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EXHIBIT 10.2
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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF MAY 15, 1998
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▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
AS BORROWER
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
AS LENDER
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TABLE OF CONTENTS
Recitals...........................................................................1
Section 1. Definitions and Accounting Matters.....................................1
1.01 Certain Defined Terms...............................................1
1.02 Accounting Terms and Determinations................................11
Section 2. Loans, Note and Prepayments...........................................11
2.01 Loans..............................................................11
2.02 Notes..............................................................12
2.03 Procedure for Borrowing............................................12
2.04 Limitation on Types of Loans; Illegality...........................14
2.05 Repayment of Loans; Interest.......................................15
2.06 Mandatory Prepayments or Pledge....................................15
2.07 Optional Prepayments...............................................15
2.08 Indemnity..........................................................16
2.09 Extension of Termination Date......................................16
Section 3. Payments; Computations; Etc...........................................16
3.01 Payments...........................................................16
3.02 Computations.......................................................16
3.03 Interest Periods...................................................16
3.04 U.S. Taxes.........................................................17
Section 4. Collateral Security...................................................17
4.01 Collateral; Security Interest......................................17
4.02 Further Documentation..............................................18
4.03 Changes in Locations, Name, etc....................................19
4.04 Lender's Appointment as Attorney-in-Fact...........................19
4.05 Performance by Lender of Borrower's Obligations....................20
4.06 Proceeds...........................................................20
4.07 Remedies...........................................................21
4.08 Limitation on Duties Regarding Presentation of Collateral..........21
4.09 Powers Coupled with an Interest....................................22
4.10 Release of Security Interest.......................................22
Section 5. Conditions Precedent..................................................22
5.01 Initial Loan.......................................................22
5.02 Initial and Subsequent Loans.......................................22
Section 6. Representations and Warranties........................................24
6.01 Existence..........................................................24
6.02 Financial Condition................................................24
6.03 Litigation.........................................................24
6.04 No Breach..........................................................24
6.05 Action.............................................................25
6.06 Approvals..........................................................25
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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.............................................26
6.12 Location of Books and Records......................................26
6.13 Hedging............................................................26
6.14 True and Complete Disclosure.......................................26
6.15 Tangible Net Worth.................................................26
6.16 ERISA..............................................................26
Section 7. Covenants of the Borrower.............................................27
7.01 Financial Statements...............................................27
7.02 Litigation.........................................................28
7.03 Existence, etc.....................................................28
7.04 Prohibition of Fundamental Changes.................................29
7.05 Borrowing Base Deficiency..........................................29
7.06 Notices............................................................29
7.07 Hedging............................................................30
7.08 Reports............................................................30
7.09 Underwriting Guidelines............................................30
7.10 Transactions with Affiliates.......................................30
7.11 Limitation on Liens................................................30
7.12 Limitation on Guarantees...........................................31
7.13 Limitation on Distributions........................................31
7.14 Maintenance of Tangible Net Worth..................................31
7.15 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth...31
7.16 Maintenance of Profitability.......................................31
7.17 Servicing Tape.....................................................31
7.18 Servicer...........................................................31
7.19 Selection of Collateral............................................31
7.20 Maintenance of Property; Insurance.................................31
Section 8. Events of Default.....................................................32
Section 9. Remedies Upon Default.................................................34
Section 10. No Duty of Lender....................................................34
Section 11. Miscellaneous........................................................34
11.01 Waiver............................................................34
11.02 Notices...........................................................34
11.03 Indemnification and Expenses......................................35
11.04 Amendments........................................................36
11.05 Successors and Assigns............................................36
11.06 Survival..........................................................36
11.07 Captions..........................................................36
11.08 Counterparts......................................................36
11.09 Loan Agreement Constitutes Security Agreement; Governing Law......36
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11.10 Submission to Jurisdiction; Waivers...............................36
11.11 Waiver of Jury Trial..............................................37
11.12 Acknowledgments...................................................37
11.13 Hypothecation or Pledge of Loans..................................37
11.14 Servicing.........................................................37
11.15 Periodic Due Diligence Review.....................................38
11.16 Intent............................................................39
11.17 Confidential Information..........................................39
SCHEDULES
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SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
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 Form of Blocked Account Agreement
EXHIBIT H Form of Bailee Agreement
EXHIBIT I Form of Insured Closing Letter
EXHIBIT J Settlement Agent Approval Request
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of May 15, 1998
between ▇▇▇▇▇▇▇▇ CAPITAL CORPORATION, a Georgia 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 multifamily and commercial
mortgage loans owned or to be originated 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):
"Affiliate" shall mean (i) with respect to the Lender, MS &
Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ & Co., and (ii) with respect to the
Borrower, any Person who controls, is controlled by or is under common control
with the Borrower, or any director, officer, partner or employee of the Borrower
or such Person.
"Applicable Collateral Percentage" shall mean 95%.
"Applicable Margin" shall mean 0.75%.
"Approved Non-Recourse Indebtedness" shall mean any
Indebtedness incurred by an Approved SPV, provided that such Indebtedness is
non-recourse (other than for environmental liability, fraud and willful
misconduct) to any shareholder or equity owner of such Approved SPV, and
provided further that the Lender shall have: (i) received, reviewed, and
approved all organizational documents of such Approved SPV; (ii) received,
reviewed, and approved a non-consolidation opinion in form and substance, and
from counsel, acceptable to the Lender in its sole good faith discretion, which
opinion shall state that in the event of an insolvency of the Approved SPV, any
shareholder or equity owner of such Approved SPV would not be consolidated into
any proceedings with respect to such insolvency; (iii) received and reviewed all
Governing Agreements, and approved the scope of the liability and indemnity
which might attach to any shareholder or equity owner thereunder (which approval
shall be consistent with the permitted non-recourse carve-outs set forth above);
(iv) received, reviewed, and approved a list of the SPV Assets, which list shall
be certified by the Approved SPV as a true, correct and complete list thereof;
and (v) received proof in form and substance acceptable to the Lender, including
but not limited to engineering reports and reports of the appropriate
Governmental Authorities, with respect to SPV Assets which constitute real
property, either that (i) (A) a Phase I environmental assessment with respect to
the SPV Assets has been conducted, which concluded that no Phase II
environmental assessment was necessary, or (B) if such Phase I environmental
assessment concluded that further investigation of such SPV Assets was
necessary, a Phase II environmental assessment was conducted which evidenced
that no remediation or further remedial action was required with respect
thereto, or, if remediation was deemed necessary, the cost of such remediation
does not exceed two percent (2%) of the Purchase Price of such SPV Asset, or
(ii) the Approved SPV has
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obtained an Environmental Insurance Policy covering all liabilities that may
arise from such SPV Assets. The Borrower will provide the Lender with such
evidence as the Lender deems satisfactory to establish the Purchase Price for
each SPV Asset for which remediation is required. No Indebtedness shall be
deemed Approved Non-Recourse Indebtedness unless and until all conditions of
this definition have been satisfied.
"Approved SPV" shall mean a Person, other than an individual,
which is formed or organized solely for the purpose of holding, directly or
indirectly, an ownership interest in the SPV Assets, does not engage in any
business unrelated to the SPV Assets, does not have any assets other than those
related to its interest in the SPV Assets, or any Indebtedness other than
Approved Non-Recourse Indebtedness, has its own separate books and records and
has its own accounts in each case which are separate and apart from the books
and records and accounts of any other Person, and holds itself out as being a
Person separate and apart from any other Person.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"Bailee Agreement" shall mean a Bailee Agreement, among the
Borrower, the Lender and a Settlement Agent, substantially in the form of
Exhibit H as the same shall be modified and supplemented and in effect from time
to time.
"Blocked Account Agreement" shall mean an agreement between
the Servicer and the Lender, substantially in the form of Exhibit G hereto, as
the same may be amended, supplemented or otherwise modified from time to time,
in which the Servicer acknowledges the Lender's lien on the Collection Account,
and agrees that, in the event that it receives notice that an Event of Default
hereunder has occurred and until such notice is rescinded by the Lender, the
Servicer shall only withdraw funds from the Collection Account on instruction
from the Lender.
"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.
"Breakage Fee" shall mean, as of any date a prepayment is made
with respect to a Loan (other than a Daily Reset Loan), the excess, if any, of
(a)(i) the amount prepaid multiplied by (ii) the Remaining Term divided by 360,
multiplied by (iii) the Interest Rate for the related Loan, minus (b) (i) the
Eurodollar Rate as of the date of prepayment, interpolated by using the
Eurodollar Rates (as they appear on page 5 of the Telerate Screen) for a term
closest to, but less than and greater than, respectively, the Remaining Term,
multiplied by (ii) the amount prepaid, multiplied by (iii) the Remaining Term
divided by 360.
"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
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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.
"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 of the lesser of (a) the
Market Value of such Mortgage Loan, and (b) the outstanding principal balance of
such Mortgage Loan; provided, that, the 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 which has a
material adverse effect on the value of such Mortgage Loan (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 30 days
(without regard to any applicable grace periods), (3) which remains pledged to
the Lender hereunder later than 364 days after the date on which it is first
included in the Collateral, (4) which is a Table Funded Mortgage Loan which the
Custodian has failed to receive the related Mortgage Loan Documents on the third
Business Day following the applicable Funding Date and such failure exists on
the date Collateral Value is determined, or (5) which has been released from the
possession of the Custodian under the Custodial Agreement to the Borrower for a
period in excess of fourteen (14) days, unless a longer period has been
expressly permitted by the Lender in writing.
"Collection Account" shall mean one or more accounts
established by the Servicer subject to a security interest in favor of the
Lender and to the Blocked Account Agreement, into which all Collections shall be
deposited by the Servicer.
"Collections" shall mean, collectively, all collections and
proceeds on or in respect of the Mortgage Loans, excluding collections required
to be paid to the Servicer or a mortgagor on the Mortgage Loans and excluding
escrow accounts, reserve accounts and holdbacks established in connection with
the origination of the Mortgage Loans.
"Committed Loan" shall have the meaning assigned thereto in
Section 2.01(a) hereof.
"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 LaSalle National Bank, as custodian
under the Custodial Agreement, and its successors and permitted assigns
thereunder.
"Daily Reset Loans" shall mean Loans that bear interest at
rates based on the rate referred to as the rate for Daily Reset Loans in the
definition of Eurodollar Base Rate.
"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.
"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 Mortgage Loan secured by
a first mortgage lien on a retail, office, hotel or other commercial property or
on a multi-family residential property which (i) conforms to the Underwriting
Guidelines, (ii) which generally has a principal balance equal to or greater
than $1,500,000 at origination and which is either a fixed rate or adjustable
rate mortgage loan, and (iii) as to which the representations and warranties in
Section 6.10 and Part I of Schedule 1 hereof are correct.
"Environmental Insurance Policy" shall mean a secured creditor
impaired property policy insuring against losses caused by the presence of
hazardous substances on or the migration of hazardous substances from the
related property, or such other insurance policy, together with any endorsements
thereto, acceptable to the Lender in its sole good faith discretion.
"ERE Yarmouth" shall mean ERE Yarmouth, Inc., a Delaware
corporation.
"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.
"Eurocurrency Reserve Requirements" shall mean for any day as
applied to a Daily Reset Loan, and for any Interest Period for any Loan other
than a Daily Reset Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
or during such Interest Period, as applicable (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto), dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member
bank of such Governmental Authority.
"Eurodollar Base Rate" shall mean:
(a) for any Daily Reset Loan, with respect to each day
such Loan is outstanding (or if such day is not a Business Day, the next
succeeding Business Day), 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 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 and
exchange operations in respect of its Loans are then
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being conducted for delivery on such day for a period of one month and in an
amount comparable to the amount of the Loans to be outstanding on such day; and
(b) for any Loan other than a Daily Reset Loan, with
respect to each day during each Interest Period pertaining to such Loan, the
rate per annum equal to the rate appearing at page 5 of the Telerate Screen, on
the first day of such Interest Period, for the two-month or three-month LIBOR,
as applicable, corresponding to such Interest Period, 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 the first day of such Interest
Period, by prime banks in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations in respect of its Loans are then
being conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
the Loans to be outstanding during such Interest Period.
"Eurodollar Rate" shall mean (a) with respect to each day a
Daily Reset Loan is outstanding, and (b) with respect to each day during each
Interest Period pertaining to a Loan other than a Daily Reset Loan, a rate per
annum determined by the Lender in its discretion in accordance with the
following formula (rounded upwards to the nearest 1/100th of one percent), which
rate as determined by the Lender shall be conclusive absent manifest error by
the Lender:
Eurodollar Base Rate
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1.00 - Eurocurrency Reserve Requirements
"Existing Advisory Agreement" shall mean that certain advisory
agreement between the Borrower and ERE Yarmouth with respect to the Mortgage
Loans.
"Existing Servicing Agreement" shall mean that certain
servicing agreement between the Borrower and ERE Yarmouth with respect to the
Mortgage Loans.
"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 as
in effect from time to time in the United States.
"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.
"Governing Agreements" shall mean any and all agreements
evidencing the obligations of an Approved SPV with respect to any Indebtedness
incurred by such Approved SPV.
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"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,
purchase assets, goods, securities or services, 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) then
outstanding 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) then
outstanding 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) then outstanding 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; (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) then outstanding Capital Lease Obligations of such Person; (f) then
outstanding obligations of such Person under repurchase agreements or like
arrangements; (g) then outstanding Indebtedness of others Guaranteed by such
Person; (h) all then outstanding obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; and
(i) then outstanding Indebtedness of general partnerships of which such Person
is a general partner.
"Insured Closing Letter" shall mean a letter addressed to the
Borrower and the Lender from the title insurance underwriter for which the
Settlement Agent is serving as an agent for each Table Funded Mortgage Loan,
which letter shall be substantially in the form of the letter attached hereto as
Exhibit I, or in form and substance reasonably acceptable to the Borrower and
the Lender.
"Interest Period" shall mean, with respect to any Loan, each
period commencing on the date such Loan is made and ending on the date two
months or three months thereafter, as the Borrower may select as provided in
Section 3.03 hereof, except that, in the case of any Interest Period for any
Loan of two or three months, each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may begin before and end
after the Termination Date; (ii) each Interest Period that would otherwise end
on a day that is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) notwithstanding
clause (i) above, no Interest Period for any Loan of one month shall have a
duration of less than one month and, if the Interest Period for any Loan would
otherwise be a shorter period, such Loan shall only be available as a Daily
Reset Loan.
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"Interest Rate" shall have the meaning provided in Section
2.05 (b) hereof.
"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.
"Large Balance Mortgage Loans" shall mean Eligible Mortgage
Loans which have an outstanding principal balance equal to or greater than
$20,000,000.
"Lender" shall have the meaning provided in the heading
hereto.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan" shall mean any Committed Loan or Uncommitted Loan, as
applicable, and collectively "Loans" shall mean the sum of all Committed Loans
and Uncommitted Loans.
"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. In determining the Market Value of each Eligible Mortgage
Loan the Lender shall consider any Interest Rate Protection Agreement covering
such Eligible Mortgage Loan and may also consider all information which it deems
relevant. 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 taken as a whole, 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, taking into account the effect of
any cash payment actually made by the Borrower on account of a Borrowing Base
Deficiency pursuant to Section 2.06.
"Maximum Committed Amount" shall mean $250,000,000.
"Maximum Credit" shall mean the sum of the Maximum Committed
Amount and the Maximum Uncommitted Amount, which shall equal $500,000,000.
"Maximum Uncommitted Amount" shall mean $250,000,000.
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"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Mortgage Note, which creates a first lien on the fee or
leasehold in real property securing the Mortgage Note and the assignment of
rents and leases related thereto.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Loan" shall mean a mortgage loan which the Custodian
has been instructed to hold for the Lender pursuant to the Custodial Agreement,
and which Mortgage Loan includes, without limitation, (i) a Mortgage Note and
related Mortgage and (ii) all right, title and interest of the Borrower in and
to the Mortgaged Property covered by such 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.
"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 Lender Tape" shall mean a computer-readable
magnetic tape containing the following information with respect to each Mortgage
Loan, to be delivered by the Borrower to the Lender pursuant to Section 2.03(b)
hereof: tape fields as are set forth in the attached Schedule 5A.
"Mortgage Loan Custodian Tape" shall mean a computer-readable
magnetic tape containing the following information with respect to each Mortgage
Loan, to be delivered by the Borrower to the Lender pursuant to Section 2.03(b)
hereof: tape fields as are set forth in the attached Schedule 5B.
"Mortgage Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a Mortgagor with respect to a
Mortgage Loan.
"Mortgaged Property" shall mean the real property (including
all improvements, buildings, fixtures, building equipment and personal property
thereon securing repayment of the Mortgage Loan 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.
"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.
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"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Loans and any promissory note delivered in substitution or
exchange therefor, in each case as the same may be modified and supplemented and
as the same shall be in effect from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"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).
"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.
"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 2% per annum
plus the Prime Rate.
"Purchase Agreement" shall mean, in the case of real property
acquired by the Borrower, the purchase agreement providing for the acquisition
of such real property.
"Purchase Price" shall mean the purchase price allocable to
the subject real property paid by the Borrower, pursuant to the Purchase
Agreement under which such Borrower acquired such real property.
"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.
"Regulations G, T, U and X" shall mean Regulations G, 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.
"Remaining Term" shall mean, with respect to any Loan (other
than a Daily Reset Loan) prepaid in advance of the last day of an Interest
Period, the number of days remaining from the date so prepaid through the last
day of such Interest Period, inclusive.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person.
"Secured Obligations" shall have the meaning provided in
Section 4.01(c) hereof.
"Servicer" shall have the meaning provided in Section 11.14(c)
hereof.
"Servicing Agreement" shall have the meaning provided in
Section 11.14(c) hereof.
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"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"Settlement Agent" shall mean, with respect to any Loan, an
entity satisfactory to the Lender in its sole discretion, which the Lender has
authorized and identified on Annex 12 of the Custodial Agreement or subsequently
authorized by the Lender pursuant to a Settlement Agent Approval Request (which
may be a title company, escrow company or attorney in accordance with local law
and practice in the jurisdiction where the related Table Funded Mortgage Loan is
being originated) to which the proceeds of such Loan are to be wired by the
Custodian pursuant to the instructions of the Lender.
"Settlement Agent Approval Request" shall mean the request for
approval of an additional Settlement Agent submitted in the form of Exhibit J
hereto, as described in Section 2.03(b) hereof.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"SPV Assets" shall mean any and all assets owned by an
Approved SPV.
"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.
"Table Funded Mortgage Loan" shall mean a Mortgage Loan which
is pledged to the Lender simultaneously with the origination thereof by the
Borrower, which origination is financed in part or in whole with proceeds of
Loans advanced directly to the Settlement Agent and held in escrow as set forth
in Section 2.03(b) hereof.
"Tangible Net Worth" shall mean, as of a particular date,
(a) all amounts which would be included under equity 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 and (ii)
intangible assets.
"Termination Date" shall mean July 15, 1999, 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.
"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.
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"Uncommitted Loan" shall have the meaning assigned thereto in
Section 2.01(b) hereof.
"Underwriting Guidelines" shall mean the underwriting
guidelines attached as Exhibit F 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.
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) Subject to fulfillment of the conditions precedent set
forth in Sections 5.01 and 5.02 hereof, and provided that no Default shall have
occurred and be continuing hereunder, the Lender agrees from time to time, on
the terms and conditions of this Agreement, to make loans (individually, a
"Committed Loan"; collectively, the "Committed 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 (i.e. if the
Borrower repays a portion of the Maximum Committed Amount, such portion may be
reborrowed) up to but not exceeding the Maximum Committed Amount as in effect
from time to time.
(b) In addition to the foregoing, in the event that Loans
outstanding would exceed the Maximum Committed Amount, the Lender may from time
to time in its sole discretion, on the terms and conditions of this Agreement,
make loans (individually, an "Uncommitted Loan"; collectively, the "Uncommitted
Loans") to the Borrower in Dollars during the period 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
Uncommitted Amount as in effect from time to time.
(c) In determining whether Loans outstanding secured by
Eligible Mortgage Loans are Committed Loans or Uncommitted Loans, such Loans
shall first be deemed Committed Loans up to the Maximum Committed Amount, and
then the remainder shall be deemed Uncommitted Loans.
(d) Subject to the terms and conditions of this Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder.
(e) 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, interest rate and duration of the
Interest Period (if applicable) 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) Mortgage Loans other than Table Funded Mortgage Loans:
(i) In addition to such other items as are specified
in this Section 2.03, including (without limitation) the required
Request for Borrowing (as defined below), the timely delivery by the
Borrower or such other designated party to the Lender or its designee
of those items related to a given Eligible Mortgage Loan as are set
forth in Schedule 4 will be conditions precedent to the obligations of
Lender to fund the corresponding Loan.
(ii) 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, an irrevocable written request
for borrowing, substantially in the form of Exhibit D attached hereto
(a "Request for Borrowing"), which request must be received by the
Lender prior to 1:00 p.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 and, subject to Section 3.03 hereof, the
Interest Period, if any, (iii) include a Mortgage Loan Lender Tape for
the Eligible Mortgage Loans that 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.
(iii) Upon the Borrower's request for a borrowing
pursuant to Section 2.03(a)(ii), 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
Committed Loan to the Borrower on the requested Funding Date, in the
amount so requested to an account designated in the Request for
Borrowing; provided, however, that with respect to Table Funded
Mortgage Loans, the Lender shall not be required to wire funds to any
party other than the Settlement Agent.
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(iv) Upon the Borrower's request for a borrowing
pursuant to Section 2.03(a)(ii) and after the Maximum Committed Amount
shall have been advanced to the Borrower and is then outstanding, the
Lender may, at its sole option, 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 an Uncommitted Loan to the
Borrower on the requested Funding Date, in the amount so requested to
an account designated in the Request for Borrowing; provided, however,
that with respect to Table Funded Mortgage Loans, the Lender shall not
be required to wire funds to any party other than the Settlement Agent.
(v) (i) The Borrower shall release to the Custodian
no later than 10:00 a.m., New York City time, one (1) Business Day
prior to the requested Funding Date, the Mortgage File pertaining to
each Eligible Mortgage Loan (other than a Table Funded Mortgage Loan,
for which the procedures for funding are set forth in section 2.03(b)
hereof) 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.
(b) Table Funded Mortgage Loans:
(i) The Borrower shall deliver an identification
certificate to the Bailee pursuant to the related Bailee Agreement
("Identification Certificate") and on or prior to the Funding Date
indicated on the Identification Certificate delivered by the Borrower,
the Borrower shall have caused to be delivered to the Bailee the
documents required pursuant to the Bailee Agreement, upon which the
Settlement Agent shall be required, pursuant to the terms of the
related closing escrow agreement executed among the Settlement Agent,
the Borrower and the Mortgagor, to (A) hold any funds received from the
Lender until such time as they are disbursed in accordance with the
escrow instructions, and (B) return the funds received from the Lender
to the Lender in the event that the Table Funded Mortgage Loan is not
originated in accordance with the escrow instructions, and the Bailee
shall be required, pursuant to terms of the related Bailee Agreement,
to (1) hold the Mortgage Loan Documents in connection with such Table
Funded Mortgage as bailee and agent for the Lender and (2) forward the
Mortgage Loan Documents in connection with such Table Funded Mortgage
Loan to the Custodian for receipt no later than the third Business Day
following the date of origination of such Table Funded Mortgage Loan.
(ii) No settlement agent may be used other than one
authorized as such as set forth in (A) Annex 12 attached to the
Custodial Agreement, or (B) a "Settlement Agent Approval Request"
signed by the Lender, as described below (such approved settlement
agent, a "Settlement Agent"). The Borrower may request the Lender's
approval (which approval shall be granted in the Lender's sole
discretion) of proposed Settlement Agents not identified on Annex 12 of
the Custodian Agreement by completing such request in the form of
Exhibit J hereto, which request shall include the name, address, and
the errors and omissions policy of each proposed Settlement Agent.
(iii) Each Settlement Agent shall establish and
maintain a segregated escrow account (the "Escrow Account") for and on
behalf of the Lender. All amounts remitted on account of Loans made or
to be made by the Lender to the Borrower, which the Borrower instructs
the Lender to remit, shall be deposited in such Escrow Account by the
Lender. The
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Lender shall not be required to remit any funds to the Escrow Account,
unless and until all conditions precedent set forth in the Loan
Agreement for the making of such Loan have been satisfied. All related
fees and expenses for the Escrow Account shall be borne by the
Borrower. Upon request, Borrower shall provide the Lender with the
federal wire reference number for a particular payment. The Escrow
Account shall be under the exclusive dominion and control of the
Lender. Neither the Borrower nor any other Person claiming on behalf of
or through the Borrower shall have any right or authority, whether
express or implied, to close or make use of, or withdraw any funds
from, the Escrow Account except as expressly provided to the contrary
herein. The Lender hereby authorizes the Settlement Agent, unless the
Settlement Agent shall receive notice in writing from the Lender to the
contrary, to apply all funds received from the Lender which are
deposited to the Escrow Account as directed by the Borrower (subject to
clause (iv) below). Funds retained in the Escrow Account shall remain
uninvested.
(iv) On each Funding Date, unless otherwise
instructed by the Lender, the Settlement Agent shall disburse all funds
standing to the credit of the Escrow Account in accordance with the
settlement statement and the disbursement instructions contained in the
Closing Escrow Agreement approved by the Lender. The Settlement Agent
will immediately disburse such funds provided, that (A) sufficient
funds exist in the Escrow Account; (B) such instructions do not include
Borrower as payee, unless otherwise authorized by the Lender in writing
to the Settlement Agent; (C) the Custodian has received a fully
executed Bailee Agreement and a Table Funded Trust Receipt issued
thereunder; and (D) if a conflict exists between the instructions of
the Lender and the instructions of the Borrower, the Settlement Agent
shall follow the Lender's instructions.
(c) All Mortgage Loans:
(i) Pursuant to the Custodial Agreement, the
Custodian shall deliver to the Lender and the Borrower, no later than
3:00 p.m. on a Funding Date (and, with respect to Table Funded Mortgage
Loans, on the first Business day following the date of receipt of the
Mortgage Loan Documents), 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.
(ii) Subject to Section 5 hereof, such borrowing will
then be made available to the Borrower by the Lender transferring, via
wire transfer, to the following account of the Borrower (or, with
respect to each Table Funded Mortgage Loan, such other account as set
forth in the applicable Bailee Agreement): Chase Manhattan, for the A/C
of ▇▇▇▇▇▇▇▇ Capital Corporation, A/C# 304222828, ABA# ▇▇▇▇▇▇▇▇▇, or
Settlement Agent, as the case may be, as specified in the Request for
Borrowing, 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 Base 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 Base 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
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(b) 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, at its election,
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 1%.
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 such Loan is advanced to but excluding the date such Loan
shall be paid in full, at a rate per annum (the "Interest Rate") 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 the principal amount of any Loan outstanding 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.
Promptly after the determination of any interest rate provided for herein or any
change therein, the Lender shall give notice thereof to the Borrower. The Lender
shall, prior to each due date hereunder, deliver notice to the Borrower of the
amount due on such due date together with the Lender's calculation thereof.
(c) It is understood and agreed that, unless and until an
Event of Default shall have occurred and be continuing, the Borrower shall be
entitled to the proceeds of the Mortgage Loans pledged to the Lender hereunder.
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 (the Borrower to determine which Loans to prepay 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 Optional Prepayments. The Loans are prepayable on the
last day of each Interest Period without premium or penalty, in whole or in
part, and may be prepaid on any other date subject to Section 2.08 hereof. Any
amounts prepaid shall be applied to repay the outstanding principal amount of
any Loans (together with interest thereon) designated by the Borrower for
prepayment (so long as no Event of Default then exists) until paid in full.
Amounts repaid may be reborrowed in accordance with the terms of this Loan
Agreement. If such notice is given, the amount
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specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial
prepayments shall be in a minimum aggregate principal amount of $1,000,000.
2.08 Indemnity If the Borrower makes a prepayment of the Loans
(other than Daily Reset Loans) on any day which is not the last day of the
applicable Interest Period, the Borrower shall indemnify the Lender and hold the
Lender harmless from any Breakage Fee. This Section 2.08 shall survive
termination of the Loan Agreement and payment of the Note.
2.09 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 of 364 days 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
A/C of MSMCI, Citibank, N.A.ABA# ▇▇▇▇▇▇▇▇▇, Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, 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
(including, without limitation, by application of the definition of "Interest
Period"), if the due date of any payment under this 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 Interest Periods. The Borrower may request a 60- or 90-
day Interest Period for any Loans at least equal to $50,000,000 in the
aggregate, not later than 3:00 p.m., New York City time, one (1) Business Day
prior to the first day of such Interest Period, by delivery of an irrevocable
written notice to the Lender of the desired Interest Period and a list of the
Loans to which such Interest Period is to relate. If the Borrower fails to so
request a 60- or 90-day Interest Period for any Loan, such Loan shall be a Daily
Reset Loan unless and until the Borrower shall make a subsequent request.
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3.04 U.S. Taxes.
(a) The Borrower agrees to pay to the Lender such additional
amounts as are necessary in order that the net payment of any amount due to the
Lender hereunder after deduction for or withholding in respect of any U.S. Tax
(as defined below) imposed after the date hereof with respect to such payment
(or in lieu thereof, payment of such U.S. Tax by the Lender), will not be less
than the amount stated herein to be then due and payable; provided that the
foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to the Lender hereunder unless the Lender
is entitled to submit a Form 1001 (relating to the Lender and entitling
it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by the Lender hereunder in
respect of the Loans), or
(ii) to any U.S. Tax imposed solely by reason of the failure
by the Lender to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of the Lender if such compliance is required by statute or
regulation of the United States of America as a precondition to relief
or exemption from such U.S. Tax.
For the purposes of this Section 3.04, (x) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (y) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related form or forms as may from time to time be adopted by
the relevant taxing authorities of the United States of America to document a
claim to which such Form relates), and (z) "U.S. Taxes" shall mean any present
or future tax, assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof or therein.
(b) Within 30 days after paying any such amount to the
Lender, and within 30 days after it is required by law to remit such deduction
or withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrower that
on the date hereof the Lender is either incorporated under the laws of the
United States or a State thereof or is entitled to submit a Form 1001 (relating
to the Lender and entitling it to a complete exemption from withholding on all
interest to be received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by the Lender hereunder in respect of
the Loans).
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 the 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
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required by the Custodial Agreement and it has identified 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 to the Borrower 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
of the Borrower 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;
(vi) all Insured Closing Letters covering any or all of the
Mortgage Loans;
(vii) the Collection Account and all monies from time to time
on deposit in the Collection Account;
(viii) all "general intangibles" 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
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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 or (ii) change its name,
identity or corporate structure (or the equivalent) or change the location where
it maintains its records with respect to the Collateral 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, upon the
Borrower's failure to do so within ten (10) days after the Lender's written
request (provided, however, that if the Lender determines in good faith that
waiting ten (10) days prior to carrying out the terms of this Loan Agreement
could have an adverse effect on the Lender's rights or the value of the
Collateral, the Lender shall have the right to act following any shorter period
of time which the Lender deems appropriate) to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
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
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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 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.
(d) In the event the Lender takes action without prior
notice to the Borrower in accordance with clause (a) above, the Lender shall
provide the Borrower with subsequent written notice of any actions taken by the
Lender pursuant to this Section 4.04.
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, as provided herein, 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, but
subject to the terms and conditions of the Mortgage Loan Documents, 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
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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 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, 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 Presentation 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.
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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, 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 documents, 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 reasonably requested in order to perfect the security interests
created pursuant to the Loan Agreement;
(iii) Blocked Account Agreement. A Blocked Account Agreement,
duly executed by the parties thereto;
(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 counsel to the
Borrower, substantially in the form attached hereto as Exhibit C;
(d) Mortgage Loan Schedule and Exception Report. A Mortgage
Loan Schedule and Exception Report, dated the Effective Date, from the
Custodian, duly completed;
(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; and
(f) 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:
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(a) no Default or Event of Default shall have occurred and
be continuing;
(b) the representations and warranties made by the Borrower
in Section 6 and Schedule 1 hereof shall be true 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 and accuracy
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 (and subject also to the limitations on such 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;
(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 dated such Business Day and duly
completed;
(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 reasonably acceptable to the Lender) or a Seller's
Release Letter substantially in the form of Exhibit E-1 hereto (or such other
form reasonably acceptable to the Lender) covering each Mortgage Loan to be
pledged to the Lender;
(g) for each Table Funded Mortgage Loan, the Lender shall
have received from the Settlement Agent an Insured Closing Letter;
(h) none of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred resulting in the
effective absence of a "repo market" or comparable "lending market" for
financing debt obligations secured by mortgage loans or securities for
a period of (or reasonably expected to be) at least 30 consecutive days
or an event or events shall have occurred resulting in the Lender not
being able to finance any Loans through the "repo market" or "lending
market" with traditional counterparties at rates which would have been
commercially reasonable prior to the occurrence of such event or
events; or
(ii) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans for a period of (or reasonably
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expected to be) at least 30 consecutive days or an event or events
shall have occurred resulting in the Lender not being able to sell
securities backed by mortgage loans at prices which would have been
reasonable prior to such event or events.
(i) the Lender shall approve, in its sole discretion, any
material amendment or modification to the Underwriting Guidelines to
the extent the Mortgage Loans to be pledged to the Lender in connection
with the Lender have been originated in accordance with such amended
Underwriting Guidelines;
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 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 as of the date hereof (or as of any other
date expressly set forth below) and 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 recent Registration Statement on Form S-11
for Registration of certain of the Borrower's securities under the Securities
Act of 1933, including all relevant financial information filed therewith. Since
the date of such Form S-11 Registration Statement, 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 Registration Statement.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
the Borrower or any of its Subsidiaries or affecting any of the Property of any
of them before any Governmental Authority (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would be
reasonably likely to have a Material Adverse Effect or (ii) which questions the
validity or enforceability of any of the Loan Documents or any action to be
taken in connection with the transactions contemplated hereby.
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
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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, 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.
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 Regulation G, 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 it and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them it, 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) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any Mortgage Loan to any other Person, and immediately
prior to the pledge of such Mortgage Loan to the Lender, the Borrower was the
sole owner of such Mortgage Loan and had good and marketable title thereto, free
and clear of all Liens on the Mortgage Loan (without taking into account the
Lien of the Mortgage on the Mortgaged Property), in each case except for Liens
to be released simultaneously with the Liens granted in favor of the Lender
hereunder. No Mortgage Loan pledged to the Lender hereunder was acquired by the
Borrower from an Affiliate of the Borrower.
(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.
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(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.
(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 (to the extent security interests in such Collateral may be perfected
under the UCC by filing) 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. The Borrower's chief executive
office on the Effective Date is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
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 Hedging. Any Interest Rate Protection Agreements
entered into with respect to the Mortgage Loans have been pledged to the Lender.
6.14 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.
6.15 Tangible Net Worth. On the Effective Date, the Tangible
Net Worth is not less than $120,000,000.
6.16 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.
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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 sixty (60)
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);
(b) as soon as available and in any event within one
hundred (100) 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 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);
(c) from time to time such other information regarding the
financial condition, operations, or business of the Borrower as the Lender may
reasonably request; and
(d) 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(b) 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
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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
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, 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 said
Sections.
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 legal or arbitrable proceedings affecting the Borrower
or any of its Subsidiaries that questions or challenges the validity or
enforceability of any of the Loan Documents or as to which there is a reasonable
likelihood of adverse determination which would result in a Material Adverse
Effect.
7.03 Existence, etc. The Borrower will:
(a) preserve and maintain its legal existence as a real
estate investment trust;
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(b) preserve and maintain 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, the Truth in Lending Act, the Real Estate Settlement Procedures Act
and 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 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 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 and upon reasonable prior notice from the Lender, 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; provided, however, that in the
event a Default shall have occurred and be continuing, no prior notice shall be
required hereunder.
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
so long as, after giving effect thereto, no Default would exist hereunder and
the Borrower may sell substantially all of its assets in connection with a
securitization of the Mortgage Loans in the ordinary course of its business.
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 any principal prepayment (in full or part)
of such pledged Mortgage Loan;
(c) with respect to any Mortgage Loan pledged to the Lender
hereunder, promptly upon receipt of notice or actual knowledge that the
underlying Mortgaged Property has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or
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otherwise damaged so as to materially and adversely affect the Collateral Value
of such pledged Mortgage Loan; and
(d) promptly upon receipt of notice or actual knowledge of
(i) any Event of Default (as defined in the Loan Documents) or any material
default under any other agreement 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 (other than
the Lien of the Mortgage on the related Mortgaged Property) 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 Hedging. The Borrower shall at all times maintain its
pledge to the Lender of any Interest Rate Protection Agreements relating to the
Mortgage Loans. The Borrower shall deliver to the Lender monthly a written
summary of the notional amount of all outstanding Interest Rate Protection
Agreements.
7.08 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 securities held
by the Borrower. The Borrower shall provide the Lender with information,
promptly upon the Borrower's receipt, with respect to each Mortgaged Property
related to each Mortgage Loan pledged to the Lender hereunder, including without
limitation, the operating statements, rent roll (if applicable and which may be
provided on a quarterly basis if not available on a monthly basis) and occupancy
status of such Mortgaged Property and property level information.
7.09 Underwriting Guidelines. The Borrower may amend or
otherwise modify the Underwriting Guidelines; provided, however, that the
Borrower shall promptly provide the Lender with written evidence of any
amendment or modification of the Underwriting Guidelines.
7.10 Transactions with Affiliates. 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 permitted or 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
Agreement 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.
7.11 Limitation on Liens. The Borrower will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien on the Mortgage Loans (other than the Lien of the Mortgage on the
Mortgaged Properties), 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,
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title and interest of the Lenders in and to any of the Collateral against the
claims and demands of all persons whomsoever other than persons claiming through
the Lender.
7.12 Information Regarding Guarantees. Promptly after the
making thereof, the Borrower shall deliver to the Lender any and all information
regarding any Guarantees not reflected on Borrower's financial statements in
order to permit the Lender to determine the dollar amount of all Guarantees made
by the Borrower. For any Guarantee reflected on Borrower's financial statements,
Borrower shall deliver to Lender such additional information as the Lender may
request in its sole discretion to ascertain the scope of such Guarantee.
7.13 Limitation on Distributions. After the occurrence and
during the continuation of any Event of 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 thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower,
except as required by the Internal Revenue Code of 1986 (as amended from time to
time) to preserve such Borrower's "REIT" status.
7.14 Maintenance of Tangible Net Worth. The Borrower shall
not permit Tangible Net Worth at any time to be less than $100,000,000.
7.15 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 12:1.
7.16 Maintenance of Profitability. The Borrower shall not
permit, for any period of three consecutive fiscal quarters (each such period, a
"Test Period"), Net Income for such Test Period, before income taxes for such
Test Period and distributions made during such Test Period, to be less than
$1.00.
7.17 Servicing Tape. The Borrower shall provide to the
Lender on a monthly basis a computer readable magnetic tape containing servicing
information, including without limitation those fields reasonably 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.
7.18 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; provided that, the Lender's execution of this Loan
Agreement shall constitute the Lender's written approval of ERE Yarmouth as a
servicer of the Mortgage Loans.
7.19 Selection of Collateral. The Borrower shall not select
Mortgage Loans to be pledged to the Lender through a process that is adverse to
the Lender or which results in the Lender receiving pledged Mortgage Loans that
are of lesser quality, determined in the sole discretion of the Lender exercised
in good faith, than Mortgage Loans substantially similar to the Mortgage Loans
pledged to other lenders pursuant to any other facility to which the Borrower
may be a party.
7.20 Maintenance of Property; Insurance. The Borrower shall
keep all property useful and necessary in its business in good working order and
condition. The Borrower shall maintain errors and omissions insurance and/or
mortgage impairment insurance and blanket bond
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coverage in such amounts as are in effect on the Effective Date (as disclosed to
the Lender in writing) and shall not reduce such coverage without the written
consent of the Lender, and shall also maintain such other insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such entities.
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, and such
default shall have continued unremedied for five (5) 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 (i) 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 the Borrower
shall have made any such representations and warranties with actual knowledge
that they were materially false or misleading at the time made); 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, and Sections 7.09
through 7.19 hereof; or the Borrower shall fail to comply with the requirements
of Section 7.17 hereof and such default shall continue unremedied for a period
of three (3) Business Days; or the Borrower shall otherwise fail to comply with
the requirements of Section 7.03 or Section 7.20 hereof and such default shall
continue unremedied for a period of five (5) Business Days; or the Borrower
shall fail to observe or perform any other covenant, condition, 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 Business
Days; or
(e) other than with respect to Approved Non-Recourse
Indebtedness, a final judgment or judgments for the payment of money in excess
of $5,000,000.00 in the aggregate shall be rendered against the Borrower or any
of its Subsidiaries by one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be discharged (or provision
shall not be made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within 60 days from the date of entry thereof, and the
Borrower or any such Subsidiary shall not, within said period of 60 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) other than with respect to Approved Non-Recourse
Indebtedness, the Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of
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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 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 Subsidiaries, 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
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of the Borrower or any such Subsidiary 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 60 or more days; or an order for relief against the
Borrower or any such Subsidiary shall be entered in an involuntary case under
the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for
whatever reason (other than by agreement of the parties therein, including the
Lender) 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 or permitted 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) other than with respect to Approved Non-Recourse
Indebtedness, the Borrower or any of the Borrower's Affiliates shall be in
default (after the giving of any required notice and the expiration of any
required cure period) 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) the occurrence of a Material Adverse Effect, as
determined in the Lender's sole good faith discretion; or
(m) ERE Yarmouth, Inc., or its Affiliate, ceases to act as
REIT advisor to the Borrower pursuant to the Existing Advisory Agreement, or the
Existing Advisory Agreement is materially amended without the prior written
consent of the Lender; or
(n) the Lender shall reasonably request, specifying the
reasons for such request, information, and/or written responses to such
requests, regarding the financial well-being of the Borrower and such
information and/or responses shall not have been provided within five (5)
Business
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Days of such request or such longer period of time as may be reasonably
necessary for the Borrower to provide such information.
Section 9. Remedies Upon Default.
(a) 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 either party 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 telecopy with
confirmation of "good" transmission) 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. 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 telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
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11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender harmless from
and indemnify the Lender against all liabilities, losses, damages, judgments,
reasonable out-of-pocket costs and expenses of any kind which may be imposed on,
incurred by or asserted against the Lender (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 (i) the
Lender's gross negligence or willful misconduct (ii) in-house administrative,
servicing or "set up" costs, and (iii) any hedging losses incurred by the Lender
under any Interest Rate Protection Agreement entered into by the Lender in
connection with the Mortgage Loans or the Note; provided, however, that to the
extent any provision of this Loan Agreement or any other Loan Document expressly
provides for the payment of the Lender's expenses or reimbursement of the
Lender's costs subject to express qualifications or limitations, such other
provisions shall be controlling over the indemnification provisions contained in
this Section 11.03. Without limiting the generality of the foregoing the
Borrower agrees to hold the Lender harmless from and indemnify the Lender
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 that, in each case, results from anything other than the Lender's
gross negligence or willful misconduct or relating to or arising out of any
breach, violation or alleged breach or violation of any consumer credit laws,
including without limitation the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act. In any suit, proceeding or action brought by the
Lender 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 the Lender 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 the Lender as and when billed by the Lender
for all the Lender's costs and expenses incurred in good faith in connection
with the enforcement or the preservation of the Lender'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 reasonable 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, and 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 not to
exceed $100,000, (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, subject to
the Due Diligence Cap, incurred by the Lender, (iii) in-house administrative,
servicing or "set up" costs, and (iv) any hedging losses incurred by the Lender
under any Interest Rate Protection Agreement entered into by the Lender in
connection with the Mortgage Loans or the Note; provided, however, that to the
extent any provision of this Loan
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Agreement or any other Loan Document expressly provides for the payment of the
Lender's expenses or reimbursement of the Lender's costs subject to express
qualifications or limitations, such other provisions shall be controlling over
the indemnification provisions contained in this Section 11.03.
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 NON-EXCLUSIVE 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 THAT SUCH ACTION OR
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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. Subject to the rights
of the Mortgagors under the Mortgage 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. Without limiting the Lender's rights pursuant to the preceding
sentences, anything to the contrary herein notwithstanding, the Lender agrees
that it will not syndicate or participate the Loans to any other Person.
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 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.
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(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 reasonably acceptable to the Lender (the "Servicing Agreement");
and (ii) 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. The
Lender hereby approves ERE Yarmouth, as the initial Servicer, and the terms of
the Existing Servicing Agreement and the Existing Advisory Agreement. Any
amendments to such agreements which materially increase the fees payable by the
Borrower or materially modify the Servicer's rights or obligations under the
Existing Servicing Agreement shall be subject to the Lender's approval, which
shall not be unreasonably withheld.
(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.
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 one
(1) Business Day's) prior notice 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 at their respective normal locations. The Borrower also shall make
available to the Lender a
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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.
Notwithstanding anything to the contrary contained herein, it is agreed by the
Lender that the Borrower's obligation to 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 ("Due Diligence Costs") shall
be limited to an aggregate amount equal to $25,000 per annum (the "Due Diligence
Cap"); provided that, in the event that a Default or an Event of Default shall
have occurred, the Due Diligence Cap shall not apply to any due diligence
performed by the Lender as a result of such Default or Event of Default (as
evidenced by the Lender's conduct of any due diligence within five (5) calendar
days following its receipt of notice of a Default or Event of Default), and the
Borrower shall reimburse the Lender for any and all such Due Diligence Costs and
no such Due Diligence Cap shall apply thereto. Notwithstanding the foregoing,
any amounts paid pursuant to this Section 11.15 shall be credited against any
underwriting fee due and payable to MS&Co. at the time such amounts accrue.
11.16 Intent. The parties recognize that each Loan is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
11.17 Confidential Information.
(a) The Lender hereby acknowledges and agrees that all
written or computer-readable information provided by the Borrower to the Lender
regarding the Borrower or the Collateral (the "Borrower Confidential
Information"), shall be kept confidential and each of their respective contents
will not be divulged to any party without Borrower's consent except to the
extent that (i) the Lender deems appropriate to do so in working with legal
counsel, auditors, taxing authorities or other governmental agencies or
regulatory bodies or in order to comply with any applicable federal or state
laws, (ii) any portion of the Borrower Confidential Information is in the public
domain other than due to a breach of this covenant, (iii) the Lender reasonably
deems appropriate in connection with exercising any or all of the Lender's
rights or remedies or complying with any obligations under any of the Loan
Documents.
(b) The Borrower hereby acknowledges and agrees that all
written or computer-readable information provided by the Lender to the Borrower
regarding the Lender (the "Lender Confidential Information"), shall be kept
confidential and each of their respective contents will not be divulged to any
party without Lender's consent except to the extent that (i) the Borrower deems
appropriate to do so in working with legal counsel, auditors, taxing authorities
or other governmental agencies or regulatory bodies or in order to comply with
any applicable federal or state laws, (ii) any portion of the Lender
Confidential Information is in the public domain other than due to a breach of
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this covenant, (iii) the Borrower reasonably deems appropriate in connection
with exercising any or all of the Borrower's rights or remedies or complying
with any obligations under any of the Loan Documents.
(c) The provisions set forth in this Section 11.17 shall
survive the termination of this Loan Agreement for a period of two (2) years
following such termination.
[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
▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
By:
---------------------------------------
Title:
Address for Notices:
▇▇▇▇▇▇▇▇ Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
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 Multifamily Mortgage Loans and Eligible Commercial
Mortgage Loans
Except as disclosed in writing to the Lender, as to each
multifamily and commercial Mortgage Loan included in the Borrowing Base on a
Funding Date or on any other date on which Collateral is determined (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). With respect to any
representations and warranties made to the best of the Borrower's knowledge, in
the event that it is discovered that the circumstances with respect to the
related Mortgage Loan are not accurately reflected in such representation and
warranty notwithstanding the knowledge or lack of knowledge of the Borrower,
then, notwithstanding that such representation and warranty is made to the best
of the Borrower's knowledge, the knowledge or lack of knowledge of Borrower
shall not be considered a breach of the representation or warranty for any other
reason, such Mortgage Loan shall be reduced to reflect Lender's determination of
the diminution in value caused by such breach; provided, however, that if the
Lender, acting in good faith, cannot promptly determine such diminution in
value, the Lender may assign such Mortgage Loan a Collateral Value of zero. With
respect to Mortgage Loans assigned a Collateral Value of zero as a result of the
Lender's inability to determine the appropriate diminution in value, if the
Lender subsequently determines the diminution in value, the Lender shall
promptly revise the Collateral Value as appropriate.
(i) The information set forth in the Mortgage Loan Schedule
as to the Mortgage Loan is complete, true and correct
in all material respects;
(ii) The Borrower is the sole owner and holder of the
Mortgage Loan and has good and marketable title
thereto, has full right, power and authority to sell
and assign such Mortgage Loan free and clear of any
interest or claim of a third party;
(iii) The Mortgage Loan has not been since the date of
origination by the applicable Qualified Originator, and
currently is not, thirty or more days delinquent, and
the Mortgagor is not in default thereunder beyond any
applicable grace period for the payment of any
obligation to pay principal and interest, taxes,
insurance premiums and required reserves;
(iv) The Borrower has not advanced funds, or knowingly
received any advance of funds from a party other than
the Mortgagor subject to the related Mortgage, directly
or indirectly, for the payment of any amount required
by the Mortgage Loan;
(v) The Mortgage Loan Documents have been duly and properly
executed, and (B) the Mortgage Loan Documents are
legal, valid and binding obligations of the Mortgagor,
and their terms are enforceable against the Mortgagor,
subject only to bankruptcy, insolvency, moratorium,
fraudulent transfer, fraudulent
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conveyance and similar laws affecting rights of
creditors generally and to the application of general
principles of equity;
(vi) The lien of each Mortgage is insured by an ALTA
lender's title insurance policy or its equivalent as
adopted in the applicable jurisdiction issued by one
or more nationally recognized title insurance
companies, insuring the Qualified Originator, its
successors and assigns, as to the first priority lien
of the Mortgage in the original principal amount of
the Mortgage Loan after all advances of principal,
subject only to (a) the lien of current real property
taxes, ground rents, water charges, sewer rents and
assessments not yet due and payable, (b) covenants,
conditions and restrictions, rights of way, easements
and other matters of public record, none of which,
individually or in the aggregate, in the reasonable
judgment of the Borrower, materially interferes with
the current use of the related Mortgaged Property or
the security intended to be provided by such Mortgage
or with the Mortgagor's ability to pay its
obligations when they become due or the value of the
related Mortgaged Property and (c) the exceptions
(general and specific) set forth in such policy, none
of which, individually or in the aggregate, in the
reasonable judgment of the Borrower, materially
interferes with the current use of the related
Mortgaged Property or security intended to be
provided by such Mortgage, with the Mortgagor's
ability to pay its obligations when they become due
or the value of the related Mortgaged Property (or if
a title insurance policy has not yet been issued in
respect of the Mortgage Loan, a policy meeting the
foregoing description is evidenced by a commitment
for title insurance "marked-up" at the closing of the
Mortgage Loan). To the actual knowledge of the
Borrower, no material claims have been made under
such title policy;
(vii) As of the date of origination of the Mortgage Loan
there were no, and to the best knowledge of the
Borrower there are no, mechanics', materialman's or
other similar liens or claims which have been filed
for work, labor or materials affecting the Mortgaged
Property which are or may be liens prior to, or equal
or coordinate with, the lien of the Mortgage, unless
such lien is insured against under the related title
insurance policy;
(viii) Each building or other improvement located on any
Mortgaged Property was insured by a fire and extended
perils insurance policy, issued by an insurer or
reinsured by an insurer meeting the requirements of
the Mortgage Loan Documents, in an amount not less
than the replacement cost of the Mortgaged Property;
each Mortgaged Property was also covered by business
interruption insurance and comprehensive general
liability insurance in amounts generally required by
institutional lenders for similar properties; all
premiums on such insurance policies required to be
paid as of the date hereof have been paid; such
insurance policies require prior notice to the
insured of termination or cancellation, and no such
notice has been received; and the Mortgage Loan
Documents obligate the Mortgagor to maintain all such
insurance and, upon the Mortgagor's failure to do so,
authorize the mortgagee to maintain such insurance at
the Mortgagor's cost and expense and to seek
reimbursement therefor from such Mortgagor;
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(ix) As of the most recent date of inspection of each
Mortgaged Property by the Borrower, based solely on
the Borrower's review of the report prepared by the
engineer who inspected the structure, exterior walls,
roofing, interior construction, mechanical and
electrical systems and general conditions of the
site, buildings and other improvements with respect
to the Mortgage Loan (which report indicated, where
appropriate, a variety of deferred maintenance items
and recommended capital improvements with respect to
such Mortgaged Property, as well as the estimated
cost of such items and improvements and the most
recent visual inspection (as described in (xviii)
below) of the Mortgaged Property), no building or
other improvement on any Mortgaged Property has been
affected in any material manner or suffered any
material loss as a result of any fire, wind,
explosion, accident, riot, war, or act of God or the
public enemy, and each Mortgaged Property is free of
any material damage that would affect materially and
adversely the value of the Mortgaged Property as
security for the Mortgage Loan and is in good repair.
The Borrower has neither received notice, nor is
otherwise actually aware, of any proceedings pending
for the total condemnation of any Mortgaged Property
or a partial condemnation of any portion material to
the Mortgagor's ability to perform its obligations
under its related Mortgage Loan;
(x) To the Borrower's best knowledge, after review of
compliance confirmations from applicable
municipalities, surveys and/or title insurance
endorsements, none of the improvements included for
the purpose of determining the Appraised Value of
each Mortgaged Property (except Mortgaged Properties
which are legal non-conforming uses and except for
immaterial encroachments or where the same is covered
by title insurance policy endorsement) at the time of
the origination of the Mortgage Loan lies outside of
the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining
properties materially encroach upon the Mortgaged
Property except those which are insured against by
the title insurance policy (including endorsements
thereto) issued in connection with the Mortgage Loan
and all improvements on the Mortgaged Property comply
with the applicable zoning laws and/or set-back
ordinances in force when improvements were added
(except legal non-conforming uses);
(xi) The Mortgage Loan does not violate applicable usury
laws;
(xii) Since the date of origination of the Mortgage Loan,
the terms of the Mortgage Loan have not been
impaired, waived, altered, satisfied, canceled,
subordinated or modified in any respect (except with
respect to modifications the economic terms of which
are reflected in the Mortgage Loan Schedule and which
are evidenced by documents in the Mortgage File
delivered to the Custodian) and no portion of the
Mortgaged Property has been released from the lien of
the Mortgage in any manner;
(xiii) All applicable Mortgage recording taxes and other
filing fees have been paid in full or deposited with
the issuer of the title insurance policy issued in
connection with the Mortgage Loan for payment upon
recordation of the relevant documents;
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(xiv) Each assignment of leases and rents, if any, creates
a valid assignment of, or a valid security interest
in, certain rights under the related leases, subject
only to a license granted to the relevant Mortgagor
to exercise certain rights and to perform certain
obligations of the lessor under such leases,
including the right to operate the related Mortgaged
Property, subject only to those exceptions described
in clause (vi) above. To the best of the Borrower's
knowledge and without affirmative investigation, no
person other than the relevant Mortgagor owns any
interest in any payments due under such leases that
is superior to or of equal priority with the
mortgagee's interest therein, subject only to those
exceptions described in clause (vi) above;
(xv) Each Mortgage, upon due recordation, is a valid and
enforceable first lien on the related Mortgaged
Property, subject only to those exceptions described
in clause (vi) above;
(xvi) The Borrower has not taken any action, nor does the
Borrower have any knowledge that the Mortgagor has
taken any action, that would cause the
representations and warranties made by the Mortgagor
in the Mortgage Loan Documents not to be true;
(xvii) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future
advances thereunder and the Borrower covenants that
it will not make any future advances under the
Mortgage Loan to the Mortgagor. Except for the
escrows and disbursements therefrom as contemplated
by the Mortgage Loan Documents, any Mortgagor
requirements for on or off-site improvements as to
disbursement of any escrow funds therefor have been
complied with;
(xviii) The Borrower has inspected or caused to be inspected
each Mortgaged Property within the past twelve months
preceding the date hereof;
(xix) The Mortgage Loan does not have a shared appreciation
feature, other contingent interest feature or
negative amortization, except with respect to those
Mortgage Loans that provide for deferred interest;
(xx) The Mortgage Loan is a whole loan and contains no
equity participation by the lender;
(xxi) To the best knowledge of the Borrower, no fraudulent
acts were committed by the Borrower in connection
with the origination process of the Mortgage Loan;
(xxii) All taxes and governmental assessments that prior to
the date of origination of the Mortgage Loan became
due and owing in respect of each Mortgaged Property
have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been
established or are insured against by the title
insurance policy issued in connection with the
origination of the Mortgage Loan;
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(xxiii) To the extent required under applicable law, the
Borrower was authorized to transact and do business
in each jurisdiction in which a Mortgaged Property is
located at all times when it held the Mortgage Loan;
(xxiv) To the best knowledge of the Borrower, there is no
material default, breach, violation or event of
acceleration existing under any of the Mortgage Loan
Documents and the Borrower has not received actual
notice of any event (other than payments due but not
yet delinquent) which, with the passage of time or
with notice and the expiration of any grace or cure
period, would and does constitute a default, breach,
violation or event of acceleration; no waiver of the
foregoing exists and no person other than the holder
of the Note may declare any of the foregoing;
(xxv) Each Mortgage contains customary and enforceable
provisions such as to render the rights and remedies
of the holder thereof adequate for the realization
against each related Mortgaged Property of the
material benefits of the security, including
realization by judicial or, if applicable,
non-judicial foreclosure, and there is no exemption
available to the Mortgagor which would materially
interfere with such right to foreclosure;
(xxvi) With respect to each Mortgaged Property, a Phase I
environmental report and, in certain cases where
warranted, a Phase II environmental report or an
update to such Phase I report was conducted by a
licensed qualified engineer. The Borrower has
reviewed each such report and update. The Borrower,
having made no independent inquiry other than
reviewing the environmental reports and updates
referenced herein and without other investigation or
inquiry, has no knowledge of any material and adverse
environmental condition or circumstance affecting the
related Mortgaged Property that was not disclosed in
the related report and/or update. The Borrower has
not received any actual notice of a material
violation of CERCLA or any applicable federal, state
or local environmental law with respect to any
Mortgaged Property that was not disclosed in the
related report and/or update. The Borrower has not
taken any actions which would cause any Mortgaged
Property not to be in compliance with all federal,
state and local laws pertaining to environmental
hazards;
(xxvii) The Mortgage Loan Documents contain provisions for
the acceleration of the payment of the unpaid
principal balance of the Mortgage Loan if (A) the
Mortgagor voluntarily transfers or encumbers all or
any portion of any related Mortgaged Property, or (B)
any direct or indirect interest in Mortgagor is
voluntarily transferred or assigned, other than, in
each case, as permitted under the terms and
conditions of the Mortgage Loan Documents;
(xxviii) To the best of the Borrower's knowledge and without
affirmative investigation or inquiry, there is no
pending action, suit or proceeding, arbitration or
governmental investigation against the Mortgagor or
any Mortgaged Property, the adverse outcome of which
could materially and adversely affect the Mortgagor's
performance of its obligations under the Mortgage
Loan Documents;
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(xxix) The servicing and collection practices used by any
Servicer, and to the best of the Borrower's
knowledge, the origination practices of the related
Qualified Originator, have been in all respects
legal, proper and prudent and have met customary
industry standards except to the extent that, in
connection with its origination, such standards were
modified by the applicable Qualified Originator in
its reasonable discretion;
(xxx) In connection with the assignment, transfer or
conveyance of any individual Mortgage, the Note and
Mortgage contain no provision limiting the right or
ability of the applicable Qualified Originator to
assign, transfer and convey the Mortgage to any other
person or entity;
(xxxi) If any Mortgaged Property is subject to any leases
(other than any Ground Lease referred to in (xxxv)
below), to the best of the Borrower's knowledge, the
Mortgagor is the owner and holder of the landlord's
interest under any leases, and the related Mortgage
and Assignment of Leases, Rents and Profits, if any,
provides for the appointment of a receiver for rents
or allows the mortgagee to enter into possession to
collect rent or provide for rents to be paid directly
to mortgagee in the event of a default, subject to
the exceptions described in clause (vi) hereof;
(xxxii) If a Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has
been properly designated and currently so serves and
is named in the deed of trust, and no fees or
expenses are or will become payable to the trustee
under the deed of trust, except in connection with
the sale or release of the Mortgaged Property
following default or payment of the Mortgage Loan;
(xxxiii) Any insurance proceeds in respect of a casualty loss
or taking (other than business interruption/rental
interruption proceeds) will be applied either to the
repair or restoration of all or part of the related
Mortgaged Property, with the mortgagee or a trustee
appointed by it having the right to hold and disburse
such proceeds (provided that such proceeds exceed the
threshold amount described in the Mortgage Loan
Documents) as the repair or restoration progresses,
or to the payment of the outstanding principal
balance of the Mortgage Loan together with any
accrued interest thereon, except to the extent of any
excess proceeds after restoration;
(xxxiv) Either (a) no improvements located on a Mortgaged
Property are located in a federally-designated
special flood hazard area as defined by the Federal
Insurance Administration or, (b) the Mortgagor is
required to maintain, or the Borrower maintains,
flood insurance with respect to such improvements 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;
(xxxv) With respect to any Mortgage which is secured in
whole or in part by the interest of a Mortgagor as a
lessee under a Ground Lease and based upon the
S-2-6
52
terms of the Ground Lease or an estoppel letter from
the ground lessor the following apply to such Ground
Lease:
(A) The Ground Lease or a memorandum thereof
has been duly recorded, the Ground Lease permits the
interest of the lessee thereunder to be encumbered by
the related Mortgage, does not restrict the use of
the Mortgaged Property by the lessee or its
successors and assigns in a manner that would
adversely affect the security provided by the related
Mortgage, and there has not been a material change in
the terms of the Ground Lease since its recordation,
with the exception of written instruments which are
part of the related Mortgage Loan Documents delivered
to the Custodian.
(B) The Ground Lease is not subject to any
liens or encumbrances superior to, or of equal
priority with, the related Mortgage, other than the
related ground lessor's related fee interest and any
exceptions described in clause (vi) hereof.
(C) The Borrower's interest in the Ground
Lease is assignable to the holder of the Mortgage
upon notice to, but without the consent of, the
lessor thereunder and, in the event that it is so
assigned, it is further assignable by the trustee and
its successors and assigns upon notice to, but
without a need to obtain the consent of, such lessor.
(D) To the best of the Borrower's knowledge,
as of the Origination Date of the Mortgage Loan, the
Ground Lease was in full force and effect and no
material default had occurred under the Ground Lease
and there was no existing condition which, but for
the passage of time or the giving of notice, would
result in a default under the terms of the Ground
Lease. No notice of default under the Ground Lease
has been received by the Borrower.
(E) The Ground Lease requires the lessor
thereunder to give notice of any default by the
lessee to the mortgagee; and the Ground Lease, or an
estoppel letter received by the mortgagee from the
lessor, further provides that notice of termination
given under the Ground Lease is not effective against
the mortgagee unless a copy of the notice has been
delivered to the mortgagee in the manner described in
such Ground Lease or estoppel letter.
(F) The mortgagee is permitted a reasonable
opportunity (including, where necessary, sufficient
time to gain possession of the interest of the lessee
under the Ground Lease) to cure any default under the
Ground Lease which is curable after the receipt of
notice of any default, before the lessor thereunder
may terminate the Ground Lease.
(G) The Ground Lease either (i) has a term
which extends not less than ten (10) years beyond the
maturity date of the related Mortgage Loan or (ii)
grants the lessee the option to extend the term of
the lease for a period (in the aggregate) which
exceeds not less than ten (10) years beyond the
maturity date of the related Mortgage Loan.
S-2-7
53
(H) The ground lease requires the lessor to
enter into a new lease with the mortgagee having
substantially similar terms as the old lease upon
termination of the Ground Lease for any reason,
including rejection of the Ground Lease in a
bankruptcy proceeding, provided the mortgagee cures
the lessee's defaults to the extent they are curable
and succeeds to the interest of the Mortgagor.
(I) Under the terms of the Ground Lease and
the related Mortgage, taken together, any related
insurance proceeds will be applied either to the
repair or restoration of all or part of the related
Mortgaged Property, with the mortgagee or a trustee
appointed by it having the right to hold and disburse
the proceeds as the repair or restoration progresses,
or to the payment of the outstanding principal
balance of the Mortgage Loan together with any
accrued interest thereon.
(J) Such Ground Lease does not impose any
material restrictions on subletting that would be
viewed as commercially unreasonable by an
institutional investor.
(K) Either the Ground Lease or the related
Mortgage contains the Borrower's covenant that such
Ground Lease shall not be amended, canceled, or
terminated without the prior written consent of the
[mortgagee].
(L) Either the Ground Lease or an estoppel
letter contains a covenant that the lessor thereunder
is not permitted in the absence of an uncured default
under the Ground Lease, to disturb the possession,
interest or quiet enjoyment of any lessee in the
relevant portion of the Mortgaged Property subject to
such Ground Lease for any reason, or in any manner,
which would materially adversely affect the security
provided by the related Mortgage;
(xxxvi) (A) the Mortgage Loan is directly secured by a
Mortgage on commercial real property or multifamily
residential property, and (B) the principal amount of
the Mortgage Loan either (I) at origination (or if
the Mortgage Loan has been modified in a manner that
constituted a deemed exchange under Section 1001 of
the Code at a time when the Mortgage Loan was not in
default or default with respect thereto was not
reasonably foreseeable, the date of the last such
modification) or (II) at the related Funding Date,
was at least equal to 80% of the fair market value of
such real property, as evidenced by an appraisal
conducted within 12 months of the origination of the
Mortgage Loan, or as determined by the Borrower based
on market studies and pursuant to its underwriting
standards; provided that the fair market value of the
real property interest must first be reduced by (1)
the amount of any lien on the real property interest
that is senior to the Mortgage Loan (unless such
senior lien also secures a Mortgage Loan, in which
event the computation described in (I) and (II) shall
be made on an aggregated basis) and (2) a
proportionate amount of any lien that is in parity
with the Mortgage Loan (unless such other lien
secures a Mortgage Loan that is cross-collateralized
with such Mortgage Loan, in which event the
computation described in (I) and (II) shall be made
on an aggregate basis);
S-2-8
54
(xxxvii) To the best knowledge of the Borrower, certificates
of occupancy and building permits, as applicable,
have been issued with respect to the Mortgaged
Property;
(xxxviii)Any escrow accounts for taxes or other reserves
required to be funded on the date of origination of
the Mortgage Loan pursuant to the Mortgage Loan
documents have been funded and all such escrow
accounts required to have been funded as of the
Funding Date (taking into account any applicable
notice and grace period) have been funded;
(xxxix) The related Assignment of Mortgage constitutes a
legal, valid and binding assignment of the related
Mortgage to the Lender, and the related Reassignment
of Assignment of Leases, Rents and Profits, if any,
constitutes a legal, valid and binding assignment
thereof to the Lender;
(xl) The related Note is not, and has not been since the
date of origination of the Mortgage Loan, secured by
any collateral except the lien of the related
Mortgage, any related Assignment of Leases, Rents and
Profits and any related security agreement and escrow
agreement and any other collateral being transferred
to the Lender hereunder; the security for the
Mortgage Loan consists only of the related Mortgaged
Property or Properties, any leases (including without
limitation any credit leases) thereof, and any
appurtenances, fixtures and other property located
thereon and any other collateral pledged or given as
part of the Mortgage Loan Documents being assigned to
the Lender hereunder; and such Mortgaged Property or
Properties do not secure any mortgage loan other than
the Mortgage Loan being transferred and assigned to
the Lender hereunder (except for Mortgage Loans, if
any, which are cross-collateralized with other
Mortgage Loans being conveyed to the Lender or
subsequent transferee hereunder and identified on the
Mortgage Loan Schedule);
(xli) To the Borrower's knowledge, based on due diligence
that it customarily performs in the origination of
comparable mortgage loans, as of the date of
origination of each Mortgage Loan, the related
Mortgagor was in possession of all material licenses,
permits and franchises required by applicable law for
the ownership and operation of the related Mortgaged
Property as it was then operated;
(xlii) The Mortgage Loan is directly secured by a first lien
on one or more parcels of real estate upon which is
located one or more commercial structures; and the
Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit
union, insurance company, or similar institution
which is supervised and examined by a Federal or
State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant
to sections 203 and 211 of the National Housing Act;
(xliii) With respect to each Mortgage Loan in excess of
$5,000,000: (A) The Borrower is an entity whose
organizational documents provide that it is, and at
least so long as the Mortgage Loan is outstanding
will continue to be, a single-purpose entity. (For
this purpose, "single-purpose entity" shall mean a
person, other than an individual, which is formed or
organized solely for the purpose of
S-2-9
55
owning and operating a single property, does not
engage in any business unrelated to such property and
its financing, does not have any assets other than
those related to its interest in the property or its
financing, or any indebtedness other than as
permitted by the related Mortgage or the other
Mortgage Loan Documents, has its own books and
records and accounts separate and apart from any
other person, and holds itself out as being a legal
entity, separate and apart from any other person);
(B) A non-consolidation opinion was obtained
for the Borrower or affiliated group of the Borrower
of Mortgage Loans or groups of Mortgage Loans with an
original principal balance in excess of $20,000,000.
(C) The general partners or managing members
of the Borrower or Affiliates of the Borrower of
Mortgage Loans or groups of Mortgage Loans having an
original principal balance in excess of $20,000,000
have an independent director.
S-2-10
56
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:
"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.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or
any successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Ground Lease" means a lease for all or any portion of the
real property comprising the Mortgaged Property, the lessee's interest in which
is held by the Mortgagor of the related Mortgage Loan.
"Origination Date" means, 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.
"Qualified Originator" means the Borrower or an originator of
Mortgage Loans reasonably acceptable to the Lender.
"Underwriting Guidelines" shall mean the underwriting
guidelines attached as Exhibit F hereto.
S-2-11
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SCHEDULE 3
FILING JURISDICTIONS AND OFFICES
The office of the Superior Court of ▇▇▇▇▇▇ County, Georgia
S-2-1
58
SCHEDULE 4
DELIVERY PROCEDURES
[TO BE PROVIDED BY LENDER]
S-2-1
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SCHEDULE 5A
REQUIRED FIELDS FOR MORTGAGE
LOAN LENDER TAPE
I. Acceptable File Formats:
1. Fixed Position ASCII - Header line is mandatory.
2. Databases - (dBase, FoxPro) - No memo fields.
3. Spreadsheet - (Lotus, Excel)
a. Remove empty rows between records.
b. Remove empty columns between fields.
▇. ▇▇▇▇ fields must contain valid date formats, not character
labels.
d. Numeric fields must not contain characters. If the value
is 0 or not applicable, leave blank or 0.
e. Unhide all columns and rows.
f. Remove all splits and panes.
4. Comma-Delimited ASCII - Header record is optional.
II. Additional data requirements:
1. For Fixed Position ASCII and Database files, provide file layout
detailing field description, starting position and ending
positions or length for initial set-up file only. The
starting positions and the field widths remain consistent on
every loan and every file.
2. For comma-delimited ASCII files, please provide field descriptions
and order of fields for initial file only.
3. For all file formats, provide comprehensive code definitions for all
fields indicated with an asterisk(*) for the initial set-up
file only. Code definitions must be exactly the same within
the file and on every file. Provide any additional codes on
subsequent files not provided on the initial set-up file
4. The order of the fields must remain the same on every file.
5. The scale of a number field must remain the same on every file. For
example, a coupon of 7.5% must always show as 7.5 or .075, but
not both.
III. File transmission:
1. Email:
CC: ▇▇▇▇▇@▇▇.▇▇▇
2. Modem: ▇▇▇-▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇.
Please call ▇▇▇-▇▇▇-▇▇▇▇ prior to transmission.
Commercial Fields Required for Data Transmission
1. Loan Number
2. Borrower Name
3. Property Address
4. Property City
5. Property State
S-2-1
60
6. Property County
7. Property Zip
8. Lien Position
9. Adjustment Type (ARM or Fixed)
10. Property (Collateral) Type - Office, Retail Store: Anchored, Unanchored,
Shadow, etc.
11. Occupancy Rate (if applicable)
12. Original Coupon
13. Current Coupon
14. Original Balance
15. Current Balance
16. Original P&I
17. Current P&I
18. Origination Date
19. First Payment Date
20. Maturity Date
21. Date Paid Through
22. Original Term
23. Original Amortization Term
24. Product Type (2/6 Arm, 3/6 Arm, etc.)
25. Balloon Flag
26. Original LTV
27. Original Appraisal
28. Unit DSCR (Debt Service Coverage Ratio)*
29. Corporate DSCR
30. Payment Frequency (monthly, quarterly, semi, etc.)
31. Servicing Fee
32. Prepayment Penalty Period
33. Prepayment Penalty Description
*"Debt Service Coverage Ratio" or "DSCR" mean the ratio of Net
Underwritable Cash Flow plus interest expense to long and
short-term borrowing requirements over the trailing twelve
months, based on the actual mortgage coupon rate for fixed
rate Mortgage Loans and at the lifetime cap rate for any
floating interest rate Mortgage Loans, with the exact
components of such ratio determined by the Lender in its sole,
good faith judgment. "Net Underwritable Cash Flow" shall mean
the net operating income (making certain assumptions regarding
minimum vacancy levels, the lesser of actual and "market"
rental rates, management fees and other factors) less
structural reserves and reserves for tenant improvements and
leasing commissions (whether these three types of reserves are
actually impounded or not), as such components are agreed upon
by the Borrower and the Lender.]
If the loan is an Adjustable Rate Loan, the following additional information is
necessary:
1. Index Type (1 YR Treasury, 6 Mo. LIBOR, etc.)
2. Rounding Factor
3. Convertible
4. Neg. Am Flag
5. Neg. Am Cap
6. Periodic Payment Cap
7. Margin
8. Maximum Rate
S-2-2
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9. Minimum Rate
10. Initial Periodic Rate Cap
11. Subsequent Periodic Rate Cap
12. First Rate Adjustment Date
13. First Payment Adjustment Date
14. Rate Adjustment Period
15. Payment Adjustment Period
S-2-3
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SCHEDULE 5B
REQUIRED FIELDS FOR
MORTGAGE LOAN CUSTODIAN TAPE
[TO BE CONFIRMED]
Commercial Fields Required for Data Transmission:
1. Loan Number
2. Borrower Name
3. Property Address
4. Property City
5. Property State
6. Property County
7. Property Zip
8. Original Balance
9. Original Coupon
10. Maturity Date
11. Wet (Yes/No)
S-2-1
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EXHIBIT A
[FORM OF PROMISSORY NOTE]
$ 500,000,000 May 15, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, ▇▇▇▇▇▇▇▇ CAPITAL CORPORATION, a Georgia
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 FIVE
HUNDRED MILLION DOLLARS ($500,000,000) (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 May 15, 1998 (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 (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
A-1
64
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.
▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
By:
---------------------------------
Name:
Title:
A-2
65
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:
PRINCIPAL AMOUNT INTEREST AMOUNT PAID UNPAID PRINCIPAL NOTATION
DATE MADE OF LOAN RATE OR PREPAID AMOUNT MADE BY
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A-3
66
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
[Stored as a separate document]
B-1
67
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 ▇▇▇▇▇▇▇▇ Capital
Corporation, a [ corporation] (the "Borrower"), with respect to certain
matters in connection with that certain Master Loan and Security Agreement,
dated as of May 15, 1998 (the "Loan and Security Agreement"), by and between the
Borrower and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Lender"), being executed
contemporaneously with a Promissory Note dated May 15, 1998 from the Borrower to
the Lender (the "Note"), a Custodial Agreement, dated as of May 15, 1998 (the
"Custodial Agreement"), by and among the Borrower, LaSalle National Bank (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 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"); and
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 me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
C-1
68
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a [ corporation] duly organized, validly
existing and in good standing under the laws of [state] and is qualified to
transact business in, and is in good standing under, the laws of the state of
[state].
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 pursuant
to 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 Mortgage Loans.
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, pursuant to 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 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 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
C-2
69
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, (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. Except for
the matters listed 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 acceptable for recording under the laws of the state where
each related Mortgaged Property is located.
Very truly yours,
C-3
70
EXHIBIT D
[FORM OF REQUEST FOR BORROWING]
Master Loan and Security Agreement, dated as of May 15, 1998 (the "Loan
and Security Agreement"), by and between the Borrower and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. (the "Lender"),
Lender: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
Borrower: ▇▇▇▇▇▇▇▇ Capital Corporation
Requested Fund Date:
-----------------------------------------
Transmission Date:
-----------------------------------------
Transmission Time:
Type of Funding:
(Table or Dry)
-----------------------------------------
Type of Loan Requested:
(Committed or Uncommitted)
-----------------------------------------
Number of Mortgage
Loans to be Pledged:
-----------------------------------------
UPB: $
-----------------------------------------
Requested Wire Amount: $
-----------------------------------------
Interest Period (if any):
-----------------------------------------
Wire Instructions:
Requested by:
▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
By:
---------------------------------------
Name:
Title:
D-1
71
EXHIBIT E-1
[FORM OF BORROWER'S RELEASE LETTER]
[Date]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
--------------------
Facsimile:
--------------------
Re: Master Loan and Security Agreement, dated as of May 15, 1998 (the "Loan
and Security Agreement"), by and between ▇▇▇▇▇▇▇▇ Capital Corporation
(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,
▇▇▇▇▇▇▇▇ Capital Corporation
By:
-----------------------------------
Name:
Title:
▇-▇-▇
▇▇
▇▇▇▇▇▇▇ ▇-▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ LENDER'S RELEASE LETTER
(Date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
----------------
Facsimile:
----------------
Re: Certain Mortgage Loans Identified on Schedule A - hereto and owned by
▇▇▇▇▇▇▇▇ Capital Corporation
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:
F-1
73
EXHIBIT F
UNDERWRITING GUIDELINES
F-2
74
EXHIBIT G
FORM OF BLOCKED ACCOUNT AGREEMENT
______ __, 1997
------------------
------------------
------------------
Attn:
-------------
Re: Blocked Account Established by ▇▇▇▇▇▇▇▇ Capital Corporation
("Borrower") Pursuant to that Certain Servicing Agreement (as amended,
supplemented or otherwise modified from time to time, the "Servicing
Agreement"), dated , 199_, between Servicer and Borrower
Ladies and Gentlemen:
We refer to the collection account established by [NAME OF SERVICER]
(the "Servicer") for the Borrower and the Lender, pursuant to the Loan
Agreement, at [BANK], [CITY], [STATE], Account No. [ACCOUNT #], ABA# [ABA #],
subaccount identified with respect to Mortgage Loans pledged to the Lender (the
"Blocked Account"), which the Borrower maintains in accordance with the Loan
Agreement.
Pursuant to the Loan Agreement, the Servicer will, from time to time,
deposit or cause to be deposited into the Blocked Account funds received from
borrowers for payment of Mortgage Loans made by the Borrower. The Lender has
established a secured loan arrangement with the Borrower. By its execution of
this letter, the Borrower acknowledges that the Borrower has granted a security
interest in all of the Borrower's right, title and interest in and to the
Blocked Account and any funds from time to time on deposit therein with respect
to such Mortgage Loans, that such funds are received by the [BANK] in trust for
the benefit of the Lender and, except as provided below, are for application
against the Borrower's liabilities to the Lender.
Except as expressly provided to the contrary herein, the Blocked
Account shall be subject to the sole dominion and control of the Lender.
By the [BANK]'s execution of this letter, it agrees: (a) that all funds
from time to time hereafter in the Blocked Account are the property of the
Borrower held in trust for the benefit of, and subject to a security interest in
favor of, the Lender; (b) that the [BANK] will not exercise any right of
set-off, banker's lien or any similar right in connection with such funds
provided, that in the event any check is returned to the [BANK] because of
insufficient funds (or is otherwise unpaid) the [BANK] shall be entitled to set
off the amount of any such returned check; (c) that until the [BANK] receives
written notification from the Lender to the contrary, as set forth in clause (e)
below, the Servicer shall
G-1
75
be entitled to withdraw or transfer funds from the Blocked Account; (d) except
as set forth in the ______ Agreement or in clause (c) above, the [BANK] will not
permit any person or entity to withdraw or transfer funds from the Blocked
Account; and (e) that if the Lender shall notify the [BANK] that an event of
default has occurred under the Lender's secured lending arrangement with the
Borrower, the [BANK] shall not permit the Servicer and/or the Borrower to make
any further withdrawals or transfers and shall thereafter cause or permit
withdrawals from the Blocked Account solely in such manner as the Lender may
instruct.
All bank statements in respect to the Blocked Account shall be sent to
the Servicer with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
G-2
76
Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
----------------------------------------
Title:
Agreed and acknowledged:
[BANK]
By:
--------------------------------------------
Title:
Agreed and acknowledged:
-----------------------------------------------
By:
--------------------------------------------
Title:
G-3
77
EXHIBIT H
[FORM OF BAILEE AGREEMENT]
May 15, 1998
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇'▇▇▇▇, Esq.
Re: Bailee Agreement (the "Bailee Agreement") in connection with
the pledge of certain mortgage loans by ▇▇▇▇▇▇▇▇ Capital
Corporation (the "Borrower") to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. (the "Lender")
Gentlemen and Mesdames:
In consideration of the mutual promises set forth herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower, the Lender and Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
(the "Bailee") hereby agree as follows:
1. The Borrower shall deliver to the Bailee in connection with
any Mortgage Loans delivered to the Bailee hereunder an Identification
Certificate in the form of Annex 1 attached hereto to which shall be attached a
Mortgage Loan Schedule identifying which Mortgage Loans are being delivered to
the Bailee hereunder. Such Mortgage Loan Schedule shall contain the following
fields of information: (a) the mortgage loan identifying number; (b) the
mortgagor's name; (c) the mortgaged property's ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and
zip code; (d) the original balance; (e) the current principal balance; (f) the
original mortgage interest rate; (g) the original term; (h) the remaining term;
(i) the date of the last payment made and the due date of such payment; (j) the
Collateral Value of such Mortgage Loan; (k) a field indicating whether the
Mortgage Loan is a Table Funded Mortgage Loan; and (l) a field indicating
whether the Mortgage Loan is an Eligible Multifamily Mortgage Loan or an
Eligible Commercial Mortgage Loan.
2. On or prior to the date indicated on the Identification
Certificate delivered by the Borrower (the "Funding Date"), the Borrower shall
have delivered to the Bailee, as bailee for hire, the following original
documents (collectively, the "Mortgage File") for each mortgage loan (the
"Mortgage Loans") listed in Exhibit A attached hereto (the "Mortgage Loan
Schedule"):
(a) The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of _________ without recourse" and
signed in the name of the last endorsee (the "Last Endorsee") by an authorized
Person (in the event that the Mortgage Loan was acquired by the
78
Last Endorsee in a merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the event that the
Mortgage Loan was acquired or originated by the Last Endorsee while doing
business under another name, the signature must be in the following form: "[Last
Endorsee], formerly known as [previous name]").
(b) The original of the guarantee executed in connection with the
Mortgage Note (if any).
(c) The original Mortgage with evidence of recording thereon, or a
copy thereof together with an Officer's Certificate of the Borrower or a
Settlement Agent 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.
(d) The originals of all assumption, modification, consolidation
or extension agreements with evidence of recording thereon, or copies thereof
together with an Officer's Certificate of the Borrower or a Settlement Agent
certifying that such represent true and correct copies of the originals and that
such originals have each been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(e) The original Assignment of Mortgage in blank for each Mortgage
Loan, in form and substance acceptable for recording and signed in the name of
the Last Endorsee (in the event that the Mortgage Loan was acquired by the Last
Endorsee in a merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the event that the
Mortgage Loan was acquired or originated while doing business under another
name, the signature must be in the following form: "[Last Endorsee], formerly
known as [previous name]").
(f) The originals of all intervening assignments of mortgage with
evidence of recording thereon, or copies thereof together with an Officer's
Certificate of the Borrower certifying that such represent true and correct
copies of the originals and that such originals have each been submitted for
recordation in the appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located.
(g) The original attorney's opinion of title and abstract of title
or the original mortgagee title insurance policy, or if the original mortgagee
title insurance policy has not been issued, the irrevocable commitment to issue
the same.
(h) The original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage Loan.
(i) The original assignment of leases and rents, if any, with
evidence of recording thereon, or a copy thereof together with an Officer's
Certificate of the Borrower or an approved Settlement Agent certifying that such
copy represents a true and correct copy of the original that has been submitted
for recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(j) The original assignment of assignment of leases and rents, if
any, from the Borrower in blank, in form and substance acceptable for recording.
-2-
79
(k) A copy of the UCC-1 Financing Statements, certified as true
and correct by the Borrower, and all necessary UCC-3 Continuation Statements
with evidence of filing thereon or copies thereof certified by the Borrower or
an approved Settlement Agent to have been sent for filing, and UCC-3 Assignments
executed by the Borrower in blank, which UCC-3 Assignments shall be in form and
substance acceptable for filing.
(l) An environmental indemnity agreement (if any).
(m) An omnibus assignment in blank (if any).
(n) A disbursement letter from the Mortgagor to the original
mortgagee (if any).
provided, however, that as to certain Mortgages or assignments thereof which
have been delivered or are being delivered to recording offices for recording
and have not been returned to the Borrower in time to permit their delivery
hereunder at the time of such transfer, in lieu of delivering such original
documents, the Borrower shall deliver to the Custodian a true copy thereof with
a certification by the Borrower on the face of such copy substantially as
follows: "certified true and correct copy of original which has been transmitted
for recordation". The Borrower will deliver such original documents, together
with any related policy of title insurance not previously delivered, on behalf
of the Borrower to the Custodian promptly after they are received.
3. The Bailee shall issue and deliver to the Lender and the
Custodian prior to [____] on the Funding Date by facsimile (a) in the name of
the Lender, an initial trust receipt and certification in the form of Annex 2
hereto (the "Trust Receipt") which Trust Receipt shall state that the Bailee has
received the documents comprising each Mortgage File as listed in Paragraph 2
hereof for each Mortgage Loan listed on the Mortgage Loan Schedule except for
such documents listed on the Mortgage Loan Schedule and Exception report
attached thereto and (b) a copy of the executed documents listed in Paragraph 2
(a).
For purposes of this Bailee Agreement:
(a) the "Mortgage Loan Schedule and Exception Report" shall mean a
list of Mortgage Loans delivered by the Bailee to the Lender on the Funding
Date, reflecting the Mortgage Loans held by the Bailee for the benefit of the
Lender, which includes any Exceptions with respect to each Mortgage Loan listed
thereon. Each Mortgage Loan Schedule and Exception Report shall set forth (a)
the Mortgage Loans being pledged to the Lender on the Funding Date as well as
the Mortgage Loans previously pledged to the Lender (if any) and held by the
Bailee under this Bailee Agreement, and (b) all Exceptions with respect thereto,
with any updates thereto from the time last delivered; and
(b) an "Exception" shall mean, with respect to any Mortgage Loan,
any of the following: (i). the variances from the requirements of Section 1
hereof with respect to the Mortgage Files (giving effect to the Borrower's right
to deliver certified copies in lieu of original documents in certain
circumstances), and (ii) any Mortgage Loan with respect to which the Bailee
receives written notice or has actual knowledge of a lien subject or security
interest in favor of a person other than the Lender with respect to such
Mortgage Loan.
4. On the applicable Funding Date, in the event that the Lender
fails to make a Loan to the Borrower secured by the Mortgage Loans identified in
the related Identification Certificate, the Lender shall deliver by facsimile to
the Bailee at (▇▇▇) ▇▇▇-▇▇▇▇ to the attention of ▇▇▇▇▇ ▇.
-3-
80
▇'▇▇▇▇, Esq. an authorization (the "Facsimile Authorization") to release the
Mortgage Files with respect to the Mortgage Loans identified therein to the
Borrower. Upon receipt of such Facsimile Authorization, the Bailee shall release
the Mortgage Files to the Borrower in accordance with the Borrower's
instructions.
5. Following the Funding Date, the Bailee shall forward the
Mortgage Files to LaSalle National Bank, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (the "Custodian") by insured
overnight courier for receipt by the Custodian no later than three (3) Business
Days following the applicable Funding Date (the "Delivery Date").
6. From and after the applicable Funding Date until the time of
receipt of the Facsimile Authorization or the applicable Delivery Date, as
applicable, the Bailee (a) shall maintain continuous custody and control of the
related Mortgage Files as bailee for the Lender and (b) is holding the related
Mortgage Loans as sole and exclusive bailee for the Lender unless and until
otherwise instructed in writing by the Lender.
7. The Borrower agrees to indemnify and hold the Bailee and its
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Bailee
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (other than special, indirect, punitive or
consequential damages, which shall in no event be paid by the Bailee) were
imposed on, incurred by or asserted against the Bailee because of the breach by
the Bailee of its obligations hereunder, which breach was caused by negligence,
lack of good faith or willful misconduct on the part of the Bailee or any of its
directors, officers, agents or employees. The foregoing indemnification shall
survive any resignation or removal of the Bailee or the termination or
assignment of this Bailee Agreement.
8. (a) In the event that the Bailee fails to produce a
Mortgage Note, Assignment of Mortgage or any other document related to a
Mortgage Loan that was in its possession within ten (10) business days after
required or requested by the Borrower or Lender (a "Delivery Failure"), and
provided that the Bailee previously delivered to the Lender a Trust Receipt
which did not list such document as an Exception on the Funding Date; the Bailee
shall indemnify the Borrower or Lender in accordance with the succeeding
paragraph of this Section 8.
(b) The Bailee agrees to indemnify and hold the Lender and
Borrower, and their respective affiliates and designees harmless against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever,
including reasonable attorney's fees, that may be imposed on, incurred by, or
asserted against it or them in any way relating to or arising out of a Custodial
Delivery Failure or the Bailee's negligence, lack of good faith or willful
misconduct. The foregoing indemnification shall survive any termination or
assignment of this Bailee Agreement.
9. The Bailee and the Borrower each hereby represents, warrants
and covenants that the Bailee is not an affiliate of or otherwise controlled by
the Borrower.
10. In connection with a pledge of the Mortgage Loans as
collateral for an obligation of the Lender, the Lender may pledge its interest
in the Mortgage Files covered held by the
-4-
81
Bailee for the benefit of the Lender from time to time by delivering written
notice to the Bailee in the form of Exhibit C hereto stating that the Lender has
pledged its interest in the identified Mortgage Loans and Mortgage Files, and
the identity of the party to whom the Mortgage Loans have been pledged (such
party, the "Pledgee"). Upon receipt of such notice from the Lender, the Bailee
shall ▇▇▇▇ its records to reflect the pledge of the Mortgage Loans by the Lender
to the Pledgee. The Bailee's records shall reflect the pledge of the Mortgage
Loans by the Lender to the Pledgee until such time as the Bailee receives
written instructions from the Lender that the Mortgage Loans are no longer
pledged by the Lender to the Pledgee, at which time the Bailee shall change its
records to reflect the release of the pledge of the Mortgage Loans and that the
Bailee is holding the Mortgage Loans as custodian for, and for the benefit of,
the Lender.
11. The agreement set forth in this Bailee Agreement letter may
not be modified, amended or altered, except by written instrument, executed by
all of the parties hereto.
12. This Bailee Agreement may not be assigned by the Borrower or
the Bailee without the prior written consent of the Lender.
13. For the purpose of facilitating the execution of this Bailee
Agreement letter as herein provided and for other purposes, this Bailee
Agreement letter may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and such
counterparts shall constitute and be one and the same instrument.
14. THIS BAILEE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Very truly yours,
▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
Borrower
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
ACCEPTED AND AGREED:
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
Bailee
By:__________________________
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇, Esq.
Title: Partner
ACCEPTED AND AGREED:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Lender
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
-6-
82
Annex 1
IDENTIFICATION CERTIFICATE
On this _____ day of April 1998, ▇▇▇▇▇▇▇▇ CAPITAL CORPORATION (the
"Borrower"), under that certain Bailee Agreement, dated as of May 15, 1998 (the
"Bailee Agreement"), among the Borrower, __________________, (the "Bailee"), and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., as Lender, does hereby instruct the Bailee
to hold, in its capacity as Bailee, the Mortgage Files with respect to the
Mortgage Loans listed on Attachment A hereto, which Mortgage Loans shall be
subject to the terms of the Bailee Agreement as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Bailee Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Identification
Certificate to be executed and delivered by its duly authorized officer as of
the day and year first above written.
▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
By:
---------------------------
Name:
Title:
-1-
83
Annex 2
TRUST RECEIPT AND CERTIFICATION
May 15, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
---------------
Re: Bailee Letter, dated as of May 15, 1998 (the "Bailee
Agreement") among ▇▇▇▇▇▇▇▇ Capital Corporation (the
"Borrower"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the
"Lender") and (the "Bailee")
Gentlemen and Mesdames:
In accordance with the provisions of Paragraph 3 of the
above-referenced Bailee Letter, the undersigned, as the Bailee, hereby certifies
that as to each mortgage loan described in the mortgage loan schedule (Exhibit
A), a copy of which is attached hereto, it has reviewed the Mortgage File and
has determined that (i) all documents listed in Paragraph 2 of the Bailee
Agreement are in its possession and (ii) such documents have been reviewed by it
and appear regular on their face and relate to such mortgage loan, and (iii)
based on its examination, the foregoing documents on their face satisfy the
requirements set forth in Paragraph 2 of the Bailee Agreement.
The Bailee hereby confirms that it is holding each such Mortgage File
as agent and bailee for the exclusive use and benefit of the Lender pursuant to
the terms of the Bailee Agreement.
All initially capitalized terms used herein shall have the meanings
ascribed to them in the above-referenced Bailee Agreement.
-----------------------------
BAILEE
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
84
EXHIBIT I
[FORM OF INSURED CLOSING LETTER]
[TO BE PROVIDED]
85
EXHIBIT J
SETTLEMENT AGENT APPROVAL REQUEST
Date: April _, 1998
The undersigned, ▇▇▇▇▇▇▇▇ CAPITAL CORPORATION (the "Borrower"),
requests the Lender's approval of the Settlement Agent[s] listed below. The
Borrower certifies that the name and address of each Settlement Agent listed
below is true and correct. The Borrower further certifies that the Borrower has
attached hereto as Attachment 1 hereto, true and correct copies of the errors
and omissions polic[ies] for each Settlement Agent listed below.
Capitalized terms not otherwise defined herein are defined in that
certain Master Loan and Security Agreement (the "Security Agreement"), dated as
of May 15, 1998 between the Borrower and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.,
as Lender, or in that certain Custodial Agreement (the "Custodial Agreement"),
dated as of May 15, 1998, among the Borrower, LaSalle National Bank, as
Custodian, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., as Lender.
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Settlement Agent's Name Settlement Agent's Address
----------------------- --------------------------
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▇▇▇▇▇▇▇▇ CAPITAL CORPORATION
By:
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Name:
Title:
Acknowledged and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
Date:
----------------------
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-4-
86
Attachment 1 Schedule J
SETTLEMENT AGENT ERRORS AND OMISSIONS POLICIES
[TO BE PROVIDED BY THE BORROWER]
-5-