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EXHIBIT 10.28
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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF APRIL 30, 1999
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LONG BEACH MORTGAGE COMPANY
AS BORROWER
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
AS LENDER
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TABLE OF CONTENTS
Page
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Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms.........................................................1
1.02 Accounting Terms and Determinations..........................................12
Section 2. Loans, Note and Prepayments.
2.01 Loans........................................................................12
2.02 Notes........................................................................13
2.03 Procedure for Borrowing......................................................13
2.04 Limitation on Types of Loans; Illegality.....................................14
2.05 Repayment of Loans; Interest.................................................14
2.06 Mandatory Prepayments or Pledge..............................................15
2.07 Extension of Termination Date................................................15
Section 3. Payments; Computations; Etc.
3.01 Payments.....................................................................15
3.02 Computations.................................................................15
3.03 Requirements of Law..........................................................15
3.04 Non-Use Fee..................................................................16
3.05 Facility Fee.................................................................17
Section 4. Collateral Security.
4.01 Collateral; Security Interest................................................17
4.02 Further Documentation........................................................18
4.03 Changes in Locations, Name, etc..............................................18
4.04 Lender's Appointment as Attorney-in-Fact.....................................18
4.05 Performance by Lender of Borrower's Obligations..............................20
4.06 Proceeds.....................................................................20
4.07 Remedies.....................................................................20
4.08 Limitation on Duties Regarding Preservation of Collateral....................21
4.09 Powers Coupled with an Interest..............................................21
4.10 Release of Security Interest.................................................21
Section 5. Conditions Precedent.
5.01 Initial Loan.................................................................22
5.02 Initial and Subsequent Loans.................................................22
Section 6. Representations and Warranties
6.01 Existence....................................................................24
6.02 Financial Condition..........................................................24
6.03 Litigation...................................................................24
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6.04 No Breach....................................................................25
6.05 Action.......................................................................25
6.06 Approvals....................................................................25
6.07 Margin Regulations...........................................................25
6.08 Taxes........................................................................25
6.09 Investment Company Act.......................................................25
6.10 Collateral; Collateral Security..............................................25
6.11 Chief Executive Office/Jurisdiction of Organization..........................26
6.12 Location of Books and Records................................................26
6.13 True and Complete Disclosure.................................................26
6.14 Tangible Net Worth...........................................................26
6.15 ERISA........................................................................27
Section 7. Covenants of the Borrower
7.01 Financial Statements.........................................................27
7.02 Litigation...................................................................29
7.03 Existence, etc...............................................................29
7.04 Prohibition of Fundamental Changes...........................................30
7.05 Borrowing Base Deficiency....................................................30
7.06 Notices......................................................................30
7.07 Reports......................................................................30
7.08 Underwriting Guidelines......................................................31
7.09 Transactions with Affiliates.................................................31
7.10 Limitation on Liens..........................................................31
7.11 Limitation on Guarantees.....................................................31
7.12 Limitation on Distributions..................................................31
7.13 Maintenance of Tangible Net Worth............................................31
7.14 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.............31
7.15 Maintenance of Profitability.................................................31
7.16 Servicer; Servicing Tape.....................................................32
7.17 Maintenance of Liquidity.....................................................32
7.18 Required Filings.............................................................32
7.19 No Adverse Selection.........................................................32
7.20 Deposit of Collections; Remittance of Prepayments............................32
7.21 Computer Systems.............................................................32
7.22 Blocked Account Agreement....................................................32
Section 8. Events of Default
Section 9. Remedies Upon Default
Section 10. No Duty of Lender
Section 11. Miscellaneous
11.01 Waiver.......................................................................35
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11.02 Notices......................................................................35
11.03 Indemnification and Expenses.................................................36
11.04 Amendments...................................................................37
11.05 Successors and Assigns.......................................................37
11.06 Survival.....................................................................37
11.07 Captions.....................................................................37
11.08 Counterparts.................................................................37
11.09 Loan Agreement Constitutes Security Agreement; Governing Law.................37
11.10 SUBMISSION TO JURISDICTION; WAIVERS..........................................37
11.11 WAIVER OF JURY TRIAL.........................................................38
11.12 Acknowledgments..............................................................38
11.13 Hypothecation or Pledge of Loans.............................................38
11.14 Servicing....................................................................38
11.15 Periodic Due Diligence Review................................................40
11.16 Set-Off......................................................................40
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SCHEDULES
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SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Cooperative Loan Documents
EXHIBITS
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EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Request for Borrowing
EXHIBIT E-1 Form of Borrower's Release Letter
EXHIBIT E-2 Form of Warehouse Lender's Release Letter
EXHIBIT F Underwriting Guidelines
EXHIBIT G Intentionally Deleted
EXHIBIT H Form of Servicer Notice
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of April 30, 1999,
between LONG BEACH MORTGAGE COMPANY, a Delaware corporation (the "Borrower"),
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a New York corporation (the "Lender").
RECITALS
The Borrower has requested that the Lender from time to time make
revolving credit loans to it to finance certain residential mortgage loans owned
by the Borrower, and the Lender is prepared to make such loans upon the terms
and conditions hereof. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"`A-' Credit Mortgage Loan" shall mean a Mortgage Loan made by
the Borrower to a Mortgagor with an `A-' credit history which is underwritten in
accordance with the Borrower's Underwriting Guidelines for `A-' Credit Mortgage
Loans.
"Acceptable Manufactured Housing" shall mean a manufactured home
which is considered and treated as "real estate" under applicable state law.
"Affiliate" shall mean, (i) with respect to the Lender, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Group Inc. and MS & Co. and (ii) with respect to any Person, any other
Person which, directly or indirectly controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "under common
control with") means possession, directly or indirectly, of the power (a) to
vote 20% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
[Remainder of Page Intentionally Blank]
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"Applicable Collateral Percentage" shall mean, with respect to
each Mortgage Loan described below, the percentage set forth in the row opposite
such description.
All Mortgage Loans (other than Delinquent 95%
Mortgage Loans, Mortgage Loans secured by
Acceptable Manufactured Housing or Mortgage
Loans pledged hereunder more than 180 days but
less than 270 days)
All Mortgage Loans pledged hereunder more 85%
than 180 days but less than 270 days and
Mortgage Loans secured by Acceptable
Manufactured Housing
30-Day Delinquent Mortgage Loans 80%
60-Day Delinquent Mortgage Loans 75%
"Applicable Margin" shall mean the sum of the weighted average of
the applicable rates per annum set forth below for each type of Eligible
Mortgage Loan for each day that Loans shall be secured by such Eligible Mortgage
Loans:
(a) for Eligible Mortgage Loans (other than Delinquent Mortgage
Loans) which have been pledged to the Lender less than 180 days, the product of
(i) a fraction equal to the Collateral Value of all Eligible Mortgage Loans
(other than Delinquent Mortgage Loans) which have been pledged to the Lender
less than 180 days, divided by the Collateral Value of all Eligible Mortgage
Loans, multiplied by (ii) 100 basis points (1.00%);
(b) for Eligible Mortgage Loans (other than Delinquent Mortgage
Loans) which have been pledged to the Lender for at least 180 days, but less
than 270 days, the product of (i) a fraction equal to the Collateral Value of
all Eligible Mortgage Loans (other than Delinquent Mortgage Loans) which have
been pledged to the Lender for at least 180 days, but less than 270 days,
divided by the Collateral Value of all Eligible Mortgage Loans, multiplied by
(ii) 125 basis points (1.25%); and
(c) for Delinquent Mortgage Loans, the product of (i) a fraction
equal to the Collateral Value of all Delinquent Mortgage Loans, divided by the
Collateral Value of all Eligible Mortgage Loans, multiplied by (ii) 150 basis
points (1.50%).
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.
"`B' Credit Mortgage Loan" shall mean a Mortgage Loan made by the
Borrower to a Mortgagor with an `B' credit history which is underwritten in
accordance with the Borrower's Underwriting Guidelines for `B' Credit Mortgage
Loans.
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"`B-' Credit Mortgage Loan" shall mean a Mortgage Loan made by
the Borrower to a Mortgagor with an `B-' credit history which is underwritten in
accordance with the Borrower's Underwriting Guidelines for `B-' Credit Mortgage
Loans.
"Blocked Account Agreement" shall mean a letter agreement between
the Borrower, the Lender, and Bank One Texas or any successor thereto (the
"Bank") in form and substance acceptable to the Lender in Lender's sole
discretion, as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrower" shall have the meaning provided in the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of all
Eligible Mortgage Loans.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of
90 days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit and eurodollar time deposits with maturities of 90 days or less from
the date of acquisition and overnight bank deposits of any commercial bank
having capital and surplus in excess of $10,000,000 (c) repurchase obligations
of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than seven days with respect to securities
issued or fully guaranteed or insured by the United States Government, (d)
commercial paper of a domestic issuer rated at least A-1 or the equivalent
thereof by S&P or P-1 or the equivalent thereof by Moody's and in either case
maturing within 90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition, or (g) shares of money market,
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
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"`C' Credit Mortgage Loan" shall mean a Mortgage Loan made by the
Borrower to a Mortgagor with an `C' credit history which is underwritten in
accordance with the Borrower's Underwriting Guidelines for `C' Credit Mortgage
Loans.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" shall have the meaning provided in Section 4.01(b)
hereof.
"Collateral Value" shall mean, with respect to each Eligible
Mortgage Loan, the Applicable Collateral Percentage multiplied by the lesser of
(a) the Market Value of such Mortgage Loan, and (b) the outstanding principal
balance of such Mortgage Loan; provided, that, the following additional
limitations on Collateral Value shall apply:
(i) the aggregate Collateral Value of Mortgage Loans which are
secured by Second Lien Mortgage Loans may not exceed $25,000,000;
(ii) the aggregate Collateral Value of Mortgage Loans which are
secured by a Cooperative Loan or an individual condominium unit in a
low-rise condominium project may not exceed $15,000,000;
(iii) the aggregate Collateral Value of Mortgage Loans which are
pledged to the Lender later than 180 days after such Mortgage Loan was
first included in the Collateral, but less than 270 days after such
Mortgage Loan was first included in the Collateral may not exceed
$10,000,000;
(iv) the aggregate Collateral Value of 30-Day Delinquent
Mortgage Loans may not exceed $10,000,000;
(v) the aggregate Collateral Value of Mortgage Loans which are
secured by Acceptable Manufactured Housing may not exceed $10,000,000;
(vi) the aggregate Collateral Value of Mortgage Loans which are
secured by non-owner occupied Mortgage Loans may not exceed $10,000,000;
(vii) the aggregate Collateral Value of 60-Day Delinquent
Mortgage Loans may not exceed $5,000,000; and
(viii) Collateral Value shall be deemed to be zero with respect
to each Mortgage Loan (1) in respect of which there is a breach of a
representation and warranty set forth on Schedule 1 (assuming each
representation and warranty is made as of the date Collateral Value is
determined), (2) in respect of which there is a delinquency in the
payment of principal and/or interest which continues for a period in
excess of 89 days (without regard to any applicable grace periods), (3)
which remains pledged to the Lender hereunder later than 270 days after
the date on which it is first included in the Collateral, or (4) which
has been released from the possession of the Custodian under the
Custodial Agreement to the Borrower for a period in excess of 10 days,
or (5) which exceed the limitations on Collateral Value set forth in (i)
through (vii) above.
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"Collection Account" shall mean the account established by the
Bank subject to a security interest in favor of the Lender and to the Blocked
Account Agreement, into which all Collections shall be deposited.
"Collections" shall mean, collectively, all collections and
proceeds on or in respect of the Mortgage Loans pledged to the Lender hereunder,
excluding collections required to be paid to the Servicer or a mortgagor on the
Mortgage Loans.
"Cooperative Corporation" shall mean the cooperative apartment
corporation that holds legal title to a Cooperative Project and grants occupancy
rights to units therein to stockholders through Proprietary Leases or similar
arrangements.
"Cooperative Loan" shall mean a Mortgage Loan that is secured by
a first lien on a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
"Cooperative Loan Documents" shall mean the documents listed on
Schedule 3 attached hereto.
"Cooperative Project" shall mean all real property owned by a
Cooperative Corporation including the land, separate dwelling units and all
common elements.
"Cooperative Shares" shall mean the shares of stock issued by a
Cooperative Corporation and allocated to a Cooperative Unit and represented by a
stock certificate.
"Cooperative Unit" shall mean a specific unit in a Cooperative
Project.
"Custodial Agreement" shall mean the Custodial Agreement, dated
as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean Chase Bank of Texas as custodian under the
Custodial Agreement, and its successors and permitted assigns thereunder.
"`D' Credit Mortgage Loan" shall mean a Mortgage Loan made by the
Borrower to a Mortgagor with an `D' credit history which is underwritten in
accordance with the Borrower's Underwriting Guidelines for `D' Credit Mortgage
Loans.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Delinquent Mortgage Loan" shall mean either a 30-Day Mortgage
Loan or a 60-Day Mortgage Loan.
"Dollars" and "$" shall mean lawful money of the United States of
America.
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"Due Diligence Review" shall mean the performance by the Lender
of any or all of the reviews permitted under Section 11.15 hereof with respect
to any or all of the Mortgage Loans, as desired by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean (a) a Mortgage Loan secured
by a first or second mortgage lien on a one-to-four family residential property
or an individual condominium unit in a low-rise condominium project, or (b) a
Cooperative Loan, in either case, as to which the representations and warranties
in Section 6.10 and Schedule 1 hereof are correct; provided that, in no event
shall any Eligible Mortgage Loan be a security for purposes of any securities or
blue-sky laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Borrower is a member.
"Eurodollar Rate" shall mean, with respect to each day a Loan is
outstanding, the rate per annum equal to the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR on such date (and if such date is not a
Business Day, the Eurodollar Rate in effect on the Business Day immediately
preceding such date), and if such rate shall not be so quoted, the rate per
annum at which the Lender is offered Dollar deposits at or about 10:00 A.M., New
York City time, on such date by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency exchange operations in respect of its
Loans are then being conducted for delivery on such day for a period of 30 days
and in an amount comparable to the amount of the Loans to be outstanding on such
day.
"Event of Default" shall have the meaning provided in Section 8
hereof.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Lender from
three federal funds brokers of recognized standing selected by it.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles
currently effective in United States.
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"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Subsidiaries or any of its properties.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person only to the extent of
the recorded value of such Property on the balance sheet; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements, sale/buy-back agreements
or like arrangements; (g) Indebtedness of others Guaranteed by such Person; (h)
all obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; and (i) Indebtedness of general
partnerships of which such Person is a general partner.
"Interest Rate Protection Agreement" shall mean, with respect to
any or all of the Mortgage Loans, any short sale of US Treasury Security, or
futures contract, or mortgage related security, or Eurodollar futures contract,
or options related contract, or interest rate swap, cap or collar agreement or
similar arrangements providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or under
specific contingencies, entered into by the Borrower and an Affiliate of the
Lender, and acceptable to the Lender.
"Lender" shall have the meaning provided in the heading hereto.
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"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan" shall have the meaning provided in Section 2.01(a) hereof.
"Loan Agreement" shall mean this Master Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Loan Documents" shall mean, collectively, this Loan Agreement,
the Note, the Custodial Agreement, and the Blocked Account Agreement.
"Market Value" shall mean, as of any date in respect of an
Eligible Mortgage Loan, the price at which such Eligible Mortgage Loan could
readily be sold as determined in good faith by the Lender, which price may be
determined to be zero. The Lender's determination of Market Value shall be
conclusive upon the parties absent manifest error on the part of the Lender.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition or prospects of the
Borrower, (b) the ability of the Borrower to perform its obligations under any
of the Loan Documents to which it is a party, (c) the validity or enforceability
of any of the Loan Documents, (d) the rights and remedies of the Lender under
any of the Loan Documents, (e) the timely payment of the principal of or
interest on the Loans or other amounts payable in connection therewith or (f)
the Collateral.
"Maximum Credit" shall mean $250,000,000.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" shall mean the mortgage, deed of trust, or other
instrument securing a Mortgage Note, which creates a first or second lien on the
fee in real property securing the Mortgage Note or in the case of each
Cooperative Loan, a Pledge Agreement which creates a first priority security
interest on the Cooperative Shares and Proprietary Lease securing the Mortgage
Note.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Loan" shall mean a mortgage loan or a Cooperative Loan
which the Custodian has been instructed to hold for the Lender pursuant to the
Custodial Agreement, and which Mortgage Loan includes, without limitation, a
Mortgage Note and related Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage
Loan, the documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan Schedule" shall have the meaning assigned thereto
in the Custodial Agreement.
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"Mortgage Loan Schedule and Exception Report" shall mean the
mortgage loan schedule and exception report prepared by the Custodian pursuant
to the Custodial Agreement.
"Mortgage Loan Tape" shall mean a computer-readable file
containing information with respect to each Mortgage Loan, to be delivered by
the Borrower to the Lender pursuant to Section 2.03(a) hereof which tape fields
are identified on Annex I to the Custodial Agreement.
"Mortgage Note" shall mean the original executed promissory note
or other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
"Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note or with respect to a Cooperative Loan, the
Cooperative Shares and the Proprietary Lease.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"MS & Co." shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, a
registered broker-dealer.
"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been or are required
to be made by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period as determined in accordance with GAAP.
"1934 Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Note" shall have the meaning provided in Section 2.02(a) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Contribution" shall mean a contribution of capital to
a wholly owned special purpose Subsidiary of the Borrower consisting solely of
(a) residential real estate acquired in connection with the foreclosure of a
residential mortgage loan, and (b) no more than $1,000,000 in cash contributed
for the purpose of capitalizing the Subsidiary and for use by the Subsidiary in
managing the real estate acquired pursuant to clause (a) hereof.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
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"Plan" shall mean an employee benefit or other plan established
or maintained by the Borrower or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Pledge Agreement" the specific security agreement or pledge
agreement creating a security interest on and pledge of the Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative Loan.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to 4% per annum
plus the Prime Rate.
"Prime Rate" shall mean the prime rate announced to be in effect
from time to time, as published as the average rate in The Wall Street Journal.
"Property" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Proprietary Lease" shall mean a lease on (or occupancy agreement
with respect to) a Cooperative Unit evidencing the possessory interest of the
owner of the Cooperative Shares or the Seller in such Cooperative Unit.
"Recognition Agreement" shall mean, with respect to a Cooperative
Loan, an agreement executed by a Cooperative Corporation which, among other
things, acknowledges the lien of the Mortgage on the Mortgaged Property in
question.
"Regulations T, U and X" shall mean Regulations T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or the chief financial officer or treasurer of such Person.
"Requirement of Law" shall mean as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"S&P" shall mean Standard and Poor's Ratings Services.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
(other than a Cooperative Loan) secured by a lien on the Mortgaged Property,
subject to one prior lien on such Mortgaged Property.
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"Secured Obligations" shall have the meaning provided in Section
4.01(c) hereof.
"Servicer" shall mean the Borrower in its capacity as servicer,
in accordance with Section 11.14(b) hereof, unless a third-party servicer shall
be appointed in accordance with Section 11.14(c).
"Servicing Agreement" shall have the meaning provided in Section
11.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"60-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan
which is more than fifty-nine (59) days, but less than ninety (90) days,
delinquent.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"System" shall mean all hardware or software, or any system
consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications, maintenance and the like
utilized by any Person for the benefit of such Person to perform its obligations
and to administer and track, store, process, provide, and where appropriate,
insert, true and accurate dates and calculations for dates and spans with
respect to the Mortgage Loans.
"Tangible Net Worth" shall mean, as of a particular date,
(a) all amounts which would be included under capital on a balance sheet of the
Borrower at such date, determined in accordance with GAAP, less
(b) (i) amounts owing to the Borrower from Affiliates to the extent such amount
exceeds $1,000,000 in the aggregate and (ii) intangible assets, provided that
intangible assets shall not include the Borrower's "deferred income taxes, net".
Tangible Net Worth shall include the amount reflected on the most recent balance
sheet delivered by the Borrower to the Lender as "deferred income taxes, net".
As of December 31, 1998, the Borrower's total "deferred income taxes, net" was
$32,523,000.
"Termination Date" shall mean April 30, 2000 or such earlier date
on which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"Test Period" shall have the meaning provided in Section 7.16
hereof.
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"30-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan
which is more than twenty-nine (29) days, but less than sixty (60) days,
delinquent.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of the Borrower during such period less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP.
"Underwriting Guidelines" shall mean the underwriting guidelines
attached as Exhibit E hereto.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Year 2000 Compliant" shall mean the ability of a System to
continue its normal functions including and following January 1, 2000 and the
ability of such System to support its continued normal usage such that neither
the performance nor the correct functioning of such System will be affected by
the approach, and passing into, the year 2000.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Loans, Note and Prepayments.
2.01 Loans.
(a) The Lender agrees to make, on the terms and conditions of
this Loan Agreement, loans (individually, a "Loan" and, collectively, the
"Loans") to the Borrower in Dollars, from and including the Effective Date to
and including the Termination Date in an aggregate principal amount at any one
time outstanding up to but not exceeding the Maximum Credit as in effect from
time to time.
(b) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder;
provided that, notwithstanding the foregoing, the Lender shall have no
obligation to make Loans to the Borrower in excess of the then current Maximum
Credit and, in the event the obligation of the Lender to make Loans to the
Borrower is terminated as permitted hereunder, the Lender shall have no further
obligation to make additional Loans hereunder.
(c) In no event shall a Loan be made when any Default or Event of
Default has occurred and is continuing.
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2.02 Notes.
(a) The Loans made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit A hereto
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Maximum Credit as originally in effect and otherwise
duly completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under the Note in
respect of the Loans.
2.03 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on any
Business Day during the period from and including the Effective Date to and
including the Termination Date, by delivering to the Lender, with a copy to the
Custodian, a written request for borrowing, substantially in the form of Exhibit
D attached hereto, which request must be received by the Lender prior to 11:00
a.m., New York City time, one (l) Business Day prior to the requested Funding
Date. Such request for borrowing shall (i) attach a schedule identifying the
Eligible Mortgage Loans that the Borrower proposes to pledge to the Lender and
to be included in the Borrowing Base in connection with such borrowing, (ii)
specify the requested Funding Date, (iii) include a Mortgage Loan Tape
containing information with respect to the Eligible Mortgage Loans that the
Borrower proposes to pledge to the Lender and to be included in the Borrowing
Base in connection with such borrowing, and (iv) attach an officer's certificate
signed by a Responsible Officer of the Borrower as required by Section 5.02(b)
hereof.
(b) Upon the Borrower's request for a borrowing pursuant to
Section 2.03(a), the Lender shall, assuming all conditions precedent set forth
in Section 5.01 and 5.02 have been met and provided no Default shall have
occurred and be continuing, make a Loan to the Borrower on the requested Funding
Date, in the amount so requested.
(c) The Borrower shall release to the Custodian no later than
11:00 a.m., New York City time, two (2) Business Days prior to the requested
Funding Date, the Mortgage File pertaining to each Eligible Mortgage Loan to be
pledged to the Lender and included in the Borrowing Base on such requested
Funding Date, in accordance with the terms and conditions of the Custodial
Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall
deliver to the Lender and the Borrower, no later than 11:00 a.m. on a Funding
Date, a Trust Receipt (as defined in the Custodial Agreement) in respect of all
Mortgage Loans pledged to the Lender on such Funding Date, and a Mortgage Loan
Schedule and Exception Report. Subject to Section 5 hereof, such borrowing will
then be made available to the Borrower by the Lender transferring,
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via wire transfer, to the following account of the Borrower: Account number
00102672087, for the A/C of Long Beach Mortgage Company Note Payment Account,
Chase Bank of Texas, Houston, TX, ABA ▇▇▇▇▇▇▇▇▇ in the aggregate amount of such
borrowing in funds immediately available to the Borrower.
2.04 Limitation on Types of Loans; Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Loans as provided herein; or
(b) the Lender determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the definition of
"Eurodollar Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for Loans is to be determined is not likely adequately to cover the
cost to the Lender of making or maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its obligation to
make or maintain Loans hereunder using a Eurodollar Rate;
then the Lender shall give the Borrower prompt notice thereof
and, so long as such condition remains in effect, the Lender shall be under no
obligation to make additional Loans, and the Borrower shall, either prepay all
such Loans as may be outstanding or pay interest on such Loans at a rate per
annum equal to the Federal Funds Rate plus 2.00%.
2.05 Repayment of Loans; Interest.
(a) The Borrower hereby promises to repay in full on the
Termination Date the then aggregate outstanding principal amount of the Loans.
(b) The Borrower hereby promises to pay to the Lender interest on
the unpaid principal amount of each Loan for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
a rate per annum equal to the Eurodollar Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Borrower hereby promises to pay to the Lender
interest at the applicable Post-Default Rate on any principal of any Loan and on
any other amount payable by the Borrower hereunder or under the Note that shall
not be paid in full when due (whether at stated maturity, by acceleration or by
mandatory prepayment or otherwise) for the period from and including the due
date thereof to but excluding the date the same is paid in full. Accrued
interest on each Loan shall be payable monthly on the first Business Day of each
month and for the last month of the Loan Agreement on the first Business Day of
such last month and on the Termination Date, except that interest payable at the
Post-Default Rate shall accrue daily and shall be payable upon such accrual.
(c) It is understood and agreed that, unless and until a Default
shall have occurred and be continuing, the Borrower shall be entitled to the
proceeds of the Mortgage Loans pledged to the Lender hereunder.
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2.06 Mandatory Prepayments or Pledge.
If at any time the aggregate outstanding principal amount of
Loans exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined
by the Lender and notified to the Borrower on any Business Day, the Borrower
shall no later than one Business Day after receipt of such notice, either prepay
the Loans in part or in whole or pledge additional Eligible Mortgage Loans
(which Collateral shall be in all respects acceptable to the Lender) to the
Lender, such that after giving effect to such prepayment or pledge the aggregate
outstanding principal amount of the Loans does not exceed the Borrowing Base.
2.07 Extension of Termination Date.
At the request of the Borrower made at least thirty (30) days,
but in no event earlier than ninety (90) days, prior to the then current
Termination Date, the Lender may in its sole discretion extend the Termination
Date for a period to be determined by Lender in its sole discretion by giving
written notice of such extension to the Borrower no later than twenty (20) days,
but in no event earlier than thirty (30) days, prior to the then current
Termination Date. Any failure by the Lender to deliver such notice of extension
shall be deemed to be the Lender's determination not to extend the then current
Termination Date.
Section 3. Payments; Computations; Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Loan Agreement
and the Note, shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to the Lender at the following account
maintained by the Lender: Account No. ▇▇▇▇▇▇▇▇, for the account of MSMCI,
Citibank, N.A., ABA No. ▇▇▇▇▇▇▇▇▇, Attn: Whole Loan Operations, not later than
1:00 p.m., New York City time, on the date on which such payment shall become
due (and each such payment made after such time on such due date shall be deemed
to have been made on the next succeeding Business Day). The Borrower
acknowledges that it has no rights of withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the due date of
any payment under this Loan Agreement or the Note would otherwise fall on a day
that is not a Business Day, such date shall be extended to the next succeeding
Business Day, and interest shall be payable for any principal so extended for
the period of such extension.
3.02 Computations. Interest on the Loans shall be
computed on the basis of a 360-day year for the actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable.
3.03 Requirements of Law.
(a) If any Requirement of Law (other than
with respect to any amendment made to the Lender's certificate of incorporation
and by-laws or other organizational or governing documents) or any change in the
interpretation or application thereof or compliance
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by the Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Loan made by it
(excluding net income taxes) or change the basis of taxation of payments
to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory Loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, Loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Lender which is not otherwise
included in the determination of the Eurodollar Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of or
any change in any Requirement of Law (other than with respect to any amendment
made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, the Borrower shall promptly pay to the
Lender such additional amount or amounts as will compensate the Lender for such
reduction.
(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this Section, it shall promptly notify the Borrower of the
event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this Section submitted by the Lender to
the Borrower shall be conclusive in the absence of manifest error.
3.04 Non-Use Fee.
The Borrower agrees to pay to the Lender a non-use fee from and
including the Effective Date to the Termination Date, computed at the rate of
0.10% per annum on the average daily amount of the unutilized portion of the
Maximum Credit during the period for which payment is made, in each case payable
monthly in arrears on the first Business Day of the following month and on the
Termination Date, such payment commencing on the first Business
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Day of the month following the date hereof, such payment to be made in Dollars,
in immediately available funds, without deduction, set-off or counterclaim, to
the Lender at the account set forth in Section 3.01(a) hereof.
3.05 Facility Fee.
The Borrower agrees to pay to the Lender on or prior to the
Effective Date a facility fee equal to 12.5 basis points (0.125%) of the Maximum
Credit, such payment to be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Lender at the account set
forth in Section 3.01(a) hereof.
Section 4. Collateral Security.
4.01 Collateral; Security Interest
(a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver to the Lender
Trust Receipts (as defined in the Custodial Agreement) each to the effect that
it has reviewed such Mortgage Loan Documents in the manner and to the extent
required by the Custodial Agreement and identifying any deficiencies in such
Mortgage Loan Documents as so reviewed.
(b) All of the Borrower's right, title and interest in, to and
under each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Collateral":
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including without limitation
all promissory notes, and all Servicing Records (as defined in Section
11.14(b) below), servicing agreements and any other collateral pledged
or otherwise relating to such Mortgage Loans, together with all files,
documents, instruments, surveys, certificates, correspondence,
appraisals, computer programs, computer storage media, accounting
records and other books and records relating thereto;
(iii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loan and all claims and payments
thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
(v) all Interest Rate Protection Agreements, relating to or
constituting any and all of the foregoing;
(vi) the Collection Account and all monies from time to time on
deposit in the Collection Account;
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(vii) all collateral, however defined, under any other agreement
between the Borrower or any of its Affiliates on the one hand and the
Lender or any of its Affiliates on the other hand;
(viii) all "general intangibles", "accounts" and "chattel paper"
as defined in the Uniform Commercial Code relating to or constituting
any and all of the foregoing; and
(ix) any and all replacements, substitutions, distributions on
or proceeds of any and all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a security
interest in all of its right, title and interest in, to and under the Collateral
to the Lender to secure the repayment of principal of and interest on all Loans
and all other amounts owing to the Lender hereunder, under the Note and under
the other Loan Documents (collectively, the "Secured Obligations"). The Borrower
agrees to ▇▇▇▇ its computer records and tapes to evidence the interests granted
to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof, (ii) change its name, identity or corporate
structure (or the equivalent), (iii) change the location where it maintains its
records with respect to the Collateral, or (iv) change the jurisdiction of its
organization unless it shall have given the Lender at least 30 days prior
written notice thereof and shall have delivered to the Lender all Uniform
Commercial Code financing statements and amendments thereto as the Lender shall
request and taken all other actions deemed necessary by the Lender to continue
its perfected status in the Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably
constitutes and appoints the Lender and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Borrower and in
the name of the Borrower or in its own name, from time to time in the Lender's
discretion, for the purpose of carrying out the terms of this Loan Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to
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accomplish the purposes of this Loan Agreement; provided, that, the Lender
shall, concurrently with any exercise of such power, use reasonable efforts to
notify the Borrower of such exercise; provided, that, any failure of the Lender
to notify the Borrower of such exercise shall not jeopardize the power,
authority or rights granted herein nor shall the Lender be liable to the
Borrower for any such failure hereunder. Without limiting the generality of the
foregoing, the Borrower hereby gives the Lender the power and right, on behalf
of the Borrower, without assent by, but with notice to, the Borrower, if an
Event of Default shall have occurred and be continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
mortgage insurance or with respect to any other Collateral and to file
any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Lender for the purpose
of collecting any and all such moneys due under any such mortgage
insurance or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for all
purposes, and to do, at the Lender's option and the Borrower's expense,
at any time, and from time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon the Collateral and
the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and from
time to time, to execute, in connection with any sale provided for in Section
4.07 hereof, any
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endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
4.06 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then or at any time thereafter may
be applied by the Lender against, the Secured Obligations (whether matured or
unmatured), such application to be in such order as the Lender shall elect. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to receive the
same. For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. If a Default shall occur and be continuing, the
Lender may, at its option, enter into one or more Interest Rate Protection
Agreements covering all or a portion of the Mortgage Loans pledged to the Lender
hereunder, and the Borrower shall be responsible for all damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by or asserted
against the Lender relating to or arising out of such Interest Rate Protection
Agreements; including without limitation any losses resulting from such Interest
Rate Protection Agreements. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which demands,
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presentments, protests, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived or released.
The Borrower further agrees, at the Lender's request, to assemble the Collateral
and make it available to the Lender at places which the Lender shall reasonably
select, whether at the Borrower's premises or elsewhere. The Lender shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including without limitation reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including without limitation Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency (plus accrued interest thereon as contemplated
pursuant to Section 2.05(b) hereof) if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the fees and disbursements of any attorneys employed by the Lender to
collect such deficiency.
4.08 Limitation on Duties Regarding Preservation of Collateral.
The Lender's duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither
the Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this Loan
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations
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under the Loan Documents the Lender shall release its security interest in any
remaining Collateral.
Section 5. Conditions Precedent.
5.01 Initial Loan. The obligation of the Lender to make its
initial Loan hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the condition precedent that the
Lender shall have received all of the following items, each of which shall be
satisfactory to the Lender and its counsel in form and substance:
(a) Loan Documents. The Loan Documents, duly completed and
executed.
(i) Note. The Note, duly completed and executed;
(ii) Custodial Agreement. The Custodial Agreement, duly executed
and delivered by the Borrower and the Custodian. In addition, the
Borrower shall have taken such other action as the Lender shall have
requested in order to perfect the security interests created pursuant to
the Loan Agreement;
(b) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of the
Borrower and of all corporate or other authority for the Borrower with respect
to the execution, delivery and performance of the Loan Documents and each other
document to be delivered by the Borrower from time to time in connection
herewith (and the Lender may conclusively rely on such certificate until it
receives notice in writing from the Borrower to the contrary);
(c) Legal Opinion. A legal opinion of outside counsel to the
Borrower, substantially in the form attached hereto as Exhibit C;
(d) Trust Receipt and Mortgage Loan Schedule and Exception
Report. A Trust Receipt, substantially in the form of Annex 2 of the Custodial
Agreement, dated the Effective Date, from the Custodian, duly completed, with a
Mortgage Loan Schedule and Exception Report attached thereto;
(e) Servicing Agreement(s). Any Servicing Agreement, certified as
a true, correct and complete copy of the original, with the letter of the
applicable Servicer consenting to termination of such Servicing Agreement upon
the occurrence of an Event of Default attached;
(f) Facility Fee. The Lender shall have received the facility fee
as contemplated by Section 3.05 and;
(g) Other Documents. Such other documents as the Lender may
reasonably request.
5.02 Initial and Subsequent Loans. The making of each Loan to the
Borrower (including the initial Loan) on any Business Day is subject to the
satisfaction of the following further conditions precedent, both immediately
prior to the making of such Loan and also after giving effect thereto and to the
intended use thereof:
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(a) no Default or Event of Default shall have occurred and be
continuing;
(b) both immediately prior to the making of such Loan and also
after giving effect thereto and to the intended use thereof, the representations
and warranties made by the Borrower in Section 6 and Schedule 1 hereof, and
elsewhere in each of the Loan Documents, shall be true, correct and complete on
and as of the date of the making of such Loan in all material respects (in the
case of the representations and warranties in Section 6.10 and Schedule 1,
solely with respect to Mortgage Loans included in the Borrowing Base) with the
same force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date). The Lender shall have received an
officer's certificate signed by a Responsible Officer of the Borrower certifying
as to the truth, accuracy and completeness of the above, which certificate shall
specifically include a statement that the Borrower is in compliance with all
governmental licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions.
(c) the aggregate outstanding principal amount of the Loans shall
not exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 11.15 hereof, the Lender shall have
completed its due diligence review of the Mortgage Loan Documents for each Loan
and such other documents, records, agreements, instruments, mortgaged properties
or information relating to such Loans as the Lender in its sole discretion deems
appropriate to review and such review shall be satisfactory to the Lender in its
sole discretion; provided, that, should the Lender require more than five (5)
Business Days prior to the making of any Loan to complete such Due Diligence
Review, the Lender shall notify the Borrower in writing of the approximate
number of days the Lender will require;
(e) the Lender shall have received from the Custodian a Mortgage
Loan Schedule and Exception Report with Exceptions as are acceptable to the
Lender in its sole discretion in respect of Eligible Mortgage Loans to be
pledged hereunder on such Business Day;
(f) the Lender shall have received from the Borrower a Warehouse
Lender's Release Letter substantially in the form of Exhibit E-2 hereto (or such
other form acceptable to the Lender) or a Seller's Release Letter substantially
in the form of Exhibit E-1 hereto (or such other form acceptable to the Lender)
covering each Mortgage Loan to be pledged to the Lender;
(g) the Lender shall have received all fees and expenses of
counsel to the Lender as contemplated by Section 11.03(b), which amount, at the
Lender's option, may be netted from any Loan advanced under this Agreement;
(h) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co.'s corporate bond rating as
calculated by S&P or ▇▇▇▇▇'▇ has not been lowered or downgraded to a rating
below A- as indicated by S&P or below A3 as indicated by ▇▇▇▇▇'▇;
(i) prior to the pledge of any Mortgage Loans which are
Cooperative Loans, the Borrower and the Lender shall have executed a custodial
agreement for the possession by the
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custodian of the Cooperative Loan Documents with a custodian acceptable to the
Lender in its sole discretion.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower that all the conditions set forth in this Section
5 (other than Section 5.02(h)) have been satisfied (both as of the date of such
notice, request or confirmation and as of the date of such borrowing).
Section 6. Representations and Warranties. The Borrower
represents and warrants to the Lender that throughout the term of this Loan
Agreement:
6.01 Existence. The Borrower (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect; and
(c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect.
6.02 Financial Condition. The Borrower has heretofore furnished
to the Lender a copy of (a) its audited consolidated balance sheet and the
consolidated balance sheets of its consolidated Subsidiaries for the fiscal year
of the Borrower ended December 31, 1998 and the related consolidated statements
of income and retained earnings and of cash flows for the Borrower and its
consolidated Subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, with the opinion thereon of
Deloitte & Touche. All such financial statements are complete and correct and
fairly present, in all material respects, the consolidated financial condition
of the Borrower and its Subsidiaries and the consolidated results of their
operations as at such dates and for such fiscal periods, all in accordance with
GAAP applied on a consistent basis. Since December 31, 1998, there has been no
material adverse change in the consolidated business, operations or financial
condition of the Borrower and its consolidated Subsidiaries taken as a whole
from that set forth in said financial statements.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened) or other legal or arbitrable proceedings affecting the
Borrower or any of its Subsidiaries or affecting any of the Property of any of
them before any Governmental Authority (in all cases, a "Claim") that (i)
questions or challenges the validity or enforceability of any of the Loan
Documents or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $3,000,000.00, which has not been disclosed to the Lender in writing within
ten (10) days following the Borrower's notice or knowledge of such Claim, (iii)
which, individually or in the aggregate, if adversely decided, could, in
Lender's good faith determination, have a Material Adverse Effect, or (iv)
requires filing with the Securities and Exchange Commission in accordance with
the 1934 Act or any rules thereunder.
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6.04 No Breach. Neither (a) the execution and delivery of the
Loan Documents nor (b) the consummation of the transactions therein contemplated
in compliance with the terms and provisions thereof will conflict with or result
in a breach of the charter or by-laws of the Borrower, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any Servicing Agreement or other material agreement or instrument
to which the Borrower or any of its Subsidiaries is a party or by which any of
them or any of their Property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant
to this Loan Agreement) upon any Property of the Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
6.05 Action. The Borrower has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents; the execution, delivery and performance by the
Borrower of each of the Loan Documents have been duly authorized by all
necessary corporate or other action on its part; and each Loan Document has been
duly and validly executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.
6.06 Approvals. No authorizations, approvals or consents of, and
no filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by the
Borrower of the Loan Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulations T, U or X.
6.08 Taxes. The Borrower and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes as
are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.10 Collateral; Collateral Security.
(a) No Mortgage Loan pledged to the Lender hereunder was acquired
(by purchase or otherwise) by the Borrower from an Affiliate of the Borrower.
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(b) The provisions of this Loan Agreement are effective to create
in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note, endorsed
in blank by a duly authorized officer of the Borrower, the Lender shall have a
fully perfected first priority security interest therein, in the Mortgage Loan
evidenced thereby and in the Borrower's interest in the related Mortgaged
Property.
(d) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
6.11 Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, and during the four months immediately preceding the Effective
Date, the Borrower's chief executive office, is, and has been, located at ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. On the Effective Date, the
Borrower's jurisdiction of organization is Delaware.
6.12 Location of Books and Records. The location where the
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
6.13 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Borrower to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer of the
Borrower, after due inquiry, that could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby.
6.14 Tangible Net Worth. On the Effective Date, the Tangible Net
Worth is not less than $69,000,000.
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6.15 ERISA. Each Plan to which the Borrower or its Subsidiaries
make direct contributions, and, to the knowledge of the Borrower, each other
Plan and each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which the Borrower would
be under an obligation to furnish a report to the Lender under Section 7.01(d)
hereof.
Section 7. Covenants of the Borrower. The Borrower covenants and
agrees with the Lender that, so long as any Loan is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to the
Lender:
(a) as soon as available and in any event within 30 days after
the end of each calendar month, the unaudited consolidated financial statements
of the Borrower and its consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated Subsidiaries for
such period and the portion of the fiscal year through the end of such period,
setting forth in each case comparative figures from the previous year,
accompanied by a certificate of a Responsible Officer of the Borrower, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of the
Borrower and its consolidated Subsidiaries in accordance with GAAP, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments) and excluding footnotes;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarterly fiscal periods of each fiscal year
of the Borrower, the unaudited consolidated balance sheets of the Borrower and
its consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for the Borrower and its consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period, setting forth in each
case in comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of the Borrower, which certificate shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower and
its consolidated Subsidiaries in accordance with GAAP, consistently applied, as
at the end of, and for, such period (subject to normal year-end audit
adjustments) and excluding footnotes;
(c) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the consolidated balance sheets of
the Borrower and its consolidated Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income and retained earnings and of
cash flows for the Borrower and its consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants
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stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default or Event of
Default;
(d) from time to time such other information regarding the
financial condition, operations, or business of the Borrower as the Lender may
reasonably request; and
(e) as soon as reasonably possible, and in any event within
thirty (30) days after a Responsible Officer of the Borrower knows, or with
respect to any Plan or Multiemployer Plan to which the Borrower or any of its
Subsidiaries makes direct contributions, has reason to believe, that any of the
events or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial officer of
the Borrower setting forth details respecting such event or condition and the
action, if any, that the Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in Section 4043(c) of ERISA
and the regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within thirty (30) days of the
occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including without limitation the failure to make on or before its due
date a required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the Code); and any
request for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice
of intent to terminate any Plan or any action taken by the Borrower or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan
by the Borrower or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by
the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
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(vi) the adoption of an amendment to any Plan that would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Borrower or an ERISA Affiliate fails to provide timely security to
such Plan in accordance with the provisions of Section 401(a)(29) of the
Code or Section 307 of ERISA.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Loan Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Borrower has taken or proposes to take with respect
thereto).
7.02 Litigation. The Borrower will promptly, and in any event
within 10 days after service of process on any of the following, give to the
Lender notice of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting the Borrower or
any of its Subsidiaries or affecting any of the Property of any of them before
any Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Loan Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $3,000,000.00, (iii) which,
individually or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect, or (iii) requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act and any rules
thereunder.
7.03 Existence, etc. The Borrower will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that nothing in
this Section 7.03(a) shall prohibit any transaction expressly permitted under
Section 7.04 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office from the address referred
to in Section 6.11 or change its jurisdiction of incorporation from the
jurisdiction referred to in Section 6.11 unless it shall have provided the
Lender 30 days' prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on
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which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained; and
(f) permit representatives of the Lender, during normal business
hours, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender.
7.04 Prohibition of Fundamental Changes. The Borrower shall not
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that the
Borrower may merge or consolidate with (a) any wholly owned subsidiary of the
Borrower, or (b) any other Person if the Borrower is the surviving corporation;
and provided further, that if after giving effect thereto, no Default would
exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. The Borrower shall give notice to the Lender:
(a) promptly upon receipt of notice or knowledge of the
occurrence of any Default or Event of Default;
(b) with respect to any Mortgage Loan pledged to the Lender
hereunder, promptly upon receipt of notice or knowledge that the underlying
Mortgaged Property has been damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged so
as to affect adversely the Collateral Value of such pledged Mortgage Loan;
(c) promptly upon receipt of notice or knowledge of (i) any
default related to any Collateral, (ii) any Lien or security interest (other
than security interests created hereby or by the other Loan Documents) on, or
claim asserted against, any of the Collateral or (iii) any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken or
proposes to take with respect thereto.
7.07 Reports. The Borrower shall provide the Lender with a
quarterly report, which report shall include, among other items, (a) a summary
of the Borrower's delinquency and loss experience with respect to mortgage loans
serviced by the Borrower, any Servicer or any designee of either, plus any such
additional reports as the Lender may reasonably request with respect to the
Borrower's or any Servicer's servicing portfolio or pending originations of
mortgage loans and (b) a ▇▇▇▇ to market summary of any residual and/or
subordinate securities held by the Borrower.
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7.08 Underwriting Guidelines. Without the prior written consent
of the Lender, the Borrower shall not materially amend or otherwise materially
modify the Underwriting Guidelines. Notwithstanding the preceding sentence, in
the event that the Borrower makes any amendment or modification to the
Underwriting Guidelines, the Borrower shall promptly deliver to the Lender a
complete copy of the amended or modified Underwriting Guidelines.
7.09 Transactions with Affiliates. Except with respect to
Permitted Contributions made by the Borrower prior to the occurrence and
continuation of any Default, the Borrower will not enter into any transaction,
including without limitation any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(a) otherwise not prohibited under this Loan Agreement, (b) in the ordinary
course of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate, or make a payment that is
not otherwise permitted by this Section 7.09 to any Affiliate. In no event shall
the Borrower pledge to the Lender hereunder any Mortgage Loan acquired by the
Borrower from an Affiliate of the Borrower. Notwithstanding anything to the
contrary herein and subject to Section 7.12 hereof, this Section 7.09 is not
intended to restrict the Borrower's distribution of dividends.
7.10 Limitation on Liens. The Borrower will defend the Collateral
against, and will take such other action as is necessary to remove, any Lien,
security interest or claim on or to the Collateral, other than the security
interests created under this Loan Agreement, and the Borrower will defend the
right, title and interest of the Lenders in and to any of the Collateral against
the claims and demands of all persons whomsoever.
7.11 Limitation on Guarantees. The Borrower shall not create,
incur, assume or suffer to exist any Guarantees in excess of $1,000,000.
7.12 Limitation on Distributions. After the occurrence and during
the continuation of any Default, the Borrower shall not make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
or partnership interest of the Borrower, whether now or hereafter outstanding,
or make any other distribution in respect of any of the foregoing or to any
shareholder or equity owner of the Borrower, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any of the
Borrower's consolidated Subsidiaries.
7.13 Maintenance of Tangible Net Worth. The Borrower shall not
permit Tangible Net Worth at any time to be less than the sum of (i) $55,000,000
plus (ii) an amount equal to 25% of the aggregate or positive monthly Net Income
(without deduction for quarterly losses) commencing after April 30, 1999.
7.14 Maintenance of Ratio of Total Indebtedness to Tangible Net
Worth. The Borrower shall not permit the ratio of Total Indebtedness to Tangible
Net Worth at any time to be greater than 8:1.
7.15 Maintenance of Profitability. The Borrower shall not permit,
for any period of two consecutive fiscal quarters (each such period, a "Test
Period"), Net Income for
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each fiscal quarter of such Test Period (it being understood that Net Income for
each quarter shall be calculated on a quarterly basis rather than over any
entire Test Period), before income taxes for such Test Period and distributions
made during such Test Period, to be less than $1.00.
7.16 Servicer; Servicing Tape. The Borrower shall provide to the
Lender on the tenth Business Day of each month a computer readable file
containing servicing information, including without limitation those fields
specified by the Lender from time to time, on a loan-by-loan basis and in the
aggregate, with respect to the Mortgage Loans serviced hereunder by the Borrower
or any Servicer. The Borrower shall not cause the Mortgage Loans to be serviced
by any servicer other than a servicer expressly approved in writing by the
Lender.
7.17 Maintenance of Liquidity. The Borrower shall ensure that, as
of the end of each calendar month, it has unencumbered Cash Equivalents in an
amount of not less than $5,000,000.
7.18 Required Filings. The Borrower shall promptly provide the
Lender with copies of all documents which the Borrower or any Affiliate of the
Borrower is required to file with the Securities and Exchange Commission in
accordance with the 1934 Act or any rules thereunder.
7.19 No Adverse Selection. The Borrower has not selected the
Collateral in a manner so as to adversely affect the Lender's interests.
7.20 Deposit of Collections; Remittance of Prepayments. Until
such time as a Blocked Account Agreement is entered into in satisfaction of
Section 7.22 hereof, the Borrower shall deposit, and shall direct its lockbox
bank and any Servicer of the Mortgage Loans to deposit, all Collections received
on account of principal and interest with respect to the Mortgage Loans into one
or more segregated accounts holding only proceeds received with respect to the
Mortgage Loans for the sole benefit of Lender. Until such time as a Blocked
Account Agreement is entered into in satisfaction of Section 7.22 hereof, the
Borrower shall remit, with sufficient detail to enable the Lender to
appropriately identify the Mortgage Loan to which any amount remitted applies
(including identification of Collections which constitute prepayments of
principal) (such detail, a "Remittance Report"), to the Lender on each Thursday
(or the next Business Day if such Thursday is not a Business Day) all
Collections that the Borrower has received during the previous week. The Lender
shall apply all amounts constituting principal prepayments so remitted to the
outstanding principal balance of the Loans and all other amounts to any Secured
Obligations then due and owing under the Loan Agreement. Any excess remaining
shall be remitted to the Borrower by wire transfer of immediately available
federal funds by the second Business Day following the later to occur of (a)
receipt of Collections by the Lender and (b) receipt of the related Remittance
Report by the Lender.
7.21 Computer Systems. The Borrower shall maintain its System in
a manner that permits the Borrower be Year 2000 Compliant.
7.22 Blocked Account Agreement. On or prior to August 1, 1999,
the Borrower shall enter into a Blocked Account Agreement in form and substance
acceptable to the Lender.
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Section 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
(a) the Borrower shall default in the payment of any principal of
or interest on any Loan when due (whether at stated maturity, upon acceleration
or at mandatory or optional prepayment); or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after notification by
the Lender of such default, and such default shall have continued unremedied for
five Business Days; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Loan Document by the Borrower or any certificate
furnished to the Lender pursuant to the provisions hereof or thereof shall prove
to have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule
1, which shall be considered solely for the purpose of determining the
Collateral Value of the Mortgage Loans; unless (i) the Borrower shall have made
any such representations and warranties with knowledge that they were materially
false or misleading at the time made or (ii) any such representations and
warranties have been determined by the Lender in its sole discretion to be
materially false or misleading on a regular basis); or
(d) the Borrower shall fail to comply with the requirements of
Section 7.03(a), Section 7.04, Section 7.05, Section 7.06, or Sections 7.09
through 7.22 hereof; or the Borrower shall otherwise fail to comply with the
requirements of Section 7.03 hereof and such default shall continue unremedied
for a period of five Business Days; or the Borrower shall fail to observe or
perform any other covenant or agreement contained in this Loan Agreement or any
other Loan Document and such failure to observe or perform shall continue
unremedied for a period of seven (7) Business Days; or
(e) a final judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall be rendered against the Borrower or
any of its Affiliates by one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be satisfied, discharged (or
provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from the date of entry
thereof, and the Borrower or any such Affiliate shall not, within said period of
30 days, or such longer period during which execution of the same shall have
been stayed or bonded, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(f) the Borrower shall admit in writing its inability to pay its
debts as such debts become due; or
(g) the Borrower or any of its Affiliates shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition
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or readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate or other
action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower or any of its Affiliates, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Affiliate or of all or any substantial part of its property, or (iii) similar
relief in respect of the Borrower or any such Affiliate under any law relating
to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 30 or more days; or an order for relief against the
Borrower or any such Affiliate shall be entered in an involuntary case under the
Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for
whatever reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Borrower; or
(j) the Borrower shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Collateral in
favor of the Lender or shall be Liens in favor of any Person other than the
Lender; or
(k) the Borrower or any of the Borrower's Affiliates shall be in
default under any note, indenture, loan agreement, guaranty, swap agreement or
any other contract to which it is a party, which default (i) involves the
failure to pay a matured obligation, or (ii) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such note,
indenture, loan agreement, guaranty, swap agreement or other contract; or
(l) any materially adverse change in the Property, business,
financial condition or prospects of the Borrower or any of its Affiliates shall
occur, in each case as determined by the Lender in its sole discretion, or any
other condition shall exist which, in the Lender's sole discretion, constitutes
a material impairment of the Borrower's ability to perform its obligations under
this Loan Agreement, the Note or any other Loan Document;
(m) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co.'s corporate bond rating as
calculated by S&P or ▇▇▇▇▇'▇ has been lowered or downgraded to a rating below A-
as indicated by S&P or below A3 as indicated by ▇▇▇▇▇'▇ and the Borrower shall
have failed to repay all outstanding Secured Obligations within ninety (90)
calendar days following demand therefor by the Lender.
Section 9. Remedies Upon Default.
(a) An Event of Default shall be deemed to be continuing unless
expressly waived by the Lender in writing. Upon the occurrence of one or more
Events of Default hereunder, the Lender's obligation to make additional Loans to
the Borrower shall automatically
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terminate without further action by any Person. Upon the occurrence of one or
more Events of Default other than those referred to in Section 8(g) or (h), the
Lender may immediately declare the principal amount of the Loans then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement. Upon
the occurrence of an Event of Default referred to in Sections 8(g) or (h), such
amounts shall immediately and automatically become due and payable without any
further action by any Person. Upon such declaration or such automatic
acceleration, the balance then outstanding on the Note shall become immediately
due and payable, without presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default, the
Lender shall have the right to obtain physical possession of the Servicing
Records and all other files of the Borrower relating to the Collateral and all
documents relating to the Collateral which are then or may thereafter come in to
the possession of the Borrower or any third party acting for the Borrower and
the Borrower shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all agreements
of the Borrower contained in this Loan Agreement.
Section 10. No Duty of Lender. The powers conferred on the Lender
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
herein and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party provided, that a copy of all notices given
under Section 7.01 shall simultaneously be delivered to Credit Department,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, 1221 Avenue of the Americas, 35(th) Floor;
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Except as otherwise provided in this Loan Agreement
and except for notices given under Section 2 (which shall be effective only on
receipt), all such communications shall be deemed to have been duly given when
transmitted by telex or telecopy
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or personally delivered or, in the case of a mailed notice, upon receipt, in
each case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender, and its Affiliates
and their officers, directors, employees, agents and advisors (each an
"Indemnified Party") harmless from and indemnify any Indemnified Party against
all liabilities, losses, damages, judgments, costs and expenses of any kind
which may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, the "Costs") relating to or arising out of this Loan Agreement,
the Note, any other Loan Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Loan Agreement, the Note, any other Loan
Document or any transaction contemplated hereby or thereby, that, in each case,
results from anything other than any Indemnified Party's gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the
Borrower agrees to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Costs with respect to all Mortgage Loans relating
to or arising out of any violation or alleged violation of any environmental
law, rule or regulation or any consumer credit laws, including without
limitation the Truth in Lending Act and/or the Real Estate Settlement Procedures
Act, that, in each case, results from anything other than such Indemnified
Party's gross negligence or willful misconduct. In any suit, proceeding or
action brought by an Indemnified Party in connection with any Mortgage Loan for
any sum owing thereunder, or to enforce any provisions of any Mortgage Loan, the
Borrower will save, indemnify and hold such Indemnified Party harmless from and
against all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrower. The Borrower also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party's costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party's rights under this
Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, including without limitation the reasonable fees
and disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender
all of the out-of-pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith.
The Borrower agrees to pay as and when billed by the Lender all of the
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including
without limitation (i) all the reasonable fees, disbursements and expenses of
counsel to the Lender and (ii) all the due diligence, inspection, testing and
review costs and expenses incurred by the Lender with respect to Collateral
under this Loan Agreement, including, but not limited to, those costs and
expenses incurred by the Lender pursuant to Sections 11.03(a), 11.14 and 11.15
hereof.
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11.04 Amendments. Except as otherwise expressly provided in this
Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under Sections
3.03 and 11.03 hereof shall survive the repayment of the Loans and the
termination of this Loan Agreement. In addition, each representation and
warranty made or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any Loan,
any Default that may arise because any such representation or warranty shall
have proved to be false or misleading, notwithstanding that the Lender may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
11.07 Captions. The table of contents and captions and Section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement; Governing
Law. This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine, and shall constitute a security agreement within the
meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR
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THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower, and
the relationship between the Borrower and the Lender is solely that of debtor
and creditor; and
(c) no joint venture exists between the Lender and the Borrower.
11.13 Hypothecation or Pledge of Loans. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Loan Agreement
shall preclude the Lender from engaging in repurchase transactions with the
Collateral or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan Agreement shall
obligate the Lender to segregate any Collateral delivered to the Lender by the
Borrower.
11.14 Servicing.
(a) The Borrower covenants to maintain or cause the servicing of
the Mortgage Loans to be maintained in conformity with accepted and prudent
servicing practices in the industry for the same type of mortgage loans as the
Mortgage Loans and in a manner at least equal in quality to the servicing the
Borrower provides for mortgage loans which it owns. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of
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Default, (ii) the date on which all the Secured Obligations have been paid in
full or (iii) the transfer of servicing approved by the Borrower.
(b) If the Mortgage Loans are serviced by the Borrower, (i) the
Borrower agrees that the Lender is the collateral assignee of all servicing
records, including but not limited to any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Mortgage Loans (the "Servicing Records"), and (ii)
the Borrower grants the Lender a security interest in all servicing fees and
rights relating to the Mortgage Loans and all Servicing Records to secure the
obligation of the Borrower or its designee to service in conformity with this
Section and any other obligation of the Borrower to the Lender. The Borrower
covenants to safeguard such Servicing Records and to deliver them promptly to
the Lender or its designee (including the Custodian) at the Lender's request.
(c) If the Mortgage Loans are serviced by a third party servicer
(such third party servicer, the "Servicer"), the Borrower (i) shall provide a
copy of the servicing agreement to the Lender, which shall be in form and
substance acceptable to the Lender (the "Servicing Agreement"); (ii) shall
provide a Servicer Notice to the Servicer substantially in the form of Exhibit H
hereto, and (iii) hereby irrevocably assigns to the Lender and the Lender's
successors and assigns all right, title, interest of the Borrower in, to and
under, and the benefits of, any Servicing Agreement with respect to the Mortgage
Loans. Any successor to the Servicer shall be approved in writing by the Lender
prior to such successor's assumption of servicing obligations with respect to
the Mortgage Loans.
(d) If the servicer of the Mortgage Loans is the Borrower or the
Servicer is an Affiliate of the Borrower, the Borrower shall provide to the
Lender a letter from the Borrower or the Servicer, as the case may be, to the
effect that upon the occurrence of an Event of Default, the Lender may terminate
any Servicing Agreement and transfer servicing to its designee, at no cost or
expense to the Lender, it being agreed that the Borrower will pay any and all
fees required to terminate the Servicing Agreement and to effectuate the
transfer of servicing to the designee of the Lender.
(e) After the Funding Date, until the pledge of any Mortgage Loan
is relinquished by the Custodian, the Borrower will have no right to modify or
alter the terms of such Mortgage Loan and the Borrower will have no obligation
or right to repossess such Mortgage Loan or substitute another Mortgage Loan,
except as provided in the Custodial Agreement.
(f) In the event the Borrower or its Affiliate is servicing the
Mortgage Loans, the Borrower shall permit the Lender to inspect the Borrower's
or its Affiliate's servicing facilities, as the case may be, for the purpose of
satisfying the Lender that the Borrower or its Affiliate, as the case may be,
has the ability to service the Mortgage Loans as provided in this Loan
Agreement.
(g) The Borrower shall ensure that the Servicer will maintain the
Servicer's System in a manner that permits the Servicer be Year 2000 Compliant.
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11.15 Periodic Due Diligence Review. The Borrower acknowledges
that the Lender has the right to perform continuing due diligence reviews with
respect to the Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than two (2) Business
Days') prior notice, unless a Default shall have occurred and is continuing, in
which case no notice is required, to the Borrower, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Mortgage Files and any and all
documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession or under the control of the Borrower and/or the
Custodian. The Borrower also shall make available to the Lender a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and the Mortgage Loans. Without limiting the
generality of the foregoing, the Borrower acknowledges that the Lender may make
Loans to the Borrower based solely upon the information provided by the Borrower
to the Lender in the Mortgage Loan Tape and the representations, warranties and
covenants contained herein, and that the Lender, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Mortgage Loans securing such Loan, including without limitation ordering new
credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Mortgage Loan.
The Lender may underwrite such Mortgage Loans itself or engage a mutually agreed
upon third party underwriter to perform such underwriting. The Borrower agrees
to cooperate with the Lender and any third party underwriter in connection with
such underwriting, including, but not limited to, providing the Lender and any
third party underwriter with access to any and all documents, records,
agreements, instruments or information relating to such Mortgage Loans in the
possession, or under the control, of the Borrower. The Borrower further agrees
that the Borrower shall reimburse the Lender for any and all out-of-pocket costs
and expenses incurred by the Lender in connection with the Lender's activities
pursuant to this Section 11.15.
11.16 Set-Off. In addition to any rights and remedies of the
Lender provided by this Loan Agreement and by law, the Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
LONG BEACH MORTGAGE COMPANY
By:
------------------------------------------
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇- ▇▇▇-▇▇▇▇
Telephone No: 800-743-3336 ext. 7725
LENDER
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE
CAPITAL INC.
By:
--------------------------------------
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Eligible Mortgage Loans
As to each Mortgage Loan included in the Borrowing Base on a
Funding Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage
and Mortgaged Property), the Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Value is determined (certain defined terms used herein and not
otherwise defined in the Loan Agreement appearing in Part II to this Schedule
1):
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule with respect to the Mortgage Loan is complete, true and
correct in all material respects.
(b) Payments Current. Other than with respect to Delinquent
Mortgage Loans, all payments required to be made up to the Funding Date for the
Mortgage Loan under the terms of the Mortgage Note have been made and credited.
No payment required under the Mortgage is delinquent nor has any payment under
the Mortgage Loan been delinquent at any time since the origination of the
Mortgage Loan. The first Monthly Payment shall be made, or shall have been made,
with respect to the Mortgage Loan on its Due Date or within the grace period,
all in accordance with the terms of the related Mortgage Note.
(c) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is earlier, to the day which precedes by one month the
Due Date of the first installment of principal and interest thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required, and
its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect
of the Mortgage Loan has been released, in whole or in part, except in
connection with an assumption agreement approved
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by the title insurer, to the extent required by such policy, and which
assumption agreement is part of the Mortgage File delivered to the Custodian and
the terms of which are reflected in the Mortgage Loan Schedule.
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor
in any state or Federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. The Borrower has no knowledge nor has it received
any notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any
state or federal bankruptcy or insolvency proceeding.
(f) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against other risks
insured against by Persons operating like properties in the locality of the
Mortgaged Property, in an amount not less than the lesser of (A) 100% of the
replacement cost of all improvements to the Mortgaged Property, or (B) either
(1) the outstanding principal balance of the Mortgage Loan with respect to each
First Lien Mortgage Loan, or (2) with respect to each Second Lien Mortgage Loan,
the sum of the outstanding principal balance of the First Lien Mortgage Loan and
the balance of the Second Lien Mortgage Loan, or (C) the amount necessary to
avoid the operation of any co-insurance provisions with respect to the Mortgaged
Property, and consistent with the amount that would have been required as of the
date of origination in accordance with the Underwriting Guidelines. If any
portion of the Mortgaged Property is in an area identified by any federal
Governmental Authority as having special flood hazards, and flood insurance is
available, a flood insurance policy meeting the current guidelines of the
Federal Emergency Management Agency is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(1) the outstanding principal balance of the Mortgage Loan, (2) the full
insurable value of the Mortgaged Property, and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the Borrower, its successors and assigns (including without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 30 days' prior written notice to the
mortgagee. No such notice has been received by the Borrower. All premiums on
such insurance policy have been paid. The related Mortgage obligates the
Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do
so, authorizes the mortgagee to maintain such insurance at the Mortgagor's cost
and expense and to seek reimbursement therefor from such Mortgagor. Where
required by state law or regulation, the Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering a condominium, or
any hazard insurance policy covering the common facilities of a planned unit
development. The hazard insurance policy is the valid and binding obligation of
the insurer and is in full force and effect. The Borrower has not engaged in,
and has no knowledge of the Mortgagor's having engaged in, any
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act or omission which would impair the coverage of any such policy, the benefits
of the endorsement provided for herein, or the validity and binding effect of
either including, without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or realized by the Borrower.
(g) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Lender, and shall deliver to the Lender, upon demand,
evidence of compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Borrower has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is not located in an Unacceptable State and consists of a single parcel
of real property with a detached single family residence erected thereon, a
Cooperative Unit in a Cooperative Project, or a two- to four-family dwelling, or
an individual condominium unit in a low-rise condominium project, or an
individual unit in a planned unit development or a de minimis planned unit
development, provided, however, that any condominium unit or planned unit
development shall conform with the applicable FNMA and FHLMC requirements
regarding such dwellings and that no residence or dwelling is a mobile home or a
manufactured dwelling unless it is Acceptable Manufactured Housing. No portion
of the Mortgaged Property is used for commercial purposes.
(j) Valid Lien. The Mortgage is a valid, subsisting, enforceable
and perfected (A) first lien and first priority interest with respect to each
Mortgage Loan which is indicated by the Borrower to be a First Lien Mortgage
Loan (as reflected on the Mortgage Loan Tape), or (B) second lien and second
priority security interest with respect to each Mortgage Loan which is indicated
by the Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Tape), in either case, on the property included in the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located
in or annexed to such buildings, and all additions, alterations and replacements
made at any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
(1) the lien of current real property taxes and assessments not yet due
and payable;
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(2) covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) referred to
or otherwise considered in the appraisal made for the originator of
the Mortgage Loan or (b) which do not adversely affect the Appraised
Value of the Mortgaged Property set forth in such appraisal; and
(3) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended
to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
(4) with respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected in the
Mortgage Loan Tape) a prior mortgage lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority security interest
with respect to each Mortgage Loan which is indicated by the Borrower to be a
First Lien Mortgage Loan (as reflected on the Mortgage Loan Tape), or (B) second
lien and second priority security interest with respect to each Mortgage Loan
which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Tape), in either case, on the property described
therein and the Borrower has full right to pledge and assign the same to the
Lender.
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. To the
best of the Borrower's knowledge, no fraud, error, omission, misrepresentation,
negligence or similar occurrence with respect to a Mortgage Loan has taken place
on the part of any Person, including, without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan. The Borrower has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein.
(l) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and there
is no further requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
▇-▇-▇
▇▇
(▇) Ownership. The Borrower is the sole owner and holder of the
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Borrower
has good, indefeasible and marketable title thereto, and has full right to
transfer, pledge and assign the Mortgage Loan to the Lender free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Loan Agreement and following the
pledge of each Mortgage Loan, the Lender will hold such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest except any such security interest created pursuant to
the terms of this Loan Agreement.
(n) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(i) in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, and (ii) either (A)
organized under the laws of such state, (B) qualified to do business in such
state, (C) a federal savings and loan association, a savings bank or a national
bank having a principal office in such state, or (D) not doing business in such
state.
(o) LTV; CLTV. No First Lien Mortgage Loan has an LTV greater
than 90%. No Second Lien Mortgage Loan has a CLTV greater than 100%.
(p) Title Insurance. Other than each Cooperative Loan, the
Mortgage Loan is covered by either (i) an attorney's opinion of title and
abstract of title, the form and substance of which is acceptable to prudent
mortgage lending institutions making mortgage loans in the area wherein the
Mortgaged Property is located or (ii) an ALTA lender's title insurance policy or
other generally acceptable form of policy or insurance acceptable to FNMA or
FHLMC and each such title insurance policy is issued by a title insurer
acceptable to FNMA or FHLMC and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring the Borrower, its successors
and assigns, as to the first (or second, if the Mortgage Loan is a Second Lien
Mortgage Loan) priority lien of the Mortgage in the original principal amount of
the Mortgage Loan (or to the extent a Mortgage Note provides for negative
amortization, the maximum amount of negative amortization in accordance with the
Mortgage), subject only to the exceptions contained in clauses (1), (2) and (3)
and, with respect to each Mortgage Loan which is indicated by the Borrower to be
a Second Lien Mortgage Loan (as reflected on the Mortgage Loan Tape) clause (4)
of paragraph (j) of this Part I of Schedule 1, and in the case of adjustable
rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress and against encroachments by or upon the Mortgaged Property or any
interest therein. The title policy does not contain any special exceptions
(other than the standard exclusions) for zoning and uses and has been marked to
delete the standard survey exception or to replace the standard survey exception
with a specific survey reading. The Borrower, its successors and assigns, are
the sole insureds of such lender's title insurance policy, and such lender's
title insurance policy is valid and remains in full force and effect and will be
in force and effect upon the consummation
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of the transactions contemplated by this Loan Agreement. No claims have been
made under such lender's title insurance policy, and no prior holder or servicer
of the related Mortgage, including the Borrower, has done, by act or omission,
anything which would impair the coverage of such lender's title insurance
policy, including, without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or event
of acceleration existing under the Mortgage or the Mortgage Note and no event
has occurred which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration, and neither the Borrower nor its predecessors have waived
any default, breach, violation or event of acceleration. With respect to each
Mortgage Loan which is indicated by the Borrower to be a Second Lien Mortgage
Loan (as reflected on the Mortgage Loan Tape) (i) the first lien is in full
force and effect, (ii) there is no default, breach, violation or event of
acceleration existing under such first lien or the related mortgage note, (iii)
no event which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration thereunder, and either (A) the first lien contains a provision
which allows or (B) applicable law requires, the mortgagee under the Second Lien
Mortgage Loan to receive notice of, and affords such mortgagee an opportunity to
cure any default by payment in full or otherwise under the first lien.
(r) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.
(s) Location of Improvements; No Encroachments. With respect to
each Mortgage Loan other than a Cooperative Loan or a condominium, all
improvements which were considered in determining the Appraised Value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning and building
law, ordinance or regulation.
(t) Origination: Payment Terms. The Mortgage Loan was (i)
originated (as the term is used for the purposes of the Secondary Mortgage
Market Enhancement Act) by a savings and loan association, a savings bank, a
commercial bank or similar banking institution which is supervised and examined
by a Federal or State authority, or by a mortgagee approved as such by the
Secretary of Housing and Urban Development or (ii) acquired by the Seller
directly through loan brokers or correspondents such that the Mortgage Loan was
originated in conformity with the Underwriting Guidelines. Principal payments on
the Mortgage Loan commenced no more than 60 days after the funds were disbursed
in connection with the Mortgage Loan. The Mortgage Interest Rate is adjusted,
with respect to adjustable rate Mortgage Loans, on each Interest Rate Adjustment
Date to equal the Index plus the Gross Margin (rounded up or down to the nearest
.125%), subject to the Mortgage Interest Rate Cap.
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The Mortgage Note is payable on the first day of each month in equal monthly
installments of principal and interest, which installments of interest, with
respect to adjustable rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date,
with interest calculated and payable in arrears, sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term of not
more than 30 years from commencement of amortization. The due date of the first
payment under the Mortgage Note is no more than 60 days from the date of the
Mortgage Note.
(u) Customary Provisions. The Mortgage Note has a stated
maturity. Other than a Cooperative Loan, the Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver good
and merchantable title to the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage.
(v) Conformance with Underwriting Guidelines and Agency
Standards. The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to
those used by FHLMC or FNMA and the Borrower has not made any representations to
a Mortgagor that are inconsistent with the mortgage instruments used.
(w) Occupancy of the Mortgaged Property or Cooperative Unit. As
of the Funding Date the Mortgaged Property or Cooperative Unit, as applicable,
is lawfully occupied under applicable law. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities. The Borrower has not received notification from any Governmental
Authority that the Mortgaged Property or Cooperative Unit, as applicable, is in
material non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be. The Borrower has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate. The Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence.
(x) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in clause (j) above.
(y) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under applicable law to serve
as such, has been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses are or
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will become payable by the Custodian or the Lender to the trustee under the deed
of trust, except in connection with a trustee's sale after default by the
Mortgagor.
(z) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Borrower or its agent is in possession of a
complete, true and accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered
to the Custodian.
(aa) Transfer of Mortgage Loans. With respect to each Mortgage
Loan other than a Cooperative Loan, the Assignment of Mortgage is in recordable
form and is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located. With respect to each Cooperative Loan, the
UCC-3 assignment is in a form suitable for filing in the jurisdiction in which
the Mortgaged Property is located.
(bb) Due-On-Sale. The Mortgage contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property or Cooperative Unit, as
applicable, is sold or transferred without the prior written consent of the
mortgagee thereunder.
(cc) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Borrower, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(dd) Consolidation of Future Advances. Any future advances made
to the Mortgagor prior to the Funding Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
With respect to each Mortgage Loan other than a Cooperative Loan, the lien of
the Mortgage securing the consolidated principal amount is expressly insured as
having (A) first lien priority with respect to each Mortgage Loan which is
indicated by the Borrower to be a First Lien Mortgage Loan (as reflected on the
Mortgage Loan Tape), or (B) second lien priority with respect to each Mortgage
Loan which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Tape), in either case, by a title insurance
policy, an endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to FNMA and FHLMC. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan.
(ee) Mortgaged Property Undamaged. The Mortgaged Property or
Cooperative Unit, is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty so as to affect adversely the value
of the Mortgaged Property or Cooperative Unit, as applicable, as security for
the Mortgage Loan or the use for which the
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premises were intended and each Mortgaged Property is in good repair. There have
not been any condemnation proceedings with respect to the Mortgaged Property and
the Borrower has no knowledge of any such proceedings.
(ff) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and the Borrower with respect to the Mortgage
Loan have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper.
With respect to escrow deposits and Escrow Payments (other than with respect to
each Mortgage Loan which is indicated by such Borrower to be a Second Lien
Mortgage Loan and for which the mortgagee under the First Lien Mortgage Loan is
collecting Escrow Payments (as reflected on the Mortgage Loan Tape) or other
Mortgage Loans for which the Mortgagor is not required to make escrow deposits
or Escrow Payments, all such payments are in the possession of, or under the
control of, the Borrower and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law. An escrow of funds is not prohibited by applicable law and (for Mortgage
Loans other than Cooperative Loans) has been established in an amount sufficient
to pay for every item that remains unpaid and has been assessed but is not yet
due and payable. No escrow deposits or Escrow Payments or other charges or
payments due the Borrower have been capitalized under the Mortgage or the
Mortgage Note. All Mortgage Interest Rate adjustments have been made in strict
compliance with state and federal law and the terms of the related Mortgage
Note. Any interest required to be paid pursuant to state, federal and local law
has been properly paid and credited.
(gg) Conversion to Fixed Interest Rate. With respect to
adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed
interest rate Mortgage Loan.
(hh) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(ii) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has
not notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(jj) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property or Cooperative Unit, as applicable, signed prior to
the approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Borrower, who had no interest, direct or indirect in the
Mortgaged Property or Cooperative Unit, as applicable, or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of FNMA or FHLMC and Title XI of the Federal Institutions
Reform, Recovery, and
▇-▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ of 1989 as amended and the regulations promulgated thereunder,
all as in effect on the date the Mortgage Loan was originated.
(kk) Disclosure Materials. The Mortgagor has executed a statement
to the effect that the Mortgagor has received all disclosure materials required
by applicable law with respect to the making of adjustable rate mortgage loans,
and the Borrower maintains such statement in the Mortgage File.
(ll) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(mm) No Defense to Insurance Coverage. No action has been taken
or failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of the Borrower, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay.
(nn) Capitalization of Interest. The Mortgage Note does not by
its terms provide for the capitalization or forbearance of interest.
(oo) No Equity Participation. No document relating to the
Mortgage Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(pp) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan
have not been and shall not be used to satisfy, in whole or in part, any debt
owed or owing by the Mortgagor to the Borrower or any Affiliate or correspondent
of the Borrower.
(qq) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 10 days (or if such tenth day
was not a Business Day, the next succeeding Business Day).
(rr) Origination Date. The Origination Date is no earlier than
twelve months prior to the date the Mortgage Loan is first included in the
Borrowing Base.
S-1-10
57
(ss) No Exception. The Custodian has not noted any material
exceptions on an Exception Report (as defined in the Custodial Agreement) with
respect to the Mortgage Loan which would materially adversely affect the
Mortgage Loan or the Lender's security interest, granted by the Borrower, in the
Mortgage Loan.
(tt) Qualified Originator. The Mortgage Loan has been originated
by, and, if applicable, purchased by the Borrower from, a Qualified Originator.
(uu) Mortgage Submitted for Recordation. The Mortgage either has
been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(vv) ▇▇▇▇▇▇ Act. None of the Mortgage Loans are classified as
"high cost" loans under the Home Ownership and Equity Protection Act of 1994, as
amended from time to time.
(ww) Rejection for Purchase by Whole Loan Buyer. Except as
previously disclosed to the Lender by the Borrower and approved by the Lender in
writing, no Mortgage Loan has been rejected for purchase by a whole loan buyer.
(xx) With respect to each Cooperative Loan the Seller represents
and warrants:
(1) the Cooperative Loan is secured by a valid, subsisting,
enforceable and perfected first lien on the corporation stock,
shares or membership certificate issued to the related Mortgagor
with respect to such Cooperative Loan. The lien of the Pledge
Agreement is subject only to the Cooperative Corporation's lien
against such corporation stock, shares or membership certificate
for unpaid assessments of the Cooperative Corporation to the
extent required by applicable law. Any security agreement,
chattel mortgage or equivalent document related to and delivered
in connection with the Cooperative Loan establishes and creates
a valid, subsisting and enforceable first lien and first
priority security interest on the property described therein and
the Borrower has full right to sell and assign the same to the
Lender. The Cooperative Unit was not, as of the date of
origination of the Cooperative Loan, subject to a mortgage, deed
of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Pledge Agreement.
(2) There is no proceeding pending or threatened for the total or
partial condemnation of the building owned by the applicable
Cooperative Corporation (the "Underlying Mortgaged Property").
The Underlying Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Underlying
Mortgaged Property as security for the mortgage loan on such
Underlying Mortgaged Property (the "Cooperative Mortgage") or
the use for which the premises were intended.
(3) There is no default, breach, violation or event of acceleration
existing under the Cooperative Mortgage or the mortgage note
related thereto and no event which, with the passage of time or
with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of
acceleration.
S-1-11
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(4) The Cooperative Corporation has been duly organized and is
validly existing and in good standing under the laws of the
jurisdiction of its formation. The Cooperative Corporation has
requisite power and authority to (i) own its properties, and
(ii) transact the business in which it is now engaged. The
Cooperative Corporation possesses all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to
entitle it to own its properties and to transact the businesses
in which is now engaged.
(5) The Cooperative Corporation complies in all material respects
with all applicable legal requirements. The Cooperative
Corporation is not in default or violation of any order, writ,
injunction, decree or demand of any governmental authority, the
violation of which might materially adversely affect the
condition (financial or otherwise) or business of the
Cooperative Corporation.
(6) The Borrower has delivered to the Lender or its designee each of
the following documents (collectively, the "Cooperative Loan
Documents"): (i) the Cooperative Loan Note, duly endorsed in
accordance with the endorsement requirements for Mortgage Notes
set forth in this Agreement, (ii) the Pledge Agreement,
accompanied by an Assignment of Pledge Agreement, in recordable
form, (iii) the corporation stock, shares or membership
certificate accompanied by a stock power which authorizes the
lender to transfer shares in the event of a default under the
Cooperative Loan Documents, (iv) the proprietary lease or
occupancy agreement, accompanied by an assignment in blank of
such proprietary lease, (v) a recognition agreement executed by
the Cooperative Corporation, which requires the Cooperative
Corporation to recognize the rights of the lender and its
successors in interest and assigns, under the Cooperative Loan,
accompanied by an assignment of such recognition agreement in
blank, (vi) UCC-1 financing statements with recording
information thereon from the appropriate state and county
recording offices if necessary to perfect the security interest
of the Cooperative Loan under the Uniform Commercial Code in the
state in which the Cooperative Project is located, accompanied
by UCC-3 financing statements executed in blank for recordation
of the change in the secured party thereunder, and (vii) any
guarantees, if applicable. The Cooperative Loan Documents are
assignable to the Lender and its successors and assigns and have
been duly assigned to the Lender in accordance with this
subsection (f ).
(7) The Pledge Agreement contains customary and enforceable
provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided
thereby.
(8) As of the date of origination the related Cooperative Project is
insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are
customary in the area where the Cooperative Project is located.
S-1-12
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Part II. Defined Terms
In addition to terms defined elsewhere in the Loan Agreement, the
following terms shall have the following meanings when used in this Schedule 1:
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"ALTA" means the American Land Title Association.
"Appraised Value" shall mean the value set forth in an appraisal
made in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Best's" means Best's Key Rating Guide, as the same shall be
amended from time to time.
"Combined LTV" or "CLTV" shall mean with respect to any Mortgage
Loan that is a Second Lien Mortgage Loan, the ratio of (a) the outstanding
principal balance on the date of origination of (i) the Mortgage Loan
constituting the first lien plus (ii) the Mortgage Loan constituting the second
lien to (b) the lesser of (i) the Appraised Value of the Mortgaged Property and
(ii) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property, expressed as a
percentage.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"First Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
secured by the lien on the related Mortgaged Property, subject to no prior liens
on such Mortgaged Property.
"Gross Margin" means with respect to each adjustable rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note.
S-1-13
60
"Index" means with respect to each adjustable rate Mortgage Loan,
the index set forth in the related Mortgage Note for the purpose of calculating
the interest rate thereon.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Mortgage Loan as adjusted in accordance with changes
in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note
for an adjustable rate Mortgage Loan.
"Mortgage Interest Rate" means the annual rate of interest borne
on a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
"Mortgagee" means the Borrower or any subsequent holder of a
Mortgage Loan.
"Origination Date" shall mean, with respect to each Mortgage
Loan, the date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Borrower with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is 40
days prior to the date of the first payment under the Mortgage Note relating to
such Mortgage Loan.
"PMI Policy" or "Primary Insurance Policy" means a policy of
primary mortgage guaranty insurance issued by a Qualified Insurer.
"Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC.
"Qualified Originator" means an originator of Mortgage Loans not
rejected in writing by the Lender.
"Servicing File" means with respect to each Mortgage Loan, the
file retained by the Borrower consisting of originals of all documents in the
Mortgage File which are not
S-1-14
61
delivered to a Custodian and copies of the Mortgage Loan Documents set forth in
Section 2 of the Custodial Agreement.
"Unacceptable State" shall mean either Alabama, Alaska or Hawaii
or any other state determined in good faith by the Lender and indicated to the
Borrower in writing from time to time.
"Underwriting Guidelines" means the underwriting guidelines
attached as Exhibit F hereto.
S-1-15
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SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
State of California
State of Delaware
S-2-1
63
SCHEDULE 3
COOPERATIVE LOAN DOCUMENTS
1. the original Pledge Agreement, or a copy thereof together with an
Officer's Certificate of the Borrower certifying that such
represents a true and correct copy of the original and that such
original has been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the
Mortgaged Property is located;
2. the original assignment of Pledge Agreement, or a copy thereof
together with an Officer's Certificate of the Borrower certifying
that such represents a true and correct copy of the original and
that such original has been submitted for recordation in the
appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located;
3. the originals of intervening assignments of the Pledge Agreement,
or a copy thereof together with an Officer's Certificate of the
Borrower certifying that such represents a true and correct copy of
the original and that such original has been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located, if any;
4. the Cooperative Shares;
5. a stock power executed in blank by the Person in whose name the
Cooperative Shares are issued;
6. the Proprietary Lease or occupancy agreement, accompanied by an
assignment in blank of such proprietary lease;
7. a Recognition Agreement executed by the Cooperative Corporation,
which requires the Cooperative Corporation, which requires the
Cooperative Corporation to recognize the rights of the lender and
its successors in interest and assigns, under the Cooperative Loan,
accompanied by an assignment of such recognition agreement in
blank;
8. UCC-1 financing statements with recording information thereon from
the appropriate governmental recording offices if necessary to
perfect the security interest of the Cooperative Loan under the
Uniform Commercial Code in the jurisdiction in which the
Cooperative Project is located, accompanied by UCC-3 financing
statements executed in blank for recordation of the change in the
secured party thereunder; and
9. any guarantees, if applicable.
S-2-1
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EXHIBIT A
[FORM OF PROMISSORY NOTE]
$ 250,000,000 April 30, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, LONG BEACH MORTGAGE COMPANY, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC. (the "Lender"), at the principal office of the
Lender at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, in lawful money of the
United States, and in immediately available funds, the principal sum of TWO
HUNDRED FIFTY MILLION DOLLARS ($250,000,000.00) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender to
the Borrower under the Loan Agreement), on the dates and in the principal
amounts provided in the Loan Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Loan Agreement.
The date, amount and interest rate of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Loans made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of April 30, 1999 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement") between the
Borrower and the Lender, and evidences Loans made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection
and enforcement (including reasonable attorneys' fees and disbursements of
Lender's counsel) in respect of this Note when incurred, including, without
limitation, reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any indorsers or guarantors hereof, (a)
severally waive diligence, presentment, protest and demand and also notice of
protest, demand, dishonor and nonpayments of this Note, (b) expressly agree that
this Note, or any payment hereunder, may be extended from time to time, and
consent to the acceptance of further Collateral, the release of any Collateral
for this Note, the release of any party primarily or secondarily liable hereon,
and
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65
(c) expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE) WHOSE LAWS THE
BORROWER EXPRESSLY ELECTS TO APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY
ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE MAY BE
COMMENCED IN THE SUPREME COURT OF THE STATE OF NEW YORK, BOROUGH OF MANHATTAN,
OR IN ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW
YORK.
LONG BEACH MORTGAGE COMPANY
By:
-------------------------------------
Name:
Title:
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66
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
UNPAID
PRINCIPAL AMOUNT PAID PRINCIPAL NOTATION
DATE MADE AMOUNT OF LOAN INTEREST RATE OR PREPAID AMOUNT MADE BY
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EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
[STORED AS A SEPARATE DOCUMENT]
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EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to Long Beach
Mortgage Company, a Delaware corporation (the "Borrower"), with respect to
certain matters in connection with that certain Master Loan and Security
Agreement, dated April 30, 1999 (the "Loan and Security Agreement"), by and
between the Borrower and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Lender"),
being executed contemporaneously with a Promissory Note, dated April 30, 1999 ,
from the Borrower to the Lender (the "Note"), a Custodial Agreement, dated as of
April [30], 1999, (the "Custodial Agreement"), by and among the Borrower, Chase
Bank of Texas (the "Custodian"), and the Lender. Capitalized terms not otherwise
defined herein have the meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. Custodial Agreement;
4. unfiled copies of the financing statements listed on Schedule
1 (collectively, the "Financing Statements") naming the
Borrower as Debtor and the Lender as Secured Party and
describing the Collateral (as defined in the Loan and
Security Agreement) as to which security interests may
be perfected by filing under the Uniform Commercial Code
of the States listed on Schedule 1 (the "Filing
Collateral"), which [we][I] understand will be filed in
the filing offices listed on Schedule 1 (the "Filing
Offices");
5. the reports listed on Schedule 2 as to UCC financing
statements (collectively, the "UCC Search Report");
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Borrower contained in
the Loan and Security Agreement. [We] [I] have assumed the authenticity of all
documents submitted to [us][me] as
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originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents submitted to
[us][me] as originals.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a Delaware corporation duly organized, validly
existing and in good standing under the laws of Delaware and is qualified to
transact business in, and is in good standing under, the laws of the Delaware.
2. The Borrower has the corporate power to engage in the
transactions contemplated by the Loan and Security Agreement, the Note, and the
Custodial Agreement and all requisite corporate power, authority and legal right
to execute and deliver the Loan and Security Agreement, the Note, and the
Custodial Agreement and observe the terms and conditions of such instruments.
The Borrower has all requisite corporate power to borrow under the Loan and
Security Agreement and to grant a security interest in the Collateral under the
Loan and Security Agreement.
3. The execution, delivery and performance by the Borrower of the
Loan and Security Agreement, the Note, and the Custodial Agreement, and the
borrowings by the Borrower and the pledge of the Collateral under the Loan and
Security Agreement have been duly authorized by all necessary corporate action
on the part of the Borrower. Each of the Loan and Security Agreement, the Note
and the Custodial Agreement have been executed and delivered by the Borrower and
are legal, valid and binding agreements enforceable in accordance with their
respective terms against the Borrower, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Lender's
security interest in the Collateral.
4. No consent, approval, authorization or order of, and no filing
or registration with, any court or governmental agency or regulatory body is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of the Loan and Security Agreement, the Note and the Custodial
Agreement or for the borrowings by the Borrower under the Loan and Security
Agreement or the granting of a security interest to the Lender in the
Collateral, under the Loan and Security Agreement.
5. The execution, delivery and performance by the Borrower of,
and the consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Custodial Agreement do not and will not (a) violate
any provision of the Borrower's charter or by-laws, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to the Borrower of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which [we][I] have knowledge (after due
inquiry) to which the Borrower is a party or by which it is bound or to which it
is subject, or (except for the Liens created pursuant to the Loan
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and Security Agreement) result in the creation or imposition of any Lien upon
any Property of the Borrower pursuant to the terms of any such agreement or
instrument.
6. There is no action, suit, proceeding or investigation pending
or, to the best of [our] [my] knowledge, threatened against the Borrower which,
in [our] [my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business
substantially as now conducted or in any material liability on the part of the
Borrower or which would draw into question the validity of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the transactions contemplated
thereby, or which would be reasonably likely to impair materially the ability of
the Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Custodial Agreement or the Mortgage Loans.
7. The Loan and Security Agreement is effective to create, in
favor of the Lender, a valid security interest under the Uniform Commercial Code
in all of the right, title and interest of the Borrower in, to and under the
Collateral as collateral security for the payment of the Secured Obligations (as
defined in the Loan and Security Agreement), except that (a) such security
interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, and (b) the security interests in Collateral in which the
Borrower acquires rights after the commencement of a case under the Bankruptcy
Code in respect of the Borrower may be limited by Section 552 of the Bankruptcy
Code.
8. When the Mortgage Notes are delivered to the Custodian,
endorsed in blank by a duly authorized officer of the Borrower, the security
interest referred to in paragraph 7 above in the Mortgage Notes will constitute
a fully perfected first priority security interest in all right, title and
interest of the Borrower therein, in the Mortgage Loan evidenced thereby and in
the Borrower's interest in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form UCC-1
naming the Lender as "Secured Party" and the Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule 1 attached hereto, the security interests referred to in paragraph 8
above will constitute fully perfected security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, which can be perfected by filing under the Uniform
Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices
and the proper debtors necessary to identify those Persons who have on file in
the jurisdictions listed on Schedule 1 financing statements covering the Filing
Collateral as of the dates and times specified on Schedule 2. The UCC Search
Report identifies no Person who has filed in any Filing Office a financing
statement describing the Filing Collateral prior to the effective dates of the
UCC Search Report.
10. The Assignments of Mortgage are in recordable form, except
for the insertion of the name of the assignee, and upon the name of the assignee
being inserted, are
C-3
71
acceptable for recording under the laws of the state where each related
Mortgaged Property is located.
Very truly yours,
C-4
72
EXHIBIT D
[FORM OF REQUEST FOR BORROWING]
Master Loan and Security Agreement, dated as of April 30, 1999
(the "Loan and Security Agreement"), by and between the Borrower and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Lender"),
Lender: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
Borrower: Long Beach Mortgage Company
Requested Fund Date:
-----------------------------------------
Transmission Date:
-----------------------------------------
Transmission Time:
-----------------------------------------
Number of Mortgage Loans to
be Pledged:
-----------------------------------------
UPB: $
-----------------------------------------
Requested Wire Amount: $
-----------------------------------------
Wire Instructions:
Requested by:
Long Beach Mortgage Company
By:
----------------------------------
Name:
Title:
D-1
73
EXHIBIT E-1
[FORM OF BORROWER'S RELEASE LETTER]
[Date]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile:
Re: Master Loan and Security Agreement, dated as of April 30, 1999
(the "Loan and Security Agreement"), by and between Long Beach
Mortgage Company (the "Borrower") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. (the "Lender")
Ladies and Gentlemen:
With respect to the mortgage loans described in the attached
Schedule A (the "Mortgage Loans") (a) we hereby certify to you that the Mortgage
Loans are not subject to a lien of any third party and (b) we hereby release all
right, interest or claim of any kind with respect to such Mortgage Loans, such
release to be effective automatically without further action by any party upon
payment from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., of the amount of the Loan
contemplated under the Loan and Security Agreement (calculated in accordance
with the terms thereof) in accordance with the wiring instructions set forth in
the Loan and Security Agreement.
Very truly yours,
Long Beach Mortgage Company
By:
------------------------------------------
Name:
Title:
▇-▇-▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
[FORM OF WAREHOUSE LENDER'S RELEASE LETTER]
(Date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
-------------------
Facsimile:
-------------------
Re: Certain Mortgage Loans Identified on Schedule A hereto and owned
by Long Beach Mortgage Company
The undersigned hereby releases all right, interest, lien or
claim of any kind with respect to the mortgage loan(s) described in the attached
Schedule A, such release to be effective automatically without any further
action by any party upon payment in one or more installments, in immediately
available funds of $, in accordance with the following wire instructions:
--------------------------------
--------------------------------
Very truly yours,
[WAREHOUSE LENDER]
By:
---------------------------
Name:
Title:
E-2-1
75
EXHIBIT F
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY THE BORROWER]
F-1
76
EXHIBIT G
INTENTIONALLY DELETED
G-1
77
EXHIBIT H
FORM OF SERVICER NOTICE
__, 199__
[SERVICER], as Servicer
[ADDRESS]
Attention:
Re: Master Loan and Security Agreement, dated as of April 30, 1999
(the "Loan and Security Agreement"), by and between Long Beach
Mortgage Company (the "Borrower") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc.
(the "Lender").
Ladies and Gentlemen:
[SERVICER] (the "Servicer") is servicing certain mortgage loans
for the Borrower pursuant to certain Servicing Agreements between the Servicer
and the Borrower. Pursuant to the Loan Agreement between the Lender and the
Borrower, the Servicer is hereby notified that the Borrower has pledged to the
Lender certain mortgage loans which are serviced by Servicer which are subject
to a security interest in favor of the Lender.
Upon receipt of a Notice of Event of Default from the Lender in
which the Lender shall identify the mortgage loans which are then pledged to
Lender under the Loan Agreement (the "Mortgage Loans"), the Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of the Lender, and remit such
collections in accordance with the Lender's written instructions. Following such
Notice of Event of Default, Servicer shall follow the instructions of Lender
with respect to the Mortgage Loans, and shall deliver to Lender any information
with respect to the Mortgage Loans reasonably requested by Lender.
Notwithstanding any contrary information which may be delivered
to the Servicer by the Borrower, the Servicer may conclusively rely on any
information or Notice of Event of Default delivered by the Lender, and the
Borrower shall indemnify and hold the Servicer harmless for any and all claims
asserted against it for any actions taken in good faith by the Servicer in
connection with the delivery of such information or Notice of Event of Default.
H-1
78
Please acknowledge receipt of this instruction letter by signing
in the signature block below and forwarding an executed copy to the Lender
promptly upon receipt. Any notices to the Lender should be delivered to the
following address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to Mr. ▇▇▇▇ ▇▇▇▇▇▇; Telephone: (▇▇▇) ▇▇▇-▇▇▇▇;
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
Very truly yours,
Long Beach Mortgage Company
By:
---------------------------------------
Name:
Title:
ACKNOWLEDGED:
, as Servicer
---------------------------------
By:
-----------------------------
Name:
Title:
Telephone:
Facsimile:
H-2