Management Agreement - Countrywide Mortgage Investments Inc. and Countrywide Asset Management Corp.
1993 AMENDED AND EXTENDED
MANAGEMENT AGREEMENT
THIS AGREEMENT, initially made as of September 3, 1985 and amended
and extended from time to time thereafter, is amended and extended as of May
15, 1993 by and between COUNTRYWIDE MORTGAGE INVESTMENTS, INC., a Delaware
corporation which has elected to qualify as a real estate investment trust
(the "Company"), and COUNTRYWIDE ASSET MANAGEMENT CORPORATION, a Delaware
corporation, and its permitted successors and assigns under this agreement
(the "Manager").
WITNESSETH
WHEREAS, the Company has elected to qualify for the tax benefits
accorded by Sections 856 to 860 of the Internal Revenue Code of 1986, as
amended; and
WHEREAS, the Company, directly or through Subsidiaries, in the
conduct of its business primarily operates a mortgage loan conduit, engages in
warehouse lending and invests in mortgage loans and mortgage-related
securities meeting the investment criteria established from time to time by
its Board of Directors; and
WHEREAS, the Company desires to retain the Manager to manage the
operations and investments of the Company and its Subsidiaries and to perform
administrative services for the Company and its Subsidiaries, each in the
manner and on the terms set forth in this Agreement; and
WHEREAS, the Company and the Manager wish to amend and extend their
agreement originally entered into as of September 3, 1985 for a one year
period through May 14, 1994;
NOW, THEREFORE, in consideration of the mutual agreements set forth
in this Agreement, the Company and the Manager agree as follows:
Section 1. Definitions. Whenever used in this Agreement, the
following terms, unless the context otherwise requires, shall have the
following meanings:
(a) "Affiliate" of another person shall mean any person directly or
indirectly owning, controlling or holding with power to vote, more than 5% of
the outstanding voting securities of such other person; any person 5% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by such other person; any person
directly or indirectly controlling, controlled by or under common control
with, such other person; and any officer, director, partner or employee of
such other person. The term "person" includes a natural person, corporation,
partnership, trust, company or other entity.
(b) "Agency Securities" shall mean (i) fully modified pass-through
mortgage-backed certificates guaranteed as to timely payment of principal and
interest by the Governmental National Mortgage Association, (ii) mortgage
participation certificates guaranteed as to payment of interest and principal
by the Federal Home Loan Mortgage Corporation and (iii) mortgage pass-through
certificates guaranteed as to payment of interest and principal by the Federal
National Mortgage Association.
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(c) "Agreement" shall mean this 1993 Amended and Extended
Management Agreement.
(d) "Average Invested Assets" for any period shall mean the average
of the aggregate book value of the assets of the mortgage conduit operations
of the Company and its Subsidiaries invested, directly or indirectly, in loans
secured by real estate (including without limitation whole mortgage loans,
retained undivided interests in mortgage loans and Agency Securities, but not
including any whole mortgage loans, retained undivided interests in mortgage
loans, or Agency Securities pledged to secure the issuance of collateralized
mortgage obligations or other mortgage collateralized debt or sold in the form
of mortgage backed securities in transactions entered into by the Company or a
Subsidiary), before deduction of reserves for depreciation and similar non-
cash reserves computed by taking the average of such values at the end of each
calendar month during such period.
(e) "Average Net Worth" for any period shall mean the arithmetic
average of the Net Worth of the Company at the beginning of such period and at
the end of each calendar month during such period.
(f) "Board of Directors" shall mean the Board of Directors of the
Company.
(g) "CCI" shall mean Countrywide Credit Industries, Inc., a
Delaware corporation.
(h) "CFC" shall mean Countrywide Funding Corporation, a Subsidiary
of CCI, and a New York corporation.
(i) "CMC" shall mean Countrywide Mortgage Conduit, Inc. a Delaware
corporation.
(j) "Commitment" shall mean any document containing the terms
pursuant to which the Company or any Subsidiary agrees to purchase on a
forward basis any specified mortgage loans, including purchases from
Affiliates of the Manager.
(k) "Consolidated Average Invested Assets" for any period shall
mean the average of the aggregate book value of the Company determined on a
consolidated basis invested, directly or indirectly, in loans secured by real
estate before deduction of reserves for depreciation and similar non-cash
reserves, computed by taking the average of such values at the end of each
calendar month during such period.
(l) "Governing Instruments" shall mean the articles or certificate
of incorporation, trust agreement and bylaws of the Company or any Subsidiary,
as applicable.
(m) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
(n) "Loan Purchase Agreement" shall mean the 1993 Amended and
Extended Loan Purchase and Administrative Services Agreement, dated as of May
15, 1993, as thereafter amended or supplemented, between the Company and CFC.
(o) "Mortgage Backed Securities" shall mean the collateralized
mortgage obligations, mortgage collateralized debt, mortgage pass-through
securities including real estate mortgage investment conduits or other
mortgage-related securities issued by the Company or a Subsidiary of the
Company.
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(p) "Net Income" for any period shall mean total revenues
applicable to such period, less the expenses applicable to such period
determined in accordance with generally accepted accounting principles.
(q) "Net Worth" at any time shall mean the sum of the gross
proceeds from any offerings of equity securities by the Company (before
deducting any underwriting discounts and commissions and other expenses and
costs relating to the offering), plus or minus any retained earnings or losses
of the Company, computed in accordance with generally accepted accounting
principals.
(r) "Return on Equity" for a period shall be calculated by dividing
the Company's Net Income for such period by the Company's Average Net Worth
for such period.
(s) "Servicing Agreement" shall mean an agreement between the
Company or any Subsidiary and each seller or servicer of mortgage loans
purchased by the Company, including CFC, which agreement governs the sale
and/or servicing of such mortgage loans.
(t) "Shareholders" shall mean the owners of the shares of the
Company.
(u) "Subsidiary" shall mean any corporation, whether now existing
or in the future established, of which the Company, directly or indirectly,
owns more than 50% of the outstanding voting securities of any class or
classes, any business trust, partnership or similar non-corporate form in
which the Company, directly or indirectly, owns more than 50% of the
beneficial interests and CMC.
(v) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of 10 years).
(w) "Ten Year U.S. Treasury Rate" for a quarterly period shall mean
the arithmetic average of the weekly per annum Ten Year Average Yields
published by the Federal Reserve Board during such quarter. In the event that
the Federal Reserve Board does not publish a weekly per annum Ten Year Average
Yield during any week in a quarter, then the Ten Year U.S. Treasury Rate for
such week shall be the weekly per annum Ten Year Average Yields published by
any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Company for such week. In the event that the Company
determines in good faith that for any reason the Company cannot determine the
Ten Year U.S. Treasury Rate for any quarter as provided above, then the Ten
Year U.S. Treasury Rate for such quarter shall be the arithmetic average of
the per annum average yields to maturity based upon the daily closing bids
during such quarter for each of the issues of actively traded marketable U.S.
Treasury fixed interest rate securities (other than securities which can, at
the option of the holder, be surrendered at face value in payment of any
federal estate tax) with a final maturity date not less than eight nor more
than twelve years from the date of each such quotation, as chosen and quoted
for each business day (or less frequently if daily quotations shall not be
generally available) in each such quarterly period in New York City to the
Company by at least three recognized dealers in U.S. Government securities
selected by the Company.
(x) "Unaffiliated Directors" shall mean those members of the Board
of Directors of the Company who are not Affiliates of the Manager.
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Section 2. General Duties of the Manager. Subject to the
supervision of the Board of Directors and in accordance with the Governing
Instruments, the Manager shall provide services to the Company and CMC, and to
the extent directed by the Board of Directors, shall provide similar services
to any other Subsidiary of the Company, as follows:
(a) conduct the day-to-day mortgage loan conduit, warehouse lending
and other operations of the Company and CMC as approved by the Board of
Directors, including without limitation, the purchase, accumulation, financing
and securitization of mortgage loans, the establishment and financing of
warehouse lending facilities, the management of assets and investments and the
administration thereof; and
(b) provide such reports and analysis to the Board of Directors
regarding the operating strategies and results of the Company and its
Subsidiaries as the Board may reasonably request.
The Manager shall perform its duties and shall take actions on
behalf of the Company and its Subsidiaries consistent with (i) the operating
policies and criteria established from time to time by the Board of Directors
or any authorized officer with respect thereto, and (ii) the obligations of
the Company and its Subsidiaries under the various agreements to which each is
a party. So long as the Manager is serving as the Manager under this
Agreement, it shall be and remain a Subsidiary of and wholly owned, directly
or indirectly, by CCI.
Section 3. Additional Activities of Manager. Except as provided
in the Letter Agreement between CCI and the Company attached hereto as Exhibit
A, nothing herein shall prevent the Manager or its Affiliates from engaging in
other businesses or from rendering services of any kind to any other person or
entity, including investment in or advisory service to others investing in any
type of real estate investment, including investments which meet the principal
investment objectives of the Company or any Subsidiary of the Company.
Directors, officers, employees and agents of the Manager or Affiliates of the
Manager may serve as directors, officers, employees, agents, nominees or
signatories for the Company or any Subsidiary of the Company, to the extent
permitted by its Governing Instruments, as from time to time amended, or by
any resolutions duly adopted by the Board of Directors pursuant to its
Governing Instruments. When executing documents or otherwise acting in such
capacities for the Company or any Subsidiary of the Company, such persons
shall use their respective titles in the Company or such Subsidiary.
Section 4. Purchases and Sales of Investments and Loans from the
Manager and its Affiliates. The Manager agrees that sales of investments to
and purchases of investments from the Manager and its Affiliates, including
without limitation purchases and sales of mortgage loans, Agency Securities
and Commitments, shall only be made as stated in an agreement therefor setting
forth in general the operating policies and guidelines within which such sales
or purchases may be made, which agreement has been approved by the Board of
Directors, including a majority of the Unaffiliated Directors.
Notwithstanding the terms of any other agreements between the manager or its
Affiliates and the Company, the Manager further agrees that all such sales and
purchases will be made upon terms no less favorable to the Company than are
generally available to other third parties. The Manager shall purchase or
exercise the Company's option to purchase mortgage loans from CFC in
accordance with the Company's rights and obligations under the Loan Purchase
Agreement or any other applicable agreement between the Company and CFC which
is approved by the Board of Directors, including a majority of the
Unaffiliated Directors.
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Section 5. Repurchase Obligation.
(a) The Manager agrees that if the Company purchases any mortgage
loan, Agency Security or other investment which does not meet the investment
and/or purchase criteria and policies of the Company and/or CMC as applicable
at the time of purchase, the Manager will repurchase or will cause the
repurchase of such mortgage loan, Agency Security or other investment from the
Company for an amount not less than the unpaid principal balance of the
mortgage loan, Agency Security or other investment as of the date of
repurchase, less any amounts received by the Company representing prepaid
interest not accrued as of the date of repurchase, plus any amounts
representing accrued and unpaid interest to the date of repurchase and any
amounts incurred by the Company, including, but not limited to reasonable fees
and out-of-pocket expenses of counsel, in enforcing the obligation of the
Manager to repurchase or cause the repurchase of such mortgage loan. In lieu
of repurchasing or causing the repurchase of any mortgage loan, Agency
Security or other investment, the Manager may, in its discretion, substitute
or cause the substitution, respectively, of a mortgage loan, Agency Security
or other investment having an unpaid principal amount and yield at least
equivalent to and a maturity not later than the defective mortgage loan,
Agency Security or other investment and otherwise meeting the investment
and/or purchase criteria and policies of the Company and/or CMC as applicable
and the terms of the agreement, if any, pursuant to which the mortgage loan,
Agency Security or other investment has been securitized.
(b) The Manager shall be subrogated to any and all rights of the
Company or any Subsidiary, and the Company agrees to assign to the Manager or
direct its Subsidiary to assign to the Manager its rights, under any Servicing
Agreement with any third party with respect to any mortgage loan repurchased
or substituted for, by or on behalf of the Manager under Subsection (a).
Section 6. Bank Accounts. The Manager may establish and
maintain one or more bank accounts in the name of the Company or any
Subsidiary, at the direction of the Board of Directors, and may collect and
deposit into any such account or accounts, and disburse from any such account
or accounts, any money on behalf of the Company or any Subsidiary, under such
terms and conditions as the Board of Directors may approve; and the Manager
shall from time to time render appropriate accountings of such collections and
payment to the Board of Directors and, when requested, to the auditors of the
Company or any Subsidiary.
Section 7. Records; Confidentiality. The Manager shall maintain
appropriate books of account and records relating to services performed
hereunder, which books of account and records shall be accessible for
inspection by the Company or any Subsidiary at any time during normal business
hours. The Manager agrees to keep confidential any and all information it
obtains from time to time in connection with the services it renders under
this Agreement and shall not disclose any portion thereof to non-affiliated
third parties except with the prior written consent of the Company.
Section 8. Obligations of Manager.
(a) The Manager shall use its best efforts to provide that each
mortgage loan conforms to the purchase criteria of the Company or CMC as
applicable and shall require each seller or transferor of mortgage loans to
the Company or CMC in connection with such purchase or transfer to make all
applicable representations and warranties contained in the Servicing Agreement
for such loans. The Manager shall take such other action as the Manager deems
necessary or appropriate with regard to the protection of the Company's or
CMC's investments.
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(b) Anything else in this Agreement to the contrary
notwithstanding, the Manager shall refrain from any action which in its sole
judgment made in good faith would adversely affect the status of the Company,
or any Subsidiary which elects to so qualify, as a real estate investment
trust as defined and limited in Section 856 through 860 of the Internal
Revenue Code or which in its sole judgment made in good faith would violate
any law, rule or regulation of any governmental body or agency having
jurisdiction over the Company or any Subsidiary or which would otherwise not
be permitted by the Company's or its Subsidiary's Governing Instruments except
if such action shall be ordered by the Board of Directors, in which event the
Manager shall promptly notify the Board of Directors of the Manager's judgment
that such action would adversely affect such status or violate any such law,
rule or regulation or the Governing Instruments and shall refrain from taking
such action pending further clarification or instructions from the Board of
Directors. If the Board of Directors thereafter instructs the Manager,
despite the Manager's notification as provided herein, to take any such action
and the Manager so acts upon the instructions given, the Manager shall not be
responsible for any loss of the Company's or Subsidiary's status as a real
estate investment trust or violation of any law, rule or regulation or the
Governing Instruments caused thereby.
Section 9. Fidelity Bond. The Manager shall maintain a fidelity
bond with a responsible surety company in an amount approved by the Board of
Directors covering all officers and employees of the Manager handling funds of
the Company or any Subsidiary and any documents or papers, which bond shall
protect the Company or any Subsidiary against all losses of any such property
from acts of such officers and employees through theft, embezzlement, fraud,
negligent acts, errors and omissions or otherwise. The premium for said bond
shall be paid by the Manager.
Section 10. Compensation.
(a) Manager will receive a base management fee equal to the Average
Invested Assets Multiplied by 1/8 of 1%."
(b) The Manager shall be paid for services rendered with respect to
warehouse lending activities a management fee in an amount equal to 3/8 of 1%
of the average daily balance of the amounts outstanding under warehouse lines
of credit extended by the Company or its Subsidiaries to originators of
mortgage loans.
(c) If the Company's annualized Return on Equity during any fiscal
quarter (computed by multiplying the Return on Equity for such fiscal quarter
by four) is in excess of the Ten Year U.S. Treasury Rate, plus 2% after taking
into account any recovery of the Manager's fees under Subsection (d), the
Company will pay the Manager as incentive compensation for such quarter an
amount equal to 25% of the amount by which the annualized Return on Equity of
the Company for such fiscal quarter exceeds the Ten Year U.S. Treasury Rate
plus 2%, but in no event shall any payment of incentive compensation under
this Subsection reduce the Company's annualized Return on Equity for such
quarter to less than the Ten Year U.S. Treasury Rate plus 2%. For purposes of
the calculation contained in this Subsection (b), all Net Income of the
Company and any Subsidiaries shall be deemed to have been distributed on the
last day of each quarter. The incentive compensation shall be paid to the
Manager within 60 days after the end of each fiscal quarter on an interim
basis, subject to adjustment under Subsection (d).
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(d) The Manager shall compute the compensation payable under
Subsections (a), (b) and (c) within 45 days after the end of each fiscal
quarter. A copy of the computations made by the Manager to calculate its
compensation shall thereafter by promptly delivered to the Company and, upon
such delivery, payment of the interim compensation earned under Subsections
(a), (b) and (c) shown therein shall be due and payable within 60 days after
the end of such fiscal quarter. The aggregate amount of the Manager's
compensation for each fiscal year shall be adjusted within 120 days after the
end of such fiscal year so as to provide compensation for such year in the
annual amounts stated in Subsections (a), (b) and (c) and any excess owed to,
or shortfall owed by, the Manager with respect to such compensation,
collectively, shall be promptly remitted by, or paid to, the Company.
(e) Notwithstanding the definition of Average Invested Assets, in
the event the Company implements a strategy of investing directly or
indirectly in loans secured by real estate which are not intended to be
securitized, the base management fee in Subsection (a) shall be paid with
respect to these assets. The Manager acknowledges that it has waived all fees
payable to the manager pursuant to Section 11(a) and (b) of this Agreement for
the calendar year 1993 and 25% of all fees payable to the Manager pursuant to
Section 11(c) of this Agreement, if any, for the calendar year 1994.
Section 11. Operating Expenses. The Company will absorb all
expenses of the Manager incurred in performing its duties and obligations
under this Agreement from may 15, 1993 to the extent that such expenses exceed
$900,000 calculated from January 1, 1993. For each month after the point in
time during 1993 that such expenses exceed $900,000, the Manager shall be
reimbursed by the Company for its operating expenses on a monthly basis.
Promptly following the end of each month for which reimbursement is due, the
Manager shall submit an itemized accounting of its expenses to the Company,
and the Company shall pay within 30 days of the receipt of the accounting.
Section 12. Limits of Manager Responsibility. The Manager assumes
no responsibility under this Agreement other than to render the services
called for hereunder in good faith and shall not be responsible for any action
of the Board of Directors in following or declining to follow any advice or
recommendations of the Manager, including as set forth in Subsection 9(b)
above. The Manager, its directors, officers, shareholders and employees will
not be liable to the Company, any Subsidiary, the Unaffiliated Directors of
the Company or the Company's or any Subsidiary's shareholders for any acts
performed by the Manager, its directors, officers, shareholders or employees
in accordance with this Agreement, except by reason of acts constituting bad
faith, willful misconduct, gross negligence or reckless disregard of their
duties. The Company or any Subsidiaries, as applicable, shall reimburse,
indemnify and hold harmless the Manager, its shareholders, directors, officers
or employees for and from any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever in respect of or arising
from any acts or omissions of the Manager, its shareholders, directors,
officers and employees made in good faith in the performance of the Manager's
duties under this Agreement and not constituting bad faith, willful
misconduct, gross negligence or reckless disregard of duties.
Section 13. No Joint Venture. The Company and the Manager are
not partners or joint venturers with each other and nothing herein shall be
construed to make them such partners or joint venturers or impose any
liability as such on either of them.
Section 14. Term; Termination. This agreement shall continue in
force through May 14, 1995, and thereafter it may be extended only with the
consent of the Manager and by the affirmative vote of a majority of the
Unaffiliated Directors.
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Each extension shall be executed in writing by all parties hereto
before the expiration of this Agreement or of any extension thereof. Each
such extension shall be effective for a period in no case exceeding twelve
months.
Notwithstanding any other provision to the contrary, this Agreement,
or any extension hereof, may be terminated by any party, upon sixty (60) days'
written notice, by majority vote of the Unaffiliated Directors or by majority
vote of the Shareholders, in the case of termination by the Company, or, in
the case of termination by the Manager, by majority vote of the directors of
the Manager.
If this Agreement is terminated pursuant to this Section, such
termination shall be without any further liability or obligation of either
party to the other, except as provided in Section 17.
Section 15. Assignment; Subcontract.
(a) This Agreement may not be assigned, in whole or in part, by the
Manager, unless such assignment is to a corporation, association, trust or
other organization which shall acquire the property and carry on the business
of the Manager, if at the time of such assignment a majority of the voting
stock of such assignee organization shall be owned, directly or indirectly, by
CCI or any of its Affiliates or unless such assignment is consented to in
writing by the Company with the consent of a majority of the Unaffiliated
Directors. Such a permitted assignment shall bind the assignee hereunder in
the same manner as the Manager is bound under this Agreement and, to further
evidence its obligations, under this Agreement, the assignee shall execute and
deliver to the Company a counterpart of this Agreement. This Agreement shall
not be assignable by the Company without the consent of the Manager, except in
the case of assignment by the Company to a real estate investment trust or
other organization which is a successor (by merger, consolidation, or
otherwise purchase of assets) to the Company, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in
the same manner as the Company is bound hereunder.
(b) Notwithstanding the foregoing, the Company and the Manager
agree that the Manager may enter into a subcontract with CFC or any of its
Affiliates pursuant to which CFC or such Affiliate will provide such of the
management services required under this Agreement as the Manager deems
necessary, and the Company hereby consents to the entering into and
performance of such subcontract; provided, however, that no such arrangement
between the Manager and CFC or any of its Affiliates shall relieve the Manager
of any of its duties or obligations under this Agreement.
Section 16. Termination by Company for Cause. At the option
solely of the Company, this Agreement shall be and become terminated upon
thirty days' written notice of termination from the Board of Directors to the
Manager if any of the following events shall occur:
(a) If the Manager shall violate any provision of this Agreement
and, after notice of such violation, shall not cure such default within 30
days; or
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(b) There is entered an order for relief or similar decree or order
with respect to the Manager by a court having jurisdiction in the premises in
an involuntary case under the federal bankruptcy laws as now or hereafter
constituted or under any applicable federal or state bankruptcy, insolvency or
other similar laws; or the Manager (i) ceases or admits in writing its
inability to pay debts as they become due and payable, or makes a general
assignment for the benefit of, or enters into any composition or arrangement
with, creditors; (ii) applies for, or consents (by admission of material
allegations of a petition or otherwise) to the appointment of a receiver,
trustee, assignee, custodian, liquidator or sequestrator (or other similar
official) of the Manager or of any substantial part of its properties or
assets, or authorizes such an application or consent, or proceedings seeking
such appointment are commenced without such authorization, consent or
application against the Manager and continue undismissed for 30 days; (iii)
authorizes or files a voluntary petition in bankruptcy, or applies for or
consents (by admission of material allegations of a petition or otherwise) to
the application of any bankruptcy, reorganization, arrangement, readjustment
of debt, insolvency, dissolution, liquidation or other similar law of any
jurisdiction, or authorizes such application or consent, or proceedings to
such end are instituted against the Manager without such authorization,
application or consent and remain undismissed for 30 days or result in
adjudication of bankruptcy or insolvency; or (iv) permits or suffers all or
any substantial part of its properties or assets to be sequestered or attached
by court order and the order remains undismissed for 30 days.
(c) The Manager agrees that if any of the events specified in
paragraph (b) of this Section 16 shall occur, it will give prompt written
notice thereof to the Board of Directors after the happening of such event.
Section 17. Action Upon Termination. From and after the
effective date of termination of this Agreement, pursuant to Sections 14, 15,
or 16 hereof, the Manager shall not be entitled to compensation for further
services hereunder, but shall be paid all compensation accruing to the date of
termination, subject to adjustment on an annualized basis in accordance with
Section 10(d). The Manager shall forthwith upon such termination:
(a) Pay over to the Company or any Subsidiary, as applicable, all
money collected and held for the account of the Company or any Subsidiary
pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;
(b) Deliver to the Board of Directors a full accounting, including
a statement showing all payments collected by it and a statement of all money
held by it, covering the period following the date of the last accounting
furnished to the Board of Directors with respect to the Company or any
Subsidiary; and
(c) Deliver to the Board of Directors all property and documents of
the Company or any Subsidiary then in the custody of the Manager.
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Section 18. Release of Money or Other Property Upon Written
Request. The Manager agrees that any money or other property of the Company
or any Subsidiary held by the Manager under this Agreement shall be held for
the Company or such Subsidiary in a custodial capacity, and the Manager's
records shall be appropriately marked to reflect clearly the ownership of such
money or other property by the Company or such Subsidiary. Upon the receipt
by the Manager of a written request signed by a duly authorized officer of the
Company requesting the Manager to release to the Company or any Subsidiary any
money or other property then held by the Manager for the account of the
Company or any Subsidiary under this Agreement, the Manager shall release such
money or other property to the Company or any Subsidiary within a reasonable
period of time, but in no event later than 60 days following such request.
The Manager shall not be liable to the Company, any Subsidiary, the
Unaffiliated Directors, or the Company's Shareholders for any acts thereafter
performed or omissions thereafter to act by the Company or any Subsidiary of
the Company in connection with the money or other property released to the
Company or any Subsidiary in accordance with this Section. The Company and
any Subsidiary receiving released money or other property hereby agree to
indemnify the Manager, its directors, officers, shareholders and employees
against any and all expenses, losses, damages, liabilities, demands, charges
and claims of any nature whatsoever, which arise in connection with the
Manager's release of such money or other property to the Company or such
Subsidiary in accordance with the terms of this Section. This provision shall
be in addition to any right of the Manager to indemnification under Section
12.
Section 19. Representations and Warranties.
(a) The Company hereby represents and warrants to the Manager as
follows:
(i) Corporate Existence. The Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power to own its assets and to transact
the business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that could not in the aggregate have a material adverse effect on the business
operations, assets or financial condition of the Company and its Subsidiaries,
taken as a whole. The Company does not do business under any fictitious
business name.
(ii) Corporate Power; Authorization; Enforceable Obligations.
The Company has the corporate power, authority and legal right to execute,
deliver and perform this Agreement and all obligations required hereunder and
has taken all necessary corporate action authorize this Agreement on the terms
and conditions hereof and its execution, delivery and performance of this
Agreement and all obligations required hereunder. Except such as have been
obtained, no consent of any other person including, without limitation,
stockholders and creditors of the Company, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority is required by the Company in
connection with this Agreement or the execution, delivery, performance,
validity or enforceability of this Agreement and all obligations required
hereunder. This Agreement has been, and each instrument or document required
hereunder will be, executed and delivered by a duly authorized officer of the
Company, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute, the
legally valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
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(iii) No Legal Bar to This Agreement. The execution, delivery
and performance of this Agreement and the documents or instruments required
hereunder, will not violate any provision of any existing law or regulation
binding on the Company, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on the Company, or the
certificate of incorporation or by-laws of, or any securities issued by the
Company or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Company is a party or by which the
Company or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Company and its Subsidiaries, taken as a whole, and will not
result in, or require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
(b) The Manager hereby represents and warrants to the Company as
follows:
(i) Corporate Existence. The Manager is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power to own its assets and to transact
the business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that could not in the aggregate have a material adverse effect on the business
operations, assets or financial condition of the Manager and its Subsidiaries,
taken as a whole. The Manager does not do business under any fictitious
business name.
(ii) Corporate Power; Authorization; Enforceable Obligations.
The Manager has the corporate power, authority and legal right to execute,
deliver and perform this Agreement and all obligations required hereunder and
has taken all necessary corporate action to authorize this Agreement on the
terms and conditions hereof and its execution, delivery and performance of
this Agreement and all obligations required hereunder. Except such as have
been obtained, no consent of any other person including, without limitation,
stockholders and creditors of the Manager, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority is required by the Manager in
connection with this Agreement or the execution, delivery, performance,
validity or enforceability of this Agreement and all obligations required
hereunder. This Agreement has been, and each instrument or document required
hereunder will be, executed and delivered by a duly authorized officer of the
Manager, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute, the
legally valid and binding obligation of the Manager enforceable against the
Manager in accordance with its terms.
(iii) No Legal Bar to This Agreement. The execution, delivery
and performance of this Agreement and the documents or instruments required
hereunder, will not violate any provision of any existing law or regulation
binding on the Manager, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on the Manager, or the
certificate of incorporation or by-laws of, or any securities issued by the
Manager or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Manager is a party or by which the
Manager or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Manager and its Subsidiaries, taken as a whole, and will not
result in, or require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
<PAGE>
Section 20. Notices. Any notice, report, or other communication
required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report, or other communication is accepted
by the party to whom it is given, and shall be given by being delivered at the
following addresses of the parties hereto:
The Company: Countrywide Mortgage Investments, Inc.
155 North Lake Avenue
P.O. Box 7137
Pasadena, California 91109-7137
Attention: General Counsel
The Manager: Countrywide Asset Management Corporation
155 North Lake Avenue
P.O. Box 7137
Pasadena, California 91109-7137
Attention: General Counsel
Either party may at any time give notice in writing to the other
party of a change of its address for the purpose of this Section 20.
Section 21. Name Change Upon Termination of Management Agreement.
The Company agrees that, if at any time the Manager or any Affiliate of CCI
shall cease to serve generally as manager of the Company or any Subsidiary,
upon receipt of a written request from the Manager, the Company and such
Subsidiary will cause their Governing Instruments to be amended so as to
change their names to a name that does not include "Countrywide" or any
approximation thereof; provided, however, that such requirement shall not
apply to any trust in which the Company or any of its Subsidiaries has sold a
majority of the beneficial interest, and which has issued Mortgage Backed
Securities that remain outstanding in whole or in part.
Section 22. Amendments. This Agreement shall not be amended,
changed, modified, terminated or discharged in whole or in part except by an
instrument in writing signed by all parties hereto, or their respective
successors or assigns, or otherwise as provided herein.
Section 23. Successors and Assigns. This Agreement shall bind
any successors or assigns of the parties hereto as herein provided.
Section 24. Governing Law. This Agreement shall be governed,
construed and interpreted in accordance with the laws of the State of
California.
Section 25. Headlines and Cross References. The section headings
hereof have been inserted for convenience of reference only and shall not be
construed to affect the meaning, construction or effect of this Agreement.
Any reference in this Agreement to a "Section" or "subsection" shall be
construed, respectively, as referring to a section of this Agreement or a
subsection of a section of this Agreement in which the reference appears.
Section 26. Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity of any other
provision, and all other provisions shall remain in full force and effect.
Section 27. Entire Agreement. This instrument contains the
entire agreement between the parties as to the rights granted and the
obligations assumed in this instrument.
Section 28. Waiver. Any forbearance by a party to this Agreement
in exercising any right or remedy under this Agreement or otherwise afforded
by applicable law shall not be a waiver of or preclude the exercise of that or
any other right or remedy.
<PAGE>
Section 29. Execution in Counterparts. This Agreement may be
executed in one or more counterparts, any of which shall constitute an
original as against any party whose signature appears on it, and all of which
shall together constitute a single instrument. This Agreement shall become
binding when one or more counterparts, individually or taken together, bear
the signatures of both parties.
Section 30. Guaranty of Manager's Obligations. The Manager
agrees that in order to insure the performance of its duties under this
Agreement, it will be necessary for CFC to guarantee the full performance of
the Manager, and this Agreement is conditioned upon the execution and delivery
to the Company of a Guaranty Agreement in the form attached to this Agreement
as Exhibit B. Such Guaranty Agreement shall remain in effect through the term
of this Agreement, including any renewals or extensions; provided, however,
that the Guaranty Agreement may be terminated by the Guarantor as provided
therein at such time as the Manager and the Guarantor are no longer
Affiliates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers thereunto duly authorized as of the day and year
first above written.
COUNTRYWIDE MORTGAGE INVESTMENTS, INC.
By __________________________________
Sandor E. Samuels
Senior Vice President and Secretary
COUNTRYWIDE ASSET MANAGEMENT CORPORATION
By __________________________________
Kevin M. Bartlett
Executive Vice President
<PAGE>
EXHIBIT B
GUARANTY
THIS GUARANTY (the "Guaranty"), dated as of September 3, 1985, is made by
Countrywide Funding Corporation (the "Guarantor") to Countrywide Asset
Management Corporation (the "Manager") and Countrywide Mortgage Investments,
Inc. (the "Company").
RECITALS
A. Pursuant to the Management Agreement, dated as of September 3, 1985,
(the "Agreement"), entered into between the Manager and the Company
concurrently with the execution of this Guaranty, the Manager has agreed to
manage the investments and the day-to-day operations of the Company, including
the issuance of commitments on behalf of the Company to acquire mortgage loans
meeting the investment criteria set from time to time by the Company's Board
of Directors;
B. The Manager is a newly organized corporation which is a wholly-owned
subsidiary of Countrywide Credit Industries, Inc.;
C. The Guarantor is an experienced originator and servicer of mortgage
loans which is also a wholly-owned subsidiary of Countrywide Credit
Industries, Inc., and in order to induce the parties thereto to enter into the
Agreement, has agreed to guarantee the full performance of the Manager of its
obligations under the Agreement; and
D. The Guarantor will benefit from the relationship embodied in the
Agreement between the Company and the Manager.
NOW THEREFORE, for the consideration recited above and other good and
valuable consideration, the Guarantor agrees as follows:
1. The Guarantor hereby unconditionally guarantees to the Company the
due and punctual payment, performance and discharge of all duties,
obligations, debts and liabilities of the Manager to the Company under the
Agreement (the "Obligations"), together with any and all expenses of, for and
incidental to collection of the Obligations, including attorneys' fees and
court costs. Nothing shall discharge or satisfy the liability of the
Guarantor hereunder except the full performance and payment of the Obligations
to the Company.
<PAGE>
2. The Guarantor hereby waives notice of acceptance hereof, notice of
the amount of the Obligations of the Manager to the Company from time to time,
notice of any adverse change in the Manager's financial condition or any other
fact which might increase the Guarantor's risk. The Guarantor waives all (x)
set-offs, counterclaims, presentments and (y) protests, notices of protest,
notices of dishonor and notices of any action or non-action, including
acceptance of this Guaranty, notices of default under the Agreement or any
agreement related thereto and notice of any other extension of credit to the
Manager. The Guarantor further waives any rights granted by statute or
otherwise to require the Company to institute suit against the Manager or to
exhaust its rights and remedies against the Manager, it being acknowledged
that the Guarantor is bound for the payment of all Obligations of the Manager
to the Company now existing or hereafter occurring as fully as if such
Obligations were owing directly to the Company by the Guarantor. The
Guarantor waives all rights of exoneration granted by statute or otherwise in
the event this Agreement is altered in any respect by or with the consent of
the Manager without the consent of the Guarantor. The Guarantor shall not be
released from any liability by reason of the Manager's personal disability.
3. The Guarantor consents and agrees that without notice to the
Guarantor and without affecting or impairing the obligations of the Guarantor
hereunder, the Company may compromise or settle, extend the period or duration
of time for payment or discharge of performance of, or may refuse to enforce
or may release all or any parties to any and all of the Obligations, or may
grant other indulgences to the Manager with respect thereof, or may amend or
modify in any manner any documents or agreements relating to such obligations.
4. The Guarantor agrees to pay any and all expenses incurred by the
Company in connection with the enforcement of its obligations under this
Guaranty, as well as court costs, collections charges and attorneys' fees and
disbursements.
5. This Guaranty is a primary, original obligations of the Guarantor
and is an absolute, unconditional, continuing and irrevocable guaranty of
payment and performance and, except as provided in Section 10, shall remain in
full force and effect throughout the term of the Agreement without respect to
future changes in conditions, including any change of law or any invalidity or
irregularity with respect to the issuance of any Obligations of the Manager to
the Company. This is a continuing Guaranty relating to the Obligations,
including that arising under successive transactions under the Agreement which
shall either continue the Obligations or from time to time renew any or all of
them. The obligations hereunder are independent of the Obligations of the
Manager and the obligations of any other guarantor of the Obligations of the
Manger under the Agreement, and a separate action or actions may be brought
and prosecuted against the Guarantor whether any action is brought against the
Manager or any of such other guarantors or whether the Manager be joined any
such action or actions; and the Guarantor waives all principles or provisions
of law, statutory or otherwise, which are or might be in conflict with the
terms of this Guaranty. However, this Guaranty shall not limit the effect of
any provisions in the Agreement or any principles or provisions of law,
statutory or otherwise, which provide legal rights to the Manager, and to the
extent the Guarantor is required to perform any of the Obligations under this
Guaranty, it shall be entitled to seek enforcement of such principles or
provisions of law to the same extent as the Manager.
<PAGE>
6. The Company shall have the right to seek recourse against the
Guarantor to the full extent provided for herein and in any other document or
instrument evidencing the Obligations and against the Manager to the full
extent provided for in the Agreement. No election to proceed in one form of
action or proceeding, or against any party, or on any Obligations, shall
constitute a waiver of the Company's right to proceed in any other form of
action or proceeding or against other parties.
7. The Guarantor agrees that all the rights, benefits and privileges
herein shall vest in, and be enforceable by, the Company and its successors
and assigns.
8. So long as any Obligations shall be owing to the company, the
Guarantor shall not, without the prior consent of The Company, commence or
join with any other person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against the Manager. The obligations of the
Guarantor under this Guaranty shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the Manger or by
any defense which the Manager may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding. The Company shall have the sole right to accept or reject any
plan proposed in such proceeding and to take any other action which a party
filing a claim is entitled to take. In the event that all or any portion of
the Obligations is paid or performed by the Manager, the obligations of
Guarantor hereunder shall continue and remain in full force and effect in the
event that all or any part of such payment(s) or performance(s) is avoided or
recovered directly or indirectly from the Company as a preference, fraudulent
transfer or otherwise in such proceeding.
9. In order to induce the Company to accept this Guaranty and to make
the Agreement, Guarantor hereby represents the warrants to the Company that
the following statements are true and correct:
(i) Corporate Existence. Guarantor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power to own its assets and to transact the
business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that could not in the aggregate have a material adverse effect on the business
operations, assets or financial condition of Guarantor and its subsidiaries,
taken as a whole. Guarantor does not do business under any fictitious
business name.
(ii) Corporate Power; Authorization; Enforceable Obligations.
Guarantor has the corporate power, authority and legal right to execute,
deliver and perform the Guaranty and all obligations required hereunder and
has taken all necessary corporate action to authorize its Guaranty hereunder
on the terms and conditions hereof and its execution, delivery and performance
of this Guaranty and all obligations required hereunder. No consent of any
other person including, without limitation, stockholders and creditors of
Guarantor, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by Guarantor in connection with this
Guaranty or the execution, delivery, performance, validity or enforceability
of this Guaranty and all obligations required hereunder. This Guaranty has
been, and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of Guarantor, and this Guaranty
constitutes, and each instrument of document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its
terms.
<PAGE>
(iii) No Legal Bar to This Guaranty. The execution, delivery
and performance of this Guaranty and the documents or instruments required
hereunder will not violate and provision of any existing law or regulation
binding on Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on Guarantor, or the certificate
of incorporation or by-laws of, or any securities issued by Guarantor, or of
any mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which Guarantor is a party or by which Guarantor or any of its
assets may be bound, the violation of which would have a material adverse
effect on the business operation, assets or financial condition of Guarantor
and its subsidiaries, taken as a whole, and will not result in, or require,
the creation or imposition of any lien on any of its property, assets or
revenues pursuant to the provisions of any such mortgage, indenture, lease,
contract or other agreement, instrument or undertaking.
10. This Guaranty shall remain in effect through the term of the
Agreement, including any renewals or extensions thereof; provided however,
that this Guaranty may be terminated by the Guarantor at such time as the
Manager and the Guarantor are not longer "Affiliates" as such term is defined
in the Agreement.
11. This Guaranty, all acts and transactions hereunder, and the rights
and obligations of the parties hereto shall be governed by, construed under
and interpreted in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the Guarantor executed this Guaranty as of the 3rd
day of September, 1985.
COUNTRYWIDE FUNDING CORPORATION
By: Angelo R. Mozilo
Title: President, Chief
Executive Officer
Attest: Wayne Turkheimer
Title: Secretary
(CORPORATE SEAL)