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EXHIBIT 10.24
Master Repurchase
Agreement
September 1996 Version
Dated as of September 23, 1998
Between:
XXXXXXX XXXXX MORTGAGE CAPITAL INC.,
XXXXXXX XXXXX CREDIT CORPORATION
and
LONG BEACH MORTGAGE COMPANY
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities or
other assets ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a
date certain or on demand, against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by this Agreement, including
any supplemental terms or conditions contained in Annex I hereto and in any
other annexes identified herein or therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the commencement by such
party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, moratorium, dissolution, delinquency or similar
law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of
creditors for purposes of commencing any such case or proceeding or seeking
such an appointment or election, (ii) the commencement of any such case or
proceeding against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a protective
decree under the provisions of the Securities Investor Protection Act of
1970, which (A) is consented to or not timely contested by such party, (B)
results in the entry of an order for relief, such an appointment or
election, the issuance of
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such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed within 15 days, (iii) the
making by such party of a general assignment for the benefit of creditors,
or (iv) the admission in writing by such party of such party's inability to
pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to Buyer
pursuant to Paragraph 4 (a) hereof;
(c) "Buyer"s Margin Amount", with respect to any Transaction as of any date, the
amount obtained by application of the Buyer's Margin Percentage to the
Repurchase Price for such Transaction as of such date;
(d) "Buyer's Margin Percentage', with respect to any Transaction as of any date,
a percentage (which may be equal to the Seller's Margin Percentage) agreed
to by Buyer and Seller or, in the absence of any such agreement, the
percentage obtained by dividing the Market Value of the Purchased Securities
on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3 (b) hereof,
(f) "Income", with respect to any Security at any time, any principal thereof
and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4 (a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice
requiring same-day satisfaction of margin maintenance obligations as
provided in Paragraph 4 hereof (or, in the absence of any such agreement,
the deadline for such purposes established in accordance with market
practice);
(j) "Market Value", with respect to any Securities as of any date, the price for
such Securities on such date obtained from a generally recognized source
agreed to by the parties or the most recent closing bid quotation from such
a source, plus accrued Income to the extent not included therein (other than
any Income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
(k) "Price Differential", 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 Purchase 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
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(reduced by any amount of such Price Differential previously paid by Seller
to Buyer with respect to such Transaction);
(l) "Pricing Rate", the per annum percentage rate for determination of the Price
Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in The
Wall Street Journal (or, if more than one such rate is published, the
average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which Purchased
Securities are transferred by Seller to Buyer, and (ii) thereafter, except
where Buyer and Seller agree otherwise, such price increased by the amount
of any cash transferred by Buyer to Seller pursuant to Paragraph 4 (b)
hereof and decreased by the amount of any cash transferred by Seller to
Buyer pursuant to Paragraph 4 (a) hereof or applied to reduce Seller's
obligations under clause (ii) of Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer in a
Transaction hereunder, and any Securities substituted therefor in accordance
with Paragraph 9 hereof. The term "Purchased Securities" with respect to any
Transaction at any time also shall include Additional Purchased Securities
delivered pursuant to Paragraph 4 (a) hereof and shall exclude Securities
returned pursuant to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the Purchased
Securities from Buyer, including any date determined by application of the
provisions of Paragraph 3 (c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which
will be determined in each case (including Transactions terminable upon
demand) as the sum of the Purchase Price and the Price Differential as of
the date of such determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of any date,
the amount obtained by application of the Seller's Margin Percentage to the
Repurchase Price for such Transaction as of such date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Buyer's Margin Percentage)
agreed to by Buyer and Seller or, in the absence of any such agreement, the
percentage obtained by dividing the Market Value of the Purchased Securities
on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction.
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3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or in writing at
the initiation of either Buyer or Seller. On the Purchase Date for the
Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or
both), as shall be agreed, shall promptly deliver to the other party a
written confirmation of each Transaction (a "Confirmation"). The
Confirmation shall describe the Purchased Securities (including CUSIP
number, if any), identify Buyer and Seller and set forth (i) the Purchase
Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand, (iv) the Pricing Rate or
Repurchase Price applicable to the Transaction, and (v) any additional terms
or conditions of the Transaction not inconsistent with this Agreement. The
Confirmation, together with this Agreement, shall constitute conclusive
evidence of the terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates, unless with respect to the
Confirmation specific objection is made promptly after receipt thereof. In
the event of any conflict between the terms of such Confirmation and this
Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall be
made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to
the business day on which such termination will be effective. On the date
specified in such demand, or on the date fixed for termination in the case
of Transactions having a fixed term, termination of the Transaction will be
effected by transfer to Seller or its agent of the Purchased Securities 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
Paragraph 5 hereof) against the transfer of the Repurchase Price to an
account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Buyer is less than the aggregate Buyer's Margin Amount for all such
Transactions (a "Margin Deficit"), then Buyer may by notice to Seller
require Seller in such Transactions, at Seller's option, to transfer to
Buyer cash or additional Securities reasonably acceptable to Buyer
("Additional Purchased Securities"), so that the cash and aggregate Market
Value of the Purchased Securities, including any such Additional Purchased
Securities, will thereupon equal or exceed such aggregate Buyer's Margin
Amount (decreased by the amount of any Margin Deficit as of such date
arising from any Transactions in which such Buyer is acting as Seller).
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(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is acting as
Seller exceeds the aggregate Seller's Margin Amount for all such
Transactions at such time (a "Margin Excess"), then Seller may by notice to
Buyer require Buyer in such Transactions, at Buyer's option, to transfer
cash or Purchased Securities to Seller, so that the aggregate Market Value
of the Purchased Securities, after deduction of any such cash or any
Purchased Securities so transferred, will thereupon not exceed such
aggregate Seller's Margin Amount (increased by the amount of any Margin
Excess as of such date arising from any Transactions in which such Seller is
acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or (b) of
this Paragraph at or before the Margin Notice Deadline on any business day,
the party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of
business in the relevant market on such day. If any such notice is given
after the Margin Notice Deadline, the party receiving such notice shall
transfer such cash or Securities no later than the close of business in the
relevant market on the next business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to such
Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a
Margin Deficit or Margin Excess, as the case may be, exceeds a specified
dollar amount or a specified percentage of the Repurchase Prices for such
Transactions (which amount or percentage shall be agreed to by Buyer and
Seller prior to entering into any such Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the elimination of a
Margin Deficit or a Margin Excess, as the case may be, may be exercised
whenever such a Margin Deficit or Margin Excess exists with respect to any
single Transaction hereunder (calculated without regard to any other
Transaction outstanding under this Agreement).
5. INCOME PAYMENTS
Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may agree
with respect to any Transaction (or, in the absence of any such agreement,
as Buyer shall reasonably determine in its discretion), on the date such
Income is paid or distributed either (i) transfer to or credit to the
account of Seller such Income with respect to any Purchased Securities
subject to such Transaction or (ii) with
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respect to Income paid in cash, apply the Income payment or payments to
reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction. Buyer shall not be obligated to take any
action pursuant to the preceding sentence (A) to the extent that such action
would result in the creation of a Margin Deficit, unless prior thereto or
simultaneously therewith Seller transfers to Buyer cash or Additional
Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if
an Event of Default with respect to Seller has occurred and is then
continuing at the time such Income is paid or distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and
shall be deemed to have granted to Buyer a security interest in, all of the
Purchased Securities with respect to all Transactions hereunder and all
Income thereon and other proceeds thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party
hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment
in blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a
Federal Reserve Bank, or (iii) shall be transferred by any other method
mutually acceptable to Seller and Buyer.
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its
possession and shall be identified as subject to this Agreement. Segregation
may be accomplished by appropriate identification on the books and records
of the holder, including a financial or securities intermediary or a
clearing corporation. All of Seller's interest in the Purchased Securities
shall pass to Buyer on the Purchase Date and, unless otherwise agreed by
Buyer and Seller, nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased
Securities, but no such transaction shall relieve Buyer of its obligations
to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11
hereof, or of Buyer's obligation to credit or pay Income to, or apply Income
to the obligations of, Seller pursuant to Paragraph 5 hereof.
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REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER
RETAINS CUSTODY OF THE PURCHASED SECURITIES
Seller is not permitted to substitute other securities for those subject
to this Agreement and therefore must keep Buyer's securities segregated at
all times, unless in this Agreement Buyer grants Seller the right to
substitute other securities. If Buyer grants the right to substitute, this
means that Buyer's securities will likely be commingled with Seller's own
securities during the trading day. Buyer is advised that, during any
trading day that Buyer's securities are commingled with Seller's
securities, they [will] * [may] ** be subject to liens granted by Seller
to [its clearing bank] * [third parties] ** and may be used by Seller for
deliveries on other securities transactions. Whenever the securities are
commingled, Seller's ability to resegregate substitute securities for
Buyer will be subject to Seller's ability to satisfy [the clearing] *
[any]** lien or to obtain substitute securities.
* Language to be used under 17 C.F.R. (beta)403.4 (e) if Seller is a
government securities broker or dealer other than a financial
institution.
** Language to be used under 17 C.F.R. (beta)403.5(d) if Seller is a
financial institution.
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1. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer, substitute
other Securities for any Purchased Securities. Such substitution shall be
made by transfer to Buyer of such other Securities and transfer to Seller of
such Purchased Securities. After substitution, the substituted Securities
shall be deemed to be Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased Securities, the
parties expressly agree that Buyer shall be deemed, for purposes of
subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased
Securities; provided, however, that such other Securities shall have a
Market Value at least equal to the Market Value of the Purchased Securities
for which they are substituted.
2. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that (i) it is
duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations hereunder
and has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance
of any Transaction by the other party hereto, as agent for a disclosed
principal), (iii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf (or on behalf of any such disclosed
principal), (iv) it has obtained all authorizations of any governmental body
required in connection with this Agreement and the Transactions hereunder
and such authorizations are in full force and effect and (v) the execution,
delivery and performance of this Agreement and the Transactions hereunder
will not violate any law, ordinance, charter, by-law or rule applicable to
it or any agreement by which it is bound or by which any of its assets are
affected. On the Purchase Date for any Transaction Buyer and Seller shall
each be deemed to repeat all the foregoing representations made by it.
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3. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to
repurchase or Buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to
comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect
to Seller or Buyer, (vi) 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, or (vii) Seller or Buyer shall
admit to the other its inability to, or its intention not to, perform any of
its obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall be deemed
to have been exercised immediately upon the occurrence of an Act of
Insolvency), declare an Event of Default to have occurred hereunder and,
upon the exercise or deemed exercise of such option, the Repurchase Date
for each Transaction hereunder shall, if it has not already occurred, be
deemed immediately to occur (except that, in the event that the Purchase
Date for any Transaction has not yet occurred as of the date of such
exercise or deemed exercise, such Transaction shall be deemed
immediately canceled). The nondefaulting party shall (except upon the
occurrence of an Act of Insolvency) give notice to the defaulting party
of the exercise of such option as promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, (i) the
defaulting party's obligations in such Transactions to repurchase all
Purchased Securities, at the Repurchase Price therefor on the Repurchase
Date determined in accordance with subparagraph (a) of this Paragraph,
shall thereupon become immediately due and payable, (ii) all Income paid
after such exercise or deemed exercise shall be retained by the
nondefaulting party and applied to the aggregate unpaid Repurchase
Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such
Transactions then in the defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and
interest in and entitlement to all Purchased Securities subject to such
Transactions shall be deemed transferred to the nondefaulting party, and
the defaulting party shall deliver all such Purchased Securities to the
nondefaulting party.
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(d) If the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party, may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or otherwise
in a commercially reasonable manner) at such price or prices as the
nondefaulting party may reasonably deem satisfactory, any or all
Purchased Securities subject to such Transactions and apply the
proceeds thereof to the aggregate unpaid Repurchase Prices and any
other amounts owing by the defaulting party hereunder or (B) in its
sole discretion elect, in lieu of selling all or a portion of such
Purchased Securities, to give the defaulting party credit for such
Purchased Securities in an amount equal to the price therefor on
such date, obtained from a generally recognized source or the most
recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by
the defaulting party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem satisfactory,
securities ("Replacement Securities") of the same class and amount
as any Purchased Securities that are not delivered by the defaulting
party to the nondefaulting party as required hereunder or (B) in its
sole discretion elect, in lieu of purchasing Replacement Securities,
to be deemed to have purchased Replacement Securities at the price
therefor on such date, obtained from a generally recognized source
or the most recent closing offer quotation from such a source.
Unless otherwise provided in Annex I, the parties acknowledge and agree
that (1) the Securities subject to any Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a
generally recognized source for prices or bid or offer quotations for
any Security, the nondefaulting party may establish the source therefor
in its sole discretion and (3) all prices, bids and offers shall be
determined together with accrued Income (except to the extent contrary
to market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer, the
defaulting party shall be liable to the nondefaulting party for any
excess of the price paid (or deemed paid) by the nondefaulting party for
Replacement Securities over the Repurchase Price for the Purchased
Securities replaced thereby and for any amounts payable by the
defaulting party under Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting
as Buyer shall not
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increase above the amount of such Repurchase Price
for such Transaction determined as of the date of the exercise or deemed
exercise by the nondefaulting party of the option referred to in
subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for (i)
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a result of an Event of
Default, (ii) damages in an amount equal to the cost (including all
fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in
connection with or as a result of an Event of Default, and (iii) any
other loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default in respect of a Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall be
liable to the nondefaulting party for interest on any amounts owing by
the defaulting party hereunder, from the date the defaulting party
becomes liable for such amounts hereunder until such amounts are (i)
paid in full by the defaulting party or (ii) satisfied in full by the
exercise of the nondefaulting party's rights hereunder. Interest on any
sum payable by the defaulting party to the nondefaulting party under
this Paragraph 11 (h) shall be at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights hereunder,
any rights otherwise available to it under any other agreement or
applicable law.
4. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of any
Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries and other transfers may be
applied against each other and netted.
5. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by mail, facsimile, telegraph,
messenger or otherwise to
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the address specified in Annex II hereto, or so sent to such party at any
other place specified in a notice of change of address hereafter received by
the other. All notices, demands and requests hereunder may be made orally,
to be confirmed promptly in writing, or by other communication as specified
in the preceding sentence.
6. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
7. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by either party without the prior
written consent of the other party, and any such assignment without the
prior written consent of the other party shall be null and void. Subject
to the foregoing, this Agreement and any Transactions shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by either party
upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.
8. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
9. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and
duly executed by both of the parties hereto. Without limitation on any of
the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later
date.
10. USE OF EMPLOYEE PLAN ASSETS
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(a) 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 so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph, any
such Transaction shall proceed only if Seller furnishes or has furnished
to Buyer its most recent available audited statement of its financial
condition and its most recent subsequent unaudited statement of its
financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller shall
be deemed (i) to represent to Buyer that since the date of Seller's
latest such financial statements, there has been no material adverse
change in Seller's financial condition which Seller has not disclosed to
Buyer, and (ii) to agree to provide Buyer with future audited and
unaudited statements of its financial condition as they are issued, so
long as it is a Seller in any outstanding Transaction involving a Plan
Party.
11. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States
Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such
definition inapplicable), and a "securities contract" as that term is
defined in Section 741 of Title 11 of the United States Code, as amended
(except insofar as the type of assets subject to such Transaction would
render such definition inapplicable).
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Paragraph 11 hereof is a contractual
right to liquidate such Transaction as described in Sections 555 and 559
of Title 11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any
rules, orders or policy statements thereunder (except insofar as the
type of assets subject to such Transaction would render such definition
inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract" as
defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
entitlement and payment obligation
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under any Transaction hereunder shall constitute a "covered contractual
payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one
or both of the parties is not a "financial institution" as that term is
defined In FDICIA).
12. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"),
the Securities Investor Protection Corporation has taken the position
that the provisions of the Securities Investor Protection Act of 1970
("SIPA") do not protect the other party with respect to any Transaction
hereunder;
(b) in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the
SEC under Section 15C of the 1934 Act, SIPA will not provide protection
to the other party with respect to any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Share Insurance Fund, as applicable.
Xxxxxxx Xxxxx Mortgage Capital Inc. Long Beach Mortgage Company
By: By:
------------------------------ --------------------------
Title: Title:
------------------------------ --------------------------
Date: Date:
------------------------------ --------------------------
Xxxxxxx Xxxxx Credit Corporation
By:
------------------------------
Title:
------------------------------
Date:
------------------------------
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EXECUTION COPY
ANNEX I
(continued)
SUPPLEMENTAL TERMS AND CONDITIONS TO
MASTER REPURCHASE AGREEMENT,
DATED AS OF SEPTEMBER 23, 1998, AMONG
XXXXXXX XXXXX MORTGAGE CAPITAL INC.,
XXXXXXX XXXXX CREDIT CORPORATION
AND LONG BEACH MORTGAGE COMPANY
1. APPLICABILITY. These Supplemental Terms and Conditions (the
"Supplemental Terms") to the Master Repurchase Agreement (the "Master
Repurchase Agreement", and collectively with these Supplemental Terms,
the "Agreement") modify the terms and conditions under which the parties
hereto, from time to time, enter into Transactions. To the extent that
these Supplemental Terms conflict with the terms of the Master
Repurchase Agreement, these Supplemental Terms shall control.
2. ADDITIONAL DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Master Repurchase
Agreement. Capitalized terms used in the Master Repurchase Agreement
whose definitions are modified in these Supplemental Terms shall, for
all purposes of the Agreement, be deemed to have such modified
definitions.
(a) "A Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(b) "A- Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(c) "Affiliate" means with respect to any Person, any
director, officer, employee or partner of such Person, and
any other Person, directly or indirectly controlling,
controlled by or under common control with such Person,
and any Affiliate of any of the foregoing. The term
"control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the
management policies of the Person, whether through the
ownership of securities, by contract or otherwise.
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(d) "B Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(e) "B- Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(f) "Book Net Worth" shall refer to the equity of Seller
determined in accordance with GAAP less the sum of (i)
intercompany receivables (ii) loans to officers or
employees of Seller in excess of $1,000,000 in aggregate
and (iii) intangible items.
(g) "Business Day" shall mean any day excluding Saturday,
Sunday and any day on which banks located in the States of
New York, California or Texas are authorized or permitted
to close for business. All references to "business day" in
the Master Repurchase Agreement shall be deemed to be
references to Business Day.
(h) "Buyer" shall mean MLCC, in the case of Eligible Assets
secured by second liens, and MLMCI in all other cases.
(i) "Buyer's Margin Amount" shall have the meaning set forth
in the Master Repurchase Agreement except that the
percentage referred to therein for each Transaction shall
be specified in the related Confirmation/Funding Request.
(j) "C Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(k) "Closing Agent" shall refer to each title company, closing
attorney or other agent that disburses funds on behalf of
Seller in connection with the origination of a Wet
Mortgage Loan included on the List of Closing Agents
attached hereto as Exhibit B; provided that such list may
be amended upon notice to Buyer and provided further than
any additional Closing Agent shall receive the prior
approval of Buyer.
(l) "CLTV" shall mean, with respect to each Mortgage Loan that
is not a first lien residential mortgage loan, the
combined loan-to-value ratio calculated as a fraction,
expressed as a percentage, the numerator of which is the
original principal balance of the related Mortgage Loan
(together with the related senior lien mortgage loans) and
the denominator of which is the lesser of the sales price
or the appraised value of the related mortgaged property.
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(m) "Confirmation/Funding Request" shall have the meaning of
"Confirmation" as set forth in the Master Repurchase
Agreement but shall be substantially in the form attached
hereto as Exhibit A.
(n) "Covenant Compliance Certificate" shall refer to a
certificate of Seller to the effect that the Seller is in
compliance, as of the date of such certificate, with the
covenants set forth Section 9(c)(v), 9(c)(vi) and
9(c)(vii) of this Agreement.
(o) "Custodian" shall refer to Chase Bank of Texas, National
Association, or any permitted successor thereto pursuant
to the Custody Agreement, as the same shall be amended
from time to time.
(p) "Custody Agreement" shall refer to a custody agreement
pursuant to which the Custodian acts as bailee for Buyer.
(q) "D Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in
the Seller's Underwriting Guidelines.
(r) "Disbursement Instructions" shall refer to the written
disbursement instructions sent by Seller to a Closing
Agent in connection with the origination of a Wet Mortgage
Loan.
(s) "Dry Mortgage Loans" shall refer to Mortgage Loans other
than Wet Mortgage Loans.
(t) "Eligible Assets" shall refer to duly recorded first or
second lien Mortgage Loans originated by Seller or
acquired by Seller in the ordinary course of business.
(u) "GAAP" shall mean generally accepted accounting principles
consistently applied.
(v) "Market Value" shall, in addition to the definition set
forth in the Master Repurchase Agreement, provide that (i)
buyer shall determine the Market Value for the Purchased
Securities in the good faith exercise of its reasonable
business judgment from time to time and at such time as it
may elect in its sole discretion and (ii) that Buyer shall
assign a Market Value of zero with respect to (A) any
Mortgage Loan that has been delinquent for more than the
Permitted Delinquency Period, (B) any Mortgage Loan with
respect to which there is a breach of a representation,
warranty or covenant made by Seller in this Agreement or
the Custody Agreement that materially adversely affects
Buyer's interest in such Mortgage Loan and which breach
has not been cured prior to the date on which Market Value
is being determined, (C) any Mortgage Loan that
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Buyer determines in its sole discretion has not been
originated in accordance with applicable laws and (D) any
Wet Mortgage Loan that is subject to the Agreement or the
Custody Agreement for more than five (5) Business Days in
aggregate without having become a Dry Mortgage Loan.
(w) "MLCC" shall refer to Xxxxxxx Xxxxx Credit Corporation.
(x) "MLMCI" shall refer to Xxxxxxx Xxxxx Mortgage Capital Inc.
(y) "Mortgage" shall mean a duly recorded first or second
mortgage or first or second deed of trust on improved
residential real property.
(z) "Mortgage Loan Schedule" shall have the meaning set forth
in Section 3(a) herein.
(aa) "Mortgage Loans" shall mean those first or second lien
residential mortgage loans that Seller has sold to Buyer
hereunder and shall include A Quality Mortgage Loans, A-
Quality Mortgage Loans, B Quality Mortgage Loans, B-
Quality Mortgage Loans, C Quality Mortgage Loans and
D Quality Mortgage Loans.
(bb) "Mortgage Loan Income" shall mean income payable with
respect to a Mortgage Loan including all amounts payable
on account of such Mortgage Loan whether principal,
interest, partial prepayments, prepayments in full,
penalties, advance payments or expenses and whether
payable by or from the Mortgagor or the servicer for such
Mortgage Loan.
(cc) "Permitted Delinquency Period" shall mean thirty (30) days
in the case of all Mortgage Loans; provided, however, that
Buyer may, in its sole discretion, extend the Permitted
Deliquency Period on a loan-by-loan basis to forty-five
(45) days with such reduction in Market Value as Buyer, in
its sole discretion, may deem appropriate.
(dd) "Person" means a corporation, association, partnership,
organization, business, trust, individual, a government or
political subdivision thereof, any governmental agency or
any other entity.
(ee) "Purchase Date" shall in addition to the meaning set forth
in the Master Repurchase Agreement, refer only to that
portion of any Purchase Date commencing at the time the
Purchase Price is paid and the Purchased Securities are
transferred, which payment and transfer shall be deemed to
be simultaneous.
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(ff) "Required Loan Documents" shall refer to the documents
required to be held by the Custodian as bailee under the
Custody Agreement.
(gg) "Securities" shall, in addition to the definition set
forth in the Master Repurchase Agreement, refer to
Mortgage Loans; provided, however, that such Mortgage
Loans shall not be deemed to be securities for the
purposes of any securities or blue sky laws.
(hh) "Seller" shall refer to Long Beach Mortgage Company, a
Delaware corporation.
(ii) "Seller's Margin Amount" shall have the meaning set forth
in the Master Repurchase Agreement except that the
percentage referred to therein for each Transaction shall
be specified in the related Confirmation/Funding Request.
(jj) "Seller's Underwriting Guidelines" shall refer to the
underwriting guidelines for various categories of Mortgage
Loans in the form most recently approved by Buyer in
writing.
(kk) "Servicer" shall refer to Ameriquest Mortgage Company or
Long Beach Mortgage Company.
(ll) "Servicing Agreement" shall, refer to the Master
Sub-servicing Agreement dated as of April 28, 1997 between
Seller and Ameriquest Mortgage Company, attached hereto as
Exhibit C.
(mm) "Third Person" shall refer to any Person to whom Buyer
transfers any portion of its interest in the Eligible
Assets.
(nn) "Transaction" shall, in addition to the definition set
forth in the Master Repurchase Agreement, refer to
substitutions pursuant to Paragraph 9 of the Master
Repurchase Agreement.
(oo) "Trust Receipt" shall refer to the Trust Receipt
substantially in the form attached as an exhibit to the
Custody Agreement.
(pp) "Wet Mortgage Loan" shall refer to a Mortgage Loan for
which the Custodian has not issued a Trust Receipt to
Buyer at the time the related Purchase Price is paid.
1. INITIATION, CONFIRMATION.
(a) Not less than two (2) Business Days prior to each proposed
Purchase Date, Seller shall forward to Buyer a detailed listing
of the Securities proposed to be
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the subject of a Transaction (a "Mortgage Loan Schedule"), which
Mortgage Loan Schedule shall indicate the category of Mortgage
Loan, whether such Mortgage Loan is a Wet Mortgage Loan or a Dry
Mortgage Loan and such other information as Buyer may require.
(b) Seller shall deliver, pursuant to the terms of the Custody
Agreement, such documents relating to each Mortgage Loan on the
Mortgage Loan Schedule.
(c) Each Confirmation shall be binding upon Seller and Buyer unless
written notice of objection is given by the objecting party to
the other party within one (1) business day after the objecting
party's receipt of such Confirmation.
(d) Buyer may, but shall not be required to, deliver Confirmations
confirming periodic adjustments in the Pricing Rate for a
particular Transaction.
(e) Notwithstanding Paragraph 3(b) of the Master Repurchase
Agreement, in the event of any conflict between the terms of a
Confirmation and this Agreement, such Confirmation shall prevail.
(f) Seller shall, simultaneously with the funding of each
Transaction, deliver to Buyer through the Custodian a fully
executed Trust Receipt.
1. MARGIN.
(a) Paragraph 4(a) of the Master Repurchase Agreement is hereby
modified to provide that if the notice to be given by Buyer to
Seller under such paragraph is given at or prior to 12:00 p.m.
New York City time on a Business Day, Seller shall transfer the
cash or Additional Purchased Securities to Buyer (in the manner
contemplated by the Agreement and the Custody Agreement) prior to
the close of business in New York City on the date of such
notice, and if such notice is given after 12:00 p.m. New York
City time, Seller shall transfer the cash or Additional Purchased
Securities (in the manner as aforesaid) prior to the close of
business in New York City on the Business Day following the date
of such notice.
(b) Paragraph 4(a) of the Master Repurchase Agreement is hereby
further amended to provide that Seller shall transfer the cash or
Mortgage Loans to Buyer (in the manner contemplated by the
Agreement and the Custody Agreement) in accordance with Section
24 of these Supplemental Terms.
(c) The Master Repurchase Agreement is hereby amended by adding the
following sentence at the end of Paragraph 4(a):
In case of a Margin Deficit with respect to Mortgage Loans,
Seller shall transfer cash or Mortgage Loans to satisfy its
obligations hereunder; provided, however, Seller may transfer
Mortgage Loans only to the extent that they have been
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reviewed by the Custodian pursuant to the Custody Agreement and
the Custodian has furnished its Trust Receipt with respect
thereto.
1. INCOME PAYMENTS. All payments and distributions, whether in cash or in
kind, made on or with respect to the Mortgage Loans shall, unless
otherwise mutually agreed by Buyer and Seller, be paid, delivered or
transferred in the case of Mortgage Loans, so long as an Event of
Default on the part of Seller shall not have occurred and be continuing,
directly to the Servicer from the related mortgagor.
2. MODIFICATIONS TO THE MASTER REPURCHASE AGREEMENT.
(a) The Master Repurchase Agreement is hereby amended by adding the
following after the last sentence of Paragraph 5:
If an Event of Default shall have occurred and be
continuing, Seller shall collect, or cause to be collected, all
Mortgage Loan Income on behalf of Buyer and, upon request of
Buyer, shall forward such payments to Buyer immediately upon
receipt.
(b) The Master Repurchase Agreement is hereby amended by adding the
following after the last sentence of Paragraph 7:
Buyer shall disburse funds to an account specified in
writing by Seller. In the case of Mortgage Loans, transfer of
such Mortgage Loans to Buyer shall occur as of the date on which
Buyer receives (i) the Trust Receipt of the Custodian and (ii) a
list identifying the Servicer with respect to each such Mortgage
Loan, if not otherwise set forth in the Trust Receipt.
In the case of Mortgage Loans transferred by Buyer to a
Third Person, Buyer shall send a notice to the Custodian and
transfer of such Mortgage Loans to any Third Person shall occur
when such Third Person receives the acknowledgment of the
Custodian identifying such Mortgage Loans. Any Mortgage Loans
repurchased by Seller pursuant to Paragraph 3(c) or 11(c) of the
Master Repurchase Agreement shall be transferred to Seller or its
agent upon the receipt by the Custodian from Buyer of a notice of
transfer which confirms the release of Buyer's interest in any
such Mortgage Loans.
(c) The Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 8:
In the case of Mortgage Loans, Buyer hereby grants to
Seller the right to perform in Buyer's stead under any
repurchase, reverse repurchase or similar transaction in which
Buyer has sold, loaned or otherwise transferred the Mortgage
Loans in the event that Buyer has defaulted on its obligation to
repurchase or accept redelivery of such Mortgage Loans in
conformity with the terms of any
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such transaction and so long as an Event of Default under the
Agreement on the part of Seller shall not have occurred and be
continuing.
(d) Paragraph 9 of the Master Repurchase Agreement is hereby amended
by adding the following at the end of subparagraph (b):
(c) 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 Securities for the Purchased Securities, 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 12:00 p.m. (New York City time) on
such Business Day, to substitute substantially the same
Securities for any Purchased Securities; provided,
however, that Buyer may elect, 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 12:00 p.m.
(New York City 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 Securities and Buyer's
transfer to Seller of such Purchased Securities, and after
such substitution, the substituted Securities shall be
deemed to be Purchased Securities. In the event Buyer
elects not to accept such substitution, Buyer shall offer
Seller the right to terminate the Transaction.
(d) In the event Seller exercises its right to substitute or
terminate under sub-paragraph (c), 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 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 securities 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 into 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.
(e) The Master Repurchase Agreement is hereby further amended by
adding the following new subsections (i) and (j) to Paragraph 11:
(i) Any sales of Purchased Securities, pursuant to Paragraph
11(d)(i) of the Agreement, which are Mortgage Loans may be
effected in public or private sales as Buyer may
reasonably deem appropriate and at such price or prices as
Buyer may reasonably deem satisfactory. In the event Buyer
elects in lieu of so selling such Purchased Securities to
give Seller credit
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for such Purchased Securities, such credit shall be in an
amount equal to the Market Value thereof as of the date of
such acceleration.
(j) Any purchases of Replacement Securities, pursuant to
Paragraph 11(d)(ii) of the Agreement, which are Mortgage
Loans shall be of the same or similar type, maturity and
amount as the Purchased Securities that are not delivered
by Buyer and may be effected in purchases in a
commercially reasonable manner at such price or prices as
Seller may reasonably deem appropriate. In the event
Seller elects in lieu of so purchasing such Replacement
Securities to be deemed to have purchased Replacement
Securities in a commercially reasonable manner as provided
in Paragraph 11(d)(ii), such Replacement Securities shall
be deemed to have been purchased at the Market Value
thereof.
1. DISBURSEMENT OF FUNDS. Seller may request that the parties enter into a
transaction hereunder by making a written request for the purchase and sale
of Eligible Assets, either by mail or facsimile transmission, to Buyer.
Buyer shall pay the Purchase Price within one (1) Business Day of receipt
of such notice, so long as the terms and conditions of the Agreement and
the Custody Agreement are fully satisfied and no Event of Default hereunder
shall have occurred and be continuing. The amount of any such Purchase
Price of Eligible Assets shall be in a minimum amount of $100,000 and
integral multiples of $100,000 in excess thereof unless otherwise agreed by
Buyer in its sole discretion.
2. SECURITY INTEREST; ASSIGNMENTS.
(a) In the event, for any reason, any Transaction is construed by any
court as a secured loan rather than a purchase and sale, the
parties intend that Buyer shall have a perfected first priority
security interest in all of the Purchased Securities.
(b) Seller shall pay all reasonable fees and expenses associated with
perfecting such security interest including, without limitation,
the cost of filing financing statements under the Uniform
Commercial Code, to the extent required by Buyer or its counsel,
and any reasonable fees charged by the Custodian.
1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each party represents and warrants, and shall on and as of the
Purchase Date of any Transaction be deemed to represent and
warrant, as follows:
(i) The execution, delivery and performance of the Agreement
and the performance of each Transaction do not and will
not result in or require the creation of any lien,
security interest or other charge or encumbrance (other
than pursuant hereto) upon or with respect to any of its
properties; and
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(ii) The Agreement is, and each Transaction when entered into
under the Agreement will be, a legal, valid and binding
obligation of such party enforceable against it in
accordance with the terms of the Agreement, subject to
applicable bankruptcy, insolvency, and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law).
(a) Seller represents and warrants as of the date of the Agreement
and as of the Purchase Date of each Transaction, as follows:
(i) All information provided by Seller to Buyer or the
Custodian concerning the Mortgage Loans is true and
correct in all material respects;
(ii) the servicing agreement attached hereto as Exhibit C is a
true, accurate and complete copy of the servicing
agreement which agreement is in full force and effect as
of the date of this Agreement and which has not been
waived, amended or modified in any respect, other than as
disclosed to Buyer, nor have any notices of termination
been given thereunder.
(iii) No Mortgage Loan shall have any scheduled payments of
Mortgage Loan Income in default or delinquent by more than
the Permitted Delinquency Period;
(iv) Seller shall cause each Mortgage Loan to be serviced in
accordance with standards maintained by the servicers of
mortgage loans that are generally accepted in the mortgage
servicing industry as reasonable and prudent;
(v) Seller, immediately prior to the purchase by Buyer under
the Agreement, is the legal and beneficial owner of the
Mortgage Loans free and clear of any lien, security
interest, option or encumbrance;
(vi) Buyer has a perfected first-priority security interest in
each Mortgage Loan subject to no prior lien, charge,
encumbrance or rights of others, and no further action,
other than the possession by the Custodian of certain
documents relating thereto pursuant to the Custody
Agreement, including any filing or recordation of any
document, is required in order to establish and perfect
the liens on and security interest in the Mortgage Loans
in favor of Buyer against any third party in any
jurisdiction;
(vii) No Mortgage Loan was subject to any lien or encumbrance at
the time of the purchase thereof by Buyer under the
Agreement;
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(viii) Notwithstanding any other provision of the Agreement, no
Eligible Asset subject to any Transaction hereunder shall
have been subject to the Agreement or to the Custody
Agreement for more than (1) one hundred and fifty (150)
days in aggregate in the case of Dry Mortgage Loans that
are the subject of a Takeout Commitment, (2) ninety (90)
days in the case of all other Dry Mortgage Loans and (3)
five (5) Business Days in the case of Wet Mortgage Loans
that have not become Dry Mortgage Loans;
(ix) The aggregate outstanding Repurchase Price for Mortgage
Loans subject to the Agreement at any time does not exceed
(1) the lesser of $10,000,000 and 10% of the aggregate
outstanding Repurchase Price for all Mortgage Loans in the
case of Mortgage Loans with respect to which the Custodian
has not received all Required Loan Documents or for which
the Custodian has advised Buyer of an irregularity with
respect to any Required Loan Documents; provided that Wet
Mortgage Loans shall not be considered in the calculations
of this clause (1) until such time as Seller is required
to deliver Required Loan Documents to the Custodian, (2)
the lesser of $10,000,000 and 10% of the aggregate
outstanding Repurchase Price of all Mortgage Loans in the
case of Mortgage Loans having a CLTV in excess of 90% and
(3) the lesser of $15,000,000 and 15% of the aggregate
facility amount for all Wet Mortgage Loans;
(x) The aggregate outstanding Repurchase Price for Mortgage
Loans that are not first lien residential mortgage loans
does not exceed an amount equal to 20% of the aggregate
outstanding Repurchase Price for all Mortgage Loans
subject to the Agreement;
(xi) The CLTV for each Mortgage Loan that is not a first lien
residential mortgage loan is not in excess of 90%;
(xii) Each Eligible Asset has been originated in compliance with
the Seller's Underwriting Guidelines and all applicable
laws;
(xiii) Each Wet Mortgage Loan has been funded by a Closing Agent;
(xiv) Each Wet Mortgage Loan is a first lien residential
mortgage loan;
(xv) No Eligible Asset has a CLTV in excess of 125%;
(xvi) Each Mortgage Loan conforms to the representations and
warranties set forth in Exhibit E hereto.
(a) Seller covenants with Buyer as follows:
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(i) Seller shall be at the time it delivers any Mortgage Loans
to the Custodian or Buyer for any Transaction, and shall
continue to be, through the Purchase Date relating to each
such Transaction, the legal and beneficial owner of such
Mortgage Loans free and clear of any lien, security
interest, option or encumbrance except for the security
interest created by the Agreement;
(ii) All data and other information relating to the Mortgage
Loans provided at any time by or on behalf of Seller to
the Custodian, whether in writing, by electronic
transmission or on computer tape or diskette or otherwise,
will be true and correct as reported by Servicer;
(iii) On an ongoing basis, at Seller's expense without request
of Buyer, Seller shall provide Buyer with:
(1) Seller's year-end balance sheet and income
statement and cash flow statement audited by a firm
of independent accountants acceptable to Buyer in
its sole discretion, within ninety (90) days after
the end of Seller's fiscal year;
(2) Seller's quarterly balance sheet and income
statement and cash flow statement within forty-five
(45) days after the end of the first three fiscal
quarters in each of Seller's fiscal years; and
(3) Seller's monthly balance sheet and income statement
within thirty (30) days after the end of the first
two months in each of Seller's fiscal quarters;
(i) Seller shall promptly notify Buyer of (i) the acceleration
of any debt obligation or the termination of any credit
facility of Seller where such debt obligation or credit
facility is for an amount equal to or greater than
$1,000,000; (ii) the amount and maturity of any such debt
assumed after the date hereof; (iii) any adverse
developments with respect to pending or future litigation
involving Seller which, if adversely determined against
Seller either would result in a judgment equal to or
greater than $5,000,000 or would materially and adversely
affect the Purchased Securities; and (iv) any other
developments which might materially and adversely affect
the financial condition of Seller;
(ii) Seller shall experience losses or changes in its financial
condition (exclusive of amounts withdrawn for payment of
taxes due and payable by the shareholders of Seller) such
that at the end of each of two consecutive calendar
quarters its Book Net Worth is less than or equal to 80%
of its Book Net Worth at the commencement of each such
calendar quarter, respectively;
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(iii) Seller's Book Net Worth shall not be less than $35,000,000
at any time from and including the date of the Agreement;
(iv) The ratio of Seller's outstanding indebtedness to all
lenders (including, without limitation, all indebtedness
incurred under any loan agreement, warehouse finance
agreement and repurchase agreement but excluding any
indebtedness to Buyer or any of its Affiliates) to its
Book Net Worth shall not at any time be more than 10 to 1;
(v) Seller shall promptly notify Buyer if Seller's
Underwriting Guidelines are amended or supplemented in any
way;
(vi) Seller shall deliver or cause to be delivered to the
Custodian the Required Loan Documents relating to each Wet
Mortgage Loan within five (5) Business Days of the payment
of the Purchase Price therefor;
(vii) There shall exist, with respect to each Wet Mortgage Loan,
a policy of title insurance (or title commitment or title
binder to issue same) effective as of the date of
origination of such Wet Mortgage Loan, the original of
which policy of title insurance (or title commitment or
title binder to issue same) shall be delivered to the
Custodian in accordance with the terms of the Agreement
and the Custody Agreement;
(viii) Seller shall provide Buyer with a monthly Covenant
Compliance Certificate within thirty (30) days of the end
of each calendar month;
(ix) Seller shall provide Buyer, promptly upon Buyer's request,
with copies of any Disbursement Instructions requested by
Buyer; and
(x) Seller shall distribute to the related Closing Agent any
funds provided to it in connection with the origination of
a Wet Mortgage Loan within one (1) Business Day of its
receipt of such funds.
1. EVENTS OF DEFAULT.
(a) The term "Event of Default" shall, in addition to the definition set
forth in the Master Repurchase Agreement, include the following
events:
(i) Any governmental or self-regulatory authority shall take
possession of Seller, or any Affiliate thereof, or all or
substantially all its property or appoint any such
trustee, receiver, conservator or other official, or such
party shall take any action to authorize any of the
actions set forth in this clause (i);
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(ii) Buyer or Seller shall have reasonably determined that the
other party is or will be unable to meet its commitments
under this Agreement, shall have notified such other party
of such determination and such other party shall not have
responded with appropriate information to the contrary to
the satisfaction of the notifying party within one (1)
Business Day;
(iii) In the judgment of Buyer a material adverse change shall
have occurred in the business, operations, properties,
prospects or financial condition of Seller;
(iv) The Agreement shall for any reason cease to create a
valid, perfected, first priority security interest in any
of the Purchased Securities;
(v) Seller shall be in default with respect to any normal and
customary covenants under any material contract or
agreement to which it is a party, such material contract
or agreement relating to obligations equal to or greater
than $500,000, or where any obligations subject to such
acceleration at any time equal or exceed $500,000 which
default permits acceleration of the obligations of Seller
under such contract or agreement by any other party
thereto;
(vi) Seller shall merge or consolidate into any entity unless
the surviving or resulting entity shall be acceptable to
Buyer, in its sole discretion, and such entity expressly
assumes by written agreement, executed and delivered to
Buyer in form and substance satisfactory to Buyer, the
performance of all Seller's duties and obligations
hereunder and under the Custody Agreement;
(vii) Buyer shall request assurances as to the financial
well-being of Seller and such assurances shall not have
been provided in writing within forty-eight (48) hours of
receipt of such request; provided, that such request shall
be in writing, and if transmitted by facsimile such
request shall be deemed to be received when transmitted so
long as the transmitting machine has provided an
electronic confirmation of such transmission.
(viii) A final non-appealable judgment by any competent court in
the United States of America for the payment of money in
an amount of at least $500,000 is rendered against the
defaulting party, and the same remains undischarged or
unpaid for a period of thirty (30) days during which
execution of such judgment is not effectively stayed;
provided, that such amount shall first be reduced by the
expected proceeds of any applicable insurance policy;
provided, further, that Seller shall have provided Buyer
with written evidence that the Seller is entitled to such
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proceeds under a current insurance policy, that a claim
has been filed under the policy, the related insurance
carrier has approved or is reviewing the related claim and
that the claim has not been rejected.
(ix) Any representation or warranty made by Seller in the
Agreement or the Custody Agreement shall have been
incorrect or untrue when made or repeated or when deemed
to have been made or repeated and such breach is
continuing; provided, however, that with respect to any
representation or warranty made by Seller with respect to
a Mortgage Loan, such circumstance shall not constitute an
Event of Default if after determining the aggregate Market
Value of all Mortgage Loans subject to Transactions
without consideration of the Mortgage Loan with respect to
which such circumstances have occurred, no other Event of
Default shall have occurred and be continuing;
(x) Seller shall breach any covenant in the Agreement and such
breach is continuing; provided, that with respect to the
covenants set forth in Sections 9(c)(iii) and (xii),
Seller shall have five (5) days in which to cure such
breach;
(xi) A firm of independent accountants shall have failed to
issue an opinion or shall have issued an opinion qualified
adversely in any material respect in connection with the
most recent audited financial statements of Seller;
(xii) Seller or any of Seller's Affiliates shall be in default
with respect to any contract or agreement with Buyer or
any of Buyer's Affiliates.
(a) In addition to the other remedies available to Buyer or Seller
upon the occurrence and during the continuance of an Event of
Default by a defaulting party, Buyer shall have the following
additional remedies upon the occurrence and during the
continuance of an Event of Default by Seller:
(i) All rights of Seller to receive payments on the Mortgage
Loans which it would otherwise be authorized to receive
pursuant to Paragraph 5 of the Master Repurchase Agreement
as modified by Section 4 of these Supplemental Terms shall
cease, and all rights to such payments shall thereupon
become vested in Buyer, which shall thereupon have the
sole right to receive such payments and apply them to the
amounts owed by Seller pursuant to the Agreement.
(ii) All payments that are received by Seller contrary to the
provisions of the preceding clause (i) shall be received
in trust for the benefit of Buyer, shall be segregated
from other funds of Seller and shall be promptly paid to
Buyer.
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(iii) Any funds paid by Buyer to Seller in respect of Wet
Mortgage Loans that have not been distributed to a Closing
Agent shall be promptly repaid to Buyer.
(iv) Buyer may unilaterally instruct the Servicer to direct all
payments of Mortgage Loan Income directly to Buyer.
(v) Buyer shall be entitled to the right of set off with
respect to any amounts owed by Buyer or any Affiliate of
Buyer to Seller or any Affiliate of Seller under any
contract, margin account or other arrangement.
(a) Any sale of Purchased Securities under Paragraph 11 of the Master
Repurchase Agreement as modified by these Supplemental Terms
shall be conducted in a commercially reasonable manner.
(b) Expenses incurred in connection with an Event of Default shall
include without limitation those reasonable costs and expenses
incurred by the nondefaulting party as a result of the early
termination of any repurchase agreement or reverse repurchase
agreement entered into by the nondefaulting party in connection
with the Transaction then in default.
(c) Any provision of the Agreement to the contrary notwithstanding,
no breach of a representation, warranty or covenant with respect
to any Mortgage Loan shall be an Event of Default if, after
determining the Market Value of the Mortgage Loans without taking
into account the Mortgage Loan with respect to which such breach
has occurred, no other Event of Default shall have occurred and
be continuing.
1. UNILATERAL TERMINATION BY BUYER.
(a) At the option of Buyer, exercised by written notice to Seller,
the Repurchase Date for some or all of the Transactions under the
Agreement shall be deemed to immediately occur in the event that
the senior debt obligations or short-term debt obligations of
Xxxxxxx Xxxxx & Co., Inc. shall be rated below the four highest
generic grades (without regard to any pluses or minuses
reflecting gradations within such generic grades) by any
nationally-recognized statistical rating organization.
(b) The event specified in subparagraph (a) above which may, at the
option of Buyer, cause an acceleration of the Repurchase Date for
a Transaction shall be in addition to any other rights of Buyer
to cause such an acceleration under the Agreement.
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1. FINANCIAL STATEMENTS.
(a) As of the date hereof, Seller shall provide Buyer with its
audited year-end financial statements and its most recent
available interim financial statement. Seller shall provide Buyer
with Seller's year-end balance sheet, income statement, and cash
flow statement, audited by a firm of independent accountants
acceptable to Buyer in its sole discretion, within ninety (90)
days after the end of Seller's fiscal year, Seller's quarterly
balance sheet, income statement and cash flow statement within
forty-five (45) days after the end of the first three fiscal
Quarters in each of Seller's fiscal years and Seller's monthly
balance sheet, income statement within thirty (30) days after the
end of the first two months in each of Seller's fiscal quarters.
(b) Seller shall provide Buyer, at the expense of Seller when
requested by Buyer, with all periodic unaudited balance sheets
and income statements from time to time as soon after the
preparation thereof as practicable.
(c) Each delivery of Purchased Securities by Seller to Buyer
hereunder will constitute a representation by Seller that there
has been no material adverse change in Seller's financial
condition not disclosed to Buyer since the date of Seller's most
recent unaudited balance sheet or income statement delivered to
Buyer. Seller shall provide Buyer, from time to time at Seller's
expense, with such information concerning Seller of a financial
or operational nature as Buyer may reasonably request promptly
upon receipt of such request.
1. PRICE DIFFERENTIAL; REPURCHASE PRICE.
(a) The Price Differential shall be payable in arrears with respect
to each Transaction, together with the Purchase Price therefor,
on the termination date for the related Transaction or as may be
otherwise mutually agreed upon by the parties and as specified in
the related Confirmation.
(b) All calculations of Price Differential shall be made on the basis
of a 360-day year and the actual number of days elapsed.
(c) Payment of the Repurchase Price (including the Price
Differential) shall be made by wire transfer in immediately
available funds or in such other manner as may be mutually agreed
upon by Buyer and Seller in writing. Amounts received by Buyer
after 3:00 p.m., New York City time, on any Business Day shall be
deemed to have been paid by Seller and received by Buyer on the
next succeeding Business Day.
1. MAXIMUM TRANSACTION AMOUNT.
(a) The aggregate outstanding Repurchase Price for the Purchased
Securities that are Mortgage Loans shall not at any time exceed
$100,000,000.
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(b) The aggregate outstanding Repurchase Price for Purchased
Securities that are C Quality Mortgage Loans or D Quality
Mortgage Loans shall not at any time exceed 20% of the aggregate
outstanding Repurchase Price for all Purchased Securities under
the Agreement.
1. TERMINATION. Notwithstanding any provisions of Paragraph 15 of the
Master Repurchase Agreement to the contrary, the Agreement and all
Transactions outstanding hereunder shall terminate automatically without
any requirement for notice on the date occurring on the earlier of (i)
eleven months and twenty-nine days after the date of the Agreement and
(ii) the written agreement of Seller and Buyer; provided, however, that
notwithstanding the foregoing, the Agreement shall continue in full
force and effect until any outstanding Repurchase Price has been paid in
full. Upon termination of the Agreement and the payment of the
Repurchase Price with respect to all Transactions, Buyer shall release
its lien and security interest under the Agreement and assign, transfer
and deliver, against receipt, any remaining Purchased Securities and
money received in respect thereof to or on the order of Seller. Upon the
request of Seller, Buyer will then execute termination statements and
such other documents as Seller may reasonably request as are necessary
to make clear upon the public record the termination of the lien and
security interests created by the Agreement with respect to the
Purchased Securities.
2. ADDITIONAL INFORMATION; CONFIDENTIALITY.
(a) At any reasonable time, Seller shall permit Buyer, its agents or
attorneys, to inspect and copy any and all documents and data in
their possession pertaining to each Mortgage Loan that is the
subject of such Transaction. Such inspection shall occur upon the
request of Buyer at a mutually agreeable location during regular
business hours and on a date not more than two (2) Business Days
after the date of such request.
(b) Seller agrees to provide Buyer from time to time with such
information concerning Seller of a financial or operational
nature as Buyer may reasonably request.
(c) Each of the parties acknowledges that the Agreement and the
Custody Agreement are confidential in nature and each such party
agrees that, unless otherwise directed by a court or regulatory
entity of competent jurisdiction or as may be required by federal
or state law (which determination as to federal or state law
shall be based upon written advice of counsel), it shall limit
the distribution of such documents to its officers, employees,
attorneys, accountants and agents as required in order to conduct
its business with the other parties hereto. This subparagraph (c)
shall not apply to information which has entered the public
domain through means other than a breach of the foregoing
covenant by the party seeking to distribute such documents or
which the other party has given written permission to disclose.
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1. OPINIONS OF COUNSEL. Seller shall, within thirty (30) days of the date
of this Agreement and, upon the request of Buyer, on the date of any
subsequent Transaction, cause to be delivered to Buyer, with reliance
thereon permitted as to any person or entity that purchases the Eligible
Assets from Buyer in a repurchase transaction, a favorable opinion of
Seller's counsel with respect to the matters set forth in Exhibit D
hereto, in form and substance reasonably acceptable to Buyer.
2. FURTHER ASSURANCES. Seller shall promptly provide such further
assurances or agreements as Buyer may request in order to effect the
purposes of the Agreement.
3. BUYER AS ATTORNEY-IN-FACT. Upon the occurrence and during the
continuation of an Event of Default, Buyer is hereby appointed the
attorney-in-fact of Seller for the purpose of carrying out the
provisions of the Agreement and taking any action and executing 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. Without limiting the generality of the
foregoing, after an Event of Default has occurred and is continuing,
Buyer shall have the right and power to (i) take any action Buyer deems
prudent to direct the receipt of payments on any Mortgage Loan from the
Servicer thereof to Buyer or its designee, including, without
limitation, the sending of any letter which irrevocably instructs such
Servicer to make all payments directly to Buyer or its designee, and
(ii) receive, endorse and collect all checks made payable to the order
of Seller representing any payment on account of the principal of or
interest on any of the Purchased Securities and to give full discharge
for the same.
4. APPOINTMENT OF AGENT. MLCC hereby appoints MLMCI as its agent for
purposes of reviewing and executing Confirmation/Funding Requests,
determining Market Value, exercising any termination option provided for
in Paragraph 15 of these Supplemental Terms, exercising MLCC's rights
under any margin maintenance provision of the Agreement, exercising
MLCC's rights under the default provisions of the Agreement and such
other purposes as MLCC may direct. The appointment of such agent shall
not relieve MLCC of its obligations as Buyer hereunder.
5. SERVICING ARRANGEMENTS.
(a) The parties hereto agree and acknowledge that, notwithstanding
the purchase and sale of the Purchased Securities contemplated
hereby, Seller shall cause the Purchased Securities to continue
to be serviced for the benefit of Buyer and, if Buyer shall
exercise its rights to sell the Purchased Securities pursuant to
this Agreement prior to the related Repurchase Date, Buyer's
assigns; provided, however, that, the obligation of Seller to
service or cause to be serviced the Purchased Securities for the
benefit of Buyer as aforesaid shall cease upon the payment to
Buyer of the Repurchase Price therefor.
(b) Seller shall service or caused to be serviced the Purchased
Securities to be serviced in accordance with the servicing
standards for similar assets generally
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employed by prudent servicers in the mortgage loan industry.
(c) Buyer may, in its sole discretion if an Event of Default shall
have occurred and be continuing, without payment of any
termination fee or any other amount to Seller, (i) sell its right
to the Purchased Securities on a servicing released basis or (ii)
terminate the Servicer with or without cause.
1. CROSS-COLLATERALIZATION; RIGHT OF SET-OFF. Buyer may, in its sole
discretion upon the occurrence and during the continuation of an Event
of Default hereunder, proceed against any assets of Seller held by Buyer
or any Affiliate under any agreement and shall have a right of set-off
against any amounts owed by Buyer or any Affiliate to Seller under any
agreement. In addition, the parties agree that Buyer may, in its sole
discretion upon the occurrence and during the continuation of an event
of default under any other agreement to which Seller and Buyer or any of
its Affiliates are parties, proceed against any assets held by Buyer
hereunder and shall have a right of set-off against any amounts owed by
Buyer to Seller hereunder.
2. EXPENSES. Seller shall pay its own expenses and all reasonable
out-of-pocket costs and expenses: (1) of Buyer incident to the
preparation and negotiation of the Agreement, the Custodial Agreement,
any documents relating thereto, any amendments or waivers thereto, and
the protection of the rights of Buyer thereunder, (including fees and
disbursements of counsel up to a maximum amount of $25,000), (2) of
Buyer incident to Buyer's due diligence review of the Mortgage Loans and
the books and records of Seller relating thereto, up to a maximum amount
of $75,000, and (3) of Buyer incident to the enforcement of payment of
amounts due under the Agreement or the Custodial Agreement, whether by
judicial proceedings or otherwise, including, without limitation, in
connection with bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceedings involving Seller.
Notwithstanding any provision hereof to the contrary, the obligations of
Seller under this Paragraph 23 shall be effective and enforceable
whether or not any Transaction remains outstanding and shall survive
payment of all other obligations owed by Seller to Buyer.
3. COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
4. BINDING TERMS. All of the covenants, stipulations, promises and
agreements in the Agreement shall bind the successors and assigns of the
parties hereto, whether expressed or not.
5. NOTICES AND OTHER COMMUNICATIONS. Any provision of Paragraph 13 of the
Master Repurchase Agreement to the contrary notwithstanding, any notice
required or permitted by the Agreement shall be in writing (including
telegraphic, facsimile or telex communication) and shall be effective
and deemed delivered only when received by the party to which it is
sent; provided, however, that a facsimile transmission
shall be deemed
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to be received when transmitted so long as the transmitting machine has
provided an electronic confirmation of such transmission. Any such
notice shall be sent to a party at the address or facsimile transmission
number set forth in Annex II attached hereto.
6. INCORPORATION OF TERMS. The Master Repurchase Agreement as supplemented
hereby shall be read, taken and construed as one and the same
instrument.
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EXHIBIT A
CONFIRMATION/FUNDING REQUEST
TO: Long Beach Mortgage Company FROM: Xxxxxxx Xxxxx Mortgage Capital Inc.
0000 Xxxx xxx Xxxxxxx Xxxx, Xxx 0000 000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000 Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx Attention: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxx Mortgage Capital Inc. ("Buyer") is pleased to confirm your sale
and our purchase of the Mortgage Loans listed on Attachment I hereto pursuant to
the Master Repurchase Agreement (including the supplemental terms set forth in
Annex I thereto), dated as of September 23, 1998 (the "Master Repurchase
Agreement") among Buyer and Long Beach Financial Corporation under the following
terms and conditions:
ORIG PRIN AMT OF MTG LOANS:
----- ----- ----- -----
REM PRIN AMT OF MTG LOANS:
----- ----- ----- -----
PURCHASE DATE:
----- ----- ----- -----
REPURCHASE DATE:
----- ----- ----- -----
PURCHASE PRICE:
----- ----- ----- -----
PRICING RATE:
----- ----- ----- -----
PRICE DIFFERENTIAL DUE:
----- ----- ----- -----
BUYER'S MARGIN AMOUNT:
----- ----- ----- -----
SELLER'S MARGIN AMOUNT:
----- ----- ----- -----
The Master Repurchase Agreement is incorporated by reference into this
Confirmation/Funding Request and made a part hereof as if it were fully set
forth herein. All capitalized terms used herein but not otherwise defined shall
have the meanings specified in the Master Repurchase Agreement.
LONG BEACH MORTGAGE COMPANY XXXXXXX XXXXX MORTGAGE
CAPITAL INC.
BY: BY:
--------------------------- -------------------------
NAME: NAME
--------------------------- -------------------------
TITLE: TITLE:
--------------------------- -------------------------
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ATTACHMENT 1
TO EXHIBIT A
CONFIRMATION/FUNDING REQUEST FOR MORTGAGE LOANS
Request No. ___
Date: _________
Investor Product Wire Loan Borrower Loan Purchase Market Note No. Days Maturity Wet/
Type Date Number Last Amount Price Value Rate Delinquent Date Dry
-------- ---- ------ --- ------ ------- ------ ---- ---------- ------- ---
TOTALS:
Long Beach Financial Corporation
By: ______________________________
Title: ______________________________
Date: ______________________________ Amount to be
funded by Buyer:
$________________
-------------------------------------------------------------------------------
** Long Beach Mortgage Company hereby represents that as of the related
Purchase Date no warehouse lien or other lien or encumbrance exists with
respect to the above-referenced Mortgage Loans.
A-1-1
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EXHIBIT B
LIST OF CLOSING AGENTS
B-1
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EXHIBIT C
SERVICING AGREEMENT
C-1
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EXHIBIT D
OPINION OF COUNSEL TO SELLER
1. Seller is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware and has all power and
authority (corporate and other) to enter into and perform its
obligations under the Agreement. Seller is duly qualified to do business
and is in good standing in each jurisdiction in which the character of
the business transacted by it requires such qualification and in which
the failure so to qualify would have a material adverse effect on the
business, properties, prospects, assets or condition (financial or
other) of Seller and its subsidiaries, considered as a whole.
2. The Agreement has been duly authorized, executed and delivered by
Seller.
3. The consummation of any of the transactions contemplated by the
Agreement will not conflict with, result in a breach of, or constitute a
default under the charter or bylaws of Seller or the terms of any
indenture or other agreement or instrument known to us to which Seller
is party or bound, or any order known to such counsel to be applicable
to Seller or any regulations applicable to Seller, of any state or
federal court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over Seller.
4. There is no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving Seller or relating to the transaction contemplated by the
Agreement which, if adversely determined, would have a material adverse
effect on Buyer.
5. Each note relating to a Mortgage Loan will have been endorsed in a
manner which satisfies any requirement of endorsement in order to
transfer all right, title and interest in and to that Mortgage Loan from
Seller to Buyer. Each assignment of Mortgage related to each Mortgage
Loan is in recordable form and is sufficient under applicable law to
validly and effectively transfer all right, title and interest of Seller
to Buyer. The Agreement together with (a) the delivery of such related
notes to the Custodian; (b) the endorsement of such Notes in blank; and
(c) the delivery of the assignments of Mortgages related to the Mortgage
Loans to the Custodian in recordable form assigning such Mortgages in
blank, creates a valid, perfected security interest in such Mortgage
Loans in favor of Custodian for the benefit of Buyer; such security
interest will have the same priority and will be subject to the same
security interests and liens as apply to such Mortgage Loans in the
hands of Seller.
6. The Agreement constitutes a valid and legally binding obligation of
Seller enforceable against Seller in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles.
D-1
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7. No consent, approval, authorization or order of any state or federal
court or government agency or body is required to be obtained by Seller
for the consummation of the transactions contemplated by the Agreement.
8. The consummation of any of the transactions contemplated by the
Agreement will not conflict with, result in a breach of, or constitute a
default under any regulations applicable to Seller, of any state or
federal court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over Seller.
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EXHIBIT E
REPRESENTATIONS AND WARRANTIES
Part I. Eligible Asset
As to each Eligible Asset on a Purchase Date (and the related Mortgage,
mortgage Note, assignment of Mortgage and mortgaged property), Seller shall be
deemed to make the following representations and warranties to Buyer as of such
date and as of each date Market Value is determined. With respect to any
representations and warranties made to the best of Seller's knowledge, in the
event that it is discovered that the circumstances with respect to the related
Mortgage Loan are not accurately reflected in such representation and warranty
notwithstanding the knowledge or lack of knowledge of Seller, then,
notwithstanding that such representation and warranty is made to the best of
Seller's knowledge, such Mortgage Loan shall be assigned a Collateral Value of
zero.
1. Seller has good title to and is the sole owner and holder of the
Mortgage Loan.
2. Immediately prior to the pledge and grant of security interest to
Buyer, the Note and the Mortgage Loan were not subject to an assignment or
pledge, and Seller has full right and authority to pledge and assign the
Mortgage Loan to Buyer.
3. Seller is transferring such Mortgage Loan to Buyer free and clear of
any and all liens, pledges, charges or security interests of any nature
encumbering the Mortgage Loan.
4. The information set forth on the List of Eligible Assets is true and
correct in all material respects as of the date of the origination of the
Mortgage Loan.
5. Each Mortgage Loan has been originated and serviced in compliance
with all applicable federal, state and local laws and regulations and the terms
of the related Note and Mortgage.
6. The related Note and Mortgage are genuine and each is the legal,
valid and binding obligation of the maker thereof, 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 equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
7. The related Mortgage is a valid and enforceable first lien or second
lien on the related mortgaged property, which mortgaged property, to the best of
Seller's knowledge, is free and clear of all encumbrances and liens (including
mechanics liens) having priority over the first lien of the Mortgage except for:
(i) liens for real estate taxes and assessments not yet due and payable; (ii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected or considered in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and
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referred to in the appraisal made in connection with the origination of the
related Mortgage Loan and (iii) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by such Mortgage.
8. Any security agreement, chattel mortgage or equivalent document
related to such Mortgage Loan establishes and creates a valid and enforceable
lien on the property described herein.
9. Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Borrower, directly or
indirectly, for the payment of any amount required under the Mortgage Loan under
the Mortgage Loan.
10. Except as otherwise disclosed by written instruments included in the
related documents required to be held by the Custodian pursuant to the Custodial
Agreement with respect to such Mortgage Loan (the "Mortgage File"), Seller has
not impaired, waived, altered or modified the related Mortgage or Note in any
material respect, or satisfied, canceled, rescinded or subordinated such
Mortgage or Note in whole or in part or released all or any material portion of
the mortgaged property from the lien of the Mortgage, or executed any instrument
of release, cancellation, rescission or satisfaction of the Note or Mortgage.
11. The Mortgage has not been satisfied, canceled or subordinated, in
whole, or rescinded, and the mortgaged property has not been released from the
lien of the Mortgage, in whole or in part (except for a release that does not
materially impair the security of the Mortgage Loan or a release the effect of
which is reflected in the loan-to-value ratio for the Mortgage Loan as set forth
in the List of Eligible Assets, nor to the best of Seller's knowledge has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission;
12. No condition exists which could give rise to any right of
rescission, set off, counterclaim, or defense including, without limitation, the
defense of usury, and no such right has been asserted.
13. To the best of Seller's knowledge, there is no proceeding pending
for the total or partial condemnation and no eminent domain proceedings pending
affecting any mortgaged property.
14. Each Mortgage Loan is covered by either (i) a mortgage title
insurance policy or other generally acceptable form of insurance policy
customary in the jurisdiction where the mortgaged property is located or (ii) if
generally acceptable in the jurisdiction where the mortgaged property is
located, an attorney's opinion of title given by an attorney licensed to
practice law in the jurisdiction where the mortgaged property is located. All of
Seller's rights under such policies, opinions or other instruments shall be
deemed to be transferred and assigned to Buyer upon transfer and pledge of the
Mortgage Loans hereunder. The title insurance policy has been issued by a title
insurer licensed to do business in the jurisdiction where the mortgaged property
is located, insuring the original lender, its successor and assigns, as to the
first or second priority lien, as applicable, of the Mortgage in the original
principal amount of the Mortgage
E-2
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Loan, subject to the exceptions contained in such policy. Seller is the sole
insured of such mortgagee title insurance policy, and such mortgagee title
insurance policy is in full force and effect and will be in force and effect
upon the consummation of the transactions contemplated by this Agreement. Seller
has not made and has no knowledge of any claims made as of the Purchase Date
under such mortgagee title insurance policy. Seller has no knowledge as to
whether or not any such claims may be made at any time in the future relating to
actions which predate the Purchase Date; and Seller shall notify Buyer if it
becomes aware of any such claim. Seller is not aware of any action by a prior
holder and Seller has not done, by act or omission, anything which could impair
the coverage or enforceability of such mortgagee title insurance policy or the
accuracy of such attorney's opinion of title.
15. Except for delinquent monthly payments, there exists no material
default, breach, violation or event of acceleration existing under the related
Mortgage or the related Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
material default, breach, violation or event of acceleration. Seller has not
waived any such default, breach, violation or event of acceleration.
16. With respect to any Mortgage Loan which provides for an adjustable
interest rate, all rate adjustments made by Seller have been performed in
accordance with the terms of the related Note or subsequent modifications, if
any.
17. With respect to any Mortgage Loan for which Seller is holding escrow
funds, and to the best of Seller's knowledge with respect to all other Mortgage
Loans, as of the time of origination, there are no delinquent taxes, ground
rents, water charges, sewer rents, assessments, insurance premiums, leasehold
payments, including assessments payable in future installments or other
outstanding charges, affecting the related mortgaged property.
18. No foreclosure proceedings are pending against the related mortgaged
property, and to Seller's best knowledge, no material litigation or lawsuit
relating to the Mortgage Loan is pending and the Mortgage Loan is not subject to
any pending bankruptcy or insolvency proceeding.
19. The Mortgage Loan obligates the Borrower thereunder to maintain a
hazard insurance policy ("Hazard Insurance") in an amount at least equal to the
lesser of (i) the amount necessary to fully compensate for any damage or loss to
the improvements which are part of such mortgaged property on a replacement cost
basis and (ii) the outstanding principal balance of the Mortgage Loan, in either
case in an amount sufficient to avoid the application of any "co-insurance
provisions". If the mortgaged property is in an area identified in the Federal
Register by the Federal Emergency Management Agency ("FEMA") as having special
flood hazards, a flood insurance policy is in effect which met the requirements
of FEMA at the time such policy was issued. The Mortgage obligates the Borrower
to maintain the Hazard Insurance and, if applicable, flood insurance policy at
the Borrower's cost and expense, and on the Borrower's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
the Borrower's cost and expense, and to seek reimbursement therefor from the
Borrower. The mortgaged property is covered by Hazard Insurance.
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00
00. The Note is not and has not been secured by any collateral except
the lien on the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage.
21. Subject to any applicable laws, the Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the mortgaged property is sold or
transferred without the prior written consent of the Mortgagee thereunder. The
Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the mortgaged property of the benefits of the security provided thereby,
including (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale or judicial foreclosure and (ii) otherwise by judicial
foreclosure. To the best of Seller's knowledge, since the date of origination of
the Mortgage Loan, the mortgaged property has not been subject to any bankruptcy
proceeding or foreclosure proceeding and the Borrower has not filed for
protection under applicable bankruptcy laws. There is no homestead or other
exemption available to the Borrower that would interfere with the right to sell
the mortgaged property at a trustee's sale or the right to foreclose the
Mortgage. In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in the Mortgage, and no fees or expenses
are or will become payable by Buyer to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the related
Borrower. The Borrower has not notified Seller and Seller has no knowledge of
any relief requested or allowed to the Borrower under the Soldiers and Sailors
Civil Relief Act of 1940.
22. Except as set forth in the appraisal which forms part of the related
Mortgage File, the mortgaged property, normal wear and tear excepted, is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect materially and adversely the value of
the mortgaged property as security for the Mortgage Loan or the use for which
the premises were intended and Seller has no knowledge of any proceeding pending
for the total or partial condemnation of such Mortgage Property.
23. There was no fraud involved in the origination of the Mortgage Loan
by the mortgagee or, to Seller's knowledge, by the Borrower, any appraiser or
any other party involved in the origination of the Mortgage Loan.
24. Each Mortgage File contains an appraisal of the mortgaged property
indicating an appraised value equal to the appraised value identified for such
mortgaged property on the List of Eligible Assets, unless indicated in Seller's
Underwriting Guidelines. Each appraisal has been performed in accordance with
the provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989.
25. All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the laws of
the state wherein the mortgaged property is located.
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00. No improvements on the related mortgaged property encroach on
adjoining properties (and in the case of a condominium unit, such improvements
are within the project with respect to that unit), and no improvements on
adjoining properties encroach upon the mortgaged property unless there exists in
the Mortgage File a title policy with endorsements which insure against losses
sustained by the insured as a result of such encroachments.
27. Principal payments on the Mortgage Loan commenced no more than sixty
days after the proceeds of the Mortgage Loan were disbursed and the Note is
payable on the first day of each month.
28. The Mortgage Loan bears interest at the mortgage interest rate as
disclosed in the electronic tape relating to the Mortgage Loans forwarded by
Seller to Buyer and the Note does not permit negative amortization.
29. With respect to escrow deposits, if any, all such payments are in
the possession of, or under the control of, Seller and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or escrow advances or
other charges or payments due Seller have been capitalized under any Mortgage or
the related Note.
30. No Mortgage Loan contains provisions pursuant to which monthly
payments are: (i) paid or partially paid with funds deposited in any separate
account established by Seller, the Borrower, or anyone on behalf of the
Borrower; (ii) paid by any source other than the Borrower or (iii) contains any
other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
31. To Seller's best knowledge, the mortgaged property is lawfully
occupied under applicable law.
32. Each Mortgage Loan has been underwritten in accordance with Seller's
Underwriting Guidelines and Policies (on the basis of its classification of an A
Quality Non-Conforming Mortgage Loan, A- Quality Non-Conforming Mortgage Loan, B
Quality Non-Conforming Mortgage Loan, B- Quality Non-Conforming Mortgage Loan, C
Quality Non-Conforming Mortgage Loan or D Quality Non-Conforming Mortgage Loan,
as applicable) in effect at the time the Mortgage Loan was originated or
purchased by Seller.
33. No law relating to servicing, collection or notification practices
and no law relating to origination practices, has been violated in connection
with any Mortgage Loan transferred to Buyer pursuant to this Agreement,
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws. The Mortgage Loan has been serviced by Seller and any predecessor servicer
in accordance with the terms of the Note.
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34. No Mortgage Loan was made in connection with (a) the construction or
rehabilitation of a mortgaged property or (b) facilitating the trade-in or
exchange of a mortgaged property.
(A) Except for Mortgage Loans for which a portion of the proceeds
of the loan, such amount not exceeding $10,000, are held by the Seller
to cover the cost of repairs to the related Mortgaged Property, such
Mortgage Loans not to exceed 10% of all Mortgage Loans subject to
Transactions, by principal balance, the proceeds of the Mortgage Loan
have been fully disbursed to or for the account of the Borrower and
there is no obligation for the Mortgagee to advance additional funds
thereunder, and any and all requirements as to completion of any on-site
or off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred
in making or closing the Mortgage Loan and the recording of the Mortgage
have been paid, and the Borrower is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Note or Mortgage.
1. To the best of Seller's knowledge, there are no mechanics' or similar
liens or claims that have been filed for work, labor or material (and no rights
are outstanding that under law could give rise to such lien) affecting the
related mortgaged property that are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage.
2. As to each fixed rate Mortgage Loan, interest is calculated on the
Note on the basis of twelve 30 day months and a 360 day year, and, as to each
adjustable rate Mortgage Loan, interest is calculated on the Note on the basis
of the number of days in the related interest accrual period.
3. The mortgaged property consists of either (i) a single parcel of real
property or (ii) more than one parcel of real property (as determined for tax
purposes only) which parcels are contiguous and are subject to a single deed or
title, in each case with a detached single family residence erected thereon, or
a two- to four-family dwelling, or an individual condominium unit in a low-rise
or high-rise condominium project, or a manufactured dwelling attached to a
permanent foundation, or an individual unit in a planned unit development or a
townhouse. No residence or dwelling is a mobile home. No Mortgage Loan is
secured by a leasehold estate.
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XXXXX XX
Names and Addresses for Communications Between Parties
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
Xxxxxxx X. Xxxxxxxx, Xx.
Vice President
Xxxxxxx Xxxxx World Headquarters
World Financial Center
Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
XXXXXXX XXXXX CREDIT CORPORATION
c/o Merrill Xxxxx Mortgage Capital Inc.
Xxxxxxx X. Xxxxxxxx, Xx.
Vice President
Xxxxxxx Xxxxx World Headquarters
World Financial Center
Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
in each case with a copy to
Xxxxxxx X. Xxxx
Director
Xxxxxxx Xxxxx World Headquarters
World Financial Center
Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxxxxx X. Xxxx, Esq.
Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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and
LONG BEACH MORTGAGE COMPANY
Xxxxxx Xxxxxx
0000 Xxxx xxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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