EXHIBIT 10.1
DATED AS OF APRIL 30, 2001
YOUR COUNTERPARTY IN ANY TRANSACTION ENTERED PURSUANT TO THIS MASTER AGREEMENT
IS SALOMON BROTHERS INTERNATIONAL LIMITED. SALOMON BROTHERS INTERNATIONAL
LIMITED IS NOT REGISTERED AS A BROKER-DEALER UNDER THE SECURITIES EXCHANGE ACT
OF 1934.
AMENDED AND RESTATED
ANNEX 1, SUPPLEMENTAL TERMS OR CONDITIONS TO GLOBAL MASTER
REPURCHASE AGREEMENT, DATED AS OF MARCH 29, 2001, AMONG XXXXXXX
XXXXX XXXXXX INC. AS AGENT FOR SALOMON BROTHERS INTERNATIONAL
LIMITED, NC RESIDUAL II CORPORATION AND
NEW CENTURY MORTGAGE CORPORATION
RECITALS
A. Buyer, Seller and Guarantor entered into that certain Global Master
Repurchase Agreement, dated as of March 29, 2001, as supplemented by
that certain Annex 1, Additional Supplemental Terms or Conditions to
Global Master Repurchase Agreement, dated as of March 29, 2001 (the
"Original Agreement").
B. These are Amended and Restated Additional Supplemental Terms or
Conditions (the "Additional Supplemental Terms") to Global Master
Repurchase Agreement, dated as of March 29, 2001, among Buyer, Seller
and Guarantor (the "Repurchase Agreement"), and the parties hereto
desire to amend and restate the Original Agreement and modify the
terms and conditions of the Repurchase Agreement and the terms under
which the parties hereto may, from time to time, enter into
Transactions (the Repurchase Agreement, together with the Annexes
thereto and these Additional Supplement Terms and the exhibits and
schedules hereto, the "Agreement"). The provisions of these Additional
Supplemental Terms shall supersede the terms in the Repurchase
Agreement to the extent they are in conflict. The Agreement shall be
read, taken and construed as one and the same instrument. Capitalized
terms used in these Additional Supplemental Terms and not otherwise
defined herein shall have the meanings set forth in the Repurchase
Agreement.
1. The following elections shall apply:
(a) Paragraph 1(d). Xxxxxxx Xxxxx Xxxxxx Inc. shall act as agent for
Salomon Brothers International Limited.
(b) Paragraph 2 (d). The Base Currency shall be: US Dollars.
(c) Paragraph 2 (1). Salomon Brothers International Limited's Designated
Offices shall be: Victoria Plaza, 000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxx,
XX0X OSB.
NC Residual II Corporation's Designated Offices shall be: 00000 Xxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000
(d) Paragraph 6(j) terms shall apply and, for purposes of paragraph 6(j),
all of the events specified in paragraph 10(a) shall apply.
(e) Paragraph 10(a)(ii) terms shall apply.
(f) Paragraph 14. For purposes of paragraph 14 of this Agreement --
(i) Address for notices and other communications for the Buyer
Address: 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000
Attention: Mortgage Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telex:
Answerback:
Other: xxxxxxx.x.xxxxx@xxxx.xxx
(ii) Address for notices and other communications for the Seller --
Address: 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telex:
Answerback:
Other: xxxxxxxx@xxxx.xxx
(g) All other elections shall be made by the Parties prior to a particular
Transaction or pursuant to a separate agreement.
2. The following Supplemental Terms and Conditions shall apply:
(a) Paragraph 4 is hereby deleted in its entirety.
(b) With effect from the date of execution of the Agreement, paragraphs 8
(Substitution) and 10 (Events of Default) of the Agreement shall apply
to all repurchase transactions and buy/sell back transactions into
which the Parties have entered before that date and which are
outstanding at that date in substitution for any corresponding
provisions in any previous master agreement between the Parties
governing such transactions.
2
(c) ADDITIONAL DEFINITIONS.
(i) Notwithstanding the definition in Paragraph 1(a) of the
Agreement, "Securities" shall mean certain non-investment
grade rated and unrated securities acceptable to the Buyer
in its sole discretion and generated from the securitization
of mortgage loans underwritten by Buyer.
(ii) Notwithstanding the definition set forth in Paragraph 2(oo)
of the Agreement, "REPURCHASE DATE" shall mean the calendar
day of each month (or the next succeeding business day
thereto) as determined by the Buyer and the Seller on or
prior to the initial purchase date.
(iii) Notwithstanding the definition set forth in Paragraph 2(w)
of the Agreement, "INCOME" shall mean, with respect to any
Purchased Security, any principal thereof and all interest,
dividends or other distributions thereon.
(iv) "ADJUSTED LEVERAGE RATIO" shall mean on any date of
determination, the ratio of (a) Total Liabilities to (b)
Adjusted Tangible Net Worth.
(v) "ADJUSTED TANGIBLE NET WORTH": on any date of determination,
the Tangible Net Worth of NCFC minus 25% of the amount by
which the book value of Junior Securitization Interests
included in calculating Tangible Net Worth exceeds
Indebtedness of the type described in paragraph 2(s) of this
Annex.
(vi) "AFFILIATE" shall mean with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, such Person, whether through the
ownership of voting securities, by contract or otherwise.
(vii) "BORROWING BASE" shall have the meaning assigned to it in
the Underlying Credit Agreement.
(viii) "BUYER" shall mean Xxxxxxx Xxxxx Barney as agent for Salomon
Brothers International Limited.
(ix) "DAILY LEVERAGE RATIO" shall mean as of any date of
determination, the ratio of (a) Total Liabilities of NCFC
and its Subsidiaries on such date to (b) Tangible Net Worth
of NCFC and its Subsidiaries as of the last day of the most
recently completed month.
(x) "GAAP" shall mean generally accepted accounting principles
in the United States set forth in the opinions and
3
pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of
the accounting profession, which are applicable to the
circumstances as of the date of determination.
(xi) "GREENWICH" shall mean Greenwich Capital Financial Products,
Inc.
(xii) "GUARANTEE" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xiii) "GUARANTOR" shall mean New Century Mortgage Corporation.
(xiv) "Guarantor Securitization Transaction" shall mean an
issuance of Mortgage-backed Securities by either Seller or
Guarantor, or by SBRC, Xxxxx Xxxxxx, or Greenwich or an
Affiliate of any of them on behalf of either Borrower,
through a trust or other entity created by either Seller or
Guarantor, SBRC, Xxxxx Xxxxxx or Greenwich, which
Mortgage-backed Securities are either secured (in whole or
in part) by Mortgage Loans originated or acquired by Seller
or Guarantor or evidence the entire beneficial ownership
interest therein, and in connection with which one or more
Junior Securitization Interests are issued to Seller or
Guarantor or an Affiliate of Seller or Guarantor.
(xv) "GUARANTY" shall mean that certain guaranty, dated March 29,
2001, between Guarantor and Xxxxxxx Xxxxx Barney Inc. as
agent for Salomon Brothers International Limited.
(xvi) "INDEBTEDNESS" shall mean with respect to any Person at any
time, without duplication, all obligations of such Person
which, in accordance with GAAP, consistently applied, should
be classified as liabilities on an unconsolidated balance
sheet of such Person, but in any event shall include: (a)
all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid
or accrued, (d) all obligations of such Person under
conditional sale or other title retention agreements
relating to property purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred
purchase price of property or services, but excluding
accrued expenses and trade payables incurred and paid in the
ordinary course of business, (f) all obligations of others
secured by any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have
been assumed, (g) all capitalized lease obligations of such
Person, (h) all obligations of such Person in respect of
interest rate protection agreements, (i) all obligations of
any partnership or joint venture as to which such Person is
or may
4
become personally liable, and (j) all Guarantees by such
Person of Indebtedness of others.
(xvii) "INITIAL PURCHASE DATE" shall mean the date of the Initial
Purchase.
(xviii) "INITIAL PURCHASE PRICE" shall mean the price paid in
connection with the one time initial purchase of the
securities.
(xix) "JUNIOR SECURITIZATION INTERESTS" shall mean a
Mortgage-backed Security created in a Guarantor
Securitization Transaction that represents a subordinated
right to receive principal or interest payments on the
underlying Mortgage Loans (whether or not such subordination
arises only under particular circumstances).
(xx) "LENDER AGENT" shall have the meaning assigned to it in
paragraph (s) of this Annex.
(xxi) "LENDERS" shall have the meaning assigned to it in paragraph
2(s) of this Annex.
(xxii) "LEVERAGE RATIO" shall mean on any date of determination,
the ratio of (a) Total Liabilities to (b) Tangible Net
Worth.
(xxiii) "LIEN" shall mean any security interest, mortgage, pledge,
lien, charge, encumbrance, title retention agreement or
analogous instrument, in, of, or on any of the assets or
properties, now owned or hereafter acquired, of any Person,
whether arising by agreement or operation of law.
(xxiv) "MORTGAGE" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xxv) "MORTGAGED-BACKED SECURITY" shall mean a security
(including, without limitation, a participation certificate)
that is an interest in a pool of Mortgage Loans or is
secured by such an interest.
(xxvi) "MORTGAGE LOAN" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xxvii) "MORTGAGE NOTE" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xxviii) "NCFC" shall mean New Century Financial Corporation, a
Delaware corporation.
5
(xxix) "OBLIGATIONS" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xxx) "XXXXX XXXXXX" shall mean Xxxxx Xxxxxx Real Estate
Securities Inc.
(xxxi) "PARTIES" shall mean Buyer and Seller.
(xxxii) "PERSON" shall mean any natural person, corporation,
partnership, joint venture, firm, association, limited
liability company, trust, unincorporated organization,
government or governmental agency or political subdivision
or any other entity, whether acting in an individual,
fiduciary or other capacity.
(xxxiii) "PRICING MARGIN", unless otherwise set forth in the related
Confirmation, shall equal 1.65% per annum for all Purchased
Securities.
(xxxiv) Unless otherwise set forth in the related Confirmation,
"PRICING RATE" shall mean one month LIBOR, plus the
applicable Pricing Margin; provided that upon the occurrence
of an Event of Default, the Pricing Rate shall equal the
Pricing Rate as set forth herein (or in the related
Confirmation) plus 2.00% per annum.
(xxxv) "QUARTERLY AVERAGE LEVERAGE RATIO" shall mean for each
three-month period ending on March 31, June 30, September 30
or December 31 of any year during the term of this
Agreement, the ratio of (a) the average daily amount of
Total Liabilities of NCFC and it Subsidiaries outstanding
during such three-month period to (b) the average of the
Tangible Net Worth of NCFC and its Subsidiaries at the end
of each month during such three-month period.
(xxxvi) "REO SUB" shall mean New Century REO Corp., a California
corporation.
(xxxvii) "REQUIRED LENDERS" shall have the meaning assigned to it in
the Underlying Credit Agreement.
(xxxviii) "SALOMON REO AGREEMENT" shall mean a Master Loan and
Security Agreement dated as of April 1, 2000 by and among
the Guarantor, NC Capital Corporation and SBRC, as the same
may be amended, supplemented, restated or otherwise modified
in accordance with this Agreement and in effect from time to
time.
(xxxix) "SBRC" shall mean Salomon Brothers Realty Corp., a New York
corporation.
(xl) "SELLER" shall mean NC Residual II.
(xli) "SERVICER" shall mean Ocwen Federal Bank FSB or its
successors or assigns.
6
(xlii) "SIGNING DATE" shall have the meaning assigned to it in the
Underlying Credit Agreement.
(xliii) "SUBORDINATED DEBT" shall mean any indebtedness of the
Seller, now existing or hereafter created, incurred or
arising, which is subordinated in right of payment to the
payment of the Obligations in a manner and to an extent that
the Required Lenders have approved in writing prior to the
creation of such Indebtedness.
(xliv) "TANGIBLE NET WORTH" shall mean, as of any date of
determination, the consolidated Net Worth of the Guarantor
or NCFC, as applicable, and its respective Subsidiaries,
less the consolidated book value of all assets of the
Guarantor or NCFC, as applicable, and its respective
Subsidiaries (to the extent reflected as an asset in the
balance sheet of the Guarantor or NCFC, as applicable, or
any such Subsidiary at such date) which are treated as
intangibles under GAAP, including, without limitation, such
items as deferred financing expenses, net leasehold
improvements, good will, trademarks, trade names, service
marks, copyrights, patents, licenses and unamortized debt
discount and expense; provided, that Junior Securitization
Interests shall not be treated as intangibles for purposes
of this definition.
(xlv) "TOTAL LIABILITIES" shall mean at any time of determination,
the amount, on a consolidated basis, of the liabilities of
the Guarantor or NCFC, as applicable, and its respective
Subsidiaries, determined in accordance with GAAP, minus
subordinated debt.
(xlvi) "UNDERLYING CREDIT AGREEMENT" shall have the meaning
assigned to it in paragraph 2(s) of this Annex.
(d) EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall, in addition to
the definition set forth in the Agreement, include the following
events:
(i) Seller shall default under, or fail to perform as requested
under, or shall otherwise breach the material terms of any
instrument, agreement or contract relating to indebtedness
(including repurchase agreements), and such default, failure or
breach shall entitle any counterparty to declare such
indebtedness to be due and payable prior to the maturity thereof
and the aggregate amount of such potentially accelerated
indebtedness shall equal at least $5,000,000 or such lesser
amount included in the cross acceleration provisions of any other
material instrument, agreement or contract relating to
indebtedness (including repurchase agreements);
(ii) Seller or Guarantor shall default under, or fail to perform as
requested under, or shall otherwise breach the material terms of
any instrument, agreement or contract
7
relating to indebtedness (including repurchase agreements)
between Seller or its affiliates, on the one hand, and Buyer or
its affiliates on the other;
(iii) in the good faith judgment of Buyer any material adverse change
shall have occurred with respect to Seller, Guarantor or Seller
and Seller's subsidiaries taken as a whole; or
(iv) the Tangible Net Worth of Guarantor is less than $40,000,000.
(e) REMEDIES/SET-OFF. After the occurrence and during the continuation of
an Event of Default, in addition to its rights pursuant to the
Agreement, Buyer shall have the right to proceed against any of
Seller's or the Guarantor's assets which may be in the possession of
Buyer, any of Buyer's Affiliates or its designee, including the right
to liquidate such assets and to set-off the proceeds against monies
owed by Seller or Guarantor to Buyer pursuant to the Agreement. Buyer
may set off cash, the proceeds of the liquidation of the Purchased
Securities, any other collateral or its proceeds and all other sums or
obligations owed by Buyer to Seller under the Agreement against all of
Seller's or Guarantor's obligations to Buyer, whether under the
Agreement, under a Transaction, or under any other agreement between
the parties, or otherwise, whether or not such obligations are then
due, without prejudice to Buyer's right to recover any deficiency.
(f) EXPENSES. Seller agrees to pay on demand (i) all out-of-pocket costs
and expenses of Buyer in connection with the preparation, negotiation,
execution, delivery, modification and amendment of this Agreement
(including, without limitation, the fees and expenses of counsel for
Buyer with respect thereto), (ii) Buyer's actual and reasonable due
diligence expenses (not to exceed $10,000 per quarter), (iii) Buyer's
custodial fees and expense, and (iv) all costs and expenses of Buyer
in connection with the enforcement of this Agreement, whether in any
action, suit or litigation, any bankruptcy, insolvency or other
similar proceeding affecting creditors' rights generally (including,
without limitation, the fees and expenses of counsel for Buyer)
whether or not the transactions contemplated hereby are consummated.
(g) COMMITMENT FEE. The Seller agrees to pay to the Buyer, a commitment
fee equal to 2% of the Initial Purchase Price (the "COMMITMENT FEE").
The Commitment Fee shall be earned and owing on the Initial Purchase
Date and shall be payable in three equal installments due on (i) the
Initial Purchase Date, (ii) the 30 day anniversary of the initial
Payment Date (or the next succeeding business day thereto if such date
is not a business day), and (iii) the 60 day anniversary of the
initial Payment Date (or the next succeeding business day thereto if
such date is not a business day). The Commitment Fee shall be paid in
dollars, in immediately available funds, in accordance with the
Buyer's instructions. At the option of the Buyer, any installment due
may be netted out of any Purchase Price to be paid to the Seller.
8
(h) INTENT/SECURITY INTEREST. Seller and Buyer intend that the
Transactions hereunder be sales to Buyer of the Purchased Securities
and not loans from Buyer to Seller secured by the Purchased
Securities. However, in order to preserve Buyer's rights under the
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for
Seller's performance of all of its obligations hereunder, Seller
hereby grants Buyer a fully perfected first priority security interest
in the Purchased Securities, the records, and all related property,
insurance, Income, accounts (including any interest of Seller in
escrow accounts) and any other contract rights, payments, rights to
payment (including payments of interest or finance charges) general
intangibles and other assets relating to the Purchased Securities
(including, without limitation, any other accounts) or any interest in
the Purchased Securities and any proceeds and distributions with
respect to any of the foregoing and any other property, rights, titles
or interests as are specified on a Transaction Notice.
(i) COVENANTS. In addition to all other obligations of the Seller and
Guarantor pursuant to the Agreement, the Seller and Guarantor hereby
covenants with the Buyer as follows:
(i) The Seller and Guarantor will cause the Servicer to provide
monthly performance reporting to the Buyer, in form acceptable to
the Buyer.
(ii) Seller will provide monthly compliance certificates to the Buyer
substantially in the form currently provided to U.S. Bank
National Association under the Underlying Credit Agreement.
(iii) If an Event of Default has occurred and is occurring, the Seller
and Guarantor shall not pay any dividends or distributions with
respect to any capital stock or other equity interests in 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.
(iv) Without the prior written consent of the Buyer, there shall not
occur any change of executive management of the Seller or the
Guarantor.
(v) FINANCIAL COVENANTS
(A) TANGIBLE NET WORTH. Guarantor will at all times during each
fiscal year maintain Tangible Net Worth of not less than (a)
the greater of (i) $85,000,000 or (ii) eighty-five percent
(85%) of the Tangible Net Worth at the end of its most
recently completed fiscal year (or, in the case of the
Tangible Net Worth at the end of any fiscal year, its prior
fiscal year) plus (b) ninety percent (90%) of capital
contributions made during such fiscal year plus (c) fifty
percent (50%) of positive year-to-date net income. NCFC will
at all times during each fiscal year maintain Tangible Net
9
Worth of not less than (a) the greater of (i) $130,000,000
or (ii) eighty-five percent (85%) of the Tangible Net Worth
at the end of its most recently completed fiscal year (or,
in the case of Tangible Net Worth at the end of any fiscal
year, its prior fiscal year) plus (b) ninety percent (90%)
of capital contributions made during such fiscal year plus
(c) fifty percent (50%) of positive year-to-date net income.
The Seller will at all times during each fiscal year
maintain Tangible Net Worth of not less than $1.00.
(B) MINIMUM LIQUIDITY. The Guarantor will not permit the sum of
(a) cash and cash equivalents plus (b) the lesser of the
Borrowing Base (as defined in the Underlying Credit
Agreement) and the sum of the Commitment Amounts (as defined
in the Underlying Credit Agreement) minus, in either case,
the outstanding principal balance of all outstanding loans
under the Underlying Credit Agreement as of the end of each
month to be less than $10,000,000.
(C) LEVERAGE RATIO. The Guarantor will not permit the Leverage
Ratio of the Guarantor to be greater than 8.0 to 1.0 as of
the last day of each fiscal quarter of the Seller. NCFC will
not permit (i) the Quarterly Average Leverage Ratio for any
period of measurement to be greater than 10.0 to 1.0, (ii)
the Daily Leverage Ratio on any date to be greater than 15.0
to 1.0, or (iii) the Adjusted Leverage Ratio as of the last
day of each fiscal quarter to be greater than 12.0 to 1.0.
(j) ROLLOVER TRANSACTIONS. Provided that all conditions in the Agreement
have been satisfied, including the requirements set forth in this
Paragraph 2(j), each Purchased Security that is repurchased by Seller
on the applicable Repurchase Date shall automatically become subject
to a new Transaction and the Repurchase Date for such new Transaction
shall be the immediately subsequent Repurchase Date, provided that if
the Repurchase Date so determined is later than the Termination Date,
the Repurchase Date for such Transaction shall automatically reset to
the Termination Date, and the provisions of this sentence as it might
relate to a new Transaction shall expire on such date; PROVIDED, THAT,
the Repurchase Price paid by the Seller on each Repurchase Date, shall
be sufficient so that the purchase price of the new Transaction
entered into on such Repurchase Date shall equal an amount which is at
least $2,000,000 less than the Purchase Price from the immediately
preceding Purchase Date; PROVIDED FURTHER, THAT, the Repurchase Price
paid by the Seller on each Repurchase Date occurring in every third
month following the initial Purchase Date, shall be sufficient so that
the Purchase Price of the new Transaction entered into on such
Repurchase Date shall equal an amount which is at least $9,000,000
less than the Purchase Price from the Purchase Date occurring three
months prior. In the event that the Seller repurchases the
Certificates prior to any Repurchase Date, the Seller shall not be
required to pay any breakage fees with respect to any such early
repurchase.
10
(k) CONDITIONS PRECEDENT. (A) The following conditions shall apply to the
initial purchase:
The Seller shall cause each of following conditions to occur:
(i) the execution of the Guaranty by the Guarantor.
(ii) U.S. Bank National Association shall have extended the maturity
of its subordinated debt of NCFC to at least December 31, 2003.
(iii) Guarantor shall have closed the sale of its mortgage servicing
rights to the Servicer.
(iv) The Buyer shall have received an opinion of counsel in form and
substance satisfactory to Buyer and its counsel.
(v) The Buyer shall have received all fees and expenses payable to
Buyer (including the first installment of the Commitment Fee).
(vi) The representations and warranties contained in the Agreement
shall be true and correct and all covenants shall be complied
with.
(B) Prior to entering into each Transaction (including the
Initial Purchase) pursuant to the Agreement, the following
conditions shall apply:
(i) No default or Event of Default shall have occurred or be
continuing.
(ii) All representations and warranties shall be true and correct and
all covenants shall be complied with.
(iii) Seller shall:
(A) provide all documents necessary (including but not limited
to, bond powers, transferor certificates and opinions of
counsel) to register the Purchased Securities in the name of
the Buyer; and
(B) deliver an instruction letter to the related trustees
instructing that all payments be remitted to Buyer with
respect to the Purchased Securities.
(l) INCOME PAYMENTS. Notwithstanding the provisions set forth in Paragraph
5(i) of the Agreement, any Income received by the Buyer shall be
applied as follows:
(i) first to reduce the amount of any unpaid expenses owed the Buyer;
11
(ii) second to reduce the amount of any accrued and unpaid Price
Differential; and
(iii) third to reduce the remaining amount to be transferred to the
Buyer by the Seller upon termination of such transaction.
Buyer and Seller hereby acknowledge and agree that all Income shall be
property of the Buyer and in the event that any Income is received by
the Seller (i) the Seller shall hold such Income separate and apart
from the assets of the Seller, in trust for the Buyer, and (ii) the
Seller shall immediately remit such Income to the Buyer.
(m) TERMINATION DATE. Notwithstanding the provisions set forth in
Paragraph 16(c) of the Agreement, the Agreement shall terminate on the
earlier of (i) December 31, 2002, or (ii) at the non-defaulting
party's option upon the occurrence of an Event of Default caused by
the other party hereto.
(n) Each party to this agreement (such party, "Party X") agrees that, upon
the insolvency of Party X or any of its affiliates or the default of
Party X or any of its affiliates under any transaction with the other
party hereto or any of such other party's affiliates (such other party
or any of its affiliates, a "Non-Defaulting Party"), each
Non-Defaulting Party may, without prior notice to Party X: (a)
liquidate any transaction between Party X and any Non-Defaulting Party
(which liquidation may include the conversion of amounts denominated
in multiple currencies into a single currency if deemed necessary or
desirable by the Non-Defaulting Party), (b) reduce any amounts due and
owing to Party X under any transaction between Party X and any
Non-Defaulting Party by setting off against such amounts due and owing
to a Non-Defaulting Party by Party X, and (c) treat all security for,
and all amounts due and owing to Party X under any transaction between
Party X and any Non-Defaulting Party as security for all transactions
between Party X and any Non-Defaulting Party; provided, however, that
the exercise of the remedies described in clauses (a), (b) and (c)
above (or in any other similar provision in any agreement between the
parties) shall be deemed to occur immediately subsequent to, but
independent of, the exercise of any netting, liquidation, set-off or
other similar provision contained in any master agreement between the
parties; provided further that each provision and agreement hereof
shall be treated as independent from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability
of any such other provision or agreement.
For purposes of the foregoing, the term "affiliate" shall not include
any entity that controls or is under common control with Xxxxxxx Xxxxx
Barney Holdings Inc., but in any event such term shall include Xxxxxxx
Xxxxx Xxxxxx Holdings Inc. and any entity controlled by it.
12
Clauses (a), (b) and (c) of this paragraph 2(n) shall be deemed not to
include any references to the affiliates of the Non-Defaulting Party
and Party X to the extent that their inclusion would prejudice the
enforceability of this paragraph 2(n).
(o) In the event that the Parties enter into a hold in custody repo
Transaction hereunder in which Salomon Brothers International Limited
acts as the Seller, segregation of the Securities the subject of such
repo Transaction shall take place by movement of such Securities from
Salomon Brothers International Limited's firm account within the
relevant settlement system to its customer account within such
relevant settlement system. The Buyer hereby consents to such
segregation arrangements.
(p) Paragraph 8 of the Agreement shall be amended by adding at the end of
the paragraph the following paragraphs (e), (f) and (g):
(e) In the case of any transaction for which the Repurchase Date is
not the Business Day immediately following the Purchase Date and
with respect to which Seller does not have any existing right to
vary the Transaction, Seller shall have the right (subject to the
proviso to this sub-paragraph) by notice to Buyer (such notice to
be given at or prior to 12 pm (London time) on that Business Day)
to vary that Transaction in accordance with sub-paragraphs (a)
and (b) above, provided however that Buyer may elect by close of
business on the Business Day notice is received (or by close of
business on the next Business Day if notice is received after 12
pm (London time) on that day) not to vary that Transaction. If
Buyer elects not to vary the Transaction, Seller shall have the
right by notice to Buyer to terminate the Transaction on the
Business Day specified in that notice, such Business Day (unless
the parties otherwise agree) not to be later than two Business
Days after the date of the notice.
(f) If Seller exercises its right to vary the Transaction or to
terminate the Transaction under sub-paragraph (e) above,
notwithstanding paragraph 10(h), Seller shall be required to pay
to Buyer by close of business on the Business Day of such
variation or termination an amount equal to:
(i) Buyer's actual cost (including all fees, expenses and
commissions) of (aa) entering into replacement transactions; (bb)
entering into or terminating hedge transactions; and (cc)
terminating or varying transactions with third parties in
connection with or as a result of such variation or termination,
and
(ii) to the extent that Buyer party does not enter into replacement
transactions, the loss incurred by Buyer directly arising or
resulting from such variation or termination, in each case as
determined and calculated in good faith by Buyer.
13
(g) Where one party (the "Requesting Party") has requested the other
party to transfer Equivalent Margin Securities to it in exchange
for the transfer to the other party of new Margin Securities in
accordance with paragraph 8(d) but the other party does not agree
to the request if the Requesting Party so elects by written
notice specifying the Equivalent Margin. Securities to be
transferred and the Business Day on which those Equivalent Margin
Securities are to be transferred (such Business Day (unless the
parties otherwise agree) not to be later than two Business Days
after the date of the notice) the other party shall, unless
otherwise agreed, transfer those Equivalent Margin Securities to
the Requesting Party in exchange for the transfer to the other
party of Cash Margin of an amount equal to the Market Value of
the Equivalent Margin Securities so transferred.
(q) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended
to be used by either party hereto (the "Plan Party") in a Transaction,
the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other
party that the transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required
to so proceed.
(r) Seller shall maintain hedging amounts reasonably acceptable to the
Buyer with respect to the Securities and shall pledge such hedge
amounts to the buyer on the related Purchase Date.
(s) INDEBTEDNESS. The Guarantor and NCFC will not, and will not permit any
of their Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:
(i) any Obligations pursuant to the Fourth Amended and Restated
Credit Agreement, dated as of May 26, 1999, among the Guarantor,
the lenders from time to time party thereto (the "Lenders"), and
U.S. Bank National Association, as agent for the Lenders (the
"Lender Agent"); as amended by the First Amendment to the Fourth
Amended and Restated Credit Agreement, dated as of August 31,
1999, among the Guarantor, the Lenders, and the Lender Agent; as
amended by the Second Amendment to the Fourth Amended and
Restated Credit Agreement, dated as of October 14, 1999, among
the Guarantor, the Lenders, and the Lender Agent; as amended by
the Third Amendment to the Fourth Amended and Restated Credit
Agreement, dated as of May 24, 2000, between the Guarantor, the
Lenders, and the Lender Agent; and as further amended by the
Fourth Amendment to the Fourth Amended and Restated Credit
Agreement, dated as of June 29, 2000, among the Guarantor, NC
Capital Corporation, the Lenders, and the Lender Agent
(collectively, the "Underlying Credit Agreement").
14
(ii) current liabilities not more than 90 days overdue, unless
contested in good faith by appropriate proceedings and any
reserves required by GAAP have been established, incurred by
NCFC, the Guarantor or NC Residual II Corporation in the ordinary
course of business otherwise than for money borrowed;
(iii) Indebtedness incurred to finance the purchase of equipment and
secured solely by Liens on such equipment, in an aggregate amount
not to exceed $10,000,000;
(iv) Indebtedness incurred to finance Junior Securitization Interests
which Indebtedness is secured only by such Junior Securitization
Interests, provided, such Indebtedness does not exceed 65% of the
value of such Junior Securitization Interests determined in
accordance with GAAP;
(v) intercompany Indebtedness of NCFC to the Guarantor or NC Residual
II Corporation in an aggregate amount not to exceed $1,000,000;
(vi) intercompany Indebtedness of the Guarantor or NC Residual II
Corporation to NCFC incurred in the ordinary course of business;
(vii) obligations under gestation repurchase agreements or similar
arrangements of the type described in paragraph 2(t)(vi) of this
Annex;
(viii) Subordinated Debt;
(ix) Indebtedness incurred by the Guarantor in connection with the
Salomon REO Agreement; and
(x) intercompany Indebtedness between the Guarantor and the Seller
incurred in the ordinary course of business.
(t) LIENS. The Guarantor and NCFC will not, and will not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien with respect to any property now owned or
hereafter acquired by NCFC, the Guarantor or the Seller, or any income
or profits therefrom, except:
(i) the security interests granted to the Lender Agent for the
benefit of the Lenders pursuant to the Underlying Credit
Agreement;
(ii) Liens in connection with deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age pensions
or other social security obligations, in the ordinary course of
business of NCFC or the Guarantor;
15
(iii) Liens for taxes, fees, assessments and governmental charges not
delinquent or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP;
(iv) encumbrances consisting of zoning regulations, easements, rights
of way, survey exceptions and other similar restrictions on the
use of real property and minor irregularities in title thereto
which do not materially impair their use in the operation of its
business;
(v) Liens on equipment arising under any capitalized lease obligation
or other purchase money Liens on equipment acquired after the
Signing Date to secure Indebtedness permitted pursuant to
paragraph 2(s)(iii);
(vi) Liens incurred in connection with gestation repurchase agreements
or similar arrangements, including, without limitation, (i)
arrangements under which NCFC or its Subsidiaries are required to
repurchase Mortgage-backed Securities or Mortgage Loans from any
Lender or other counterparty reasonably satisfactory to the
Lender Agent, or (ii) credit facilities structured as loan and
security agreements; provided, that (x) such gestation repurchase
agreements or similar arrangements are not used to fund wet
Mortgage Loans, and (y) such gestation repurchase agreements or
similar arrangements are entered into in the ordinary course of
business in contemplation of the subsequent non-recourse sale of
such Mortgage-backed Securities or Mortgage Loans;
(vii) Liens arising out of any agreements or other arrangements
(including, without limitation, interest rate swap agreements,
interest rate cap agreements and forward sale agreements) entered
into to protect Guarantor against changes in interest rates or in
the value of any assets of the Guarantor;
(viii) Liens on Junior Securitization Interests which secure
Indebtedness permitted by paragraph 2(s)(iv);
(ix) a pledge of the stock of REO Sub to SBRC pursuant to the Salomon
REO Agreement; and
(x) a pledge of the stock of NC Residual II Corporation to Financial
Securities Assurance Corporation.
16
IN WITNESS WHEREOF, the Buyer, the Seller and the Guarantor have caused
their names to be duly signed hereto by their respective officers thereunto duly
authorized, all as of the date first above written.
XXXXXXX XXXXX XXXXXX INC. AS AGENT FOR
SALOMON BROTHERS INTERNATIONAL LIMITED
By:
------------------------------------
Authorized Signatory
Title:
NC RESIDUAL II CORPORATION
By: /s/ XXXXXXX XXXXXXXX
--------------------------------------
Authorized Signatory: Xxxxxxx Xxxxxxxx
Title: President
ACCEPTED AND ACKNOWLEDGED
NEW CENTURY MORTGAGE CORPORATION
By: /s/ XXXXXXX XXXXXXXX
---------------------------------------
Authorized Signatory: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
17
