EXHIBIT 4(ccc)
Funding Note Purchase and Security Agreement dated as of September 22,
1995 among the Federal Home Loan Mortgage Corporation, CRIIMI MAE Inc. and
CRIIMI MAE Financial Corporation II
ARTICLE I
DEFINITIONS
Section Page
1.1. Definitions 1
1.2. Usage 6
ARTICLE II
SALE AND PURCHASE OF FUNDING NOTE
2.1. Authorization of Funding Note 6
2.2. Sale and Purchase of Funding Note 6
2.3. Closing 6
2.4 Non-Recourse Obligation 7
2.5. Interest and Principal on the Funding Note 7
2.6. Optional Prepayment at Direction of by Xxxxxxx Mac 7
2.7. Optional Prepayment by Subsidiary 7
2.8. Special Prepayment by Subsidiary 9
ARTICLE III
COLLATERAL SECURITY FOR FUNDING NOTE
3.1. Grant of Security Interest 10
3.2 Collection of Money
3.3. Collection of Amounts 10
3.4. Satisfaction Release of Security Interest 11
ARTICLE IV
CONDITIONS TO CLOSING
4.1. Conditions Precedent to Closing 9
ARTICLE V
REPRESENTATION AND WARRANTIES
5.1. Representations and Warranties of Xxxxxxx Mac 17
5.2. Representations and Warranties of Subsidiary and Parent 18
ARTICLE VI
COVENANTS
6.1. Covenants of Xxxxxxx Mac 19
6.2. Covenants of Subsidiary 19
6.3. Covenants of the Parent 24
6.4. Tax-Related Provisions 24
ARTICLE VII
DEFAULTS AND REMEDIES
7.1. Events of Default 25
7.2. Remedies 25
7.3. Additional Remedies 26
7.4. No Remedy Exclusive 26
ARTICLE VIII
INDEMNIFICATION
Section Page
8.1. Indemnification of Xxxxxxx Mac and the Underwriter 27
8.2. Contribution 27
ARTICLE IX
MISCELLANEOUS
9.1. Notices 28
9.2. Parties Entitled to Benefit, etc. 29
9.3. Transfer and Assignment 29
9.4. Entire Agreement; Severability of Provisions;
Amendments 29
9.5. Governing Law 29
9.6. No Waiver; Remedies 29
9.7. Costs and Expenses 29
9.8. Execution of Counterparts 30
9.9. Survival of Representations, Warranties and Covenants 30
EXHIBITS
Exhibit A Form of Funding Note Agreement
Exhibit B Form of Assignment and Agreement
Schedule I - Pledged Securities, GNMA Certificates and Mortgages
FUNDING NOTE PURCHASE AND SECURITY AGREEMENT, dated as of September 22, 1995,
among the FEDERAL HOME LOAN MORTGAGE CORPORATION, a corporation duly organized
and existing under and by virtue of the laws of the United States (12 U.S.C.
1451-59) ( Xxxxxxx Mac ), CRIIMI MAE INC., a Maryland corporation (the
Parent ), and CRIIMI MAE FINANCIAL CORPORATION II, a Maryland corporation
(the Subsidiary ).
RECITALS
The Parent is the owner of certain Giant Securities (as defined herein).
Pursuant to the Assignment and Agreement (as defined herein), the Parent
will transfer the Giant Securities to the Subsidiary, which will issue the
Funding Note (as defined herein). Payments on the Funding Note will be made
from distributions received on the Collateral (as defined herein), which will be
pledged by the Subsidiary to Xxxxxxx Mac to secure the Funding Note.
Xxxxxxx Mac is willing to purchase and the Subsidiary is willing to sell
the Funding Note for the purchase price described herein.
Xxxxxxx Mac intends to issue its Structured Pass-Through Securities, Series
C007 , which will receive principal and interest payments from distributions on
the Funding Note.
In consideration of the premises and the mutual covenants and
representations hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms will
have the following meanings unless the context requires otherwise:
Affiliate: any Person directly or indirectly controlling or controlled by
or under common control with Parent or Subsidiary, including (without
limitation) any Person beneficially owning or holding 5% or more of any class of
voting securities of Parent or Subsidiary or any other corporation of which
Parent owns or holds 5% or more of any class of voting securities, provided
that, for purposes of this definition, control (including, with correlative
meanings, the terms controlled by and under common control with ), as used
with respect to any Person, will mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
Agreement: this Funding Note Purchase and Security Agreement.
Assignment and Agreement: the Assignment and Agreement dated as of the
date hereof between the Parent and the Subsidiary pursuant to which Parent
sells, assigns, transfers and conveys the Giant Securities to the Subsidiary,
in the form of Exhibit B.
Assumed Reinvestment Rate: As to any Special Prepayment Determination
Date, the overnight Fed Funds rate for such date.
Bankrupt: with respect to the Parent or Subsidiary, means,
(a) a court (i) enters a decree or order for relief in respect of Parent
or Subsidiary in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, (ii) appoints a receiver,
liquidator, assignee, custodian or sequestrator (or other similar official) of
Parent or Subsidiary or any subsidiary of Parent or for all or substantially all
its property or (iii) orders the winding up or liquidation of its affairs, and
such decree or order remains unstayed and in effect for a period of 60
consecutive days; or
(b) Parent or Subsidiary (i) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consents to the entry of any order for relief in an involuntary
case under any such law, (iii) consents to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, or
sequestrator (or other similar official) of Parent or Subsidiary or for any
substantial part of its property, (iv) makes any general assignment for the
benefit of creditors, (v) fails generally to pay its debts as they become due or
(vi) takes any action in furtherance of the foregoing.
Business Day: a day other than (a) a Saturday or Sunday, (b) a day on which
the Depository is authorized or obligated by law or executive order to remain
closed, (c) a day on which the offices of the federal government located in the
District of Columbia generally are closed for business or (d) a day on which the
offices of Xxxxxxx Mac are closed.
Closing: the meaning specified in Section 2.3.
Collateral: the meaning specified in Section 3.1.
Collection Account: the meaning specified in Section 3.3 hereof.
Eligible Investments: any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America ( USA ), Xxxxxxx Mac, or any agency or instrumentality
of the USA the obligations of which are backed by the full faith and credit of
the USA;
(ii) (A) demand and time deposits in, certificates of deposit of, or
bankers acceptances issued by any depository institution or trust company
incorporated under the laws of the USA or any state thereof and subject to
supervision and examination by federal and /or state banking authorities, so
long as the commercial paper and long-term debt obligations of such depository
institution or trust company (or in the case of the principal depository
institution in a holding company system, of such holding company), at the time
of such investment or the contractual commitment providing for such investment,
have credit ratings of at least A-1 and AA, respectively, from Standard &
Poor s, a division of the XxXxxx-Xxxx Companies, Inc. ( S&P ), at least P-1 and
Aa2, respectively, from Xxxxx s Investors Services, Inc. ( Xxxxx s ) or at least
F-1 and AA, respectively, from Fitch Investors Service, Inc. ( Fitch ), and (B)
any other demand or time deposit or certificate of deposit that is fully insured
by the Federal Deposit Insurance Corporation;
(iii) repurchase agreements with a depository institution or trust
company (acting as principal) specified in clause (ii) above with respect to (A)
any security described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the USA, provided that in either
case Xxxxxxx Mac or its custodian shall take delivery of such security; and
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the USA or any state thereof that
have a credit rating of at least A-1(short term) or AA (long term unsecured)
from S&P, at least P-1 (short term) or Aa2 (long term unsecured) from Xxxxx s or
at least F-1(short term) or AA (long term unsecured) from Fitch; provided,
however, that securities issued by any particular corporation shall not be
Eligible Investments to the extent that investment therein would cause the then
outstanding principal amount of securities issued by such corporation in the
Collection Account to exceed 10% of the aggregate outstanding principal amount
of all Eligible Investments held as part of the Collection Account.
Event of Default: the meaning specified in Section 7.1.
Xxxxxxx Mac: the meaning specified in the preamble to this Agreement.
Funding Note: the meaning specified in Section 2.1.
Funding Note Coupon: the interest rate specified in the Funding Note.
Funding Surplus: with respect to any Quarterly Payment Date, an amount
equal to the excess of (i) the sum of Giant Security Payments made on the
Pledged Securities on such Quarterly Payment Date and the two immediately
preceding Giant Security Payment Dates plus any amounts received pursuant to
investments and reinvestments on such Giant Security Payments made pursuant to
Section 3.3 hereof over (ii) the sum of amounts due on the Funding Note on such
Quarterly Payment Date and any amounts required to be paid on the Funding Note
on any Special Prepayment Date that occurred in the two immediately preceding
months.
Giant Security Payment: any principal, interest, mortgage prepayment
premium, guarantee or other payment made in respect of a Giant Security pledged
as a Pledged Security.
Giant Security Payment Date: as to any Giant Security, the Payment Date
occurring in each month, commencing in October 1995.
Giant Securities: Giant GNMA-Backed Securities, Pool No. G80009, issued by
Xxxxxxx Mac.
Governing Instruments: the certificate of incorporation and bylaws of
Parent and Subsidiary.
Indebtedness: with respect to any Person means any indebtedness, whether
or not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property, except any such balance that constitutes
an accrued expense or a trade payable and which is not overdue by more than 90
days and not being contested in good faith, if and to the extent such
indebtedness would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
any guarantee of Indebtedness.
Interest Accrual Period: as to any Giant Security Payment Date, the
calendar month preceding such Giant Security Payment Date. As to any Quarterly
Payment Date, the three calendar months immediately preceding such Quarterly
Payment Date.
Material Adverse Effect: any circumstance or event which (a) may be
reasonably expected to have any material adverse effect whatsoever upon the
validity or enforceability of this Agreement or the Funding Note, (b) may be
reasonably expected to be material and adverse to the financial condition,
business, operations or property of Subsidiary or (c) may be reasonably expected
to materially impair the ability of Subsidiary to fulfill its obligations under
this Agreement or the Funding Note.
Officers Certificate: a certificate executed on behalf of Parent or
Subsidiary by the Chairman, President, General Counsel or one of the Vice
Presidents and the Chief Financial Officer of Parent or Subsidiary, as the case
may be.
Parent: the meaning specified in the preamble to this Agreement.
Payment Date: the second Business Day after the 15th calendar day of any
month.
Person or person: any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or other agency or political
subdivision thereof.
Pledged Securities: the Giant Securities listed on Schedule I hereto and
pledged by the Subsidiary to Xxxxxxx Mac hereunder to secure payment of the
Funding Note.
Prepayment Amount: the meaning specified in Section 2.7 hereof.
Prepayment Date: the meaning specified in Section 2.7 hereof.
Purchase Price: the consideration in the form of cash paid by Xxxxxxx Mac
to Subsidiary hereunder for the Funding Note.
Quarterly Payment Date: the Payment Date occurring in each of December,
March, June and September commencing in December, 1995.
Series Documents: all agreements, documents, certificates and other papers
(including this Agreement) required to be executed by Subsidiary or Parent in
connection with the issuance of the Funding Note and the SPSs.
Solvent: when used with respect to any person, means at the time of
determination, that: (a) (i) the fair saleable value and the fair value of such
person s assets, after giving effect to the issuance and sale of the Funding
Note pursuant to this Agreement, exceeds and will exceed the amount that will be
required to be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) as they mature, (ii) such person will not
have unreasonably small capital with which to conduct its businesses and (iii)
such person will have the ability to pay its debts as they mature; and (b) in
any case, such person is not insolvent within the meaning of (i) Section 2 of
the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act of any
applicable jurisdiction (and, with respect to such Act, is not properly to be
presumed to be insolvent under Section 2(b) thereof), (ii) Section 101 of Title
II of the United States Code or (iii) any comparable law or regulation
applicable in the circumstances.
SPSs: the Structured Pass-Through Securities, Series C007 , issued by
Xxxxxxx Mac pursuant to the Structured Pass-Through Securities Agreement dated
September 22, 1995, representing beneficial ownership interests in the Funding
Note.
Special Prepayment Date: the meaning specified in Section 2.8.
Special Prepayment Determination Date: the meaning specified in Section
2.8.
Structured Pass-Through Securities Agreement: the Xxxxxxx Mac Structured
Pass-Through Securities Agreement to be dated as of September 22, 1995 among
Xxxxxxx Mac and the holders of the SPSs.
Underwriter: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.
1.2. Usage. As used herein, references to Articles, Sections, Exhibits
and Schedules are to articles and sections hereof and exhibits and schedules
hereto, references to a person are also references to its successors and
assigns, references to a document are to it as amended, waived and otherwise
modified from time to time, references to a statute or another governmental rule
are to it as amended and otherwise modified from time to time, and the word
including and correlative words shall be deemed to be followed by without
limitation whether or not followed by such words of like import. The
definitions set forth in Section 1.1 are equally applicable both to the singular
and plural forms and the feminine, masculine and neuter forms of the terms
defined. The headings of Articles and Sections and the table of contents
relating hereto have been included solely for convenience of reference and shall
not have any effect to the construction hereof.
ARTICLE II
SALE AND PURCHASE OF FUNDING NOTE
2.1. Authorization of Funding Note. Subsidiary will authorize the issue
and sale of $249,324,595 aggregate principal amount of its 7% Funding Note due
September 17, 2031 (the Funding Note ), to be substantially in the form of the
Funding Note set forth in Exhibit A.
2.2. Sale and Purchase of Funding Note. Subsidiary will issue and sell
to Xxxxxxx Mac and, subject to the terms and conditions of this Agreement,
Xxxxxxx Mac will purchase from Subsidiary at the Closing provided for in Section
2.3 the Funding Note in the principal amount of $249,324,595, at the purchase
price of $237,927,630, plus accrued interest thereon from September 1, 1995 to
(but excluding) the date of Closing. The Funding Note shall be secured by the
Collateral.
2.3. Closing. The sale of the Funding Note to be purchased by Xxxxxxx Mac
will take place at the offices of Xxxxxxx Mac, 0000 Xxxxx Xxxxxx Xxxxx, XxXxxx,
Xxxxxxxx 00000, at 10:00 a.m., Eastern time, at a Closing (the Closing ) on
September 22, 1995 or on such other Business Day thereafter on or prior to
September 29, 1995 as may be agreed upon by Subsidiary and Xxxxxxx Mac. The
Funding Note to be purchased by Xxxxxxx Mac will be in the form of a single
Funding Note dated the date of the Closing and registered in the name of Xxxxxxx
Mac. Subsidiary will deliver the duly executed Funding Note and the documents
set forth in Section 4.1.10 to Xxxxxxx Mac on or prior to Closing to be held in
escrow as provided for in Section 4.1.10. At the Closing, Subsidiary and Parent
will instruct Xxxxxxx Mac (either in writing or by telephone followed by written
confirmation) to release from escrow (a) the Funding Note against delivery by
Xxxxxxx Mac of same-day federal funds in the amount of the Purchase Price and
(b) the documents set forth in Section 4.1.10 and Xxxxxxx Mac shall release from
escrow such documents. If at the Closing, Subsidiary fails to tender such
Funding Note to Xxxxxxx Mac as provided in this Section 2.3, or any of the
conditions specified in Article IV shall not have been fulfilled to Xxxxxxx
Mac s satisfaction, Xxxxxxx Mac will, at its election, be relieved of its
obligation to purchase the Funding Note at such Closing, without thereby waiving
any other rights it may have by reason of such failure or such nonfulfillment.
2.4 Non-Recourse Obligation. The Funding Note shall be a non-recourse
obligation of the Subsidiary payable solely from the Collateral to the extent
such Collateral has not been properly released from the security interest
created by this Agreement. Neither the Parent nor any Affiliate of the Parent
(except for the Subsidiary, but only to the extent of the Collateral as provided
in the preceding sentence) nor any of their respective successors and assigns
shall be liable in any respect or under any theory (including, without
limitation, any theory based upon piercing the corporate veil of the Subsidiary)
for payments due on the Funding Note.
2.5. Interest and Principal on the Funding Note. The Funding Note shall
accrue interest from September 1, 1995 at the Funding Note Coupon specified
therein. Subsidiary shall pay the interest and principal on the Funding Note on
each Quarterly Payment Date (or Special Prepayment Date, in the event of a
special prepayment of the Funding Note) in the manner specified in the Funding
Note and Sections 2.8 and 3.3 hereof. The final Quarterly Payment Date for the
Funding Note is September 17, 2031. So long as no Event of Default has
occurred, Xxxxxxx Mac shall remit to Subsidiary on each Quarterly Payment Date
any Funding Surplus received by it. Upon such remittance, such Funding Surplus
shall be released from the security interest created by this Agreement.
2.6. Optional Prepayment at Direction of Xxxxxxx Mac. The outstanding
principal amount of the Funding Note shall become immediately due and payable,
at the option of Xxxxxxx Mac, upon not less than 60 nor more than 90 days
notice, on any Quarterly Payment Date on or after the date on which, after
giving effect to principal payments to be made on the Funding Note on such
Quarterly Payment Date, the outstanding principal amount of the Funding Note
would be equal to or less than 1% of its original principal amount. In such
event, the amount due and payable on the Funding Note to Xxxxxxx Mac shall be
equal to the outstanding principal amount of the Funding Note, plus accrued and
unpaid interest for the Interest Accrual Period relating to the applicable
Quarterly Payment Date. ( Repurchase Price ) In order to satisfy such amount,
Xxxxxxx Mac shall liquidate a like principal amount of the Pledged Securities at
fair market value as determined by Xxxxxxx Mac, and apply the net proceeds of
such liquidation (together with funds contributed by Xxxxxxx Mac if such net
proceeds are insufficient) to pay the amount due and payable on the Funding Note
to Xxxxxxx Mac, provided , however, that Xxxxxxx Mac shall provide Subsidiary
with written notice of its intent to liquidate such Pledged Securities and the
date of such proposed liquidation not less than 10 days prior to the proposed
liquidation date specified in such notice and Subsidiary shall have the option ,
in its discretion, to purchase the Funding Note and Pledged Securities at a
price equal to the Repurchase Price on or prior to the liquidation date
specified in such notice. Upon payment of the amount due and payable pursuant
to this Section, Xxxxxxx Mac shall cause the Funding Note, any remaining Pledged
Securities and any remaining proceeds from such liquidation (net of liquidation
expenses) to be transferred to the Subsidiary, free and clear of the security
interest created by this Agreement.
2.7. Optional Prepayment by Subsidiary. The outstanding Funding Note may
be prepaid, in whole but not in part, at the option of the Subsidiary, on any
Quarterly Payment Date on or after the Quarterly Payment Date on which, after
giving effect to principal payments to be made on the SPSs on such Quarterly
Payment Date, the aggregate remaining principal amount of the SPSs would be
equal to or less than 20 % of the aggregate original principal amount of such
SPSs (the Prepayment Date ). Notice of such prepayment must be given by the
Subsidiary to Xxxxxxx Mac not earlier than the eighteenth calendar day of the
month preceding the Quarterly Payment Date on which such prepayment is to occur
and not later than the sixth Business Day of the month in which such Quarterly
Payment Date occurs. In such event, the amount payable by the Subsidiary (the
Prepayment Amount ) shall be equal to the unpaid principal amount of the
Funding Note, plus accrued and unpaid interest for the Interest Accrual Period
relating to the Prepayment Date. In order to effect such prepayment, the
Subsidiary shall, on the date such notice is given, deposit in the Collection
Account an amount which, after giving effect to (i) any amounts already held in
such Collection Account and (ii) earnings on amounts held in the Collection
Account through the Prepayment Date at any reinvestment rate which may be agreed
upon by Xxxxxxx Mac and the Subsidiary, will be at least equal to the Prepayment
Amount. Alternatively, if the Subsidiary, on or before the date such notice is
given, shall have entered into a forward purchase agreement reasonably
satisfactory to Xxxxxxx Mac with an institution whose unsecured short-term debt
obligations are rated at least A-1 by S&P, at least P-1 by Xxxxx s or at least
F-1 by Fitch for the sale of a principal amount of the Pledged Securities equal
to the unpaid principal amount of the Funding Note, the Subsidiary shall, no
later than the Business Day preceding the Prepayment Date, deposit in the
Collection Account an amount (the Required Amount ) which will be at least
equal to the Prepayment Amount, after giving effect to the amounts described in
clauses (i) and (ii) of the preceding sentence; provided, however, that if the
proceeds from the sale of such Pledged Securities are less than the Required
Amount, the Subsidiary shall , no later than the Business Day immediately
preceding the date of deposit of such proceeds, deposit in the Collection
Account an amount equal to the amount of such deficiency. Upon either deposit
referred to in the two preceding sentences, all funds held in the Collection
Account shall be invested and reinvested by Xxxxxxx Mac in Eligible Investments
pursuant to the provisions of Section 3.3, and the excess of funds held in such
Collection Account on the Prepayment Date over the Prepayment Amount shall be
remitted by Xxxxxxx Mac to the Subsidiary on such Prepayment Date. In addition,
upon either such deposit, Xxxxxxx Mac shall cause the Funding Note and the
Pledged Securities to be transferred to the Subsidiary, free and clear of the
security interest created by this Agreement.
2.8. Special Prepayment by Subsidiary.
(a) The Funding Note is subject to special prepayment, in whole or in
part, on any Payment Date other than a Quarterly Payment Date (a "Special
Prepayment Date") in the event Xxxxxxx Mac determines that the amount of funds
in the Collection Account expected to be available for payment of interest on
the Funding Note on the next Quarterly Payment Date could be less than the
amount required for payment of interest.
(b) On the sixth Business Day of each month other than a month in which a
Quarterly Payment Date occurs (a "Special Prepayment Determination Date"),
Xxxxxxx Mac shall make such determination based upon the following factors:
(i) distributions of principal of and interest on and, if received by
Xxxxxxx Mac and in Xxxxxxx Mac s sole discretion, mortgage prepayment premiums
on, the Pledged Securities received or due to be received through the Giant
Security Payment Date occurring in the same month and since the preceding
Quarterly Payment Date or Special Redemption Date, whichever is later (or since
the date hereof, if no Quarterly Payment Date or Special Prepayment Date has
yet occurred);
(ii) the scheduled distributions (if any) of principal of and
interest on the Pledged Securities required to be made during the period
following the Giant Security Payment Date occurring in the same month and prior
to the next succeeding Quarterly Payment Date;
(iii) the aggregate amount of interest then being earned on all
Eligible Investments held in the Collection Account; and
(iv) the aggregate amount of interest which would be earned through
the Business Day preceding the next Quarterly Payment Date at the Assumed
Reinvestment Rate, on the amount referred to in clause (i) above (but not clause
(ii) above)and on the principal and interest of the Eligible Investments
referred to in clause (iii) above, as and when such amounts are receivable for
deposit in the Collection Account.
(c) In the event such determination is made, Xxxxxxx Mac no later than one
Business Day after the Special Prepayment Determination Date, shall notify the
Subsidiary by writing or telefax that a special prepayment of the Funding Note
is required in an amount specified by Xxxxxxx Mac. The Subsidiary, in lieu of a
special prepayment, shall have the option, in its sole discretion, to pay to
Xxxxxxx Mac for deposit in the Collection Account the amount by which payment of
interest on the next Quarterly Payment Date is determined to be insufficient.
Payment must be received by Xxxxxxx Mac on or before the eighth Business Day of
the month in which the determination is made.
(d) If the Subsidiary does not deposit funds in lieu of a special
prepayment, the Subsidiary shall make a special prepayment in the amount
specified by Xxxxxxx Mac on the Funding Note on the Special Prepayment Date
occurring in the month in which the determination to make a special prepayment
is made. Such special prepayment of the Funding Note shall be at a prepayment
price equal to 100% of the principal amount of the portion of the Funding Note
to be prepaid, plus accrued and unpaid interest thereon through the preceding
calendar month. The amount of any special prepayment shall be limited to the
amount of principal or payments on the Giant Securities received since the
immediately preceding Quarterly Payment Date or preceding Special Prepayment
Date , whichever is later, that would otherwise be required to be applied to the
payment of principal on the Funding Note on the next succeeding Quarterly
Payment Date.
2.9. Prepayment and Redemption. The Funding Note may not be prepaid or
redeemed otherwise than pursuant to Section 2.6, Section 2.7 or Section 2.8
hereof.
ARTICLE III
COLLATERAL SECURITY FOR FUNDING NOTE
3.1. Grant of Security Interest. To secure the payment of the principal
of and interest on the Funding Note in accordance with its terms and the
performance of the covenants contained in the Funding Note and this Agreement,
Subsidiary hereby grants to Xxxxxxx Mac, as of the Closing, as collateral
security for the exclusive benefit of Xxxxxxx Mac and the holders of the SPSs,
all of Subsidiary's right, title and interest in and to (a) the Pledged
Securities, including all Giant Security Payments made thereon after the date
hereof, (b) the Collection Account, including all income from investment and
reinvestment of funds in the Collection Account and (c) all products and
proceeds of the foregoing, including all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivable which at any time constitute all or part or are included in the
proceeds of the foregoing (collectively, the Collateral ). Subject to the
security interest granted under this Section 3.1, the Collateral shall remain
the property of Subsidiary. Until the release of the security interest under
Section 3.3, Xxxxxxx Mac, as the holder of the Pledged Securities, shall be
entitled to exercise all voting rights on the Pledged Securities under Xxxxxxx
Mac s Giant GNMA-Backed Securities Agreement (including any applicable Terms
Supplements), pursuant to which the Pledged Securities were issued and sold.
3.2. Collection of Money. Xxxxxxx Mac shall receive and collect all
money and other property payable to or receivable by Xxxxxxx Mac under the
Funding Note, including all Giant Security Payments made on the Pledged
Securities.. Xxxxxxx Mac shall apply such funds received by it as provided in
this Agreement. If any default occurs in the making of any payment or
performance under any Eligible Investment, Xxxxxxx Mac may, and upon the request
and at the expense of the Subsidiary shall, take such action as may be
appropriate to enforce such payment or performance. Any such action shall be
without prejudice to any right to declare a default hereunder and to proceed as
provided herein.
3.3. Collection Account.
(a) Prior to Closing, Xxxxxxx Mac shall open one or more accounts
(collectively, the Collection Account ). The Collection Account shall be
identified on Xxxxxxx Mac's books and records as relating solely to the Funding
Note purchased hereunder and to the Pledged Securities. Xxxxxxx Mac shall
promptly deposit in such Collection Account all Giant Security Payments
received with respect to the Pledged Securities and all amounts received from
the reinvestment of amounts on deposit in the Collection Account. All Giant
Security Payments on the Pledged Securities and other monies deposited from time
to time in the Collection Account, and all investments made in Eligible
Investments with such monies, including all income or other gain from such
investments, shall be held by Xxxxxxx Mac in such Collection Account subject to
withdrawal by Xxxxxxx Mac for the purpose of making payments hereunder and
pursuant to the Structured Pass -Through Securities Agreement.
(b) All or a portion of the Collection Account shall be invested and
reinvested by Xxxxxxx Mac in one or more Eligible Investments bearing interest
or sold at a discount at the direction and in the sole discretion of Xxxxxxx
Mac. No such investment shall mature later than the Business Day immediately
preceding the next Quarterly Payment Date. All income or other gain from
investments of monies deposited in the Collection Account shall be deposited by
Xxxxxxx Mac in such Collection Account immediately upon receipt, and any loss
resulting from such investments shall be charged to such Collection Account.
(c) Notwithstanding Section 3.3 (b) above, in the event Subsidiary
reasonably determines that the investment of funds in the Collection Account by
Xxxxxxx Mac involves undue interest rate risk, amounts in the Collection
Accounts (upon notice to Xxxxxxx Mac from Subsidiary) thereafter shall be
invested by Xxxxxxx Mac at the direction o f the Subsidiary, provided that the
Subsidairy shall bear any additional costs to Xxxxxxx Mac related to such
investment.
(d) Amounts on deposit in the Collection Account shall be applied on each
Quarterly Payment Date as follows:
first, to the payment of all interest due on the Funding Note,
second, to the payment of all principal due on the Funding Note, in an
amount equal to theamount of principal payments received on the Pledged Giant
Securities on such Quarterly Payment Date and in each of the two preceding
months, less the amount of principal paid upon any special prepayment of the
Funding Note that occurred in the two preceding months, and
third, unless an Event of Default shall have occurred and be continuing
hereunder, any remaining amounts which represent Funding Surplus shall be
remitted to the Subsidiary. Upon remittance of any Funding Surplus to the
Subsidiary, such Funding Surplus shall be released from the security interest
created by this Agreement.
(e) Xxxxxxx Mac shall provide reports to Subsidiary relating to all
deposits to and withdrawals from the Collection Account. Such reports shall be
provided quarterly following each Quarterly Payment Date, or monthly following
any Special Prepayment Date.
3.4. Satisfaction; Release of Security Interest. Upon the payment by
Subsidiary of all sums payable by Subsidiary hereunder or pursuant to the
Funding Note in accordance with the terms thereof, this Agreement (except for
the terms and provisions of Section 8.1 and Section 9.7, which shall remain in
full force and effect) shall cease to be of further effect, and Xxxxxxx Mac, on
demand of and at the expense of Subsidiary, shall execute proper instruments
acknowledging satisfaction and discharge of this Agreement and the Funding Note.
ARTICLE IV
CONDITIONS TO CLOSING
4.1. Conditions Precedent to Closing. The obligation of Xxxxxxx Mac to
purchase and pay for the Funding Note from Subsidiary is subject to Xxxxxxx
Mac s satisfaction, prior to or at the Closing, of the following conditions:
4.1.1. Delivery of Pledged Securities. The Pledged Securities
shall have been delivered to an account designated by Xxxxxxx Mac free
and clear of any lien, mortgage, pledge, charge, security interest or
other encumbrance, other than any lien that is removed at Closing.
4.1.2. Absence of Material Adverse Change. There shall not have
occurred any material adverse change in the financial or business
condition or prospects of Parent since the date of the most recent
financial statement delivered pursuant to Section 4.1.10 (d).
4.1.3. Representations and Warranties. The representations and
warranties of Subsidiary and Parent contained in this Agreement and
those otherwise made in writing by or on behalf of Subsidiary and
Parent in connection with the transactions contemplated by this
Agreement shall have been correct when made and shall be correct at
the time of the Closing.
4.1.4. Performance; No Default. Subsidiary and Parent shall have
performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by them prior
to the dates specified herein and, at the time of the Closing, no
Event of Default shall have occurred and be continuing.
4.1.5. Litigation, etc. The consummation of the transactions
contemplated hereby shall not be permanently, preliminarily or
temporarily enjoined or restrained, and no litigation or other
proceeding seeking any such injunction or restraint or other
proceeding seeking any such injunction or restraint or otherwise
challenging such transaction, shall have been commenced or threatened.
4.1.6. Compliance Certificate. Subsidiary shall have delivered
to Xxxxxxx Mac an Officers Certificate, dated as of the Closing,
certifying that the conditions specified in Section 4.1.1 and Sections
4.1.3 through 4.1.5 have been fulfilled and Parent shall have
delivered to Xxxxxxx Mac an Officers Certificate dated as of the
Closing, certifying that the conditions specified in Sections 4.1.1
through 4.1.5 have been fulfilled.
4.1.7. Tax Status.
(a) Xxxxxxx Mac and Cadwalader, Xxxxxxxxxx & Xxxx shall have
received from Xxxxxxx Xxxxxxxx & Wood, counsel to the Parent and
Subsidiary, an opinion (attached as exhibit x) in form and substance
satisfactory to Xxxxxxx Mac and Cadwalader, Xxxxxxxxxx & Xxxx, that
the Funding Note constitutes debt of the Subsidiary for federal income
tax purposes;
(b) Xxxxxxx Mac and Cadwalader, Xxxxxxxxxx & Xxxx shall have
received a letter from the Underwriter in form and substance
satisfactory to them with respect to certain information regarding the
likelihood of special prepayments occurring, the present value
analysis of the equity interest retained by Subsidiary based on
assumptions as of pricing and the reasonableness of the assumptions
and the realistic possibility of exercise of the optional prepayment
by Subsidiary.
(c) Xxxxxxx Mac and Cadwalader, Xxxxxxxxxx & Xxxx shall have received
a comfort letter from Deloitte and Touche that the net present value
of the equity interest retained by Subsidiary, based on assumptions
provided by the Underwriter, exceeds 2% of the total transaction
value.
4.1.8. Opinions of Counsel. Xxxxxxx Mac shall have received
from Xxxxxxx Xxxxxxxx & Xxxx and Xxxxxxx & Berlin, counsel to Parent
and Subsidiary, favorable opinions in form and substance satisfactory
to Xxxxxxx Mac.
4.1.9. Fairness Opinion. Xxxxxxx Mac shall have received an
opinion from the Underwriter that the price paid for the Pledged
Securities by Subsidiary to Parent represents fair and reasonably
equivalent value for such Pledged Securities.
4.1.10. Closing Papers. Prior to the Closing, Subsidiary or
Parent, as the case may be, shall have delivered to Xxxxxxx Mac the
following documents to be held in escrow by Xxxxxxx Mac until the
Closing:
(a) The Funding Note, in the form of Exhibit A, duly executed by
Subsidiary.
(b) Evidence of the assignment and the transfer of the Pledged
Securities from Parent to Subsidiary pursuant to the terms of the
Assignment and Agreement.
(c) Evidence of filing of a financing statement.
(d) A copy of Parent s most recent full-year financial
statements (consolidated, if applicable) filed with the Securities and
Exchange Commission, and any subsequent interim financial statements
so filed, all of which shall be prepared in accordance with generally
accepted accounting principles.
(e) Certified copies of the Governing Instruments of the Parent
and the Subsidiary and such resolutions of the Board of Directors of
Subsidiary and Parent and such other corporate documents of Subsidiary
and Parent as Xxxxxxx Mac reasonably may request.
(f) Certificates of good standing of Parent and Subsidiary,
dated not more than 14 days prior to the Closing.
(g) Certified copies of the resolutions adopted by the Board of
Directors of each of Subsidiary and Parent authorizing the execution,
delivery and performance of this Agreement, the Funding Note and each
of the other agreements, instruments and transactions contemplated
hereby;
(h) A certificate of the Secretary or Assistant Secretary of
each of Subsidiary and Parent, dated the Closing, as to the incumbency
and signatures of the Officers of Subsidiary or Parent, as the case
may be, authorized to act with respect to this Agreement and all
instruments executed pursuant thereto.
(i) Such other documents, certificates and resolutions as
Xxxxxxx Mac may reasonably request.
4.1.11. Proceedings. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated by this
Agreement and all documents and instruments incidental to such
transactions will be satisfactory in form and substance to Xxxxxxx
Mac, and Xxxxxxx Mac will have received all such counterpart originals
or certified or other copies of such documents as it may reasonably
request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Xxxxxxx Mac.
Xxxxxxx Mac represents and warrants to Parent and Subsidiary
as follows:
5.1.1. Organization. Xxxxxxx Mac is a
corporation duly organized and validly existing
under the laws of the United States, with power
and authority to conduct its business as it is
currently being conducted and to enter into and
perform its obligations under this Agreement and
the Structured Pass - Through Securities
Agreement.
5.1.2. Authorization. The execution, delivery
and performance of this Agreement and the
Structured Pass - Through Securities Agreement
have been duly authorized by all necessary action
of Xxxxxxx Mac, and this Agreement and the
Structured Pass - Through Securities Agreement
each constitute the valid, legal and binding
agreement of Xxxxxxx Mac, enforceable in
accordance with its terms subject, as to
enforcement of remedies, to applicable bankruptcy,
reorganization, moratorium, insolvency or other
similar laws affecting creditors rights generally
from time to time in effect and to general
principles of equity (regardless of whether
enforcement is brought in a proceeding in equity
or at law). The issuance and sale of the SPSs
have been duly authorized by all necessary action
of Xxxxxxx Mac.
5.1.3. No Violation; Conflicts. The execution
and delivery by Xxxxxxx Mac of this Agreement and
the Structured Pass-Through Securities Agreement,
the performance by Xxxxxxx Mac of its obligations
hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby
will not (a) conflict with or result in a breach
of, or constitute a default under, any of the
provisions of Xxxxxxx Mac's charter, or to its
knowledge, any law, rule or regulation, or any
judgment, decree or order applicable to Xxxxxxx
Mac or any of its properties, or (b) violate, or
conflict with, or result in a breach of any
provision of, or constitute a default (or an event
which, with or without due notice or lapse of
time, or both, would constitute a default) under,
or give rise to any right of termination,
cancellation or acceleration of any obligation or
to surrender of a material benefit under, any
note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or
obligation by which Xxxxxxx Mac is bound.
5.2. Representations and Warranties of Subsidiary and
Parent. Parent with respect to itself and Subsidiary, and
Subsidiary with respect to itself, each represent and
warrant to Xxxxxxx Mac as follows:
5.2.1. Organization; Good Standing. Each of
Subsidiary and Parent has been duly organized and is
validly existing and in good standing, under the
applicable laws of the jurisdiction of its formation,
and is duly qualified to do business in and is in good
standing under the laws of each jurisdiction which
requires such qualification, other than any
jurisdictions in which the failure to qualify would not
have a material adverse effect on either Parent s or
Subsidiary s properties or business. Each of Subsidiary
and Parent has full power and authority to own its
properties and conduct its business as presently
conducted. Subsidiary holds all franchises, licenses,
certificates and permits from all governmental
authorities necessary in all material respects for the
conduct of its business as currently conducted.
5.2.2. No Violation; Conflicts. The execution
and delivery by Subsidiary and Parent of this
Agreement, the Funding Note and other Series Documents
(as applicable), the performance by Subsidiary and
Parent of their respective obligations hereunder and
thereunder and the consummation of the transactions
contemplated hereby and thereby will not (a) conflict
with or result in a breach of, or constitute a default
under, any of the provisions of the Governing
Instruments of Subsidiary or Parent, or any law, rule
or regulation, or any judgment, decree or order
applicable to Subsidiary or Parent or any of their
properties, or (b) violate, or conflict with, or result
in a breach of any provision of, or constitute a
default (or an event which, with or without due notice
or lapse of time, or both, would constitute a default)
under, or give rise to any right of termination,
cancellation or acceleration of any obligation or to of
a material benefit under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or
other instrument or obligation by which Parent or
Subsidiary is bound or (except as contemplated hereby)
result in the creation of any lien, security interest,
charge or other encumbrance upon any of the properties
of the Subsidiary or Parent.
5.2.3. Authorization. Each of this Agreement, the
Funding Note, and all other Series Documents, when
executed and delivered as contemplated hereby, will
have been duly executed and delivered by Subsidiary or
Parent (as applicable) and will constitute, when so
executed and delivered, the legal, valid, and binding
agreement of Subsidiary or Parent (as applicable),
enforceable in accordance with its terms subject, as to
enforcement of remedies, to applicable bankruptcy,
reorganization, moratorium, insolvency or other similar
laws affecting creditors rights generally from time to
time in effect and to general principles of equity
(regardless of whether enforcement is brought in a
proceeding in equity or at law).
5.2.4. Consents. Parent has filed all
applications and notices and received all consents and
authorizations as are required under federal and state
law to organize Subsidiary and transfer thereto all its
right, title and interest in and to the Pledged
Securities, and Parent and Subsidiary have each filed
all applications and notices and received all consents
and authorizations as are required under federal and
state law and all other applicable governmental rules
to enter into and perform the transactions contemplated
by the Assignment and Agreement and this Agreement and,
in the case of Subsidiary, the Funding Note other than,
in the case of Parent, any consents, authorizations,
applications and notices that, if not so obtained or
filed, would not have a material adverse effect on the
Parent's right, title and interest in and to the
Pledged Securities or its ability to enter into and
perform such transactions. No further consent,
approval, authorization or order of any court or
governmental agency or body or any private party is
required for consummation by Parent or Subsidiary of
the transactions contemplated by the Assignment and
Agreement, this Agreement or the Funding Note.
5.2.5. Litigation, Proceedings, etc. There are no
actions, suits, proceedings or other litigation pending
or, to the knowledge of Subsidiary or Parent,
threatened against Subsidiary which could affect the
ability of Subsidiary to perform its obligations under
this Agreement and the other Series Documents., There
are no actions, suits, proceedings or other litigation
pending or, to the knowledge of Parent, threatened
against Parent, or any other subsidiary of Parent, at
law or in equity, or before or by any federal, state or
municipal agency or other instrumentality or other
governmental authority, which could materially and
adversely affect the ability of Parent to perform its
obligations under this Agreement and the other Series
Documents.
5.2.6. Compliance with Laws. Each of Parent and
Subsidiary is not subject to, and has not been
threatened to its knowledge with, any fine, penalty or
disability as the result of its failure to comply with
any requirements of federal, state, local or foreign
law or regulation or other governmental rule or of any
governmental body or agency having jurisdiction over
it, the conduct of its business or the use of its
assets.
5.2.7. Capital Stock. Parent owns directly all
the outstanding capital stock of Subsidiary. No
Person has any direct or indirect right to acquire any
capital stock of Subsidiary. Parent has heretofore
furnished to Xxxxxxx Mac and the Underwriter true and
correct copies of the Governing Instruments of
Subsidiary as in effect on the date hereof.
5.2.8. Solvency, etc. Each of Parent and
Subsidiary is Solvent, and neither Parent nor
Subsidiary is, and with the passage of time neither
expects to become, Bankrupt.
5.2.9. Disclosure. There is no material fact
that Subsidiary or Parent has not disclosed to Xxxxxxx
Mac which would have a Material Adverse Effect. No
information, report, financial statement or certificate
delivered to Xxxxxxx Mac in connection with this
Agreement or the Funding Note relating to historical
events or conditions contains any untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make such statements not misleading
in light of the circumstances in which such statements
were made.
5.2.10. Pledged Securities. In the case of all
Pledged Securities:
(i) On or prior to the Closing, Parent will
be the owner of the Pledged Securities free and
clear of any lien, mortgage, pledge, charge,
security interest or other encumbrance, except any
lien released concurrently with the disposition of
the Pledged Securities by Parent.
(ii) On the Closing date, upon the transfer
of the Pledged Securities to Subsidiary,
Subsidiary will be the owner of the Pledged
Securities free and clear of any lien, mortgage,
pledge, charge, security interest or other
encumbrance, except the lien of this Agreement and
the Funding Note and any lien released
concurrently with the acquisition of the Pledged
Securities by Subsidiary; and at the time of the
Closing, Xxxxxxx Mac shall be the pledgee of such
Pledged Securities.
(iii) Subsidiary will acquire the Pledged
Securities in good faith and without notice of
any adverse liens or claims, including, any
federal tax liens or liens arising under the
Employee Retirement Income Security Act of 1974,
as amended. No portion of the Pledged
Securities will have been purchased by the
Subsidiary with collateral or proceeds of
collateral subject to the security interest of any
third party.
(iv) The information set forth with respect
to the Pledged Securities in Schedule I to this
Agreement is correct.
(v) With respect to information set forth on
"Exhibit A" to the Xxxxxxx Mac offering circular
for the SPSs, dated September 19, 1995 ("Offering
Circular") relating to the "GNMA Certificates" and
"Mortgages" (each as defined in the Offering
Circular) which underlie the Pledged Securities:
(a) except as provided in subsections (b) and (c)
below, the information is correct in all material
respects;
(b) information under the heading "% Units Section 8"
was obtained from the Department of Housing and Urban
Development and accurately reflects the information so
obtained; and
(c) information under each of the headings "Mortgage
Interest Rate" and "Lockout End Date" was calculated
based upon publicly available information, the
calculations used to produce such information were
reasonable and such information as so calculated is
correct in all material respects.
(vi) As of the Closing, each Pledged Security shall have
been duly and validly assigned to Xxxxxxx Mac and duly and
validly transferred to or deposited in an account designated
by Xxxxxxx Mac; and Xxxxxxx Mac shall have a duly and
validly perfected security interest in each such Pledged
Security subject to no prior lien, mortgage, security
interest, pledge, charge or other encumbrance.
5.2.11. Legal Counsel, etc. Each of Parent and
Subsidiary has consulted with its own legal counsel and
independent accountants to the extent it deems necessary
regarding the tax, accounting and regulatory consequences of
the transactions contemplated here, and neither Parent nor
Subsidiary is participating in such transactions in reliance
on any representations of Xxxxxxx Mac, the Underwriter, or
their counsel with respect to tax, accounting or regulatory
matters.
5.2.12. Separate Existence. Subsidiary has taken all
action necessary under applicable law to establish and
maintain a separate existence from Parent and its affiliates
including the actions set forth in section 6.2.9.
5.2.13. Establishment of Subsidiary. Parent has been
duly authorized to establish Subsidiary and to transfer all
of its right, title and interest in and to the Pledged
Securities to Subsidiary, has complied with all applicable
laws, rules and regulations in connection with the
establishment and operation of, and transactions and
agreements with respect to, Subsidiary; and owns 100% of the
outstanding capital stock of in Subsidiary.
[Reps to come]
The Underwriter may rely on the foregoing representations
and warranties as if they were made to the Underwriter .
The Underwriter and any person which controls such
Underwriter are hereby made third party beneficiaries of the
foregoing representations and warranties in consideration
of, and as an inducement to, the Underwriter's purchase of
the SPSs from Xxxxxxx Mac.
ARTICLE VI
COVENANTS
6.1.Covenants of Xxxxxxx Mac. Xxxxxxx Mac covenants that it
shall hold its entire right, title and interest in and to
the Funding Note and this Agreement (except for its rights
to indemnification under Section 8.1) on behalf of Xxxxxxx
Mac and the holders of the SPSs, and no such right, title or
interest in and to the Funding Note or this Agreement shall
be held otherwise or assigned by Xxxxxxx Mac except pursuant
to the Structured Pass - Through Securities Agreement.
6.2.Covenants of Subsidiary. Subsidiary covenants as
follows:
6.2.1. Corporate Existence. Subsidiary will do or cause to
be done all things necessary to preserve and keep in full
force and effect its corporate existence and shall continue
to be in good standing under the laws of the state of its
organization.
6.2.2. Performance. Subsidiary will perform all of the
terms of the Funding Note.
6.2.3. Security Interest. Subsidiary will from time to
time execute and deliver all supplements and amendments
hereto and all financing statements, continuation
statements, instruments of further assurance and other
instruments, and will take such other action as Xxxxxxx Xxx
xxxxx necessary or advisable, to:
(a)grant more effectively all or any portion of the
Collateral as security for the Funding Note,
(b) maintain or preserve the lien provided for by this
Agreement and the Funding Note or carry out more effectively
the purposes hereof and thereof,
(c) perfect, publish notice of, or protect the validity of
the security interest granted to Xxxxxxx Mac pursuant to
this Agreement,
(d)enforce Xxxxxxx Mac's rights as pledgee of the
Collateral,
(e)enforce this Agreement and the Funding Note, and
(f)preserve and defend title to the Collateral granted
hereunder and the rights of Xxxxxxx Mac thereto against the
claims of all persons.
Subsidiary hereby appoints Xxxxxxx Mac as its agent and
attorney-in-fact to execute any financing statement,
continuation statement or other instrument required by
Xxxxxxx Mac pursuant to this Section; such appointment is
irrevocable, includes full power of substitution and
resubstitution and is coupled with an interest.
6.2.4. Encumbrances. Subsidiary will not (i) sell,
transfer, exchange, dispose of or otherwise allow the
encumbrance of any of the Collateral except as expressly
permitted by this Agreement or (ii) claim any credit on, or
make any deduction on, principal, or interest payable with
respect to the Funding Note by reason of the payment of any
taxes levied or assessed on the Collateral.
6.2.5. Taxes. Subsidiary will pay or cause to be paid any
federal, state or local taxes levied on account of the
ownership by it of the Collateral.
6.2.6. Compliance With Laws, etc. Subsidiary will comply
at all times and in all material respects during the term of
the Funding Note with all applicable laws, regulations and
other governmental rules.
6.2.7. Examination of Records, etc. Subsidiary, on
reasonable prior notice, will permit any representative of
Xxxxxxx Mac, during normal business hours, to examine all
the books of account, records, reports and other papers of
Subsidiary, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public
accountants selected by Xxxxxxx Mac, and to discuss its
affairs, finances and accounts with its officers, employees
and independent certified public accountants (and by this
provision Subsidiary hereby authorizes its accountants to
discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may
be reasonably requested. Any expense incident to the
exercise by Xxxxxxx Mac of any right under this Section
6.2.7 will be borne by Xxxxxxx Mac, provided that if an
audit is made during the continuance of an Event of Default,
the expense incident to such audit shall be borne by
Subsidiary.
6.2.8. Restriction on Additional Indebtedness. Subsidiary
will not create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect
to any Indebtedness other than the Funding Note.
6.2.9. Additional Covenants Regarding Independence of
Subsidiary. Subsidiary shall observe the formal legal
requirements of a separate and independent corporation. The
directors of Subsidiary will act independently and in the
interests of the Subsidiary.
6.2.10. Governing Instruments. Subsidiary will comply at
all times during the term of the Funding Note with each and
every provision of Subsidiary s Governing Instruments and
will not amend or otherwise change its Governing Instruments
except as permitted therein and with the approval of Xxxxxxx
Mac.
6.3. Covenants of Parent. Parent covenants as follows:
6.3.1. Subsidiary s Performance. Parent will cause
the Subsidiary to perform all its covenants and agreements
contained in Section 6.2.
6.3.2. Bankruptcy. Parent will not file any bankruptcy
petition against Subsidiary or otherwise take action to
cause Subsidiary to become Bankrupt.
6.3.3. Compliance With Laws, etc. Parent will at all times
and in all material respects during the term of the Funding
Note comply with all applicable laws, regulations and other
governmental rules.
6.4. Tax-Related Provisions.
6.4.1. Consistent Performance Parent and Subsidiary shall
treat the Funding Note as debt of the Subsidiary for all tax
return, tax information reporting and financial statement
reporting purposes and shall not take any action
inconsistent with, or to call into question or to negate,
the treatment of the Funding Note as debt for federal income
tax purposes.
6.4.2. Providing Information Parent and Subsidiary shall
make available to Xxxxxxx Mac in a timely and accurate
fashion any information necessary or appropriate in order
for Xxxxxxx Mac to fulfill its tax information reporting
obligations with respect to the SPS. The tax reporting
information for each calendar year shall be provided to
Xxxxxxx Mac's Investor Tax Reporting Group (ITR) within the
Structured Finance Department on or before January 15 of the
year following the calendar year. The information shall be
prepared in a format acceptable to ITR and contain all the
necessary items of income and deduction to be reported to
Holders of the SPSs. Such information shall include the
information required to be furnished pursuant to Reg.
1.6049-7 of the Income Tax Regulations. Parent shall make
available to Xxxxxxx Mac, at no charge, documentation to
enable ITR to perform a detailed review of the tax reporting
information, if requested. If errors are found in the tax
reporting information supplied by Parent, Parent shall
reimburse Xxxxxxx Mac for all costs incurred in filing
amended Forms K-1 due to the error. If the tax reporting
information provided by Parent is late and/or inaccurate,
Xxxxxxx Mac shall have the option to prepare the tax
reporting information or engage another party to prepare the
tax reporting information, in either case, at Parent's
expense.
ARTICLE VII
DEFAULTS AND REMEDIES
7.1. Events of Default. An Event of Default occurs if:
(a) Subsidiary defaults in the payment of interest or
principal on the Funding Note in accordance with Section 2.1
of this Agreement.
(b) Subsidiary or Parent fails to comply with any of its
agreements or covenants in, or provisions of, the Funding
Note or this Agreement, and the default continues for a
period of 10 days after written notice shall have been given
to the Subsidiary or the Parent by Xxxxxxx Mac.
(c) Subsidiary shall become Bankrupt.
7.2. Remedies. If an Event of Default occurs and is
continuing, Xxxxxxx Mac may do any one or more of the
following:
(a) Declare the Funding Note immediately due and payable
and take ownership of and sell the Pledged Securities and
apply the proceeds toward repayment in full of the Funding
Note. Notwithstanding any such declaration of acceleration
of the Funding Note, Xxxxxxx Mac shall retain indefinitely
the Pledged Securities unless Xxxxxxx Mac, in its sole
judgment, determines that (a) the Pledged Securities would
not continue to provide sufficient funds for the payment of
principal and interest on the Funding Note as such principal
and interest would have become due if there had not been
such a declaration or (b) such retention would be likely to
(i) subject to tax the arrangement by which the Securities
are created and sold or (ii) violate applicable laws. So
long as Xxxxxxx Mac retains the Pledged Securities, it shall
apply distributions to the Funding Note as if the Funding
Note had not been declared immediately due and payable. In
the event that, following a declaration of acceleration of
the Funding Note, Xxxxxxx Mac, in its sole judgment,
determines that (a) the Pledged Securities would not
continue to provide sufficient funds for the payment of
principal and interest on the Funding Note as such principal
and interest would have become due if there had not been
such a determination or (b) such retention would be likely
to (i) subject to tax the arrangement by which the
Securities are created and sold or (ii) violate applicable
laws, Freddie Mac may, but will not be required to, sell the
Pledged Securities. The proceeds of any such sale will be
applied to payments on the Funding Note in the same manner
as prepayments on the Pledged Securities.
(b) Retain in satisfaction of any amounts owing from the
Subsidiary, any Funding Surplus otherwise required to be
remitted to the Subsidiary pursuant to Section 3.1.
(c) If the Event of Default hereunder relates to the
Subsidiary s payments of principal or interest of the
Funding Note, in whole or in part, demand that the
Subsidiary pay Xxxxxxx Mac all loss, cost and expense
incurred by Xxxxxxx Mac as a result of the timing of such
payment.
(d) Pursue any available remedy by proceeding at law or in
equity as may appear necessary or desirable (i) to collect
amounts owed pursuant to the Funding Note and any other
payments then due and thereafter to become due under the
Funding Note or (ii) to enforce the performance and
observance of any obligation, covenant, agreement or
provision contained in this Agreement to be observed or
performed by Subsidiary or Parent.
7.3. Additional Remedies. In addition to the above
remedies, if Subsidiary commits a breach, or threatens to
commit a breach of this Agreement, Xxxxxxx Mac shall have
the right and remedy, without posting bond or other
security, to have the provisions of this Agreement
specifically enforced by any court having equity
jurisdiction, it being acknowledged that any such breach or
threatened breach will cause irreparable injury to Xxxxxxx
Mac that money damages will not provide an adequate remedy
thereto.
7.4. No Remedy Exclusive. No remedy herein conferred
or reserved to Xxxxxxx Mac is intended to be exclusive of
any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute . A
delay or omission to exercise any right or power accruing
upon any default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of
Default. Any such right and power may be exercised from
time to time and as often as may be deemed expedient. No
remedy is exclusive of any other remedy. All remedies are
cumulative to the extent permitted by law. In order to
entitle Xxxxxxx Mac to exercise any remedy reserved to it in
this Article VII, it shall not be necessary to give notice,
other than such notice as may be required in this Article
VII.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification. Each of Subsidiary and Parent
hereby agrees to indemnify and hold harmless Xxxxxxx Mac,
its directors, officers, agents and employees, and each
other person controlling Xxxxxxx Mac, within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each an Indemnified Party ), from and against
any and all losses, claims, damages, liabilities and
expenses any of them may incur (including any attorneys
fees) ( Losses and Expenses ) caused by any breach by
Subsidiary or Parent of its representations, warranties, or
covenants in this Agreement, the Funding Note, the other
Series Documents or in any other documents executed in
connection herewith, including any losses, claims, damages,
liabilities and expenses resulting from (a) the failure of
Subsidiary or Parent to file all applications and notices,
obtain all necessary consents and authorizations to
establish Subsidiary, to execute this Agreement, the Funding
Note or other Series Document, or to comply with any
conditions imposed on any such consents or authorizations by
the applicable governmental agency; (b) the failure of
Subsidiary or Parent to file all notices as are required to
perfect the security interest of Xxxxxxx Mac in the
Collateral; and (c) the existence of any state of facts
different from any state of facts represented or warranted
by Parent or Subsidiary hereunder or under any other Series
Documents..
8.2. Contribution. If, for any reason,
indemnification is unavailable to any Indemnified Party or
insufficient to hold it harmless as contemplated by Section
8.1, then Subsidiary or Parent shall contribute to the
amount paid or payable by the Indemnified Party as a result
of such loss, claims, damage or liability in such proportion
as is appropriate to reflect not only the relative benefits
received by Parent or Subsidiary, on the one hand, and
Xxxxxxx Mac, on the other hand, but also the relative fault
of Parent or Subsidiary, as the case may be, and Xxxxxxx
Mac, as well as any other relevant equitable consideration.
ARTICLE I
MISCELLANEOUS
9.1. Notices. All notices, consents and other
communications provided for hereunder shall be in writing
(including facsimile, telegraphic or cable communication)
and telecopied, telegraphed, telexed, cabled or delivered
and addressed as follows:
(i)if to Xxxxxxx Mac:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: General Counsel
(ii)If to the Subsidiary:
CRIIMI MAE FINANCIAL CORPORATION II
The CRI Building
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
(With a copy to the Parent)
Telecopy: (000) 000-0000
Confirmation Number: (000) 000-0000
(iii)if to the Parent:
CRIIMI MAE INC.
The CRI Building
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
(With a copy to the Subsidiary)
Telecopy: (000) 000-0000
Confirmation Number: (000) 000-0000
(iv)if to the Underwriter:
Xxxxxxx Xxxxx & Co.
World Financial Center
Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Confirmation Number: (000) 000-0000
Any party may alter the address to which communications or
copies are to be sent by giving written notice of such
change of address in conformity with the provisions of this
Section 9.1 for the giving of notice. All such notices,
consents and other communications shall, when telecopied,
telegraphed, telexed or cabled, be effective when received.
9.2. Parties Entitled to Benefit. etc. This Agreement
together with all Schedules, Exhibits and other documents
and instruments referred to herein or attached hereto, shall
be binding upon, and inure to the benefit of the parties
hereto (and, in the case of Sections 5.2 and 9.1, to the
benefit of the Underwriter) and their respective successors,
personal representatives and permitted assigns. All the
understandings, covenants and agreements contained herein
are solely for the benefit of such parties and their
respective successors and permitted assigns, and there are
no other persons that are intended to be benefited by, or
entitled to enforce, any provision of this Agreement except
as expressly provided herein.
9.3. Transfer and Assignment. No party to this
Agreement may transfer or assign its rights or obligations
hereunder to any Person other than as contemplated by this
Agreement, without the prior written consent of each other
party hereto.
9.4. Entire Agreement: Amendments: Severability of
Provisions. This Agreement, together with all Schedules,
Exhibits and other documents or instruments referred to
herein or attached hereto, contains the entire agreement of
the parties hereto and supersedes all prior agreements and
understanding, oral or otherwise, among the parties hereto
with respect to the matters contained herein. This
Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto, and in
the case of Sections 5.2 and 9.1, an agreement in writing
signed by the Underwriter). If any provision of this
Agreement or the application thereof to any Person or
circumstance is invalid or unenforceable, or contravenes any
law, regulations or document applicable to such Person, such
provision or application shall be deemed ineffective, but
the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be
affected thereby, and the provisions of this Agreement shall
be severable in any such instances.
9.5. Governing Law. This Agreement shall be governed by
the interpreted and construed in accordance with the laws of
the United States. Insofar as there may be no applicable
precedent, and insofar as to do so would not frustrate the
purpose of Title III of the Emergency Home Finance Act of
1970 or any provision of this Agreement or the transactions
governed thereby, the laws of the State of New York
(excluding principles of conflict of laws) shall be deemed
reflective of the laws of the United States.
9.6. No Waiver; Remedies. No failure on the part of
any party to this Agreement to exercise, and no delay in
exercising, any right thereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise
thereof or the exercise of any other right. No waiver shall
be effective unless it is in writing and is signed by the
party asserted to have granted such waiver. The remedies
therein provided are cumulative and not exclusive of any
remedies provided by law.
9.7. Costs and Expenses. Each party hereto shall bear
its own costs and expenses (including the fees and
disbursements of counsel and accountants) incurred in
connection with the negotiation and preparation of and the
settlement under this Agreement and all matters incident
thereto, except as otherwise provided herein.
9.8. Execution of Counterparts. This Agreement may be
executed in any number of counterparts or in separate
counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall
constitute one and the same agreement. One or more
counterparts of this Agreement (or portions hereof) may be
delivered via facsimile, with the intention that they shall
have the same effect as an original counterpart hereof (or
such portions hereof). All signatures need not be on the
same counterpart.
9.9. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants
contained in this Agreement and those made in or resulting
from any certificates, instruments or other documents
delivered pursuant to this Agreement shall survive
execution, delivery and settlement of this Agreement or any
such certificate, instrument or other document and shall
continue until the satisfaction and discharge of this
Agreement as provided in Section 3.4 or until such other
time as is provided in Section 3.4.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized
representatives as of the date first above written.
FEDERAL HOME LOAN MORTGAGE CORPORATION
By: /s/ Xxxxx Xxxxxx
--------------------
Title: Director
CRIIMI MAE INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Title: Senior Vice President/Chief Financial Officer
CRIIMI MAE FINANCIAL CORPORATION II
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Title: Senior Vice President/Chief Financial Officer
