EXECUTION
12/6/99
AMENDED AND RESTATED
MORTGAGE WAREHOUSING LOAN AND SECURITY AGREEMENT
dated as of December 6, 1999
among
AMERICAN HOME MORTGAGE CORP.,
as Borrower
and
THE BANKING INSTITUTIONS NAMED HEREIN,
as Banks
FIRST UNION NATIONAL BANK,
as Agent
$60,000,000
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Definitions....................................................2
Section 1.02 Accounting Terms..............................................12
Section 1.03 Computation of Time Periods...................................12
Section 1.04 Rules of Construction.........................................12
ARTICLE II
LOANS
Section 2.01 The Commitment................................................12
Section 2.02 The Loans.....................................................12
Section 2.03 Advance Rates.................................................13
Section 2.04 Notice and Manner of Borrowing................................14
Section 2.05 Payment of Principal..........................................15
Section 2.06 Interest......................................................15
Section 2.07 Notes.........................................................15
Section 2.08 Mandatory Prepayment..........................................16
Section 2.09 Fees..........................................................16
Section 2.10 Method of Payment of Interest and Fees........................17
Section 2.11 Use of Proceeds...............................................17
Section 2.12 Reliance Upon Instructions....................................17
Section 2.13 Reduction and Termination of Commitment.......................17
ARTICLE III
COLLATERAL
Section 3.01 Security Interest.............................................18
Section 3.02 Security Interest in Mortgage-backed Securities...............19
Section 3.03 Responsibility for Collateral.................................19
Section 3.04 Representations and Warranties Concerning Collateral..........19
Section 3.05 Release of Security Interest..................................21
Section 3.06 Covenants and Agreements Concerning Collateral................21
Section 3.07 List of Qualified Investors...................................22
Section 3.08 Uniform Commercial Code Financing Statements..................23
Section 3.09 Collection Rights.............................................23
Section 3.10 Attorney-in-Fact..............................................23
-i-
Section 3.11 Borrower Remains Liable.......................................24
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Initial Loan..........................24
Section 4.02 Conditions Precedent to All Loans.............................26
Section 4.03 Loan Requests for Loans to Fund Mortgage Loans................26
Section 4.04 Disbursing Loans..............................................27
Section 4.05 Wet Mortgage Loan Closings....................................27
Section 4.06 Qualified Investor Requirements; Other Approvals..............29
Section 4.07 Temporary Release of Collateral Documents; Delivery of
Collateral Documents.........................................29
Section 4.08 Deemed Representation.........................................30
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Formation, Good Standing and Due Qualification................30
Section 5.02 Power and Authority; No Conflicts.............................30
Section 5.03 Legally Enforceable Agreements................................31
Section 5.04 Litigation....................................................31
Section 5.05 Financial Statements..........................................31
Section 5.06 Ownership and Liens...........................................31
Section 5.07 Taxes.........................................................31
Section 5.08 ERISA.........................................................31
Section 5.09 Subsidiaries..................................................32
Section 5.10 Operation of Business; Prior or Existing Restrictions, Etc....32
Section 5.11 No Default on Outstanding Judgments or Orders.................32
Section 5.12 No Defaults on Other Agreements...............................32
Section 5.13 Labor Disputes and Acts of God................................32
Section 5.14 Partnerships..................................................33
Section 5.15 Environmental Protection......................................33
Section 5.16 Management of Borrower........................................33
Section 5.17 Compliance with Laws..........................................33
Section 5.18 Solvency......................................................33
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01 Maintenance of Existence......................................34
Section 6.02 Conduct of Business...........................................34
Section 6.03 Maintenance of Properties.....................................34
-ii-
Section 6.04 Maintenance of Records........................................34
Section 6.05 Maintenance of Qualification with Agencies....................34
Section 6.06 Maintenance of Insurance......................................34
Section 6.07 Compliance with Laws..........................................34
Section 6.08 Right of Inspection...........................................34
Section 6.09 Reporting Requirements........................................35
Section 6.10 Compliance With Environmental Laws............................37
Section 6.11 Agency and Take-Out Commitments...............................37
Section 6.12 Taxes.........................................................38
Section 6.13 ERISA.........................................................38
Section 6.14 Year 2000 Compliance..........................................38
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01 Liens.........................................................39
Section 7.02 Debt..........................................................40
Section 7.03 Mergers, Etc..................................................40
Section 7.04 Leases........................................................40
Section 7.05 Sale and Leaseback............................................41
Section 7.06 No Dividends..................................................41
Section 7.07 Management of the Borrower....................................41
Section 7.08 Sale of Assets................................................41
Section 7.09 Investments...................................................41
Section 7.10 Financial Hedge Instruments...................................41
Section 7.11 Guaranties, Etc...............................................41
Section 7.12 Transactions With Affiliates..................................42
ARTICLE VIII
FINANCIAL COVENANTS
Section 8.01 Financial Covenants...........................................42
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01 Events of Default.............................................42
Section 9.02 Remedies......................................................44
Section 9.03 Application of Proceeds.......................................45
Section 9.04 The Agent May Perform.........................................45
Section 9.05 The Agent's Duties With Respect to Collateral.................45
Section 9.06 Continuing Security Interest; Transfer of Note................46
-iii-
ARTICLE X
THE AGENT
Section 10.01 Appointment and Authorization.................................46
Section 10.02 General Immunity..............................................46
Section 10.03 Consultation with Professionals...............................46
Section 10.04 Documents.....................................................46
Section 10.05 Delivery of Collateral Reports................................47
Section 10.06 Rights as a Bank..............................................47
Section 10.07 Responsibility of the Agent...................................47
Section 10.08 Action by the Agent...........................................47
Section 10.09 Notices of Event of Default, Etc..............................47
Section 10.10 Indemnification of the Agent..................................47
Section 10.11 Resignation or Replacement of the Agent.......................48
ARTICLE XI
MISCELLANEOUS
Section 11.01 No Waiver; Cumulative Remedies................................48
Section 11.02 Set-Off; Disproportionate Payments............................48
Section 11.03 Amendments....................................................49
Section 11.04 Arbitration...................................................49
Section 11.05 Exchange of Information among Banks...........................50
Section 11.06 Costs and Expenses; Indemnification...........................50
Section 11.07 Binding Effect; Assignment; Participation.....................51
Section 11.08 Chance in Laws; Increased Costs...............................51
Section 11.09 Notices.......................................................52
Section 11.10 Usury.........................................................52
Section 11.11 Nature of the Banks' Obligations..............................53
Section 11.12 Nature of the Borrower's Obligations..........................53
Section 11.13 Table of Contents; Headings...................................53
Section 11.14 Severability..................................................53
Section 11.15 Counterparts..................................................53
Section 11.16 Integration...................................................53
Section 11.17 GOVERNING LAW.................................................53
Section 11.18 JURISDICTION; IMMUNITIES......................................53
Section 11.19 WAIVER OF JURY TRIAL..........................................54
-iv-
EXHIBITS
Exhibit 1.01-a Borrowing Base Certificate (Warehouse Loans) Exhibit 1.01-c Wet
Closing Agreement Exhibit 1.01-e Note Assignment Agreement Exhibit 2.07 Form of
Note Exhibit 4.01(9) Form of Opinion of Counsel to Borrower Exhibit 4.01(10)
Guaranty Exhibit 4.03 Description of Collateral Documents Exhibit 4.07 Form of
Trust Receipt
SCHEDULES
Schedule A Non-Conforming Credit Underwriting Criteria
Schedule B List of Qualified Investors as of the Closing Date
Schedule D Monthly Report of Computation of Borrowing Base and
Availability of Warehouse Loans
Schedule 5.05 Material Liabilities of Borrower
Schedule 5.09 Shareholders of Borrower
Schedule 5.14 Partnerships of Borrower
Schedule 5.16 Management of Borrower
Schedule 7.02 Debt of Borrower
-v-
AMENDED AND RESTATED MORTGAGE WAREHOUSING LOAN AND SECURITY
AGREEMENT dated as of December 6, 1999 among AMERICAN HOME MORTGAGE CORP.
("Borrower") with its principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and FIRST UNION NATIONAL BANK, a national banking
association with offices at 1 First Union Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇-▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("First Union"), and the banks set
forth on the signature pages hereof or joining herein (First Union and the other
banks party hereto are each sometimes referred to herein individually as a
"Bank" and collectively as the "Banks"), and First Union, as Agent (the
"Agent"), for the benefit of the Banks.
The Borrower desires that the Banks extend credit as provided
herein, and the Banks are prepared to extend such credit pursuant to the terms
hereof. Accordingly, the Borrower and the Banks agree as follows:
WHEREAS, the Borrower engages in the business of origination,
purchase and sale of Mortgage Loans; and
WHEREAS, the Borrower and First Union are parties to that certain
Mortgage Warehousing Loan and Security Agreement dated as of December 8, 1998
(the "Existing Credit Agreement") pursuant to which First Union agreed to lend
to the Borrower an aggregate amount not to exceed Fifty Million Dollars
($50,000,000) outstanding at any time and as amended from time to time; and
WHEREAS, the Existing Credit Agreement is being amended and replaced
in its entirety by this Agreement, pursuant to which the Banks agree on a
several basis, subject to the terms and conditions hereof, to lend to the
Borrower a credit facility of up to Sixty Million Dollars ($60,000,000)
outstanding at any time, in order to finance its origination or purchase of
Mortgage Loans pending sale to investors;
WHEREAS, the Banks are willing, subject to the terms and conditions
of this Agreement, to make advances to the Borrower, up to the maximum amount of
the Commitment, with the Borrower's obligations for repayment to be secured, as
hereinafter described, by Mortgage Loans; and
WHEREAS, this Agreement amends and restates in its entirety the
Existing Credit Agreement, provided, that this Agreement shall not constitute a
novation and shall not be deemed to have extinguished or discharged the
indebtedness and obligations of the Borrower under the Existing Credit
Agreement, or any collateral security therefor, all of which shall continue
under and be governed by this Agreement and the other documents and agreements
executed in connection herewith.
NOW, THEREFORE, in consideration of the promises and the agreements
hereinafter set forth and of each advance made by the Banks to the Borrower, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular are to have a
correlative meaning when used in the plural and vice versa):
"Advance Account" shall have the meaning specified in the Custodial
Agreement.
"Affiliate" means, with respect to the Borrower, any Person:
(a) which directly or indirectly Controls, or is Controlled by,
or is under common Control with the Borrower;
(b) which directly or indirectly beneficially owns or holds ten
percent or more of any ownership interest in the Borrower; or
(c) ten percent or more of the ownership interest of which is
directly or indirectly beneficially owned or held by the Borrower.
"Aged Mortgage Loan Inventory" means Mortgage Loans which have been
pledged as Collateral hereunder for a period greater than ninety (90) days but
not more than one hundred twenty (120) days.
"Aged Mortgage Loan Inventory Sublimit" means Six Million Dollars
($6,000,000).
"Agencies" means FNMA or FHLMC.
"Agent" is the entity specified in the first paragraph of this
Agreement as well as any successors to or assigns of such entity.
"Agreement" means this Amended and Restated Mortgage Warehousing
Loan and Security Agreement, as amended, supplemented or modified from time to
time.
"Approved Custodian" means a Person acceptable to the Agent from
time to time in its sole discretion, who possesses Mortgage Loans that secure
Mortgaged-backed Securities.
"Assignee" has the meaning specified in Section 11.07(b).
"Base Rate" means the Corporate Base Rate plus 1.50% per annum.
"Borrowing Base" means, as of the date of determination, the
Collateral Value of Eligible Mortgages for all Eligible Mortgage Loans;
provided, however, in no event will the Collateral Value of Eligible Mortgages
include (a) Wet Mortgage Loans to the extent that they aggregate in excess of
the Wet Mortgage Loan Sublimit, (b) Non-Conforming Mortgage Loans to the extent
that they aggregate in excess of the Non-Conforming Mortgage Loans Sublimit,
-2-
(c) Aged Mortgage Loan Inventory to the extent that it aggregates in excess of
the Aged Mortgage Loan Inventory Sublimit, and (d) Eligible Repurchase Mortgage
Loans to the extent that they aggregate in excess of the Eligible Repurchase
Mortgage Loan Sublimit.
"Borrowing Base Certificate" means a Certificate in the form of
Exhibit 1.01-a or 1.01-b hereto, properly completed, executed and delivered to
the Agent and the Banks.
"Business Day" means any day on which commercial banks are not
authorized or required to close in the Commonwealth of Pennsylvania or the State
of North Carolina or any day on which a Federal Reserve Bank is closed.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Certificate of No Default" shall have the meaning specified in
Section 6.08(4).
"Clearing Account" shall have the meaning specified in the Custodial
Agreement.
"Closing Agent" means a title company, a closing attorney or other
entity which conducts the settlement of a Mortgage Loan.
"Closing Date" means December 6, 1999 or such earlier date as the
parties shall agree.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, together with all rules and regulations promulgated in connection
therewith.
"Collateral" means Mortgage Loans, Mortgage Notes, Mortgages and all
other property rights, proceeds and payments relating to (i) Mortgage Loans
which have been pledged to the Banks (whether by delivery to the Banks, the
Agent, or to a third party on the Banks' behalf or otherwise) and (ii) all other
personal property of the Borrower hereinafter described in Section 3.01, and/or
from time to time deposited with, delivered or to be delivered or held by or for
the Banks pursuant to this Agreement, and the proceeds thereof in each case,
whether now or hereafter arising.
"Collateral Sale Proceeds" shall mean all proceeds of the sale of
Pledged Mortgages.
"Collateral Value of Eligible Mortgages" has the meaning given to
such term in Section 2.03 hereof.
"Collateral Custodian" means Deutsche Bank or such other entity as
is acceptable to the Agent and is approved by the Majority Banks.
"Combined" means, when used in reference to financial statements,
financial and accounting terms, and financial covenants, a presentation in which
the balance sheet accounts and the income statement accounts of the Borrower and
its Subsidiaries have been added
-3-
together as if the Borrower and its Subsidiaries were a single company, and
wherein all intercompany transactions and relationships among and between them
have been eliminated.
"Committed Purchase Price" means the committed amount to be paid by
a Qualified Investor pursuant to a Take-Out Commitment.
"Commitment" has the meaning specified in Section 2.01.
"Conforming Mortgage Loans" means Mortgage Loans which meet FNMA,
FHLMC, or other generally accepted underwriting criteria for conforming loans,
and which further meet such additional requirements as a Bank may impose from
time to time.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Corporate Base Rate" shall mean for any day a fluctuating interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with numbers of the Federal Reserve System averaged by
Federal funds brokers for such day as reported by the Federal Reserve Bank of
New York, or if no longer so reported then as published in Statistical Release
H.15 of the Federal Reserve System, or if such rate is not so published for any
day, the average of the quotations for such day of such transactions received by
Agent from three (3) Federal funds brokers of recognized standing selected by
Agent.
"Custodial Agreement" shall mean the Amended and Restated Custodial
Agreement dated as of December 6, 1999 among the Borrower, the Agent and the
Collateral Custodian.
"Debt" means all liabilities of the Borrower, including, without
limitation, (1) indebtedness or liability for borrowed money; (2) obligations
evidenced by bonds, debentures, notes, or other similar instruments;
(3) obligations for the deferred purchase price of property or services
(including trade obligations); (4) obligations as lessee under Capital Leases;
(5) current liabilities in respect of unfunded vested benefits under Plans
covered by ERISA; (6) obligations under letters of credit; (7) obligations under
acceptance facilities; (8) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply funds to invest
in any Person or entity, or otherwise to assure a creditor against loss; and
(9) obligations secured by any Liens, whether or not the obligations have been
assumed. The term "Debt" shall not include deferred loan origination fees of
the Borrower.
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means, with respect to an amount of any Loan not paid
when due, a rate per annum equal to the rate which would otherwise be in effect
hereunder plus three percent (3%).
-4-
"Distribution" means any distribution, advance, draw, management
fees, or other transfers of cash or other assets out of the Borrower to any
Shareholder or Affiliate of the Borrower.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Eligible Mortgage Loans" means single family (1-4 family)
(a) Conforming, Jumbo, and Non-Conforming Mortgage Loans which have been pledged
as Collateral hereunder for not more than 90 days, (b) Eligible Repurchase
Mortgage Loans that have been pledged as Collateral hereunder for not more than
270 days, and (c) Aged Mortgage Loan Inventory pledged as Collateral hereunder
for not more than 120 days. Wherever applicable such Mortgage Loans shall be
subject to a policy of title insurance acceptable to the Agent in its sole
discretion.
"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 the
Agent 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.
"Eligible Repurchase Mortgage Loans" means Mortgage Loans
repurchased by the Borrower from a Qualified Investor but which would otherwise
meet all requirements of Eligible Mortgage Loans except as expressly disclosed
in writing to the Agent and approved by the Agent in its sole and absolute
discretion.
"Eligible Repurchase Mortgage Loans Sublimit" means Two Million
Dollars ($2,000,000).
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
"Environmental Law" means any Law relating to pollution or the
environment, including, without limitation, Laws relating to noise or to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the workplace, the community or the environment, or otherwise relating to
the generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Environmental Notice" means any complaint, order, citation, letter,
inquiry, notice or other written communication from any Person (1) affecting or
relating to the Borrower's compliance with any Environmental Law in connection
with any activity or operations at any time conducted by the Borrower;
(2) relating to the occurrence or presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at any of the locations or facilities of the
Borrower, including, without limitation (a) the existence of any contamination
or possible or threatened contamination at any such location or facility and
(b) remediation of any Environmental Discharge or Hazardous Materials at any
such location or facility or any part thereof; and (3) any violation or alleged
violation of any relevant Environmental Law.
-5-
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations, promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 4 14(c) of the Code) with the Borrower.
"Escrow Deposits" means all monies held by the Borrower representing
principal, interest, tax, insurance and other deposits or payments made by
mortgagors under Mortgage Loans.
"Event of Default" has the meaning specified in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time and any successor statute.
"Expiration Date" means December 5, 2000.
"Fees" has the meaning given to such term in Section 2.09 hereof.
"Fair Market Value" shall mean, at any date, with respect to 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. In the event Telerate ceases to
publish either the market or bid price referenced above, the average bid price
quoted in writing to the Agent as of the date of determination by any two
nationally recognized dealers selected by the Agent 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 its successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation and its
successors.
"FNMA" means the Federal National Mortgage Association and its
successors.
"GAAP" means generally accepted accounting principles in the United
States of America used by the Borrower in the preparation of its financial
statements referred to in Section 5.05, and consistently applied.
"Good Faith Contest" means the contest of an item if, in the Agent's
sole determination: (1) the item is diligently contested in good faith by
appropriate proceedings timely instituted; (2) adequate reserves are established
on the books of the Borrower with respect to the contested item; (3) during the
period of such contest, the enforcement of any contested item is effectively
stayed; and (4) the failure to pay or comply with the contested item could not
result in a Material Adverse Change.
-6-
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including, without limitation, asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based products or
derivatives.
"Interest Rate" means the Base Rate or the Default Rate, as
applicable.
"Jumbo Mortgage Loan" means an Eligible Mortgage Loan in a principal
amount greater than the limits established from time to time by FNMA or FHLMC
for sale to FNMA or FHLMC but which Eligible Mortgage Loan in all other respects
satisfies the requirements for sale to FNMA and FHLMC.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority, including any
judicial or administrative order, consent decree or judgment.
"Leverage Ratio" means a fraction, determined as of the pertinent
financial statement date, the numerator of which is the sum total of the
Borrower's outstanding liabilities and the denominator of which is Tangible
Stockholder's Equity.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"List of Qualified Investors" means the List of Qualified Investors
attached hereto as Schedule B as such list may be revised from time to time in
accordance with Section 3.06.
"Loan" has the meaning specified in Section 2.01.
"Loan Documents" means this Agreement, the Notes, each written loan
request, each Compliance Certificate, each Borrowing Base Certificate and the
UCC-l financing statements delivered in connection with this Agreement, together
with any and all documents, instruments and materials issued, executed and/or
delivered by the Borrower in connection with any of the foregoing together with
all amendments, restatements, and modifications thereof.
-7-
"Majority Banks" means those Banks which are then in compliance with
their obligations hereunder holding not less than 66 2/3% of the aggregate
Commitments of those Banks who are then in compliance with their obligations
hereunder, but in no event shall fewer than two banks constitute Majority Banks.
"Material Adverse Change" means (1) a material adverse change in the
status of the business, results of operations, condition (financial or
otherwise), property or prospects of the Borrower, (2) any event or occurrence
of whatever nature which could have a material adverse effect on the Borrower's
ability to perform their obligations under the Loan Documents or (3) any
material adverse change in the Collateral or any event or occurrence of whatever
nature which could have a material adverse effect or result in an adverse change
in the value, enforceability, collectibility or the nature of the Collateral.
"Monthly Date" means the first (1st) day of each month.
"Mortgage" means a mortgage, deed of trust, security agreement (for
cooperative share loans) on real estate, and securing a Mortgage Loan and also
creating a valid first or second lien on the fee simple title (or leasehold in
the case of cooperative share loans) to real estate referred therein subject
only to (i) liens for taxes, not yet due and payable or similar governmental
charges not yet due and payable or still subject to payment without interest or
penalty, (ii) zoning restrictions, utility easements, covenants, or conditions
and restrictions of record, which shall neither defeat nor render invalid such
lien or the priority thereof, nor materially impair the marketability or value
of such real estate, nor be violated by the existing improvements or the
intended use thereof; (iii) such other liens as may have been approved in
writing by the Majority Banks.
"Mortgage-backed Securities" means FHLMC or FNMA securities that are
backed by Mortgage Loans.
"Mortgage Loan" means a loan, with interest payable at a fixed or
variable rate, evidenced by a Mortgage Note and secured by a Mortgage covering a
fee simple interest (or leasehold in the case of cooperative share loans) in
completed residential (1-4 family) real property and all improvements located
thereon located in the United States.
"Mortgage Loan Closing Date" means the date that a Mortgage Loan is
scheduled to close.
"Mortgage Note" means a valid and binding note, bond or other
evidence of indebtedness evidencing a Mortgage Loan and secured by a Mortgage,
which (i) was executed by a bona fide third person who has capacity to contract;
(ii) is payable in accordance with terms acceptable to FNMA or FHLMC or other
generally acceptable investors at the time the Loan is closed and otherwise
acceptable to the Agent; (iii) matures in 30 years or less unless otherwise
agreed to by the Agent; and (iv) complies with any other terms as may be
required in writing in advance of the closing date by the Agent from time to
time.
"Mortgage Pool" means a pool of Mortgage Loans that were warehoused
in accordance with this Agreement, on the basis of which there is to be issued a
Mortgage-backed Security.
-8-
"Multiemployer Plan" means a Plan defined as such in Section 3(37)
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Non-Conforming Mortgage Loans" means Mortgage Loans which do not
comply with all of the requirements for Conforming Mortgage Loans as defined by
FNMA, FHLMC or other generally accepted criteria for conforming loans, but are
written in accordance with guidelines stipulated in Schedule A, which have a
loan to value ratio not exceeding 90% (other than where permitted elsewhere in
this Agreement), and which constitute a valid first or second lien on the real
estate referred to in the Mortgage, provided, however, that Non-Conforming
Mortgage Loans shall not include Jumbo Mortgage Loans.
"Non-Conforming Mortgage Loans Sublimit" means Ten Million
Dollars ($10,000,000).
"Note" has the meaning specified in Section 2.07.
"Obligations" means (1) each and every obligation, covenant and
agreement of the Borrower now or hereafter existing contained in this Agreement,
and any of the other Loan Documents, whether for principal, interest, fees,
expenses, indemnities or otherwise, and any amendments or supplements thereto,
extensions or renewals thereof or replacements therefor, including but not
limited to all indebtedness, obligations and liabilities of the Borrower to the
Banks now existing or hereafter incurred under or arising out of or in
connection with the Notes, this Agreement, the other Loan Documents, and any
documents or instruments executed in connection therewith, (2) all sums advanced
in accordance with this Agreement by or on behalf of the Banks to protect any of
the Collateral purported to be covered hereby, and (3) any amounts paid by the
Agent in preservation of any of the Bank's rights or interest in the Collateral,
together with interest on such amounts from the date such amounts are paid until
reimbursement in full at a rate per annum equal at all times to the Default
Rate; in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished and
later increased, created or incurred, and including all indebtedness of the
Borrower under any instrument now or hereafter evidencing or securing any of the
foregoing.
"Operating Account" means a demand deposit account established by
the Borrower with the Agent for use by the Borrower for its general business
operations and for the payment to the Agent, by automatic debit, of interest,
fees and any other amounts payable from time to time hereunder.
"Outstanding Credit" means, as of the date of determination, the
aggregate principal amount of all outstanding Loans.
"Participant" has the meaning specified in Section 11.07 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" has the meaning specified in Section 7.01.
-9-
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies.
"Pledged Mortgages" means all Mortgages and Mortgage Notes (1)
(1) covered by or referred to or included in a loan request, or (2) relied on by
any Bank in making a Loan, or (3) for which any of the documentation related
thereto is received by the Agent under or pursuant to any of the Loan Documents,
or (4) which are the subject of the Wet Closing provisions of this Agreement.
"Pledged Securities" means 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 Agent, or its designee, its agent, bailee or custodian as
assignee or pledged to the Agent, or for such purpose are registered by
book-entry in the name of the Agent.
"Presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Qualified Investors" shall mean the investors set forth on the List
of Qualified Investors attached hereto as Schedule B, and each investor approved
by the Agent in accordance with Section 3.06 hereof which may include banks,
insurance companies, mortgage bankers, pension funds, investment bankers,
securities dealers, state, county or municipal housing agencies and other
financially responsible private investors.
"Restricted Account" means a demand deposit account established by
the Borrower with the Agent to which there may be deposited from time to time
monies paid by Qualified Investors in connection with a purchase of Mortgage
Loans held as Collateral hereunder by such Qualified Investor, which account
shall be restricted in that the Borrower shall not be entitled to withdraw money
therefrom and the Agent shall be authorized to charge or otherwise make
withdrawals from such account for amounts due in connection with the release of
such Collateral.
"Single Family Residences" means completed one (1) to four (4)
family residential dwellings and property related thereto.
"Stockholder's Equity" means the sum of the following accounts set
forth in the Borrower's balance sheet prepared in accordance with generally
accepted accounting principles consistently applied: (a) the par or stated value
of all outstanding capital stock; (b) capital surplus; and (c) retained
earnings.
-10-
"Subsidiary" means a corporation of which 50% or more of the
outstanding voting stock (except for directors' qualifying shares, if and to the
extent required by law) is owned, at the time of determination, directly or
indirectly, by the Borrower.
"Take-Out Commitment" means an existing written commitment to the
Borrower in form and substance acceptable to Agent from a Qualified Investor
pursuant to which the Qualified Investor agrees to purchase one or more Mortgage
Loans.
"Tangible Stockholder's Equity" means, at any time, Stockholders'
Equity, less the sum of:
(a) Any surplus resulting from any write-up of assets;
(b) Goodwill including any amounts, however designated on a
balance sheet of the Borrower, representing the excess of the purchase price
paid for assets or stock acquired over the value assigned thereto on the books
of the Borrower;
(c) Patents, trademarks, trade names and copyrights;
(d) Any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet;
(e) Loans and advances to stockholders, directors, officers,
employees or affiliated companies;
(f) Deferred expenses;
(g) Capitalized purchased servicing;
(h) Capitalized excess servicing; and
(i) Assets, the marketability, and/or liquidity value of which are
not readily ascertainable, in the Agent's sole discretion.
"VA" means the Veterans Administration and its successors.
"Wet Closing" means a Wet Mortgage Loan closing where the Agent is
requested to make a Loan one day prior to, on the date of, or after, the closing
of the Wet Mortgage Loan, but prior to the delivery of the documentation related
thereto required to be delivered to the Agent, in all such cases in accordance
with the procedures outlined therefor under this Agreement.
"Wet Loans" means Loans made to originate Wet Mortgage Loans.
"Wet Mortgage Loan" means any Eligible Mortgage Loan that is pledged
to the Agent pursuant to the Wet Closing provisions contained in this Agreement.
-11-
"Wet Mortgage Loan Sublimit" means Thirty Million Dollars
($30,000,000); however, the Wet Mortgage Loan Sublimit shall increase to
Thirty-Nine Million Dollars ($39,000,000) during the first five Business Days
and last five Business Days of each month but may not exceed Thirty Million
Dollars ($30,000,000) for more than ten days in the aggregate.
Section 1.02 Accounting Terms. All accounting terms not specifically
defined herein shall be determined in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP, consistently applied.
Section 1.03 Computation of Time Periods. Except as otherwise
provided in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
Section 1.04 Rules of Construction. When used in this Agreement:
(1) a reference to time shall be United States Eastern Standard Time; (2) a
reference to an agreement, instrument or document shall include such agreement,
instrument or document as the same may be amended, modified or supplemented from
time to time in accordance with its terms and as permitted by the Loan
Documents; (3) a reference to a day shall be a calendar day unless a Business
Day is specified.
ARTICLE II
LOANS
Section 2.01 The Commitment. Subject to and upon the terms and
conditions set forth in this Agreement and in reliance upon the representations
and warranties set forth herein, each Bank, for itself only, agrees to lend to
the Borrower, from time to time during the period from the Closing Date up to
but not including the Expiration Date (or earlier termination of the Commitment
as provided herein), such sums (collectively, the "Loan" or "Loans") as the
Borrower may request, up to a maximum aggregate principal amount, of the Banks
collectively, of Sixty Million Dollars ($60,000,000) (the "Commitment").
Section 2.02 The Loans. The Loans shall be in the form of Warehouse
Loans and with respect to each of the Banks shall be in amounts not to exceed at
any one time outstanding the amount shown as each Bank's proportionate share of
the Commitment in the table below.
Percentage of
Commitment Total Commitment
----------- ----------------
First Union $35,000,000 58.33%
Comerica Bank $15,000,000 25.00%
National City $10,000,000 16.67%
----------- ----------------
TOTAL $60,000,000 100.00%
-12-
Notwithstanding the foregoing, in no event (a) shall the Borrower be
entitled to any Loan if after giving effect to such Loan (1) the Outstanding
Credit would exceed the lesser of (A) the Commitment or (B) the Borrowing Base,
(2) the Wet Mortgage Loans would exceed the Wet Mortgage Loan Sublimit, (3) the
Non-Conforming Mortgage Loans would exceed the Non-Conforming Mortgage Loans
Sublimit, (4) the Aged Mortgage Loan Inventory would exceed the Aged Mortgage
Loan Inventory Sublimit, or (5) the Eligible Repurchase Mortgage Loans would
exceed the Eligible Repurchase Mortgage Loans Sublimit. Within the foregoing
limits, the Borrower may borrow, repay, and reborrow under this Section 2.02
until the Expiration Date (or earlier termination of the Commitment as provided
herein).
Each Loan made by a Bank shall be made contemporaneously with a
corresponding Loan made by the other Banks, provided that a default by one or
more of the Banks in making their Loans shall not relieve any other Bank of its
obligation to make its Loan. Each Loan shall be apportioned as among the Banks
pro rata in accordance with their respective proportionate share of the
Commitment.
Section 2.03 Advance Rates. The Borrower may request advances and
readvances of the Loan, subject to the following requirements, limitations and
sub-limitations (the "Collateral Value of Eligible Mortgages"):
(a) all Loans made hereunder shall be secured by Eligible
Mortgage Loans;
(b) each Loan secured by Conforming or Jumbo Mortgage Loans shall
not exceed 98% of the least of (i) the Committed Purchase Price (if applicable);
(ii) the aggregate original principal balance of the Mortgage Loans securing
such advance; or (iii) the market value as determined by the Agent from time to
time or at the direction of the Majority Banks; and
(c) 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
Qualified Investor has committed to pay for such Mortgage-backed Securities
pursuant to a Take-out Commitment; or (iii) the Fair Market Value of such
Mortgage-backed Securities;
(d) each Loan secured by Non-Conforming Mortgage Loans shall not
exceed 95% of the least of (i) the Committed Purchase Price; (ii) the aggregate
original principal balance of the Mortgage Loans securing such advance; or
(iii) the market value as determined by the Agent from time to time or at the
direction of the Majority Banks;
(e) each Loan secured by Aged Mortgage Loan Inventory shall not
exceed 90% of the least of (i) the Committed Purchase Price; (ii) the aggregate
original principal balance of the Mortgage Loans securing such advance; or
(iii) the market value as determined by the Agent from time to time or at the
direction of the Majority Banks; and
(f) each advance of the Loan secured by Eligible Repurchase
Mortgage Loans shall not exceed 70% of the lesser of (i) the original principal
amount; (ii) the current outstanding principal balance; or (iii) the most recent
appraised value of the real estate set forth in the appraisal delivered to the
Collateral Custodian at the time of advance.
-13-
Section 2.04 Notice and Manner of Borrowing. (a) The Borrower may
request a Loan hereunder (in accordance with the procedures more particularly
set forth in Article IV hereof) by delivering to the Agent a completed Borrowing
Base Certificate executed by its chief financial officer (or other officer whose
authorization to so act shall have been provided to the Agent in writing) not
later than 2:30 p.m. on the Business Day of the requested Loan. Each such
Borrowing Base Certificate shall be irrevocable. Unless the Agent elects the
procedure set forth in Section 2.04(b) below, the Agent shall by 3:00 p.m. on
the Business Day of the receipt of such request notify each other Bank of the
proposed Loan. After receipt of a request for a Loan hereunder, each Bank shall
make available to the Agent by 4:00 p.m. on the Business Day of the receipt of
such request, into Account Number 2000000998262, at the Agent's address in funds
immediately available to the Agent, such Bank's ratable share of such Loan. Upon
receipt of such funds by the Agent and upon satisfaction of all of the terms of
this Agreement, including satisfaction of all conditions precedent, and upon
fulfillment of all of the applicable conditions set forth in Article IV hereof,
the Agent will immediately make such funds available to the Collateral Custodian
for the benefit of the Borrower. The Agent shall have no obligation to make
funds available to the Borrower in excess of amounts received by the Agent from
the Banks. If one or more Banks fail to make available to the Agent such Bank(s)
ratable share of any Loan as to which the Agent has advanced the full amount of
the Loan requested by the Borrower, the Borrower shall be obligated to repay to
the Agent for the Agent's account the amount, with interest at the rate
applicable to the Loan, so advanced by the Agent and not advanced by the Bank(s)
in amounts and at the times the Borrower otherwise would be obligated to repay
such Loan. Unless the Agent shall have been notified by a Bank prior to 10:00
a.m. on the date such Bank's ratable share of any Loan is to be made by such
Bank that such Bank does not intend to make such ratable share available to the
Agent, the Agent may (but shall not be obligated to) assume that such Bank has
made such proceeds available to the Agent on such date, and the Agent, in
reliance upon such assumption may (but shall not be obligated to) make available
to the Collateral Custodian on behalf of the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Bank on the date the Loan is made, the Agent shall be entitled to recover such
amount on demand from such Bank (or, if such Bank fails to pay such amount
forthwith upon demand, from the Borrower) together with interest thereon at a
rate per annum equal to the Federal Funds rate for each day during the period
between the date that the Agent advances the Loan and the date on which the Bank
makes its ratable share of the Loan available to the Agent.
(b) The Agent, in its sole discretion, may elect not to notify the
Banks immediately of Loan requests made by the Borrower, but may instead advance
its own funds on a timely basis in response to such requests provided that the
Agent has no actual knowledge that a Default or Event of Default exists
hereunder and the Borrower is otherwise in conformance with the terms of this
Agreement, and then provide notification and a request for funds to the Banks
once each week on the same day, such day to be specified from time to time by
the Agent to the other Banks in writing, in which case the Agent shall on the
designated day (or if such day is not a Business Day, the next succeeding
Business Day) not later than 11:00 a.m., notify each other Bank of the aggregate
dollar amount of all Loans advanced by the Agent pursuant to Subsection (a)
above during the immediately preceding week net of proceeds of sale of Mortgage
Loans received during such week. By 2:00 p.m. on the same day, each Bank shall
make available to the Agent, into Account Number 2000000998262, at the Agent's
address, in funds immediately available to the Agent, such Bank's ratable share
of all such net Loans made during
-14-
the previous week. If Loans have been advanced by the Agent without actual
knowledge that a Default or Event of Default exists hereunder and any Bank fails
to make available to the Agent any amounts so required to be paid, the Agent
shall be entitled to recover such amount on demand from such Bank (or, if such
Bank fails to pay such amount forthwith upon demand, from the Borrower) together
with interest thereon at a rate per annum equal to the Federal Funds rate for
each day during the period between the date that the Agent made demand on the
Bank and the date on which the Bank makes its ratable share of the Loan or Loans
available to the Agent. The Agent shall not use the weekly settlement procedure
set forth in this Section 2.04(b) if Agent is not a Bank or, if any advance to
be made pursuant thereto would, if made, cause the Agent (in its capacity as a
Bank) to exceed its proportionate share of the Commitment.
Section 2.05 Payment of Principal. (a) The Borrower shall take all
actions required so that all Collateral Sale Proceeds will be paid directly to
the Collateral Custodian for the benefit of the Agent and the Banks and shall be
deposited into the Clearing Account. Without limiting the generality of the
foregoing, the Borrower shall cause all Qualified Investors, when making payment
for Mortgage Loans, to remit directly to the Collateral Custodian, by way of
wire transfer into the Clearing Account, from such Mortgage Loan proceeds, as
payments of principal hereunder, an amount equal to all amounts advanced by the
Collateral Custodian on behalf of the Agent and the Banks with respect to such
Mortgage Loans. In the event that notwithstanding the foregoing any such
Collateral Sale Proceeds shall be paid to the Borrower, the Borrower shall,
immediately upon such receipt, pay same over directly to the Collateral
Custodian; and while in the Borrower's possession, such amounts shall be held in
trust for the Agent on behalf of the Banks. The Borrower shall also make
payments of principal as required in accordance with Section 2.08 hereof.
Provided that no Default or Event of Default has occurred and is continuing, the
Collateral Custodian shall remit to the Borrower Collateral Sale Proceeds in
excess of the amounts due hereunder.
(b) All Obligations shall be repaid in full upon the Expiration
Date.
Section 2.06 Interest. (a) Generally. The Borrower will pay
interest monthly on the Outstanding Credit, until the Outstanding Credit is
paid in full with interest, at the Base Rate.
(b) Distribution of Interest; Calculation; Etc. Upon actual
receipt by the Agent, interest shall be distributed pro rata to all of the
Banks; provided, that in the case of weekly settlement pursuant to Section
2.04(b), the Agent shall be entitled to and shall retain for its own account, as
to any Bank, all interest accrued prior to receipt by the Agent of such Bank's
ratable share of Loans advanced by the Agent. Any principal amount not paid when
due (at maturity, by acceleration or otherwise) shall bear interest thereafter
(including after judgment is entered against the Borrower), payable on demand,
at the Default Rate. Any change in the interest rate resulting from a change in
the Base Rate shall become effective as of 12:01 a.m. on the date that the Base
Rate changes. Interest shall be calculated on the basis of a year of three
hundred sixty days for the actual number of days elapsed.
Section 2.07 Notes. All Loans made under this Agreement shall be
evidenced by, and repaid with interest in accordance with, promissory notes of
the Borrower, one each payable to the order of each Bank in substantially the
form of Exhibit 2.07 attached hereto, duly
-15-
completed, each such note to be in an original principal amount equal to such
Bank's proportionate share of the Commitment (the "Notes"). The amount of each
Loan and payment of principal amount received by the Agent shall be recorded in
the books and records of the Agent and the appropriate Bank, which books and
records shall, in the absence of manifest error, be conclusive as to the
outstanding balance of and other information related to the Loans. Each Bank
shall be entitled at any time to endorse on a schedule attached to its
respective Note the amount and type of each Loan and information relating
thereto.
Section 2.08 Mandatory Prepayment. (a) To the extent that the
Outstanding Credit exceeds the lesser of the (i) Commitment or (ii) the
Borrowing Base, the Borrower shall immediately either (A) make a prepayment on
the Outstanding Credit in an amount equal to such excess or (B) if no Default or
Event of Default exists hereunder, provide additional Collateral so that the
Outstanding Credit does not exceed the Borrowing Base.
(b) All Collateral Sale Proceeds shall be paid directly to the
Collateral Custodian by the Qualified Investor or other Person making such
payment; and interest shall continue to accrue on the Loan to be repaid with
such proceeds until the Agent actually receives the funds to be applied by the
Agent to reduce the Outstanding Credit.
(c) If for any reason a Wet Mortgage Loan is not closed and funded
on the scheduled date, the Borrower will prepay the Wet Loan made in respect of
such Wet Mortgage Loan on the immediately following Business Day.
Section 2.09 Fees.
(a) The Borrower shall pay a fee to the Agent pursuant to the
terms of the fee letter between the Borrower and the Agent.
(b) The Borrower shall pay to the Agent, for the pro rata benefit
of the Banks, the following fees:
(1) A Non-Conforming Mortgage Loan fee in an amount equal to 0.25%
per annum multiplied by the average monthly amount of the Non-Conforming Loans
pledged as Collateral during the prior calendar month divided by the total
Mortgage Loans pledged during such month multiplied by the average Loans
outstanding during such month, which fee shall be paid according to Section 2.10
hereof;
(2) An Aged Mortgage Loan Inventory fee in an amount equal to
0.75% per annum multiplied by the average monthly amount of the Aged Mortgage
Loan Inventory pledged as Collateral during the prior calendar month divided by
the total Mortgage Loans pledged during such month multiplied by the average
Loans outstanding during such month, which fee shall be paid according to
Section 2.10 hereof; and
(3) An Eligible Repurchase Mortgage Loan fee in an amount equal to
0.75% per annum multiplied by the average monthly amount of Eligible Repurchase
Mortgage Loans pledged as Collateral during the prior calendar month divided by
the total Mortgage Loans pledged during such month multiplied by the average
Loans outstanding during such month, which fee shall be paid according to
Section 2.10 hereof.
-16-
Section 2.10 Method of Payment of Interest and Fees. The Agent shall
submit a ▇▇▇▇ to the Borrower for interest and fees on or before the fifth
Business Day of each month. The Borrower shall make payment of interest, fees,
and other amounts under this Agreement and under the Notes by means of the
Agent's direct charge to the Operating Account on the seventh Business Day of
each month. The Borrower hereby authorizes the Agent to make such charges from
the Operating Account and in the event there are insufficient funds in the
Operating Account at the time the Agent attempts to make the charge, the Agent
may charge from time to time against any account the Borrower maintains with the
Agent (excluding any account containing Escrow Deposits) the amount so due. The
Borrower, however, shall at all times remain obligated to make such payments
when due. Upon actual receipt of fees due under Section 2.09(b) of this
Agreement, the Agent shall pay an applicable pro rata share of such fees due to
the Banks. Except to the extent provided in this Agreement, whenever any payment
to be made under this Agreement or under the Notes shall be stated to be due on
any day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.
Section 2.11 Use of Proceeds. The Borrower will use the proceeds of
the Loans only to originate, purchase or repurchase Mortgage Loans which will be
Eligible Mortgage Loans. The Borrower will not, directly or indirectly, use any
part of such proceeds: (a) for the purpose of purchasing or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, (b) to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock, or (c) to make any Distributions
or investments of any kind.
Section 2.12 Reliance Upon Instructions. Without limiting the
coverage of any other indemnities provided in this Agreement, the Borrower
hereby indemnifies and agrees to hold harmless the Agent and each of the Banks,
and their respective officers, employees and agents from and against any and all
liabilities, damages, losses, costs and expenses, including counsel fees,
howsoever arising out of any actions taken by the Agent or any Bank in reliance
upon telephonic, telecopier or other instructions believed in good faith to have
been given under this Agreement on any of the Borrower's behalf by a Person
designated by the Borrower.
Section 2.13 Reduction and Termination of Commitment. (a) The
Borrower shall have the right at any time and from time to time, upon three (3)
Business Days' prior written notice to Agent, to reduce the Commitment in whole
or in part without penalty or premium, provided that: (i) any such reduction
shall be in an aggregate amount not less than Five Million Dollars ($5,000,000);
and (ii) on the effective date of such reduction the Borrower shall make a
prepayment of the Outstanding Credit in an amount, if any, by which the
Outstanding Credit exceeds the amount of the Commitment as then so reduced,
together with accrued interest on the amount so prepaid. All reductions in the
Commitment shall reduce each Bank's share of the Commitment proportionally.
(b) Any termination or reduction of the Commitment pursuant to
subsection 2.13(a) shall be permanent, and the Commitment cannot thereafter be
restored or increased without the written consent of all Banks.
-17-
ARTICLE III
COLLATERAL
Section 3.01 Security Interest. The Borrower hereby grants to the
Agent for the benefit of the Banks, as one general, continuing collateral
security for the Loan and for any other sums owing from the Borrower to the
Agent and the Banks under the Obligations and the Notes, a security interest in
all Mortgage Loans now or hereafter made and all Mortgage-backed Securities
which have been pledged to the Agent (whether by delivery to the Agent, to the
Collateral Custodian, or to any other third party on the Agent's behalf or
otherwise) or upon which any advance is made by the Banks, and in the Mortgage
Note and Mortgage evidencing said Mortgage Loan, and in all accounts,
instruments, general intangibles, property, rights proceeds and payments
relating thereto, including without limitation the following:
(a) All payments and prepayments of principal, interest, and other
income due or to become due thereon and all proceeds therefrom, and all the
right, title and interest of every nature whatsoever of the Borrower in and to
the same and every part of such property including, without limitation, the
following:
(1) All rights, liens and security interest existing with
respect thereto or as security therefor;
(2) All hazard insurance policies, title insurance policies or
condemnation proceeds with respect thereto and all FHA insurance, VA guarantees,
PMI or any other guarantee of payment and the proceeds thereof;
(3) All prepayment premiums and late payment charges with
respect thereto;
(b) All real estate acquired by the Borrower by deed in lieu of
foreclosure or by foreclosure attributable to any such Mortgage Loan;
(c) All accounts and receivables of any kind that relate to
Eligible Repurchase Mortgage Loans;
(d) All Take-Out Commitments, Mortgage-backed Securities, and/or
pool participation certificates and the proceeds resulting from sales of same by
the Borrower;
(e) All right, title and interest of the Borrower in and to all
files, surveys, certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records, and other records, information, and
related data of the Borrower;
(f) The proceeds from the sale of any Collateral;
(g) Any other property and proceeds thereof that may, from time to
time hereafter, be subject to the security interests created hereby; and
-18-
(h) All business records, computer tapes, software, microfiche,
etc., necessary to identify and locate the Collateral.
Section 3.02 Security Interest in Mortgage-backed Securities. The
Borrower'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 Agent's security interest only against payment to the Agent
of the amount due the Banks in connection with such Pledged Mortgages in
accordance with this Agreement or against the issuance of such Mortgage-backed
Securities and the continuation of the Agent's first priority, perfected
security interest in such Mortgage-backed Securities and the proceeds thereof
until payment due the Banks in respect of said Pledged Mortgages is made to the
Agent.
(b) In the case of Mortgage-backed Securities created from Pledged
Mortgages, the Agent 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 Agent's name or the name or names
of its designees. The Agent shall cause delivery of the Mortgage-backed
Securities to be made to the Qualified Investor or the book entries registered
in the name of the Qualified Investor or the Qualified Investor's designee only
against payment therefor. The Borrower acknowledges that the Agent 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 Agent, and the Borrower agrees
upon request of the Agent, to execute and deliver to such other financial
institutions the Borrower's written concurrence in any such standing
arrangements.
Section 3.03 Responsibility for Collateral. All Collateral at any
time delivered to the Collateral Custodian hereunder shall, to the extent
reasonably practical under the circumstances, be held by the Collateral
Custodian pursuant to the terms of the Custodial Agreement.
Section 3.04 Representations and Warranties Concerning Collateral.
The Borrower hereby represents and warrants to the Agent and the Banks and by
submitting each loan request shall be deemed to have represented and warranted
to the Agent and the Banks that as of the date of such loan request and as to
each Pledged Mortgage to which the loan request relates:
(a) Ownership; No Liens; Pledge to the Agent. The Borrower is the
legal and equitable owner of such Pledged Mortgage and all other items of
Collateral related thereto, free and clear of all Liens, except for the Lien
granted under this Agreement. Pledged Mortgages and other items of Collateral
related thereto have been duly authorized by the Borrower thereunder and all
items of Collateral (1) comply, as applicable, with all of the requirements of
this Agreement, including those required for inclusion in the Borrowing Base,
and (2) have been validly pledged or assigned to the Agent, subject to no other
Liens, and the Agent has a first perfected Lien therein within the meaning of
the applicable Uniform Commercial Code. The
-19-
Borrower has the full right and authority to pledge the Collateral pledged by it
hereunder and has not pledged the Collateral, or any part thereof, to any other
Person.
(b) Compliance with Laws; Enforceability; Modification; Required
Documents, Etc. Each such Pledged Mortgage and documents related thereto (1) has
been made in compliance, in all respects, with all requirements of the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the Federal
Truth-In-Lending Act and all other applicable Laws, (2) is genuine, valid, duly
authorized, properly executed, properly recorded (or duly delivered to the
appropriate recording office for recordation) and enforceable in accordance with
its terms, without defense or offset, (3) has not been modified or amended and
has not had any requirements thereof waived except (i) for minor modifications
in the ordinary course of the Borrower's business which do not in any event
materially adversely affect the value or marketability of the relevant item of
Collateral or (ii) with respect to Mortgage Loans creating a valid first lien,
modifications or waivers which are required by FNMA or FHLMC, in connection with
changes to FNMA's or FHLMC's rules, regulations or guidelines, (4) complies with
the terms of this Agreement, (5) has been fully advanced in the respective face
amounts thereof and (6) is secured by a Mortgage which is a first or second Lien
on the residential real property described therein. With respect to each such
Pledged Mortgages, the Borrower has in its possession all documents and
instruments required to be possessed by the Borrower (x) under this Agreement,
(y) under FNMA's or FHLMC's rules, regulations or guidelines, if applicable, and
(z) under a Take-Out Commitment, if any, other than those documents and
instruments which are in the possession of the Agent.
(c) Defaults. No default, nor any event which would become a
default with notice or lapse of time or both, has occurred and is continuing
under any Pledged Mortgage for a period in excess of thirty days.
(d) Compliance with Agency Requirements or Underwriting Standards.
(1) All Pledged Mortgages that are Conforming Mortgage Loans comply in all
material respects with all applicable requirements for purchase under the FNMA
or FHLMC standard form of selling contract for similar Mortgage Loans and any
supplement thereto then in effect, including, but not limited to, the
representations and warranties made therein, or such Conforming Mortgage Loans
comply in all respects with the requirements of the Qualified Investors to whom
such Mortgage Loans are to be sold. (2) All Pledged Mortgages that are Jumbo
Mortgage Loans comply in all material respects with all applicable requirements
for purchase under the FNMA or FHLMC standard form of selling contract for
similar Mortgage Loans and any supplement thereto then in effect, including, but
not limited to, the representations and warranties made therein (excluding
compliance due to the principal amount thereof), or such Jumbo Mortgage Loans
comply in all respects with the requirements of the Qualified Investors to whom
such Mortgage Loans are to be sold. (3) All Pledged Mortgages that are
Non-Conforming Mortgage Loans are written in accordance with guidelines
stipulated in Schedule A.
(e) Insurance Relating to Pledged Mortgages. All fire and casualty
policies covering the premises encumbered by each Mortgage included in the
Pledged Mortgages (1) name the Borrower as the insured under a standard
mortgagee clause not less favorable to the Borrower than the applicable standard
mortgagee endorsement, (2) are in full force and effect, and (3) afford
insurance against fire and such other hazards as are usually insured against in
the
-20-
broad form of extended coverage insurance from time to time available. All
flood, title and other insurance policies (including required private mortgage
insurance) (i) name the Borrower as an additional insured under a standard
mortgagee clause not less favorable to the Borrower than the applicable standard
mortgagee endorsement, or in the case of title insurance, the insured mortgagee,
(ii) are in full force and effect, and (iii) afford insurance against the
hazards and risks required to be insured against by any Agency or prudent
underwriting practices. The Borrower has complied with all requirements of the
Agencies or any Qualified Investor for obtaining insurance with respect to such
Pledged Mortgage.
(f) Escrow Deposits. All Escrow Deposits are held by the Borrower
in accordance with applicable Laws and any agreements relating to same and have
been and will be applied to the obligations for which they were deposited in
accordance with any agreements relating to same.
Section 3.05 Release of Security Interest. (a) The Collateral
Custodian may, with the consent of the Agent, within a reasonable time of the
receipt of a request therefor from the Borrower, release any Collateral
specified in such request from the Lien granted hereby and thereupon deliver the
same to the Borrower, provided, however, that (a) no Default or Event of Default
shall have occurred and be continuing or would result from such release, and
(b) after giving effect to such release and delivery, the Borrowing Base of the
remaining Collateral shall be at least equal to the Outstanding Credit.
(b) Upon receipt by the Collateral Custodian of payment in an
amount equal to all amounts advanced by the Banks with respect to a Mortgage
Loan or Mortgage Pool, the Lien in such Mortgage Loan or the Mortgage-backed
Security issued with respect to such Mortgage Pool and in any proceeds thereof,
shall, except in the event of the existence of a Default or Event of Default or
if a Default or Event of Default would result from such release, be released
automatically.
Section 3.06 Covenants and Agreements Concerning Collateral.
The Borrower covenants and agrees as follows:
(a) Defense of Interests. It will defend, at its sole expense, the
right, title and interest of the Agent and the Banks in and to the Pledged
Mortgages, the Pledged Securities and all other items of Collateral against the
claims and demands of all Persons.
(b) Modification; Etc. Except as provided in Section 3.03(b), it
shall not amend, modify, or waive any of the terms and conditions of, or settle
or compromise any claim in respect of, any Pledged Mortgages, Pledged Securities
or other Collateral, or any rights related to any of the foregoing.
(c) Sale or Encumbrance. It shall not sell, option, assign,
transfer or otherwise alienate any Collateral, other than in the ordinary course
of its business and in accordance with the terms and provisions of this
Agreement, or permit any Collateral or any interest therein to be subject to a
Lien, except the Lien granted under this Agreement.
(d) Performance under Servicing Contracts; Escrow Deposits. It
shall service or cause to be serviced all Pledged Mortgages and all Mortgage
Loans backing Pledged
-21-
Securities in accordance with the standard requirements of the issuers of
Take-Out Commitments covering the same. It shall hold all Escrow Deposits in
accordance with all applicable Laws and all agreements relating to such Escrow
Deposits, without commingling the same with non-escrow funds, and shall hold and
apply the same for the purposes for which such Escrow Deposits were collected in
accordance with all applicable Laws and agreements.
(e) Failure to Qualify for Inclusion in Borrowing Base and Related
Matters. It shall notify the Agent of (1) any default under any Pledged Mortgage
which continues beyond sixty days in each monthly Collateral report, (2) the
failure of any item of Collateral which is required by the terms hereof to be
covered by a Take-Out Commitment to be so covered, (3) the failure of any item
of Collateral to satisfy any requirements of this Agreement for inclusion in the
Borrowing Base, and (4) any other event or occurrence which could cause a
Material Adverse Change in the Collateral.
(f) Further Assurances. From time to time, at the expense of the
Borrower (including the payment of all filing fees whether the items are filed
by the Borrower or by the Agent), the Borrower will promptly execute and deliver
all further instruments and documents, and take all further actions, that may be
necessary or desirable, or that the Agent or Collateral Custodian may request,
in order to preserve, perfect and protect any Lien granted or purported to be
granted hereby or to enable the Agent and the Banks to exercise and enforce
their rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Borrower will execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Agent or any
Bank may request, in order to perfect and preserve the Lien granted or purported
to be granted to the Agent for the benefit of the Banks hereby.
(g) Inspection. The Agent and/or any Bank, or a representative
thereof, shall have the right at any reasonable time from time to time to enter
the Borrower's premises to inspect the Collateral, documents and agreements
related thereto and the records relating to the Collateral (including field or
collateral audits). The Agent and each of the Banks shall have the right to make
abstracts or photocopies from the Borrower's books and records pertaining to the
Collateral and the cost and expense of such abstracts and photocopy for the
Agent or the Banks shall be borne by the Borrower.
Section 3.07 List of Qualified Investors. When requested by the
Agent, the Borrower shall submit to the Agent for its approval, a List of
Qualified Investors to which the Borrower may direct the delivery of Mortgage
Loans in accordance with the terms of this Agreement, from time to time. The
Agent shall have the right, in its sole discretion, to approve or disapprove of
any Qualified Investors so listed by the Borrower at any time upon notice to the
Borrower (which notice may be telephonic) and the initial acceptance of a
Qualified Investor by the Agent shall not prevent the subsequent rejection of
any such Qualified Investor by the Agent. The Borrower may add or delete
Qualified Investors to or from, as the case may be, the List of Qualified
Investors by submitting an updated List of Qualified Investors to the Agent,
which updated List of Qualified Investors shall be subject in all respects to
the approval of the Agent. The Agent shall, from time to time, distribute the
List of Qualified Investors to the Banks.
-22-
Section 3.08 Uniform Commercial Code Financing Statements. The Agent
is hereby authorized to file in the name of the Borrower, without the need for
the Borrower's signature thereto, such Uniform Commercial Code financing
statements, amendments thereto and continuations thereof which the Agent at any
time determines is necessary to perfect or better assure the Lien and other
benefits intended to be afforded hereby. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
Section 3.09 Collection Rights. Unless a Default or Event of Default
shall have occurred and be continuing, and except with respect to Collateral
Sale Proceeds which shall be paid to the Collateral Custodian for the benefit of
the Banks directly by a Qualified Investor or other Person purchasing a Mortgage
Loan or Mortgage Pool, the Borrower shall be entitled to receive and collect
directly all principal and interest payable to the Borrower in respect of the
Collateral and to exercise all voting or consensual powers in respect of the
Collateral in a manner not inconsistent with the terms of this Agreement. Upon
the occurrence and during the continuance of a Default or an Event of Default,
the Agent shall be entitled to receive and collect all sums payable to the
Borrower in respect of the Collateral, and in such case (a) Agent may, in its
name or in the name of the Borrower or otherwise, demand, ▇▇▇ for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for any of the Collateral, but shall be under no obligation to do
so, (b) the Borrower shall forthwith pay to the Agent at its principal office
all amounts thereafter received by the Borrower upon or in respect of any of the
Collateral, advising the Agent as to the source of such funds, and (c) all
amounts so received and collected by the Agent shall be held by the Agent as
part of the Collateral.
Section 3.10 Attorney-in-Fact. The Agent or a duly appointed agent
or representative of the Agent is hereby appointed the agent and
attorney-in-fact of the Borrower for the purpose of carrying out the provisions
of this Agreement, taking any action and executing any instruments which the
Agent may deem necessary or advisable to accomplish the purposes hereof and to
obtain, on behalf of the Banks, the benefits of this Agreement, the other Loan
Documents, the Collateral and the security intended to be provided to the Banks
hereby and thereby, which agency and appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Agent shall have the right and power in the place and stead of
the Borrower, and in the name of the Borrower or otherwise (from time to time
and without prior notice to or consent from the Borrower, and without releasing
or in any manner affecting the Borrower's Obligations hereunder): (a) to
receive, endorse and collect all checks, drafts or chattel paper made payable to
the order of the Borrower (provided that all such endorsements recite that they
are made without recourse) representing any payment on account of the principal,
interest or other amount on any of the Pledged Mortgages, Pledged Securities or
other items of Collateral, to give full discharge for the same and to complete
any endorsements or assignments made in blank or which are updated or otherwise
incomplete or to execute new endorsements (provided that all such endorsements
recite that they are made without recourse) or assignments to any Persons,
(b) to ask, demand, collect, ▇▇▇ for, recover, receive and give, acquittances
and receipts for moneys due and to become due under or in respect of any of the
Collateral, (c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the collection
or completion of, or perfection of the Agent's interest in any of the Collateral
or otherwise to enforce the rights of the Borrower or the Agent with respect to
any of the Collateral, this Agreement or the other
-23-
Loan Documents, including, without limitation, the endorsement of any Mortgage
Note, and the creation, execution and recording of any Assignment of Mortgage
for any Pledged Mortgage and (d) if the Borrower fails to perform any obligation
under this Agreement or the other Loan Documents, or cause performance of such
obligation.
Section 3.11 Borrower Remains Liable. Notwithstanding anything
herein to the contrary: (a) the Borrower shall remain liable under the contracts
and agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (b) the exercise by the Agent and/or any
Bank of any of the rights hereunder shall not release the Borrower from any of
its duties or obligations under the contracts and agreements included in the
Collateral; and (c) the Agent shall not have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Agent be obligated to perform any of the obligations or
duties of the Borrower thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Initial Loan. The obligation of
each Bank to continue to allow its current Loans to remain outstanding or to
make the initial disbursement of its portion of a new Loan, as applicable, is
subject to the condition precedent that the Agent shall have received on or
before the Closing Date each of the following documents, in form and substance
satisfactory to the Agent and its counsel, as applicable, and each of the
following requirements shall have been fulfilled:
(a) Amended and Restated Mortgage Warehousing Loan and Security
Agreement. This Agreement duly executed by the Borrower.
(b) Evidence of Due Organization of and all Corporate Actions by
the Borrower. A certificate of the Secretary or Assistant Secretary of each of
the Borrower, dated the Closing Date, attesting to the certificate of
incorporation, by-laws or operating agreement of the Borrower and all amendments
thereto, and to all corporate actions taken by the Borrower, including, without
limitation, resolutions of its board of directors, authorizing the execution,
delivery and performance of the Loan Documents, and each other document to be
delivered by the Borrower pursuant to the Loan Documents;
(c) Incumbency and Signature Certificate of Borrower. A
certificate of the Secretary, Assistant Secretary or Managing Member of the
Borrower, dated the Closing Date, certifying the names and true signatures of
the officers of the Borrower authorized to sign the Loan Documents, and the
other documents to be delivered by the Borrower under the Loan Documents
including, without limitation, each loan request;
(d) Good Standing Certificates for the Borrower. A certificate,
dated reasonably near the Closing Date, from the Secretary of State (or other
appropriate official) of the Borrower's state of incorporation or formation
certifying as to the due incorporation and
good standing of the Borrower and
-24-
certificates, dated within one month of the Closing Date, from the Secretary of
State (or other appropriate official) of each other jurisdiction where the
Borrower is required to be qualified to conduct business or where such
qualification is necessary to enforce any Mortgage Loan, certifying that the
Borrower is duly qualified to do such business and is in good standing in such
state;
(e) Notes. The Notes duly executed by the Borrower;
(f) Financing Statements, Etc. (1) To the extent requested by the
Agent, duly executed financing statements (UCC-1) to be filed under the Uniform
Commercial Code of all jurisdictions necessary or, in the opinion of the Agent,
desirable to perfect the Liens created by this Agreement; duly executed copies
of the termination statements (UCC-3) to be filed under the Uniform Commercial
Code of all jurisdictions necessary, or in the opinion of the Agent, desirable
to terminate any Liens in favor of any party other than the Agent; and
(2) Uniform Commercial Code searches identifying all of the financing statements
on file with respect to the Borrower;
(g) FNMA Tri-Party Agreement. An executed Tri-party agreement
with FNMA;
(h) Material Adverse Change. As of the Closing Date no Material
Adverse Change has occurred since the date of the financial statements referred
to in Section 5.05 hereof.
(i) Fees. All fees, costs and expenses payable to the Agent and
its legal counsel required to be paid at or prior to the closing of the
transactions contemplated hereby, shall have been paid in full on the Closing
Date.
(j) Opinion of Counsel for the Borrower. A favorable opinion of
counsel for the Borrower, acceptable to the Agent dated the Closing Date, in
substantially the form of Exhibit 4.01(9) and as to such other matters as the
Agent or the Banks may reasonably request;
(k) Guaranty. The Guaranty, in the form attached hereto as
Exhibit 4.01(k), duly executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(l) Certificate. The following statements shall be true and the
Agent shall have received a certificate signed by the President of the Borrower
dated the Closing Date stating that:
(1) The representations and warranties contained in this
Agreement and in each of the other Loan Documents are correct on and as of the
Closing Date as though made on and as of such date; and
(2) No Default or Event of Default has occurred and is
continuing;
(m) Financial Information. The Borrower shall have delivered to
the Agent and the Banks financial statements for the period ending 9/30/99 along
with a compliance certificate setting forth the Tangible Stockholder's Equity
and Leverage Ratio (and the related calculations thereof calculating as of such
date executed by the CFO of the Borrower; and
-25-
(n) Additional Documentation. Such other approvals, opinions or
documents as the Agent may reasonably request.
Section 4.02 Conditions Precedent to All Loans. The obligations of
the Banks to make each Loan (including the initial Loan), shall be subject to
the further conditions precedent that on the date of providing each such Loan
the following statements shall be true:
(a) All the representations and warranties contained in this
Agreement and in each of the other Loan Documents are correct on and as of the
date of providing such Loan as though made on and as of such date;
(b) No Default or Event of Default has occurred and is continuing,
or could result from providing such Loan; and
(c) There has been no Material Adverse Change of any kind.
Section 4.03 Loan Requests for Loans to Fund Mortgage Loans. In
connection with each request for a Loan to fund a Mortgage Loan, the Borrower
shall deliver to the Collateral Custodian a signed loan request in form and
content satisfactory to the Collateral Custodian. For each Loan requested, the
Collateral Custodian shall receive the written loan request not later than 10:00
a.m. on the Business Day of the requested Loan. Unless the Borrower has
previously funded or purchased the Mortgage Loan to be pledged with the
Borrower's own funds, not later than 10:00 a.m. on the Business Day of such
requested Loan, the Borrower shall deliver to the Collateral Custodian all of
the Collateral Documents as listed on Exhibit 4.03 attached hereto (the
"Description of Collateral Documents"), including, without limitation, each of
the following:
(a) written wire instructions advising the Collateral Custodian to
wire Loan proceeds from the Borrower's account to the Closing Agent reflecting
the intended amount and date of disbursement of the proceeds of the Mortgage
Loan and giving other wiring instructions as needed by the Collateral Custodian;
(b) the original of the Mortgage Note duly executed at settlement,
and duly endorsed by the Borrower in blank, without recourse, and containing any
necessary intervening endorsements on a Mortgage purchased by the Borrower;
(c) a copy of the Mortgage duly executed at settlement and in
recordable form, certified in writing by the settlement agent as being a true
and accurate copy of the original Mortgage;
(d) Original assignment of the Mortgage, in recordable form and
executed by the Borrower in blank, and with respect to a Mortgage purchased by
the Borrower, the original recorded intervening assignment or a copy thereof
certified in writing by the Borrower as being a true and accurate copy of the
original intervening assignment delivered for recording, and/or a Mortgage
Electronic Reporting Systems ("MERS") assignment of the Mortgage securing the
Mortgage Note by the Borrower in the format as may be prescribed by MERS from
time to time, executed in recordable form in blank. If appropriate filing and
recording information regarding such Mortgage, including the MERS Identification
Number ("MIN"), has not been inserted into
-26-
the assignment and the Agent has determined that such information is necessary
to perfect its Security Interest in such Mortgage, the Borrower shall promptly
provide such information to the Bank when available and hereby authorizes the
Collateral Custodian to insert such information as appropriate (whether or not
such information is supplied to the Collateral Custodian by the Borrower);
however, the Collateral Custodian shall not have any obligation to insert such
information, and may require the missing information to be completed by the
Borrower.
(e) With respect to a Mortgage Loan to be pledged by the Borrower
which was funded by the Borrower with the Borrower's own funds or purchased by
the Borrower, the Borrower will deliver the documents required by this
Section 4.03 at or prior to the time of making its loan request.
Upon receipt thereof, the Collateral Custodian shall review all documents and
instruments to determine that they are satisfactory.
Section 4.04 Disbursing Loans. Upon satisfaction of all conditions
for the making of a Loan under this Agreement and subject to the limitations
contained herein, on the date of the requested Loan, the Collateral Custodian
shall, subject to the next sentence, wire transfer from the Advance Account to
the Closing Agent account designated in the applicable Borrower's loan request
(or with respect to a requested Loan where the Pledged Mortgage was previously
funded by the applicable Borrower with the Borrower's own funds, to the
Operating Account) the requested Loan amount or portion thereof representing the
Collateral Value of Eligible Mortgages for the applicable Mortgage Loan. To the
extent that the amount of funds to be provided by the Banks are insufficient to
close and fund the applicable Mortgage Loan, the Collateral Custodian shall
transfer from the Operating Account to the Advance Account sufficient additional
funds, and the Collateral Custodian will not initiate a wire transfer of funds
to the applicable Closing Agent until sufficient additional funds are on
deposit. To the extent that the amount of funds to be provided by the Banks
exceeds the amount needed to close and fund the applicable Mortgage Loan, and to
the extent that the amount of funds to be provided by the Banks is due to excess
Collateral, the Collateral Custodian shall transfer the excess amount to the
Operating Account for use by the Borrower in accordance with this Agreement.
Upon the Agent's deposit of the Loan proceeds into the Restricted Account, the
applicable Loan shall be deemed made.
Section 4.05 Wet Mortgage Loan Closings. (a) The Borrower may
deliver Wet Mortgage Loans in pledge under this Agreement for inclusion in the
Borrowing Base and as Collateral for a requested Loan up to the Wet Mortgage
Loan Sublimit without the prior delivery of all original Collateral Documents
otherwise required by this Agreement. In connection with the pledge of any such
Wet Mortgage Loans, the Borrower shall deliver to the Collateral Custodian a
written loan request which specifies that the requested Loan shall fund a Wet
Mortgage Loan. In order for any Wet Mortgage Loan to be included in the
Borrowing Base, and for the Collateral Custodian to consider disbursing the Loan
proceeds related thereto, the Collateral Custodian must receive and approve the
applicable loan request not later than 12:00 noon on the Business Day of the
applicable Mortgage Loan Closing Date. Upon such timely receipt of the required
loan request, the Collateral Custodian shall, provided that the Collateral
Custodian determines that the Collateral Documents for such Wet Mortgage Loan
are satisfactory, include any such Wet Mortgage Loan in the Borrowing Base on
the applicable
-27-
Mortgage Loan Closing Date notwithstanding that such Wet Mortgage
Loan may not yet have been closed and funded for purposes of permitting the
requested Wet Loan to be made in respect thereof. If a Wet Mortgage Loan shall
not be closed and funded by the Mortgage Loan Closing Date specified, or shall
be closed but subsequently rescinded pursuant to the Truth in Lending Act, the
Borrower shall immediately notify the Collateral Custodian and the Closing Agent
to such effect and such Wet Mortgage Loan shall cease to be included in the
Borrowing Base.
(b) In connection with each Wet Closing, the Borrower agrees that
it shall deliver all Collateral Documents relating to a Wet Mortgage Loan to the
Collateral Custodian not later than ten days after the date of the Wet Closing,
and in the event that the Collateral Custodian shall not have received all such
Collateral Documents complying in all respects with the requirements of this
Agreement within such ten day period, such Wet Mortgage Loan shall cease to be
included in the Borrowing Base and the Borrower shall immediately repay to the
Collateral Custodian all amounts previously advanced in connection with such Wet
Mortgage Loan, unless the Collateral Custodian with the consent of the Agent
extend the date for delivery of such Collateral Documents.
(c) Upon satisfaction of all conditions for the making of a Wet
Loan under this Agreement and subject to the limitations contained herein, Wet
Loans shall be funded in the following manner as directed by the Borrower in
each loan request:
(1) Wire Transfers: On the date of the requested Wet Loan, the
Collateral Custodian shall, subject to the next sentence, wire transfer from the
Advance Account to the Closing Agent account designated in the applicable loan
request the requested Loan amount or portion thereof representing the Collateral
Value of Eligible Mortgages for the applicable Wet Mortgage Loan. To the extent
that the amount of funds to be provided by the Banks are insufficient to close
and find the applicable Wet Mortgage Loan, the Collateral Custodian shall
transfer from the Operating Account to the Advance Account sufficient additional
funds, and the Collateral Custodian will not initiate a wire transfer of funds
to the applicable Closing Agent until sufficient additional funds are on
deposit. Upon the Collateral Custodian's deposit of the Loan proceeds into the
Advance Account, the applicable Wet Loan shall be deemed made, provided,
however, that until the applicable Wet Mortgage Loan is closed and funded, the
Banks shall have a Lien on the Wet Loan proceeds as security for all Obligations
owed to the Banks and the Closing Agent shall hold such Wet Loan proceeds as
agent for and on behalf of the Banks.
(2) Upon closing each Wet Mortgage Loan, the Closing Agent
shall, unless advised by the Collateral Custodian to the contrary (which advice
may be by telephone), deliver the applicable Collateral Documents to the
Borrower for endorsement of the Note and transmittal to the Collateral Custodian
within the ten day time period provided herein unless extended by the Agent or
the Collateral Custodian with the Agent's consent, provided that at no time
shall the aggregate outstanding principal balance of the Mortgage Loans for
which the ten day time period provided herein has been extended exceed One
Million Dollars ($1,000,000) in the aggregate. While the Collateral Documents
are in the Borrower's possession, they shall be held in trust for the benefit of
the Banks and the Borrower shall have no authority to transfer same to any other
Person other than the Collateral Custodian, or, if required by the Collateral
Custodian, at Collateral Custodian's direction.
-28-
(3) The Borrower will not request the delivery of any wire
transfer of Wet Loan proceeds to a Closing Agent who is not approved or has not
delivered an original Closing Agent agreement in accordance with this Agreement.
The Agent shall require the Borrower to obtain at the Borrower's expense "stand
behind," indemnity or similar agreements, or "insured closing letters," for all
Closing Agents in form and substance acceptable to the Agent from title
insurance companies acceptable to the Agent providing assurance to the
Collateral Custodian that funds delivered to a Closing Agent will be applied
only for the purposes intended in accordance with this Agreement and providing
such other assurances as the Agent shall require. The delivery by the Borrower
of any such agreement or letter from an approved title insurance company shall
not affect the rights that the Agent or any other Person would otherwise have by
reason of the breach of any Closing Agent Agreement or otherwise with respect to
any Closing Agent.
Section 4.06 Qualified Investor Requirements; Other Approvals. For
all Loans, the Borrower shall have possession of all other documents required by
the relevant Qualified Investor to be held by the Borrower, and the Agent shall
have received such other approvals, opinions and documents as the Agent may
request.
Section 4.07 Temporary Release of Collateral Documents; Delivery
of Collateral Documents.
(a) Return to the Borrower. The Borrower may from time to time
request in writing that the Collateral Custodian return Mortgage Notes to the
Borrower on a temporary basis for the purpose of correction or completion and
the Collateral Custodian may, provided that there is no Default or Event of
Default hereunder, unless directed not to do so by the Agent, deliver the
requested Mortgage Notes to the Borrower. The written request to release shall
be in the form of a trust receipt in form and content satisfactory to the Agent
and attached hereto as Exhibit 4.07. Promptly upon completion of such correction
or completion, the Borrower shall return such Mortgage Notes to the Collateral
Custodian, but in no case later than ten days from the date same were shipped to
the Borrower. The Collateral Custodian shall not release to the Borrower at any
given time Mortgage Notes related to Pledged Mortgages with an outstanding
principal balance in excess of One Million Dollars ($1,000,000) in the
aggregate. If the Borrower fails to return any Collateral Documents within ten
days of the delivery thereof to the Borrower or if such Collateral Documents are
not corrected or completed so as to comply with the terms of this Agreement, the
Pledged Mortgage to which such Collateral Documents relate shall not be included
in the Borrowing Base.
(b) Delivery to a Qualified Investor. Provided that there is no
Default hereunder, the Borrower may from time to time make requests by written
notice to the Collateral Custodian to deliver Collateral Documents relating to a
Mortgage Loan or Pledged Securities to a Qualified Investor who has issued a
Take-Out Commitment to the Borrower, for review prior to purchase. Provided that
there is no Default or Event of Default hereunder (or the Agent has instructed
the Collateral Custodian not to), the Collateral Custodian shall deliver the
requested Collateral Documents relating to such Mortgage Loan or Pledged
Securities to the Qualified Investor designated by the Borrower, along with a
bailee letter in form and content satisfactory to the Agent. If any Qualified
Investor fails to return any Collateral Documents or Pledged Securities to the
Collateral Custodian within twenty-one days of the delivery thereof or on such
-29-
earlier date requested by the Collateral Custodian or the Agent, the Mortgage
Loan to which such Collateral Documents related or Collateral Value of
Mortgage-backed Securities shall not be included in the Borrowing Base.
(c) Delivery to an Approved Custodian. Provided that there is no
Default hereunder, the Borrower may from time to time make requests by written
notice to the Collateral Custodian to deliver Collateral Documents relating to a
Mortgage Loan or Pledged Securities to an Approved Custodian for purposes of
examination or delivery in connection with the issuance of Mortgage-backed
Securities. Provided that there is no Default or Event of Default hereunder (or
the Agent has instructed the Collateral Custodian not to), the Collateral
Custodian shall deliver the requested Collateral Documents relating to such
Mortgage Loan or Pledged Securities to the Approved Custodian designated by the
Borrower, along with a bailee letter in form and content satisfactory to the
Agent. If any Approved Custodian fails to return any Collateral Documents or
Pledged Securities to the Collateral Custodian within twenty-one days of the
delivery thereof or on such earlier date requested by the Collateral Custodian
or the Agent, the Mortgage Loan to which such Collateral Documents related or
Collateral Value of Mortgage-backed Securities shall not be included in the
Borrowing Base.
Section 4.08 Deemed Representation. Each request for a Loan and
acceptance by the Borrower of any Loan shall constitute a representation and
warranty that the statements contained in Section 4.02 are true and correct both
on the date of such notice and as of the date of the providing of such Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
Section 5.01 Formation, Good Standing and Due Qualification. It is
duly formed, validly existing and in good standing under the laws of the state
of its formation, has the power and authority to own its assets and to transact
the business in which it is now engaged or proposed to be engaged, and is duly
qualified and in good standing under the laws of each other jurisdiction in
which such qualification is required or where such qualification is necessary to
permit it to enforce any Mortgage Loan.
Section 5.02 Power and Authority; No Conflicts. The execution,
delivery and performance by the Borrower of the Loan Documents to which it is a
party has been duly authorized and does not and will not: (1) contravene its
articles of incorporation, by-laws, operating agreement or other formation
documents; (2) violate any provision of, or require any filing (other than the
filing of the financing statements contemplated by this Agreement),
registration, consent or approval under any Law, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower; (3) result in a breach of or constitute a default
under or require any consent under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected; (4) result in, or require,
the creation or imposition of any Lien (other than as created under this
Agreement) upon or with respect to any
-30-
of the properties now owned or hereafter acquired by the Borrower; or (5) cause
the Borrower to be in default under any such Law, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
Section 5.03 Legally Enforceable Agreements. Each Loan Document to
which the Borrower is a party is a legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
Section 5.04 Litigation. There are no actions, suits or proceedings
pending or threatened, against or affecting the Borrower before any court,
governmental agency or arbitrator, which could, in any one case or in the
aggregate, result in (1) a Material Adverse Change or (2) liability to the
Borrower in excess of Two Hundred Fifty Thousand Dollars ($250,000).
Section 5.05 Financial Statements. All financial information
furnished to the Banks concerning the operations of the Borrower on a
consolidated basis, the balance sheets and related statements of income and
retained earnings of the Borrower, as at any date, and for any period ending on
or prior to 10/31/99, fairly present the financial condition of the Borrower at
such date and the results of the Borrower's operations for the periods covered
by such statements. There are no liabilities of the Borrower, fixed or
contingent, which are material but are not reflected on Schedule 5.05 hereto. No
information, exhibit, or report furnished by the Borrower to the Banks in
connection with this Agreement contain any material misstatement of fact or omit
to state a material fact or any fact necessary to make the statements contained
therein not materially misleading.
Section 5.06 Ownership and Liens. The Borrower has title to, or
valid leasehold interests in, all of its properties and assets, real and
personal, including the properties and assets and leasehold interests reflected
in the financial statements referred to in Section 5.05 (other than any
properties or assets disposed of in the ordinary course of business), and none
of the properties and assets owned by it and none of its leasehold interests is
subject to any Lien, except as may be permitted under this Agreement.
Section 5.07 Taxes. The Borrower has filed all tax returns (federal,
state and local) required to be filed and has paid all taxes, assessments and
governmental charges and levies reported thereon to be due, including interest
and penalties, except to the extent they are the subject of a Good Faith
Contest.
Section 5.08 ERISA. The Borrower is in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction has occurred with respect to any Plan; no notice of
intent to terminate a Plan has been filed nor has any Plan been terminated; no
circumstance exists which constitutes grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings; the
Borrower nor any ERISA Affiliate of the Borrower has not completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the
Borrower has met its
-31-
minimum funding requirements under ERISA with respect to all of its Plans and
there are no unfunded vested liabilities; and the Borrower nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
Section 5.09 Subsidiaries. Except as set forth on Schedule 5.09
hereof, the Borrower does not have any Subsidiaries. The ownership of all of the
issued and outstanding shares of stock in the Borrower is held by the Persons
listed on Schedule 5.09 attached hereto, and in the amounts and percentages
listed therein.
Section 5.10 Operation of Business; Prior or Existing Restrictions,
Etc. The Borrower possesses all licenses, qualifications (including licenses and
qualifications required in each state where each Single Family Residence
securing each Mortgage Loan acquired or originated by the Borrower is located),
Agency approvals, permits, franchises, patents, copyrights, trademarks and trade
names, or rights thereto, to conduct the Borrower's business substantially as
now conducted and as presently proposed to be conducted and the Borrower is not
in violation of any valid rights of others with respect to any of the foregoing.
The Borrower has disclosed all written reports, actions and/or sanctions of any
nature threatened, and all reviews, investigations, examinations, audits,
actions and/or sanctions that have been undertaken and/or imposed as of the date
of this Agreement and of which the Borrower has knowledge, by any federal or
state agency or instrumentality (including any Agency) with respect to either
the lending or related financial operations of the Borrower. The Borrower is
operating under any type of agreement or order (including, without limitation, a
supervisory agreement, memorandum of understanding, cease and desist order,
capital directive, supervisory directive, or consent decree) with any state or
federal banking department or government banking or other agency or
instrumentality (including any Agency), and the Borrower is in compliance with
any and all capital, leverage or other financial standards and requirements
imposed by any applicable regulatory authority, agency or instrumentality,
including any Agency.
Section 5.11 No Default on Outstanding Judgments or Orders. The
Borrower has satisfied all judgments and the Borrower is not in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court, arbitrator or federal, state, municipal or other Governmental Authority,
commission, board, bureau, agency or instrumentality, domestic or foreign.
Section 5.12 No Defaults on Other Agreements. The Borrower is not a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any certificate of incorporation or corporate
restriction which could result in a Material Adverse Change. The Borrower is not
in default in any respect in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument which could result in a Material Adverse Change.
Section 5.13 Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower has been and continues to be affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hurricane, hail, earthquake, embargo, act of God or of the public enemy
or other casualty (whether or not covered by insurance), which could result in a
Material Adverse Change.
-32-
Section 5.14 Partnerships. The Borrower is not a partner in any
partnership or any joint venture except as set forth in Schedule 5.14 hereto.
Section 5.15 Environmental Protection. The Borrower has obtained all
permits, licenses and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization could not result in a Material Adverse Change. The
Borrower is in compliance with all Environmental Laws and the terms and
conditions of any required permits, licenses and authorizations, and is also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those Laws or contained in any plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder, except to
the extent failure to comply could not result in a Material Adverse Change.
The Collateral contains no Hazardous Materials that, under any
Environmental Law currently in effect, (1) would impose liability on the
Borrower that could result in a Material Adverse Change, or (2) could result in
the imposition of a Lien on the Collateral or any portion thereof or any other
assets of the Borrower, in each case if not properly handled in accordance with
applicable Law.
Section 5.16 Management of Borrower. As of the Closing Date,
Schedule 5.16 sets forth the key members of the management of the Borrower.
Section 5.17 Compliance with Laws. The Borrower and the
operation of its business are in compliance with all applicable Laws.
Section 5.18 Solvency. To the best of the Borrower's knowledge, the
Borrower is, and after receipt and application of advances hereunder will be,
solvent such that: (i) the fair value of its assets (including without
limitation the fair salable value of the goodwill and other intangible property
of the Borrower) is greater than the total amount of its liabilities, including
without limitation, contingent liabilities, (ii) the present fair salable value
of its assets (including without limitation the fair salable value of the
goodwill and other intangible property of the Borrower) is not less than the
amount that will be required to pay the probable liability on its debts as they
become absolute and matured, and (iii) it is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business. The Borrower does
not (i) intend to, nor does it believe that it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature, and (ii) is
engaged in a business or transaction, or about to engage in a business or
transaction, for which its property would constitute unreasonably small capital
after giving due consideration to the prevailing practice and industry in which
it is engaged. For purposes of this Section 5.18, in computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual mature liability.
-33-
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Notes or any Obligation shall remain unpaid or the
Commitment shall exist hereunder, or any other amount is owing by the Borrower
hereunder or under any other Loan Document, the Borrower shall:
Section 6.01 Maintenance of Existence. Preserve and maintain its
existence and good standing in the state of its formation and qualified to do
business and remain qualified in each jurisdiction in which such qualification
is required.
Section 6.02 Conduct of Business. Continue to engage in an efficient
and economical manner in a business of the same general type as conducted by it
on the Closing Date, and use its best efforts to adhere to customary practices
and standards in effect from time to time in the mortgage banking industry.
Section 6.03 Maintenance of Properties. Maintain, keep and preserve
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear and tear excepted.
Section 6.04 Maintenance of Records. Keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
Section 6.05 Maintenance of Qualification with Agencies.
Preserve and maintain its qualifications with the Agencies.
Section 6.06 Maintenance of Insurance. Maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated or required by any
agreement to which the Borrower is a party, including, without limitation, a
standard policy of mortgage bankers' blanket bond insurance. To the extent
permitted under the terms of the policy, the Borrower shall cause the Agent to
be named, and remain named as long as any amounts are outstanding on the Notes,
an additional insured on such mortgage bankers' blanket bond insurance policies.
Such insurance may provide for reasonable deductibility from coverage thereof
Section 6.07 Compliance with Laws. Comply in all respects with all
applicable Laws and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent they are the
subject of a Good Faith Contest.
Section 6.08 Right of Inspection. At any reasonable time and from
time to time the Borrower shall permit the Agent or any Bank or representative
thereof, to examine and make copies and abstracts from the records and books of
account of, and visit the properties of, the Borrower and to discuss the
affairs, finances and accounts of the Borrower with the Borrower's officers and
directors and independent certified public accountants.
-34-
Section 6.09 Reporting Requirements. Furnish directly to the
Agent and to each Bank:
(a) Annual Financial Statements of the Borrower. As soon as
available and in any event within ninety days after the end of the respective
fiscal years of the Borrower and each of its Subsidiaries (a) the balance sheet
of the Borrower and each of its Subsidiaries as of the end of such fiscal year,
the statements of income and retained earnings of the Borrower, and the
statements of cash flows of the Borrower for such fiscal year, on a
Consolidating and Combining basis, all prepared in accordance with GAAP
consistently applied and accompanied by an opinion thereon acceptable to the
Agent by independent certified public accountants of national standing selected
by the Borrower, and acceptable to the Agent and (b) with respect to the
foregoing, reports of the independent certified public accountants stating in
comparative form the respective figures for the corresponding date and period in
the prior fiscal years.
(b) Quarterly Financial Statements. Each fiscal quarter, as soon
as available and in any event not later than forty-five days after the end of
the fiscal quarter, a balance sheet of the Borrower as of the end of such
quarter, statements of income and retained earnings of the Borrower for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, and statements of changes in financial position of the Borrower
for the portion of the fiscal year ended with the last day of such quarter, all
on a Consolidating and Combining basis and all in reasonable detail and stating
in comparative form the respective figures of the corresponding date and period
in the previous fiscal year and all prepared in accordance with GAAP
consistently applied and certified by the chief financial officer of the
Borrower;
(c) Monthly Report. As soon as available, and in any event within
30 days of the end of each month, the balance sheet and income statement of the
Borrower as of the end of such month prepared in accordance with GAAP
consistently applied and certified by the chief financial officer of the
Borrower.
(d) Management Letters. As soon as available and in any event
within one hundred twenty days after the end of each fiscal year, copies of any
reports submitted to the Borrower by independent certified public accountants in
connection with the examination of the financial statements of the Borrower made
by such accountants.
(e) Certificate of No Default. Not later than 30 days after the
last day of each month, the Borrower will provide the Agent with a certificate
(the "Certificate of No Default") of the chief financial officer, controller or
chief executive officer of the Borrower (a) certifying that to the best of his
or her knowledge no Default or Event of Default has occurred and is continuing
or, if a Default or Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken with
respect thereto, and (b) with computations demonstrating compliance with the
covenants contained in Article VIII.
(f) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or Governmental
Authority, affecting the Borrower which, if determined adversely to the
Borrower, could result in a Material Adverse Change.
-35-
(g) Notices of Defaults and Events of Default. As soon as possible
and in any event within five days after the occurrence of each Default or Event
of Default a written notice setting forth the details of such Default or Event
of Default and the action which is proposed to be taken by the Borrower with
respect thereto.
(h) ERISA Reports. As soon as possible and in any event within
five days after the Borrower knows or has reason to know that any Reportable
Event or Prohibited Transaction has occurred with respect to any Plan or that
the PBGC or the Borrower has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, the Borrower will deliver to the Agent
a certificate of the chief financial officer of the Borrower setting forth
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action the Borrower proposes to take with respect thereto.
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, unless prohibited by law, copies of any statement or report furnished
to any other creditor pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Agent
pursuant to any other clause of this Agreement.
(j) Reports, Etc. Promptly after the sending or filing thereof,
copies of all financial statements and reports which the Borrower sends to, or
receives from, any Governmental Authority or Agency.
(k) Insurance. Upon the occurrence of any casualty, damage or
loss, whether or not giving rise to a claim under any insurance policy, in an
amount greater than Two Hundred Fifty Thousand Dollars ($250,000), notice
thereof, together with copies of any document relating thereto (including copies
of any such claim) in possession or control of the Borrower or any agent of the
Borrower.
(l) Material Adverse Change. As soon as possible and in any event
within three Business Days after the Borrower has knowledge of the occurrence of
any event or circumstance which could result in or has resulted in a Material
Adverse Change, written notice thereof.
(m) Offices. Thirty days prior written notice of any change in the
chief executive office or principal place of business of the Borrower.
(n) Management. Thirty days prior written notice of any change in
the management of the Borrower as set forth in Schedule 5.16.
(o) Liens. As soon as possible and in any event within three
Business Days after the Borrower has knowledge of the assertion of any Lien
against the Collateral or the occurrence of any event that could have a Material
Adverse Change in respect of the value or marketability of the Collateral or the
validity, enforceability or priority of the Liens created under this Agreement,
written notice thereof
(p) Environmental Notices. As soon as possible and in any event
within five Business Days after receipt, copies of all Environmental Notices
received by the Borrower which are not received in the ordinary course of the
Borrower's business.
-36-
(q) Reports Relating to Collateral. (1) With respect to Conforming
Mortgage Loans only, as soon as available and in any event within ten days after
the end of each month:
(i) A separate schedule from the Borrower in a form
satisfactory in form and content to the Agent of all commitments to make
Mortgage Loans, commitments to purchase Mortgage Loans and other information
related to all Mortgages/Loans intended to be or which are pledged under this
Agreement as to the Borrower.
(ii) A separate schedule for the Borrower in a form
satisfactory in form and content to the Agent of all Take-Out Commitments held
by the Borrower grouped by type of Mortgage Loan (whether or not delivered as
Collateral hereunder) which qualifies for delivery pursuant to such Take-Out
Commitments, listing the name of the investor, the commitment amount which
remains available for future deliveries, the yield requirement or the price and
interest rate for which said price is quoted, and the expiration, delivery or
settlement date for each such Take-Out Commitment, and the weighted average
yield requirement or the weighted average price at each applicable interest rate
for each such group of Take-Out Commitments and (b) a schedule in a form
satisfactory in form and content to the Agent listing the mandatory Take-Out
Commitments held by the Borrower which shall be satisfied by delivering Mortgage
Loans which the Borrower has committed to purchase; and
(iii) From time to time, with reasonable promptness, such
further information regarding the Collateral as the Agent or any Bank may
request.
(2) As soon as available, but in any event not later than the
date that such reports, if any, are delivered to the Agencies, copies of all
annual and regularly delivered reports to the Agencies relating to the
Borrower's Mortgage Loan origination and acquisition activities and other
matters requested or required by the Agencies.
(3) As soon as available, but in any event not later than
three Business Days after the receipt thereof by the Borrower, of any notice
received from an Agency or a Qualified Investor relating to a material default
or other deficiency under a Take-Out Commitment which could result in
termination thereof.
(4) As soon as available, but in any event not later than ten
days after the end of each month, a report of aging and delinquencies for all
Pledged Mortgage Loans.
(r) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower as either the
Agent or any Bank may from time to time request.
Section 6.10 Compliance With Environmental Laws. Comply in all
material respects with all applicable Environmental Laws and immediately pay or
cause to be paid all costs and expenses incurred in connection with such
compliance.
Section 6.11 Agency and Take-Out Commitments. Maintain valid and
enforceable Take-Out Commitments sufficient at all times to (i) satisfy the
requirements of this Agreement and (ii) in accordance with prudent business
practices to protect the Borrower against
-37-
interest rate risk with respect to Mortgage Loans originated or acquired by it
and to permit the timely sale of Mortgage Loans in accordance with prudent
mortgage banking industry practices.
Section 6.12 Taxes. Pay and discharge all taxes, assessments or
other governmental charges or levies imposed on the Borrower or any of its
property or assets prior to the date on which any penalty for non-payment or
late payment is incurred, unless the same are the subject of a Good Faith
Contest.
Section 6.13 ERISA. (a) Comply in all material respects with the
provisions of ERISA to the extent applicable to any employee benefit plan
maintained for the Borrower's or a Subsidiary's employees or any multiemployer
pension plan to which the Borrower, any Subsidiary or any ERISA Affiliate is
required to contribute; not incur any material accumulated funding deficiency or
withdrawal liability (within the meaning of ERISA), or any material liability to
the PBGC; and not permit any Prohibited Transaction or Reportable Event or other
event to occur which could result in a Material Adverse Change with respect to
the Borrower or any employee benefit plan or which may be the basis for the PBGC
to assert a material liability against it or which may result in the imposition
of a lien on the Borrower's properties or assets.
(b) Notify the Agent in writing promptly after it has come to the
attention of senior management of the Borrower of the assertion or threat of any
Prohibited Transaction or Reportable Event, the existence of any fact or set of
facts or event (including without limitation any change in the actuarial
assumptions or funding methods of any employee benefit plan or the incurrence of
any withdrawal liability under any multiemployer plan) which could have a
Material Adverse Change or may be the basis for the PBGC to assert a material
liability against it or impose a Lien on the Borrower's properties or assets.
The Borrower shall also provide to the Agent promptly after receipt thereof,
copies of (i) all notices received by the Borrower or any ERISA Affiliate of the
reorganization of any multiemployer pension plan or the PBGC's intent to
terminate any employee benefit plan or multiemployer pension plan administered
or maintained by the Borrower or any ERISA Affiliate, or to have a trustee
appointed to administer any such employee benefit plan; and (ii) at the request
of a Bank each annual report and all accompanying schedules, the most recent
actuarial reports, the most recent financial information concerning the
financial status of each employee benefit plan or multiemployer plan
administered or maintained by the Borrower or any ERISA Affiliate or to which
the Borrower makes contributions, and schedules showing the amounts contributed
to each such plan by or on behalf of the Borrower or any ERISA Affiliate in
which any of the Borrower's personnel participate or from which such personnel
may derive a benefit, and each Schedule B (Actuarial Information) to the annual
report filed by the Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each such plan.
Section 6.14 Year 2000 Compliance. Perform all acts reasonably
necessary to ensure that: (i) the Borrower and any business in which it holds a
substantial interest, and (ii) all customers, suppliers and vendors that are
material to the Borrower's business, become Year 2000 Compliant in a timely
manner. Such acts shall include, without limitation, performing a comprehensive
review and assessment of all of the Borrower's systems and adopting a detailed
plan, with itemized budget, for the remediation, monitoring and testing of such
systems. As used in this Section, "Year 2000 Compliant" shall mean, in regard to
any entity, that all software, hardware, firmware, equipment, goods or systems
utilized by or material to the business
-38-
operations or financial condition of such entity, will properly perform date
sensitive functions before, during and after the year 2000. The Borrower shall,
immediately upon request, provide to the Agent for the benefit of the Banks such
certifications or other evidence of the Borrower's compliance with terms of this
paragraph as the Agent or any Bank may from time to time require.
ARTICLE VII
NEGATIVE COVENANTS
So long as the Notes or any Obligation shall remain unpaid or the
Commitment shall exist hereunder or any other amount is owing by the Borrower
hereunder or under any other Loan Document, the Borrower shall not:
Section 7.01 Liens. (a) Create, incur, assume, or suffer to exist,
any Lien upon or with respect to any of its properties, now owned or hereafter
acquired, except the following kinds of Liens on properties other than Mortgage
Loans ("Permitted Liens"):
(1) Liens in favor of the Agent, for the benefit of the
Banks;
(2) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or, if due and payable, if they are the
subject of a Good Faith Contest;
(3) Liens imposed by Law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than thirty days or which are the subject of a Good Faith
Contest;
(4) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
(5) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, indemnity, performance, or other similar bonds, or other similar
obligations arising in the ordinary course of business, and the pledge of assets
for the purpose of securing an appeal, stay or discharge in the course of any
legal proceeding, provided that the aggregate amount of liabilities of the
Borrower secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $250,000 at
any one time outstanding;
(6) Judgment and other similar Liens arising in connection
with court proceedings, provided the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are the subject of a
Good Faith Contest;
-39-
(7) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower of the property or assets
encumbered thereby in the normal course of the Borrower's business or materially
impair the value of the property subject thereto;
(8) Purchase-money Liens on any property hereafter acquired or
the assumption of any Lien on property existing at the time of such acquisition
(and not created in contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title retention agreement or a
Capital Lease; and
No Liens shall be permitted on Mortgage Loans other than the Liens of the Agent
for the benefit of the Banks hereunder.
(b) Agree with any other Person to prohibit or otherwise restrict
its ability to grant Liens upon, or security interests in, any of its property
to the Agent or to the Banks.
Section 7.02 Debt. Create, incur, assume, or suffer to exist,
any Debt, except:
(a) Debt of the Borrower under this Agreement or the Notes;
(b) Debt described in Schedule 7.02;
(c) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred in the ordinary course of business as presently conducted; and
(d) Debt of the Borrower secured by purchase-money Liens permitted
by Section 7.01 (a)(8).
Section 7.03 Mergers, Etc. Wind up, liquidate or dissolve itself,
reorganize, merge or consolidate with or into, convey, sell, assign, transfer,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person; provided that the Borrower may acquire the
assets of, or merge with, another Person in a similar line of business if,
immediately after giving effect to such merger or acquisition (i) no default or
Event of Default exists and is continuing, (ii) the Borrower is the surviving
Person, and (iii) the assets acquired are pledged to the Agent as Collateral
hereunder.
Section 7.04 Leases. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except: (1) Capital Leases permitted under Section 7.01(a)(8); (2) leases
existing on the date of this Agreement and any extensions, renewals or
replacements thereof, including but not limited thereto, the lease of Borrower's
primary or other business locations and (3) new leases for equipment and similar
items used in the ordinary course of the Borrower's business.
-40-
Section 7.05 Sale and Leaseback. Sell, transfer, or otherwise
dispose of any real or personal property to any Person and thereafter directly
or indirectly lease back the same or similar property.
Section 7.06 No Dividends. Advances or Distributions. Declare
or pay any cash or stock dividends or make any cash advances or distributions
of any kind to any of the Borrower's stockholders, directors, officers,
employees, or affiliated companies.
Section 7.07 Management of the Borrower. Cause or permit ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ to not be the President of the Borrower, unless the Majority Banks shall
have approved any replacement President.
Section 7.08 Sale of Assets. (a) Sell, lease, assign, transfer, or
otherwise dispose of any of the Borrower's now-owned or hereafter acquired
assets (including, without limitation, receivables, and leasehold interests),
except, subject to Subsection (b) of this Section 7.08, the sale or other
disposition of assets (i) in the ordinary course of the Borrower's business or
(ii) no longer used or useful in the conduct of its business, or
(b) Sell any Mortgage Loans on a recourse basis.
Section 7.09 Investments. Make any loan or advance to any Person
(other than Mortgage Loans in the ordinary course of business), or purchase or
otherwise acquire any capital stock, assets, obligations, or other securities
of, make any capital contribution to, or otherwise invest in or acquire any
interest in any Person, or participate as a partner or joint venturer with any
other Person, except the Borrower may acquire or invest in: (1) direct
obligations of the United States or any agency thereof with maturities of one
year or less from the date of acquisition; (2) commercial paper of a domestic
issuer rated at least "A-l" by Standard & Poor's Rating Agency or "P-l" by
▇▇▇▇▇'▇ Investors Service, Inc.; (3) certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial bank
having capital and surplus in excess of One Billion Dollars ($1,000,000,000);
(4) stock, obligations, or securities received in settlement of debts (created
in the ordinary course of business) owing to the Borrower; and (5) investments
required to be made or purchased by any Agency or any applicable provisions of
law; provided that the Borrower may engage in joint ventures in a similar line
of business as the Borrower or create subsidiaries to the extent that the
Borrower obtains and retains a controlling interest and to the extent that the
total value of the investment by the Borrower in any such joint venture or
subsidiary does not exceed Five Million Dollars ($5,000,000).
Section 7.10 Financial Hedge Instruments. Engage in financial hedge
transactions of any kind (i) other than financial hedge transactions such as
mandatory commitments with FNMA, FHLMC or other Qualified Investors or (ii) for
interest rate protection purposes (but not for speculation purposes) with
respect to the Borrower's loan pipeline.
Section 7.11 Guaranties, Etc. Assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or liable
(including, but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds,
-41-
assets, goods, or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth, or otherwise to assure the
creditors of any Person against loss) for obligations of any Person, except
guaranties by endorsement of negotiable instruments for deposits or collection
or similar transactions in the ordinary course of business.
Section 7.12 Transactions With Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower
than would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
ARTICLE VIII
FINANCIAL COVENANTS
So long as the Notes and any Obligation shall remain unpaid or the
Commitment shall exist hereunder or any other amount is owing by the Borrower
hereunder or under any other Loan Document:
Section 8.01 Financial Covenants. The Borrower will maintain at
all times and tested as of the last day of each fiscal year:
(a) Tangible Stockholder's Equity in the minimum amount of
$5,500,000;
(b) a Leverage Ratio not exceeding 11:1.
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01 Events of Default. Any of the following events
shall be an "Event of Default":
(a) The Borrower shall: (a) fail to pay the principal amount of
the Loans when due; or (b) fail to make any of the prepayments required by
Section 2.08 as and when required; (c) fail to fulfill or satisfy any of the
covenants regarding the Collateral in Section 3.05; or (d) fail to pay within
five days after the Agent bills it interest on the Loan or any fee or interest
or any other amount due under this Agreement or any other Loan Document;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement or in any other Loan Document or Which is contained
in any certificate, document, opinion, financial or other statement furnished at
any time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
-42-
(c) (1) the Borrower shall fail to perform or observe any covenant
contained in Articles VII and VIII of this Agreement, or (2) the Borrower shall
fail to perform or observe any other term, covenant or agreement contained in
this Agreement (other than as referred to above in Sections 9.01(a), (b) or
(c)(I)) and such failure of performance or observance is not cured within
fifteen days;
(d) the Borrower shall: (a) fail to pay any Debt (other than the
payment obligations described in (a) above), of the Borrower when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise);
or (b) fail to perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument relating to any such
Debt, when required to be performed or observed, if the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration of, after
the giving of notice or the lapse of time, or both, of the maturity of such
Debt, whether or not the failure to perform or observe shall be waived by the
holder of such Debt; or any such Debt shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) the Borrower: (a) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such debts become due;
or (b) shall make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (c) shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) shall have had any such petition or application filed or any such
proceeding shall have been commenced, against it, in which an adjudication or
appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed or unstayed for a period of thirty
days or more; or shall be the subject of any proceeding under which its assets
may be subject to seizure, forfeiture or divestiture; or (e) by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its property;
or (f) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of thirty days or more;
(f) one or more judgments, decrees or orders for the payment of
money in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate shall be rendered against the Borrower, and such judgments, decrees or
orders shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
(g) any of the following events shall occur or exist with respect
to the Borrower or any ERISA Affiliate: (a) any Prohibited Transaction involving
any Plan; (b) any Reportable Event shall occur with respect to any Plan; (c) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan; (d) any event or circumstance exists which might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;
(e) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the
-43-
reorganization, insolvency, or termination of any Multiemployer Plan; and in
each case above, such event or condition, together with all other events or
conditions, if any, could in the opinion of the Agent subject the Borrower or
any ERISA Affiliate to any tax, penalty, or other liability to a Plan,
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate exceeds or may exceed Two Hundred Fifty Thousand Dollars
($250,000);
(h) this Agreement shall at any time and for any reason cease to
create a valid and perfected first priority Lien in the Collateral or the
validity or enforceability of this Agreement shall be contested by the Borrower,
or the Borrower shall deny it has any further liability or obligation under this
Agreement; or
(i) if there is a Material Adverse Change in the Collateral, or if
there shall occur a Material Adverse Change (as determined by the Agent or the
Agent, as directed by the Majority Banks), or if the Majority Banks in good
faith believe that the prospects of payment, performance or realization upon the
Collateral is impaired, or if the Majority Banks shall deem themselves insecure.
Section 9.02 Remedies. (a) If any Event of Default shall occur and
be continuing, the Agent may, and shall, at the request of the Majority Banks,
by notice to the Borrower, (1) declare the Commitments to be terminated,
whereupon the same shall forthwith terminate; (2) declare the Notes, all
interest thereon, and all other amounts payable under this Agreement and any
other Loan Documents to be forthwith due and payable, whereupon the Notes, all
such interest, and all such amounts due under this Agreement and under any other
Loan Document shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Borrower; and/or (3) exercise any remedies
provided in any of the Loan Documents, at Law or otherwise with respect to the
Collateral and the Loans; provided, however, that upon the occurrence of an
Event of Default referred to in Section 9.01(e), the Commitment shall
automatically terminate and the Notes and any other amounts payable under this
Agreement and any of the other Loan Documents, and all interest on any of the
foregoing shall be forthwith due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower.
(b) Upon the occurrence of an Event of Default, the Agent may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, at Law or otherwise available to it, all the rights and
remedies of a secured party on default under the applicable Uniform Commercial
Code (whether or not the applicable Uniform Commercial Code applies to the
affected Collateral) and also may (i) require the Borrower to, and the Borrower
hereby agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the Agent and
make it available to the Agent or Collateral Custodian at a place to be
designated by the Agent, and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Agent's or Collateral Custodian's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other commercially
reasonable terms. The Borrower agrees that, to the extent notice of sale shall
be required by law, five days prior notice of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice
-44-
of sale having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. All cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent in a restricted
account (which the Agent is hereby authorized to establish) as Collateral for,
and/or then or at any time thereafter applied in accordance with the terms of
Section 9.03 in whole or in part by the Agent against, all or any part of the
Obligations. After the occurrence of an Event of Default, the Agent shall have
the right to deliver any Pledged Mortgage into any Take-Out Commitment and to
obtain the benefits of any Agency commitment, in any such event either in the
name of the Agent or the Borrower, pursuant to the power of attorney granted
under this Agreement or otherwise.
Section 9.03 Application of Proceeds. The proceeds of any sale
or enforcement of all or any part of the Collateral shall be applied by the
Agent:
First to the payment of all costs and expenses incurred by (a) the
Agent in connection with such sale or enforcement of (i) any rights and benefits
afforded hereby, by any other Loan Documents or at Law, and/or (ii) the Liens
granted hereunder of all or any part of the Collateral or of the Liens,
collateral, any guaranty or other assurances granted under the other Loan
Documents, (b) the Agent in collecting, maintaining and preserving the
Collateral, (c) the Agent and the Banks in the enforcement of this Agreement,
the Notes and the other Loan Documents, including payment to the Agent's and any
of the Banks' agents and counsel in accordance with Section 11.06, and to the
payment of all expenses, liabilities and advances made or incurred by such
parties in connection therewith;
Second, to the payment of all accrued and unpaid interest due and
owing on the Outstanding Credit on a pro rata basis for each of the Banks in
proportion to each Bank's share of the Outstanding Credit;
Third, to the payment of all unpaid Outstanding Credit on a pro rata
basis for each of the Banks in proportion to each Bank's share of the
Outstanding Credit;
Fourth, to the payment of all other amounts owed by the Borrower
in respect of the Loan Documents; and
Finally, to the payment to the Borrower, 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 are insufficient to cover the amounts described
in clauses First through Fourth, inclusive, above, the Borrower shall remain
liable for any deficiency.
Section 9.04 The Agent May Perform. If the Borrower fails to perform
any agreement contained in this Agreement, the Agent may itself perform (but
shall not be obligated to perform), or cause performance of, such agreement, and
the expenses of the Agent incurred in connection therewith shall be payable by
the Borrower under Section 11.06.
Section 9.05 The Agent's Duties With Respect to Collateral. The
powers conferred on the Agent under this Agreement are solely to protect its
interest and the interests of
-45-
the Banks in the Collateral and shall not impose any duty upon the Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Agent shall not have any duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
Section 9.06 Continuing Security Interest; Transfer of Note. This
Agreement creates a continuing Lien in the Collateral and shall (i) remain in
full force and effect until termination of the Commitment and payment in full of
all the Obligations to the Banks, (ii) be binding upon the Borrower, and their
successors and assigns, and (iii) inure to the benefit of the Banks and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), each Bank may assign or otherwise transfer any document
evidencing any Obligation held by it to its successors or any Affiliate, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Bank herein or otherwise. Upon termination of the
Commitment and the payment in full of the Obligations, the Lien granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower.
Upon any such termination, the Agent will, at the Borrower's expense, execute
and deliver to the Borrower such documents as the Borrower shall reasonably
request to evidence such termination.
ARTICLE X
THE AGENT
Section 10.01 Appointment and Authorization. Each Bank hereby
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are incidental thereto.
Section 10.02 General Immunity. In performing its duties as Agent
hereunder, the Agent will take the same care as it takes in connection with
loans in which it alone is interested. However, neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith except for
its or their own gross negligence or willful misconduct.
Section 10.03 Consultation with Professionals. The Agent may consult
with legal counsel and other professionals selected by it and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel and professionals in their respective areas of
expertise.
Section 10.04 Documents. The Agent shall not be under a duty to
examine or pass upon the effectiveness, genuineness or validity of this
Agreement or any of the Notes or any other instrument or document furnished
pursuant hereto or in connection herewith, and the Agent shall be entitled to
assume that the same are valid, effective and genuine and what they purport to
be.
-46-
Section 10.05 Delivery of Collateral Reports. The Agent shall
promptly deliver to the Banks the monthly collateral reports delivered by the
Collateral Custodian in accordance with Section 4D of the Custodial Agreement.
Section 10.06 Rights as a Bank. With respect to its Commitment and
their respective portions of the Loan, the Agent shall have the same rights and
powers hereunder as any Bank and may exercise the same as though it was not the
Agent, and the terms "Bank" and "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to and generally engage in any kind of banking or
trust business with the Borrower as if it was not the Agent.
Section 10.07 Responsibility of the Agent. It is expressly
understood and agreed that the obligations of the Agent hereunder are only those
expressly set forth in this Agreement and that the Agent shall not be entitled
to assume that no Default or Event of Default, has occurred and is continuing,
unless the Agent has actual knowledge of such fact or has received notice from a
Bank that such Bank considers that a Default or Event of Default has occurred
and is continuing and specifying the nature thereof
Section 10.08 Action by the Agent. So long as the Agent shall be
entitled, pursuant to Section 10.06 hereof, to assume that no Default or Event
of Default has occurred and is continuing, the Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising any
rights that may be vested in it by, or with respect to taking or refraining from
taking any action or actions that they may be able to take under or in respect
of, this Agreement. The Agent shall not incur liability under or in respect of
this Agreement by acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything that it may
do or refrain from doing in the reasonable exercise of its judgment, or that may
seem to it to be necessary or desirable under the circumstances.
Section 10.09 Notices of Event of Default, Etc. In the event that
the Agent shall have acquired actual knowledge of any Default or Event of
Default, the Agent shall promptly give written notice thereof to the Banks, and
the Agent may take such action and assert such rights with respect to taking or
refraining from taking any action or actions that it may be able to take under
or in respect of, this Agreement, as it deems to be advisable in its discretion
for the protection of the interests of the Banks including, without limitation,
the exercise of rights and remedies under Article IX hereof.
Section 10.10 Indemnification of the Agent. The Banks agree to
indemnify the Agent (to the extent reimbursable, but not reimbursed by the
Borrower), ratably according to the amount of each Bank's Commitment, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatever that may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, provided that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
-47-
Section 10.11 Resignation or Replacement of the Agent. The Agent may
resign at any time by giving 30 days written notice thereof to each of the Banks
and to the Borrower or may be replaced by the Majority Banks for cause. Upon any
such resignation or replacement, the Majority Banks shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Banks and shall have accepted such appointment within 30 days after
any such notice of resignation, then the resigning entity may, on behalf of the
Banks, appoint a successor which shall be another Bank, if any other Bank is
willing to serve in such capacity, or, if not, a commercial bank organized under
the laws of the United States of America or any State thereof having a combined
capital and surplus of at least $1,000,000,000. After any such resignation or
replacement, the provisions of this Article 10 shall continue in effect for the
benefit of the resigning entity with respect to any actions taken by or omitted
by it while acting as agent.
ARTICLE XI
MISCELLANEOUS
Section 11.01 No Waiver; Cumulative Remedies. No failure or delay on
the part of the Agent or any Bank in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law. In the event of a dispute between the Borrower and the Agent
concerning the principal amount outstanding hereunder, the interest rates
applicable thereto, the amounts available under the Commitments, the payment of
principal, interest and other amounts hereunder, or concerning similar factual
matters, absent manifest error, the books and records of the Agent shall be
irrebuttably presumed to be correct.
Section 11.02 Set-Off; Disproportionate Payments. The Borrower
agrees that, in addition to (and without limitation of) any right of setoff,
bankers' lien or counter-claim the Agent and the Banks or any of them may have,
each Bank shall have a right of setoff against, and a Lien upon all property of
the Borrower now or at any time in the possession of the Agent or such Bank in
any capacity whatever, including, but not limited to, the Borrower's interest in
any deposit account, as security for all Obligations. In the event that any Bank
exercises such rights, that Bank will, to the fullest extent permitted by law,
apply the proceeds to the payment of its portion of the Obligations hereunder
prior to applying any such amount against amounts due from the Borrower in
connection with other transactions outside of this Agreement; and to the extent
that such proceeds exceed such Bank's portion of the Obligations and if
Obligations remain hereunder to other Banks, prior to applying any such excess
proceeds against amounts due from the Borrower in connection with other
transactions outside of this Agreement, such Bank shall remit the balance of any
such proceeds to the Agent for the account of such other Banks with respect to
such Obligations. To the fullest extent permitted by law, any proceeds obtained
pursuant to this Section 11.02 shall be applied in accordance with Section 9.03.
If at any time, as the result of exercising such rights or otherwise, any Bank
receives a payment on account of its portion of the Loans in a proportion
greater than similar payments on account of the portions of the Loans held by
the other Banks, the Bank so receiving such greater
-48-
proportionate payment will purchase a participation in the portions of the Loans
held by the other Banks of such amount that after such purchase each Bank shall
hold a proportionate share in the aggregate outstanding principal balance of
Loans equal to their respective proportionate shares in the outstanding
principal balance of Loans before the disproportionate payment. If, however, any
payment on account of the Loans is rescinded or invalidated or must otherwise be
restored or returned by the recipient in a bankruptcy or insolvency proceeding
or otherwise, then any participations purchased as a result of such payment will
be rescinded.
Section 11.03 Amendments. Any of the provisions of this Agreement
may be waived, modified or amended in writing by any agreement or agreements
entered into by the Borrower and the Majority Banks, except that (1) all Banks
must join in (a) the deferral of the payment of any interest or principal due
hereunder, or fee due under Section 2.09(b) hereof, beyond its due date, (b) any
reduction in the Borrower's obligation to repay the principal amount of the
Loans or any decrease in the Interest Rate or fees applicable to the Loans,
(c) any change in the amount of the Commitment of any Bank or an increase in the
aggregate amount of the Commitments, (d) any change in the Expiration Date,
(e) any amendment to this Section 11.03, (f) the release of any Collateral other
than as provided in Section 3.04 or as otherwise permitted in accordance with
this Agreement, or (g) any amendment to the definition of Majority Banks, and
(2) no such waiver, modification or amendment shall extend to or affect any
obligation not expressly waived, modified or amended, or impair any right of the
Banks related to such obligation.
Section 11.04 Arbitration. (a) Upon demand of the Borrower or a Bank
whether made before or after institution of any judicial proceeding, any claim
or controversy arising out of, or relating to the Agreement between the parties
hereto (a "Dispute") shall be resolved by binding arbitration conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements (as defined in 11 U.S.C.
ss. 101) between the parties.
(b) All arbitration hearings shall be conducted in the city in
which the office of a Bank first stated above is located. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall be concluded
within 120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more than a
total of 60 days. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.
Arbitrators shall be licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The parties do not waive applicable
federal or state substantive law except as provided herein.
(c) Notwithstanding the preceding binding arbitration provisions,
the parties agree to preserve, without diminution, certain remedies that any
party may exercise before or after an arbitration proceeding is brought. The
parties shall have the right to proceed in any court
-49-
of proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self help including peaceful occupation of real
property and collection of rents, set-off and peaceful possession of personal
property, (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any
party's entitlement to such remedies is a Dispute.
(d) The parties agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute, whether the Dispute is
resolved by arbitration or judicially.
Section 11.05 Exchange of Information among Banks. Each Bank will
promptly give each other Bank notice of any matter coming to its attention that,
in its judgment, would materially and adversely affect the interest of any Bank
in connection with this Agreement. No Bank will be liable for failure to give
any other Bank notice under this Section 11.05 unless such Bank intentionally
fails to provide such notice with the knowledge that such failure will
materially and adversely affect the interest of the other Banks hereunder.
Section 11.06 Costs and Expenses; Indemnification. The Borrower
agrees to pay on demand (a) all reasonable costs and expenses of the Agent in
connection with the preparation, printing, execution, delivery and
administration of this Agreement, the Notes and the other instruments and
documents to be delivered hereunder (including the reasonable fees and out-of
pocket expenses of the Agent's counsel with respect thereto; all reasonable fees
and expenses relating to any special audit or audits, investigations,
examinations, or the like, of the finances or operations of the Borrower,
conducted by the Agent's representatives), (b) all reasonable costs and
expenses, if any, of the Banks in connection with the enforcement against the
Borrower of this Agreement, the Notes and the other instruments and documents to
be delivered hereunder (including the reasonable fees and out-of-pocket expenses
of legal counsel with respect thereto) and (c) all reasonable costs, expenses
and fees of the Agent in connection with any amendment, renegotiation or
extension of this Agreement. The Borrower agrees to indemnify the Agent and the
Banks, and their directors, officers, employees and agents from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to the Loan Documents
or transactions contemplated by any of the Loan Documents, including any actual
or proposed use by the Borrower of the proceeds of the Loans, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). The obligations of the Borrower under this Section 11.06 shall
survive the repayment in full of the Notes and the Obligations and all amounts
due under or in connection with any of the Loan Documents and the termination of
the Commitment.
-50-
Section 11.07 Binding Effect; Assignment; Participation. (a) This
Agreement shall become effective when it shall have been executed by the
Borrower and the Agent shall have been notified by each Bank that such Bank has
executed it, and it shall thereafter be binding upon and inure to the benefit of
the Borrower, the Agent and each of the Banks and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights or obligations hereunder or any interest herein.
(b) Any Bank may assign to one or more banks or other institutions
(each an "Assignee") acceptable to the Agent in its reasonable discretion, up to
100% of its Commitments and Loans under this Agreement and the Note, provided
that in no event shall any such assignment under this Section be permitted if
the amount of Commitments and Loans under this Agreement and the Note to be
assigned in such assignment would be less than Five Million Dollars
($5,000,000), and further provided that in no event shall any such assignment be
permitted if after such assignment the assigning Bank's Commitment would be less
than Ten Million Dollars ($10,000,000). The assigning Bank shall timely notify
the Agent of any assignment pursuant to this Section, and with respect to each
assignment, the assigning Bank shall pay the Agent, for the Agent's account, a
fee of Three Thousand Dollars ($3,000). Such Assignee shall assume rights and
obligations, pursuant to an assignment and assumption agreement, reasonably
satisfactory in form and substance to the Agent, executed by such Assignee and
the assigning Bank. Upon execution and delivery of such instruments and payment
by such Assignee to the assigning Bank of an amount equal to the purchase price
agreed between the assigning Bank and such Assignee, such Assignee shall be a
Bank under this Agreement and shall have all the rights and obligations of the
assigning Bank with a Commitment as set forth in such assignment and assumption
agreement, and the assigning Bank shall be released from its obligations
hereunder to a corresponding extent with respect to the assigned interest, and
no further consent or action by any Person shall be required. Upon the
consummation of any assignment pursuant to this paragraph, a new Note or Notes
shall be issued by the Borrower.
(c) Any Bank may at any time sell a participation interest,
without limitation as to amount, to one or more banks or other institutions
(each a "Participant") of all or a proportionate part of all of its rights and
obligations under this Agreement, the Note and the other Loan Documents pursuant
to a participation agreement, provided, that any such participation agreement
may not grant the participant the right to direct the Bank selling the
participation interest as to how to vote on matters under this Agreement except
with respect to voting hereunder regarding (1) changes in the maturity of the
Loans, (2) the amount of the Commitments and (3) decreases in the interest
rates.
(d) The Borrower agrees to provide all assistance requested by any
Bank to enable the Bank either to sell participations in or to make assignments
of its portion of the Loans as permitted by this Section 11.07.
Section 11.08 Chance in Laws; Increased Costs. In the event that any
applicable law, order, regulation, treaty or directive issued by any central
bank or any other applicable governmental authority, or in the governmental or
judicial interpretation or application thereof, or compliance by any Bank with
any request or directive (whether or not having the force of law) issued
subsequent to the date hereof by any central bank or other
-51-
applicable government authority: (i) does or shall subject any Bank to any tax
of any kind whatsoever with respect to this Agreement or any Loans made
hereunder, or change the basis of taxation of payments to such Bank of
principal, fee, interest or any other amount payable hereunder (except for
change in the rate of tax on the overall net income of such Bank imposed by the
jurisdiction in which such Bank maintains its principal office); (ii) does or
shall impose, modify or hold applicable any reserve, capital requirement,
special deposit, compulsory loan or similar requirements against assets held by,
or deposits or other liabilities in or for the accounts of, advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Bank which are not otherwise included in the determination of the
Base Rate; or (iii) does or shall impose on such Bank any other condition; and
the result of any oft he foregoing is to increase the cost to such Bank of
making, renewing or maintaining any Loan hereunder, or to reduce any amount
receivable in respect thereof or to reduce the rate of return on the capital of
such Bank or any Person controlling such Bank, then, in any such case, the
Borrower shall promptly pay to the Agent for remittance to such Bank, upon its
written demand made through the Agent, any additional amounts necessary to
compensate such Bank for such additional cost or reduced amounts receivable or
rate of return as reasonably determined by such Bank with respect to this
Agreement or the Advances made hereunder. If a Bank becomes entitled to claim
any additional amounts pursuant to this Section 11.08, it shall promptly notify
the Borrower through the Agent of the event of which it has become so entitled.
In conjunction with such notification, such Bank shall provide the Company with
a certificate specifying any additional amounts payable pursuant to the
foregoing sentence, which certificate shall set forth a calculation of such
amounts in sufficient detail and according to reasonable and customary
computation methods. The provisions of this Section 11.08 shall survive the
termination of this Agreement and the payment of all obligations hereunder.
Section 11.09 Notices. Except as specifically provided otherwise in
this Agreement or in any of the other Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing (for requests for
Loans hereunder, notice may be given by telephone, confirmed in writing within
one (1) Business Day) at the addresses and numbers specified in this Agreement
or at such other address or number of which notice thereof is given to the other
parties. Notices in writing shall be delivered personally or sent by certified
or registered mail postage prepaid or by telex or telecopy and shall be deemed
received in the case of personal delivery, when delivered against a receipt
therefor, in the case of mailing, on the fourth Business Day after mailing, in
the case of telex, upon transmittal, and in the case of telecopies, when
transmitted, provided, that the sender of a telex or telecopy must immediately
confirm such transmittal in writing or by telephone. A telephonic notice to the
Agent, as understood by the Agent, will be deemed to be the controlling and
proper notice in the event of a discrepancy with, or failure to receive, a
confirming written notice.
Section 11.10 Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrower under this Agreement and the
Note shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
applicable law limiting rates of interest which may be charged or collected by
the Banks. Any payments of interest in excess of amounts permitted by applicable
law limiting rates of interest shall be applied to reduce the Obligations.
-52-
Section 11.11 Nature of the Banks' Obligations. The obligations of
the Banks hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by the Agent or any Bank pursuant hereto shall be
deemed to create a partnership, association, joint venture or other entity.
Section 11.12 Nature of the Borrower's Obligations. The Obligations
of the Borrower hereunder are joint and several, and the Borrower shall be fully
liable for the full amount of all of the Obligations hereunder until all of such
Obligations have been paid in full and all of the Commitments have terminated.
Section 11.13 Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 11.14 Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.15 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 11.16 Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
Section 11.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (BUT NOT THE
LAW OF CONFLICTS OF LAW) OF THE COMMONWEALTH OF PENNSYLVANIA.
Section 11.18 JURISDICTION; IMMUNITIES. THE BORROWER HEREBY
ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE COMMONWEALTH OF PENNSYLVANIA OR THE UNITED STATES OF AMERICA FOR
THE EASTERN DISTRICT OF PENNSYLVANIA IN CONNECTION WITH ANY ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, ANY OTHER
LOAN DOCUMENT, OR THE BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT; AND
THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH PENNSYLVANIA OR FEDERAL COURT.
IN ANY SUCH ACTION OR PROCEEDING, THE BORROWER HEREBY ABSOLUTELY AND IRREVOCABLY
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, DECLARATION OR OTHER PROCESS
AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT
53
THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, POSTAGE
PREPAID, TO THE BORROWER AT ITS ADDRESS SPECIFIED BELOW (OR AT SUCH OTHER
ADDRESS AS THE BORROWER SHALL LAST SPECIFY TO THE AGENT IN WRITING). THE
BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES ANY OBJECTION
TO VENUE IN PHILADELPHIA AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN
PHILADELPHIA ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES
THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT WITH REGARD TO THIS
CREDIT AGREEMENT SHALL BE BROUGHT ONLY IN PENNSYLVANIA OR UNITED STATES FEDERAL
COURT SITTING IN PHILADELPHIA.
NOTHING IN THIS SECTION 11.18 SHALL AFFECT THE RIGHT OF THE AGENT TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTIONS.
TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, THE NOTE, AND ANY OTHER LOAN DOCUMENT.
Section 11.19 WAIVER OF JURY TRIAL. THE BORROWER HEREBY
(I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY A JURY, AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT
THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL
BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY THE BORROWER, AND
THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT OF JURY TRIAL WOULD OTHERWISE ACCRUE. THE AGENT IS HEREBY
AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS
CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL. THE
BORROWER HEREBY CERTIFIES THAT NEITHER THE AGENT NOR ANY REPRESENTATIVE OR AGENT
OF THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF THE UNDERSIGNED
THAT THE AGENT WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.
-54-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
AMERICAN HOME MORTGAGE CORP.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
Address for Notices: FIRST UNION NATIONAL BANK
By: /s/ R. ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: R. ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
Address for Notices: COMERICA BANK
▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Account Officer
Address for Notices: NATIONAL CITY BANK OF KENTUCKY
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: Assistant Vice President
AMENDMENT NO. 1 TO
AMENDED AND RESTATED MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of December 22, 1999, is by
and among AMERICAN HOME MORTGAGE (the "Borrower") and FIRST UNION NATIONAL BANK
(as a Bank and as Agent), NATIONAL CITY BANK OF KENTUCKY and COMERICA BANK
(collectively, the "Banks").
BACKGROUND
----------
A. The Borrower and the Banks are parties to that certain Amended
and Restated Mortgage Warehousing Loan and Security Agreement dated as of
December 6, 1999 (as amended from time to time, the "Agreement").
B. The Borrower has requested that First Union temporarily increase
the Wet Mortgage Loan Sublimit, and First Union's Commitment by $12,000,000.00.
C. The Borrower and the Banks desire to amend the Agreement as set
forth herein.
D. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, the foregoing Background Section being incorporated
by reference, the parties hereto agree as follows:
1. The definition of Wet Mortgage Loan Sublimit is hereby amended,
effective upon the execution hereof by all parties hereto and until the earliest
to occur of (a) an Event of Default, (b) the termination of the Commitments in
full or (c) December 30, 1999 by deleting the reference to $30,000,000 contained
therein and replacing it, with $42,000,000, and deleting the reference to
$39,000,000 contained therein and replacing it with $51,000,000.
2. Effective upon execution hereof by all parties hereto and
delivery to First Union of the Note attached hereto as Exhibit "A," and until
the earliest to occur of (a) an Event of Default, (b) the termination of the
Commitments in full or (c) December 30, 1999, First Union's Commitment shall be
increased from $35,000,000 to $47,000,000 and the total Commitment shall be
increased from $60,000,000 to $72,000,000
3. National City and Comerica, by signing below, each consent to the
increase in the Wet Mortgage Loan Sublimit and the increase in First Union's
Commitment as well as the overall Commitment.
4. The Borrower has taken all corporate action necessary to
authorize the execution, delivery and performance of this Amendment. This
Amendment is, or when executed by the Borrower and the Guarantor delivered to
the Agent together with the Note will be, a valid and legally binding obligation
of the Borrower in accordance with its terms. The Borrower
hereby ratifies and reaffirms the representations and warranties set forth in
Article V of the Agreement as being true and correct as of the date hereof.
5. Except as amended hereby, all of the terms and conditions of the
Agreement and the obligations of the Borrower under the Notes are ratified and
confirmed, and the Agreement shall continue in full force and effect in
accordance with its terms.
6. This Amendment may be executed in counterparts, all of which
counterparts, when taken together, will constitute the entire agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date set forth above.
AMERICAN HOME MORTGAGE CORP.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Its President
----------------------------------
FIRST UNION NATIONAL BANK,
as a Bank, and as Agent
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Its Vice President
-------------------------------------
COMERICA BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Its Account Officer
-------------------------------------
NATIONAL CITY BANK OF KENTUCKY
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
-------------------------------------
Its Asst. Vice President
-------------------------------------
Consent of Guarantor
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Guarantor under that certain Guaranty Agreement
dated as of December 6, 1999, hereby consents to the foregoing increase in the
Wet Mortgage Loan Sublimit and expressly acknowledges the increase of the
Commitment and ratifies the continued existence of the Guaranty.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AMENDMENT NO. 2 TO
AMENDED AND RESTATED MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of January 2, 2000, is by and
among AMERICAN HOME MORTGAGE (the "Borrower") and FIRST UNION NATIONAL BANK (as
a Bank and as Agent), NATIONAL CITY BANK OF KENTUCKY and COMERICA BANK
(collectively, the "Banks").
BACKGROUND
A. The Borrower and the Banks are parties to that certain Amended
and Restated Mortgage Warehousing Loan and Security Agreement dated as of
December 6, 1999 (as amended from time to time, the "Agreement").
B. The Borrower has requested that certain modifications be made to
the Agreement to accommodate late funding of Loans by the Agent.
C. The Borrower and the Banks desire to amend the Agreement as set
forth herein.
D. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, the foregoing Background Section being incorporated
by reference, the parties hereto agree as follows:
1. A new Section 2.04(c) is hereby added to the Agreement as
follows:
"(c) The Agent may, subject to Section 2.04(b), above, advance
its owns funds for Loans requested by the Borrower not later than
4:00 p.m. prevailing New York time."
2. This Amendment shall be effective upon execution hereof by all
parties hereto and delivery to First Union of the First Amendment to Custodial
Agreement attached hereto as Exhibit "A."
3. The Borrower has taken all corporate action necessary to
authorized the execution, delivery and performance of this Amendment. This
Amendment is, or when executed by the Borrower and the Guarantor delivered to
the Agent together with the Note will be, a valid and legally binding obligation
of the Borrower in accordance with its terms. The Borrower hereby ratifies and
reaffirms the representations and warranties set forth in Article V of the
Agreement as being true and correct as of the date hereof.
4. Except as amended hereby, all of the terms and conditions of the
Agreement and the obligations of the Borrower under the Notes are ratified and
confirmed, and the Agreement shall continue in full force and effect in
accordance with its terms.
5. This Amendment may be executed in counterparts, all of which
counterparts, when taken together, will constitute the entire agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date set forth above.
AMERICAN HOME MORTGAGE CORP.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Its President
------------------------------------
FIRST UNION NATIONAL BANK,
as a Bank, and as Agent
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Its Vice President
------------------------------------
COMERICA BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its Account Officer
------------------------------------
NATIONAL CITY BANK OF KENTUCKY
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------------------------
Its Asst. Vice President
------------------------------------
AMENDMENT NO. 3 TO
AMENDED AND RESTATED MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of January 31, 2000, is by
and among AMERICAN HOME MORTGAGE (the "Borrower") and FIRST UNION NATIONAL BANK
(as a Bank and as Agent), NATIONAL CITY BANK OF KENTUCKY and COMERICA BANK
(collectively, the "Banks").
BACKGROUND
----------
A. The Borrower and the Banks are parties to that certain Amended
and Restated Mortgage Warehousing Loan and Security Agreement dated as of
December 6,1999 (as amended from time to time, the "Agreement").
B. The Borrower has requested that First Union temporarily increase
the Wet Mortgage Loan Sublimit, and First Union's Commitment by $15,000,000.00.
C. The Borrower and the Banks desire to amend the Agreement as set
forth herein.
D. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, the foregoing Background Section being incorporated
by reference, the parties hereto agree as follows:
1. Subject to Paragraph 5 hereof, the definition of Wet Mortgage
Loan Sublimit is hereby amended, effective upon the execution hereof by all
parties hereto and the delivery by Borrower of its Second Replacement Note and
until the earliest to occur of (a) an Event of Default, (b) the termination of
the Commitments in full, (c) the closing a permanent increase in the total
Commitment or (d) March 17, 2000 as follows:
"Wet Mortgage Loan Sublimit" means fifty percent (50%) of the
Commitment; however, the Wet Mortgage Loan Sublimit shall increase to
sixty-five percent (65%) of the Commitment for the first five (5) Business
Days and the last five (5) Business Days of each month but may not exceed
fifty percent (50%) of the Commitment for more than ten (10) Business Days
each month.
2. Subject to Paragraph 5 hereof, effective upon execution hereof by
all parties hereto and delivery to First Union of the Second Replacement Note
attached hereto as Exhibit "A" and until the earliest to occur of (a) an Event
of Default, (b) the termination of the Commitments in full or (c) March 17,
2000, First Union's Commitment shall be increased from $35,000,000 to
$50,000,000 and the total Commitment shall be increased from $60,000,000 to
$75,000,000.
3. National City and Comerica, by signing below, each consent to the
increase in the Wet Mortgage Loan Sublimit and the increase in First Union's
Commitment as well as the overall Commitment.
4. The Borrower has taken all corporate action necessary to
authorize the execution, delivery and performance of this Amendment. This
Amendment is, or when executed by the Borrower and the Guarantor delivered to
the Agent together with the Note will be, a valid and legally binding obligation
of the Borrower in accordance with its terms. The Borrower hereby ratifies and
reaffirms the representations and warranties set forth in Article V of the
Agreement as being true and correct as of the date hereof.
5. This temporary increase in First Union's Commitment shall cease
to be effective if the Borrower does not deliver Borrower prepared financial
statements as of November 30, 1999 and December 31, 1999 to the Agent on or
before February 4, 2000.
6. Except as amended hereby, all of the terms and conditions of the
Agreement and the obligations of the Borrower under the Notes are ratified and
confirmed, and the Agreement shall continue in full force and effect in
accordance with its terms.
7. This Amendment may be executed in counterparts, all of which
counterparts, when taken together, will constitute the entire agreement.
-2-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date set forth above.
AMERICAN HOME MORTGAGE CORP.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Its President
-------------------------------------
FIRST UNION NATIONAL BANK,
as a Bank, and as Agent
By /s/
-------------------------------------
Its Vice President
-------------------------------------
COMERICA BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Its Account Officer
-------------------------------------
NATIONAL CITY BANK OF KENTUCKY
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
-------------------------------------
Its Asst. Vice President
-------------------------------------
Consent of Guarantor
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Guarantor under that certain Guaranty Agreement
dated as of December 6, 1999, hereby consents to the foregoing increase in the
Wet Mortgage Loan Sublimit and expressly acknowledges the increase of the
Commitment and ratifies the continued existence of the Guaranty.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AMENDMENT NO. 4 TO
AMENDED AND RESTATED MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 ("Amendment"), dated as of February 29, 2000,
is by and among AMERICAN HOME MORTGAGE (the "Borrower"), MARINA MORTGAGE
COMPANY, INC. ("Marina") and FIRST UNION NATIONAL BANK (as a Bank and as Agent),
NATIONAL CITY BANK OF KENTUCKY and COMERICA BANK (collectively, the "Banks").
BACKGROUND
----------
A. The Borrower and the Banks are parties to that certain Amended
and Restated Mortgage Warehousing Loan and Security Agreement dated as of
December 6, 1999 (as amended from time to time, the "Agreement").
B. The Borrower has requested that the Banks add Marina as a
"Borrower" under the terms of the Agreement.
C. The Borrower and the Banks desire to amend the Agreement as set
forth herein and add Marina as a Borrower and, Marina hereby joins in the
Agreement as a Borrower for all purposes.
D. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, the foregoing Background Section being incorporated
by reference, the parties hereto agree as follows:
1. From and after the date hereof, Marina hereby: (a) shall be,
become and is a Borrower under, in accordance with and subject to the terms and
conditions of the Agreement; (b) joins in and agrees to be bound by and to
perform in accordance with the terms of the Agreement; (c) confirms that Marina
and the Borrower are jointly and severally liable to Banks for all the
Liabilities; (d) hereby pledges, transfers, assigns and delivers and grants to
Banks a first lien on and security interest in and to the Collateral; and (e)
confirms the truth and accuracy of the representations and warranties in the
Agreement as of the date hereof.
2. Each and every reference to the term "Borrower" in the Agreement
shall be deemed to include Marina from and after the effective date of this
Amendment.
3. The effectiveness of this Amendment is conditioned upon the
Banks' receipt of the following:
a. This Amendment No. 4 duly executed by Marina and Borrower;
b. A Note payable to each of the Banks in the form attached hereto
as Exhibit "A" duly executed by Marina and Borrower;
c. A certificate of the Secretary or Assistant Secretary of Marina,
dated the date hereof, attesting to the certificate of incorporation,
by-laws or operating agreement of Marina and all amendments thereto, and
to all corporate actions taken by Marina, including, without limitation,
resolutions of its board of directors, authorizing the execution, delivery
and performance of the Loan Documents, and each other document to be
delivered by Marina pursuant to the Loan Documents;
d. A certificate of the Secretary or Assistant Secretary of Marina,
dated the date hereof, certifying the names and true signatures of the
officers of Marina authorized to sign the Loan Documents, and the other
documents to be delivered by Marina under the Loan Documents including,
without limitation, each loan request;
e. A certificate, dated reasonably near the date hereof, from the
Secretary of State (or other appropriate official) of Marina's state of
incorporation or formation certifying as to the due incorporation and good
standing of Marina and certificates, dated within one month of the date
hereof, from the Secretary of State (or other appropriate official) of
each other jurisdiction where Marina is required to be qualified to
conduct business or where such qualification is necessary to enforce any
Mortgage Loan, certifying that Marina is duly qualified to do such
business and is in good standing in such state;
f. (1) To the extent requested by the Agent, duly executed financing
statements (UCC-1) to be filed under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Agent, desirable to
perfect the Liens created by this Agreement, duly executed copies of the
termination statements (UCC-3) to be filed under the Uniform Commercial
Code of all jurisdictions necessary, or in the opinion of the Agent,
desirable to terminate any Liens in favor of any party other than the
Agent; and (2) Uniform Commercial Code searches identifying all of the
financing statements on file with respect to the Borrower;
g. Asset, lien, Uniform Commercial Code, and judicial searches dated
as of a date reasonably near the date hereof;
h. The Agent shall have received a certificate signed by the
Presidents of Borrower and Marina dated the date hereof stating that:
(i) The representations and warranties contained in this
Agreement and in each of the other Loan Documents are correct on and as of
the Closing Date as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is
continuing;
i. Copies of Marina's articles of incorporation and corporate
by-laws;
j. Agreement and Plan of Merger dated as of December 29, 1999; and
2
k. Such other approvals, opinions or documents as the Agent may
reasonably request;
4. The Borrower and Marina have taken all corporate action necessary
to authorize the execution, delivery and performance of this Amendment. This is,
or when executed by the Borrower, Marina and the Guarantor delivered to the
Agent together with the Notes will be, a valid and legally binding obligation of
the Borrower in accordance with its terms. Borrower and Marina each hereby
ratifies and reaffirms the representations and warranties set forth in Article V
of the Agreement as being true and correct as of the date hereof.
5. Except as amended hereby, all of the terms and conditions of the
Agreement and the obligations of the Borrower under the Notes are ratified and
confirmed, and the Agreement shall continue in full force and effect in
accordance with its terms.
6. This Amendment may be executed in counterparts, all of which
counterparts, when taken together, will constitute the entire agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date set forth above.
AMERICAN HOME MORTGAGE CORP.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its President
MARINA MORTGAGE COMPANY, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Chairman
FIRST UNION NATIONAL BANK,
as a Bank, and as Agent
By /s/___________________
Its Vice President
COMERICA BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Its Account Officer
3
NATIONAL CITY BANK OF KENTUCKY
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
-----------------
▇▇▇▇ ▇▇ ▇▇▇▇▇
Its Asst. Vice President
Consent of Guarantor
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Guarantor under that certain Guaranty Agreement
dated as of December 6, 1999, hereby consents to the addition of Marina Mortgage
Company, Inc. and ratifies the continued existence of the Guaranty.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
4
AMENDMENT NO. 5 TO
AMENDED AND RESTATED MORTGAGE WAREHOUSING
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of March 17, 2000, is by and
among AMERICAN HOME MORTGAGE (the "Borrower") and FIRST UNION NATIONAL BANK (as
a Bank and as Agent), NATIONAL CITY BANK OF KENTUCKY and COMERICA BANK
(collectively, the "Banks").
BACKGROUND
A. The Borrower and the Banks are parties to that certain Amended
and Restated Mortgage Warehousing Loan and Security Agreement dated as of
December 6, 1999 (as amended from time to time, the "Agreement").
B. On January 31, 2000, the Borrower requested that First Union
temporarily increase the Wet Mortgage Loan Sublimit, and First Union's
Commitment by $15,000,000.00. First Union agreed to this request. However, this
temporary increase is expiring and the Borrower requests that it be extended.
C. The Borrower and the Banks desire to amend the Agreement as
set forth herein.
D. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, the foregoing Background Section being incorporated
by reference, the panics hereto agree as follows:
1. The definition of Wet Mortgage Loan Sublimit is hereby amended,
effective upon the execution hereof by all parties hereto and until the earliest
to occur of (a) an Event of Default, (b) the termination of the Commitments in
full, (c) the closing a permanent increase in the total Commitment or (d) April
30, 2000 as follows:
"Wet Mortgage Loan Sublimit" means fifty percent (50%) of the
Commitment; however, the Wet Mortgage Loan Sublimit shall increase
to sixty-five percent (65%) of the Commitment for the first five (5)
Business Days and the last five (5) Business Days of each month but
may not exceed fifty percent (50%) of the Commitment for more than
ten (10) Business Days each month.
2. Effective upon execution hereof by all parties hereto and until
the earliest to occur of (a) an Event of Default, (b) the termination of the
Commitments in full or (c) April 30, 2000, First Union's Commitment shall remain
increased from $35,000,000 to $50,000,000 and the total Commitment shall be
increased from $60,000,000 to $75,000,000.
3. National City and Comerica, by signing below, each consent to the
increase in the Wet Mortgage Loan Sublimit and the increase in First Union's
Commitment as well as the overall Commitment.
4. The Borrower has taken all corporate action necessary to
authorize the execution, delivery and performance of this Amendment. This
Amendment is, or when executed by the Borrower and the Guarantor delivered to
the Agent together with the Note will be, a valid and legally binding obligation
of the Borrower in accordance with its terms. The Borrower hereby ratifies and
reaffirms the representations and warranties set forth in Article V of the
Agreement as being true and correct as of the date hereof.
5. Except as amended hereby, all of the terms and conditions of the
Agreement and the obligations of the Borrower under the Notes are ratified and
confirmed, and the Agreement shall continue in full force and effect in
accordance with its terms.
6. This Amendment may be executed in counterparts, all of which
counterparts, when taken together, will constitute the entire agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date set forth above.
AMERICAN HOME MORTGAGE CORP.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Its President
----------------------------------
FIRST UNION NATIONAL BANK,
as a Bank, and as Agent
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Its Vice President
COMERICA BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its Account Officer
----------------------------------
-2-
NATIONAL CITY BANK OF KENTUCKY
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇
----------------------------------
Its Assistant Vice President
----------------------------------
Consent of Guarantor
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Guarantor under that certain Guaranty Agreement
dated as of December 6, 1999, hereby consents to the foregoing extension of the
increase in the Wet Mortgage Loan Sublimit and expressly acknowledges the
increase of the Commitment and ratifies the continued existence of the Guaranty.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-3-