Exhibit 10.14
ANNEX I
TO
MASTER REPURCHASE AGREEMENT
SUPPLEMENTAL TERMS AND CONDITIONS
---------------------------------
DATED AS OF JANUARY 29, 2002
BETWEEN, DELAWARE BONDS HOLDINGS, INC.,
AS SELLER
AND
DEUTSCHE BANK, AG, NEW YORK BRANCH, AS BUYER
TABLE OF CONTENTS
Page
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1. OTHER APPLICABLE ANNEXES......................................... 4
2. ADDITIONAL AND SUBSTITUTE DEFINITIONS............................ 4
3. INITIATION; CONFIRMATION; TERMINATION; FEES...................... 22
4. MARGIN MAINTENANCE............................................... 29
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS........................... 31
6. SECURITY INTEREST................................................ 33
7. PAYMENT, TRANSFER AND CUSTODY.................................... 34
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES.. 39
9. SUBSTITUTION..................................................... 40
10. REPRESENTATIONS.................................................. 40
11. NEGATIVE COVENANTS OF SELLER..................................... 44
12. AFFIRMATIVE COVENANTS OF SELLER.................................. 45
13. SINGLE-PURPOSE ENTITY............................................ 48
14. EVENTS OF DEFAULT; REMEDIES...................................... 50
15. RECORDING OF COMMUNICATIONS...................................... 55
16. NOTICES AND OTHER COMMUNICATIONS................................. 55
17. NON-ASSIGNABILITY................................................ 55
18. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.................... 56
19. NO RELIANCE...................................................... 57
20. INDEMNITY........................................................ 57
21. DUE DILIGENCE.................................................... 58
22. SERVICING........................................................ 58
23. MISCELLANEOUS.................................................... 59
EXHIBITS AND SCHEDULES
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SCHEDULE I-A Original Purchase Percentages, CF Sweep Purchase
Purchase Percentages, Margin Maintenance
Percentages and Applicable Spreads
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Monthly Reporting Package
EXHIBIT IV Form of Custodial Delivery
EXHIBIT V Form of Power of Attorney
EXHIBIT VI Representations and Warranties Regarding
Individual Purchased Loans and Purchased
Securities
EXHIBIT VII Collateral Information
EXHIBIT VIII Advance Procedure
EXHIBIT IX Form of Re-Direction Letter
EXHIBIT X Form of Certificate of Incorporation for
Subsidiary
ANNEX I TO
MASTER REPURCHASE AGREEMENT
Supplemental Terms and Conditions
---------------------------------
This Annex I forms a part of the Master Repurchase Agreement dated as of
January 29, 2002, between Delaware Bonds Holdings, Inc., as seller, and Deutsche
Bank AG, New York Branch, as buyer (the "Agreement"). Capitalized terms used in
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this Annex I without definition shall have the respective meanings assigned to
such terms in the Agreement. This Annex I is intended to supplement the
Agreement and shall, wherever possible, be interpreted so as to be consistent
with the Agreement; however, in the event of any conflict or inconsistency
between the provisions of this Annex I, on the one hand, and the provisions of
the Agreement, on the other, the provisions of this Annex I shall govern and
control. All references in the Agreement to "the Agreement" shall be deemed to
mean and refer to the Agreement, as supplemented and modified by this Annex I or
as otherwise modified after the date hereof.
1. OTHER APPLICABLE ANNEXES
In addition to this Annex I, the following Annexes and any Schedules
thereto shall form a part of the Agreement and shall be applicable thereunder:
Annex II - Names and Addresses for Communications Between Parties.
2. ADDITIONAL AND SUBSTITUTE DEFINITIONS
(a) In addition to the terms defined in the Agreement, the following terms
shall have the respective meanings set forth below:
"Accepted Servicing Practices" shall mean with respect to any
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Purchased Loan, those mortgage servicing practices of prudent mortgage loan
servicers which service mortgage or other commercial loans of the same type
as such Purchased Loan in the jurisdiction where the related Mortgaged
Property is located.
"Accelerated Repurchase Date" shall have the meaning specified in
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Section 14(a)(i) of this Annex I.
"Affiliate" shall mean, when used with respect to any specified
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Person, any other Person directly or indirectly controlling, controlled by,
or under common control with, such Person. Control shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise and "controlling"
and "controlled" shall have meanings correlative thereto.
"Agreement" shall have the meaning specified in the introductory
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paragraph of this Annex I.
"Alternative Rate" shall have the meaning specified in Section 3(g) of
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this Annex I.
"Alternative Rate Transaction" shall mean, with respect to any Pricing
----------------------------
Rate Period, any Transaction with respect to which the Pricing Rate for
such Pricing Rate Period is determined with reference to the Alternative
Rate.
"Applicable Spread" shall mean, with respect to a Transaction
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involving Purchased Securities in any Rating Category (other than
collateralized debt obligation securities (or CDOs)) and/or Purchased Loans
in any Collateral Type Grouping,
(i) so long as no Event of Default shall have occurred and be
continuing, the incremental per annum rate (expressed as a number of
"basis points", each basis point being equivalent to 1/100 of 1%)
specified in Schedule I-A attached to this Annex I as being the
"Applicable Spread" for Purchased Securities in such Rating Category
or Purchased Loans in such Collateral Type Grouping, and
(ii) after the occurrence and during the continuance of an Event
of Default, the applicable incremental per annum rate described in
clause (i) of this definition, plus 400 basis points (4.0%).
"Assignment of Leases" shall mean with respect to any Purchased Loan,
--------------------
any assignment of leases, rents and profits or equivalent instrument,
whether contained in the related Mortgage or executed separately, assigning
to the holder or holders of such Mortgage all of the related Mortgagor's
interest in the leases, rents and profits derived from the ownership,
operation, leasing or disposition of all or a portion of the related
Mortgaged Property as security for repayment of such Purchased Loan.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
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assignment of the mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related property is located to reflect the assignment and pledge of the
Mortgage.
"Business Day" shall mean a day other than (i) a Saturday or Sunday,
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or (ii) a day in which the New York Stock Exchange or banks in the State of
New York or Illinois are authorized or obligated by law or executive order
to be closed.
"Buyer" shall mean Deutsche Bank AG, New York Branch, or any
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successor.
"Cash Management Account" shall mean a segregated interest bearing
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account, in the name of Buyer, established at the Depository.
"CF Sweep Event" shall mean, with respect to any Purchased Security or
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Purchased Loan as of any date, a determination by Buyer that (i) the
Repurchase Price of such Purchased Security or Purchased Loan as of such
date exceeds (ii) the product obtained by multiplying the Market Value of
such Purchased Security or Purchased Loan as of such date by the "CF Sweep
Purchase Percentage" for such Purchased Security or Purchased Loan, as set
forth in Schedule I-A attached to this Annex I.
"Change of Control" shall mean either clause (i) or (ii) have
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occurred:
(i) (a) as a result of changes in the members of the board of
directors of Sponsor during any twelve (12) month period, a majority
of the members of the board of directors of the Sponsor are not
Continuing Directors; and
(b) Buyer shall have made the good faith reasonable
determination that any two of Messrs. Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx no longer retain their
position (or in lieu thereof, a comparable or higher position)
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as a senior officer of Sponsor and at least the same or comparable
level of management responsibilities with the Sponsor as held as of
the date of this Agreement, or
(ii) (x) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any "person" (as that term is used in Section 13(d)(3) of the Exchange
Act) shall have acquired the beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act) directly or indirectly, in one or more transactions, of
securities of the Sponsor (including convertible securities)
representing more than fifty percent (50%) of the combined voting
power of all securities of the Sponsor entitled to vote in the
election of directors (other than the "persons" owning such securities
on the date of this Agreement), or (y) the direct or indirect sale,
transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all
or substantially all of the properties or assets of the Sponsor and
its subsidiaries taken as a whole to any "person" (as that term is
used in Section 13(d)(3) of the Exchange Act); and (z) as a result of
the occurrence of either of the events referred to in clause (x) or
(y) above, a rating downgrade in any public debt security issued by
the Sponsor occurs.
"Collateral Information" shall mean, with respect to each Purchased
----------------------
Loan, the information set forth in Exhibit VII attached hereto.
"Collateral Type Grouping" shall mean, with respect to the Eligible
------------------------
Loans, any of the types of Eligible Loans listed in Schedule I-A attached
to this Annex I.
"Collection Period" shall mean with respect to the Remittance Date in
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any month, the period beginning on but excluding the Cut-off Date in the
month preceding the month in which such Remittance Date occurs and
continuing to and including the Cut-off Date immediately preceding such
Remittance Date.
"Continuing Directors" means, as of any date of determination, any
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member of the board of directors of Sponsor who (1) was a member of such
board of directors on the date of this Agreement or (2) was nominated for
election or elected to such board of directors with the approval of a
majority of the Continuing Directors who were members of such board of
directors at the time of such nomination or election.
"Closing Fee" shall have the meaning assigned to such term in Section
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3(f) of this Annex I.
"Credit Loss" shall mean the occurrence of either of the following:
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(i) with respect to any Purchased Security that has a rating of "B-"
(or the equivalent) or higher from any Rating Agency, any realized
loss or appraisal reduction (as each such term or any comparable term
is defined or otherwise used in the Securitization Document for such
Purchased Security)) occurs affecting such Purchased Security; or
(ii) with respect to any Purchased Loan, any monetary or material
non-monetary default or any failure by a Mortgagor to make a payment
when due (which default or failure is not cured within the applicable
grace period) occurs.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
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January 29, 2002, by and among the Custodian, the Seller and the Buyer.
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"Custodial Delivery" shall mean the form executed by Seller in order
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to deliver the Purchased Loan Schedule and the Purchased Loan File to Buyer
or its designee (including the Custodian) pursuant to Section 7, a form of
which is attached hereto as Exhibit IV.
"Custodian" shall mean LaSalle Bank National Association or any
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successor Custodian appointed by Buyer with the prior written consent of
Seller (which consent shall not be unreasonably withheld, delayed or
conditioned).
"Cut-off Date" shall mean the third Business Day preceding each
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Remittance Date.
"Default" shall mean any event which, with the giving of notice, the
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passage of time, or both, would constitute an Event of Default.
"Deficit Cure Amount" shall mean, with respect to any Purchased
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Securities or any Purchased Loans as of any date, the amount (expressed in
dollars) obtained by dividing (i) the Repurchase Price of such Purchased
Securities or Purchased Loans as of such date by (ii) the "Original
Purchase Percentage" for the Rating Category for such Purchased Securities
or Collateral Type Grouping for such Purchased Loans, as set forth in
Schedule I-A attached to this Annex I.
"Depository" shall mean LaSalle Bank National Association or any
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successor Depository appointed by Buyer with the prior written consent of
Seller (which consent shall not be unreasonably withheld, delayed or
conditioned).
"Diligence Materials" shall mean the Preliminary Due Diligence Package
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together with the Supplemental Due Diligence List.
"Draft Appraisal" shall mean a short form appraisal, "letter opinion
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of value," or any other form of draft appraisal reasonably acceptable to
Buyer.
"Early Repurchase Date" shall have the meaning specified in Section
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3(d) of this Annex I.
"Eligible Loans" shall mean any of the following types of performing
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loans, which performing loans are acceptable to Buyer in the exercise of
its good faith business judgment and are secured directly or indirectly by
or the payments on which are derived from a property that is a multifamily,
retail, office, warehouse, or hospitality property (or any other property
type acceptable to Buyer in the exercise of its good faith business
judgment, but excluding in all cases undeveloped land) and is located in
the United States of America, its territories or possessions:
(i) subject to the following proviso, performing commercial
mortgage loans secured by first liens on multifamily and commercial
properties which satisfy the following criteria (referred to on
Schedule 1-A as the "1/st/ Lien" Collateral Type Grouping):
(a) LTV determined by Buyer for the Mortgaged Property
securing directly such loan (including for purposes of this
calculation, such loan but excluding any loan junior to such loan
and secured directly or indirectly by the related property) does
not exceed 80%; and
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(b) the underwritten debt service coverage ratio at
origination as determined by Buyer (giving effect to any
reserves) for the Mortgaged Property securing directly such loan
(including for purposes of this calculation, such loan but
excluding any loan junior to such loan and secured directly or
indirectly by the related property) is not less than 1.20x,
provided, that with respect to any Eligible Loan of the type described
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in this clause (i) which has an LTV in excess of 80% and which Buyer
accepts for inclusion in a Transaction, Buyer shall in good faith
consider administering such Eligible Loan as two Eligible Loans with
the portion of such Eligible Loan equal to 80% LTV treated as an
Eligible Loan of the type described in this clause (i) and the balance
of such Eligible Loan up to a LTV of 85% treated as an Eligible Loan
of the type described in clause (ii) below,
(ii) junior participation interests in performing commercial
mortgage loans secured by first liens in multifamily and commercial
properties which satisfy the following criteria (referred to on
Schedule 1-A as the "B-Note" Collateral Type Grouping):
(a) LTV determined by Buyer for the property from which
payments on such participation are derived (including for
purposes of this calculation, such participation and any loan
senior to such participation and secured directly or indirectly
by the related property and excluding any more junior loan or
participation) does not exceed 85%; and
(b) the underwritten debt service coverage ratio at
origination as determined by Buyer (giving effect to any
reserves) for the property from which payments on such
participation are derived (including for purposes of this
calculation, such participation and any loan senior to such
participation and secured directly or indirectly by the related
property and excluding any more junior loan or participation) is
not less than 1.15x,
provided, that in addition to the foregoing, for purposes of this
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Agreement, an Eligible Loan of the type described in this clause (ii)
shall include the portion of an Eligible Loan described in (i) above
and referred to in the proviso to clause (i) above; and
(iii) performing mezzanine loans secured by pledges of the entire
equity ownership interests (or the applicable lesser ownership
interest approved by Buyer in its sole discretion) in entities that
directly or indirectly own multifamily and commercial properties which
satisfy the following criteria (referred to on Schedule 1-A as the
"Mezzanine Loan" Collateral Type Grouping):
(a) LTV determined by Buyer for the property securing
indirectly such loan (including for purposes of this calculation,
such loan and any loan senior to such loan and secured directly or
indirectly by the related property and excluding junior loans) does
not exceed 85%; and
(b) the underwritten debt service coverage ratio at
origination as determined by Buyer (giving effect to any reserves)
for the property securing indirectly such loan (including for
purposes of this calculation, such loan and any
8
loan senior to such loan and secured directly or indirectly by
the related property and excluding junior loans) is not less than
1.15x.
"Eligible Securities" shall mean any of the following types of
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performing securities, which performing securities are acceptable to Buyer
in the exercise of its good faith business judgment:
(i) commercial mortgage-backed securities that either (a) have a
rating of "B-" (or its equivalent) or higher from any Rating Agency or
(b) are securities rated "CCC" (or the equivalent) or are unrated
securities, in each case with respect to this clause (b) issued in a
conduit commercial mortgage-backed securities offering, and
(ii) collateralized debt obligation securities (also known as
CDOs) that have a rating of not lower than "BB" from Standard & Poor's
or "Ba2" from Moody's and are secured by or the payments on which are
derived from Purchased Securities and/or Purchased Loans purchased
under the Agreement;
provided, that "Eligible Securities" shall exclude securities derived from
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the re-securitization (including for this purpose "re-REMIC") of Eligible
Securities (it being understood and agreed that the limitation of this
proviso shall not apply to collateralized debt obligation securities (or
CDOs) which satisfy the rating requirement of clause (ii) above and
represent a resecuritization of other collateralized debt obligation
securities which were previously purchased by the Buyer under the
Agreement).
"Environmental Report" shall have the meaning specified in paragraph
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12 of Exhibit VI.
"Equity" shall mean, with respect to each Purchased Loan or Purchased
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Security, the amount (not less than zero) equal to the Market Value of such
Purchased Loan or Purchased Security minus the related Repurchase Price.
"Equity Deficit" shall mean the amount (not less than zero) equal to
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the Minimum Seller's Equity Requirement minus the Seller's Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business that is a
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member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section
412(c)(l1) of the Code and the lien created under Section 302(f) of ERISA
and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Seller is a member.
"Exchange Act" means the securities Exchange Act of 1934, as amended.
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"Exit Fee" shall mean the fee payable by the Seller either:
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(x) pursuant to Section 3(d) of this Annex I in the event Seller
terminates a Transaction on demand and repurchases the related
Purchased Security (other than an
9
Eligible Security of the type described in clause (ii) of the
definition thereof) or Purchased Loan or
(y) pursuant to Section 14(a)(iii) of this Annex I if an Event
of Default on the part of Seller occurs and Buyer disposes of the
Purchased Securities and Purchased Loans, in each case in an amount
equal to 1.125% of the related Repurchase Price; provided, that no
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Exit Fee shall be due and payable either:
(1) if the reason for the termination of a Transaction is
the related Purchased Security or Purchased Loan is simultaneous
with such termination being included in a collateralized debt
obligation (or CDO) transaction where Deutsche Banc AG or an
Affiliate of Deutsche Banc AG is acting as sole lead manager and
sole book runner (or as co-manager, if agreed to by Deutsche Banc
in its sole discretion), or
(2) if in connection with the termination of the
Transaction, Buyer has accepted a substitution pursuant to
Section 9(a) of this Annex I, or
(3) in the circumstance contemplated by Section 17(b) of
this Annex I.
"Extension Conditions" shall have the meaning specified in Section
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3(e) of this Annex I.
"Facility Amount" shall mean $430,000,000.
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"Filings" shall have the meaning specified in Section 6 of this Annex
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I.
"GAAP" shall mean United States generally accepted accounting
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principles consistently applied as in effect from time to time.
"Governmental Authority" shall mean any national or federal
----------------------
government, any state, regional, local or other political subdivision
thereof with jurisdiction and any Person with jurisdiction exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guaranty" shall mean the Guaranty, dated as of the date hereof, from
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the Sponsor to the Buyer, of full and timely payment of amounts due under
this Agreement to the Buyer in an aggregate amount of:
(a) with respect to all Purchased Loans and all Purchased
Securities (other than Purchased Securities which are rated lower than
"B-" (or the equivalent) by the Rating Agencies or which are not
rated), the lesser of (i) the Equity Deficit and (ii) $30,000,000 plus
(b) with respect to each of the Purchased Securities which is
rated lower than "B-" (or the equivalent) by the Rating Agencies or
which is not rated, the related Repurchase Price;
provided, that notwithstanding anything in this Agreement to the contrary, the
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Seller may substitute a letter of credit for the Guaranty, in whole or in part,
on the following terms and subject to the following conditions:
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(1) the Seller provides to the Buyer not less than ten (10)
Business Days prior written notice of its desire to substitute a
letter of credit for the Guaranty, in whole or in part, including
with such written notice the proposed form of the letter of
credit;
(2) the letter of credit is a stand-by irrevocable letter of
credit from a financial institution rated not lower than "BBB+"
(or the equivalent) by at least two of the Rating Agencies (one
of which shall be Standard & Poor's) in form and substance
acceptable to the Buyer;
(3) the aggregate amount of credit enhancement provided by
the letter of credit and/or the Guaranty shall equal not less
than the sum of $30,000,000 plus the amount referred to in clause
(b) above (i.e. at the election of the Seller, the letter of
credit may cover such sum in its entirety or such sum may be
covered in part through the letter of credit and in part through
the Guaranty in a reduced amount);
(4) the expiration date of the letter of credit is the
Repurchase Date or such shorter period as Seller using reasonable
commercial efforts can obtain, but in no event shorter than one
(1) year;
(5) simultaneous with the delivery of the letter of credit,
the Seller and the Buyer enter into a letter agreement acceptable
to the Buyer which provides, among other conditions established
by the Buyer, (x) the Seller's written confirmation that the
provider of the letter of credit does not have any interest in
the Purchased Loans or the Purchased Securities, (y) that in the
event the letter of credit is withdrawn or cancelled for any
reason, then the Guaranty is automatically reinstated and
reaffirmed and (z) that in the event the credit rating of the
provider of the letter of credit is reduced below "BBB+" (or the
equivalent) by the Rating Agencies, then the Seller shall be
provided the opportunity to cure such downgrade of the letter of
credit provider by either reinstating and reaffirming in writing
the Guaranty or delivering to the Buyer a replacement letter of
credit that complies with clauses (1) through (4) above within
thirty (30) days (or if the Seller does not so reinstate and
reaffirm the Guaranty or deliver a replacement letter of credit,
the Buyer may draw upon the letter of credit and deposit such
funds in an account of the Buyer at the Depository to be held as
collateral for the Seller's obligations under this Agreement on
the same basis as set forth in the letter of credit and the
Guaranty);
(6) in the event the expiration date of the letter of credit
is prior to the Repurchase Date, then on such expiration date the
Seller shall either reinstate and reaffirm in writing the
Guaranty or deliver to the Buyer a replacement letter of credit
that complies with clauses (1) through (5) above (or if the
Seller does not so reinstate and reaffirm the Guaranty or deliver
a replacement letter of credit, the Buyer may draw upon the
letter of credit and deposit such funds in an account of the
Buyer at the Depository to be held as collateral for the Seller's
obligations under this Agreement on the same basis as set forth
in the letter of credit and the Guaranty);
(7) at any time that the Seller shall have substituted a
letter of credit for the Guaranty in its entirety in accordance
with clauses (1) through (6) above,
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all representations, warranties, covenants and Events of Default
with respect to the Sponsor in this Agreement shall no longer be
operative or if any force or effect and the Guaranty shall have
no force or effect; and
(8) at any time the Seller shall have substituted a letter
of credit for a portion of the Guaranteed Obligation (as defined
in the Guaranty) in accordance with clauses (1) through (6)
above, the aggregate amount of the Guaranteed Obligation under
the Guaranty shall be reduced by the aggregate amount of the
letter of credit.
"Hedging Transactions" shall mean, with respect to any or all of the
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Purchased Securities and/or Purchased Loans, any short sale of U.S.
Treasury Securities or mortgage-related securities, futures contract
(including Eurodollar futures) or options contract or any interest rate
swap, cap or collar agreement or similar arrangements providing for
protection against fluctuations in interest rates or the exchange of
nominal interest obligations, either generally or under specific
contingencies, entered into by Seller, with one or more counterparties
reasonably acceptable to the Buyer.
"Indemnified Amounts" and "Indemnified Parties" shall have the meaning
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specified in Section 20 of this Annex I.
"Insured Closing Letter and Escrow Instructions" shall mean a letter
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addressed to Seller and Buyer from the title insurance underwriter for
which the Settlement Agent is serving as an agent for each Table Funded
Purchased Loan and related escrow instructions, which letter and
instructions shall be in form and substance reasonably acceptable to Buyer
and Seller.
"LIBOR" shall mean the rate per annum calculated as set forth below:
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(i) On each Pricing Rate Determination Date, LIBOR for the next
Pricing Rate Period will be the rate for deposits in United States
dollars for a one-month period which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such date; or
(ii) On any Pricing Rate Determination Date on which no such rate
appears on Telerate Page 3750 as described above, LIBOR for the next
Pricing Rate Period will be determined on the basis of the arithmetic
mean of the rates at which deposits in United States dollars are
offered by the Reference Banks at approximately 11:00 a.m., London
time, on such date to prime banks in the London interbank market for a
one-month period.
All percentages resulting from any calculations or determinations referred
to in this definition will be rounded upwards, if necessary, to the nearest
multiple of 1/100th of 1% and all U.S. dollar amounts used in or resulting
from such calculations will be rounded to the nearest cent (with one-half
cent or more being rounded upwards).
"LIBO Rate" shall mean, with respect to any Pricing Rate Period
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pertaining to a Transaction, a rate per annum determined for such Pricing
Rate Period in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
LIBOR
__________________________
1 - Reserve Requirement
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"LIBOR Transaction" shall mean, with respect to any Pricing Rate
-----------------
Period, any Transaction with respect to which the Pricing Rate for such
Pricing Rate Period is determined with reference to the LIBO Rate.
"LTV" shall mean the ratio of total loan to appraised value for the
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Mortgaged Property securing directly or indirectly an Eligible Loan or from
which the payments on such Eligible Loan are derived. If Seller has not
received an appraisal (or Draft Appraisal) approved by Buyer from an MAI
Appraiser, "LTV" shall mean the ratio of total loan to market value for the
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Mortgaged Property securing directly or indirectly an Eligible Loan or from
which the payments on such Eligible Loan are derived, as determined by the
Buyer in the exercise of its good faith business judgment.
"Margin Excess" shall have the meaning assigned to such term in
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Section 4(b) hereof.
"Material Adverse Effect" means a material adverse effect upon (i) the
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business operations, properties, assets or condition (financial or
otherwise) of Sponsor and its subsidiaries, taken as a whole or (ii) the
ability of Buyer to enforce the Guaranty.
"Mezzanine Note" shall mean a note or other evidence of indebtedness
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of the owner or owners of all equity or ownership interests in an
underlying real property owner secured by a pledge of such ownership
interests.
"Minimum CMBS Diversification" means, at any time, ten or more issues
----------------------------
of Purchased Securities are then subject to Transactions.
"Minimum Seller's Equity Requirement" means an amount equal to
-----------------------------------
$100,000,000.
"Moody's" shall mean Xxxxx'x Investor Service, Inc.
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"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt
--------
or other instrument, creating a valid and enforceable first or second lien
on or a first or second priority ownership interest in an estate in fee
simple or leasehold estate in real property and the improvements thereon,
securing a mortgage note or similar evidence of indebtedness.
"Mortgage Note" shall mean a note or other evidence of indebtedness of
-------------
a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing repayment
------------------
of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note and the grantor
---------
of the related Mortgage.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
------------------
in Section 3(37) of ERISA to which contributions have been, or were
required to have been, made by Seller or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"New Collateral" shall mean an Eligible Loan or Eligible Security that
--------------
Seller proposes to be included as Collateral.
13
"Original Purchase Percentage" shall mean, with respect to any
----------------------------
Transaction as of any day, the "Original Purchase Percentage" specified for
the applicable Rating Category or Collateral Type Grouping in Schedule I-A
attached to this Annex I.
"Originated Collateral" shall mean any Collateral that is an Eligible
---------------------
Loan and whose Purchased Loan Documents were prepared by Seller, Sponsor or
an Affiliate controlled by the Sponsor.
"Person" shall mean an individual, corporation, limited liability
------
company, business trust, partnership, joint tenant or tenant-in-common,
trust, unincorporated organization, or other entity, or a federal, state or
local government or any agency or political subdivision thereof.
"Plan" means an employee benefit or other plan established or
----
maintained by Seller or any ERISA Affiliate during the five year period
ended prior to the date of this Agreement or to which Seller or any ERISA
Affiliate makes, is obligated to make or has, within the five year period
ended prior to the date of this Agreement, been required to make
contributions and that is covered by Title IV of ERISA or Section 302 of
ERISA or Section 412 of the Code, other than a Multiemployer Plan.
"Portfolio Collateral" shall mean, collectively, the Purchased
--------------------
Securities and the Purchased Loans.
"Portfolio Securities" shall mean, collectively, the Purchased
--------------------
Securities and the Related Securities.
"Pre-Existing Collateral" shall mean any Collateral that is an
-----------------------
Eligible Loan and is not Originated Collateral.
"Preliminary Due Diligence Package" shall mean with respect to any New
---------------------------------
Collateral, a summary memorandum outlining the proposed transaction,
including potential transaction benefits and all material underwriting
risks, all Underwriting Issues and all other characteristics of the
proposed transaction that a reasonable buyer would consider material,
together with the following due diligence information relating to the New
Collateral to be provided by Seller to Buyer pursuant to this Agreement:
With respect to each Eligible Loan:
(i) the Collateral Information;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical information, if
available;
(iv) description of the Mortgaged Property and the ownership
structure of the borrower and the sponsor (including, without
limitation, the board of directors, if applicable) and financial
statements of the borrower and the sponsor;
(v) indicative debt service coverage ratios;
(vi) indicative loan-to-value ratio;
14
(vii) term sheet outlining the transaction generally;
(viii) Seller's relationship with the Mortgagor, if any; and
(ix) with respect to any New Collateral that is Pre-Existing
Collateral, a list that specifically and expressly identifies any
Purchased Loan Documents that relate to such New Collateral but are
not in Seller's possession; and
(x) any exceptions to the representations and warranties set
forth in Exhibit VI to the Agreement.
With respect to each Eligible Security:
(i) collateral summary books which include, to the extent
provided to the Seller, the following:
(A) loan detail and asset description
(B) map, photo
(C) rent roll
(D) operating information
(E) appraisal, environmental, engineering summary;
(ii) loan data disk;
(iii) materials furnished to the Rating Agencies in connection
with the issuance of the Eligible Securities, to the extent provided
to Seller;
(iv) Securitization Documents;
(v) remittance report for most recent period in Seller's
possession;
(vi) quarterly remittance reports in Seller's possession;
(vii) accounting reports delivered with respect to the
Eligible Security in Seller's possession;
(viii) legal opinions delivered with respect to the Eligible
Security in Seller's possession; and
(ix) a copy of the executed trade ticket (including evidence
of the dollar price paid and/or purchase spread over Treasuries or
other relevant benchmark for such Eligible Security).
"Pricing Rate Determination Date" shall mean (a) in the case of the
-------------------------------
first Pricing Rate Period with respect to any Transaction, the second
(2/nd/) Business Day preceding the first day of such Pricing Rate Period
and (b) with respect to any subsequent Pricing Rate Period, the second
15
(2/nd/) Business Day preceding the first day of the Pricing Rate Period
commencing on and including the Remittance Date in a calendar month.
"Pricing Rate Period" shall mean, (a) in the case of the first Pricing
-------------------
Rate Period with respect to any Transaction, the period commencing on and
including the Purchase Date for such Transaction and ending on and
excluding the following Remittance Date, and (b) in the case of any
subsequent Pricing Rate Period, the period commencing on and including such
Remittance Date and ending on and excluding the following Remittance Date;
provided, however, that in no event shall any Pricing Rate Period end
-------- -------
subsequent to the Repurchase Date.
"Principal Payment" shall mean, with respect to any Purchased Loans or
-----------------
Purchased Securities, any payment or prepayment of principal received by
the Depository in respect thereof.
"Purchased Loan File" shall mean the documents specified as the
-------------------
"Purchased Loan File" in Section 7(e), together with any additional
documents and information required to be delivered to Buyer or its designee
(including the Custodian) pursuant to this Agreement.
"Purchased Loan Documents" shall mean, with respect to a Purchased
------------------------
Loan, the documents comprising the Purchased Loan File for such Purchased
Loan.
"Purchased Loans" shall mean (i) with respect to any Transaction, the
---------------
Eligible Loans sold by Seller to Buyer in such Transaction and (ii) with
respect to the Transactions in general, all Eligible Loans sold by Seller
to Buyer and any additional collateral delivered by Seller to Buyer
pursuant to Section 4(a) of this Annex I.
"Purchased Loan Schedule" shall mean a schedule of Purchased Loans
-----------------------
attached to each Trust Receipt and Custodial Delivery containing
information substantially similar to the Collateral Information.
"Rating Agency" shall mean any of Fitch Inc., Moody's and Standard &
-------------
Poor's.
"Rating Category" shall mean any of the rating categories listed in
---------------
Schedule I-A attached to this Annex I.
"Reference Banks" shall mean banks each of which shall (i) be a
---------------
leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market and (ii) have an established place of
business in London. Initially, the Reference Banks shall be The Chase
Manhattan Bank, Barclays Bank, Plc and Deutsche Bank AG. If any such
Reference Bank should be unwilling or unable to act as such or if the Buyer
shall terminate the appointment of any such Reference Bank or if any of the
Reference Banks should be removed from the Reuters Monitor Money Rates
Service or in any other way fail to meet the qualifications of a Reference
Bank, the Buyer in the exercise of its good faith business judgment may
designate alternative banks meeting the criteria specified in clauses (i)
-----------
and (ii) above.
----
"Related Securities" shall mean commercial mortgage backed securities
------------------
(other than the Purchased Securities) issued as part of the same
transaction as the transaction in which the Purchased Securities are issued
and having a lower rating than such Purchased Securities or having no
rating.
16
"Relevant System" shall mean (a) The Depository Trust Company in New
---------------
York, New York, or (b) such other clearing organization or book-entry
system as is designated in writing by the Buyer.
"Remittance Date" shall mean the twenty-fifth calendar day of each
---------------
month, or the next succeeding Business Day, if such calendar day shall not
be a Business Day.
"Requirement of Law" shall mean any law, treaty, rule, regulation,
------------------
code, directive, policy, order or requirement or determination of an
arbitrator or a court or other Governmental Authority whether now or
hereafter enacted or in effect.
"Reserve Requirement" shall mean, with respect to any Pricing Rate
-------------------
Period, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect during such Pricing
Rate Period (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board of Governors) maintained by the
Buyer.
"Reset Date" shall mean, with respect to any Pricing Rate Period for
----------
any Transaction, the second Business Day preceding the first day of such
Pricing Rate Period.
"Securitization Document" shall mean, with respect to any Eligible
-----------------------
Securities, any pooling and servicing agreement or other agreement
governing the issuance and administration of such Eligible Securities.
"Seller" shall mean Delaware Bonds Holdings, Inc., a Delaware
------
corporation.
"Seller's Equity" means an aggregate amount equal to the sum of the
---------------
Equity with respect to each Purchased Loan and Purchased Security, which
amount and its relationship to the Minimum Seller's Equity Requirement
(i.e. lower than on the one hand or equal to or greater than on the other
hand) shall determine the applicable "Original Purchase Percentage," "CF
Sweep Purchase Percentage" and "Margin Maintenance Percentage" as set forth
on Schedule I-A to this Annex I for each Transaction. Upon request of
Seller made from time to time, Buyer shall provide to Seller information
with respect to the Equity with respect to each Purchased Loan and
Purchased Security. In addition, Seller's Equity shall include any cash
and the value as determined by Buyer of other collateral (including,
without limitation, Eligible Loans or Eligible Securities) which the Seller
pledges and/or delivers to the Buyer and the Seller and the Buyer agree in
writing shall be included in the determination of Seller's Equity.
"Servicing Agreement" has the meaning specified in Section 22(b) of
-------------------
this Annex I.
"Servicing Records" has the meaning specified in Section 22(b) of this
-----------------
Annex I.
"Settlement Agent" shall mean, with respect to any Transaction
----------------
involving Table Funded Purchased Loans, an entity satisfactory to the Buyer
in its reasonable discretion (which may be a title company, escrow company
or attorney in accordance with local law and practice in the jurisdiction
where the related Table Funded Purchased Loan is being originated), to
which the Purchase Price is to be wired by Buyer at the request of Seller.
17
"Single-Purpose Entity" shall mean a Person, other than an individual,
---------------------
which is formed or organized solely for the purpose of holding, directly
and subject to this Agreement, the Portfolio Collateral, Related Securities
and equity ownership interests in Subsidiaries approved by Buyer, does not
engage in any business unrelated to the Portfolio Collateral, Related
Securities and equity ownership interests in Subsidiaries approved by Buyer
and the financing thereof, does not have any assets other than the
Portfolio Collateral, Related Securities and equity ownership interests in
Subsidiaries approved by Buyer and the financing thereof, or any
indebtedness other than as permitted by the Agreement, has its own separate
books and records and its own accounts, in each case which are separate and
apart from the books and records and accounts of any other Person, holds
itself out as being a Person, separate and apart from any other Person and
provides in its certificate of incorporation for the inclusion of at least
one "independent director."
"Sovereign Repurchase Event" shall mean as a result of sovereign (i.e.
--------------------------
country) action or inaction (directly or indirectly), Buyer becomes unable
to perform any absolute or contingent obligation to make a payment or
transfer or to receive a payment or transfer in respect on any Transaction
hereunder or to comply with any other material provision of the Agreement
relating to such Transaction.
"Sponsor" shall mean LNR Property Corporation, a Delaware corporation
-------
and its permitted successors.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
-----------------
division of the XxXxxx-Xxxx Companies.
"Supplemental Due Diligence List" shall mean, with respect to any New
-------------------------------
Collateral, information or deliveries concerning the New Collateral that
Buyer shall reasonably request in addition to the Preliminary Due Diligence
Package.
"Subsidiary" shall mean, 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.
"Survey" shall mean a certified ALTA/ACSM (or applicable state
------
standards for the state in which the Collateral is located) survey of a
Mortgaged Property prepared by a registered independent surveyor and in
form and content reasonably satisfactory to the Buyer and the company
issuing the Title Policy for such Property.
"Table Funded Purchased Loan" shall mean a Purchased Loan which is
---------------------------
sold to the Buyer simultaneously with the origination or acquisition
thereof, which origination or acquisition is financed with the Purchase
Price, pursuant to Seller's request, paid directly to the Settlement Agent
for disbursement in connection with such origination or acquisition. A
Purchased Loan shall cease to be a Table Funded Purchased Loan after the
Custodian has delivered a Trust Receipt to Buyer certifying its receipt of
the Purchased Loan File therefor.
18
"Table Funded Trust Receipt" shall have the meaning given to such term
--------------------------
in the Custodial Agreement.
"Target Price" shall mean, with respect to any Purchased Securities or
------------
Purchased Loans as of any date, the amount (expressed in dollars) obtained
by multiplying (i) the Market Value of such Purchased Securities or
Purchased Loans as of such date by (ii) the "Original Purchase Percentage"
for the Rating Category applicable to such Purchased Securities or the
Collateral Type Grouping applicable to such Purchased Loans, as set forth
in Schedule I-A attached to this Annex I.
"Telerate Page 3750" shall mean the display page currently so
------------------
designated on the Dow Xxxxx Service (or such other page as may replace that
page on that service for the purpose of displaying comparable rates or
prices).
"Title Policy" shall have the meaning specified in paragraph 8 of the
------------
first paragraph of Exhibit VI.
----------
"Transaction Conditions Precedent" shall have the meaning specified in
--------------------------------
Section 3(b) of this Annex I.
"Transaction Documents" shall mean, collectively, the Agreement, this
---------------------
Annex I, any other applicable Annexes to the Agreement, the Guaranty, the
Custodial Agreement and all Confirmations executed pursuant to the
Agreement and this Annex I in connection with specific Transactions.
"Transition Down Date" shall have the meaning specified in Section
--------------------
4(a) of this Annex I.
"Transition Up Date" shall have the meaning specified in Section 3(l)
------------------
of this Annex I.
"Trustee" shall mean, with respect to any Eligible Securities, the
-------
trustee under the Securitization Document applicable to such Eligible
Securities.
"Trust Receipt" shall mean a trust receipt issued by Custodian to
-------------
Buyer confirming the Custodian's possession of certain Purchased Loan Files
which are the property of and held by Custodian for the benefit of the
Buyer (or any other holder of such trust receipt).
"UCC" shall have the meaning specified in Section 6 of this Annex I.
---
"Underwriting Issues" shall mean, with respect to any Collateral as to
-------------------
which Seller intends to request a Transaction, all material information
that has come to Seller's attention that, based on the making of reasonable
inquiries and the exercise of reasonable care and diligence under the
circumstances, would be considered a materially "negative" factor (either
separately or in the aggregate with other information) (including, but not
limited to, whether any of the Purchased Securities or Purchased Loans were
rejected for inclusion in, or repurchased from, any securitization
transaction, warehouse loan facility or a repurchase transaction due to the
breach of a representation and warranty) or a material defect in loan
documentation or closing deliveries (such as any absence of any material
Purchased Loan Document(s)), to a reasonable institutional mortgage buyer
in determining whether to originate or acquire the Collateral in question.
19
"Unpermitted Ownership Interest Transfer" means any sale, assignment,
---------------------------------------
conveyance or other disposition (directly or indirectly) of the legal or
beneficial ownership interests in the Seller following which the Sponsor
does not
(1) own (directly or indirectly) the lesser of (a) twenty percent
(20%) of the equity ownership interests in the Seller and (b) the
equity ownership interest percentage that represents a minimum of
$50,000,000 of the Seller's equity and
(2) control (directly or indirectly) the operations, management
and investment decision-making of the Seller.
"Usage Fee" shall have the meaning specified in Section 3(f) of this
---------
Annex I.
(b) The following capitalized terms shall have the respective meanings set
forth below, in lieu of the meanings for such terms set forth in the Agreement:
"Buyer's Margin Percentage" shall mean, with respect to the Purchased
-------------------------
Loans or Purchased Securities, the applicable percentage set forth in
Schedule I-A attached to this Annex I under the heading "Margin Maintenance
Percentage".
"Confirmation" shall have the meaning specified in Section 3(b) of
------------
this Annex I.
"Event of Default" shall have the meaning specified in Section 14 of
----------------
this Annex I.
"Margin Notice Deadline" shall mean 11:00 a.m. (New York City time).
----------------------
"Market Value" shall mean, with respect to any Purchased Securities as
------------
of any relevant date, the market value for such Purchased Securities on
such date, as determined by Buyer in the exercise of its good faith
business judgment or, with respect to any Purchased Loans as of any
relevant date, the lesser of
(x) the market value for such Purchased Loans on such date, as
determined in good faith by Buyer in the exercise of its good faith
business judgment and
(y) the par amount of such Purchased Loan (and including the
value of any Hedging Transactions assigned with such Purchased Securities
or Purchased Loans for which the Buyer or an Affiliate of the Buyer is the
counterparty).
The Market Value of all Purchased Securities and Purchased Loans shall be
determined by Buyer, in the exercise of its good faith business judgment,
on each Business Day during the term of the Agreement.
"Price Differential" shall mean, with respect to any Transaction as of
------------------
any date, the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Repurchase Price for such Transaction on a
360-day-per-year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the date of determination (reduced by any amount
of such Price Differential previously paid by Seller to Buyer with respect
to such Transaction).
"Pricing Rate" shall mean, for any Pricing Rate Period, either
------------
20
(x) with respect to a Transaction involving Purchased Securities
in any Rating Category (other than collateralized debt obligation
securities (or CDOs) rated "BB" or "BB+" (or the equivalent)) and/or
Purchased Loans in any Collateral Type Grouping on Schedule I-A of this
Annex I, an annual rate equal to the LIBO Rate for such Pricing Rate Period
plus the relevant Applicable Spread for such Transaction, subject to
adjustment and/or conversion as provided in Sections 3(g) and 3(h) of this
Annex I or
(y) with respect to a Transaction involving Purchased Securities
which are collateralized debt obligation securities (or CDOs) rated "BB" or
"BB+" (or the equivalent), 12.00% (or after the occurrence and during the
continuance of an Event of Default, 16.00%), in each case, subject to
adjustment as provided in footnote 5 on Schedule I-A of this Annex I.
"Purchase Price" shall mean, with respect to any Purchased Securities
--------------
or Purchased Loans, (i) initially, the price at which such Purchased
Securities or Purchased Loans are transferred by Seller to Buyer on the
applicable Purchase Date and (ii) thereafter, such price increased by the
amount of any cash transferred by Buyer to Seller pursuant to Section 3(l)
or 4(b) hereof. The Purchase Price as of any Purchase Date for any
Purchased Securities in a particular Rating Category or any Purchased Loans
in a particular Collateral Type Grouping shall be an amount (expressed in
dollars) equal to the product obtained by multiplying (i) the Market Value
of such Purchased Securities (or, if the Securities proposed to be included
in a Transaction are being or were acquired by the Seller from the Sponsor,
the acquisition cost of the Sponsor in such Securities, if lower than the
Market Value) or such Purchased Loans by (ii) the "Original Purchase
Percentage" for such Rating Category or such Collateral Type Grouping, as
set forth in Schedule I-A attached to this Annex I; provided, that
--------
notwithstanding the foregoing,
(1) the Purchase Price (x) for Purchased Loans which are Eligible
Loans of the type described in clause (i) of the definition of
Eligible Loans shall not exceed a 75% LTV determined by Buyer for the
Mortgaged Property securing directly such Purchased Loan and (y) for
Purchased Loans which are Eligible Loans of the type described in
clause (ii) or (iii) of the definition of Eligible Loans shall not
exceed an amount equal to (a) an 80% LTV determined by Buyer for the
property securing indirectly such loan or from which payments on the
related participation are derived minus (b) the outstanding principal
balance of any loan senior to such Eligible Loan and secured directly
or indirectly by the related property; and
(2) the Seller may request that the Purchase Price set forth in a
Confirmation be determined applying a percentage lower than the
Original Purchase Percentage set forth in Schedule I-A attached to
this Annex I and, in such event, such lower percentage shall be deemed
the "Original Purchase Percentage" for purposes of the calculation of
the Target Price but not for any other purpose under the Agreement.
"Purchased Securities" shall mean, (i) with respect to any
--------------------
Transaction, the Eligible Securities sold by Seller to Buyer in such
Transaction, and (ii) with respect to the Transactions in general, all
Eligible Securities sold by Seller to Buyer and any additional collateral
delivered by Seller to Buyer pursuant to Section 4(a) of this Annex I.
Whenever Purchased Securities are rated by more than one Rating Agency and
a split rating applies to such Purchased Securities (i.e., one Rating
Agency rates such Purchased Securities at a lower rating level than the
other of such Rating Agencies), then for all purposes of this Agreement
where a rating is to be selected (including, without limitation, in the
determination of any percentages pursuant to Schedule I-A of this Annex I),
the lower of the ratings shall apply.
21
"Replacement Collateral" shall have the meaning specified in Section
----------------------
14(b)(ii) of this Annex I.
"Repurchase Date" shall mean January 28, 2005; provided, however, that
--------------- -------- -------
if all of the Extension Conditions described in Section 3(e) of this Annex
I shall be timely satisfied, the Repurchase Date shall be extended to
January 28, 2006.
"Repurchase Price" shall mean, with respect to any Purchased
----------------
Securities or Purchased Loans as of any date, the price at which such
Purchased Securities or Purchased Loans are to be transferred from Buyer to
Seller upon termination of the related Transaction; such price will be
determined in each case as the sum of the Purchase Price of such Purchased
Securities or Purchased Loans and the Price Differential with respect to
such Purchased Securities or Purchased Loans as of the date of such
determination, minus all Income and cash actually received by Buyer in
respect of such Transaction pursuant to Sections 3(d), 3(e), 4(a), 5(b),
5(c), 5(d), 5(e) and 5(f) of this Annex I.
3. INITIATION; CONFIRMATION; TERMINATION; FEES
The provisions of Paragraph 3 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 3:
(a) Subject to the terms and conditions set forth in the Agreement
(including, without limitation, the "Transaction Conditions Precedent" specified
in Section 3(b) of this Annex I), the Buyer shall from time to time enter into
Transactions with the Seller on any Business Day from and including the date of
the Agreement to but excluding the three year anniversary date of the date of
the Agreement and pursuant to any such Transaction, Seller shall be entitled to
sell, repurchase and re-sell any assets in accordance with this Agreement. An
agreement to enter into a Transaction shall be made in writing at the initiation
of Seller as provided below; provided, however, that the aggregate Repurchase
-------- -------
Price (excluding the Price Differential with respect to the Purchased Securities
and Purchased Loans as of the date of determination) for all Transactions shall
not exceed the Facility Amount. Seller shall give Buyer written notice of each
proposed Transaction and Buyer shall inform Seller of its determination with
respect to any assets proposed to be sold to Buyer by Seller solely in
accordance with Exhibit VIII attached hereto. Buyer shall have the right to
review all Eligible Loans and Eligible Securities proposed to be sold to Buyer
in any Transaction and to conduct its own due diligence investigation of such
Eligible Loans and Eligible Securities as Buyer reasonably determines. Buyer
shall be entitled to make a determination, in the exercise of its good faith
business judgment, that it shall not purchase any or all of the assets proposed
to be sold to Buyer by Seller. On the Purchase Date for the Transaction which
shall be not less than three (3) Business Days following the approval of an
Eligible Loan or an Eligible Security by the Buyer in accordance with Exhibit
VIII hereto, the Purchased Securities or Purchased Loans, as applicable shall be
transferred to Buyer or its agent against the transfer of the Purchase Price to
Seller's account at the Depository.
(b) Upon agreeing to enter into a Transaction hereunder, provided each of
the Transaction Conditions Precedent (as hereinafter defined) shall have been
satisfied (or waived by Buyer), Seller shall promptly deliver to Buyer a written
confirmation in the form of Exhibit I attached hereto of each Transaction (a
"Confirmation"). Unless otherwise agreed by the parties, Seller shall deliver a
------------
separate Confirmation with respect to each Purchased Loan or Purchased Security
which is the subject of a Transaction. Such Confirmation shall describe the
Purchased Securities (including CUSIP number, if any) and/or Purchased Loans,
shall identify Buyer and Seller, and shall set forth
(i) the Purchase Date,
22
(ii) the Purchase Price for such Purchased Securities and/or
Purchased Loans,
(iii) the Repurchase Date,
(iv) the Pricing Rate applicable to the Transaction (including
the Applicable Spread);
(v) the acquisition cost; and
(vi) any additional terms or conditions not inconsistent with
the Agreement.
With respect to any Transaction, the Pricing Rate shall be determined initially
on the Pricing Rate Determination Date applicable to the first Pricing Rate
Period for such Transaction, and shall be reset on each Reset Date for the next
succeeding Pricing Rate Period for such Transaction. Buyer or its agent shall
determine in accordance with the terms of this Agreement the Pricing Rate on
each Pricing Rate Determination Date for the related Pricing Rate Period and
notify Seller of such rate for such period on the Reset Date. For purposes of
this Section 3(b), the "Transaction Conditions Precedent" shall be deemed to
--------------------------------
have been satisfied with respect to any proposed Transaction if:
(1) no Default or Event of Default under the Agreement shall
have occurred and be continuing as of the Purchase Date for such proposed
Transaction;
(2) the representations and warranties made by Seller in any
of the Transaction Documents shall be true and correct in all material
respects as of the Purchase Date for such Transaction;
(3) Buyer shall have (A) determined, in accordance with the
applicable provisions of Section 3(a) of this Annex I, that the assets
proposed to be sold to Buyer by Seller in such Transaction are Eligible
Securities and/or Eligible Loans and (B) obtained internal credit approval
for the inclusion of such Eligible Security or Eligible Loan as a Purchased
Loan in a Transaction;
(4) Seller shall have paid to Buyer the Usage Fee, if any, due
and payable (which amount may, at Buyer's option, be held back from funds
remitted to Seller by Buyer);
(5) Buyer shall have determined that, with respect to the
Purchased Loans then subject to Transactions, following the consummation of
the proposed Transaction,
(i) the aggregate Repurchase Price (excluding any accrued
unpaid Price Differential) with respect to all Purchased Loans then
subject to Transactions does not exceed $50,000,000, and
(ii) the aggregate Repurchase Price (excluding any accrued
unpaid Price Differential) with respect to all Purchased Loans then
subject to Transactions which are mezzanine loans as described on
Schedule I-A attached to this Annex I does not exceed the lesser of
$25,000,000 or 50% of the aggregate Repurchase Price (excluding any
accrued unpaid Price Differential) with respect to all Purchased Loans
then subject to Transactions:
23
(6) Buyer shall have determined that, with respect to the
Purchased Securities then subject to Transactions, following the
consummation of the proposed Transaction;
(i) the aggregate Market Value with respect to all Purchased
Securities then subject to Transactions in each Rating Category set
forth below does not exceed the applicable percentage set forth below
as a percentage of the Market Value of all Purchased Securities then
subject to Transactions:
Rating Category (or the Maximum Market Value (%)
----------------------- ------------------------
equivalent)
-----------
BB- 40
B+ 25
B 25
X- 00
XX&XXX 00
(xx) if the number of separate issues of Purchased Securities
then subject to Transactions with a minimum $20,000,000 outstanding
principal amount per issue is less than fifteen (15), then the
aggregate outstanding principal amount of all Purchased Securities
then subject to Transactions issued by a single issuer does not exceed
$75,000,000; and
(iii) the aggregate Repurchase Price (excluding any accrued
unpaid Price Differential) with respect to all Purchased Securities
which are collateralized debt obligation securities (or CDOs) then
subject to Transactions does not exceed $40,000,000;
(7) Buyer shall have determined that, with respect to the
Purchased Securities which are collateralized debt obligation securities
(or CDOs) and Purchased Loans then subject to Transactions, following the
consummation of the proposed Transaction, the aggregate Repurchase Price
(excluding any accrued unpaid Price Differential) then subject to
Transactions does not exceed $60,000,000;
(8) Buyer shall have determined that,
(i) with respect to any Purchased Securities which are the
subject of a proposed Transaction and are rated "BB-"(or the
equivalent) or lower or are not rated, such Purchased Securities,
together with any Purchased Securities issued by the same trust,
entitle the holder thereof to control the selection of the special
servicer for the mortgage loans underlying such Purchased Securities
or the Seller shall have complied with Section 3(b)(9) below with
respect to such Purchased Securities which are the subject of a
Proposed Transaction; and
(ii) notwithstanding anything to the contrary in subparagraph
(8)(i) above, with respect to the Purchased Securities then subject to
Transactions that are rated "BB-" (or the equivalent) or higher,
following the consummation of the proposed Transaction, at least 75%
of such Purchased Securities by Market Value have the Seller as the
special servicer for the mortgage loans underlying such Purchased
Securities; and
24
(9) with respect to any proposed Transaction for Purchased
Securities which are rated "BB-" (or the equivalent) or lower or are not
rated, in the event an Affiliate of the Seller owns the Related Securities
(it being understood that for purposes of this provision, Related
Securities shall include (a) the securities issued in a "real estate
mortgage investment conduit" transaction which have no rating and (b) if
such unrated securities do not entitle the holder thereof to control the
selection of the special servicer for the mortgage loans underlying such
Purchased Securities, the securities which have a rating and entitle the
holder thereof to control the selection of the special servicer for the
mortgage loans underlying such Purchased Securities), the Seller shall have
(x) (i) caused ownership of the Related Securities to be
transferred to the Seller simultaneous with or prior to the purchase
of the Purchased Securities by Buyer and (ii) delivered to the Buyer a
power of attorney and any other documentation reasonably required by
the Buyer sufficient to permit the Buyer upon the occurrence and
during the continuance of an Event of Default to register the transfer
of the Related Securities from Seller to Buyer or its designee, or
(y) delivered to the Buyer an agreement satisfactory to
Buyer irrevocably conveying and transferring to Buyer the right to
control the selection of the special servicer for the related mortgage
loans if an Event of Default occurs under the Agreement.
(c) Each Confirmation, together with the Agreement, including this Annex
I, shall be conclusive evidence of the terms of the Transaction(s) covered
thereby unless objected to in writing by Seller no more than two (2) Business
Days after the date such Confirmation is received by Seller. An objection sent
by Seller with respect to any Confirmation must state specifically that the
writing is an objection, must specify the provision(s) of such Confirmation
being objected to by Seller, must set forth such provision(s) in the manner that
Seller believes such provisions should be stated, and must be received by Buyer
no more than two (2) Business Days after such Confirmation is received by
Seller.
(d) No Transaction shall be terminable on demand by Buyer (other than upon
the occurrence and during the continuance of an Event of Default by Seller or if
a Sovereign Repurchase Event occurs). Seller shall be entitled to terminate a
Transaction on demand, and repurchase all of the Purchased Securities and/or
Purchased Loans subject to a Transaction on any Business Day prior to the
Repurchase Date (an "Early Repurchase Date"); provided, however, that:
--------------------- -------- -------
(i) Seller repurchases on such Early Repurchase Date, all of the
Purchased Securities and/or Purchased Loans subject to such Transaction,
(ii) Seller notifies Buyer in writing of its intent to terminate such
Transaction and repurchase such Purchased Securities and/or Purchased Loans
no later than three (3) Business Days prior to such Early Repurchase Date,
(iii) on such Early Repurchase Date Seller pays to Buyer an amount
equal to the sum of the Repurchase Price for such Transaction, the Exit
Fee, if any, and any other amounts payable under this Agreement (including,
without limitation, Section 3(i) of this Annex I) with respect to such
Transaction against transfer to the Seller or its agent of such Purchased
Securities and/or Purchased Loans, and
(iv) on such Repurchase Date, if the Minimum Seller's Equity
Requirement has not been achieved and if a CF Sweep Event has occurred and
is continuing with respect to any
25
Purchased Security or Purchased Loan, Seller shall, if the Purchased
Security or Purchased Loan in question is not being redeemed or satisfied
by the underlying obligor, only be permitted to repurchase a Purchased
Security or Purchased Loan (other than the Purchased Security or Purchase
Loan that triggered a CF Sweep Event) if Seller pays to Buyer an amount, in
addition to the amount referred to in clause (iii) above, on account of and
to reduce the Repurchase Price of the Purchased Securities or Purchased
Loans in respect of which such CF Sweep Event occurred, until the
Repurchase Price for such Purchased Securities or Purchased Loans has been
reduced to the amount (expressed in dollars) obtained by multiplying (i)
the Market Value of such Purchased Securities or Purchased Loans as of such
date by (ii) the "CF Sweep Purchase Percentage" applicable to such
Purchased Securities or Purchased Loans, as set forth in Schedule I-A
attached to this Annex I, respectively as of the date of such payment (as
determined by Buyer after giving effect to such Principal Payment); and
(v) if the reason for the termination of a Transaction is the related
Purchased Security or Purchased Loan is simultaneous with such termination
being included in a collateralized debt obligation (or CDO) transaction
where Deutsche Banc AG or an Affiliate of Deutsche Banc AG is acting as
sole lead manager and sole book runner (or as co-manager, if agreed to by
Deutsche Banc in its sole discretion), then the proceeds of the transfer of
such Purchased Security or Purchased Loan shall be applied as follows:
(1) first, to pay to Buyer the amount referred to in clause (iii)
above;
(2) second, if a Transition Down Date has occurred, to reduce the
Repurchase Price of any Purchased Securities or Purchased Loans then
subject to Transactions in respect of which the Market Value is less than
the Buyer's Margin Amount (using the higher Original Purchase Percentages
and CF Sweep Purchase Percentages and lower Margin Maintenance Percentages
then in effect as described in Section 4 of this Annex I) until the
Repurchase Price of all Purchased Securities and Purchased Loans then
subject to Transactions equals the Target Price (for this purpose, making
such payment in the order of those Purchased Securities or Purchased Loans
with the largest to smallest excess of Repurchase Price over Target Price);
and
(3) third, to pay any excess to the Seller.
Such notice shall set forth the Early Repurchase Date and shall identify with
particularity the Purchased Securities and/or Purchased Loans to be repurchased
on such Early Repurchase Date.
(e) On the Repurchase Date, termination of the applicable Transactions
will be effected by transfer to Seller or, if requested by Seller, its designee
of the Purchased Securities and Purchased Loans and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Section 5 of this Annex I)
against the simultaneous transfer of the Repurchase Price to an account of
Buyer. Notwithstanding the foregoing, provided all of the Extension Conditions
(as hereinafter defined) shall have been satisfied, the Repurchase Date shall be
extended with respect to all of the Transactions until the first (1/st/)
anniversary of the originally scheduled Repurchase Date (all of the other terms
and conditions of such Transactions remaining the same). For purposes of the
preceding sentence, the "Extension Conditions" shall be deemed to have been
--------------------
satisfied if:
(i) Seller shall have given Buyer written notice, not less than
thirty (30) days prior to the originally scheduled Repurchase Date, of
Seller's desire to extend the Repurchase Date,
26
(ii) no Default or Event of Default under the Agreement shall
have occurred and be continuing as of the originally scheduled Repurchase
Date; provided, that if a Default has occurred and is continuing as of the
--------
originally scheduled Repurchase Date and is in the process of being cured
by the Seller, then the Repurchase Date shall be extended until the cure
period expires at which time the Repurchase Date shall be extended if the
Default is no longer continuing or shall be deemed to occur if an Event of
Default exists, and
(iii) Seller shall have paid Buyer an extension fee in an amount
equal to one-quarter of one percent (0.25%) of the aggregate outstanding
Repurchase Price of all Transactions as of the third anniversary of the
date of the Agreement.
In the event the Repurchase Date is extended pursuant to this Section 3(e) of
Annex I, then Seller shall be required to terminate all Transactions in part by
paying 25% of the aggregate outstanding Repurchase Price as of the January 2005
Remittance Date on each of the Remittance Dates occurring in April, July and
October 2005 and by paying any unpaid portion of the Repurchase Price of all
Transactions on the Repurchase Date. Each such payment of the Repurchase Price
of all Transactions shall reduce the Repurchase Price of individual Transactions
on a pro rata basis.
(f) Concurrently with its execution and delivery of the Agreement,
Seller shall pay Buyer a structuring fee in an amount equal to $5,375,000 (such
amount representing one and one-quarter percent (1.25%) of the Facility Amount).
On each Purchase Date, Seller shall pay Buyer a usage fee (a "Usage Fee") in an
----- ---
amount equal to one-quarter of one percent (0.25%) of the Purchase Price
specified in the related Confirmation with respect to such Transaction;
provided, however, that no such Usage Fee shall be payable in connection with
-------- -------
any Transaction until the aggregate Purchase Price of all Purchased Securities
and Purchased Loans purchased by Buyer pursuant to the Agreement shall exceed
$430,000,000 (determined on a cumulative basis).
(g) If prior to the first day of any Pricing Rate Period with respect
to any Transaction, (i) Buyer shall have determined (which determination shall
be conclusive and binding upon Seller) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate
determined or to be determined for such Pricing Rate Period will not adequately
and fairly reflect the cost to Buyer (as determined and certified to Seller by
Buyer) of making or maintaining Transactions during such Pricing Rate Period,
Buyer shall give telecopy or telephonic notice thereof to Seller as soon as
practicable thereafter. If such notice is given, the Pricing Rate with respect
to such Transaction for such Pricing Rate Period, and for any subsequent Pricing
Rate Periods until such notice has been withdrawn by Buyer, shall be a per annum
rate (the "Alternative Rate") equal to a rate determined based on an index
----------------
approximating the behavior of LIBOR as reasonably determined by the Buyer (which
may be the Prime Rate).
(h) Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for Buyer to effect Transactions as contemplated
by the Transaction Documents, (a) the commitment of Buyer hereunder to enter
into new Transactions and to continue Transactions as such shall forthwith be
canceled, and (b) the Transactions then outstanding shall be converted
automatically to Alternative Rate Transactions on the last day of the then
current Pricing Rate Period or within such earlier period as may be required by
law. If any such conversion of a Transaction occurs on a day which is not the
last day of the then current Pricing Rate Period with respect to such
Transaction, Seller shall pay to Buyer such amounts, if any, as may be required
pursuant to Section 3(i) of this Annex I.
(i) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer
harmless from any net loss or expense (not to include any lost profit or
opportunity) (including, without limitation,
27
reasonable attorneys' fees and disbursements) which Buyer may sustain or incur
as a consequence of (i) default by the Seller in terminating any Transaction
after the Seller has given a notice in accordance with Section 3(d) of a
termination of a Transaction, (ii) any payment of the Repurchase Price on any
day other than a Remittance Date (including, without limitation, any such loss
or expense in the nature of a breakage cost attributable thereto arising from
the reemployment of funds obtained by Buyer to maintain Transactions hereunder
or from fees payable to terminate the deposits from which such funds were
obtained) or (iii) default by Seller in selling Eligible Securities or Eligible
Loans after Seller has notified Buyer of a proposed Transaction and Buyer has
agreed to purchase such Eligible Securities or Eligible Loans in accordance with
the provisions of this Agreement. A certificate as to such costs, losses,
damages and expenses, setting forth the calculations therefor shall be submitted
promptly by Buyer to Seller and shall be conclusive and binding on Seller in the
absence of manifest error.
(j) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:
(i) shall subject Buyer to any tax of any kind whatsoever with
respect to the Transaction Documents, any Purchased Security or
Purchased Loan or any Transaction, or change the basis of taxation of
payments to Buyer in respect thereof (except for changes in the rate
of tax on Buyer's overall net income);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of Buyer which is not otherwise included in the
determination of the LIBO Rate hereunder; or
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering into, continuing or
maintaining Transactions or to reduce, by an amount which Buyer deems to be
material, any amount receivable under the Transaction Documents in respect
thereof; then, in any such case, Seller shall promptly pay Buyer, upon its
demand, any additional amounts necessary to compensate Buyer for such increased
cost or reduced amount receivable. If Buyer becomes entitled to claim any
additional amounts pursuant to this Section 3(j), it shall promptly notify
Seller of the event by reason of which it has become so entitled. A certificate
as to the calculation of any additional amounts payable pursuant to this
subsection shall be submitted by Buyer to Seller and shall be conclusive and
binding upon Seller in the absence of manifest error. This covenant shall
survive the termination of the Agreement and this Annex I and the repurchase by
Seller of any or all of the Purchased Securities and Purchased Loans.
(k) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does have the effect of reducing the rate of return on Buyer's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which Buyer or such corporation could have achieved but for such
adoption, change or compliance by an amount deemed by Buyer to be material, then
from time to time, after submission by Buyer to Seller of a written request
therefore, Seller shall pay to Buyer such additional amount or amounts as will
compensate Buyer for such reduction. A certificate as to the
28
calculation of any additional amounts payable pursuant to this subsection shall
be submitted by Buyer to Seller and shall be conclusive and binding upon Seller
in the absence of manifest error. This covenant shall survive the termination of
the Agreement and this Annex I and the repurchase by Seller of any or all of the
Purchased Securities and Purchased Loans.
(1) If (x) the Seller's Equity at any time equals or exceeds the Minimum
Sellers' Equity Requirement and with respect to the Purchased Securities only,
the number of issues of Purchased Securities which are then subject to
Transactions at any time equals or exceeds the Minimum CMBS Diversification or
(y) the rating of any Purchased Security then subject to a Transaction is
upgraded (such date, the "Transition Up Date"), then, so long as an Event of
------------------
Default shall not have occurred,
(i) the Original Purchase Percentage, CF Sweep Purchase Percentage
and Margin Maintenance Percentage shall, without further action of the
parties, immediately be deemed increased as set forth in Schedule I-A
attached hereto (1) in the case of clause (x), with respect to all
Purchased Securities and Purchased Loans then subject to Transactions (i.e.
the percentages that apply shall shift horizontally to the right one column
under each such heading), or (2) in the case of clause (y), with respect to
the affected Purchased Security (i.e. the percentages that apply shall
shift vertically upward to the applicable Rating Category), and
(ii) on the Purchase Date for the initial Transaction following the
Transition Up Date or on any Business Day not less than five (5) Business
Days after the Transition Up Date, as determined by Seller, the Buyer shall
transfer to an account of Seller the corresponding increase in the Purchase
Price which reflects the new higher Original Purchase Percentage for the
applicable Purchased Loans and Purchased Securities referred to in the
preceding clause (i) and Buyer and Seller shall enter into an amended and
restated Confirmation reflecting such change in Purchase Price for each
prior Transaction;
provided, that such increase in Purchase Price reflecting the higher Original
--------
Purchase Percentage for each Purchased Security or Purchased Loan which was
included in a Transaction prior to such Purchase Date shall in no event reduce
the Seller's Equity below the Minimum Seller's Equity Requirement.
4. MARGIN MAINTENANCE
(a) Paragraphs 4(a), 4(b) and 4(c) of the Agreement are hereby modified in
their entirety to read as follows:
"(a) If at any time, either (i) the Market Value of any of the
Purchased Securities or Purchased Loans shall be less than the
Buyer's Margin Amount for such Purchased Securities or Purchased
Loans, respectively (a "Margin Deficit"), or (ii) a Credit Loss
--------------
shall occur with respect to any Purchased Securities that have a
rating of "B-" (or the equivalent) or higher from a Rating
Agency or Purchased Loans, then Buyer may by notice to Seller
require Seller to transfer to Buyer (A) cash or (B) additional
collateral acceptable to Buyer in its sole and absolute
discretion, so that the sum obtained by adding the Market Value
of such Purchased Securities or Purchased Loans plus such cash
and additional collateral shall equal or exceed the Deficit Cure
Amount for such Purchased Securities or Purchased Loans,
respectively, as of the same date. Seller's failure to cure any
Margin Deficit as required by the preceding sentence shall
constitute an Event of Default under the Transaction Documents
and shall entitle Buyer to exercise its remedies under Section
14 of Annex I (including, without limitation, the liquidation
remedy provided for in Section
29
14(a)(iv) of this Annex I). In connection with the foregoing, if
the Margin Deficit is caused at any time by the Seller's Equity
(which previously exceeded the Minimum Seller's Equity
Requirement) falling below the Minimum Seller's Equity
Requirement or by the Minimum CMBS Diversification (which
previously was in effect) no longer being in effect (such date,
the "Transition Down Date"), then
--------------------
(1) except as described in clause (2) below, the
Original Purchase Percentages and CF Sweep Purchase
Percentages shall automatically be reduced to the lower
Original Purchase Percentages and CF Sweep Purchase
Percentages and the Margin Maintenance Percentages
shall automatically be increased to the higher Margin
Maintenance Percentages, in each case for the Purchased
Securities and/or Purchased Loans subject to
Transactions as of such Transition Down Date, and
(2) in the event the Transaction Down Date was
caused by a collateralized debt obligation (or CDO)
transaction, in which Deutsche Banc Alex. Xxxxx Inc.
acts as sole lead manager and sole book-runner (or as
co-manager, if agreed to by Deutsche Banc in its sole
discretion), (x) during the (9) months following the
closing of such transaction the Original Purchase
Percentages, CF Sweep Purchase Percentage and Margin
Maintenance Percentages shall not be reduced or
increased as described in (1) above and shall remain at
the Original Purchase Percentages, CF Sweep Purchase
Percentages and Margin Maintenance Percentages that
applied immediately before the collateralized debt
obligation (or CDO) transaction (i.e. during such nine
(9) month period Buyer shall apply Income deposited in
the Cash Management Account pursuant to Section 5
utilizing such higher or lower percentages, as the case
may be) and (y) at the end of such nine (9) month
period, the Original Purchase Percentages, CF Sweep
Purchase Percentages and Margin Maintenance Percentages
shall be determined by whether the Minimum Seller's
Equity Requirement and the Minimum CMBS Diversification
is achieved at such time."
"(b) If any time the aggregate Market Value of any Purchased
Security in any Rating Category or any Purchased Loan in any
Collateral Type Grouping multiplied by the "Original Purchase
Percentage" (as such Original Purchase Percentage may be
adjusted in accordance with this Agreement) for such Purchased
Security or such Purchased Loan shall be greater than the
aggregate Repurchase Price for the Transaction relating to such
Purchased Security or Purchased Loan, respectively (a "Margin
------
Excess") then Seller may by notice to Buyer require Buyer to
------
transfer to Seller cash in an amount (expressed in dollars) up
to the Margin Excess; provided, that any such transfer of cash
--------
(1) shall be subject to the restrictions set forth in the
parenthetical in the definition of "Purchase Price", (2) shall
not be in an amount less than $500,000 and (3) shall be
evidenced by amended and restated Confirmations.
"(c) If any notice is given by Buyer under Paragraph 4(a) of the
Agreement at or before the Margin Notice Deadline on any
Business Day, the Seller shall transfer cash or additional
collateral as provided in Paragraph 4(a) no later than
30
the close of business in the relevant market on the next
following Business Day. If any such notice is given after the
Margin Notice Deadline, the Seller shall transfer such cash or
additional collateral no later than the close of business in the
relevant market on the second Business Day following such
notice. If any notice is given by Seller under Paragraph 4(b) of
the Agreement prior to the close of business on any Business
Day, the Buyer shall transfer cash as provided in Paragraph 4(b)
no later than the close of business in the relevant market on
the second Business Day following such notice. Notice required
pursuant to Paragraph 4(a) or 4(b) of the Agreement may be given
by any means of telecopier or telegraphic transmission and shall
be delivered in accordance with the terms of the Agreement. The
failure of Buyer or Seller on any one or more occasions, to
exercise its rights under Paragraph 4(a) or 4(b) of the
Agreement shall not change or alter the terms and conditions to
which the Agreement is subject or limit the right of Buyer or
Seller to do so at a later date. Buyer and Seller agree that any
failure or delay by Buyer to exercise its rights under Paragraph
4(a) of the Agreement shall not limit such party's rights under
the Agreement or otherwise existing by law or in any way create
additional rights for such party.
(b) Paragraph 4(d) of the Agreement is hereby modified in its entirety to read
as follows:
"(d) Any cash transferred to Buyer pursuant to Paragraph 4(a) of the
Agreement with respect to any Purchased Securities or any Purchased Loans
shall be attributed to the relevant Transaction."
(c) Paragraphs 4(e) and 4(f) of the Agreement are hereby deleted in their
respective entireties.
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
The provisions of Paragraph 5 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 5:
(a) The Cash Management Account shall be established at the Depository
concurrently with the execution and delivery of the Agreement and this Annex I
by Seller and Buyer. Buyer shall have sole dominion and control over the Cash
Management Account. The Seller shall cause all Income in respect of the
Portfolio Collateral, as well as any payments in respect of associated Hedging
Transactions, to be deposited directly into the Cash Management Account. Such
income shall be remitted by the Depository in accordance with the applicable
provisions of Sections 5(b), 5(c), 5(d) 5(e), 5(f) and 14(a)(iii) of this Annex
I.
(b) With respect to Purchased Loans, Seller shall deliver to each
Mortgagor, issuer of a participation or borrower under a Purchased Loan an
irrevocable direction letter in the form attached as Exhibit X to this Agreement
---------
instructing the Mortgagor, issuer of a participation or borrower to pay all
amounts payable under the related Purchased Loan to the Cash Management Account
and shall provide to Buyer proof of such delivery. If a Mortgagor, issuer of a
participation or borrower forwards any Income with respect to a Purchased Loan
to Seller rather than directly to the Cash Management Account, Seller shall (i)
deliver an additional irrevocable direction letter to the applicable Mortgagor,
issuer of a participation or borrower and make other commercially reasonable
efforts to cause such Mortgagor, issuer of a participation or borrower to
forward such amounts directly to the Cash Management Account and (ii)
immediately deposit in the Cash Management Account any such amounts.
31
(c) So long as no Event of Default or CF Sweep Event with respect to any
Purchased Security and Purchased Loan shall have occurred and be continuing, all
Income received by the Depository in respect of the Portfolio Collateral and the
associated Hedging Transactions (other than Principal Payments) during each
Collection Period shall be applied by the Depository on the related Remittance
Date as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding as of such Remittance
Date; and
(ii) second, to remit to Seller the remainder, if any.
(d) So long as no Event of Default with respect to any Purchased Security
and Purchased Loan shall have occurred, any Principal Payment received by the
Depository in respect of any Portfolio Collateral during each Collection Period
(including, without limitation, after a CF Sweep Event shall have occurred)
shall be applied by the Depository on the related Remittance Date in the
following order of priority:
(i) first, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities or Purchased Loans in respect of which
such Principal Payment has been received, until the Repurchase Price for
such Purchased Securities or Purchased Loans has been reduced to the Target
Price for such Purchased Securities or Purchased Loans, respectively as of
the date of such payment (as determined by Buyer after giving effect to
such Principal Payment);
(ii) second, to make a payment on account of the Repurchase Price of
any other Purchased Securities or Purchased Loans as to which the
Repurchase Price exceeds the Target Price (for this purpose, making such
payment in the order of those Purchased Securities or Purchased Loans with
the largest to smallest excess of Repurchase Price over Target Price),
until the aggregate Repurchase Price for all of such Purchased Securities
or Purchased Loans has been reduced to the aggregate Target Price for all
of the Purchased Securities or Purchased Loans, respectively as of the date
of such payment (as determined by Buyer after giving effect to such
Principal Payment); and
(iii) third, to remit to Seller the remainder of such Principal
Payment.
(e) If a CF Sweep Event with respect to any Purchased Security or
Purchased Loan shall have occurred, all Income received by the Depository in
respect of the Portfolio Collateral and the associated Hedging Transactions
(other than Principal Payments) shall be applied by the Depository on the
Business Day next following the Business Day on which such funds are deposited
in the Cash Management Account as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of the
Purchased Securities and Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities or Purchased Loans in respect of which a
CF Sweep Event occurred, until Repurchase Price for such Purchased
Securities or Purchased Loans has been reduced to the Target Price for such
Purchased Securities or Purchased Loans, respectively, as of the date of
such payment (as determined by Buyer after giving effect to such Principal
Payment); and
32
(iii) third, to remit to Seller the remainder.
(f) If an Event of Default shall have occurred and be continuing, all Income
received by the Depository in respect of the Portfolio Collateral and the
associated Hedging Transactions shall be applied by the Depository on the
Business Day next following the Business Day on which such funds are deposited
in the Cash Management Account as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all of the
Purchased Securities and Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities and Purchased Loans until the Repurchase
Price for all of the Purchased Securities and Purchased Loans has been
reduced to zero; and
(iii) third, to remit to Seller the remainder.
6. SECURITY INTEREST
Paragraph 6 of the Agreement is hereby modified in its entirety to read as
follows:
The Buyer and Seller intend that all Transactions hereunder
be sales to the Buyer of the Purchased Securities and
Purchased Loans and not loans from the Buyer to Seller
secured by the Purchased Securities and Purchased Loans.
However, in the event any such Transaction is deemed to be a
loan, Seller hereby pledges all of its right, title, and
interest in, to and under and grants a first priority lien
on, and security interest in, all of the following property
owned by the Seller, whether now owned or hereafter
acquired, now existing or hereafter created and wherever
located (collectively, the "Collateral") to the Buyer to
----------
secure the payment and performance of all other amounts or
obligations owing to the Buyer pursuant to this Agreement
and the related documents described herein:
(a) the Purchased Securities and all "securities accounts" (as defined in
Section 8-501(a) of the UCC) to which any or all of the Purchased
Securities are credited;
(b) the Purchased Loans, Servicing Agreements, Servicing Records,
insurance relating to the Purchased Loans, and collection and escrow
accounts relating to the Purchased Loans;
(c) the Cash Management Account and all monies from time to time on
deposit in the Cash Management Account;
(d) all "general intangibles", "accounts" and "chattel paper" as defined
in the UCC relating to or constituting any and all of the foregoing;
and
(e) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, and records (but excluding any
financial models or other proprietary information) and files relating
to any and all of any of the foregoing.
The Buyer's security interest in the Collateral shall terminate only upon
termination of the Seller's obligations under this Agreement and the documents
delivered in connection herewith and therewith. For
33
purposes of the grant of the security interest pursuant to Paragraph 6 of the
Agreement, the Agreement shall be deemed to constitute a security agreement
under the New York Uniform Commercial Code (the "UCC"). Buyer shall have all of
---
the rights and may exercise all of the remedies of a secured creditor under the
UCC and the other laws of the State of New York. In furtherance of the
foregoing, (a) Seller, at its sole cost and expense, shall cause to be filed in
such locations as may be necessary to perfect and maintain perfection and
priority of the security interest granted hereby, UCC-1 financing statements and
continuation statements (collectively, the "Filings"), and shall forward copies
-------
of such Filings to Buyer upon completion thereof, and (b) Seller shall from time
to time take such further actions as may be reasonably requested by Buyer to
maintain and continue the perfection and priority of the security interest
granted hereby (including marking its records and files to evidence the
interests granted to Buyer hereunder).
7. PAYMENT, TRANSFER AND CUSTODY
The provisions of Paragraph 7 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 7:
(a) Subject to the terms and conditions of this Agreement, on the Purchase
Date for each Transaction, ownership of the Portfolio Securities and/or
Purchased Loans shall be transferred to Buyer or its designee (including the
Custodian) against the simultaneous transfer of the Purchase Price to an account
of Seller specified in the Confirmation relating to such Transaction.
(b) On or prior to the applicable Purchase Date, the Seller shall deliver
the related Portfolio Securities owned by the Seller re-registered in the name
of the Buyer or other designee of the Buyer in accordance with the Custodial
Agreement (or, subject to the approval of Buyer, together with documentation
sufficient to permit the re-registration of the Purchased Securities by the
Buyer in the name of the Buyer or other designee of the Buyer) and the Buyer or
its other designee shall have all rights of conversions, exchange, subscription
and any other rights, privileges and options pertaining to such Portfolio
Securities as the owner thereof, and, subject to the terms and conditions of
this Agreement, in connection therewith, the right to deposit and deliver any
and all of such Portfolio Securities with any committee, depositary transfer,
agent, register or other designated agency upon such terms and conditions as the
Buyer may reasonably determine. Such Portfolio Securities shall be held by the
Buyer or its designee, as exclusive bailee and agent for the Buyer, either
directly or through the facilities of a Relevant System, as "securities
intermediary" (as defined in Section 8-102(a)(14) of the UCC and 31 C.F.R.
Section 357.2) and credited to the "securities account" (as defined in
Section 8-501(a) of the UCC) of the Buyer. The Buyer, as "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC) with respect to such Portfolio
Securities, shall be entitled to receive all cash dividends and distributions
paid in respect thereof. Any such dividends or distributions with respect to
such Portfolio Securities received by the Seller shall be promptly remitted to
the Cash Management Account.
(c) With respect to Portfolio Securities owned by the Seller that shall be
delivered or held in uncertificated form and the ownership of which is
registered on books maintained by the issuer thereof or its transfer agent, the
Seller shall cause the registration of such security or other item of investment
property in the name of Buyer or its designee and at the request of the Buyer,
shall take such other and further steps, and shall execute and deliver such
documents or instruments necessary in the reasonable opinion of the Buyer, to
effect a legally valid transfer to Buyer hereunder. With respect to such
Portfolio Securities that shall be delivered or held in definitive, certificated
form, the Seller shall deliver to the Buyer or its designee (which shall be the
Custodian initially) the original of the relevant certificate registered in the
name of the Buyer or its designee (or, subject to the approval of Buyer,
together with documentation sufficient to permit the re-registration of the
Purchased Securities by the Buyer in the name of the Buyer or other designee of
the Buyer). Unless otherwise instructed by Buyer, any delivery of
34
a security or other item of investment property in definitive, certificated form
shall be made to the Custodian. With respect to such Portfolio Securities that
shall be delivered through a Relevant System in book entry form and credited to
or otherwise held in a securities account, the Seller shall take such actions
necessary to provide instruction to the relevant financial institution or other
entity to register the transfer of Portfolio Securities from Seller to Buyer or
its designee. In connection with any account to which such Portfolio Securities
are credited or otherwise held, the Seller shall execute and deliver such other
and further documents or instruments necessary, in the reasonable opinion of the
Buyer, to effect a legally valid transfer to Buyer hereunder. Any account to
which the Portfolio Securities are credited or otherwise held shall be
designated in accordance with the Custodial Agreement or such variation thereon
as the Buyer may direct. Any delivery of such a Portfolio Security in accordance
with this paragraph, or any other method acceptable to the Buyer, shall be
sufficient to cause the Buyer to be the "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC) with respect to such Portfolio Securities and,
if the Transaction is recharacterized as a secured financing, to have a
perfected first priority security interest therein. No Portfolio Securities
owned by Seller, whether certificated or uncertificated, shall remain in the
name, or possession, of Seller or any of its agents or in any securities account
in the name of Seller or any of its agents.
(d) As a condition to Buyer's purchase of any Securities, Seller shall deliver
to Buyer on or prior to the Purchase Date with respect to such Securities:
(A) copies of the executed Securitization Document governing such
Securities, and the offering documents related to such Securities, each
certified by the Seller as a true, correct and complete copy of the original
document delivered to the Seller, and any ancillary documents required to be
delivered to holders of the Securities under such Securitization Document (which
documents may be delivered in electronic mail or "e-mail" format);
(B) one or more officer's certificates with respect to the completeness of
the documents delivered and one or more opinions of counsel, if any, with
respect to the foregoing as may be reasonably requested by Buyer,
(C) an instruction letter from the Seller to the Trustee under such
Securitization Document, instructing the Trustee to remit all sums required to
be remitted to the holder of such Securities under such Securitization Document
to the Depository or as otherwise directed in a written notice signed by Seller
and Buyer,
(D) copies of all distribution statements, if any, delivered to the Seller
pursuant to such Securitization Document during the three-month period
immediately preceding such Purchase Date, and
(E) any other documents or instruments necessary in the reasonable opinion
of the Buyer to consummate the sale of such Securities to the Buyer or, if such
Transaction is recharacterized as a secured financing, to create and perfect in
favor of Buyer a valid perfected first priority security interest in such
Securities.
(e) On or before each Purchase Date with respect to each Purchased Loan,
Seller shall deliver or cause to be delivered to Buyer or its designee the
Custodial Delivery in the form attached hereto as Exhibit IV. On or before each
Purchase Date, with respect to each Table Funded Purchased Loan, the Seller
shall cause the Settlement Agent to deliver to the Custodian by facsimile the
related Mortgage Note, the Insured Closing Letter and Escrow Instructions, and a
Settlement Agent trust receipt issued thereunder. In connection with each sale,
transfer, conveyance and assignment of a Purchased Loan, on or prior to each
Purchase Date with respect to such Purchased Loan (other than a Table Funded
35
Purchased Loan) or by not later than 12:00 p.m. (New York time) on the third
Business Day following the applicable Purchase Date with respect to each Table
Funded Purchased Loan, the Seller shall deliver or cause to be delivered and
released to the Custodian the following original documents (collectively, the
"Purchased Loan File"), pertaining to each of the Purchased Loans identified in
--------------------
the Custodial Delivery delivered therewith:
With respect to each Purchased Loan secured by a Mortgage:
(i) The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________ without recourse or, except as
provided in that certain Master Repurchase Agreement dated as of January
29, 2002 between Delaware Bonds Holdings, Inc. and Deutsche Bank AG, New
York Branch, warranty" and signed in the name of the last endorsee (the
"Last Endorsee") by an authorized Person (in the event that the Purchased
--------------
Loan was acquired by the Last Endorsee in a merger, the signature must be
in the following form: "[Last Endorsee], successor by merger to [name of
predecessor]"; in the event that the Purchased Loan was acquired or
originated by the Last Endorsee while doing business under another name,
the signature must be in the following form: "[Last Endorsee], formerly
known as [previous name]") or a lost note affidavit in a form reasonably
approved by Buyer, with a copy of the applicable Mortgage Note attached
thereto.
(ii) The original of any guarantee executed in connection with the
Mortgage Note (if any).
(iii) The original Mortgage with evidence of recording thereon, or a
copy thereof together with an officer's certificate of Seller certifying
that such represents a true and correct copy of the original and that such
original has been submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located.
(iv) The originals of all assumption, modification, consolidation or
extension agreements with evidence of recording thereon, or copies thereof
together with an officer's certificate of Seller certifying that such
represent true and correct copies of the originals and that such originals
have each been submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located.
(v) The original Assignment of Mortgage in blank for each Purchased
Loan, in form and substance acceptable for recording and signed in the name
of the Last Endorsee (in the event that the Purchased Loan was acquired by
the Last Endorsee in a merger, the signature must be in the following form:
"[Last Endorsee], successor by merger to [name of predecessor]"; in the
event that the Purchased Loan was acquired or originated while doing
business under another name, the signature must be in the following form:
"[Last Endorsee], formerly known as [previous name]").
(vi) The originals of all intervening assignments of mortgage with
evidence of recording thereon, or copies thereof together with an officer's
certificate of Seller certifying that such represent true and correct
copies of the originals and that such originals have each been submitted
for recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(vii) The original attorney's opinion of title and abstract of title or
the original mortgagee title insurance policy, or if the original mortgagee
title insurance policy has not been issued, the irrevocable marked
commitment to issue the same.
36
(viii) The original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Purchased Loan.
(ix) The original assignment of leases and rents, if any, with
evidence of recording thereon, or a copy thereof together with an officer's
certificate of Seller, certifying that such copy represents a true and
correct copy of the original that has been submitted for recordation in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.
(x) The originals of all intervening assignments of assignment of
leases and rents, if any, or copies thereof, with evidence of recording
thereon.
(xi) A copy of the UCC-1 financing statements, certified as true and
correct by Seller, and all necessary UCC-3 continuation statements with
evidence of filing thereon or copies thereof certified by Seller to have
been sent for filing, and UCC-3 assignments executed by Seller in blank,
which UCC-3 assignments shall be in form and substance acceptable for
filing.
(xii) An environmental indemnity agreement (if any).
(xiii) An omnibus assignment in blank (if any).
(xiv) A disbursement letter from the Mortgagor to the original
mortgagee (if any).
(xv) Mortgagor's certificate or title affidavit (if any).
(xvi) A survey of the Mortgaged Property (if any) as accepted by the
title company for issuance of the Title Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if any).
(xviii) An assignment of permits, contracts and agreements (if any).
With respect to each Purchased Loan which is a mezzanine loan secured by a
pledge of the entire equity ownership interest in an entity that owns a
multifamily or commercial property:
(i) The original Mezzanine Note signed in connection with
the Purchased Loan bearing all intervening endorsements, endorsed
"Pay to the order of __________ without recourse or, except as
provided in that certain Master Repurchase Agreement dated as of
January 29, 2002 between Delaware Bonds Holdings, Inc. and
Deutsche Bank AG, New York Branch, warranty" and signed in the
name of the Last Endorsee by an authorized Person (in the event
that the Mezzanine Note was acquired by the Last Endorsee in a
merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the
event that the Purchased Loan was acquired or originated by the
Last Endorsee while doing business under another name, the
signature must be in the following form: "[Last Endorsee],
formerly known as [previous name]") or a lost note affidavit in a
form reasonably approved by Buyer with a copy of the applicable
Mezzanine Note attached thereto.
(ii) The original of the loan agreement and the guarantee, if any,
executed in connection with the Purchased Loan.
37
(iii) The original intercreditor or loan coordination agreement, if
any, executed in connection with the Purchased Loan.
(iv) The original security agreement, if any, executed in
connection with the Purchased Loan.
(v) Copies of all documents relating to the formation and
organization of the borrower of such Purchased Loan, together with all
consents and resolutions delivered in connection with such borrower's
obtaining the Purchased Loan.
(vi) All other documents and instruments evidencing, guaranteeing,
insuring or otherwise constituting or modifying or otherwise affecting such
Purchased Loan, or otherwise executed or delivered in connection with, or
otherwise relating to, such Purchased Loan, including all documents
establishing or implementing any lockbox pursuant to which Seller is
entitled to receive any payments from cash flow of the underlying real
property.
(vii) The assignment of Purchased Loan sufficient to transfer to
Buyer all of Seller's rights, title and interest in and to the Purchased
Loan.
(viii) A copy of the borrower's opinion of counsel (if any).
(ix) A copy of the UCC-1 financing statements, certified as true
and correct by th e Seller, and all necessary UCC-3 continuation statements
with evidence of filing thereon or copies thereof certified by the Seller
to have been sent for filing, and UCC-3 assignments executed by the Seller
in blank, which UCC-3 assignments shall be in form and substance acceptable
for filing.
(x) The original certificates representing the pledged equity
interests (if any).
(xi) Stock powers relating to each pledged equity interest,
executed in blank, if an original stock certificate is provided.
(xii) Assignment of any management agreements, agreements among
equity interest holders or other material contracts.
(xiii) If no original stock certificate is provided, evidence (which
may be an officer's certificate confirming such circumstances) that the
pledged ownership interests have been transferred to, or otherwise made
subject to a first priority security interest in favor of, the Seller.
With respect to each Purchased Loan which is a junior participation
interest (including a junior or "B" note) in a commercial mortgage loan secured
by a first lien on a multifamily or commercial property;
(i) Originals or copies of all of the applicable documents
described above with respect to a Purchased Loan secured by a Mortgage.
(ii) The original of any participation agreement, intercreditor
agreement and/or servicing agreement executed in connection with the
Purchased Loan.
(iii) The assignment of Purchased Loan sufficient to transfer to
Buyer all of Seller's rights, title and interest in and to the Purchased
Loan.
38
From time to time, Seller shall forward to the Custodian additional
original documents or additional documents evidencing any assumption,
modification, consolidation or extension of a Purchased Loan approved in
accordance with the terms of the Agreement, and upon receipt of any such other
documents, the Custodian shall hold such other documents as Buyer shall request
from time to time. With respect to any documents which have been delivered or
are being delivered to recording offices for recording and have not been
returned to Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Seller shall deliver to
Buyer a true copy thereof with an officer's certificate certifying that such
copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to
the Custodian promptly when they are received. With respect to all of the
Purchased Loans delivered by Seller to Buyer or its designee (including the
Custodian), Seller shall execute an omnibus power of attorney substantially in
the form of Exhibit V attached hereto irrevocably appointing Buyer its attorney-
in-fact with full power to (i) complete and record the Assignment of Mortgage,
(ii) complete the endorsement of the Mortgage Note or Mezzanine Note and (iii)
take such other steps as may be necessary or desirable to enforce Buyer's rights
against such Purchased Loans and the related Purchased Loan Files and the
Servicing Records. Buyer shall deposit the Purchased Loan Files representing
the Purchased Loans, or direct that the Purchased Loan Files be deposited
directly, with the Custodian. The Purchased Loan Files shall be maintained in
accordance with the Custodial Agreement. Any Purchased Loan Files not delivered
to Buyer or its designee (including the Custodian) are and shall be held in
trust by Seller or its designee for the benefit of Buyer as the owner thereof.
Seller or its designee shall maintain a copy of the Purchased Loan File and the
originals of the Purchased Loan File not delivered to Buyer or its designee.
The possession of the Purchased Loan File by Seller or its designee is at the
will of the Buyer for the sole purpose of servicing the related Purchased Loan,
and such retention and possession by the Seller or its designee is in a
custodial capacity only. The books and records (including, without limitation,
any computer records or tapes) of Seller or its designee shall be marked
appropriately to reflect clearly the transfer, subject to the terms and
conditions of this Agreement, of the related Purchased Loan to Buyer. Seller or
its designee (including the Custodian) shall release its custody of the
Purchased Loan File only in accordance with written instructions from Buyer,
unless such release is required as incidental to the servicing of the Purchased
Loans or is in connection with a repurchase of any Purchased Loan by Seller.
(f) Unless an Event of Default on the part of Seller shall have occurred
and be continuing, Buyer shall exercise, or permit the Seller to exercise, all
voting and corporate rights with respect to the Portfolio Securities in
accordance with Seller's written instructions; provided, however, that Buyer
-------- -------
shall not be required to follow Seller's instructions concerning any vote or
corporate right if doing so would, in Buyer's good faith reasonable business
judgment, impair the Purchased Securities or be inconsistent with or result in
any violation of any provision of the Transaction Documents; provided, further,
--------- -------
however, that so long as an Event of Default on the part of Seller has not
-------
occurred and is not continuing, upon request of Seller, Buyer shall provide to
Seller a revocable power of attorney allowing Seller to exercise voting and
corporate rights with respect to the Purchased Securities directly. Buyer shall
notify Seller promptly (and shall endeavor to notify Seller within two (2)
Business Days), if Buyer makes any determination described in the preceding
proviso not to follow Seller's instructions. Upon the occurrence and during the
continuation of an Event of Default, Buyer shall be entitled to exercise all
voting and corporate rights with respect to the Portfolio Securities without
regard to Seller's instructions (including, but not limited to, if an Act of
Insolvency shall occur with respect to Seller or the Sponsor, to the extent
Seller controls or is entitled to control selection of the special servicer,
Buyer may transfer such special servicing to an entity satisfactory to Buyer).
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES
The provisions of Paragraph 8 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 8:
39
(a) Title to all Purchased Securities and Purchased Loans shall pass to Buyer
on the applicable Purchase Date, and Buyer shall have free and unrestricted use
of all Purchased Securities and Purchased Loans, subject, however, to the
limitation set forth in the Agreement, including, without limitation, Section
7(f) above. Nothing in the Agreement or any other Transaction Document shall
preclude Buyer from engaging in repurchase transactions with the Purchased
Securities and Purchased Loans or otherwise selling, transferring, pledging,
repledging, hypothecating, or rehypothecating the Purchased Securities and
Purchased Loans, but no such transaction shall relieve Buyer of its obligations
(x) to transfer the Purchased Securities and/or Purchased Loans to Seller
pursuant to Sections 3 or 14 of this Annex I, (y) to credit or pay Income to, or
apply Income to the obligations of, Seller pursuant to Section 5 hereof or (z)
to obtain Seller's instructions pursuant to and otherwise comply with Section
7(f) hereof.
(b) Nothing contained in the Agreement or any other Transaction Document
shall obligate Buyer to segregate any Purchased Securities or Purchased Loans
delivered to Buyer by Seller. Notwithstanding anything to the contrary in this
Agreement or any other Transaction Document, no Purchased Security or Purchased
Loans shall remain in the custody of the Seller or an Affiliate of the Seller.
9. SUBSTITUTION
Paragraph 9 of the Agreement ("Substitution") is hereby deleted in its
entirety and replaced by the following:
(a) In the case of any Transaction for which the Repurchase Date is other
than the Business Day immediately following the Purchase Date and with respect
to which Seller does not have any existing right to substitute substantially the
same Eligible Loans or Eligible Securities for the Purchased Loans or Purchased
Securities, respectively, Seller shall have the right, subject to the proviso to
this sentence, upon notice to Buyer, which notice shall be given at or prior to
10:00 a.m. (New York time) on such Business Day, to substitute substantially the
same Eligible Loans or Eligible Securities for any Purchased Loans or Purchased
Securities, respectively, provided, however, that Buyer may elect, in the
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exercise of its good faith business judgment, by the close of business on the
Business Day notice is received, or by the close of the next Business Day if
notice is given after 10:00 a.m. (New York time) on such day, not to accept such
substitution. In the event such substitution is accepted by Buyer, such
substitution shall be made by Seller's transfer to Buyer of such other Eligible
Loans or Eligible Securities and Buyer's transfer to Seller of such Purchased
Loans or Purchased Securities, respectively, and after substitution, the
substituted Eligible Loans or Eligible Securities shall be deemed to be
Purchased Loans or Purchased Securities, respectively. In the event Buyer elects
not to accept such substitution, Buyer shall offer Seller the right to terminate
the Transaction.
(b) In the event Seller exercises its right to substitute or terminate under
sub-paragraph (a), Seller shall be obligated to pay to Buyer, by the close of
the Business Day of such substitution or termination, as the case may be, an
amount equal to (A) Buyer's actual out-of-pocket cost (including all fees,
expenses and commissions) of (i) entering into replacement transactions; (ii)
entering into or terminating hedge transactions; and/or (iii) terminating
transactions or substituting mortgage loans in like transactions with third
parties in connection with or as a result of such substitution or termination,
and (B) to the extent Buyer determines not to enter replacement transactions,
the loss incurred by Buyer directly arising or resulting from such substitution
or termination. The foregoing amounts shall be solely determined and calculated
by Buyer in good faith, with such calculations provided to Seller in writing
prior to the closing of such substitution or termination.
10. REPRESENTATIONS
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(a) In addition to the representations and warranties appearing in
Paragraph 10 of the Agreement, Seller represents and warrants to Buyer that as
of the Purchase Date for the purchase of any Purchased Securities or Purchased
Loans by Buyer from Seller and any Transaction thereunder and as of the date of
the Agreement and at all times while the Agreement and any Transaction
thereunder is in full force and effect:
(i) Organization. Seller is duly organized, validly existing and
------------
in good standing under the laws and regulations of the state of
Seller's organization and is duly licensed, qualified, and in good
standing in every state where such licensing or qualification is
necessary for the transaction of Seller's business. Seller has the
power to own and hold the assets it purports to own and hold, and to
carry on its business as now being conducted and proposed to be
conducted, and has the power to execute, deliver, and perform its
obligations under the Agreement and the other Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents have
-----------------------------
been duly executed and delivered by Seller, for good and valuable
consideration. The Transaction Documents constitute the legal, valid
and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms subject to bankruptcy,
insolvency, and other limitations on creditors' rights generally and to
equitable principles.
(iii) Non-Contravention. Neither the execution and delivery of
-----------------
the Transaction Documents, nor consummation by Seller of the
transactions contemplated by the Transaction Documents (or any of
them), nor compliance by Seller with the terms, conditions and
provisions of the Transaction Documents (or any of them) will conflict
with or result in a breach of any of the terms, conditions or
provisions of (i) the limited liability company agreement of Seller,
(ii) any contractual obligation to which Seller is now a party or the
rights under which have been assigned to Seller or the obligations
under which have been assumed by Seller or to which the assets of
Seller are subject or constitute a default thereunder, or result
thereunder in the creation or imposition of any lien upon any of the
assets of Seller, other than pursuant to the Transaction Documents,
(iii) any judgment or order, writ, injunction, decree or demand of any
court applicable to Seller, or (iv) any applicable Requirement of Law.
Seller has all licenses, permits and other consents from Governmental
Authorities necessary to acquire, own and sell the Portfolio
Collateral and for the performance of its obligations under the
Transaction Documents, other than such licenses, permits and other
consents which if not obtained are not reasonably likely to result in
a material adverse effect on the Seller.
(iv) Litigation; Requirements of Law. There is no action, suit,
-------------------------------
proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against Seller, the Sponsor or any of
their respective assets, which may result in any material adverse
change in the business, operations, financial condition, properties,
or assets of Seller or the Sponsor, or which may have an adverse
effect on the validity of the Transaction Documents or the Purchased
Securities or any action taken or to be taken in connection with the
obligations of Seller under any of the Transaction Documents. Seller
is in compliance in all material respects with all Requirements of
Law. Neither Seller nor the Sponsor is in default in any material
respect with respect to any judgment, order, writ, injunction, decree,
rule or regulation of any arbitrator or Governmental Authority.
(v) No Broker. Seller has not dealt with any broker, investment
---------
banker, agent, or other Person (other than Buyer or an Affiliate of
Buyer) who may be entitled to
41
any commission or compensation in connection with the sale of
Purchased Securities pursuant to any of the Transaction Documents.
(vi) Good Title to Purchased Securities and Purchased Loans.
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Immediately prior to the purchase of any Purchased Securities or
Purchased Loans by Buyer from Seller, such Purchased Securities and
Purchased Loans are free and clear of any lien, encumbrance or
impediment to transfer (including any "adverse claim" as defined in
Section 8-102(a)(1) of the UCC), and Seller is the record and
beneficial owner of and has good and marketable title to and the right
to sell and transfer such Purchased Securities and Purchased Loans to
Buyer and, upon transfer of such Purchased Securities or Purchased
Loans to Buyer, Buyer shall be the owner of such Purchased Securities
and Purchased Loans free of any adverse claim. In the event the
related Transaction is recharacterized as a secured financing of the
Purchased Securities or Purchased Loans, the provisions of the
Agreement are effective to create in favor of the Buyer a valid
security interest in all rights, title and interest of the Seller in,
to and under the Collateral and the Buyer shall have a valid,
perfected first priority security interest in the Purchased Securities
or Purchased Loans (and without limitation on the foregoing, the
Buyer, as entitlement holder, shall have a "security entitlement" to
the Purchased Securities).
(vii) No Default. No Default or Event of Default exists under or
----------
with respect to the Transaction Documents.
(viii) Chief Executive Office. On the date of the Agreement, the
----------------------
Seller's chief executive office and principal place of business is
located at 000 Xxxxxxxxx 000/xx/ Xxxxxx, Xxxxx, Xxxxxxx 00000. The
location where the Seller keeps its books and records, including all
computer tapes and records relating to the Collateral is its chief
executive office.
(ix) Representations and Warranties Regarding Purchased Loans;
---------------------------------------------------------
Delivery of Purchased Loan File. Seller represents and warrants to
-------------------------------
the Buyer that each Purchased Loan sold hereunder, as of each Purchase
Date for a Transaction conforms in all material respects to the
applicable representations and warranties set forth in Exhibit VI
attached hereto, except as disclosed to the Buyer in writing. It is
understood and agreed that the representations and warranties set
forth in Exhibit VI hereto, if any, shall survive delivery of the
respective Purchased Loan File to Buyer or its designee (including the
Custodian). With respect to each Purchased Loan, the Mortgage Note or
Mezzanine Note, the Mortgage (if any), the Assignment of Mortgage (if
any) and any other documents required to be delivered under this
Agreement and the Custodial Agreement for such Purchased Loan have
been delivered to the Buyer or the Custodian on its behalf, except to
the extent delivery has been waived by Buyer. Seller or its designee
is in possession of a complete, true and accurate Purchased Loan File
with respect to each Purchased Loan, except for such documents the
originals of which have been delivered to the Custodian or such
documents which the Buyer has agreed do not have to be included in
such Purchased Loan File.
(x) Adequate Capitalization; No Fraudulent Transfer. Seller
----------------------------------------------
has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations. Seller
is generally able to pay, and as of the date hereof is paying, its
debts as they come due. Seller has not become, or is presently,
financially insolvent nor will Seller be made insolvent by virtue of
Seller's execution of or performance under any of the Transaction
42
Documents within the meaning of the bankruptcy laws or the insolvency
laws of any jurisdiction. Seller has not entered into any Transaction
Document or any Transaction pursuant thereto in contemplation of
insolvency or with intent to hinder, delay or defraud any creditor.
(xi) Consents. No consent, approval or other action of, or
--------
filing by Seller with, any Governmental Authority or any other Person
is required to authorize, or is otherwise required in connection
with, the execution, delivery and performance of any of the
Transaction Documents (other than consents, approvals and filings
that have been obtained or made, as applicable).
(xii) Stockholders. No transfer of the legal or beneficial
------------
ownership interests in the Seller has occurred which would constitute
an Unpermitted Ownership Interest Transfer.
(xiii) Organizational Documents. Seller has delivered to Buyer
------------------------
certified copies of its certificate of formation and limited liability
company agreement, together with all amendments thereto and certified
copies of the sponsor's organizational documents, together with all
amendments thereto.
(xiv) No Encumbrances. There are (i) no outstanding rights,
---------------
options, warrants or agreements on the part of Seller for a purchase,
sale or issuance, in connection with the Purchased Securities or
Purchased Loans, (ii) no agreements on the part of the Seller to
issue, sell or distribute the Purchased Securities or Purchased Loans
(other than with an Affiliate of the Buyer), and (iii) no obligations
on the part of the Seller (contingent or otherwise) to purchase,
redeem or otherwise acquire any securities or any interest therein or
to pay any dividend or make any distribution in respect of the
Purchased Securities.
(xv) Federal Regulations. Seller is not (A) an "investment
-------------------
company," or a company "controlled by an investment company," within
the meaning of the Investment Company Act of 1940, as amended, or (B)
a "holding company," or a "subsidiary company of a holding company,"
or an "affiliate" of either a "holding company" or a "subsidiary
company of a holding company," as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
(xvi) Taxes. Seller has filed or caused to be filed all tax
-----
returns which to the knowledge of Seller would be delinquent if they
had not been filed on or before the date hereof and has paid all taxes
shown to be due and payable on or before the date hereof on such
returns or on any assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it and any of
its assets by any Governmental Authority; no tax liens have been filed
against any of Seller's assets and, to Seller's knowledge, no claims
are being asserted with respect to any such taxes, fees or other
charges.
(xvii) ERISA. Seller does not have any Plans or any ERISA
-----
Affiliates and makes no contributions to any Plans or any
Multiemployer Plans.
(xviii) Judgments/Bankruptcy. There are no judgments against
--------------------
Seller or the Sponsor or unsatisfied of record or docketed in any
court located in the United States of America as of the date hereof
and no Act of Insolvency has ever occurred with respect to Seller or
the Sponsor.
43
(xix) Full and Accurate Disclosure. No information contained in
----------------------------
the Transaction Documents, or any written statement furnished by or on
behalf of Seller pursuant to the terms of the Transaction Documents,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they
were made.
(xx) Financial Information. All financial data concerning Seller
---------------------
and the Purchased Securities and Purchased Loans that has been
delivered by or on behalf of Seller to Buyer is true, complete and
correct in all material respects and has been prepared in accordance
with GAAP; provided, that the foregoing representation is made to the
--------
actual knowledge of the Seller with respect to any such financial data
prepared by a third party (other than the Seller or an Affiliate of
the Seller) and delivered to the Buyer. Since the delivery of such
data, except as otherwise disclosed in writing to Buyer, there has
been no change in the financial position of Seller or the Purchased
Securities and Purchased Loans, or in the results of operations of
Seller, which change is reasonably likely to have in a material
adverse effect on Seller.
(b) On the Purchase Date for any Transaction, Seller shall be deemed to
have made all of the representations set forth in Section 10(a) of this Annex I
as of such Purchase Date.
11. NEGATIVE COVENANTS OF SELLER
On and as of the date hereof and each Purchase Date and until the Agreement
and this Annex I are no longer in force with respect to any Transaction, Seller
shall not without the prior written consent of the Buyer:
(a) take any action which would directly or indirectly impair or adversely
affect Buyer's title to the Purchased Securities or the Purchased Loans;
(b) transfer, assign, convey, grant, bargain, sell, set over, deliver or
otherwise dispose of, or pledge or hypothecate, directly or indirectly, any
interest in the Purchased Securities or the Purchased Loans (or any of them) to
any Person other than Buyer, or engage in repurchase transactions or similar
transactions with respect to the Purchased Securities or Purchased Loans (or any
of them) with any Person other than Buyer;
(c) with respect to any Purchased Securities purchased by Buyer that are
rated lower than "BB" (or the equivalent) or are unrated and where the Related
Securities are owned by Seller or an Affiliate of the Seller, transfer, assign,
convey, grant, bargain, sell, set over, deliver or otherwise dispose of or
pledge or hypothecate, directly or indirectly, any interest in the Related
Securities (it being understood that for purposes of this provision Related
Securities shall include (a) the securities issued in a "real estate mortgage
investment conduit" transaction which have no rating and (b) if such unrated
securities do not entitle the holder thereof to control the selection of the
special servicer for the mortgage loans underlying such Purchased Securities,
the securities which have a rating and entitle the holder thereof to control the
selection of the special servicer for the mortgage loans underlying such
Purchased Securities); provided however, that this subsection (c) shall not
apply or be operative as to any Purchased Securities as to which Seller has
delivered an agreement reasonably satisfactory to Buyer irrevocably conveying
and transferring to Buyer the right to control the selection of the special
servicer for the related mortgage loans.
44
(d) create, incur or permit to exist any lien, encumbrance or security
interest in or on the Portfolio Securities or the Purchased Loans, except as
described in Paragraph 6 of the Agreement;
(e) create, incur or permit to exist any lien, encumbrance or security
interest in or on any of the other Collateral subject to the security interest
granted by Seller pursuant to Paragraph 6 of the Agreement;
(f) modify or terminate any of the organizational documents of Seller;
(g) consent or assent to any amendment or supplement to, or termination of,
any Securitization Document, any note, loan agreement, mortgage or guaranty
relating to the Purchased Loans or other material agreement or instrument
relating to the Portfolio Securities or the Purchased Loans, other than in
accordance with Section 7(f);
(h) admit any additional members in Seller, or permit the Sponsor to assign or
transfer all or any portion of its member interest in Seller, which, in either
case, would result in an Unpermitted Ownership Interest Transfer;
(i) at any time after an Event of Default has occurred and is continuing, vote
or take any action to exercise any rights afforded to a holder of the Portfolio
Securities under the related Securitization Documents;
(j) after the occurrence and during the continuation of any Default or Event
of Default, make any distribution, payment on account of, or set apart assets
for, a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any equity or ownership interest of Seller,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Seller; or
(k) create any Subsidiaries (it being understood and agreed that the Buyer
shall deliver its consent to the formation of a Subsidiary created to refinance
or resell Collateral transferred to Buyer pursuant to a Transaction under this
Agreement which Subsidiary has a certificate of incorporation substantially in
the form of Exhibit X hereto).
12. AFFIRMATIVE COVENANTS OF SELLER
(a) Seller shall promptly notify Buyer of any material adverse change in its
business operations and/or financial condition; provided, however, that nothing
-------- -------
in this Section 12 shall relieve Seller of its obligations under the Agreement.
(b) Seller shall provide Buyer with copies of such documents as Buyer may
reasonably request evidencing the truthfulness of the representations set forth
in Section 10.
(c) Seller (1) shall defend the right, title and interest of the Buyer in and
to the Collateral against, and take such other action as is necessary to remove,
the Liens, security interests, claims and demands of all Persons (other than
security interests by or through Buyer) and (2) shall, at Buyer's request, take
all action necessary to ensure that Buyer will have a first priority security
interest in the Portfolio Securities owned by Seller, and Purchased Loans
subject to any of the Transactions in the event such Transactions are
recharacterized as secured financings.
45
(d) Seller shall notify Buyer and the Depository of the occurrence of any
Default or Event of Default with respect to Seller as soon as possible but in no
event later than the second (2/nd/) Business Day after obtaining actual
knowledge of such event.
(e) Seller shall, at all times with respect to Purchased Securities then
subject to Transactions representing not less than 75% of the Market Value of
all Pu rchased Securities then subject to Transactions, cause the special
servicer rating of the special servicer with respect to all mortgage loans
underlying such Purchased Security and the related Securities to be no lower
than "above-average" by Standard & Poor's Ratings Group. If an Act of
Insolvency occurs with respect to Seller or Sponsor, Seller shall permit Buyer
to transfer special servicing with respect to all mortgage loans underlying the
Portfolio Securities to an entity satisfactory to Buyer at Seller's expense, to
the extent the Seller controls or is entitled to control the selection of the
special servicer. If the Purchased Securities that are rated lower than "BB"
(or the equivalent) or are unrated at any time do not entitle the holder of such
Purchased Securities to control the selection of the special servicer for the
related mortgage loans (i.e. such securities are not the controlling class) and
the Seller shall not have (i) caused ownership of the Related Securities to be
transferred to the Seller simultaneous with or prior to the purchase of the
Purchased Securities by Buyer and (ii) delivered to the Buyer a power of
attorney and any other documentation reasonably required by the Buyer sufficient
to permit the Buyer upon the occurrence and during the continuance of an Event
of Default to register the transfer of the Related Securities from Seller to
Buyer or its designee, then Seller shall either
(x) deliver an agreement reasonably satisfactory to Buyer irrevocably
conveying and transferring to Buyer the right to control the selection of
the special servicer for the related mortgage loans or
(y) upon request of Buyer, terminate the related Transaction on demand
pursuant to and in accordance with Section 3(d) of this Annex I;
provided, however, that the requirements of this sentence shall not apply to any
--------
Purchased Securities then subject to Transactions that are rated "BB" (or the
equivalent) or higher.
(f) Seller shall maintain a hedging strategy acceptable to Buyer and, upon
request of Buyer, provide evidence of such strategy within one (1) Business Day
of such request as necessary to enable Buyer to review the strategy. In the
event any Hedging Transaction for which Buyer or an Affiliate of the Buyer is
the counterparty is assigned to the Buyer together with any Purchased Securities
or Purchased Loans, Buyer acknowledges and agrees with Seller that Buyer shall
work with Seller to develop and agree upon a methodology of valuation of such
Hedging Transaction which methodology shall be included in any Market Value
calculation under the Agreement.
(g) Seller shall promptly (and in any event not later than two (2)
Business Days following receipt) deliver to Buyer (i) any notice of the
occurrence of an event of default under or material report received by or
required to be delivered by Seller pursuant to the Securitization Documents;
(ii) any notice of transfer of servicing under the Securitization Documents and
(iii) any other material information in the Seller's possession with respect to
the Portfolio Collateral as may be reasonably requested by Buyer from time to
time.
(h) Seller will permit Buyer or its designated representative to inspect
Seller's records with respect to the Collateral and the conduct and operation of
its business related thereto upon reasonable prior written notice from Buyer or
its designated representative, at such reasonable times and with reasonable
frequency, and to make copies of extracts of any and all thereof, subject to the
terms of any confidentiality agreement between the Buyer and the Seller, which
shall be executed prior to such
46
inspection. Buyer shall act in a commercially reasonable manner in requesting
and conducting any inspection relating to the conduct and operation of Seller's
business.
(i) If the Seller shall at any time become entitled to receive or shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for the Portfolio Securities, or otherwise in respect
thereof, the Seller shall accept the same as the Buyer's agent, hold the same in
trust for the Buyer and deliver the same forthwith to the Buyer in the exact
form received, duly endorsed by the Seller to the Buyer, if required, together
with an undated bond or other securities power covering such certificate duly
executed in blank to be held by the Buyer hereunder as additional collateral
security for the Transactions. If any sums of money or property so paid or
distributed in respect of the Portfolio Securities shall be received by the
Seller, the Seller shall, until such money or property is paid or delivered to
the Buyer, hold such money or property in trust for the Buyer, segregated from
other funds of the Seller, as additional collateral security for the
Transactions.
(j) At any time from time to time upon request of Buyer, at the sole expense
of Seller, Seller will promptly and duly execute and deliver such further
instruments and documents and take such further actions as Buyer may reasonably
request for the purposes of obtaining or preserving the full benefits of this
Agreement including the first priority security interest granted hereunder and
of the rights and powers herein granted (including, among other things, filing
such UCC financing statements as Buyer may reasonably request). If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the Buyer or its
designee (initially, the Custodian), duly endorsed in a manner satisfactory to
the Buyer, to be held as Collateral pursuant to this Agreement, and the
documents delivered in connection herewith.
(k) Seller shall provide Buyer with the following financial and reporting
information:
(i) Within 45 days after the last day of the first three fiscal
quarters in any fiscal year, Sponsor's unaudited consolidated
statement of income for such quarter and balance sheet as of the end
of such quarter (which statement and balance sheet shall separately
break out the statement of income and balance sheet of the Seller), in
each case presented fairly in accordance with GAAP and certified as
being true and correct by an officer's certificate;
(ii) Within 120 days after the last day of its fiscal year,
Sponsor's audited consolidated statement of income and statement of
changes in cash flow for such year and balance sheets as of the end of
such year (which statements and balance sheet shall separately break
out the statements of income and changes in cash flow and balance
sheet of the Seller), in each case presented fairly in accordance with
GAAP, and accompanied, in all cases, by an unqualified report of (1) a
"Big Five" accounting firm or (2) another nationally recognized
independent certified public accounting firm reasonably consented to
by Buyer;
(iii) Within 45 days after the last day of each calendar quarter
in any fiscal year, an officer's certificate from the Seller addressed
to Buyer certifying that, as of such calendar month, (x) Seller is in
compliance in all material respects with all of the terms, conditions
and requirements of this Agreement, and (y) no Event of Default
exists; and
(iv) Within 15 days after each month end, a monthly reporting
package containing all information set forth on Exhibit III attached
hereto.
47
(l) Seller shall at all times comply in all material respects with all
laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.
(m) Seller shall at all times keep proper books of records and accounts in
which full, true and correct entries shall be made of its transactions in
accordance with GAAP and set aside on its books from its earnings for each
fiscal year all such proper reserves in accordance with GAAP.
(n) Seller shall observe, perform and satisfy in all material respects all
the terms, provisions, covenants and conditions required to be observed,
performed or satisfied by it, and shall pay when due all costs, fees and
expenses required to be paid by it, under the Transaction Documents. Seller
shall pay and discharge all taxes, levies, liens and other charges on its assets
and on the Collateral that, in each case, in any manner would create any lien or
charge upon the Collateral, except for any such taxes as are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided in accordance with GAAP.
(o) Seller shall advise Buyer in writing of the opening of any new chief
executive office or the closing of any such office and of any change in Seller's
name or the places where the books and records pertaining to the Purchased
Securities are held not less than fifteen (15) Business Days prior to taking any
such action.
(p) Seller will maintain records with respect to the Collateral and the
conduct and operation of its business with no less a degree of prudence than if
the Collateral were held by Seller for its own account and will furnish Buyer,
upon reasonable request by Buyer or its designated representative, with
reasonable information reasonably obtainable by Seller with respect to the
Collateral and the conduct and operation of its business.
(q) Seller shall provide Buyer with reasonable access to operating
statements, the occupancy status and other property level information, with
respect to the Mortgaged Properties, plus any such additional reports as Buyer
may reasonably request.
13. SINGLE-PURPOSE ENTITY
Seller hereby represents and warrants to Buyer, and covenants with Buyer,
that as of the date hereof and so long as any of the Transaction Documents shall
remain in effect:
(a) It is and intends to remain solvent and it has paid and will pay its
debts and liabilities (including employment and overhead expenses) from its own
assets as the same shall become due.
(b) It has complied and will comply with the provisions of its certificate
of incorporation and by-laws.
(c) It has done or caused to be done and will do all things necessary to
observe corporate formalities and to preserve its existence.
(d) It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its shareholders and any other Person, and it will file its own tax returns
(except to the extent consolidation is required under GAAP or as a matter of
law).
48
(e) It has been, is and will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name and
shall not identify itself or any of its Affiliates as a division or part of the
other (provided the foregoing shall not prevent Seller from identifying its
relationship to the Sponsor's over-all group of companies).
(f) It has not owned and will not own any property or any other assets
other than Portfolio Collateral, Related Securities, cash, equity ownership
interests in any Subsidiary approved by Buyer and its interest under any
associated Hedging Transactions.
(g) It has not engaged and will not engage in any business other than the
origination, acquisition, ownership, financing and disposition of Portfolio
Collateral in accordance with the applicable provisions of the Transaction
Documents.
(h) It has not entered into, and will not enter into, any contract or
agreement with any of its Affiliates, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arm's-length basis with Persons other than such Affiliate.
(i) It has not incurred and will not incur any indebtedness or obligation,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (A) obligations under the Transaction
Documents, (B) obligations under the documents evidencing the Portfolio
Collateral and Related Securities, (C) customary representations, warranties,
indemnities, and other agreements in connection with the acquisition, sale or
other disposition of the Portfolio Collateral and Related Securities, and (D)
unsecured trade payables, in an aggregate amount not to exceed 2% of the
aggregate Repurchase Price at any one time outstanding, incurred in the ordinary
course of acquiring, owning, financing and disposing of Portfolio Collateral and
Related Securities; provided, however, that any such trade payables incurred by
-------- -------
Seller shall be paid when due.
(j) It has not made and will not make any loans or advances to any other
Person, and shall not acquire obligations or securities of any shareholder or
any Affiliate of any shareholder (other than in connection with the origination,
acquisition or disposition of the Portfolio Securities) or any other Person,
other than Eligible Loans which are Purchased Loans and equity ownership
interests in any Subsidiary approved by Buyer.
(k) It will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(l) Neither it nor the Sponsor will seek its dissolution, liquidation or
winding up, in whole or in part, or suffer any Change of Control, and Seller
will not suffer any consolidation or merger.
(m) It will not commingle its funds and other assets with those of any of
its Affiliates or any other Person.
(n) It has maintained and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any of its Affiliates or any other Person.
(o) It has not held and will not hold itself out to be responsible for the
debts or obligations of any other Person.
49
(p) The Seller shall not permit the Sponsor to take any of the following
actions: (i) dissolve or liquidate, in whole or in part, except in connection
with a merger or consolidation where the Sponsor is not the surviving entity if
such transaction will not effect a Change in Control; (ii) consolidate or merge
with or into any other entity or convey or transfer all or substantially all of
its properties and assets to any entity if such action would result in a Change
in Control; (iii) institute any proceeding to be adjudicated as bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against it, or file a petition or answer or consent seeking reorganization or
relief under the Bankruptcy Code or consent to the filing of any such petition
or to the appointment of a receiver, rehabilitator, conservator, liquidator,
assignee, trustee or sequestrator (or other similar official) of Seller or
Sponsor or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, or make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any of the foregoing; or (iv)
amend Sections 3 or 9 of the certificate of incorporation of Seller.
(q) It has no liabilities, contingent or otherwise, other than those
normal and incidental to the acquisition, origination, ownership, servicing,
administration, enforcement, financing and disposition of Portfolio Collateral
and Related Securities.
(r) It has conducted and shall conduct its business consistent in all
material respects with the requirements of being a Single-Purpose Entity.
14. EVENTS OF DEFAULT; REMEDIES
After the occurrence and during the continuance of an Event of Default by
Seller, Seller hereby appoints Buyer as attorney-in-fact of Seller for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, which appointment as attorney-in-
fact is irrevocable and coupled with an interest. Furthermore, Paragraph 11 of
the Agreement is amended by the deletion of clauses (i) and (vi) in the first
paragraph, by the addition of "or Purchased Loans" in clause (ii) of the first
paragraph after the term Purchased Securities and by the addition of the
following at the end of the first paragraph before the phrase "(each an 'Event
of Default')":
(viii) either (A) the Transaction Documents shall for any reason not
cause, or shall cease to cause, Buyer to be the owner free of any adverse
claim of any of the Purchased Securities or Purchased Loans, or (B) if a
Transaction is recharacterized as a secured financing, the Transaction
Documents with respect to any Transaction shall for any reason cease to
create a valid first priority security interest in favor of Buyer in any of
the Purchased Securities or Purchased Loans;
(ix) in the event that the Buyer or any of its Affiliates is a
party to an ISDA Master Agreement with Seller and an event occurs which
would constitute an Event of Default or an Additional Termination Event
under any Transaction between Seller and the Buyer or any of its Affiliates
(capitalized terms used in this paragraph (ix) shall have the respective
meanings ascribed to them in the ISDA Master Agreement (including
respective Schedules and Confirmations) between Seller and the Buyer and/or
any of its Affiliates);
(x) failure of the Buyer to receive on any Remittance Date the
accrued value of the Price Differential (less any amount of such Price
Differential previously paid by Seller to Buyer) (including, without
limitation, in the event the Income paid or distributed on or in respect of
the Purchased Securities and Purchased Loans is insufficient to make such
payment and the Seller does not make such payment or cause such payment to
be made), which failure is not remedied
50
within one Business Day (except that such failure shall not be an Event of
Default by Seller if sufficient Income, other than Principal Payments, is
on deposit in the Cash Management Account and the Depository fails to remit
such funds to Buyer);
(xi) failure of the Seller to make any other payment owing to the
Buyer which has become due, whether by acceleration or otherwise under the
terms of this Agreement which failure is not remedied within the applicable
period (in the case of a failure pursuant to Paragraph 4) or five Business
Days (in the case of any other such failure);
(xii) any governmental, regulatory, or self-regulatory authority
shall have taken any action to remove, limit, restrict, suspend or
terminate the rights, privileges, or operations of Seller, which suspension
has a material adverse effect on the financial condition or business
operations of Seller;
(xiii) a Change of Control or an Act of Insolvency shall have
occurred with respect to the Sponsor;
(xiv) any representation made by Seller or Buyer shall have been
incorrect or untrue in any material respect when made or repeated or deemed
to have been made or repeated (other than the representations and
warranties set forth in Section 10(a)(ix) or (xx) (in the case of (xx),
with respect to the affected Purchased Securities or Purchased Loans only)
made by the Seller, which shall not be considered an Event of Default if
incorrect or untrue in any material respect, provided the Buyer terminates
the related Transaction, as applicable, and Seller repurchases the related
Purchased Securities or Purchased Loans on an Early Repurchase Date no
later than five (5) Business Days after receiving written notice from Buyer
of such incorrect or untrue representation; unless the Seller shall have
made any such representation with knowledge that it was materially
incorrect or untrue at the time made);
(xv) the Sponsor shall fail to observe any of the financial
covenants set forth in Section 21 of the Guaranty which failure is not
remedied within ten (10) Business Days (including by substituting a letter
of credit in accordance with this Agreement) or shall have defaulted or
failed to perform in any material respect under the Guaranty (and, other
than in the case of a monetary default, shall not have remedied such
default or failure to perform, including by substituting a letter of credit
in accordance with this Agreement, within ten (10) Business Days);
(xvi) a final judgment by any competent court in the United States
of America for the payment of money in an amount greater than $100,000 (in
the case of the Seller) or an amount which has a Material Adverse Effect on
the Sponsor in the reasonable good faith determination of the Buyer (in the
case of the Sponsor) shall have been rendered against Seller or the
Sponsor, and remained undischarged or unpaid for a period of thirty (30)
days, during which period execution of such judgment is not effectively
stayed;
(xvii) Sponsor shall have defaulted or failed to perform under any
note, indenture, loan agreement, guaranty, swap agreement or any other
contract, agreement or transaction to which it is a party, which default
(A) involves the failure to pay a matured obligation or (B) permits the
acceleration of the obligation by any other party to or beneficiary of such
note, indenture, loan agreement, guaranty, swap agreement or other contract
agreement or transaction and in the case of either (A) or (B) has a
Material Adverse Effect on the Sponsor in the reasonable good faith
determination of the Buyer, or Sponsor shall breach any covenant or
condition or shall fail to perform under any transaction in respect of any
repurchase agreement, reverse repurchase
51
agreement, securities contract or derivative transaction with any party
which breach or failure to perform has a Material Adverse Effect on the
Sponsor in the reasonable good faith determination of the Buyer; provided,
--------
however, that any such default, failure to perform or breach shall not
-------
constitute an Event of Default under this Section 14(xviii) if Sponsor
cures such default, failure to perform or breach, as the case may be,
within the grace period, if any, provided under the applicable agreement;
or
(xviii) if Seller or Buyer shall breach or fail to perform in any
material respect any of the terms, covenants, obligations or conditions of
this Agreement, other than as specifically otherwise referred to in this
definition of "Event of Default", and such breach or failure to perform is
not remedied within five (5) Business Days after notice thereof to Seller
or Buyer from the applicable party or its successors or assigns; provided,
--------
however, that if such breach or failure to perform is a default other than
-------
a default which can be cured by the payment of a sum of money and is
susceptible of cure but cannot be cured within five (5) Business Days and
Seller or Buyer, as the case may be, shall have commenced such cure, then
such five (5) Business Days period shall be extended to ten (10) Business
Days in total.
(a) Paragraph 11(a) through (i) of the Agreement is hereby deleted and
replaced with the following and with Section 14(b) below:
If an Event of Default shall occur and be continuing with respect to
Seller, the following rights and remedies shall be available to Buyer:
(i) At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if no notice is
given, immediately upon the occurrence of an Act of Insolvency), the
Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (the date on which such option is
exercised or deemed to have been exercised being referred to hereinafter as
the "Accelerated Repurchase Date").
---------------------------
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in Section 14(a)(i) of this Annex I:
(A) Seller's obligations hereunder to repurchase all Purchased
Securities and Purchased Loans shall become immediately due
and payable on and as of the Accelerated Repurchase Date; and
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each Transaction (determined as of the
Accelerated Repurchase Date) shall be increased by the
aggregate amount obtained by daily application of, on a 360
day per year basis for the actual number of days during the
period from and including the Accelerated Repurchase Date to
but excluding the date of payment of the Repurchase Price (as
so increased), (x) the Pricing Rate for such Transaction
multiplied by (y) the Repurchase Price for such Transaction
(decreased by (I) any amounts actually remitted to Buyer by
the Depository, Seller or Sponsor from time to time pursuant
to Section 5 of this Annex I and applied to such Repurchase
Price, and (II) any amounts applied to the Repurchase Price
pursuant to Section 14(a)(iii) of this Annex I); and (C) the
Custodian shall, upon the request of Buyer (with simultaneous
copy of such request to Seller), deliver to Buyer all
instruments, certificates and other documents
52
then held by the Custodian relating to the Purchased
Securities and Purchased Loans.
(C) In addition to any rights and remedies of the Buyer provided
by this Agreement and by law, the Buyer shall have the right,
without prior notice to the Seller, any such notice being
expressly waived by the Seller to the extent permitted by
applicable law, upon any amount becoming due and payable by
the Seller hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held
or owing by the Buyer or any Affiliate thereof to or for the
credit or the account of the Seller. The Buyer agrees promptly
to notify the Seller after any such set-off and application
made by the Buyer; provided that the failure to give such
--------
notice shall not affect the validity of such set-off and
application.
(iii) Upon the occurrence and during the continuation of an Event of
Default with respect to Seller, Buyer may (A) immediately sell, at a public
or private sale in a commercially reasonable manner and at such price or
prices as Buyer may reasonably deem satisfactory any or all of the
Purchased Securities and Purchased Loans or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Purchased Securities and
Purchased Loans, to give Seller credit for such Purchased Securities and
Purchased Loans in an amount equal to the Market Value of such Purchased
Securities and Purchased Loans against the aggregate unpaid Repurchase
Price for such Purchased Securities and Purchased Loans and any other
amounts owing by Seller under the Transaction Documents. Buyer shall
provide copies to Seller of any notices issued by Buyer in connection with
the exercise of remedies pursuant to the preceding sentence; provided,
--------
however, that in all events Buyer shall provide to Seller not less than one
-------
(1) Business Day's advance notice prior to the exercise of remedies
pursuant to the preceding sentence. The proceeds of any disposition of
Purchased Securities and Purchased Loans effected pursuant to this Section
14(a)(iii) shall be applied, (v) first, to the costs and expenses incurred
by Buyer in connection with Seller's default; (w) second, to consequential
damages, including, but not limited to, costs of cover and/or Hedging
Transactions, if any; (x) third, to the Exit Fee; (y) fourth, to the
Repurchase Price; and (z) fifth, to any other outstanding obligation of
Seller to Buyer or its Affiliates pursuant to the Transaction Documents.
(iv) The parties recognize that it may not be possible to purchase or
sell all of the Purchased Securities and Purchased Loans on a particular
Business Day, or in a transaction with the same purchaser, or in the same
manner because the market for such Purchased Securities and Purchased Loans
may not be liquid. In view of the nature of the Purchased Securities and
Purchased Loans, the parties agree that liquidation of a Transaction or the
Purchased Securities and Purchased Loans 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, in its sole discretion, the time and manner of liquidating any
Purchased Securities and Purchased Loans, and nothing contained herein
shall (A) obligate Buyer to liquidate any Purchased Securities and
Purchased Loans on the occurrence and during the continuance of an Event of
Default or to liquidate all of the Purchased Securities and Purchased Loans
in the same manner or on the same Business Day or (B) constitute a waiver
of any right or remedy of Buyer.
53
(v) Seller shall be liable to Buyer for (A) the amount of all
reasonable fees and expenses, including legal fees and expenses, actually
incurred by Buyer in connection with or as a consequence of an Event of
Default with respect to Seller, (B) all costs incurred in connection with
covering transactions or Hedging Transactions, and (C) any other actual
loss, damage, cost or expense directly arising or resulting from the
occurrence of an Event of Default with respect to Seller.
(vi) Buyer shall have, in addition to its rights and remedies under
the Transaction Documents, all of the rights and remedies provided by
applicable federal, state, foreign, and local laws (including, without
limitation, if the Transactions are recharacterized as secured financings,
the rights and remedies of a secured party under the UCC of the State of
New York, to the extent that the UCC is applicable, and the right to offset
any mutual debt and claim), in equity, and under any other agreement
between Buyer and Seller. Without limiting the generality of the foregoing,
Buyer shall be entitled to set off the proceeds of the liquidation of the
Purchased Securities and Purchased Loans against all of Seller's
obligations to Buyer, whether or not such obligations are then due, without
prejudice to Buyer's right to recover any deficiency.
(vii) Buyer may exercise any or all of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and at any time
during the continuance thereof. All rights and remedies arising under the
Transaction Documents, as amended from time to time, are cumulative and not
exclusive of any other rights or remedies which Buyer may have.
(viii) Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its rights
by judicial process. Seller also waives any defense Seller might otherwise
have arising from the use of nonjudicial process, disposition of any or all
of the Purchased Securities and Purchased Loans, or from any other election
of remedies. Seller recognizes that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity and
are the result of a bargain at arm's length.
(b) If an Event of Default occurs and is continuing with respect to Buyer,
the following rights and remedies shall be available to Seller:
(i) Upon tender by Seller of payment of the aggregate Repurchase Price
for all Purchased Securities and Purchased Loans, Buyer's right, title and
interest in such Purchased Securities and Purchased Loans shall be deemed
transferred to Seller, and Buyer shall deliver such Purchased Securities
and Purchased Loans to Seller.
(ii) If Seller exercises the option referred to in Section 14(b)(i)
hereof and Buyer fails to deliver any Purchased Securities or Purchased
Loans to Seller, after three (3) Business Days' notice to Buyer, Seller may
(A) purchase securities or loans, as applicable ("Replacement Collateral"),
----------------------
that are in as similar an amount and interest rate as is reasonably
practicable and in the same Rating Category as such Purchased Securities or
the same Collateral Type Grouping as such Purchased Loans or (B) in its
sole discretion elect, in lieu of purchasing Replacement Collateral, to be
deemed to have purchased Replacement Collateral at a price therefor equal
to the Market Value of such Purchased Securities or Purchased Loans as of
such date (in which event following the occurrence of either clause (A) or
(B) above, Seller shall be deemed relieved of any obligation to purchase
the collateral so replaced).
54
(iii) Buyer shall be liable to Seller for any excess of the price paid
(or deemed paid) by Seller for Replacement Collateral therefor over the
Repurchase Price for the Purchased Securities and Purchased Loans replaced
thereby.
(iv) Seller shall have all the rights and remedies provided herein,
provided by applicable federal, state, foreign, and local laws, in equity,
and under any other agreement between Buyer and Seller (including, without
limitation, the right to offset any debt or claim).
15. RECORDING OF COMMUNICATIONS
EACH OF BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM
TIME TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS
BETWEEN ITS EMPLOYEES AND THOSE OF THE OTHER PARTY WITH RESPECT TO TRANSACTIONS;
PROVIDED, HOWEVER, THAT PRIOR NOTICE SHALL BE PROVIDED BY THE PARTY MAKING SUCH
RECORDING TO THE PARTY BEING RECORDED AND SUCH RIGHT TO RECORD COMMUNICATIONS
SHALL BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING
FLOOR OF THE APPLICABLE PARTY. EACH OF BUYER AND SELLER HEREBY CONSENTS TO THE
ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER
PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE
RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES'
AGREEMENT.
16. NOTICES AND OTHER COMMUNICATIONS
The provisions of Paragraph 13 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 16:
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a), (b) or (c) above, to the address specified in
Annex II hereto or at such other address and person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section. A copy of all
-------
notices, consents, approvals and requests directed to Seller (other than
Confirmations) shall be delivered concurrently to the following: Bilzin Xxxxxxx
Xxxx Xxxxx Price & Xxxxxxx LLP, 0000 Xxxxx Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx,
Xxxxxxx 00000, Facsimile No. (000) 000-0000, Attention: Xxxxx X. Xxxxxx, Esq.
A notice shall be deemed to have been given: (a) in the case of hand delivery,
at the time of delivery, (b) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day, (c) in the case of
expedited prepaid delivery upon the first attempted delivery on a Business Day,
or (d) in the case telecopier, upon receipt of answerback confirmation, provided
that such telecopied notice was also delivered as required in this Section. A
-------
party receiving a notice which does not comply with the technical requirements
for notice under this Section may elect to waive any deficiencies and treat the
-------
notice as having been properly given.
17. NON-ASSIGNABILITY
The provisions of Paragraph 15 of the Agreement are hereby modified and
superseded in their respective entireties by the following provisions of this
Section 17:
55
(a) The rights and obligations of the Seller under the Transaction
Documents and under any Transaction shall not be assigned by Seller without the
prior written consent of the Buyer. Subject to compliance with Section 17(b)
below, Buyer may assign or participate its rights and obligations under the
Transaction Documents and under any Transaction to any Person without the prior
written consent of Seller.
(b) With respect to any issuance by Buyer of a participation in any
Transaction, (i) Buyer shall act as agent for all participants in any dealings
with Seller in connection with such Transactions and (ii) Seller shall not be
obligated to deal directly with any party other than Buyer in connection with
such Transactions, or to pay or reimburse Buyer for any costs that would not
have been incurred by Buyer had no participation interests in such Transactions
been issued. With respect to any assignment by Buyer of a Transaction, in the
event following any such assignment Buyer shall not control all decision-making
with respect to such Transaction, then no Exit Fee shall be payable if the
Seller elects to terminate such Transaction pursuant to Section 3(d) of this
Annex I.
(c) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns. Nothing in the
Transaction Documents, express or implied, shall give to any Person, other than
the parties to the Transaction Documents and their respective successors, any
benefit or any legal or equitable right, power, remedy or claim under the
Transaction Documents.
18. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) Each party irrevocably and unconditionally (i) submits to the non-
exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement and (ii) waives, to the fullest extent it may effectively do
so, any defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.
(b) To the extent that either party has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding,
from jurisdiction of any court or from set off or any legal process (whether
service or notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) with respect to itself or any
of its property, such party hereby irrevocably waives and agrees not to plead or
claim such immunity in respect of any action brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement.
(c) The parties hereby irrevocably waive, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding and irrevocably consent to the service of any summons
and complaint and any other process by the mailing in the manner provided herein
of copies of such process to them at their respective address specified herein.
The parties hereby agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Section 18
shall affect the right of the Buyer to serve legal process in any other manner
permitted by law or affect the right of the Buyer to bring any action or
proceeding against the Seller or its property in the courts of other
jurisdictions.
56
(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER.
19. NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants to
the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and each Transaction
thereunder:
(a) It is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written or oral)
of the other party to the Transaction Documents, other than the representations
expressly set forth in the Transaction Documents;
(b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party;
(c) It is a sophisticated and informed Person that has a full understanding
of all the terms, conditions and risks (economic and otherwise) of the
Transaction Documents and each Transaction thereunder and is capable of assuming
and willing to assume (financially and otherwise) those risks;
(d) It is entering into the Transaction Documents and each Transaction
thereunder for the purposes of managing its borrowings or investments or hedging
its underlying assets or liabilities and not for purposes of speculation; and
(e) It is not acting as a fiduciary or financial, investment or commodity
trading advisor for the other party and has not given the other party (directly
or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.
20. INDEMNITY
The Seller hereby agrees to indemnify the Buyer, the Buyer's designee and
each of its officers, directors, employees and agents ("Indemnified Parties")
-------------------
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, taxes (including stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by
this Agreement and the documents delivered in connection herewith, other than
income taxes of the Buyer), fees, costs, expenses (including reasonable
attorneys fees and disbursements) or disbursements (all of the foregoing,
collectively "Indemnified Amounts") which may at any time (including, without
-------------------
limitation, such time as this Agreement shall no longer be in effect and the
Transactions shall have been repaid in full) be imposed on or asserted against
any Indemnified Party in any way whatsoever arising out of or in connection
with, or relating to, this Agreement or any Transactions thereunder or any
action taken or omitted to be taken by any Indemnified Party under or in
connection with any of the foregoing; provided, that Seller shall not be liable
--------
for Indemnified Amounts resulting from the gross negligence or willful
misconduct of any Indemnified Party. Without limiting the generality of the
foregoing, Seller agrees to hold Buyer harmless from and
57
indemnify Buyer against all Indemnified Amounts with respect to all Purchased
Loans relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation ERISA, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
Buyer's gross negligence or willful misconduct. In any suit, proceeding or
action brought by Buyer in connection with any Purchased Loan for any sum owing
thereunder, or to enforce any provisions of any Purchased Loan, Seller will
save, indemnify and hold Buyer harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Seller of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from Seller. Seller also
agrees to reimburse Buyer as and when billed by Buyer for all Buyer's reasonable
out-of-pocket third party costs and expenses incurred in connection with Buyer's
due diligence reviews with respect to the Purchased Loans and Purchased
Securities (including, without limitation, those incurred pursuant to Section
21) and the enforcement or the preservation of Buyer's rights under this
Agreement or any Transaction contemplated hereby, including without limitation
the reasonable fees and disbursements of its counsel. Seller hereby acknowledges
that, the obligation of Seller hereunder is a recourse obligation of Seller.
21. DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Purchased Securities and the Purchased
Loans, for purposes of verifying compliance with the representations, warranties
and specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable prior notice to Seller, Buyer or its authorized representatives will
be permitted during normal business hours to examine, inspect, and make copies
and extracts of, the Purchased Loan Files, Servicing Records and any and all
documents, records, agreements, instruments or information relating to such
Purchased Securities and Purchased Loans in the possession or under the control
of Seller, any other servicer or subservicer and/or the Custodian. Seller also
shall make available to Buyer a knowledgeable financial or accounting officer
for the purpose of answering questions respecting the Purchased Loan Files and
the Purchased Securities and Purchased Loans. Without limiting the generality
of the foregoing, Seller acknowledges that Buyer may enter into Transactions
with the Seller based solely upon the information provided by Seller to Buyer
and the representations, warranties and covenants contained herein, and that
Buyer, at its option, has the right at any time to conduct a partial or complete
due diligence review on some or all of the Purchased Securities and Purchased
Loans. Buyer may underwrite such Purchased Loans itself or engage a third party
underwriter to perform such underwriting. Seller agrees to reasonably cooperate
with Buyer and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Purchased Securities and Purchased Loans in the
possession, or under the control, of Seller. Seller further agrees that Seller
shall reimburse Buyer for any and all out-of-pocket third party costs and
expenses reasonably incurred by Buyer in connection with Buyer's activities
pursuant to this Section 21.
22. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans hereby,
Seller, Sponsor or an Affiliate of the Sponsor controlled by the Sponsor shall
continue to service the Purchased Loans for the benefit of Buyer and, if Buyer
shall exercise its rights to pledge or hypothecate the Purchased Loans prior to
the Repurchase Date pursuant to Section 8, Buyer's assigns; provided, however,
-------- -------
that the obligations of Seller or Sponsor or an Affiliate of Sponsor to service
any of the Purchased Loans shall cease, at Seller's option, upon the payment by
Seller to Buyer of the Repurchase Price therefor. Seller
58
shall service or cause the servicer to service the Purchased Loans in accordance
with Accepted Servicing Practices.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "Servicing
---------
Agreements"), files, documents, records, data bases, computer tapes, copies of
----------
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Loans (the "Servicing
---------
Records") so long as the Purchased Loans are subject to this Agreement. Seller
-------
grants Buyer a security interest in all servicing fees and rights relating to
the Purchased Loans and all Servicing Records to secure the obligation of the
Seller or its designee to service in conformity with this Section and any other
obligation of Seller to Buyer. Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer's request.
(c) Upon the occurrence and continuance of an Event of Default, Buyer may,
in its sole discretion, (i) sell its right to the Purchased Loans on a servicing
released basis or (ii) terminate the Seller or any sub-servicer of the Purchased
Loans with or without cause, in each case without payment of any termination
fee.
(d) Seller shall not employ sub-servicers (other than the Sponsor or an
Affiliate controlled by the Sponsor) to service the Purchased Loans without the
prior written approval of Buyer. If the Purchased Loans are serviced by a sub-
servicer, Seller shall irrevocably assign all rights, title and interest in the
Servicing Agreements in the Purchased Loans to Buyer.
(e) Seller shall cause any sub-servicers engaged by Seller to execute a
letter agreement with Buyer acknowledging Buyer's security interest and agreeing
that it shall deposit all Income with respect to the Purchased Loans in the Cash
Management Account.
(f) The payment of servicing fees with respect to Purchased Loans shall be
subordinate to payment of amounts outstanding under any Transaction and this
Agreement.
23. MISCELLANEOUS
(a) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time in
effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(b) All rights, remedies and powers of Buyer hereunder and in connection
herewith are irrevocable and cumulative, and not alternative or exclusive, and
shall be in addition to all other rights, remedies and powers of Buyer whether
under law, equity or other agreement. In addition to the rights and remedies
granted to it in this Agreement, Buyer shall have all rights and remedies of a
secured party under the UCC.
(c) The Transaction Documents may be executed in counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(d) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
59
(e) Without limiting the rights and remedies of Buyer under the Transaction
Documents, Seller shall pay Buyer's reasonable out-of-pocket costs and expenses,
including reasonable fees and expenses of accountants, attorneys and advisors,
incurred in connection with the preparation, negotiation, execution and
consummation of, and any amendment, supplement or modification to, the
Transaction Documents and the Transactions thereunder. Seller agrees to pay
Buyer on demand all reasonable out-of-pocket costs and expenses (including
reasonable expenses for legal services of every kind) of any subsequent
enforcement of any of the provisions hereof, or of the performance by Buyer of
any obligations of Seller in respect of the Purchased Securities, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral and for the custody, care or
preservation of the Collateral (including insurance costs) and defending or
asserting rights and claims of Buyer in respect thereof, by litigation or
otherwise. In addition, Seller agrees to pay Buyer on demand all reasonable
costs and expenses (including reasonable expenses for legal services) incurred
in connection with the maintenance of the Cash Management Account and
registering the Collateral in the name of Buyer or its nominee. All such
expenses shall be recourse obligations of Seller to Buyer under this Agreement.
(f) Each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or be invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(g) The parties acknowledge and agree that although they intend to treat
each Transaction as a sale of the Purchased Securities and Purchased Loans, in
the event that such sale shall be recharacterized as a secured financing, this
Annex I shall also serve as a security agreement with respect to Buyer's rights
in the Collateral. In order to secure and to provide for the prompt and
unconditional repayment of the Repurchase Price and the performance of its
obligations under the Agreement, Seller hereby pledges to Buyer and hereby
grants to Buyer a first priority security interest in all of its rights in the
Purchased Securities and Purchased Loans. Seller hereby covenants to duly
execute any Form UCC-1 financing statements as reasonably required by Buyer in
order to perfect its security interest created hereby in such rights and
obligations granted above, it being agreed that Seller shall pay any and all
fees required to file such financing statements.
(h) This Agreement contains a final and complete integration of all prior
expressions by the parties with respect to the subject matter hereof and thereof
and shall constitute the entire agreement among the parties with respect to such
subject matter, superseding all prior oral or written understandings.
(i) The parties understand that this Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding the
meaning and legal significance of this Agreement and that it is satisfied with
its legal counsel and the advice received from it.
(j) Should any provision of this Agreement require judicial interpretation,
it is agreed that a court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against any
Person by reason of the rule of construction that a document is to be construed
more strictly against the Person who itself or through its agent prepared the
same, it being agreed that all parties have participated in the preparation of
this Agreement.
(k) The parties recognize that each Transaction is a "securities contract"
as that term is defined in Section 741 of Title 11 of the United States Code, as
amended.
60
(l) The obligations and liabilities of Seller under the Transaction
Documents and any claim based thereon or otherwise in respect thereof shall be
direct and full recourse obligations of Seller. Notwithstanding the foregoing,
no recourse shall be had for the payment or performance of any obligation or
liability hereunder or under any other Transaction Documents or for any claim
based hereon or thereon or otherwise in respect hereof or thereof against (i)
any partner, agent, employee, contractor, director, officer, member, consultant,
manager, stockholder, subscriber to capital stock, incorporator, beneficiary,
participant, trustee, advisor or Affiliate of Seller or any partner or member
therein; (ii) any legal representative, heir, estate, successor or assign of any
thereof; (iii) any corporation (or any officer, director, employee or
shareholder thereof), limited liability company (or member thereof), partnership
(or any partner thereof), individual or other entity or Person to which any
ownership interest in Seller shall have been directly or indirectly transferred;
(iv) any purchaser of any asset of Seller; or (v) any other Person (except
Seller and Sponsor pursuant to and to the extent provided under the Guaranty),
for any deficiency or other sum, payment or performance owing with respect to
any obligation or liability arising under this Agreement. It is understood that
any obligation or liability under or with respect to this Agreement or the other
Transaction Documents may not be enforced against any Person described clauses
-------
(i) through (v) above; provided, however, that the foregoing provisions of this
--- --- -------- -------
paragraph shall not:
(1) prevent recourse to Seller, the assets of Seller or any Portfolio
Collateral;
(2) in the event of any fraud, misappropriation or misapplication of
funds, or intentional misrepresentation in writing, estop the Buyer from
instituting or prosecuting a legal action or proceeding or otherwise making
a claim against the Person or Persons committing such fraud,
misappropriating or misapplying such funds, or making such intentional
misrepresentation in writing, or the recipient or beneficiary of such
fraud, misappropriation or misapplication, or intentional misrepresentation
in writing, whether or not such Person, recipient or beneficiary, is any
Person described in clauses (i) through (v) above for losses relating to or
----------- ---
arising from such fraud, misappropriation or misapplication, or intentional
misrepresentation in writing;
(3) prevent recourse to Sponsor pursuant to and as and to the extent
provided under the Guaranty; or
(4) constitute a waiver, release or discharge of any obligation
evidenced by this Agreement, and the same shall continue until paid or
discharged in full.
61
IN WITNESS WHEREOF, the parties have executed this Annex I as of the 29th
day of January, 2002.
BUYER:
-----
DEUTSCHE BANK AG, NEW YORK BRANCH
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: _____________________________
Title: _____________________________
ANNEX I TO MASTER REPURCHASE AGREEMENT
SELLER:
DELAWARE BONDS HOLDINGS, INC.,
a Delaware corporation
By: _____________________________
Name: _____________________________
Title: _____________________________
ANNEX I TO MASTER REPURCHASE AGREEMENT
SCHEDULE I-A
Original Purchase Percentages, CF Sweep Purchase Percentages
Margin Maintenance Percentages and Applicable Spreads
-----------------------------------------------------
ELIGIBLE LOANS:
------------------------------------------------------------------------------------------------------------------------------------
Collateral Spread in
Type Original CF Sweep Margin Maintenance Basis
Grouping Purchase Percentage (1) Purchase Percentage (1) Percentage (1) Points (5)
------------------------------------------------------------------------------------------------------------------------------------
MSER*$100m MSER**$100m MSER*$100m MSER**$100m MSER*$100m MSER**$100m
m m m m m m
------------------------------------------------------------------------------------------------------------------------------------
0/xx/ Xxxx (2) 70% 85% 85% 90% 111.11% 105.26% 165
------------------------------------------------------------------------------------------------------------------------------------
B Note 60% 65% 65% 70% 133.33% 125.00% 190
------------------------------------------------------------------------------------------------------------------------------------
Mezzanine 55% 60% 65% 70% 133.33% 125.00% 215
------------------------------------------------------------------------------------------------------------------------------------
ELIGIBLE SECURITIES:
------------------------------------------------------------------------------------------------------------------------------------
Spread in
Original CF Sweep Margin Maintenance Basis
Rating Category Purchase Percentage (3) Purchase Percentage (3) Percentage (3) Points (5)
------------------------------------------------------------------------------------------------------------------------------------
MSER*$ MSER**$100m MSER*$100m MSER**$100m MSER*$100m MSER**$100m
100mm/D m/DIV***10 m/DIV*10 m/DIV***10 m/DIV*10 m/DIV***10
IV*10
------------------------------------------------------------------------------------------------------------------------------------
BBB- & higher 70% 80% 82.5% 82.5% 117.65% 117.65% 150
------------------------------------------------------------------------------------------------------------------------------------
BB+ & BB 65% 75% 80% 82.5% 121.21% 117.65% 165
------------------------------------------------------------------------------------------------------------------------------------
BB- 60% 70% 75% 80% 125.00% 117.65% 180
------------------------------------------------------------------------------------------------------------------------------------
B+ & B 55% 65% 70% 75% 133.33% 125.00% 185
------------------------------------------------------------------------------------------------------------------------------------
B- 45% 55% 60% 65% 142.86% 133.33% 185
------------------------------------------------------------------------------------------------------------------------------------
NR & CCC 25% 30% 30% 35% 285.71% 250.00% 205
------------------------------------------------------------------------------------------------------------------------------------
CDO Rated BBB- & higher 45% 55% 50% 60% 181.82% 153.85% 300
------------------------------------------------------------------------------------------------------------------------------------
CDO Rated BB+ & BB 40% 50% 45% 55% 200.00% 166.67% (4)
------------------------------------------------------------------------------------------------------------------------------------
__________________
(1) "MSER" means Minimum Seller's Equity Requirement.
(2) With respect to any Eligible Loan in the 0/xx/ Xxxx Collateral Type
Grouping for which the LTV exceeds 80%, Buyer may treat such Eligible Loan
as two Eligible Loans with the portion up to 80% treated as in the 0/xx/
Xxxx Collateral Type Grouping and the excess over 80% up to 85% treated as
in the B Note Collateral Type Grouping.
(3) "DIV" means Minimum CMBS Diversification.
(4) With respect to Eligible Securities that are collateralized debt
obligations securities (or CDOs) rated "BB+" or "BB" (or the equivalent),
the Pricing Rate shall equal 12.00%.
(5) Notwithstanding anything in the Agreement to the contrary, in the event the
Sponsor and the Seller shall not have caused Deutsche Banc Alex. Xxxxx Inc.
to be named sole lead manager and sole bookrunner
* means less than
** means more than or equal to
*** means more than
during any consecutive twenty-four month period during the term of the
Agreement with respect to a collateralized debt obligation transaction in
which Collateral that is the subject of one or more Transactions is
included, then the spread in basis points and the fixed rate referred to in
footnote (4) above shall be subject to adjustment as described below:
(i) at the conclusion of such consecutive twenty-four month period,
each of the spreads in basis points shall increase by 25 basis points and
such fixed rate shall increase by 0.25%;
(ii) following the increase referred to in (i) above, at the end of
each subsequent ninety (90) day period, each of the spreads in basis points
shall increase by 25 basis points and such fixed rate shall increase by an
additional 0.25% (for example, if the increases commenced as of the end of
the twenty-four month period following the date of the Agreement, the
maximum increase to spreads and such fixed rate shall equal 100 basis
points and 1.00%, respectively);
(iii) if the Seller extends the Repurchase Date in accordance with
Section 3(e) of this Annex I, the spreads in basis points and such fixed
rate shall be fixed for the entire extension period at the higher spreads
in basis points and fixed rate determined in accordance with clauses (i)
and (ii) above as of the commencement date of the extension period;
(iv) the increases referred to in clauses (i), (ii) and (iii) above
shall no longer be applicable and the spreads in basis points and such
fixed rate shall revert to the spreads in basis points and fixed rate
presented in the tables above if the Sponsor and the Seller shall cause
Deutsche Banc Alex. Xxxxx Inc. to be named sole lead manager and sole
bookrunner with respect to a collateralized debt obligation transaction in
which Collateral that is the subject of one or more Transactions is
included; and
(v) Buyer shall have the right in its sole reasonable discretion
acting in good faith to decide not to increase the spreads in basis points
and such fixed rate if either (x) Buyer determines in its sole reasonable
good faith judgment that a collateralized debt obligation transaction shall
not have occurred due to material adverse changes in market conditions
which are not conducive to the issuance of a collateralized debt obligation
transaction or (y) Buyer determines in its sole reasonable good faith
judgment that the Sponsor and the Seller have made reasonable efforts to,
but have been unable to, aggregate sufficient collateral to consummate a
collateralized debt obligation transaction.
(vi) Notwithstanding anything to the contrary in this Annex I, at
any time the increase in basis points or the fixed rate described above is
in effect, the percentage applicable to the payment of any Exit Fees shall
be changed from 1.125% to 0.75%.
2
EXHIBIT I
CONFIRMATION STATEMENT
DEUTSCHE BANK AG,
New York Branch
Ladies and Gentlemen:
Deutsche Bank AG, New York Branch, is pleased to deliver our written
CONFIRMATION of our agreement to enter into the Transaction pursuant to which
Deutsche Bank AG, New York Branch shall purchase from you the Purchased
Securities and/or Purchased Loans identified in Annex I, pursuant to the Master
Repurchase Agreement between Deutsche Bank AG, New York Branch (the "Buyer") and
-----
Delaware Bonds Holdings, Inc. ("Seller"), dated as of January 29, 2002 (as
------
amended from time to time the "Agreement"; capitalized terms used herein without
---------
definition have the meanings given in the Agreement), as follows below and on
the attached Schedule 1:
Purchase Date: __________, 200_
Purchased Securities/Purchased Loans: As identified on attached Schedule 1
Aggregate Principal Amount of Purchased As identified on attached Schedule 1
Securities/Purchased Loans:
Repurchase Date:
Purchase Price: $
Original Purchase Percentage:
Pricing Rate: one-month LIBOR plus ______%
Margin Maintenance Percentage:
Acquisition Cost/Acquisition Price: $
Dollar Price Paid or Benchmark/Spread to Benchmark:
Margin Notice Deadline: 11:00 a.m.
Governing Agreements: As identified on attached Schedule 1
Name and address for communications: Buyer: Deutsche Bank AG, New York Branch
-----
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Seller: Delaware Bonds Holdings, Inc.
c/o LNR Property Corporation
000 Xxxxxxxxx 000/xx/ Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
DEUTSCHE BANK AG, NEW YORK BRANCH
By: _____________________________
Name: ___________________________
Title: __________________________
By: _____________________________
Name: ___________________________
Title: __________________________
AGREED AND ACKNOWLEDGED:
DELAWARE BONDS HOLDINGS, INC.,
a Delaware corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
2
Schedule 1 to Confirmation Statement
Purchased Securities:
Aggregate Principal Amount (Original/Current):
CUSIP NO.:
Securitization Document (including trustee):
--------------------------------------------------------------------------------
Purchased Loans:
Aggregate Principal Amount (Original/Current):
Purchased Loan Documents:
3
EXHIBIT II
AUTHORIZED REPRESENTATIVES OF SELLER
------------------------------------
Name Specimen Signature
---- ------------------
Xxxxxxx Xxxxxxxx
--------------------------- -----------------------------------------
Xxxxxx Xxxxxx
--------------------------- -----------------------------------------
Xxxxxx Xxxxx
--------------------------- -----------------------------------------
Xxxxxx Xxxxxxxx
--------------------------- -----------------------------------------
EXHIBIT III
MONTHLY REPORTING PACKAGE
-------------------------
FORM OF AGGREGATE COLLATERAL REPORT
AGGREGATE COLLATERAL REPORT INFORMATION
FOR EACH PORTFOLIO SECURITY
Portfolio Security Information (By Rating Category):
Issuer, Series and Class
Beginning Balance
Pass-Through Rate
Principal Distribution Amount
Interest Distribution Amount
Total Distribution
Principal Losses
Interest Shortfalls/Recoveries
Ending Certificate Balance
Available credit support, in %, available to Portfolio Security*
Additional Underlying Trust Expenses
Rating
CUSIP No.
Deal Name Description
Payment Date
Trustee, Master Servicer, Special Servicer
Special Servicing Report
Details
Mortgage Loan Information:
Aggregate Outstanding Balance
Realized Losses per Asset for Underlying Trust for the Prior Month
Cumulative Realized Losses per Asset from Date
Dollar Amount and Percentage of Aggregate Pool Balance of:
Purchased Loans 30-59 days delinquent
Purchased Loans 60-89 days delinquent
Purchased Loans 90 or more days delinquent
Purchased Loans in Foreclosure
REO - Listing of Assets
Number of loans at start and end of the month
Outstanding principal balance at start and end of the month
Repayments-Listing of Assets
Foreclosures-Listing of Assets
Bankruptcies-Listing of Assets
Current weighted average maturity
Current weighted average coupon (Based on Pay Rate)
_____________
* Only to the extent provided in Portfolio Security distribution date
statements.
EXHIBIT IV
FORM OF CUSTODIAL DELIVERY
--------------------------
On this ______ of ________, 2002, Delaware Bonds Holdings, Inc. ("Seller"),
as the Seller under that certain Master Repurchase Agreement, dated as of
January 29, 2002 (as amended from time to time, the "Repurchase Agreement")
between the Seller and Deutsche Bank AG, New York Branch ("Buyer"), does hereby
deliver to LaSalle Bank National Association ("Custodian"), as custodian under
that certain Custodial Agreement, dated as of January 29, 2002, as amended from
time to time, among Buyer, Seller and Custodian, the Purchased Loan Files with
respect to the Purchased Loans to be purchased by Buyer pursuant to the
Repurchase Agreement, which Purchased Loans are listed on the Purchased Loan
Schedule attached hereto and which Purchased Loans shall be subject to the terms
of the Custodial Agreement on the date hereof.
With respect to the Purchased Loan Files delivered hereby, for the purposes
of issuing the Trust Receipt, the Custodian shall review the Purchased Loan
Files to ascertain delivery of the documents listed in Section 3(g) to the
Custodial Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Custodial Agreement.
IN WITNESS WHEREOF, the Seller has caused its name to be signed hereto by
its officer thereunto duly authorized as of the day and year first above
written.
DELAWARE BONDS HOLDINGS, INC.,
a Delaware corporation
By: _______________________________
Name: _______________________________
Title: _______________________________
EXHIBIT V
FORM OF POWER OF ATTORNEY
-------------------------
"Know All Men by These Presents, that Delaware Bonds Holdings, Inc.
("Seller"), does hereby appoint Deutsche Bank AG, New York Branch ("Buyer"), its
attorney-in-fact to act in Seller's name, place and stead in any way which
Seller could do with respect to (i) the completion of the endorsements of the
Mortgage Notes and the Assignments of Mortgages and the Mezzanine Notes, (ii)
the recordation of the Assignments of Mortgages and (iii) the enforcement of the
Seller's rights under the Purchased Loans purchased by Buyer pursuant to the
Master Repurchase Agreement dated as of January 29, 2002, as amended from time
to time, between Seller and Buyer and to take such other steps as may be
necessary or desirable to enforce Buyer's rights against such Purchased Loans,
the related Purchased Loan Files and the Servicing Records to the extent that
Seller is permitted by law to act through an agent.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OF FACSIMILE OF THIS INSTRUMENT MAY
ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS
TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OR SUCH
REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND
SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER'S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed
and the Seller's seal to be affixed this _____ day of January, 2002.
DELAWARE BONDS HOLDINGS, INC.,
a Delaware corporation
By: ____________________________
Name: ____________________________
Title: ____________________________
(Seal)
EXHIBIT VI
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
SECURED BY A MORTGAGE
---------------------
With respect to each Purchased Loan of the type described in clause
(i) of the definition of Eligible Loan, the Seller represents and warrants on
each Purchase Date as follows, other than as set forth on the exception report
provided to Buyer in accordance with the Agreement.
1. Purchased Loan Schedule and Collateral Information. The
--------------------------------------------------
information set forth in the Purchased Loan Schedule and the Collateral
Information is complete, true and correct in all material respects.
2. Whole Loan; Ownership of Purchased Loans. Each Purchased Loan is
----------------------------------------
a whole loan and not a participation interest in a whole loan. Immediately prior
to the transfer to the Buyer of the Purchased Loans, the Seller had good title
to, and was the sole owner of, each Purchased Loan. The Seller has full right,
power and authority to transfer and assign each of the Purchased Loans to or at
the direction of the Buyer and has validly and effectively conveyed (or caused
to be conveyed) to the Buyer or its designee all of the Seller's legal and
beneficial interest in and to the Purchased Loans free and clear of any and all
pledges, liens, charges, security interests and/or other encumbrances. The sale
of the Purchased Loans to the Buyer or its designee does not require the Seller
to obtain any governmental or regulatory approval or consent that has not been
obtained.
3. Payment Record. No scheduled payment of principal and non-
--------------
contingent interest under any Purchased Loan was 30 days or more past due as of
the Purchase Date without giving effect to any applicable grace period, and no
Purchased Loan was 30 days or more delinquent in the twelve-month period
immediately preceding the Purchase Date.
4. Lien; Valid Assignment. The Mortgage related to and delivered in
----------------------
connection with each Purchased Loan constitutes a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable first or second priority
lien upon the related Mortgaged Property, prior to all other liens and
encumbrances, except for
(a) the lien for current real estate taxes and assessments not yet
due and payable,
(b) covenants, conditions and restrictions, rights of way, easements
and other matters that are of public record and/or are referred to in the
related lender's title insurance policy,
(c) exceptions and exclusions specifically referred to in such
lender's title insurance policy, and
(d) other matters to which like properties are commonly subject, none
of which matters referred to in clauses (b), (c) or (d) materially
interferes with the security intended to be provided by such Mortgage or
the marketability or current use of the Mortgaged Property or the current
ability of the Mortgaged Property to generate operating income sufficient
to service the Purchased Loan debt (the foregoing items (a) through (d)
being herein referred to as the "Permitted Encumbrances").
----------------------
The related assignment of such Mortgage executed and delivered in favor of the
Buyer is in recordable form and constitutes a legal, valid and binding
assignment, sufficient to convey to the assignee named
therein all of the assignor's right, title and interest in, to and under such
Mortgage. Such Mortgage, together with any separate security agreements, chattel
mortgages or equivalent instruments, establishes and creates a valid and,
subject to the exceptions set forth in paragraph 13 below, enforceable security
interest in favor of the holder thereof in all of the related Mortgagor's
personal property used in, and reasonably necessary to operate the related
Mortgaged Property. A Uniform Commercial Code financing statement has been filed
and/or recorded in all places necessary to perfect a valid security interest in
such personal property, and such security interest is a first or second priority
security interest, subject to any prior purchase money security interest in such
personal property and any personal property leases applicable to such personal
property. Notwithstanding the foregoing, no representation is made as to the
perfection of any security interest in rents or other personal property to the
extent that possession or control of such items or actions other than the filing
of Uniform Commercial Code financing statements are required in order to effect
such perfection.
5. Assignment of Leases and Rents. The Assignment of Leases set
------------------------------
forth in the Mortgage (or in a separate instrument) and related to and delivered
in connection with each Purchased Loan establishes and creates a valid,
subsisting and, subject to the exceptions set forth in paragraph 13 below,
enforceable first or second priority perfected lien and first or second priority
perfected security interest in the related Mortgagor's interest in all leases,
subleases, licenses or other agreements pursuant to which any person is entitled
to occupy, use or possess all or any portion of the real property subject to the
related Mortgage, and each assignor thereunder has the full right to assign the
same. The related assignment of any Assignment of Leases, not included in a
Mortgage, executed and delivered in favor of the Buyer is in recordable form and
constitutes a legal, valid and binding assignment, sufficient to convey to the
assignee named therein all of the assignor's right, title and interest in, to
and under such Assignment of Leases.
6. Mortgage Status; Waivers and Modifications. No Mortgage has been
------------------------------------------
satisfied, canceled, rescinded or subordinated in whole or in material part,
and, except for releases requested under the terms and conditions of the
applicable loan documents, the related Mortgaged Property has not been released
from the lien of such Mortgage, in whole or in material part, nor has any
instrument been executed that would effect any such satisfaction, cancellation,
subordination, rescission or release except for any partial reconveyances of
portions of the real property that do not materially adversely affect the value
of the property. None of the terms of any Mortgage Note, Mortgage or Assignment
of Leases have been impaired, waived, altered or modified in any respect, except
by written instruments, all of which are included in the related Mortgage File.
7. Condition of Property; Condemnation. Except as set forth in an
-----------------------------------
engineering report prepared in connection with the origination or acquisition of
the related Purchased Loan or otherwise in the Seller's possession and
previously delivered to Buyer, each Mortgaged Property is, to the Seller's
knowledge, free and clear of any damage that would materially and adversely
affect its value as security for the related Purchased Loan (normal wear and
tear excepted). The Seller has received no notice of any pending or threatened
proceeding for the condemnation of all or any material portion of any Mortgaged
Property. To the Seller's knowledge (based on surveys and/or title insurance
obtained in connection with the origination or acquisition of the Purchased
Loans) as of the date of the origination or acquisition, by Seller, of each
Purchased Loan, all of the material improvements on the related Mortgaged
Property which were considered in determining the appraised value of the
Mortgaged Property lay wholly within the boundaries and building restriction
lines of such property, except for encroachments that are insured against by the
lender's title insurance policy referred to herein or that do not materially and
adversely affect the value or marketability of such Mortgaged Property, and no
improvements on adjoining properties materially encroached upon such Mortgaged
Property so as to materially and adversely affect the value or marketability of
such Mortgaged Property, except those encroachments that are insured against by
the Title Policy referred to herein.
2
8. Title Insurance. Each Mortgaged Property is covered by an
---------------
American Land Title Association (or an equivalent form thereof as adopted in the
applicable jurisdiction) lender's title insurance policy (the "Title Policy") in
------------
the original principal amount of the related Purchased Loan after all advances
of principal. Each Title Policy insures that the related Mortgage is a valid
first or second priority lien on such Mortgaged Property, subject only to the
exceptions stated therein (or an escrow letter or a marked up title insurance
commitment on which the required premium has been paid exists which evidences
that such Title Policy will be issued). Each Title Policy (or, if it has yet to
be issued, the coverage to be provided thereby) is in full force and effect, all
premiums thereon have been paid and, to the Seller's knowledge, no material
claims have been made thereunder and no claims have been paid thereunder. No
holder of the related Mortgage has done, by act or omission, anything that would
materially impair the coverage under such Title Policy. Immediately following
the transfer and assignment of the related Purchased Loan to the Buyer, such
Title Policy (or, if it has yet to be issued, the coverage to be provided
thereby) will inure to the benefit of the Buyer as its interest may appear
without the consent of or notice to the insurer.
9. No Holdbacks. The proceeds of each Purchased Loan have been fully
------------
disbursed and there is no obligation for future advances with respect thereto.
With respect to each Purchased Loan, any and all requirements as to completion
of any on-site or off-site improvement and as to disbursements of any funds
escrowed for such purpose that were to have been complied with on or before the
Purchase Date have been complied with, or any such funds so escrowed have not
been released.
10. Mortgage Provisions. The Mortgage Note or Mortgage for each
-------------------
Purchased Loan, together with applicable state law, contains customary and
enforceable provisions for comparable mortgaged properties similarly situated
(subject to the exceptions set forth in paragraph 13) such as to render the
rights and remedies of the holder thereof adequate for the practical realization
against the related Mortgaged Property of the principal benefits of the security
intended to be provided thereby.
11. Buyer under Deed of Trust. If any Mortgage is a deed of trust,
-------------------------
(1) a trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage, and (2) no fees or expenses are
payable to such trustee by the Seller, the Buyer or any transferee thereof
except in connection with a trustee's sale after default by the related
Mortgagor or in connection with any full or partial release of the related
Mortgaged Property or related security for the related Purchased Loan.
12. Environmental Conditions. An environmental site assessment (or an
------------------------
update of a previous assessment) was performed with respect to each Mortgaged
Property in connection with the origination or acquisition of the related
Purchased Loan or as otherwise in Seller's possession, a report of each such
assessment (an "Environmental Report") has been delivered to the Buyer, and to
--------------------
Seller's knowledge there is no material and adverse environmental condition or
circumstance affecting any Mortgaged Property that was not disclosed in such
report delivered to Buyer. Each Mortgage requires the related Mortgagor to
comply with all applicable federal, state and local environmental laws and
regulations. Where such Environmental Report disclosed the existence of a
material and adverse environmental condition or circumstance affecting any
Mortgaged Property, (i) a party not related to the Mortgagor was identified as
the responsible party for such condition or circumstance, (ii) the related
Mortgagor was required either to provide additional security and/or to obtain an
operations and maintenance plan or (iii) the related Mortgagor provided evidence
that applicable federal, state or local governmental authorities would not take
any action, or require the taking of any action, in respect of such condition or
circumstance. The related Purchased Loan Documents contain provisions pursuant
to which the related borrower or a principal of such borrower has agreed to
indemnify the mortgagee for damages resulting from violations of any applicable
Environmental Laws.
3
13. Loan Document Status. Each Mortgage Note, Mortgage and other
--------------------
agreement that evidences or secures a Purchased Loan and that was executed by or
on behalf of the related Mortgagor is the legal, valid and binding obligation of
the maker thereof (subject to any non-recourse provisions contained in any of
the foregoing agreements and any applicable state anti-deficiency or market
value limit deficiency legislation), enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) and there is
no valid defense, counterclaim or right of offset or rescission available to the
related Mortgagor with respect to such Mortgage Note, Mortgage or other
agreements.
14. Insurance. Each Mortgaged Property is, and is required pursuant
---------
to the related Mortgage to be, insured by (a) a fire and extended perils
insurance policy issued by an insurer meeting the requirements of such Purchased
Loan providing coverage against loss or damage sustained by reason of fire,
lightning, windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicles and smoke, and, to the extent required as of the
date of origination by the originator of such Purchased Loan consistent with its
normal commercial mortgage lending practices, against other risks insured
against by persons operating like properties in the locality of the Mortgaged
Property in an amount not less than the lesser of the principal balance of the
related Purchased Loan and the replacement cost (not allowing for depreciation)
of the Mortgaged Property, and not less than the amount necessary to avoid the
operation of any co-insurance provisions with respect to the Mortgaged Property;
(b) a business interruption or rental loss insurance policy, in an amount at
least equal to six months of operations of the Mortgaged Property (other than
Manufactured Housing Communities); (c) a flood insurance policy (if any portion
of the Mortgaged Property is located in an area identified by the Federal
Emergency Management Agency as having special flood hazards) and (d) a
comprehensive general liability insurance policy in amounts as are generally
required by commercial mortgage lenders, and in any event not less than $1
million per occurrence. Such insurance policy contains a standard mortgagee
clause that names the Mortgagee as an additional insured and that requires at
least thirty days' (in the case of termination or cancellation other than for
nonpayment of premiums) and at least ten days' (in the case of termination or
cancellation for nonpayment of premiums) prior notice to the holder of the
Mortgage, and no such notice has been received, including any notice of
nonpayment of premiums, that has not been cured. Each Mortgage obligates the
related Mortgagor to maintain all such insurance and, upon such Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from such Mortgagor. Other than as set forth in paragraph 17(h) hereof, each
Mortgage provides that casualty insurance proceeds will be applied either to the
restoration or repair of the related Mortgaged Property or to the reduction or
defeasance of the principal amount of the Purchased Loan.
15. Taxes and Assessments. There are no delinquent or unpaid taxes or
----------------------
assessments (including assessments payable in future installments), or other
outstanding charges affecting any Mortgaged Property which are or may become a
lien of priority equal to or higher than the lien of the related Mortgage. For
purposes of this representation and warranty, real property taxes and
assessments shall not be considered unpaid until the date on which interest
and/or penalties would be first payable thereon.
16. Mortgagor Bankruptcy. No Mortgagor is a debtor in any state or
--------------------
federal bankruptcy or insolvency proceeding.
17. Leasehold Estate. Each Mortgaged Property consists of the related
----------------
Mortgagor's fee simple estate in real estate or, if the related Purchased Loan
is secured in whole or in part by the interest of a Mortgagor as a lessee under
a ground lease of a Mortgaged Property (a "Ground Lease"), by
------------
4
the related Mortgagor's interest in the Ground Lease but not by the related fee
interest in such Mortgaged Property (the "Fee Interest"). With respect to any
------------
Purchased Loan secured by a Ground Lease but not by the related Fee Interest:
a. Such Ground Lease or a memorandum thereof has been duly recorded;
such Ground Lease (or the related estoppel letter or lender
protection agreement between the Seller and related lessor)
permits the current use of the Mortgaged Property and permits the
interest of the lessee thereunder to be encumbered by the related
Mortgage and does not restrict the use of the related Mortgaged
Property by such lessee, its successors or assigns in a manner
that would adversely effect the security provided by the related
Mortgage by limiting in any way its current use; and there has
been no material change in the payment terms of such Ground Lease
since the origination or acquisition of the related Purchased
Loan, with the exception of material changes reflected in written
instruments that are a part of the related Mortgage File;
b. The lessee's interest in such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than Permitted Encumbrances;
c. The Mortgagor's interest in such Ground Lease is assignable to
the Buyer and its successors and assigns upon notice to, but
without the consent of, the lessor thereunder (or, if such
consent is required, it has been obtained prior to the Purchase
Date) and, in the event that it is so assigned, is further
assignable by the Buyer and its successors and assigns upon
notice to, but without the need to obtain the consent of, such
lessor;
d. Such Ground Lease is in full force and effect, and the Seller has
received no notice that an event of default has occurred
thereunder, and, to the Seller's knowledge, there exists no
condition that, but for the passage of time or the giving of
notice, or both, would result in an event of default under the
terms of such Ground Lease;
e. Such Ground Lease, or an estoppel letter or other agreement, (A)
requires the lessor under such Ground Lease to give notice of any
default by the lessee to the mortgagee, provided that the
mortgagee has provided the lessor with notice of its lien in
accordance with the provisions of such Ground Lease to the extent
such Ground Lease requires such notice, (B) further provides that
no notice of termination given under such Ground Lease (including
rejection of such Ground Lease in a bankruptcy proceeding) is
effective against the holder of the Mortgage unless a copy of
such notice has been delivered to such holder and the lessor has
offered to enter into a new lease with such holder on terms that
do not materially vary from the economic terms of the Ground
Lease;
f. A mortgagee is permitted a reasonable opportunity (including,
where necessary, sufficient time to gain possession of the
interest of the lessee under such Ground Lease) to cure any
default under such Ground Lease, which is curable after the
receipt of notice of any such default, before the lessor
thereunder may terminate such Ground Lease;
5
g. Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty
years beyond the stated maturity date of the related Purchased
Loan;
h. Under the terms of such Ground Lease and the related Mortgage,
taken together, any related insurance proceeds or condemnation
award other than in respect of a total loss will be applied
either to the repair or restoration of all or part of the related
Mortgaged Property, with the mortgagee or a Buyer appointed by it
having the right to hold and disburse such proceeds as the repair
or restoration progresses (except in such cases where a provision
entitling another party to hold and disburse such proceeds would
not be viewed as commercially unreasonable by a prudent
commercial mortgage lender for conduit programs), or to the
payment or defeasance of the outstanding principal balance of the
Purchased Loan together with any accrued interest thereon;
i. Such Ground Lease does not impose any restrictions on subletting
which would be viewed as commercially unreasonable by prudent
commercial mortgage lenders in the lending area where the
Mortgaged Property is located; and
j. Such Ground Lease provides, or the lessor has otherwise agreed,
that such Ground Lease may not be amended or modified without the
prior written consent of the mortgagee under such Purchased Loan.
18. Escrow Deposits. All escrow deposits and payments relating to
---------------
each Purchased Loan that are, as of the Purchase Date required to be deposited
or paid, have been so deposited or paid.
19. LTV Ratio. The gross proceeds of each Purchased Loan to the
---------
related Mortgagor at origination did not exceed the non-contingent principal
amount of the Purchased Loan and either: (a) such Purchased Loan is secured by
an interest in real property having a fair market value (i) at the date the
Purchased Loan was originated at least equal to 80 percent of the original
principal balance of the Purchased Loan or (ii) at the Purchase Date at least
equal to 80 percent of the principal balance of the Purchased Loan on such date;
provided that for purposes hereof, the fair market value of the real property
--------
interest must first be reduced by (x) the amount of any lien on the real
property interest that is senior to the Purchased Loan and (y) a proportionate
amount of any lien that is in parity with the Purchased Loan (unless such other
lien secures a Purchased Loan that is cross-collateralized with such Purchased
Loan, in which event the computation described in clauses (a)(i) and (a)(ii) of
this paragraph 19 shall be made on a pro rata basis in accordance with the fair
market values of the Mortgaged Properties securing such cross-collateralized
Purchased Loans; or (b) substantially all the proceeds of such Purchased Loan
were used to acquire, improve or protect the real property which served as the
only security for such Purchased Loan (other than a recourse feature or other
third party credit enhancement within the meaning of Treasury Regulations
Section 1.860G-2(a)(1)(ii)).
20. Purchased Loan Modifications. Any Purchased Loan that was
----------------------------
"significantly modified" prior to the Purchase Date so as to result in a taxable
exchange under Section 1001 of the Code either (a) was modified as a result of
the default or reasonably foreseeable default of such Purchased Loan or (b)
satisfies the provisions of either clause (a)(i) of paragraph 19 (substituting
the date of the last such modification for the date the Purchased Loan was
originated) or clause (a)(ii) of paragraph 19, including the proviso thereto.
21. Advancement of Funds by the Seller. No holder of a Purchased Loan
----------------------------------
has advanced funds or induced, solicited or knowingly received any advance of
funds from a party other than
6
the owner of the related Mortgaged Property, directly or indirectly, for the
payment of any amount required by such Purchased Loan.
22. No Mechanics' Liens. As of the date of the Mortgage, and to the
-------------------
actual knowledge of the Seller as of the Purchase Date, each Mortgaged Property
is free and clear of any and all mechanics' and materialmen's liens that are
prior or equal to the lien of the related Mortgage, and no rights are
outstanding that under law could give rise to any such lien that would be prior
or equal to the lien of the related Mortgage except, in each case, for liens
insured against by the Title Policy referred to herein or otherwise bonded.
23. Compliance with Usury Laws. Each Purchased Loan complied with, or
--------------------------
is exempt from, all applicable usury laws in effect at its date of origination.
24. Cross-collateralization; Cross-default. No Purchased Loan is
--------------------------------------
cross-collateralized or cross-defaulted with any loan other than one or more
other Purchased Loans.
25. Releases of Mortgaged Property. Except as described in the next
------------------------------
sentence, no Mortgage Note or Mortgage requires the mortgagee to release all or
any material portion of the related Mortgaged Property from the lien of the
related Mortgage except upon payment in full or defeasance of all amounts due
under the related Purchased Loan. The Mortgages relating to those Purchased
Loans identified on the Purchased Loan Schedule require the mortgagee to grant
releases of portions of the related Mortgaged Properties upon (a) the
satisfaction of certain legal and underwriting requirements and (b) except where
the portion of the Mortgaged Property permitted to be released was not
considered by the Seller to be material in the underwriting of the Purchased
Loan, either (1) the payment of a release price set forth therein and prepayment
consideration in connection therewith or (2) the partial defeasance of such
Purchased Loan.
No Purchased Loan permits the release or substitution of collateral if
such release or substitution (a) would create a "significant modification" of
such Purchased Loan within the meaning of Treas. Reg. (S)1.1001 3 or (b) would
cause such Purchased Loan not to be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code (without regard to clauses (A)(i) or (A)(ii)
thereof).
26. No Equity Participation or Contingent Interest. No Purchased Loan
----------------------------------------------
contains any equity participation by the lender or provides for negative
amortization or for any contingent or additional interest in the form of
participation in the cash flow of the related Mortgaged Property.
27. No Material Default. To the Seller's knowledge, there exists no
-------------------
material default, breach, violation or event of acceleration (and no event
which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and adversely
affects the value of the Purchased Loan and the related Mortgaged Property;
provided, however, that this representation and warranty does not address or
otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered by any other
representation and warranty made by the Seller in any of paragraphs 3, 7, 12,
14, 15 and 17 of this Exhibit VI.
28. Inspections. The Seller (or if the Seller is not the originator,
-----------
the originator of the Purchased Loan) has inspected or caused to be inspected
each Mortgaged Property in connection with the origination of the related
Purchased Loan.
29. Local Law Compliance. Based on due diligence considered
--------------------
reasonable by prudent commercial mortgage lenders in the lending area where each
Mortgaged Property is located, the
7
improvements located on or forming part of each Mortgaged Property complies with
applicable zoning laws and ordinances, or constitutes a legal non-conforming use
or structure or, if any such improvement does not so comply, such non-compliance
does not materially and adversely affect the value of the related Mortgaged
Property as determined by the appraisal performed at origination.
30. Junior Liens. None of the Purchased Loans permits the related
------------
Mortgaged Property to be encumbered by any lien junior to or of equal priority
with the lien of the related Mortgage without the prior written consent of the
holder thereof or the satisfaction of debt service coverage or similar criteria
specified therein. To Seller's knowledge, none of the Mortgaged Properties is
encumbered by any lien junior to the lien of the related Mortgage. Each
Purchased Loan contains a "due on sale" clause that provides for the
acceleration of the payment of the unpaid principal balance of the Purchased
Loan if, without the prior written consent of the holder of the Purchased Loan,
the related Mortgaged Property is transferred or sold.
31. Actions Concerning Purchased Loans. To the knowledge of the
----------------------------------
Seller, there are no actions, suits or proceedings pending or threatened before
any court, administrative agency or arbitrator concerning any Purchased Loan or
related Mortgagor or Mortgaged Property that might adversely affect title to the
Purchased Loan or the validity or enforceability of the related Mortgage or that
might materially and adversely affect the value of the Mortgaged Property as
security for the Purchased Loan or the use for which the premises were intended.
32. Servicing. The servicing and collection practices used by the
---------
Seller have been in all material respects legal, proper and prudent and have met
customary industry standards for servicing of commercial Purchased Loans similar
to the Purchased Loans in question.
33. Licenses and Permits. To the Seller's knowledge, as of the date
--------------------
of origination or acquisition of each Purchased Loan, the related Mortgagor was
in possession of all material licenses, permits and franchises required by
applicable law for the ownership and operation of the related Mortgaged Property
as it was then operated.
34. Assisted Living Facility Regulation. If any Mortgaged Property is
-----------------------------------
operated as an assisted living facility, to the Seller's knowledge, (a) the
related Mortgagor and operator, if different, is in compliance in all material
respects with all federal and state laws applicable to the use and operation of
the related Mortgaged Property and (b) if the operator of the Mortgaged Property
participates in Medicare or Medicaid programs, the facility is in compliance in
all material respects with the requirements for participation in such programs.
35. Non-Recourse Exceptions. The Purchased Loan Documents for each
-----------------------
Purchased Loan provide that such Purchased Loan constitutes the non-recourse
obligations of the related obligor thereon except that either (i) such provision
does not apply in the case of fraud by the Mortgagor or (ii) such documents
provide that the Mortgagor shall be liable to the holder of the Purchased Loan
for losses incurred as a result of fraud by the Mortgagor.
36. Single Purpose Entity. The Mortgagor on each Purchased Loan with
---------------------
an outstanding principal balance in excess of $5,000,000, was, as of the
origination of the Purchased Loan, a Single Purpose Entity. For this purpose, a
"Single Purpose Entity" shall mean an entity, other than an individual, whose
organizational documents provide substantially to the effect that it was formed
or organized solely for the purpose of owning and operating one or more
Mortgaged Properties securing the Purchased Loans and prohibit it from engaging
in any business unrelated to such Mortgaged Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Purchased Loan documents, substantially to the effect that it does not
have any assets other than those
8
related to its interest in and operation of such Mortgaged Property or
Properties, or any indebtedness other than as permitted by the related Mortgage
or the other related Purchased Loan documents, that it has its own books and
records and accounts separate and apart from any other person, and that it holds
itself out as a legal entity, separate and apart from any other person.
Each borrower of a Purchased Loan in excess of $10,000,000 is an
entity which has represented in connection with the origination of the Purchased
Loan, or whose organizational documents as of the date of origination of the
Purchased Loan, provided that so long as the Purchased Loan is outstanding it
will have at least one independent director, manager or executive committee
member.
37. Separate Tax Parcels. Each Mortgaged Property constitutes one or
--------------------
more complete separate tax lots or is subject to an endorsement under the
related title insurance policy.
38. Defeasance. Each Purchased Loan containing provisions for
----------
defeasance of mortgage collateral either (i) requires the prior written consent
of, and compliance with the conditions set by, the holder of the Purchased Loan,
or (ii) requires that (A) defeasance may not occur prior to the time permitted
by applicable "real estate mortgage investment conduit" rules and regulations
(if applicable), (B) the replacement collateral consist of U.S. governmental
securities in an amount sufficient to make all scheduled payments under the
Mortgage Note when due, (C) independent public accountants certify that the
collateral is sufficient to make such payments, (D) counsel provide an opinion
that the Buyer has a perfected security interest in such collateral prior to any
other claim or interest, and (E) all costs and expenses arising from the
defeasance of the mortgage collateral shall be borne by the borrower.
39. Operating or Financial Statement. The related Purchased Loan
--------------------------------
Documents require the related borrower to furnish to the mortgagee at least
annually an operating statement with respect to the related Mortgaged Property.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A MEZZANINE LOAN SECURED BY A PLEDGE OF THE
ENTIRE EQUITY OWNERSHIP INTEREST IN AN ENTITY THAT OWNS
A MULTIFAMILY OR COMMERCIAL PROPERTY
------------------------------------
With respect to each Purchased Loan of the type described in clause (iii)
of the definition of Eligible Loan, the Seller represents and warrants on each
Purchase Date as follows, other than as set forth on the exception report
provided to Buyer in accordance with the Agreement:
(1) Purchased Loan Information. The information set forth in the
--------------------------
Purchased Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. There
----------------------------------------------------
exists no material default, breach, violation or event of acceleration (and no
event which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and adversely
affects the value of the Purchased Loan and the related underlying real
property.
(3) No Offsets, Defenses or Counterclaims. There is no valid offset,
-------------------------------------
defense or counterclaim to such Purchased Loan.
9
(4) Equity Pledges. The pledge of ownership interests securing such
--------------
Purchased Loan relates to all direct or indirect equity or ownership interests
in the underlying real property owner (so that, except for the equity interests
pledged to Seller, there are no direct or indirect equity or ownership interests
in underlying real property owner or in any constituent entity) and has been
fully perfected in favor of Seller as mezzanine lender.
(5) Lockbox. The lockbox administrator, if any, is not an Affiliate
-------
of Seller.
(6) Enforceability. The Purchased Loan Documents have been duly and
--------------
properly executed by the parties thereto, and each is the legal, valid and
binding obligation of the parties thereto, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Loan is not usurious. Seller has fully and validly
perfected all security interests created or intended to be created pursuant to
the Purchased Loan Documents.
(7) Waivers and Modifications. The terms of the related Purchased
-------------------------
Loan Documents have not been impaired, waived, altered or modified in any
material respect (other than by a written instrument which is included in the
related Purchased Loan File).
(8) Valid Assignment. The assignment of Purchased Loan constitutes
----------------
the legal, valid and binding assignment of such Purchased Loan from Seller to or
for the benefit of Buyer. No consent or approval by any third party is required
for any such assignment of such Purchased Loan, for Buyer's exercise of any
rights or remedies under the assignment of Purchased Loan, or for Buyer's sale
or other disposition of such Purchased Loan if Buyer acquires title thereto,
other than consents and approvals which have been obtained. No third party
(including underlying real property owner and underlying real property
mortgagee) holds any "right of first refusal," "right of first negotiation,"
"right of first offer," purchase option, or other similar rights of any kind on
account of the occurrence of any of the foregoing. No other material impediment
exists to any such transfer.
(9) Certain Representations and Warranties. To the Sellers'
--------------------------------------
knowledge, all representations and warranties in the Purchased Loan Documents
and in the underlying real property mortgage documents are true and correct in
all material respects.
(10) Parties Authorized. To the extent required under applicable law
------------------
as of the Purchase Date, each party to the Purchased Loan Documents was
authorized to do business in the jurisdiction in which the related underlying
real property is located at all times when it held the Purchased Loan to the
extent necessary to ensure the validity and enforceability of such Purchased
Loan.
(11) No Advances of Funds. No party to the Purchased Loan Documents
--------------------
has advanced funds on account of any default under the Purchased Loan or under
the underlying real property mortgage documents.
(12) Servicing. The servicing and collection practices used by Seller
---------
for the Purchased Loan have complied with applicable law in all material
respects and are consistent with those employed by prudent servicers of
comparable Purchased Loans.
(13) No Assignment. Seller has not effectuated any transfer, sale,
-------------
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
10
(14) No Bankruptcy. To Seller's actual knowledge, none of the
-------------
following parties is a debtor in any state or federal bankruptcy or insolvency
proceeding: Seller; underlying real property owner; or underlying real property
mortgagee.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A JUNIOR PARTICIPATION INTEREST
(OR JUNIOR OR "B" NOTE) IN A PERFORMING COMMERCIAL
MORTGAGE LOAN SECURED BY A FIRST LIEN ON
A MULTIFAMILY OR COMMERCIAL PROPERTY
------------------------------------
With respect to each Purchased Loan of the type described in clause (ii) of
the definition of Eligible Loan, the Seller represents and warrants on each
Purchase Date as follows, other than as set forth on the exception report
provided to Buyer in accordance with the Agreement.
(1) Purchased Loan Information. The information set forth in the
--------------------------
Purchased Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. There
----------------------------------------------------
exists no material default, breach, violation or event of acceleration (and no
event which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and adversely
affects the value of the Purchased Loan and the related underlying real
property.
(3) No Offsets, Defenses or Counterclaims. There is no valid offset,
-------------------------------------
defense or counterclaim to such Purchased Loan.
(4) Lockbox. The lockbox administrator, if any, is not an Affiliate
-------
of Seller.
(5) Enforceability. The Purchased Loan Documents have been duly and
--------------
properly executed by the parties thereto, and each is the legal, valid and
binding obligation of the parties thereto, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The Purchased Loan is not usurious. Seller has fully and validly
perfected all security interests created or intended to be created pursuant to
the Purchased Loan Documents.
(6) Waivers and Modifications. The terms of the related Purchased
-------------------------
Loan Documents have not been impaired, waived, altered or modified in any
material respect (other than by a written instrument which is included in the
related Purchased Loan File).
(7) Valid Assignment. The assignment of Purchased Loan constitutes
----------------
the legal, valid and binding assignment of such Purchased Loan from Seller to or
for the benefit of Buyer. No consent or approval by any third party is required
for any such assignment of such Purchased Loan, for Buyer's exercise of any
rights or remedies under the assignment of Purchased Loan, or for Buyer's sale
or other disposition of such Purchased Loan if Buyer acquires title thereto,
other than consents and approvals which have been obtained. No third party
(including underlying real property owner and underlying real property
mortgagee) holds any "right of first refusal," "right of first negotiation,"
"right of first offer," purchase option, or other similar rights of any kind on
account of the occurrence of any of the foregoing. No other material impediment
exists to any such transfer.
11
(8) Certain Representations and Warranties. To the Seller's
--------------------------------------
knowledge, all representations and warranties in the Purchased Loan Documents
and in the underlying documents for the performing commercial mortgage loan
secured by a first lien on a multifamily or commercial property to which such
Purchased Loan relates are true and correct in all material respects.
(9) Parties Authorized. To the extent required under applicable law
------------------
as of the Purchase Date, each party to the Purchased Loan Documents was
authorized to do business in the jurisdiction in which the related underlying
real property is located at all times when it held the Purchased Loan to the
extent necessary to ensure the validity and enforceability of such Purchased
Loan.
(10) No Advances of Funds. No party to the Purchased Loan Documents
--------------------
has advanced funds on account of any default under the Purchased Loan or under
the underlying real property mortgage documents.
(11) Servicing. The servicing and collection practices used by Seller
---------
for the Purchased Loan have complied with applicable law in all material
respects and are consistent with those employed by prudent servicers of
comparable Purchased Loans.
(12) No Assignment. Seller has not effectuated any transfer, sale,
-------------
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(13) No Bankruptcy. To Seller's actual knowledge, none of the
-------------
following parties is a debtor in any state or federal bankruptcy or insolvency
proceeding: Seller; underlying real property owner; or underlying real property
mortgagee.
REPRESENTATIONS AND WARRANTIES REGARDING EACH
INDIVIDUAL PURCHASED SECURITY
-----------------------------
With respect to each Purchased Security, the Seller represents and warrants
on each Purchase Date as follows, other than as set forth on the exception
report provided to Buyer in accordance with the Agreement.
(1) All of the Purchased Securities have been validly issued and are
fully paid and non-assessable and not subject to preemptive rights and have been
offered, issued and sold in compliance with all Requirements of Law.
(2) To the extent that an Affiliate of the Seller is a party thereto,
the Securitization Documents are genuine, in full force and effect and the
legal, valid and binding obligation of such Affiliate enforceable in accordance
with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors and the effect of
general principles of equity, whether enforcement is considered in a proceeding
in equity or at law.
(3) The Securitization Documents have not been altered or modified,
except as disclosed to the Buyer in writing. The Seller has not waived the
performance of any action or any default, breach or violation resulting from
action or inaction under a Securitization Document and has not been made aware
of any such waiver.
(4) Except as disclosed to the Buyer in writing, there is no default,
breach, violation or event of acceleration existing under a Securitization
Document and no event has occurred which, with
12
the passage of time or giving of notice or both and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration thereunder.
(5) Each Purchased Security is freely assignable and the related
Securitization Document permits the Seller to sell, assign or pledge such
Purchased Security in accordance with any applicable securities laws.
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EXHIBIT VII
COLLATERAL INFORMATION
----------------------
Loan ID #:
Borrower Name:
Borrower Address:
Borrower City:
Borrower State:
Borrower Zip Code:
Recourse:
Guaranteed:
Related Borrower Name(s):
Original Principal Balance:
Note Date:
Loan Date:
Loan Type (e.g. fixed/arm):
Current Principal Balance:
Current Interest Rate (per annum):
Paid to date:
Annual P&I:
Next Payment due date:
Index (complete whether fixed or arm):
Gross Spread/Margin (complete whether fixed or arm):
Life Cap:
Life Floor:
Periodic Cap:
Periodic Floor:
Rounding Factor:
Lookback (in days):
Interest Calculation Method (e.g., Actual/360):
Interest rate adjustment frequency:
P&I payment frequency:
First P&I payment due:
First interest rate adjustment date:
First payment adjustment date:
Next interest rate adjustment date:
Next payment adjustment date:
Conversion Date:
Converted Interest Rate Index:
Converted Interest Rate Spread:
Maturity date:
Loan term:
Amortization term:
Hyper-Amortization Flag:
Hyper-Amortization Term:
Hyper-Amortization Rate Increase:
Balloon Amount:
Balloon LTV:
Prepayment Penalty Flag:
Prepayment Penalty Text:
Lockout Period:
Lien Position:
Fee/Leasehold:
Ground Lease Expiration Date:
COLLATERAL INFORMATION
----------------------
Property Name:
Property Address:
Property City:
Property Zip Code:
Property Type (General):
Property Type (Specific):
Cross-collateralized (Yes/No)*:
Property Size:
Year built:
Year renovated:
Actual Average Occupancy:
Occupancy Rent Roll Date:
Underwritten Average Occupancy:
Largest Tenant:
Largest Tenant SF:
Largest Tenant Lease Expiration:
2/nd/ Largest Tenant:
2/nd/ Largest Tenant SF:
2/nd/ Largest Tenant Lease Expiration:
3/rd/ Largest Tenant:
3/rd/ Largest Tenant SF:
3/rd/ Largest Tenant Lease Expiration:
Underwritten Average Rental Rate/ADR:
Underwritten Vacancy/Credit Loss:
Underwritten Other Income:
Underwritten Total Revenues:
Underwritten Replacement Reserves:
Underwritten Management Fees:
Underwritten Franchise Fees:
Underwritten Total Expenses:
Underwritten Leasing Commissions:
Underwritten Tenant Improvement Costs:
Underwritten NOI:
Underwritten NCF:
Underwritten Debt Service Constant:
Underwritten DSCR at NOI:
Underwritten DSCR at NCF:
Underwritten NOI Period End Date:
Hotel Franchise:
Hotel Franchise Expiration Date:
Appraiser Name: (if Applicable)
Appraised Value: (if Applicable)
Appraisal Date: (if Applicable)
Appraisal Cap Rate: (if Applicable)
Appraisal Discount Rate: (if Applicable)
Underwritten LTV:
Environmental Report Preparer:
Environmental Report Date:
Environmental Report Issues:
Architectural and Engineering Report Preparer:
Architectural and Engineering Report Date:
Deferred Maintenance Amount:
________________________________
* If yes, give property information on each property covered and in aggregate as
appropriate. Loan ID's should be denoted with a suffix letter to signify
loans/collateral.
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COLLATERAL INFORMATION
----------------------
Ongoing Replacement Reserve Requirement per A&E Report:
Immediate Repairs Escrow % (e.g. 125%):
Replacement Reserve Annual Deposit:
Replacement Reserve Balance:
Tenant Improvement/Leasing Commission Annual Deposits:
Tenant Improvement/Leasing Commission Balance:
Taxes paid through date:
Monthly Tax Escrow:
Tax Escrow Balance:
Insurance paid through date:
Monthly Insurance Escrow:
Insurance Escrow Balance:
Reserve/Escrow Balance as of Date:
Probable Maximum Loss %:
Covered by Earthquake Insurance (Yes/No):
Number of times 30 days late in last 12 months:
Number of times 60 days late in last 12 months:
Number of times 90 days late in last 12 months:
Servicing Fee:
Notes:
3
EXHIBIT VIII
TRANSACTION PROCEDURE
---------------------
Final Approval of New Collateral Which is an Eligible Security/Preliminary
--------------------------------------------------------------------------
Approval of New Collateral Which is an Eligible Loan.
----------------------------------------------------
(a) Seller may, from time to time, submit to Buyer a Preliminary Due
Diligence Package for Buyer's review and approval in order to enter into a
Transaction with respect to any New Collateral that Seller proposes to be
included as Collateral under the Agreement.
(b) Upon Buyer's receipt of a complete Preliminary Due Diligence Package,
Buyer, within two (2) Business Days, shall have the right to request, in Buyer's
good faith business judgment, additional diligence materials and deliveries that
Buyer shall specify on a Supplemental Due Diligence List. Upon Buyer's receipt
of all of the Diligence Materials in a form satisfactory to Buyer or Buyer's
waiver thereof, Buyer, within five (5) Business Days shall either (i) notify
Seller of the Purchase Price and the Market Value for the New Collateral or (ii)
deny, in Buyer's sole and absolute discretion, Seller's request for a
Transaction. Buyer's failure to respond to Seller within five (5) Business
Days, as applicable, shall be deemed to be a denial of Seller's request for an
Advance, unless Buyer and Seller have agreed otherwise in writing.
Final Approval of New Collateral which is an Eligible Loan. Upon Buyer's
----------------------------------------------------------
notification to Seller of the Purchase Price and the Market Value for any New
Collateral which is an Eligible Loan, Seller shall, if Seller desires to enter
into a Transaction with respect to such New Collateral, satisfy the conditions
set forth below (in addition to satisfying the Transaction Conditions Precedent
to obtaining each advance, as set forth in Section 3(b) of this Agreement) as a
------------
condition precedent to Buyer's approval of such New Collateral as Collateral,
all in a manner reasonably satisfactory to Buyer and pursuant to documentation
reasonably satisfactory to Buyer:
(a) Delivery of Purchased Loan Documents. Seller shall deliver to
------------------------------------
Buyer: (i) with respect to New Collateral that is Pre-Existing Collateral, each
of the Purchased Loan Documents, except Purchased Loan Documents that Seller
expressly and specifically disclosed in Seller's Preliminary Due Diligence
Package were not in Seller's possession; and (ii) with respect to New Collateral
that is Originated Collateral, each of the Purchased Loan Documents.
(b) Environmental and Engineering. Buyer shall have received a "Phase
-----------------------------
1" (and, if necessary, "Phase 2") environmental report, an asbestos survey, if
applicable, and an engineering report, each in form reasonably satisfactory to
Buyer, by an engineer or environmental consultant reasonably approved by Buyer.
(c) Appraisal. Buyer shall have received either an appraisal
---------
approved by Buyer (or a Draft Appraisal), each by an MAI appraiser. If Buyer
receives only a Draft Appraisal prior to entering into a Transaction, Seller
shall deliver an appraisal approved by Buyer by an MAI appraiser on or before
thirty (30) days after the Purchase Date.
(d) Insurance. Buyer shall have received certificates or other
---------
evidence of insurance demonstrating insurance coverage in respect of the
Mortgaged Property of types, in amounts, with insurers and otherwise in
compliance with the terms, provisions and conditions set forth in the Purchased
Loan Documents. Such certificates or other evidence shall indicate that Seller
will be named as an additional insured as its interest may appear and shall
contain a loss payee endorsement in favor of such
additional insured with respect to the policies required to be maintained under
the Purchased Loan Documents.
(e) Survey. Buyer shall have received all surveys of the Mortgaged
------
Property that are in Seller's possession.
(f) Lien Search Reports. Buyer or Buyer's counsel shall have
-------------------
received, as reasonably requested by Buyer, satisfactory reports of UCC, tax
lien, judgment and litigation searches and title updates conducted by search
firms and/or title companies acceptable to Buyer with respect to the Eligible
Loan, Mortgaged Property, Seller and Mortgagor, such searches to be conducted in
each location Buyer shall reasonably designate.
(g) Opinions of Counsel. Buyer shall have received copies of all
-------------------
legal opinions in the Seller's possession with respect to the Eligible Loan
which shall be in form and substance reasonably satisfactory to Buyer.
(h) Additional Real Estate Matters. Seller shall have delivered to
------------------------------
Buyer to the extent in Seller's possession such other real estate related
certificates and documentation as may have been requested by Buyer, such as:
(i) certificates of occupancy issued by the appropriate Governmental Authority
and either letters certifying that the Mortgaged Property is in compliance with
all applicable zoning laws issued by the appropriate Governmental Authority or
evidence that the related Title Policy includes a zoning endorsement and (ii)
abstracts of all leases in effect at the Mortgaged Property and estoppel
certificates, in form and substance acceptable to Buyer, from any ground lessor
and from any tenant that occupies 7.5% or more of the rentable space at the
Mortgaged Property, and in any event from tenants whose occupancies aggregate
not less than 70% of the occupied rentable square footage at the Mortgaged
Property.
(i) Other Documents. Buyer shall have received such other documents
---------------
as Buyer or its counsel shall reasonably deem necessary.
Within two (2) Business Days of Seller's satisfaction of all of the conditions
enumerated in clauses (a) through (i) above, Buyer shall either (i) if the
Purchased Loan Documents with respect to the New Collateral are not reasonably
satisfactory in form and substance to Buyer, notify Seller that Buyer has not
approved the New Collateral as Collateral or (ii) notify Seller that Buyer has
approved the New Collateral as Collateral. Buyer's failure to respond to Seller
within two (2) Business Days shall be deemed to be a denial of Seller's request
that Buyer approve the New Collateral, unless Buyer and Seller have agreed
otherwise in writing.
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EXHIBIT IX
FORM OF REDIRECTION LETTER
--------------------------
EXHBIIT X
FORM OF CERTIFICATE OF INCORPORATION FOR SUBSIDIARY
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