EXHIBIT 10.13
EXECUTION COPY
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U.S. $150,000,000
LOAN PURCHASE AND REPURCHASE AGREEMENT
by and among
ARBOR REALTY FUNDING LLC
as the Seller
WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Purchaser
and
ARBOR REALTY TRUST, INC.,
as the Guarantor
Dated as of December 23, 2003
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TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS........................................................................................... 1
Section 1.1 Certain Defined Terms................................................................. 1
Section 1.2 Other Terms........................................................................... 26
Section 1.3 Computation of Time Periods........................................................... 26
Section 1.4 Interpretation........................................................................ 26
ARTICLE II PURCHASE OF ELIGIBLE ASSETS........................................................................... 27
Section 2.1 Purchase and Sale..................................................................... 27
Section 2.2 Transaction Mechanics; Related Matters................................................ 27
Section 2.3 Reduction of Maximum Amount; Optional Repurchases..................................... 30
Section 2.4 Extension of Facility Maturity Date................................................... 30
Section 2.5 Payment of Price Differential......................................................... 31
Section 2.6 Request for Additional Transaction for Excess Margin.................................. 32
Section 2.7 Margin Account Maintenance............................................................ 33
Section 2.8 Income Payments....................................................................... 34
Section 2.9 Payment, Transfer and Custody......................................................... 35
Section 2.10 Disputes Regarding Market Value Determination......................................... 36
Section 2.11 Hypothecation or Pledge of Purchased Assets........................................... 37
Section 2.12 Fees.................................................................................. 37
Section 2.13 Increased Costs; Capital Adequacy; Illegality......................................... 37
Section 2.14 Taxes................................................................................. 39
ARTICLE III CONDITIONS TO TRANSACTIONS........................................................................... 40
Section 3.1 Conditions to Closing and Initial Purchase............................................ 40
Section 3.2 Conditions Precedent to all Transactions.............................................. 41
Section 3.3 Additional Opinions................................................................... 45
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................ 46
Section 4.1 Representations and Warranties of the Seller.......................................... 46
ARTICLE V COVENANTS.............................................................................................. 56
Section 5.1 Covenants of the Seller............................................................... 56
ARTICLE VI ADMINISTRATION AND SERVICING.......................................................................... 70
Section 6.1 Servicing............................................................................. 70
Section 6.2 Seller as Servicer.................................................................... 70
Section 6.3 Third Party Servicer.................................................................. 70
Section 6.4 Duties of the Seller.................................................................. 71
Section 6.5 Authorization of the Seller........................................................... 72
Section 6.6 Collection of Payments................................................................ 73
Section 6.7 Realization Upon Defaulted Purchased Items............................................ 73
Section 6.8 Maintenance of Insurance Policies..................................................... 74
Section 6.9 Termination Event..................................................................... 74
Section 6.10 Modification.......................................................................... 74
Section 6.11 Inspection............................................................................ 75
Section 6.12 Servicing Compensation................................................................ 75
Section 6.13 Payment of Certain Expenses by Servicer............................................... 75
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Section 6.14 Pooling and Servicing Agreements...................................................... 75
Section 6.15 Servicer Default...................................................................... 76
ARTICLE VII [RESERVED]........................................................................................... 76
ARTICLE VIII SECURITY INTEREST................................................................................... 76
Section 8.1 Security Interest..................................................................... 76
Section 8.2 Release of Lien on Purchased Assets................................................... 78
Section 8.3 Further Assurances.................................................................... 78
Section 8.4 Remedies.............................................................................. 78
Section 8.5 Waiver of Certain Laws................................................................ 78
ARTICLE IX POWER OF ATTORNEY..................................................................................... 79
Section 9.1 Purchaser's Appointment as Attorney-in-Fact........................................... 79
ARTICLE X TERMINATION EVENTS..................................................................................... 80
Section 10.1 Termination Events.................................................................... 80
Section 10.2 Remedies.............................................................................. 84
Section 10.3 Determination of Termination Events................................................... 86
ARTICLE XI INDEMNIFICATION....................................................................................... 87
Section 11.1 Indemnities by the Seller............................................................. 87
ARTICLE XII [RESERVED]........................................................................................... 88
ARTICLE XIII MISCELLANEOUS....................................................................................... 88
Section 13.1 Amendments and Waivers................................................................ 88
Section 13.2 Notices, Etc.......................................................................... 88
Section 13.3 Set-offs.............................................................................. 88
Section 13.4 No Waiver; Remedies................................................................... 89
Section 13.5 Binding Effect........................................................................ 89
Section 13.6 Term of this Agreement................................................................ 89
Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue.................. 89
Section 13.8 Waiver of Jury Trial.................................................................. 89
Section 13.9 Costs, Expenses and Taxes............................................................. 90
Section 13.10 Legal Matters......................................................................... 90
Section 13.11 Recourse Against Certain Parties...................................................... 91
Section 13.12 Protection of Right, Title and Interest in the Purchased Assets; Further Action
Evidencing Transactions............................................................... 91
Section 13.13 Confidentiality....................................................................... 92
Section 13.14 Execution in Counterparts; Severability; Integration.................................. 93
Section 13.15 Seller's Waiver of Setoff............................................................. 94
Section 13.16 Assignments and Participations; Hypothecation of Purchased Assets..................... 94
Section 13.17 Heading and Exhibits.................................................................. 95
Section 13.18 Single Agreements..................................................................... 95
Section 13.19 Disclosure Relating to Certain Federal Protections.................................... 95
Section 13.20 Intent................................................................................ 95
Section 13.21 Periodic Due Diligence Review......................................................... 96
Section 13.22 Use of Employee Plan Assets........................................................... 97
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SCHEDULES Schedule 1 Representations and Warranties Regarding Mortgage Assets....................................... 1 Schedule 2 Asset Pricing.................................................................................. 1 Schedule 3 Accounts....................................................................................... 1 Schedule 4 Approved Servicers............................................................................. 1 Schedule 5 List of Existing Financing Facilities.......................................................... 1 Schedule 6 Exceptions to Subsection 4.1(h)(h)............................................................. 1 Schedule 7 UCC Filing Locations........................................................................... 1 Schedule 8 List of Subsidiaries........................................................................... 1
EXHIBITS
Exhibit I-1 Form of Closing Certificate of Seller.......................................................... 1 Exhibit I-2 Form of Closing Certificate of Guarantor....................................................... 1 Exhibit I-3 Form of Closing Certificate of Pledgor......................................................... 1 Exhibit II-1 Form of Confirmation - Mezzanine Loan Transactions............................................. 1 Exhibit II-2 Form of Confirmation - Whole Loan and Junior Interest Transactions............................. 1 Exhibit III Power of Attorney.............................................................................. 1 Exhibit IV Form of Transaction Request.................................................................... 1 Exhibit V Form of Account Agreement...................................................................... 1 Exhibit VI-1 Form of Perfection Certificate of the Seller................................................... 1 Exhibit VI-2 Form of Perfection Certificate of the Pledgor.................................................. 1 Exhibit VII-1 Form of Seller's Release Letter................................................................ 1 Exhibit VII-2 Form of Warehouse Lender's Release Letter...................................................... 1 Exhibit VIII Form of Servicer Notice........................................................................ 1 Exhibit IX Form of Request for Additional Transactions for Excess Margin.................................. 1 Exhibit X Compliance Certificate......................................................................... 1 Exhibit XI Form of Summary of Purchased Asset Data Summary................................................ 1 Exhibit XII Form of Margin Deficit Notice.................................................................. 1 Exhibit XIII Form of Assignment............................................................................. 1
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LOAN PURCHASE AND REPURCHASE AGREEMENT
THIS LOAN PURCHASE AND REPURCHASE AGREEMENT (such agreement as amended, modified, waived, supplemented, extended, replaced or restated from time to time, the "Agreement") is made as of this 23rd day of December, 2003, by and among:
(1) ARBOR REALTY FUNDING LLC, a Delaware limited liability company, as the seller (together with its successors and permitted assigns in such capacity, the "Seller");
(2) WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, "Wachovia"), as the purchaser (together with its successors and assigns in such capacity, the "Purchaser"); and
(3) ARBOR REALTY TRUST, INC., a Maryland corporation (together with its successors and assigns, "Arbor"), as the guarantor (together with its successors and permitted assigns in such capacity, the "Guarantor").
R E C I T A L S
WHEREAS, the Seller desires to sell and the Purchaser desires to purchase from time to time Eligible Assets under the terms and conditions stated herein; and
WHEREAS, the parties desire that the Seller repurchase the Purchased Assets on or before the Facility Maturity Date under the terms and conditions stated herein.
NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and agreements contained herein, and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are defined above or in this Article I.
(b) As used in this Agreement and the schedules, exhibits and other attachments hereto, unless the context requires a different meaning, the following terms shall have the following meanings:
"40 Act": Defined in Subsection 10.1(e).
Loan Purchase and Repurchase Agreement
(Wachovia and Arbor)
"Accepted Servicing Practices": With respect to any Mortgage Asset, those mortgage servicing practices of prudent mortgage lending institutions that service Mortgage Assets of the same type, size and structure as such Mortgage Asset in the jurisdiction where the related Mortgaged Property is located, but in any event, in accordance with the terms of the Repurchase Documents and without prejudice to the interests of the Purchaser.
"Account Agreement": A letter agreement among the Seller, the Purchaser and Wachovia substantially in the form of Exhibit V attached hereto.
"Accrual Period": With respect to the first Payment Date, the period from and including the applicable Purchase Date to but excluding such first Payment Date, and, with respect to any subsequent Payment Date, the period from and including the previous Payment Date to but excluding such subsequent Payment Date.
"Additional Amount": Defined in Section 2.14.
"Adjusted Eurodollar Rate": For any Eurodollar Period, a rate per annum equal to a fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of 1%, (i) the numerator of which is equal to the Eurodollar Rate for such Eurodollar Period and (ii) the denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for such Eurodollar Period.
"Advance Rate": With respect to a Mortgage Asset of a certain Class and the applicable Type of Underlying Mortgaged Property, the "Advance Rate" set forth in the applicable column on Schedule 2 attached hereto.
"Affiliate": With respect to a Person, means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person, or is a director of such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by" and "under common control with") when used with respect to any specified Person means the possession, direct or indirect, of the power to vote 20% or more of the voting securities of such Person or to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
"Aggregate Unpaids": At any time, an amount equal to the sum of the aggregate Purchase Price outstanding for all Transactions, the aggregate Price Differential outstanding, Margin Deficits outstanding, Breakage Costs, Increased Costs, Taxes, Additional Amounts, Late Payment Fees and all other amounts owed by the Seller to the Purchaser or by the Seller or any other Person under this Agreement, the Repurchase Documents and any fee letter (including, without limitation, the Fee Letter and the Custodial Fee Letter) delivered in connection with the transactions contemplated by this Agreement or the Repurchase Documents (whether due or accrued).
"Agreement": Defined in the Preamble of this Agreement.
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"ALTA": The American Land Title Association.
"Alternative Market Price Quote": The good faith determination of the price at which a Mortgage Asset could readily be sold by a bona fide third-party that (a) is not the Seller, the Guarantor, the Pledgor or any Affiliate of the Seller, the Guarantor or the Pledgor, (b) regularly engages in the business of buying and/or selling assets similar in type, size and structure as the Purchased Assets and in the same jurisdiction as the related Underlying Mortgaged Property, and (c) is familiar with the market for such Mortgage Assets.
"Anti-Money Laundering Laws": Defined in Subsection 4.1(nn).
"Applicable Law": For any Person or Property of such Person, all existing and future applicable laws, rules, regulations (including temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders and licenses of and interpretations by any Governmental Authority (including, without limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System), and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction.
"Asset Schedule and Exception Report": Defined in the Custodial Agreement.
"Asset Tape": Defined in Subsection 5.1(ff).
"Asset Value": As of any date of determination for each Eligible Asset or Purchased Asset, as applicable, with respect to a Mortgage Asset of a certain Class and the applicable Type of Underlying Mortgaged Property, the lesser of (a) the product of the Book Value of such Mortgage Asset times the Advance Rate applicable thereto and (b) the product of the Market Value of such Mortgage Asset times the LTV applicable thereto; provided, however, (i) the Asset Value of any Mortgage Asset shall not include any portion of a Mortgage Asset that exceeds the Sub-Limit applicable thereto at any time, unless waived in writing by the Purchaser in its sole and absolute discretion, and (ii) the Asset Value shall be deemed to be zero (0) for each Mortgage Asset (A) in respect of which there is a breach of a representation and warranty set forth in Schedule 1 (assuming each representation and warranty is made as of the date the Asset Value is determined), (B) in respect of which the complete Mortgage Asset File has not been delivered to the Custodian within the time period required by the Custodial Agreement, (C) which is a Table Funded Purchased Asset in respect of which the Mortgage Asset Files have not been delivered to the Custodian within three (3) Business Days following the Purchase Date, or (D) that has been released from the possession of the Custodian under the Custodial Agreement to the Seller for a period in excess of twenty (20) calendar days.
"Assignment": The transfer of all of the Seller's rights and interests under an Eligible Asset pursuant to an assignment agreement among the Seller and the Purchaser, which agreement shall be in the form of Exhibit XIII and is otherwise satisfactory to the Purchaser in its discretion.
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"Assignment of Leases": With respect to any Mortgage, an assignment of leases thereunder, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the Underlying Mortgaged Property is located to reflect the assignment of leases to the Purchaser.
"Assignment of Mortgage": With respect to any Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage to the Purchaser.
"Availability": At any time, an amount equal to the positive excess (if any) of (a) the Maximum Amount minus (b) the aggregate Purchase Price outstanding for all Transactions on such day; provided, however, on and after the occurrence of the Facility Maturity Date (not including any extensions thereof) or a Termination Event, the Availability shall be zero (0).
"Bailee": With respect to each Table Funded Purchased Asset, the related title company or other settlement agent, in each case, approved by the Purchaser in its sole discretion.
"Bailee Agreement": The Bailee Agreement among the Seller, the Purchaser and the Bailee in the form of Annex 13 to the Custodial Agreement.
"Bailee's Trust Receipt": A Trust Receipt in the form of Attachment 2 to the Bailee Agreement.
"Bankruptcy Code": The United States Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.), as amended from time to time.
"Base Rate": On any date, a fluctuating rate per annum equal to the lower of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%.
"Benefit Plan": Any employee benefit plan as defined in Section 3(3) of ERISA in respect of which the Seller or the Guarantor or any ERISA Affiliate of the Seller or the Guarantor is, or at any time during the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Book Value": With respect to any Mortgage Asset at any time, an amount, as certified by the Seller, equal to the price that the Seller initially paid or advanced for or in respect of such Mortgage Asset, as such Book Value may be marked down by the Seller from time to time, including any loss/price adjustments, less an amount equal to the sum of all principal paydowns paid and realized losses recognized relating to such Mortgaged Asset.
"Borrower": Defined in the Custodial Agreement.
"Borrower Reserve Payments": Any payments made by a Borrower under the applicable Mortgage Loan Documents which, pursuant to the terms of such Mortgage Loan Documents, are required to be deposited into escrow or into a reserve to be used for a specific purpose (e.g., tax and insurance escrows).
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"Breakage Costs": Defined in Subsection 2.5(b).
"Business Day": Any day other than a Saturday or a Sunday on which (a) banks are not required or authorized to be closed in Minneapolis, Minnesota or Charlotte,
North Carolina and (b) if the term "Business Day" is used in connection with the determination of the Eurodollar Rate, dealings in United States dollar deposits are carried on in the London interbank market.
"Capital Lease Obligations": For any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
"Capital Stock": Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person that is not a corporation, including, without limitation, any and all member or other equivalent interests in any limited liability company or partnership interests or other equivalents in any kind of partnership, and any and all warrants or options to purchase any of the foregoing.
"Class": With respect to a Mortgage Asset, such Mortgage Asset's classification as a Whole Loan, a Junior Interest or a Mezzanine Loan.
"Closing Date": December 23, 2003.
"Code": The Internal Revenue Code of 1986, as amended from time to time.
"Collection Account": ...