Exhibit 10.6
MASTER REPURCHASE AGREEMENT
Dated as of May 30, 2002
BETWEEN:
Salomon Brothers Realty Corp., as buyer ("Buyer", which term shall include any
"Principal" as defined and provided for in Annex I), or as agent pursuant hereto
("Agent"), and
New Century Funding SB-1, as seller ("Seller").
1. APPLICABILITY
Buyer shall, from time to time, upon the terms and conditions set forth
herein, agree to enter into transactions in which Seller transfers to Buyer
Eligible Assets against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Seller such Purchased Assets at a date
certain, 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.
2. DEFINITIONS AND INTERPRETATION
a. Defined Terms.
"Additional Purchased Assets" shall have the meaning assigned thereto
in Section 6(a) hereof.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting equity, by contract or otherwise.
"Agent" means Salomon Brothers Realty Corp. or any successor.
"Agreement" means this Master Repurchase Agreement, as it may be amended,
supplemented or otherwise modified from time to time.
"Borrower" means the obligor or obligors on a Note, including any Person
that has acquired the related collateral and assumed the obligations of the
original obligor or obligors under the Note.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a
day upon which the New York Stock Exchange, the Federal Reserve Bank of New York
or the Custodian is obligated by law or executive order to be closed.
"Buyer's Margin Amount" means, with respect to any Transaction as of
any date of determination, the amount obtained by application of Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such date.
"Buyer's Margin Percentage" shall have the meaning assigned thereto in
the Side Letter.
"Change in Control" shall mean the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of outstanding shares of voting stock of an entity at any
time if after giving effect to such acquisition such Person or Persons owns
fifty percent (50%) or more of such outstanding voting stock.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by Buyer (or any Affiliate of
Buyer) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned thereto in Section 8
hereof.
"Computer Medium" means a computer or other electronic medium generated
by or on behalf of Seller and delivered or transmitted to Buyer and Custodian
which provides information relating to the Purchased Assets, including the
identity of the related servicer with respect to each Loan and the information
set forth in the Loan Schedule, in a format reasonably acceptable to Buyer.
"Confirmation" shall have the meaning assigned thereto in Section 4(b)
hereof.
"Custodian" means Deutsche Bank National Trust Company, or its
successors and permitted assigns.
"Custody Agreement" means the Custodial Agreement, dated as of May 30,
2002 among Seller, Buyer, NCMC and Custodian.
"Default" means any event, that, with the giving of notice or the
passage of time or both, would constitute an Event of Default.
"Default Rate" means, as of any date of determination, the lesser of
(i) the Pricing Rate plus 4% and (ii) the maximum rate permitted by applicable
law.
"Effective Date" shall mean the date set forth on the top of the first
page of this Agreement.
"Eligible Asset" shall have the meaning assigned thereto in the Side
Letter.
"Eligible Loan" shall have the meaning assigned thereto in the Side
Letter. "Event of Default" shall have the meaning assigned thereto in
Section 18 hereof.
"Facility Fee Amount" shall have the meaning assigned thereto in the
Side Letter.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall mean 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
Guarantor.
"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.
"Guarantors" means each of NCFC and NCMC, or any successors thereto.
"Guaranty" means the Guaranty and Pledge Agreement of the Guarantors in
favor of the Buyer, dated as of May 30, 2002.
"Hedge Counterparty": A Person (i) (A) with long-term and commercial
paper or short-term deposit ratings of "P-1" by Xxxxx'x Investors Service and
"A-1" by Standard & Poor's and (B) which shall agree in writing that, in the
event that any of its long-term or commercial paper or short-term deposit
ratings cease to be at or above "A-2" by Moody's and "A" by Standard & Poor's,
it shall secure its obligations in accordance with the request of the Buyer or
Buyer shall have the option to treat such failure as an Early Termination Event
(as defined in the ISDA Master Agreement) by such Hedge Counterparty, and (ii)
that has entered into a Hedge Instrument.
"Hedge Instrument" means any interest rate cap agreement, interest rate
floor agreement, interest rate swap agreement or other interest rate hedging
agreement entered into by the Seller or a Guarantor with a Hedge Counterparty
that relates to applies to the Purchased Assets or assets similar to the
Purchased Assets.
"Income" means, with respect to any Purchased Asset at any time, any
principal and/or interest thereon and all dividends, sale proceeds and other
collections and distributions thereon, but not including any commitment fees,
origination fees and/or servicing fees (with respect to third party servicers
that are not an Affiliate of Seller or any Guarantor).
"Indebtedness" shall mean, for any Person: (a) all obligations for
borrowed money; (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 and paid within ninety (90) days of the date the related invoice is
received for the respective goods delivered or the respective services 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 for account of such Person; (e)
capital lease obligations of such Person; (f) obligations of such Person under
repurchase agreements or like arrangements; (g) indebtedness of others
guaranteed on a recourse basis by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; (i) indebtedness of general partnerships of which such Person is
a general partner; and (j) any other contingent liabilities of such Person.
"Interim Servicer" means (i) Ocwen Federal Bank, FSB, or (ii) any other
servicer approved by Buyer in its sole discretion exercised in good faith.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, including all rules and regulations promulgated thereunder.
"LIBOR" shall mean, for each day, the rate determined by the Buyer on
such date (or, in the event such day is not a Business Day, the prior Business
Day) on the basis of the offered rate for overnight U.S. dollar deposits, as
such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such
date (rounded up to the nearest whole multiple of 1/16%); provided that if such
rate does not appear on Telerate Page 3750, the rate for such date will the rate
determined by the Buyer in its sole discretion. LIBOR shall be calculated daily.
"Loan" means (i) a first or second lien single family (one-to-four
units) non-conforming residential loan, (ii) such other type of loan, lease or
other receivable as shall be agreed upon by the parties as evidenced by Appendix
A to the Custody Agreement, as amended or supplemented by mutual agreement of
the parties, or (iii) any interest in, or secured by, any such loan, lease or
other receivable.
"Loan Documents" shall have the meaning assigned thereto in the Custody
Agreement.
"Loan File" shall have the meaning assigned thereto in the Custody
Agreement.
"Loan Schedule" means the list of Loans delivered by a Guarantor or the
Seller to Buyer and Custodian together with each Transaction Notice and attached
by the Custodian to the related Trust Receipt. Each Loan Schedule shall set
forth as to each Loan the related Borrower name, the address of the related
Mortgaged Property and the outstanding principal balance of the Loan as of the
initial Purchase Date, together with any other information specified by Buyer
from time to time in good faith.
"Margin Call" As defined in Section 6(a).
"Margin Deficit" shall have the meaning assigned thereto in Section
6(a) hereof.
"Market Value" means (i) with respect to any Purchased Asset that is an
Eligible Asset, as of any date of determination, the value ascribed to such
asset by Buyer in its sole discretion, and (ii) with respect to a Purchased
Asset that is not an Eligible Asset, zero.
"Master Contribution Agreement" means the Master Contribution
Agreement, dated as of May 30, 2002 between NCMC and Seller.
"Master Netting Agreement" means the Master Collateral Security and
Master Netting Agreement dated as of May 30, 2002 among Buyer and certain
Affiliates and the Guarantors and certain Affiliates.
"Material Adverse Change" means, with respect to a Person, any material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects taken as a whole or prospects of such
Person.
"Material Adverse Effect" means (a) a Material Adverse Change with
respect to a Guarantor or such Guarantor and its Affiliates that are party to
any Program Document taken as a whole; (b) a material impairment of the ability
of a Guarantor or any Affiliate that is a party to any Program Document to
perform under any Program Document and to avoid any Event of Default; (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability of any Program Document against either Guarantor or any Affiliate
that is a party to any Program Document; or (d) a material adverse effect upon
the value or marketability of a material portion of the Purchased Assets.
"Maximum Aggregate Purchase Price" means $150,000,000.
"Mortgage" means a mortgage, deed of trust, or other instrument that
creates a lien on the related Mortgaged Property and secures a Note.
"Mortgaged Property" means, with respect to a Loan, the related
Borrower's fee interest in real property or leasehold interest in real property
and all other collateral securing repayment of the debt evidenced by the related
Note.
"NCCC" means NC Capital Corporation, or any successor thereto.
"NCFC" means New Century Financial Corporation, or any successor
thereto.
"NCMC" means New Century Mortgage Corporation, or any successor
thereto.
"Note" means, with respect to any Loan, the related promissory note
together with all riders thereto and amendments thereof or other evidence of
indebtedness of the related Borrower.
"Notice Date" shall have the meaning assigned thereto in Section 4
hereof.
"Obligations" means (a) all of Seller's and Guarantors' obligation to
pay the Repurchase Price on the Repurchase Date and other obligations and
liabilities of Seller and Guarantors to
Buyer, its Affiliates or Custodian arising under, or in connection with, the
Program Documents or directly related to the Purchased Assets, whether now
existing or hereafter arising; (b) any and all sums paid by Buyer or on behalf
of Buyer pursuant to the Program Documents in order to preserve any Purchased
Asset or its interest therein; (c) in the event of any proceeding for the
collection or enforcement of any of Seller's or Guarantors' indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Asset, or of any exercise by Buyer or
such Affiliate of its rights under the Program Documents, including without
limitation, reasonable attorneys' fees and disbursements and court costs; and
(d) all of Seller's and Guarantor's obligations to Buyer, Custodian or any other
Person pursuant to the Program Documents.
"Person" shall mean any legal person, including any individual,
corporation, partnership, association, joint-stock company, trust, limited
liability company, unincorporated organization, governmental entity or other
entity of similar nature.
"Price Differential" means, with respect to each Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Transaction to the Purchase Price on a 360-day-per-year basis for the
actual number of days during the period commencing on (and including) the
Purchase Date and ending on (but excluding) the Repurchase Date (reduced by any
amount of such Price Differential in respect of such period previously paid by
Seller to Buyer) with respect to such Transaction.
"Pricing Rate" means the per annum percentage rate for determination of
the Price Differential as set forth in Section 3(b) hereof or as otherwise set
forth in the Side Letter.
"Prime Rate" means the daily prime loan rate as reported in The Wall
Street Journal or if more than one rate is published, the highest of such rates.
"Principal" shall have the meaning given to it in Annex I.
"Program Documents" means this Agreement, the Custody Agreement, any
Servicing Agreement, the Master Netting Agreement, the Guaranty, any assignment
of Hedge Instrument, the Master Contribution Agreement, the Side Letter, the
Servicer Side Letter and any other agreement entered into by Seller and/or
Guarantor, on the one hand, and Buyer or one of its Affiliates (or Custodian on
its behalf) on the other, in connection herewith or therewith.
"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 Date" means the date on which Purchased Assets are to be
transferred by Seller to Buyer.
"Purchase Price" shall have the meaning assigned thereto in the Side
Letter.
"Purchased Assets" means, with respect to a Transaction, the Loans set
forth on the related Loan Schedule, together with the related Records, Servicing
Rights, Seller's or Guarantor's rights under any related Hedge Instruments
(which interest in Hedge Instruments shall be pro rata and subject to rights of
other parties holding security interest therein), and other Collateral, and all
instruments, chattel paper, and general intangibles comprising or relating to
all of the foregoing. The term "Purchased Assets" with respect to any
Transaction at any time also shall include Additional Purchased Assets delivered
pursuant to Section 6(a) hereof.
"Records" means all instruments, agreements and other books, records,
reports and data generated by other media for the storage of information
maintained by Seller, Guarantor, any of their Affiliates or agents, or their
servicer or custodian with respect to a Purchased Asset. Records shall include
the Notes, any Mortgages, the Loan Files and any other instruments necessary to
document or service a Loan that is a Purchased Asset, including, without
limitation, the complete payment and modification history of each Loan that is a
Purchased Asset.
"Repurchase Date" shall have the meaning assigned thereto in Section
3(b) and shall also include the date determined by application of Section 19.
"Repurchase Price" means the price at which Purchased Assets are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination.
"Servicer Side Letter" means the letter agreement, dated as of May 30,
2002, among Seller, Guarantors, Ocwen Federal Bank, FSB and Buyer.
"Servicing Agreement" means any agreement (other than the Custody
Agreement) giving rise or relating to Servicing Rights with respect to a
Purchased Asset, including any assignment or other agreement relating to such
agreement.
"Servicing Rights" means contractual, possessory or other rights of
Seller or any other Person arising under a Servicing Agreement, the Custody
Agreement or otherwise, to administer or service a Purchased Asset or to possess
related Records.
"Side Letter" means the pricing side letter, dated as of May 30, 2002,
among Seller, Guarantors and Buyer, as the same may be amended, supplemented or
modified from time to time.
"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.
"Substitute Assets" has the meaning assigned thereto in Section 16(a).
"Termination Date" has the meaning assigned thereto in Section 27.
"Transaction" has the meaning assigned thereto in Section 1.
"Transaction Notice" means a written request of Seller to enter into a
Transaction, in the form attached to the Custody Agreement which is delivered to
Buyer and Custodian.
"Trust Receipt" means a Trust Receipt and Certification as defined in
the Custody Agreement.
"Underwriting Guidelines" means NCMC's underwriting guidelines in
effect as of the date of this Agreement, which have been approved in writing by
Buyer, as the same may be amended from time to time in accordance with terms of
this Agreement.
"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.
"Wet Funded Loan" means a Loan for which, as of the related initial
Purchase Date, the documents in the related Loan File has not been delivered to
the Custodian, and thereafter, each date until the documents in the related Loan
File has been delivered to the Custodian.
"Wet Funding Package" shall have the meaning assigned thereto in the
Custody Agreement.
b. Capitalized terms used but not defined in this Agreement shall
have the meanings assigned thereto in the Custody Agreement.
c. Interpretation.
Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (c) apply unless the context requires
otherwise. The singular includes the plural and conversely. A gender includes
all genders. Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit
is, unless otherwise specified, a reference to a Section of, or annex or exhibit
to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party's successors and permitted substitutes
or assigns. A reference to an agreement or document is to the agreement or
document as amended, modified, novated, supplemented or replaced, except to the
extent prohibited by any Program Document. A reference to legislation or to a
provision of legislation includes a modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued under it. A reference to writing includes a facsimile
transmission and any means of reproducing words in a tangible and permanently
visible form. A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing. An Event of Default
subsists until it has
been waived in writing by the Buyer or has been timely cured. The words
"hereof", "herein", "hereunder" and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement. The term
"including" is not limiting and means "including without limitation." In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including", the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and including." This
Agreement may use several different limitations, tests or measurements to
regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their
terms. Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied. References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Seller. Except where otherwise provided in
this Agreement any determination, statement or certificate by the Buyer or an
authorized officer of the Buyer provided for in this Agreement is conclusive and
binds the parties in the absence of manifest error. A reference to an agreement
includes a security interest, guarantee, agreement or legally enforceable
arrangement whether or not in writing related to such agreement. A reference to
a document includes an agreement (as so defined) in writing or a certificate,
notice, instrument or document, or any information recorded in computer disk
form. Where the Seller or a Guarantor is required to provide any document to the
Buyer under the terms of this Agreement, the relevant document shall be provided
in writing or printed form unless the Buyer requests otherwise. At the request
of the Buyer, the document shall be provided in computer readable format or both
printed and computer readable format. This Agreement is the result of
negotiations among and has been reviewed by counsel to the Buyer, Guarantors and
the Seller, and is the product of all parties. In the interpretation of this
Agreement, no rule of construction shall apply to disadvantage one party on the
ground that such party proposed or was involved in the preparation of any
particular provision of this Agreement or this Agreement itself. Except where
otherwise expressly stated the Buyer may give or withhold, or give
conditionally, approvals and consents, may be satisfied or unsatisfied, and may
form opinions and make determinations at its absolute discretion. Any
requirement of good faith, discretion or judgment by the Buyer shall not be
construed to require Buyer to request or await receipt of information or
documentation not immediately available from or with respect to the Seller,
Guarantor, a servicer of the Purchased Assets, any other Person or the Purchased
Assets themselves.
3. THE TRANSACTIONS
a. Seller shall repurchase Purchased Assets from Buyer on each related
Repurchase Date. Each obligation to repurchase subsists without regard to any
prior or intervening liquidation or foreclosure with respect to any Purchased
Asset. Seller is obligated to obtain the Purchased Assets from Buyer or its
designee (including the Custodian) at Seller's expense on (or after) the related
Repurchase Date.
b. Provided that the applicable conditions in Sections 9(a) and (b) have
been satisfied, each Purchased Asset that is repurchased by Seller on the
Repurchase Date occurring on the 20th day of each month (or, if such 20th day is
not a Business Day, the immediately following Business Day) following the
related Purchase Date (the day of the month so determined for each month, or any
other date designated by Seller to Buyer for such a repurchase
on at least one Business Day's prior notice to Buyer, a "Repurchase Date", which
term shall also include the date determined by application of Section 19) shall
automatically become subject to a new Transaction unless Buyer is notified by
Seller at least one (1) Business Day prior to any such Repurchase Date, provided
that if the Repurchase Date so determined is later than the Termination Date,
the Repurchase Date for such Transaction shall automatically reset to the
Termination Date, and the provisions of this sentence as it might relate to a
new Transaction shall expire on such date. For each new Transaction, unless
otherwise agreed, (y) the accrued and unpaid Price Differential shall be settled
in cash on each related Repurchase Date, and (z) the Pricing Rate shall be as
set forth in the Side Letter.
4. ENTERING INTO TRANSACTIONS, TRANSACTION NOTICE CONFIRMATIONS
a. Under the terms and conditions of the Program Documents, Buyer hereby
agrees to enter into Transactions with a Purchase Price up to the Maximum
Aggregate Purchase Price. Unless otherwise agreed, Seller shall give Buyer and
Custodian notice of any proposed Purchase Date in accordance with the terms of
the Custody Agreement (the date on which such notice is so given, the "Notice
Date"). On the Notice Date, Seller or a Guarantor shall (i) request that Buyer
enter into a Transaction by furnishing to Buyer and Custodian a Transaction
Notice and Loan Schedule, (ii) deliver to Buyer a Computer Medium for the
related Purchased Assets and (iii) deliver to Custodian the Loan File or Wet
Funding Package for each Loan subject to such Transaction.
b. In the event that the parties hereto desire to enter into a Transaction
on terms other than as set forth in this Agreement (as amended by the Side
Letter), the parties shall execute a "Confirmation" specifying such terms prior
to entering into such Transaction. Any such Confirmation and the related
Transaction Notice, together with this Agreement, shall constitute conclusive
evidence of the terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates. In the event of any conflict
between this Agreement and a Confirmation, the terms of the Confirmation shall
control with respect to the related Transaction.
5. PAYMENT AND TRANSFER
Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Purchased Assets transferred shall be
transferred to the Custodian pursuant to the Custody Agreement. Any Repurchase
Price or Price Differential received by Buyer after 2:30 p.m. New York City time
shall be applied on the next succeeding Business Day.
6. MARGIN MAINTENANCE
a. If at any time the aggregate Market Value of all Purchased Assets
subject to all Transactions is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller
require Seller in such Transactions to transfer to Buyer cash or, at Buyer's
option (and provided Seller has additional Eligible Assets), additional Eligible
Assets ("Additional Purchased Assets"), so that the cash and aggregate Market
Value of the Purchased Assets, including any such Additional Purchased Assets,
will thereupon equal or exceed such aggregate Buyer's Margin Amount (such
requirement, a "Margin Call").
b. Notice required pursuant to Section 6(a) may be given by any means
provided in Section 35 hereof. Any notice given before 10:00 a.m. New York time
on a Business Day shall be satisfied no later than 5:00 p.m. New York time on
such Business Day. Any notice given on or after 10:00 a.m. New York time on a
Business Day shall be satisfied no later than 5:00 p.m. New York time on the
Business Day following the date of such notice. 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, Guarantors 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 or a Guarantor.
7. INCOME PAYMENTS
Where a particular term of a Transaction extends over the date on which
Income is paid in respect of any Purchased Assets subject to that Transaction,
such Income shall be the property of Buyer. Notwithstanding the foregoing, Buyer
agrees that prior to the occurrence of an Event of Default, Seller shall be
entitled to receive an amount equal to all Income received, whether by
Guarantor, Buyer, Custodian, Interim Servicer or any servicer or any other
Person, which is not otherwise received by Seller, in respect of the Purchased
Assets; provided, however, that any income received by or on behalf of Seller
while the related Transaction is outstanding shall be deemed held by Seller
solely in trust for Buyer pending the repurchase on the related Repurchase Date.
Upon the occurrence of an Event of Default, the Seller and each Guarantor shall
cause all Income to be delivered to the Buyer.
8. SECURITY INTEREST
Seller and Buyer intend that the Transactions hereunder be sales to Buyer
of the Purchased Assets and not loans from Buyer to Seller secured by the
Purchased Assets. However, in order to preserve Buyer's rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for Seller's
performance of all of its Obligations, Seller hereby grants Buyer a fully
perfected first priority security interest in the following property, whether
now existing or hereafter acquired: the Purchased Assets, the related Records,
all mortgage guaranties and insurance relating to such Purchased Assets (issued
by governmental agencies or otherwise) and any mortgage insurance certificate or
other document evidencing such mortgage guaranties or insurance relating to such
Purchased Assets and all claims and payments thereunder, any purchase agreements
or other agreements or contracts relating to or constituting any or all of the
foregoing, all "accounts" as
defined in the Uniform Commercial Code relating to or constituting any or all of
the foregoing, all other insurance policies and insurance proceeds relating to
any Purchased Asset or the related Mortgaged Property, any security account and
all rights to Income and the rights to enforce such payments arising from any of
the Purchased Assets, and any and all replacements, substitutions, distributions
on or proceeds with respect to any of the foregoing (collectively the
"Collateral").
9. CONDITIONS PRECEDENT
a. 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 each party thereto (as
applicable):
(i) The Program Documents duly executed and delivered by the
parties thereto and being in full force and effect, free of any
modification, breach or waiver;
(ii) Evidence that all other actions necessary or, in the opinion of
Buyer, desirable to perfect and protect Buyer's interest in the Purchased
Assets and other Collateral have been taken, including, without limitation,
duly executed and filed Uniform Commercial Code financing statements on
Form UCC-1;
(iii) A certified copy of Seller's and Guarantors' consents or
corporate resolutions, as applicable, approving the Program Documents and
Transactions thereunder (either specifically or by general resolution), and
all documents evidencing other necessary corporate action or governmental
approvals as may be required in connection with the Program Documents;
(iv) An incumbency certificate of the secretaries of Seller and
Guarantors certifying the names, true signatures and titles of Seller's and
Guarantors' representatives duly authorized to request Transactions
hereunder and to execute the Program Documents and the other documents to
be delivered thereunder;
(v) An opinion of Seller's and Guarantors' counsel as to such
matters as Buyer may reasonably request and in form and substance
acceptable to Buyer;
(vi) A copy of the Underwriting Guidelines certified by an officer
of NCMC;
(vii) The original trust certificate of NCMC, representing 100%
ownership of Seller, issued in the name of NCMC and an original conveyance
power in blank executed by NCMC;
(viii) All of the conditions precedent in the Guaranty shall have been
satisfied; and
(ix) Any other documents reasonably requested by Buyer.
(x) Buyer's legal, tax, business and environmental due diligence of
the Seller
and Guarantors each shall have been completed to the satisfaction of the
Buyer.
b. The obligation of Buyer to enter into each Transaction pursuant to
this Agreement is subject to the following conditions precedent:
(i) Buyer or its designee shall have received on or before the day
of a Transaction with respect to such Purchased Assets (unless otherwise
specified in this Agreement) the following, in form and substance
satisfactory to Buyer and (if applicable) duly executed:
(A) Transaction Notice, Loan Schedule and Computer Medium delivered
pursuant to Section 4(a);
(B) The related Trust Receipt; and
(C) Such certificates, customary opinions of counsel or other
documents as Buyer may reasonably request, provided that such
opinions of counsel shall not be required in connection with
each Transaction but shall only be required from time to time
as deemed necessary by Buyer in its good faith.
(ii) No Default or Event of Default shall have occurred and be
continuing.
(iii) Buyer shall not have reasonably determined that a change in any
requirement of law or in the interpretation or administration of any
requirement of law applicable to Buyer has made administration of
Governmental Authority shall have asserted that it is unlawful, for Buyer
to enter into Transactions with a Pricing Rate based on LIBOR.
(iv) All representations and warranties in the Program Documents
shall be true and correct on the date of such Transaction.
(v) The then aggregate outstanding Purchase Price for all Purchased
Assets, when added to the Purchase Price for the requested Transaction,
shall not exceed the Maximum Aggregate Purchase Price.
(vi) No event or events shall have been reasonably determined by
Buyer to have occurred and be continuing resulting in the effective absence
of a whole loan or asset-backed securities market.
(vii) Satisfaction of any conditions precedent to the initial
Transaction as set forth in clause (a) of this Section 9 that were not
satisfied prior to such initial Purchase Date.
(viii) The Purchase Price for the requested Transaction shall not be
less than $500,000.
(ix) Buyer shall have determined that all actions necessary or, in the
opinion of Buyer, desirable to maintain Buyer's perfected interest in the
Purchased Assets and other Collateral have been taken, including, without
limitation, duly executed and filed Uniform Commercial Code financing
statements on Form UCC-1.
(x) Any other documents reasonably requested by Buyer.
(xi) The Buyer shall not be obligated to enter into more than one
Transaction per Business Day or more than eight Transactions in any
calendar month.
10. RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other
Obligations that relate to and are owed with respect to a Purchased Asset, if no
Default or Event of Default has occurred and is continuing, Buyer shall, and
shall direct Custodian to, release such Purchased Asset unless such release
would give rise to or perpetuate a Margin Deficit. Except as set forth in
Sections 6(a) and 16, Seller shall give at least one (1) Business Day's prior
written notice to Buyer if such repurchase shall occur on other than a
Repurchase Date set forth in Section 3(b).
If such a Margin Deficit is applicable, Buyer shall notify Seller of the
amount thereof and Seller may thereupon satisfy the Margin Call in the manner
specified in Section 6.
11. RELIANCE
With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to Seller or Guarantors in acting upon, any request or
other communication that Buyer reasonably believes to have been given or made by
a person authorized to enter into a Transaction on Seller's or a Guarantor's
behalf.
12. REPRESENTATIONS AND WARRANTIES
Each of the Seller and each Guarantor hereby represents and warrants, and
shall on and as of the Purchase Date for any Transaction and on and as of each
date thereafter through and including the related Repurchase Date be deemed to
represent and warrant, that:
a. Due Organization and Qualification. Each of the Seller and each
Guarantor is duly organized, validly existing and in good standing under the
laws of the jurisdiction under whose laws it is organized. Each of the Seller
and each Guarantor is duly qualified to do business, is in good standing and has
obtained all necessary licenses, permits, charters, registrations and approvals
necessary for the conduct of its business as currently conducted and the
performance of its obligations under the Program Documents or any failure to
obtain such a license, permit, charter, registration or approval will not cause
a Material Adverse Effect or impair the enforceability of any Loan.
b. Power and Authority. Each of the Seller and each Guarantor has all
necessary power and authority to conduct its business as currently conducted, to
execute, deliver and perform its obligations under the Program Documents and to
consummate the Transactions.
c. Due Authorization. The execution, delivery and performance of the
Program Documents by each of the Seller and each Guarantor have been duly
authorized by all necessary action and do not require any additional approvals
or consents or other action by or any notice to or filing with any Person other
than any that have heretofore been obtained, given or made.
d. Noncontravention. None of the execution and delivery of the Program
Documents by Seller or either Guarantor or the consummation of the Transactions
and transactions thereunder:
i) conflicts with, breaches or violates any provision of any
material agreements of Seller or a Guarantor or in any material
respect any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to Seller or either Guarantor or its properties;
ii) constitutes a material default by Seller or a Guarantor
under any loan or repurchase agreement, mortgage, indenture or other
agreement or instrument to which Seller or a Guarantor is a party or
by which it or any of its properties is or may be bound or affected;
or
iii) results in or requires the creation of any lien upon or in
respect of any of the assets of Seller or a Guarantor except the lien
relating to the Program Documents.
e. Legal Proceeding. Except as otherwise disclosed in the financial
statements of NCFC, there is no action, proceeding or investigation by or before
any court, governmental or administrative agency or arbitrator affecting any of
the Purchased Assets, Seller, a Guarantor or any of their Affiliates, pending or
threatened, which has a reasonable likelihood of having a Material Adverse
Effect.
f. Valid and Binding Obligations. Each of the Program Documents to which
the Seller or a Guarantor is a party, when executed and delivered by such Seller
or Guarantor, will constitute the legal, valid and binding obligations of such
Seller or Guarantor, enforceable against such Seller or Guarantor, in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles.
g. Financial Statements. The financial statements of Guarantors, copies
of which have been furnished to Buyer, (i) are, as of the dates and for the
periods referred to therein, complete and correct in all material respects, (ii)
present fairly the financial condition and results of operations of each
Guarantor as of the dates and for the periods indicated and (iii) have been
prepared in accordance with GAAP consistently applied, except as noted therein
(subject as to
interim statements to normal year-end adjustments). Since the date of the most
recent financial statements, there has been no Material Adverse Change with
respect to either Guarantor. Except as disclosed in such financial statements,
neither Guarantor is subject to any contingent liabilities or commitments that,
individually or in the aggregate, have a reasonably likelihood of causing a
Material Adverse Change with respect to either Guarantor.
h. Accuracy of Information. None of the documents or information prepared
by or on behalf of Seller or a Guarantor and provided by Seller or a Guarantor
to Buyer relating to Seller's or a Guarantor's financial condition contain any
statement of a material fact with respect to Seller or Guarantors or the
Transactions that was untrue or misleading in any material respect when made.
Since the furnishing of such documents or information, there has been no change,
nor any development or event involving a prospective change known to Seller or
either Guarantor, that would render any of such documents or information untrue
or misleading in any material respect.
i. No Consents. No consent, license, approval or authorization from, or
registration, filing or declaration with, any regulatory body, administrative
agency, or other governmental, instrumentality, nor any consent, approval,
waiver or notification of any creditor, lessor or other non-governmental person,
is required in connection with the execution, delivery and performance by Seller
or either Guarantor of this Agreement or the consummation by Seller or either
Guarantor of any other Program Document, other than any that have heretofore
been obtained, given or made.
j. Compliance With Law. Etc. No practice, procedure or policy employed or
proposed to be employed by Seller or either Guarantor in the conduct of its
businesses violates any law, regulation, judgment, regulatory consent, order or
decree applicable to it which, if enforced, would result in either a Material
Adverse Change with respect to Seller or either Guarantor or a Material Adverse
Effect.
k. Solvency: Fraudulent Conveyance. Each of the Seller and each Guarantor
is solvent and will not be rendered insolvent by the Transaction and, after
giving effect to such Transaction, neither Seller nor either Guarantor will be
left with an unreasonably small amount of capital with which to engage in its
business. Neither Seller nor a Guarantor intends to incur, nor believes that it
has incurred, debts beyond its ability to pay such debts as they mature. Neither
Seller nor a Guarantor is 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
Seller or either Guarantor or any of their assets. The amount of consideration
being received by Seller upon the sale of the Purchased Assets to Buyer
constitutes reasonably equivalent value and fair consideration for such
Purchased Assets. Seller is not transferring any Purchased Assets with any
intent to hinder, delay or defraud any of its creditors. The amount of
consideration being received by NCMC upon the sale and/or contribution of the
Purchased Assets to Seller, respectively, constitutes reasonably equivalent
value and fair consideration for such Purchased Assets. Neither Guarantor is
transferring any Purchased Assets with any intent to hinder, delay or defraud
any of its creditors.
l. Investment Company Act Compliance. Seller is not required to be
registered as an "investment company" as defined under the Investment Company
Act nor as an entity under the control of an "investment company" as defined
under the Investment Company Act.
m. Taxes. Each of the Seller and each Guarantor has filed all federal
and state tax returns which are required to be filed and paid all taxes,
including any assessments received by it, to the extent that such taxes have
become due (other than for taxes that are being contested in good faith or for
which it has established adequate reserves). Any taxes, fees and other
governmental charges payable by Seller or a Guarantor in connection with a
Transaction and the execution and delivery of the Program Documents have been
paid.
n. Additional Representations. With respect to each Loan, Seller and
Guarantors, jointly and severally, hereby make all of the applicable
representations and warranties set forth in Appendix A to the Custody Agreement
as of the date the Loan File or Wet Funding Package, as applicable, is delivered
to the Custodian. Further, as of each Purchase Date, the Seller and the
Guarantors shall be deemed to have represented and warranted in like manner that
neither the Seller nor either Guarantor has any knowledge that any such
representation or warranty may have ceased to be true in a material respect as
of such date, except as otherwise stated in a Transaction Notice, any such
exception to identify the applicable representation or warranty and specify in
reasonable detail the related knowledge of the Seller or either Guarantor.
o. No Broker. Neither Seller nor a Guarantor has dealt with any broker,
investment banker, agent, or other person, except for Buyer, who may be entitled
to any commission or compensation in connection with the sale of Purchased
Assets pursuant to this Agreement; provided, that if Seller or either Guarantor
has dealt with any broker, investment banker, agent, or other person, except for
Buyer, who may be entitled to any commission or compensation in connection with
the sale of Purchased Assets pursuant to this Agreement, such commission or
compensation shall have been paid in full by Seller or a Guarantor, as
applicable.
p. Corporate Separateness.
(i) The capital of Seller and Guarantors is adequate for the
respective business and undertakings of Seller and Guarantors.
(ii) Other than as provided in this Agreement and the other
Program Documents, Seller is not engaged in any business transactions
with either Guarantor or any of their Affiliates other than transactions
in the ordinary course of its business on an "arms-length" basis.
(iii) The funds and assets of the Seller are not and will not be,
commingled with the funds of any other Person.
The representations and warranties set forth in this Agreement shall
survive transfer of the Purchased Assets to Buyer and shall continue for so long
as the Purchased Assets are subject to this Agreement.
13. COVENANTS OF SELLER AND GUARANTOR
Each of Seller and each Guarantor, as applicable, hereby covenants with
Buyer as follows:
a. Defense of Title. Each of Seller and each Guarantor warrants and will
defend the right, title and interest of Buyer in and to all Collateral against
all adverse claims and demands.
b. No Amendment or Compromise. Following an Event of Default, without
the prior written consent of the Buyer, neither Seller, either Guarantor nor
those acting on Seller's or either Guarantor's behalf shall amend or modify, or
waive any term or condition of, or settle or compromise any claim in respect of,
any item of the Purchased Assets, any related rights or any of the Program
Documents, provided that any such party may amend or modify a Loan if such
amendment or modification does not affect the amount or timing of any payment of
principal or interest, extend its scheduled maturity date, modify its interest
rate, or constitute a cancellation or discharge of its outstanding principal
balance and does not materially and adversely affect the security afforded by
the real property, finishings, fixtures, or equipment securing the Loan.
c. No Assignment. Except as permitted herein, neither Seller, NCMC 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 Program Documents), any
of the Purchased Assets or any interest therein, provided that this Section
shall not prevent any of the following: any transfer of Purchased Assets in
accordance with the Program Documents; any Hedging Instruments for the related
Purchased Assets; any servicing arrangement between the Interim Servicer and
Seller or its Affiliates; and any forward purchase commitment or other types of
take out commitment for the Purchased Assets.
d. Servicing of Loans. Seller and each Guarantor shall cause Interim
Servicer to service, or cause to be serviced, all Loans that are part of the
Purchased Assets in accordance with prudent servicing practices, pending any
delivery of such servicing to Buyer pursuant to this Agreement, employing at
least the same procedures and exercising the same care that Interim Servicer
customarily employs in servicing Loans for its own account. Seller shall notify
servicers of Buyer's interest hereunder and Seller shall notify Buyer of the
name and address of all servicers of Loans and shall identify each servicer with
respect to each Purchased Asset on a loan-by-loan basis. Buyer shall have the
right to approve each servicer and the form of all Servicing Agreements or
servicing side letter agreements. Seller shall cause each servicer to hold or
cause to be held all escrow funds collected with respect to such Loans in
customary custodial accounts and shall apply the same for the purposes for which
such funds were collected. Upon Buyer's request, Seller shall provide reasonably
promptly to Buyer a letter addressed to and agreed to by each servicer of Loans,
in form and substance reasonably satisfactory to Buyer, advising such servicer
of such matters as Buyer may reasonably request relating to the Loans. If Seller
should discover that, for any reason whatsoever, Seller or any entity
responsible to Seller by contract for the administration and/or servicing any
such Loan has failed to perform fully Seller's obligations under the Program
Documents or any of the obligations of such entities with respect to the
Purchased Assets, Seller shall promptly notify Buyer.
e. Preservation of Collateral: Collateral Value. Each of Seller and each
Guarantor shall do all things necessary to preserve the Collateral so that it
remains subject to a first priority perfected security interest hereunder.
Without limiting the foregoing, Seller and each Guarantor will comply with all
rules, regulations and other laws of any Governmental Authority and cause the
Collateral to comply with all applicable rules, regulations and other laws.
Neither Seller nor a Guarantor will allow any default by Seller or either
Guarantor to occur under any Collateral or any Program Documents and Seller and
each Guarantor shall fully perform or cause to be performed when due all of its
obligations under any Collateral or the Program Documents.
f. Maintenance of Papers, Records and Files. Seller and each Guarantor
shall require, and Seller or either Guarantor shall build, maintain and have
available, a complete file in accordance with lending industry custom and
practice for each Purchased Asset. Seller or either Guarantor will maintain or
cause to be maintained all such Records not in the possession of Custodian in
good and complete condition in accordance with industry practices and preserve
them against loss.
i) Seller and each Guarantor shall collect and maintain or cause
to be collected and maintained all Records relating to the Purchased
Assets in accordance with industry custom and practice, including those
maintained pursuant to the preceding subsection, and all such Records
shall be in the possession of the Custodian, the Interim Servicer, the
Seller or a Guarantor unless Buyer otherwise approves. Neither Seller nor
a Guarantor will 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 Loan, in
which event Seller or a Guarantor will obtain or cause to be obtained a
receipt from a financially responsible person for any such paper, record
or file.
ii) For so long as Buyer has an interest in or lien on any
Purchased Asset, Seller and each Guarantor will hold or cause to be held
all related Records in trust, as the custodian and bailee, for Buyer.
Seller or Guarantor shall notify, or cause to be notified, every other
party holding any such Records of the interests and liens granted hereby.
iii) Upon reasonable advance notice from Custodian or Buyer,
Seller and each Guarantor 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, (y) permit Buyer or its
authorized agents to discuss the affairs, finances and accounts of Seller
or either Guarantor with its respective chief operating officer and chief
financial officer and to discuss the affairs, finances and accounts of
Seller or either Guarantor with its independent certified public
accountants.
g. Financial Statements: Accountants' Reports: Other Information. Seller
and each Guarantor 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 Assets to Buyer. Seller and Guarantors shall furnish
or cause to be furnished to Buyer the following:
i) Financial Statements. (x) As soon as available and in any event
within 90 days after the end of each fiscal year, the consolidated,
audited balance sheets of NCFC, Guarantors and Seller as of the end of
each fiscal year of NCFC (inclusive of NCMC and Seller), and the audited
financial statements of income and changes in equity of Guarantors and
Seller, and the audited statement of cash flows of NCFC (inclusive of
NCMC and Seller), for such fiscal year and (y) as soon as available and
in any event within 45 days after the end of each quarter (including the
fourth quarter), the consolidated and consolidating, unaudited balance
sheets of NCFC (inclusive of NCMC and Seller) as of the end of each
quarter, and the unaudited financial statements of income and changes in
equity of NCFC (inclusive of NCMC and Seller), and the unaudited
statement of cash flows of NCFC (inclusive of NCMC and Seller), for the
portion of the fiscal year then ended, and (z) within 45 days after the
end of each month, monthly consolidated and unaudited financial
statements of income and changes in equity (and, to the extent available,
cash flow statements) and balance sheets as provided in clause (y), all
of which have been prepared in accordance with GAAP and certified by such
NCFC's, Guarantor's and Seller's, as applicable, chief financial officer
in the form of a compliance certificate to be delivered along with the
above financial statements.
ii) Loan Data. Monthly reports in form and scope satisfactory to
Buyer, setting forth data regarding the performance of the Purchased
Assets for the immediately preceding month, and such other information as
Buyer may reasonably request, including, without limitation, any other
information regarding the Purchased Assets reasonably requested by Buyer,
the performance of any loans serviced by or on behalf of each Interim
Servicer and any other financial information regarding the Guarantors
reasonably requested by Buyer.
iii) Monthly Servicing Diskettes. On or before the second Business
Day prior to each Repurchase Date, or any other time at Buyer's request,
a Computer Medium (or any other electronic transmission acceptable to
Buyer) in a format acceptable to Buyer containing such information with
respect to the Purchased Assets as Buyer may reasonably request upon
reasonable prior notice.
iv) Certifications. NCMC shall execute and deliver, on behalf of
the Seller, a monthly certification substantially in the form of Exhibit
A-1 attached hereto and each Guarantor shall execute and deliver a
quarterly certification substantially in the form of Exhibit A-2 attached
hereto.
h. Notice of Material Events. Each of Seller and each Guarantor shall
promptly inform Buyer in writing of any of the following:
i) any Default, Event of Default or default or breach by Seller or
either Guarantor of any other material obligation under any Program
Document, or the occurrence or existence of any event or circumstance
that Seller or either Guarantor with the passage of time expects to have
a reasonably likelihood of becoming an Event of Default;
ii) any material change in the insurance coverage required of
Seller or either Guarantor or any other Person pursuant to any Program
Document, with copy of evidence of same attached;
iii) any material dispute, litigation, investigation, proceeding
or suspension between Seller or a Guarantor, on the one hand, and any
Governmental Authority or any other Person;
iv) any material adverse change in accounting policies or
financial reporting practices of Seller or a Guarantor;
v) the occurrence of any material employment dispute and a
description of the strategy for resolving it; and
vi) any event, circumstance or condition that has resulted, or has
a reasonably likelihood of resulting, in either a Material Adverse Change
with respect to Seller or a Guarantor or a Material Adverse Effect.
i. Maintenance of Licenses. Each of Seller and each Guarantor shall
maintain, all licenses, permits or other approvals necessary for each of Seller
and each Guarantor to conduct its business and to perform its obligations under
the Program Documents, and each of Seller and each Guarantor shall conduct its
business strictly in accordance with applicable law.
j. No Withholdings for Taxes. Any payments made by Seller to Buyer shall
be free and clear of, and without deduction or withholding for, any taxes;
provided, however, that if Seller shall be required by law to deduct or withhold
any taxes from any sums payable to Buyer, then Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant authority in
accordance with applicable law, (B) pay to Buyer the sum that would have been
payable had such deduction or withholding not been made, and (C) at the time the
Price Differential is paid, pay to Buyer all additional amounts as specified by
Buyer to preserve the after-tax yield Buyer would have received if such tax had
not been imposed. This provision does not apply to income taxes payable by Buyer
on its taxable income.
k. Nature of Business. Neither Seller nor a Guarantor shall make any
material change in the nature of its business as carried on at the date hereof.
l. Limitation on Distributions. If a Default has occurred and is
occurring, neither Seller nor either Guarantor shall pay any dividends or
distributions with respect to any capital stock or other equity interests in
Seller or either Guarantor, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Seller or either Guarantor.
m. Reserved.
n. Merger of Guarantor. Neither Guarantor shall at any time, directly or
indirectly, (i) liquidate or dissolve or enter into any consolidation or merger
or be subject to a Change in
Control without Buyer's prior consent; (ii) form or enter into any partnership,
joint venture, syndicate or other combination which would have a Material
Adverse Effect; or (iii) make any Material Adverse Change with respect to a
Guarantor or such Guarantor's Subsidiaries.
o. Insurance. Seller will, and shall cause the Interim Servicer to,
obtain and maintain insurance with responsible companies in such amounts and
against such risks as are customarily carried by business entities engaged in
similar businesses similarly situated, and will furnish Buyer on request full
information as to all such insurance, and provide within (15) days after receipt
of such request the certificates or other documents evidencing renewal of each
such policy.
p. Affiliate Transaction. Neither Seller nor a Guarantor will at any
time, directly or indirectly, sell, lease or otherwise transfer any property or
assets to, or otherwise acquire any property or assets from, or otherwise engage
in any transactions with, any of their Affiliates unless the terms thereof are
no less favorable to such Seller or Guarantor, as applicable, than those that
could be obtained at the time of such transaction in an arm's length transaction
with a Person who is not such an Affiliate.
q. Change of Fiscal Year. Neither Seller nor a Guarantor will at any
time, directly or indirectly, except upon ninety (90) days' prior written notice
to Buyer, change the date on which such Seller's or Guarantor's fiscal year
begins from such Seller's or Guarantor's current fiscal year beginning date.
r. Delivering of Servicing Rights. With respect to the Servicing Rights
of each Loan, Seller and Guarantors shall deliver such Servicing Rights to the
designee of Buyer, within 75 days of a Purchase Date, unless otherwise stated in
writing by Buyer; provided that on each Repurchase Date that is subject to a new
Transaction, such delivery requirement is deemed restated for such new
Transaction (and the immediately preceding delivery requirement is deemed to be
rescinded) in the absence of directions to the contrary from Buyer, and a new
75-day period is deemed to commence as of such Repurchase Date. The Seller's and
Guarantors' transfer of the Servicing Rights under this Section shall be in
accordance with customary standards in the industry.
s. Underwriting Guidelines. NCMC shall not permit any material
modifications to be made to the Underwriting Guidelines without the prior
consent of the Buyer (such consent not to be unreasonably withheld).
t. No Other Indebtedness. Without the prior written consent of the
Buyer, the Seller shall not incur any Indebtedness or guaranty the Indebtedness
of any other Person other than the Indebtedness incurred under the Program
Documents.
u. Facility Fee. Seller agrees to pay to Buyer on the date of execution
of this Agreement, a facility fee in the amount of the Facility Fee Amount, such
payment to be made in United States dollars, in immediately available funds,
without deduction, set-off or counterclaim. The Buyer may, in its sole
discretion, net such commitment fee from the proceeds of any Purchase Price
payable to the Seller.
14. REPURCHASE DATE PAYMENTS/COLLECTIONS
On each Repurchase Date, Seller shall remit or shall cause to be remitted
to Buyer the Repurchase Price.
15. REPURCHASE OF PURCHASED ASSETS, CHANGE OF LAW
a. Upon discovery by Seller or a Guarantor of a breach of any of the
representations and warranties set forth in Appendix A to the Custody Agreement,
Seller or a Guarantor shall give prompt written notice thereof to Buyer. Upon
any such discovery by Buyer, Buyer will notify Seller. It is understood and
agreed that the representations and warranties set forth in Appendix A to the
Custody Agreement shall survive delivery of the respective Loan Files to the
Custodian and shall inure to the benefit of Buyer. The fact that Buyer has
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with its purchase of any Purchased Asset shall not
affect Buyer's right to demand repurchase as provided under this Agreement. The
Seller shall within two (2) Business Days of the earlier of the Seller's or a
Guarantor's discovery or either Seller or a Guarantor receiving notice, with
respect to any Purchased Asset, of (i) any breach of a representation or
warranty contained in Appendix A to the Custody Agreement or (ii) any failure to
deliver any of the items required to be delivered as part of the Loan File
within the time period required for delivery pursuant to the Custody Agreement,
promptly cure such breach or delivery failure in all material respects. If
within two (2) Business Days after the earlier of Seller's or a Guarantor's
discovery of such breach or delivery failure or Seller or a Guarantor receiving
notice thereof that such breach or delivery failure has not been remedied by the
Seller, the Seller shall promptly upon receipt of written instructions from
Buyer, at Buyer's option, either (i) purchase such Purchased Asset at a purchase
price equal to the Repurchase Price with respect to such Purchased Asset by wire
transfer to the account designated by Buyer, or (ii) transfer comparable
Substitute Assets to Buyer, as provided in Section 16 hereof.
b. If Buyer determines that the introduction of, any change in, or the
interpretation or administration of any requirement of law has made it unlawful
or commercially impracticable to engage in any Transactions with a Pricing Rate
based on LIBOR, then Seller (i) shall, upon its receipt of notice of such fact
and demand from Buyer (with a copy of such notice to Custodian), repurchase the
Purchased Assets subject to the Transaction on the next succeeding Business Day
and, at Seller's election, concurrently enter into a new Transaction with Buyer
with a Pricing Rate based on the Prime Rate plus the margin set forth in the
Side Letter as part of the Pricing Rate and (ii) may elect, by giving notice to
Buyer and Custodian, that all new Transactions shall have Pricing Rates based on
the Prime Rate plus such margin.
c. If Buyer determines in its sole discretion that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on Buyer's capital or on the capital of any Affiliate of Buyer as a
consequence of such Change in Law on this Agreement, then from time to xxxx
Xxxxxx will compensate Buyer or Buyer's Affiliate, as applicable, for such
reduced rate of return suffered as a consequence of such Change in Law on terms
similar to those imposed by Buyer on its other similarly affected customers.
Buyer shall provide Seller with prompt notice as to any Change in Law.
Notwithstanding any other
provisions in this Agreement, in the event of any such Change in Law Seller will
have the right to terminate all Transactions then outstanding without any
prepayment penalty as of a date selected by Seller, which date shall be prior to
the then applicable Repurchase Date and which date shall thereafter for all
purposes hereof be deemed to be the Repurchase Date.
16. SUBSTITUTION
Seller may, subject to agreement with and acceptance by Buyer, substitute
other assets which are substantially the same as the Purchased Assets (the
"Substitute Assets") for any Purchased Assets. Such substitution shall be made
by transfer to Buyer of such other Substitute Assets and transfer to Seller of
such Purchased Assets. After substitution, the Substitute Assets shall be deemed
to be Purchased Assets.
17. REPURCHASE TRANSACTIONS
Buyer may, in its sole election, engage in repurchase transactions with
the Purchased Assets or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Purchased Assets with a counterparty of Buyer's choice, in
all cases subject to Buyer's obligation to reconvey the Purchased Assets (and
not substitutes therefor) on the Repurchase Date. In the event Buyer engages in
a repurchase transaction with any of the Purchased Assets or otherwise pledges
or hypothecates any of the Purchased Assets, Buyer shall have the right to
assign to Buyer's counterparty any of the applicable representations or
warranties in Appendix A to the Custody Agreement and the remedies for breach
thereof, as they relate to the Purchased Assets that are subject to such
repurchase transaction.
18. EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this Agreement,
the occurrence of any of the following events shall constitute an "Event of
Default":
a. Seller fails to transfer the Purchased Assets to Buyer on the
applicable Purchase Date (provided Buyer has tendered the related Purchase
Price);
b. Seller either fails to repurchase the Purchased Assets on the
applicable Repurchase Date or fails to perform its obligations under Section 6;
c. either Seller or a Guarantor shall fail to perform, observe or comply
with any other material term, covenant or agreement contained in the Program
Documents (other than Appendix A to the Custody Agreement) and such failure is
not cured within the time period expressly provided or, if no such cure period
is provided, within two (2) Business Days of the earlier of (i) such party's
receipt of written notice from Buyer or Custodian of such breach or (ii) the
date on which such party obtains notice or knowledge of the facts giving rise to
such breach;
d. any representation or warranty made by Seller or a Guarantor (or any
of Seller's or a Guarantor's officers) in the Program Documents or in any other
document delivered in connection therewith (other than the representations or
warranties in Appendix A to the Custody
Agreement) shall have been incorrect or untrue in any material respect when made
or repeated or deemed to have been made or repeated;
e. Seller, a Guarantor, or any of Seller's or a Guarantor's Subsidiaries
shall fail (i) to pay any of Seller's, a Guarantor's or Seller's or a
Guarantor's Subsidiaries' Indebtedness (with respect to a Guarantor or a
Guarantor and its Subsidiaries taken as a whole, aggregating in excess of
$2,500,000), or any interest or premium thereon when due (whether by scheduled
maturity, requirement prepayment, acceleration, demand or otherwise), or (ii) to
make any payment when due under Seller's, a Guarantor's or Seller's or a
Guarantor's Subsidiaries' Guarantee of another person's Indebtedness for
borrowed money, and, in either case, such failure shall entitle any related
counterparty to declare any such Indebtedness or Guarantee to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
f. a custodian, receiver, conservator, liquidator, trustee, sequestrator
or similar official for Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries, or of any of Seller's, a Guarantor's or their respective Property
(as a debtor or creditor protection procedure), is appointed or takes possession
of such property; or Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries generally fails to pay Seller's, a Guarantor's or Seller's or a
Guarantor's Subsidiaries' debts as they become due; or Seller, a Guarantor or
any of Seller's or a Guarantor's Subsidiaries is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Federal Bankruptcy Code,
or any successor or similar applicable statute, or any administrative insolvency
scheme, against Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries; or any of Seller's, a Guarantor's or Seller's or a Guarantor's
Subsidiaries' Property is sequestered by court or administrative order; or a
petition is filed against Seller, a Guarantor or any of Seller's or a
Guarantor's Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, moratorium, delinquency or
liquidation law of any jurisdiction, whether now or subsequently in effect;
g. Seller, a Guarantor or any of Seller's or a Guarantor's Subsidiaries
files a voluntary petition in bankruptcy seeks relief under any provision of any
bankruptcy, reorganization, moratorium, delinquency, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction whether
now or subsequently in effect; or consents to the filing of any petition against
it under any such law; or consents to the appointment of or taking possession by
a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar
official for Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries, or of all or any part of Seller's, a Guarantor's or Seller's or a
Guarantor's Subsidiaries' Property; or makes an assignment for the benefit of
Seller, a Guarantor or Seller's or a Guarantor's Subsidiaries' creditors;
h. any final, nonappealable judgment or order for the payment of money
or a judgment affecting all or a substantial part of the Seller or any
Guarantor's business or property shall be rendered against Seller, a Guarantor
or any of Seller's or a Guarantor's Subsidiaries and remains undischarged or
unsatisfied after the passage of 30 days following the date on which it is
entered;
i. 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, a Guarantor or any of Seller's or a
Guarantor's Subsidiaries, or shall have taken any action to displace the
management of Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries or to curtail its authority in the conduct of the business of
Seller, a Guarantor or any of Seller's or a Guarantor's Subsidiaries, or takes
any action in the nature of enforcement to remove, limit or restrict the
approval of Seller, a Guarantor or any of Seller's or a Guarantor's Subsidiaries
as an issuer, buyer or a seller/servicer of Loans or securities backed thereby;
j. Seller, a Guarantor or any of Seller's or a Guarantor's Subsidiaries
shall default (as principal, guarantor or surety) in the performance of any
material contract or in the payment of any principal or interest on any
indebtedness or in the performance of or compliance with any agreement,
instrument or other writing evidencing such indebtedness or delivered pursuant
thereto or in connection therewith, which default shall have continued beyond
any applicable period of grace and, in the case of a default in respect of
indebtedness, would permit the holder of such indebtedness to accelerate payment
of the principal thereof;
k. in the reasonable good faith judgment of Buyer any Material Adverse
Change shall have occurred with respect to Seller, a Guarantor or any of
Seller's or a Guarantor's Subsidiaries taken as a whole;
l. Seller or a Guarantor shall admit in writing its inability to, or
intention not to, perform any of such Seller's or a Guarantor's respective
material Obligations;
m. except as expressly permitted in this Agreement, Seller or a Guarantor
dissolves, merges or consolidates with another entity, or sells, transfers, or
otherwise disposes of a material portion of such Seller's or a Guarantor's (as
applicable) business or assets unless Buyer's written consent is given;
n. this Agreement shall for any reason cease to create a valid, first
priority security interest or ownership interest upon transfer in any material
portion of the Purchased Assets or Collateral purported to be covered hereby;
o. either Seller's or a Guarantor's audited annual financial statements
or the notes thereto or other opinions or conclusions stated therein shall be
qualified or limited by reference to the status of such Seller or a Guarantor as
a "going concern" or a reference of similar import or shall indicate that any
Guarantor has a negative net worth or is insolvent;
p. a Change in Control of Seller or a Guarantor shall have occurred which
has not been approved by Buyer;
q. any material amendment is made to the Underwriting Guidelines which
was not previously approved in writing by Buyer;
r. Buyer shall reasonably request, specifying the reasons for such
request, information, and/or written responses to such requests, regarding the
financial well-being of the Seller or any Guarantor and such information and/or
responses shall not have been provided within three business days of such
request;
s. the Seller or any Guarantor shall fail to fully and timely perform
any obligation to Buyer or to any broker, dealer, bank or other financial
institution in respect of a transaction involving securities, commodities or
other instruments ("Instruments") (regardless of whether Buyer has any right,
title or interest therein);
t. If the Seller or any Guarantor admits its inability or Buyer
reasonably believes the Seller or any Guarantor is unable to perform fully when
such performance will become due any obligation on the Seller's or the
applicable Guarantor's part to any broker, dealer, bank or other financial
institution in respect of a transaction involving Instruments not then due
(regardless of whether Buyer has any right, title or interest therein);
u. If the Securities and Exchange Commission, Commodity Futures Trading
Commission, any securities or commodities exchange or association, any banking
department or authority, or any other business association or governmental
entity or authority shall revoke, cancel, enjoin, suspend or fail to renew
NCMC's registration, licensing, qualification or other authorization to do
business in respect of any type of business or any geographic area, or any of
the foregoing shall occur in respect of any one or more of NCMC's general
partners, principals or parent entities or other persons exercising control over
NCMC;
v. If NCMC shall fail to maintain, or acknowledge that it has failed to
maintain, sufficient net capital or any other indicia of financial condition as
required by any rule or regulation applicable to NCMC of the Securities and
Exchange Commission, Commodity Futures Trading Commission, any securities or
commodities exchange or association, any banking department or authority, or any
other business association or governmental entity or authority;
w. If any securities or commodities exchange or association or other
business association shall revoke, cancel, enjoin, suspend or fail to renew
NCMC's membership;
x. If there shall have occurred any outbreak or material escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis, the effect of which on the financial markets is such
as to make it, in the judgment of Buyer, impracticable to continue this
Agreement; or
y. If the Seller, Guarantor or any of their affiliates shall default in
respect of any transaction with Buyer or any of its affiliates;
It is understood and agreed that any default, cure or notice period
provided for in the Program Documents may be accelerated by Buyer unilaterally
upon Buyer's or Agent's reasonable determination that it is reasonable to do so
under the circumstances, with due
consideration to the volatility of markets, the seriousness of any Defaults and
the perceived risk to Buyer of delay.
19. REMEDIES
Upon the occurrence of an Event of Default, Buyer, at its option (which
option shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default pursuant to Section 18(f) or (g) hereof), shall have any or
all of the following rights and remedies, which may be exercised by Buyer:
a. The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
b. Seller's obligations hereunder to repurchase all Purchased Assets at
the Repurchase Price therefor on the Repurchase Date in such Transactions shall
thereupon become immediately due and payable; all Income paid after such
exercise or deemed exercise shall be remitted to and retained by Buyer and
applied to the aggregate Repurchase Prices and any other amounts owing by Seller
hereunder; Seller and Guarantors shall immediately deliver to Buyer or its
designee any and all Records relating to the Purchased Assets subject to such
Transaction then in Seller's and Guarantor's possession and/or control; and all
right, title and interest in and entitlement to such Purchased Assets and
Servicing Rights thereon shall be deemed transferred to Buyer.
Buyer may (A) sell, on or following the Business Day following the date
on which the Repurchase Price became due and payable pursuant to Section 19(b)
without notice or demand of any kind, at a public or private sale and at such
price or prices as Buyer may reasonably deem satisfactory any or all Purchased
Assets or (B) in its sole discretion elect, in lieu of selling all or a portion
of such Purchased Assets, to give Seller credit for such Purchased Assets in an
amount equal to the Market Value of the Purchased Assets against the aggregate
unpaid Repurchase Price and any other amounts owing by Seller hereunder. The
Seller shall remain liable to the Buyer for any amounts that remain owing to
Buyer following a sale or credit under the preceding sentence. The proceeds of
any disposition of Purchased Assets shall be applied first to the reasonable
costs and expenses incurred by Buyer in connection with or as a result of an
Event of Default; second to costs of cover and/or related hedging transactions;
third to the aggregate Repurchase Prices; and fourth to all other Obligations.
The parties recognize that it may not be possible to purchase or sell all
of the Purchased Assets on a particular Business Day, or in a transaction with
the same purchaser, or in the same manner because the market for such Purchased
Assets may not be liquid. In view of the nature of the Purchased Assets, the
parties agree that liquidation of a Transaction or the underlying Purchased
Assets does not require a public purchase or sale and that a good faith private
purchase or sale shall be deemed to have been made in a commercially reasonable
manner. Accordingly, Buyer may elect the time and manner of liquidating any
Purchased Asset and nothing contained herein shall obligate Buyer to liquidate
any Purchased Asset on the occurrence of an Event of Default or to liquidate all
Purchased Assets in the same manner or on the same
Business Day or constitute a waiver of any right or remedy of Buyer.
Notwithstanding the foregoing, the parties to this Agreement agree that the
Transactions have been entered into in consideration of and in reliance upon the
fact that all Transactions hereunder constitute a single business and
contractual obligation and that each Transaction has been entered into in
consideration of the other Transactions.
In addition to its rights hereunder, Buyer shall have the right to
proceed against any of Seller's assets which may be in the possession of Buyer,
any of Buyer's Affiliates or its designee (including the Custodian), including
the right to liquidate such assets and to set-off the proceeds against monies
owed by Seller to Buyer pursuant to this Agreement. Buyer may set off cash, the
proceeds of the liquidation of the Purchased Assets and Additional Purchased
Assets, any other Collateral or its proceeds and all other sums or obligations
owed by Buyer to Seller against all of Seller's Obligations to Buyer, whether
under this Agreement, under a Transaction, or under any other agreement between
the parties, or otherwise, whether or not such Obligations are then due, without
prejudice to Buyer's right to recover any deficiency.
The Buyer shall have the right to obtain physical possession of the
Records and all other files of the Seller relating to the Purchased Assets and
all documents relating to the Purchased Assets which are then or may thereafter
come into the possession of the Seller or any third party acting for the Seller
and the Seller shall deliver to the Buyer such assignments as the Buyer shall
request.
Buyer may direct all Persons servicing the Purchased Assets to take such
action with respect to the Purchased Assets as Buyer determines appropriate.
Each of Seller and each Guarantor shall cause all sums received by it
with respect to the Purchased Assets to be deposited with Custodian (or such
other Person as Buyer may direct) after receipt thereof.
Buyer shall without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Assets and any other Collateral or any
portion thereof, collect the payments due with respect to the Purchased Assets
and any other Collateral or any portion thereof, and do anything that Buyer is
authorized hereunder to do. Seller shall pay all costs and expenses incurred by
Buyer in connection with the appointment and activities of such receiver.
Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives, to the extent
permitted by law, any right Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives, to the extent
permitted by law, any defense Seller might otherwise have to the Obligations,
arising from use of nonjudicial process, enforcement and sale of all or any
portion of the Purchased Assets and any other Collateral or from any other
election of remedies. Seller recognizes that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity and are the
result of a bargain at arm's length.
In addition to all the rights and remedies specifically provided herein,
Buyer shall have all other rights and remedies provided by applicable federal,
state, foreign, and local laws, whether existing at law, in equity or by
statute.
Upon the occurrence of an Event of Default, Buyer shall have, except as
otherwise expressly provided in this Agreement, the right to exercise any of its
rights and/or remedies without presentment, demand, protest or further notice of
any kind other than as expressly set forth herein, all of which are hereby
expressly waived by Seller.
Seller hereby authorizes Buyer, at Seller's expense, to file such
financing statement or statements relating to the Purchased Assets and the
Collateral without Seller's signature thereon as Buyer at its option may deem
appropriate, and appoints Buyer as Seller's 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 the lien and security
interest granted hereby and to protect, preserve and realize upon the Purchased
Assets and the Collateral, including, but not limited to, the right to endorse
notes, complete blanks in documents and execute assignments on behalf of Seller
as its attorney-in-fact. This power of attorney is coupled with an interest and
is irrevocable without Buyer's consent.
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Buyer to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by Buyer of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All rights and remedies of Buyer provided for
herein are cumulative and in addition to any and all other rights and remedies
provided by law, the Program Documents and the other instruments and agreements
contemplated hereby and thereby, and are not conditional or contingent on any
attempt by Buyer to exercise any of its rights under any other related document.
Buyer may exercise at any time after the occurrence of an Event of Default one
or more remedies, as it so desires, and may thereafter at any time and from time
to time exercise any other remedy or remedies.
21. USE OF EMPLOYEE PLAN ASSETS
No assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") shall be
used by either party hereto in a Transaction.
22. INDEMNITY
a. Seller agrees to pay on demand (i) all reasonable out-of-pocket costs
and expenses of Buyer in connection with the preparation, execution, delivery,
modification, administration and amendment of the Program Documents (including,
without limitation, (A) all collateral review and UCC search and filing fees and
expenses and (B) the reasonable fees and expenses of counsel for Buyer with
respect to advising Buyer as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under this
Agreement, with respect to
negotiations with Seller or with other creditors of Seller or any of its
Subsidiaries arising out of any-Default or any events or circumstances that may
rise to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors' rights generally and any proceeding ancillary
thereto) and (ii) all costs and expenses of Buyer in connection with the
enforcement of this Agreement (including any waivers), whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally (including, without limitation, the
reasonable fees and expenses of counsel for Buyer) whether or not the
transactions contemplated hereby are consummated.
b. Seller agrees to indemnify and hold harmless Buyer and each of its
respective Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against (and will reimburse
each Indemnified Party as the same is incurred) any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or other proceeding (whether or not such Indemnified Party is a party
thereto) relating to, resulting from or arising out of any of the Program
Documents and all other documents related thereto, any breach of a
representation or warranty of Seller or a Guarantor or Seller's or a Guarantor's
officer in this Agreement or any other Program Document, and all actions taken
pursuant thereto) (i) the Transactions, the actual or proposed use of the
proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby, including, without limitation, any acquisition or proposed
acquisition or (ii) the actual or alleged presence of hazardous materials on any
Property or any environmental action relating in any way to any Property. 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 Program Documents, the
actual or proposed use of the proceeds of the Transactions, this Agreement or
any of the transactions contemplated thereby.
c. If Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation, reasonable
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of Seller by Buyer, in its sole discretion, and Seller shall remain liable for
any such payments by Buyer. No such payment by Buyer shall be deemed a waiver of
any of Buyer's rights under the Program Documents.
d. Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Assets by Buyer against full
payment therefor.
23. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Purchased Assets as a
result of restrictions upon Buyer or Custodian contained in the Program
Documents or any other instrument delivered in connection therewith, and any
right that it may have to direct the order in which any of the Purchased Assets
shall be disposed of in the event of any disposition pursuant hereto.
24. REIMBURSEMENT
All sums reasonably expended by Buyer in connection with the exercise of
any right or remedy provided for herein shall be and remain Seller's obligation.
Seller agrees to pay, with interest at the Default Rate, to the extent that an
Event of Default has occurred, the reasonable out-of-pocket expenses and
reasonable attorneys' fees incurred by Buyer and/or Custodian in connection with
the preparation, enforcement (including any waivers), administration and
amendments of the Program Documents, the taking of any action, including a
Guarantor action, required or permitted to be taken by Buyer (without
duplication to Buyer) and/or Custodian pursuant thereto, any "due diligence" or
loan agent reviews conducted by Buyer or on its behalf or by refinancing or
restructuring in the nature of a "workout." 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. Notwithstanding
any other provisions in this Agreement, in the event of any such change in the
eurocurrency reserve requirement or the interpretation of any law, regulation or
any guideline or request from any central bank or other Governmental Authority,
Seller will have the right to terminate all Transactions then outstanding as of
a date selected by Seller (without the payment by Seller of any prepayment
penalty), which date shall be prior to the applicable Repurchase Date and which
date shall thereafter for all purposes hereof, be deemed to be the Repurchase
Date. In addition, Buyer shall promptly notify Seller if any events in clause
(i) or (ii) of this Section 24 occur.
25. FURTHER ASSURANCES
Seller and Guarantors agree to do such further acts and things and to
execute and deliver to Buyer such additional assignments, acknowledgments,
agreements, powers and instruments as are reasonably required by Buyer to carry
into effect the intent and purposes of this Agreement, to perfect the interests
of Buyer in the Purchased Assets or to better assure and confirm unto Buyer its
rights, powers and remedies hereunder.
26. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a sale
and repurchase of Purchased Assets and Additional Purchased Assets thereto, and
it, together with the other Program Documents, and the other documents delivered
pursuant hereto or thereto, contains the
entire final agreement of the parties. No prior negotiation, agreement,
understanding or prior contract shall have any validity.
27. TERMINATION
This Agreement shall remain in effect until the earlier of (i) December
31, 2002 or (ii) at Buyer's option upon the occurrence of an Event of Default
(such date, the "Termination Date"). However, no such termination shall affect
Seller's outstanding obligations to Buyer at the time-of such termination.
Seller's obligations to indemnify Buyer pursuant to this Agreement shall survive
the termination hereof.
28. ASSIGNMENT
The Program Documents 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 Program Documents; provided, however, that 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. Upon such assignment, (a) such assignee shall
be a party hereto and to each Program Document 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 (b) Buyer shall, to
the extent that such rights and obligations have been so assigned by it to
either (i) an Affiliate of Buyer which assumes the obligations of Buyer or (ii)
to another Person approved by Seller (such approval not to be unreasonably
withheld) which assumes the obligations of Buyer, be released from its
obligations hereunder accruing thereafter and under the Program Documents.
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. Notwithstanding any assignment by
Buyer pursuant to this Section 28, Buyer shall remain liable as to the
Transactions.
29. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any consent
to any failure to comply herewith or therewith shall in any event be effective
unless the same shall be in writing and signed by Seller and Buyer, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
30. SEVERABILITY
If any provision of any Program Document is declared invalid by any court
of competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
31. BINDING EFFECT: GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Seller may not
assign or transfer any of its rights or obligations under this Agreement or any
other Program Document without the prior written consent 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.
32. CONSENT TO JURISDICTION
SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENTS TO
THE NON-EXCLUSIVE JURISDICTION OF 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 PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER
HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION SELLER MAY HAVE TO, NON-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 PROGRAM DOCUMENTS.
33. SINGLE AGREEMENT
Seller, Guarantors and Buyer acknowledge that, and have entered hereinto
and will enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and have been made in consideration of
each other. Accordingly, Seller, Guarantors and Buyer each agree (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, and (ii) that payments, deliveries
and other transfers made by any of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfer in respect of any other Transaction hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied against
each other and netted.
34. INTENT
Seller and Buyer 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 ("USC") (except insofar as the 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 USC (except insofar as the Loans subject to such
Transaction or the term of such Transaction would render such definition
inapplicable).
It is understood that Buyer's right to liquidate the Purchased Assets
delivered to it in connection with the Transactions hereunder or to exercise any
other remedies pursuant to Section 19 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the USC.
35. NOTICES AND OTHER COMMUNICATIONS
Except as provided herein, any notice required or permitted by this
Agreement shall be in writing and shall be effective and deemed delivered only
when received by the party to which it is sent; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation (without
error message) of such transmission. Any such notice shall be sent to a party at
the address or facsimile transmission number set forth below:
if to Seller:
New Century Funding SB-1
c/o Christiana Bank & Trust Company
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
with a copy to:
New Century Funding Corporation
as administrator of New Century Funding A
00000 Xxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to NCMC:
New Century Mortgage Corporation
00000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to Buyer or Agent:
Salomon Brothers Realty Corp.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
as such address or number may be changed by like notice.
36. CONFIDENTIALITY
This Agreement and its terms, provisions, supplements and amendments, and
transactions and notices hereunder, are proprietary to Buyer and Agent and shall
be held by Seller and each Guarantor (and Seller and Guarantors shall cause
Interim Servicer to hold it) in strict confidence and shall not be disclosed to
any third party without the consent of Buyer except for (i) disclosure to
Seller's or a Guarantor's direct and indirect parent companies, attorneys,
agents or accountants, provided that such attorneys or accountants likewise
agree to be bound by this covenant of confidentiality or (ii) disclosure
required by law, rule, regulation or order of a court or other regulatory body
or (iii) disclosure to any approved Hedge Counterparty to the extent necessary
to obtain any Hedge Instrument hereunder or (iv) any disclosures or filing
required under Securities and Exchange Commission or state securities' laws;
provided that neither the Seller nor any Guarantor shall file the Side Letter
with the Securities and Exchange Commission or state securities office, unless
otherwise agreed by Buyer in writing, and the Seller and Guarantor agree to use
best efforts not to file the terms of the Side Letter with any such filing;
provided, that in the case of (ii), (iii) and (iv), Seller shall take reasonable
actions to provide Buyer with prior written notice.
37. NO RECOURSE.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Christiana Bank & Trust Company, not
individually or personally but solely as trustee of the Seller, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Seller is made and intended not as personal representations, undertakings and
agreements by Christiana Bank & Trust Company but is made and intended for the
purpose for binding only the Seller, (c) nothing herein contained shall be
construed as creating any liability on the Christiana Bank & Trust Company,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall the Christiana Bank & Trust Company
be personally liable for the payment of any indebtedness or expenses of the
Seller or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Seller under this Agreement or
any other related documents.
[Signature Page Follows]
IN WITNESS WHEREOF, Seller, Guarantors and Buyer have caused their names
to be signed to this Master Repurchase Agreement by their respective officers
thereunto duly authorized as of the date first above written.
NEW CENTURY FUNDING SB-1,
as Seller
By: Christiana Bank & Trust Company,
not in its individual capacity but solely as
trustee
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Trust Officer
-----------------------------
Title: _____________________________
SALOMON BROTHERS REALTY
CORP., as Buyer and Agent, as applicable
By: /s/ Xxxxxxx Xxxxx
--------------------------------------
Name: Authorized Agent
-----------------------------
Title: _____________________________
Acknowledged and Agreed:
NEW CENTURY MORTGAGE CORPORATION,
as Guarantor
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: President
-------------------------------
Title:______________________________
NEW CENTURY FINANCIAL CORPORATION,
as Guarantor
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Executive Vice President
-------------------------------
Title:______________________________
ANNEX I
BUYER ACTING AS AGENT
This Annex I forms a part of the Master Repurchase Agreement dated as of
May 30, 2002 (the "Agreement") between Salomon Brothers Realty Corp. and New
Century Funding SB-1. This Annex I sets forth the terms and conditions governing
all transactions in which a party selling assets or buying assets, as the case
may be ("Agent"), in a Transaction is acting as agent for one or more third
parties (each, a "Principal"). Capitalized terms used but not defined in this
Annex I shall have the meanings ascribed to them in the Agreement.
1. Additional Representations. Agent hereby makes the following
representations, which shall continue during the term of any Transaction:
Principal has duly authorized Agent to execute and deliver the Agreement
on its behalf, has the power to so authorize Agent and to enter into the
Transactions contemplated by the Agreement and to perform the obligations
of Seller or Buyer, as the case may be, under such Transactions, and has
taken all necessary action to authorize such execution and delivery by
Agent and such performance by it.
2. Identification of Principals. Agent agrees (a) to provide the other
party, prior to the date on which the parties agree to enter into any
Transaction under the Agreement, with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing
from time to time with the consent of the other party) and (b) to provide
the other party, before the close of business on the next business day
after orally agreeing to enter into a Transaction, with notice of the
specific Principal or Principals for whom it is acting in connection with
such transaction. If (i) Agent fails to identify such Principal or
Principals prior to the close of business on such next business day or
(ii) the other party shall determine in its sole discretion any Principal
or Principals identified by Agent are not acceptable to it, the other
party may reject and rescind any Transaction with such Principal or
Principals, return to Agent any Purchased Assets or portion of the
Purchase Price, as the case may be, previously transferred to the other
party and refuse any further performance under such Transaction, and
Agent shall immediately return to the other party any portion of the
Purchase Price or Purchased Assets, as the case may be, previously
transferred to Agent in connection with such Transaction; provided,
however, that (A) the other party shall promptly (and in any event within
one business day) notify Agent of its determination to reject and rescind
such Transaction and (B) to the extent that any performance was rendered
by any party under any Transaction rejected by the other party, such
party shall remain entitled to any Price Differential or other amounts
that would have been payable to it with respect to such performance if
such Transaction had not been rejected. The other party acknowledges that
Agent shall not have any obligation to provide it with confidential
information regarding the financial status of its Principals; Agent
agrees, however, that it will assist the other party in obtaining from
Agent's Principals such Information regarding the financial status of
such Principals as the other party may reasonably request.
3. Limitation of Agent's Liability. The parties expressly acknowledge that
if the representations of Agent under the Agreement, including this Annex
I, are true and correct in all material respects during the term of any
Transaction and Agent otherwise complies with the provisions of this
Annex I, then (a) Agent's obligations under the Agreement shall not
include a guarantee of performance by its Principal or Principals;
provided that Agent shall remain liable for performance pursuant to
Section 10 of the Agreement, and (b) the other party's remedies shall not
include a right of setoff in respect of rights or obligations, if any, of
Agent arising in other transactions in which Agent is acting as
principal.
4. Multiple Principals.
(a) In the event that Agent proposes to act for more than one
Principal hereunder, Agent and the other party shall elect whether
(i) to treat Transactions under the Agreement as transactions
entered into on behalf of separate Principals or (ii) to aggregate
such Transactions as if they were transactions by a single
Principal. Failure to make such an election in writing shall be
deemed an election to treat Transactions under the Agreement as
transactions on behalf of a single Principal.
(b) In the event that Agent and the other party elect (or are deemed
to elect) to treat Transactions under the Agreement as
transactions on behalf of separate Principals, the parties agree
that (i) Agent will provide the other party, together with the
notice described in Section 2(b) of this Annex I, notice
specifying the portion of each Transaction allocable to the
account of each of the Principals for which it is acting (to the
extent that any such Transaction is allocable to the account of
more than one principal); (ii) the portion of any individual
Transaction allocable to each Principal shall be deemed a separate
Transaction under the Agreement; (iii) the margin maintenance
obligations of Seller under Section 6(a) of the Agreement shall be
determined on a Transaction-by-Transaction basis (unless the
parties agree to determine such obligations on a
Principal-by-Principal basis); and (iv) Buyer's and Seller's
remedies under the Agreement upon the occurrence of an Event of
Default Shall be determined as if Agent had entered into a
separate Agreement with the other party on behalf of each of its
Principals.
(c) In the event that Agent and the other party elect to treat
Transactions under the Agreement as if they were transactions by a
single Principal, the parties agree that (i) Agent's notice under
Section 2(b) of this Annex I need only identify the names of its
Principals but not the portion of each Transaction allocable to
each Principal's account; (ii) the margin maintenance obligations
of Seller under Section 6(a) of the Agreement shall, subject to
any greater requirement imposed by applicable law, be determined
on an aggregate basis for all Transactions entered into by Agent
on behalf of any Principal; and (iii) Buyer's and Seller's
remedies upon the occurrence of an Event of Default shall be
determined as if all Principals were a single Seller or Buyer, as
the case may be.
(d) Notwithstanding any other provision of the Agreement (including,
without limitation, this Annex I), the parties agree that any
Transactions by Agent on
behalf of an employee benefit plan under ERISA shall be treated
as Transactions on behalf of separate Principals in accordance
with Section 4(b) of this Annex I (and all margin maintenance
obligations of the parties shall be determined on a
Transaction-by-Transaction basis).
5. Interpretation of Terms. All references to "Seller" or "Buyer", as the
case may be, in the Agreement shall, subject to the provisions of this
Annex I (including, among other provisions, the limitations on Agent's
liability in Section 3 of this Annex 1), be construed to reflect that (i)
each Principal shall have, in connection with any Transaction or
Transactions entered into by Agent on its behalf, the rights,
responsibilities, privileges and obligations of a "Seller" or "Buyer", as
the case may be, directly entering into such Transaction or Transactions
with the other party under the Agreement, and (ii) Agent's Principal or
Principals have designated Agent as their sole agent for performance of
Seller's obligations to Buyer or Buyer's obligations to Seller, as the
case may be, and for receipt of performance by Buyer of its obligations
to Seller or Seller of its obligations to Buyer, as the case may be, in
connection with any Transaction or Transactions under the Agreement
(including, among other things, as Agent for each Principal in connection
with transfers of Securities, cash or other property and as agent for
giving and receiving all notices under the Agreement). Both Agent and its
Principal or Principals shall be deemed "parties" to the Agreement and
all references to a "party" or "either party" in the Agreement shall be
deemed revised accordingly.
EXHIBIT A-1
FORM OF MONTHLY CERTIFICATION
I, _______________________, _______________________ of New Century
Mortgage Corporation as administrator of New Century Funding SB-1 (the
"Company"), do hereby certify that the Company is in compliance with all
provisions and terms of the Master Repurchase Agreement, dated as of May 30,
2002, by and between Salomon Brothers Realty Corp. and the Company.
IN WITNESS WHEREOF, I have signed this certificate and affixed the seal
of the Company Date: ______________, 200__
NEW CENTURY MORTGAGE
CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
[SEAL]
I, ________________________, ___________________ of the Company, do
hereby certify that is the duly elected or appointed, qualified and acting
__________________of the Company, and the signature set forth above is the
genuine signature of such officer on the date hereof.
__________________________
Name:
Title:
EXHIBIT A-2
FORM OF QUARTERLY CERTIFICATION
I, ________________________, ______________________________ of [New
Century Mortgage Corporation][New Century Financial Corporation] (the
"Company"), do hereby certify that:
(i) the Company is in compliance with all provisions and terms of the
Master Repurchase Agreement, dated as of May 30, 2002 (the
"Repurchase Agreement"), by and between Salomon Brothers Realty
Corp. (the "Buyer"), and New Century Funding SB-1 (the "Seller");
(ii) there have not been any material modifications to the Underwriting
Guidelines that have not been approved by the Buyer; and
(iii) all additional modifications to the Underwriting Guidelines since
the date of the most recent disclosure to the Buyer of any
modification to the Underwriting Guidelines are set forth on the
"grid-line" delivered in connection herewith.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Repurchase Agreement.
IN WITNESS WHEREOF, I have signed this certificate and affixed the seal
of the Company.
Date: , 200__
----------------------
________________________
Name:
Title:
[SEAL]
I, ________________________, ___________________ of the Company, do
hereby certify that _____________________ is the duly elected or appointed,
qualified and acting _____________of the Company, and the signature set forth
above is the genuine signature of such officer on the date hereof.
________________________
Name:
Title:
