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EXHIBIT 10.12
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WAREHOUSING CREDIT AND SECURITY AGREEMENT
(SINGLE-FAMILY MORTGAGE LOANS)
BETWEEN
E-LOAN, INC.,
A CALIFORNIA CORPORATION
AND
BANK UNITED,
A FEDERAL SAVINGS BANK
DATED AS OF FEBRUARY 3, 1999
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TABLE OF CONTENTS
1. DEFINITIONS.........................................................................................Page 1
1.1 Defined Terms..............................................................................Page 1
1.2 Other Definitional Provisions.............................................................Page 11
2. THE CREDIT.........................................................................................Page 11
2.1 The Commitment............................................................................Page 11
2.2 Procedures for Obtaining Advances.........................................................Page 12
2.3 Note......................................................................................Page 13
2.4 Interest..................................................................................Page 13
2.5 Principal Payments........................................................................Page 14
2.6 Expiration of Commitment..................................................................Page 16
2.7 Method of Making Payments.................................................................Page 16
2.8 Non-Usage Fee.............................................................................Page 16
2.9 Miscellaneous Charges.....................................................................Page 17
2.10 Bailee....................................................................................Page 17
3. COLLATERAL.........................................................................................Page 17
3.1 Grant of Security Interest................................................................Page 17
3.2 Security Interest in Mortgage-backed Securities...........................................Page 18
3.3 Delivery of Collateral Documents..........................................................Page 19
3.4 Delivery of Additional Collateral or Mandatory Prepayment.................................Page 19
3.5 Right of Redemption from Pledge...........................................................Page 20
3.6 Collection and Servicing Rights...........................................................Page 20
3.7 Return or Release of Collateral at End of Commitment......................................Page 20
3.8 Master Repurchase Agreement...............................................................Page 20
4. CONDITIONS PRECEDENT...............................................................................Page 21
4.1 Initial Advance...........................................................................Page 21
4.2 Each Advance..............................................................................Page 22
5. REPRESENTATIONS AND WARRANTIES.....................................................................Page 23
5.1 Organization; Good Standing; Subsidiaries.................................................Page 23
5.2 Authorization and Enforceability..........................................................Page 23
5.3 Financial Condition.......................................................................Page 24
5.4 Litigation................................................................................Page 24
5.5 Compliance with Laws......................................................................Page 24
5.6 Regulation U..............................................................................Page 25
5.7 Investment Company Act....................................................................Page 25
5.8 Agreements................................................................................Page 25
5.9 Title to Properties.......................................................................Page 25
5.10 ERISA.....................................................................................Page 25
5.11 Eligibility...............................................................................Page 25
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5.12 Special Representations Concerning Collateral.............................................Page 26
5.13 RICO......................................................................................Page 28
5.14 Proper Names..............................................................................Page 28
5.15 Direct Benefit From Loans.................................................................Page 28
5.16 Loan Documents Do Not Violate Other Documents.............................................Page 28
5.17 Consents Not Required.....................................................................Page 28
5.18 Material Fact Representations.............................................................Page 29
5.19 Place of Business.........................................................................Page 29
5.20 Use of Proceeds; Business Loans...........................................................Page 29
5.21 No Undisclosed Liabilities................................................................Page 29
5.22 Tax Returns and Payments..................................................................Page 29
5.23 Subsidiaries..............................................................................Page 30
5.24 Holding Company...........................................................................Page 30
5.25 Year 2000 Issue...........................................................................Page 30
6. AFFIRMATIVE COVENANTS..............................................................................Page 30
6.1 Payment of Note...........................................................................Page 30
6.2 Financial Statements and Other Reports....................................................Page 30
6.3 Maintenance of Existence; Conduct of Business.............................................Page 31
6.4 Compliance with Applicable Laws...........................................................Page 32
6.5 Inspection of Properties and Books........................................................Page 32
6.6 Notice....................................................................................Page 32
6.7 Payment of Debt, Taxes, etc...............................................................Page 32
6.8 Insurance.................................................................................Page 33
6.9 Other Loan Obligations....................................................................Page 33
6.10 Use of Proceeds of Advances...............................................................Page 33
6.11 Special Affirmative Covenants Concerning Collateral.......................................Page 33
6.12 Cure of Defects in Loan Documents.........................................................Page 34
6.13 Year 2000 Compliant.......................................................................Page 34
7. NEGATIVE COVENANTS.................................................................................Page 35
7.1 Contingent Liabilities....................................................................Page 35
7.2 Pledge of Mortgage Loans..................................................................Page 35
7.3 Merger; Acquisitions......................................................................Page 35
7.4 Loss of Eligibility.......................................................................Page 35
7.5 Debt to Adjusted Tangible Worth Ratio.....................................................Page 35
7.6 Minimum Adjusted Tangible Net Worth.......................................................Page 36
7.7 Transactions with Affiliates..............................................................Page 36
7.8 Limits on Corporate Distributions.........................................................Page 36
7.9 RICO......................................................................................Page 36
7.10 No Loans or Investments Except Approved Investments.......................................Page 36
7.11 Charter Documents and Business Termination................................................Page 37
7.12 Changes in Accounting Methods.............................................................Page 37
7.13 Changes in Business or Assets.............................................................Page 37
7.14 Changes in Office or Inventory Location...................................................Page 37
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7.15 Special Negative Covenants Concerning Collateral..........................................Page 37
7.16 No Indebtedness...........................................................................Page 38
8. DEFAULTS; REMEDIES.................................................................................Page 38
8.1 Events of Default.........................................................................Page 38
8.2 Remedies..................................................................................Page 41
8.3 Application of Proceeds...................................................................Page 43
8.4 Lender Appointed Attorney-in-Fact.........................................................Page 44
8.5 Right of Set-Off..........................................................................Page 44
9. NOTICES............................................................................................Page 45
10. REIMBURSEMENT OF EXPENSES; INDEMNITY...............................................................Page 45
11. FINANCIAL INFORMATION..............................................................................Page 46
12. MISCELLANEOUS......................................................................................Page 47
12.1 Terms Binding Upon Successors; Survival of Representations................................Page 47
12.2 Assignment................................................................................Page 47
12.3 Amendments................................................................................Page 47
12.4 Governing Law.............................................................................Page 47
12.5 Participations............................................................................Page 47
12.6 Relationship of the Parties...............................................................Page 47
12.7 Severability..............................................................................Page 48
12.8 Usury.....................................................................................Page 48
12.9 CONSENT TO JURISDICTION...................................................................Page 49
12.10 Arbitration...............................................................................Page 49
12.11 ADDITIONAL INDEMNITY......................................................................Page 50
12.12 No Waivers Except in Writing..............................................................Page 51
12.13 Waiver of Jury Trial......................................................................Page 51
12.14 Multiple Counterparts.....................................................................Page 51
12.15 No Third Party Beneficiaries..............................................................Page 51
12.16 RELEASE OF LENDER LIABILITY...............................................................Page 51
12.17 Entire Agreement; Amendment...............................................................Page 52
12.18 NO ORAL AGREEMENTS........................................................................Page 52
EXHIBIT "A".................................................................................................Page 54
EXHIBIT "B".................................................................................................Page 56
EXHIBIT "C".................................................................................................Page 57
EXHIBIT "D".................................................................................................Page 61
EXHIBIT "E".................................................................................................Page 62
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EXHIBIT "F".................................................................................................Page 63
ANNEX "A"...................................................................................................Page 64
EXHIBIT "G".................................................................................................Page 66
EXHIBIT "H".................................................................................................Page 67
EXHIBIT "I".................................................................................................Page 68
EXHIBIT "J".................................................................................................Page 69
EXHIBIT "K".................................................................................................Page 73
EXHIBIT "L".................................................................................................Page 75
EXHIBIT "M".................................................................................................Page 76
EXHIBIT "N".................................................................................................Page 79
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WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS WAREHOUSING CREDIT AND SECURITY AGREEMENT (this "Agreement"), is
dated as of February 3, 1999, by and between E-LOAN, INC., a California
corporation (the "Company"), having its principal office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and BANK UNITED, a federal savings bank (the
"Lender"), having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Company has requested the Lender to make certain loans to
the Company to finance the origination or purchase of Mortgage Loans (as that
term is herein defined) which loans are for the benefit of the Company;
WHEREAS, the Lender is willing to make such loans as herein provided,
upon the terms, agreements and covenants and subject to the conditions
hereinafter set forth and in reliance on the representations and warranties
herein made and referred to; and
WHEREAS, the Company and the Lender desire to set forth herein the
terms and conditions upon which the Lender shall provide warehouse financing to
the Company;
NOW, THEREFORE, for good and valuable consideration, the amount and
sufficiency of which are hereby acknowledged by the parties hereto, to induce
the Lender to provide the warehouse financing facility to the Company and in
reliance of the representations and warranties made herein, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or elsewhere in this
Agreement (including the exhibits hereto) shall have the following meanings:
"Adjusted Tangible Net Worth" means, with respect to Company
at any date, the Tangible Net Worth of Company at such date plus 1.0%
of the sum of the outstanding principal balances of Mortgage Loans for
which Company owns the Servicing Rights plus Subordinated Debt of the
Company.
"Advance" means a disbursement by the Lender under the
Commitment pursuant to Article 2 of this Agreement.
"Advance Request" has the meaning set forth in Section 2.2(a)
hereof.
"Affiliate" shall mean any Person controlling, controlled by
or under common control with any other Person. For purposes of this
definition "control" (including "controlled by" and "under common
control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract, or otherwise or owning or possessing
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the power to vote 10% or more of any class of voting securities of any
Person. Without limiting the generality of the foregoing, for purposes
of this Agreement, Company and each of its respective Subsidiaries
shall be deemed to be Affiliates of one another.
"Aged Mortgage Loans" means an Eligible Mortgage Loan that has
been included in Collateral for a period of more than ninety (90) days.
"Agreement" means this Warehousing Credit and Security
Agreement (Single Family Mortgage Loans), either as originally executed
or as it may from time to time be supplemented, modified or amended.
"Applicable Law" shall mean the laws of the State of Texas and
the United States of America in effect from time to time and applicable
to the transactions between the Lender and the Company pursuant to this
Agreement and the other Loan Documents whichever permits the charging
and collection of the highest nonusurious rate of interest on such
transactions. For purposes of determining Texas law with respect to the
highest nonusurious rate of interest, the weekly ceiling permitted
under Chapter 1D. of the Texas Credit Title, as amended, shall be
controlling.
"Approved Custodian" means a Person acceptable to the Lender
from time to time in its sole discretion, who possesses Mortgage Loans
that secure Mortgaged-backed Securities.
"Bailee Letter" has the meaning set forth in Section 3.3
hereof.
"Business Day" means any day excluding Saturday, Sunday and
any day on which Lender is closed for business.
"Capitalized Lease" shall mean any lease under which rental
payments are required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capitalized Rentals" shall mean the amount of aggregate
rentals due and to become due under all Capitalized Leases under which
the Company is a lessee that would be reflected as a liability on a
balance sheet of the Company.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Documents" means all of the documents and other
items described on EXHIBIT "C" hereto and required to be delivered to
the Lender in connection with an Advance.
"Collateral Value" means
(a) with respect to any Eligible Mortgage Loan, an
amount equal to the least of (i) the actual out-of-pocket cost
of such Mortgage Loan to the Company, i.e.,
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the net amount actually funded against such Mortgage Loan or
the net purchase price of such Mortgage Loan, (ii) the Par
Value thereof, (iii) the amount which the Investor has
committed to pay for such Mortgage Loan pursuant to a
Purchase Commitment, or (iv) the Fair Market Value of such
Mortgage Loan;
(b) with respect to Mortgage-backed Securities, an
amount equal to the least of (i) the sum of the principal
balances of the Mortgage Loans from which such Mortgage-backed
Securities were created, (ii) the amount which the Investor
has committed to pay for such Mortgage-backed Securities
pursuant to a Purchase Commitment, or (iii) the Fair Market
Value of such Mortgage-backed Security;
(c) with respect to Collateral that is not described
within (a) or (b), and that is pledged pursuant to Section 3.4
hereof, Collateral Value shall equal an amount established by
Lender in its sole discretion;
(d) with respect to Collateral that is not described
in (a), (b), or (c) the Collateral Value shall be equal to
$0.00;
(e) notwithstanding the foregoing, with respect to
Mortgage Loans that are not Eligible Mortgage Loans, the
Collateral Value thereof shall equal $0.00.
"Commitment" has the meaning set forth in Section 2.1(a)
hereof.
"Company" has the meaning set forth in the first paragraph of
this Agreement.
"Conventional Mortgage Loan" means a Single-family Mortgage
Loan, other than an FHA Loan or VA Loan, that complies with all
applicable material requirements for purchase under the FNMA or FHLMC
standard form of conventional mortgage purchase contract.
"Debt" means, with respect to any Person, at any date (a) all
indebtedness or other obligations of such Person which, in accordance
with GAAP, would be included in determining total liabilities as shown
on the liabilities side of a balance sheet of such Person at such date;
and (b) all indebtedness or other obligations of such Person for
borrowed money or for the deferred purchase price of property or
services; provided that for purposes of this Agreement, there shall be
excluded from Debt at any date loan loss reserves, deferred taxes
arising from capitalized excess service fees, and operating leases.
"Default" means the occurrence of any event or existence of
any condition which, but for the giving of notice, the lapse of time,
or both, would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.4(c)
hereof.
"Electronic Request" has the meaning set forth in Section
2.2(a) hereof.
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"Eligible Mortgage Loan" means a Conventional Mortgage Loan,
FHA Loan, Jumbo Loan, or VA Loan that, at all times during the term of
this Agreement, (a) is evidenced by loan documents that are the
standard forms approved by FNMA or FHLMC or forms previously approved,
in writing, by the Lender in its sole discretion; (b) is validly
pledged to the Lender, subject to no other Liens; (c) is not in default
in the payment of principal and interest or in the performance of any
obligation under the Mortgage Note or the Mortgage evidencing or
securing such Eligible Mortgage Loan for a period of 60 days or more;
(d) has closed less than 25 days prior to the date of the Advance made
in connection with such Eligible Mortgage Loan; and (e) is covered by a
Purchase Commitment.
"Eligible Mortgage Pool" means a pool of Mortgage Loans that
will secure a "mortgage related security", as defined in Section
3(a)(41) of the Exchange Act administered or to be administered by a
trustee acceptable to Lender in its sole discretion where the Mortgage,
Mortgage Note and other documents relating to such Mortgage Loans are
held or to be held by an Approved Custodian.
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated thereunder, as amended
from time to time and any successor statute.
"Event of Default" means any of the conditions or events set
forth in Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and any successor statute.
"Fair Market Value" shall mean, at any date, with respect to:
(a) any Mortgage-backed Security, the bid price rate
reflected on the Telerate screen for a Mortgage-backed
Security with the closest coupon rate that does not exceed
that of the Mortgage-backed Security in question multiplied by
the original face amount of such Mortgage-backed Security, and
multiplied by the current pool factor for such Mortgage-backed
Security.
(b) any Mortgage Loan, the market price rate
reflected on the Telerate screen for thirty (30) day mandatory
future delivery of such Mortgage Loan multiplied by the
outstanding principal balance thereof.
In the event Telerate ceases to publish either the market or
bid price referenced in (a) and (b) above, the average bid price quoted
in writing to the Lender as of the date of determination by any two
nationally recognized dealers reasonably selected by Lender that are
making a market in similar Mortgage Loans or Mortgaged-backed
Securities shall be utilized in lieu of the market or bid price, as the
case may be.
"FHA" means the Federal Housing Administration and any
successor thereto.
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"FHA Loan" means a Single-family Mortgage Loan, payment of
which is partially or completely insured by the FHA under the National
Housing Act or Title V of the Housing Act of 1949 or with respect to
which there is a current, binding and enforceable commitment for such
insurance issued by the FHA.
"FHLMC" means the Federal Home Loan Mortgage Corporation and
any successor thereto.
"FHLMC Guide" means the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' and Servicers'
Guide, dated September 17, 1984, applicable bulletins, the applicable
MIDANET Users Guide (or the MIDAPHONE User's Guide) and any particular
purchase documents as defined in the Sellers' and Servicers' Guide, as
revised prior to the date hereof.
"FICA" means the Federal Insurance Contributions Act.
"First Mortgage" means a mortgage or deed of trust which
constitutes a first Lien on the property covered thereby.
"First Mortgage Loan" means a Mortgage Loan secured by a First
Mortgage.
"Floating Rate" has the meaning set forth in Section 2.4(a)
hereof.
"FNMA" means the Federal National Mortgage Association and any
successor thereto.
"FNMA Guide" means the FNMA Servicing Guide dated June 30,
1990, as revised prior to the date hereof.
"Funding Account" means the non-interest bearing demand
checking account established with, maintained by, and pledged to Lender
into which shall be deposited the proceeds of Advances, the proceeds
from any sale of Collateral, and from which funds shall be disbursed
for the acquisition of Mortgage Loans.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"GNMA" means the Government National Mortgage Association and
any successor thereto.
"GNMA Guide" means the GNMA I Mortgage-Backed Securities
Guide, Handbook GNMA 5500.1 REV. 6, as revised prior to the date
hereof, and as may be revised from time
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to time, and GNMA II Mortgage-Backed Securities Guide Handbook GNMA
5500.2, as revised prior to the date hereof.
"HUD" means the Department of Housing and Urban Development
and any successor thereto.
"Indebtedness" shall mean and include, without duplication,
(1) all items which in accordance with GAAP, consistently applied,
would be included on the liability side of a balance sheet on the date
as of which Indebtedness is to be determined (excluding shareholders'
equity), (2) Capitalized Rentals under any Capitalized Lease, (3)
guaranties, endorsements and other contingent obligations in respect
of, or any obligations to purchase or otherwise acquire, Indebtedness
of others, and (4) indebtedness secured by any mortgage, pledge,
security interest or other Lien existing on any property owned by the
Person with respect to which indebtedness is being determined, whether
or not the indebtedness secured thereby shall have been assumed.
"Indemnified Liabilities" has the meaning set forth in Article
10 hereof.
"Interim Date" has the meaning set forth in Section 4.1(a)(5)
hereof.
"Internal Revenue Code" means the Internal Revenue Code of
1986, or any subsequent federal income tax law or laws, as any of the
foregoing have been or may from time to time be amended.
"Investor" means FNMA, FHLMC, GNMA, any of the Persons listed
in EXHIBIT "L" hereto, or a financially responsible institution which
is acceptable to Lender, in its sole discretion; provided that at any
time by written notice to Company Lender may disapprove any Investor in
its reasonable discretion, whether or not that Person is named as an
Investor in this definition or in EXHIBIT "L" or has been previously
approved as an Investor by Lender. Upon receipt of such notice, the
Persons named in Lender's notice shall no longer be Investors from and
after the date of the receipt of such notice; provided, that Pledged
Mortgages covered by Purchase Commitments from Persons named in such
notice and held by the Lender prior to the date of the receipt of such
notice shall not cease being Eligible Mortgage Loans because of such
disapproval.
"Jumbo Loan" means a Single-family Mortgage Loan (other than a
FHA Loan or VA Loan) that complies with all applicable requirements for
purchase under the FNMA or FHLMC standard form of conventional mortgage
purchase contract then in effect except that the amount of such
Mortgage Loan exceeds the maximum amount under those requirements, but
in no event shall the amount of such Single-family Mortgage Loan exceed
$650,000.00.
"Lender" has the meaning set forth in the first paragraph of
this Agreement.
"LIBOR Rate" means a rate of interest equal to the London
Interbank Offered Rate for U. S. dollar deposits as quoted by Telerate,
Bloomberg or any other rate quoting service,
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selected by Lender in its sole discretion for an interest period of one
month, effective two (2) Business Days from the date of quotation. In
the event such rate ceases to be published, LIBOR Rate shall mean a
comparable rate of interest reasonably selected by Lender.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Loan Documents" means this Agreement, the Note, and each
other document, instrument or agreement executed by the Company or any
other Person in connection herewith or therewith, as any of the same
may be amended, restated, renewed or replaced from time to time.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as
in effect from time to time.
"Master Repurchase Agreement" means that certain Master
Repurchase Agreement dated of even date herewith by and between Company
and Lender.
"Maximum Rate" shall mean the maximum lawful non-usurious rate
of interest (if any) that, under Applicable Law, the Lender may charge
the Company on the Advances from time to time. To the extent that the
interest rate laws of the State of Texas are applicable and unless
changed in accordance with law, the applicable rate ceiling shall be
the weekly ceiling determined in accordance with Chapter 1D. of the
Texas Credit Title, as amended.
"Monthly Average LIBOR Rate" means the average of all LIBOR
Rates quoted during a given month. In the event (i) the Note is paid in
full and the Commitment is terminated prior to a month end; or (ii) the
initial Advance hereunder occurs on a date other than the first day of
that month on which LIBOR Rates are quoted, the Monthly Average LIBOR
Rate shall mean, in the case of clause (i), the average of all LIBOR
Rates quoted that month up to and including the last Business Day prior
to such payment in full; or, in the case of clause (ii), the LIBOR
Rates quoted on the date of the initial Advance through the end of that
month.
"Mortgage" means a First Mortgage or Second Mortgage on
improved real property.
"Mortgage-backed Securities" means FHLMC, GNMA or FNMA
securities that are backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note. A
Mortgage Loan, unless otherwise expressly stated herein, means a
Single-family Mortgage Loan.
"Mortgage Note" means a note secured by a Mortgage.
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"Mortgage Note Amount" means, as of the date of determination,
the then outstanding unpaid principal amount of a Mortgage Note.
"Mortgage Pool" means a pool of Mortgage Loans that were
warehoused with the Lender, on the basis of which there is to be issued
a Mortgage-backed Security.
"Mortgaged Property" means the property, real, personal,
tangible or intangible, securing a Mortgage Note.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA that is maintained for employees of the
Company or a Subsidiary of the Company.
"Net Investable Balances" means the average collected balances
in non-interest bearing deposit accounts controlled or maintained by
the Company and its Subsidiaries in accounts at the Lender, less
balances to support float, activity charges, reserve requirements,
Federal Deposit Insurance Corporation insurance premiums and such other
assessments as may be imposed by governmental authorities from time to
time.
"Non-Usage Fee" has the meaning set forth in Section 2.8
hereof.
"Note" has the meaning set forth in Section 2.3 hereof.
"Notices" has the meaning set forth in Article 9 hereof.
"Obligations" shall mean any and all indebtedness, obligations
and liabilities of the Company to the Lender (whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly
owed with others, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred),
arising out of or related to the Loan Documents, or any of them.
"Officer's Certificate" means a certificate executed on behalf
of the Company by its chief financial officer or its treasurer or by
such other officer as may be designated herein, in form and substance
satisfactory to Lender.
"OTS" means the Office of Thrift Supervision.
"Par Value" means, with respect to any Mortgage Loan, the
unpaid principal balance of such Mortgage Loan, on the date of the
Advance made against such Mortgage Loan.
"Participant" has the meaning set forth in Section 12.5
hereof.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts,
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banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and federal and state
governments and agencies or regulatory authorities and political
subdivisions thereof.
"Plans" has the meaning set forth in Section 5.10 hereof.
"Pledged Mortgages" has the meaning set forth in Section
3.1(a) hereof.
"Pledged Securities" has the meaning set forth in Section
3.1(b) hereof.
"PMI" means any private mortgage insurance company selected by
Company and reasonably acceptable to Lender.
"Purchase Commitment" means a written commitment, in form and
substance reasonably satisfactory to the Lender, issued in favor of the
Company by an Investor pursuant to which that Investor commits to
purchase Mortgage Loans or Mortgage-backed Securities.
"Purchase Price" shall have the meaning set forth in the
Master Repurchase Agreement.
"Redemption Amount" has the meaning set forth in Section 3.5
hereof.
"RICO" means the Racketeer Influenced and Corrupt
Organizations Act of 1970, as amended.
"Second Mortgage" means a mortgage or deed of trust which
constitutes a second Lien on the property covered thereby.
"Second Mortgage Loan" means a Mortgage Loan secured by a
Second Mortgage.
"Securities" means the Mortgage Notes, securities, and
financial instruments sold by Company to the Lender under the Master
Repurchase Agreement at any time and from time to time.
"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person
has the right to service Mortgage Loans.
"Servicing Rights" means (a) the rights, obligations,
remedies, powers, and responsibilities of a Person to service Mortgage
Loans owned by that Person, including without limitation the right to
collect principal and interest payments, administer escrow accounts,
and the right to own and possess loan files and all records, documents,
and data relating to such Mortgage Loans, and (b) the obligations,
rights, remedies, powers, privileges, benefits and responsibilities of
a Person to service Mortgage Notes for GNMA, FNMA or FHLMC under and in
accordance with the GNMA Guide, the FNMA Guide and
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the FHLMC Guide, respectively or for any Investor under any Servicing
Contract, including, without limitation, (i) the right to receive
servicing fees, termination fees, net sales proceeds, late charges,
insufficient fund fees, and other ancillary income relating to the
Mortgage Notes (ii) the right to hold and administer the escrow
accounts, and (iii) the right to all loan files, insurance files, tax
records, collection records, documents, ledgers, computer printouts,
computer tapes and other records, data or information relating to the
Mortgage Notes, the escrow accounts or the servicing or otherwise
necessary or proper to perform the obligations of servicer.
"Single-family Mortgage Loan" means a Mortgage Loan secured by
a Mortgage covering improved real property containing one to four
family residences.
"Statement Date" has the meaning set forth in Section
4.1(a)(5) hereof.
"Subordinated Debt" means, with respect to any Person, all
Indebtedness of such Person, for borrowed money, which is, by its terms
(which terms shall have been approved by the Lender) or by the terms of
a subordination agreement, in form and substance satisfactory to the
Lender, effectively subordinated in right of payment to all other
present and future obligations and all indebtedness of such Person, of
every kind and character, owed to the Lender.
"Subsidiary" means any corporation, association or other
business entity in which more than fifty percent (50%) of the total
voting power or shares of stock entitled to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means, with respect to any Person at any
date, the sum of the total shareholders' equity in such Person
(including capital stock, additional paid-in capital, and retained
earnings, but excluding treasury stock, if any), on a consolidated
basis; less the aggregate book value of all intangible assets of such
Person (as determined in accordance with GAAP), including without
limitation, goodwill, trademarks, trade names, service marks,
copyrights, patents, licenses, franchises, and Servicing Rights, each
to be determined in accordance with GAAP consistent with those applied
in the preparation of the financial statements referred to in Section
5.3 hereof; provided that, for purposes of this Agreement, there shall
be excluded from total assets, advances or loans to shareholders,
officers or Affiliates, investments in Affiliates, assets pledged to
secure any liabilities not included in the Debt of such Person and
those other assets which would be deemed by HUD to be non-acceptable in
calculating adjusted net worth in accordance with its requirements in
the Audit Guide for Audit of Approved Non-Supervised Mortgagees", as in
effect as of such date.
"Termination Date" shall mean February 2, 2000, or such
earlier date upon which Lender's obligation to fund shall be terminated
pursuant to the terms of this Agreement.
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"Tribunal" shall mean any court or governmental department,
commission, board, bureau, agency, or instrumentality of any state,
commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted and/or existing.
"VA" means the Veterans Administration and any successor
thereto.
"VA Loan" means a Single-family Mortgage Loan, payment of
which is partially or completely guaranteed by the VA under the
Servicemen's Readjustment Act of 1944 or Chapter 37 of Title 38 of the
United States Code or with respect to which there is a current binding
and enforceable commitment for such a guaranty issued by the VA.
"Wet Settlement Advance" means a disbursement by the Lender
under the Commitment and pursuant to Section 2.2(a) of this Agreement,
in respect of the closing or settlement of a Single-family Mortgage
Loan, in anticipation of and pending subsequent delivery and
examination of the Collateral Documents as provided in Section II of
EXHIBIT "C".
"Year 2000 Issue" means the failure of computer software,
hardware, and firmware systems and equipment containing embedded
computer chips to properly receive, transmit, process, manipulate,
store, retrieve, re-transmit or in any other way utilize data and
information due to the occurrence of the year 2000 or the inclusion of
dates on or after January 1, 2000.
1.2 Other Definitional Provisions.
(a) Accounting terms not otherwise defined herein shall have
the meanings given the terms under GAAP.
(b) Defined terms may be used in the singular or the plural,
as the context requires.
2. THE CREDIT.
2.1 The Commitment.
(a) Subject to the terms and conditions of this Agreement and
provided no Default or Event of Default has occurred and is continuing,
the Lender agrees, from time to time during the period from the date
hereof to and including the Termination Date, to make Advances to the
Company, provided the sum of the total aggregate principal amount
outstanding at any one time of all such Advances plus the aggregate
Purchase Prices of all Securities which have not been repurchased by
the Company under the Master Repurchase Agreement shall not exceed
FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00). The obligation of
the Lender to make Advances hereunder up to such limit is hereinafter
referred to as the "Commitment." Within the Commitment, the Company may
borrow, repay and reborrow. All Advances under this Agreement shall
constitute a single indebtedness,
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and all of the Collateral shall be security for the Note and for the
performance of all the Obligations of the Company to the Lender.
Notwithstanding anything contained herein to the contrary or otherwise,
each purchase of Securities by the Lender under the Master Repurchase
Agreement will automatically reduce by the amount of the purchase price
for such Securities, dollar for dollar, the principal amount available
to be borrowed within the Commitment for so long as that purchase is
outstanding under the Master Repurchase Agreement.
(b) Advances shall be used by the Company solely for the
purpose of funding the acquisition or origination of Mortgage Loans, as
specified in the Advance Request and none other, and shall be made at
the request of the Company in the manner hereinafter provided in
Section 2.2, against the pledge of such Mortgage Loans and such other
collateral as is set forth in Section 3.1 hereof as Collateral
therefor. Advances shall also be subject to the following restrictions:
(1) No Advance shall be made against Mortgage Loans
which are not Eligible Mortgage Loans.
(2) The aggregate amount of Wet Settlement Advances
outstanding at any one time shall not exceed FOUR MILLION AND
NO/100 DOLLARS ($4,000,000.00).
(3) The aggregate amount of Advances against Second
Mortgage Loans outstanding at any one time shall not exceed
FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00).
(4) The aggregate amount of Advances against Aged
Mortgage Loans outstanding at any one time shall not exceed
FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00).
(c) No Advance against a Mortgage Loan shall exceed an amount
equal to 99% of the Collateral Value of such Mortgage Loan, to be
determined as of the date such Mortgage Loan is pledged to Lender.
2.2 Procedures for Obtaining Advances.
(a) The Company may obtain an Advance hereunder subject
to the following:
(1) The Company may obtain an Advance hereunder,
subject to the satisfaction of the conditions set forth in
Sections 4.1 and 4.2 hereof, upon compliance with the
procedures set forth in this Section 2.2 and in EXHIBIT "C"
attached hereto and made a part hereof. Requests for Advances
shall be initiated by the Company (i) by delivering to the
Lender and its designee, by telecopy (with original to be sent
immediately thereafter by overnight mail) a completed and
signed request for an Advance (an "Advance Request") in the
form of EXHIBIT "A" attached
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hereto and made a part hereof, or (ii) by using the electronic
data transmission service provided by the Lender and its
licensor, MBMS Incorporated, to transmit to the Lender a
request for Advance ("Electronic Request"), which shall
include all information required by EXHIBIT "A" through the
Warehouse Management System software provided by the Lender
and its licensor, MBMS Incorporated. The Lender shall have the
right, on not less than three (3) Business Days' prior notice
to the Company, to modify the Advance Request, Electronic
Request, or any exhibits hereto to conform to current legal
requirements or Lender practices, and, as so modified, said
Advance Request, Electronic Request or exhibits shall be
deemed a part hereof. In consideration of the Lender
permitting the Company to make Electronic Requests for
Advances utilizing the Warehouse Management System software or
Advance Requests by telecopy, the Company covenants and agrees
to assume liability for and to protect, indemnify and save the
Lender harmless from, any and all liabilities, obligations,
damages, penalties, claims, causes of action, costs, charges
and expenses, including attorneys' fees and expenses of
employees, which may be imposed, incurred by or asserted
against the Lender by reason of any loss, damage or claim
howsoever arising or incurred because of, out of or in
connection with (i) any action of the Lender pursuant to
Electronic Requests or Advance Requests by telecopy, (ii) the
breach of any provisions of this Agreement by the Company or,
willful misconduct or gross negligence (iii) the transfer of
funds pursuant to such Electronic Requests or Advance Requests
by telecopy. The Lender is entitled to rely upon and act upon
Electronic Requests or Advance Requests by telecopy, and the
Company shall be unconditionally and absolutely estopped from
denying (x) the authenticity and validity of any such
transaction so acted upon by the Lender once the Lender has
advanced funds and has deposited or transferred such funds as
requested in any such Electronic Request or Advance Request by
telecopy, and (y) the Company's liability and responsibility
therefor.
(2) In the case of any Wet Settlement Advances, the
Company shall follow the procedures and, at or prior to the
Lender's making of such Wet Settlement Advance, shall deliver
to the Lender or its designee the documents set forth in
Section II of EXHIBIT "C" hereto. In case of Collateral
financed through a Wet Settlement Advance, the Company shall
cause all Collateral Documents to be delivered to the Lender
or its designee within five (5) Business Days after the date
of the Wet Settlement Advance relating thereto.
(3) Before funding, the Lender and its designee shall
have a reasonable time to examine such Advance Request and the
Collateral Documents to be delivered prior to such requested
Advance, as set forth in the applicable Exhibit hereto, and
may reject such of them as do not meet the requirements of
this Agreement or of the related Purchase Commitment. The
Advance Request and the Collateral Documents must be received
by Lender no later than 2:00 p.m. Houston, Texas time in order
for funding to occur the same day.
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(b) To make an Advance, the Lender shall credit the Funding
Account upon compliance by the Company with the terms of this
Agreement.
2.3 Note. The Company's obligation to pay the principal of, and
interest on, all Advances made by the Lender shall be evidenced by a promissory
note (the "Note") of the Company dated as of the date hereof, in form of EXHIBIT
"N" hereto. The term "Note" shall include all extensions, renewals and
modifications of the Note and all substitutions therefor. All terms and
provisions of the Note are hereby incorporated herein.
2.4 Interest.
(a) (1) The unpaid amount of each Advance against Mortgage
Loans that are not Aged Mortgage Loans shall bear interest
from the date of such Advance until paid in full, at a rate of
interest equal to the lesser of (i) the Maximum Rate, or (ii)
a floating rate of interest (the "Floating Rate") which is
equal to 185 basis points (1.85%) per annum over the Monthly
Average LIBOR Rate.
(2) The unpaid amount of each Advance outstanding
against Mortgage Loans that are Aged Mortgage Loans shall bear
interest from the date such Mortgage Loans become Aged
Mortgage Loans until such Advance is paid in full at a rate of
interest equal to the lesser of (i) the Maximum Rate or (ii) a
variable rate of interest which is equal to 285 basis points
(2.85%) per annum over the Monthly Average LIBOR Rate.
(3) Notwithstanding Section 2.4(a)(1) and (2) above
to the contrary, the unpaid portion of Advances ("NIB
Advances") equal to Net Investable Balances shall bear
interest at the following rates in the following priority:
(i) First, NIB Advances against Mortgage
Loans that are not Aged Mortgage Loans shall bear
interest at the rate of 1.85% per annum; and,
(ii) Second, the balance, if any, of NIB
Advances against Aged Mortgage Loans shall bear
interest at the rate of 2.85% per annum.
(b) Interest shall be computed on the basis of a 360-day year
and applied to the actual number of days elapsed in each interest
calculation period and shall be payable monthly in arrears, on the
first day of each month, commencing with the first month following the
date of this Agreement, and ending on Termination Date.
(c) Obligations not paid when due (whether at stated maturity,
upon acceleration following the occurrence of an Event of Default or
otherwise) shall bear interest, from the date due until paid in full,
at a rate of interest ("Default Rate") at all times equal to the lesser
of (i) four percent (4%) per annum over the Floating Rate; or (ii) the
Maximum Rate, said interest to be payable on demand by Lender.
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2.5 Principal Payments.
(a) The outstanding unpaid principal amount of all Advances
shall be payable in full upon February 2, 2000.
(b) The Company shall have the right to prepay the outstanding
Advances in whole or in part, from time to time, without premium or
penalty, subject to the Company's obligation to pay the Non-Usage Fee
pursuant to Section 2.8 hereof.
(c) The Company shall be obligated to pay to the Lender,
without the necessity of prior demand or notice from the Lender, and
the Company authorizes the Lender to charge the Funding Account or any
other accounts of the Company (excluding any monies held by Company in
trust for third parties) in Lender's possession for the amount of any
outstanding Advance against a specific Mortgage Loan, upon the earliest
occurrence of any of the following events:
(1) The expiration of ninety (90) days from the date
of any Advance for any Mortgage Loan (excluding Aged Mortgage
Loans);
(2) The expiration of thirty (30) days from the date
the Mortgage Loan was delivered to an Investor for examination
and purchase, without the purchase being made;
(3) The expiration of forty-five (45) days from the
date Mortgage Loan is delivered to the certificating custodian
acceptable to the Lender for the issuance of a Mortgage-backed
Security;
(4) The expiration of five (5) Business Days from the
date a Wet Settlement Advance was made without receipt of all
Collateral Documents relating to such Mortgage Loan, or such
Collateral Documents, upon examination by the Lender, are
found not to be in compliance with the requirements of this
Agreement or the related Purchase Commitment;
(5) The expiration of fifteen (15) calendar days from
the date a Collateral Document in connection with such
Mortgage Loan was delivered to the Company for correction or
completion, without being returned to the Lender, corrected or
completed;
(6) The Mortgage Loan is in default and such default
continues for a period of sixty (60) days or more;
(7) The expiration of five (5) Business Days after
the date on which the related Purchase Commitment, if any,
expires, is terminated or otherwise canceled or no longer in
full force and effect and the specific Mortgage Loan was not
delivered under the Purchase Commitment prior to such
termination, expiration or cancellation;
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(8) Upon sale of the Mortgage Loan.
Upon receipt of such payment by the Lender, such Mortgage
Loans or Mortgage-backed Securities shall be considered to have been
redeemed from pledge, and the Collateral Documents relating thereto
which have not been delivered to the Investor or the pool custodian or
pool trustee shall be released by the Lender to the Company.
(d) With respect to each Aged Mortgage Loan, the Company shall
be obligated to pay to the Lender (and the Company authorizes the
Lender to charge the Funding Account or any other accounts of the
Company [excluding monies held by the Company in trust for third
parties] in Lender's possession for the payment thereof), the principal
payments in the amounts and on the dates specified below:
(1) On the date a Pledged Mortgage becomes an Aged
Mortgage Loan, a principal payment in an amount equal to
twenty percent (20%) of the outstanding unpaid Advances
against such Aged Mortgage Loan;
(2) On the date an Aged Mortgage Loan has been
included in the Collateral for 120 days (computed from the
date it was originally pledged as Collateral), a principal
payment in an amount equal to ten percent (10%) of the
outstanding unpaid Advances against such Aged Mortgage Loan;
(3) On the date an Aged Mortgage Loan has been
included in the Collateral for 150 days (computed from the
date it was originally pledged as Collateral), a principal
payment in an amount equal to ten percent (10%) of the
outstanding unpaid Advances made against such Aged Mortgage
Loan;
(4) On the date an Aged Mortgage Loan has been
included in the Collateral for 180 days (computed from the
date it was originally pledged as Collateral), an amount equal
to the balance of the aggregate outstanding unpaid Advances
against such Aged Mortgage Loan.
2.6 Expiration of Commitment. Unless extended or terminated
earlier as permitted hereunder, the Commitment shall expire of its own term, and
without the necessity of action by the Lender, at the close of business on the
Termination Date. However, the remainder of this Agreement shall remain in full
force and effect until all amounts due on the Obligations have been paid in
full. The Lender has not made, and does not hereby make, any commitment to
renew, extend, rearrange or otherwise refinance the outstanding and unpaid
principal of the Note or accrued interest thereon. In the event, however, the
Lender from time to time renews, extends, rearranges, increases and/or otherwise
refinances any portion or all of any Obligation and any accrued interest thereon
at any time, such refinancing shall be evidenced by an appropriate promissory
note in form and substance satisfactory to the Lender and, unless otherwise
noted or modified at such time or times by the terms of such promissory note or
any agreements executed in connection therewith, any such promissory note or
notes and refinancing evidenced thereby shall be governed in all respects by the
terms of this Agreement.
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2.7 Method of Making Payments. Except as otherwise specifically
provided herein, all payments hereunder shall be made to the Lender not later
than the close of business (Houston time) on the date when due unless such date
is a non-Business Day, in which case, such payment shall be due on the first
Business Day thereafter, and shall be made in lawful money of the United States
of America in immediately available funds.
2.8 Non-Usage Fee. At the end of each month during the term of this
Agreement (i.e., from its effective date through the Termination Date), the
Lender shall determine average usage of the Commitment by calculating the
arithmetic daily average of the outstanding balance of Advances in the preceding
month. The Lender shall then subtract the average usage (the "Used Portion")
from the Commitment (the result being called the "Unused Portion") and the
Company shall pay in arrears (without duplication of payment), on or before five
(5) days after the later of (a) the end of each month or (b) the Company's
receipt of the Lender's ▇▇▇▇ for such monthly period, a Non-Usage Fee equal to
0.250% per annum on the total amount of the Unused Portion of the Commitment, as
compensation to the Lender for its agreement to make the Commitment available to
the Company during that month and not as compensation for the use, forbearance
or detention of money (i.e., as a "true commitment fee" under Texas law);
provided that such fee shall be waived for the first two (2) calendar months
following the execution of this Agreement and for any month if the Unused
Portion for such month is equal to or less than fifty percent (50%) of the
Commitment. Each calculation by the Lender of the amount of any Non-Usage Fee
shall be conclusive and binding on the Company, absent manifest error.
2.9 Miscellaneous Charges. At the end of each month during the term
of this Agreement, the Company shall pay to the Lender in arrears on or before
five (5) days after the later of (a) the end of each calendar month or (b) the
Company's receipt of the Lender's ▇▇▇▇ for such monthly period, a transaction
fee equal to $20.00 per Pledged Mortgage held by Lender during such month and
for which Lender has not previously received a transaction fee, for the handling
and administration of Advances and Collateral. For the purposes hereof, Company
shall, at its sole cost and expense, pay all miscellaneous charges and expenses
incurred by the Lender in connection with the handling and administration of
Advances and Collateral, including, without limitation, all charges for security
delivery fees and charges for overnight delivery of Collateral to Investors.
Miscellaneous charges are due when incurred, but shall not be delinquent if paid
within ten (10) days after receipt of an invoice or an account analysis
statement from the Lender.
2.10 Bailee. Lender appoints Company - and Company shall act - as
its bailee to (i) hold in trust for Lender (A) the original recorded copy of the
mortgage, deed of trust, or trust deed securing each Pledged Mortgage, (B) a
mortgagee policy of title insurance (or binding unexpired and unconditional
commitment to issue such insurance if the policy has not yet been delivered to
Company) insuring the Company's perfected, first priority Lien created by that
mortgage, deed of trust, or trust deed, (C) the original insurance policies for
each Pledged Mortgage, and (D) all other original documents relating to each
Pledged Mortgage, including any promissory notes, any other loan documents, and
supporting documentation, surveys, settlement statements, closing instructions,
and Mortgage-backed Securities, and (ii) deliver to Lender any of the foregoing
items as soon as reasonably practicable upon Lender's request.
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3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment of the
Note and for the performance of all of the Company's Obligations hereunder, the
Company hereby assigns and transfers all right, title and interest in and to and
grants a security interest to the Lender in the following described property,
whether now owned or hereafter acquired (the "Collateral"):
(a) All Mortgage Loans including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans including without limitation
all Mortgage Loans in respect of which Wet Settlement Advances have
been made by the Lender, which from time to time are delivered or
caused to be delivered to the Lender or its designee, come into the
possession, custody or control of the Lender for the purpose of
assignment or pledge or in respect of which an Advance has been made by
the Lender hereunder (the "Pledged Mortgages").
(b) All Mortgage-backed Securities which are from time to time
delivered or caused to be delivered to, or are otherwise in the
possession of the Lender, or its designee, its agent, bailee or
custodian as assignee or pledged to the Lender, or for such purpose are
registered by book-entry in the name of the Lender (the "Pledged
Securities").
(c) All private mortgage insurance and all commitments issued
by the FHA or VA to insure or guarantee any Mortgage Loans included in
the Pledged Mortgages; all guaranties related to Pledged Securities;
all Purchase Commitments held by the Company covering the Pledged
Mortgages or the Pledged Securities and all proceeds resulting from the
sale thereof to Investors pursuant thereto; all personal property,
contract rights, servicing and servicing fees and income or other
proceeds, amounts and payments payable to the Company as compensation
or reimbursement, accounts and general intangibles of whatsoever kind
relating to the Pledged Mortgages, the Pledged Securities and all other
documents or instruments relating to the Pledged Mortgages, the Pledged
Securities, including, without limitation, any interest of the Company
in any fire, casualty or hazard insurance policies and any awards made
by any public body or decreed by any court of competent jurisdiction
for a taking or for degradation of value in any eminent domain
proceeding as the same relate to the Pledged Mortgages.
(d) All right, title and interest of the Company in and to all
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records (including all information, records, tapes, data,
programs, discs and cards necessary or helpful in the administration or
servicing of the foregoing Collateral) and other information and data
of the Company relating to the foregoing Collateral.
(e) All now existing or hereafter acquired cash delivered to
or otherwise in the possession of the Lender or its agent, bailee or
custodian or designated on the books and records of the Company as
assigned and pledged to the Lender.
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(f) All cash and non-cash proceeds of the foregoing
Collateral, including all dividends, distributions and other rights in
connection with, and all additions to, modifications of and
replacements for, the foregoing Collateral, and all products and
proceeds of the foregoing Collateral, together with whatever is
receivable or received when the foregoing Collateral or proceeds
thereof are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including,
without limitation, all rights to payment with respect to any cause of
action affecting or relating to the foregoing Collateral or proceeds
thereof.
3.2 Security Interest in Mortgage-backed Securities. The Company's
ability to convert Mortgage Loans that are within the Collateral to
Mortgage-backed Securities are subject to the following conditions:
(a) Pledged Mortgages that are to be transferred to a pool
custodian in connection with the issuance of Mortgage-backed
Securities, shall be released from the Lender's security interest only
against payment to the Lender of the amount due the Lender in
connection with such Pledged Mortgages as determined in accordance with
Section 3.5 of this Agreement or against the issuance of such
Mortgage-backed Securities and the continuation of the Lender's first
priority, perfected security interest in such Mortgage-backed
Securities and the proceeds thereof until payment due the Lender in
respect of said Pledged Mortgages is made to the Lender.
(b) In the case of Mortgage-backed Securities created from
Pledged Mortgages, the Lender shall have the exclusive right to the
possession of the Mortgage-backed Securities or, if the Mortgage-backed
Securities are not to be issued in certificated form, shall have the
right to have the book entries for the Mortgage-backed Securities
issued in the Lender's name or the name or names of its designees.
Lender shall cause delivery of the Mortgage-backed Securities to be
made to the Investor or the book entries registered in the name of the
Investor or the Investor's designee only against payment therefor. The
Company acknowledges that the Lender may enter into one or more
standing arrangements with other financial institutions for the
issuance of Mortgage-backed Securities in book entry form in the name
of such other financial institutions, as agent for the Lender, and the
Company agrees upon request of the Lender, to execute and deliver to
such other financial institutions the Company's written concurrence in
any such standing arrangements.
3.3 Delivery of Collateral Documents. The Lender or its designee
exclusively shall deliver Pledged Mortgages or Pledged Securities to (a) an
Investor that has issued a Purchase Commitment with respect thereto for its
examination and purchase, or (b) an Approved Custodian for purposes of
examination or delivery in connection with the issuance of Mortgage-backed
Securities. In such cases where the Lender must deliver documents to an Investor
or Approved Custodian, the Lender must receive signed shipping instructions (in
the form of EXHIBIT "D" attached hereto), no later than 2:00 p.m. Houston, Texas
time one (1) Business Day prior to the expiration of the appended Purchase
Commitment, in addition to any other documents listed in Section III of EXHIBIT
"C" in respect of the issuance of Mortgage-backed Securities. If shipping
instructions are received by Lender before 2:00 p.m. Houston, Texas time of any
Business Day,
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Lender will ship the documents together with the Bailee Letter (in form of
EXHIBIT "K") to the Investor or Approved Custodian on the same Business Day,
otherwise Lender will ship the documents the next Business Day following receipt
of shipping instructions. In any case in which an Advance has been made
hereunder against Pledged Mortgages, based on the existence of a Purchase
Commitment covering such Pledged Mortgages, the Company agrees that such Pledged
Mortgages will not be placed in any mortgage pool other than an Eligible
Mortgage Pool, unless such Pledged Mortgages have been redeemed from pledge as
permitted hereunder or other arrangements, satisfactory to the Lender in its
sole discretion, have been made for the redemption of such Pledged Mortgages
from pledge hereunder. The Lender may deliver any document relating to the
Collateral to the Company for correction or completion against a trust receipt
in the form of EXHIBIT "E" attached hereto executed by the Company. The Company
hereby represents and warrants to and agrees with the Lender that any request by
the Company for release of the Collateral consisting of or relating to Mortgage
Loans to the Company shall be solely for the purposes of correcting clerical or
non-substantial documentation problems in preparation for returning such
Collateral to the Lender for ultimate sale or exchange and the aggregate
Collateral Value of the Collateral released to the Company pursuant to this
Section 3.3 will not exceed $500,000.00; the Company shall request such release
in compliance with all of the terms and conditions of such release set forth
herein; and the Company will return to the Lender such documentation released to
the Company pursuant to this Section 3.3 within ten (10) calendar days after
such delivery.
3.4 Delivery of Additional Collateral or Mandatory Prepayment. At
any time that the aggregate Collateral Value of the Collateral then pledged
hereunder is less than the aggregate amount of the Advances then outstanding
hereunder, the Lender may request, and the Company shall within two (2) Business
Days after Notice by the Lender (a) deliver to the Lender or its designee for
pledge hereunder additional Mortgage Loans and/or cash, in aggregate amounts
sufficient to cover the difference between the Collateral Value of the
Collateral pledged and the aggregate amount of Advances outstanding hereunder,
or (b) repay the Advances in an amount sufficient to reduce the aggregate
balance thereof outstanding to an amount equal to or below the Collateral Value
of the Collateral pledged hereunder.
3.5 Right of Redemption from Pledge. So long as no Event of
Default has occurred the Company may redeem a Mortgage Loan or, Mortgage-backed
Security, by notifying the Lender of its intention to redeem such Mortgage Loan
or Mortgage-backed Security, from pledge and by paying, or causing an Investor
to pay, to the Lender, for application to prepayment of the principal balance of
the Note, an amount (the "Redemption Amount") equal to the amount of the Advance
made with respect to or relating to such Mortgage Loan or Mortgage-backed
Security.
3.6 Collection and Servicing Rights. So long as no Event of
Default shall have occurred, the Company shall be entitled to service and
receive and collect directly all sums payable to the Company in respect of the
Collateral other than proceeds of any Purchase Commitment or proceeds of the
sale of any Collateral unless deposited to funding account. Following the
occurrence of any Event of Default the Lender or its designee shall thereafter
be entitled to service and receive and collect all sums payable to the Company
in respect of the Collateral, and in such case (a) the Lender or its designee in
its discretion may, in its own name or in the name of the Company or otherwise,
demand, ▇▇▇ for, collect or receive any money or property at any time payable or
receivable on
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account of or in exchange for any of the Collateral, but shall be under no
obligation to do so, (b) the Company shall, if the Lender so requests, forthwith
pay to the Lender at its principal office all amounts thereafter received by the
Company upon or in respect of any of the Collateral, advising the Lender as to
the source of such funds, and (c) all amounts so received and collected by the
Lender shall be held by it as part of the Collateral.
3.7 Return or Release of Collateral at End of Commitment. If (a)
the Commitment shall have expired or been terminated, and (b) no Advances,
interest or other Obligations evidenced by the Loan Documents or due under this
Agreement shall be outstanding and unpaid, the Lender shall deliver or release
all Collateral in its possession to the Company. The receipt of the Company for
any Collateral released or delivered to the Company pursuant to any provision of
this Agreement shall be a complete and full acquittance for the Collateral so
returned, and the Lender shall thereafter be discharged from any liability or
responsibility therefor.
3.8 Master Repurchase Agreement. If the Lender purchases any
Pledged Mortgages under the Master Repurchase Agreement, the Purchase Price to
be paid by the Lender for such Pledged Mortgage under the Master Repurchase
Agreement shall be credited against the Note in an amount equal to the
outstanding Advance made against such Pledged Mortgage and the balance of the
Purchase Price after such application, if any, shall be paid to the Company. Any
Pledged Mortgage shall be eligible for purchase by Lender under the Master
Repurchase Agreement following delivery of such Pledged Mortgage to the
Investor.
4. CONDITIONS PRECEDENT.
4.1 Initial Advance. The obligation of the Lender to make the
initial Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, on or before the date thereof, of the following
conditions precedent:
(a) The Lender shall have received the following, all of which
must be satisfactory in form and content to the Lender, in its sole
discretion:
(1) The Loan Documents dated as of the date hereof
duly executed by the Company;
(2) Certified copies of the Company's articles of
incorporation and bylaws and certificates of good standing
dated no less recently than ninety (90) days prior to the date
of this Agreement and a certification from the taxing
authority of the state of incorporation stating that the
Company is in good standing with said taxing authority;
(3) An original resolution of the board of directors
of the Company, certified as of the date of this Agreement by
its corporate secretary, authorizing the execution, delivery
and performance of this Agreement and the other Loan
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Documents, and all other instruments or documents to be
delivered by the Company pursuant to this Agreement;
(4) A certificate (in the form of EXHIBIT "J") of the
Company's corporate secretary as to the resolution of the
board of directors of the Company authorizing the execution,
delivery and performance of this Agreement and the other Loan
Documents and the incumbency and authenticity of the
signatures of the officers of the Company executing this
Agreement and the other Loan Documents and each Advance
Request and all other instruments or documents to be delivered
pursuant hereto (the Lender being entitled to rely thereon
until a new such certificate has been furnished to the
Lender);
(5) Financial statements of the Company (and its
Subsidiaries, on a consolidated basis) containing a balance
sheet as of September 30, 1998 (the "Statement Date") and
related statements of income, changes in stockholders' equity
and cash flows for the period ended on the Statement Date and
a balance sheet as of December 31, 1998 ("Interim Date") and
related statement of income for the period ended on the
Interim Date, all prepared in accordance with GAAP applied on
a basis consistent with prior periods and in the case of the
statements as of the Statement Date, audited by independent
certified public accountants of recognized standing acceptable
to the Lender;
(6) A favorable written opinion of counsel to the
Company, dated as of the date of this Agreement, to be in
substantially the form of EXHIBIT "M" hereto, and addressed to
the Lender;
(7) A tax, lien and judgment search of the
appropriate public records for the Company, including a search
of Uniform Commercial Code financing statements, which search
shall not have disclosed the existence of any prior Lien on
the Collateral other than in favor of the Lender or as
permitted hereunder;
(8) Copies of the certificates, documents or other
written instruments which evidence the Company's eligibility
described in Section 5.11 hereof, all in form and substance
satisfactory to the Lender;
(9) Copies of the Company's errors and omissions
insurance policy or mortgage impairment insurance policy and
blanket bond coverage policy, all in form and content
satisfactory to the Lender, showing compliance by the Company
as of the date of this Agreement with the related provisions
of Section 6.8 hereof and showing Lender as an additional loss
payee on such policies;
(10) Executed financing statements in recordable form
covering the Collateral and ready for filing in all
jurisdictions required by the Lender;
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(11) Evidence that the Funding Account has been
established with the Lender.
4.2 Each Advance. The obligation of the Lender to make the
initial and each subsequent Advance under this Agreement is subject to
the satisfaction, in the sole discretion of the Lender, as of the date
of each such Advance, of the following additional conditions precedent:
(a) In connection with an Advance, the Company shall have
delivered to the Lender the Advance Request or the Electronic Request,
Collateral Documents, and documents required under and shall have
satisfied the procedures set forth in Section 2.2 and EXHIBIT "C",
according to the type of Collateral to be financed through the
requested Advance. All items delivered to the Lender or its designee
shall be satisfactory to the Lender in form and content, and the Lender
may reject such of them as do not meet the requirements of this
Agreement or of the related Purchase Commitment.
(b) The Lender shall have received evidence satisfactory to it
as to the making and/or continuation of any book entry or the due
filing and recording in all appropriate offices of all financing
statements and other instruments as may be necessary to perfect the
security interest of the Lender in the Collateral under the Uniform
Commercial Code of Texas or other applicable law.
(c) The representations and warranties of the Company
contained in Article 5 hereof shall be accurate and complete in all
material respects as if made on and as of the date of each Advance.
(d) The Company shall have performed all agreements to be
performed by it hereunder, including without limitation, the payment of
all Non-Usage Fees when due hereunder, and, as of the date of the
Advance Request, and after giving effect to the requested Advance,
there shall exist no Default or Event of Default hereunder.
(e) The Company shall not have incurred any material
liabilities, direct or contingent, except as approved by Lender
pursuant to Section 7.16, since the dates of the Company's most recent
financial statements theretofore delivered to the Lender.
(f) The Lender shall have received from counsel for the
Company, if requested by the Lender in its sole discretion, an updated
opinion, in form and substance satisfactory to the Lender, addressed to
the Lender and dated as of the date of such Advance, covering such of
the matters as the Lender may reasonably request.
(g) Such additional documents, instruments, and information as
Lender or its legal counsel may require.
Acceptance of the proceeds of the requested Advance by the Company
shall be deemed a representation by the Company that all conditions set forth in
this Article 4 shall have been satisfied as of the date of such Advance.
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5. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Lender, as of the
date of this Agreement and (unless otherwise notified in writing by the Company
and Lender, in its sole discretion, approves in writing) as of the date of each
Advance Request and the making of each Advance, that:
5.1 Organization; Good Standing; Subsidiaries. The Company and
each Subsidiary of the Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the full legal power and authority to own its property and to carry on its
business as currently conducted and is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no material
adverse effect on the business, operations, assets or financial condition of the
Company or any such Subsidiary. For the purposes hereof, good standing shall
include qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which the Company transacts business. The Company has no Subsidiaries except as
set forth on EXHIBIT "F" hereto. EXHIBIT "F" sets forth with respect to each
such Subsidiary, its name, address, place of incorporation, each state in which
it is qualified as a foreign corporation, and the percentage ownership of the
Company in such Subsidiary.
5.2 Authorization and Enforceability. The Company has all
requisite corporate power and authority to execute, deliver, create, issue,
comply and perform this Agreement, the Note and all other Loan Documents to
which the Company is party and to make the borrowings hereunder. The execution,
delivery and performance by the Company of this Agreement, the Note and all
other Loan Documents to which the Company is party and the making of the
borrowings hereunder and thereunder, have been duly and validly authorized by
all necessary corporate action on the part of the Company (none of which actions
has been modified or rescinded, and all of which actions are in full force and
effect) and do not and will not conflict with or violate any provision of the
articles of incorporation or by-laws of the Company, conflict with or result in
a breach of or constitute a default or require any consent under any contracts
to which Company is a party, or result in the creation of any Lien upon any
property or assets of the Company other than the Lien on the Collateral granted
hereunder, or result in or require the acceleration of any Indebtedness of the
Company pursuant to any agreement, instrument or indenture to which the Company
is a party or by which the Company or its property may be bound or affected, or
to the Company's knowledge, materially violate any provision of law applicable
to the Company. This Agreement, the Note and all other Loan Documents
contemplated hereby or thereby constitute legal, valid, and binding obligations
of the Company, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other such laws affecting the enforcement
of creditors' rights generally.
5.3 Financial Condition. The balance sheet of the Company provided
to Lender pursuant to Section 4.1(a)(5) hereof (and if applicable, its
Subsidiaries, on a consolidating and consolidated basis) as at the Statement
Date, and the related statements of income, changes in stockholders' equity, and
cash flows for the fiscal year ended on
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the Statement Date, heretofore furnished to the Lender, fairly present the
financial condition of the Company and its Subsidiaries as at the Statement Date
and the Interim Date and the results of its and their operations for the fiscal
period ended on the Statement Date and the Interim Date. The Company had, on the
Statement Date and the Interim Date, no known material liabilities, direct or
indirect, fixed or contingent, matured or unmatured, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, said balance sheet and related statements, and at the
present time there are no material unrealized or anticipated losses from any
loans, advances or other commitments of the Company except as heretofore
disclosed to the Lender in writing. Said financial statements were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved. Since the Statement Date, there has been no material adverse change in
the business, operations, assets or financial condition of the Company or its
Subsidiaries, nor is the Company aware of any state of facts particular to the
Company which (with or without notice or lapse of time or both) would or could
result in any such material adverse change.
5.4 Litigation. Except as disclosed on EXHIBIT "H", there are no
actions, claims, suits or proceedings pending, or to the knowledge of the
Company, threatened or reasonably anticipated against or affecting the Company
or any Subsidiary of the Company in any court or before any arbitrator or before
any government commission, board, bureau or other administrative agency which,
if adversely determined, may reasonably be expected to result in any material
and adverse change in the business, operations, assets or financial condition of
the Company or any of Company's Subsidiaries, as a whole.
5.5 Compliance with Laws. To the knowledge of Company, neither the
Company nor any Subsidiary of the Company is in violation of any provision of
any law, or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority which might have
a material adverse effect on the business, operations, assets or financial
condition of the Company or any of Company's Subsidiaries, as a whole.
5.6 Regulation U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock, and no part of the proceeds of
any Advances made hereunder will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
5.7 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" or controlled by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
5.8 Agreements. Neither the Company nor any Subsidiary of the
Company is a party to any agreement, instrument or indenture, or subject to any
restriction, materially and adversely affecting its business, operations, assets
or financial condition, except as disclosed in the financial statements
described in Section 5.3 hereof. The Company and each Subsidiary of the Company
are not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement, instrument, or
indenture which default could have a material adverse effect on the business,
operations, properties or financial condition of the Company as a whole. No
holder of any Indebtedness of the Company or of any of its Subsidiaries has
given notice
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31
of any alleged default thereunder or, if given, the same has been cured or will
be cured by Company within the cure period provided therein, and no liquidation
or dissolution of the Company or any of its Subsidiaries and no receivership,
insolvency, bankruptcy, reorganization or other similar proceedings relative to
the Company or any of its Subsidiaries or any of their respective properties is
pending, or to the knowledge of the Company, threatened.
5.9 Title to Properties. The Company and each Subsidiary of the
Company has good, valid, insurable (in the case of real property) and marketable
title to all of its properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described in Section 5.3
hereof, and all such properties and assets are free and clear of all Liens
except as disclosed in such financial statements and not prohibited under this
Agreement.
5.10 ERISA. All plans ("Plans") of a type described in Section 3(3)
of ERISA in respect of which the Company or any Subsidiary of the Company is an
"Employer," as defined in Section 3(5) of ERISA, are in substantial compliance
with ERISA, and none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Internal Revenue Code, and neither the Company nor any Subsidiary of the
Company has incurred any material liability (including any material contingent
liability) to or on account of any such Plan pursuant to Sections 4062, 4063,
4064, 4201 or 4204 of ERISA; and no proceedings have been instituted to
terminate any such Plan, and no condition exists which presents a material risk
to the Company or a Subsidiary of the Company of incurring a liability to or on
account of any such Plan pursuant to any of the foregoing Sections of ERISA. No
Plan or trust forming a part thereof has been terminated since December 1, 1974.
5.11 Eligibility. The Company has all requisite corporate power and
authority to carry on its business as now conducted. The Company has all
necessary licenses, permits, franchises and all other authorizations to own its
property and to carry on its business as now conducted, except where the failure
to have such licenses, permits, franchises, and other authorizations has no
material adverse effect on the business operations, assets or financial
condition of the Company or any Subsidiary of Company. If approved now or
hereafter as a lender or seller/servicer for any one or more of the governmental
agencies as set forth below, the Company will remain at all times approved and
qualified and in good standing and meet all requirements applicable to such
status:
(a) FNMA approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to FNMA.
(b) FHLMC approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to FHLMC.
(c) GNMA approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to GNMA.
(d) HUD approved lender, eligible to originate, purchase,
hold, sell and service FHA-insured Mortgage Loans.
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(e) VA lender in good standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell, and service
VA-guaranteed Mortgage Loans.
5.12 Special Representations Concerning Collateral. The Company
hereby represents and warrants to the Lender, as of the date of this Agreement
and as of the date of each Advance, that:
(a) The Company is the legal and equitable owner and holder,
free and clear of all Liens (other than Liens granted hereunder), of
the Pledged Mortgages and the Pledged Securities. All Pledged
Mortgages, Pledged Securities, and Purchase Commitments have been duly
authorized and validly granted or issued to the Company, and all of the
foregoing items of Collateral comply with all of the requirements of
this Agreement, and have been validly pledged or assigned to the
Lender, subject to no other Liens.
(b) The Company has, and will continue to have, the full
right, power and authority to pledge the Collateral pledged and to be
pledged by it hereunder.
(c) Any Mortgage Loan and related documents included in the
Pledged Mortgages (1) as of the date of the Advance Request for such
Mortgage Loan, has been duly executed and delivered by the parties
thereto at a closing held not more than sixty (60) days prior to such
date; (2) has been made in compliance with all requirements of the Real
Estate Settlement Procedures Act, Equal Credit Opportunity Act, the
federal Truth-In-Lending Act and all other applicable laws and
regulations; (3) is valid and enforceable in accordance with its terms,
without defense or offset; (4) has not been modified or amended except
in writing, which writing is part of the Collateral Documents, nor any
requirements thereof waived; and (5) complies with the terms of this
Agreement and, if applicable, with the related Purchase Commitment held
by the Company. Each Mortgage Loan has been fully advanced in the face
amount thereof and each Mortgage creates a Lien on the premises
described therein.
(d) No monetary default, nor, to the knowledge of the Company,
any event which, with notice or lapse of time or both, would become a
default, has occurred and is continuing under any Mortgage Loan
included in the Pledged Mortgages; provided, however, that, with
respect to Pledged Mortgages which have already been pledged as
Collateral hereunder, if any such default or event has occurred, the
Company will promptly notify the Lender and the same shall not have
continued for more than sixty (60) days.
(e) The Company has complied with all laws, rules and
regulations in respect of the FHA insurance or VA guarantee of each
Mortgage Loan included in the Pledged Mortgages designated by the
Company as an FHA insured or VA guaranteed Mortgage Loans, and such
insurance or guarantee is in full force and effect. All such FHA
insured and VA guaranteed Mortgage Loans comply in all respects with
all applicable requirements for purchase under the FNMA standard form
of selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect.
(f) All fire and casualty policies covering Mortgaged Property
encumbered by a Pledged Mortgage (1) name the Company and its
successors and assigns as the insured
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under a standard mortgagee clause, (2) are and will continue to be in
full force and effect, and (3) afford and will continue to afford
insurance against fire and such other risks as are usually insured
against in the broad form of extended coverage insurance from time to
time available, as well as insurance against flood hazards if the same
is required by FHA or VA.
(g) Pledged Mortgages encumbering Mortgaged Property located
in a special flood hazard area designated as such by the Secretary of
HUD are and shall continue to be covered by special flood insurance
under the National Flood Insurance Program.
(h) Each FHA insured Mortgage Loan pledged hereunder meets all
applicable governmental requirements for such insurance. Each Mortgage
Loan, against which an Advance is made on the basis of a Purchase
Commitment meets all requirements of such Purchase Commitment. The
Company shall assure that Mortgage Loans pledged pursuant to this
Agreement and intended to be used in the formation of Mortgage-backed
Securities shall comply, or prior to the formation of any such
Mortgage-backed Security, shall comply with the requirements of the
governmental instrumentality, department or agency guaranteeing such
Mortgage-backed Security.
(i) For Pledged Mortgages which will be used to secure GNMA
Mortgage-backed Securities, the Company has received from GNMA a
Confirmation Notice or Confirmation Notices for Request Additional
Commitment Authority and for Request Pool Numbers, and there remains
available thereunder a commitment on the part of GNMA sufficient to
permit the issuance of GNMA Mortgage-backed Securities in an amount at
least equal to the amount of such Pledged Mortgages designated by the
Company as the Mortgage Loans to be used to secure such GNMA
Mortgage-backed Securities; each such Confirmation Notice is in full
force and effect; each of such Pledged Mortgages has been assigned by
the Company to one of such Pool Numbers and a portion of the available
GNMA Commitment has been allocated thereto by the Company, in an amount
at least equal to the principal amount of each Mortgage Note secured by
such Pledged Mortgages; and each such assignment and allocation has
been reflected in the books and records of the Company.
(j) Each Pledged Mortgage in excess of $250,000.00 is
supported by an appraisal that meets the appraisal requirements of FNMA
or FHLMC (in the case of residential Mortgaged Property), or the Office
of Thrift Supervision for the type of Mortgaged Property securing that
Pledged Mortgage; or, alternatively, such Pledged Mortgage is eligible
for purchase or is guaranteed or insured by a U.S. Government agency or
a U.S. Government sponsored enterprise.
5.13 RICO. The Company is not in violation of any laws, statutes or
regulations, including, without limitation, RICO, which contain provisions which
could potentially override Lender's security interest in the Collateral.
5.14 Proper Names. The Company does not operate in any jurisdiction
under a trade name, division, division name or name other than those names set
forth on EXHIBIT "I" attached
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hereto and all such names included on EXHIBIT "I" are utilized by the Company
only in the jurisdictions listed therein.
5.15 Direct Benefit From Loans. The Company has received, or, upon
the execution and funding thereof, will receive (a) direct benefit from the
making and execution of this Agreement and the other Loan Documents to which it
is a party, and (b) fair and independent consideration for the entry into, and
performance of, this Agreement and the other Loan Documents to which it is a
party. Contemporaneously with the disbursements of each Advance by the Lender to
the Company, all such proceeds will be used to finance the origination or
purchase of Mortgage Loans.
5.16 Loan Documents Do Not Violate Other Documents. Neither the
execution and delivery by the Company of this Agreement or any other Loan
Document to which it is a party nor the consummation of the transactions herein
and therein contemplated, nor the performance of, or compliance with, the terms
and provisions hereof and thereof, does or will contravene, breach or conflict
with any provision of either of its articles of incorporation or by-laws, or, to
its knowledge, any applicable law, statute, rule or regulation or any judgment,
decree, writ, injunction, franchise, order or permit applicable to the Company
or its assets or properties, or does or will conflict or be inconsistent with,
or does or will result in any breach or default of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of any Lien upon any of the property or assets of the
Company pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, or other instrument to which the Company is a party or by which the
Company or any of its property may be bound, the contravention, conflict,
inconsistency, breach or default of which will have a materially adverse effect
on the Company's condition, financial or otherwise, or affect its ability to
perform, promptly and fully, its obligations hereunder or under any of the other
Loan Documents.
5.17 Consents Not Required. Except for those consents that have
already been obtained and delivered to Lender or required as a condition to any
Advance hereunder, no consent of any Person and no consent, license, permit,
approval, or authorization of, exemption by, or registration or declaration
with, any Tribunal is required in connection with the execution, delivery,
performance, validity, or enforceability of this Agreement or any of the Loan
Documents by the Company.
5.18 Material Fact Representations. Neither the Loan Documents nor
any other agreement, document, certificate, or written statement furnished to
the Lender by or on behalf of the Company in connection with the transactions
contemplated in any of the Loan Documents contains any untrue statement of a
material adverse fact. There are no material adverse facts or conditions
relating to the making of the Commitment, any of the Collateral, and/or the
financial condition and business of the Company known to the Company which have
not been fully disclosed, in writing, to the Lender, it being understood that
this representation is made as of, and shall be limited to the date of this
Agreement. All writings heretofore or hereafter exhibited or delivered to the
Lender by or on behalf of the Company are and will be genuine and what they
purport to be.
5.19 Place of Business. The principal place of business of the
Company is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the chief executive
office of the Company and the office where
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35
it keeps its financial books and records relating to its property and all
contracts relating thereto and all accounts arising therefrom is located at the
address set forth for the Company in Section 9 hereof.
5.20 Use of Proceeds; Business Loans. The Company will use the
proceeds of the Advances made pursuant to the Commitment solely as follows, and
for no other purpose: finance the origination and purchase of Mortgage Loans.
All loans evidenced by the Note are and shall be "business loans", as such term
is used in the Depository Institutions Deregulation and Monetary Control Act of
1980, as amended, and such loans are for business or commercial purposes and not
primarily for personal, family, household or agricultural use, as such terms are
used or defined in Texas Revised Civil Statutes, Texas Credit Title, Regulation
Z promulgated by the Board of Governors of the Federal Reserve System, and
Titles I and V of the Consumer Credit Protection Act. The provisions of the
Texas Credit Title which regulate revolving loans and revolving triparty
accounts) shall not apply to this Agreement.
5.21 No Undisclosed Liabilities. Other than as permitted in Section
7.16 hereof and as disclosed in the financial statements delivered to Lender
prior to the date hereof, the Company does not have any liabilities or
Indebtedness, direct or contingent, except for liabilities or Indebtedness
which, in the aggregate, do not exceed $25,000.00.
5.22 Tax Returns and Payments. All federal, state and local income,
excise, property and other tax returns required to be filed with respect to
Company's operations and those of its Subsidiaries in any jurisdiction have been
filed on or before the due date thereof (plus any applicable extensions); all
such returns are true and correct; all taxes, assessments, fees and other
governmental charges upon the Company, and Company's Subsidiaries and upon its
property, income or franchises, which are due and payable have been paid,
including, without limitation, all FICA payments and withholding taxes, if
appropriate, other than those which are being contested in good faith by
appropriate proceedings, diligently pursued and as to which the Company has
established adequate reserves determined in accordance with GAAP, consistently
applied. The amounts reserved, as a liability for income and other taxes
payable, in the financial statements described in Section 5.3 hereof are
sufficient for payment of all unpaid federal, state and local income, excise,
property and other taxes, whether or not disputed, of the Company and its
Subsidiaries, accrued for or applicable to the period and on the dates of such
financial statements and all years and periods prior thereto and for which the
Company, and Company's Subsidiaries may be liable in their own right or as
transferee of the assets of, or as successor to, any other Person.
5.23 Subsidiaries. The Company has not issued, and does not have
outstanding, any warrants, options, rights or other obligations to issue or
purchase any shares of its capital stock or other securities. The outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. All of Company's Subsidiaries are
listed on EXHIBIT "H", attached hereto.
5.24 Holding Company. The Company is not a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
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5.25 Year 2000 Issue. The Company and its Subsidiaries are in the
process of reviewing the effect of the year 2000 Issue on the computer software,
hardware, and firmware systems and equipment containing embedded microchips
owned or operated by or for the Company and its Subsidiaries or used or relied
upon in the conduct of their business (including systems and equipment supplied
by others or with which such computer systems of the Company and its
Subsidiaries interface if the failure of such systems would have a material
adverse effect on the operations of the Company or its Subsidiaries ). The
Company and its Subsidiaries currently do not believe that the costs to the
Company and its Subsidiaries of any reprogramming required as a result of the
Year 2000 Issue to permit the proper functioning of such systems and equipment
and the proper processing of data, and the testing of such reprogramming, and of
the reasonably foreseeable consequences of the year 2000 Issue to the Company or
any of its Subsidiaries (including reprogramming errors and the failure of
systems or equipment supplied by others if the failure of such systems would
have a material adverse effect on the operations of the Company or its
Subsidiaries), are not reasonably expected to result in a Default or Event of
Default or to have a material adverse effect on the business, assets,
operations, prospects, or condition (financial or otherwise) of the Company or
its Subsidiaries.
6. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees that, so long as the Commitment
is outstanding or there remain any Obligations of the Company to be paid or
performed under this Agreement or under any other Loan Document, the Company
shall:
6.1 Payment of Note. Punctually pay or cause to be paid the
principal of, interest on and all other amounts payable hereunder and under the
Note in accordance with the terms thereof.
6.2 Financial Statements and Other Reports. Deliver to the
Lender:
(a) As soon as available and in any event within thirty (30)
days after the end of each calendar month, statements of income and
changes in stockholders' equity and cash flow of the Company and, if
applicable, Company's Subsidiaries, on a consolidated and consolidating
basis for the immediately preceding month, and related balance sheet as
at the end of the immediately preceding month, all in reasonable
detail, prepared in accordance with GAAP applied on a consistent basis,
and certified as to the fairness of presentation by the president or
chief financial officer of the Company, subject, however, to year-end
audit adjustments.
(b) As soon as available and in any event within ninety (90)
days after the close of each fiscal year: statements of income, changes
in stockholders' equity and cash flows of the Company, and, if
applicable, Company's Subsidiaries, on a consolidated and consolidating
basis for such year, the related balance sheet as at the end of such
year (setting forth in comparative form the corresponding figures for
the preceding fiscal year), all in reasonable detail, prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved, and accompanied by an opinion in form and substance
satisfactory to the Lender and prepared by an accounting firm
reasonably satisfactory to the
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Lender, or other independent certified public accountants of recognized
standing selected by the Company and acceptable to the Lender, as to
said financial statements and a certificate signed by the president or
chief financial officer of the Company stating that said financial
statements fairly present the financial condition and results of
operations of the Company and, if applicable, Company's Subsidiaries as
at the end of, and for, such year.
(c) Together with each delivery of financial statements
required in this Section 6.2, an Officer's Certificate in substantially
the form of EXHIBIT "F" hereto.
(d) Reports in respect of the Pledged Mortgages and Pledged
Securities, in such detail and at such times as the Lender in its
discretion may request at any time or from time to time, including,
without limitation, a monthly pipeline report in form satisfactory to
Lender, to be delivered with the monthly financial statements required
in Section 6.2(a).
(e) Copies of all regular or periodic financial and other
reports, if any, which the Company shall file with the Securities and
Exchange Commission or any governmental agency successor thereto and
copies of any audits completed by GNMA, FHLMC, or FNMA. Copies of the
Mortgage Bankers' Financial Reporting Forms (FNMA Form 1002) which the
Company shall have filed with FNMA.
(f) From time to time, with reasonable promptness, such
further information regarding the business, operations, properties or
financial condition of the Company as the Lender may reasonably
request.
6.3 Maintenance of Existence; Conduct of Business. Preserve and
maintain its corporate existence in good standing and all of its rights,
privileges, licenses and franchises necessary in the normal conduct of its
business, including, without limitation, its eligibility as lender,
seller/servicer and issuer described under Section 5.11 hereof; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required by HUD at any and all times for maintaining the Company's
status as a FHA approved mortgagee; and make no material change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement.
6.4 Compliance with Applicable Laws. Comply with the requirements
of all applicable laws, rules, regulations and orders of any governmental
authority, a breach of which could materially adversely affect its business,
operations, assets, or financial condition, except where contested in good faith
and by appropriate proceedings, and with sufficient reserves established
therefor.
6.5 Inspection of Properties and Books. Permit authorized
representatives of the Lender to (a) discuss the business, operations, assets
and financial condition of the Company and Company's Subsidiaries with their
officers and employees and to examine their books of account, records, reports
and other papers and make copies or extracts thereof, and (b) inspect all of the
Company's property and all related information and reports at Lender's expense,
all at such reasonable times as the Lender may request. The Company will provide
its accountants with a copy of this Agreement promptly after the execution
hereof and will instruct its accountants to answer candidly any and all
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questions that the officers of the Lender or any authorized representatives of
the Lender may address to them in reference to the financial condition or
affairs of the Company and Company's Subsidiaries. The Company may have its
representatives in attendance at any meetings between the officers or other
representatives of the Lender and the Company accountants held in accordance
with this authorization.
6.6 Notice. Give prompt written notice to the Lender of (a) any
action, suit or proceeding instituted by or against the Company or any of its
Subsidiaries in any federal or state court or before any commission or other
regulatory body (federal, state or local, domestic or foreign) which action,
suit or proceeding has at issue in excess of Seventy-Five Thousand Dollars
($75,000.00) (except for normal collection and foreclosure proceedings initiated
by the Company in connection with a Mortgage Loan or any other mortgage loan),
or any such proceedings threatened against the Company, or any of Company's
Subsidiaries in writing containing the details thereof, (b) the filing,
recording or assessment of any federal, state or local tax Lien against it, or
any of its assets or any of its Subsidiaries, (c) the occurrence of any Event of
Default hereunder or the occurrence of any Default and continuation thereof for
five (5) days, (d) the suspension, revocation or termination of the Company's
eligibility, in any respect, as approved lender, seller/servicer or issuer as
described under Section 5.11 hereof, (e) the transfer, loss or termination of
any Servicing Contract to which the Company is a party, or which is held for the
benefit of the Company, and the reason for such transfer, loss or termination,
if known to the Company, and (f) any other action, event or condition of any
nature which may lead to or result in a material adverse effect upon the
business, operations, assets, or financial condition of the Company or Company's
Subsidiaries or which, with or without notice or lapse of time or both, would
constitute a default under any other agreement instrument or indenture to which
the Company is a party or to which the Company its properties or assets may be
subject.
6.7 Payment of Debt, Taxes, etc. Pay and perform all obligations
and Indebtedness of the Company, and cause to be paid and performed all
obligations and Indebtedness of its Subsidiaries in accordance with the terms
thereof and pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon the Company or its
Subsidiaries, or upon their respective income, receipts or properties before the
same shall become past due, as well as all lawful claims for labor, materials
and supplies or otherwise which, if unpaid, might become a Lien or charge upon
such properties or any part thereof; provided, however, that the Company and its
Subsidiaries shall not be required to pay obligation, Indebtedness, taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies for which the Company or its Subsidiaries shall have obtained an
adequate bond or adequate insurance or which are being contested in good faith
and by proper proceedings which are being reasonably and diligently pursued if
such proceedings do not involve any likelihood of the sale, forfeiture or loss
of any such property or any interest therein while such proceedings are pending,
and provided further that book reserves adequate under generally accepted
accounting principles shall have been established with respect thereto and
provided further that the owing Person's title to, and its right to use, its
property is not materially adversely affected thereby.
6.8 Insurance. Maintain (a) errors and omissions insurance or
mortgage impairment insurance and blanket bond coverage, with such companies and
in such amounts as satisfy prevailing
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PFNMA and FHLMC requirements applicable to a qualified mortgage originating
institution, and (b) liability insurance and fire and other hazard insurance on
its properties, with responsible insurance companies approved by the Lender, in
such amounts and against such risks as is customarily carried by similar
businesses operating in the same vicinity; and (c) within thirty (30) days after
notice from the Lender, obtain such additional insurance as the Lender shall
reasonably require, all at the sole expense of the Company. Copies of such
policies shall be furnished to the Lender without charge upon obtaining such
coverage or any renewal of or modification to such coverage.
6.9 Other Loan Obligations. Perform all obligations under the
terms of each loan agreement, note, mortgage, security agreement or debt
instrument by which the Company is bound or to which any of its property is
subject, and promptly notify the Lender in writing of a declared default under
or the termination, cancellation, reduction or non-renewal of any of its other
lines of credit or financing agreements with any other lender. EXHIBIT "B"
hereto is a true and complete list of all such lines of credit or financing
agreements as of the date hereof.
6.10 Use of Proceeds of Advances. Use the proceeds of each Advance
solely for the purpose of financing or purchasing Pledged Mortgages, including
the issuance of Mortgage-backed Securities based thereon.
6.11 Special Affirmative Covenants Concerning Collateral.
(a) Warrant and defend the right, title and interest of the
Lender in and to the Collateral against the claims and demands of all
Persons whomsoever.
(b) Service or cause to be serviced all Pledged Mortgages in
accordance with the standard requirements of the issuers of Purchase
Commitments covering the same and all applicable FHA and VA
requirements, including without limitation taking all actions necessary
to enforce the obligations of the obligors under such Mortgage Loans.
The Company shall service or cause to be serviced all Mortgage Loans
backing Pledged Securities in accordance with applicable governmental
requirements and issuers of Purchase Commitments covering the same. The
Company shall hold all escrow funds collected in respect of Pledged
Mortgages and Mortgage Loans backing Pledged Securities in trust,
without commingling the same with non-custodial funds, and apply the
same for the purposes for which such funds were collected.
(c) Execute and deliver to the Lender such Uniform Commercial
Code financing statements with respect to the Collateral as the Lender
may request. The Company shall also execute and deliver to the Lender
such further instruments of sale, pledge or assignment or transfer, and
such powers of attorney, as required by the Lender to secure the
Collateral, and shall do and perform all matters and things necessary
or desirable to be done or observed, for the purpose of effectively
creating, maintaining and preserving the security and benefits intended
to be afforded the Lender under this Agreement. The Lender shall have
all the rights and remedies of a secured party under the Uniform
Commercial Code of Texas, or any other applicable law, in addition to
all rights provided for herein.
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(d) Notify the Lender within two (2) Business Days after
receipt of notice from an Investor of any default under, or of the
termination of, any Purchase Commitment relating to any Pledged
Mortgage, Eligible Mortgage Pool or Pledged Security.
(e) Promptly comply in all respects with the terms and
conditions of all Purchase Commitments, and all extensions, renewals
and modifications or substitutions thereof or thereto. The Company will
cause to be delivered to the Investor the Pledged Mortgages and Pledged
Securities to be sold under each Purchase Commitment not later than the
expiration thereof.
(f) Maintain, at its principal office or in a regional office
approved by the Lender, or in the office of a computer service bureau
engaged by the Company and approved by the Lender, and, upon request,
shall make available to the Lender the originals, or copies in any case
where the originals have been delivered to the Lender or to an
Investor, of its Mortgage Notes and Mortgages included in Pledged
Mortgages, Mortgage-backed Securities delivered to the Lender as
Pledged Securities, Purchase Commitments, and all related Mortgage Loan
documents and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records and other information and data relating to the
Collateral.
6.12 Cure of Defects in Loan Documents. The Company will promptly
cure and cause to be promptly cured any defects in the creation, issuance,
execution and delivery of this Agreement and the other Loan Documents; and upon
request of the Lender and at the Company's expense, the Company will promptly
execute and deliver, and cause to be executed and delivered, to the Lender or
its designee, all such additional documents, agreements and/or instruments in
compliance with or in accomplishment of the covenants and agreements of this
Agreement and the other Loan Documents, and/or to create, perfect, preserve,
extend and/or maintain any and all Liens created pursuant hereto or pursuant to
any other Loan Document as valid and perfected Liens (of a priority as set forth
in this Agreement) in favor of the Lender to secure the Obligations, all as
reasonably requested from time to time by the Lender.
6.13 Year 2000 Compliant. Will take all necessary reasonable action
to complete in all material respects by July 1, 1999, the reprogramming of
computer software, hardware, and firmware systems used or relied upon in the
conduct of the Company's business (including systems and equipment supplied by
others or with which such systems of Company interface if the failure of such
system would have a material adverse effect on the operations of the Company or
its Subsidiaries) required as a result of the Year 2000 Issue to permit the
proper functioning of such computer systems and other equipment and testing of
such systems and equipment, as so reprogrammed. At the request of the Lender,
Company shall provide to the Lender reasonable assurance of its compliance with
the preceding sentence.
7. NEGATIVE COVENANTS.
The Company hereby covenants and agrees that, so long as the Commitment
is outstanding or there remain any Obligations of the Company to be paid or
performed under this Agreement or
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any other Loan Document, the Company shall not, either directly or indirectly,
without the prior written consent of the Lender:
7.1 Contingent Liabilities. Assume, incur, create, guarantee,
endorse, or otherwise become or be liable for the obligation of any Person other
than the Company except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business and excluding the sale of Mortgage
Loans with recourse in the ordinary course of the company's business.
7.2 Pledge of Mortgage Loans. Except for Mortgage Loans pledged to
the lenders described in EXHIBIT "B", pledge or grant a security interest in any
existing or future Mortgage Loans acquired by the Company other than to the
Lender except as otherwise expressly permitted in this Agreement; provided,
however, that if no Default or Event of Default has occurred and is continuing,
servicing on individual Mortgage Loans may be sold concurrently with and
incidental to the sale of such Mortgage Loans (with servicing released) in the
ordinary course of the Company's business.
7.3 Merger; Acquisitions. Company shall, or shall permit any of
its Subsidiaries which are engaged in the mortgage banking business to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation (except mergers or consolidations of a Subsidiary into the
Company, with the Company as the surviving corporation), or convey, sell, lease
or otherwise dispose of (or agree to do any of the foregoing at any future time)
all or any part of its property or assets which are material (including, but not
limited to, any rights to service Mortgage Loans), individually or in the
aggregate, other than obsolete or worn out property, whether now owned or
hereafter acquired, other than in the ordinary course of business as presently
conducted and at fair market value, without the prior approval of the Lender
(which approval shall not be reasonably withheld), except that the Company and
its Subsidiaries may, in the ordinary course of business, acquire Mortgage Loans
for resale and sell Mortgage Loans and Mortgage-backed Securities.
7.4 Loss of Eligibility. Take any action that would cause the
Company to lose all or any part of its status as an eligible lender,
seller/servicer and issuer as described under Section 5.11 hereof.
7.5 Debt to Adjusted Tangible Worth Ratio. Permit the ratio of
Debt to Adjusted Tangible Worth of the Company (and its Subsidiaries, on a
consolidated basis) to exceed 10:1 computed as of the end of each calendar
month.
7.6 Minimum Adjusted Tangible Net Worth. Permit Adjusted Tangible
Net Worth of the Company (and its Subsidiaries, on a consolidated basis) to be
less than Twelve Million Dollars ($12,000,000.00), computed as of the end of
each calendar month.
7.7 Transactions with Affiliates. Directly or indirectly (a) make
any loan, advance, extension of credit or capital contribution to any of its
Affiliates, (b) transfer, sell, pledge, assign or otherwise dispose of any of
its assets to or on behalf of such Affiliates, or (c) merge or consolidate
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with or purchase or acquire assets from such Affiliates except for transactions
described in clauses (a) through (c) of this Section 7.7 involving not more than
$25,000.00 each.
7.8 Limits on Corporate Distributions. Pay, make or declare or
incur any liability to pay, make or declare any dividend (excluding stock
dividends) or other distribution, direct or indirect, on or on account of any
shares of its stock or any redemption or other acquisition, direct or indirect,
of any shares of its stock or of any warrants, rights or other options to
purchase any shares of its stock nor purchase, acquire, redeem or retire any
stock or ownership interest in itself whether now or hereafter outstanding
except that so long as no Default, Event of Default or violation of Sections 7.5
and 7.6 hereof exists at such time, or would exist immediately thereafter, the
Company may declare and pay cash dividends to its shareholders; provided,
however, that (a) such cash dividends must be declared and paid within 20 days
after delivery to Lender of the financial statements described in Section 6.2(a)
hereof; and (b) provided, further that such dividends shall not exceed, in the
aggregate during any fiscal year, fifty percent (50%) of the Company's net
income for such fiscal year; provided, however, that this restriction shall not
apply to the repurchase of shares of common stock from employees, officers,
directors, consultants or other persons performing services for this Company or
any Subsidiary pursuant to agreements under which this Company has the option to
repurchase such shares upon the occurrence of certain events, such as the
termination of employment.
7.9 RICO. Violate any laws, statutes or regulations, whether
federal or state, for which forfeiture of its properties is a potential penalty,
including, without limitations, RICO.
7.10 No Loans or Investments Except Approved Investments. Without
the prior written consent of Lender, make or permit to remain outstanding any
loans or advances to, or investments in, any Person, except that the foregoing
restriction shall not apply to:
(a) investments in marketable obligations maturing no later
than 180 days from the date of acquisition thereof by the Company and
issued and fully guaranteed, directly, by the full faith and credit of
the Government of the United States of America or any agency thereof;
and
(b) investments in certificates of deposit maturing no later
than 180 days from the date of issuance thereof and issued by
commercial banks in the United States and such banks rated by ▇▇▇▇▇'▇
Investor Service, Inc. and receiving a rating of Prime-2 or higher on
Moody's short term debt rating or rated by Standard & Poor's
Corporation and receiving a rating of AA-/A1+ or higher on S&P's short
term debt rating, or issued by Lender, it being acknowledged and agreed
that the foregoing requirements shall pertain to certificates of
deposit issued and/or received on a date on or after the date of this
Agreement); and
(c) investments not to exceed $100,000.00 in the aggregate.
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7.11 Charter Documents and Business Termination.
(a) Except as permitted in Section 7.3 hereof, issue, sell or
commit to issue or sell any shares of its capital stock of any class,
or other equity or investment security,
(b) Amend or otherwise modify its corporate charter or
otherwise change its corporate structure in any manner which will have
a materially adverse effect on the Company's condition, financial or
otherwise, or which will have a material adverse effect upon the
Company's ability to perform, promptly and fully, its obligations
hereunder or under any of the other Loan Documents, or
(c) Take any action with a view toward its dissolution,
liquidation or termination, or, in fact, dissolve, liquidate or
terminate its existence.
7.12 Changes in Accounting Methods. Make any change in its
accounting method as in effect on the date of this Agreement or change its
fiscal year ending date from September 30, unless such changes (a) are required
for conformity with generally accepted accounting principles and, in such event,
the Company will give prior written notice of each such change to the Lender or
(b) or if not so required, are in conformity with generally accepted accounting
principles and have the prior written approval of the Lender which approval
shall not be unreasonably withheld.
7.13 Changes in Business or Assets. Except as permitted by Section
7.3 hereof, make any substantial change (a) in the nature of its business as now
conducted, or (b) in the use of its property as now used and proposed to be
used.
7.14 Changes in Office or Inventory Location. Change the address
and/or location of its chief executive office or principal place of business or
the place where it keeps its books and records or its inventory to a location
outside the State of California unless, prior to any such change, the Company
shall execute and cause to be executed such additional agreements and/or lien
instruments as the Lender may reasonably request to conform with the provisions
hereof and the transactions and perfected Liens in the Collateral contemplated
under this Agreement and the other Loan Documents.
7.15 Special Negative Covenants Concerning Collateral.
(a) The Company shall not amend or modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect
of, any Pledged Mortgages or Pledged Securities.
(b) The Company shall not sell, assign, transfer or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber (except pursuant to this Agreement or as permitted herein) any
of the Collateral or any interest therein.
(c) The Company shall not make any compromise, adjustment or
settlement in respect of any of the Collateral or accept other than
cash in payment or liquidation of the Collateral.
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7.16 No Indebtedness. Except for the Indebtedness described in
EXHIBIT "B" hereto, without the prior written consent of Lender, the Company
will not incur, create, assume or guarantee or in any manner become or be liable
or permit to be outstanding any Indebtedness (including obligations for the
payment of rentals other than provided for herein) nor guarantee any contract or
other obligation, and will not in any way become or be responsible for
obligations of any Person, whether by agreement to purchase the Indebtedness of
any other Person or agreement for the furnishing of funds to any other Person
through the purchase of goods, supplies or services (or by way of stock
purchase, capital contribution, advance or loan) for the purpose of paying or
discharging the Indebtedness of any other Person or otherwise, except that the
foregoing restrictions shall not apply to:
(a) the Obligations.
(b) liabilities for taxes, assessments, governmental charges
or levies which are not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently conducted
if reserves adequate under generally accepted accounting principles
have been established therefor.
(c) endorsements of negotiable instruments for collection in
the ordinary course of business.
(d) Indebtedness incurred in the ordinary course of business
in connection with normal trade or business obligations which are
payable within 90 days of the occurrence thereof, provided, however,
that no Indebtedness shall be incurred by the Company to any Affiliate
other than in the ordinary course of business and upon substantially
the same or better terms as it could obtain in an arm's length
transaction with a Person who is not an Affiliate.
(e) Indebtedness of less than $100,000.00, in the aggregate,
incurred in the ordinary course of business.
(f) Indebtedness incurred in the ordinary course of business
for the purpose of leasing office space or equipment to be used in the
conduct of the business of the Company.
8. DEFAULTS; REMEDIES.
8.1 Events of Default. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):
(a) Failure to pay the principal of any Advance when due,
whether at stated maturity, by acceleration, or otherwise; or failure
to pay any installment of interest on any Advance or any other amount
due under this Agreement within ten (10) days after the due date; or
failure to pay, beyond any applicable grace period, the principal or
interest on any other indebtedness due the Lender; or
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(b) Failure of the Company to pay any sums due and payable
under the Master Repurchase Agreement or Company's breach or default of
any term, condition, covenant, or agreement of the Master Repurchase
Agreement and such default shall not have been remedied or waived
within ten (10) days after receipt of notice from the Lender of such
default; or
(c) Failure of the Company or any of its Subsidiaries to pay,
or any default in the payment of any principal or interest on, any
other Indebtedness or in the payment of any contingent obligation
beyond any period of grace provided; or breach or default with respect
to any other material term of any other Indebtedness of any loan
agreement, mortgage, indenture or other agreement relating thereto, if
the effect of such failure, default or breach is to cause, or to permit
the holder or holders thereof (or a trustee on behalf of such holder or
holders) to cause, Indebtedness of the Company or its Subsidiaries in
the aggregate amount of Fifty Thousand Dollars ($50,000.00) or more to
become or be declared due prior to its stated maturity (upon the giving
or receiving of notice, lapse of time, both, or otherwise) or failure
of the Company to comply with Section 6.11 hereof; or
(d) Any of the Company's representations or warranties made or
deemed made herein or in any other Loan Document, or in any statement
or certificate at any time given by the Company in writing pursuant
hereto or thereto shall be inaccurate or incomplete in any materially
adverse respect on the date as of which made or deemed made; or
(e) The Company shall default in the performance of or
compliance with any term or covenant contained in this Agreement and
such default shall not have been remedied or waived within thirty (30)
days after receipt of notice from the Lender of such default other than
those referred to above in Subsections 8.1(a), 8.1(b), 8.1(c), or
8.1(d); or
(f) (1) A court having jurisdiction shall enter a decree or
order for relief in respect of the Company or any of Company's
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect in respect
of the Company or any of Company's Subsidiaries, which decree or order
is not stayed; or a filing of an involuntary case under any applicable
bankruptcy, insolvency or other similar law in respect of the Company
or any of Company's Subsidiaries has occurred; or (2) any other similar
relief shall be granted under any applicable federal or state law; or a
decree or order of a court having jurisdiction for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over the Company or any of Company's
Subsidiaries, or over all or a substantial part of their respective
property, shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of the Company or any of
Company's Subsidiaries, for all or a substantial part of their
respective property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the
property of the Company or any of Company's Subsidiaries, and the
continuance of any such events in Subsections (1) and (2) above for
sixty (60) days unless dismissed or discharged; or
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(g) The Company or any of Company's Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion to an
involuntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by
the Company or any of Company's Subsidiaries of any assignment for the
benefit of creditors; or the failure of the Company or any of Company's
Subsidiaries, or the admission by any of them of its inability, to pay
its debts as such debts become due; or
(h) Any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of One
Hundred Thousand Dollars ($100,000.00) shall be entered or filed
against the Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event no later than
five (5) days prior to the date of any proposed sale thereunder; or
(i) Any order, judgment or decree shall be entered against the
Company decreeing the dissolution or split up of the Company and such
order shall remain undischarged or unstayed for a period in excess of
twenty (20) days; or
(j) Any Plan maintained by the Company or any of Company's
Subsidiaries shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States
district court to administer any Plan, or the Pension Benefit Guaranty
Corporation (or any successor thereto) shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan if as
of the date thereof the Company's or any Subsidiary's liability (after
giving effect to the tax consequences thereof) to the Pension Benefit
Guaranty Corporation (or any successor thereto) for unfunded guaranteed
vested benefits under the Plan exceeds the then current value of assets
accumulated in such Plan by more than One Hundred Thousand Dollars
($100,000.00) (or in the case of a termination involving the Company or
any of Company's Subsidiaries as a "substantial employer" (as defined
in Section 4001(a)(2) of ERISA) the withdrawing employer's
proportionate share of such excess shall exceed such amount); or
(k) The Company or any of Company's Subsidiaries as employer
under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount
exceeding One Hundred Thousand Dollars ($100,000.00); or
(l) The Company shall purport to disavow its obligations
hereunder or shall contest the validity or enforceability hereof, or
the Lender's security interest on any portion of the Collateral shall
become unenforceable or otherwise impaired; provided that, subject to
the Lender's approval, no Event of Default shall occur as a result of
such impairment if all
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Advances made against any such Collateral shall be paid in full within
ten (10) days of the date of such impairment; or
(m) The Company dissolves or terminates its existence, or
discontinues its usual business; or
(n) Any court shall find or rule, or the Company shall assert
or claim, (i) that the Lender does not have a valid, perfected,
enforceable Lien and security interest in the Collateral of the
priority as represented in this Agreement or in any other Loan
Document, or (ii) that this Agreement or any of the Loan Documents does
not or will not constitute the legal, valid, binding and enforceable
obligations of the party or parties (as applicable) thereto, or (iii)
that any Person has a conflicting or adverse Lien, claim or right in,
or with respect to, the Collateral and the Company is unable within 10
days to have such finding or ruling reversed or to have such adverse
Lien, claim or right removed; or
(o) The Company shall have concealed, removed, or permitted to
be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or shall
have made any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not
been paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal
proceedings or distraint or other process which is not vacated within
60 days from the date thereof; or
8.2 Remedies.
(a) Upon the occurrence of any Event of Default described in
Sections 8.1(f) or 8.1(g), the Commitment shall be terminated and all
Obligations of the Company shall automatically become due and payable,
without presentment for payment, demand, notice of non-payment,
protest, notice of protest, notice of intent to accelerate, notice of
acceleration, maturity, or any other notices or requirements of any
kind of Lender to the Company or any other Person liable thereon or
with respect thereto, all of which are hereby expressly waived by the
Company.
(b) Upon the occurrence of any Event of Default, other than
those described in Sections 8.1(f) or 8.1(g), the Lender may, by
written notice to the Company, terminate the Commitment and/or declare
all Obligations of the Company to be immediately due and payable,
whereupon the same shall forthwith become due and payable, together
with all accrued and unpaid interest thereon, and the obligation of the
Lender to make any Advances shall thereupon terminate.
(c) Upon the occurrence of any Event of Default, the Lender
may also do any of the following:
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(1) Foreclose upon or otherwise enforce its security
interest in and Lien on the Collateral to secure all payments
and performance of Obligations of the Company in any manner
permitted by law or provided for hereunder.
(2) Notify all obligors in respect of the Collateral
that the Collateral has been assigned to the Lender and that
all payments thereon are to be made directly to the Lender or
such other party as may be designated by the Lender; settle,
compromise, or release, in whole or in part, any amounts owing
on the Collateral, any such obligor or any Investor or any
portion of the Collateral, on terms acceptable to the Lender;
enforce payment and prosecute any action or proceeding with
respect to any and all Collateral; and where any such
Collateral is in default, foreclose on and enforce security
interests in, such Collateral by any available judicial
procedure or without judicial process and sell property
acquired as a result of any such foreclosure.
(3) Act, or contract with a third party to act, as
servicer or subservicer of each item of Collateral requiring
servicing and perform all obligations required in connection
with Purchase Commitments, such third party's fees to be paid
by the Company.
(4) Require the Company to assemble the Collateral
and/or books and records relating thereto and make such
available to the Lender at a place to be designated by the
Lender.
(5) Enter onto property where any Collateral or books
and records relating thereto are located and take possession
thereof with or without judicial process.
(6) Prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the
Lender deems appropriate.
(7) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of Texas or other
applicable law, including, but not limited to, selling or
otherwise disposing of the Collateral, or any part thereof, at
one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit
or future delivery, on such terms and in such manner as the
Lender may determine, including, without limitation, sale
pursuant to any applicable Purchase Commitment. If notice is
required under such applicable law, the Lender will give the
Company not less than ten (10) days' notice of any such public
sale or of the date after which private sale may be held. The
Company agrees that ten (10) days' notice shall be reasonable
notice. The Lender may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed
for the sale, and such sale may be made at any time or place
to which the same may be so adjourned. In case of any sale of
all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Lender
until the selling price is paid by the purchaser thereof, but
the Lender shall not incur any liability in case of the
failure of
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such purchaser to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may again be
sold upon like notice. The Lender may, however, instead of
exercising the power of sale herein conferred upon it, proceed
by a suit or suits at law or in equity to collect all amounts
due upon the Collateral or to foreclose the pledge and sell
the Collateral or any portion thereof under a judgment or
decree of a court or courts of competent jurisdiction, or
both.
(8) Proceed against the Company on the Note.
(d) The Lender shall incur no liability as a result of the
sale or other disposition of the Collateral, or any part thereof, at
any public or private sale or disposition. The Company hereby waives
(to the extent permitted by law) any claims it may have against the
Lender arising by reason of the fact that the price at which the
Collateral may have been sold at such private sale was less than the
price which might have been obtained at a public sale or was less than
the aggregate amount of the outstanding Advances and the unpaid
interest accrued thereon, even if the Lender accepts the first offer
received and does not offer the Collateral to more than one offeree and
none of the actions described herein shall render Lender's disposition
of the Collateral in such a manner as commercially unreasonable.
(e) The Company specifically waives (to the extent permitted
by law) any equity or right of redemption, all rights of redemption,
stay or appraisal which the Company has or may have under any rule of
law or statute now existing or hereafter adopted, and any right to
require the Lender to (1) proceed against any Person, (2) proceed
against or exhaust any of the Collateral or pursue its rights and
remedies as against the Collateral in any particular order, or (3)
pursue any other remedy in its power. The Lender shall not be required
to take any steps necessary to preserve any rights of the Company
against holders of mortgages prior in lien to the Lien of any Mortgage
included in the Collateral or to preserve rights against prior parties.
(f) The Lender may, but shall not be obligated to, advance any
sums or do any act or thing necessary to uphold and enforce the Lien
and priority of, or the security intended to be afforded by, any
Mortgage included in the Collateral, including, without limitation,
payment of delinquent taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Lender in exercising
any right, power or remedy conferred by this Agreement, or in the
enforcement hereof, together with interest thereon, at the Default
Rate, from the time of payment until repaid, shall become a part of the
principal balance outstanding hereunder and under the Note.
(g) No failure on the part of the Lender to exercise, and no
delay in exercising, any right, power or remedy provided hereunder, at
law or in equity shall operate as a waiver thereof; nor shall any
single or partial exercise by the Lender of any right, power or remedy
provided hereunder, at law or in equity preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
Without intending to limit the foregoing, all defenses based on the
statute of limitations are hereby waived by the Company to the extent
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permitted by law. The remedies herein provided are cumulative and are
not exclusive of any remedies provided at law or in equity.
8.3 Application of Proceeds. The proceeds of any sale, disposition
or other enforcement of the Lender's security interest in all or any part of the
Collateral shall be applied by the Lender:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Lender's
agents and counsel, and all expenses, liabilities and advances made or
incurred by or on behalf of the Lender in connection therewith;
Second, to the payment of any other amounts due (other than
principal and interest) under the Note or this Agreement;
Third, to the payment of interest accrued and unpaid on the
Note;
Fourth, to the payment of the outstanding principal balance of
the Note; and
Finally, to the payment to the Company, or to its successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
If the proceeds of any such sale, disposition or other enforcement are
insufficient to cover the costs and expenses of such sale, as aforesaid, and the
payment in full of all Obligations of the Company, the Company shall remain
liable for any deficiency.
8.4 Lender Appointed Attorney-in-Fact. The Lender is hereby
appointed the attorney-in-fact of the Company, with full power of substitution,
for the purpose of carrying out the provisions hereof and taking any action and
executing any instruments which the Lender 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, the Lender shall have the right and power to give notices of its
security interest in the Collateral to any Person, either in the name of the
Company or in its own name, to endorse all Pledged Mortgages or Pledged
Securities payable to the order of the Company, to change or cause to be changed
the book-entry registration or name of subscriber or Investor on any Pledged
Security, or to receive, endorse and collect all checks made payable to the
order of the Company representing any payment on account of the principal of or
interest on, or the proceeds of sale of, any of the Pledged Mortgages or Pledged
Securities and to give full discharge for the same.
8.5 Right of Set-Off. If the Company shall default in the payment
of the Note, any interest accrued thereon, or any other sums which may become
payable hereunder when due, or in the performance of any of its other
Obligations under this Agreement, the Lender, shall have the right, at any time
and from time to time, without notice, to set-off and to appropriate or apply
any and all property or indebtedness of any kind at any time held or owing by
the Lender to or for the credit of the account of the Company (excluding any
monies held by the Company in trust for third parties) against and on account of
the Obligations, irrespective of whether or not the Lender shall have made any
demand hereunder and whether or not said Obligations shall have matured;
provided,
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however, that the Lender shall not be allowed to set-off against funds in
accounts with respect to which (i) the Company is a trustee or an escrow agent
in respect of bona fide third parties other than Affiliates, and (ii) such trust
or escrow arrangement was so denominated at the time of the creation of such
account.
9. NOTICES.
All notices, demands, consents, requests and other communications
required or permitted to be given or made hereunder (collectively, "Notices")
shall, except as otherwise expressly provided hereunder, be in writing and shall
be delivered in person or mailed, first class, return receipt requested, postage
prepaid, or delivered by overnight courier, addressed to the respective parties
hereto at their respective addresses hereinafter set forth or, as to any such
party, at such other address as may be designated by it in a Notice to the
other. All Notices shall be conclusively deemed to have been properly given or
made when duly delivered, in person or by overnight courier, or if mailed on the
third Business Day after being deposited in the mails, addressed as follows:
If to the Company: E-LOAN, INC.
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender: Bank United
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
Mortgage Banker Financing
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Bank United
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director, Mortgage Banker
Financing
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and: Bank United
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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10. REIMBURSEMENT OF EXPENSES; INDEMNITY.
The Company shall: (a) pay all out-of-pocket costs and expenses of the
Lender, including, without limitation, reasonable attorneys' fees, in connection
with the preparation, negotiation, documentation, enforcement and administration
of this Agreement, the Note, and other Loan Documents and the making and
repayment of the Advances and the payment of interest thereon; provided,
however, costs and expenses of Lender for attorneys fees in connection with the
preparation, negotiation and documentation of the lending transaction evidenced
by this Agreement shall not exceed $3,000.00 plus the reasonable expenses of
Lender's counsel; (b) pay, and hold the Lender and any holder of the Note
harmless from and against, any and all present and future stamp, documentary
and other similar taxes with respect to the foregoing matters and save the
Lender and the holder or holders of the Note harmless from and against any and
all liabilities with respect to or resulting from any delay or omission to pay
such taxes; (C) INDEMNIFY, PAY AND HOLD HARMLESS THE LENDER AND ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS AND ANY SUBSEQUENT HOLDER OF THE NOTE
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND
WHATSOEVER (THE "INDEMNIFIED LIABILITIES") (INCLUDING, WITHOUT LIMITATION,
INDEMNIFIED LIABILITIES RESULTING, IN WHOLE OR IN PART, FROM LENDER'S OWN
NEGLIGENCE OR STRICT LIABILITY) WHICH MAY BE IMPOSED UPON, INCURRED BY OR
ASSERTED AGAINST THE LENDER OR SUCH HOLDER IN ANY WAY RELATING TO OR ARISING
OUT OF THIS AGREEMENT, THE NOTE, OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY TO THE EXTENT THAT ANY SUCH
INDEMNIFIED LIABILITIES RESULT (DIRECTLY OR INDIRECTLY) FROM ANY CLAIMS MADE,
OR ANY ACTIONS, SUITS OR PROCEEDINGS COMMENCED OR THREATENED, BY OR ON BEHALF
OF ANY CREDITOR (EXCLUDING THE LENDER AND THE HOLDER OR HOLDERS OF THE NOTE),
SECURITY HOLDER, SHAREHOLDER, CUSTOMER (INCLUDING, WITHOUT LIMITATION, ANY
PERSON HAVING ANY DEALINGS OF ANY KIND WITH THE COMPANY), TRUSTEE, DIRECTOR,
OFFICER, EMPLOYEE AND/OR AGENT OF THE COMPANY ACTING IN SUCH CAPACITY, THE
COMPANY OR ANY GOVERNMENTAL REGULATORY BODY OR AUTHORITY. THE FOREGOING
INDEMNITY SHALL NOT APPLY TO THE EXTENT THE INDEMNIFIED LIABILITIES RESULT FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER OR LENDER'S OWN
VIOLATIONS OF REGULATIONS APPLICABLE TO IT. THE AGREEMENT OF THE COMPANY
CONTAINED IN THIS SUBSECTION (C) SHALL SURVIVE THE EXPIRATION OR TERMINATION OF
THIS AGREEMENT AND THE PAYMENT IN FULL OF THE NOTE. ATTORNEYS' FEES AND
DISBURSEMENTS INCURRED IN ENFORCING, OR ON APPEAL FROM, A JUDGMENT PURSUANT
HERETO SHALL BE RECOVERABLE SEPARATELY FROM AND IN ADDITION TO ANY OTHER AMOUNT
INCLUDED IN SUCH JUDGMENT, AND THIS CLAUSE IS INTENDED TO BE SEVERABLE FROM THE
OTHER PROVISIONS OF THIS
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AGREEMENT AND TO SURVIVE AND NOT BE MERGED INTO SUCH JUDGMENT.
11. FINANCIAL INFORMATION.
All financial statements and reports furnished to the Lender hereunder
shall be prepared in accordance with GAAP, applied on a basis consistent with
that applied in preparing the financial statements as at, and for the period
ended, the Statement Date (except to the extent otherwise required to conform to
good accounting practice).
12. MISCELLANEOUS.
12.1 Terms Binding Upon Successors; Survival of Representations.
The terms and provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
All representations, warranties, covenants and agreements herein contained on
the part of the Company shall survive the making of any Advance and the
execution of the Note, and shall be effective so long as the Commitment is
outstanding hereunder or there remain any Obligations of the Company hereunder
or under the Note to be paid or performed.
12.2 Assignment. This Agreement may not be assigned by the Company.
The Lender may assign, at any time, in whole or in part, its rights and delegate
its obligations under this Agreement and the other Loan Documents, along with
the Lender's security interest in any or all of the Collateral, and any assignee
thereof may enforce this Agreement and the other Loan Documents, and such
security interest.
12.3 Amendments. Except as otherwise provided in this Agreement,
this Agreement may not be amended, modified or supplemented unless such
amendment, modification or supplement is set forth in a writing signed by the
parties hereto.
12.4 Governing Law. This Agreement and the other Loan Documents
shall be governed by the laws of the State of Texas, without reference to its
principles of conflicts of laws.
12.5 Participations. The Lender may at any time sell, assign or
grant participations in, or otherwise transfer to any other Person (a
"Participant"), all or part of the Obligations of the Company under this
Agreement. Without limitation of the exclusive right of the Lender to collect
and enforce such Obligations, the Company agrees that each disposition will give
rise to a debtor-creditor relationship of the Company to the Participant, and
the Company authorizes each Participant, upon the occurrence of an Event of
Default, to proceed directly by right of setoff, banker's lien, or otherwise,
against any assets of the Company which may be in the hands of such Participant.
The Company authorizes the Lender to disclose to any prospective Participant and
any Participant any and all information in the Lender's possession concerning
the Company, this Agreement and the Collateral.
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12.6 Relationship of the Parties. This Agreement provides for the
making of Advances by the Lender, in its capacity as a lender, to the Company,
in its capacity as a borrower, and for thepayment of interest, repayment of
principal by the Company to the Lender, and for the payment of certain fees by
the Company to the Lender. The relationship between the Lender and the Company
is limited to that of creditor/secured party, on the one hand, and debtor, on
the other hand. The provisions herein for compliance with financial covenants
and delivery of financial statements are intended solely for the benefit of the
Lender to protect its interests as lender in assuring payments of interest and
repayment of principal and payment of certain fees, and nothing contained in
this Agreement shall be construed as permitting or obligating the Lender to act
as a financial or business advisor or consultant to the Company, as permitting
or obligating the Lender to control the Company or to conduct the Company's
operations, as creating any fiduciary obligation on the part of the Lender to
the Company, or as creating any joint venture, agency, or other relationship
between the parties hereto other than as explicitly and specifically stated in
this Agreement. The Company acknowledges that it has had the opportunity to
obtain the advice of experienced counsel of its own choosing in connection with
the negotiation and execution of this Agreement and to obtain the advice of such
counsel with respect to all matters contained herein, including, without
limitation, the provision for waiver of trial by jury. The Company further
acknowledges that it is experienced with respect to financial and credit matters
and has made its own independent decisions to apply to the Lender for credit and
to execute and deliver this Agreement.
12.7 Severability. If any provision of this Agreement shall be
declared to be illegal or unenforceable in any respect, such illegal or
unenforceable provision shall be and become absolutely null and void and of no
force and effect as though such provision were not in fact set forth herein, but
all other covenants, terms, conditions and provisions hereof shall nevertheless
continue to be valid and enforceable.
12.8 Usury. It is the intent of Lender and the Company in the
execution and performance of this Agreement and the Note or any Loan Document to
remain in strict compliance with Applicable Law from time to time in effect. In
furtherance thereof, Lender and the Company stipulate and agree that none of the
terms and provisions contained in the Note, this Agreement or any Loan Document
shall ever be construed to create a contract to pay for the use, forbearance or
detention of money with interest at a rate or in an amount in excess of the
Maximum Rate or amount of interest permitted to be charged under Applicable Law.
For purposes of this Agreement, the Note and any other Loan Document, "interest"
shall include the aggregate of all charges which constitute interest under
Applicable Law that are contracted for, taken, charged, reserved, or received
under this Agreement, the Note or any other Loan Document. The Company shall
never be required to pay unearned interest or interest at a rate or in an amount
in excess of the Maximum Rate or amount of interest that may be lawfully charged
under Applicable Law, and the provisions of this paragraph shall control over
all other provisions of this Agreement and the Note or any Loan Document, which
may be in actual or apparent conflict herewith. If the Note is prepaid, or if
the maturity of the Note is accelerated for any reason, or if under any other
contingency the effective rate or amount of interest which would otherwise be
payable under the Note would exceed the Maximum Rate or amount of interest
Lender or any other holder of the Note is allowed by Applicable Law to charge,
contract for, take, reserve or receive, or in the event Lender or any holder of
the Note shall charge, contract for, take, reserve or receive monies that are
deemed to constitute interest which would, in
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the absence of this provision, increase the effective rate or amount of interest
payable under the Note to a rate or amount in excess of that permitted to be
charged, contracted for, taken, reserved or received under Applicable Law then
in effect, then the principal amount of the Note or the amount of interest which
would otherwise be payable under the Note or both shall be reduced to the amount
allowed under Applicable Law as now or hereinafter construed by the courts
having jurisdiction, and all such moneys so charged, contracted for, taken,
reserved or received that are deemed to constitute interest in excess of the
Maximum Rate or amount of interest permitted by Applicable Law shall immediately
be returned to or credited to the account of the Company upon such
determination. Lender and the Company further stipulate and agree that, without
limitation of the foregoing, all calculations of the rate or amount of interest
contracted for, charged, taken, reserved or received under the Note which are
made for the purpose of determining whether such rate or amount exceeds the
Maximum Rate, shall be made to the extent not prohibited by Applicable Law, by
amortizing, prorating, allocating and spreading during the period of the full
stated term of the Note, all interest at any time contracted for, charged,
taken, reserved or received from the Company or otherwise by Lender or any other
holder of the Note.
12.9 CONSENT TO JURISDICTION. SUBJECT TO THE PROVISIONS OF SECTION
12.9 OF THIS AGREEMENT, THE COMPANY HEREBY AGREES THAT ANY ACTION OR PROCEEDING
UNDER THIS AGREEMENT, THE NOTE OR ANY DOCUMENT DELIVERED PURSUANT HERETO MAY BE
COMMENCED AGAINST IT IN ANY COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF
TEXAS, BY SERVICE OF PROCESS UPON THE COMPANY BY FIRST CLASS REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE COMPANY AT ITS
ADDRESS LAST KNOWN TO THE LENDER. THE COMPANY AGREES THAT ANY SUCH SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER SUCH
DOCUMENT MAY BE INSTITUTED IN ▇▇▇▇▇▇ COUNTY, STATE DISTRICT COURT OR IN THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF TEXAS AT THE OPTION OF THE
LENDER; AND THE COMPANY HEREBY WAIVES ANY OBJECTION TO THE VENUE, OR ANY CLAIM
AS TO INCONVENIENT FORUM, OF ANY SUCH SUIT, ACTION OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDER TO ACCOMPLISH SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION OR COURT.
12.10 Arbitration. To the maximum extent not prohibited by law, any
controversy, dispute or claim arising out of, in connection with, or relating to
the Commitment or the Loan Documents or any transaction provided for therein,
including but not limited to any claim based on or arising from an alleged tort
or an alleged breach of any agreement contained in any of the Loan Documents,
shall, at the request of any party to the Loan Documents (either before or after
the commencement of judicial proceedings), be settled by arbitration pursuant to
Title 9 of the United States Code, which the parties hereto acknowledge and
agree applies to the transaction involved herein, and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"). If Title 9 of the United States Code is inapplicable to any such claim,
dispute or controversy for any reason, such arbitration shall be conducted
pursuant to the Texas General Arbitration Act and in accordance with the
Commercial Arbitration Rules of the AAA. In any such arbitration proceeding: (i)
all statutes of limitations which would otherwise be applicable shall apply; and
(ii) the proceeding shall be conducted in Houston, Texas, by a single
arbitrator, if the amount in controversy is $1,000,000.00 or less, or by a panel
of three arbitrators if the amount in controversy is over $1,000,000.00. All
arbitrators shall be selected by the process of appointment
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from a panel pursuant to Section 13 of the AAA Commercial Arbitration Rules and
each arbitrator shall be either an active attorney, a mortgage banker or retired
judge with an AAA acknowledged expertise in the subject matter of the
controversy, dispute or claim. Any award rendered in any such arbitration
proceeding shall be final and binding, and judgment upon any such award may be
entered in any court having jurisdiction.
If any party to any Loan Document files a proceeding in any court to
resolve any such controversy, dispute or claim, such action shall not constitute
a waiver of the right of such party or a bar to the right of any other party to
seek arbitration under the provisions of this Section of that or any other
claim, dispute or controversy, and the court shall, upon motion of any party to
the proceeding, direct that such controversy, dispute or claim be arbitrated in
accordance with this Section.
Notwithstanding any of the foregoing, the parties hereto agree that no
arbitrator or panel of arbitrators shall possess or have the power to (i) assess
punitive damages, (ii) dissolve, rescind or reform (except that the arbitrator
may construe ambiguous terms) any Loan Document, (iii) enter judgment on the
debt, (iv) exercise equitable powers or issue or enter any equitable remedies
with respect to matters submitted to arbitration, or (v) allow discovery of
attorney/client privileged information. The Commercial Arbitration Rules of the
AAA are hereby modified to this extent for the purpose of arbitration of any
dispute, controversy or claim arising out of, in connection with, or relating to
the Loan or any Loan Document. The parties hereby further agree to waive, each
to the other, any claims for punitive damages and agree neither an arbitrator
nor any court shall have the power to assess such damages.
No provision of, or the exercise of any rights under, this Section
shall limit or impair the right of any party to any Loan Document before, during
or after any arbitration proceeding to: (i) exercise self-help remedies such as
setoff or repossession; (ii) foreclose (judicially or otherwise) any Lien on or
security interest in any real or personal Collateral; or (iii) obtain emergency
relief from a court of competent jurisdiction to prevent the dissipation,
damage, destruction, transfer, hypothecation, pledging or concealment of assets
or of Collateral securing any Indebtedness, obligation or guaranty referenced in
any Loan Document. Such emergency relief may be in the nature of, but is not
limited to: pre-judgment attachments, garnishments, sequestrations, appointments
of receivers, or other emergency injunctive relief to preserve the status quo.
12.11 ADDITIONAL INDEMNITY. IN ADDITION TO THE INDEMNITY PROVIDED IN
SECTION 10, THE COMPANY SHALL INDEMNIFY AND HOLD THE LENDER, ITS SUCCESSORS,
ASSIGNS, AGENTS, AND EMPLOYEES, HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
ACTIONS, SUITS, PROCEEDINGS, COSTS, EXPENSES, DAMAGES, FINES, PENALTIES, AND
LIABILITIES, INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND COSTS, ARISING
OUT OF, CONNECTED WITH, OR RESULTING FROM (A) THE OPERATION OF THE COMPANY'S
BUSINESSES, (B) THE LENDER'S PRESERVATION OR ATTEMPTED PRESERVATION OF
COLLATERAL, AND (C) ANY FAILURE OF THE SECURITY INTERESTS AND LIENS IN THE
COLLATERAL GRANTED TO THE LENDER PURSUANT TO THIS AGREEMENT TO BE OR TO REMAIN
PERFECTED OR TO
Page 51
57
HAVE THE PRIORITY AS CONTEMPLATED THEREIN REGARDLESS OF WHETHER THE CLAIM IS
CAUSED BY OR ARISES OUT OF, IN WHOLE OR IN PART, THE NEGLIGENCE OF THE LENDER OR
MAY BE BASED ON THE STRICT LIABILITY OF THE LENDER. THIS INDEMNITY SHALL NOT
APPLY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES
OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER. AT THE LENDER'S
REQUEST, THE COMPANY SHALL, AT ITS OWN COST AND EXPENSE, DEFEND OR CAUSE TO BE
DEFENDED ANY AND ALL SUCH ACTIONS OR SUITS THAT MAY BE BROUGHT AGAINST THE
LENDER AND, IN ANY EVENT, SHALL SATISFY, PAY, AND DISCHARGE ANY AND ALL
JUDGMENTS, AWARDS, PENALTIES, COSTS, AND FINES THAT MAY BE RECOVERED AGAINST THE
LENDER IN ANY SUCH ACTION, PLUS ALL ATTORNEYS' FEES AND COSTS RELATED THERETO TO
THE EXTENT PERMITTED BY APPLICABLE LAW; PROVIDED, HOWEVER, THAT THE LENDER SHALL
GIVE THE COMPANY (TO THE EXTENT THE LENDER SEEKS INDEMNIFICATION THEREFOR FROM
THE COMPANY UNDER THIS SECTION 12.11) WRITTEN NOTICE OF ANY SUCH CLAIM, DEMAND,
OR SUIT AFTER THE LENDER HAS RECEIVED WRITTEN NOTICE THEREOF, AND THE LENDER
SHALL NOT SETTLE ANY SUCH CLAIM, DEMAND, OR SUIT, IF THE LENDER SEEKS
INDEMNIFICATION THEREFOR FROM THE COMPANY, WITHOUT FIRST GIVING NOTICE TO THE
COMPANY OF THE LENDER'S DESIRE TO SETTLE AND OBTAINING THE CONSENT OF THE
COMPANY TO THE SAME, WHICH CONSENT THE COMPANY HEREBY AGREES NOT TO UNREASONABLY
WITHHOLD. ALL OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 12.11 SHALL SURVIVE
THE PAYMENT OF THE NOTE AND THE OBLIGATIONS.
12.12 No Waivers Except in Writing. No failure or delay on the part
of the Lender in exercising any power or right hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. No notice to or demand on
the Company or any other Person in any case shall entitle the Company or such
other Person to any other or further notice or demand in similar or other
circumstances.
12.13 Waiver of Jury Trial. Company hereby expressly waives any
right to a trial by jury in any action or legal proceeding arising out of or
relating to this Agreement or any other Loan Document for the transactions
contemplated hereby or thereby.
12.14 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which, taken together, shall constitute one and
the same instrument.
12.15 No Third Party Beneficiaries. This Agreement is for the sole
and exclusive benefit of the Company and Lender. This Agreement does not create,
and is not intended to create, any rights in favor of or enforceable by any
other Person. This Agreement may be amended or modified
Page 52
58
by the agreement of the Company and Lender, without any requirement or necessity
for notice to, or the consent of or approval of any other Person.
12.16 RELEASE OF LENDER LIABILITY. TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW FROM TIME TO TIME IN EFFECT, THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY (AND AFTER IT HAS CONSULTED WITH ITS OWN ATTORNEY)
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT NO CLAIM MAY BE MADE BY THE COMPANY
AGAINST THE LENDER OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS,
ACCOUNTANTS, AGENTS OR INSURERS, OR ANY OF ITS OR THEIR SUCCESSORS AND ASSIGNS,
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED ON CONTRACT OR TORT OR
DUTY IMPOSED BY LAW) ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS
CONTEMPLATED BY ANY OF THIS AGREEMENT, THE NOTE, OR ANY OTHER LOAN DOCUMENTS, OR
ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH. IN
FURTHERANCE OF THE FOREGOING, THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT
TO ▇▇▇ UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER
OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
12.17 Entire Agreement; Amendment. This Agreement, the Note, and the
other Loan Documents referred to herein embody the final, entire Agreement among
the parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof. The provisions of this Agreement and the other Loan
Documents to which the Company is a party may be amended or waived only by an
instrument in writing signed by the parties hereto.
12.18 NO ORAL AGREEMENTS. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
E-LOAN, INC.
a California corporation
By: /s/ signature illegible
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director,
Mortgage Banking
Page 53
59
BANK UNITED
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
EXHIBITS:
A - Advance Request
B - Existing Company Indebtedness
C - Procedures and Documentation for Warehousing Single-family Mortgage Loans
D - Shipping Instructions
E - Trust Receipt
F - Officer's Certificate
G - Subsidiaries
H - Litigation
I - Trade Names
J - Secretary's Certificate
K - Bailee Letter
L - Investors
M - Legal Opinion
N - Note
Page 54
60
EXHIBIT "A"
REQUEST FOR ADVANCE SINGLE-FAMILY MORTGAGE LOANS
Mortgage Company: E-LOAN, INC. Loan Number:
Mortgagor: Prepared By:
---------------------- --------------------------
Address: Warehouse Date:
---------------------- -----------------------
Social Security No.: Loan Type (check all that apply):
------------ -----
Advance Type (check all that apply):
Jumbo Conventional
--- ---
Wet Settlement Advance VA FHA
------ --- ---
Dry Settlement Advance First Second
------ --- ---
Interest Rate:
Note Amount: ---------
------------------- Requested Warehouse
Note Date: Amount:
--------------------- ----------
Credit Rating: Investor Expiration Date:
------------------ -----------
Investor:
----------------------
Investor Takeout Price:
---------
Purchase Commitment No.:
--------
METHOD OF ADVANCE
( ) Wire Transfer (see attached instructions) Amount of Wire/Check:$
( ) Check No. Date of Wire/Check:
Page 55
61
REQUIRED DOCUMENTATION
(in addition to this Advance Request)
Attached please find the following documents in connection with the above
request:
Wet Settlement Advance
o Copy of check funding the Single-family Mortgage Loan, if not funded by
wire transfer.
o Copy of closing instructions to title company or closing agent, noting
Lender's security interest in the Single-family Mortgage Loan.
o Copy of specific Purchase Commitment.
Dry Settlement Advance
o Copy of check funding the Single-family Mortgage Loan, if not funded by
wire transfer.
o Original Mortgage Note, endorsed in blank.
o Certified copy of Mortgage.
o Recordable Assignment of Mortgage (in blank).
o Certified copies of all interim Assignments (if
applicable).
o Copy of specific Purchase Commitment.
BAILEE PLEDGE
The Company creates and grants in favor and for the benefit of the
Lender a security interest in and to the Single-family Mortgage Loans listed
above and all instruments and documents described as Required Documentation
above.
The Company has given to ___________________________________ ("Closing
Agent") who has possession of such instruments and documents, notice of the
foregoing described security interest in favor of the Lender.
The Company further agrees to deliver the documents described above to
Lender, immediately upon the request of the Lender (whether written or oral),
but in any event, on or before five (5) Business Days from the date hereof.
The Company further agrees that this Agreement shall be binding upon
and inure to the benefit of the legal representatives, successors or assigns of
the Lender.
The Company further agrees that all rights, interests, duties and
liabilities arising hereunder shall be determined according to the laws of the
State of Texas.
Executed as of the ____________ day of ____________________, 199__.
E-LOAN, INC., a California corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT "A"
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62
EXHIBIT "B"
LIST OF EXISTING INDEBTEDNESS OF COMPANY
=========================================================================================
LENDER TYPE OF FINANCING COMMITMENT COLLATERAL AVERAGE BALANCE
AMOUNT OUTSTANDING AS OF
DECEMBER 31, 1998
=========================================================================================
G.E. Warehouse 15 million 10 million
-----------------------------------------------------------------------------------------
Greenwich Warehouse 35 milliion 25 million
=========================================================================================
EXHIBIT "B"
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EXHIBIT "C"
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
SINGLE-FAMILY MORTGAGE LOANS
The following procedures and documentation requirements must be
observed in all respects by the Company. All documents must be satisfactory to
Lender in its sole discretion. Terms used below, which are not otherwise
defined, shall have the meanings given them in the Warehousing Credit and
Security Agreement, as amended, modified or renewed from time to time. The HUD,
FNMA and FHLMC form numbers referred to herein are for convenience only and the
Company shall use the equivalent forms required at the time of delivery of the
Mortgage Loans or Mortgage-backed Securities.
I. Prior to making an Advance that is not a Wet Settlement Advance, the
Lender must receive the following:
(1) Copy of settlement or funding check issued to, or signed wire
transfer request directing funds to escrow/title company or
closing agent.
(2) If not an Electronic Request, Original Request for Advance
against Single-Family Mortgage Loans (Exhibit "A").
(3) Original signed Mortgage Note, endorsed by the Company in
blank with corresponding interim endorsements, if applicable.
(4) Copy of the Mortgage certified true by the escrow/title
company or closing agent.
(5) Certified true copies of all interim assignments (recorded or
sent for recordation) of the Mortgage.
(6) An Assignment of the Mortgage to the Lender in recordable form
but unrecorded.
(7) Copy of specific Purchase Commitment.
II. Prior to making a Wet Settlement Advance, the Lender must receive the
following:
(1) Copy of settlement or funding check issued to, or signed wire
transfer request directing funds to escrow/title company or
closing agent.
(2) If not an Electronic Request, Original Request for Advance
against Single-Family Mortgage Loans (Exhibit "A").
(3) Copy of specific Purchase Commitment.
EXHIBIT "C"
Page 58
64
(4) A copy of the Company's final closing instructions to the
title company or closing agent, noting Lender's security
interest in the loan, as provided below:
"You are hereby notified that Bank United, a federal savings
bank (the "Lender") has a security interest in the promissory
note, the deed of trust or mortgage, and all other supporting
documents for the above referenced loan. Unless the Lender
otherwise instructs you, all loan documents are to be returned
to the undersigned company within twenty-four (24) hours after
settlement."
The Mortgage Note and other supporting documents described in Section I
must be received by the Lender within five (5) Business Days of the
date of the Wet Settlement Advance.
III. The Lender exclusively shall deliver Pledged Mortgages or Pledged
Securities and all related loan documents and/or pool documents to
Investor or Approved Custodian unless otherwise agreed in writing.
A. The following procedures are to be followed for deliveries of
Pledged Mortgages to Investors:
No later than 2:00 p.m. Houston, Texas time one (1) Business Day prior
to the expiration date of the Purchase Commitment, the Lender must receive the
following:
(1) Signed or electronic shipping instructions for the delivery of
the Pledged Mortgages including the following:
(a) Name and address of the office of the Investor to
which the loan documents are to be shipped and the
preferred method of delivery;
(b) Instructions for endorsement of the Mortgage Note;
(c) Names of Mortgagor and Mortgage Note Amounts of
Pledged Mortgages to be shipped; and
(d) Number and expiration date of the Purchase
Commitment.
(2) All loan documents related to the Pledged Mortgages required
for delivery to the Investor.
(3) For deliveries of Pledged Mortgages to FNMA for cash purchase,
the following additional documents are required:
a) Original Loan Schedule (FNMA Form 1068 or 1069)
showing the Lender's designated FNMA payee code as
recipient of the loan purchase proceeds.
(4) For deliveries of Pledged Mortgages to FHLMC for cash
purchase, the following additional documents are required:
EXHIBIT "C"
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65
a) Original completed Warehouse Lender Release of
Security Interest (FHLMC Form 996) to be executed by
the Lender.
b) Original Wire Transfer Authorization for a Cash
Warehouse Delivery (FHLMC Form 987), designating the
Lender as the Warehouse Lender and showing the cash
collateral account designated by the Lender as the
receiving account for loan purchase proceeds.
B. The following procedures are to be followed for deliveries of
Pledged Mortgages to Approved Custodians:
No later than one (1) Business Day prior to required delivery date to
the Approved Custodian, the Lender must receive the following:
1. Signed or electronic shipping instructions for the delivery of
the Pledged Mortgages to the Approved Custodian including the
following:
a) Name and address of the office of the Approved
Custodian to which the loan documents are to be
shipped and the preferred method of delivery;
b) Instructions for endorsement of the Mortgage Note;
and
c) Names of Mortgagor and Mortgage Note Amounts of
Pledged Mortgages to be shipped.
d) Commitment number and expiration date of the Purchase
Commitment for the Pledged Securities.
2. All loan documents related to the Pledged Mortgages required
for the issuance of the Mortgage-backed Securities.
3. For FNMA Mortgage-backed Securities issuance, the following
additional documents are required:
a) Original Schedule of Mortgages (FNMA Form 2005 or
2025).
b) Original executed Security Release Certification
(FNMA Form 2004) to be executed by the Lender.
c) Original Delivery Schedule (FNMA Form 2014),
instructing FNMA to issue the Mortgage-backed
Securities in the name of the Company with the Lender
as pledgee and to deliver the Mortgage-backed
Securities to the Lender's custody account at
Banker's Trust (Account No. 92798) and bearing the
following instructions: These instructions may not be
changed without the prior written consent of Bank
United.
EXHIBIT "C"
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66
4. For FHLMC Mortgage-backed Securities issuance, the following
additional documents are required:
a) Original Settlement Information and Delivery
Authorization (FHLMC Form 939), designating the
Lender as the Warehouse Lender and instructing FHLMC
to deliver the Mortgage-backed Securities to the
Lender's custody account at Banker's Trust, Account
No. 92798.
5. For GNMA Mortgage-backed Securities issuance, the following
additional documents are required:
a) Signed original Schedule of Mortgages (HUD Form
11706).
b) Signed original Schedule of Subscribers (HUD Form
11705) instructing GNMA to issue the Mortgage-backed
Securities in the name of the Company and designating
Bankers Trust as Agent for the Lender as the
subscriber, using the following language: BANKERS
TRUST AS AGENT FOR BANK UNITED and deliver the
Mortgage-backed Securities to the Lender's custody
Account No. 92798 at Bankers Trust. The following
instructions must also be included on the form:
"These instructions may not be changed without the
prior written consent of Bank United."
c) Completed original Release of Security Interest (HUD
Form 11711A) to be executed by the Lender.
Upon instruction by the Company, the Lender will complete the
endorsement of the Mortgage Note and make arrangements for the delivery
of the complete loan package with the appropriate Bailee Letter to the
Investor or Approved Custodian. Upon receipt of Mortgage-backed
Securities, the Lender will cause such Mortgage-backed Securities to be
delivered to the Investor which issued the Purchase Commitment.
Mortgage-backed Securities will be released to the Investor only upon
payment of the purchase proceeds to the Lender. Cash proceeds of sales
of Pledged Mortgages and Pledged Securities shall be applied to related
Advances outstanding under the Commitment. Provided no Default exists,
the Lender shall return any excess proceeds of the sale of Mortgage
Loans or Mortgage-backed Securities to the Company, unless otherwise
instructed in writing.
EXHIBIT "C"
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EXHIBIT "D"
FORM OF SHIPPING REQUEST AND AUTHORIZATION
[Company Letterhead]
Date:
BANK UNITED
[Address]
Attention: Re: Commitment No.
This letter is to serve as authorization for you to endorse and ship Loan
Documents for the following loans:
LOAN NUMBER BORROWER NAME NOTE AMOUNT
----------- ------------- -----------
to the following address:
NAME:
ADDRESS:
ATTENTION:
Please endorse the notes as follows:
Please ship the Loan Documents either by _________________________ or by such
other courier service we have specifically approved in writing. You are not
responsible for any delays in shipment or any other actions or inactions of the
courier. However, because the commitment expires on _________________________,
19___, we ask that you deliver the Loan Documents to the courier no later than
_________________________, 19___.
Please have the courier ▇▇▇▇ us by using our account no. _______________. If you
should have any questions, or should feel the need for additional documentation,
please do not hesitate to call _____________________.
E-LOAN, INC., a California corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT "D"
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EXHIBIT "E"
TRUST RECEIPT
Trust Receipt No. ______________, 19___
The undersigned, E-LOAN, INC., a California corporation (the
"Company"), acknowledges receipt from Bank United, a federal savings bank
("Lender"), pursuant to that certain Warehousing Credit and Security Agreement
(Single-Family Mortgage Loans) dated effective as of February 3, 1999, by and
between the Company and Lender (the "Agreement"), of the following described
property (the "Trust Property"), possession of which is herewith entrusted to
the Company for the purposes set forth below:
Mortgage Loan No. Note Amount:
Obligor:
Purpose: [Specify nature of clerical or other documentation
problem to be corrected.]
The Company hereby acknowledges that a security interest in the Trust
Property and in the proceeds of the Trust Property has been granted to the
Lender pursuant to the Agreement.
In consideration of the delivery of the Trust Property by the Lender to
the Company, the Company hereby agrees to hold the Trust Property in trust for
the Lender as provided under and in accordance with all provisions of the
Agreement and to return the Trust Property to the Lender no later than the close
of business on the tenth day following the date hereof or, if such day is not a
Business Day, on the following Business Day. The Company further agrees that the
aggregate Collateral Value of Single-family Mortgage Loans with respect to which
notes or other documentation has been released under trust receipts, does not
exceed $500,000.00.
E-LOAN, INC., a California corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
Delivery to Company Acknowledged
BANK UNITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
The undersigned, acknowledges that the above-mentioned Trust Property
has been returned to the Lender on __________________, 19___.
BANK UNITED
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT "E"
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EXHIBIT "F"
OFFICER'S CERTIFICATE
COMPANY: E-LOAN, INC., a California corporation
LENDER: BANK UNITED
DATE:
REPORTING PERIOD: ended , 199___
This certificate is delivered to Lender under the Warehousing Credit
and Security Agreement dated effective as of February 3, 1999, between Company
and Lender (the "Agreement"), all the defined terms of which have the same
meanings when used herein.
I hereby certify that: (a) I am, and at all times mentioned herein have
been, the duly elected, qualified, and acting officer of Company designated
below; (b) to the best of my knowledge, the Financial Statements of Company for
the period shown above (the "Reporting Period") and which accompany this
certificate were prepared in accordance with GAAP and present fairly the
financial condition of Company as of the end of the Reporting Period and the
results of its operations for the Reporting Period; (c) a review of the
Agreement and of the activities of the Company during the Reporting Period has
been made under my supervision with a view to determining Company's compliance
with the covenants, requirements, terms, and conditions of the Agreement, and
such review has not disclosed the existence during or at the end of the
Reporting Period (and I have no knowledge of the existence as of the date
hereof) of any Event of Default or Default, except as disclosed on Annex "A"
hereto (which specifies the nature and period of existence of each Event of
Default or Default, if any, and what action Company has taken, is taking, and
proposes to take with respect to each); (d) the calculations described on the
attached Annex "A" evidence that the Company is in compliance with the
requirements of Sections 7.5 and 7.6 of the Agreement at the end of the
Reporting Period (or if Company is not in compliance, showing the extent of
non-compliance and specifying the period of non-compliance and what actions the
Company proposes to take with respect thereto; (e) the Company was, as of the
end of the Reporting Period, in compliance and good standing with applicable
FNMA, GNMA, FHLMC, and HUD net worth requirements.
E-LOAN, INC., a California corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT "F"
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70
ANNEX "A"
COMPANY NAME: E-LOAN, INC., a California corporation
REPORTING PERIOD:
All financial calculations set forth herein are as of the Reporting Period.
(a) TANGIBLE NET WORTH
The Tangible Net Worth of the Company is:
GAAP Net Worth: $_______________
Minus: Intangible Assets, including Capitalized Servicing Rights: $_______________
Minus: Advances or loans to shareholders, officers or Affiliates $_______________
Minus: Investments in Affiliates: $_______________
Minus: Assets pledged to secure liabilities not included in Debt: $_______________
Minus: Any other HUD nonacceptable assets: $_______________
TANGIBLE NET WORTH: $_______________
(b) ADJUSTED TANGIBLE NET WORTH
The Adjusted Tangible Net Worth of the Company is:
Tangible Net Worth (from above): $_______________
Plus: Subordinated Debt $_______________
Plus: 1% of Servicing Rights $_______________
ADJUSTED TANGIBLE NET WORTH: $_______________
MINIMUM ADJUSTED TANGIBLE NET WORTH IS $12,000,000.00
Covenant Satisfied:__________ Covenant Not Satisfied:__________
ANNEX "A"
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71
(c) DEBT OF THE COMPANY
Total Liabilities: $_______________
DEBT: $_______________
(d) DEBT TO ADJUSTED TANGIBLE NET WORTH
The ratio of Debt to Adjusted Tangible Net Worth is: _______ to 1.
MAXIMUM DEBT TO ADJUSTED TANGIBLE NET WORTH RATIO IS 10:1.
Covenant Satisfied:_________ Covenant Not Satisfied:___________
(e) DEFAULTS OR EVENTS OF DEFAULT (DISCLOSE NATURE AND PERIOD OF EXISTENCE
AND ACTION BEING TAKEN IN CONNECTION THEREWITH; IF NONE, STATE NONE)
ANNEX "A"
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72
EXHIBIT "G"
LIST OF SUBSIDIARIES
================================================================================
NAME ADDRESS OF STATE OF WHERE COMPANY'S
PRINCIPAL INCORPORATION QUALIFIED PERCENTAGE
OFFICE FOREIGN CORP. OWNERSHIP
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
None.
EXHIBIT "G"
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73
EXHIBIT "H"
DISCLOSURE OF PENDING LITIGATION
(Include the caption of the case, including styling, cause number, and court in
which it is pending, date filed, status of the proceedings, and description of
claims, counterclaims and damages asserted.)
None.
EXHIBIT "H"
Page 68
74
EXHIBIT "I"
TRADE NAMES OF COMPANY
--------------------------------------------------------------------------------
TRADE NAME JURISDICTION USED
--------------------------------------------------------------------------------
None.
--------------------------------------------------------------------------------
EXHIBIT "I"
Page 69
75
EXHIBIT "J"
CERTIFICATE OF CORPORATE RESOLUTIONS
AND INCUMBENCY OF OFFICERS
(BORROWING AUTHORITY)
I, the undersigned, hereby certify that I am the Secretary of E-LOAN,
INC., a corporation duly organized and existing under the laws of the State of
California (the "Corporation").
I further certify that true and correct copies of the Articles of
Incorporation and Bylaws of the Corporation together with all amendments thereto
are attached hereto as EXHIBITS "A" AND "B", respectively, and that such
articles and bylaws remain unaltered and in full force and effect.
I further certify that the following resolutions were duly adopted by
the Board of Directors of the Corporation at a meeting of the Board of Directors
of the Corporation, duly and legally called and held in accordance with the
Articles of Incorporation and Bylaws of the Corporation on the _____ day of
February, 1999, at which meeting a quorum was present and voting throughout, or
(if the foregoing date was not completed) pursuant to a written consent signed
by all of the members of the Board of Directors of the Corporation in accordance
with the Articles of Incorporation and Bylaws of the Corporation, and that such
resolutions are now in full force and effect and have not been amended, modified
or revoked:
"RESOLVED, that each of the following officers of this Corporation:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
acting alone without the joinder of any other officer, is hereby
authorized in the name and on behalf of this Corporation (i) to borrow
from and to otherwise incur liabilities to BANK UNITED ("Lender") from
time to time, in such amounts, for such periods of time, at such rates
of interest and payable in such manner as such officers may deem
necessary or proper, and (ii) as evidence of such indebtedness so
incurred, to execute and deliver to Lender such promissory notes, loan
agreements and other instruments, documents and agreements, containing
such terms and provisions as may be acceptable or agreeable to any one
of such officers, such acceptance and agreement to be conclusively
evidenced by the execution and delivery thereof by any one of such
officers;
FURTHER RESOLVED, that this Corporation grant to Lender a lien
and/or security interest upon such assets of this Corporation as may be
agreed upon between any one of the above named officers and Lender, as
security for all present and future indebtedness, obligations and
liabilities of this Corporation to Lender and that each of said
officers, acting alone without the joinder of any other officer, is
hereby authorized in the name and on behalf of this Corporation to
execute and deliver such
EXHIBIT "J"
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76
security agreements, deeds of trust and other instruments, documents
and agreements as may be required by Lender in connection with each
such grant of a lien and/or security interest and containing such terms
and provisions as may be acceptable or agreeable to any one of such
officers, such acceptance and agreement to be conclusively evidenced by
the execution and delivery thereof by any one of such officers;
FURTHER RESOLVED, that any one of the above named officers,
acting alone without the joinder of any other officer, is hereby
authorized in the name and on behalf of this Corporation to take such
further action and to do all things that any one of such officers deems
necessary in connection with any (i) increases, renewals, extensions,
rearrangements, retirements or compromises of any indebtedness,
obligations and liabilities owing to Lender from time to time by this
Corporation, either directly or by assignment, and (ii) amendments to
any of the provisions contained in any instruments, documents or
agreements evidencing, securing, governing and/or pertaining to any
indebtedness, obligations and liabilities owing to Lender by this
Corporation from time to time;
FURTHER RESOLVED, that any one of the above named officers, or
any one of the following representatives of this Corporation:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
acting alone without the joinder of any other officer or
representative, is hereby authorized in the name and on behalf of this
Corporation to (i) make requests for advances under any credit facility
that this Corporation may have with Lender from time to time, and (ii)
do or cause to be done all such acts or things and to sign and deliver,
or cause to be signed and delivered, all such instruments, documents,
agreements and certificates (including without limitation, any and all
notices and certificates required or permitted to be given or made to
Lender under the terms of any of the instruments, documents or
agreements executed on behalf of this Corporation in connection with
these resolutions), as any and all of such officers or representatives
may deem necessary, advisable or appropriate to effectuate and carry
out the purposes and intent of the foregoing resolutions and to perform
the obligations of this Corporation under all instruments, documents
and agreements executed on behalf of this Corporation in connection
with any indebtedness, obligations or liabilities incurred by this
Corporation to Lender from time to time;
FURTHER RESOLVED, that any one of the above named officers,
acting alone without joinder of any other officer or representative is
hereby authorized in the name and on behalf of this Corporation (i) to
sell and transfer notes, securities and financial instruments of this
Corporation to the Lender, from time to time, in such amounts and on
such terms and conditions and in such manner as any one of
EXHIBIT "J"
Page 71
77
such officers may deem necessary or proper and (ii) in connection
therewith, to execute and deliver to the Lender a master repurchase
agreement and such other documents and agreements containing such terms
and provisions as may be acceptable or agreeable to any one of such
officers, such acceptance and agreement to be conclusively evidenced by
the execution and delivery thereof by any one of such officers;
FURTHER RESOLVED, that all acts, transactions or agreements
with Lender undertaken prior to the adoption of the foregoing
resolutions by any one or more of the officers and/or representatives
of this Corporation in its name and on its behalf in connection with
the foregoing matters are hereby ratified, confirmed and adopted by
this Corporation; and
FURTHER RESOLVED, that each of the officers of this
Corporation is hereby authorized and directed to certify these
resolutions to Lender;
FURTHER RESOLVED, the foregoing resolutions shall continue in
full force and effect, and the Lender is authorized to rely upon the
foregoing resolutions unless and until (i) countermanded by resolution
of the Board of Directors of this Corporation, and (ii) a copy of such
resolution, properly certified by an officer of this Corporation, has
actually been received by Lender."
I further certify that the foregoing resolutions do not conflict with
the Articles of Incorporation or Bylaws of the Corporation, or any amendments
thereto.
I further certify that neither the seal of the Corporation, nor the
attestation by the Secretary, Assistant Secretary or any other officer of the
Corporation, is necessary to make any instruments, documents or agreements
executed by the officers or representatives of this Corporation pursuant to the
foregoing resolutions, enforceable against the Corporation, unless such seal is
affixed to, or such attestation is provided on, such instruments, documents or
agreements.
I further certify that the officers of the Corporation set forth below
have been duly elected and qualified and as of the date hereof hold the
specified offices with the Corporation, that the signature set forth beside each
officer's name is the true signature of such officer, and that the signature set
forth beside the name of each of the representatives specified in the foregoing
resolutions is the true signature of such representative:
TITLE TYPED NAME SIGNATURE
----- ---------- ---------
CEO ▇▇▇▇▇ ▇▇▇▇▇▇ ------------------------
President ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ------------------------
Dir., Mortgage Banking Operations ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ------------------------
EXHIBIT "J"
Page 72
78
TITLE TYPED NAME SIGNATURE
----- ---------- ---------
Secretary ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ------------------------
------------------------ ▇▇▇▇▇ ▇▇▇▇ ------------------------
------------------------ ▇▇▇▇▇ ▇▇▇▇ ------------------------
------------------------ ▇▇▇ ▇▇▇▇▇▇▇ ------------------------
IN WITNESS WHEREOF, I hereunto subscribe my name this _____ day of
February, 1999.
By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary
STATE OF CALIFORNIA )
)
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me this __________ day
of February, 1999, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary of E-LOAN, INC., a California
corporation, on behalf of said corporation.
---------------------------------
NOTARY PUBLIC IN AND FOR
[Seal] THE STATE OF CALIFORNIA
EXHIBIT "J"
Page 73
79
EXHIBIT "K"
BAILEE LETTER
(Investor Name and Address)
Re: Purchase of Mortgage Loans from E-LOAN, INC., a California
corporation .
Ladies and Gentlemen:
Attached please find those Mortgage Loans listed separately on the
attached schedule, which Mortgage Loans are owned by E-LOAN, INC., a California
corporation (the "Company") and are being delivered to you for purchase.
The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined hereunder are
defined in) that certain Warehousing Credit and Security Agreement
(Single-family Mortgage Loans) ("Warehouse Agreement") dated effective as of
February 3, 1999, by and between the Company and BANK UNITED, a federal savings
bank ("Lender"). Each of the Mortgage Loans is subject to a security interest in
favor of Lender, which security interest shall be automatically released upon
our receipt of the full amount due to the Lender under the Warehouse Agreement
in connection with such Mortgage Loans (as set forth on the schedule attached
hereto) by wire transfer to the following account:
Bank United
Houston, Texas
ABA #▇▇▇▇▇▇▇▇▇
Credit:
Account:
Until payment therefor is received, the aforesaid security interest
therein will remain in full force and effect, and you shall hold possession of
such Collateral and the documentation evidencing same as custodian, agent and
bailee for and on behalf of Lender. In the event any Mortgage Loan is
unacceptable for purchase, return the reject item directly to the undersigned at
the address set forth below. In no event shall any Mortgage Loan be returned or
sales proceeds remitted in full no later than thirty (30) days from the date
hereof. If you are unable to comply with the above instructions, please so
advise the undersigned immediately.
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR LENDER
ON THE TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED REQUESTS THAT
YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND THIS
EXHIBIT "K"
Page 74
80
LETTER BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE
UNDERSIGNED AT THE FOLLOWING ADDRESS: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
HOWEVER, YOUR FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.
Sincerely,
BANK UNITED
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
IRREVOCABLY ACKNOWLEDGED
AND AGREED TO:
[INVESTOR]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT "K"
Page 75
81
EXHIBIT "L"
LIST OF INVESTORS
================================================================================
INVESTOR CONTACT PERSON PHONE NUMBER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
{See Attached}
EXHIBIT "L"
Page 76
82
EXHIBIT "M"
OPINION LETTER
February 3, 1999
Bank United
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Warehousing Credit and Security Agreement (Single-Family
Mortgage Loans)
Gentlemen:
We have acted as special counsel for E-LOAN, INC., a California
corporation (the "Company"), in connection with the negotiation and execution of
the following documents (collectively, the "Credit Documents"):
1. the Warehousing Credit and Security Agreement (Single-Family
Mortgage Loans) dated effective as of February 3, 1999 (the
"Loan Agreement"), between the Company and Bank United (the
"Lender"); and
2. the Note dated effective as of February 3, 1999 (the "Note"),
executed and delivered by the Company.
Unless otherwise provided herein, terms used herein which are defined
in the Credit Documents (including schedules and exhibits thereto) and not
defined herein shall have the meanings attributed thereto in the Credit
Documents.
I. BASIS OF OPINION.
As the basis for the conclusions expressed in this opinion letter, we
have examined, considered and relied upon the following:
(1) A copy of each of the Credit Documents executed by the
Company;
(2) A Recent Certificate of Domestic Status of the Company
issued by the Secretary of State of California;
(3) A copy of the Articles of Incorporation and amendments
thereto, and a copy of the Bylaws of the Company, in each case as certified to
us by the Company Certificate;
(4) Such other documents and records as we have deemed
relevant, necessary or appropriate in connection with or as a basis for the
opinions hereafter set forth; and
EXHIBIT "M"
Page 77
83
Bank United
February 3, 1999
(5) Such matters of law as we have considered necessary or
appropriate for the expression of the opinions contained herein.
For the purposes of this opinion letter, the documents and information
referred to in this Section A are herein collectively referred to as the
"Documents".
II. OPINIONS.
Based upon our examination and consideration of the foregoing
Documents, and subject to the comments, assumptions, exceptions, qualifications
and limitations set forth in Section C below, we are of the opinion that:
(1) The Company (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California (ii)
has the full legal power and authority and all necessary licenses, permits,
franchises, and other authorizations to own and operate its property and assets
and to transact the business in which it is engaged, and (iii) is duly qualified
to transact business as a foreign corporation in each jurisdiction where the
nature of the business it transacts or the property it owns requires such
qualification or licensing except in such jurisdictions where the failure to be
in good standing or be licensed (as the case may be) would have no material
adverse effect on the Company.
(2) The Company has the requisite corporate power to execute,
deliver, and perform the terms and provisions of each of the Credit Documents
and has taken all necessary corporate action to authorize the execution,
delivery, and performance by it of each such Credit Document. The Company has
duly executed each of the Credit Documents, and each such Credit Document
constitutes its legal, valid, and binding obligation enforceable in accordance
with its terms, except as the enforceability of the rights and remedies of the
Lender under each of the Credit Documents may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law) including requirements of reasonableness and good faith in
the exercise of rights and remedies under the Credit Documents.
(3) Neither the execution, delivery, or performance by the
Company of the Credit Documents, nor compliance by it with the terms and
provisions thereof, (i) will contravene any law, statute, rule, or regulation;
(ii) to the best of our knowledge, will contravene any order, writ, injunction,
or decree of any court or governmental instrumentality; (iii) to the best of our
knowledge, will conflict or be inconsistent with or result in any breach of any
of the material terms, covenants, conditions, or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any lien upon any of the property or assets of the Company
EXHIBIT "M"
Page 78
84
Bank United
February 3, 1999
pursuant to the terms of any agreement of the Company; (iv) will violate any
provision of the Articles of Incorporation or Bylaws of the Company.
(4) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document, or (ii) the legality, validity,
binding effect or enforceability of any such Credit Document.
(5) To the best of our knowledge, there are no actions, suits,
or proceedings pending or threatened (i) with respect to any Credit Document or
(ii) that could materially and adversely affect the business, operations,
property, assets, condition (financial or otherwise) or prospects of the
Company.
(6) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(7) The Company is not a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(8) The execution and delivery of the Loan Agreement by the
Borrower is effective to create a valid and enforceable security interest in
favor of the Lender in the Collateral and the proceeds thereof.
(9) The Lender will have a valid and duly perfected security
interest, without further requirements for perfection, in (a) the Pledged
Mortgages and Pledged Securities upon the delivery thereof to the Lender and (b)
the other Collateral described in the Financing Statements to the extent that a
security interest therein may be perfected under Article 9 of the UCC solely by
filing a financing statement with the Secretary of State of California, which
lien shall be superior to any other interests therein.
III. COMMENTS, ASSUMPTIONS, LIMITATION, QUALIFICATIONS AND
EXCEPTIONS.
The opinions expressed in Section B above are based upon, and subject
to, the further comments, assumptions, limitations, qualifications and
exceptions set forth below:
Respectfully submitted,
EXHIBIT "M"
Page 79
85
EXHIBIT "N"
PROMISSORY NOTE
$40,000,000.00 Houston, Texas February 3, 1999
FOR VALUE RECEIVED, the undersigned, E-LOAN, INC., a California
corporation (herein called the "Borrower"), hereby promises to pay to the order
of BANK UNITED, a federal savings bank (the "Lender" or, together with its
successors and assigns, the "Holder") whose principal place of business is ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
the Holder may designate from time to time, the principal sum of FORTY MILLION
AND NO/100 DOLLARS ($40,000,000.00) or so much thereof as may be outstanding
from time to time pursuant to the Warehousing Credit and Security Agreement (the
"Agreement') dated the date hereof between the Borrower and the Lender, as the
same may be amended or supplemented from time to time, and to pay interest on
said principal sum or such part thereof as shall remain unpaid from time to
time, from the date of each Advance until repaid in full, and all other fees and
charges due under the Agreement, at the rate and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds.
This Note is given to evidence an actual warehouse line of credit in
the above amount and is the Note referred to in the Agreement, and is entitled
to the benefits thereof. Reference is hereby made to the Agreement (which is
incorporated herein by reference as fully and with the same effect as if set
forth herein at length) for a description of the Collateral, a statement of the
covenants and agreements, a statement of the rights and remedies and securities
afforded thereby and other matters contained therein. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given them in
the Agreement.
The entire unpaid principal balance of this Note plus all accrued and
unpaid interest shall be due and payable in full on February 2, 2000.
This Note may be prepaid in whole or in part at any time without
premium or penalty.
Should this Note be placed in the hands of attorneys for collection,
the Borrower agrees to pay, in addition to principal and interest, fees and
charges due under the Agreement, and all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
This Note shall be construed and enforced in accordance with the laws
of the State of Texas, without reference to its principles of conflicts of law,
and applicable federal laws of the United States of America.
This Note is secured by all security agreements, collateral
assignments, deeds of trust and lien instruments executed by the Borrower in
favor of Lender, or executed by any other Person as security for this Note,
including any executed prior to, simultaneously with, or after the date of this
Note.
EXHIBIT "N"
Page 80
86
The Borrower and any and each co-maker, guarantor, accommodation party,
endorser or other Person liable for the payment or collection of this Note
expressly waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, bringing of suit, and diligence in
taking any action to collect amounts called for hereunder and in the handling of
Collateral at any time existing as security in connection herewith, and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder or in
connection with any Lien at any time had or existing as security for any amount
called for hereunder.
It is the intention of the parties hereto to conform strictly to usury
laws applicable to the Lender. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including the laws of the United
States of America and the State of Texas), then, in that event, notwithstanding
anything to the contrary herein or in the Agreement or in any other Loan
Document or agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to the Lender that is contracted for,
taken, reserved, charged, or received herein or under the Agreement or under any
of the other aforesaid Loan Documents or agreements or otherwise in connection
herewith shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited by the Lender on the principal
amount of the Obligations (or, if the principal amount of the Obligations shall
have been paid in full, refunded by the Lender to the Borrower, as required);
and (ii) in the event that the maturity of this Note is accelerated by reason of
an election of the Lender resulting from any Event of Default under the
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to the
Lender may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in the Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the Lender on the
principal amount of the Obligations (or, if the principal amount of the
Obligations shall have been paid in full, refunded by the Lender to the
Borrower, as required). Without limiting the foregoing, all calculations of the
rate of interest taken, reserved, contracted for, charged, received or provided
for under this Note or any of the Loan Documents which are made for the purpose
of determining whether the interest rate exceeds the Maximum Rate shall be made,
to the extent allowed by law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of the loan evidenced
hereby, all interest at any time taken, reserved, contracted for, charged,
received, or provided for under this Note of any of the Loan Documents. To the
extent that the Texas Credit Title is relevant for purposes of determining the
Maximum Rate, the Lender hereby elects to determine the applicable rate ceiling
under such statute by the weekly rate ceiling from time to time in effect,
subject to the Lender's right subsequently to change such method in accordance
with applicable law.
EXHIBIT "N"
Page 81
87
E-LOAN, INC.,
a California corporation
By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director,
Mortgage Banking
EXHIBIT "N"
Page 82
88
FINANCING STATEMENT
This Financing Statement is presented to a Filing Officer in the Office
of the Secretary of State of the State of California for filing pursuant to the
Uniform Commercial Code.
1. The name, address and federal tax number of the Debtor is:
E-LOAN, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Federal Tax I.D. ▇▇-▇▇▇▇▇▇▇
2. The name, address and federal tax number of the Secured Party is:
BANK UNITED
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Federal Tax I.D. No. ▇▇-▇▇▇▇▇▇▇
3. This Financing Statement covers all right, title, and interest of
Debtor in, to and under the following, whether now owned or hereafter
acquired (collectively, the "Collateral"):
(a) All Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans including without limitation
all Mortgage Loans in respect of which Wet Settlement Advances have
been made by the Secured Party, which from time to time are delivered
or caused to be delivered to the Secured Party or its designee, come
into the possession, custody or control of the Secured Party for the
purpose of assignment or pledge or in respect of which an Advance has
been made by the Secured Party (the "Pledged Mortgages").
(b) All Mortgage-backed Securities which are from time to time
delivered or caused to be delivered to, or are otherwise in the
possession of the Secured Party, or its designee, its agent, bailee or
custodian as assignee or pledged to the Secured Party, or for such
purpose are registered by book-entry in the name of the Secured Party
(the "Pledged Securities").
(c) All private mortgage insurance and all commitments issued
by the FHA or VA to insure or guarantee any Mortgage Loans included in
the Pledged Mortgages; all guaranties related to Pledged Securities;
all Purchase Commitments held by the Debtor covering the Pledged
Mortgages or the Pledged Securities and all proceeds resulting from the
sale thereof to Investors pursuant thereto; all personal property,
contract rights, servicing and servicing fees and income or other
proceeds, amounts and payments payable to the Debtor as compensation or
reimbursement, accounts and general intangibles of whatsoever kind
relating to the Pledged Mortgages, the Pledged Securities, and all
other documents or
Page 1
89
instruments relating to the Pledged Mortgages and the Pledged
Securities, including, without limitation, any interest of the Debtor
in any fire, casualty or hazard insurance policies and any awards made
by any public body or decreed by any court of competent jurisdiction
for a taking or for degradation of value in any eminent domain
proceeding as the same relate to the Pledged Mortgages.
(d) All right, title and interest of the Debtor in and to all
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records (including all information, records, tapes, data,
programs, discs and cards necessary or helpful in the administration or
servicing of the foregoing Collateral) and other information and data
of the Debtor relating to the foregoing Collateral.
(e) All now existing or hereafter acquired cash delivered to
or otherwise in the possession of the Secured Party or its agent,
bailee or custodian or designated on the books and records of the
Debtor as assigned and pledged to the Secured Party.
(f) All cash and non-cash proceeds of the foregoing
Collateral, including all dividends, distributions and other rights in
connection with, and all additions to, modifications of and
replacements for, the foregoing Collateral, and all products and
proceeds of the foregoing Collateral, together with whatever is
receivable or received when the foregoing Collateral or proceeds
thereof are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including,
without limitation, all rights to payment with respect to any cause of
action affecting or relating to the foregoing Collateral or proceeds
thereof.
4. Definitions: The following terms shall have the meanings set forth
below unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms
defined.
"Advance" means any advance by the Secured Party to Debtor
under the Warehouse Credit Agreement.
"Collateral Documents" has the meaning set forth in the
Warehouse Credit Agreement.
"FHA" means the Federal Housing Administration and any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation and
any successor thereto.
"FHLMC Guide" means the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' and Servicers'
Guide dated September 17, 1984, as amended, revised, modified and
supplemented from time to time heretofore, now and hereafter.
Page 2
90
"FHLMC Pool" means a "group" or "grouping" of Mortgage Loans
assembled in accordance with (and as such term is used in) the FHLMC
Guide.
"First Mortgage" means a mortgage or deed of trust which
constitutes a first lien on the property covered thereby.
"FNMA" means the Federal National Mortgage Association and any
successor thereto.
"FNMA Guide" means the ▇▇▇▇▇▇ ▇▇▇ Servicing Guide dated June
30, 1990, as amended, revised, modified and supplemented from time to
time heretofore, now and hereafter.
"FNMA Pool" means a "group" or "grouping" of Mortgage Loans
assembled in accordance with (and as such term is used in) the FNMA
Guide.
"GNMA" means the Government National Mortgage Association and
any successor thereto.
"GNMA Guide" means, as applicable under the circumstances, (a)
the GNMA I Mortgage-Backed Securities Guide, Handbook GNMA 5500.1
REV-6, as amended, revised, modified and supplemented from time to time
heretofore, now and hereafter or (b) the GNMA II Mortgage-Backed
Securities Guide, Handbook GNMA 5500.2, as amended, revised, modified
and supplemented from time to time heretofore, now and hereafter..
"GNMA Pool" means, as applicable under the circumstances, a
"pool" of Mortgage Loans assembled in accordance with (and as such term
is used in) the GNMA Guide.
"Investor" means FNMA, FHLMC, GNMA, or a financially
responsible institution which is acceptable to Secured Party, in its
sole discretion; provided that at any time by written notice to Debtor
Secured Party may disapprove any Investor in its sole discretion for
any reason, whether or not that Person is named as an Investor in this
definition or has been previously approved as an Investor by Secured
Party. Upon receipt of such notice, the Persons named in Secured
Party's notice shall no longer be Investors from and after the date of
the receipt of such notice.
"Mortgage" means a First Mortgage or Second Mortgage on
improved real property.
"Mortgage-backed Securities" means FHLMC, GNMA or FNMA
securities that are backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note.
"Mortgage Note" means a note secured by a Mortgage.
Page 3
91
"Mortgage Pool" means (a) a FHLMC Pool, (b) a FNMA Pool, or
(c) a GNMA Pool.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether
or not legal entities, and federal and state governments and agencies
or regulatory authorities and political subdivisions thereof.
"Purchase Commitment" means a written commitment, in form and
substance satisfactory to the Secured Party, issued in favor of the
Debtor by an Investor pursuant to which that Investor commits to
purchase Mortgage Loans or Mortgage-backed Securities.
"Second Mortgage" means a mortgage or deed of trust which
constitutes a second lien on the property covered thereby.
"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person
has the right to service Mortgage Loans.
"Single-family Mortgage Loan" means a Mortgage Loan secured by
a Mortgage covering improved real property containing one to four
family residences.
"VA" means the Veterans Administration and any successor
thereto.
"Warehouse Credit Agreement" means the Warehousing Credit and
Security Agreement dated of even date herewith between Debtor and
Secured Party.
"Wet Settlement Advance" means an Advance by the Secured Party
pursuant to Section 2.2(a) of the Warehouse Credit Agreement, in
respect of the closing or settlement of a Single-family Mortgage Loan,
in anticipation of and pending subsequent delivery and examination of
the Collateral Documents as provided in Section II of EXHIBIT "C" to
the Warehouse Credit Agreement.
EXECUTED effective as of the 3rd day of February, 1999.
DEBTOR:
E-LOAN, INC.,
a California corporation
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director,
Mortgage Banking
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SECURED PARTY:
BANK UNITED
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
After recording, return copy to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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93
PROMISSORY NOTE
$40,000,000.00 Houston, Texas February 3, 1999
FOR VALUE RECEIVED, the undersigned, E-LOAN, INC., a California
corporation (herein called the "Borrower"), hereby promises to pay to the order
of BANK UNITED, a federal savings bank (the "Lender" or, together with its
successors and assigns, the "Holder") whose principal place of business is ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
the Holder may designate from time to time, the principal sum of FORTY MILLION
AND NO/100 DOLLARS ($40,000,000.00) or so much thereof as may be outstanding
from time to time pursuant to the Warehousing Credit and Security Agreement (the
"Agreement') dated the date hereof between the Borrower and the Lender, as the
same may be amended or supplemented from time to time, and to pay interest on
said principal sum or such part thereof as shall remain unpaid from time to
time, from the date of each Advance until repaid in full, and all other fees and
charges due under the Agreement, at the rate and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds.
This Note is given to evidence an actual warehouse line of credit in
the above amount and is the Note referred to in the Agreement, and is entitled
to the benefits thereof. Reference is hereby made to the Agreement (which is
incorporated herein by reference as fully and with the same effect as if set
forth herein at length) for a description of the Collateral, a statement of the
covenants and agreements, a statement of the rights and remedies and securities
afforded thereby and other matters contained therein. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given them in
the Agreement.
The entire unpaid principal balance of this Note plus all accrued and
unpaid interest shall be due and payable in full on February 2, 2000.
This Note may be prepaid in whole or in part at any time without
premium or penalty.
Should this Note be placed in the hands of attorneys for collection,
the Borrower agrees to pay, in addition to principal and interest, fees and
charges due under the Agreement, and all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
This Note shall be construed and enforced in accordance with the laws
of the State of Texas, without reference to its principles of conflicts of law,
and applicable federal laws of the United States of America.
This Note is secured by all security agreements, collateral
assignments, deeds of trust and lien instruments executed by the Borrower in
favor of Lender, or executed by any other Person as security for this Note,
including any executed prior to, simultaneously with, or after the date of this
Note.
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94
The Borrower and any and each co-maker, guarantor, accommodation party,
endorser or other Person liable for the payment or collection of this Note
expressly waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, bringing of suit, and diligence in
taking any action to collect amounts called for hereunder and in the handling of
Collateral at any time existing as security in connection herewith, and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder or in
connection with any Lien at any time had or existing as security for any amount
called for hereunder.
It is the intention of the parties hereto to conform strictly to usury
laws applicable to the Lender. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including the laws of the United
States of America and the State of Texas), then, in that event, notwithstanding
anything to the contrary herein or in the Agreement or in any other Loan
Document or agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to the Lender that is contracted for,
taken, reserved, charged, or received herein or under the Agreement or under any
of the other aforesaid Loan Documents or agreements or otherwise in connection
herewith shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited by the Lender on the principal
amount of the Obligations (or, if the principal amount of the Obligations shall
have been paid in full, refunded by the Lender to the Borrower, as required);
and (ii) in the event that the maturity of this Note is accelerated by reason of
an election of the Lender resulting from any Event of Default under the
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to the
Lender may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in the Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the Lender on the
principal amount of the Obligations (or, if the principal amount of the
Obligations shall have been paid in full, refunded by the Lender to the
Borrower, as required). Without limiting the foregoing, all calculations of the
rate of interest taken, reserved, contracted for, charged, received or provided
for under this Note or any of the Loan Documents which are made for the purpose
of determining whether the interest rate exceeds the Maximum Rate shall be made,
to the extent allowed by law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of the loan evidenced
hereby, all interest at any time taken, reserved, contracted for, charged,
received, or provided for under this Note of any of the Loan Documents. To the
extent that the Texas Credit Title is relevant for purposes of determining the
Maximum Rate, the Lender hereby elects to determine the applicable rate ceiling
under such statute by the weekly rate ceiling from time to time in effect,
subject to the Lender's right subsequently to change such method in accordance
with applicable law.
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E-LOAN, INC.,
a California corporation
By:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director,
Mortgage Banking
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