Master Repurchase Agreement - Merrill Lynch Mortgage Capital Inc. and Countrywide Mortgage Investments Inc.
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MASTER REPURCHASE AGREEMENT
BETWEEN
MERRILL LYNCH MORTGAGE CAPITAL INC.
AND
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
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Dated as of October 1, 1993
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Table of Contents
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Document Item No.
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Master Repurchase Agreement . . . . . . . . . . . . . . . . . . . . . 1
Tri-Party Custody Agreement . . . . . . . . . . . . . . . . . . . . . 2
Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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MASTER REPURCHASE AGREEMENT
Between: Dated as of October 1, 1993
MERRILL LYNCH MORTGAGE CAPITAL INC.
and
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
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
financial instruments ("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 shall be governed
by this Agreement, including any supplemental terms or conditions contained in
Annex I hereto, unless otherwise agreed in writing.
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, dissolution or similar law, or substantial part of
its property, or (ii) the commencement of any such case or proceeding against
such party, or another seeking such an appointment, 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, the issuance of 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 a party of a general assignment for the benefit of creditors, or (iv)
the admission in writing by a party of 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) "Buyers Margin Amount", with respect to any Transaction as of any date,
the amount obtained by application of a percentage (which may be equal to the
percentage that is agreed to as the Seller's Margin Amount under subparagraph
(q) of this Paragraph), agreed to by Buyer and Seller prior to entering into the
Transaction, to the Repurchase Price for such Transaction as of such date;
(d) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(e) "Income", with respect to any Security at any time, any principal thereof
then payable and all interest, dividends or other distributions thereon;
(f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(g) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(h) "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);
(i) "Price Differential", with respect to any Transaction hereunder 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 (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
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(j) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;
(k) "Prime Rate", the price rate of U.S. money center commercial banks as
published in The Wall Street Journal;
(l) "Purchase Date", the date on which Purchased Securities are transferred
by Seller to Buyer;
(m) "Purchase Price", (i) on the Purchase Date, the price at which Purchased
Securities are transferred by Seller to Buyer, and (ii) thereafter, such price
increased 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;
(n) "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) and shall exclude Securities returned
pursuant to Paragraph 4(b);
(o) "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 Paragraphs 3(c) or 11 hereof;
(p) "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, increased by any amount determined by the application of the
provisions of Paragraph 11 hereof;
(q) "Seller's Margin Amount", with respect to any Transaction as of any date,
the amount obtained by application of a percentage (which may be equal to the
percentage that is agreed to as the Buyer's Margin Amount under subparagraph (c)
of this Paragraph), agreed to by Buyer and Seller prior to entering into the
Transaction, to the Repurchase Price for such Transaction a of such date.
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 amount 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 applicable 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 tie a 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 Transaction 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
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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).
(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) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by Buyer and Seller.
(d) 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 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).
(e) 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
Where a particular Transaction's term extends over an Income payment date on
the Securities subject to that Transaction, Buyer shall, as the parties may
agree with respect to such Transaction (or, in the absence of any agreement, as
Buyer shall reasonably determine in its discretion), on the date such Income is
payable either (i) transfer to or credit to the account of Seller an amount
equal to such Income payment or payments with respect to any Purchased
Securities subject to such Transaction or (ii) apply the Income payment or
payments to reduce the amount to be transferred to Buyer by Seller upon
termination of the Transaction. Buyer shall not be obligated to take any action
pursuant to the preceding sentence 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.
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 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. As used herein with respect to Securities, "transfer" is
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intended to have the same meaning as when used in Section 8-313 of the New York
Uniform Commercial Code or, where applicable, in any federal regulation
governing transfers of the Securities.
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 intermediary or a clearing corporation. Title to
all Purchased Securities shall pass to Buyer and, unless otherwise agreed by
Buyer and Seller, noting in this Agreement shall preclude Buyer from engaging in
repurchase transactions with the Purchased Securities or otherwise pledging or
hypothecating the Purchased Securities, but no such transaction shall relieve
Buyer of its obligations to transfer Purchased Securities to Seller pursuant to
Paragraphs 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 or 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.
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*Language to be used under 17 C.F.R. S403.4(e) if Seller is a government
securities broker or dealer other than a financial institution.
**Language to be used under 17 C.F.R. S403.5(d) if Seller is a financial
institution.
9. 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 the 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.
10. 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 the
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 a principal (or, if agreed
in writing 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)
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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.
11. EVENTS OF DEFAULT
In the even that (i) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repurchase Date, (ii) Seller or Buyer
fails, after one business day's notice, to comply with Paragraph 4 hereof, (iii)
Buyer fails to comply with Paragraph 5 hereof, (iv) an Act of Insolvency occurs
with respect to Seller or Buyer, (v) 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 (vi) 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) At the option of the nondefaulting party, exercised by written notice to
the defaulting party (which option shall be deemed to have been exercised, even
if no notice is given, immediately upon the occurrence of an Act of Insolvency),
the Repurchase Date for each Transaction hereunder shall be deemed immediately
to occur.
(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 n subparagraph (a) of this Paragraph, (i) the defaulting party's
obligations hereunder to repurchase all Purchased Securities in such
Transactions shall thereupon become immediately due and payable, (ii) to the
extent permitted by applicable law, the Repurchase Price with respect to each
such Transaction shall be increased by the aggregate amount obtained by daily
application of (x) the greater of the Pricing Rate for such Transaction or the
Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase
Date as determined pursuant to subparagraph (a) of this Paragraph (decreased as
of any day by (A) any amounts retained by the nondefaulting party with respect
to such Repurchase Price pursuant to clause (iii) of this subparagraph, (B) any
proceeds from the sale of Purchased Securities pursuant to subparagraph (d)(i)
of this Paragraph, and (C) any amounts credited to the account of the defaulting
party pursuant to subparagraph (e) of this Paragraph) on a 360 day per year
basis for the actual number of days during the period from and including the
date of the Event of Default giving rise to such option to but excluding the
date of payment of the Repurchase Price as so increased, (iii) all Income paid
after such exercise or deemed exercise shall be retained by the nondefaulting
party and applied to the aggregate unpaid Repurchase Prices owed by the
defaulting party, and (iv) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions then
in the defaulting party's possession.
(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 Transaction, the defaulting party's right, title and
interest in 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.
(d) After one business day's notice to the defaulting party (which notice
need not be given if an Act of Insolvency shall have occurred, and which may be
the notice given under subparagraph (a) of this Paragraph or the notice referred
to in clause (ii) of the first sentence of this Paragraph), the nondefaulting
party may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market 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
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(ii) as to Transactions in which the defaulting party is acting as Buyer,
(A) purchase 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 of (B) in its sole
discretion elect, in lieu of purchasing Replacement Securities, to be deemed
to have purchased Replacement Securities at the price thereof on such date,
obtained from a generally recognized source or the most recent closing bid
quotation from such a source.
(e) As to Transactions in which the defaulting party is acting as Buyer, the
defaulting party shall be liable to the nondefaulting party (i) with respect to
Purchased Securities (other than Additional Purchased Securities), for any
excess of the price paid (or deemed paid) by the nondefaulting party for
Replacement Securities therefor over the Repurchase Price for such Purchased
Securities and (ii) with respect to Additional Purchased Securities, for the
price paid (or deemed paid) by the nondefaulting party or the Replacement
Securities therefor. In addition, the defaulting party shall be liable to the
nondefaulting party for interest on such remaining liability with respect to
each purchase (or deemed purchase) of Replacement Securities from the date of
such purchase (or deemed purchase) until paid in full by Buyer. Such interest
shall be at a rate equal to the greater of the Pricing Rate for such Transaction
or the Prime Rate.
(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 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 its option under subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for the
amount of all reasonable legal or other expenses incurred by the nondefaulting
party n connection with or as a consequence of an Event of Default, together
with interest thereon at a rat equal to the greater of the Pricing Rate for the
relevant Transaction or the Prime Rate.
(h) The nondefaulting party shall have, in addition to its rights hereunder,
any rights otherwise available to it under any other agreement or applicable
law.
12. 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.
13. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective party to whom
any notice or other communication is to be given hereunder, all such notices or
communications shall be in writing or confirmed in writing and delivered at the
respective addresses set forth in Annex II attached hereto.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.
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15. NON-ASSIGNABILITY; TERMINATION
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. 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 canceled 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.
16. 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.
17. 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 subparagraphs 4(a) or 4(b) hereof will not constitute a
waiver of any right to do so at a later date.
18. USE OF EMPLOYEE PLAN ASSETS
(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.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined i 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.
(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.
20. 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
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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, the Federal Savings and Loan Insurance Corporation or the
National Credit Union Share Insurance Fund, as applicable.
Merrill Lynch Mortgage Countrywide Mortgage
Capital Inc. Investments, Inc.
By:____________________________ By:____________________________
Title: Director Title:
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Date: August 16, 1993 Date:
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ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
The supplemental terms attached hereto as a continuation of this Annex I are
incorporated herein and made a part hereof as though fully set forth on this
page.
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[EXECUTION COPY]
ANNEX I
(continued)
SUPPLEMENTAL TERMS TO MASTER REPURCHASE AGREEMENT,
DATED AS OF OCTOBER 1, 1993, BETWEEN
MERRILL LYNCH MORTGAGE CAPITAL INC. AND
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
1. APPLICABILITY. These Supplemental Terms (the "Supplemental Terms") to
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Master Repurchase Agreement (the "Master Repur-chase 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.
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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 Supplemen-tal Terms shall, for all purposes of the Agreement, be
deemed to have such modified definitions.
"Agency" shall refer to GNMA, FNMA or FHLMC, as the case may be.
"Agency Cash Purchase Commitment" shall refer (i) to the commitment of an
Agency to purchase Mortgage Loans from a Qualified Originator under the
Agency's cash purchase program and (ii) where applicable, to the written or
printed evidence of such commitment.
"Agency Custodian" shall mean an institution, acceptable to MLMCI in its
sole discretion, that is an approved custodian for the agency to which the
related Mortgage Loans will be submitted.
"Agency Documentation" shall refer collectively to the Guides and parts or
chapters thereof and to GNMA, FNMA and FHLMC forms and schedules.
"Agency Mortgage Loans" shall refer to Mortgage Loans that are, or are
intended to be, pooled and are intended to (i) back the Agency Security
specified in the related Confirmation/Funding Request or (ii) sold to an
Agency under its cash purchase program.
<PAGE>
"Agency Payee Form" shall refer, with respect to Mortgage Loans to be sold
to an Agency under its cash purchase program, to FNMA Form 482 (Lender's
Designation/Deletion of Payee Information) and FHLMC Form 987 (Wire
Transfer Authorization for a Cash Warehouse Delivery), as applicable, and
to any superseding or successor form, on which forms MLMCI is designated
the payee of the Cash Purchase Price for such Mortgage Loans.
"Agency Registration Form" shall refer to Form HUD 11705 (Schedule of
Subscriber), Fannie Mae Form 2014 (Delivery Schedule), FHLMC Form 939
(Settlement and Information Multiple Registration Form) or FHLMC Form 987
(Warehouse Delivery Form) as applicable, on which it is indicated that the
related Agency Security shall be issued to, and in the name of, MLGSI.
"Agency Security" shall refer to a GNMA Security, a FNMA Security or a
FHLMC Security.
"Approvals" shall refer to the approvals of FHLMC, FNMA and GNMA described
in Paragraph 13(c)(ii) of these Supplemental Terms.
"Bank" shall refer to The First National Bank of Chicago.
"Business Day" shall mean any day excluding Saturday, Sunday and any day on
which banks located in the States of New York or California 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.
"MLMCI'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.
"Cash Purchase Price" shall refer the cash price, and to the corresponding
cash proceeds, to be paid by an Agency, under its cash purchase program,
for Mortgage Loans sold by a Qualified Originator that are the subject of a
Transaction.
"Closing Agent" shall refer to a title company, closing attorney or other
agent that disburses funds on behalf of a Qualified Originator in
connection with the origination of a Mortgage Loan; each such title
company, closing attorney or other agent must be acceptable to MLMCI in its
sole discretion.
"CMI" shall refer to Countrywide Mortgage Investments, Inc.
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<PAGE>
"Collateral Submission Summary" shall refer to the Collateral Submission
Summary substantially in the form attached as an exhibit to the Custody
Agreement.
"Commitment/Certificate of Insurance" shall refer to the
Commitment/Certificate of Insurance issued by a Qualified Insurer with
respect to each Mortgage Loan and held by the Custodian pursuant to the
Custody Agreement.
"Commitment Number" shall mean the commitment number provided by a
Qualified Originator to CMI, and communicated by CMI to the Custodian, with
respect to a Mortgage Loan indicating that such Mortgage Loan has either
been designated (i) to be included in a pool of Agency Mortgage Loans
backing an Agency Security, (ii) for sale to an Agency under an Agency
purchase program or (iii) to be included in a pool of Non-Agency Mortgage
Loans to be sold to a Trade Investor.
"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 B, in the case of Agency Mortgage Loans
intended to back an Agency Security, Exhibit C in the case of Non-Agency
Mortgage Loans and Exhibit D in the case of Agency Mortgage Loans that are
not intended to back an Agency Security.
"Custody Agreement" shall refer to the Custody Agreement, dated as of
October 1, 1993, by and among MLMCI, CMI, the Bank and the Custodian named
therein, as the same may be modified and amended from time to time.
"Custodian" shall refer to the custodian named in the Custody Agreement.
"FHA" shall refer to the Federal Housing Administration.
"FHLMC" shall refer to the Federal Home Loan Mortgage Corporation.
"FHLMC Guide" shall refer to the Freddie Mac Seller's and Servicers' Guide,
-----------------------------------------
as such Guide may hereafter from time to time be amended.
"FHLMC Security" shall refer to a Mortgage Participation Certificate issued
and guaranteed by FHLMC and backed by a pool of Agency Mortgage Loans.
"FNMA" shall refer to the Federal National Mortgage Association.
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<PAGE>
"FNMA Guide" shall refer to the Fannie Mae Selling and Servicing Guide, as
--------------------------------------
such Guide may hereafter from time to time be amended.
"FNMA Security" shall refer to a Guaranteed Mortgage Pass-Through
Certificate issued and guaranteed by FNMA and backed by a pool of Agency
Mortgage Loans.
"GEMICO" shall refer to General Electric Mortgage Insurance Corporation, a
North Carolina stock insurance company.
"GNMA" shall refer to the Government National Mortgage Association.
"GNMA Guide" shall refer to the GNMA Mortgage-Backed Securities Guide, as
-------------------------------------
such Guide may hereafter from time to time be amended.
"GNMA Security" shall refer to a fully-modified pass-through mortgage-
backed certificate guaranteed by GNMA and backed by a pool of Agency
Mortgage Loans.
"Instruction Letters" refer to the irrevocable instructions to Servicers
substantially in the form of Exhibit A hereto.
"Master Agency Custodian Bailee Letter" shall refer to a Master Agency
Custodian bailee letter in the form attached as an exhibit to the Custody
Agreement.
"Master Bailee Letter" shall refer to a master bailee letter in the form
attached as an exhibit to the Custody Agreement.
"MLGSI" shall refer to Merrill Lynch Government Securities Inc.
"MLMCI" shall refer to Merrill Lynch Mortgage Capital Inc.
"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.
"Mortgage Loans" shall refer to the residential mortgage loans secured by
first liens delivered to the Custodian pursuant to the Custody Agreement
and shall include both Agency and Non-Agency Mortgage Loans.
"Non-Agency Mortgage Loans" shall refer to Mortgage Loans that are not
intended to back an Agency Security or to be sold to an Agency under its
cash purchase program; such
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<PAGE>
Mortgage Loans may, however, conform to Agency securitization requirements
and may, at a later date, become Agency Mortgage Loans.
"PMI" shall refer to PMI Mortgage Insurance Co.
"Qualified Insurer" shall refer to GEMICO, PMI or UGI.
"Qualified Originator" shall refer to a correspondent of CMI that
originates Mortgage Loans and subsequently assigns its rights thereto to
CMI pursuant to a warehouse lending agreement between CMI and such
Qualified Originator.
"Securities" shall, in addition to the definition set forth in the Master
Repurchase Agreement, refer to Mortgage Loans.
"Security Release Form" shall refer to (i) Freddie Mac Form 996 (Warehouse
Lender Release of Security Interest) in the case of a FHLMC Security, (ii)
Fannie Mae Form 2004 (Secu-rity Release Certification) in the case of a
FNMA Security and (iii) Form HUD 11711A (Release of Security Interest) in
the case of a GNMA Security.
"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.
"Servicer" shall, with respect to any Mortgage Loan, refer to the related
Qualified Originator.
Supplemental Agency Custodian Bailee Letter" shall refer to a supplemental
Agency Custodian bailee letter in the form attached as an exhibit to the
Custody Agreement.
"Supplemental Bailee Letter" shall refer to a supplemental bailee letter in
the form attached as an exhibit to the Custody Agreement.
"Takeout Commitment" shall refer to a trade confirmation from the Takeout
Investor to a Qualified Originator, which trade confirmation has been
assigned by the Qualified Originator to CMI, confirming the details of a
forward trade between the Takeout Investor and such Qualified Originator
with respect to one or more Agency Securities, which trade confirmation
shall be valid, binding and in full force and effect and relate to pools of
Agency Mortgage Loans that satisfy the "good delivery standard" of the
Public Securities Association as set forth in the Public Securities
-----------------
Association Uniform Practices Guide.
-----------------------------------
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<PAGE>
"Trade Commitment" shall refer to a trade confirmation or similar document
from the Trade Investor to a Qualified Originator, which trade confirmation
has been assigned by the Qualified Originator to CMI, confirming the
details of a mandatory forward trade or similar arrangement reasonably
acceptable to MLMCI between the Trade Investor and such Qualified
Originator with respect to one or more Non-Agency Mortgage Loans, which
trade confirmation or similar document shall be valid, binding and in full
force and effect and relate to pools of Non-Agency Mortgage Loans that
satisfy the delivery standards of the related Trade Investor.
"Takeout Investor" shall refer to a securities dealer or other financial
institution, reasonably acceptable to MLMCI, who has made a Takeout
Commitment. A list of Takeout Investors that are acceptable to MLMCI as of
the date hereof is set forth at Exhibit F hereto, which list may be
modified from time to time by MLMCI in its reasonable discretion.
"Trade Investor" shall refer to a securities dealer or other financial
institution (other than an Agency), reasonably acceptable to MLMCI, who has
made a Trade Commitment. A list of Trade Investors that are acceptable to
MLMCI as of the date hereof is set forth at Exhibit F hereto, which list
may be modified from time to time by MLMCI in its reasonable discretion.
"Third Person" shall have the meaning set forth in the Custody Agreement.
"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.
"UGI" shall refer to United Guaranty Insurance Company.
"VA" shall refer to the Department of Veterans Affairs.
"Warehouse Lending Agreement" shall refer to a lending agreement between
CMI and a Qualified Originator substantially in the form of Exhibit E
hereto.
3. MODIFICATION OF PARAGRAPH 4 OF THE MASTER REPURCHASE AGREEMENT.
--------------------------------------------------------------
(a) Paragraph 4 of the Master Repurchase Agreement is hereby amended by
adding the following sentence at the end of subparagraph (a):
In case of a Margin Deficit with respect to Mortgage Loans, CMI
shall transfer cash or Mortgage Loans to satisfy its obligations
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hereunder; provided, however, CMI may transfer Mortgage Loans only to
-------- -------
the extent that they have been reviewed by the Custodian pursuant to
the Custody Agreement and the Custodian has furnished its
Certification with respect thereto.
(b) Paragraph 4(a) of the Master Repurchase Agreement is hereby further
amended to provide that CMI shall transfer the cash or Mortgage Loans
to MLMCI (in the manner contemplated by the Agreement and the Custody
Agreement) prior to the close of business in New York City on the
Business Day following the date of such notice.
4. MODIFICATION OF PARAGRAPH 5 OF THE MASTER REPURCHASE AGREEMENT. Paragraph
--------------------------------------------------------------
5 of the Master Repurchase Agreement is hereby amended by adding the
following after the last sentence of such Paragraph:
So long as an Event of Default shall not have occurred and be
continuing, CMI shall collect all Mortgage Loan Income on behalf of
MLMCI.
If an Event of Default shall have occurred and is continuing, CMI
shall, upon request of MLMCI, send to MLMCI, immediately upon receipt,
all payments of Mortgage Loan Income received by CMI.
In addition, if an Event of Default shall have occurred and is
continuing, MLMCI may, in its sole discretion, send Instruction
Letters to the Servicers directing such Servicers to make all payments
of Mortgage Loan Income directly to MLMCI.
5. MODIFICATION OF PARAGRAPH 7 OF THE MASTER REPURCHASE AGREEMENT. Paragraph
--------------------------------------------------------------
7 of the Master Repurchase Agreement is hereby amended by adding the
following after the last sentence of such Paragraph:
MLMCI shall disburse funds in the manner contemplated by the
Custody Agreement through an agent of the Custodian on behalf of CMI
to Closing Agents. In the case of Mortgage Loans, transfer of such
Mortgage Loans to MLMCI shall occur as of the date on which MLMCI
receives (i) the Collateral Submission Summary executed by the
Custodian, (ii) a list of the names and addresses of each Servicer and
(iii) a list identifying the Servicer with respect to each such
Mortgage Loan.
In the case of Mortgage Loans, MLMCI shall have the unconditional
right, in its sole discretion using
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<PAGE>
its reasonable business judgment, to demand that CMI deliver to MLMCI
original executed Instruction Letters and, within 24 hours after
MLMCI's making such demand, CMI shall fully comply therewith. Upon
termination of any Transaction with respect to Mortgage Loans by
repayment of the Repurchase Price to MLMCI by CMI, MLMCI shall
redeliver to CMI any such executed letters of instructions delivered
by CMI to MLMCI pursuant to the immediately preceding sentence that
have not been sent by MLMCI to a Servicer.
In the case of Mortgage Loans transferred by MLMCI to a Third
Person, MLMCI 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 CMI pursuant to
Subparagraph 3(c) or 11(c) of the Master Repurchase Agreement shall be
transferred to CMI or its agent upon the receipt by the Custodian from
MLMCI of a notice of transfer which confirms the release of MLMCI's
interest in any such Mortgage Loans.
6. MODIFICATION OF PARAGRAPH 8 OF THE MASTER REPURCHASE AGREEMENT. Paragraph
--------------------------------------------------------------
8 of the Master Repurchase Agreement is amended by adding the following at
the end of the last sentence thereof:
In the case of Mortgage Loans, MLMCI hereby grants to CMI the
right to perform in MLMCI's stead under any repurchase, reverse
repurchase or similar transaction in which MLMCI has sold, loaned or
otherwise transferred the Mortgage Loans in the event that MLMCI has
defaulted on its obligation to repurchase or accept redelivery of such
Mortgage Loans in conformity with the terms of any such transaction
and so long as an Event of Default under this Agreement on the part of
CMI shall not have occurred and be continuing.
7. MODIFICATIONS OF PARAGRAPH 11 OF THE MASTER REPURCHASE AGREEMENT.
----------------------------------------------------------------
Paragraph 11 of the Master Repurchase Agreement is hereby further amended
by adding new subsections (i), (j), (k) and (l) to such Paragraph:
(i) Any sales of Purchased Securities, pursuant to Paragraph
11(d)(i) of this Agreement, which are Mortgage Loans may be effected
in public or private sales as MLMCI may reasonably deem appropriate
and at such price or prices as MLMCI may reasonably deem satisfactory.
In the event MLMCI elects in lieu of so selling such Purchased
Securities to give CMI credit
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<PAGE>
for such Purchased Securities, such credit shall be in an amount equal
to the Market Value thereof on the date of such election or, if
applicable, the prevailing price therefor in a recognized market.
(j) MLMCI shall exercise reasonable efforts (the reasonableness
of which shall be determined by MLMCI in its discretion in light of
the circumstances) to provide notice to CMI prior to exercising any
remedy in respect of an Event of Default by CMI, provided, however,
-------- -------
that notwithstanding anything in this Agreement to the contrary, MLMCI
shall not be required, prior to exercising any remedy in respect of an
Event of Default by CMI, to give any notice otherwise required
hereunder, if MLMCI reasonably believes that (i) the Mortgage Loans
then held by MLMCI threaten to decline speedily in value or (ii) any
delay occasioned by the giving of such notice will jeopardize MLMCI's
ability to recover, by sale of such Securities or otherwise, all or
part of the then-outstanding amount of the Repurchase Price or of any
other amounts owed to MLMCI in connection therewith. If no prior
notice is given, MLMCI shall give notice to CMI of the remedies
effected by MLMCI promptly thereafter.
(k) Any purchases of Replacement Securities, pursuant to
Paragraph 11(d)(ii) of this Agreement, which are Mortgage Loans shall
be of the same or similar class, series and amount as the Purchased
Securities that are not delivered by MLMCI and may be effected in
public or private purchases, in each case as CMI may reasonably deem
appropriate and at such price or prices as CMI may reasonably deem
satisfactory. In the event CMI 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 or, if applicable, at
the prevailing price therefor in a recognized market.
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<PAGE>
8. CONFIRMATION/FUNDING REQUESTS.
-----------------------------
(a) Each Confirmation/Funding Request shall be prepared and duly executed
by CMI and delivered to MLMCI:
(i) prior to 2:00 p.m., New York City time, on the proposed Purchase
Date for the related Transaction in the case of
Confirmation/Funding Requests for sums not greater than
$5,000,000; and
(ii) prior to 1:00 p.m., New York City time, on the Business Day prior
to the proposed Purchase Date for the related Transaction in the
case of Confirmation/Funding Requests for sums in excess of
$5,000,000.
Each such Confirmation/Funding Request delivered by CMI to MLMCI shall
be complete in every respect except for the signature of an authorized
signatory of MLMCI.
(c) Each Confirmation/Funding Request shall be binding upon the parties
hereto unless written notice of objection is given by the objecting
party to the other party within one (1) Business Day after MLMCI has
delivered the completed Confirmation/Funding Request to CMI.
(d) Notwithstanding the last sentence of Paragraph 3(b) of the Master
Repurchase Agreement, in the event of any conflict between the terms
of a Confirmation/Funding Request and the Agreement, such
Confirmation/Funding Request shall prevail.
9. INCOME PAYMENTS. All payments and distributions, whether in cash or in
---------------
kind, made on or with respect to the Purchased Securities shall, unless
otherwise mutually agreed by MLMCI and CMI, be paid, delivered or
transferred:
(a) in the case of Agency Securities, directly to MLGSI as agent for
MLMCI; and
(b) in the case of Mortgage Loans, so long as an Event of Default on the
part of CMI or an Additional Event of Termination set forth in
Paragraph 11 of these Supple-mental Terms shall not have occurred and
be continuing, directly to the related Qualified Originator from the
related mortgagor.
10. MARKET VALUE DETERMINATION. MLMCI shall determine the Mar-ket Value for
--------------------------
the Purchased Securities in its reasonable business judgment from time to
time and at such time as it may elect in its sole discretion; provided,
--------
however, that MLMCI shall not take into account (i) any Mortgage Loan that
-------
I-10
<PAGE>
has been delinquent for at least thirty (30) days and for which all
delinquent payments shall not have been advanced by the servicers, (ii) any
Mortgage Loan with respect to which there is a breach of a representation,
warranty or covenant made by CMI in the Agreement or the Custody Agreement
that materially adversely affects MLMCI's interest in such Mortgage Loan
and which breach has not been cured prior to the date on which Market Value
is being determined, (iii) any Mortgage Loan that is subject to the
Agreement or the Custody Agreement for more than sixty (60) days in
aggregate or (iv) any Mortgage Loan that has been subject to the Agreement
for more than two (2) Business Days and respecting which CMI shall not have
advised the Custodian of a Commitment Number; and provided further,
-------- -------
however, that the Market Value of the Purchased Securities shall in no
-------
event exceed the amount of money lent by CMI to the related Qualified
Originator in respect of such Purchased Securities.
11. INTENT OF THE PARTIES; SECURITY INTEREST.
----------------------------------------
(a) Each Transaction involving Mortgage Loans is entered into in
contemplation of (i) the issuance of one or more Agency Securities
backed by the related Agency Mortgage Loans, (ii) the sale of Agency
Mortgage Loans to an Agency under its cash purchase program or (iii)
the sale of Non-Agency Mortgage Loans to a Trade Investor. The
parties intend that, (1) in the case of clause (i) of the preceding
sentence, the related Qualified Originator will act as issuer or
seller/servicer with respect to such Agency Securities, as applicable,
and that each Agency Security will be issued in the name of, and
delivered to or upon the order of, MLGSI, (2) in the case of clause
(ii) of the preceding sentence, the Cash Purchase Price relating to
such Mortgage Loans will be paid by the related Agency through the
Bank to MLMCI and (3) in the case of clause (iii) of the preceding
sentence, the purchase price for the Non-Agency Mortgage Loans will be
paid by the related Trade Investor through the Bank to MLMCI.
(b) In the event, for any reason, any Transaction is con-strued by any
court as a secured loan rather than a purchase and sale, the parties
intend that MLMCI shall have a perfected first priority security
interest in all of the Purchased Securities.
(c) CMI shall pay all 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
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<PAGE>
required by MLMCI or its counsel, and any fees charged by the
Custodian or an Agency Custodian.
12. DELIVERY OF ADDITIONAL DOCUMENTS.
--------------------------------
(a) CMI shall, simultaneously with the funding of each Transaction,
deliver to MLMCI through the Custodian a fully executed Collateral
Submission Summary and all other applicable documents required by the
Custody Agreement.
(b) In the case of a Transaction involving Agency Mortgage Loans that have
been designated to back an Agency Security, CMI shall deliver, or
shall cause the related Qualified Originator to deliver, to MLMCI
through the Custodian or the related Agency Custodian a copy of the
related Agency Registration Form in form and substance satisfactory to
MLMCI.
(c) In the case of a Transaction involving Non-Agency Mortgage Loans, CMI
shall deliver, or shall cause the related Qualified Originator to
deliver, to MLMCI through the Custodian evidence either (i) of a
Commitment/Certificate of Insurance covering such Non-Agency Mortgage
Loans in form and substance satisfactory to MLMCI or (ii) a binding
Trade Commitment from a Trade Investor relating to such Mortgage
Loans.
(d) In the case of a Transaction involving Agency Mortgage Loans that have
been designated intended to be sold to an Agency under its cash
purchase program, CMI shall deliver, or shall cause the related
Qualified Originator to deliver, to MLMCI through the Custodian or the
related Agency Custodian a copy of the related Agency Payee Form.
(e) CMI shall, simultaneously with the funding of the initial Transaction
under the Agreement relating to each type of Agency Security and from
time to time thereafter upon the request of MLMCI, cause the Qualified
Originators to each deliver to MLMCI evidence of the commitment of
FHLMC, FNMA or GNMA, as appropriate, pursuant to which the related
Agency Securities shall be issued.
(f) CMI shall, promptly upon a request of MLMCI with respect to any
Transaction under the Agreement relating to Mortgage Loans designated
to be sold to an Agency under its cash purchase program, deliver, or
shall cause the related Qualified Originator to deliver, to
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<PAGE>
MLMCI evidence of the related Agency Cash Purchase Commitment.
(g) MLMCI shall, with respect to each Transaction involving Agency
Mortgage Loans, cause the Custodian to be provided with an executed
Security Release Form appropriate for the related Agency Security
indicating that MLMCI releases its interest in the related Agency
Mortgage Loans (i) in the case of securitization of such Mortgage
Loans into one or more Agency Securities, upon the issuance of such
Agency Security or Securities and (ii) in the case of the cash
purchase of such Mortgage Loans, upon such Agency's payment of the
related Cash Purchase Price. Such form shall be pre-pared by CMI and
provided to the Custodian on behalf of MLMCI in advance of the date on
which delivery thereof is required to be made to the related Agency.
The Custodian shall execute such form on behalf of MLMCI.
(h) CMI shall cause any documents relating to a Mortgage Loan that are
delivered to a Trade Investor for inspection prior to purchase to be
delivered under an enforceable Master Bailee Letter, as supplemented
by a Supplemental Bailee Letter, that requires such Trade Investor to
act as bailee and custodian for MLMCI with respect to such documents.
(i) CMI shall cause any documents relating to a Mortgage Loan that are
delivered to an Agency Custodian in connection with the securitization
by, or sale to, an Agency to be delivered under an enforceable Master
Agency Custodian Bailee Letter, as supplemented by a Supplemental
Agency Custodian Bailee Letter, that requires such Agency Custodian to
act as bailee and custodian for MLMCI with respect to such documents.
13. 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 crea-tion of any lien, security interest or other
charge or encumbrance (other than pursuant hereto) upon or with
respect to any of its properties;
(ii) The Agreement is, and each Transaction when entered into under
the Agreement will be, a legal, valid and binding obligation of
it enforceable
I-13
<PAGE>
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 enforce-ability,
to general principles of equity (regard-less of whether
enforcement is sought in a proceed-ing in equity or at law); and
(iii) Since the date of the most recent balance sheet or financial
statement delivered by it pursuant to Paragraph 16 hereof, there
has been no material adverse change in its financial condition or
results of operations.
(b) CMI represents and warrants as to each Transaction and, if applicable,
the Mortgage Loans relating thereto as of the Purchase Date of such
Transaction as follows:
(i) All information provided by CMI to MLMCI concerning the Mortgage
Loans is true and correct;
(ii) All data and other information provided by or on behalf of CMI to
the Custodian, whether in writing, by electronic transmission or
on computer tape or diskette or otherwise, is true and correct;
(iii) No Mortgage Loan shall have any scheduled payments of Mortgage
Loan Income in default or delinquent by more than 30 days within
the past 12 months unless the Servicer shall have advanced such
payment;
(iv) CMI shall cause each Mortgage Loan to be serviced in accordance
with standards maintained by servicers of mortgage loans (i) as
required by the applicable Agency in the case of Agency Mortgage
Loans and (ii) generally accepted in the mortgage servicing
industry as reasonable and prudent in the case of Non-Agency
Mortgage Loans;
(v) CMI had a perfected first-priority security interest in each
Mortgage Loan immediately prior to the purchase thereof by MLMCI
under the Agreement;
(vi) MLMCI has a perfected first-priority security interest in each
Mortgage Loan purchased under the Agreement and no further
action, other than the possession by the Custodian of certain
documents relating thereto pursuant to the Custody
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<PAGE>
Agreement, is necessary in order to maintain such perfected
first-priority security interest;
(vii) CMI is able to produce and deliver to MLMCI the Instruction
Letters pursuant to Paragraph 5 of these Supplemental Terms
within 24 hours after MLMCI's demand for them and such
Instruction Letters are enforceable instructions against the
addressees;
(viii) No Mortgage Loan was subject to a warehouse lien or other lien or
encumbrance immediately prior to the purchase thereof by MLMCI
under the Agreement other than the lien of CMI under its
Warehouse Lending Agreement with the related Qualified
Originator;
(ix) Each of the Qualified Insurers has made a written representation
to MLMCI, in form and substance satisfactory to MLMCI and which
representation has not been amended and continues in full force
and effect, to the effect that, as to each Non-Agency Mortgage
Loan purchased by MLMCI under the Agreement and as to which a
Commitment/Certificate of Insurance has been issued by such
Qualified Insurer, notwithstanding the fact that a Qualified
Originator is the named insured on such Commitment/Certificate of
Insurance, MLMCI may, after notifying such Qualified Insurer that
an Event of Default has occurred and is continuing, without any
action or consent on the part of the related Qualified Originator
and upon payment of the applicable premium and completion of the
related Commitment/Certificate of Insurance, have the related
Mortgage Loan insured under a mortgage pool insurance policy of
such Qualified Insurer established by MLMCI or its designee which
policy shall name MLMCI or its designee as the insured;
(x) To the best of CMI's knowledge, upon due inquiry and reasonable
investigation, no Qualified Originator has suffered a material
adverse change in its business, operations, properties, prospects
or condition (financial or otherwise);
(xi) CMI, Countrywide Funding Corporation, Countrywide Mortgage
Corporation or any affiliate thereof are not Qualified
Originators nor has any Qualified Originator been established by
any of them; and
(xii) The aggregate outstanding principal amount of Mortgage Loans
subject to the Agreement at any
I-15
<PAGE>
time that were originated by a single Qualified Originator does
not exceed $20,000,000.
(c) CMI represents and warrants as to each Transaction involving Agency
Mortgage Loans and the Agency Mortgage Loans relating thereto as of
the Purchase Date of such Transaction as follows:
(i) The consummation of the Transaction as contem-plated herein and
in the Custody Agreement will not violate any policy, regulation
or guideline of the FHA or VA or result in the voiding or reduc-
tion of the FHA insurance, VA guarantee or any other insurance or
guarantee in respect of any Mortgage Loan, and such insurance or
guarantee is in full force and effect or shall be in full force
and effect as required by the applicable GNMA Guide, FNMA Guide
or FHLMC Guide;
(ii) Each Qualified Originator is either (i) approved as an originator
by the related Takeout Investor or (ii) a GNMA-approved issuer, a
GNMA-approved servicer, a FHA-approved mortgagee, a VA-approved
lender, a FNMA-approved issuer, a FNMA-approved servicer or a
FHLMC-approved seller/servicer in good standing ("Approvals");
(iii) Each Agency Mortgage Loan conforms to the requirements and
specifications (including, without limitation, all
representations and warranties required in respect thereof) set
forth in the GNMA Guide, FNMA Guide or FHLMC Guide, as
applicable;
(iv) There exists for each Agency Mortgage Loan a binding Takeout
Commitment from a Takeout Investor to the related Qualified
Originator or a binding commitment from an Agency to purchase
such Mortgage Loan under its cash purchase program;
(v) Each and every document, certificate, instrument, insurance
policy, escrow and any other item neces-sary to satisfy the final
delivery requirements of FHLMC, FNMA or GNMA as required by the
FHLMC Guide, the FNMA Guide or the GNMA Guide, as appli-cable,
for the issuance of the related Agency Security or the purchase
by the related Agency are in form and substance acceptable to
FHLMC, FNMA or GNMA, as appropriate, and have been delivered to
the Custodian;
I-16
<PAGE>
(vi) CMI has no notice or knowledge of any fact, event or circumstance
whatsoever on the basis of which FHLMC, FNMA or GNMA, as
applicable, may (i) delay the issuance of, or refuse to issue,
the related Agency Security or (ii) delay the payment of, or
refuse to pay, the related Cash Purchase Price;
(vii) Each copy of the document or documents evidencing the Agency
commitment delivered to MLMCI through the Custodian pursuant to
Paragraph 12(e) of these Supplemental Terms, and each copy of the
Agency Cash Purchase Commitment delivered to MLMCI pursuant to
Paragraph 12(f) of these Supplemental Terms, is a true and
correct copy, and such Agency commitment or Agency Cash Purchase
Commitment, as applicable, has not been withdrawn, amended or
supplemented except as has been theretofore disclosed to MLMCI in
writing;
(viii) Each Agency Mortgage Loan that has been designated to back an
Agency Security conforms in all respects with all requirements of
the Takeout Commitment applicable to the Agency Security to be
backed by such Agency Mortgage Loans;
(ix) Each Takeout Commitment is a legal, valid and binding obligation
of the parties thereto enforceable against each of them in
accordance with its terms, 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);
(x) Each Takeout Commitment has been duly and validly assigned to CMI
by the related Qualified Originator and such assignment is
enforceable against such Qualified Originator in accordance with
its terms;
(xi) The Qualified Originator relating to each Mortgage Loan that has
been designated to be sold to an Agency under its cash purchase
program has duly and validly assigned the right to receive the
cash proceeds of such sale to CMI and CMI has full power and
authority (corporate and other) to assign, and has duly and
validly so assigned, the right to receive such cash proceeds to
MLMCI; and
I-17
<PAGE>
(xii) Each Takeout Commitment assigned or pledged by CMI to MLMCI is
enforceable by MLMCI against the related Takeout Investor.
(d) CMI represents and warrants as to each Transaction involving Non-
Agency Mortgage Loans as of the Purchase Date of such Transaction as
follows:
(i) There exists for each Non-Agency Mortgage Loan either: (a) a
binding Trade Commitment from a Trade Investor to the related
Qualified Originator or (b) an enforceable Commitment/Certificate
of Insurance in form and substance satisfactory to MLMCI;
(ii) Each Non-Agency Mortgage Loan conforms in all respects with all
requirements of any applicable Trade Commitment;
(iii) Notwithstanding any other provision of the Agreement, no Non-
Agency Mortgage Loan for which a Commitment/Certificate of
Insurance has been issued shall be subject to the Agreement or to
the Custody Agreement for any period after the date occurring 37
days prior to the expiration date for the related
Commitment/Certificate of Insurance;
(iv) Each Trade Commitment has been duly and validly assigned to CMI
by the related Qualified Originator and such assignment is
enforceable against such Qualified Originator in accordance with
its terms; and
(v) Each Trade Commitment assigned or pledged by CMI to MLMCI is
enforceable by MLMCI against the related Trade Investor.
(e) CMI covenants with MLMCI as follows:
(i) CMI shall immediately notify MLMCI if any Approvals are withdrawn
or modified;
(ii) In the case of a Transaction involving Agency Mortgage Loans, CMI
shall not alter or amend the Agency Registration Form relating to
such Transaction following the initial preparation thereof
without the express approval of MLMCI;
(iii) In the case of a Transaction involving Agency Mortgage Loans to
be sold to an Agency under its cash purchase program, CMI shall
not alter or amend the "payee" designation on any Cash Purchase
I-18
<PAGE>
Loan Schedule or Agency Payee Form relating to such Transaction
without the express prior written approval of MLMCI;
(iv) Without MLMCI's express prior written approval, CMI shall not
execute, in favor of any third party other than MLMCI or MLGSI,
any assignment of rights held or purportedly held by CMI under a
given Agency Cash Purchase Commitment, Takeout Commitment or
Trade Commitment;
(v) CMI shall be at the time it delivers any Purchased Securities to
the Custodian or MLMCI for any Transaction, and shall continue to
be, through the Purchase Date relating to each such Transaction,
the legal and beneficial owner of such Purchased Securities free
and clear of any lien, security interest, option or encumbrance
except for the security interest created by the Agreement;
(vi) CMI shall promptly notify MLMCI after the occurrence of any
change contemplated by Paragraph 11(a) of these Supplemental
Terms;
(vii) Notwithstanding any other provision of the Agreement, no Mortgage
Loan shall be subject to the Agreement or to the Custody
Agreement for more than 90 days in aggregate;
(viii) All data and other information relating to the Mortgage Loans
provided at any time by or on behalf of CMI to the Custodian,
whether in writing, by electronic transmission or on computer
tape or diskette or otherwise, will be true and correct;
(ix) CMI will maintain on its Non-Agency Mortgage Loans either a Trade
Commitment or a Commitment/ Certificate of Insurance, in each
case, in form and substance acceptable to MLMCI;
(x) CMI will provide, or will cause to be provided, written notice to
MLMCI of the date on which any Agency Security is to be issued
and delivered by the related agency at least two (2) Business
Days prior to such issuance and delivery;
(xi) CMI shall immediately notify MLMCI if any representations,
warranties or covenants of CMI under the Guaranty are breached;
I-19
<PAGE>
(xii) CMI shall immediately notify MLMCI if CMI discovers that any
Qualified Originator has suffered a material adverse change in
its business, operations, properties, prospects or condition
(financial or otherwise); and
(xiii) CMI shall immediately advise MLMCI if CMI believes that any
Commitment Number reported to it by a Qualified Originator does
not accurately indicate the status of the related Mortgage Loan.
14. EVENTS OF DEFAULT.
-----------------
(a) The term "Event of Default" shall, in addition to the definition set
forth in the Master Repurchase Agree-ment, include the following
events:
(i) Any governmental or self-regulatory authority shall take
possession of MLMCI or CMI 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).
(ii) MLMCI or CMI shall have reasonably determined that the other
party is or will be unable to meet its commitments under the
Agreement, shall have noti-fied 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 forty-eight (48) hours.
(iii) A final judgment by any competent court in the United States of
America for the payment of money in an amount of at least
$1,000,000 is rendered against the defaulting party, and the same
remains undischarged or unpaid for a period of 60 days during
which execution of such judgment is not effectively stayed.
(iv) The Agreement shall for any reason cease to create a valid, first
priority security interest in any of the Purchased Securities
purported to be cov-ered thereby; provided, however, that such
-------- -------
circum-stance shall not constitute an Event of Default if, after
determining the Market Value of the Mortgage Loans without taking
into account the Mortgage Loans with respect to which such
circum-stance has occurred, no other Event of Default shall have
occurred and be continuing.
I-20
<PAGE>
(v) Any representation or warranty made by CMI 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
MLMCI's interests shall have been materially adversely affected
thereby.
(vi) CMI shall breach any covenant in the Agreement or the Custody
Agreement and MLMCI's interests shall have been materially
adversely affected thereby.
(vii) Any Approvals of CMI are materially adversely modified or
revoked.
(viii) An Act of Insolvency shall occur with respect to CMI or any
controlling entity.
(b) In addition to the other remedies available to MLMCI or CMI upon the
occurrence and during the continuance of an Event of Default by the
other party, MLMCI shall have the following additional remedies upon
the occur-rence and during the continuance of an Event of Default by
CMI;
(i) All rights of CMI and any Qualified Originator to receive
payments which any of them would otherwise be authorized to
receive pursuant to Paragraph 5 of the Agreement shall cease, and
all such rights shall thereupon become vested in MLMCI, which
shall thereupon have the sole right to receive such payments and
apply them to the aggregate unpaid Repurchase Prices owed by CMI.
(ii) All payments that are received by CMI or any Qualified Originator
contrary to the provisions of the preceding clause (i) shall be
received in trust for the benefit of MLMCI and shall be
segregated from other funds of CMI.
(iii) MLMCI may unilaterally instruct the Servicers to direct all
payments of Mortgage Loan Income directly to MLMCI pursuant to
the Instruction Letters.
(c) Any sale of Purchased Securities under Paragraph 11 of the Master
Repurchase Agreement shall be conducted in a commercially reasonable
manner.
(d) Expenses incurred in connection with an Event of Default shall include
without limitation those costs and expenses incurred by the
nondefaulting party as a result of the early termination of any
repurchase
I-21
<PAGE>
agreement or reverse repurchase agreement entered into by the
nondefaulting party in connection with the Transaction then in
default.
15. ADDITIONAL EVENTS OF TERMINATION.
--------------------------------
At the option of MLMCI, exercised by written notice to CMI, the Repurchase
Date for any or all Transactions under the Agreement shall be deemed to
immediately occur in the event that:
(a) With respect to any Mortgage Loans that MLMCI and CMI agree will back
publicly issued securities with respect to which Merrill Lynch,
Pierce, Fenner & Smith Incorporated will act as lead manager of the
underwriting thereof, at the option of MLMCI, exercised by written
notice to CMI, the Repurchase Date for a Transaction shall be deemed
to immediately occur in the event that CMI removes or replaces Merrill
Lynch, Pierce, Fenner & Smith Incorporated as such lead manager;
(b) In the reasonable judgment of MLMCI a material adverse change shall
have occurred in the business, operations, properties, prospects or
condition (financial or otherwise) of CMI;
(c) MLMCI shall request written assurances as to the finan-cial well-being
of CMI and such assurances shall not have been provided verbally
within twenty-four (24) hours and in writing within forty-eight (48)
hours of such request;
(d) CMI shall be in default with respect to any normal and customary
covenants under any material contract or agreement to which it is a
party (which covenants include, but are not limited to, an Act of
Insolvency of CMI or the failure of CMI to make required payments
under such contract or agreement as they become due) which default
permits acceleration of the obligations of CMI under such contract or
agreement by any other party thereto;
(e) CMI shall merge or consolidate into any entity unless the surviving or
resulting entity shall be a corporation organized under the laws of
the United States and such entity expressly assumes by written
agreement, executed and delivered to MLMCI in form and substance
satisfactory to MLMCI, the performance of all of CMI's duties and
obligations hereunder and under the Custody Agreement;
I-22
<PAGE>
(f) A firm of independent accountants shall have failed to issue an
opinion or shall have issued a qualified opinion in connection with
the most recent audited financial statements of CMI; or
(g) A Qualified Originator shall have suffered a material adverse change
in its business, operations, properties, prospects or condition
(financial or otherwise) and (i) MLMCI's interests shall have been
materially adversely affected thereby and (ii) CMI shall not have paid
to MLMCI the Repurchase Price relating to the Mortgage Loans subject
to the Agreement that were originated by such Qualified Originator.
The acceleration of the Repurchase Date as provided in this Paragraph 15
shall be in addition to any other rights of the parties to cause such an
acceleration under the Agreement.
16. FINANCIAL STATEMENTS.
--------------------
(a) As of the date hereof, MLMCI and CMI shall each provide the other with
its audited year-end financial statements and its most recent
available interim finan-cial statement. MLMCI and CMI shall from time
to time each provide the other with audited year-end financial
statements and additional available interim financial statements upon
such other party 's reasonable request.
(b) CMI shall provide MLMCI, at the expense of CMI without request of
MLMCI, 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 CMI to MLMCI hereunder will
constitute a representation by CMI that there has been no material
adverse change in CMI's financial condition not disclosed to MLMCI
since the date of CMI's most recent unaudited balance sheet or income
statement delivered to MLMCI. CMI shall provide MLMCI, from time to
time at CMI's expense, with such information of a financial or
operational nature as MLMCI may reasonably request promptly upon
receipt of such request.
17. REPURCHASE PRICE; PRICE DIFFERENTIAL. The Price Differen-tial 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/Funding Request. 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 MLMCI and CMI in writing. Amounts received
I-23
<PAGE>
by MLMCI after 3:00 p.m., New York City time, on any Business Day shall be
deemed to have been paid by CMI and received by MLMCI on the next
succeeding Business Day.
18. ADDITIONAL INFORMATION; CONFIDENTIALITY.
---------------------------------------
(a) At any reasonable time CMI shall permit MLMCI, 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 any
Transac-tion. Such inspection shall occur upon the request of MLMCI
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) CMI agrees to provide MLMCI from time to time with such information
concerning CMI of a financial or opera-tional nature as MLMCI may
reasonably request.
(c) CMI acknowledges that the Agreement and the Custody Agreement are
confidential in nature and CMI agrees that, unless otherwise directed
by a court 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 MLMCI.
19. MARGIN MAINTENANCE. Paragraph 4(a) of the Master Repurchase Agreement is
------------------
hereby modified to provide that if the notice to be given by MLMCI to CMI
under such paragraph is given at or prior to 10:00 a.m. New York City time
on a Business Day, CMI shall transfer the cash or Additional Purchased
Securi-ties to MLMCI (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 10:00 a.m. New York
City time, CMI 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.
20. APPOINTMENT OF AGENT. MLMCI hereby appoints MLGSI as its agent for
--------------------
purposes of the receipt, registration and sale of Agency Securities.
21. FURTHER ASSURANCES. CMI shall promptly provide such further assurances or
------------------
agreements as MLMCI may request in order to effect the purposes of the
Agreement.
I-24
<PAGE>
22. MLMCI AS ATTORNEY-IN-FACT. MLMCI is hereby appointed to act after the
-------------------------
occurrence and during the continuation of an Event of Default as the
attorney-in-fact of CMI for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instruments that
MLMCI 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, MLMCI shall
have the right and power during the occurrence and continuation of any
Event of Default to (i) take any action MLMCI deems prudent to direct the
receipt of payments on any Mortgage Loan from the servicer and master
servicer thereof to MLMCI or its designee, including, without limitation,
the sending of any letter which irrevocably instructs such servicer or
master service to make all payment directly to MLMCI or its designee, and
(ii) receive, endorse and collect all checks made payable to the order of
CMI 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.
MLMCI agrees that, so long as an Event of Default shall not have occurred
and be continuing, it will provide prior notice to CMI of any actions taken
by MLMCI pursuant to the power granted by this Paragraph 22.
23. TERMINATION. Notwithstanding any provisions of Paragraph 15 of the Master
-----------
Repurchase Agreement to the contrary, this Agreement and all Transactions
outstanding hereunder shall terminate automatically without any requirement
for notice on the date occurring eleven calendar months and twenty-nine
days after the date as of which this Agreement is entered into; provided,
however, that this Agreement and any Transaction outstanding hereunder may
be extended by mutual agreement of MLMCI and CMI; and provided further,
however, that no such party shall be obligated to agree to such an
extension.
24. MAXIMUM TRANSACTION AMOUNT.
--------------------------
(a) The aggregate outstanding Repurchase Price for the Purchased
Securities subject to the Agreement as of any date of determination shall
not exceed $100,000,000.
(b) The aggregate outstanding principal amount of Non-Agency Mortgage
Loans subject to the Agreement at any time shall not exceed $50,000,000.
(c) The aggregate outstanding principal amount of Mortgage Loans
subject to the Agreement at any time that were originated by a single
Qualified Originator shall not exceed $20,000,000.
I-25
<PAGE>
25. EXPENSES. Each party shall bear its own expenses in connection with the
--------
Transactions contemplated hereby.
26. AGENCY DOCUMENTATION. All references in this Agreement to items of Agency
--------------------
Documentation shall, if such items are amended or superseded from time to
time by the related Agency, be deemed references to such Agency
Documentation as so amended or superseded.
27. COUNTERPARTS. This 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.
28. 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.
29. 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 to be
-------- -------
received when transmitted so long as the transmitting machine has provided
an electronic confirmation of such transmission and such transmission has
occurred not earlier than 9:30 a.m. New York City time and not later than
5:00 p.m. New York City time. Any such notice shall be sent to a party at
the address or facsimile transmission number set forth in Annex II attached
hereto.
30. INCORPORATION OF TERMS. The Master Repurchase Agreement as supplemented
----------------------
hereby shall be read, taken and construed as one and the same instrument.
I-26
<PAGE>
EXHIBIT A
---------
LETTER OF INSTRUCTIONS TO SERVICERS
-----------------------------------
[Servicer]
Gentlemen:
On [date], Countrywide Mortgage Investments, Inc. ("CMI") sold to Merrill
Lynch Mortgage Capital Inc. ("MLMCI") all of CMI's right, title and interest in
and to the mortgage loans identified on Schedule A attached to this letter and
made a part hereof (the "Mortgage Loans"). Accordingly, CMI hereby
unconditionally and irrevocably instructs you to pay to MLMCI, pursuant to the
terms of our existing servicing arrangements, any and all monies received by you
on or after [date] which would have been payable from time to time by you to CMI
on account of or otherwise in connection with the Mortgage Loans, including
without limitation any and all principal, interest, partial prepayments,
prepayments in full, penalties, advance payments, or expenses; provided,
--------
however, that any such monies representing scheduled payments of principal of or
-------
interest on such Mortgage Loans due prior to [date] shall be paid to CMI.
All such monies should be paid by you to the order of MLMCI in the manner
and on the date such monies would have been payable to CMI, as follows:
Bankers NYC
Acct.: MLMCI Matched Book
Acct. No.: 00 812 914
ABA No.: 021 001 033
CMI further instructs you that all rights and powers of CMI under the
existing servicing arrangements with respect to the Mortgage Loans have been
transferred to MLMCI and that MLMCI has the sole right as the owner of the
Mortgage Loans to direct your actions under such servicing arrangements with
respect to the Mortgage Loans and to exercise such rights and powers.
Very truly yours,
COUNTRYWIDE MORTGAGE INVESTMENTS,
INC.
By: ____________________________
Name: __________________________
Title: _________________________
A-1
<PAGE>
EXHIBIT B
CONFIRMATION/FUNDING REQUEST
TO: FROM:
Countrywide Mortgage Investments,Inc. Merrill Lynch Mortgage Capital Inc.
155 North Lake Avenue 101 Hudson Street, 12th Floor
Pasadena, CA 91101 Jersey City, NJ 07302
Attention: Michael W. Perry Attention: Christine Star
RE: TRANSACTIONS INVOLVING AGENCY MORTGAGE LOANS TO BE SECURITIZED
INTO AGENCY SECURITIES
AGENCY (check one): FNMA / / FHLMC / / GNMA / /
Merrill Lynch Mortgage Capital Inc. ("MLMCI") is pleased to confirm your sale
and our purchase of the Purchased Securities (backed by the Mortgage Loans
listed on Attachment I hereto) described below pursuant to the Master Repurchase
Agreement (including the supplemental terms set forth in Annex I thereto), dated
as of October 1, 1993 (the "Master Repurchase Agreement") between MLMCI and
Countrywide Mortgage Investments, Inc. under the following terms and conditions:
POOL/COMMITMENT NO.
----- ----- ----- ----- -----
ORIG PRIN AMT OF MTG LOANS:
----- ----- ----- ----- -----
REM PRIN AMT OF MTG LOANS:
----- ----- ----- ----- -----
PURCHASE DATE:
----- ----- ----- ----- -----
REPURCHASE DATE:
----- ----- ----- ----- -----
PURCHASE PRICE:
----- ----- ----- ----- -----
PRICING RATE:
----- ----- ----- ----- -----
PRICE DIFFERENTIAL DUE:
----- ----- ----- ----- -----
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.
COUNTRYWIDE MORTGAGE INVESTMENTS, INC. MERRILL LYNCH MORTGAGE CAPITAL INC.
BY:___________________________________ BY:________________________________
NAME:_________________________________ NAME:______________________________
TITLE:________________________________ TITLE:_____________________________
B-1
<PAGE>
ATTACHMENT I
TO EXHIBIT B
CONFIRMATION/FUNDING REQUEST FOR AGENCY MORTGAGE LOANS
======================================================
Request No. ____________
Date: __________________
Amount
Funded
to
Product Wire Loan Borrower Loan Purchase Qualified
Investor Type Date Number Last Amount Price Originator
----------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Market Takeout Note Commitment Takeout Maturity
Investor Value Date Rate Number* Price Date
----------------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTALS:
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.**
By: ______________________________
Title: ______________________________
Date: ______________________________
Amount to be
funded by MLMCI: $____________
__________
* To be provided within 2 Business Days of funding if not currently
available.
** Countrywide Mortgage Investments, Inc. ("CMI") hereby represents that no
warehouse lien or other lien or encumbrance exists with respect to the
above-referenced Mortgage Loans other than the lien of CMI under its
Warehouse Lending Agreement with the related Qualified Originator.
B-2
<PAGE>
EXHIBIT C
CONFIRMATION/FUNDING REQUEST
TO: Countrywide Mortgage Investments, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention: Michael W. Perry
FROM: Merrill Lynch Mortgage Capital Inc.
101 Hudson Street
12th Floor
Jersey City, NJ 07302
Attention: Christine Star
RE: TRANSACTIONS INVOLVING NON-AGENCY MORTGAGE LOANS
Merrill Lynch Mortgage Capital Inc. ("MLMCI") is pleased to confirm your sale
and our purchase of the Mortgage Loans described below and on Attachment I
hereto pursuant to the Master Repurchase Agreement (including the supplemental
terms set forth in Annex I thereto), dated as of October 1, 1993 (the "Master
Repurchase Agreement") between MLMCI and Countrywide Mortgage Investments, Inc.
under the following terms and conditions:
Additional Aggregate
ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS: _________ _________
CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS: _________ _________
PURCHASE DATE: _________ _________
REPURCHASE DATE: _________ _________
PURCHASE PRICE: _________ _________
PRICING RATE: _________ _________
PRICE DIFFERENTIAL DUE DATE: _________ _________
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.
MERRILL LYNCH MORTGAGE CAPITAL INC.
BY:________________________________
NAME:______________________________
TITLE:_____________________________
C-1
<PAGE>
ATTACHMENT I
TO EXHIBIT C
CONFIRMATION/FUNDING REQUEST FOR NON-AGENCY MORTGAGE LOANS
==========================================================
Request No. ____________
Date: __________________
Amount
Funded
to
Product Wire Loan Borrower Loan Purchase Qualified
Investor Type Date Number Last Amount Price Originator
----------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Market Takeout Note Commitment Takeout Maturity
Investor Value Date Rate Number* Price Date
----------------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTALS:
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.**
By: ______________________________
Title: ______________________________
Date: ______________________________
Amount to be
funded by MLMCI: $____________
__________
* To be provided within 2 Business Days of funding if not currently
available.
** Countrywide Mortgage Investments, Inc. ("CMI") hereby represents that no
warehouse lien or other lien or encumbrance exists with respect to the
above-referenced Mortgage Loans other than the lien of CMI under its
Warehouse Lending Agreement with the related Qualified Originator.
C-2
<PAGE>
EXHIBIT D
CONFIRMATION/FUNDING REQUEST
TO: Countrywide Mortgage Investments, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention: Michael W. Perry
FROM: Merrill Lynch Mortgage Capital Inc.
101 Hudson Street
12th Floor
Jersey City, NJ 07302
Attention: Christine Star
RE: TRANSACTIONS INVOLVING AGENCY MORTGAGE LOANS
Merrill Lynch Mortgage Capital Inc. ("MLMCI") is pleased to confirm your sale
and our purchase of the Purchased Securities described below (backed by 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 October 1, 1993 (the "Master Repurchase Agreement") between MLMCI and
Countrywide Mortgage Investments, Inc. under the following terms and conditions:
Additional Aggregate
ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS: _________ _________
CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS: _________ _________
PURCHASE DATE: _________ _________
REPURCHASE DATE: _________ _________
PURCHASE PRICE: _________ _________
PRICING RATE: _________ _________
PRICE DIFFERENTIAL DUE DATE: _________ _________
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.
MERRILL LYNCH MORTGAGE CAPITAL INC.
BY:________________________________
NAME:______________________________
TITLE:_____________________________
D-1
<PAGE>
ATTACHMENT I
TO EXHIBIT D
CONFIRMATION/FUNDING REQUEST FOR AGENCY MORTGAGE LOANS
======================================================
Request No. ____________
Date: __________________
Amount
Funded
to
Product Wire Loan Borrower Loan Purchase Qualified
Investor Type Date Number Last Amount Price Originator
----------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Market Takeout Note Commitment Takeout Maturity
Investor Value Date Rate Number* Price Date
----------------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTALS:
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.**
By: ______________________________
Title: ______________________________
Date: ______________________________
Amount to be
funded by MLMCI: $____________
__________
* To be provided within 2 Business Days of funding if not currently
available.
** Countrywide Mortgage Investments, Inc. ("CMI") hereby represents that no
warehouse lien or other lien or encumbrance exists with respect to the
above-referenced Mortgage Loans other than the lien of CMI under its
Warehouse Lending Agreement with the related Qualified Originator.
D-2
<PAGE>
EXHIBIT E
FORM OF WAREHOUSE LENDING AGREEMENT
[To be provided by CMI.]
E-1
<PAGE>
EXHIBIT F
LIST OF TAKEOUT INVESTORS AND TRADE INVESTORS
---------------------------------------------
American Residential Mortgage, Inc.
Arbor National Mortgage
Bear, Stearns & Co. Inc.
Capstead Mortgage Corporation
Countrywide Funding Corporation
Countrywide Mortgage Conduit
Countrywide Mortgage Investments, Inc.
Dean Witter Reynolds Inc.
Directors Mortgage Loan Corp.
The First Boston Corporation
First Franklin Financial Corporation
Fleet Financial Group, Inc.
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
Imperial Credit Industries
Kidder, Peabody & Co. Incorporated
Margaretten & Company, Inc.
Merrill Lynch Government Securities, Inc.
Morgan Stanley & Co. Incorporated
Nomura International
North American Mortgage
Norwest Mortgage, Inc.
PaineWebber Incorporated
Plaza Home Mortgage Bank, F.S.B.
The Prudential Home Mortgage Company Inc.
Residential Funding Corporation
Salomon Brothers Inc
Saxon Mortgage Funding Corporation
Shearson Lehman Brothers Inc.
F-1
<PAGE>
ANNEX II
Names and Addresses for Communications Between Parties
Merrill Lynch Mortgage Capital Inc.
Louis V. Molinari
Director
Merrill Lynch World Headquarters
World Financial Center, North Tower
New York, New York 10281-1306
Telephone No. (212) 449-5333
Facsimile No. (212) 449-6673
Countrywide Mortgage Investments, Inc.
Michael W. Perry
Senior Vice President and
Chief Operating Officer
155 North Lake Avenue
Pasadena, California 91101
Telephone No. (818) 304-8400
Facsimile No. (818) __________
<PAGE>
[EXECUTION COPY]
TRI-PARTY CUSTODY AGREEMENT
by and among
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
("CMI")
and
MERRILL LYNCH MORTGAGE CAPITAL INC.
("MLMCI")
and
THE FIRST NATIONAL BANK OF CHICAGO
("Bank")
and
FIRST CHICAGO NATIONAL PROCESSING CORPORATION
("Custodian")
Dated as of: October 1, 1993
<PAGE>
This TRI-PARTY CUSTODY AGREEMENT is made and entered into as of the date
written on the cover by and among CMI, the Custodian, the Bank and MLMCI, on
behalf of itself and other owners from time to time of interests in the Mortgage
Loans.
WHEREAS, MLMCI and CMI have entered into the Master Repurchase Agreement
pursuant to which CMI sells to MLMCI with a simultaneous agreement to repurchase
such at a later date;
WHEREAS, MLMCI has also agreed to provide funds to CMI under the Master
Repurchase Agreement to allow CMI to provide funds to Qualified Originators for
the creation of enforceable first lien mortgages on real estate properties,
which funds provided by MLMCI to CMI will be disbursed by the Bank, as agent for
MLMCI, to specified Closing Agents of the Qualified Originators closing the
Mortgage Loans;
WHEREAS, CMI provides funding to the Qualified Originators under a
warehouse lending arrangement pursuant to which CMI holds a first priority
perfected security interest in the related Mortgage Loans and agrees to deliver
the Mortgage Loans to the related Agency or Trade Investor for purchase or
securitization, as the case may be;
WHEREAS, CMI has or shall hereafter grant to MLMCI a security interest in
certain Mortgage Loans as security for the due and punctual payment of sums due
from CMI to MLMCI, and its successors and assigns, in the event that the
purchase and sale under the Master Repurchase Agreement is deemed to be a
financing;
WHEREAS, CMI intends to deliver, or intends to cause a Qualified Originator
to deliver, certain documents relating to such Mortgage Loans to the Custodian
and the Custodian is willing to hold such documents in custody for the benefit
of, and as bailee and agent for, MLMCI and its successors and assigns, in order
to perfect the security interest in such of each person having an interest in
the Mortgage Loans; and
WHEREAS, the parties to this Agreement desire to set forth the terms and
conditions under which the Custodian will hold such collateral;
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the indicated meanings unless the context or use indicates another or
different meaning and intent,
<PAGE>
and the definitions of such terms are equally applicable to the singular and the
plural forms of such terms.
"Agency" shall mean GNMA, FNMA or FHLMC, as applicable.
"Agency Custodian" shall mean an institution, acceptable to MLMCI in its
sole discretion, that is an approved custodian for the Agency to which the
related Mortgage Loans will be submitted.
"Agency Mortgage Loans" shall mean Mortgage Loans that are, or are intended
to be, pooled (each of which pools may consist of one or more Mortgage Loans)
and are intended to (i) back an Agency Security or (ii) be sold to an Agency
under its cash purchase program.
"Agency Security" shall mean a security issued by GNMA, FNMA or FHLMC which
is backed by Agency Mortgage Loans.
"Agreement" shall mean this Tri-Party Custody Agreement, as supplemented or
amended from time to time.
"Authorized Representative" shall have the meaning set forth in Section 27
hereof.
"Bank" shall mean The First National Bank of Chicago.
"Business Day" shall mean any day excluding Saturday, Sunday and any day on
which banks located in the States of New York, California, or Illinois are
authorized or permitted to close for business.
"Closing Agent" shall refer to a title company, closing attorney or other
agent that disburses funds on behalf of a Qualified Originator in connection
with the origination of a Mortgage Loan; each such title company, closing
attorney or other agent must be acceptable to MLMCI in its sole discretion and
MLMCI may, in its discretion, refuse to have funds disbursed to any Closing
Agent.
"CMI Loan Number" shall mean the number assigned by the Qualified
Originator and/or CMI to a Mortgage Loan to facilitate identification for
administrative purposes.
"Collateral Submission Summary" shall mean a Collateral Submission Summary
substantially in the form attached hereto as Exhibit A, having appended thereto
a Mortgage Loan Schedule in form satisfactory to MLMCI.
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<PAGE>
"Collateral Submission Summary Amendment" shall mean a Collateral
Submission Summary Amendment substantially in the form attached hereto as
Exhibit B.
"Commitment/Certificate of Insurance" shall mean the effective mortgage
pool insurance policy commitment issued by General Electric Mortgage Insurance
Corporation, PMI Mortgage Insurance Company or United Guaranty Insurance
Company.
"Commitment Number" shall mean the commitment number provided by a
Qualified Originator to CMI, and communicated by CMI to the Custodian, with
respect to a Mortgage Loan indicating that such Mortgage Loan has either been
designated (i) to be included in a Pool of Agency Mortgage Loans backing an
Agency Security, (ii) for sale to an Agency under an Agency purchase program or
(iii) to be included in a Pool of Non-Agency Mortgage Loans to be sold to a
Trade Investor.
"DDA Account" shall have the meaning set forth in Section 16 hereof.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation.
"FHLMC Required Documents" shall mean the documents referred to in Sections
4 and 7 hereof.
"FNMA" shall mean the Federal National Mortgage Association.
"FNMA Required Documents" shall mean the documents referred to in Sections
4 and 6 hereof.
"GNMA" shall mean the Government National Mortgage Association.
"GNMA Required Documents" shall mean the documents referred to in Sections
4 and 5 hereof.
"Lender's Title Insurance Policy" shall mean an ALTA or CLTA (extended
coverage) form lender's title insurance policy, including all riders or
endorsements thereto, together with at least such additional endorsements as are
required by FNMA Guidelines, in an amount not less than the outstanding
principal balance of the Mortgage Loan, insuring the holder of the Mortgage Loan
that the mortgage or deed of trust constitutes a valid first lien on the
Mortgaged Premises, subject only to matters specified in the Master Repurchase
Agreement, or such other exceptions as are acceptable under FNMA Guidelines.
3
<PAGE>
"Master Agency Custodian Bailee Letter" shall mean a letter substantially
in the form of Exhibit O-1 hereto.
"Master Bailee Letter" shall refer to a letter substantially in the form of
Exhibit D hereto.
"Master Escrow Letter" shall mean an escrow letter executed by an
authorized signatory of a Closing Agent substantially in the form attached
hereto as Exhibit C.
"Master Repurchase Agreement" shall mean the Master Repurchase Agreement,
dated as of October 1, 1993, between MLMCI and CMI, as the same may be modified
and amended from time to time.
"MLGSI" shall mean Merrill Lynch Government Securities Inc.
"MLMCI" shall mean Merrill Lynch Mortgage Capital Inc.
"Mortgage" shall mean a duly recorded first mortgage or first deed of trust
on improved real property.
"Mortgage File" shall mean, as to each Mortgage Loan subject to this
Agreement, the Required Documents and all other documents relating to such
Mortgage Loan that are held by the Custodian.
"Mortgage Loan" shall mean those loans listed on a Mortgage Loan Schedule,
each of which loans shall be evidenced by a Note secured by a Mortgage and by
the other documents that constitute the Mortgage File delivered to and held by
the Custodian under this Agreement.
"Mortgage Loan Schedule" shall mean a listing of Mortgage Loans setting
forth, as to each Mortgage Loan listed thereon, the CMI Loan Number, the
Mortgagor's name, the original principal amount, the outstanding principal
amount, the Note rate, the maturity date, the loan type, the loan-to-value
ratio, the Commitment Number (if any), the expiration date of the
Commitment/Certificate of Insurance (if any) and such other information as may
be mutually agreed upon by MLMCI, CMI and the Custodian, substantially in the
form attached hereto as Exhibit N.
"Mortgaged Premises" shall mean the real property, including all buildings,
structures, improvements or fixtures thereon and all appurtenances, water
rights, privileges and benefits appertaining thereto, that is conveyed, pledged
or mortgaged, or in which a security interest is granted under a
4
<PAGE>
mortgage or deed of trust to secure the payment and performance of a Mortgage
Loan.
"Mortgagor" shall mean any obligor under a Note, including any Person that
has acquired Mortgaged Premises and assumed the obligations of the original
maker under the Note and mortgage or deed of trust, or a Person that has
acquired title to any Mortgaged Premises subject to the lien of the mortgage or
deed of trust.
"Non-Agency Mortgage Loans" shall mean Mortgage Loans that have not been
pooled with the intention of backing an Agency Security or to be sold to an
Agency; such Mortgage Loans may, however, conform to Agency securitization
and/or sale requirements.
"Non-Agency Required Documents" shall mean the documents referred to in
Sections 4 and 8 hereof.
"Note" shall mean a promissory note, together with any rider, addendum or
amendment thereto, evidencing a Mortgage Loan.
"Officer's Certificate" shall mean a certificate signed by (i) an officer
(authorized to sign an Officer's Certificate) of CMI or other Person submitting
a Mortgage File to the Custodian or (ii) an officer from the appropriate records
depository for the jurisdiction where the respective Mortgaged Premises are
located. (The text of any particular Officer's Certificate may be printed or
stamped upon or attached to a document constituting a portion of a Mortgage File
and the signature of an officer authorized to sign an Officer's Certificate may
be either a facsimile or other reproduction thereof.)
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Pool" shall refer to a collection of one or more Mortgage Loans.
"Preliminary Title Report" shall mean a title report prepared by a company
qualified to issue the Lender's Title Insurance Policy that sets forth (i) the
legal description of the Mortgaged Premises and (ii) the complete status of
title as to the Mortgaged Premises.
5
<PAGE>
"Preliminary Title Report State" shall mean any state in which a
Preliminary Title Report constitutes a binding commitment for the insurer to
issue a Lender's Title Insurance Policy.
"Primary Mortgage Insurance Policy" shall mean a mort-gage insurance
policy, in form and substance satisfactory to CMI and MLMCI, insuring the holder
of a Mortgage Loan against all or a portion of the loss sustained by reason of a
default by a Mortgagor in the payment of principal and interest thereon,
together with all riders and endorsements thereto.
"P&S Report" shall refer to the report contemplated by Section 15 hereof
substantially in the form of Exhibit E hereto with a list attached thereto
reflecting those Mortgage Loans with respect to which the related amount owed by
CMI to MLMCI under the Master Repurchase Agreement has been paid in full as a
result of the deposits to the Settlement Account referred to in such report.
"Qualified Originator" shall refer to a correspondent of CMI that
originates Mortgage Loans and subsequently assigns its rights thereto to CMI
pursuant to a warehouse lending agreement between CMI and such Qualified
Originator. Each Qualified Originator shall be acceptable to MLMCI in its sole
discretion. Upon request by MLMCI, CMI shall provide a credit officer of MLMCI
with a complete list of Qualified Originators, which list may be modified from
time to time by MLMCI and which list will not be further distributed by MLMCI.
"Request and Receipt" shall mean a request and receipt for documents in a
Mortgage File substantially in the form of Exhibit F hereto.
"Required Documents" shall refer to GNMA, FNMA, FHLMC and Non-Agency
Required Documents, as the case may be.
"Servicer" shall mean, with respect to any Mortgage Loan, the related
Qualified Originator.
"Settlement Account" shall have the meaning set forth in Section 15 hereof.
"Supplemental Agency Custodian Bailee Letter" shall refer to a letter
substantially in the form of Exhibit O-2 hereto.
"Supplemental Bailee Letter" shall refer to a letter substantially in the
form of Exhibit G hereto.
6
<PAGE>
"Takeout Commitment" shall refer to a trade confirmation from the Takeout
Investor to a Qualified Originator, which trade confirmation has been assigned
by the Qualified Originator to CMI, confirming the details of a forward trade
between the Takeout Investor and such Qualified Originator with respect to one
or more Agency Securities, which trade confirmation shall be valid, binding and
in full force and effect and relate to Pools of Agency Mortgage Loans that
satisfy the "good delivery standard" of the Public Securities Association as set
forth in the Public Securities Association Uniform Practices Guide.
-----------------------------------------------------
"Takeout Investor" shall refer to a securities dealer or other financial
institution, reasonably acceptable to MLMCI, who has made a Takeout Commitment.
A list of Takeout Investors that are acceptable to MLMCI is set forth at Exhibit
H hereto, which list may be modified from time to time by MLMCI in its
reasonable discretion. Notice of any such modification shall be provided by CMI
to the Custodian.
"Transaction" shall have the meaning set forth in the Master Repurchase
Agreement.
"Trade Commitment" shall refer to a trade confirmation or similar document
from the Trade Investor to a Qualified Originator, which trade confirmation has
been assigned by the Qualified Originator to CMI, confirming the details of a
mandatory forward trade or similar arrangement reasonably acceptable to MLMCI
between the Trade Investor and such Qualified Originator with respect to one or
more Non-Agency Mortgage Loans, which trade confirmation or similar document
shall be valid, binding and in full force and effect and relate to Pools of Non-
Agency Mortgage Loans that satisfy the delivery standards of the related Trade
Investor.
"Trade Investor" shall refer to a securities dealer or other financial
institution (other than an Agency), reasonably acceptable to MLMCI, who has made
a Trade Commitment. A list of Trade Investors that are acceptable to MLMCI is
set forth at Exhibit H hereto, which list may be modified from time to time by
MLMCI in its reasonable discretion. Notice of any such modification shall be
provided by CMI to the Custodian.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
California.
2. APPOINTMENT OF THE CUSTODIAN AND THE BANK. CMI hereby appoints the
Custodian, and the Custodian hereby accepts its appointment, to act as the agent
of MLMCI, and its successors and assigns, for the purpose of taking custody of
such present and
7
<PAGE>
future collateral or substitutions thereof on the terms and conditions set forth
herein. With respect to each individual collateral pool, the Custodian's
appointment as MLMCI's bailee and agent shall terminate upon the earlier of (i)
issuance by an Agency of securities which are backed by such collateral, (ii)
purchase by an Agency of Agency Mortgage Loans constituting such collateral,
(iii) the purchase by a Trade Investor of Non-Agency Mortgage Loans constituting
such collateral, (iv) repurchase of such collateral by CMI and (v) termination
of the Custodian's obligations under this Agreement in accordance with Section
18 hereof.
CMI hereby appoints the Bank, and the Bank hereby accepts its appointment,
to act as the agent of MLMCI, and its successors and assigns, for the purposes
contemplated in Sections 15 and 16 hereof.
Notwithstanding anything to the contrary contained herein, the Custodian
shall not perform any duties hereunder relating to the certification to an
Agency or other processing for securitization of Mortgage Loans intended to back
an Agency Security, other than to hold as bailee for MLMCI documents relating
thereto and to send such documents to the Agency Custodian as contemplated
hereby, unless CMI requests in writing that the Custodian perform such duties
and the Custodian provides CMI and MLMCI with written notice of its consent. In
the event the Custodian provides the consent contemplated in the preceding
sentence, the Custodian shall commence performing such duties on the terms and
conditions set forth herein five (5) Business Days after the date of such
consent.
3. DEPOSIT OF COLLATERAL. CMI shall deposit, or cause a Qualified
Originator to deposit, with the Custodian not later than 10:30 a.m. Los Angeles
time on the Business Day immediately preceding the date on which a related
Transaction is to be entered into under the Master Repurchase Agreement, and the
Custodian agrees to hold in pledge on behalf of and as bailee and agent for
MLMCI, and its successors and assigns, such collateral which may have been, or
may in the future be, so deposited hereunder on the terms and conditions set
forth herein. The Custodian shall maintain such collateral so deposited in
records and files segregated from any other assets it holds for itself or any
other party.
4. REQUIRED DOCUMENTS FOR ALL MORTGAGE LOANS. CMI shall deposit, or cause
a Qualified Originator to deposit, the following documents with the Custodian
for each Mortgage Loan:
8
<PAGE>
(a) a Collateral Submission Summary relating to such Mortgage Loan
executed by an Authorized Representative of CMI;
(b) the original Note endorsed "Pay to the order of _____________________
without recourse" and signed in the name of the related Qualified
Originator by an officer of such Qualified Originator (together with
all intervening endorsements evidencing a complete chain of
endorsements from the originator of the Mortgage Loan to the related
Qualified Originator and with an original principal amount set forth
therein greater than or equal to the current principal amount of the
indebtedness secured by the related Mortgage as reported to the
Custodian by CMI on the related Mortgage loan Schedule) and (if
applicable) the original assumption agreement, together with the
original of any surety agreement or guaranty agreement relating to the
Note or any such assumption agreement, endorsed in blank by the
holder/payee thereof without recourse, and if the Note or Mortgage or
any other material document relating to the Mortgage Loan has been
signed by a Person on behalf of the Mortgagor, the original power of
attorney or other instrument that authorized and empowered such Person
to sign or a copy of such power of attorney together with an Officer's
Certificate (or to the extent available a certificate from the
recorder's office) certifying that such copy represents a true and
correct reproduction of the original and that such original has been
duly recorded in the appropriate records depository for the
jurisdiction in which the Mortgaged Premises are located;
(c) the original recorded Mortgage or a copy thereof with a certificate of
an officer of a title insurance company to the effect that such copy
represents a true and correct reproduction of the original mortgage
and that such original Mortgage has been recorded or has been sent for
recording in the appropriate records depository for the jurisdiction
in which the mortgaged property is located;
(d) an original assignment of mortgage (an "Assignment of Mortgage") with
assignee in blank but otherwise in recordable form, but not recorded,
and all interim assignments, if any;
(e) a Mortgage Loan Schedule relating to such Mortgage Loan in a form
acceptable to MLMCI and the Custodian;
9
<PAGE>
(f) as to each Mortgage Loan relating to a Note with an original principal
amount in excess of 80% of the appraised value of the related
Mortgaged Premises at the time of origination of such Mortgage Loan,
either an original commitment for, or certificate of, Primary Mortgage
Insurance Policy issued by the applicable insurer; and
(g) a Master Escrow Letter signed by a Closing Agent in the case of any
Mortgage Loans funded by such Closing Agent with funds disbursed
through the DDA Account.
5. GNMA DOCUMENTS. For each Pool of Mortgage Loans intended to back a
security issued by GNMA, CMI shall deposit, or cause a Qualified Originator to
deposit, with the Custodian the following documents and/or all such other
documents as GNMA or MLMCI may require from time to time for the issuance of the
related GNMA securities, duly authorized and completed:
(a) a Schedule of Subscribers and GNMA Contractual Agreement on Form HUD-
11705 listing MLGSI, Merrill Lynch Word Headquarters, World Financial
Center, North Tower, New York, New York 10281, taxpayer number 13-
2761776, as the only subscriber and as the sole person who is
authorized to take delivery of the related GNMA security;
(b) a Schedule of Pooled Mortgages on Form HUD-11706;
(c) a Release of Security Interest on Form HUD-11711A, with the authorized
signature of the person signing for MLMCI in blank;
(d) a Certification and Agreement Regarding Security Interest on Form HUD-
11711B; and
(e) a Summary of Guaranty Agreement on Form HUD-11716 (level payment),
HUD-1746 (GPM or GEM) or HUD-1733 (serial notes) as appropriate.
6. FNMA DOCUMENTS. For each FNMA Pool of Mortgage Loans, CMI shall
deposit, or cause a Qualified Originator to deposit, with the Custodian the
following documents and/or all such other documents as FNMA or MLMCI may require
from time to time for either the issuance of the related FNMA securities or the
purchase by FNMA of such Mortgage Loans, duly authorized and completed:
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<PAGE>
(a) a Security Release Certification on Form 2004, with the authorized
signature of the person signing for MLMCI in blank;
(b) a Schedule of Mortgages on Form 2005 (fixed rate), Form 2025 (ARMs,
GEMs and VRMs) or other appropriate form; and
(c) either a Delivery Schedule on Form 2014 listing Merrill Lynch
Government Securities, Inc. as the only subscriber and as the sole
person to which the related FNMA securities shall be delivered or, if
the Mortgage Loans are to be purchased by FNMA, a Loan Schedule (Form
1068 or 1069) listing the payee Code for the Settlement Account.
7. FHLMC DOCUMENTS. For each FHLMC Pool of Mortgage Loans, CMI shall
deposit, or cause a Qualified Originator to deposit, with the Custodian the
following documents and/or all such other documents as FHLMC or MLMCI may
require from time to time for either the issuance of the related FHLMC
securities or the purchase by FHLMC of such Mortgage Loans, duly authorized and
completed:
(a) a Mortgage Loan Submission Schedule on Form 11 (fixed rate), Mortgage
Submission Voucher on Form 13SF (ARM, GPM), or other appropriate form;
(b) a Contract Delivery Summary on Form 381;
(c) a Warehouse Lender Release of Security Interest on Form 996 listing
either (a) Merrill Lynch Government Securities, Inc. as the only
subscriber and as the sole person to which the related FHLMC
securities shall be delivered, or (b) wire transfer instructions
listing the Settlement Account as the recipient of such funds wired;
with the authorized signature of the person signing on behalf of MLMCI
in blank; and
(d) either (a) a Security Settlement Information and Delivery
Authorization on Form 939 listing Merrill Lynch Government Securities,
Inc. as the only subscriber and as the sole person to which the
related FHLMC securities shall be delivered; or (b) a Wire Transfer
Authorization for Cash Warehouse Delivery on Form 987 listing the
Settlement Account as the recipient of such funds wired.
8. NON-AGENCY DOCUMENTS. For each Non-Agency Mortgage Loan CMI shall
deposit, or cause a Qualified Originator to deposit,
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<PAGE>
with the Custodian the following documents and/or all such other documents as
MLMCI may require from time to time, duly authorized and completed:
(a) either (i) an effective Commitment/Certificate of Insurance (1) naming
the related Qualified Originator as the named insured which has been
assigned to CMI which has in turn assigned it to MLMCI and (2) having
an expiration date set forth on the related Mortgage Loan Schedule
that is at least 37 days after the date of the related certification
by the Custodian as required by Section 10 hereof or (ii) evidence of
a Trade Commitment from a Trade Investor;
(b) either (i) an original title insurance policy insuring that the
Mortgage constitutes a first lien on the Mortgaged Premises, (ii) a
written commitment of the title insurance company to issue such policy
if such policy has not yet been issued, which commitment obligates the
title insurance company to issue such policy or (iii) a Preliminary
Title Report if the Mortgaged Premises is located in a Preliminary
Title Report State; and
(c) a certificate of insurance issued by the insurer as to the flood
insurance policy or an Officer's Certificate of CMI (which may be a
blanket certificate covering all of the applicable Mortgage Loans)
certifying that a flood insurance policy is in effect as to the
Mortgaged Premises or that such insurance coverage is not required for
such property (as appropriate).
9. SUBSEQUENT ASSIGNMENT OF COMMITMENT NUMBERS. Commitment Numbers that
are not communicated by CMI to the Custodian at the time of delivery of the
related Collateral Submission Summary to MLMCI and the Custodian shall be
communicated to MLMCI and the Custodian by CMI by delivering to such parties a
Collateral Submission Summary Amendment. Any such Commitment Numbers will be
communicated within two (2) Business Days of the date on which MLMCI advanced
funds against such Mortgage Loans.
10. THE CUSTODIAN'S RECEIPT, EXAMINATION AND CERTIFICATION OF MORTGAGE
FILES.
(a) Certification by Custodian. The Custodian shall examine the
--------------------------
documents received by the Custodian hereunder. However, the Custodian shall not
be responsible for the value, form, substance, genuineness, validity,
perfection, priority, effectiveness, recordability or enforceability of any of
such documents delivered to it hereunder. The Custodian may accept
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<PAGE>
but shall not be responsible for examining, determining the meaning or effect of
or notifying or advising CMI or MLMCI in any way concerning any item or document
in a Mortgage File that is not one of the documents listed in Sections 4, 5, 6,
7 and 8 hereof. CMI shall be solely responsible for providing each and every
document required for each Mortgage File to the Custodian in a timely manner and
for completing or correcting any missing, incomplete or inconsistent documents
and, except as otherwise specifically provided herein, the Custodian shall not
be responsible or liable for taking any such action, causing CMI or any other
Person to do so or notifying MLMCI that any such action has or has not been
taken. With respect to each Mortgage Loan listed on a given Mortgage Loan
Schedule, the Custodian shall confirm, as of the date of the issuance of the
certification set forth on the related Collateral Submission Summary, that:
(i) the Note and Mortgage each appear to bear an original signature or
signatures purporting to be the signature or signatures of the Person
or Persons named as the maker and mortgagor or grantor or, in the
case of copies of the Mortgage permitted hereunder, that such copies
bear a reproduction of such signature or signatures;
(ii) neither the original Note, nor the copy of the Mortgage, if any,
delivered pursuant to this Agreement nor the original assignment of
mortgage contain any notations on their face which appear in the good
faith judgment of the Custodian to evidence any claims, liens,
security interests, encumbrances or restrictions on transfer;
(iii) the original principal amount of the Note is not less than the
current outstanding principal amount of the indebtedness secured by
the Mortgage as reported to the Custodian by CMI;
(iv) the Note is endorsed in blank by the named holder or payee thereof;
(v) each original of the assignment of mortgage and any intervening
mortgage assignment, if applicable, appears to bear the original
signature of the named mortgagee or beneficiary including any
subsequent assignors (and any other necessary party), as applicable,
or in the case of copies permitted hereunder, that such copies appear
to bear a reproduction of such signature or signatures and the
Officer's Certificate accompanying such copies
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appears to bear an original signature or a reproduction of such
signature; and
(vi) the original power of attorney (if any) appears to bear an original
signature of the maker of the Note and the Mortgagor or grantor of
the Mortgage and bears evidence that such power of attorney was
recorded in the appropriate records depository for the jurisdiction
where the Mortgaged Premises are located, or in case of copies, that
such copies bear a reproduction of such signatures.
If the Custodian has determined that such documents satisfy the
requirements enumerated in Sections 10(a)(i) through 10(a)(vi) hereof and that
all other Required Documents delivered in connection therewith are complete and
conform to the description thereof set forth herein, the Custodian shall deliver
to MLMCI its signed certification in substantially the form set forth on the
related Collateral Submission Summary. If upon examination of the Required
Documents relating to any Mortgage File, the Custodian determines that such
documents do not satisfy the above requirements, or is unable to confirm that
such documents satisfy such requirements, the Custodian shall note such Mortgage
Loan as an exception on such certification or the Mortgage Loan Schedule
attached thereto and, upon request of MLMCI, the Custodian shall delete such
Mortgage Loan from such Certification and the Mortgage Loan Schedule attached
thereto. The certification of the Custodian with respect to each Mortgage File
shall be deemed to include a certification that the documents reviewed by the
Custodian, in the Custodian's good faith judgment, appear regular on their face
and relate to the Mortgage Loan described in the Mortgage File. The Custodian
shall promptly deliver copies of any Required Documents to MLMCI upon its
request.
(b) Signatures, Authenticity and Signers' Authority or Capacity. Under no
-----------------------------------------------------------
circumstances shall the Custodian be obligated to verify the authenticity of any
signature on any of the documents received or examined by it in connection with
this Agreement or the authority or capacity of any person to execute or issue
any such document.
(c) Standard of Care. The Custodian shall have respon-sibility only for
----------------
Mortgage Files and their contents which have been actually delivered to it and
which have not been released to MLMCI, CMI, any Third Person, a Servicer or
their respective agent or designee in accordance with this Agreement. The
standard of care to be exercised by the Custodian in the performance of its
duties under this Agreement shall be to exercise the same degree of care as the
Custodian exercises when
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it holds mortgage loan documents as security for loans made by the Bank or its
or the Bank's own mortgage warehouse loan customers. The Custodian in carrying
out its duties under this Agreement shall act in good faith and in accordance
with the reasonable commercial standards of the mortgage banking business. The
Custodian is not intended to be a fiduciary of or for either MLMCI, CMI or any
other Person.
11. FURTHER OBLIGATIONS OF THE CUSTODIAN AND THE BANK.
(a) Notice of Events by the Custodian. The Custodian shall promptly
---------------------------------
notify MLMCI if (i) CMI fails to pay any amount due to the Custodian under this
Agreement or otherwise, and such failure results in the Custodian's accelerating
the payment of any amount owed to the Custodian by CMI, or (ii) the Custodian
has actual knowledge that any mortgage, pledge, lien, security interest or other
charge or encumbrance (other than for the benefit of MLMCI or incurred in the
ordinary course of business or of which MLMCI has been advised in writing and
has not objected) has been placed on any accounts maintained by CMI with the
Bank or on the Required Documents or that GNMA, FNMA or FHLMC has rejected any
related Required Document.
(b) Notice of Events by the Bank. The Bank shall promptly notify MLMCI if
----------------------------
(i) CMI fails to pay any amount due to the Bank under this Agreement or
otherwise, and such failure results in the Bank's accelerating the payment of
any amount owed to the Bank by CMI, or (ii) the Bank has actual knowledge that
any mortgage, pledge, lien, security interest or other charge or encumbrance
(other than for the benefit of MLMCI or incurred in the ordinary course of
business or of which MLMCI has been advised in writing and has not objected) has
been placed on any accounts maintained by CMI with the Bank.
(c) Standard of Care. The Custodian shall use reasonable care and due
----------------
diligence in the performance of its duties hereunder, shall hold the Required
Documents in its fire rated storage vault under its exclusive custody and
control, in accordance with customary standards for such custody, and shall
maintain a fidelity bond and document hazard insurance in a sufficient amount or
be otherwise adequately self-insured to cover any and all transactions
contemplated by this Agreement.
(d) Agency Transactions. In the event CMI advises the Custodian that it
-------------------
desires to deliver a particular Pool of Mortgage Loans to an Agency in order to
back an Agency Security or to sell a particular Pool of Mortgage Loans directly
to an Agency, and so long as the Custodian shall not have received contrary
instructions from MLMCI, the Custodian shall complete
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the endorsements and forward such related Required Documents to the related
Agency Custodian as instructed by CMI to effect such securitization or sale to
the related Agency; provided, however, that any Required Documents that are
-------- -------
unacceptable to the Agency and that are returned through the Agency Custodian to
the Custodian shall be held by the Custodian for MLMCI in accordance with this
Agreement; and provided further, however, that prior to delivering any Required
-------- ------- -------
Documents to an Agency Custodian, the Custodian shall have received a Master
Agency Custodian Bailee Letter executed by such Agency Custodian and that any
such Required Documents delivered to such Agency Custodian pursuant to the
instructions of CMI shall be accompanied by a Supplemental Agency Custodian
Bailee Letter. The Custodian shall provide MLMCI with a copy of each fully
executed Master Agency Custodian Bailee Letter and Supplemental Agency Custodian
Bailee Letter upon MLMCI's request.
(e) Sale to Trade Investor. In the event CMI advises the Custodian that
----------------------
it desires to sell Mortgage Loans directly to a Trade Investor, the Custodian
shall prepare, execute and deliver to such Trade Investor a Master Bailee Letter
and shall request that such Trade Investor execute the Master Bailee Letter and
return it to the Custodian. Upon receiving such Master Bailee Letter bearing an
original signature purporting to be the signature of an authorized signatory of
such Trade Investor, the Custodian shall complete any required endorsements of
MLMCI and forward the related Required Documents along with a Supplemental
Bailee Letter to the related Trade Investor; provided, however, that any
-------- -------
Required Documents that are unacceptable to the Trade Investor shall be returned
directly to the Custodian and held by the Custodian for MLMCI in accordance with
this Agreement. The Custodian shall deliver a notice to MLMCI in writing one
(1) Business Day prior to forwarding any such documents to a Trade Investor.
MLMCI hereby consents to the delivery by the Custodian of Required Documents to
any Trade Investor that has executed a Master Bailee Letter, which consent may
only be withdrawn by notice in writing (including telex or telecopy) from MLMCI
to the Custodian and CMI. The Custodian shall provide MLMCI with a copy of each
fully executed Master Bailee Letter and Supplemental Bailee Letter upon MLMCI's
request.
12. RELEASE OF REQUIRED DOCUMENTS. CMI may from time to time request the
Custodian in writing to permit the withdrawal of certain Required Documents for
the purpose of correction of errors therein or for permanent withdrawal, which
request and withdrawal shall be made in accordance with the applicable GNMA,
FNMA and FHLMC guidelines, in the case of GNMA, FNMA or FHLMC Required
Documents, and in all cases in accordance with the procedures set forth in
Exhibit I hereto. The Custodian may permit the withdrawal of Notes relating to
three Mortgage Files
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for the purpose of correcting such documents, without the written consent of
MLMCI. If Notes relating to more than three Mortgage Files have been and remain
released for correction, any additional request for release shall require the
consent of MLMCI. The Custodian may permit the withdrawal of documents (other
than Notes) relating to ten Mortgage Files for the purpose of correcting such
documents without the written consent of MLMCI. If documents (other than Notes)
relating to more than ten Mortgage Files have been and remain released for
correction, any additional request for release shall require the consent of
MLMCI. Any request for release by CMI shall be in the form of the Request and
Receipt and any written consent of MLMCI required hereby shall be indicated on
such form.
13. RIGHT TO INSPECT. The Custodian shall permit (i) inspection at all
reasonable times upon reasonable notice during regular business hours by MLMCI
(or by its auditors or agents when requested by MLMCI) of the Required Documents
and the records of the Custodian relating to this Agreement and (ii) MLMCI (or
by its auditors when requested by MLMCI) to make copies of the Required
Documents and the records of the Custodian relating to this Agreement.
14. DELIVERY OF REQUIRED DOCUMENTS TO MLMCI. The Custodian shall promptly
deliver to MLMCI or its designee any or all Required Documents and other items
of collateral in the Custodian's custody upon MLMCI's written request. MLMCI
shall provide CMI with a copy of any such notice delivered to the Custodian.
Written instructions as to the method of shipment and the shipper(s) the
Custodian is directed to utilize in connection with the transmission of Required
Documents in the performance of the Custodian's duties hereunder shall be
delivered by MLMCI to the Custodian prior to any shipment of any Required
Documents pursuant to the request of MLMCI hereunder. MLMCI will arrange for
the provision of such services at its sole cost and expense (or, at the
Custodian's option, reimburse the Custodian for all costs and expenses incurred
by the Custodian consistent with such instructions) and will maintain such
insurance against loss or damage to the Required Documents as MLMCI deems
appropriate.
15. ESTABLISHMENT OF THE SETTLEMENT ACCOUNT.
(a) The Bank shall establish and maintain, as agent for MLMCI, a
demand deposit account (the "Settlement Account") for and on behalf of MLMCI
entitled "Merrill Lynch Mortgage Capital Inc., Account Number 19-19873, Re:
Tri-Party Custody Agreement dated as of October 1, 1993." All proceeds from the
sale of designated Mortgage Loans to an Agency will be sent directly to the Bank
for credit to the Settlement Account. The sole responsibility of the Custodian
with respect to the
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<PAGE>
Settlement Account shall be to convey to the Bank instructions provided by MLMCI
from time to time regarding the transfer of funds contained therein, and MLMCI
appoints the Custodian as its agent for the purpose of conveying such
instructions to the Bank. In no event shall the Custodian effect any funds
transfers, perform any monitoring or exercise any discretion with respect to the
Settlement Account or funds relating thereto. All related fees and expenses for
such Settlement Account shall be borne by CMI.
(b) Unless otherwise agreed, CMI will submit to the Custodian, the
Bank and MLMCI on each Business Day a P&S Report and the Bank will promptly
disburse funds in the Settlement Account by wire transfer as directed in the P&S
Report provided (i) funds in the amount to be so disbursed are on deposit in the
Settlement Account and have been finally and irrevocably settled and (ii) MLMCI
has authorized such wire instructions. Notwithstanding the foregoing, if a
conflict exists between the instructions of MLMCI and the instructions of CMI,
the Bank shall follow MLMCI's instructions.
(c) The Bank shall promptly notify the Custodian upon the deposit of
funds in the Settlement Account. The Custodian shall promptly notify MLMCI and
CMI upon the receipt of such advice from the Bank of the deposit of funds in the
Settlement Account and the Custodian shall make appropriate entries on its
records to indicate those Mortgage Loans that have been purchased by an Agency
or Trade Investor.
(d) The Bank shall use due care in the performance of its duties
relating to the Settlement Account. The Bank shall be bound by, and entitled to
the benefits of, provisions of this Agreement relating to standard of care,
certain representations and warranties, indemnification and the ability to rely
on instructions (including without limitation, Sections 23, 24, 25, 26 and 27
hereof) as they relate to its obligations hereunder, and the references to
"Custodian" in such provisions shall be deemed to include the Bank to the extent
of its duties hereunder.
16. ESTABLISHMENT OF THE DDA ACCOUNT. For each Mortgage Loan intended to
be financed by CMI through funds provided by MLMCI directly to a Qualified
Originator, MLMCI, CMI, the Bank and the Custodian agree as follows:
(a) The Bank shall establish and maintain, as agent for MLMCI, a
demand deposit account (the "DDA Account") for and on behalf of MLMCI entitled
"Merrill Lynch Mortgage Capital Inc., Account Number 52-99306, DDA Account
relating to Countrywide Mortgage Investments, Inc., Re: Tri-Party Custody
Agreement dated October 1, 1993." Upon request, the Bank will provide a
Qualified Originator, a Closing Agent, CMI or MLMCI with the
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<PAGE>
federal wire reference number for a particular payment. All related fees and
expenses for such DDA Account shall be borne by CMI.
(b) Unless otherwise agreed in writing, CMI will deliver disbursement
wiring instructions in writing, electronically or by computer diskette to the
Bank as agent for MLMCI and the Bank will respond to such wire instructions and
promptly disburse such funds provided (i) sufficient funds exist in the DDA
Account and have been finally and irrevocably settled, (ii) such instructions do
not include CMI or a Qualified Originator as payee and (iii) if a conflict
exists between the instructions of MLMCI and the instructions of CMI, the Bank
will follow MLMCI's instructions.
(c) CMI shall include in the wiring instructions for each Mortgage
Loan funded through the DDA Account a statement to the effect that if the funds
have not been disbursed to fund the related Mortgage Loan by the second Business
Day following the date on which the funds were initially sent by the Bank to the
Closing Agent, then the Closing Agent is to return the funds to the account at
the Bank from which the funds were sent not later than the close of business on
such second Business Day.
(d) Unless otherwise agreed in writing, at the time CMI delivers
disbursement wiring instructions as contemplated by subsection (b) above, CMI
will also provide the Custodian with a written report (which report may be in
the form of a computer generated print-out or other reasonable form) indicating
for each Mortgage Loan to be funded through the DDA Account the amount to be
funded. The Custodian shall not be obligated to provide copies of such report
to any Person other than MLMCI, upon MLMCI's request. The Custodian shall
communicate with the Bank and verify that (i) the information provided in the
wiring instructions regarding the amount to be wired with respect to each
related Mortgage Loan matches that provided in the aforementioned written report
and (ii) the statement to be included in the wiring instructions for each
Mortgage Loan as contemplated by subsection (c) above is in fact so included.
(e) The Bank will deposit to an account designated by MLMCI all funds
remaining on deposit in the DDA Account on each Business Day at the earlier of
(i) fifteen minutes prior to the close of the FedWire System and (ii) 5:00 p.m.
New York City time.
17. THE FEES OF THE CUSTODIAN AND THE BANK. It is understood that the
Custodian, or its successor, and the Bank will charge such fees for its
respective services under this Agreement as are set forth in a separate
agreement between each
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such party and CMI, the payment of which, together with each such party's
expenses in connection herewith, shall be solely the obligation of CMI.
18. TERMINATION. Except as otherwise provided in Section 2 hereof and in
the third sentence of this Section 18, the Custodian may terminate its
obligations under this Agreement upon 30 days' prior written notice to CMI and
MLMCI. In the event of such termination, CMI shall appoint a successor
custodian, subject to approval by MLMCI, and the Custodian shall promptly
transfer to the successor custodian, as directed, all Required Documents and
other items of collateral being held by the Custodian under this Agreement. If,
however, a successor custodian is not appointed by CMI or MLMCI within sixty
(60) days, all duties and obligations of the Custodian shall cease and
terminate. The Custodian's sole responsibility after termination of its
obligations as aforesaid shall be to safely maintain all of the Custodian's
mortgage files and to deliver the same to a successor custodian, provided,
however, if CMI and MLMCI have not appointed a successor custodian within thirty
(30) days after the expiration of the aforementioned 60 day period, the
Custodian shall deliver such documents to MLMCI.
19. REPRESENTATIONS BY CMI. CMI hereby represents and warrants to, and
covenants with, MLMCI, the Bank and the Custodian that:
(a) With reference to the Master Repurchase Agreement, any Mortgage
Loan described herein shall constitute a Mortgage Loan within the meaning
of the Master Repurchase Agreement, and all provisions of the Master
Repurchase Agreement (including the provisions of the Master Repurchase
Agreement granting a security interest in the Mortgage Loans to MLMCI), and
all representations and warranties contained in such documents, are
applicable to such Mortgage Loans;
(b) This Agreement has been duly authorized, executed and delivered
by CMI and constitutes the legal, valid and binding obligation of CMI
enforceable in accordance with its terms;
(c) No Mortgage Loan held by the Custodian pursuant to this
Agreement shall remain deposited with the Custodian for more than sixty
(60) days;
(d) All documents and requirements to create an enforceable first
lien mortgage on the related real estate property have been completed and
duly executed; and
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(e) CMI shall cause each Qualified Originator to deliver such
documents and take such other actions as are necessary to effect the
purposes of this Agreement.
20. CUSTODY OF MORTGAGE FILES.
(a) The Custodian shall retain possession and custody of the
Mortgage Files for the benefit of MLMCI and as bailee and custodian for
MLMCI for all purposes until otherwise notified by MLMCI pursuant to the
terms hereof. The Custodian shall also make appropriate notations in the
Custodian's books and records reflecting that the Required Documents are
owned by MLMCI unless otherwise notified by MLMCI pursuant to the terms
hereof.
(b) The Custodian acknowledges that MLMCI may, but need not,
transfer its interest in the Mortgage Loans to one or more third persons
(each a "Third Person"). At least twenty-four (24) hours prior to any such
transfer, MLMCI shall deliver to the Custodian (i) written notice that
MLMCI will transfer to a Third Person MLMCI's interest in the Mortgage
Loans identified on a schedule to such notice (the "Notice Schedule").
Within twenty-four (24) hours after receipt by the Custodian of such
written notice the Custodian shall promptly advise CMI that a transfer to a
Third Person is occurring and acknowledge by letter (in the form of Exhibit
J) to such Third Person that it is holding the Mortgage Loans identified in
the related Notice Schedule solely and exclusively as the custodian for
such Third Person and shall issue an amended Certification to MLMCI;
provided that the Custodian shall not be required to deliver to MLMCI such
Certification until the Custodian has received from MLMCI the appropriate
schedules to be attached to the Certification. The notice sent by MLMCI to
the Custodian shall be in substantially the form of Exhibit K hereto and
shall (i) specify the name of the Third Person, (ii) state the address of
the Third Person (which may be an address in care of MLMCI), (iii) have
attached thereto the Notice Schedule, (iv) be signed by the Third Person
and (v) state that the Third Person agrees to be bound by this Agreement.
Upon receipt of a notice from MLMCI as described in the preceding sentence,
the Custodian shall (a) retain possession and custody of the Mortgage Files
with respect to the Mortgage Loans listed in the Notice Schedule as
custodian for such Third Person and (b) make appropriate notations in the
Custodian's books and records reflecting that the Mortgage Files relating
to the Mortgage Loans identified in the Notice Schedule are owned by such
Third Person.
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Subsequent transfers of interests in the Mortgage Loans identified in
the Notice Schedule by a transferor shall be effected by delivery from
such transferor of a notice in the form attached hereto as Exhibit K to the
Custodian at least twenty-four (24) hours prior to such transfer specifying
the transferee to whom such Mortgage Loans will be transferred, such
transferee's address and the Notice Schedule identifying such Mortgage
Loans. Within twenty-four (24) hours after receipt of such notice, the
Custodian shall (a) acknowledge by letter in the form of Exhibit J to the
transferee designated in the notice received from the transferor that it is
acting solely and exclusively as custodian for such transferee and (b) make
appropriate notations in the Custodian's books and records reflecting that
the Mortgage Files relating to the Mortgage Loans identified in the Notice
Schedule are owned by such transferee. The Custodian is permitted to act
on requests from a transferor to deliver Required Documents upon receipt of
the notice or notices from such transferor as required hereunder.
The Custodian shall segregate and maintain continuous custody of all
related Mortgage Files for the benefit of the party to whom it has sent the
acknowledgment in the form of Exhibit J. The Custodian may not act on
instructions from a Third Person with respect to any Mortgage Files unless
such Third Person delivers to the Custodian an executed certificate (a
"Notice of Default Certificate") in the form of Exhibit L. The Custodian
is permitted to deliver Mortgage Files after such Third Person delivers a
Notice of Default Certificate. The Custodian shall be entitled to presume
conclusively that the Notice of Default Certificate is properly executed
and that when delivered to the Custodian an event of default exists under
MLMCI's agreement with such Third Person.
(c) MLMCI or any Third Person may transfer its interest in any
Mortgage Loan to CMI by providing written notice thereof to the Custodian.
Upon receipt of such notice the Custodian shall follow the instructions of
CMI with respect to the related Mortgage Loans.
(d) With respect to the repurchase of any Mortgage Loan by CMI from
MLMCI under the Master Repurchase Agreement, the interest of any Third
Person in any such Mortgage Loan shall automatically terminate
simultaneously with the payment to MLMCI of the repurchase price for such
Mortgage Loan under the Master Repurchase Agreement and any such interest
shall be deemed to have been transferred to MLMCI as of such time, except
with respect to any Mortgage
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Loans delivered to a Third Person pursuant to a Notice of Default
Certificate.
21. ADDITIONAL REPORTING REQUIREMENTS.
(a) The Custodian shall maintain a system for reviewing the Mortgage
Loans that enables it to determine as of any date of determination those
Mortgage Loans:
(i) that have been subject to this Agreement for more than sixty (60)
days in aggregate;
(ii) that have been subject to this Agreement for any period after the
date occurring 37 days prior to the expiration date for the
related Commitment/Certificate of Insurance, if any;
(iii) that have been subject to this Agreement for more than two (2)
Business Days and with respect to which a Commitment Number has
not yet been assigned; and
(iv) that have been delivered to an Agency or a Trade Investor at
least twenty (20) days prior to the date of determination and
with respect to which funds have not been received in the
Settlement Account.
(b) The Custodian shall provide a written report, substantially in
the form of Exhibit M hereto, no less frequently than weekly to CMI, MLMCI
and any Third Person for which the Custodian acts as custodian with respect
to Mortgage Files under this Agreement. The report shall relate only to
those Mortgage Loans with respect to which Mortgage Files are held by the
Custodian on behalf of the addressee. Such report may be delivered by
facsimile transmission so long as the transmitting machine provides an
electronic confirmation of such transmission.
22. NOTICES. Except as otherwise expressly provided herein, all
communications hereunder shall be in writing and shall be mailed, telecopied or
delivered, if to CMI, MLMCI or the Custodian at its address as indicated on
Schedule I or at such other address as shall be designated by such party in a
written notice to the other party. All such notices and communications shall be
effective when delivered to the party to which such notice is to be given;
provided, however, that any notice delivered by facsimile transmission shall be
deemed to be delivered at the time it is sent if the transmitting machine
provides an electronic confirmation of such transmission.
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23. CONCERNING THE CUSTODIAN. Neither the Custodian nor any of its
directors, officers, agents or employees shall be liable for any action or
omission to act hereunder except for its or their own gross negligence or
willful misconduct. In no event shall the Custodian have any responsibility to
ascertain or take action with respect to the Required Documents and other items
of collateral, except as expressly provided herein. The Custodian may act in
reliance upon any written communication of CMI and MLMCI concerning the delivery
of the Required Documents and other items of collateral pursuant to this
Agreement. The Custodian does not assume and shall have no responsibility for,
and makes no representation as to, monitoring the value of the Required
Documents and other items of collateral. In no event shall the Custodian be
liable for any indirect, special or consequential damages even if the Custodian
has been advised of the possibility of such damages.
24. REPRESENTATIONS BY THE CUSTODIAN, THE BANK AND MLMCI.
(a) The Custodian and the Bank each hereby represents and warrants that it
will not assert any lien, claim or adverse interest against the collateral.
However, neither the Custodian nor the Bank makes any representations as to
the title, or as to the validity or adequacy of the security afforded
thereby or hereby (except as to such party's authority to enter into this
Agreement), and neither the Custodian nor the Bank shall incur any
liability or responsibility in respect of any such matters.
(b) The Custodian and the Bank each hereby represents and warrants to
MLMCI that such party is not controlled by, under common control with or
otherwise affiliated with CMI, and each covenants and agrees with MLMCI
that in the event that such affiliation occurs, such party shall promptly
notify MLMCI thereof.
(c) The Custodian and the Bank each hereby represents and warrants to
MLMCI that this Agreement has been duly authorized, executed and delivered
by such party and constitutes the legal, valid and binding obligation of
such party enforceable in accordance with its terms.
(d) MLMCI hereby represents and warrants to the Custodian and the Bank
that this Agreement has been duly authorized, executed and delivered by
MLMCI and constitutes the legal, valid and binding obligation of MLMCI
enforceable in accordance with its terms.
25. DUTIES OF THE CUSTODIAN. The Custodian shall have no duties or
responsibilities except those that are specifically set
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forth herein and no duties or obligations shall be implied in this Agreement
against the Custodian. The Custodian shall be under no responsibility or duty
with respect to the disposition of any Required Documents while such Required
Documents are not in its possession. If the Custodian shall request
instructions from MLMCI with respect to any act, action or failure to act in
connection with this Agreement, the Custodian shall be entitled to refrain from
taking such action and continue to refrain from acting unless and until the
Custodian shall have received written instructions from MLMCI without incurring
any liability therefor to MLMCI, CMI or any other person.
If the Custodian shall at any time receive conflicting instructions from
MLMCI and CMI with respect to the Mortgage Files and the conflict between such
instructions cannot be resolved by reference to the terms of this Agreement, the
Custodian shall be entitled to rely on the instructions of MLMCI. In the
absence of bad faith, gross negligence or willful misconduct on the part of the
Custodian, the Custodian may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or other document or, to the extent
permitted hereby, oral communication furnished to the Custodian, reasonably
believed by the Custodian to be genuine and to have been signed or presented or,
to the extent permitted hereby, orally communicated by the proper party or
parties and conforming to the requirements of this Agreement. The Custodian may
rely upon the validity of documents and, to the extent permitted hereby, oral
communications delivered to it, without investigation as to their authenticity
or legal effectiveness, and CMI will hold the Custodian harmless from any claims
which may arise or be asserted against the Custodian because of the invalidity
of any such documents or oral communications or their failure to fulfill their
intended purpose. The Custodian shall not be responsible to MLMCI or any other
party for recitals, statements or warranties or representations of CMI contained
herein, or in any document or be bound to ascertain or inquire as to the
performance or observance of any of the terms of this Agreement or any other
agreement on the part of any party, except as may otherwise be specifically set
forth herein. No provision of this Agreement shall require the Custodian to
expend or risk its own funds or otherwise incur financial liability in the
performance of its duties under this Agreement if it shall have the reasonable
grounds for believing that repayment of such funds or adequate indemnity is not
reasonably assured to it. The Custodian may consult with counsel with regard to
legal questions arising out of or in connection with this Agreement and the
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken,
25
<PAGE>
omitted or suffered by the Custodian in good faith in accordance therewith.
MLMCI hereby authorizes and directs the Custodian to sign on behalf of
MLMCI, if required, each of the Required Documents referred to in Sections 4, 5,
6, 7 and 8 hereof. Without limiting the generality of the foregoing, the
Custodian may rely upon and shall be protected in acting in good faith upon any
notice or other communication received by it and which it reasonably believes to
be genuine and duly authorized with respect to all matters pertaining to this
Agreement and its duties hereunder; provided, however, that nothing set forth in
this section shall relieve the Custodian of its obligations set forth in Section
10 of this Agreement.
26. INDEMNIFICATION. CMI agrees, notwithstanding the transfer of any
interest in a Mortgage Loan to a Third Person as permitted hereby, to reimburse,
indemnify and hold harmless the Custodian, its directors, officers, employees,
and agents from and against any and all liability, loss, cost and expense,
including reasonable fees and expenses of counsel arising from or connected with
the Custodian's execution and performance of this Agreement, including but not
limited to the claims of any third parties, including MLMCI, except in the case
of loss, liability or expense resulting from gross negligence or willful
misconduct on the part of the Custodian. To the extent the Custodian is not
reimbursed, indemnified or held harmless by CMI, MLMCI will reimburse, indemnify
and hold harmless the Custodian, its directors, officers, employees and agents
for liability, loss or expense arising from any action or refraining from action
in accordance with instructions given to the Custodian by MLMCI, and CMI shall
reimburse MLMCI for any sums so expended by MLMCI. The Custodian may not enter
into a settlement agreement with respect to any matter for which indemnity is
granted pursuant to this paragraph without the express prior written consent of
the indemnifying party. The foregoing indemnification shall survive any
termination of this Agreement.
27. AUTHORIZATIONS. Any of the persons whose signatures and titles appear
on Schedule I (an "Authorized Representative") are authorized, acting singly, to
act for CMI, MLMCI, the Bank or the Custodian, as the case may be, under this
Agreement. The specimen signature for each such Authorized Representative of
CMI, the Custodian, the Bank and MLMCI initially authorized hereunder is set
forth on Schedule I. From time to time, CMI, the Custodian, the Bank and MLMCI
may, by delivering to the others a revised schedule, change the information
previously given, but each of the parties hereto shall be entitled to rely
conclusively on the then current schedule until receipt of a superseding
schedule. The Custodian may rely, and shall be
26
<PAGE>
protected in acting or refraining to act, upon any written instruction, notice,
order, request, direction, certificate, opinion or other instrument or document
believed by the Custodian to be genuine and to have been signed or presented by
an Authorized Representative in the case of CMI and MLMCI and by the proper
party or parties, in all other cases.
28. AMENDMENTS. No amendment or waiver of any provision of this Agreement
nor consent to any departure herefrom shall in any event be effective unless the
same shall be in writing and signed by all the parties hereto (providing that
MLMCI may modify the Required Documents set forth in Sections 4, 5, 6, 7 and 8
hereof by giving notice of such modification to CMI and the Custodian, which
notice is not objected to within two (2) Business Days after being given), and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. This Agreement
constitutes the entire agreement and understanding of the parties with respect
to the matters and transactions contemplated by this Agreement and supersedes
any prior agreement and understandings with respect to those matters and
transactions. The provisions of this Agreement set forth the exclusive duties
of the Custodian and the Bank and no implied duties shall be read into this
Agreement against the Custodian or the Bank.
29. SEVERABILITY. If any provision of this Agreement is declared invalid
by any court of competent jurisdiction, such invalidity shall not affect any
other provision, and this Agreement shall be enforced to the fullest extent
required by law.
30. BINDING EFFECT; GOVERNING LAW. This Agreement shall be binding and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that CMI, the Bank and the Custodian may not assign
this Agreement or any of its rights or obligations hereunder except with the
prior written consent of MLMCI. This Agreement shall be construed in accordance
with, and governed by the law of the State of New York, without giving effect to
the conflict of law principles thereof.
27
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
COUNTRYWIDE MORTGAGE INVESTMENTS,
INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
MERRILL LYNCH MORTGAGE CAPITAL INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Custodian
By: ______________________________
Name: ____________________________
Title: ___________________________
THE FIRST NATIONAL BANK OF CHICAGO
By: ______________________________
Name: ____________________________
Title: ___________________________
28
<PAGE>
EXHIBIT A
COLLATERAL SUBMISSION SUMMARY NO.______
FOR AGENCY MORTGAGE LOANS/FOR NON-AGENCY MORTGAGE LOANS
Merrill Lynch Mortgage Capital Inc. CUSTODIAN: First Chicago
101 Hudson Street National Processing
12th Floor Corporation
Jersey City, New Jersey 07302 1111 South Arroyo Parkway
Attn: Christine Star Suite 630
Facsimile: (201) 557-2485 Pasadena, CA 91105
Attn: Ms. Jeanne Ranallo
Facsimile: (818) 441-6395
Reference is made to the Tri-Party Custody Agreement dated as of October 1, 1993
(the "Custody Agreement") among the undersigned ("CMI"), First Chicago National
Processing Corporation, as custodian ("Custodian"), The First National Bank of
Chicago (the "Bank") and Merrill Lynch Mortgage Capital Inc. ("MLMCI").
Capitalized terms not defined herein have the respective meanings assigned
thereto in the Custody Agreement.
Certification of CMI:
In consideration of MLMCI making advances to finance the securitization or cash
purchase period for the Mortgage Loans having an aggregate face value of $
and a weighted average interest rate of % and more fully described in the
Mortgage Loan Schedule attached hereto, the undersigned duly authorized officer
of CMI states that:
(a) the Required Documents with respect to such Mortgage Loans have been, or
are hereby submitted to the Custodian pursuant to the Custody Agreement;
(b) all other documents related to such Mortgage Loans have been or will be
created and held by the related Qualified Originator in trust for MLMCI; and
(c) CMI will not attempt to pledge or otherwise hypothecate the Mortgage
Loans or any documents relating thereto to any other party until the repurchase
price relating to such Mortgage Loans has been paid in full by CMI.
A-1
<PAGE>
A security interest in such Mortgage Loans has been granted by CMI to MLMCI. At
the request of MLMCI, all such other related documents will be delivered to the
Custodian, MLMCI or its assigns and may be inspected or verified at any time by
such parties.
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
[DATE]
================================================================================
Certification of Custodian:
The Custodian hereby acknowledges that it has examined, in accordance with the
review and certification guidelines set forth in the Custody Agreement, and
holds as agent for MLMCI the Required Documents referred to above as delivered
to it pursuant to the Custody Agreement.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Custodian
By: ____________________________
Name: __________________________
Title: _________________________
A-2
<PAGE>
EXHIBIT B
COLLATERAL SUBMISSION SUMMARY AMENDMENT
Merrill Lynch Mortgage Capital Inc. CUSTODIAN: First Chicago National
101 Hudson Street Processing Corporation
12th Floor 1111 South Arroyo Parkway
Jersey City, New Jersey 07302 Suite 630
Attn: Christine Star Pasadena, CA 91105
Facsimile: (201) 557-2485 Attn: Ms. Jeanne Ranallo
Facsimile: (818) 441-6395
Reference is made to the Tri-Party Custody Agreement dated as of October 1, 1993
(the "Custody Agreement") among the undersigned ("CMI"), First Chicago National
Processing Corporation, as custodian ("Custodian"), The First National Bank of
Chicago and Merrill Lynch Mortgage Capital Inc. ("MLMCI") and to the Collateral
Submission Summaries referred to below. Capitalized terms not defined herein
have the respective meanings assigned thereto in the Custody Agreement.
Certification of CMI:
The Mortgage Loans listed below were previously delivered by CMI to the
Custodian under the corresponding Collateral Submission Summary without a
Commitment Number having been assigned thereto. Each such Mortgage Loan has
subsequently been assigned a Commitment Number as follows:
Original
Collateral Submission Commitment
CMI Loan Number Summary Number Number
------------------ --------------------- ----------
------------------ --------------------- ----------
------------------ --------------------- ----------
------------------ --------------------- ----------
------------------ --------------------- ----------
------------------ --------------------- ----------
Countrywide Mortgage Investments, Inc.
By:_____________________________
Name:___________________________
Title:__________________________
Date:___________________________
B-1
<PAGE>
EXHIBIT C
MASTER ESCROW LETTER
[DATE]
First Chicago National
Processing Corporation,
as Custodian
1111 South Arroyo Parkway
Suite 630
Pasadena, California 91105
Attention: Ms. Jeanne Ranallo
The undersigned closing agent (the "Closing Agent") will from time to time
receive funds (the "Origination Funds") for purposes of funding the origination
of mortgage loans (the "Mortgage Loans"), which Origination Funds will be
provided via wire transfer from The First National Bank of Chicago ("the Bank")
on behalf of and as agent for Merrill Lynch Mortgage Capital Inc. ("MLMCI").
Each such wire transfer will contain an instruction to the Closing Agent to the
effect that if the Origination Funds have not been disbursed to fund the related
Mortgage Loan by the second business day following the date on which the
Origination Funds were initially sent by the Bank to the Closing Agent, then the
Closing Agent is to return the Origination Funds to the account at the Bank from
which such funds were sent not later than the close of business on such second
business day.
The Closing Agent hereby agrees, with respect to the Origination Funds
received for each Mortgage Loan, as follows:
1. The Closing Agent will hold the Origination Funds in trust for the
Bank until such time as the related Mortgage Loan is recorded and
funds are disbursed in accordance with the escrow instructions
contained herein and in the related wire instructions (the "Escrow
Instructions");
2. In the event that the Origination Funds have not been disbursed to
fund the related Mortgage Loan by the second business day following
the date on which the Origination Funds were initially sent by the
Bank to the Closing Agent, then the Closing Agent will return the
Origination Funds to the account at the Bank from which such funds
were sent not later than the close of business on such second business
day; and
3. Between the time the Origination Funds are received by the Closing
Agent and the related Mortgage Loan is recorded, the Closing Agent
will accept instructions regarding the use of the Origination Funds
that are in conflict with the Escrow Instructions only in writing from
the Bank acting as agent for MLMCI.
C-1
<PAGE>
The terms of this escrow letter are binding upon the Closing Agent with
respect to all Origination Funds received by the Closing Agent from time to
time. This escrow letter is irrevocable and coupled with an interest and can
only be modified with the express approval of the Bank acting as agent for
MLMCI.
Agreed and Acknowledged:
CLOSING AGENT:
By:
Escrow Officer
C-2
<PAGE>
EXHIBIT D
FORM OF MASTER BAILEE LETTER
[Date]
[TRADE INVESTOR]
Re: Tri-Party Custody Agreement, dated as of October 1, 1993, by and among
Countrywide Mortgage Investments, Inc. ("CMI"), Merrill Lynch Mortgage
Capital Inc. ("MLMCI"), The First National Bank of Chicago and First
Chicago National Processing Corporation, as custodian (the "Custodian")
-----------------------------------------------------------------------
Gentlemen:
Countrywide Mortgage Investments, Inc. ("CMI") has sold (subject to its
obligation to repurchase), and granted a first priority security interest in,
its rights to certain mortgage loans (the "Mortgage Loans") to Merrill Lynch
Mortgage Capital Inc. ("MLMCI") under a Master Repurchase Agreement, dated as of
October 1, 1993 (the "Master Repurchase Agreement"). First Chicago National
Processing Corporation, as custodian (the "Custodian") under the above-
referenced Tri-Party Custody Agreement, holds original promissory notes and
other documents relating to the Mortgage Loans (the "Loan Documents") on behalf
of, and as agent and bailee for, MLMCI. The Custodian, from time to time at the
request of CMI and unless MLMCI shall object, will deliver Loan Documents to you
for your inspection prior to purchase pursuant to your commitment(s) to purchase
the related Mortgage Loans. Any Loan Documents delivered by the Custodian to
you shall be accompanied by a letter (a "Supplemental Bailee Letter")
substantially in the form attached hereto.
The Loan Documents (including, without limitation, any assignments of purchase
commitments of takeout investors) that are hereafter delivered to you are to be
held by you as a bailee and agent for the benefit of the Custodian, as agent and
bailee for MLMCI, subject only to direction and control of the Custodian, as
agent and bailee for MLMCI, until released as provided in the related
Supplemental Bailee Letter, without any right of defense, offset or counterclaim
with respect thereto pursuant to any agreement between you and CMI. Any
interest you may have in the Mortgage Loans and the proceeds thereof, including
without limitation any claim or setoff you may at any time have, is subject to
and subordinate to the security interest of MLMCI therein, and you will not
exercise any right with respect to the Mortgage Loans or said proceeds without
the prior
D-1
<PAGE>
written consent of the Custodian, as agent and bailee for MLMCI.
Immediately upon purchase by you, the proceeds of the purchase of the
related Mortgage Loans in an amount equal to the purchase price set forth in the
related purchase commitment issued by you to CMI, a copy of which will be
attached to the related Supplemental Bailee Letter, as such purchase price may
be adjusted by mutual agreement between you and CMI (such sum being hereinafter
referred to as the "Purchase Proceeds"), must be wire transferred in immediately
available funds to:
The First National Bank of Chicago
ABA No. 071000013
For credit to the account of Merrill Lynch
Mortgage Capital Inc.
Re: Tri-Party Custody Agreement
dated as of October 1, 1993
Acct. No. 19-19873
Attention: Kathleen Lasky
Phone: (312) 732-6982
Funds deposited from time to time in the aforementioned account will be
distributed to MLMCI pursuant to the Custody Agreement. MLMCI has no obligation
to release its first priority security interest in any Mortgage Loans unless
MLMCI receives the full amount of the Purchase Proceeds for such Mortgage Loans.
Loan Documents relating to Mortgage Loans that are not accepted for purchase
must be returned immediately to the Custodian, as agent and bailee for MLMCI, at
First Chicago National Processing Corporation, 1111 South Arroyo Parkway, Suite
630, Pasadena, California 91105, to the attention of the signatory of the
related Supplemental Bailee Letter, or in any event within twenty (20) days
after the date of the related Supplemental Bailee Letter.
You are not to honor any communications from CMI relating to any Mortgage
Loans without the written consent of the Custodian, as agent and bailee for
MLMCI, or until MLMCI has received the full amount of the Purchase Proceeds.
You are not to deliver any Mortgage Loans to any third party without the written
consent of the Custodian, as agent and bailee for MLMCI. In no event shall any
Mortgage Loans be returned to CMI or the originator thereof.
No deviation in performance of the terms of any Supplemental Bailee Letter
will alter any of your duties or responsibilities as set forth in this Master
Bailee Letter.
By executing and returning this Master Bailee Letter to the Custodian, as
agent and bailee for MLMCI, you agree to observe and be bound by the terms of
the Supplemental Bailee Letter relating to Loan Documents delivered to you from
time to time as aforesaid. We ask that an authorized officer of [Trade
Investor] date and sign this Master Bailee Letter and that a copy of the
D-2
<PAGE>
signed Master Bailee Letter be returned by overnight courier to the Custodian,
as agent and bailee for MLMCI, at the aforementioned address.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION,
as custodian, agent and bailee for MLMCI
By: _________________________
Its: _________________________
Date: _________________________
RECEIVED AND AGREED:
Trade Investor: ______________
By: __________________________
Its: _________________________
Date: ________________________
D-3
<PAGE>
EXHIBIT E
RE: POSITION AND SETTLEMENT REPORT
TO: CUSTODIAN: First Chicago National Processing Corporation, 1111 South Arroyo
Parkway, Suite 630, Pasadena, CA 91105, Attention: Ms. Jeanne
Ranallo, PHONE: (818) 441-9017, FAX: (818) 441-6395
MLMCI: Merrill Lynch Mortgage Capital Inc., 101 Hudson Street, 12th
Floor, Jersey City, NJ 07302, Attention: Christine Star
PHONE: 201-557-2482, FAX: 201-557-2485
Bank: The First National Bank of Chicago, One First National
Plaza, Chicago, IL 60670, Attention: Kathleen Lasky, PHONE:
(312) 732-6982, FAX: (312) 732-3852
CUSTODIAN MORTGAGE LOAN BALANCES
--------------------------------
(CURRENT BALANCE) (ORIGINAL BALANCE)
----------------- ------------------
LOAN BALANCE YESTERDAY $_________________ $_________________
(AS OF THE CLOSE OF BUS-
INESS ON THE BUSINESS DAY
PRECEDING THE DATE OF THIS
REPORT)
ADD: NEW LOANS $_________________ $_________________
LOAN BALANCE BEFORE REPAYMENTS $_________________ $_________________
LOAN BALANCE @95%(Max Advance) $_________________ $_________________
TOTAL PERMITTED BORROWINGS $_________________ $_________________
MLMCI ADVANCES
--------------
ADVANCE BALANCE YESTERDAY (NET) $_________________
ADD: OVERNIGHT ACCRUED INTEREST $_________________
ADD: NEW ADVANCES TODAY $_________________
TODAY'S ADVANCE (A.M.) $ (*)
=================
PAYMENTS FROM AGENCIES AND CMI
------------------------------
(CURRENT BALANCE) (ORIGINAL BALANCE)
----------------- ------------------
LOAN BALANCE BEFORE REPAYMENTS $_________________ $_________________
E-1
<PAGE>
TODAY'S PAYMENTS $ $
---------------- -----------------
LOAN BALANCE AFTER REPAYMENTS $ $
================ =================
LOAN BALANCE @95% (Max Advance) $ $
================ =================
FUNDS RECEIVED FROM AGENCIES
AND CMI $
================
TRANSFER TO CMI TODAY $
----------------
WIRE TO MLMCI TODAY $ (*)
----------------
TODAY'S ADVANCE (A.M.) $
----------------
TODAY'S ADVANCE (NET) $ $ % OF FACE VALUE
---------------- ----------------
COUNTRYWIDE MORTGAGE
INVESTMENTS, INC. BY:
---------------------------
VERIFIED AT FIRST CHICAGO NATIONAL PROCESSING
CORPORATION BY:
---------------------------
WIRE AUTHORIZED BY MLMCI BY:
-----------------------------------------
E-2
<PAGE>
EXHIBIT F
REQUEST AND RECEIPT
-------------------
To: First Chicago National Processing Corporation
From: Countrywide Mortgage Investments, Inc.
Re: Tri-Party Custody Agreement among Merrill Lynch Mortgage
Capital Inc. ("MLMCI"), Countrywide Mortgage Investments,
Inc. ("CMI"), The First National Bank of Chicago and First
Chicago National Processing Corporation ("Custodian")
dated October 1, 1993 (the "Custody Agreement")
----------------------------------------------------------
In connection with the Mortgage Loans held by you as the Custodian for MLMCI,
CMI hereby requests and acknowledges receipt of the Required Documents for the
Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address and Zip Code__________________________________
__________________________________
Mortgage Loan Number: __________________________________
Reason for Requesting Documents (circle one)
1. Mortgage Loan paid in full
2. Mortgage Loan liquidated by ________________________________ (CMI hereby
certifies that the Repurchase Price related to such Mortgage Loan has been
repaid in full)
3. Mortgage Loan in Foreclosure
4. Other (explain) ____________________________________________
If item 1 or 2 above is circled, please release to CMI any and all documents in
your possession relating to the above specified Mortgage Loan.
If item 3 or 4 above is circled, please acknowledge release of the documents by
signing in the appropriate space below and distributing copies of this form to
MLMCI and CMI and, upon CMI's return of all of the above documents to you as
Custodian, please acknowledge your receipt thereof by signing in the space
indicated below, and returning this form to CMI.
F-1
<PAGE>
Acknowledgment of release of documents to CMI:
COUNTRYWIDE MORTGAGE MERRILL LYNCH MORTGAGE CAPITAL INC.
INVESTMENTS, INC. (only required if item 1 or 2 is circled or if
Notes relating
By: _______________________ to more than three Mortgage Files
Date: _____________________ or other documents relating to more than ten
Mortgage Files have been withdrawn for correction)
By:_________________________________________
Date:_______________________________________
Acknowledgment that documents have been released by the Custodian for any of
the reasons listed in items 1 through 4 above:
First Chicago National Processing Corporation
By: _______________________ Date:_______________________________________
Acknowledgment that documents have been returned to the Custodian for the
reasons listed in items 3 or 4 above, as applicable:
First Chicago National Processing Corporation
By: _______________________ Date:_______________________________________
F-2
<PAGE>
EXHIBIT G
FORM OF SUPPLEMENTAL BAILEE LETTER
[Date]
[TRADE INVESTOR]
Re: Tri-Party Custody Agreement among Merrill Lynch Mortgage Capital Inc.
("MLMCI"), Countrywide Mortgage Investments, Inc. ("CMI"), The First
National Bank of Chicago and First Chicago National Processing Corporation
("Custodian") dated October 1, 1993 (the "Custody Agreement")
---------------------------------------------------------------------------
Gentlemen:
Reference is made to the Master Bailee Letter, dated ___________, 1993 (the
"Master Bailee Letter"), from the Custodian, as agent and bailee for MLMCI that
was executed by your authorized signatory. Enclosed with this letter (the
"Supplemental Bailee Letter") are ____ original promissory notes evidencing the
mortgage loans described on the attached schedule, along with other related
documents (hereinafter collectively referred to as the "Mortgage Loans"), for
your inspection prior to purchase pursuant to your commitment(s) to purchase
such Mortgage Loans. A first priority security interest in the Mortgage Loans
and the proceeds thereof has been granted to MLMCI, in accordance with a Master
Repurchase Agreement, dated as of October 1, 1993, between MLMCI and CMI.
Mortgage Loans and all documents relating thereto (including, without
limitation, any assignments of purchase commitments of takeout investors) that
are now or hereafter delivered to you are to be held by you as a bailee and
agent for the benefit of the Custodian, as agent and bailee for MLMCI, subject
only to direction and control of the Custodian, as agent and bailee for MLMCI,
until released as provided herein, without any right of defense, offset or
counterclaim with respect thereto pursuant to any agreement between you and CMI.
Any interest you may have in the Mortgage Loans and the proceeds thereof,
including without limitation any claim of setoff you may at any time have, is
subject to and subordinate to the security interest of MLMCI therein, and you
will not exercise any right with respect to the Mortgage Loans or said proceeds
without the prior written consent of the Custodian, as agent and bailee for
MLMCI.
Immediately upon purchase by you, the proceeds of such purchase of the
Mortgage Loans in an amount equal to the purchase price set forth in the related
purchase commitment issued by you to CMI, a copy of which is attached hereto, as
such purchase price may be
G-1
<PAGE>
adjusted by mutual agreement between you and CMI (such amount being hereinafter
referred to as the "Purchase Proceeds"), must be wire transferred in immediately
available funds to:
The First National Bank of Chicago
ABA No. 071000013
For credit to the account of Merrill Lynch
Mortgage Capital Inc.
Re: Tri-Party Custody Agreement
dated as of October 1, 1993
Acct. No. 19-19873
Attention: Kathleen Lasky
Phone: (312) 732-6982
Funds deposited in the aforementioned account will be distributed to MLMCI
pursuant to the Custody Agreement. MLMCI has no obligation to release its first
priority security interest in the Mortgage Loans unless MLMCI receives the full
amount of the Purchase Proceeds for the Mortgage Loans. Subject to the
foregoing, upon MLMCI's receipt of the full amount of the Purchase Proceeds, its
security interest in the Mortgage Loans shall terminate without further action.
Mortgage Loans that are not accepted for purchase must be returned
immediately to the Custodian, as agent and bailee for MLMCI, at First Chicago
National Processing Corporation, 1111 South Arroyo Parkway, Suite 630, Pasadena,
California 91105, to the attention of the undersigned, or in any event within
twenty (20) days after the date of this Supplemental Bailee Letter. The
Custodian, as agent and bailee for MLMCI, reserves the right at any time, prior
to receipt of the Purchase Proceeds, to demand the return of the Mortgage Loans.
You are not to honor any communications from CMI relating to any Mortgage
Loans without the written consent of the Custodian, as agent and bailee for
MLMCI, or until MLMCI has received the full amount of the Purchase Proceeds.
You are not to deliver any Mortgage Loans to any third party without the written
consent of the Custodian, as agent and bailee for MLMCI. In no event shall the
Mortgage Loans enclosed herein be returned to CMI or the originator thereof.
No deviation in performance of the terms of any previous Supplemental Bailee
Letter will alter any of your duties or responsibilities as set forth in this
Supplemental Bailee Letter.
G-2
<PAGE>
By accepting the Mortgage Loans for inspection and pursuant to your
agreement under the Master Bailee Letter, you are bound by the terms of this
Supplemental Bailee Letter and the notices referred to herein.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION,
as custodian, agent and bailee for MLMCI
By: ____________________________
Its: ___________________________
Date: __________________________
G-3
<PAGE>
EXHIBIT H
LIST OF TAKEOUT INVESTORS AND TRADE INVESTORS
---------------------------------------------
American Residential Mortgage, Inc.
Arbor National Mortgage
Bear, Stearns & Co. Inc.
Capstead Mortgage Corporation
Countrywide Funding Corporation
Countrywide Mortgage Conduit
Countrywide Mortgage Investments, Inc.
Dean Witter Reynolds Inc.
Directors Mortgage Loan Corp.
The First Boston Corporation
First Franklin Financial Corporation
Fleet Financial Group, Inc.
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
Imperial Credit Industries
Kidder, Peabody & Co. Incorporated
Margaretten & Company, Inc.
Merrill Lynch Government Securities, Inc.
Morgan Stanley & Co. Incorporated
Nomura International
North American Mortgage
Norwest Mortgage, Inc.
PaineWebber Incorporated
Plaza Home Mortgage Bank, F.S.B.
The Prudential Home Mortgage Company Inc.
Residential Funding Corporation
Salomon Brothers Inc
Saxon Mortgage Funding Corporation
Shearson Lehman Brothers Inc.
H-1
<PAGE>
EXHIBIT I
WITHDRAWAL OF REQUIRED DOCUMENTS PROCEDURES
-------------------------------------------
CMI and the Custodian will adhere to the following procedures with respect
to the withdrawal of Required Documents:
(i) A Request and Receipt form will be prepared by CMI and signed by an
authorized officer of CMI and submitted to the Custodian.
(ii) Custodian will review the Request and Receipt and all previous Request
and Receipt forms maintained by the Custodian pursuant to clause (iv)
below to ensure that Notes from not more than three Mortgage Files and
documents from not more than ten Mortgage Files in aggregate are being,
or have been, withdrawn for correction.
If Notes from three or fewer Mortgage Files and other documents from ten
or fewer Mortgage Files are being requested or have been withdrawn for
correction, the Custodian shall acknowledge such release on the Request
and Receipt form, return the original Request and Receipt to CMI and
maintain a copy and a log of each Request and Receipt form indicating the
sequential number, date issued, Mortgage Loan number, Mortgagor, Note
amount and date documents are returned.
If documents from more than three Mortgage Files or other documents from
more than ten Mortgage Files are being requested or have been withdrawn
for correction, or if the documents are being permanently withdrawn, the
Custodian shall only release such documents with the express written
approval of MLMCI, which approval shall be indicated on the related
Request and Receipt.
(iii) Upon return of the documents to the Custodian, the Request and
Receipt form will be surrendered to the Custodian for acknowledgment of
such return of documents. Thereupon, such original will be returned to
CMI.
(iv) The Custodian will maintain photocopies of all Request and Receipt
forms in a vault, drawer or other depository of a type which is suitable
and customary for such documents controlled solely by the Custodian with
the forms filed in numerical order.
I-1
<PAGE>
EXHIBIT J
ACKNOWLEDGMENT FROM THE CUSTODIAN
---------------------------------
To: ________________
From: First Chicago National Processing Corporation, as Custodian
Date: ________________
The undersigned hereby acknowledges that it is in possession of the
Required Documents with respect to the Mortgage Loans identified in the Notice
Schedule attached to the Notice to the Custodian, dated [date] from [transferor]
(a copy of which Notice is attached hereto) and it is holding such Required
Documents as custodian for [transferee] and subject to the terms of the Tri-
Party Custody Agreement dated as of October 1, 1993, among Countrywide Mortgage
Investments, Inc., Merrill Lynch Mortgage Capital Inc., The First National Bank
of Chicago and First Chicago National Processing Corporation, as Custodian
("Custody Agreement").
No person or entity other than [transferee] may rely or shall be entitled
to rely on this acknowledgment.
First Chicago National Processing
Corporation, as Custodian
By:_________________________________________
Name:_______________________________________
Title:______________________________________
cc: Merrill Lynch Mortgage Capital Inc.
J-1
<PAGE>
EXHIBIT K
NOTICE TO THE CUSTODIAN
-----------------------
To: First Chicago National Processing Corporation, as Custodian
From: _______________________________
Date: _______________________________
You are hereby notified that the undersigned has assigned its right,
title and interest in and to the Mortgage Loans identified in the schedule
attached hereto (the "Notice Schedule") to [transferee's name and address] and
the undersigned hereby releases all right, title and interest in and to such
Mortgage Loans. You are hereby instructed to hold the related Required
Documents pursuant to the terms of the Tri-Party Custody Agreement, dated as of
October 1, 1993 (the "Custody Agreement") among Countrywide Mortgage
Investments, Inc., Merrill Lynch Mortgage Capital Inc., The First National Bank
of Chicago and First Chicago National Processing Corporation, as custodian (the
"Custodian"), for the sole and exclusive benefit of [name of transferee].
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed in the Custody Agreement.
[________________________]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
[Name of transferee] hereby acknowledges that (i) the Mortgage Loans listed on
the Notice Schedule are being held for it by the Custodian pursuant to the
terms of the Custody Agreement, (ii) it agrees to be bound by the terms and
conditions of the Custody Agreement and (iii) the Custodian will not act on any
request of a Third Person to deliver Required Documents unless such Third
Person has delivered to the Custodian an executed Notice of Default
Certificate.
[NAME OF TRANSFEREE]
By: ___________________________
Name: _________________________
Title: ________________________
K-1
<PAGE>
EXHIBIT L
NOTICE OF DEFAULT CERTIFICATE
(REQUEST FOR RELEASE OF DOCUMENTS)
To: First Chicago National Processing Corporation, as custodian
Re: Tri-Party Custody Agreement dated as of October 1, 1993
among Countrywide Mortgage Investments, Inc.,
Merrill Lynch Mortgage Capital Inc., The First
National Bank of Chicago and First Chicago National
Processing Corporation, as Custodian
------------------------------------------------------
As the transferee of certain Mortgage Loans identified in the Notice
Schedule attached to the Notice to the Custodian, dated [date] from [transferor]
(a copy of which is attached hereto), we hereby notify you that an event of
default has occurred under our agreement with Merrill Lynch Mortgage Capital
Inc. and we are entitled to receive the Required Documents relating to the
Mortgage Loans so identified in such Notice Schedule. Accordingly, we request
the release, and acknowledge receipt, of such Required Documents relating to the
Mortgage Loans identified in such Notice Schedule and described below.
CMI Mortgage Loan Number:
------------------------
[ ]
---------------------------------
By:
-------------------------------
Title:
----------------------------
Date:
----------------------------
Notice of Default Certificate received by Custodian on [date]:
First Chicago National Processing Corporation, as Custodian
By: ________________________
Date: ______________________
L-1
<PAGE>
EXHIBIT M
CUSTODIAN'S WEEKLY REPORT
-------------------------
TO: _________________________
FROM: First Chicago National Processing Corporation, as Custodian
DATE: ____________________
RE: Tri-Party Custody Agreement dated as of
October 1, 1993 among Countrywide Mortgage
Investments, Inc., Merrill Lynch Mortgage
Capital Inc., The First National Bank of
Chicago and First Chicago National Processing
Corporation, as Custodian
---------------------------------------------
The Custodian hereby advises you that it is holding Mortgage Files on
your behalf as your custodian relating to Mortgage Loans (other than Mortgage
Loans allocated to a GNMA, FNMA or FHLMC Pool for securitization or purchase by
an Agency) that as of the date hereof, based solely upon the most current data
provided to the Custodian by or on behalf of Countrywide Mortgage Investments,
Inc., had an outstanding principal balance of $____________.
The following Mortgage Loans, as of the date hereof, have been subject to
the Custody Agreement for more than sixty (60) days in aggregate:
(Check one and ___ None
attach schedule ___ The Mortgage Loans
if applicable) listed on Schedule 1
hereto
The following Mortgage Loans, as of the date hereof, have been subject to
the Custody Agreement for a period after the date occurring thirty-seven (37)
days prior to the expiration date for the related Commitment/Certificate of
Insurance:
(Check one and ___ None
attach schedule ___ The Mortgage Loans
if applicable) listed on Schedule 2
hereto
The following Mortgage Loans, as of the date hereof, have been subject to
the Custody Agreement for more than two (2) Business Days and a Commitment
Number has not yet been assigned.
(Check one and ___ None
attach schedule ___ The Mortgage Loans
if applicable) listed on Schedule 3
hereto
M-1
<PAGE>
All initially capitalized terms used herein shall have the meanings
ascribed to them in the above-referenced Custody Agreement.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Custodian
By: _________________________
Name: _______________________
Title: ______________________
M-2
<PAGE>
EXHIBIT N
FORM OF MORTGAGE LOAN SCHEDULE
[DATE]
----------------------------------------------------
Original Outstanding
CMI Loan Mortgagor Principal Principal
Number Name Note Rate Amount Amount Loan Type
----------- --------------- ------------ ------------- ------------- -------------
Commitment Expiration Date of
CMI Loan Mortgagor Loan-to Value Number Commitment/Certificate
Number Name Ratio Maturity Date (if any) of Insurance (if any)
----------- --------------- -------------- ------------- ------------- -----------------------
N-1
<PAGE>
EXHIBIT O-1
FORM OF MASTER AGENCY CUSTODIAN BAILEE LETTER
[Date]
[NAME AND ADDRESS OF
AGENCY CUSTODIAN]
Re: Tri-Party Custody Agreement, dated as of October 1, 1993, by and among
Countrywide Mortgage Investments, Inc. ("CMI"), Merrill Lynch Mortgage
Capital Inc. ("MLMCI"), The First National Bank of Chicago and First
Chicago National Processing Corporation, as custodian (the "Custodian")
-----------------------------------------------------------------------
Gentlemen:
Countrywide Mortgage Investments, Inc. ("CMI") has sold (subject to its
obligation to repurchase), and granted a first priority security interest in,
its rights to certain mortgage loans (the "Mortgage Loans") to Merrill Lynch
Mortgage Capital Inc. ("MLMCI") under a Master Repurchase Agreement, dated as of
October 1, 1993 (the "Master Repurchase Agreement"). First Chicago National
Processing Corporation, as custodian (the "Custodian") under the above-
referenced Tri-Party Custody Agreement, holds original promissory notes and
other documents relating to the Mortgage Loans (the "Loan Documents") on behalf
of, and as agent and bailee for, MLMCI. The Custodian, from time to time at the
request of CMI and unless MLMCI shall object, will deliver Loan Documents to you
for your review in connection with the securitization or purchase of such
Mortgage Loans by the Government National Mortgage Association, the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation, as
applicable. Any Loan Documents delivered by the Custodian to you shall be
accompanied by a letter (a "Supplemental Agency Custodian Bailee Letter")
substantially in the form attached hereto.
Loans Documents that are now or hereafter delivered to you are to be held
by you as a bailee and agent for the benefit of the Custodian, as agent and
bailee for MLMCI, subject only to direction and control of the Custodian, as
agent and bailee for MLMCI, until released as provided in the related
Supplemental Agency Custodian Bailee Letter, without any right of defense,
offset or counterclaim with respect thereto pursuant to any agreement between
you and CMI or any other Person. Any interest you may have in the Mortgage
O-1-1
<PAGE>
Loans and the proceeds thereof, including without limitation any claim or setoff
you may at any time have, is subject to and subordinate to the security interest
of MLMCI therein, and you will not exercise any right with respect to the
Mortgage Loans or said proceeds without the prior written consent of the
Custodian, as agent and bailee for MLMCI.
Mortgage Loans that, upon your review, are not acceptable for
securitization or purchase by the related Agency must be returned immediately to
the Custodian, as agent and bailee for MLMCI, at First Chicago National
Processing Corporation, 1111 South Arroyo Parkway, Suite 630, Pasadena,
California 91105, to the attention of the signatory of the related Supplemental
Agency Custodian Bailee Letter, or in any event, within twenty (20) days after
the date of the related Supplemental Agency Custodian Bailee Letter. The
Custodian, as agent and bailee for MLMCI reserves the right at any time, prior
to your initial certification of the related pool to the applicable Agency, to
demand the return of the Mortgage Loans.
You are not to honor any communications from the originator of the
related Mortgage Loan or from CMI with respect to any Mortgage Loan without the
written consent of the Custodian, as agent and bailee for MLMCI. You are not to
deliver any Mortgage Loans to any third party without the written consent of the
Custodian, as agent and bailee for MLMCI. In no event shall any Mortgage Loans
be returned to CMI or the originator thereof.
No deviation in performance of the terms of any previous Supplemental
Agency Custodian Bailee Letter will alter any of your duties or responsibilities
as set forth in this Master Agency Custodian Bailee Letter.
By executing and returning this Master Agency Custodian Bailee Letter to
the Custodian, as agent and bailee for MLMCI, you agree to observe and be bound
by the terms of the Supplemental Agency Custodian Bailee Letter relating to Loan
Documents delivered to you from time to time as aforesaid. We ask that you
promptly
O-1-2
<PAGE>
date and sign this Master Agency Custodian Bailee Letter and that you return a
copy of this Master Agency Custodian Bailee Letter to the Custodian, as agent
and bailee for MLMCI, via facsimile transmission (fax no. (818) 441-6395,
Attention: Jeanne Ranallo).
FIRST CHICAGO NATIONAL
PROCESSING CORPORATION,
as agent and bailee for MLMCI
By: _________________________
Its: ________________________
Date: _______________________
RECEIVED AND ACKNOWLEDGED:
[AGENCY CUSTODIAN]
By: ________________________
Its: _______________________
Date: ______________________
O-1-3
<PAGE>
EXHIBIT O-2
FORM OF SUPPLEMENTAL AGENCY CUSTODIAN BAILEE LETTER
[Date]
[NAME AND ADDRESS OF
AGENCY CUSTODIAN]
Re: Tri-Party Custody Agreement, dated as of October 1, 1993, by and among
Countrywide Mortgage Investments, Inc. ("CMI"), Merrill Lynch Mortgage
Capital Inc. ("MLMCI"), The First National Bank of Chicago and First
Chicago National Processing Corporation, as custodian (the "Custodian")
-----------------------------------------------------------------------
Gentlemen:
Reference is made to the Master Agency Custodian Bailee Letter, dated
___________, 1993 (the "Master Agency Custodian Bailee Letter"), from the
Custodian, as agent and bailee for MLMCI, that was executed by your authorized
signatory. Enclosed with this letter (the "Supplemental Bailee Letter") are ____
original promissory notes evidencing the mortgage loans described on the
attached schedule, along with other related documents (hereinafter collectively
referred to as the "Mortgage Loans"), for your review in connection with the
securitization or purchase of such Mortgage Loans by the Government National
Mortgage Association, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, as applicable (each an "Agency"). A first
priority security interest in the Mortgage Loans and proceeds thereof has been
granted to MLMCI, in accordance with a Master Repurchase Agreement, dated as of
October 1, 1993, between MLMCI and CMI.
Mortgage Loans and all documents relating thereto that are now or
hereafter delivered to you are to be held by you as a bailee and agent for the
benefit of the Custodian, as agent and bailee for MLMCI, subject only to
direction and control of the Custodian, as agent and bailee for MLMCI, until
released as provided herein, without any right of defense, offset or
counterclaim with respect thereto pursuant to any agreement between you and CMI
or any other Person. Any interest you may have in the Mortgage Loans and the
proceeds thereof, including without limitation any claim of setoff you may at
any time have, is subject to and subordinate to the security interest of MLMCI
therein, and you will not exercise any right with respect to the Mortgage Loans
or said proceeds without
O-2-1
<PAGE>
the prior written consent of the Custodian, as agent and bailee for MLMCI.
The first priority security interest of MLMCI in the Mortgage Loans
will be released upon (i) receipt by MLMCI or its agent of an Agency security
backed by such Mortgage Loans and registered in the name of MLMCI or its agent
or (ii) receipt of the proceeds of the purchase of the Mortgage Loans, in the
case of Mortgage Loans being sold to an Agency under its cash purchase program,
in the form of immediately available funds deposited into the following account:
The First National Bank of Chicago
ABA No. 071000013
For credit to the account of Merrill Lynch
Mortgage Capital Inc.
Re: Tri-Party Custody Agreement
dated as of October 1, 1993
Acct. No. 19-19873
Attention: Kathleen Lasky
Phone: (312) 732-6982
Funds deposited in the aforementioned account will be distributed to MLMCI
pursuant to the Tri-Party Custody Agreement.
Mortgage Loans that, upon your review, are not acceptable for
securitization or purchase by the related Agency must be returned immediately to
the Custodian, as agent and bailee for MLMCI, at First Chicago National
Processing Corporation, 1111 South Arroyo Parkway, Suite 630, Pasadena,
California 91105, to the attention of the undersigned, or in any event, within
twenty (20) days after the date of this Supplemental Agency Custodian Bailee
Letter. The Custodian, as agent and bailee for MLMCI, reserves the right at any
time, prior to your initial certification of the related pool to the applicable
Agency, to demand the return of the Mortgage Loans.
You are not to honor any communications from the originator of the
related Mortgage Loan or from CMI with respect to any Mortgage Loans without the
written consent of the Custodian, as agent and bailee for MLMCI. You are not to
deliver any Mortgage Loans to any third party without the written consent of the
Custodian, as agent and bailee for MLMCI. In no event shall the Mortgage Loans
enclosed herein be returned to CMI or the originator thereof.
No deviation in performance of the terms of any previous Supplemental
Agency Custodian Bailee Letter will alter any of your duties or responsibilities
as set forth in this Supplemental Agency Custodian Bailee Letter.
By accepting the Mortgage Loans for review, you are bound by the terms
of this Supplemental Agency Custodian Bailee Letter, and
O-2-2
<PAGE>
the notices stated herein, whether or not you sign or return this Supplemental
Agency Custodian Bailee Letter to the Custodian, as agent and bailee for MLMCI.
We ask that you promptly date and sign this Supplemental Agency Custodian Bailee
Letter and that you return a copy of this Supplemental Agency Custodian Bailee
Letter to the Custodian, as agent and bailee for MLMCI, via facsimile
transmission (fax no. (818) 441-6395, Attention: Jeanne Ranallo), within one
business day of your receipt of the Mortgage Loans.
FIRST CHICAGO NATIONAL
PROCESSING CORPORATION,
as agent and bailee for MLMCI
By: _________________________
Its: ________________________
Date: _______________________
O-2-3
<PAGE>
SCHEDULE I
CMI NOTICES
-----------
Name: Address: Countrywide Mortgage
Investments, Inc.
Title: 155 North Lake Avenue
Pasadena, California 91101
Telephone:
Facsimile:
CMI AUTHORIZATIONS
------------------
Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for CMI under this Agreement:
Name Signature Title
----------------- --------------------- ------------------
----------------- --------------------- ------------------
----------------- --------------------- ------------------
CUSTODIAN NOTICES
-----------------
Name: Jeanne Ranallo Address: First Chicago National
Processing Corporation
1111 South Arroyo Parkway
Telephone: (818) 441-9017 Suite 630
Pasadena, California 91105
Facsimile: (818) 441-6395
CUSTODIAN AUTHORIZATIONS
------------------------
Any person whose signature and title appears below is authorized, acting singly,
to act for Custodian, or for Custodian as Agent for MLMCI, under this Agreement:
Name Signature Title
----------------- --------------------- ------------------
----------------- --------------------- ------------------
----------------- --------------------- ------------------
I-1
<PAGE>
BANK NOTICES
------------
Name: Kathleen Lasky Address: The First National Bank of Chicago
One First National Plaza
Telephone: (312) 732-6982 Chicago, Illinois 60670
Facsimile: (312) 732-3852
BANK AUTHORIZATIONS
-------------------
Any person whose signature and title appears below is authorized, acting singly,
to act for the Bank, or for the Bank as Agent for MLMCI, under this Agreement:
Name Title Signature
--------------------- ----------------------- ---------------------
--------------------- ----------------------- ---------------------
--------------------- ----------------------- ---------------------
MLMCI NOTICES
-------------
Name: Christine Star Address: Merrill Lynch Mortgage
Capital Inc.
Telephone: (201) 557-2482 101 Hudson Street
12th Floor
Facsimile: (201) 557-2485 Jersey City, New Jersey 07302
MLMCI AUTHORIZATIONS
--------------------
Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for MLMCI under this Agreement:
Name Title Signature
Gary F. Rupert Director ________________________
Louis V. Molinari Director ________________________
Mary Beth Gould Supervisor ________________________
Cory G. Carlesimo Trader ________________________
I-2