
or any portion thereof, and do anything that Buyer is authorized hereunder to
do. Seller shall pay all reasonable costs and expenses incurred by Buyer in
connection with the appointment and activities of such receiver.
Section 11.03 Continuing Event of Default. An Event of Default with
respect to Seller shall be deemed to be continuing unless expressly waived by
Buyer in writing.
ARTICLE XII
SERVICING
Section 12.01 Servicing Agreement. Seller and Buyer shall contract
with Servicer to service the Purchased Assets pursuant to the Servicing
Agreement, consistent with the degree of skill and care that Seller or Asset
Seller customarily requires with respect to similar Mortgage Assets owned or
managed by it and in accordance with Accepted Servicing Practices. The Servicing
Agreement shall require, inter alia, that: Servicer (i) comply with all
applicable federal, state and local laws and regulations, (ii) maintain all
state and federal licenses necessary for it to perform its servicing
responsibilities hereunder and (iii) not impair the rights of Buyer in any
Purchased Assets or any payment thereunder. Seller hereby irrevocably assigns to
Buyer and Buyer's successors and assigns all right, title and interest of Seller
in, to and under, and the benefits of, the Servicing Agreement and any Primary
Servicing Agreement applicable to the Mortgage Assets.
Section 12.02 Servicing Records.
(a) Upon purchase of an Eligible Asset, Buyer shall become 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 such Mortgage Asset (the "Servicing
Records"). Seller and Servicer covenant to safeguard all Servicing Records (as
defined below) and to deliver them promptly to Buyer or its designee at Buyer's
request.Section 12.03 Servicing Transfer.
(a) Seller agrees that no Person shall assume the servicing
obligations with respect to the Mortgage Assets as successor to the Servicer
unless such successor is approved in writing by Buyer (which approval shall not
be unreasonably withheld or delayed) prior to such assumption of servicing
obligations. Buyer hereby agrees that upon the repurchase of a Mortgage Asset,
Buyer shall assign to Seller all right, title and interest of Seller in, to and
under, and the benefits of, any Servicing Agreement with respect to such
Mortgage Asset.
(b) Upon the occurrence of any of (i) a Default or Event of Default
hereunder, (ii) an event of default under the Servicing Agreement, or (iii) a
Material Adverse Change with respect to Servicer, Winston or any Affiliate
thereof, Buyer shall have the right to immediately terminate the Servicer's
right to service the Purchased Assets without payment of any penalty or
termination fee. Seller and Servicer shall cooperate in transferring, at
Seller's expense, the
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servicing of the Purchased Assets to a successor servicer appointed by Buyer in
its sole discretion.
Section 12.04 Modification.After the Purchase Date, until the
repurchase of any Mortgage Asset, neither Seller nor Servicer will have any
right to modify, waive, amend or otherwise alter the terms of such Mortgage
Asset.
Section 12.05 Inspection.Seller and Servicer 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 Assets as provided in this
Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Indemnification and Expenses. (a) Seller agrees 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 at any time be imposed on or incurred by any Indemnified Party
(including counsel's fees and disbursements) (collectively, "Costs"), relating
to or arising out of this Agreement, any other Facility Agreement 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 Facility Agreement 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, Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Mortgage
Assets, whether relating to or arising out of any violation or alleged violation
of any Environmental Law or otherwise, 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 Asset for any sum owing thereunder, or to enforce any provisions of
any Mortgage Asset, Seller will save, indemnify and hold such Indemnified Party
harmless from and against all Costs suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by Seller of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Seller. Seller also agrees to reimburse an Indemnified Party
as and when billed by such Indemnified Party for all the Indemnified Party's
Costs incurred in connection with the enforcement or the preservation of Buyer's
rights under this Agreement, any other Facility Agreement or any transaction
contemplated hereby or thereby, including without limitation the fees and
disbursements of its counsel.
(b) Seller agrees to pay as and when billed by Buyer all
out-of-pocket costs and expenses (including actual and reasonable legal fees and
expenses) incurred by Buyer in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement,
any other Facility Agreement or any other documents
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prepared in connection herewith or therewith. Seller agrees to pay as and when
billed by Buyer all 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. Seller agrees to pay to Buyer a fee of Two
Thousand Five Hundred and No/100 Dollars ($2,500.00) per Underlying Property to
cover due diligence, inspection, appraisals, testing and review costs and
expenses incurred by Buyer with respect to Mortgage Assets submitted by Seller
for purchase under this Agreement which fee shall be payable on the Purchase
Date of the relevant Purchased Asset and shall cover the costs and expenses
incurred by Buyer pursuant to Sections 12.01 through 12.06 and Section 13.11 but
shall not include any legal fees and expenses incurred by Buyer in connection
therewith.
Section 13.02 Fees.
(a) Seller shall pay to Buyer a commitment fee equal to 1.50% of the
Maximum Amount, payable on the date hereof.
(b) On the first Business Day of each January, April, July, and
October after the first Transaction under this Agreement, Seller shall pay to
Buyer a fee equal to the product of (i) 0.50% and (ii) the difference between
the Maximum Amount and the aggregate Purchase Price of all outstanding
Transactions as of such Business Day.
(c) With respect to each Mortgage Asset that is a Construction Loan,
Seller shall pay to Buyer a funding fee equal to 1.00% of the Purchase Price of
such Mortgage Asset.
Section 13.03 Single Agreements. 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.
Section 13.04 Notices and Other Communications. Except as otherwise
expressly permitted by this Agreement, any and all notices (with the exception
of Transaction Requests or Confirmations, which shall be delivered via facsimile
only), statements, demands or other communications hereunder may be given by a
party to the other by mail, facsimile, messenger or otherwise to the address
specified below, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices,
demands and requests
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hereunder may be made orally, to be confirmed promptly in writing, or by other
communication as specified in the preceding sentence.
If to Seller:
Winston Finance Partners LLC
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx and Xxxxx Xxxx
Fax Number: (000) 000-0000
With a copy to:
Hunton & Xxxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax Number: (000) 000-0000
If to Buyer:
Marathon Structured Finance Fund, LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Fax Number: (000) 000-0000
With a copy to:
Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax Number: (000) 000-0000
If to Situs:
The Situs Companies
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Fax Number: (000) 000-0000
Section 13.05 Entire Agreement; Severability. This Agreement
together with the other Facility Agreements constitute the entire understanding
between Buyer and Seller with
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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.
Section 13.06 Terminability. Except as set forth below, this
Agreement may be terminated by Seller upon giving thirty (30) days written
notice to Buyer and, upon such termination, the Repurchase Date for each
outstanding Transaction shall be the Facility Termination Date specified in such
notice. 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 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 and continuance of an Event of Default, all of the representations
and warranties and covenants hereunder shall continue and survive. The
obligations of Seller under Section 13.01 shall survive the termination of this
Agreement.
Section 13.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 13.08 SUBMISSION TO JURISDICTION; WAIVERS. EACH OF BUYER AND
SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE RELATED DOCUMENTS TO WHICH IT IS A
PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF; TO
THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND 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
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OF MAIL), POSTAGE PREPAID, TO SELLER OR BUYER, AS APPLICABLE, AT ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL
HAVE BEEN NOTIFIED PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT THE
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN
THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
Section 13.09 No Waivers, Etc. No failure on the part of Buyer to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Facility Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any Facility Agreement 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.
Section 13.10 Intent. (a) The parties recognize that each
Transaction is not a "Repurchase Agreement" as that term is defined in Section
101 of Title 11 of the United States Code, as amended (except insofar as the
sub-limit of Purchased Assets subject to such Transaction or the term of such
Transaction would render such definition applicable), or a "Securities Contract"
as that term is defined in Section 741 of Title 11 of the United States Code, as
amended (except insofar as the type of Purchased Assets subject to such
Transaction would render such definition applicable).
(b) It is understood that either party's right to liquidate
Purchased Assets delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Section 11.02 hereof is a contractual
right to liquidate such Transaction as described in Sections 555 and 559 of
Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"Insured Depository Institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"Qualified Financial Contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of Purchased
Assets subject to such Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "Netting
Contract" as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a "Covered
Contractual Payment Entitlement" or "Covered Contractual Payment Obligation",
respectively, as defined in and subject to FDICIA
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(except insofar as one or both of the parties is not a "Financial Institution"
as that term is defined in FDICIA or regulations promulgated thereunder).
Section 13.11 Periodic Due Diligence Review. Seller acknowledges
that Buyer has the right to perform continuing due diligence reviews with
respect to the Mortgage Assets, 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 three (3) Business Day's)
prior notice unless an Event of Default shall have occurred and be continuing,
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 Asset Files and any and
all documents, records, agreements, instruments or information relating to such
Mortgage Assets 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 Asset Files and the Mortgage Assets. Without limiting the generality of
the foregoing, Seller acknowledges that Buyer may purchase Mortgage Assets from
Seller based solely upon the information provided by Seller to Buyer in 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 Assets
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 Asset. Buyer may
underwrite such Mortgage Assets 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 reasonable access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Assets in the possession,
or under the control, of Seller. Seller shall pay all out-of-pocket costs and
expenses (including fees and expenses of counsel, if any) incurred by Buyer not
exceeding Two Thousand Five Hundred and No/100 ($2,500.00) per Underlying
Property in connection with Buyer's activities pursuant to this Section 13.11
("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 any due diligence review conducted by Buyer
pursuant to this Section 13.11 following the occurrence and during the
continuation of such Default or Event of Default.
Section 13.12 Buyer's Appointment as Attorney-in-Fact.
(a) Following the occurrence and during the continuance of an Event
of Default, Seller 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 written notice to, Seller, to do the
following:
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(i) 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 or with respect to any other Collateral 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
or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral;
(iii) (A) to direct any party liable for any payment under any
Collateral 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 Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any proceeds thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against Seller with respect to any
Collateral; (F) to settle, compromise or adjust without Seller's consent
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 Collateral 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 Collateral and Buyer's
Liens thereon and to effect the intent of this Agreement, all as fully and
effectively as Seller might do;
(iv) to direct the actions of Custodian with respect to the
Collateral under the Custodial Agreement; and
(v) to execute, from time to time, in connection with any sale
provided for in Section 11.02, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by the express terms hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) The powers conferred on Buyer hereunder are solely to protect
Buyer's interests in the Collateral and Purchase 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
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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.
Section 13.13 Legal Matters.
(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) Seller hereby acknowledges that:
(i) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Facility Agreements;
(ii) Buyer has no fiduciary relationship to Seller; and
(iii) no joint venture exists between Buyer and Seller.
Section 13.14 Confidentiality. Seller and Buyer hereby acknowledge
and agree that all information regarding the terms set forth in any of the
Facility Agreements 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 reasonably necessary or desirable 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 including, without limitation, federal securities laws applicable to Seller
or its Affiliates, (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;
provided that nothing herein shall prevent any party from disclosing any such
information (i) to any other party to this Agreement, (ii) to any Transferee or
potential Transferee which agrees to comply with the provisions of this Section,
(iii) to its employees, directors, agents, attorneys, accountants and other
professional advisors who are made aware of and instructed to comply with the
provisions of this Section 13.14. The provisions set forth in this section shall
survive the termination of this Agreement for a period of one year following
such termination.
Section 13.15 Set-offs. 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
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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.
Section 13.16 Treatment of Certain Information.Notwithstanding
anything to the contrary contained herein or in any related document, all
Persons may disclose to any and all Persons, without limitation of any kind, the
federal income tax treatment of any of the transactions contemplated by this
Agreement or any other related document, any fact relevant to understanding the
federal tax treatment of such transactions and all materials of any kind
(including opinions or other tax analyses) relating to such federal income tax
treatment.
[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:
MARATHON STRUCTURED FINANCE FUND, LP
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: Managing Director
SELLER:
WINSTON FINANCE PARTNERS LLC
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
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SCHEDULE 2
ASSET PRICING
CLASS AND MAXIMUM PURCHASE PRICING
TYPE MINIMUM DSCR LTV RATE SPREAD
----------------- ------------ ------- -------- -------
JUNIOR INTERESTS:
FPS Hotel 1.25 85% 65% 4.50%
LS Hotel 1.25 85% 65% 4.50%
Construction N/A 85% 45% 5.50%
MEZZANINE LOANS:
FPS Hotel 1.25 85% 65% 4.50%
LS Hotel 1.25 85% 65% 4.50%
Construction N/A 85% 45% 5.50%
Sch. 2-1
SCHEDULE 5
EXCLUDED TRANSFEREES
Lennar Corporation
Orix Corporation
Xxxxxx Brothers
Sch. 5-1
