$25,000,000
WAREHOUSE CREDIT AGREEMENT
among
FIRST MORTGAGE NETWORK, INC., as Borrower,
▇▇▇▇▇▇ RIVER FUNDING INC., as Lender
and
GE CAPITAL MORTGAGE SERVICES, INC., as Agent
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Dated as of August 7, 1998
-------------------------------------
TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION..........................1
1.01 Defined Terms ......................................................1
1.02 Principles of Construction.........................................14
SECTION 2. AMOUNT AND TERMS OF CREDIT ........................................15
2.01 Commitment.........................................................15
2.02 Minimum Borrowing Amount...........................................15
2.03 Pledge of Collateral...............................................15
2.04 Request for Advance................................................16
2.05 Disbursement of Funds..............................................16
2.06 Note...............................................................16
2.07 Interest...........................................................17
SECTION 3. FEES...............................................................17
3.01 Fees...............................................................17
SECTION 4. PREPAYMENTS; PAYMENTS..............................................17
4.01 Voluntary Prepayments..............................................18
4.02 Mandatory Prepayments..............................................18
4.03 Release of Collateral; Substitution................................20
4.04 Sale of Collateral to Investors....................................21
4.05 Method and Place of Payment........................................22
4.06 Net Payments.......................................................22
4.07 Breakage Costs.....................................................22
SECTION 5. CONDITIONS PRECEDENT ..............................................22
5.01 Execution of Agreement; Note.........................................22
5.02 No Default; Representations and Warranties...........................23
5.03 Request for Advance .................................................23
5.04 Opinions of Counsel..................................................23
5.05 Diligence............................................................23
5.06 Corporate Documents; Proceedings.....................................23
5.07 Financial Statements.................................................23
5.08 Mandatory Prepayment ................................................24
5.09 Warehouse Security Agreement.........................................24
5.10 No Adverse Change....................................................24
5.11 Insurance............................................................24
5.12 [Intentionally Omitted]..............................................25
5.13 Delivery of the Collateral...........................................25
5.14 Fees.................................................................25
5.15 No Litigation........................................................25
5.16 Liquidity Agreement..................................................25
5.17 Acknowledgment.......................................................25
5.18 Legal or Regulatory Proceedings......................................25
5.19 Intercreditor Agreement..............................................26
5.20 Treatment of Existing Liens..........................................26
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS ........................26
6.01 Corporate Status.....................................................26
6.02 Corporate Power and Authority........................................26
6.03 No Violation.........................................................26
6.04 Governmental Approvals...............................................27
6.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; etc.........................................27
6.06 Litigation...........................................................27
6.07 True and Complete Disclosure.........................................27
6.08 Use of Proceeds; Margin Regulations..................................28
6.09 Tax Returns and Payments.............................................28
6.10 Compliance with ERISA................................................28
6.11 Capitalization.......................................................28
6.12 Subsidiaries.........................................................29
6.13 Compliance with Statutes, etc........................................29
6.14 Investment Company Act...............................................29
6.15 No Burdensome Agreement..............................................29
6.16 Security Interests...................................................29
6.17 Registration.........................................................29
6.18 Representations Relating to the Mortgage Loans.......................30
6.19 Representations Relating to the Mortgage-backed Securities...........31
6.20 Insurance............................................................31
6.21 Title to Property....................................................31
6.22 No Recourse Sales....................................................31
6.23 Fictitious Names.....................................................32
SECTION 7. AFFIRMATIVE COVENANTS .............................................32
7.01 Information Covenants................................................32
7.02 Books, Records and Inspections.......................................35
7.03 Maintenance of Property, Insurance...................................35
7.04 Corporate Franchises.................................................36
7.05 Compliance with Statutes, etc........................................36
7.06 ERISA................................................................36
7.07 Performance of Obligations...........................................37
7.08 Mortgage Loans.......................................................37
7.09 Payment of Taxes.....................................................37
7.10 Corporate Separateness...............................................38
7.11 Collateral...........................................................38
7.12 Portfolio Hedging Arrangements.......................................38
7.13 Borrowing Base Valuation Reports.....................................38
7.14 Year 2000 Compliance.................................................39
SECTION 8. NEGATIVE COVENANTS.................................................39
8.01 Liens................................................................39
8.02 Consolidation, Merger, Sale of Assets, etc...........................39
8.03 Dividends............................................................39
8.04 Indebtedness.........................................................40
8.05 Advances, Investments and Loans......................................40
8.06 Transactions with Affiliates.........................................41
8.07 Capital Expenditures.................................................41
8.08 Maximum Adjusted Leverage Ratio......................................41
8.09 Minimum Adjusted Tangible Net Worth. ................................41
8.10 [Intentionally Omitted]..............................................41
8.11 Modifications of Certificate of Incorporation,
By-Law's, Certain Other Agreements and Collateral....................41
8.12 Limitation on Restrictions on Subsidiary Dividends
and Other Distributions..............................................42
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8.13 Limitation on Issuances of Capital Stock by Subsidiaries.............42
8.14 Business.............................................................42
8.15 Portfolio Aging......................................................42
8.16 Minimum Current Ratio................................................42
SECTION 9. EVENTS OF DEFAULT .................................................42
9.01 Payments.............................................................42
9.02 Representations, etc.................................................43
9.03 Covenants............................................................43
9.04 Default Under Other Agreements.......................................43
9.05 Default Under Agreements With Agent..................................43
9.06 Bankruptcy, etc......................................................43
9.07 ERISA................................................................43
9.08 Warehouse Security Agreement.........................................44
9.09 [Intentionally Omitted]..............................................44
9.10 Management...........................................................44
9.11 Judgments............................................................44
9.12 Material Adverse Change..............................................44
9.13 Default Not a Condition of a 120-Day Demand..........................45
SECTION 10. THE AGENT.........................................................45
10.01 Authorization and Action.............................................45
10.02 Agent's Duties.......................................................45
10.03 GE Capital Mortgage Services, Inc. and Affiliates....................45
10.04 Successor Agent......................................................45
SECTION 11. MISCELLANEOUS ...................................................46
11.01 Payment of Expenses; Indemnity.......................................46
11.02 Notices..............................................................51
11.03 Benefit of Agreement.................................................51
11.04 Remedies Cumulative..................................................51
11.05 Calculations; Computations...........................................51
11.06 Governing Law; Submission to Jurisdiction; Venue.....................51
11.07 No Proceedings.......................................................52
11.08 Counterparts.........................................................52
11.09 Effectiveness........................................................52
11.10 Headings Descriptive.................................................52
11.11 Amendment or Waiver..................................................52
11.12 Survival.............................................................52
11.13 Waiver of Jury Trial.................................................53
SCHEDULES
SCHEDULE 6.11 - CAPITALIZATION
SCHEDULE 6.23 - FICTITIOUS NAMES
SCHEDULE 7.01(p) - CREDIT PACKAGE DOCUMENTS (LIST OF DOCUMENTS
TO BE DELIVERED WITH RESPECT TO A PLEDGE MORTGAGE)
SCHEDULE 8.04(ii) - EXISTING INDEBTEDNESS
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EXHIBITS
EXHIBIT A-1 FORM OF PLEDGE OF COLLATERAL
EXHIBIT A-2 FORM OF REQUEST FOR ADVANCE BY CHECK
EXHIBIT A-3 FORM OF REQUEST FOR ADVANCE BY WIRE
EXHIBIT B-1 FORM OF WET ADVANCE DISBURSEMENT INSTRUCTION
EXHIBIT B-2 FORM OF BORROWER'S WET ADVANCE DISBURSEMENT INSTRUCTION
INTENTIONALLY OMITTED
EXHIBIT C FORM OF NOTE
EXHIBIT D FORM OF OPINION OF SPECIAL COUNSEL FOR THE BORROWER
EXHIBIT E FORM OF OFFICERS' CERTIFICATE FOR BORROWER
EXHIBIT F-1 FORM OF OWNERS' AND OFFICERS' CERTIFICATION
EXHIBIT F-2 CREDIT SCORES
EXHIBIT G FORM OF ACKNOWLEDGMENT OF COLLATERAL AGENT'S RIGHTS
EXHIBIT H FORM OF WAREHOUSE SECURITY AGREEMENT
EXHIBIT I FORM OF INTERCREDITOR AGREEMENT
EXHIBIT J
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WAREHOUSE CREDIT AGREEMENT (as modified, supplemented or amended from
time to time, this "Agreement"), dated as of August 7, 1998, among FIRST
MORTGAGE NETWORK, INC., a Florida corporation (the "Borrower"), ▇▇▇▇▇▇ RIVER
FUNDING INC., a Delaware corporation (the "Lender"), and GE CAPITAL MORTGAGE
SERVICES, INC., a New Jersey corporation (the "Agent").
WITNESSETH:
-----------
WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lender is willing to make available to the Borrower the credit facilities
provided for herein;
NOW, THEREFORE, IT IS AGREED:
Section 1. Definitions and Principles of Construction.
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1.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjusted Leverage Ratio" shall mean, as to any Person, the ratio of
the Consolidated Liabilities of such Person to the Adjusted Tangible Net Worth
of such Person.
"Adjusted Tangible Net Worth" shall mean, as to any Person, (x) the sum
of, without duplication, the Consolidated Net Worth of such Person and its
Subsidiaries, plus an amount equal to 1.00% of the aggregate principal amount of
the Servicing Portfolio of such Person, plus the principal amount of any
Indebtedness that is subordinated to the payment of the Obligations on such
terms as are acceptable to the Agent and that does not permit or require any
principal payment in respect thereof prior to the Expiration Date in effect from
time to time, less (y) the sum of (i) the amount of all intangible items,
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand names, write-ups of
assets and purchased, capitalized or excess servicing, (ii) all receivables from
any officer, director or Affiliate of the Borrower, (iii) all unpaid stock
subscriptions, (iv) the Contingent Obligations of such Person as determined by
the Agent and (v) any other assets determined by the Agent in its reasonable
discretion.
"Advance" shall have the meaning provided in Section 2.01.
"Advance Account" shall mean the depositary account of the Borrower
designated by the Borrower by written notice to the Agent and the Lender.
"Affiliate" shall mean, as to any Person, any other Person (other than
an individual) directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such
Person; provided, however, that for purposes of Section 8.06, an Affiliate of
the Borrower shall include any Person that directly or indirectly owns more than
5% of the Borrower and any officer or director of the Borrower or any such
Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto.
"Borrower's Wet Advance Disbursement Instruction" shall have the
meaning provided in Section 2.05.
"Borrowing Base" shall mean, as of any date, an amount that is the sum
of the following, with respect to all Eligible Mortgage Loans, Eligible
Nonconforming Mortgage Loans and Liquid Assets pledged to the Security Agent as
of such date: (1) the sum for all Conforming Loans that are Committed Mortgage
Loans and are the subject of an Interest Rate Commitment of the product of (x)
the Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y)
100% of the Market Value of such Mortgage Loan, (2) the sum for all other
Conforming Loans that are Committed Mortgage Loans of the product of (x) the
Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y) 99% of
the Market Value of such Mortgage Loan, (3) the sum for all Jumbo Loans (each of
which shall be a Committed Mortgage Loan) which are the subject of an Interest
Rate Commitment of the product of (x) the Mortgage Loan Aging Percentage with
respect to such Mortgage Loan and (y) 100% of the Market Value of such Mortgage
Loan, (4) the sum for all other Jumbo Loans (each of which shall be a Committed
Mortgage Loan) of the product of (x) the Mortgage Loan Aging Percentage with
respect to such Mortgage Loan and (y) 99% of the Market Value of such Mortgage
Loan, (5) the sum for all Mortgage Loans that are FHA Loans, VA Loans or State
Loans of the product of (x) the Mortgage Loan Aging Percentage with respect to
such Mortgage Loan and (y) 99% of the Market Value of such Mortgage Loan, (6)
0% of the Market Value of each Mortgage-backed Security, (7) an amount equal to
the aggregate principal amount of the Liquid Assets, (8) the sum for all Credit
A- Loans of the product of (x) the Nonconforming Mortgage Loan Aging Percentage
with respect to such Mortgage Loan and (y) 99% of the Market Value of such
Mortgage Loan, (9) the sum for all Credit B Loans of the product of (x) the
Nonconforming Mortgage Loan Aging Percentage with respect to such Mortgage Loan
and (y) 99% of the Market Value of such Mortgage Loan, (10) the sum for all
Credit C Loans of the product of (x) the Nonconforming Mortgage Loan Aging
Percentage with respect to such Mortgage Loan and (y) 98% of the Market Value
of such Mortgage Loan and (1 1) the sum for all Credit D Loans of the product of
(x) the Nonconforming Mortgage Loan Aging Percentage with respect to such
Mortgage Loan and (y) 0% of the Market Value of such Mortgage Loan.
"Borrowing Base Valuation Report" shall have the meaning provided in
Section 7.13.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York, New York, a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
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"Cash Equivalents" means (i) securities with maturities of sixty days
or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (ii) certificates of
deposit, eurodollar time deposits, overnight bank deposits, bankers' acceptances
and repurchase agreements of any commercial bank whose short-term obligations
are rated "A-1" by S&P and, if rated by ▇▇▇▇▇'▇, "P-1" by ▇▇▇▇▇'▇ and, if rated
by Fitch, "F-1" by Fitch, having maturities of sixty days or less from the date
of acquisition, (iii) commercial paper having maturities of sixty days or less
from the date of acquisition, rated at least "A-1" by S&P or by ▇▇▇▇▇'▇ and, if
rated by Fitch, "F-1 " by Fitch, (iv) money market funds rated at least "AAAM"
or "AAA-G" by S&P or "P-1" by ▇▇▇▇▇'▇ and, if rated by Fitch, "AAA" by Fitch,
and (v) repurchase agreements with counterparties whose short-term obligations
are rated at least "A-1" by S&P or "P-1" by ▇▇▇▇▇'▇ and, if rated by Fitch,
"F-1" with a term of sixty days or less.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all "Collateral" as defined in the Warehouse
Security Agreement.
"Collateral Agent" shall mean General Electric Capital Corporation in
its capacity as collateral agent pursuant to the ▇▇▇▇▇▇ River Security
Agreement.
"Collateral Documents" shall mean, as to a Mortgage Loan which has been
or is to be pledged to the Security Agent as Collateral, the following documents
and instruments:
(i) The original Mortgage Note executed with respect to such
Mortgage Loan by a third party in favor of the Borrower (or
properly endorsed to the Borrower if purchased or acquired by
the Borrower) and endorsed in blank by the Borrower;
(ii) The original recorded Mortgage securing such Mortgage Note or
a copy of the original Mortgage securing such Mortgage Note,
certified by the Borrower or a title company or escrow company
reasonably satisfactory to the Security Agent to be a true
copy of the original instrument submitted for recording;
(iii) If the Mortgage Note was purchased by the Borrower, an
original properly recorded assignment of the related Mortgage
to the Borrower or a copy of such assignment certified by the
Borrower or a title or escrow company reasonably satisfactory
to the Security Agent to be a true copy of the original
instrument submitted for recording and a certified copy of
each intervening assignment of such Mortgage, if any;
(iv) An assignment of the Mortgage by the Borrower to the Security
Agent fully completed and in recordable form. If appropriate
filing and recording information regarding the Mortgage has
not been inserted into the assignment, the Borrower hereby
authorizes the Security Agent to insert such information, when
available. Such assignment shall not be filed for recordation
unless the Security Agent shall in good ▇▇▇▇▇ ▇▇▇▇ such action
necessary to further secure any Advances, in which
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case the Security Agent may file of record any or all such
assignments. The Borrower shall immediately reimburse the
Security Agent for any and all costs and expenses incurred by
the Security Agent in connection with such recordation;
(v) A closing protection letter executed by an authorized
representative of a title insurance company or escrow company
reasonably satisfactory to the Agent stating that the closing
agent with respect to such Mortgage Loan is an authorized
agent of such title insurance company or escrow company; and
(vi) Such other documents as the Security Agent may reasonably
require from time to time, including, without limitation, a
copy of any Purchase Commitment or Master Commitment relating
to the Mortgage Loan.
"Collateral Value" shall mean, at any time, with respect to a Mortgage
Loan or a Mortgagebacked Security, the amount resulting from that part of the
calculation of the Borrowing Base at such time that relates to such Mortgage
Loan or Mortgage-backed Security.
"Combined Loan-to-Value Ratio" shall mean, as to any Mortgage Loan, the
ratio expressed as a percentage that the sum of the original principal balance
of such Mortgage Loan and the then current principal balance of any related
first priority mortgage bears to the appraised value of the related mortgaged
property at the time such Mortgage Loan was originated.
"Commercial Paper" shall mean the short-term promissory notes of the
Lender.
"Commercial Paper Rate" shall mean with respect to any calendar month,
a rate per annum determined by annualizing the aggregate interest expense of
Lender (determined on an accrual basis) for such calendar month in respect of
(i) Commercial Paper outstanding during such calendar month and (ii) any
borrowings made by Lender under the Liquidity Agreement.
"Commitment" shall mean the obligation of the Lender to make Advances
in an aggregate principal amount outstanding at any time not to exceed
$25,000,000.
"Committed Mortgage Loans" shall mean all Mortgage Loans pledged to
the Security Agent pursuant to the terms of this Agreement and of the Warehouse
Security Agreement (i) which satisfy all of the requirements of any Purchase
Commitment or are covered by a Hedging Contract, (ii) which could be delivered
under any such Purchase Commitment, and (iii) which, in respect of all Mortgage
Loans of a particular type and yield, do not in the aggregate have a principal
amount in excess of the sum of (A) the aggregate then remaining amount of all
Purchase Commitments the requirements of which are satisfied by Mortgage Loans
of such type and yield owned by the Borrower plus (B) the aggregate amount of
all Hedging Contracts that cover Mortgage Loans of such type and yield owned by
the Borrower.
"Conforming Loan" shall mean a Mortgage Loan (other than a VA Loan, an
FHA Loan or a State Loan) that is underwritten in conformity with FHLMC or FNMA
underwriting standards and is otherwise eligible for purchase by FNMA or FHLMC.
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"Consolidated Liabilities" shall mean, as to any Person, the
liabilities of such Person and its Subsidiaries determined on a consolidated
basis and in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis, and shall include in any event the
Contingent Obligations of such Person and its Subsidiaries.
"Consolidated Net Worth" shall mean, as to any Person, the Net Worth of
such Person and its Subsidiaries determined on a consolidated basis and in
accordance with generally accepted accounting principles in the United States,
applied on a consistent basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are or are required to be consolidated with
such Person for financial reporting purposes in accordance with generally
accepted accounting principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person arising from an existing condition or situation that involves
uncertainty as to outcome and that will be resolved by the occurrence or
nonoccurrence of some future event, including but not limited to any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by the Agent.
"▇▇▇▇▇▇ River Security Agreement" shall mean the Assignment and
Security Agreement dated as of March 1, 1993 among the Lender, the Collateral
Agent and the cash collateral bank named therein (as such agreement may be
amended, supplemented or modified from time to time).
"Credit A- Loan" shall mean a Mortgage Loan (other than a Mortgage Loan
that satisfies all the requirements of an Eligible Mortgage Loan) the obligor of
which has a Credit Score as described on Exhibit G hereto.
"Credit B Loan" shall mean a Mortgage Loan (other than a Mortgage Loan
that satisfies all the requirements of an Eligible Mortgage Loan) the obligor of
which has a Credit Score as described on Exhibit G hereto.
"Credit C Loan" shall mean a Mortgage Loan (other than a Mortgage Loan
that satisfies all the requirements of an Eligible Mortgage Loan) the obligor of
which has a Credit Score as described on Exhibit G hereto.
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"Credit D Loan" shall mean a Mortgage Loan (other than a Mortgage Loan
that satisfies all the requirements of an Eligible Mortgage Loan) the obligor of
which has a Credit Score as described on Exhibit G hereto.
"Credit Documents" shall mean this Agreement, the Note and the
Warehouse Security Agreement.
"Credit Package Documents" shall have the meaning provided in Section
7.01(p).
"Credit Score" shall mean the numeric consumer credit score developed
by Fair ▇▇▇▇▇ & Co., Inc. and referred to as a "FICO Score".
"Current Ratio" shall mean, as to any Person, the ratio of current
assets to current liabilities, as determined in accordance with generally
accepted accounting principles in the United States, applied on a consistent
basis.
"Custodian" shall mean, with respect to any Investor, any financial
institution selected by such Investor to act as a custodian for Mortgage Loans
acquired or to be acquired by such Investor; provided that such financial
institution has been approved by the Security Agent and meets all applicable
requirements of such Investor to act as such custodian.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Depositary" shall mean Bankers Trust Company, a New York banking
corporation, in its capacity as issuing and paying agent for the Commercial
Paper under the Depositary Agreement.
"Depositary Agreement" shall mean the Depositary Agreement entered into
by the Lender, the Depositary, and the agent under the Liquidity Agreement, as
such agreement may be supplemented or modified from time to time.
"Effective Date" shall have the meaning provided in Section 11.09.
"Eligible Mortgage Loan" shall mean at the time of the determination
thereof (a) a Mortgage Loan, which at such time (i) is pledged as Collateral
pursuant to the terms of this Agreement and of the Warehouse Security Agreement
and is not pledged as security for any Indebtedness owing to, or otherwise
subject to a Lien for the benefit of, any person other than the Lender, (ii) is
a First Mortgage Loan, (iii) is, without duplication, a Conforming Loan, a
Jumbo Loan, an FHA Loan, a VA Loan or a State Loan, (iv) is subject to a
Purchase Commitment or covered by a Hedging Contract or is a Mortgage Loan that
bears interest at an adjustable rate and is covered by a Master Commitment, (v)
in the case of a Mortgage Loan that is not subject to a Wet Advance, has an
Origination Date that is less than 180 calendar days prior to such time, (vi) in
the case of a Mortgage Loan that is subject to a Wet Advance, has an Origination
Date that is not more than five Business Days prior to such time and (vii) has a
Combined Loan-to-Value Ratio of 100% or less, excluding in all such cases,
however, any Mortgage Loan about which any of the
6
representations, warranties and agreements contained in Section 6.18 is not true
and correct; provided that, in the case of a Mortgage Loan (other than a State
Loan), the interest rate on such Mortgage Loan was, as of the date on which such
interest rate was set or established, at least equal to the then current market
rate of interest for mortgage loans of the same type as determined by the Agent;
or (b) a Mortgage-backed Security which at such time (i) is subject to a
Purchase Commitment, (ii) is pledged as Collateral pursuant to the terms of this
Agreement and of the Warehouse Security Agreement and (iii) was issued by FNMA,
FHLMC or GNMA not more than 60 calendar days prior to such time.
"Eligible Nonconforming Mortgage Loan" shall mean at the time of the
determination thereof, a Mortgage Loan, which at such time (i) is pledged as
Collateral pursuant to the terms of this Agreement and of the Warehouse Security
Agreement and is not pledged as security for any Indebtedness owing to, or
otherwise subject to a Lien for the benefit of, any person other than the
Lender, (ii) is, without duplication, a First Mortgage Loan or a Second Mortgage
Loan, (iii) is subject to a Purchase Commitment, (iv) has and has had no
delinquency with respect to any payment due thereunder, (v) has no deficiencies
in respect of the documentation therefor, (vi) is, without duplication, a Credit
A- Loan, a Credit B Loan, a Credit C Loan or a Credit D Loan, (vii) in the case
of a Mortgage Loan that is not subject to a Wet Advance, has an Origination Date
that is less than 20 calendar days prior to such time, (viii) in the case of a
Mortgage Loan that is subject to a Wet Advance, has an Origination Date that is
not more than five Business Days prior to such time and (ix) has a Combined
Loan-to-Value Ratio of 100% or less, excluding in all such cases, however any
Mortgage Loan about which any of the representations, warranties and agreements
contained in Section 6.18 is not true and correct; provided that the interest
rate on such Mortgage Loan was, as of the date on which such interest rate was
set or established, at least equal to the then current market rate of interest
for mortgage loans of the same type as determined by the Agent.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations Promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any of its Subsidiaries would be a
member of the same "controlled group" within the meaning of Section 414(b), (m),
(c) and (o) of the Code.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section
8.04(ii).
"Expiration Date" shall mean the earlier of (i) August 31, 1999 as such
date may be extended upon mutual agreement among the Borrower, the Lender and
the Agent from time to time, (ii) the date which is fifteen days prior to the
Liquidity Termination Date in effect from time to time and (iii) the date that
is 120 days after the date on which the Lender shall have given the Borrower the
notice referred to in Section 9.13 hereof.
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"Facility Documents" shall mean the Credit Documents, the Collateral
Documents, the Liquidity Agreement, the Depositary Agreement, the Reimbursement
Agreement, the ▇▇▇▇▇▇ River Security Agreement, any letters of credit issued
pursuant to the terms of the Reimbursement Agreement, the Commercial Paper and
any agreements entered into by the Lender with placement agent(s) or dealer(s)
for the placement or sale of Commercial Paper.
"Fees" shall mean all fees and expenses required to be paid by the
Borrower pursuant to Section 3.01.
"FHA" shall mean the Federal Housing Administration or any successor
thereto.
"FHA Loan" shall mean a Mortgage Loan which (i) is eligible for
insurance by FHA and (ii) is so insured or is subject to a current binding, and
enforceable commitment for such insurance pursuant to the provisions of the
National Housing Act, as now in effect and as may be hereafter amended from time
to time, and is otherwise eligible for inclusion in a GNMA Mortgage-backed
Security pool.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or any
successor thereto.
"First Mortgage Loan" shall mean a Mortgage Loan that is underwritten
in conformity with underwriting standards approved by the applicable Investor
and is secured by a first priority Mortgage.
"Fitch" shall mean Fitch Investors Service, L.P.
"FNMA" shall mean the Federal National Mortgage Association or any
successor thereto.
"GNMA" shall mean the Governmental National Mortgage Association or any
successor thereto.
"Hedging Contract" shall mean a written contractual arrangement
designed to provide protection against fluctuations in interest rates with
respect to Mortgage Loans and commitments made to prospective Mortgage Loan
obligors to extend Mortgage Loans at specified rates of interest, in each case
in accordance with guidelines acceptable to the Agent.
"HUD" shall mean the Department of Housing and Urban Development or any
successor thereto.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all drafts drawn thereunder, (iii) all liabilities secured by
any Lien on any property owned by such Person, whether or not such liabilities
have been assumed by such Person, (iv) the aggregate amount required in
accordance with generally accepted accounting
8
principles to be capitalized under leases under which such Person is the lessee
and (v) all Contingent Obligations of such Person.
"Initial Borrowing Date" shall mean the date on which the initial
incurrence of Advances occurs.
"Insolvency Event" shall mean, with respect to any Person, the
occurrence of any of the following events: (i) such Person shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a receiver,
trustee, custodian, conservator or liquidator for itself or a substantial
portion of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or such Person, or a substantial part of its property,
assets or business, shall be subject to, consent to or acquiesce in the
appointment of a receiver, trustee, custodian, conservator or liquidator for
itself or a substantial portion of its property, assets or business; (ii)
corporate action shall be taken by such Person for the purpose of effectuating
any of the foregoing; (iii) an order for relief shall be entered in a case under
the Bankruptcy Code in which such Person is a debtor; or (iv) involuntary
proceedings or an involuntary petition shall be commenced or filed against such
Person under any bankruptcy, insolvency or similar law or seeking, the
dissolution, liquidation or reorganization of such Person or the appointment of
a receiver, trustee, custodian, conservator or liquidator for such Person or of
a substantial part of the property, assets or business of such Person, or any
writ, order, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of the property, assets or
business of such Person, and such proceeding or petition shall not be dismissed,
or such execution or similar process shall not be released, vacated or fully
bonded, within sixty (60) days after commencement, filing or levy, as the case
may be.
"Interest Rate Commitment" shall mean a commitment whereby the Borrower
agrees to deliver a Mortgage Loan to GE Capital Mortgage Services, Inc., as
investor, according to the terms of a Purchase Commitment and GE Capital
Mortgage Services, Inc. agrees to a specified interest rate and purchase price
for a designated length of time.
"Investor" shall mean FHLMC, FNMA, GNMA or any financial institution,
broker, dealer, institutional investor or state agency or instrumentality
approved by the Agent.
"Jumbo Loan" shall mean a Mortgage Loan (other than an FHA Loan, a VA
Loan, or a State Loan) that is underwritten in accordance with standards
approved by the Agent that are generally comparable to the standards established
by FNMA or FHLMC in all respects other than the original principal amount of the
Mortgage Loan and that were established by an Investor (other than FHLMC, FNMA
or GNMA).
9
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Liquid Assets" shall mean (i) certificates of deposit of any
commercial bank whose short term obligations are rated "A-1+" by S&P and, if
rated by Moody's, "P-1" by Moody's and, if rated by Fitch, "F-1+" by Fitch
having maturities of 60 days or less from the date of acquisition and (ii)
securities issued or fully guaranteed or insured by the United States Government
or any agency thereof having maturities of 60 days or less from the date of
acquisition.
"Liquidity Agreement" shall mean the Liquidity Agreement dated as of
March 1, 1993 among the Lender, the liquidity lenders party thereto and General
Electric Capital Corporation, as liquidity agent, as the same may be amended or
modified from time to time.
"Liquidity Lenders" shall mean the banks and financial institutions
that are parties to the Liquidity Agreement from time to time.
"Liquidity Termination Date" shall mean the earlier of (1) June 23,
1999, as such date may be extended in accordance with the terms of the Liquidity
Agreement and (ii) the date on which the commitment of the Liquidity Lenders
under the Liquidity Agreement is terminated following the occurrence of an event
of default thereunder.
"LOC Providers" shall mean those banks and financial institutions that
are parties to the Reimbursement Agreement.
"Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.
"Market Value" shall mean as of any date at which the amount thereof is
to be determined, (i) as to any Mortgage-backed Security, the purchase price
therefor (exclusive of any accrued interest included in such purchase price)
under the Purchase Commitment with respect thereto; and (ii) as to any Mortgage
Loan an amount equal to the lower of (A) an amount equal to (1) with respect to
a Mortgage Loan that was funded directly by the Borrower to the obligor
thereunder, the outstanding principal amount of such Mortgage Loan or (2) with
respect to a Mortgage Loan that was purchased by the Borrower, the lesser of (x)
the purchase price paid by the Borrower therefor (exclusive of any accrued
interest or servicing release premium included in such purchase price) and (y)
the outstanding principal amount of such Mortgage Loan, as applicable, (B) the
amount determined by the Agent, in its sole discretion, as the price (exclusive
of any accrued interest that would be included in such price) at which such
Mortgage Loan could on the date of such determination be sold in the secondary
market to a bona fide investor in an arm's-length transaction and (C) the price
at which an Investor has committed to purchase such Mortgage Loan.
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"Master Commitment" shall mean a written master commitment or any other
written commitment, on general terms and conditions approved by the Agent, from
an Investor to purchase from the Borrower from time to time up to a specified
dollar amount of Mortgage Loans without specification of the yield or purchase
price of each such Mortgage Loan.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" shall mean a first or second mortgage, first or second deed
of trust, first or second deed to secure debt or other first or second security
device which is customary and serves the same function as a mortgage under the
law and practice in the jurisdiction in which the premises subject to the
mortgage are located. For all Mortgage Loans secured by premises located in
states in which it is customary to use deeds of trust or security deeds as the
security device, a deed of trust or security deed, as the case may be, shall be
used as the security device. Mortgages shall, unless the Agent shall otherwise
approve, be on forms acceptable to FNMA, GNMA or FHLMC.
"Mortgage-backed Securities" shall mean securities that are (A) (i)
issued in accordance with guidelines established by GNMA, FNMA or FHLMC, (ii)
guaranteed as to payment by GNMA, FNMA or FHLMC in accordance with the
guidelines established by such entities and (iii) secured by a pool of Mortgage
Loans originally included as Eligible Mortgage Loans hereunder, or which would
have otherwise satisfied the requirements for Eligible Mortgage Loans if such
Mortgage Loans had been pledged to the Security Agent pursuant to the terms of
this Agreement and of the Warehouse Security Agreement, (B) subject to a
Purchase Commitment and (C) issued in book-entry form.
"Mortgage Bankers' Reporting Forms" shall have the meaning provided in
Section 7.01(o).
"Mortgage Loan" shall mean a loan evidenced by a Mortgage Note and
secured by a Mortgage encumbering a completed one to four family residential
property (including, without limitation, condominium units and excluding
cooperative ownership interests).
"Mortgage Loan Aging Percentage" shall mean, as of any date, with
respect to any Eligible Mortgage Loan, (i) 100% if such Mortgage Loan has an
Origination Date that is less than 90 days prior to such date, (ii) 75% if such
Mortgage Loan has an Origination Date that is less than 120 days and more than
89 days prior to such date, (iii) 50% if such Mortgage Loan has an Origination
Date that is less than 150 days and more than 119 days prior to such date, (iv)
25% if such Mortgage Loan has an Origination Date that is less than 180 days and
more than 149 days prior to such date and (v) 0% if such Mortgage Loan has an
Origination Date that is 180 or more days prior to such date.
"Mortgage Note" shall mean a promissory note executed by a competent
party which is secured by a Mortgage.
"Net Worth" shall mean, as to any Person, the sum of (i) Its capital
stock, capital in excess of par or stated value of shares of its capital stock,
retained earnings and any other account which,
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in accordance with generally accepted accounting principles in the United
States, constitutes stockholder equity less (ii) any treasury stock, any unpaid
stock subscriptions and any subordinated or other loans from stockholders, in
each case to the extent included in clause (i).
"Nonconforming Commitment" shall have the meaning provided in Section
2.01.
"Nonconforming Mortgage Loan Aging Percentage" shall mean, as of any
date, with respect to any Eligible Nonconforming Mortgage Loan, (i) 100% if such
Mortgage Loan has an Organization Date that is less than 60 days prior to such
date, (ii) 50% if such Mortgage Loan has an Origination Date that is less than
90 days and more than 59 days prior to such date and (iii) 0% if such Mortgage
Loan has an Origination Date that is 90 days or more prior to such date.
"Note" shall have the meaning provided in Section 2.06.
"Obligations" shall mean all amounts owing to the Lender or the Agent
pursuant to the terms of this Agreement and any other Credit Document.
"Office" shall mean the office of the Agent located at Three Executive
Campus, Cherry Hill, New Jersey 08002 or such other address as the Agent may
specify from time to time in a written notice to the Borrower and the Lender.
"Origination Date" shall mean, with respect to any Mortgage Loan, the
date such Mortgage the Loan was funded to the obligor thereon.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA or any successor thereto.
"Person" shall mean any individual, partnership, joint venture,
firm-, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), or at any time during the
five calendar years preceding the date of this Agreement was maintained or
contributed to by (or to which there is an obligation to contribute of), the
Borrower or by a Subsidiary of the Borrower or an ERISA Affiliate.
"Purchase Commitment" shall mean a current binding and enforceable
written commitment (or contract for purchase) from an Investor to purchase from
the Borrower Mortgage Loans or Mortgage-backed Securities of a particular type
and yield owned by the Borrower at a committed price, which commitment shall at
all times be subject to approval by the Agent as to terms and conditions.
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"Rating Agency" shall mean each credit rating agency that the Lender
shall have requested to provide a credit rating with respect to the Commercial
Paper and which is then providing such a credit rating.
"Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement dated as of March 1, 1993 among the Lender, the banks
and financial institutions party thereto and General Electric Capital
Corporation, as letter of credit agent, as such agreement may be amended,
supplemented or modified from time to time.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Request for Advance" shall have the meaning provided in Section 2.04.
"S&P" shall mean Standard & Poor's Corporation.
"Second Mortgage Loan" shall mean a Mortgage Loan that is underwritten
in conformity with underwriting standards approved by the applicable Investor
and is secured by a second priority Mortgage.
"Security Agent" shall mean GE Capital Mortgage Services, Inc. in its
capacity as security agent for the Lender pursuant to the Warehouse Security
Agreement.
"Servicing Portfolio" shall mean, as to any Person, all Mortgage Loans
the servicing or subservicing rights for which are owned by such Person and with
respect to which such Person functions as the servicing institution.
"State Loan" shall mean a Mortgage Loan that is (i) underwritten in
conformity with underwriting standards that are established by a state agency or
instrumentality and approved by the Agent and (ii) subject to a Purchase
Commitment from such state agency or instrumentality.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has (A) more than a 50% equity interest at the time or (B) an
interest satisfying the provisions of clause (i) hereof in any general partner
of any limited partnership or joint venture.
"Taxes" shall have the meaning provided in Section 11.01(e).
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in New Jersey or any other relevant jurisdiction, as applicable.
13
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan, exceeds
the fair market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"VA" shall mean the Veterans Administration or any successor thereto.
"VA Loan" shall mean a Mortgage Loan which is eligible for guarantee by
VA and is either so guaranteed or is subject to a current binding and
enforceable commitment for such guarantee pursuant to the provisions of the
Servicemen's Readjustment Act, as now in effect and as may be hereafter amended
from time to time, and is otherwise eligible for inclusion in a GNMA
Mortgagebacked Security pool.
"Warehouse Payment Account" shall mean the segregated direct deposit
account number ▇▇-▇▇▇-▇▇▇ maintained by the Collateral Agent with respect to
this Agreement at Bankers Trust Company in accordance with the terms of the
▇▇▇▇▇▇ River Security Agreement.
"Warehouse Security Agreement" shall have the meaning provided in
Section 5.09.
"Wet Advance" shall mean an Advance made by the Lender against the
pledge of Eligible Mortgage Loans or Eligible Nonconforming Mortgage Loans with
respect to which the Borrower has delivered to the Agent a Request for Advance
in accordance with Section 2.04 in lieu of the delivery of the Mortgage Note
related thereto; provided, however, that from and after the date on which the
Mortgage Note with respect to any such Mortgage Loan is received by the Security
Agent, such Advance shall cease to be a Wet Advance.
"Wet Advance Disbursement Instruction" shall have the meaning provided
in Section 2.05.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
1.02 Principles of Construction. (a) All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
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(b) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in
conformity with those used in the preparation of the financial statements
referred to in Section 6.05(a).
Section 2. Amount and Terms of Credit.
2.01 Commitment. Subject to and upon the terms and conditions set forth
herein, the Lender agrees, at any time and from time to time prior to the
Expiration Date (or such earlier date as the Commitment shall have been
terminated pursuant to the terms hereof), to make an advance or advances (each
an "Advance" and, collectively, the "Advances") to the Borrower, which Advance:
(i) shall be made at any time and from time to time in accordance with the terms
hereof on and after the Effective Date and prior to the Expiration Date; (ii)
shall bear interest as provided in Section 2.07; (iii) may be prepaid and
reborrowed in accordance with the provisions hereof; and (iv) shall be made
against the pledge by the Borrower of Eligible Mortgage Loans, Eligible
Nonconforming Mortgage Loans or Liquid Assets as Collateral for such Advance as
provided herein and in the Warehouse Security Agreement; provided, however, that
(1) the aggregate principal amount of Advances outstanding at any time shall not
exceed the lesser of (x) the Commitment and (y) the Borrowing Base, at such
time, (2) the aggregate principal amount of Advances outstanding at any time
secured by Mortgage-backed Securities shall not exceed 0% of the Commitment, (3)
the aggregate principal amount of Wet Advances outstanding at any time shall not
exceed 30% of the Commitment, (4) the aggregate principal amount of Advances
outstanding at any time secured by Jumbo Loans shall not exceed 75% of the
Commitment, (5) the aggregate principal amount of Advances outstanding at any
time secured by Eligible Nonconforming Mortgage Loans shall not exceed
$5,000,000 (the "Nonconforming Commitment"), (6) the aggregate principal amount
of Advances outstanding at any time secured by Credit A- Loans shall not exceed
100% of the Nonconforming Commitment, (7) the aggregate principal amount of
Advances outstanding at any time secured by Credit B Loans shall not exceed 100%
if the Nonconforming Commitment, (8) the aggregate principal amount of Advanced
outstanding at any time secured by Credit C Loans shall not exceed 50% of the
Nonconforning Commitment and (9) the aggregate principal amount of Advances
outstanding at any time secured by Credit D Loans shall not exceed 0% of the
Nonconforming Commitment.
2.02 Minimum Borrowing Amount. The principal amount of each Advance
shall not be less than $500.
2.03 Pledge of Collateral. Whenever the Borrower desires to pledge a
Mortgage Loan or Mortgage-Backed Security to the Security Agent, it shall
deliver to the Agent at its office a pledge of Collateral substantially in the
form of Exhibit A-1 (the "Pledge of Collateral"). Each Pledge of Collateral:
(i) shall be appropriately completed by an authorized employee of the Borrower
to describe the Collateral to be pledged; and (ii) shall have attached thereto
each of the Collateral Documents required in the Pledge of Collateral,
including, without limitation, in the case of a Mortgage Loan with respect to
which a Wet Advance is being requested in accordance with Section 2.04, an
assignment by the Borrower to the Security Agent of the related Mortgage fully
completed and in recordable form.
15
2.04 Request for Advance. Whenever the Borrower desires to incur an
Advance hereunder, it shall deliver to the Agent at its Office a request for
Advance substantially in the form of Exhibit A-2 or Exhibit A-3, as applicable
(the "Request for Advance") not later than the close of business on the Business
Day prior to the proposed date of such Advance; provided, however, that before
submitting a request for an Advance to be secured by a Mortgage Loan with an
outstanding principal amount in excess of $650,000, the Borrower shall have
obtained the prior approval of the Agent. Each Request for Advance: (i) shall be
appropriately completed by an authorized employee of the Borrower to specify the
aggregate principal amount of the Advance or Wet Advance to be made and the
proposed date of such Advance (which shall be a Business Day); and (ii) shall,
in the case of a Wet Advance, include instructions with respect to the
disbursement of such Wet Advance.
2.05 Disbursement of Funds. (a) No later than 3:00 P.M. (New York City
time) on the date specified in the Request for Advance with respect to any
Advance other than a Wet Advance, the Lender shall make available to the
Borrower the amount of such Advance requested to be made on such date by wire
transfer of funds to the Borrower's Advance Account.
(b) No later than 3:00 P.M. (New York City time) on the date specified
in the Request for Advance with respect to any Wet Advance, the Agent shall
disburse the amount of such Wet Advance directly to the appropriate title
company, escrow agent or closing agent, by cashier's check or wire transfer in
accordance with the instructions set forth in the related Request for Advance,
the Agent's customary practice and the requirements of applicable law.
(c) In the event that a Wet Advance is disbursed by a cashier's check
sent by the Agent or the Agent's bank to the appropriate title company, escrow
agent or closing agent, the Agent shall disburse the amount of such Wet Advance
under cover of an instruction letter substantially in the form of Exhibit B-1
(a "Wet Advance Disbursement Instruction"). In the event that a Wet Advance is
to be disbursed by wire transfer or by a cashier's check printed at the
Borrower's office and sent by the Borrower to the appropriate title company,
escrow agent or closing agent, the Borrower shall deliver to the appropriate
title company, escrow agent or closing agent an instruction letter substantially
in the form of Exhibit B-2 (a "Borrower's Wet Advance Disbursement
Instruction"). Upon the request of the Agent, the Borrower shall deliver to the
Agent a copy of any Borrower's Wet Advance Disbursement Instruction delivered by
the Borrower.
2.06 Note. The Borrower's obligation to pay the principal of, and
interest on, all Advances made to it by the Lender shall be evidenced by a
promissory note substantially in the form of Exhibit D (the "Note"). The Note
shall (i) be executed by the Borrower, (ii) be payable to the order of the
Lender and be dated on or prior to the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Commitment and be payable in the aggregate
principal amount of the Advances evidenced thereby, (iv) mature, with respect to
each Advance evidenced thereby, on the Expiry Date, (v) bear interest as
provided in Section 2.07, (vi) be subject to mandatory prepayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents. The Lender will note on its internal records the amount
of each Advance made by it and each payment in respect thereof and will prior to
any transfer of the Note endorse on the
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reverse side thereof the outstanding principal amount of Advances evidenced
thereby. Failure to make any such notation shall not affect the Borrower's
obligations in respect of such Advances.
2.07 Interest. [REDACTED]
(b) Overdue principal and, to the extent permitted by law, overdue
interest, and any other overdue amount payable by the Borrower hereunder, shall
bear interest at a rate per annum equal to 4% per annum in excess of the rate
specified in clause (a) above in effect from time to time; provided, however,
that no Advance shall bear interest at a rate in excess of the maximum rate
permitted by applicable law.
(c) Accrued (and theretofore unpaid) interest shall be payable in
respect of the Advances (i) monthly in arrears on the fifth Business Day of each
calendar month with respect to interest accrued during the preceding calendar
month, (ii) on any prepayment which reduces the outstanding Advances to zero,
(iii) at maturity (whether by acceleration, demand or otherwise) and (iv) after
such maturity, on demand. The Agent shall provide the Borrower with a notice
setting forth the interest accrued with respect to each calendar month not later
than the third Business Day following the end of such calendar month.
Section 3. Fees.
----
3.01 [REDACTED]
(b) The Agent shall provide the Borrower with a notice setting forth
the Administration Fee accrued and the administrative costs with respect to each
calendar month not later than the third Business Day following the end of such
calendar month.
Section 4. Prepayments; Payments.
---------------------
17
4.01 Voluntary Prepayments. The Borrower shall have the right to prepay
the Advances, without premium or penalty except as set forth in Section 4.07, in
whole or in part from time to time on the following terms and conditions: (i)
the Borrower shall give the Agent at its Office notice of its intent to prepay
not later than 2:00 p.m. (New York City time) at least one Business Day prior to
the date of such prepayment; provided, however, that with respect to any
prepayment of an amount in excess of 30% of the Advances then outstanding, the
Borrower shall give the Agent notice of its intent to prepay at least 5 Business
Days prior to the date of such prepayment, and (ii) the amount of such
prepayment shall be at least $10,000.
4.02 Mandatory Prepayments. Except as set forth in Section 4.03(b), a
prepayment of Advances shall be required, without notice or demand of any kind
to the Borrower, as follows:
(a) if on any date the aggregate principal amount of Advances
outstanding (after giving effect to all other repayments thereof on
such date) exceeds the lesser of (x) the Commitment or (y) the
Borrowing Base, as then in effect, the Borrower shall immediately
prepay the principal of Advances in an aggregate amount equal to such
excess;
(b) if on any date the aggregate principal amount outstanding of
Advances secured by Mortgage-backed Securities exceeds 0% of the
Commitment, the Borrower shall immediately prepay the principal of
Advances secured by Mortgage-backed Securities in an aggregate amount
equal to such excess;
(c) if on any date the aggregate principal amount outstanding of
Wet Advances exceeds 30% of the Commitment, the Borrower shall
immediately prepay the principal of Wet Advances in an aggregate amount
equal to such excess;
(d) if on any date the aggregate principal amount outstanding of
Advances secured by Jumbo Loans exceeds 75% of the Commitment, the
Borrower shall immediately prepay the principal of Advances secured by
Jumbo Loans in an aggregate amount equal to such excess;
(e) if (i) 60 calendar days shall have elapsed from the date of
first issuance of a Mortgage-backed Security in respect of which an
Advance has been made hereunder, and (ii) such Mortgage-backed Security
has not been sold by the Borrower and paid for by an Investor and (iii)
the Advances secured by such Mortgage-backed Security have not been
prepaid pursuant to any other clause of this Section 4.02, the Borrower
shall immediately prepay the principal of Advances in an aggregate
amount equal to the Collateral Value of such Mortgage-backed Security;
(f) if the Agent shall have notified the Borrower or the Borrower
otherwise becomes aware that any Mortgage Loan or Mortgage-backed
Security originally included as an Eligible Mortgage Loan or an
Eligible Nonconforming Mortgage Loan no longer constitutes an Eligible
Mortgage Loan or an Eligible Nonconforming Mortgage Loan pursuant to
the terms and standards set forth herein and in the Warehouse Security
Agreement, the Borrower shall immediately prepay the principal of
Advances in an
18
aggregate amount equal to the Collateral Value of such Mortgage Loan
or Mortgage-backed Security;
(g) if a Mortgage Loan or a Mortgage-backed Security in respect of
which an Advance has been made hereunder is sold, the Borrower shall on
the date of settlement for such sale prepay the principal of Advances
in an aggregate amount equal to the Collateral Value of such Mortgage
Loan or Mortgage-backed Security;
(h) if 21 calendar days shall have elapsed from the date a
Mortgage Loan is sent from the Security Agent to an Investor or the
Custodian for an Investor as provided in Section 4.04 and in the
Warehouse Security Agreement and such Mortgage Loan has neither been
redelivered to the Security Agent nor purchased pursuant to the letter
of transmittal delivered therewith, the form of which shall be that
customarily used by the Security Agent or, if appropriate, the form
required by FNMA or FHLMC, the Borrower shall immediately prepay the
principal of Advances in an aggregate amount equal to the Collateral
Value of such Mortgage Loan;
(i) if 14 calendar days shall have elapsed from the date on which
the Borrower is requested by the Security Agent to obtain a corrected
or completed copy of any document in connection with any Mortgage Loan
or Mortgage-backed Security and the same shall not have been delivered
to the Security Agent with the appropriate completion or correction,
the Borrower shall immediately prepay the principal of Advances in an
aggregate amount equal to the Collateral Value of such Mortgage Loan or
Mortgage-backed Security;
(j) if (1) there shall be a default in the payment of principal or
interest by the obligor under (x) an Eligible Mortgage Loan in respect
of which an Advance has been made hereunder and such default shall be
continuing for 60 days or more or (y) a Mortgage- backed Security in
respect of which an Advance has been made hereunder and such default
shall be continuing for 3 Business Days or more or (z) an Eligible
Nonconforming Mortgage Loan in respect of which an Advance has been
made hereunder and such default shall be continuing for 60 days or
more, (2) an Insolvency Event shall occur in respect of an obligor on
any Mortgage Loan in respect of which an Advance has been made
hereunder or (3) foreclosure or similar proceedings shall be commenced
in respect of the premises which secure any Mortgage Loan in respect of
which an Advance has been made hereunder, the Borrower shall
immediately prepay the principal of Advances in an aggregate amount
equal to the Collateral Value of such Mortgage Loan or Mortgage-backed
Security;
(k) if the Mortgage Loan to be funded with the proceeds of any Wet
Advance is not funded on the date of such Wet Advance, the Borrower
shall immediately prepay the full principal amount of such Wet Advance;
(l) if the Mortgage Note in respect of any Mortgage Loan securing
a Wet Advance is not delivered to the Lender within five Business Days
following the date on which such Wet Advance was made, the Borrower
shall immediately prepay the full principal amount of such Wet Advance;
19
(m) if on any date the aggregate principal amount of Advances
outstanding at any time secured by Eligible Nonconforming Mortgage
Loans exceeds the Nonconforming Commitment then in effect, the Borrower
shall immediately prepay the principal of Advances in an aggregate
amount equal to such excess;
(n) if on any date the aggregate principal amount of Advances
secured b Credit A- Loans exceeds 100% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit A- Loans in an aggregate amount equal to such excess;
(o) if on any date the aggregate principal amount of Advances
secured by Credit B Loans exceeds 100% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit B Loans in an aggregate amount equal to such excess;
(p) if on any date the aggregate principal amount of Advances
secured by Credit C Loans exceeds 50% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit C Loans in an aggregate amount equal to such excess; and
(q) if on any date the aggregate principal amount of Advances
secured by Credit D Loans exceeds 0% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit D Loans in an aggregate amount equal to such excess.
4.03 Release of Collateral; Substitution. (a) So long as no Default or
Event of Default has occurred and is continuing or would result therefrom, upon
the Borrower's request therefor accompanied by a prepayment by the Borrower of
Advances in an amount sufficient to cause the amount of Advances outstanding to
be less than or equal to the Borrowing Base (calculated without reference to any
Collateral which the Borrower requests be released from the Lien granted
pursuant to the Warehouse Security Agreement) and a deposit by the Borrower of
such amount as the Agent shall designate as a reserve for application to any
fees, accrued interest or breakage costs payable with respect to the calendar
month in which such prepayment occurs, the Security Agent shall, within one
Business Day after the later of the receipt of such request or such prepayment
and deposit, release from the Lien granted pursuant to the Warehouse Security
Agreement and deliver to the Borrower in accordance with the terms of the
Warehouse Security Agreement (i) the Collateral corresponding to such Mortgage
Loan(s) or Mortgage-backed Security(ies) and (ii) the Collateral Documents
pertaining thereto.
(b) So long as no Default or Event of Default has occurred and is
continuing in lieu of any required pre-payment of principal pursuant to Section
4.02, the Borrower may, subject to the terms and conditions hereof and the prior
consent of the Agent, substitute and pledge additional Eligible Mortgage Loans
and/or Eligible Nonconforming Mortgage Loans (together with all required
Collateral Documents with respect thereto) having an aggregate Collateral Value
in an amount such that immediately after giving effect to such substitution or
addition, such prepayment is no longer required.
20
4.04 Sale of Collateral to Investors. (a) The Security Agent shall
arrange, in accordance with the provisions of the Warehouse Security Agreement,
for the delivery of Mortgage Loans pledged to the Security Agent to an Investor
(or such Investor's Custodian) pursuant to a Purchase Commitment for examination
and purchase thereof by such Investor; provided, however, that prior thereto the
Security Agent shall have received from the Borrower one Business Day's prior
written notice describing the Mortgage Loan(s) to be delivered and the shipping
or wiring instructions therefor, such notice executed by an authorized employee
of the Borrower and identifying the Investor and the price which such Investor
has agreed to pay for such Collateral and/or the Mortgage-backed Security that
is to be issued against the delivery and release of such Collateral.
(b) The Security Agent shall release Collateral consisting of
Mortgage-backed Securities to the Investor under the related Purchase Commitment
on the settlement date specified in such Purchase Commitment by book-entry
transfer of such Mortgage-backed Securities to the account of such Investor
against the wire transfer to the account of the Security Agent of the full
purchase price specified in such Purchase Commitment; provided that (i) the
Security Agent shall have received from the Investor or the Borrower appropriate
instructions with respect to such delivery, transfer and payment and (ii) the
Borrower shall have made all deposits (if any) required in connection therewith
pursuant to Section 4.04(c) below.
(c) The Borrower shall make a deposit in immediately available funds
into the Warehouse Payment Account by 4:00 p.m. on the Business Day on which the
release of the Security Agent's security interest in such Mortgage Loan or
Mortgage-backed Securities is scheduled to occur pursuant to the purchase by an
Investor under a Purchase Commitment, in an amount equal to the amount by which
the aggregate amount of Advances outstanding exceeds the Borrowing Base
(calculated without reference to any such Mortgage Loan or Mortgage-backed
Security).
(d) Each delivery of Collateral pursuant to this Section 4.04 shall be
accompanied by a bailee letter in accordance with the requirements of the
Warehouse Security Agreement. All payments in respect of such Collateral so
purchased shall not be deemed received by the Security Agent until such funds
constitute "immediately available" funds in the Warehouse Payment Account or
such Mortgage-backed Securities have been credited to the account of the
Security Agent. For purposes hereof, confirmation of receipt of wired funds
shall constitute "immediately available" funds.
(e) In the event that the Borrower has entered into an agreement which
provides for the sale by the Borrower to an Investor of the rights to service
any Mortgage Loan (which sale is separate from the sale of such Mortgage Loan)
pledged to the Security Agent pursuant to the terms of this Agreement and the
Warehouse Security Agreement, the Borrower shall provide such Investor with
written notice (in a form satisfactory to the Agent) that the payment for such
servicing rights shall be made directly to the Agent for the account of the
Lender.
(f) The Borrower shall deliver to the Agent, on or prior to 10:30 a.m.
on the Business Day following receipt by the Security Agent of payment from an
Investor for Mortgage Loans (or the right to service Mortgage Loans) or
Mortgage-backed Securities purchased, notice designating
21
the Mortgage Loans or Mortgage-backed Securities to which such payment applies.
An amount equal to the funds transferred to the Security Agent in respect of
Mortgage Loans (or the right to service Mortgage Loans) or Mortgage-backed
Securities purchased by an Investor (whether such funds were transferred by the
Borrower pursuant to Section 4.04(c,) or by the Investor pursuant to Sections
4.04(b), 4.04(d) or 4.04(e)) shall be applied by the Security Agent as a
prepayment of Advances.
4.05 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement and the Note shall be made to
the Agent for the account of the Lender not later than 2:00 p.m. (New York City
time) on the date when due and shall be made in immediately available funds for
deposit to the Warehouse Payment Account. Any payment received after 2:00 p.m.
(New York City time) on any Business Day shall be treated as being received on
the next succeeding Business Day. Whenever any payment to be made hereunder or
under the Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest, fees and penalties shall be
payable at the rate otherwise applicable. The Borrower hereby authorizes the
Lender to deduct from each Advance to be made hereunder, all amounts due and
owing to the Lender or Agent including interest, penalties, fees or mandatory
prepayments.
4.06 Net Payments. All payments made by or on behalf of the Borrower
hereunder will be made without setoff, counter-claim or other defense.
4.07 Breakage Costs. If the Borrower shall prepay any principal of
Advances, whether pursuant to a voluntary or mandatory prepayment (other than a
mandatory prepayment made pursuant to Section 4.02(g)), at any time prior to the
maturity date of the Commercial Paper issued by the Lender to fund or maintain
such Advances, Borrower shall pay to the Lender (in addition to principal and
interest) such additional amounts as may be necessary to compensate the Lender
for any loss and any direct or indirect costs, including the lost of
reemployment of funds so prepaid at rates lower than the cost to the Lender of
such funds. Such losses and costs, which the Lender shall exercise reasonable
efforts to minimize, shall be specified in writing to the Borrower by the Lender
and, absent manifest error in computation, shall be binding on the Borrower. The
Borrower shall make payment of such costs and losses on the date on which
interest in respect of the Advances prepaid is otherwise due and payable.
Section 5. Conditions Precedent.
--------------------
The obligation of the Lender to make each Advance to the Borrower
hereunder is subject, at the time of the making of each such Advance (except as
hereinafter indicated), to the satisfaction of the following conditions:
5.01 Execution of Agreement; Note. On or prior to the Initial Borrowing
Date, (i) the Effective Date shall have occurred and (ii) there shall have been
delivered to the Lender the Note executed by the Borrower in the amount,
maturity and as otherwise provided herein.
22
5.02 No Default, Representations and Warranties. At the time of the
making of each Advance and also after giving effect thereto (1) there shall
exist no Default or Event of Default, and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Advance.
5.03 Request for Advance. Prior to the making of each Advance, the
Agent shall have received a Request for Advance with respect thereto meeting the
requirements of Section 2.04.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the Lender
shall have received from outside counsel for the Borrower (who shall be
reasonably satisfactory to the Lender) an opinion addressed to the Lender and
dated the Initial Borrowing Date covering the matters set forth in Exhibit E and
such other matters incident to the transactions contemplated herein as the
Lender may reasonably request. If, at the time of the making of any Advance
subsequent to the Initial Borrowing Date, the Lender shall have requested same,
the Lender shall have received from counsel (who shall be reasonably
satisfactory to the Lender) for the Borrower an opinion in form and substance
reasonably satisfactory to the Lender, addressed to the Lender and dated the
date of such Advance, covering such matters as the Lender shall specify or such
other matters incident to the transactions contemplated herein as the Lender may
reasonably request.
5.05 Diligence. On or prior to the Initial Borrowing Date, the Agent
shall have satisfactorily completed its due diligence review of the Borrower's
operations, business, financial condition and underwriting and origination of
Mortgage Loans.
5.06 Corporate Documents; Proceedings. (a) On the Initial Borrowing
Date, the Lender shall have received a certificate, dated the Initial Borrowing
Date, signed by the President or any Vice President of the Borrower, and
attested to by the Secretary or any Assistant Secretary of the Borrower,
substantially in the form of Exhibit F-1 and with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws of the
Borrower, the resolutions of the Borrower referred to in such certificate and a
good-standing certificate from the Secretary of State of the jurisdiction of
incorporation of the Borrower.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in this Agreement
and the other Credit Documents shall be reasonably satisfactory in form and
substance to the Lender, and the Lender shall have received all information and
copies of all documents and papers, including records of corporate proceedings
and governmental approvals, if any, which the Lender reasonably may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.07 Financial Statements. On or prior to the Initial Borrowing Date,
the Lender shall have received (i) the consolidated and consolidating balance
sheets of the Borrower and its Consolidated Subsidiaries for the fiscal year
most recently ended and the related statements of income and retained earnings
and statements of cash flows of the Borrower and its Consolidated Subsidiaries
for such fiscal year, in each case certified by an independent certified public
23
accountant reasonably acceptable to the Lender and prepared in accordance with
generally accepted accounting principles in the United States consistently
applied, together with any "management letters" detailing any "material
weaknesses in internal controls" (as defined by the Financial Accounting
Standards Board) noted by such accountants for such period and (ii) copies of
any uniform single audit reports in respect of the Borrower required or
requested by FNMA or FHLMC, any audits or financial reports in respect of the
Borrower completed or requested by HUD, GNMA, FNMA, FHLMC or any other
governmental agency or Investor and any Mortgage Bankers' Reporting Forms
prepared by the Borrower, in each case during the year preceding the date
hereof.
5.08 Mandatory Prepayment. After giving effect to the proposed Advance,
no prepayment would be required pursuant to Section 4.02.
5.09 Warehouse Security Agreement. The Borrower shall have duly
authorized, executed and delivered a Warehouse Security Agreement substantially
in the form of Exhibit I (as modified, supplemented or amended from time to
time, the "Warehouse Security Agreement") covering all of the Borrower's present
and future Collateral, together with:
(a) acknowledgment copies of proper financing statements (Form UCC-1)
duly filed under the UCC of each jurisdiction as may be necessary or, in the
opinion of the Security Agent, desirable to perfect the security interests
purported to be created by the Warehouse Security Agreement;
(b) certified copies of "Requests for Information or Copies" (Form
UCC-11), or equivalent reports, listing the financing statements referred to in
clause (a) above and all other effective financing statements that name the
Borrower as debtor and that are filed in the jurisdictions referred to in said
clause (a), together with copies of such other financing statements (none of
which shall cover the Collateral, except to the extent evidencing Liens
permitted pursuant to Section 8.01).
(c) evidence of the completion of all other recordings and filings of,
or with respect to, the Warehouse Security Agreement and the taking of all other
actions as may be necessary or, in the opinion of the Security Agent, desirable
to perfect the security interests purported to be created by the Warehouse
Security Agreement.
5.10 No Adverse Change. Since May 31, 1998, there shall have been no
material adverse change in the operations, business, property, assets or
financial condition or prospects of the Borrower.
5.11 Insurance. On or prior to the Initial Borrowing Date, the Lender
shall have received from the Borrower, a copy of a fidelity bond and policy of
insurance containing errors and omissions coverage and such other insurance as
the Lender shall require, each of which policies, where applicable, shall be in
such form, with such companies and in such amounts as are in accordance with the
Agent's requirements and shall name the Lender and the Agent as loss payees and
certificate holders.
24
5.12 [Intentionally Omitted]
5.13 Delivery of the Collateral. Prior to the making of an Advance, the
Security Agent shall have received (a) if such Advance is to be made in respect
of Mortgage Loans and is not to be a Wet Advance, the Collateral Documents
relating to the Mortgage Loans pledged to secure such Advance; (b) if such
Advance is to be a Wet Advance, a duly executed assignment by the Borrower to
the Security Agent of the related Mortgage fully completed and in recordable
form, a copy of the Purchase Commitment or the Master Commitment, if applicable,
and satisfactory confirmation that the Collateral Documents relating thereto are
to be delivered to an escrow agent, closing agent or title company acceptable to
the Lender with instructions that such Collateral Documents are to be delivered
directly to the Security Agent; or (c) if such Advance is to be made in respect
of Mortgage-backed Securities, copies of the applicable mortgage schedules and
FNMA, FHLMC or GNMA delivery schedules, the confirmed trade ticket and
satisfactory confirmation of the Security Agent's interest in such
Mortgage-backed Securities.
5.14 Fees. Prior to the making of an Advance, the Borrower shall have
paid all Fees then due and payable to the Lender and the Agent.
5.15 No Litigation. There shall be no judgment, order, injunction or
other restraint which shall prohibit or impose, and no litigation pending or
threatened against or affecting the Borrower or any of its Subsidiaries which,
in the opinion of the Lender or the Agent, would prohibit or result in the
imposition of materially adverse conditions upon, the financing contemplated
hereby, or otherwise have a material adverse effect on the business, operations,
property, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries.
5.16 Liquidity Agreement. The Liquidity Agreement shall be in full
force and effect and the Lender shall have obtained sufficient funds to permit
it to make such Advance through the issuance of Commercial Paper as provided in
the Liquidity Agreement or through the borrowing of such funds from the
Liquidity Lenders.
5.17 Acknowledgment. On or prior to the Initial Borrowing Date, the
Borrower shall have executed and delivered to the Agent an Acknowledgment of
Collateral Agent's Rights substantially in the form of Exhibit H pursuant to
which the Borrower shall have acknowledged that all of the right, title and
interest of the Lender in and to this Agreement, the Note and the Collateral has
been pledged and assigned to, and will be enforceable by, General Electric
Capital Corporation, as Collateral Acent for the secured parties under the
▇▇▇▇▇▇ River Security Agreement.
5.18 Legal or Regulatory Proceedings. On or prior to the Initial
Borrowing Date, the Borrower shall have delivered to the Agent certificates of
the principal shareholders and senior officers of the Borrower, in substantially
the form of Exhibit F-2, with respect to certain legal and regulatory
proceedings relating to such persons.
25
5.19 Intercreditor Agreement. On or prior to September 30, 1998, the
Lender shall have received from the Borrower an lntercreditor Agreement
substantially in the form of Exhibit J hereto, duly executed by the Borrower and
each of the Borrower's then current warehouse lenders (as modified, supplemented
or amended from time to time, the "Intercreditor Agreement").
5.20 Treatment of Existing Liens. Within ten (10) days after the
Initial Borrowing Date, the Borrower shall have delivered to the Agent for
filing a proper amendment to financing statement (Form UCC-3) duly executed by
Eastern National Bank, evidencing the amendment of the original financing
statement filed by such lender to make clear that the collateral covered by such
financing statement does not include any of the Collateral.
The acceptance of the benefits of each Advance shall constitute a
representation, and warranty by the Borrower to the Lender that all the
conditions specified in Sections 5.02, 5.08, 5.10 and 5.15 exist as of that
time. All of the Note, certificates and other documents and papers referred to
in this Section 5, unless otherwise specified, shall be delivered to the Agent
at the Office for the account of the Lender and shall be reasonably satisfactory
in form and substance to the Agent.
Section 6. Representations. Warranties and Agreements.
-------------------------------------------
In order to induce the Lender to enter into this Agreement and to make
the Advances, the Borrower makes the following representations, warranties and
agreements as of the Effective Date, all of which shall survive the execution
and delivery of this Agreement and the Note and the making of the Advances (with
the execution and delivery of this Agreement and the making of each Advance
thereafter being deemed to constitute a representation and warranty that the
matters as specified in this Section 6 are true and correct in all respects on
and as of the date hereof and as of the date of such Advance, unless stated to
relate to a specific earlier date):
6.01 Corporate Status. Each nf the Borrower and its Subsidiaries (i) is
a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, (ii) has the power and authority
to own its property and assets and to transact the business in which it is
engaged and (iii) is duly qualified as a foreign corporation and in good
standing in each jurisdiction where the ownership, leasing or operation of
property or the conduct of its business requires such qualification.
6.02 Corporate Power and Authority. The Borrower has the corporate
power to execute, deliver and perform the terms and provisions of each of the
Credit Documents and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each of such Credit Documents. The
Borrower has duly executed and delivered each of the Credit Documents, and each
of such Credit Documents constitutes its legal, valid and binding obligation
enforceable in accordance with its terms.
6.03 No Violation. Neither the execution, delivery or performance by
the Borrower of the Credit Documents, nor compliance by it with the terms and
provisions thereof, (i) will contravene any provision of any law, statute, rule
or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
26
result in any breach of any of the material terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien other than a Lien
permitted pursuant to Section 8.01 upon any of the property or assets of the
Borrower pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other agreement, contract or instrument to
which the Borrower is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws of the Borrower.
6.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any Governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any such Credit Document.
6.05 Financial Statements: Financial Condition; Undisclosed
Liabilities; etc. (a) The consolidated and consolidation balance sheet of the
Borrower and its Consolidated Subsidiaries and the related consolidated and
consolidating statements of income and retained earnings and statements of cash
flows of the Borrower and its Consolidated Subsidiaries furnished to the Lender
in accordance with Section 5.07 hereof present fairly the consolidated and
consolidating financial condition of the Borrower and its Consolidated
Subsidiaries at the dates of such balance sheets and the consolidated and
consolidating results of the operations of the Borrower and its Consolidated
Subsidiaries for the fiscal periods covered by such statements of income and
retained earnings and statements of cash flows. All such financial statements
have been prepared in accordance with generally accepted accounting principles
and practices in the United States consistently applied. Since May 31, 1998
there has not been any material adverse change in the business, operations,
property, assets, condition (financial or otherwise) or prospects of the
Borrower.
(b) Except as fully reflected on the financial statements referred to
in Section 6.05(a), there will be as of the Effective Date no liabilities or
obligations with respect to the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would be
material to the Borrower or to the Borrower and its Subsidiaries taken as a
whole.
6.06 Litigation. There are no actions, suits or proceedings pending or
threatened (i) with respect to any Credit Document or (ii) that could materially
and adversely affect the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower.
6.07 True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
to the Lender or the Agent (including, without limitation, all information
contained in the Credit Documents) for purposes of or in connection with this
Agreement, the Warehouse Security Agreement or any transaction contemplated
herein or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of the Borrower to the Lender or the Agent
will be, true and accurate in all material respects on the date furnished to the
Lender or the Agent and not
27
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
6.08 Use of Proceeds; Margin Regulations. All proceeds of each Advance
will be used by the Borrower for the financing of the Borrower's mortgage
lending business; provided that no part of the proceeds of any Advance will be
used by the Borrower to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Advance nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. The Borrower and each of its
Subsidiaries has filed all tax returns required to be filed by it and has paid
all income taxes payable by it which have become due pursuant to such tax
returns and all other taxes and assessments payable by it which have become due,
other than those not yet delinquent and except for those contested in good faith
and for which adequate reserves have been established. The Borrower and each of
its Subsidiaries has paid, or has provided adequate reserves (in the good faith
judgement of the management of the Borrower or such Subsidiary, as the case may
be) for the payment of, all federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the date hereof.
6.10 Compliance with ERISA. Each Plan is in substantial compliance with
ERISA and the Code; no Reportable Event has occurred with respect to a Plan; no
Plan is insolvent or in reorganization, no Plan has an Unfunded Current
Liability, and no Plan has an accumulated or waived funding deficiency or
permitted decreases in its funding standard account within the meaning- of
Section 412 of the Code; neither the Borrower nor any ERISA Affiliate of the
Borrower has incurred any material liability to or on account of a Plan pursuant
to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code or expects to incur any liability
under any of the foregoing sections on account of the termination of,
participation in or contributions to any such Plan; no proceedings have been
instituted to terminate any Plan; no condition exists which presents a material
risk to the Borrower or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
Lien imposed under the Code or ERISA on the assets of the Borrower exists or is
likely to arise on account of any Plan; and the Borrower may terminate
contributions to any other employee benefit plans maintained by it without
incurring any material liability to any Person interested therein.
6.11 Capitalization. Set forth on Schedule 6.11 is an accurate and
complete list of all Persons who own 5% or more of the voting stock of the
Borrower, together with the percentage ownership of each. All outstanding shares
of the Borrower's capital stock have been duly and validly issued, are fully
paid and non-assessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock
except as set forth on Schedule 6.11 hereto.
28
6.12 Subsidiaries. Set forth on Schedule 6.12 is an accurate and
complete list of all Subsidiaries of the Borrower, together with a brief
description of the business of each such Subsidiary.
6.13 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliances as would not (i) in the aggregate,
have a material adverse effect on the business, operations, property, assets,
condition (financial or otherwise) or prospects of the Borrower and (ii) affect
in any respect the validity or enforceability of any Credit Document or the
Security Agent's rights in the Collateral.
6.14 Investment Company Act. Neither the Borrower nor any Subsidiary of
the Borrower is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
6.15 No Burdensome Agreement. Neither of the Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or corporate restriction
which by its terms would have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the Borrower or
such Subsidiary or on the ability of the Borrower to carry out its obligations
under the Note or the other Credit Documents to which it is a party.
6.16 Security Interests. The Warehouse Security Agreement creates, as
security for the Obligations, valid and enforceable security interests in and
Liens on all of the Collateral in favor of the Security Agent on behalf of the
Lender which are perfected and superior and prior to the rights of all third
Persons and subject to no other Liens (other than Liens permitted pursuant to
Section 8.01). The Borrower has, or will have at the time of pledge thereof,
good and marketable title to all of the Collateral, free and clear of all Liens
except those described in the preceding sentence.
6.17 Registration. The Borrower currently is, and will be at all times
at which any Advance is outstanding hereunder, licensed, registered, approved,
qualified or otherwise authorized in good standing to the extent required under
applicable law, as a mortgage banker, mortgage broker, real estate broker,
servicer of mortgage loans or otherwise in each jurisdiction in which the
conduct of its business requires such licensing, registration, approval,
qualification or other authorization, including, without limitation, as
applicable, as a (i) GNMA approved seller and/or servicer of Mortgage Loans and
issuer of Mortgage-backed Securities guaranteed by GNMA, (ii) FNMA approved
seller and/or servicer of Mortgage Loans, eligible to originate, purchase, hold,
sell and service Mortgage Loans to be sold to FNMA, (iii) FHLMC approved seller
and/or servicer of Mortgage Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to FHLMC, (iv) lender in good standing
under the VA loan guaranty program eligible to originate, purchase, hold, sell
and service VA Loans, (v) HUD approved lender, eligible to originate, purchase,
hold, sell and service FHA Loans and (vi) licensed mortgage banker in each state
in which it originates Mortgage Loans. All appraisers providing services in
connection with
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the origination of Mortgage Loans by the Borrower have all licenses,
registrations, approvals and qualifications required by all applicable laws or
regulations.
6.18 Representations Relating to the Mortgage Loans. (a) At all times
during which a Mortgage Loan is pledged as Collateral for Advances hereunder,
such Mortgage Loan will (i) be an FHA Loan, a VA Loan, a Conforming Loan, a
Jumbo Loan, a State Loan, a Credit A- Loan, a Credit B Loan, a Credit C Loan or
a Credit D Loan; (ii) be an Eligible Mortgage Loan or an Eligible Nonconforming
Mortgage Loan and be free of any default and the Borrower will have had no
notice of any event which has occurred which may, with the passage of time or
the giving of notice, or both, become a default; (iii) comply with the terms of
this Agreement and with the relevant Purchase Commitment and/or Master
Commitment, if any; (iv) be a legal, valid and binding obligation of the
mortgagor and the mortgagee thereunder enforceable in accordance with its terms
and subject to no offset, defense or counterclaim, obligating such mortgagor to
make the payments specified therein, and each FHA Loan and each VA Loan will be
fully eligible for, and the Borrower will have complied with all applicable
requirements of law, rule or regulation in respect of, FHA insurance or VA
guaranty, respectively; (v) if such Mortgage Loan is an Eligible Nonconforming
Mortgage Loan, be subject to a Purchase Commitment, or if such Mortgage Loan is
an Eligible Mortgage Loan, be subject to a Purchase Commitment or Hedging
Contract or, if it is a Mortgage Loan that bears interest at an adjustable rate,
a Master Commitment which Purchase Commitment or Master Commitment is a legal,
valid and binding obligation of the Investor party thereto, is enforceable
against such Investor in accordance with its terms, and, except as is otherwise
notified in writing by the Borrower to the Lender and Agent, permits the
assignment thereof to the Security Agent; (vi) be owned by the Borrower and be
subject to no Lien or claim whatsoever, either legal or equitable, other than
that granted to the Security Agent for the benefit of the Lender; (vii) be fully
disbursed, the final disbursement to the mortgagor in connection therewith
having been made no more than 30 days prior to the date of pledge if such
disbursement was made by the Borrower (unless such Mortgage Loan is delivered as
Collateral securing the initial Advance made to the Borrower hereunder); (viii)
not be modified (except as to correction of clerical or scrivener errors),
amended, superseded or otherwise subject to any other agreement or contract of
any kind with the relevant mortgagor under such Mortgage Loan except to the
extent such amendment, modification or other agreement or contract has been
disclosed in writing to the Security Agent by the Borrower at the time of the
pledge and does not affect the salability of such Mortgage Loan pursuant to any
applicable Master Commitment or Purchase Commitment; (ix) be a valid first or
second lien on the mortgaged premises subject thereto; (x) if required by the
Investor, have a title insurance policy or binder, in ALTA form satisfactory to
the Agent insuring the priority of the Borrower's first or second lien therein
subject only to (1) the lien of the related first mortgage, if any, (2) the lien
of current real property taxes and assessments, (3) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as of
the date of recording of the related mortgage or deed of trust, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
in the area wherein the property subject thereto is located and (4) other
matters to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
related mortgage or deed of trust and (xi) not have been selected for pledge
hereunder utilizing procedures, other than those necessary to comply with the
representations and warranties set forth herein, which are adverse to the
interests of the Lender.
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(b) At the time of the pledge of each Mortgage Loan, the Borrower will
have received with respect to each such Mortgage Loan (i) a hazard insurance
policy with a standard mortgage clause in a form satisfactory to the Agent and
with extended coverage in an amount which is at least equal to the maximum
insurable value of the improvements securing such Mortgage Loan from time to
time or the principal balance owing on such Mortgage Loan, whichever is less and
(ii) a policy, or other satisfactory evidence, of flood insurance or
satisfactory documentation to demonstrate that the mortgaged premises are not
located in a special flood hazard area. Such documentation will be retained in
the Borrower's files relating to such Mortgage Loan.
(c) With respect to each Mortgage Loan pledged to the Security Agent,
the Borrower has fully complied with, and will fully comply with, or the
original mortgage thereof has fully complied with and will fully complete with,
(A) all applicable state and federal laws and regulations, including but not
limited to (i) the Real Estate Settlement Procedures Act of 1974, (ii) the Equal
Credit Opportunity Act, (iii) the Federal Truth in Lending Act and Regulation Z
of the Board of Governors of the Federal Reserve System, (iv) any laws requiring
persons providing appraisals of property values to be properly licensed, and (v)
all other usury, disclosure, consumer credit protection or truth-in-lending laws
which may apply, and in each such case with all regulations promulgated in
connection therewith as the same may be from time to time amended and will
maintain sufficient documentary evidence in its file to substantiate such
compliance (including, without limitation, delivery of all necessary disclosure
statements) and (B) all of the terms and provisions of such Mortaage Loan and of
any contractual escrow arrangements applicable thereto.
6.19 Representations Relating to the Mortgage-backed-Securities. At the
time a Mortgage-backed Security is pledged as Collateral, such Mortgage-backed
Security will be (i) an Eligible Mortgage Loan free of any default, (ii) subject
to a Purchase Commitment which is a legal, valid and binding obligation of the
Investor party thereto, is enforceable against such Investor in accordance with
its terms, permits the assignment thereof to the Security Agent and the
Collateral Acent and may be enforced against such Investor by the Security Agent
or the Collateral Agent, (iii) comply with all of the terms of such Purchase
Commitment, (iv) a legal, valid and binding obligation of the issuer thereof
enforceable in accordance with its terms, and (v) subject to no Lien or claim
whatsoever, either legal or equitable, other than that granted to the Security
Agent for the benefit of the Lender and the interest of the Investor under the
related Purchase Commitment.
6.20 Insurance. The Borrower has blanket fidelity bond coverage and
errors and omissions insurance coverage in such form, with such companies and
in such amounts as are in accordance with standards and requirements
satisfactory to the applicable Investor and the Agent.
6.21 Title to Property. The Borrower has good and marketable title to
all of its property, the value of which is included in the financial statements
delivered pursuant hereto, subject to no Liens, encumbrances or claims other
than those disclosed on such financial statements.
6.22 No Recourse Sales. No commitment or other contractual arrangement
pursuant to which the Borrower has sold or currently has a right to sell
Mortgage Loans to a third party
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provides for any recourse to the Borrower except in the event of a breach of
representations or warranties made in connection with such sale.
6.23 Fictitious Names. Neither the Borrower nor any Subsidiary of the
Borrower operates or does business under any assumed, trade or fictitious name,
except as set forth on Schedule 6.23.
Section 7. Affirmative Covenants.
The Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the Agent
(unless otherwise indicated):
(a) Monthly Financial Statements. Within 30 days after the close of
each monthly accounting period of the Borrower, the consolidated
statements of financial condition of the Borrower and its Consolidated
Subsidiaries as at the end of such period, and the related consolidated
statements of income and retained earnings and statements of cash flows
for such period and for the elapsed portion of the fiscal year ended
with the last day of such period, setting forth comparative figures for
the related periods in the prior fiscal year, all of which shall be in
form and substance satisfactory to the Agent and certified as to
fairness of presentation by the Chief Financial Officer of the
Borrower, subject to normal year-end audit adjustments and accompanied
by a certificate from such financial officer to the effect that no
Default or Event of Default has occurred and is continuing.
(b) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Borrower, the consolidated and consolidating
statements of financial condition of the Borrower and its Consolidated
Subsidiaries as at the end of such fiscal year, and the related
consolidated and consolidating statements of income and retained
earnings and statements of cash flows for such fiscal year, in form and
substance satisfactory to the Agent and setting forth comparative
figures for the preceding fiscal year and certified, in the case of the
consolidated financial statements, by independent certified public
accountants reasonably acceptable to the Agent, together with a report
of such accounting firm stating that its regular audit of the financial
statements of the Borrower was conducted in accordance with generally
accepted auditing standards.
(c) Management Letters. Promptly, and in no event later than five
days, after receipt by the Borrower thereof, a copy of any "management
letter" received by the Borrower from its certified public accountants
detailing any "material weaknesses in internal control" noted by such
accountants (as defined by the Financial Accounting Standards Board).
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.01(a) and (b), a
certificate of the Chief Financial Officer of the
32
Borrower to the effect that, to the best of his knowledge, no Default
or Event of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing, specifying the
nature and extent thereof and any actions taken or proposed to be
taken to cure any such Default or Event of Default, which certificate
shall set forth the calculations required to establish whether the
Borrower was in compliance with the provisions of Sections 8.08 and
8.09, at the end of such month or fiscal year, as the case may be.
(e) Notice of Default. Promptly (and in no event later than one
Business Day following the occurrence thereof), notice of (i) the
occurrence of any event which constitutes a Default or Event of
Default, detailing the nature of such Default or Event of Default and
any actions taken or proposed to be taken to cure such Default or Event
of Default, (ii) the commencement of any action, suit or proceeding
against the Borrower or any of its Subsidiaries before any court,
arbitrator or governmental department, commission, board, bureau,
agency or instrumentality which (A) could result in liability or loss
of $250,000 or more, in excess of any applicable insurance coverage to
the Borrower or such Subsidiary, as the case may be, or (B) would
otherwise materially adversely affect the management or the condition
or operations (financial or otherwise) of the Borrower or any of its
Subsidiaries, (iii) any change in any executive or financial officer of
the Borrower, (iv) any change in ownership of the voting stock of the
Borrower or (v) any loss or threatened loss of any authorization,
qualification, license or permit issued by any governmental or
regulatory authority to the Borrower or any of its Subsidiaries the
loss of which could have a material adverse effect upon the financial
condition or business of the Borrower or any of its Subsidiaries.
(f) Reports Relating to Collateral. In respect of the Collateral,
bi-weekly or more frequently as Agent may, from time to time, request a
position valuation report from the Borrower in a form acceptable to the
Agent (the "Position Valuation Report").
(g) Monthly Servicing Reports. Within 30 days after the close of each
calendar month in which the Borrower owns a Servicing Portfolio, a
consolidated report of the Borrower providing a summary, for all
Mortgage Loans the servicing rights to which are owned by the Borrower,
regardless of whether such Mortgage Loans are pledged to the Lender, of
(i) the entities that own such Mortgage Loans, (ii) the original terms
of such Mortgage Loans and whether such Mortgage Loans bear interest at
a fixed rate or an adjustable rate, (iii) the weighted average interest
rate and the weighted average net servicing fee with respect to such
Mortgage Loans, (iv) whether any such Mortgage Loans were sold by the
Borrower with recourse and the nature of such recourse, (v) which of
such Mortgage Loans (A) are current and in good standing, (B) are more
than 30, 60 or 90 days past due, respectively, (C) are the subject of
pending litigation, bankruptcy or foreclosure proceedings, and (D) have
been converted (through foreclosure or other proceedings in lieu
thereof) by the Borrower into real estate owned by the Borrower, and
(vi) any reserves established by the Borrower for losses in respect of
delinquent Mortgage Loans or real estate owned by the Borrower.
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(h) Other Reports and Filings. Promptly, and in any event within 10
days following the filing thereof, copies of all financial information,
proxy materials and other information and reports, if any, which the
Borrower shall file with the Securities and Exchange Commission or any
governmental agencies substituted therefor.
(i) Servicing Transactions. (i) Promptly, and in any event within 10
days following the execution thereof, copies of any agreements executed
by the Borrower which provide for the sale by the Borrower to an
Investor of the rights to service any Mortgage Loan, which sale is
separate from the sale of the related Mortgage Loan, pledged to the
Security Agent pursuant to the terms of this Agreement and the
Warehouse Security Agreement and (ii) written notice not less than 10
days prior to any purchase or sale of mortgage servicing rights or any
other transaction which would result in greater than a 10 percent
increase or decrease in the aggregate unpaid principal balance of all
Mortgage Loans included in the Servicing Portfolio of the Borrower.
(j) Leases. Written notice not less than 10 days prior to any agreement
to rent or lease any real or personal property which would result in
aggregate payments thereunder by the Borrower (including, without
limitation, any property taxes paid as additional rent or lease
payments) in excess of $500,000.
(k) Capital Expenditures. Written notice not less than 10 days prior
to any agreement by the Borrower pursuant to which the Borrower intends
to make any expenditure for fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be
capitalized in accordance with generally accepted accounting principles
and including capitalized lease obligations) which will exceed
$1,000,000.
(1) Prepayments, Modification. Prior written notice of any (i)
voluntary or optional payment or prepayment on or redemption or
acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities
before due for the purpose of paying when due) any Existing
Indebtedness providing for repayment in installments or (ii) amendment
or modification of any provision affecting the term, principal amount,
applicable interest rate, financial covenants or collateral securing
any obligations of the Borrower under any Existing Indebtedness or any
agreement (including, without limitation, any purchase agreement,
indenture, loan agreement or security agreement) otherwise relating to
any of the foregoing.
(m) Commitment Default. Notice within 2 Business Days of any default
under, or of the termination, invalidation or cancellation of, any
Purchase Commitment or Master Commitment relating to any Mortgage Loan
or Mortgage backed Security constituting Collateral.
(n) Collateral Servicing Report. Within five (5) Business Days after
the end of each calendar month, a report detailing the identities of
the entities other than the Borrower, if any, servicing any Mortgage
Loans pledged as Collateral hereunder or which secure a Mortgage-backed
Security pledged as Collateral hereunder.
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(o) Other Information. Promptly, and in any event within five (5)
Business Days after the Borrower's receipt or filing thereof, (i)
copies of any notices or information given to or received from the
holders of any Indebtedness of the Borrower relating to any actual or
alle-ed default, demand for payment or acceleration of payment, or from
the PBGC or the United States Department of Labor in connection with
any matter arising with respect to ERISA, (ii) copies of all audits
completed by HUD, GNMA, FNMA, FHLMC or any other governmental agency or
Investor with respect to the Borrower, (iii) all Mortgage Bankers'
Financial Reporting Form Statement of Condition (designated as FHLMC
Form 1055 and FNMA Form 1002, respectively, and any successor thereto
or replacement thereof) (the "Mortgage Bankers' Reporting Forms") filed
by the Borrower with FHLMC or FNMA, (iv) copies of any uniform single
audit reports required or requested by FNMA or FHLMC, and (v) such
other information or documents (financial or otherwise) as the Agent or
the Lender may reasonably request.
(p) Credit Package Documents. Promptly upon the written request by
the Agent, to the extent available, each of the documents listed in
Schedule 7.01(p) (collectively, the "Credit Package Documents"), as
applicable.
7.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with generally accepted accounting
principles in the United States and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Agent or the Lender to visit and inspect any
of the properties of the Borrower or such Subsidiary, and to examine the books
of record and account of the Borrower or such Subsidiary and discuss the
affairs, finances and accounts of the Borrower or such Subsidiary with, and be
advised as to the same by, its and their officers, employees and independent
accountants, all at such reasonable times and intervals and to such extent as
the Agent or the Lender may request. Any such inspection and/or examination may
include an audit by the Agent of the servicing of the Collateral and the
Borrower's Servicing Portfolio and such procedures as the Agent deems
appropriate to confirm the reporting of Mortgage Loan balances.
7.03 Maintenance of Property, Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (i) keep all property necessary for the
operation of its business in good working order and condition, (ii) except as
otherwise provided in clause (iii) below, maintain with financially sound and
reputable insurance companies insurance (including such insurance as the Agent
or the Lender shall require) in at least such amounts and against at least such
risks as are customarily insured against by companies in the same or similar
business, (iii) maintain fidelity bond coverage and errors and omissions
insurance coverage in accordance with standards and requirements satisfactory to
the applicable Investor and the Agent and (iv) furnish to the Agent or the
Lender, upon written request, full information as to the insurance carried. The
provisions of this Section 7.03 shall be deemed to be supplemental to, but not
duplicative of, the provisions of any of the security documents that require the
maintenance of insurance.
35
7.04 Corporate Franchises. The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, qualifications, licenses, permits and patents; provided, however,
that nothing in this Section 7.04 shall prevent the withdrawal by the Borrower
or any of its Subsidiaries of its qualification as a foreign corporation in any
jurisdiction where such withdrawal could not have a material adverse effect on
the business, operations, property, assets, condition (financial or otherwise)
or prospects of the Borrower or such Subsidiary.
7.05 Compliance with Statutes, etc. The Borrower will, and will cause
each of its Subsidiaries and each appraiser, correspondent, broker or other
service provider that participates with the Borrower in the origination or
servicing of Mortgage Loans to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to (1) licensing or registration (as described in
Section 6.17 hereof) and (2) environmental standards and controls), except such
noncompliances as could not (i) adversely affect in any manner the legality,
validity or enforceability of any Mortgage Loan, Mortgage-backed Security,
Purchase Commitment or Hedging Contract or (ii) in the aggregate, have a
material adverse effect on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole.
7.06 ERISA. As soon as possible and, in any event, within 10 days after
the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has reason
to know any of the following, the Borrower will deliver to the Agent a
certificate of the Chief Financial Officer of the Borrower setting, forth
details as to such occurrence and such action, if any, which the Borrower, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by the
Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant
or the Plan administrator with respect thereto: that a Reportable Event has
occurred; that an accumulated funding deficiency has been incurred or an
application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a Lien under
ERISA; that proceedings may be or have been instituted to terminate a Plan; that
a proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; or that the Borrower, any of its Subsidiaries
or ERISA Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or with respect
to a Plan under Section 4971 or 4975 of the Code or Section 409, 502(i) or
502(l) of ERISA. The Borrower will deliver to the Agent a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Agent pursuant to the first sentence hereof, copies of annual reports and any
other notices received by the Borrower or any of its Subsidiaries required to be
delivered to the Agent hereunder shall be delivered to the Agent no later than
10 days after the later of the date such report or notice has been
36
filed with the Internal Revenue Service or the PBGC, given to Plan participants
or received by the Borrower or such Subsidiary.
7.07 Performance of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, indenture, security agreement and other debt instrument by which
it is bound, except such non-perfonnances as could not in the aggregate, have a
material adverse effect on the business, operations, property, assets, condition
(financial or otherwise) or, prospects of the Borrower or of the Borrower and
its Subsidiaries taken as a whole.
7.08 Mortgage Loans. (a) The Borrower will not modify or waive any
term of any pledged Mortgage Loan or release any security or obligor, if as a
result thereof such Mortgage Loan would become, nor cause, through any activity
or inactivity, a Mortgage Loan to become, ineligible for FHA insurance or VA
guaranty, if applicable, or for purchase in accordance with the relevant Master
Commitment or Purchase Commitment. The Borrower will notify the Agent of (i) any
payment default in respect of any pledged Collateral which has continued for 30
days, 60 days or 90 days, respectively, (ii) the occurrence of an Insolvency
Event in respect of an obligor on any Mortgage Loan pledged as Collateral, (iii)
the commencement of foreclosure or similar proceedings in respect of the
premises which secure any Mortgage Loan pledged as Collateral and (iv) any other
material default in any other term of any pledged Collateral, such notice to be
delivered not later than three (3) Business Days following the occurrence
thereof in the case of an event specified in clauses (i) or (iii) and promptly
upon the Borrower's receiving notice or otherwise becoming aware thereof in the
case of an event specified in clauses (ii) or (iv).
(b) All FHA Loans, and VA Loans will comply in all respects with all
applicable requirements for purchase under the applicable GNMA or FNMA standard
form of selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect. All Conforming Mortgage Loans will comply in
all respects with all applicable requirements for purchase under the applicable
FNMA or FHLMC selling contract for Mortgage Loans of such type and any
supplement thereto then in effect. All Jumbo Loans will comply in all respects
with all applicable requirements for purchase under any Purchase Commitment
relating thereto. All State Loans will comply in all respects with all
applicable requirements for purchase by the state agency or instrumentality that
issued a Purchase Commitment in respect thereof. All Eligible Nonconforming
Mortgage Loans will comply in all respects with all applicable requirements for
purchase under any Purchase Commitment relating thereto. All Mortgage Loans will
be serviced and administered in accordance with all requirements of any Investor
that has issued a Purchase Commitment or a Master Commitment applicable thereto.
7.09 Payment of Taxes. The Borrower will pay and discharge all taxes,
assessments and governmental charges or liens imposed upon the Borrower or upon
the Borrower's income or profits, or upon any properties belonging to the
Borrower, prior to the date on which any penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien upon any such property.
37
7.10 Corporate Separateness. The Borrower will, and will cause each of
its Subsidiaries to, take such actions as are necessary to keep its operations
and the operations of each of its Subsidiaries separate and apart from each of
the other's, including, without limitation, insuring that all customary
formalities regarding the corporate existence of the Borrower and each such
Subsidiary, including holding regular meetings and maintenance of its current
minute books, are followed.
7.11 Collateral. The Borrower will (a) warrant and defend the right,
title and interest of the Lender and the Security Agent in and to the Collateral
against the claims and demands of all persons whomsoever; (b) service, or cause
to be serviced, all Mortgage Loans in accordance with the requirements of the
issuers of Master Commitments and Purchase Commitments covering the same and all
applicable FHA and VA requirements (including without limitation taking all
actions necessary to enforce the obligations of the obligors under such Mortgage
Loans) and service, or cause to be serviced, all Mortgage Loans backing
Mortgage-backed Securities in accordance with applicable governmental
requirements and the requirements of issuers of Purchase Commitments covering
the same; (c) hold all escrow funds collected in respect of Mortgage Loans and
mortgage loans backing Mortgage-backed Securities in trust, without commingling
the same with noncustodial funds, and apply the same for the purposes for which
such funds were collected; (d) comply in all respects with the terms and
conditions of all Master Commitments and Purchase Commitments, and all
extensions, renewals and modifications or substitutions thereof or thereto, and
deliver or cause to be delivered to the applicable Investor the Mortgage Loans
and Mortgagebacked Securities to be sold under each Purchase Commitment not
later than three (3) Business Days prior to the expiration thereof; and (e)
maintain, and, upon request, shall make available to the Lender, the Agent or
the Security Agent the originals, or copies in any case where the original has
been delivered to the Security Agent or to an Investor, of its Mortgage Notes,
Mortgages, Purchase Commitments, Master Commitments, Hedging Contracts and all
related Mortgage Loan documents and instruments, and all files, surveys,
certificates, correspondence, appraisals, computer programs, tapes, discs,
cards, accounting records and other information and data relating to the
Collateral.
7.12 Portfolio Hedging Arrangements. The Borrower will enter into and
maintain from time to time Hedging Contracts with respect to Mortgage Loans held
by it and commitments made by it to prospective Mortgage Loan obligors to extend
Mortcage Loans at specified rates of interest.
7.13 Borrowing Base Valuation Reports. The Agent will prepare and
deliver to the Borrower weekly, or more frequently as the Agent may from time to
time determine, a report with respect to all Eligible Mortgage Loans, Eligible
Nonconforming Mortgage Loans and Liquid Assets pledged to the Security Agent as
of such date (a "Borrowing Base Valuation Report"). Unless the Borrower shall,
within 24 hours after receiving any such Borrowing Base Valuation Report, notify
the Agent that the Borrower disagrees with the information contained therein,
the Borrower shall be deemed to have certified to the Agent that, as of the date
of the Borrowing Base Valuation Report: (a) the calculations contained therein
are accurate and have been prepared in accordance with the terms and conditions
of the Warehouse Credit Agreement; and (b) no prepayment is required under the
terms of Section 4.02 of the Warehouse Credit Agreement.
38
7.14 Year 2000 Compliance. On or before October 31, 1999, the Borrower
shall eliminate all problems or limitations on the capacity or readiness of the
Borrower's system, network, applications, data base and computer file software
and related software (including information processing and delivery systems of
any kind and telecommunications systems and other communications processors and
security systems) to accurately process (including, but not limited to,
calculating, comparing and sequencing) calendar date information with respect to
calendar year 1999 or any subsequent calendar year beginning on or after January
1, 2000 (including leap year calculations), except where the failure to correct
the same could not reasonably be expected to have a material adverse impact on
the financial condition, operations or prospects of the Borrower.
Section 8. Negative Covenants.
-------------------
The Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full, without the
prior written consent of the Lender:
8.01 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to (i) any Collateral, or (ii) any portion of the Servicing Portfolio of
the Borrower or any Subsidiary; provided that the provisions of this Section
8.01 shall not prevent the creation, incurrence, assumption or existence of:
(a) Liens for taxes not yet due, or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves
have been established;
(b) Liens created pursuant to the Warehouse Security Agreement; and
(c) Liens in favor of FNMA, GNMA or FHLMC on the right of the Borrower
to service Mortgage Loans sold to such agencies.
8.02 Consolidation, Merger, Sale of Assets, etc. The Borrower will
not, and will not permit any of its Subsidiaries which are engaged in the
mortgage banking business to, wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation (except a merger or
consolidation in which the Borrower is the surviving corporation), or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any part of its property or assets (including, but not
limited to, any rights to service Mortgage Loans in such Person's Servicing
Portfolio), without the prior approval of the Lender or the Agent, except that
the Borrower and its Subsidiaries may, in the ordinary course of business, (1)
sell equipment which is uneconomic or obsolete and (ii) acquire Mortgage Loans
for resale and sell Mortgage Loans and Mortgage-backed Securities.
8.03 Dividends. (a) Upon the occurrence and during the continuance of
any Default or Event of Default (determined after giving effect to any proposed
action of the Borrower), the Borrower will not, and will not permit any of its
Subsidiaries to, declare or pay any dividends, or
39
return any capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any options or warrants issued by the Borrower or by
such Subsidiary with respect to its capital stock), or set aside any funds for
any of the foregoing purposes, or permit any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of the Borrower or such Subsidiary now or hereafter outstanding (or any
options or warrants issued by the Borrower or such Subsidiary with respect to
its capital stock), except that any Subsidiary may pay dividends to the Borrower
or to any Wholly-Owned Subsidiary of the Borrower.
(b) The Borrower will not at any time declare or pay any dividends, or
return, any capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any options or warrants issued by the Borrower with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock of the Borrower now
or hereafter outstanding (or any options or warrants issued by the Borrower with
respect to its capital stock), or pay any special distributions or bonuses not
in the ordinary course of business to any officer or employee that owns capital
stock of the Borrower, if after giving effect thereto the Adjusted Tangible Net
Worth of the Borrower would be less than the amount required by Section 8.09
hereof.
8.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except (i) Indebtedness of the Borrower incurred under the Credit
Documents, (ii) Indebtedness listed on Schedule 8.04(ii) ("Existing
Indebtedness"), (iii) Indebtedness in an aggregate amount not in excess of
$250,000 incurred to finance the acquisition by the Borrower of assets other
than Collateral and secured solely by such assets, (iv) accrued expenses and
current trade accounts payable incurred in the ordinary course of business by
the Borrower, or any of its Subsidiaries, which are to be repaid in full not
more than one year after the date on which such Indebtedness is originally
incurred, and (v) Indebtedness incurred by any Subsidiary of the Borrower which
is not engaged in the mortgage banking business, so long as the Borrower is not
obligated thereon; provided that the Borrower and its Subsidiaries shall not be
permitted to incur any Indebtedness otherwise permitted under this Section 8.04
so long as any Default or Event of Default has occurred and is continuing or if
a Default or Event of Default would occur as a result of the incurrence of any
such Indebtedness.
8.05 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make anv capital contribution to, any other Person,
except for:
(a) Mortgage Loans or other loans extended in the ordinary course of
the Borrower's or any Subsidiary's mortgage banking business; or
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(b) cash, Cash Equivalents and Mortgage-backed Securities.
8.06 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate; provided, however, that the Borrower will
not, and will not permit any of its Subsidiaries to:
(a) use, furnish, or rely upon an insurance policy (including but not
limited to, title insurance and hazard insurance) underwritten by or
issued by any Affiliate of the Borrower;
(b) use, furnish, or rely upon an appraisal issued by any Affiliate or
by any Person controlled by any Affiliate of the Borrower except with
respect to FHA Loans, VA Loans or State Loans; or
(c) pledge any Mortgage Loan to the Lender under which the Borrower or
any Affiliate thereof is a mortgagor or Guarantor for such Mortgage
Loan.
8.07 Capital Expenditures. The Borrower will not, and will not permit
any of its Subsidiaries to, make any expenditure for fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted accounting
principles and including capitalized lease obligations) other than such
expenditures made in the ordinary course of such Person's business in an amount
not in excess of $500,000.
8.08 Maximum Adjusted Leverage Ratio. The Borrower will not permit its
Adjusted Leverage Ratio at any time during any fiscal year to be greater than 15
to 1.
8.09 Minimum Adjusted Tangible Net Worth. The Borrower will not permit
its Adjusted Tangible Net Worth at any time during any fiscal year to be less
than $8,000,000.
8.10 [Intentionally Omittedl
8.11 Modifications of Certificate of Incorporation, By-Laws, Certain
Other Agreements and Collateral. The Borrower will not, without prior written
notice to the Lender, amend, modify or change its certificate of incorporation
(including, without limitation, by the filing or modification of any certificate
of designation) or by-laws, or any agreement entered into by it, with respect to
its capital stock, or enter into any new agreement with respect to its capital
stock. The Borrower will not, without the prior written consent of the Lender,
amend, modify or waive any of the terms of, or settle or compromise any claim
with respect to, any Collateral or any Collateral Document.
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8.12 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Subsidiary to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the
Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or (c) transfer any of its properties or assets to the Borrower, except
for such encumbrances or restrictions existing under or by reasons of (i)
applicable law, (ii) this Agreement and (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of the
Borrower or any Subsidiary of the Borrower.
8.13 Limitation on Issuances of Capital Stock by Subsidiaries. The
Borrower will not permit any of its Subsidiaries to issue any capital stock
(including by way of sales of treasury stock or any options or warrants to
purchase, or securities convertible into, capital stock, except for (i)
transfers and replacements of then outstanding shares of capital stock and (ii)
stock splits, stock dividends and similar issuances which do not decrease the
percentage ownership of the Borrower or any of its Subsidiaries in any class of
the capital stock of such Subsidiary.
8.14 Business. The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
business in which the Borrower or such Subsidiary, respectively, is engaged on
the Effective Date.
8.15 Portfolio Aging. The Borrower will not at any time permit the
aggregate principal amount of the Eligible Mortgage Loans then pledged as
Collateral that have an Origination Date that is more than 60 days prior to such
time, to exceed 0% of the aggregate principal amount of all Eligible Mortgage
Loans that are pledged as Collateral at such time and will not at any time
permit the aggregate principal amount of the Eligible Nonconforming Mortgage
Loans then pledged as Collateral that have an Origination Date that is more than
60 days prior to such time to exceed 0% of the aggregate principal amount of all
Eligible Nonconforming Mortgage Loans that are pledged as Collateral at such
time.
8.16 Minimum Current Ratio. The Borrower will not permit its Current
Ratio to be less than 1.0 to 1.0 at any time during any fiscal year.
Section 9. Events of Default.
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Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when due
of any principal of any Advance or (ii) default, and such default shall continue
unremedied for 3 or more days, in the payment when due of any interest on any
Advance or any Fees or any other amount owing hereunder or under any Credit
Document; or
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9.02 Representations, etc. Any representation, warranty or statement
made or deemed made by the Borrower herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto or to the Agent as part of
the Agent's due diligence review of the Borrower shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
9.03 Covenants. The Borrower shall (i) default in the due performance
or observance by it of any term, covenant or agreement contained in Sections
7.01(e), 7.04, 7.05, 7.06, 7.07, 7.08 or 8 or (ii) default in the due
performance or observance by it of any term, covenant or agreement contained in
this Agreement (other than those referred to in Sections 9.01 and 9.02 and
clause (i) of this Section 9.03) and such default shall continue unremedied for
a period of 15 days after written notice thereof from the Agent or the Lender to
the Borrower; or
9.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment of any Indebtedness pursuant to
which the Borrower is obligated in any manner (other than the Obligations)
beyond the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness (other than the Obligations) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity; or (b) any Indebtedness
(other than the Obligations) of the Borrower or any Indebtedness of its
Subsidiaries pursuant to which the Borrower is obligated in any manner shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment or as a mandatory prepayment (unless
such required prepayment or mandatory prepayment results from a default
thereunder or an event of the type that constitutes an Event of Default), prior
to the stated maturity thereof; or
9.05 Default Under Agreements With Agent. The Borrower, or any of its
Subsidiaries, shall default under any contract, agreement or arrangement between
the Borrower, or such Subsidiary, and the Agent or any Affiliate of the Agent,
or the Borrower or such Subsidiary shall terminate, for any reason whatsoever
(other than the failure of any such Mortgage Loan to be funded to the obligor
thereunder), any commitment of the Agent or any Affiliate of the Agent to
purchase Mortgage Loans originated or owned by the Borrower or such Subsidiary;
or
9.06 Bankruptcy, etc. An Insolvency Event shall occur with respect to
the Borrower or any of its Subsidiaries; or
9.07 ERISA. Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code, any Plan is, shall have been or is likely to be terminated or the
subject of termination proceeding under ERISA, any Plan shall have an Unfunded
Current Liability, or the Borrower or any of its Subsidiaries or ERISA
Affiliates has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 501 (i), 501 (1),
43
515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of
the Code, and there shall result from any such event or events the imposition of
a Lien upon the assets of the Borrower or any of its Subsidiaries, the granting
of a security interest, or a liability or a material risk of incurring a
liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty
under Section 4971 of the Code, which lien, security interest, liability or
penalty, singly or in the aggregate exceeds $250,000; or
9.08 Warehouse Security Aizreement. The Warehouse Security Agreement or
any provision thereof shall cease to be in full force and effect, or shall cease
to give the Security Agent the Liens, rights, powers and privileges purported to
be created thereby, or the Borrower shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to the Warehouse Security Agreement; or
9.09 [Intentionally Omitted]
9.10 Management. The Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer or any other executive officer of the Borrower shall
cease to be actively involved in the management of the Borrower and its
Subsidiaries with substantially the same duties as currently performed and,
within 90 days thereafter, the Borrower shall have failed to replace such
individual with a substitute satisfactory to the Lender and the Agent; or
9.11 Judgements. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or fully covered by
insurance) of $250,000 or more, and all such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30 days after
the entry thereof; or
9.12 Material Adverse Change. A material adverse change shall occur in
the financial condition, operations or prospects of the Borrower; or any
material adverse action shall be taken by any state or federal regulatory body
or any court against the Borrower which may result in the loss of any agreement,
permit or license of the Borrower, or otherwise limit the business or operations
of the Borrower which loss or limitation would have a material adverse effect on
the financial condition, operations or prospects of the Borrower;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Lender shall, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, the Lender or
the holder of the Note to enforce its claims against the Borrower (provided-
that, if an Event of Default specified in Section 9.06 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Agent to the Borrower as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Commitment terminated, whereupon the Commitment of the Lender shall forthwith
terminate immediately and any Fees shall forthwith become due and payable
without any other notice of any kind; and (ii) declare the principal of and any
accrued interest in respect of all Advances and all Obligations to be, whereupon
the same shall become, forthwith due and payable
44
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
9.13 Default Not a Condition of a 120-Day Demand. Notwithstanding any
of the other terms of this Agreement, including, without limitation, the
preceding provisions of this Section 9, the Lender shall have the right to
demand payment of the outstanding Advances at any time, upon 120 days' prior
written notice to the Borrower, whether or not any Default or Event of Default
exists or the Expiry Date has occurred.
Section 10. The Agent.
10.01 Authorization and Action. The Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, to-ether with such powers as are reasonably incidental thereto. The
Lender hereby delegates to the Agent all of its powers hereunder.
10.02 Agent's Duties. The Agent shall follow its customary standards,
policies and procedures in performing its duties as Agent hereunder and in
performing such duties shall use that degree of care and attention that the
Agent exercises with respect to the administration of comparable financing
facilities that the Agent extends for its own account. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Agent under or in connection with
this Agreement (including, without limitation, the Agent's servicing,
administering or collecting Collateral as Security Agent pursuant to the
Warehouse Security Agreement), except for its or their own willful misconduct,
gross negligence or bad faith. Without limiting the generality of the foregoing,
the Agent: (i) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (ii) makes no warranty or representation to the
Lender and shall not be responsible to the Lender for any statements, warranties
or representations (whether written or oral) made by the Borrower in or in
connection with this Agreement; (iii) shall not be responsible to the Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, the Note, any other Credit Document, any Collateral
Document or any other instrument or document furnished pursuant hereto; and (iv)
shall incur no liability under or in respect of this Agreement by acting upon
any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
10.03 GE Capital Mortgage Services, Inc. and Affiliates. GE Capital
Mortgage Services, Inc. and its Affiliates may generally engage in any kind of
business with the Borrower, any of its Affiliates and any person who may do
business with or own securities of the Borrower or any of its Affiliates, all as
if GE Capital Mortgage Services, Inc. were not the Agent and without any duty to
account therefor to the Lender.
10.04 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lender and the Borrower; provided, that each
Rating Agency shall have confirmed in
45
writing that such resignation shall not result in a withdrawal or reduction of
the then current rating by such Rating Agency of the Commercial Paper. Upon any
such resignation, the Lender shall have the right to appoint a successor Agent,
subject to (i) the prior written approval of such successor Agent by each LOC
Provider and each Liquidity Lender and (ii) receipt of written confirmation from
each Rating Agency that such appointment shall not result in a withdrawal or
downgrading of the then current credit rating of the Commercial Paper. If no
successor Agent shall have been so appointed by the Lender or shall have
accepted such appointment within 15 days after the retiring Agent's giving of
notice of resignation, the Agent, on behalf of the Lender, may appoint a
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and from such time the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 10 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
Section 11. Miscellaneous.
11.01 Payment of Expenses; Indemnity. (a) Whether or not the
transactions contemplated hereby are consummated, in addition to the rights of
indemnification granted to the Indemnified Parties under Section 11.01(b)
hereof, the Borrower agrees to pay on demand all costs and expenses in
connection with the preparation, execution, delivery, modification, amendment,
administration and monitoring of the Credit Documents and the other documents to
be delivered thereunder (including the costs in respect of the perfection and
maintenance of the security interests and conducting due diligence with respect
to the Borrower and its business), including, without limitation, the fees and
out-of-pocket expenses of counsel for the Lender and the Agent, and of local
counsel who may be retained by the Lender and the Agent, with respect thereto
and with respect to advising the Lender and the Agent as to their rights and
remedies under the Credit Documents, and including all reasonable costs and
expenses in connection with the servicing and liquidation of the Collateral. The
Borrower further agrees to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, workout, legal
proceedings or otherwise) of the Credit Documents and the other documents to be
delivered thereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section 11.01
(a).
(b) (i) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for all fees, expenses or
increased costs payable by the Lender to any Liquidity Lender pursuant to the
Liquidity Agreement due to either (x) the effectiveness of or the introduction
of, or any change in, or in the interpretation of, any law or regulation or (y)
compliance by such Liquidity Lender with any guideline or request from any
central bank or other governmental authority or official (whether or not having
the force of law), which subjects such Liquidity Lender (A) to an increase in
the cost of making, funding or maintaining any loan or any commitment under the
Liquidity Agreement or (B) to make a payment calculated by reference to the
principal of, or interest on, such loan or such commitment made by such
Liquidity Lender.
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(ii) The Borrower shall reimburse the Lender upon demand (which demand
shall contain reasonable details thereof), for all fees, expenses or increased
costs payable by the Lender to any Liquidity Lender or any LOC Provider (the
Liquidity Lenders and the LOC Providers collectively referred to in this Section
11.01(b) as the "Financial Institutions" and, individually, as a "Financial
Institution") pursuant to the Liquidity Agreement or the Reimbursement
Agreement, respectively, due to either (x) the effectiveness of or the
introduction of, or any change in, or in the interpretation of, any law or
regulation or (y) compliance by any Financial Institution with any guideline or,
request from any central bank or other governmental authority or official
(whether or not having the force of law and including, in any event, any law,
regulation, interpretation, or guideline with respect to capital adequacy or
request in connection with any of the foregoing and any law, regulation,
interpretation, guideline or request contemplated by the report dated July, 1988
entitled "International Convergence of Capital Measurement and Capital
Standards" issued by the Basle Committee on Banking Regulations and Supervisory
Practices at the Bank for International Settlements) which has or would have the
effect of reducing the rate of return on the capital of such Financial
Institution, or any corporation controlling such Financial Institution, as a
consequence of its obligations under the Liquidity Agreement, the Reimbursement
Agreement or the Letters of Credit, as the case may be, to a level below that
which such Financial Institution, or such controlling corporation, could have
otherwise achieved but for such adoption, change or compliance (taking into
consideration such Financial Institution's, or the respective controlling
corporation's, policies with respect to capital adequacy) or which has or would
have the effect of increasing the amount of capital required or expected to be
maintained by such Financial Institution, or such controlling corporation, as a
consequence of its obligations under the Liquidity Agreement, the Reimbursement
Agreement or the Letters of Credit, as the case may be.
(iii) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for any increase in any sum
payable by the Lender to any Liquidity Lender under the Liquidity Agreement to
compensate such Liquidity Lender for deductions for Liquidity Taxes (as defined
below) applicable to such sum (including deductions for Liquidity Taxes
applicable to such increase in such sum) such that such Liquidity Lender shall
receive an amount equal to the sum it would have otherwise received had no such
deductions for Liquidity Taxes been made. As used in this Section 11.01 (b),
the term "Liquidity Taxes" shall mean any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities, with
respect to any sum payable under the Liquidity Agreement (but excluding taxes
that would not be imposed but for a connection between the Liquidity Lenders or
the Liquidity Agent (as the case may be) and the jurisdiction imposing such tax,
other than a connection arising by virtue of the activities of the Liquidity
Lenders or the Liquidity Agent (as the case may be) pursuant to or in respect of
the Liquidity Agreement or under any other Facility Document, including, without
limitation, the entering into, the loan of money or the extension of credit
pursuant to, the receipt of payments under, or the enforcement of, the Liquidity
Agreement or any other Facility Document).
(iv) The Borrower shall reimburse the Lender, upon demand (which demand
shall contain reasonable details thereof), for all costs or expenses payable by
the Lender under the Liquidity Agreement for any present or future stamp,
recording or documentary taxes or similar levies arising from any payment made
under the Liquidity Agreement or from the execution,
47
delivery or registration of, or otherwise with respect to, the Liquidity
Agreement or the promissory notes delivered by the Lender thereunder or from the
execution, delivery or registration of, or otherwise with respect to, the
Liquidity Agreement or such promissory notes.
(v) The Borrower shall reimburse the Lender, upon demand (which demand
shall contain reasonable details thereof), for any increase in any payment
payable by the Lender to any LOC Provider under the Reimbursement Agreement to
compensate such LOC Provider for deductions of LOC Taxes (as defined below) such
that such increase results in a yield to such LOC Provider (after payment of all
LOC Taxes) of interest or any other amounts payable under the Reimbursement
Agreement at the rates or in the amounts specified in the Reimbursement
Agreement. As used in this Section 11.01 (b), the term "LOC Taxes" shall mean
any present or future stamp or other taxes, levies, imports, duties, charges,
fees, deductions, withholdings or restrictions or conditions of any nature
whatsoever, now or hereafter imposed, levied, collected, withheld or assessed by
any jurisdiction or by any political subdivision or taxing authority thereof or
therein in respect of any payment made under the Reimbursement Agreement (but
excluding, in the case of each LOC Provider, any tax imposed on or measured by
the net income of such LOC Provider pursuant to the laws of any jurisdiction (or
any political subdivision or taxing authority thereof or therein) in which the
principal office of such LOC Provider is located).
(vi) The Borrower shall reimburse the Lender, upon demand (which demand
shall contain reasonable details thereof), for all indemnities payable by the
Lender to any placement agents or dealers for the Commercial Paper.
(vii) In the event the Lender enters into agreements for the making of
advances to one or more borrowers other than the Borrower, the Lender shall
allocate the liability for the costs, expenses and other amounts referred to in
clauses (i) through (vi), inclusive, of this Section 11.01(b) and Section
11.01(c) to the Borrower and each other borrower who has so agreed, provided
that if such costs, expenses or amounts are attributable to the Borrower or the
Credit Documents and not attributable to any other borrower, the Borrower
shall be solely liable for such costs, expenses and amounts.
(c) Without limiting any other rights which the Lender, the Agent, the
Security Agent, the LOC Providers, the Liquidity Lenders, the Collateral Agent,
the Depositary or any Affiliate of any thereof, as well as their respective
directors, officers, employees and agents (each, an "Indemnified Party") may
have hereunder or under applicable law, the Borrower hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses, damages,
expenses and liabilities (including reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "Indemnified Amounts") arising out
of, relating to or resulting from this Agreement, any other Facility Document,
any Mortgage Loan, Mortgage-backed Security or other Collateral or the use of
any proceeds of Advances, excluding, however, Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct (as determined by a final
judgment of a court of competent Jurisdiction) on the part of such Indemnified
Party or any Affiliate of such Indemnified Party which directly or indirectly
controls, is controlled by or is under common control with such Indemnified
Party or is a director or officer of such Indemnified Party or of an Affiliate
of such Indemnified Party. Without limiting or being limited by the foregoing,
the Borrower shall pay on
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demand to each Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from:
(i) the making of an Advance secured by a pledge of a Mortgage
Loan or Mortgage-backed Security which is not at the date of the
creation of such security interest an Eligible Mortgage Loan or
an Eligible Nonconforming Mortgage Loan or which thereafter
ceases to be an Eligible Mortgage Loan or an Eligible
Nonconforming Mortgage Loan;
(ii) reliance on any representation or warranty or statement made
or deemed made by the Borrower (or any of its officers) under or
in connection with any Credit Document which shall have been
incorrect when made;
(iii) the failure by the Borrower to comply with any applicable
law, rule or regulation with respect to any Collateral, or the
nonconformity of any Collateral with any such applicable law,
rule or regulation;
(iv) the failure to vest in the Security Agent under the
Warehouse Security Agreement a valid first priority security
interest in the Mortgage Loans, the Mortgage-backed Securities
and the other Collateral, except as otherwise permitted by this
Agreement;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with
respect to any Collateral, whether at the time of any Advance or
at any subsequent time;
(vi) [Intentionally omitted];
(vii) any investigation, litigation or proceeding related to this
Agreement or, any other Credit Document or the use of proceeds of
Advances or in respect of any Mortgage Loan or other Collateral;
(viii) the loss, misplacement or destruction of any cashier's
check issued by the Lender in respect of any Advance after
receipt of such check by the closing agent, escrow agent, title
company, attorney or any other authorized party identified in the
Request for Advance relating to such Advance, it being understood
and agreed that, notwithstanding the indemnity under this Section
11.01 (c)(viii) or any such loss, misplacement or destruction,
the funds represented by any such lost, misplaced or destroyed
cashier's check shall constitute an Advance hereunder; and
(ix) the making of any wire transfer to an incorrect account or
in an incorrect amount in accordance with instructions received
from the Borrower, it being understood and agreed that,
notwithstanding the indemnity under this
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Section 11.01 (c)(ix), the funds represented by any such wire
shall constitute an Advance hereunder.
(d) If after the date hereof due to either (a) the effectiveness or
introduction of, or any change in, or any change in the interpretation of, any
law or regulation by any court or administrative or governmental authority
charced with administration thereof or (b) compliance with any guideline or
request from any central bank or other Governmental authority or official
(whether or not having the force of law and including, in any event, any law,
regulation or interpretation with respect to capital adequacy or request in
connection with any of the foregoing), there shall be an increase in the cost to
the Lender of making, funding or maintaining any Advance or the Commitment
hereunder or the Lender shall be required to make a payment calculated by
reference to the principal of, or interest on, any Advance made by it or the
Commitment (other than any,such increased cost, reduction in the amount
receivable, or payment required to be made resulting from the imposition or an
increase in the rate of any Taxes unless such Taxes are payable by the Borrower
under Section 11.01 (e) or there shall be an increase in the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender and the Lender reasonably determines that the amount of
such capital is increased by or based upon the existence of the Lender's
agreement, in its discretion, to make or maintain Advances hereunder and other
similar agreements and facilities), then the Borrower shall, from time to time,
upon demand by the Lender, immediately pay to the Lender additional amounts
sufficient to compensate the Lender for any such increased cost or increase in
capital (to the extent the Lender reasonably determines such increase in capital
to be allocable to the existence of the Lender's agreements hereunder). A
certificate of an officer of the Lender as to such amounts (and the calculation
thereof) submitted to the Borrower shall be conclusive and binding for all
purposes, absent manifest error.
(e) Promptly upon (and in no event later than 10 days following) notice
from the Lender or the Agent to the Borrower, the Borrower agrees to pay, prior
to the date on which penalties attach thereto, all present and future income,
stamp and other taxes, levies, or costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of an Advance and/or the
recording, registration, notarization or other formalization of an Advance or
the execution and delivery or otherwise with respect to the Agreement or the
other Credit Documents and/or any payments of principal, interest or other
amounts made on or in respect of an Advance (all such taxes, levies, costs and
charges being herein collectively called "Taxes"); provided that Taxes shall not
include taxes imposed on or measured by the overall net income or receipts of
the Lender by the United States of America or any political subdivision or
taxing authority thereof or therein. The Borrower agrees to also pay such
additional amounts equal to increases in taxes payable by the Lender described
in the foregoing proviso, which increases arise solely from the receipt by the
Lender of payments made by the Borrower described in the immediately preceding
sente7nce of this Section 11.01(e). Promptly (and in no event later than 10
days) after the date on which payment of any such Tax is due pursuant to
applicable law, the Borrower will, at the request of the Lender, furnish to the
Lender evidence, in form and substance satisfactory to the Lender, that the
Borrower has met its obligation under this Section 11.01 (e). The Borrower
agrees to indemnify the Lender against, and reimburse the Lender on demand for,
any Taxes, as reasonably determined by the Lender in good faith. The Lender
shall provide the Borrower with appropriate receipts for any payments or
reimbursements made by the Borrower pursuant to this Section 11.01 (e).
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11.02 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, the
Lender or the Agent, at its address specified opposite its signature below, or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall, when
mailed, telegraphed, telecopied or sent by ovenight courier, be effective when
deposited in the mails, delivered to the telegraph company or overnight courier,
as the case may be, or sent by telecopier, except that notices and
communications given to the Agent or the Lender pursuant to Section 2 and
Section 4 shall not be effective until received by the Agent or the Lender, as
the case may be.
11.03 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that the Borrower may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Agent and the Lender. The Lender may at any time assign
any of its rights and obligations hereunder or under the Note.
11.04 Remedies Cumulative. No failure or delay on the part of the
Agent or the Lender or the holder of the Note in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Agent or the Lender or the holder of the Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies herein or
in any other Credit Document expressly provided are cumulative and not exclusive
of any rights, powers or remedies which the Agent or the Lender or the holder of
the Note would otherwise have. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further rotice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agent, or the Lender or the holder of the Note to any other or further action
in any circumstances without notice or demand.
11.05 Calculations; Computations. (a) The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Lender);
provided that, except as otherwise specifically provided herein, all
computations determining compliance with Section 8 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements referred to in Section 6.05(a).
(b) All computations of interest and the Fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days occurring in
the period for which such interest or fees are payable.
11.06 Governing Law; Submission to Jurisdiction; Venue. (a) This
Agreement and the other Credit Documents and the rights and obligation of the
parties hereunder and thereunder shall
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be construed in accordance with and be governed by the law of the State of New
York, without regard to principles of conflicts of laws. Any legal action or
proceeding against the Borrower with respect to this Agreement or any other
Credit Document may be brought in the courts of the State of New Jersey located
in Camden County or in the United States Federal courts located in Camden
County, and, by execution and delivery of this Agreement, the Borrower hereby
irrevocably accepts for itself and in respect of its property, Generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any,such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.07 No Proceedings. The Borrower hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
outstanding Commercial Paper, it will not institute against, or join any other
Person in instituting against, the Lender, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
11.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
11.09 Effectiveness. This Agreement shall become effective on the date
(the "Effective Date") on which the Borrower, the Lender and the Agent shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Agent at its Office.
11. 1O Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.11 Amendment or Waiver. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Lender, the Agent and the Borrower.
11.12 Survival. All indemnities set forth herein including, without
limitation, in Section 11.01 shall survive the execution and delivery of this
Agreement and the Note and the making and repayment of the Advances.
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11.13 Waiver of Jury Trial. THE LENDER, THE AGENT AND THE BORROWER EACH
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EACH OF THEM
MAY HAVE TO A TRIAL BY JURY OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
NOTE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER AND THE AGENT TO ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address: FIRST MORTGAGE NETWORK, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------
Title: Chairman & CEO
c/o GE Capital Mortgage Services, Inc. ▇▇▇▇▇▇ RIVER FUNDING INC.
Three Executive Campus
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------
Title: Assistant Treasurer
Three Executive Campus GE CAPITAL MORTGAGE SERVICES, INC.,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ as Agent
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/
----------------------------
Title: Vice President
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