Exhibit 10.18
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MASTER REPURCHASE AGREEMENT
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL, LLC, as buyer
("Buyer"), and
CAPITALSOURCE SNF FUNDING LLC, as seller ("Seller")
Dated as of August 1, 2003
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TABLE OF CONTENTS
Page
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1. Applicability........................................................................1
2. Definitions..........................................................................1
3. Program; Initiation of Transactions.................................................14
4. Repurchase..........................................................................15
5. Price Differential..................................................................16
6. Margin Maintenance and Repurchase...................................................17
7. Income Payments.....................................................................17
8. Security Interest...................................................................17
9. Payment and Transfer................................................................19
10. Conditions Precedent................................................................19
11. Program; Costs......................................................................22
12. Servicing...........................................................................23
13. Representations and Warranties......................................................24
14. Covenants...........................................................................29
15. Events of Default...................................................................34
16. Remedies Upon Default...............................................................36
17. Reports.............................................................................38
18. Repurchase Transactions.............................................................41
19. Single Agreement....................................................................41
20. Notices and Other Communications....................................................42
21. Entire Agreement; Severability......................................................42
22. Non assignability...................................................................43
23. Set-off.............................................................................43
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24. Binding Effect; Governing Law; Jurisdiction.........................................43
25. No Waivers, Etc.....................................................................44
26. Intent..............................................................................44
27. Disclosure Relating to Certain Federal Protections..................................45
28. Power of Attorney...................................................................45
29. Buyer May Act Through Affiliates....................................................45
30. Indemnification; Obligations........................................................46
31. Counterparts........................................................................47
32. Confidentiality.....................................................................47
33. Recording of Communications.........................................................47
34. Periodic Due Diligence Review.......................................................47
35. Facility Fee........................................................................48
36. Authorizations......................................................................48
SCHEDULES
Schedule 1 - Representations and Warranties with Respect to Purchased Mortgage
Loans
Schedule 2 - Authorized Representatives
EXHIBITS
Exhibit A - Form of Transaction Request
Exhibit B - Form of Purchase Confirmation
Exhibit C - Form of Mortgage Loan Schedule and Exception Report
Exhibit D - Form of Officer's Compliance Certificate
Exhibit E - Intentionally Omitted
Exhibit F - Underwriting Guidelines
Exhibit G - Authorized Signatories of Seller
Exhibit H - Officer's Certificate of the Seller and Corporate Resolutions of
Seller
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Exhibit I - Seller's Tax Identification Number
Exhibit J - Intentionally Omitted
Exhibit K - Blocked Account Agreement
Exhibit L - Distribution Worksheet
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1. APPLICABILITY
From time to time the parties hereto may enter into transactions
in which Seller agrees to transfer to Buyer Mortgage Loans (as hereinafter
defined) against the transfer of funds by Buyer, with a simultaneous agreement
by Buyer to transfer to Seller such Mortgage Loans at a date certain or on
demand, against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a "Transaction" and, unless otherwise agreed in writing,
shall be governed by this Agreement, including any supplemental terms or
conditions contained in any annexes identified herein, as applicable hereunder.
2. DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"Accepted Servicing Practices" means, with respect to any
Mortgage Loan the higher of the following standards of care (A) the same manner
in which, and with the same care, skill, prudence and diligence with which the
Primary Servicer services and administers similar commercial mortgage loans for
third parties, giving due consideration to the customary and usual standards of
practice of prudent institutional commercial mortgage master servicers servicing
commercial mortgage loans for third parties, and (B) the same care, skill,
prudence and diligence with which the Servicer services and administers similar
commercial mortgage loans owned by the Servicer exercising reasonable business
judgment and acting in accordance with applicable laws, in each case, without
regard to (a) any relationship that the Servicer or any Affiliate thereof may
have with any Mortgagor any of their respective Affiliates, (b) the Servicer's
obligation to make advances, (c) the ownership, servicing or management for
others by the Servicer or any Affiliate thereof of any mortgage loan or
property, (d) the right of the Servicer to receive reimbursement of costs, or
the sufficiency of any compensation payable to it under this Agreement or with
respect to any particular transaction; and (e) the origination of the Mortgage
Loans by the originator.
"Act of Insolvency" means, with respect to any Person or its
Affiliates, (i) the filing of a petition, commencing, or authorizing the
commencement of any case or proceeding, or the voluntary joining 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 of the appointment of a receiver, trustee, custodian or similar official
for such party or an Affiliate or any substantial part of the property of
either; (iii) the appointment of a receiver, conservator, or manager for such
party or an Affiliate by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by such party or an Affiliate
of a composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such party or an Affiliate of such party 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 party or of any of its Affiliates, or shall have taken
any action to displace the management of such party or of any of its Affiliates
or to curtail its authority in the conduct of the business of such party or of
any of its Affiliates.
"Affiliate" means, with respect to any Person, any "affiliate"
of such Person, as such term is defined in the Bankruptcy Code.
"Agreement" means this Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"Appraised Value" means the value set forth in an appraisal made
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Asset Tape" means a remittance report on a monthly basis or as
requested by Buyer pursuant to Section 17d hereof containing servicing
information, including, without limitation, those fields reasonably requested by
Buyer from time to time, on a loan-by-loan basis and in the aggregate, with
respect to the Purchased Mortgage Loans serviced by Seller or any Servicer for
the month (or any portion thereof) prior to the Reporting Date.
"Assignment of Mortgage" means an assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect the sale of the Mortgage to Buyer.
"Authorized Person" means a person authorized to act for the
Seller as set forth on Exhibit L.
"Bank" means Bank of American, N.A. or another bank approved by
the Buyer in its sole discretion, in its capacity as bank with respect to the
Blocked Account Agreement.
"Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended from time to time.
"Blocked Account" shall mean any bank account subject to a
Blocked Account Agreement, including, without limitation, the Collection
Account.
"Blocked Account Agreement" shall mean with respect to any
Purchased Mortgage Loan the agreement between the Servicer and the Buyer
substantially in the form of Exhibit K, attached hereto.
"Business Day" means any day other than (A) a Saturday or Sunday
and (B) a public or bank holiday in New York City.
"Buyer" means Credit Suisse First Boston Mortgage Capital LLC,
and any successor hereunder.
"Buyer's Margin Amount" means with respect to any Transaction as
of any date of determination, an amount equal to the product of (A) the Purchase
Price Percentage as of such
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date of determination with respect to each Eligible Mortgage Loan subject to
such Transaction and (B) the outstanding principal amount of such Eligible
Mortgage Loans subject to such Transaction.
"Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Equivalents" means (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $200,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
seven days with respect to securities issued or fully guaranteed or insured by
the United States Government, (d) commercial paper of a domestic issuer rated at
least A-1 or the equivalent thereof by Standard and Poor's Ratings Group ("S&P")
or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc. ("Moody's")
and in either case maturing within one year after the day of acquisition, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A2 by
Moody's, (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition or
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition.
"Change in Control" means:
(A) any transaction or event as a result of which Parent ceases
to own, beneficially or of record, 100% of the stock of Seller;
(B) any transaction or event as a result of which the current
members of the Parent ceases to own, beneficially or of record, either
30% of the membership interests of Parent or voting control of the
Parent;
(C) the sale, transfer, or other disposition of all or
substantially all of Seller's or Parent's assets (excluding any such
action taken in connection with any securitization transaction); or
(D) the consummation of a merger or consolidation of Seller or
the Parent with or into another entity or any other corporate
reorganization, if more than 50% of the
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combined voting power of the continuing or surviving entity's stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of Seller
immediately prior to such merger, consolidation or other reorganization
provided, that an initial public offering of the Parent
or any Affiliate of the Parent (other than Seller) which is
widely distributed shall not be deemed to be a Change in
Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means one or more accounts established by
the Servicer for the benefit of Buyer, into which all collections and proceeds
on or in respect of the Mortgage Loans shall be deposited by Servicer which is
subject to the Blocked Account Agreement.
"Cross-Default Event: has the meaning set forth in Section
10b.7(e) hereof.
"Custodial Agreement" means the custodial agreement dated as of
the date hereof, among Seller, Buyer and Custodian as the same may be amended
from time to time.
"Custodian" means Deutsche Bank National Trust Company or such
other party specified by Buyer and agreed to by Seller, which approval shall not
be unreasonably withheld.
"Debt Service Coverage Ratio" or "DSCR" means, with respect to
any Mortgage Loan, as of any date of determination, Net Underwritable Cash Flow
for such Mortgage Loan divided by 11.83% of the principal balance of the
Mortgage Loan.
"Default" means an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"Defaulted Mortgage Loan" means any Mortgage Loan (a) which is
90 days or more delinquent or (b) for which there is a breach of the
representations and warranties set forth on Schedule 1 hereto that materially
and adversely affects the value of the Mortgaged Loan or (c) for which there is
a material non-monetary default under the related Mortgage Loan Documents that
has not been cured within the applicable cure period in the related Mortgage
Loan Documents, if any.
"Delinquent Mortgage Loan" means either a 30 Day Delinquent
Mortgage Loan or a 60 Day Delinquent Mortgage Loan.
"Determination Date" shall mean, with respect to any Interest
Period, the date that is two (2) London Business Days prior to the fifteenth
(15th) day of the calendar month in which such Interest Period commences.
"Distribution Worksheet" means a worksheet setting forth the
amounts and recipients of remittances to be made on the next succeeding Price
Differential Payment Date, substantially in the form of Exhibit L.
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"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"E&O Insurance" means 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 acceptable to the Buyer.
"Effective Date" means the date upon which the conditions
precedent set forth in Section 10 shall have been satisfied.
"Eligible Mortgage Loan" shall mean any Mortgage Loan which has
been approved as an Approved Loan under Article II of the Program Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means 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.
"Event of Default" has the meaning specified in Section 15
hereof.
"Event of Termination" means with respect to Seller (i) with
respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as
to which the PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified with 30 days of the occurrence of such
event, or (ii) the withdrawal of Seller or any ERISA Affiliate thereof from a
Plan during a plan year in which it is a substantial employer, as defined in
Section 4001(a)(2) of ERISA, or (iii) the failure by Seller or any ERISA
Affiliate thereof to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA with respect to any Plan, including, without
limitation, the failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the
distribution under Section 4041 of ERISA of a notice of intent to terminate any
Plan or any action taken by Seller or any ERISA Affiliate thereof to terminate
any plan, or (v) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss
of tax-exempt status of the trust of which such Plan is a part if Seller or any
ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by Seller
or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action
of the type described in the previous clause (vi) has been taken by the PBGC
with respect to such Multiemployer Plan, or (viii) any event or circumstance
exists which may reasonably be expected to constitute grounds for Seller or any
ERISA Affiliate
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thereof to incur liability under Title IV of ERISA or under Sections 412(c)(11)
or 412(n) of the Code with respect to any Plan.
"Existing Indebtedness" has the meaning specified in Section
13(a)(23) hereof.
"Facility" means a skilled nursing facility securing a Mortgage
Loan.
"Facility Agreements" means, collectively, this Agreement, the
Custodial Agreement, the Program Agreement, the Transfer Agreement, the Interim
Servicing Agreement and the Blocked Account Agreement.
"GAAP" means generally accepted accounting principles in effect
from time to time in the United States of America and applied on a consistent
basis.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions over
Seller or Buyer, as applicable.
"Guarantee" means, 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, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by Buyer. 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.
"Hedging Agreement" means, with respect to any or all of the
Mortgage Loans, any short sale of a US Treasury Security, or futures contract,
or mortgage related security, or Eurodollar futures contract, or options related
contract, or interest rate swap, cap or collar agreement or take-out commitment,
or similar arrangement providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or under
specific contingencies, entered into by Seller and an Affiliate of Buyer or such
other party acceptable to Buyer in its sole discretion, which agreement is
acceptable to Buyer in its sole discretion.
"Holdings" means, CapitalSource Holdings LLC or its successors
and assigns.
"Income" means with respect to any Purchased Mortgage Loan at
any time until repurchased by the Seller, any principal received thereon or in
respect thereof and all interest, dividends or other distributions thereon.
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"Indebtedness" means, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of
general partnerships of which such Person is a general partner.
"Interest Period" shall mean, with respect to any Price
Differential Payment Date, the period commencing on the ninth (9th) day of the
preceding calendar month and terminating on the eighth (8th) day of the calendar
month in which such Price Differential Payment Date occurs; and with respect to
each Transaction, the initial Interest Period shall begin on the Purchase Date
and shall end on the immediately following eighth (8th) day of a calendar month.
"Interim Servicing Agreement" means a servicing agreement, by
and between the Seller, the Primary Servicer, and the Master Servicer, in form
and substance acceptable to the Buyer.
"Late Fee" means, with respect to any payment not made on the
date due, a fee equal to 5% of the amount of such payment.
"LIBOR" shall mean, with respect to each Interest Period, the
rate (expressed as a percentage per annum and rounded upward, if necessary, to
the next nearest 1/8 of 1%) for deposits in U.S. dollars, for a one-month
period, that appears on Telerate Page 3750 (or the successor thereto) as of
11:00 a.m., London time, on the related Determination Date. If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such
Determination Date, LIBOR shall be the arithmetic mean of the offered rates
(expressed as a percentage per annum) for deposits in U.S. dollars for a
one-month period that appear on the Reuters Screen Libor Page as of 11:00 a.m.,
London time, on such Determination Date, if at least two such offered rates so
appear. If fewer than two such offered rates appear on the Reuters Screen Libor
Page as of 11:00 a.m., London time, on such Determination Date, Lender shall
request the principal London office of any four major reference banks in the
London interbank market selected by Lender to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London time, on such Determination Date for the amounts of not less than
U.S. $1,000,000. If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided,
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Lender shall request any three major banks in New York City selected by Lender
to provide such bank's rate (expressed as a percentage per annum) for loans in
U.S. dollars to leading European banks for a one-month period as of
approximately 11:00 a.m., New York City time on the applicable Determination
Date for amounts of not less than U.S. $1,000,000. If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates. LIBOR shall
be determined conclusively by Lender or its agent.
"Lien" means any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan-to-Value Ratio" or "LTV": means, with respect to any
Mortgage Loan, the ratio of the outstanding principal amount of the Mortgage
Loan as of the Purchase Date to the value of the Mortgaged Property (calculated
as the Net Underwritable Cash Flow on the Mortgage Loan divided by 13.5%),
expressed as a percentage.
"London Business Day" means any day other than a Saturday,
Sunday or any other day on which commercial banks in London, England are not
open for business.
"Margin Call" has the meaning specified in Section 6(a) hereof.
"Margin Deadline" has the meaning specified in Section 6(b)
hereof.
"Margin Deficit" has the meaning specified in Section 6(a)
hereof.
"Master Servicer" means ORIX Capital Markets LLC or another
servicer mutually agreed upon between the Seller and the Parent.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
financial condition or prospects of Seller, the Servicer, the Parent or any
Affiliate that is a party to any Facility Agreement taken as a whole; (b) a
material impairment of the ability of Seller, the Parent, the Servicer or any
Affiliate that is a party to any Facility Agreement to perform under any
Facility Agreement and to avoid any Event of Default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability of any
Facility Agreement against Seller, the Parent, the Servicer or any Affiliate of
any of the foregoing that is a party to any Facility Agreement.
"Maximum Aggregate Purchase Price" means THREE HUNDRED MILLION
DOLLARS ($300,000,000).
"Member" means CapitalSource Finance LLC, a Delaware limited
liability company, as the initial member of the Seller, and includes any Person
admitted as an additional member of the Seller or a substitute member of the
Seller pursuant to the provisions of the Seller's operating agreement (the "LLC
Agreement"), each in its capacity as a member of the Seller; provided, however,
the term "Member" shall not include an Independent Member.
"Monthly Payment" means the scheduled monthly payment of
principal and/or interest on a Mortgage Loan.
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"Moody's" means Xxxxx'x Investors Service, Inc. or any
successors thereto.
"Mortgage" means each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents, security
agreement and fixture filing, deed to secure debt, 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.
"Mortgage File" means, with respect to a Mortgage Loan, the
documents and instruments relating to such Mortgage Loan and set forth on
Exhibit 1 to the Custodial Agreement.
"Mortgage Interest Rate" means the rate of interest borne on a
Mortgage Loan from time to time in accordance with the terms of the related
Mortgage Note.
"Mortgage Loan" means a first lien mortgage loan secured by a
skilled nursing facility.
"Mortgage Loan Documents" means the documents in the related
Mortgage File to be delivered to the Custodian.
"Mortgage Loan Schedule" means with respect to any Transaction
as of any date, a mortgage loan schedule in the form of either (a) Exhibit C
attached hereto or (b) a computer tape or other electronic medium generated by
Seller, and delivered to Buyer and Custodian, which provides information
(including, without limitation, the information set forth on Exhibit C attached
hereto) relating to the Purchased Mortgage Loans in a format acceptable to
Buyer.
"Mortgage Loan Schedule and Exception Report" has the meaning
assigned to such term in the Custodial Agreement.
"Mortgage Note" means the promissory note or other evidence of
the indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" means the real property securing repayment
of the debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Multiemployer Plan" means 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 Underwritable Cash Flow" shall mean, with respect to each
Mortgage Loan, the underwritable cash flow from the related Mortgaged Property
or Properties, as determined in good faith by the Buyer.
"Net Worth" means, with respect to any Person, an amount equal
to, on a consolidated basis, such Person's stockholder equity (determined in
accordance with GAAP).
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"1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Notice Date" has the meaning given to it in Section 3(b)
hereof.
"Obligations" means (a) all of Seller's indebtedness,
obligations to pay the Repurchase Price on the Repurchase Date, the Price
Differential on each Price Differential 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 Mortgage Loan or its interest therein; (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 Mortgage Loan,
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" means CapitalSource Finance LLC, a Delaware limited
liability company, or its permitted successors and assigns.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means 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.
"Portfolio" means all Portfolio Mortgage Loans which are
cross-collateralized and/or cross-defaulted with each other.
"Portfolio Mortgage Loan" means a Mortgage Loan which is part of
a portfolio of cross-collateralized and/or cross-defaulted mortgage loans.
"Post Default Rate" means an annual rate of interest equal to
the Pricing Rate plus 5%.
"Price Differential" means with respect to any Transaction as of
any date of determination, an amount equal to the product of (A) the Pricing
Rate for such Transaction and (B) the Purchase Price for such Transaction,
calculated daily on the basis of a 360-day year for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date.
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"Price Differential Payment Date" means, with respect to a
Purchased Mortgage Loan, the 9th calendar day of the month following the related
Purchase Date and each succeeding 9th calendar day of the month thereafter;
provided, that, with respect to such Purchased Mortgage Loan, the final Price
Differential Payment Date shall be the related Repurchase Date; and provided,
further, that if any such day is not a Business Day, the Price Differential
Payment Date shall be the immediately preceding Business Day.
"Pricing Rate" means LIBOR plus 1.25%. The Pricing Rate shall
change in accordance with LIBOR, as provided in Section 5(a).
"Primary Servicer" means CapitalSource Finance LLC, a Delaware
limited liability company, as Servicer, or its permitted successors and assigns.
"Program Agreement" means the Master Program Agreement by and
among Parent, Buyer, Credit Suisse First Boston, LLC and Column Financial, Inc.
"Property" means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Confirmation" means a confirmation of a Transaction,
in the form attached as Exhibit B hereto.
"Purchase Date" means the date on which Purchased Mortgage Loans
are to be transferred by Seller to Buyer.
"Purchase Price" means (i) the price at which each Purchased
Mortgage Loan is transferred by Seller to Buyer, which shall equal the product
of (1) the outstanding principal amount thereof as set forth on the related
Mortgage Loan Schedule and Exception Report multiplied by (2) the applicable
Purchase Price Percentage and (ii) thereafter, except where Buyer and Seller
agree otherwise, the amount determined under the immediately preceding clause
(i) decreased by the amount of any cash transferred by Seller to Buyer pursuant
to Section 6) hereof or applied to reduce Seller's obligations under clause (3)
of Section 7d hereof.
"Purchase Price Percentage" means, with respect to each Mortgage
Loan, the following percentage, as applicable:
(a) with respect to each Mortgage Loan (other than a
Defaulted Mortgage Loan or Delinquent Mortgage Loan):
(i) which has been subject to a Transaction hereunder
for 12 months or less, 70%;
(ii) which has been subject to a Transaction hereunder
for more than 12 months but not more than 15 months, 60%;
(iiii) which has been subject to a Transaction hereunder
for more than 15 months but not more than 18 months, 50%;
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(b) with respect to each 30 Day Delinquent Mortgage Loan,
50%;
(c) with respect to each 60 Day Delinquent Mortgage Loan,
25%
(d) with respect to each Defaulted Mortgage Loan, 0%.
"Purchased Mortgage Loans" means the collective reference to
Mortgage Loans together with the Repurchase Assets related to such Mortgage
Loans transferred by Seller to Buyer in a Transaction hereunder, listed on the
related Mortgage Loan Schedule attached to the related Transaction Request,
which such Mortgage Loans the Custodian has been instructed to hold pursuant to
the Custodial Agreement.
"Qualified Originator" means an originator of Mortgage Loans
which is acceptable to the Buyer.
Receivable Loan" means, with respect to any Mortgage Loan, any
loan made by the Parent to the Mortgagor or Operator secured by a lien on the
Mortgagor's Medicare and Medicaid accounts receivable.
"Records" means all instruments, agreements and other books,
records, and reports and data generated by other media for the storage of
information maintained by Seller, or any other person or entity with respect to
a Purchased Mortgage Loan. Records shall include the mortgage notes, any
Mortgages, the Mortgage Files, the credit files related to the Purchased
Mortgage Loan and any other instruments necessary to document or service a
Mortgage Loan.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"Reporting Date" means the 5th day of each month or, if such day
is not a Business Day, the next succeeding Business Day.
"Repurchase Assets" has the meaning assigned thereto in Section
8 hereof.
"Repurchase Date" means the earlier of (i) the Termination Date,
(ii) the date set forth in the applicable Purchase Confirmation (which date
shall be eighteen months after the related Purchase Date), (iii) the date
determined by application of Section 16 hereof, or (iv) the date of any
voluntary repurchase pursuant to Section 4b.
"Repurchase Price" means the price at which Purchased Mortgage
Loans 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 accrued but
unpaid Price Differential as of the date of such determination.
"Request for Certification" means a notice sent to the Custodian
reflecting the sale of one or more Purchased Mortgage Loans to Buyer hereunder.
"Requirement of Law" means, with respect to any Person, any law,
treaty, rule or regulation or determination of an arbitrator, a court or other
governmental authority, applicable
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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" means shall mean, as to any Person, the
chief executive officer or, with respect to financial matters, the chief
financial officer of such Person.
"Rolling Termination Date" means, with respect to any date, the
date which is 364 days from such date, provided, that on and after the date on
which the Buyer delivers to the Seller written notice that the Buyer shall no
longer roll the Rolling Termination Date forward (the "Rolling Termination
Notice Date"), the Rolling Termination Date shall be the date which is 364 days
after the Rolling Termination Notice Date.
"S&P" means Standard & Poor's Ratings Services, or any successor
thereto.
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"Seller" means CapitalSource SNF Funding LLC or its permitted
successors and assigns.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.
"60 Day Delinquent Mortgage Loan" means a mortgage loan which is
60 or more days, but less than 90 days, delinquent.
"Subsidiary" means, with respect to any Person, any corporation,
partnership 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 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.
"Termination Date" means the earlier of (a) July 31, 2008, (b)
the Rolling Termination Date, or (c) the date on which the Buyer has declared an
Event of Default to have occurred pursuant to Section 16.a hereof.
"Test Period" means any period of three (3) consecutive calendar
months.
"30 Day Delinquent Mortgage Loan" means a mortgage loan which is
30 or more days, but less than 60 days, delinquent.
"Transaction" has the meaning set forth in Section 1 hereof.
"Transaction Request" means a request from Seller to Buyer, in
the form attached as Exhibit A hereto, to enter into a Transaction.
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"Transfer Agreement" means that certain Mortgage Loan Purchase
Agreement dated the same date as this Repurchase Agreement by and between the
Parent and the Seller.
"Transfer Assignment" means the assignment entered into between
the Parent and the Seller on the Purchase Date in the form of Exhibit A to the
Transfer Agreement.
"Trust Receipt and Certification" means, with respect to any
Transaction as of any date, a receipt and certification in the form attached as
an exhibit to the Custodial Agreement.
"Underwriting Guidelines" means the standards, procedures and
guidelines of the Parent for underwriting and acquiring Mortgage Loans, which
are set forth in the written policies and procedures of the Parent, a copy of
which is attached hereto as Exhibit F and such other guidelines as are approved
in writing by Buyer.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect on the date hereof in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.
3. PROGRAM; INITIATION OF TRANSACTIONS
a. From time to time, Buyer will purchase from Seller certain
Eligible Mortgage Loans that have been either originated by
Seller or purchased by Seller from other originators. All
Purchased Mortgage Loans shall have been approved by the Buyer
pursuant to the Program Agreement and shall exceed or meet the
Underwriting Guidelines, and shall be serviced by Servicer. The
aggregate Purchase Price of Purchased Mortgage Loans subject to
outstanding Transactions shall not exceed the Maximum Aggregate
Purchase Price.
b. Seller shall give Buyer and Custodian at least six Business
Day's prior notice of any proposed Purchase Date (the date on
which such notice is given, the "Notice Date"). On the Notice
Date, Seller shall (i) request that Buyer enter into a
Transaction by furnishing to Buyer a Transaction Request, (ii)
deliver to Buyer and Custodian a Mortgage Loan Schedule and
(iii) deliver to Custodian a Request for Certification and each
Mortgage File in accordance with Section 10(b)(2). In the event
the Mortgage Loan Schedule provided by Seller contains erroneous
computer data, is not formatted properly or the computer fields
are otherwise improperly aligned, Buyer shall provide written or
electronic notice to Seller describing such error and Seller may
either (a) give Buyer written or electronic authority to correct
the computer data, reformat the Mortgage Loans or properly align
the computer fields or (b) correct the computer data, reformat
or properly align the computer fields itself and resubmit the
Mortgage Loan Schedule as required herein. The Seller shall hold
Buyer harmless for such correction, reformatting or realigning,
as applicable, except as otherwise expressly provided herein.
c. With respect to each Mortgage Loan, upon receipt of the
Transaction Request, Buyer shall, consistent with this
Agreement, specify the terms for such proposed
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Transaction, including the Purchase Price, the Pricing Rate, and
the Repurchase Date in respect of such Transaction. The terms
thereof shall be set forth in the Purchase Confirmation to be
delivered to Seller on or prior to the Purchase Date.
d. With respect to each Mortgage Loan, the Purchase
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 Purchase
Confirmation relates, and Seller's acceptance of the related
proceeds shall constitute Seller's agreement to the terms of
such Purchase Confirmation. It is the intention of the parties
that, with respect to each Mortgage Loan, each Purchase
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, with respect to each Mortgage Loan,
a Purchase Confirmation, the terms of the Purchase Confirmation
shall control with respect to the related Transaction.
e. Upon the satisfaction of the applicable conditions precedent
set forth in Section 10 hereof, all of Seller's interest in the
Repurchase Assets shall pass to Buyer on the Purchase Date,
against the transfer of the Purchase Price to Seller. Upon
transfer of the Mortgage Loans to Buyer as set forth in this
Section and until termination of any related Transactions as set
forth in Sections 4 or 16 of this Agreement, ownership of each
Mortgage Loan, including each document in the related Mortgage
File and Records, is vested in Buyer; provided that, prior to
the recordation by the Custodian as provided for in the
Custodial Agreement record title in the name of Seller to each
Mortgage shall be retained by Seller in trust, for the benefit
of Buyer, for the sole purpose of facilitating the servicing and
the supervision of the servicing of the Mortgage Loans.
4. REPURCHASE
a. Seller shall repurchase the related Purchased Mortgage Loans
from Buyer on each related Repurchase Date. Such obligation to
repurchase exists without regard to any prior or intervening
liquidation or foreclosure with respect to any Purchased
Mortgage Loan (but liquidation or foreclosure proceeds received
by Buyer shall be applied to reduce the Repurchase Price for
such Purchased Mortgage Loan on each Price Differential Payment
Date except as otherwise provided herein). Seller is obligated
to repurchase and take physical possession of the Purchased
Mortgage Loans from Buyer or its designee (including the
Custodian) at Seller's expense on the related Repurchase Date.
b. The Seller may repurchase any or all of the Purchased
Mortgage Loans upon one (1) Business Day's prior written notice
thereof by the Seller to the Buyer, designating the Purchased
Mortgage Loans 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
Mortgage Loans. Said Repurchase Price shall be accompanied by
the Exit Fee described in Section 4.c below in those
circumstances when an Exit Fee is payable under Section 4.c
below.
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c. Upon the repurchase of any Purchased Mortgage Loan subject to
a Transaction hereunder other than a Purchased Mortgage Loan (x)
which the Seller is obligated to repurchase or has the specific
right to repurchase pursuant to Xxxxxxx 0.x, Xxxxxxx 0.x,
Section 10.b(7), Section 11.b, Section 13.c, Section 22 or
Section 35 of this Agreement or (y) with respect to which Buyer
has advised Seller will not be included in a securitization
pursuant to the Program Agreement, the Seller shall pay to the
Buyer a fee in an amount equal to 1.00% of the outstanding
principal balance of such Mortgage Loan as of the date on which
such Purchased Mortgage Loan is removed (the "Exit Fee"), such
Exit Fee to be paid in Dollars, in immediately available funds,
without deduction, set-off or counterclaim to the account set
forth in Section 9 hereof.
d. Provided that no Default shall have occurred and is
continuing, and Buyer has received the related Repurchase Price
upon repurchase of the Purchased Mortgage Loans, Buyer agrees to
release its ownership interest hereunder in the Purchased
Mortgage Loans (including, the Repurchase Assets related
thereto) at the request of Seller. With respect to payments in
full by the related Mortgagor of a Purchased Mortgage Loan,
Seller agrees to (i) provide Buyer with a copy of a report from
the related Servicer indicating that such Purchased Mortgage
Loan has been paid in full, (ii) remit to Buyer, within two
Business Days, the Repurchase Price with respect to such
Purchased Mortgage Loans and (iii) provide Buyer a notice
specifying each Purchased Mortgage Loan that has been prepaid in
full. Buyer agrees to release its ownership interest in
Purchased Mortgage Loans which have been prepaid in full after
receipt of evidence of compliance with clauses (i) through (iii)
of the immediately preceding sentence.
5. PRICE DIFFERENTIAL.
a. On the first day of each Interest Period that a Transaction
is outstanding, the Pricing Rate shall be reset and, unless
otherwise agreed, the accrued and unpaid Price Differential
shall be settled in cash on each related Price Differential
Payment Date. Two Business Days prior to the Price Differential
Payment Date, Buyer shall give Seller written or electronic
notice of the amount of the Price Differential due on such Price
Differential Payment Date. On the Price Differential Payment
Date, Seller shall pay to Buyer the Price Differential for such
Price Differential Payment Date (along with any other amounts to
be paid pursuant to Sections 7, and 35 hereof), by wire transfer
in immediately available funds.
b. If Seller fails to pay all or part of the Price Differential
by 3:00 p.m. (New York City time) on the related Price
Differential Payment Date, with respect to any Purchased
Mortgage Loan, Seller shall be obligated to pay to Buyer (in
addition to, and together with, the amount of such Price
Differential) interest on the unpaid Repurchase Price at a rate
per annum equal to the Post Default Rate until the Price
Differential is received in full by Buyer.
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6. MARGIN MAINTENANCE AND REPURCHASE
a. If on any date the Buyer's Margin Amount of any Purchased
Mortgage Loan subject to a Transaction is less than the Purchase
Price paid on the Purchase Date for such Transaction as reduced
pursuant to the definition thereof (a "Margin Deficit"), the
Buyer may by notice to the Seller require the Seller to transfer
to Buyer cash in an amount at least equal to the Margin Deficit.
Notice delivered pursuant to this Section may be given by any
written means
b. Such payment shall be made not later than 5:00 p.m. (New York
City time) on the date which is two Business Days after the date
of notice to the Seller of the occurrence of the Margin Deficit
(the foregoing time requirement is referred to as the "Margin
Deadline"). The failure of Buyer, on any one or more occasions,
to exercise its rights hereunder, shall not change or alter the
terms and conditions to which this Agreement is subject or limit
the right of Buyer to do so at a later date. Seller and Buyer
each agree that a failure or delay by Buyer to exercise its
rights hereunder shall not limit or waive Buyer's rights under
this Agreement or otherwise existing by law or in any way create
additional rights for Seller.
c. In lieu of making a payment to Buyer in an amount at least
equal to the Margin Deficit pursuant to Section 6.a above,
Seller, at Seller's option, may elect to repurchase any
Purchased Mortgage Loan for which there is a Margin Deficit by
notifying Buyer thereof and paying to Buyer, on or before the
Margin Deadline, the Repurchase Price for such Mortgaged Loan. A
repurchase of a Mortgaged Loan pursuant to this Section 6.c
shall be without penalty, premium or Exit Fee.
7. INCOME PAYMENTS
a. Notwithstanding that Buyer and Seller intend that the
Transactions hereunder be sales to Buyer of the Purchased
Mortgage Loans, Seller shall pay to Buyer the accreted value of
the Price Differential on each Price Differential Payment Date.
b. Servicer shall cause each Mortgagor to remit all amounts paid
on account of the Purchased Mortgage Loans to the Collection
Account held pursuant to the Blocked Account Agreement.
c. Servicer shall hold for the benefit of, and in trust for,
Buyer all Income, including without limitation all Income
received by or on behalf of Seller (or deposited into the
lockbox account) with respect to such Purchased Mortgage Loans.
Servicer shall deposit such Income in a trust account (the title
of which shall indicate that the funds therein are being held in
trust for Buyer) (the "Collection Account") with a financial
institution acceptable to Buyer and subject to the Blocked
Account Agreement within two Business Days of receipt by the
Servicer.
d. All such Income shall be held in trust for Buyer, shall
constitute the property of Buyer and shall not be commingled
with other property of Seller, any Affiliate
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of Seller or the Servicer. Funds deposited in the Collection
Account during any month shall be held therein, in trust for the
Buyer, until the next Price Differential Payment Date. On or
before 3 p.m. (New York time) on the date prior to the Price
Differential Payment Date, the Seller shall deliver to the Buyer
and the Bank a Distribution Worksheet. Subject to the terms of
the Blocked Account Agreement and in accordance with the Buyer
authorization, the Bank shall withdraw any funds on deposit in
the Collection Account and apply such funds as follows:
(1) first, to the Buyer in payment of any
accrued and unpaid Price Differential;
(2) second, without limiting the rights of Buyer
under Section 6 of this Repurchase Agreement, to the Buyer, in
the amount of any unpaid Margin Deficit;
(3) third, to the Buyer in an amount equal to,
with respect to each Mortgage Loan, the product of (a) all
Income received on account of principal on such Mortgage Loan,
multiplied by (b) the applicable Purchase Price Percentage;
(4) fourth, to the payment of all costs and fees
payable by the Seller pursuant to this Repurchase Agreement
(including Late Fees with respect to any late payments); and
(5) fifth, to the Seller.
e. Notwithstanding the preceding provisions, if an Event of
Default has occurred and Buyer shall have declared an Event of
Default to have occurred hereunder under Section 16.a hereof,
all funds in the Collection Account shall be withdrawn and
applied as determined by the Buyer.
f. Buyer shall offset against the accrued and outstanding Price
Differential all Price Differential payments actually received
by Buyer pursuant to Section 5, excluding any amounts paid
pursuant to any Price Differential payments made at the
Post-Default Rate pursuant to Section 5(b) and any Late Fees.
Buyer shall offset against the Repurchase Price all amounts on
account of principal actually received by Buyer pursuant to
Section 7(d).
8. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be
sales and purchases and not loans, in the event any such Transactions are deemed
to be loans, Seller hereby pledges to Buyer as security for the performance by
Seller of its Obligations and hereby grants, assigns and pledges to Buyer a
security interest in the Purchased Mortgage Loans, the Records, and all related
servicing rights, the Facility Agreements (to the extent such Facility
Agreements and Seller's right thereunder relate to the Purchased Mortgage
Loans), any Property relating to the Purchased Mortgage Loans, all insurance
policies and insurance proceeds relating to any Purchased Mortgage Loan or the
related Mortgaged Property, including, but not limited to, any
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payments or proceeds under any related primary insurance, hazard insurance,
Income relating to the Purchased Mortgage Loan, all Blocked Accounts and the
balance from time to time standing to the credit of Blocked Accounts and all
rights with respect thereto, Hedging Agreements relating to the Purchased
Mortgage Loan, accounts (including any interest of Seller in escrow accounts)
and any other contract rights, accounts, payments, rights to payment (including
payments of interest or finance charges) general intangibles, (including,
without limitation, any other accounts) or any interest in the Purchased
Mortgage Loans, the servicing of the Purchased Mortgage Loans, and any proceeds
(including the related securitization proceeds) and distributions with respect
to any of the foregoing and any other property, rights, title or interest as are
specified on a Transaction Request and/or Trust Receipt and Certification, in
all instances described herein, whether now owned or hereafter acquired, now
existing or hereafter created (collectively, the "Repurchase Assets"). Seller
agrees to execute, deliver and/or file such documents and perform such acts as
may be reasonably necessary to fully perfect Buyer's security interest created
hereby. Furthermore, the Seller hereby authorizes the Buyer to file financing
statements relating to the Repurchase Assets without the signature of the
Seller, as the Buyer, at its option, may deem appropriate. The Seller shall pay
the filing costs for any financing statement or statements prepared pursuant to
this Section.
9. PAYMENT AND TRANSFER
Unless otherwise mutually agreed in writing, all transfers of
funds to be made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
following account maintained by Buyer: Citibank, ABA# 000000000, Column
Financial Inc, A/C# 30489046 or such other account as Buyer shall specify to
Seller in writing. Seller acknowledges that it has no rights of withdrawal from
the foregoing account. All Purchased Mortgage Loans transferred by one party
hereto to the other party shall be in the case of a purchase by Buyer in
suitable form for transfer or shall be accompanied by duly executed instruments
of transfer or assignment in blank and such other documentation as Buyer may
reasonably request. All Purchased Mortgage Loans shall be evidenced by a Trust
Receipt and Certification. Any Repurchase Price received by Buyer after 2:00
p.m. (New York City time) shall be deemed received on the next succeeding
Business Day.
10. CONDITIONS PRECEDENT
a. Initial Transaction. As conditions precedent to the initial
Transaction, Buyer shall have received on or before the day of
such initial Transaction the following, in form and substance
satisfactory to Buyer and duly executed by Seller and each other
party thereto:
(1) Facility Agreements. The Facility Agreements
(including a Custodial Agreement in a form acceptable to Buyer)
duly executed and delivered by the parties thereto and being in
full force and effect, free of any modification, breach or
waiver.
(2) Security Interest. Evidence that all other
actions necessary or, in the opinion of Buyer, desirable to
perfect and protect Buyer's interest in the Purchased Mortgage
Loans and other Repurchase Assets have been taken,
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including, without limitation, duly executed and filed Uniform
Commercial Code financing statements on Form UCC-1.
(3) Collection Account. The Buyer shall have
received evidence satisfactory to the Buyer of the existence of
the Collection Account which constitutes a "securities account"
within the meaning of the applicable Uniform Commercial Code in
the state in which the Collection Account is located.
(4) Blocked Account Agreement. With respect to
each Collection Account, the Seller has delivered to Buyer a
fully executed Blocked Account Agreement.
(5) Organizational Documents. A certificate of
the secretary of Seller, substantially in the form of Exhibit H
hereto, attaching certified copies of Seller's operating
agreement, certificate of formation and resolutions approving
the Facility Agreements and transactions thereunder (either
specifically or by general resolution) and all documents
evidencing other necessary limited liability company action or
governmental approvals as may be required in connection with the
Facility Agreements.
(6) Parent Organizational Documents. A
certificate of the secretary of Parent, substantially in the
form of Exhibit H hereto, attaching certified copies of Parent's
operating agreement and certificate of formation.
(7) Good Standing Certificate. A certified copy
of a good standing certificate of Seller, dated as of no earlier
than the date 10 Business Days prior to the Purchase Date with
respect to the initial Transaction hereunder.
(8) Incumbency Certificate. An incumbency
certificate of the corporate secretary of Seller, certifying the
names, true signatures and titles of the representatives duly
authorized to request transactions hereunder and to execute the
Facility Agreements.
(9) Opinions of Counsel.
(a) An opinion of Seller's counsel, in form and
substance acceptable to the Buyer.
(b) An opinion or opinions of outside counsel to
the Seller with respect to nonconsolidation and true
sale in form and substance acceptable to the Buyer.
(c) An opinion of Parent's counsel, in form and
substance substantially acceptable to the Buyer.
(10) Underwriting Guidelines. A true and correct
copy of the Underwriting Guidelines certified by an officer of
the Seller.
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(11) Fees. Payment of any fees due to Buyer
hereunder.
(12) Insurance. Evidence that Seller has added
Buyer as a loss payee under the Seller's E&O Insurance.
b. All Transactions. The obligation of Buyer to enter into each
Transaction pursuant to this Agreement is subject to the
following conditions precedent:
(1) Due Diligence Review. Without limiting the
generality of Section 34 hereof, Buyer shall have completed its
due diligence review of the related Mortgage Loans and Seller
and determined that the results are acceptable to the Buyer.
(2) Required Documents. With respect to each
Purchased Mortgage Loan the Mortgage File has been delivered to
the Custodian at least 24 hours prior to the related Purchase
Date;
(3) Transaction Documents. Buyer or its designee
shall have received on or before the day of such Transaction
(unless otherwise specified in this Agreement) the following, in
form and substance satisfactory to Buyer and (if applicable)
duly executed:
(a) A Transaction Request delivered pursuant to Section
3(c) hereof and a Purchase Confirmation.
(b) The Request for Certification and the related
Mortgage Loan Schedule and Exception Report, and the Trust
Receipt.
(c) Such certificates, opinions of counsel or other
documents as Buyer may reasonably request.
(4) No Default. No Default or Event of Default
shall have occurred and be continuing;
(5) Requirements of 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 with a Pricing
Rate based on LIBOR.
(6) Representations and Warranties. Both
immediately prior to the related Transaction and also after
giving effect thereto and to the intended use thereof, the
representations and warranties made by Seller in each Facility
Agreement 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).
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(7) Material Adverse Change. None of the
following shall have occurred and/or be continuing:
(a) Credit Suisse First Boston, New York Branch's
corporate bond rating as calculated by S&P or Xxxxx'x has been
lowered or downgraded to a rating below investment grade by S&P
or Xxxxx'x;
(b) an event or events shall have occurred in the good
faith determination of Buyer resulting in the effective absence
of a "repo market" or comparable "lending market" for financing
debt obligations secured by mortgage loans or securities or an
event or events shall have occurred resulting in Buyer not being
able to finance Purchased Mortgage Loans 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
(c) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
(d) there shall have occurred a material adverse change
in the financial condition of Buyer which affects (or can
reasonably be expected to affect) materially and adversely the
ability of Buyer to fund its obligations under this Agreement;
or
(e) Parent, Affiliate or subsidiary of the Parent shall
be in default under (i) any Indebtedness of Parent, Affiliate or
subsidiary of the Parent with an outstanding principal balance
in excess of $4,000,000, which default (1) involves the failure
to pay a matured obligation, or (2) permits the acceleration of
the maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness, or (ii) any other contract to
which Parent, Affiliate or subsidiary of the Parent is a party
which default (1) involves the failure to pay a matured
obligation with an outstanding principal balance in excess of
$4,000,000, or (2) permits the acceleration of the maturity of
obligations with an outstanding principal balance in excess of
$4,000,000 by any other party to or beneficiary of such contract
(any such event, a 'Cross-Default Event").
11. PROGRAM; COSTS
a. Seller shall reimburse Buyer for any of Buyer's reasonable
out-of-pocket costs, including due diligence review costs and
reasonable attorney's fees, incurred by Buyer in determining the
acceptability to Buyer of any Mortgage Loans. Buyer shall notify
the Seller if the costs incurred to review any single Mortgage
Loan exceed $2,500. Seller shall also pay, or reimburse Buyer if
Buyer shall pay, any termination fee, which may be due any
servicer. Seller shall pay to the Buyer an amount equal to one
half of the reasonable fees and expenses of
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Buyer's counsel in connection with the Facility Agreements.
Reasonable legal fees for any subsequent amendments to this
Agreement or related documents shall be borne by Seller. Seller
shall pay ongoing custodial and bank fees and expenses as set
forth in the Custodial Agreement, and any other ongoing fees and
expenses under any other Program Document.
b. If Buyer determines that, due to the introduction of, any
change in, or the compliance by Buyer with (i) any eurocurrency
reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of
law), there shall be an increase in the cost to Buyer in
engaging in the present or any future Transactions, then Seller
agrees to pay to Buyer, from time to time, upon demand by Buyer
(with a copy to Custodian) the actual cost of additional amounts
as specified by Buyer to compensate Buyer for such increased
costs. In the event that any additional amounts are payable
pursuant to the foregoing sentence, Seller, at Seller's option,
may elect to repurchase any Purchased Mortgage Loan for which
additional amounts may be due by notifying Buyer thereof and
paying to Buyer, on or before the date which is thirty (30) days
after the date on which Buyer shall have notified the Seller
that such additional amounts are due, by payment of the
Repurchase Price plus any accrued additional amounts for such
Mortgaged Loans. A repurchase of a Mortgaged Loan pursuant to
this Section 11.b shall be without penalty, premium or Exit Fee.
c. With respect to any Transaction, Buyer may conclusively rely
upon, and shall incur no liability to Seller in acting upon, any
request or other communication that Buyer reasonably believes to
have been given or made by an Authorized Person on Seller's
behalf, whether or not such person is listed on the certificate
delivered pursuant to Section 10(a)(7) hereof. In each such
case, Seller hereby waives the right to dispute Buyer's record
of the terms of the Purchase Confirmation, request or other
communication.
d. 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 such payer shall be required by law
to deduct or withhold any taxes from any sums payable to Buyer,
then such payer 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 Price Differential is paid, pay to Buyer all
additional amounts as specified by Buyer to preserve the
after-tax yield Buyer would have received if such tax had not
been imposed.
12. SERVICING
a. Seller, on Buyer's behalf, shall contract with Master
Servicer to service the Mortgage Loans. The Primary Servicer
shall service pursuant to the Interim Servicing Agreement,
consistent with the degree of skill and care that Seller
customarily requires with respect to similar Mortgage Loans
owned or managed
-23-
by it and in accordance with Accepted Servicing Practices. The
Servicer shall (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 Mortgage Loans or any payment thereunder. Buyer may
terminate the servicing of any Mortgage Loan with the
then-existing servicer in accordance with Section 12(e) hereof.
b. Seller shall cause the Servicer to direct all Mortgagors to
deliver all payments with respect to the Purchased Mortgage
Loans to the Collection Account. Seller shall cause the Servicer
not to commingle any funds with respect to the Purchased
Mortgage Loans with any other funds held by the Servicer.
c. Seller shall cause the Servicer to deposit all collections
received by Servicer on account of the Purchased Mortgage Loans
in the Collection Account no later than two Business Days
following receipt.
d. Upon the occurrence of any of (i) a Default or Event of
Default hereunder, (ii) a Default or Event of Default under the
Interim Servicing Agreement, or (iii) a Cross-Default Event,
Buyer shall have the right to immediately terminate the
Servicer's right to service the Purchased Mortgage Loans without
payment of any penalty or termination fee. Seller and the
Servicer shall cooperate in transferring the servicing of the
Purchased Mortgage Loans to a successor servicer appointed by
Buyer in its sole discretion.
e. If Seller should discover that, for any reason whatsoever,
Servicer or any entity responsible to Seller for managing or
servicing any such Purchased Mortgage Loan has failed to perform
fully Seller's obligations under the Facility Agreements or any
of the obligations of such entities with respect to the
Purchased Mortgage Loans, Seller shall promptly notify Buyer.
13. REPRESENTATIONS AND WARRANTIES
a. Seller represents and warrants to Buyer as of the date hereof
and as of each Purchase Date for any Transaction that:
(1) Seller Existence. Seller has been duly
organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware.
(2) Licenses. Seller is duly licensed or is
otherwise qualified in each jurisdiction in which it transacts
business for the business which it conducts and is not in
default of any applicable federal, state or local laws, rules
and regulations unless, in either instance, the failure to take
such action is not reasonably likely (either individually or in
the aggregate) to cause a Material Adverse Effect. Seller has
the requisite power and authority and legal right to purchase
Mortgage Loans and to own, sell and xxxxx x xxxx on all of its
right, title and interest in and to the Mortgage Loans, and to
execute and deliver, engage in
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the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement, each Facility Agreement
and any Transaction Request or, if applicable, Purchase
Confirmation.
(3) Power. Seller has all requisite corporate or
other power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted, except
where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material
Adverse Effect.
(4) Due Authorization. Seller has all necessary
corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Facility
Agreements, as applicable. This Agreement, any Transaction
Request, Purchase Confirmation and the Facility Agreements have
been (or, in the case of Facility Agreements and any Transaction
Request, Purchase Confirmation not yet executed, will be) duly
authorized, executed and delivered by Seller, all requisite
action having been taken, and each is valid, binding and
enforceable against Seller in accordance with its terms except
as such enforcement may be affected by bankruptcy, by other
insolvency laws, or by general principles of equity.
(5) Financial Statements. The Seller has
heretofore furnished to Buyer a copy of (a) the consolidated
balance sheet of Holdings and the consolidated balance sheets of
Holdings' consolidated Subsidiaries for the fiscal year of
Holdings ended December 31, 2002 and the related consolidated
statements of income and members' equity and of cash flows for
Holdings and Holdings' consolidated Subsidiaries for such fiscal
year, setting forth in each case in comparative form the figures
for the previous year, with the opinion thereon of Ernst &
Young. All such financial statements are complete and correct
and fairly present, in all material respects, the consolidated
financial condition of Holdings and its Subsidiaries and the
consolidated results of their operations as at such dates and
for such fiscal periods, all in accordance with GAAP applied on
a consistent basis. Since December 31, 2002, there has been no
material adverse change in the consolidated business, operations
or financial condition of Holdings and its consolidated
Subsidiaries taken as a whole from that set forth in said
financial statements nor is Seller aware of any state of facts
which (without notice or the lapse of time) would or could
result in any such material adverse change. Holdings has, on the
date of the statements delivered pursuant to this Section (the
"Statement Date") no material liabilities, direct or indirect,
fixed or contingent, matured or unmatured, known or unknown, or
liabilities for taxes, long-term leases or unusual forward or
long-term commitments not disclosed by, or reserved against in,
said balance sheet and related statements, and at the present
time there are no material unrealized or anticipated losses from
any loans, advances or other commitments of Seller except as
heretofore disclosed to Buyer in writing.
(6) Event of Default. There exists no Event of
Default under Section 15(b) hereof, which default gives rise to
a right to accelerate indebtedness
-25-
as referenced in Section 15(b) hereof, under any mortgage,
borrowing agreement or other instrument or agreement pertaining
to indebtedness for borrowed money or to the repurchase of
mortgage loans or securities.
(7) Solvency. Seller is solvent and will not be
rendered insolvent by any Transaction and, after giving effect
to such Transaction, will not be left with an unreasonably small
amount of capital with which to engage in its business. Seller
does not intend to incur, and does not believe that it has
incurred, debts beyond its ability to pay such debts as they
mature and is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of such entity or any of its assets.
The amount of consideration being received by Seller upon the
sale of the Purchased Mortgage Loans to Buyer constitutes
reasonably equivalent value and fair consideration for such
Purchased Mortgage Loans. Seller is not transferring any
Purchased Mortgage Loans with any intent to hinder, delay or
defraud any of its creditors.
(8) No Conflicts. The execution, delivery and
performance by Seller of this Agreement, any Transaction Request
or Purchase Confirmation hereunder and the Facility Agreements
do not conflict with any term or provision of the certificate of
formation or operating agreement of Seller or any law, rule,
regulation, order, judgment, writ, injunction or decree
applicable to Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over Seller, which conflict would have a Material Adverse Effect
and will not result in any violation of any such mortgage,
instrument, agreement or obligation to which Seller is a party.
(9) True and Complete Disclosure. All
information, reports, exhibits, schedules, financial statements
or certificates of Seller, Holdings or any Affiliate thereof or
any of their officers furnished or to be furnished to Buyer in
connection with the initial or any ongoing due diligence of
Seller, Holdings or any Affiliate or officer thereof,
negotiation, preparation, or delivery of the Facility Agreements
are true and complete in all material respects and do not omit
to disclose any material facts necessary to make the statements
herein or therein, in light of the circumstances in which they
are made, not misleading. All financial statements have been
prepared in accordance with GAAP.
(10) Approvals. No consent, approval,
authorization or order of, registration or filing with, or
notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and
performance by Seller of this Agreement, any Transaction
Request, Purchase Confirmation and the Facility Agreements.
(11) Litigation. There is no action, proceeding
or investigation pending with respect to which Seller has
received service of process or, to the best of Seller's
knowledge threatened against it before any court, administrative
agency or other tribunal (A) asserting the invalidity of this
Agreement, any
-26-
Transaction, Transaction Request, Purchase Confirmation or any
Facility Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, any
Transaction Request, Purchase Confirmation or any Facility
Agreement, (C) makes a claim individually in an amount greater
than $500,000 or in an aggregate amount greater than $1,000,000,
(D) which requires filing with the Securities and Exchange
Commission in accordance with the 1934 Act or any rules
thereunder or (E) which might materially and adversely affect
the validity of the Mortgage Loans or the performance by it of
its obligations under, or the validity or enforceability of,
this Agreement, any Transaction Request, Purchase Confirmation
or any Facility Agreement.
(12) Material Adverse Change. There has been no
material adverse change in the business, operations, financial
condition, properties or prospects of Seller or its Affiliates
since the date set forth in the most recent financial statements
supplied to Buyer.
(13) Ownership. Upon payment of the Purchase
Price and the filing of the financing statement and delivery of
the Mortgage Files to the Custodian and the Custodian's receipt
of the related Request for Certification, Buyer shall become the
sole owner of the Purchased Mortgage Loans and related
Repurchase Assets, free and clear of all liens and encumbrances.
(14) Underwriting Guidelines. The Underwriting
Guidelines provided to Buyer are the true and correct
Underwriting Guidelines of the Parent.
(15) Taxes. Seller and its Subsidiaries have
filed all Federal income tax returns and all other material tax
returns that are required to be filed by it and have paid all
taxes due pursuant to such returns or pursuant to any assessment
received by it, except for any such taxes as are being
appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the
books of Seller and its Subsidiaries in respect of taxes and
other governmental charges are, in the opinion of Seller,
adequate.
(16) Investment Company. Neither Seller nor any
of its Subsidiaries is required to be registered as an
"investment company", or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended.
(17) Chief Executive Office; Jurisdiction of
Organization. On the Effective Date, Seller's chief executive
office is located at 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx
00000. On the Effective Date, Seller's jurisdiction of
organization is Delaware. Seller shall provide Buyer with thirty
days advance notice of any change in Seller's principal office
or place of business or jurisdiction. 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
-27-
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.
(18) Location of Books and Records. The location
where Seller keeps its books and records, including all computer
tapes and records relating to the Purchased Mortgage Loans and
the related Repurchase Assets is its chief executive office.
(19) Net Worth. On the Effective Date, Holdings'
Net Worth is not less than $200,000,000.
(20) ERISA. Each Plan to which Parent or its
Subsidiaries make direct contributions, and, to the knowledge of
Seller, each other Plan and each Multiemployer 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.
(21) Adverse Selection. Seller has not selected
the Purchased Mortgage Loans in a manner so as to adversely
affect Buyer's interests.
(22) Agreements. Neither Parent nor any
Affiliate of Parent is a party to any agreement, instrument, or
indenture or subject to any restriction materially and adversely
affecting its business, operations, assets or financial
condition, except as disclosed in the financial statements
described in Section 13(a)(5) hereof. Neither Parent nor any
Affiliate of Parent is in default in the performance, observance
or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, instrument, or indenture
which default could have a material adverse effect on the
business, operations, properties, or financial condition of
Parent as a whole. No holder of any indebtedness of Parent or of
any Affiliate of Parent has given notice of any asserted default
thereunder.
(23) Other Indebtedness. As of June 30, 2003,
the total borrowings of Holdings and its consolidated
subsidiaries (as set forth in the Form S-1 Registration
Statement of CapitalSource Inc. as filed with the Securities and
Exchange Commission (the "SEC") on June 12, 2003, as amended
from time to time, including by Amendment No. 3 to S-1
Registration Statement filed with the SEC on July 24, 2003, and
as may be amended subsequent to the date hereof) was
$1,141,297,000.
(24) 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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(25) Purchase of Each Mortgage Loan. a. Each
Mortgage Loan was purchased by the Seller on the relevant
Purchase Date pursuant to the Transfer Agreement and the related
Transfer Assignment.
b. With respect to every Purchased Mortgage Loan, Seller
represents and warrants to Buyer as of the applicable Purchase
Date for any Transaction and each date thereafter that each
representation and warranty set forth on Schedule 1 is true and
correct.
c. The representations and warranties set forth in this
Agreement shall survive transfer of the Purchased Mortgage Loans
to Buyer and shall continue for so long as the Purchased
Mortgage Loans are subject to this Agreement.
14. COVENANTS
Seller covenants with Buyer that, during the term of this facility:
a. Litigation. Seller will promptly, and in any event within ten
(10) days after service of process on any of the following, give
to Buyer notice of (a) all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any
of the foregoing which are threatened or pending) or other legal
or arbitrable proceedings affecting Seller or affecting any of
the Property of any of them before any Governmental Authority or
(b) all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are
threatened or pending) or other legal or arbitrable proceedings
affecting Seller or 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 in an
aggregate amount greater than $500,000, or (iii) which,
individually or in the aggregate, if adversely determined, could
be reasonably likely to have a Material Adverse Effect.
b. 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) or sell all or
substantially all of its assets.
c. Servicer; Asset Tape. Upon the occurrence of any of the
following (a) the occurrence and continuation of an Event of
Default, (b) the fifth Business Day of each month, or (c) upon
the request of Buyer, Seller shall cause Servicer to provide to
Buyer, electronically, in a format mutually acceptable to Buyer
and Seller, an Asset Tape. Seller shall not cause the Mortgage
Loans to be serviced by any servicer other than a servicer
expressly approved in writing by Buyer, which approval shall be
deemed granted by Buyer with respect to Seller with the
execution of this Agreement.
d. Insurance. Seller will continue to maintain insurance
coverage with respect to employee dishonesty, forgery or
alteration, theft, disappearance and destruction,
-29-
robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount equal to
at least $2,000,000.
e. No Adverse Claims. Seller warrants and will defend, and shall
cause any Servicer to defend, the right, title and interest of
Buyer in and to all Purchased Mortgage Loans and the related
Repurchase Assets against all adverse claims and demands.
f. Assignment. Except as permitted herein, neither Seller nor
any Servicer shall sell, assign, transfer or otherwise dispose
of, or grant any option with respect to, or pledge, hypothecate
or grant a security interest in or lien on or otherwise encumber
(except pursuant to the Facility Agreements), any of the
Purchased Mortgage Loans or any interest therein.
g. Security Interest. Seller shall do all things necessary to
preserve the Purchased Mortgage Loans and the related Repurchase
Assets so that they remain subject to a first priority perfected
security interest hereunder. Without limiting the foregoing,
Seller will comply with all rules, regulations and other laws of
any Governmental Authority and cause the Purchased Mortgage
Loans or the related Repurchase Assets to comply with all
applicable rules, regulations and other laws. Seller will not
allow any default for which Seller is responsible to occur under
any Purchased Mortgage Loans or the related Repurchase Assets or
any Facility Agreement and Seller shall fully perform or cause
to be performed when due all of its obligations under any
Purchased Mortgage Loans or the related Repurchase Assets and
any Facility Agreement.
h. Records.
(1) Seller shall collect and maintain or cause
to be collected and maintained all Records relating to the
Purchased Mortgage Loans in accordance with industry custom and
practice for assets similar to the Purchased Mortgage Loans,
including those maintained pursuant to the preceding
subparagraph, and all such Records shall be in Custodian's
possession unless 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
Mortgage Loan, 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 the Servicer of the
Purchased Mortgage Loans will maintain all such Records not in
the possession of Custodian in good and complete condition in
accordance with industry practices for assets similar to the
Purchased Mortgage Loans and preserve them against loss.
(2) For so long as Buyer has an interest in or
lien on any Purchased Mortgage Loan, Seller will hold or cause
to be held all related Records in trust for Buyer. Seller shall
notify, or cause to be notified, every other party holding any
such Records of the interests and liens in favor of Buyer
granted hereby.
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(3) Upon reasonable advance notice from
Custodian or Buyer, Seller shall (x) make any and all such
Records available to Custodian or Buyer to examine any such
Records, either by its own officers or employees, or by agents
or contractors, or both, and make copies of all or any portion
thereof, and (y) permit Buyer or its authorized agents to
discuss the affairs, finances and accounts of Seller with its
chief operating officer and chief financial officer and to
discuss the affairs, finances and accounts of Seller with its
independent certified public accountants.
i. Books. Seller shall keep or cause to be kept in reasonable
detail books and records of account of its assets and business
and shall clearly reflect therein the transfer of Purchased
Mortgage Loans to Buyer.
j. Approvals. Seller shall maintain all licenses, permits or
other approvals necessary for Seller to conduct its business and
to perform its obligations under the Facility Agreements, and
Seller shall conduct its business strictly in accordance with
applicable law.
k. Material Change in Business. Seller shall not make any
material change in the nature of its business as carried on at
the date hereof. At least one of the following individuals shall
be part of the senior management of the Parent: Xxxx Xxxxxx,
Xxxxx Xxxx or Xxxx Xxxxxxx.
l. Underwriting Guidelines. Without the prior written consent of
Buyer, Seller shall not permit the Servicer to amend or
otherwise modify the Underwriting Guidelines in any material
respect in any manner that might adversely affect the Mortgage
Loans. Without limiting the foregoing, in the event that the
Servicer makes any amendment or modification to the Underwriting
Guidelines, Seller shall promptly deliver to Buyer a complete
copy of the amended or modified Underwriting Guidelines.
m. Applicable Law. Seller shall comply with the requirements of
all applicable laws, rules, regulations and orders of any
Governmental Authority, except where the failure to comply would
not have a Material Adverse Effect..
n. Existence. Seller shall preserve and maintain its legal
existence and all of its material rights, privileges, licenses
and franchises.
o. Chief Executive Office; Jurisdiction of Organization. Seller
shall not move its chief executive office from the address
referred to in Section 13(a)(17) or change its jurisdiction of
organization from the jurisdiction referred to in Section
13(a)(17) unless it shall have provided Buyer 30 days' prior
written notice of such change.
p. 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
-31-
faith and by proper proceedings and against which adequate
reserves are being maintained.
q. Transactions with Affiliates. Seller will not enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service,
with any Affiliate unless such transaction is (a) otherwise
permitted under the Facility Agreements, (b) in the ordinary
course of Seller's business and (c) 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, or make a payment that is not otherwise permitted
by this Section to any Affiliate.
r. Guarantees. Seller shall not create, incur, assume or suffer
to exist any Guarantees.
s. True and Correct Information. All information, reports,
exhibits, schedules, financial statements or certificates of
Seller, Holdings, any Affiliate thereof or any of their officers
furnished to Buyer hereunder and during Buyer's diligence of
Seller are and will be true and complete and do not omit to
disclose any material facts necessary to make the statements
herein or therein, in light of the circumstances in which they
are made, not misleading. All required financial statements,
information and reports delivered by Seller to Buyer pursuant to
this Agreement shall be prepared in accordance with U.S. GAAP,
or, if applicable, to SEC filings, the appropriate SEC
accounting regulations.
t. Blocked Account. The Seller shall maintain the Collection
Account subject to the Blocked Account Agreement.
u. Amendment. Without the prior written consent of the Buyer,
neither the Seller nor the Servicer shall enter into any
amendment, supplement or modification of any Mortgage Loan
subject to a Transaction hereunder which would (A) change the
aggregate principal amount evidenced by the Mortgage Note, (B)
change the interest rate payable under the Mortgage Note, (C)
modify the maturity date of the Mortgage Loan, (D) provide for
the payment of any additional interest, additional fees, kicker
or similar equity feature in respect of the Mortgage Loan or (E)
change the amount of any payments required under the Note or
modify any related amortization schedule.
v. Special Purpose Entity. Seller shall (i) maintain its own
separate books and records and bank accounts (except that, for
accounting and reporting purposes, the Seller may be included in
the consolidated financial statements of an equity owner of the
Seller in accordance with GAAP) provided that (A) appropriate
notation shall be made on such consolidated financial statements
to indicate the separateness of the Seller from such Affiliate
and to indicate that the 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 the Seller's own separate balance sheet); (ii) at all
times hold itself out to the public
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and all other Persons as a legal entity separate from the Member
and any other Person (except for inclusion in consolidated
financial statements of an equity owner, as described in clause
(i) above) (iii) have a Board of Managers composed differently
from that of the Member and any other Person; (iv) conduct its
business in its own name (or any trade name that will not be
reasonably likely to cause confusion as to its separate
existence) and strictly comply with all organizational
formalities to maintain its separate existence; (v) maintain
separate financial statements (except for inclusion in
consolidated financial statements of an equity owner, as
described in clause (i) above); (vi) except as contemplated
under the provisions of clause (ix) below, pay its own
liabilities only out of its own funds; (vii) maintain an arm's
length relationship with its Affiliates and the Member and any
other party furnishing services to it; (viii) maintain a
sufficient number of employees (which may be zero) for its
contemplated business and pay the salaries of its own employees,
if any; (ix) allocate fairly and reasonably, and pay its share
of, any overhead expenses and other common expenses for shared
office space and facilities, goods or services provided to
multiple entities; (xi) maintain adequate capital in light of
its contemplated business purpose, transactions and liabilities;
(xii) observe all limited liability company formalities
necessary to maintain its separate identity as an entity
separate and distinct from the Member and all of its other
Affiliates; (xiii) hold title to its assets in its own name;
(xv) not engage, directly or indirectly, in any business other
than the actions required or permitted to be performed under
Article 4 of the LLC Agreement, the Facility Agreements or this
Section 14 v.; (xvi) not incur, create or assume any
indebtedness other than as expressly permitted under the
Facility Agreements; (xvii) not to the fullest extent permitted
by law, 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;
(xviii) not fail to file separate federal or state income tax
returns, if any, as may be required under applicable law (to the
extent (1) not part of a consolidated return or returns or (2)
not treated as a division of another taxpayer or a disregarded
entity for tax purposes), and pay any taxes so required to be
paid under applicable law; (xix) not assume or guarantee or
become obligated for the debts of any other Person or hold out
its credit as being available to satisfy the obligations of any
other Person; provided, however, that this provision shall not
be deemed to prohibit indemnification and contribution
agreements by the Company and its Affiliates entered into under
the LLC Agreement, or (to the extent not prohibited under the
Facility Agreements) commercially reasonable indemnification
obligations incurred in the ordinary course of business of the
Company; (xx) not fail to correct any known misunderstanding
regarding its separate identity; (xxi) not except as otherwise
contemplated under the Facility Agreements, commingle its funds
or other assets with those of any other Person; (xxii) not
acquire obligations or securities of its Members; (xxiii) not
pledge any of its assets for the benefit of any other Person,
except as otherwise contemplated or permitted by the Facility
Agreements; (xxiv) not make any loans to any other Person, or
buy or hold evidence of indebtedness issued by any other Person;
(xxv) not identify its
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Members or any of its Affiliates as a division or part of it
(except for inclusion in consolidated financial statements of an
equity owner); (xxvi) not engage (either as transferor or
transferee) in any material transaction with any Affiliate other
than for fair value and on terms similar to those obtainable in
arms-length transactions with unaffiliated parties, or engage in
any transaction with any Affiliate involving any intent to
hinder, delay or defraud any entity; (xxvii) not have or create
any subsidiaries, or hold any equity interest in any other
Person and (xxviii) except as provided in the Facility
Agreements, deposit all of its funds in checking accounts,
savings accounts, time deposits or certificates of deposit in
its own name. The Member will (i) observe all customary
formalities necessary to maintain its identity as an entity
separate and distinct from the Seller; (ii) hold itself out as a
separate and distinct entity from the Seller and not identify
the Seller as a division of the Member; (iii) maintain its books
and records and bank accounts separate from the Seller; and (iv)
hold its assets in its own name.
w. Subsidiaries. The Seller shall have no Subsidiaries.
15. EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default"
hereunder:
a. Payment Failure. Failure of Seller to (i) make any payment of
Price Differential or Repurchase Price or any other sum which
has become due, on a Price Differential Payment Date or a
Repurchase Date or otherwise, whether by acceleration or
otherwise, under the terms of this Agreement, any other
warehouse and security agreement or any other document
evidencing or securing Indebtedness of Seller to Buyer or to any
Affiliate of Buyer, and, in the case of a failure to make a
payment of any sum other than a Price Differential or a
Repurchase Price, the continuance of such failure for a period
of two (2) Business Days after Buyer notifies Seller of such
failure or (ii) cure any Margin Deficit when due pursuant to
Section 6 hereof.
b. Cross Default. (i) Seller shall be in default under (i) any
Indebtedness of Seller which default (1) involves the failure to
pay a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness, or (ii) any other contract to
which Seller is a party which default (1) involves the failure
to pay a matured obligation, or (2) permits the acceleration of
the maturity of obligations by any other party to or beneficiary
of such contract or (iii) Seller or any of Seller's Affiliates
shall be in default under any Facility Agreement.
c. Assignment. Assignment or attempted assignment by Seller of
this Agreement or any rights hereunder without first obtaining
the specific written consent of Buyer, or the granting by Seller
of any security interest, lien or other encumbrances on any
Purchased Mortgage Loans to any person other than Buyer.
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d. Insolvency. An Act of Insolvency shall have occurred with
respect to Seller, the Parent or any Affiliate.
e. Material Adverse Change. Any material adverse change in the
Property, business, financial condition or operations of Seller
or any of its Affiliates shall occur, in each case as determined
by Buyer in its sole good faith discretion, or any other
condition shall exist which, in Buyer's sole good faith
discretion, constitutes a material impairment of Seller's
ability to perform its obligations under this Agreement or any
other Facility Agreement.
f. Breach of Financial Representation or Covenant or Obligation.
A breach by Seller of any of the representations, warranties or
covenants or obligations set forth in Sections 13(a)(1),
13(a)(7), 13(a)(12), 13(a)(19), 13(a)(25), 00x, 00x, 00x, 00x,
00x, 00x, 14q, 14r, 14t, 14u or 14v of this Agreement.
g. Breach of Non-Financial Representation or Covenant. A breach
by Seller of any other material representation, warranty or
covenant set forth in this Agreement (and not otherwise
specified in Section 15(f) above), if such breach is not cured
within five (5) Business Days (other than the representations
and warranties set forth in Schedule 1, which shall be
considered solely for the purpose of determining the existence
of a Margin Deficit and the obligation to repurchase such
Mortgage Loan) unless (i) such party shall have made any such
representations and warranties with knowledge that they were
materially false or misleading at the time made, (ii) any such
representations and warranties have been determined by Buyer in
its sole discretion to be materially false or misleading on a
regular basis, or (iii) Buyer, in its sole discretion,
determines that such breach of a material representation,
warranty or covenant materially and adversely affects (A) the
financial condition of such party, its Subsidiaries or
Affiliates; or (B) Buyer's determination to enter into this
Agreement or Transactions with such party, then such breach
shall constitute an immediate Event of Default and Seller shall
have no cure right hereunder).
h. Change of Control. The occurrence of a Change in Control of
the Seller or the Parent.
i. Failure to Transfer. Seller fails to transfer the Purchased
Mortgage Loans to Buyer on the applicable Purchase Date
(provided Buyer has tendered the related Purchase Price).
j. Judgment.
(1) A final judgment or judgments for the
payment of money shall be rendered against the Seller by
one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be
satisfied, discharged (or provision shall not be made
for such discharge) or bonded, or a stay of execution
thereof shall not be procured, within 30 days from the
date of entry thereof.
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(2) A final judgment or judgments for the
payment of money in excess of $2,000,000 in the
aggregate shall be rendered against the Parent or any of
its Affiliates by one or more courts, administrative
tribunals or other bodies having jurisdiction and the
same shall not be satisfied, discharged (or provision
shall not be made for such discharge) or bonded, or a
stay of execution thereof shall not be procured, within
30 days from the date of entry thereof.
k. Government Action. 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, or shall have taken
any action to displace the management of Seller or to curtail
its authority in the conduct of the business of Seller, or takes
any action in the nature of enforcement to remove, limit or
restrict the approval of Seller as an issuer, buyer or a
seller/servicer of Mortgage Loans or securities backed thereby,
and such action provided for in this subparagraph (m) shall not
have been discontinued or stayed within 30 days.
l. Inability to Perform. An officer of Seller shall admit its
inability to, or its intention not to, perform any of Seller's
Obligations hereunder.
m. Security Interest. This Agreement shall for any reason cease
to create a valid, first priority security interest in any
material portion of the Purchased Mortgage Loans or other
Repurchase Assets purported to be covered hereby.
n. Financial Statements. Holdings' 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 Holdings as a "going concern" or a reference of
similar import.
An Event of Default shall be deemed to be continuing unless
expressly waived by Buyer in writing.
16. REMEDIES UPON DEFAULT
In the event that an Event of Default shall have occurred:
a. Buyer may, at its option (which option shall be deemed to
have been exercised immediately upon the occurrence of an Act of
Insolvency of Seller or any Affiliate), declare an Event of
Default to have occurred hereunder and, upon the exercise or
deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred, be
deemed immediately to occur (except that, in the event that the
Purchase Date for any Transaction has not yet occurred as of the
date of such exercise or deemed exercise, such Transaction shall
be deemed immediately canceled). Buyer shall (except upon the
occurrence of an Act of Insolvency) give notice to Seller of the
exercise of such option as promptly as practicable.
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b. If Buyer exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Section, (i) Seller's
obligations in such Transactions to repurchase all Purchased
Mortgage Loans, at the Repurchase Price therefor on the
Repurchase Date determined in accordance with subparagraph (a)
of this Section, 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 owing by Seller
hereunder, and (iii) Seller shall immediately deliver to Buyer
the Mortgage Files relating to any Purchased Mortgage Loans
subject to such Transactions then in Seller's possession or
control.
c. Buyer also shall have the right to obtain physical
possession, and to commence an action to obtain physical
possession, of all Records and files of Seller relating to the
Purchased Mortgage Loans and all documents relating to the
Purchased Mortgage Loans (including, without limitation, any
legal, credit or servicing files with respect to the Purchased
Mortgage Loans) which are then or may thereafter come in to the
possession of Seller or any third party acting for Seller. To
obtain physical possession of any Purchased Mortgage Loans held
by Custodian, Buyer shall present to Custodian a Trust Receipt
and Certification. Buyer shall be entitled to specific
performance of all agreements of Seller contained in this
Agreement.
d. Buyer shall have the right to direct all servicers then
servicing any Purchased Mortgage Loans to remit all collections
thereon to Buyer, and if any such payments are received by
Seller, Seller shall not commingle the amounts received with
other funds of Seller and shall promptly pay them over to Buyer.
Buyer shall also have the right to terminate any one or all of
the servicers then servicing any Purchased Mortgage Loans with
or without cause. In addition, Buyer shall have the right to
immediately sell the Purchased Mortgage Loans and liquidate all
Repurchase Assets. Such disposition of Purchased Mortgage Loans
may be, at Buyer's option, on either a servicing-released or a
servicing-retained basis. Buyer shall be entitled to place the
Purchased Mortgage Loans in a pool for issuance of
mortgage-backed 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 Mortgage Loans individually for the prevailing
price.
e. Upon the happening of one or more Events of Default, Buyer
may apply any proceeds from the liquidation of the Purchased
Mortgage Loans and Repurchase Assets to the Repurchase Prices
hereunder and all other Obligations in the manner Buyer deems
appropriate in its sole discretion.
f. 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,
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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.
g. 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 under this
Section 16(g) shall be at a rate equal to the Post-Default Rate.
h. Buyer shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or
applicable law.
i. Buyer may exercise one or more of the remedies available to
Buyer immediately upon the occurrence of an Event of Default
and, except to the extent provided in subsections (a) and (d) of
this Section, at any time thereafter without notice to Seller.
All rights and remedies arising under this Agreement as amended
from time to time hereunder are cumulative and not exclusive of
any other rights or remedies which Buyer may have.
j. Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly
waives any defenses Seller might otherwise have to require Buyer
to enforce its rights by judicial process. Seller also waives
any defense (other than a defense of payment or performance)
Seller might otherwise have arising from the use of nonjudicial
process, enforcement and sale of all or any portion of the
Purchased Mortgage Loans, 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.
k. Buyer shall have the right to perform reasonable due
diligence with respect to Seller and the Mortgage Loans, which
review shall be at the expense of Seller.
17. REPORTS
a. Notices. Seller shall furnish to Buyer (x) promptly, copies
of any material and adverse notices (including, without
limitation, notices of defaults, breaches, potential defaults or
potential breaches) and any material financial information that
is not otherwise required to be provided by Seller hereunder
which is given to Seller's lenders, (y) immediately, notice of
the occurrence of any Event of Default
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hereunder or default or breach by Seller or Parent of any
obligation under any Facility Agreement or any material contract
or agreement of Seller or Parent or the occurrence of any event
or circumstance that such party reasonably expects has resulted
in, or will, with the passage of time, result in, a Material
Adverse Effect or an Event of Default or such a default or
breach by such party and (z) the following:
(1) as soon as available and in any event within
forty-five (45) calendar days after the end of each calendar
quarter, the unaudited consolidated balance sheets of Holdings
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 Holdings and its
consolidated Subsidiaries for such period and the portion of the
fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Holdings, which
certificate shall state that said consolidated financial
statements fairly present in all material respects the
consolidated financial condition and results of operations of
Holdings and its consolidated Subsidiaries in accordance with
GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end adjustments);
(2) as soon as available and in any event within
ninety (90) days after the end of each fiscal year of Holdings,
the consolidated balance sheets of Holdings and its consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and members' equity and of
cash flows for Holdings and its consolidated Subsidiaries for
such year, setting forth in each case in comparative form the
figures for the previous year, accompanied by an opinion thereon
of independent certified public accountants of recognized
national standing, which opinion and the scope of audit shall be
acceptable to Buyer in its sole discretion, shall have no "going
concern" qualification and shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations of Holdings and its
respective consolidated Subsidiaries as at the end of, and for,
such fiscal year in accordance with GAAP;
(3) such other prepared statements that Buyer
may reasonably request;
(4) if applicable, copies of any 10-Ks, 10-Qs,
registration statements and other "corporate finance" SEC
filings (other than 8-Ks) by Seller, within 5 Business Days of
their filing with the SEC; provided, that, Seller or any
Affiliate will provide Buyer and Credit Suisse First Boston LLC
with a copy of the annual 10-K filed with the SEC by Seller or
its affiliates, no later than 90 days after the end of the year;
(5) as soon as available, and in any event
within thirty (30) days of receipt, copies of relevant portions
of all final written Governmental Authority and investor audits,
examinations, evaluations, monitoring reviews and reports of
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operations (including those prepared on a contract basis) with
respect to the Seller or Parent, which provide for or relate to
(i) material corrective action required, (ii) material sanctions
proposed, imposed or required, including without limitation
notices of defaults, notices of termination of approved status,
notices of imposition of supervisory agreements or interim
servicing agreements, and notices of probation, suspension, or
non-renewal, or (iii) "report cards," "grades" or other
classifications of the quality of Seller's operations;
(6) from time to time such other information
regarding the financial condition, operations, or business of
the Seller as Buyer may reasonably request;
(7) as soon as reasonably possible, and in any
event within thirty (30) days after a Responsible Officer of the
Seller has knowledge of the occurrence of any Event of
Termination, stating the particulars of such Event of
Termination in reasonable detail;
(8) As soon as reasonably possible, notice of
any of the following events:
(a) reduction in the insurance coverage required of
Seller, Servicer or any other Person pursuant to any Facility
Agreement, with a copy of evidence of same attached;
(b) any material dispute, litigation, investigation,
proceeding or suspension between Seller or Parent, on the one
hand, and any Governmental Authority or any Person;
(c) any material change in accounting policies or
financial reporting practices of Seller or Parent;
(d) with respect to any Purchased Mortgage Loan,
immediately upon receipt of notice or knowledge thereof, that
the underlying Mortgaged Property has been damaged by waste,
fire, earthquake or earth movement, windstorm, flood, tornado or
other casualty, or otherwise damaged so as to affect adversely
the value of such Mortgaged Loan;
(e) any material issues raised upon examination of
Seller or Seller's facilities by any Governmental Authority;
(f) promptly upon receipt of notice or knowledge of (i)
any default related to any Repurchase Asset, (ii) any lien or
security interest (other than security interests created hereby
or by the other Facility Agreements) on, or claim asserted
against, any of the Purchased Mortgage Loans; and
(g) any other event, circumstance or condition that has
resulted, or is reasonably likely to result in a Material
Adverse Effect with respect to Seller or Parent.
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b. Officer's Certificates. Seller will furnish to Buyer, at the
time the Seller furnishes each set of financial statements
pursuant to Section 17(a)(1) or (2) above, a certificate of a
Responsible Officer of Seller in the form of Exhibit D hereto. -
c. Mortgage Loan Reports. Seller will furnish to Buyer monthly
electronic Mortgage Loan performance data, including, without
limitation, delinquency reports (i.e., delinquency, foreclosure
and net charge-off reports).
d. Asset Tape. Seller shall provide to Buyer, electronically, in
a format mutually acceptable to Buyer and Seller, an Asset Tape
by no later than the Reporting Date.
e. Other. Seller shall deliver to Buyer any other reports or
information reasonably requested by Buyer or as otherwise
required pursuant to this Agreement.
18. REPURCHASE TRANSACTIONS
Buyer may, in its sole election, engage in repurchase
transactions with the Purchased Mortgage Loans or otherwise pledge, hypothecate,
assign, transfer or otherwise convey the Purchased Mortgage Loans with a
counterparty of Buyer's choice. Unless an Event of Default shall have occurred,
no such transaction shall relieve Buyer of its obligations to transfer Purchased
Mortgage Loans to Seller pursuant to Section 4 hereof, or of Buyer's obligation
to credit or pay Income to, or apply Income to the obligations of, Seller
pursuant to Section 7 hereof. In the event Buyer engages in a repurchase
transaction with any of the Purchased Mortgage Loans or otherwise pledges or
hypothecates any of the Purchased Mortgage Loans, Buyer shall have the right to
assign to Buyer's counterparty any of the applicable representations or
warranties herein and the remedies for breach thereof, as they relate to the
Purchased Mortgage Loans that are subject to such repurchase transaction.
19. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereunto,
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 have been made in consideration of
each other. 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 Transactions hereunder
and (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.
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20. NOTICES AND OTHER COMMUNICATIONS
Any and all notices (with the exception of Transaction Requests
or Purchase 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 hereunder may be made orally, to be confirmed promptly in writing, or
by other communication as specified in the preceding sentence.
If to Seller:
CapitalSource SNF Funding LLC
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer:
Credit Suisse First Boston Mortgage Capital LLC
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
21. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between
the parties containing general terms and conditions for repurchase transactions.
Each provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.
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22. NON ASSIGNABILITY
The Facility Agreements are not assignable by Seller. Buyer may from time to
time assign all or a portion of its rights and obligations under this Agreement
and the Facility Agreements; provided, however that (a) Buyer shall not assign
its ongoing obligations under this Agreement to any entity unless such entity or
its Affiliate is rated at least BBB- by S&P, and (b) Buyer shall maintain, for
review by Seller upon written request, a register of assignees and a copy of an
executed assignment and acceptance by Buyer and assignee ("Assignment and
Acceptance"), specifying the percentage or portion of such rights and
obligations assigned; and provided further, that in the event that the Buyer
assigns its rights to an entity which originates loans secured by skilled
nursing facilities, the Seller shall have the right to repurchase all Mortgage
Loans without penalty, premium or Exit Fee. Upon such assignment, such assignee
shall be a party hereto and to each Facility Agreement to the extent of the
percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and Buyer
shall be released from its obligations hereunder and under the Facility
Agreements. Unless otherwise stated in the Assignment and Acceptance, Seller
shall continue to take directions solely from Buyer unless otherwise notified by
Buyer in writing. Buyer may distribute to any prospective assignee any document
or other information delivered to Buyer by Seller.
23. SET-OFF
In addition to any rights and remedies of Buyer provided 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 hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by Buyer or any
branch or agency 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.
24. BINDING EFFECT; GOVERNING LAW; JURISDICTION
a. This Agreement shall be binding and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns. Seller acknowledges that the obligations of Buyer
hereunder or otherwise are not the subject of any guaranty by,
or recourse to, any direct or indirect parent or other Affiliate
of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
b. SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF
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ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING
OUT OF OR RELATING TO THE FACILITY AGREEMENTS IN ANY ACTION OR
PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION
IT MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN XXX
XXXXXX XX XXX XXXXX XX XXX XXXX AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
DISPUTES ARISING OUT OF OR RELATING TO THE FACILITY AGREEMENTS.
25. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either
party shall constitute a waiver of any other Event of Default and no exercise of
any remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any provision
of this Agreement and no consent by any party to a departure herefrom shall be
effective unless and until such shall be in writing and duly executed by both of
the parties hereto. Without limitation on any of the foregoing, the failure to
give a notice pursuant to Section 6(a), 16(a) or otherwise, will not constitute
a waiver of any right to do so at a later date.
26. INTENT
a. The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of
the United States Code, as amended (except insofar as the type
of Purchased Mortgage Loans subject to such Transaction or the
term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is
defined in Section 741 of Title 11 of the United States Code, as
amended (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
b. It is understood that either party's right to liquidate
Purchased Mortgage Loans delivered to it in connection with
Transactions hereunder or to exercise any other remedies
pursuant to Section 16 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and 559
of Title 11 of the United States Code, as amended.
c. The parties agree and acknowledge that if a party hereto is
an "insured depository institution," as such term is defined in
the Federal Deposit Insurance Act, as amended ("FDIA"), then
each Transaction hereunder is a "qualified financial contract,"
as that term is defined in FDIA and any rules, orders or policy
statements thereunder (except insofar as the type of 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
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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 (except insofar as one or both
of the parties is not a "financial institution" as that term is
defined in FDICIA).
27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
a. in the case of Transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
1934 Act, the Securities Investor Protection Corporation has
taken the position that the provisions of the SIPA do not
protect the other party with respect to any Transaction
hereunder;
b. in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to
any Transaction hereunder; and
c. in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and
therefore are not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Share Insurance Fund,
as applicable.
28. POWER OF ATTORNEY
Seller hereby authorizes Buyer to file such financing statement
or statements relating to the Purchased Mortgage Loans without Seller's
signature thereon as Buyer, at its option, may deem appropriate. Seller hereby
appoints Buyer as Seller's agent and attorney-in-fact to execute any such
financing statement or statements in Seller's name and to perform all other acts
which Buyer deems appropriate to perfect and continue its ownership interest in
and/or the security interest granted hereby, if applicable, and to protect,
preserve and realize upon the Purchased Mortgage Loans, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of Seller as its agent and
attorney-in-fact. This agency and power of attorney is coupled with an interest
and is irrevocable without Buyer's consent. Notwithstanding the foregoing, the
power of attorney hereby granted may be exercised only during the occurrence and
continuance of any Event of Default hereunder. Seller shall pay the filing costs
for any financing statement or statements prepared pursuant to this Section 28.
29. BUYER MAY ACT THROUGH AFFILIATES
Buyer may, from time to time, designate one or more affiliates
for the purpose of performing any action hereunder.
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30. INDEMNIFICATION; OBLIGATIONS
a. Seller agrees to hold Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") harmless from and
indemnify each Indemnified Party (and will reimburse each
Indemnified Party as the same is incurred) against all
liabilities, losses, damages, judgments, costs and expenses
(including, without limitation, reasonable fees and expenses of
counsel) of any kind which may be imposed on, incurred by, or
asserted against any Indemnified Party relating to or arising
out of this Agreement, any Transaction Request, Purchase
Confirmation, any Facility Agreement or any transaction
contemplated hereby or thereby resulting from anything other
than the Indemnified Party's gross negligence or willful
misconduct. Without limiting the generality of the foregoing,
the Seller agrees to hold any Indemnified Party harmless from
and indemnify such Indemnified Party against all Costs with
respect to all Mortgage Loans relating to or arising out of any
violation or alleged violation of any environmental law, rule or
regulation. Seller also agrees to reimburse each Indemnified
Party for all reasonable expenses in connection with the
enforcement of this Agreement and the exercise of any right or
remedy provided for herein, any Transaction Request, Purchase
Confirmation and any Facility Agreement, including, without
limitation, the reasonable fees and disbursements of counsel.
Seller's agreements in this Section 30 shall survive the payment
in full of the Repurchase Price and the expiration or
termination of this Agreement. Seller hereby acknowledges that
(1) its obligations hereunder are recourse obligations of Seller
and are not limited to recoveries each Indemnified Party may
have with respect to the Purchased Mortgage Loans and (2) Buyer
shall have no recourse to any equity owner of the Seller;
provided, however, that the Parent, by executing this Agreement,
hereby agrees to be liable to the Buyer, on a joint and several
basis with the Seller, solely for losses incurred by the Buyer
hereunder as a result of (i) fraud or intentional
misrepresentation by the Seller or the Parent in connection with
a Mortgage Loan, (ii) the gross negligence or willful misconduct
of the Seller or the Parent in connection with a Mortgage Loan
or (iii) the breach of any representation, warranty, covenant or
indemnification provision in a Mortgage concerning a
environmental laws, hazardous substances and asbestos or in any
separate indemnity executed in connection with a Mortgage Loan.
Seller also agrees not to assert any claim against Buyer or any
of its Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the facility
established hereunder, the actual or proposed use of the
proceeds of the Transactions, this Agreement or any of the
transactions contemplated thereby.
b. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS
EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT
NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED
PARTIES.
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c. Without limitation to the provisions of Section 4, if any
payment of the Repurchase Price of any Transaction is made by
Seller other than on the then scheduled Repurchase Date thereto
as a result of an acceleration of the Repurchase Date pursuant
to Section 16 or for any other reason, Seller shall, upon demand
by Buyer, pay to Buyer an amount sufficient to compensate Buyer
for any losses, costs or expenses that it may reasonably incur
as of a result of such payment.
d. Without limiting the provisions of Section 30(a) hereof, if
Seller fails to pay when due any costs, expenses or other
amounts payable by it under this Agreement, including, without
limitation, fees and expenses of counsel and indemnities, such
amount may be paid on behalf of Seller by Buyer, in its sole
discretion.
31. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.
32. CONFIDENTIALITY
This Agreement and its terms, provisions, supplements and
amendments, and notices hereunder, are proprietary to Buyer and shall be held by
Seller in strict confidence and shall not be disclosed to any third party
without the written consent of Buyer except for (i) disclosure to Seller's
direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but
only to the extent such disclosure is necessary and such parties agree to hold
all information in strict confidence, or (ii) disclosure required by law, rule,
regulation or order of a court or other regulatory body.
33. RECORDING OF COMMUNICATIONS
Buyer and Seller shall have the right (but not the obligation)
from time to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to Transactions.
Buyer and Seller consent to the admissibility of such tape recordings in any
court, arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.
34. PERIODIC DUE DILIGENCE REVIEW
Seller acknowledges that Buyer has the right to perform
continuing due diligence reviews with respect to the Seller and the Mortgage
Loans, for purposes of verifying compliance with the representations, warranties
and specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than five (5) Business Day's) prior notice unless a
Default or an Event of Default shall have occurred, in which case no notice is
required, to Seller, Buyer or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Mortgage Files and any and all
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documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession or under the control of Seller, the Servicer
and/or the Custodian. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and the Mortgage Loans. Without limiting the
generality of the foregoing, Seller acknowledges that Buyer may purchase
Mortgage Loans from Seller based solely upon the information provided by Seller
to Buyer in the Mortgage Loan Schedule and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on some or all of the
Mortgage Loans purchased in a Transaction, including, without limitation,
ordering Broker's price opinions, new credit reports and new appraisals on the
related Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. Seller agrees to cooperate with Buyer and any third party
underwriter in connection with such underwriting, including, but not limited to,
providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of Seller. Seller
further agrees that Seller shall pay all out-of-pocket costs and expenses
incurred by Buyer in connection with Buyer's activities pursuant to this Section
34 ("Due Diligence Costs"); provided, that so long as no Default has occurred,
Seller shall pay for only one (1) due diligence review of a Mortgage Loan in any
calendar year (not including any initial due diligence of the Mortgage Loan
prior to the Purchase Date.
35. FACILITY FEE
Subject to the provisions of the following paragraph, the Seller
shall pay to Buyer on each Purchase Date a facility fee in an amount equal to
the product of (a) 0.50% and (b) the amount by which the aggregate Purchase
Price of all outstanding Transactions (including the aggregate Purchase Price of
Transactions entered into on such Purchase Date) exceeds the highest aggregate
Purchase Price of Transactions outstanding on any day prior to such Purchase
Date; provided, that the aggregate facility fees paid pursuant to this section
during the period prior to the Termination Date shall not exceed $1,500,000.
Each such fee shall be payable in immediately available funds on
the related Purchase Date. Such payment shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
account set forth in Section 9 hereof.
36. AUTHORIZATIONS Any of the persons whose signatures and titles appear
on Schedule 2 are authorized, acting singly, to act for Seller or Buyer, as the
case may be, under this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have entered into this
Repurchase Agreement as of the date set forth above.
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
By: /s/
--------------------------------------------
Title:
-----------------------------------------
Date:
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CAPITALSOURCE SNF FUNDING LLC
By: /s/
--------------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
Solely for purposes of Section 30 hereof:
CAPITALSOURCE FINANCE LLC
By: /s/
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Title:
-----------------------------------------
Date:
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES OF SELLER
REGARDING MORTGAGE LOANS
The Seller represents and warrants to the Buyer, with respect to
each Mortgage Loan, that as of the Purchase Date for the purchase of any
Purchased Mortgage Loans by the Buyer from the Seller and as of the date of this
Repurchase Agreement and any Transaction hereunder and at all times while the
Repurchase Documents and any Transaction hereunder is in full force and effect:
For purposes of this Schedule 1 and the representations and warranties set forth
herein, a breach of a representation or warranty shall be deemed to have been
cured with respect to a Mortgage Loan if and when the Seller has taken or caused
to be taken action such that the event, circumstance or condition that gave rise
to such breach no longer adversely affects such Mortgage Loan. With respect to
those representations and warranties which are made to the best of the Seller's
knowledge, if it is discovered by the Seller or the Buyer that the substance of
such representation and warranty is inaccurate, notwithstanding the Seller's
lack of knowledge with respect to the substance of such representation and
warranty, such inaccuracy shall be deemed a breach of the applicable
representation and warranty.
(1) No Mortgage Note or Mortgage was subject to any assignment (other
than assignments which show a complete chain of assignment to the Seller),
participation or pledge, and the Seller had good and marketable title to,
and was the sole owner of, the related Mortgage Loan;
(2) The Seller has full right and authority to sell, assign and transfer
such Mortgage Loan and the assignment to the Buyer constitutes a legal,
valid and binding assignment of such Mortgage Loan;
(3) The Seller is transferring such Mortgage Loan free and clear of any
and all liens, pledges, charges or security interests of any nature
encumbering such Mortgage Loan;
(4) Each related Mortgage Note, Mortgage, assignment of leases (if any)
and other agreement executed by or for the benefit of the related Mortgagor,
any guarantor or their successors or assigns in connection with such
Mortgage Loan is the legal, valid and binding obligation of the related
Mortgagor, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights or
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law); and there is no valid
defense, counterclaim, or right of rescission available to the related
Mortgagor with respect to such Mortgage Note, Mortgage, assignment of leases
and other agreements, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(5) Each related assignment of leases creates a valid first priority
collateral assignment of, or a valid first priority lien or security
interest in, certain rights under the related lease or leases, subject only
to a license granted to the related Mortgagor to exercise certain rights and
to perform certain obligations of the lessor under such lease or leases,
including the right to operate the related leased property, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights or by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law); no
person other than the related Mortgagor owns any interest in any payments
due under such lease or leases that is superior to or of equal priority with
the lender's interest therein;
(6) Each related assignment of Mortgage from the Seller to the Buyer and
related assignment of the assignment of leases, if any, or assignment of any
other agreement executed by or for the benefit of the related Mortgagor, any
guarantor or their successors or assigns in connection with such Mortgage
Loan from the Seller to the Buyer constitutes the legal, valid and binding
assignment from the Seller to the Buyer, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or other laws relating to or affecting the
enforcement of creditors' rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(7) Since origination, and except as set forth in the related mortgage
file and except as permitted by this Agreement, (a) such Mortgage Loan has
not been modified, altered, satisfied, canceled, subordinated or rescinded
and (b) each related Mortgaged Property has not been released from the lien
of the related Mortgage in any manner which materially interferes with the
security intended to be provided by such Mortgage;
(8) Each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property (subject to Permitted Encumbrances (as defined
below)), except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and such Mortgaged Property is free and clear of any
mechanics' and materialmen's liens which are prior to or equal with the lien
of the related Mortgage, except those which are insured against by a
lender's title insurance policy (as described below) or covered by a bond. A
UCC financing statement has been filed and/or recorded (or sent for filing
or recording) in all places necessary to perfect a valid security interest
in the personal property necessary to operate the Mortgaged Property; any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a
valid and enforceable lien on property described therein, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights or
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(9) None of the Seller, the Servicer or the Parent has taken any action
that would cause the representations and warranties made by the related
Mortgagor in the related Mortgage Loan Documents not to be true;
(10) None of the Seller, the Parent, or the Servicer has any knowledge
that the material representations and warranties made by the related
Mortgagor in the related Mortgage Loan Documents are not true in any
material respect;
(11) The lien of each related Mortgage is a first priority lien on the
fee or leasehold interest of the related Mortgagor in the principal amount
of such Mortgage Loan or allocated loan amount of the portions of the
Mortgaged Property covered thereby (as set forth in the related Mortgage)
after all advances of principal and is insured by an ALTA lender's title
insurance policy (or a binding commitment therefor), or its equivalent as
adopted in the applicable jurisdiction, insuring the Seller and its
successors and assigns as to such lien, subject only to (a) the lien of
current real property taxes, ground rents, water charges, sewer rents and
assessments not yet delinquent or accruing interest or penalties, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, none of which, individually or in the aggregate,
materially interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the Mortgagor's
ability to pay its obligations when they become due or the value of the
Mortgaged Property and (c) the exceptions (general and specific) and
exclusions set forth in such policy, none of which, individually or in the
aggregate, materially interferes with the current general use of the
Mortgaged Property or materially interferes with the security intended to be
provided by such Mortgage or with the related Mortgagor's ability to pay its
obligations when they become due or the value of the Mortgaged Property
(items (a), (b) and (c) collectively, "Permitted Encumbrances"); the premium
for such policy was paid in full; such policy (or if it is yet to be issued,
the coverage to be afforded thereby) is issued by a title insurance company
licensed to issue policies in the state in which the related Mortgaged
Property is located (unless such state is Iowa) and is assignable (with the
related Mortgage Loan) to the Buyer without the consent of or any
notification to the insurer, and is in full force and effect upon the
consummation of the transactions contemplated by the Agreement; no claims
have been made under such policy and none of the Seller, the Parent or the
Servicer has (a) undertaken any action or omitted to take any action, and
(b) knowledge of any such act or omission, in each case, which would impair
or diminish the coverage of such policy;
(12) Except where approved by the Buyer, the proceeds of such Mortgage
Loan have been fully disbursed and there is no requirement for future
advances thereunder, and no future advances have been made which are not
reflected in the related mortgage file;
(13) Except as set forth in a property inspection report or engineering
report prepared in connection with the origination of the Mortgage Loan, as
of the later of the date of origination of such Mortgage Loan or the most
recent inspection of the related Mortgaged Property by the Seller, the
Parent or the Servicer, as applicable, and to the knowledge of Seller, the
Parent and the Servicer as of the date hereof, each related Mortgaged
Property is free of any material damage that would affect materially and
adversely the value of such Mortgaged Property as security for the Mortgage
Loan or reserves have been established to cover the costs to remediate such
damage and, as of the closing date for each Mortgage Loan and, to the and
the Seller's, the Parent's and the Servicer's knowledge, as of the date
hereof, there is no proceeding pending for the total or partial condemnation
of such Mortgaged Property that would have a material adverse effect on the
value of the Mortgaged Property;
(14) The Seller, the Parent or the Servicer has inspected or caused to
be inspected each related Mortgaged Property within the past twelve months,
or the originator of the Mortgage Loan inspected or caused to be inspected
each related Mortgage Property within three months of origination of the
Mortgage Loan;
(15) No Mortgage Loan has a shared appreciation feature, any other
contingent interest feature or a negative amortization feature;
(16) Each Mortgage Loan is a whole loan and contains no equity
participation by Seller or any affiliate of Seller;
(17) The Mortgage Interest Rate (exclusive of any default interest, late
charges, or prepayment premiums) of such Mortgage Loan complied as of the
date of origination with, or was exempt from, applicable state or federal
laws, regulations and other requirements pertaining to usury. Except to the
extent any noncompliance did not materially and adversely affect the value
of the related Mortgaged Property, the security provided by the Mortgage or
the related Mortgagor's operations at the related Mortgaged Property, any
and all other requirements of any federal, state or local laws, including,
without limitation, truth-in-lending, real estate settlement procedures,
equal credit opportunity or disclosure laws, applicable to such Mortgage
Loan have been complied with as of the date of origination of such Mortgage
Loan;
(18) None of the Seller, the Parent or the Servicer or to the Seller's,
the Parent's or Servicer's knowledge, any originator, committed any
fraudulent acts during the origination process of any Mortgage Loan and the
origination, servicing and collection of each Mortgage Loan is in all
respects legal, proper and prudent in accordance with customary commercial
mortgage lending standards, and no person other than the Servicer has been
granted or conveyed the right to service the Mortgage Loans or receive any
consideration in connection therewith;
(19) Except as disclosed in the Mortgage Loan Schedule, all taxes and
governmental assessments that became due and owing prior to the date hereof
with respect to each related Mortgaged Property and that are or may become a
lien of priority equal to or higher than the lien of the related Mortgage
have been paid or an escrow of funds has been established and such escrow
(including all escrow payments required to be made prior to the delinquency
of such taxes and assessments) is sufficient to cover the payment of such
taxes and assessments;
(20) All escrow deposits and payments required pursuant to each Mortgage
Loan are in the possession, or under the control, of the Seller, the
Servicer or their respective agents and there are no deficiencies (subject
to any applicable grace or cure periods) in connection therewith and all
such escrows and deposits are being conveyed by the Seller to the Buyer and
identified as such with appropriate detail;
(21) Each related Mortgaged Property is insured by a fire and extended
perils insurance policy or an "all-risk" insurance policy, issued by an
insurer meeting the requirements of the Agreement, in an amount not less
than the lesser of the principal amount of the related Mortgage Loan and the
replacement cost (with no deduction for physical
depreciation) and not less than the amount necessary to avoid the operation
of any co-insurance provisions with respect to the related Mortgaged
Property; each related Mortgaged Property is also covered by business
interruption or rental loss insurance which covers a period of not less than
12 months and comprehensive general liability insurance in amounts generally
required by commercial mortgage lenders for similar properties; all premiums
on such insurance policies required to be paid as of the date hereof have
been paid; such insurance policies require prior notice to the insured of
termination or cancellation, and no such notice has been received by the
Seller, the Parent or the Servicer; such insurance names the lender under
the Mortgage Loan and its successors and assigns as a named or additional
insured; each related Mortgage Loan obligates the related Mortgagor to
maintain all such insurance and, at such Mortgagor's failure to do so,
authorizes the lender to maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from such Mortgagor;
(22) Except for a Mortgage Loan that is a Defaulted or Delinquent
Mortgage Loan, there is no monetary default, breach, violation or event of
acceleration existing under the related Mortgage Loan. To the Seller's, the
Parent's and the Servicer's knowledge, there is no (a) non-monetary default,
breach, violation or event of acceleration existing under the related
Mortgage Loan or (b) event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any
grace or cure period, would and does constitute a default, breach, violation
or event of acceleration, which default, breach, violation or event of
acceleration, in the case of either (a) or (b), materially and adversely
affects the value of the Mortgage Loan or the related Mortgaged Property;
provided, however, that this representation and warranty does not address or
otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered by any other
representation or warranty made by the Seller in any of paragraphs (13),
(19), (23), (25), (27), and (29) of this Schedule 1;
(23) Except for a Mortgage Loan that is a Defaulted or Delinquent
Mortgage Loan, no Mortgage Loan has been more than 30 days delinquent in
making required payments since origination and as of the related Purchase
Date no Mortgage Loan is 30 or more days delinquent in making required
payments;
(24) (a) Each related Mortgage contains provisions so as to render the
rights and remedies of the holder thereof adequate for the practical
realization against the Mortgaged Property of the principal benefits of the
security, including realization by judicial or, if applicable, non-judicial
foreclosure, and (b) there is no exemption available to the Mortgagor which
would interfere with such right to foreclose, except, in the case of either
(a) or (b), as the enforcement of the Mortgage may be limited by bankruptcy,
insolvency, reorganization, moratorium, redemption or other laws affecting
the enforcement of creditors' rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). To the Seller's, the Parent's and the Servicer's
knowledge, no Mortgagor is a debtor in a state or federal bankruptcy or
insolvency proceeding;
(25) At origination, each Mortgagor represented and warranted in all
material respects that to its knowledge, except as set forth in certain
environmental reports, no hazardous materials or any other substances or
materials which are included under or regulated by
Environmental Laws are located on or have been handled, manufactured,
generated, stored, processed, or disposed of on or released or discharged
from the Mortgaged Property, except for those substances used by Mortgagor
in the ordinary course of its business and in compliance with all
Environmental Laws. A Phase I environmental report and with respect to
certain Mortgage Loans, a Phase II environmental report, was conducted by a
reputable environmental engineer in connection with such Mortgage Loan,
which report did not indicate any material non-compliance with applicable
environmental laws or material existence of hazardous materials or, if any
material non-compliance or material existence of hazardous materials was
indicated in any such report, then at least one of the following statements
is true: (A) funds reasonably estimated to be sufficient to cover the cost
to cure any material non-compliance with applicable environmental laws or
material existence of hazardous materials have been escrowed by the related
Mortgagor and held by the related mortgagee; (B) an operations or
maintenance plan has been required to be instituted by the related
Mortgagor; (C) the environmental condition identified in the related
environmental report was remediated or abated in all material respects prior
to the date hereof and a no further action or closure letter was obtained
from the applicable governmental regulatory authority (or the environmental
issue affecting the related Mortgaged Property was otherwise listed by such
governmental authority as "closed"); or (D) a lender's environmental
insurance policy was obtained and is a part of the related mortgage file. To
the best of the Seller's, the Parent's and the Servicer's knowledge, in
reliance on such environmental reports and except as set forth in such
environmental reports, each Mortgaged Property is in material compliance
with all applicable federal, state and local environmental laws, and to the
best of the Seller's, the Parent's and the Servicer's knowledge, no notice
of violation of such laws has been issued by any governmental agency or
authority; and none of the Seller, the Parent or the Servicer has taken any
action which would cause the Mortgaged Property to not be in compliance with
all federal, state and local environmental laws pertaining to environmental
hazards;
(26)(1) Each Mortgage Loan contains provisions for the acceleration of
the payment of the unpaid principal balance of such Mortgage Loan if,
without the consent of the holder of the Mortgage (and the Mortgage requires
the mortgagor to pay all fees and expenses associated with obtaining such
consent), the related Mortgaged Property is directly or indirectly
transferred or sold, and (2) except with respect to transfers of certain
interests in the related Mortgagor to persons already holding interests in
the Mortgagor, their family members, affiliated companies and other estate
planning related transfers that satisfy certain criteria specified in the
related Mortgage (which criteria is consistent with the practices of prudent
commercial mortgage lenders), each Mortgage Loan with a Stated Principal
Balance of over $20,000,000 also contains the provisions for the
acceleration of the payment of the unpaid principal balance of such Mortgage
Loan if, without the consent of the holder of the Mortgage, (and the
Mortgage requires the mortgagor to pay all fees and expenses associated with
obtaining such consent) a majority interest in the related Mortgagor is
directly or indirectly transferred or sold;
(27) All improvements included in the related appraisal are within the
boundaries of the related Mortgaged Property, except for encroachments onto
adjoining parcels for which the Seller, the Parent or the Servicer has
obtained title insurance against losses arising therefrom or that do not
materially and adversely affect the value of such Mortgaged
Property. No improvements on adjoining parcels encroach onto the related
Mortgaged Property except for encroachments that do not materially and
adversely affect the value of such Mortgaged Property, the security provided
by the Mortgage or the related Mortgagor's operations at the Mortgaged
Property;
(28)The information pertaining to the Mortgage Loan set forth in the
Mortgage Loan Schedule is complete and accurate in all material respects as
of the dates of the information set forth therein (or, if not set forth
therein, as of the related Purchase Date);
(29)With respect to any Mortgage Loan where all or a material portion of
the estate of the related Mortgagor therein is a leasehold estate, and the
related Mortgage does not also encumber the related lessor's fee interest in
such Mortgaged Property, based upon the terms of the ground lease and any
estoppel received from the ground lessor, the Seller represents and warrants
that:
A. The ground lease or a memorandum regarding such ground
lease has been duly recorded. The ground lease permits the interest of
the lessee to be encumbered by the related Mortgage and does not
restrict the use of the related Mortgaged Property by such lessee, its
successors or assigns in a manner that would adversely affect the
security provided by the related Mortgage. To the Seller's, the Parent's
and the Servicer's best knowledge, there has been no material change in
the terms of the ground lease since its recordation, except by any
written instruments which are included in the related mortgage file;
B. The lessor under such ground lease has agreed in a
writing included in the related mortgage file that the ground lease may
not be amended, modified, canceled or terminated without the prior
written consent of the lender and that any such action without such
consent is not binding on the lender, its successors or assigns;
C. The ground lease has an original term (or an original
term plus one or more optional renewal terms, which, under all
circumstances, may be exercised, and will be enforceable, by the lender)
that extends not less than 20 years beyond the stated maturity of the
related Mortgage Loan;
D. Based on the title insurance policy (or binding
commitment therefor) obtained by the Seller, the Parent or the Servicer,
the ground lease is not subject to any liens or encumbrances superior
to, or of equal priority with, the Mortgage, subject to Permitted
Encumbrances and liens that encumber the ground lessor's fee interest;
E. The ground lease is assignable to the lender under the
leasehold estate and its assigns without the consent of the lessor
thereunder;
F. As of the Purchase Date, the ground lease is in full
force and effect, none of the Seller, the Parent or the Servicer has any
actual knowledge that any default beyond applicable notice and grace
periods has occurred, and there is no existing condition which, but for
the passage of time or giving of notice, would result in a default under
the terms of the ground lease;
G. The ground lease or ancillary agreement between the
lessor and the lessee requires the lessor to give notice of any default
by the lessee to the lender;
H. A lender is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the
interest of the lessee under the ground lease through legal proceedings,
or to take other action so long as the lender is proceeding diligently)
to cure any default under the ground lease which is curable after the
receipt of notice of any default before the lessor may terminate the
ground lease. All rights of the lender under the ground lease and the
related Mortgage (insofar as it relates to the ground lease) may be
exercised by or on behalf of the lender;
I. The ground lease does not impose any restrictions on
subletting that would be viewed as commercially unreasonable by an
institutional investor. The lessor is not permitted to disturb the
possession, interest or quiet enjoyment of any subtenant of the lessee
in the relevant portion of the Mortgaged Property subject to the ground
lease for any reason, or in any manner, which would adversely affect the
security provided by the related Mortgage;
J. Under the terms of the ground lease and the related
Mortgage, any related insurance proceeds or condemnation award (other
than in respect of a total or substantially total loss or taking) will
be applied either to the repair or restoration of all or part of the
related Mortgaged Property, with the lender or a trustee appointed by it
having the right to hold and disburse such proceeds as repair or
restoration progresses, or to the payment of the outstanding principal
balance of the Mortgage Loan, together with any accrued interest, except
that in the case of condemnation awards, the ground lessor may be
entitled to a portion of such award;
K. Under the terms of the ground lease and the related
Mortgage, any related insurance proceeds, or condemnation award in
respect of a total or substantially total loss or taking of the related
Mortgaged Property will be applied first to the payment of the
outstanding principal balance of the Mortgage Loan, together with any
accrued interest (except as provided by applicable law or in cases where
a different allocation would not be viewed as commercially unreasonable
by any institutional investor, taking into account the relative duration
of the ground lease and the related Mortgage and the ratio of the market
value of the related Mortgaged Property to the outstanding principal
balance of such Mortgage Loan). Until the principal balance and accrued
interest are paid in full, neither the lessee nor the lessor under the
ground lease will have an option to terminate or modify the ground lease
without the prior written consent of the lender as a result of any
casualty or partial condemnation, except to provide for an abatement of
the rent; and
L. Provided that the lender cures any defaults which are
susceptible to being cured, the lessor has agreed to enter into a new
lease upon termination of the ground lease for any reason, including
rejection of the ground lease in a bankruptcy proceeding;
(30) With respect to any Mortgage Loan where all or a material portion
of the estate of the related Mortgagor therein is a leasehold estate, but
the related Mortgage also encumbers the related lessor's fee interest in
such Mortgaged Property: (a) such lien on the related fee interest is
evidenced by the related Mortgage, (b) such Mortgage does not by its terms
provide that it will be subordinated to the lien of any other mortgage or
encumbrance upon such fee interest, (c) upon the occurrence of a default
under the terms of such Mortgage by the related Mortgagor, any right of the
related lessor to receive notice of, and to cure, such default granted to
such lessor under any agreement binding upon the Seller, the Parent or the
Servicer would not be considered commercially unreasonable in any material
respect by prudent commercial mortgage lenders, (d) the related lessor has
agreed in a writing included in the related mortgage file that the related
ground lease may not be amended or modified without the prior written
consent of the lender and that any such action without such consent is not
binding on the lender, its successors or assigns, and (e) the related ground
lease is in full force and effect, and none of the Seller, the Parent or the
Servicer has actual knowledge that any default beyond applicable notice and
grace periods has occurred or that there is any existing condition which,
but for the passage of time or giving of notice, would result in a default
under the terms of such ground lease;
(31) With respect to Mortgage Loans that are cross-collateralized or
cross-defaulted, all other loans that are cross-collateralized by or
cross-defaulted with such Mortgage Loans (other than Receivables Loans) are
being transferred to the Buyer;
(32) Neither Seller nor any affiliate thereof has any obligation to make
any capital contribution to any Mortgagor under a Mortgage Loan, other than
contributions made on or prior to the date hereof;
(33) (1) The Mortgage Loan is directly secured by a Mortgage on a
skilled nursing facility, and (2) the fair market value of such real
property, as evidenced by an appraisal satisfying the requirements of FIRREA
conducted within 12 months of the origination of the Mortgage Loan, was at
least equal to 80% of the principal amount of the Mortgage Loan (a) at
origination (or if the Mortgage Loan has been modified in a manner that
constituted a deemed exchange under Section 1001 of the Code at a time when
the Mortgage Loan was not in default or default with respect thereto was not
reasonably foreseeable, the date of the last such modification) or (b) at
the date hereof; provided that the fair market value of the real property
must first be reduced by (A) the amount of any lien on the real property
interest that is senior to the Mortgage Loan and (B) a proportionate amount
of any lien that is in parity with the Mortgage Loan (unless such other lien
secures a Mortgage Loan that is cross-collateralized with such Mortgage
Loan, in which event the computation described in (a) and (b) shall be made
on an aggregated basis);
(34) There are no subordinate mortgages encumbering the related
Mortgaged Property, nor are there any preferred equity interests held by the
Seller, the Parent or the Servicer or any mezzanine debt related to such
Mortgaged Property, except as set forth in the Mortgage Loan Schedule;
(35) The Mortgage Loan Documents executed in connection with each
Mortgage Loan require that the related Mortgagor be a single-purpose entity
(for this purpose,
"single-purpose entity" shall mean an entity, other than an individual,
having organizational documents which provide substantially to the effect
that it is formed or organized solely for the purpose of owning and
operating one or more Mortgaged Properties, is prohibited from engaging in
any business unrelated to such property and the related Mortgage Loan, does
not have any assets other than those related to its interest in the related
Mortgaged Property or its financing, or any indebtedness other than as
permitted under the related Mortgage Loan);
(36) Each Mortgage Loan prohibits the related Mortgagor from mortgaging
or otherwise encumbering the Mortgaged Property without the prior written
consent of the mortgagee or the satisfaction of debt service coverage or
similar criteria specified therein and, except in connection with trade debt
and equipment financings in the ordinary course of Mortgagor's business,
from carrying any additional indebtedness, except, in each case, liens
contested in accordance with the terms of the Mortgage Loans;
(37) Each Mortgagor covenants in the Mortgage Loan documents that it
shall keep all licenses, permits, franchises, certificates of occupancy,
consents, and other approvals necessary for the operation of the Property in
full force and effect;
(38) Each Mortgaged Property (a) is located on or adjacent to a
dedicated road, or has access to an irrevocable easement permitting ingress
and egress, (b) is served by public utilities and services generally
available in the surrounding community or otherwise appropriate for the use
in which the Mortgaged Property is currently being utilized, and (c)
constitutes one or more separate tax parcels or is covered by an endorsement
with respect to the matters described in (a), (b) or (c) under the related
title insurance policy (or the binding commitment therefor);
(39) Based solely on a flood zone certification or a survey of the
related Mortgaged Property, if any portion of the improvements on the
Mortgaged Property is located in an area identified by the Federal Emergency
Management Agency or the Secretary of Housing and Urban Development as
having special flood hazards categorized as Zone "A" or Zone "V" and flood
insurance is available, the terms of the Mortgage Loan require the Mortgagor
to maintain flood insurance, or at such Mortgagor's failure to do so,
authorizes the lender to maintain such insurance at the cost and expense of
the Mortgagor;
(40) To the knowledge of the Seller, the Parent and the Servicer, with
respect to each Mortgage which is a deed of trust, a trustee, duly qualified
under applicable law to serve as such, currently so serves and is named in
the deed of trust or has been substituted in accordance with applicable law
or may be substituted in accordance with applicable law by the related
mortgagee, and except in connection with a trustee's sale after a default by
the related Mortgagor, no fees are payable to such trustee;
(41) Except as disclosed in the Mortgage Loan Schedule, to the knowledge
of the Seller, the Parent and the Servicer, as of the date hereof, there was
no pending action, suit or proceeding, arbitration or governmental
investigation (other than routine regulatory investigations) against any
Mortgagor or Mortgaged Property, an adverse outcome of which would
materially and adversely affect such Mortgagor's ability to perform under
the related Mortgage Loan;
(42) No advance of funds has been made by the Seller to the related
Mortgagor and no funds have, to the Seller's knowledge, been received from
any person other than, or on behalf of, the related Mortgagor, for, or on
account of, payments due on the Mortgage Loan;
(43) To the extent required under applicable law, as of the related
Purchase Date or as of the date that such entity held the Mortgage Note,
each holder of the Mortgage Note was authorized to transact and do business
in the jurisdiction in which each related Mortgaged Property is located,
except if the failure to be so authorized did not materially and adversely
affect the enforceability of such Mortgage Loan;
(44) All collateral for the Mortgage Loans is being transferred as part
of the Mortgage Loans;
(45) No Mortgage Loan requires the lender to release any portion of the
Mortgaged Property from the lien of the related Mortgage except upon (a)
payment in full of the related Mortgage Loan, (b) the satisfaction of
certain legal and underwriting requirements, (c) releases of unimproved
out-parcels or (d) releases of portions of the Mortgaged Property which will
not have a material adverse effect on the value of the collateral for the
related Mortgage Loan;
(46) Except as provided in paragraphs (29) (J) and (K) above, any
insurance proceeds in respect of a casualty loss or taking will be applied
either to (a) the repair or restoration of all or part of the related
Mortgaged Property, with, in the case of all Mortgage Loans and with respect
to all casualty losses or takings in excess of a specified percentage of the
related loan amount, the lender (or a trustee appointed by it) having the
right to hold and disburse such proceeds as the repair or restoration
progresses (except in any case where a provision entitling another party to
hold and disburse such proceeds would not be viewed as commercially
unreasonable by a prudent commercial mortgage lender) or (b) to the payment
of the outstanding principal balance of such Mortgage Loan together with any
accrued interest thereon;
(47) Each Form UCC-1 financing statement, if any, filed with respect to
personal property constituting a part of the related Mortgaged Property and
each Form UCC-2 or UCC-3 assignment, if any, of such financing statement to
the Seller or the Servicer was, and each Form UCC-3 assignment, if any, of
such financing statement in blank which the Trustee or its designee is
authorized to complete (but for the insertion of the name of the assignee
and any related filing information which is not yet available to the Seller
or the Servicer) is, in suitable form for filing in the filing office in
which such financing statement was filed;
(48) Based upon an opinion of counsel and/or other due diligence
considered reasonable by prudent commercial mortgage lenders, the
improvements located on or forming part of each Mortgaged Property comply
with applicable zoning laws and ordinances, or constitute a legal
non-conforming use or structure or, if any such improvement does not so
comply, such non-compliance does not materially and adversely affect the
value of the related Mortgaged Property. With respect to properties with a
principal balance of over $10,000,000, if the related Mortgaged Property
does not so comply, to the extent the Seller, the Parent or the Servicer is
aware of such non-compliance, it has required the related
Mortgagor to obtain law and ordinance insurance coverage in amounts
customarily required by prudent commercial mortgage lenders;
(49) Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (but without regard to the rule in
Treasury Regulation (as defined herein) Section 1.860G-2(f)(2) that treats a
defective obligation as a qualified mortgage or any substantially similar
successor provision) and all prepayment premiums and yield maintenance
charges constitute "customary prepayment penalties" within the meaning of
Treasury Regulation Section 1.860G-1(b)(2);
(50) The Mortgage Loan Documents for each Mortgage Loan provide that the
related Mortgagor thereunder shall be liable to the Seller for any losses
incurred by the Seller due to (i) the misapplication or misappropriation of
rents, insurance proceeds or condemnation awards, (ii) any willful act of
material waste, (iii) any breach of the environmental covenants contained in
the related Mortgage Loan Documents, and (iv) fraud;
(51) The Seller or the Servicer has delivered to the Custodian, with
respect to each Mortgage Loan, in accordance the Custodial Agreement, a
complete Mortgage File;
(52) The Mortgage Loan has not been subject to a Transaction hereunder
for a period of greater than 540 days;
(53) The Mortgage Loan Documents are on forms approved by the Buyer;
(54) No material adverse change in the Property, business, financial
condition or operations of the Mortgagor has occurred since the origination
date of the related Mortgage Loan, as determined by Buyer in its sole good
faith discretion; and
(55)There is no payment default, or material breach, or event of
acceleration existing under any related Receivables Loan.
(56) As of the Purchase Date, the Loan-to-Value Ratio does not exceed
80%.
With respect to each Mortgaged Property:
(a) The Mortgagor, the Facility and the operator, administrator or manager
of the Facility (each, as "Operator") are in compliance with the
applicable provisions of the laws, ordinances, statutes, regulations,
orders, standards, policies, accreditation standards, restrictions or
rules of any federal, state, local or other governmental or
quasi-governmental agency, authority, intermediary or other entity
having jurisdiction over the ownership or operation of the Facility
including, without limitation, (1) health and fire safety codes and (2)
the applicable provisions of laws, rules, regulations and published
interpretations or policies to which the Facility and/or the Mortgagor
is subject, including, without limitation, Medicare, Medicaid, or other
federal, state, local or other governmental or quasi-governmental
authorities', agencies', intermediaries' or other entities' laws, rules,
regulations or published interpretations or policies relating to the
prevention of fraud and abuse, prohibitions against self-referral,
billing for services provided, the quality and adequacy of medical care,
distribution of pharmaceuticals, rate
setting, equipment, personnel, operating policies, additions to
facilities and services and fee-splitting.
(b) All certificates, certifications, permits, licenses and approvals,
including, without limitation, certificates of completion and occupancy
and certificates of need ("CON"), required, necessary or desirable in
connection with the Mortgage Loan and for the legal use, occupancy and
operation of the Facility and approved provider status in any applicable
approved provider payment program (collectively, the "Licenses") have
been obtained and are in full force and effect. The Mortgagor has
obtained all regulatory approvals necessary for construction on, or
renovation of, the Mortgaged Property, or the purchase of new equipment
for the Mortgaged Property, including any certificates of need.
(c) The Licenses, including, without limitation, the CON:
(i) have not been transferred to any location other than the
Facility;
(ii) have not been pledged as collateral security for any other
Mortgage Loan or indebtedness; and
(iii) are held free from restrictions or known conflicts which would
materially impair the use or operation of the Facility as
intended, and are not provisional, probationary or restricted in
any way.
(d) So long as the Mortgage remains outstanding, neither Mortgagor nor
Operator is permitted pursuant to the terms of the Mortgage without the
consent of the holder of the Mortgage and, if required, the consent or
approval of any federal, state, local or other governmental and
quasi-governmental authorities, agencies, intermediaries or other
entities that have direct or indirect authority or oversight over the
Mortgagor, the Mortgaged Property, or the operations conducted on the
Mortgaged Property, to:
(i) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of the Licenses for
any Facility (other than the addition of services or other
matters expanding or improving the scope of such license);
(ii) amend or otherwise change any Facility's authorized bed capacity
and/or the number of approved beds; or
(iii) replace or transfer all or any part of any Facility's beds to
another site or location.
(e) The Facility is in compliance with the requirements for participation in
Medicare and Medicaid; each Facility is in conformance with all
insurance, reimbursement and cost reporting requirements, and has a
current provider agreement under Title XVIII (Medicare) and/or XIX
(Medicaid) of the Social Security Act or any other applicable laws or
regulations for reimbursement for the type of care or services provided
by Mortgagor.
(f) There is no threatened or pending revocation, suspension, termination,
probation, restriction, limitation, or nonrenewal affecting any
Mortgagor, Operator, or the Facility or any participation or provider
agreement with any third-party payor, including Medicare, Medicaid, Blue
Cross and/or Blue Shield, and any other private commercial insurance
managed care or employee assistance program (such programs, the
"Third-Party Payors' Programs") to which the Mortgagor, Operator or
Facility presently is subject. None of the Mortgagor, Operator nor the
Facility is currently a target or subject of, or participant in, any
investigation, or a defendant or respondent in any administrative
proceeding, arbitration, lawsuit or threatened administrative
proceeding, audit, investigation, arbitration or lawsuit brought by any
governmental or other third-party payor, including, without limitation,
any managed care company, insurance company, or other commercial payor.
The Mortgage contains representations and covenants by the Mortgagor
that all Medicaid, Medicare, Third-Party Payors' Programs, and private
insurance cost reports and financial reports submitted by the Mortgagor,
Operator, or Facility are and will be true, accurate and complete and
have not been and will not be misleading in any material respects, and
except as otherwise disclosed, no cost reports for any Facility remain
"open" or unsettled.
(g) None of the Mortgagor, Operator or Facility is currently the target or
subject of any current or threatened action, proceeding, suit, audit,
investigation or sanction by any federal, state, local or other
governmental or quasi-governmental agency, authority, intermediary or
other entity or any other third party or any patient or resident
(including, without limitation, whistleblower suits, suits brought
pursuant to federal or state False Claims Acts, and
Medicaid/Medicare/state/commonwealth fraud/abuse laws or other
investigations) which may directly or indirectly, or with the passage of
time:
(i) result in the imposition of a fine, penalty, alternative,
interim or final sanction, a lower rate certification,
suspension, discontinuance or recoupment of all or part of
reimbursement from any federal, state, commonwealth or local
government or quasi-government body, or by any intermediary,
third-party, insurance carrier or private payor, or a lower
reimbursement rate for services rendered to eligible patients or
other civil or criminal remedy, or the suspension, denial or
recoupment of all or part of payments;
(ii) have a material adverse effect on the Mortgagor, Operator or
Facility;
(iii) result in the appointment of a receiver or manager;
(iv) result in the revocation, transfer, surrender, suspension or
other impairment of the operating certificate(s), provider
agreement(s), license(s), permit(s), approval(s) or
authorization(s) of the Mortgagor or Operator or the operations
of the Facility; and
(v) have a material adverse impact on the Mortgagor's, Operators or
Facility's ability to accept and/or retain patients or
residents.
(h) The Facility and the use thereof complies in all material respects with
all applicable federal, state, local and other building codes, fire
codes, health care, hospital, nursing facility, assisted living
facility, senior housing, continuing care retirement community,
psychiatric facility, intermediate care facility for the developmentally
disabled and other similar regulatory requirements, including, but not
limited to, Medicare, Medicaid or other federal, state, local or
intermediary laws, rules, regulations or published interpretations or
guidelines relating to the prevention of fraud, abuse, neglect or
mistreatment (the "Physical Plant Standards") and no waivers of Physical
Plant Standards exist at any of the Facilities.
(i) No warning statement of charges or deficiencies, or other equivalent
report or letter, has been issued or penalty enforcement action has been
undertaken against the Operator, Facility or Mortgagor, or against any
officer, director or stockholder of the Operator, Facility or Mortgagor
by any governmental agency during the last three calendar years, and
there have been no violations over the past three years which have
resulted in the loss of Mortgagor's, Facility's or Operator's license or
termination of a provider agreement for any period whatsoever, nor have
there been repeated citations of those deficiencies which may lead to
the termination of a provider agreement when they are cited in
consecutive surveys.
(j) There are no current, pending or outstanding Medicaid, Medicare,
Third-Party Payors' Programs or other reimbursement audits or appeals
pending for any of the Mortgagors, Operators or Facilities concerning
allegations of fraud or that might have a material adverse effect on the
operations of the Facility.
(k) There are no current or pending Medicaid, Medicare, or Third-Party
Payors' Programs recoupment efforts at the Facility that might have a
material adverse effect on the operations of the Facility.
(l) There are no agreements with residents of the Facility or with any other
persons or organizations which deviate in any material adverse respect
from the standard form customarily used at the Facility or which
conflict with any statutory or regulatory requirements.
(m) All resident records at the Facility, including patient or resident
account records, are true, and correct in all material respects.
(n) Any existing agreement relating to the management, administration or
operation of the Facility with respect to such Facility is in full force
and effect and is not in default by any party thereto.
(o) The terms of the related Mortgage require that no Facility, Operator or
Mortgagor shall, other than in the normal course of business or were
required by law, change the terms of any of the Third-Party Payors'
Programs or its normal billing payment or reimbursement policies and
procedures with respect thereto (including, without limitation, the
amount and timing of finance charges, fees and write-offs) without the
prior written consent of the holder of the Mortgage and, if required,
the consent or approval of any federal, state,
local or other governmental and quasi-governmental authorities,
agencies, intermediaries or other entities that have direct or indirect
authority or oversight over the Mortgagor, the Mortgaged Property, or
the operations conducted on the Mortgaged Property.
(p) The Mortgagor is not a participant in any federal, state, local or other
governmental program (other than Medicare and Medicaid) whereby any
federal, state, local or other governmental or quasi-governmental
authority, agency, intermediary, board or other authority or entity may
have the right to recover funds by reason of the advance of federal,
state or local funds, including, without limitation, those authorized
under the Xxxx-Xxxxxx Act (42 U.S.C. 291, et seq.). The Mortgagor has
not received notice of and is not aware of any violation of applicable
antitrust laws of any federal, state, commonwealth or local government
or quasi-governmental body.
(q) The Mortgagor maintains professional liability and malpractice insurance
with limits of at least $2 million per occurrence (claim)/$6 million in
the aggregate which coverage includes healthcare professionals employed
by the Facility.
(r) Other than the Medicare and Medicaid programs, Mortgagor is not a
participant in any federal, state or local program whereby any federal,
state or local government or quasi-governmental body, or any
intermediary, agency, board or other authority or entity may have the
right to recover funds by reason of the advance of federal, state or
local funds, including, without limitation, those authorized under the
Xxxx-Xxxxxx Act (42 U.S.C. 291, et seq.). Mortgagor has received no
notice, and is not aware of any violation of applicable antitrust laws.
(s) Mortgagor is not a party to any collective bargaining agreement or other
labor contract applicable to persons employed by it and there are no
threatened or pending labor disputes at the Facility, provided that
Mortgagor may adopt or may be deemed to have adopted collective
bargaining agreements respecting employees employed at the Facility
prior to the date hereof, copies of which have been or will be provided
to Mortgagee.
(t) If the Facility does not have a compliance plan in place, Mortgagor
shall institute (or cause Operator to institute) within thirty (30) days
from the date hereof, and shall operate (or cause the Operate to
operate) the Facility in accordance with, a compliance plan which
follows applicable guidelines established by the United States
Department of Health and Human Services.
