Exhibit 10.35
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WAREHOUSING CREDIT AND SECURITY
AGREEMENT
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BETWEEN
AMERICAN HOME MORTGAGE CORP.,
A NEW YORK CORPORATION
AND
MARINA MORTGAGE COMPANY, INC.
A CALIFORNIA CORPORATION
AND
RESIDENTIAL FUNDING CORPORATION,
A DELAWARE CORPORATION
DATED AS OF DECEMBER 19, 2001
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TABLE OF CONTENTS
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1. THE CREDIT .........................................................................................1
1.1. The Warehousing Commitment..............................................................1
1.2. Expiration of Warehousing Commitment....................................................2
1.3. Warehousing Note........................................................................2
2. PROCEDURES FOR OBTAINING ADVANCES...................................................................3
2.1. Warehousing Advances....................................................................3
3. INTEREST, PRINCIPAL AND FEES........................................................................4
3.1. Interest ...............................................................................4
3.2. Interest Limitation.....................................................................5
3.3. Principal Payments......................................................................5
3.4. Warehousing Fees........................................................................7
3.5. Miscellaneous Charges...................................................................7
3.6. Method of Making Payments...............................................................7
4. COLLATERAL .........................................................................................9
4.1. Grant of Security Interest..............................................................9
4.2. Maintenance of Collateral Records......................................................10
4.3. Release of Security Interest in Pledged Loans and Pledged Securities...................10
4.4. Collection and Servicing Rights........................................................12
4.5. Return of Collateral at End of Warehousing Commitment..................................12
4.6. Delivery of Collateral Documents.......................................................12
5. CONDITIONS PRECEDENT...............................................................................13
5.1. Initial Advance........................................................................13
5.2. Each Advance...........................................................................15
6. GENERAL REPRESENTATIONS AND WARRANTIES.............................................................16
6.1. Place of Business......................................................................16
6.2. Organization; Good Standing; Subsidiaries..............................................16
6.3. Authorization and Enforceability.......................................................16
6.4. Authorization and Enforceability of Guaranty...........................................17
6.5. Approvals .............................................................................17
6.6. Financial Condition....................................................................17
6.7. Litigation.............................................................................17
6.8. Compliance with Laws...................................................................17
6.9. Regulation U...........................................................................18
6.10. Investment Company Act.................................................................18
6.11. Payment of Taxes.......................................................................18
6.12. Agreements.............................................................................18
6.13. Title to Properties....................................................................18
6.14. ERISA .................................................................................19
6.15. No Retiree Benefits....................................................................19
6.16. Assumed Names..........................................................................19
6.17. Servicing .............................................................................19
7. AFFIRMATIVE COVENANTS..............................................................................20
7.1. Payment of Obligations.................................................................20
7.2. Financial Statements...................................................................20
7.3. Other Borrower Reports.................................................................21
7.4. Maintenance of Existence; Conduct of Business..........................................21
7.5. Compliance with Applicable Laws........................................................21
7.6. Inspection of Properties and Books; Operational Reviews................................22
7.7. Notice ................................................................................22
7.8. Payment of Debt, Taxes and Other Obligations...........................................22
7.9. Insurance 22
7.10. Closing Instructions...................................................................23
7.11. Subordination of Certain Indebtedness..................................................23
7.12. Other Loan Obligations.................................................................23
7.13. ERISA .................................................................................23
7.14. Use of Proceeds of Warehousing Advances................................................24
8. NEGATIVE COVENANTS.................................................................................25
8.1. Contingent Liabilities.................................................................25
8.2. Pledge of Servicing Contracts..........................................................25
8.3. Restrictions on Fundamental Changes....................................................25
8.4. Subsidiaries...........................................................................26
8.5. Deferral of Subordinated Debt..........................................................26
8.6. Loss of Eligibility....................................................................26
8.7. Accounting Changes.....................................................................26
8.8. Leverage Ratio of Guarantor............................................................26
8.9. Minimum Tangible Net Worth of Guarantor................................................26
8.10. Leverage Ratio of Borrower.............................................................26
8.11. Minimum Tangible Net Worth of Borrower.................................................26
8.12. Distributions to Shareholders..........................................................26
8.13. Transactions with Affiliates...........................................................26
8.14. Recourse Servicing Contracts...........................................................27
8.15. Gestation Agreements...................................................................27
9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL............................28
9.1. Special Representations and Warranties Concerning Eligibility as
Seller/Servicer of Mortgage Loans................................................28
9.2. Special Representations and Warranties Concerning Warehousing Collateral...............28
9.3. Special Affirmative Covenants Concerning Warehousing Collateral........................30
9.4. Special Negative Covenants Concerning Warehousing Collateral...........................31
10. DEFAULTS; REMEDIES.................................................................................32
10.1. Events of Default......................................................................32
10.2. Remedies ..............................................................................33
10.3. Application of Proceeds................................................................36
10.4. Lender Appointed Attorney-in-Fact......................................................36
10.5. Right of Set-Off.......................................................................36
11. MISCELLaNEOUS......................................................................................37
11.1. Notices .............................................................................37
11.2. Reimbursement Of Expenses; Indemnity...................................................37
11.3. Financial Information..................................................................38
11.4. Terms Binding Upon Successors; Survival of Representations.............................38
11.5. Assignment.............................................................................38
11.6. Amendments.............................................................................38
11.7. Governing Law..........................................................................38
11.8. Participations.........................................................................39
11.9. Relationship of the Parties............................................................39
11.10. Severability...........................................................................39
11.11. Consent to Credit References...........................................................39
11.12. Counterparts...........................................................................39
11.13. Entire Agreement.......................................................................40
11.14. Consent to Jurisdiction................................................................40
11.15. Waiver of Jury Trial...................................................................40
11.16. Waiver of Punitive, Consequential, Special or Indirect Damages.........................40
12. DEFINITIONS........................................................................................42
12.1. Defined Terms..........................................................................42
12.2. Other Definitional Provisions; Terms of Construction...................................50
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EXHIBITS
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Exhibit A Request for Advance
Exhibit B-SF Procedures and Documentation for Warehousing Mortgage Loans
Exhibit B-REP Procedures and Documentation for Warehousing Repurchase/Rejected
Mortgage Loans
Exhibit C Schedule of Servicing Portfolio
Exhibit D Subsidiaries
Exhibit E Compliance Certificate
Exhibit F Lines of Credit
Exhibit G Assumed Names
Exhibit H Eligible Loans and Other Assets
Exhibit I Commitment Summary Report
Exhibit J Terms of Guaranteed Obligations
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WAREHOUSING CREDIT AND
SECURITY AGREEMENT
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WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of December 19,
2001, between AMERICAN HOME MORTGAGE CORP. a New York corporation
("American Home") and MARINA MORTGAGE COMPANY, INC., a California
corporation ("Marina Mortgage") (American Home and Marina Mortgage are
collectively referred to as the "Borrower"), and RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation ("Lender").
A. Borrower has requested certain financing from Lender.
B. Lender has agreed to provide that financing to
Borrower subject to the terms and conditions of this
Agreement.
C. The "Closing Date" for the transactions contemplated
by this Agreement is December 19, 2001.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. THE CREDIT
1.1. THE WAREHOUSING COMMITMENT
On the terms and subject to the conditions and limitations of this
Agreement, including Exhibit H, Lender agrees to make Warehousing
Advances to Borrower from the Closing Date to the Business Day
immediately preceding the Warehousing Maturity Date, during which
period Borrower may borrow, repay and reborrow in accordance with the
provisions of this Agreement. The total aggregate principal amount of
all Warehousing Advances outstanding at any one time may not exceed the
Warehousing Commitment Amount. While a Default or Event of Default
exists, Lender may refuse to make any additional Warehousing Advances
to Borrower. All Warehousing Advances under this Agreement constitute a
single indebtedness, and all of the Collateral is security for the
Warehousing Note and for the performance of all of the Obligations.
Warehousing Advances will be made either to American Home or to Marina
Mortgage as requested by either American Home or Marina Mortgage, but
each Warehousing Advance, whether made to American Home or to Marina
Mortgage, will be deemed made to or for the benefit of American Home
and Marina Mortgage, and American Home and Marina Mortgage, jointly and
severally, are obligated to repay any Warehousing Advances made to
American Home or Marina Mortgage under the Warehousing Commitment. With
respect to its obligation to repay Warehousing Advances made to the
other Borrower, each Borrower agrees to the terms set forth in Exhibit
J. If the initial Warehousing Advance has not been made within 15 days
after the Closing Date, the Warehousing Commitment and Lender's
obligation to make Warehousing Advances to Borrower under this
Agreement will automatically terminate, and all Obligations (including
any Obligations arising under Section 11.2) will automatically become
due and payable, without presentment, demand or other Notice or
requirements of any kind, all of which Borrower expressly waives.
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1.2. EXPIRATION OF WAREHOUSING COMMITMENT
The Warehousing Commitment expires on the earlier of ("Warehousing
Maturity Date"): (a) August 31, 2002 as such date may be extended in
writing by Lender, in its sole discretion, on which date the
Warehousing Commitment will expire of its own term and the Warehousing
Advances will become due and payable, without the necessity of Notice
or action by Lender, and (b) the date the Warehousing Commitment is
terminated and the Warehousing Advances become due and payable under
Section 10.2.
1.3. WAREHOUSING NOTE
Warehousing Advances under the Warehousing Commitment are evidenced by
Borrower's promissory note, payable to Lender on the form prescribed by
Lender ("Warehousing Note"). The term "Warehousing Note" as used in
this Agreement includes all amendments, restatements, renewals or
replacements of the original Warehousing Note and all substitutions for
it. All terms and provisions of the Warehousing Note are incorporated
into this Agreement.
END OF ARTICLE 1
Page 2
2. PROCEDURES FOR OBTAINING ADVANCES
2.1. WAREHOUSING ADVANCES
To obtain a Warehousing Advance under this Agreement, Borrower must
deliver to Lender either a completed and signed request for a
Warehousing Advance on the then current form approved by Lender or an
Electronic Advance Request, together with a list of the Mortgage Loans
for which the request is being made and a signed RFConnects Pledge
Agreement sent by facsimile ("Warehousing Advance Request"), not later
than (i) in the case of Electronic Advance Requests, 3:00 p.m. on the
Business Day, and (ii) in all other cases, 1 Business Day before the
Business Day, on which Borrower desires the Warehousing Advance.
Subject to the delivery of a Warehousing Advance Request and the
satisfaction of the conditions set forth in Sections 5.1 and 5.2,
Borrower may obtain a Warehousing Advance under this Agreement upon
compliance with the procedures set forth in this Section and in the
applicable Exhibit B, including delivery to Lender of all required
Collateral Documents. Lender's current form of Warehousing Advance
Request is set forth in Exhibit A. Upon not less than 3 Business Days'
prior Notice to Borrower, Lender may modify its form of Warehousing
Advance Request and any other Exhibit referred to in this Section to
conform to current legal requirements or Lender practices and, as so
modified, those Exhibits will be deemed a part of this Agreement.
END OF ARTICLE 2
Page 3
3. INTEREST, PRINCIPAL AND FEES
3.1. INTEREST
3.1 (a) Except as provided in Sections 3.1 (d) and 3.1 (f), Borrower
must pay interest on the unpaid amount of each Warehousing
Advance from the date the Warehousing Advance is made until
it is paid in full at the Interest Rate specified in
Exhibit H.
3.1 (b) As long as no Default or Event of Default exists, Borrower
is entitled to receive a benefit in the form of an "Earnings
Credit" on the portion of the Eligible Balances maintained
in time deposit accounts with a Designated Bank, and
Borrower is entitled to receive a benefit in the form of an
"Earnings Allowance" on the portion of the Eligible Balances
maintained in demand deposit accounts with a Designated
Bank. Any Earnings Allowance will be used first and any
Earnings Credit will be used second as a credit against
accrued Designated Bank Charges, any other Miscellaneous
Charges and fees, including and Warehousing Fees, and may be
used, at Lender's option, to reduce accrued interest. Any
Earnings Allowance not used during the month in which the
benefit was received will be accumulated and must be used
within 6 months of the month in which the benefit was
received. As long as no Default or Event of Default exists,
any Earnings Credit not used during the month in which the
benefit was received will be used to provide a cash benefit
to Borrower. Any Earnings Credit retained by Lender as a
result of a Default or Event of Default will be applied to
the payment of Borrower's Obligations in such order as
Lender determines in its sole discretion. Lender's
determination of the Earnings Credit and the Earnings
Allowance for any month will be determined by Lender in its
sole discretion and will be conclusive and binding absent
manifest error. In no event will the benefit received by
Borrower exceed the Depository Benefit.
Either party to this Agreement may terminate the benefits
provided for in this Section effective immediately upon
Notice to the other party, if the terminating party
determines (which determination is conclusive and binding on
the other party, absent manifest error) at any time that any
applicable law, rule, regulation, order or decree or any
interpretation or administration of such law, rule,
regulation, order or decree by any governmental authority
charged with its interpretation or administration, or
compliance by such party with any request or directive
(whether or not having the force of law) of any such
authority, makes it unlawful or impossible for the party
sending the Notice to continue to offer or receive the
benefits provided for in this Section. No Notice is required
for a termination of benefits as a result of a Default or
Event of Default.
3.1 (c) Lender computes interest on the basis of the actual number
of days elapsed in a year of 360 days. Interest is payable
monthly in arrears, on the first day of each month,
commencing with the first month following the Closing Date
and on the Warehousing Maturity Date.
3.1 (d) After an Event of Default occurs and upon Notice to Borrower
by Lender, the unpaid amount of each Warehousing Advance
will bear interest at the Default Rate until paid in full.
3.1 (e) If, for any reason, an Advance is made pursuant to an
Advance Request and repaid to Lender on the same day,
whether or not the funds for the Advance have been disbursed
or held for disbursement, Borrower agrees to pay to Lender
an administrative fee equal to 1 day of interest on that
Advance at a rate set forth in Exhibit H for the applicable
Eligible
Page 4
Loan type. Administrative and other fees are due and payable
in the same manner as interest is due and payable under this
Agreement.
3.1 (f) The rates of interest provided for in this Agreement will be
adjusted as of the effective date of each change in the
applicable index. Lender's determination of such rates of
interest as of any date of determination are conclusive and
binding, absent manifest error.
3.2. INTEREST LIMITATION
Lender does not intend, by reason of this Agreement, the Warehousing
Note or any other Loan Document, to receive interest in an amount in
excess of that permitted by applicable law. If Lender receives any
interest in excess of the amount permitted by applicable law, whether
by reason of acceleration of the maturity of the Obligations or
otherwise, Lender will apply the excess to the unpaid principal balance
of the Warehousing Advances and not to the payment of interest. If all
Warehousing Advances have been paid in full and the Warehousing
Commitment has expired or has been terminated, Lender will remit any
excess to Borrower. This Section controls every other provision of all
agreements between Borrower and Lender and is binding upon and
available to any subsequent holder of the Warehousing Note.
3.3. PRINCIPAL PAYMENTS
3.3 (a) Borrower must pay Lender the outstanding principal amount of
all Warehousing Advances on the Warehousing Maturity Date.
3.3 (b) Borrower may prepay any portion of the Warehousing Advances
without premium or penalty at any time.
3.3 (c) Borrower must pay to Lender, without the necessity of prior
demand or Notice from Lender, and Borrower authorizes Lender
to cause the Funding Bank to charge Borrower's Operating
Account for, the amount of any outstanding Warehousing
Advance against a specific Pledged Asset upon the earliest
occurrence of any of the following events:
(1) One (1) Business Day elapses from the date a
Warehousing Advance was made if the Pledged Loan that
was to have been funded by that Warehousing Advance
is not closed and funded.
(2) Ten (10) Business Days elapse without the return of a
Collateral Document delivered by Lender to Borrower
under a Trust Receipt for correction or completion.
(3) On the date on which a Pledged Loan is determined to
have been originated based on untrue, incomplete or
inaccurate information or otherwise to be subject to
fraud, whether or not Borrower had knowledge of the
misrepresentation, incomplete or incorrect
information or fraud, on the date on which Borrower
knows, has reason to know, or receives Notice from
Lender, that one or more of the representations and
warranties set forth in Article 9 were inaccurate or
incomplete in any material respect on any date when
made or deemed made, or on the date on which Borrower
knows, has reason to know, or receives Notice form
Lender, of any breach of the covenants set forth in
Article 9.
(4) On the date the Pledged Loan or a Lien prior to the
Mortgage securing repayment of the Pledged Loan is
defaulted and remains in default for a period of 60
days or more.
Page 5
(5) If the outstanding Warehousing Advances against
Pledged Loans of a specific type of Eligible Loan
exceed the aggregate Purchase Commitments for that
type of Eligible Loan.
(6) Three (3) Business Days after the mandatory delivery
date of the related Purchase Commitment if the
specific Pledged Loan or the Pledged Security backed
by that Pledged Loan has not been delivered under the
Purchase Commitment prior to such mandatory delivery
date, or on the date the related Purchase Commitment
expires or is terminated, unless, in each case, the
Pledged Loan or Pledged Security is eligible for
delivery to another Investor under a comparable
Purchase Commitment.
(7) Upon the sale, other disposition or prepayment of any
Pledged Asset or, with respect to a Pledged Loan
included in an Eligible Mortgage Pool, upon the sale
or other disposition of the related Agency Security.
(8) One (1) Business Day immediately preceding the date
scheduled for the foreclosure or trustee sale of the
premises securing a Pledged Loan.
3.3 (d) Upon telephonic Notice to Borrower by Lender, Borrower must
pay to Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower's Operating Account for, the
amount of any outstanding Warehousing Advance against a
specific Pledged Asset upon the earliest occurrence of any
of the following events:
(1) For any Pledged Loan, the Warehouse Period elapses.
(2) Forty-five (45) days elapse from the date a Pledged
Loan was delivered to an Investor or Approved
Custodian for examination and purchase or for
inclusion in a Mortgage Pool, without the purchase
being made or an Eligible Mortgage Pool being
initially certified, or upon rejection of a Pledged
Loan as unsatisfactory by an Investor or Approved
Custodian.
(3) Seven (7) Business Days elapse from the date a Wet
Settlement Advance was made against a Pledged Loan
other than a Repurchased Mortgage Loan without
receipt by Lender of all Collateral Documents
relating to the Pledged Loan, or the Collateral
Documents, upon examination by Lender, do not comply
with the requirements of this Agreement.
(4) Twenty (20) Business Days elapse from the date a Wet
Settlement Advance was made against a Repurchased
Mortgage Loan without receipt by Lender of all
Collateral Documents relating to the Pledged Loan, or
the Collateral Documents, upon examination by Lender,
do not comply with the requirements of this
Agreement.
(5) With respect to any Pledged Loan, any of the
Collateral Documents, upon examination by Lender, are
found not to be in compliance with the requirements
of this Agreement or the related Purchase Commitment.
3.3 (e) Borrower must pay the outstanding amount of any Overdraft
Advance in full within 1 Business Day after the date of the
Overdraft Advance.
3.3 (f) In addition to the payments required pursuant to Sections
3.3 (c) and 3.3 (d), if the principal amount of any Pledged
Loan is prepaid in whole or in part while a Warehousing
Advance is outstanding against the Pledged Loan, Borrower
must pay to Lender, without the necessity or prior demand or
Notice from Lender, and Borrower authorizes Lender to
Page 6
cause the Funding Bank to charge Borrower's Operating
Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.
3.3 (g) Lender reserves the right to revalue any Pledged Loan unless
(1) the Pledged Loan is covered by a Purchase Commitment
from ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac or (2) the Pledged Loan is to
be exchanged for an Agency Security and the Agency Security
is covered by a Purchase Commitment. Borrower must pay to
Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding
Bank to charge Borrower's Operating Account for, any amount
required after any such revaluation to reduce the principal
amount of the Warehousing Advance outstanding against the
revalued Pledged Loan to an amount equal to the Advance Rate
for the applicable type of Eligible Loan multiplied by the
Fair Market Value of the Mortgage Loan.
3.3 (h) The proceeds of the sale or other disposition of Pledged
Assets must be paid directly by the Investor to the Cash
Collateral Account. Borrower must give Notice to Lender (by
telephone or electronic mail, and if by telephone, followed
promptly by written notice) of the Pledged Assets for which
proceeds have been received. Upon receipt of Borrower's
Notice, Lender will apply any proceeds deposited into the
Cash Collateral Account to the payment of the Warehousing
Advances related to the Pledged Assets identified by
Borrower in its Notice, and those Pledged Assets will be
considered to have been redeemed from pledge. Lender is
entitled to rely upon Borrower's affirmation that deposits
in the Cash Collateral Account represent payments from
Investors for the purchase of the Pledged Assets specified
by Borrower in its Notice. If the payment from an Investor
for the purchase of Pledged Assets is less than the
outstanding Warehousing Advances against the Pledged Assets
identified by Borrower in its Notice, Borrower authorizes
Lender to cause the Funding Bank to charge Borrower's
Operating Account in an amount equal to that deficiency. As
long as no Default or Event of Default exists, Lender will
return to Borrower any excess payment from an Investor for
Pledged Assets.
3.4. WAREHOUSING FEES
At the time of each Warehousing Advance against an Eligible Loan,
Borrower will incur a fee payable to Lender ("Warehousing Fee") in the
amount set forth in Exhibit H. Borrower must pay all Warehousing Fees
within 10 days after the date of Lender's invoice or account analysis
statement.
3.5. MISCELLANEOUS CHARGES
Borrower must reimburse Lender for all Miscellaneous Charges.
Miscellaneous Charges are due when incurred, but will not be considered
delinquent if Borrower pays them within 10 days after the date of
Lender's invoice or account analysis statement.
3.6. METHOD OF MAKING PAYMENTS
3.6 (a) Unless otherwise specified in this Agreement, Borrower must
make all payments under this Agreement to Lender by the
close of business on the date when due unless the date is
not a Business Day. If the due date is not a Business Day,
payment is due on, and interest will accrue to, the next
Business Day. Borrower must make all payments in United
States dollars in immediately available funds transferred
via wire to accounts designated by Lender.
Page 7
3.6 (b) While a Default or Event of Default exists, Borrower
authorizes Lender to cause the Funding Bank to charge
Borrower's Operating Account for any Obligations due and
owing Lender, without the necessity of prior demand or
Notice from Lender.
END OF ARTICLE 3
Page 8
4. COLLATERAL
4.1. GRANT OF SECURITY INTEREST
As security for the payment of the Warehousing Note and for the
performance of all of Borrower's Obligations, Borrower grants a
security interest to Lender in all of Borrower's right, title and
interest in and to the following described property ("Collateral"):
4.1 (a) All amounts advanced by Lender to or for the account of
Borrower under this Agreement to fund a Mortgage Loan until
that Mortgage Loan is closed and those funds disbursed.
4.1 (b) All Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing or securing those Mortgage Loans, that
are delivered or caused to be delivered to Lender (including
delivery to a third party on behalf of Lender), come into
the possession, custody or control of Lender for the purpose
of pledge or in respect of which Lender has made Warehousing
Advances under this Agreement, including all Mortgage Loans
in respect of which Lender has made Wet Settlement Advances
under this Agreement (collectively, "Pledged Loans").
4.1 (c) All Mortgage-backed Securities that are created in whole or
in part on the basis of Pledged Loans or are delivered or
caused to be delivered to Lender, or are otherwise in the
possession of Lender, or its agent, bailee or custodian as
assignee, or pledged to Lender, or for such purpose are
registered by book-entry in the name of Lender (including
delivery to or registration in the name of a third party on
behalf of Lender) under this Agreement or in respect of
which an Advance has been made by Lender under this
Agreement (collectively, "Pledged Securities").
4.1 (d) All private mortgage insurance and all commitments issued by
the VA or FHA to insure or guarantee any Mortgage Loans
included in the Pledged Loans; all Purchase Commitments held
by Borrower covering Pledged Loans or Pledged Securities or
proposed permanent Pledged Loans, and all proceeds from the
sale of Pledged Loans or Pledged Securities to Investors
pursuant to those Purchase Commitments; and all personal
property, contract rights, servicing and servicing fees and
income or other proceeds, amounts and payments payable to
Borrower as compensation or reimbursement, accounts,
payments, intangibles and general intangibles of whatsoever
kind relating to Pledged Loans, Pledged Securities, Purchase
Commitments, VA commitments or guaranties, FHA commitments
and private mortgage insurance and commitments, and all
other documents or instruments relating to Pledged Loans and
Pledged Securities, including any interest of Borrower in
any fire, casualty or hazard insurance policies and any
awards made by any public body or decreed by any court of
competent jurisdiction for a taking or for degradation of
value in any eminent domain proceeding as the same relate to
Pledged Loans.
4.1 (e) All accounts or general intangibles owned by Borrower
("Receivables") for the payment of money against (1) VA
under a VA guaranty of, FHA or a private mortgage insurer
under an FHA or private insurer's mortgage insurance policy
insuring payment of, or any other Person under any other
agreement (including a Servicing Contract) relating to, all
or part of a defaulted Mortgage Loan repurchased by Borrower
from an investor or out of a pool of Mortgage Loans serviced
by Borrower, (2) obligors and their accounts, ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or any other investor under a
Servicing Contract covering, or out of the proceeds of any
sale of or foreclosure sale in respect of, any Mortgage Loan
(A) repurchased by Borrower out of a pool of Mortgage Loans
serviced by Borrower, or (B)
Page 9
being serviced by Borrower, in either case, for the
reimbursement of real estate taxes or assessments, or
casualty or liability insurance premiums, paid by Borrower
in connection with Mortgage Loans and (3) obligors and their
accounts, or ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or any
other investor under or in respect of, or out of the
proceeds of any sale or foreclosure sale in respect of, any
Mortgage Loans serviced by Borrower for repayment of
advances made by Borrower to cover shortages in principal
and interest payments.
4.1 (f) All escrow accounts, documents, instruments, files, surveys,
certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records (including all
information, records, tapes, data, programs, discs and cards
necessary or helpful in the administration or servicing of
the Collateral) and other information and data of Borrower
relating to the Collateral.
4.1 (g) All cash, whether now existing or acquired after the date of
this Agreement, delivered to or otherwise in the possession
of Lender, the Funding Bank or Lender's agent, bailee or
custodian or designated on the books and records of Borrower
as assigned and pledged to Lender, including all cash
deposited in the Cash Collateral Account and the Wire
Disbursement Account and the Check Disbursement Account.
4.1 (h) All Hedging Arrangements related to the Collateral ("Pledged
Hedging Arrangements") and Borrower's accounts in which
those Hedging Arrangements are held ("Pledged Hedging
Accounts"), including all rights to payment arising under
the Pledged Hedging Arrangements and the Pledged Hedging
Accounts, except that Lender's security interest in the
Pledged Hedging Arrangements and Pledged Hedging Accounts is
limited to benefits, including rights to payment, related to
the Collateral.
4.1 (i) All cash and non-cash proceeds of the Collateral, including
all dividends, distributions and other rights in connection
with, and all additions to, modifications of and
replacements for, the Collateral, and all products and
proceeds of the Collateral, together with whatever is
receivable or received when the Collateral or proceeds of
Collateral are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or
involuntary, including all rights to payment with respect to
any cause of action affecting or relating to the Collateral
or proceeds of Collateral.
4.2. MAINTENANCE OF COLLATERAL RECORDS
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under
any other Loan Document, Borrower must preserve and maintain, at its
principal office or in a regional office approved by Lender, or in the
office of a computer service bureau engaged by Borrower and approved by
Lender and, upon request, make available to Lender the originals, or
copies in any case where the originals have been delivered to Lender or
to an Investor, of the Mortgage Notes and Mortgages included in Pledged
Loans, Mortgage-backed Securities delivered to Lender as Pledged
Securities, Purchase Commitments, and all related Mortgage Loan
documents and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records and other information and data relating to the
Collateral.
4.3. RELEASE OF SECURITY INTEREST IN PLEDGED LOANS AND PLEDGED SECURITIES
4.3 (a) Except as provided in Section 4.3 (b), Pledged Loans will be
released from Lender's security interest only against
payment to Lender of the Release Amount in connection with
those Pledged Loans. If Pledged Loans are transferred to a
pool custodian or an investor for inclusion in a Mortgage
Pool and Lender's security interest in the Pledged Loans
included in the Mortgage Pool is not released before the
issuance of the related
Page 10
Mortgage-backed Security, then that Mortgage-backed
Security, when issued, is a Pledged Security, Lender's
security interest continues in the Pledged Loans backing
that Pledged Security and Lender is entitled to possession
of the Pledged Security in the manner provided in this
Agreement.
4.3 (b) If Pledged Loans are transferred to an Approved Custodian
and included in an Eligible Mortgage Pool, Lender's security
interest in the Pledged Loans included the Eligible Mortgage
Pool will be released upon the delivery of the Agency
Security to Lender (including delivery to or registration in
the name of a third party on behalf of Lender), and that
Agency Security is a Pledged Security. Lender's security
interest in that Pledged Security will be released only
against payment to Lender of the Release Amount in
connection with the Mortgage Loans backing that Pledged
Security.
4.3 (c) Lender has the exclusive right to possession of all Pledged
Securities or, if Pledged Securities are issued in
book-entry form or issued in certificated form and delivered
to a clearing corporation (as such term is defined in the
Uniform Commercial Code of Minnesota) or its nominee, Lender
has the right to have the Pledged Securities registered in
the name of a securities intermediary (as such term is
defined in the Uniform Commercial Code of Minnesota) in an
account containing only customer securities and credited to
an account of Lender. Lender has no duty or obligation to
deliver Pledged Securities to an Investor or to credit
Pledged Securities to the account of an Investor or the
Investor's designee except against payment for those Pledged
Securities. Borrower acknowledges that Lender may enter into
one or more standing arrangements with securities
intermediaries with respect to Pledged Securities issued in
book entry form or issued in certificated form and delivered
to a clearing corporation or its designee, under which the
Pledged Securities are registered in the name of the
securities intermediary, and Borrower agrees, upon request
of Lender, to execute and deliver to those securities
intermediaries Borrower's written concurrence in any such
standing arrangements.
4.3 (d) If no Default or Event of Default occurs, Borrower may
redeem a Pledged Loan or Pledged Security from Lender's
security interest by notifying Lender of its intention to
redeem the Pledged Loan or Pledged Security from pledge and
either (1) paying, or causing an Investor to pay, to Lender,
for application to prepayment on the principal balance of
the Warehousing Note, the Release Amount in connection with
the Pledged Loan or the Pledged Loans backing that Pledged
Security, or (2) delivering substitute Collateral that, in
addition to being acceptable to Lender in its sole
discretion will, when included with the remaining
Collateral, result in a Warehousing Collateral Value of all
Collateral held by Lender that is at least equal to the
aggregate outstanding Warehousing Advances.
4.3 (e) After a Default or Event of Default occurs, Lender may, with
no liability to Borrower or any Person, continue to release
its security interest in any Pledged Loan or Pledged
Security against payment of the Release Amount in connection
with that Pledged Loan or the Pledged Loans backing that
Pledged Security.
4.3 (f) The amount to be paid by Borrower to obtain the release of
lender's security interest in a Pledged Loan ("Release
Amount") will be (1) in connection with the sale of a
Pledged Loan by Borrower, the payment required in any bailee
letter pursuant to which Lender ships that Pledged Loan to
an Investor, Approved Custodian, pool custodian or other
party, (2) in connection with the sale of a Pledged Loan by
Lender while an Event of Default exists, the amount paid to
Lender in a commercially reasonable disposition of that
Pledged Loan and (3) otherwise, until an Event of Default
occurs, the principal amount of the Advance outstanding
against the Pledged Loan.
Page 11
4.4. COLLECTION AND SERVICING RIGHTS
4.4 (a) If no Event of Default exists, Borrower may service and
receive and collect directly all sums payable to Borrower in
respect of the Collateral other than proceeds of any
Purchase Commitment or proceeds of the sale of any
Collateral. All proceeds of any Purchase Commitment or any
other sale of Collateral must be paid directly to the Cash
Collateral Account for application as provided in this
Agreement.
4.4 (b) After an Event of Default, Lender or its designee are
entitled to service and receive and collect all sums payable
to Borrower in respect of the Collateral, and in such case
(1) Lender or its designee in its discretion may, in its own
name, in the name of Borrower or otherwise, demand, ▇▇▇ for,
collect or receive any money or property at any time payable
or receivable on account of or in exchange for any of the
Collateral, but Lender has no obligation to do so, (2)
Borrower must, if Lender requests it to do so, hold in trust
for the benefit of Lender and immediately pay to Lender at
its office designated by Notice, all amounts received by
Borrower upon or in respect of any of the Collateral,
advising Lender as to the source of such funds and (3) all
amounts so received and collected by Lender will be held by
it as part of the Collateral.
4.5. RETURN OF COLLATERAL AT END OF WAREHOUSING COMMITMENT
If (a) the Warehousing Commitment has expired or been terminated, and
(b) no Warehousing Advances, interest or other Obligations are
outstanding and unpaid, Lender will release its security interest and
will deliver all Collateral in its possession to Borrower at Borrower's
expense. Borrower's acknowledgement or receipt for any Collateral
released or delivered to Borrower under any provision of this Agreement
is a complete and full acquittance for the Collateral so returned, and
Lender is discharged from any liability or responsibility for that
Collateral.
4.6. DELIVERY OF COLLATERAL DOCUMENTS
4.6 (a) Lender may deliver documents relating to the Collateral to
Borrower for correction or completion under a Trust Receipt.
4.6 (b) If no Default or Event of Default exists, upon delivery by
Borrower to Lender of shipping instructions pursuant to the
applicable Exhibit B, Lender will transmit Pledged Loans or
Pledged Securities, together with all related loan documents
and pool documents in Lender's possession, to the applicable
Investor, Approved Custodian or other party acceptable to
Lender in its sole discretion.
4.6 (c) If a Default or Event of Default exists, Lender may, without
liability to Borrower or any other Person, continue to
transmit Pledged Loans or Pledged Securities, together with
all related loan documents and pool documents in Lender's
possession, to the applicable Investor, Approved Custodian
or other party acceptable to Lender in its sole discretion.
4.6 (d) Upon receipt of Notice from Borrower under Section 3.3 (h),
and payment of the Release Amount with respect to a Pledged
Loan identified by Borrower, Lender will release to Borrower
any Collateral Documents relating to the redeemed Pledged
Loan or the Pledged Loans backing a Pledged Security that
Lender has in its possession and that have not been
delivered to an Investor or Approved Custodian.
END OF ARTICLE 4
Page 12
5. CONDITIONS PRECEDENT
5.1. INITIAL ADVANCE
The obligation of Lender to make the initial Warehousing Advance under
this Agreement is subject to the satisfaction, in the sole discretion
of Lender, of the following conditions precedent:
5.1 (a) Lender must receive the following, all of which must be
satisfactory in form and content to Lender, in its sole
discretion:
(1) The Warehousing Note and this Agreement duly executed
by Borrower.
(2) American Home's articles or certificate of
incorporation together with all amendments, as
certified by the Secretary of State of New York and
their bylaws, together with all amendments, certified
by the corporate secretary or assistant secretary of
American Home and certificates of good standing dated
within 30 days of the date of this Agreement.
(3) Marina Mortgage's articles or certificate of
incorporation together with all amendments, as
certified by the Secretary of State of California and
each Borrower's bylaws, together with all amendments,
certified by the corporate secretary or assistant
secretary of Borrower and certificates of good
standing dated within 30 days of the date of this
Agreement, together with a certification from the
Franchise Tax Board of the State of California
stating that Borrower is in good standing with the
Franchise Tax Board.
(4) A resolution of the board of directors of each
Borrower authorizing the execution, delivery and
performance of this Agreement and the other Loan
Documents, each Warehousing Advance Request and all
other agreements, instruments or documents to be
delivered by Borrower under this Agreement.
(5) A certificate as to the incumbency and authenticity
of the signatures of the officers of each Borrower
executing this Agreement and the other Loan
Documents, and of the officers and employees of
Borrower delivering each Warehousing Advance Request
and all other agreements, instruments or documents to
be delivered under this Agreement (Lender being
entitled to rely on that certificate until a new
incumbency certificate has been furnished to Lender).
(6) Assumed Name Certificates dated within 30 days of the
date of this Agreement for any assumed name used by
each Borrower in the conduct of its business.
(7) Fiscal year-end financial statements of Guarantor and
each Borrower (and, if applicable, its Subsidiaries,
on a consolidated basis) containing a balance sheet
as of December 31, 2000, and related statements of
income, cash flows and changes in stockholders'
equity for the period ended on such date, all in
reasonable detail and prepared in accordance with
GAAP applied on a basis consistent with prior periods
and accompanied by (A) an opinion as to those
financial statements in form and substance
satisfactory to Lender and prepared by independent
certified public accountants of recognized standing
acceptable to Lender and (B) any management letters,
management reports or other supplementary comments or
reports delivered by those accountants to borrower or
its board of directors.
Page 13
(8) Interim financial statements of Guarantor and each
Borrower (and, if applicable, its Subsidiaries, on a
consolidated basis) containing a balance sheet as of
March 31, 2001, related statements of income, cash
flows and changes in stockholders' equity for the
period ended on such date prepared in accordance with
GAAP applied on a basis consistent with Borrower's
most recent audited financial statements.
(9) The Guaranty, on the form prescribed by Lender, duly
executed by the Guarantor.
(10) The Guarantor's articles or certificate of
incorporation, together with all amendments, as
certified by the Secretary of State of Delaware,
bylaws certified by the corporate secretary of the
Guarantor and certificates of good standing dated
within 30 days of the date of this Agreement.
(11) A resolution of the board of directors of the
Guarantor, certified as of the date of the Agreement
by its corporate secretary, authorizing the
execution, delivery and performance of the Guaranty,
and all other agreements, instruments or documents to
be delivered by the Guarantor under this Agreement.
(12) A certificate as to the incumbency and authenticity
of the signatures of the officers of the Guarantor
executing the Guaranty and all other agreements,
instruments or documents to be delivered under this
Agreement (Lender being entitled to rely on that
certificate until a new incumbency certificate has
been furnished to Lender).
(13) A favorable written opinion of counsel to Borrower
and the Guarantor (or of separate counsel at the
option of Borrower and the Guarantor), addressed to
Lender and dated as of the date of this Agreement,
covering such matters as Lender may reasonably
request.
(14) Uniform Commercial Code, tax lien and judgment
searches of the appropriate public records for
Borrower that do not disclose the existence of any
prior Lien on the Collateral other than in favor of
Lender or as permitted under this Agreement.
(15) Copies of the certificates, documents or other
written instruments that evidence Borrower's
eligibility described in Section 9.1, together with
copies of all seller/servicer contracts to which the
Borrower is a party, all in form and substance
satisfactory to Lender.
(16) Copies of Borrower's errors and omissions insurance
policy or mortgage impairment insurance policy, and
blanket bond coverage policy, or certificates in lieu
of policies, showing compliance by Borrower as of the
date of this Agreement with the related provisions of
Section 7.9.
(17) Receipt by Lender of any fees due on the date of this
Agreement.
(18) Receipt of a fully-executed Funding Bank Agreement
and evidence that all accounts into which Warehousing
Advances will be funded have been established at the
Funding Bank.
(19) One or more agreements among Borrower, Lender and
▇▇▇▇▇▇ ▇▇▇ in which ▇▇▇▇▇▇ Mae agrees to send all
cash proceeds of Mortgage Loans sold by Borrower to
▇▇▇▇▇▇ ▇▇▇ to the Cash Collateral Account, each in
form and substance satisfactory to Lender.
Page 14
5.1 (b) If Borrower is indebted to any of its directors, officers,
shareholders or Affiliates, or to the Guarantor, as of the
date of this Agreement, which indebtedness has a term of
more than 1 year or is in excess of $25,000, the Person to
whom Borrower is indebted must have executed a Subordination
of Debt Agreement, on the form prescribed by Lender; and
Lender must have received an executed copy of that
Subordination of Debt Agreement, certified by the corporate
secretary of Borrower to be true and complete and in full
force and effect as of the date of the Warehousing Advance.
5.1 (c) Borrower must not have incurred any material liabilities,
direct or contingent, other than in the ordinary course of
its business, since the Audited Statement Date.
5.2 EACH ADVANCE
The obligation of Lender to make the initial and each subsequent
Warehousing Advance is subject to the satisfaction, in the sole
discretion of Lender, as of the date of each Warehousing Advance, of
the following additional conditions precedent:
5.2 (a) Borrower must have delivered to Lender the Warehousing
Advance Request and Collateral Documents called for under,
and must have satisfied the procedures set forth in, Article
2 and the applicable Exhibits described in that Article. All
items delivered to Lender must be satisfactory to Lender in
form and content, and Lender may reject any item that does
not satisfy the requirements of this Agreement or of the
related Purchase Commitment.
5.2 (b) Lender must have received evidence satisfactory to it as to
the making and/or continuation of any book entry or the due
filing and recording in all appropriate offices of all
financing statements and other instruments as may be
necessary to perfect the security interest of Lender in the
Collateral under the Uniform Commercial Code or other
applicable law.
5.2 (c) The representations and warranties of Borrower contained in
Article 6 and Article 9 must be accurate and complete in all
material respects as if made on and as of the date of each
Warehousing Advance.
5.2 (d) Borrower must have performed all agreements to be performed
by it under this Agreement, and after giving effect to the
requested Warehousing Advance, there will exist no Default
or Event of Default under this Agreement.
5.2 (e) The Guarantor must have performed all agreements to be
performed by the Guarantor under the Guaranty.
Delivery of a Warehousing Advance Request by Borrower will be deemed a
representation by Borrower that all conditions set forth in this
Section have been satisfied as of the date of the Warehousing Advance.
END OF ARTICLE 5
Page 15
6. GENERAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and
the making of each Warehousing Advance, that:
6.1. PLACE OF BUSINESS
Borrower's chief executive office and principal place of business is
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
6.2. ORGANIZATION; GOOD STANDING; SUBSIDIARIES
American Home is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and Marina
Mortgage is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and each Borrower
is has the full legal power and authority to own its property and to
carry on its business as currently conducted. Borrower is duly
qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which the transaction of its business
makes qualification necessary, except in jurisdictions, if any, where a
failure to be in good standing has no material adverse effect on each
Borrower's business operations, assets or financial condition as a
whole. For the purposes of this Agreement, good standing includes
qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each
jurisdiction in which Borrower transacts business. Borrower has no
Subsidiaries except as set forth on Exhibit D, which sets forth with
respect to each Subsidiary, its name, address, place of incorporation,
each state in which it is qualified as a foreign corporation, and the
percentage ownership of its capital stock by Borrower.
6.3. AUTHORIZATION AND ENFORCEABILITY
Borrower has the power and authority to execute, deliver and perform
this Agreement, the Warehousing Note and other Loan Documents to which
Borrower is party and to make the borrowings under this Agreement. The
execution, delivery and performance by Borrower of this Agreement, the
Warehousing Note and the other Loan Documents to which Borrower is
party and the making of the borrowings under this Agreement and the
Warehousing Note, have been duly and validly authorized by all
necessary corporate action on the part of Borrower (none of which
actions has been modified or rescinded, and all of which actions are in
full force and effect) and do not and will not conflict with or violate
any provision of law, of any judgments binding upon Borrower, or of the
articles of incorporation or bylaws of Borrower, conflict with or
result in a breach of or constitute a default or require any consent
under, or result in the creation of any Lien upon any property or
assets of Borrower other than the Lien on the Collateral granted under
this Agreement, or result in or require the acceleration of any
indebtedness of Borrower under any agreement, instrument or indenture
to which Borrower is a party or by which Borrower or its property may
be bound or affected. This Agreement, the Warehousing Note and the
other Loan Documents constitute the legal, valid, and binding
obligations of Borrower, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other
such laws affecting the enforcement of creditors' rights.
Page 16
6.4. AUTHORIZATION AND ENFORCEABILITY OF GUARANTY
The Guarantor has the power and authority to execute, deliver and
perform the Guaranty. The Guaranty constitutes the legal, valid, and
binding obligation of the Guarantor, enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency or other such laws
affecting the enforcement of creditors' rights.
6.5. APPROVALS
The execution and delivery of this Agreement, the Warehousing Note and
the other Loan Documents and the performance of Borrower's obligations
under this Agreement, the Warehousing Note and the other Loan Documents
and the validity and enforceability of this Agreement, the Warehousing
Note and the other Loan Documents do not require any license, consent,
approval or other action of any state or federal agency or governmental
or regulatory authority other than those which have been obtained and
remain in full force and effect.
6.6. FINANCIAL CONDITION
The balance sheet of Guarantor and each Borrower (and, if applicable,
its Subsidiaries, on a consolidated basis) as of each Statement Date,
and the related statements of income, cash flows and changes in
stockholders' equity for the fiscal period ended on each Statement
Date, previously furnished to Lender, fairly present the financial
condition of Guarantor or such Borrower (and, if applicable, its
Subsidiaries) as at that Statement Date and the results of its
operations for the fiscal period ended on that Statement Date.
Guarantor and each Borrower had, on each Statement Date, no known
material liabilities, direct or indirect, fixed or contingent, matured
or unmatured, or liabilities for taxes, long-term leases or unusual
forward or long-term commitments not disclosed by, or reserved against
in, said balance sheet and related statements, and at the present time
there are no material unrealized or anticipated losses from any loans,
advances or other commitments of Guarantor or such Borrower except as
previously disclosed to Lender in writing. Those financial statements
were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved. Since the Audited Statement Date,
there has been no material adverse change in the business, operations,
assets or financial condition of Guarantor or either Borrower (and, if
applicable, its Subsidiaries), nor is Borrower aware of any state of
facts that (with or without notice or lapse of time or both) would or
could result in any such material adverse change.
6.7. LITIGATION
There are no actions, claims, suits or proceedings pending or, to
Borrower's knowledge, threatened or reasonably anticipated against or
affecting Guarantor, Borrower or any Subsidiary of Borrower in any
court or before any arbitrator or before any government commission,
board, bureau or other administrative agency that, if adversely
determined, may reasonably be expected to result in a material adverse
change in Guarantor's or Borrower's business, operations, assets or
financial condition as a whole, or that would affect the validity or
enforceability of this Agreement, the Warehousing Note, any other Loan
Document or the Guaranty.
6.8. COMPLIANCE WITH LAWS
Neither Borrower nor any Subsidiary of Borrower is in violation of any
provision of any law, or of any judgment, award, rule, regulation,
order, decree, writ or injunction of any court or public regulatory
body or authority that could result in a material adverse change in
Borrower's
Page 17
business, operations, assets or financial condition as a whole or that
would affect the validity or enforceability of this Agreement, the
Warehousing Note or any other Loan Document.
6.9. REGULATION U
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no part of the proceeds of any
Warehousing Advances made under this Agreement will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock.
6.10. INVESTMENT COMPANY ACT
Borrower is not an "investment company" or controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
6.11. PAYMENT OF TAXES
Borrower and each of its Subsidiaries has filed or caused to be filed
all federal, state and local income, excise, property and other tax
returns that are required to be filed with respect to the operations of
Borrower and its Subsidiaries, all such returns are true and correct
and Borrower and each of its Subsidiaries has paid or caused to be paid
all taxes shown on those returns or on any assessment, to the extent
that those taxes have become due, including all FICA payments and
withholding taxes, if appropriate. The amounts reserved as a liability
for income and other taxes payable in the financial statements
described in Section 6.6 are sufficient for payment of all unpaid
federal, state and local income, excise, property and other taxes,
whether or not disputed, of Borrower and its Subsidiaries accrued for
or applicable to the period and on the dates of such financial
statements and all years and periods prior to those financial
statements and for which Borrower and its Subsidiaries may be liable in
its own right or as transferee of the assets of, or as successor to,
any other Person. No tax Liens have been filed and no material claims
are being asserted against Borrower, any Subsidiary of Borrower or any
property of Borrower or any Subsidiary of Borrower with respect to any
taxes, fees or charges.
6.12. AGREEMENTS
Neither Borrower nor any Subsidiary of Borrower is a party to any
agreement, instrument or indenture or subject to any restriction
materially and adversely affecting its business, operations, assets or
financial condition, except as disclosed in the financial statements
described in Section 6.6. Neither Borrower nor any Subsidiary of
Borrower is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement, instrument, or indenture which default could result in a
material adverse change in Borrower's business, operations, properties
or financial condition as a whole. No holder of any indebtedness of
Borrower or of any of its Subsidiaries has given notice of any asserted
default under that indebtedness, and no liquidation or dissolution of
Borrower or of any of its Subsidiaries and no receivership, insolvency,
bankruptcy, reorganization or other similar proceedings relative to
Borrower or of any of its Subsidiaries or any of its properties is
pending, or to the knowledge of Borrower, threatened.
6.13. TITLE TO PROPERTIES
Borrower and each Subsidiary of Borrower has good, valid, insurable and
(in the case of real property) marketable title to all of its
properties and assets (whether real or personal, tangible or
Page 18
intangible) reflected on the financial statements described in Section
6.6, except for those properties and assets that Borrower has disposed
of since the date of those financial statements either in the ordinary
course of business or because they were no longer used or useful in the
conduct of Borrower's or the Subsidiary's business. All of Borrower's
properties and assets are free and clear of all Liens except as
disclosed in Borrower's financial statements.
6.14. ERISA
Each Plan is in compliance with all applicable requirements of ERISA
and the Internal Revenue Code and with all material applicable rulings
and regulations issued under the provisions of ERISA and the Internal
Revenue Code setting forth those requirements, except where any failure
to comply would not result in a material loss to Borrower or any ERISA
Affiliate. All of the minimum funding standards or other contribution
obligations applicable to each Plan have been satisfied. No Plan is a
defined-benefit pension plan subject to Title IV of ERISA, and there is
no Multiemployer Plan.
6.15. NO RETIREE BENEFITS
Except as required under Section 4980B of the Internal Revenue Code,
Section 601 of ERISA or applicable state law, neither Borrower nor, if
applicable, any Subsidiary is obligated to provide post-retirement
medical or insurance benefits with respect to employees or former
employees.
6.16. ASSUMED NAMES
Borrower does not originate Mortgage Loans or otherwise conduct
business under any names other than its legal name and the assumed
names set forth on Exhibit G. Borrower has made all filings and taken
all other action as may be required under the laws of any jurisdiction
in which it originates Mortgage Loans or otherwise conducts business
under any assumed name. Borrower's use of the assumed names set forth
on Exhibit G does not conflict with any other Person's legal rights to
any such name, nor otherwise give rise to any liability by Borrower to
any other Person. Borrower may amend Exhibit G to add or delete any
assumed names used by Borrower to conduct business. An amendment to
Exhibit G to add an assumed name is not effective until Borrower has
delivered to Lender an assumed name certificate in the jurisdictions in
which the assumed name is to be used, which must be satisfactory in
form and content to Lender, in its sole discretion. In connection with
any amendment to delete a name for Exhibit G, Borrower represents,
warrants and agrees that it has ceased using that name in all
jurisdictions.
6.17. SERVICING
Exhibit C is a true and complete list of Borrower's Servicing
Portfolio. All of Borrower's Servicing Contracts are in full force and
effect, and are unencumbered by Liens other than Liens disclosed in
Exhibit C. No default or event that, with notice or lapse of time or
both, would become a default, exists under any of Borrower's Servicing
Contracts.
END OF ARTICLE 6
Page 19
7. AFFIRMATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under
any other Loan Document, Borrower must:
7.1. PAYMENT OF OBLIGATIONS
Punctually pay or cause to be paid all Obligations, including the
Obligations payable under this Agreement and under the Warehousing
Note, in accordance with their terms.
7.2. FINANCIAL STATEMENTS
Deliver to Lender:
7.2 (a) As soon as available and in any event within 45 days after
the end of each month, interim statements of income, cash
flows and changes in stockholders' equity of each Borrower
(and, if applicable, its Subsidiaries, on a consolidated
basis) for the immediately preceding month and for the
period from the beginning of the fiscal year to the end of
that month, and the related balance sheet as at the end of
the immediately preceding month, all in reasonable detail,
subject, however, to year-end audit adjustments.
7.2 (b) As soon as available and in any event within 45 days after
the end of each Calendar Quarter, interim statements of
income, cash flows and changes in stockholders' equity of
Guarantor (and, if applicable, its Subsidiaries, on a
consolidated basis) for the immediately preceding Calendar
Quarter and for the period from the beginning of the fiscal
year to the end of that Calendar Quarter, and the related
balance sheet as at the end of the immediately preceding
Calendar Quarter, all in reasonable detail, subject,
however, to year-end audit adjustments.
7.2 (c) As soon as available and in any event within 90 days after
the end of each fiscal year of Borrower, fiscal year-end
statements of income, cash flows and changes in
stockholders' equity of Guarantor and each Borrower (and, if
applicable, its Subsidiaries, on a consolidated basis) for
that year, and the related balance sheet as of the end of
that year (setting forth in comparative form the
corresponding figures for the preceding fiscal year), all in
reasonable detail and accompanied by (1) an opinion as to
those financial statements in form and substance
satisfactory to Lender and prepared by independent certified
public accountants of recognized standing acceptable to
Lender and (2) any management letters, management reports or
other supplementary comments or reports delivered by those
accountants to Borrower or its board of directors.
7.2 (d) Together with each delivery of financial statements required
by this Section, a Compliance Certificate substantially in
the form of Exhibit E.
7.2 (e) As soon as available and in all events within 90 days after
the beginning of each fiscal year of Borrower, financial
projections of Borrower for such fiscal year consisting of
projected income and cash flow statements for each month
during such fiscal year, projected balance sheets as of the
end of each month during such fiscal year, and projected
Mortgage Loan origination and sale reports for each month
during such fiscal year, all in reasonable detail and
otherwise reasonably acceptable to Lender.
Page 20
7.2 (f) Copies of all regular or periodic financial and other
reports that Borrower files with the Securities and Exchange
Commission or any successor governmental agency or other
entity.
7.3. OTHER BORROWER REPORTS
Deliver to Lender:
7.3 (a) As soon as available and in any event within 45 days after
the end of each month, a consolidated report ("Servicing
Portfolio Report") as of the end of the month, as to all
Mortgage Loans the servicing rights to which are owned by
Borrower (specified by investor type, recourse and
non-recourse) regardless of whether the Mortgage Loans are
Pledged Loans. The Servicing Portfolio Report must indicate
which Mortgage Loans (1) are current and in good standing,
(2) are more than 30, 60 or 90 days past due, (3) are the
subject of pending bankruptcy or foreclosure proceedings, or
(4) have been converted (through foreclosure or other
proceedings in lieu of foreclosure) into real estate owned
by Borrower.
7.3 (b) As soon as available and in any event within 45 days after
the end of each fiscal quarter in the fiscal year of
Borrower, a consolidated loan production report as of the
end of that fiscal quarter, presenting the total dollar
volume and the number of Mortgage Loans originated and
closed or purchased during that fiscal quarter and for the
fiscal year-to-date, specified by property type and loan
type.
7.3 (c) As soon as available and in any event within 45 days after
the end of each month, a commitment summary and pipeline
report, substantially in the form of Exhibit I, as of the
end of that month.
7.3 (d) Other reports in respect of Pledged Assets, in such detail
and at such times as Lender in its discretion may reasonably
request.
7.3 (e) With reasonable promptness, such further information
regarding the business, operations, properties or financial
condition of Borrower as Lender may reasonably request,
including copies of any audits completed by HUD, ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
7.4. MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS
Preserve and maintain its corporate existence in good standing and all
of its rights, privileges, licenses and franchises necessary or
desirable in the normal conduct of its business, including its
eligibility as lender, seller/servicer and issuer described under
Section 9.1; conduct its business in an orderly and efficient manner;
maintain a net worth of acceptable assets as required for maintaining
Borrower's eligibility as lender, seller/servicer and issuer described
under Section 9.1; and make no material change in the nature or
character of its business or engage in any business in which it was not
engaged on the date of this Agreement.
7.5. COMPLIANCE WITH APPLICABLE LAWS
Comply with the requirements of all applicable laws, rules, regulations
and orders of any governmental authority, a breach of which could
result in a material adverse change in Borrower's business, operations,
assets, or financial condition as a whole or on the enforceability of
this Agreement, any other Loan Document or any Collateral, except where
contested in good faith and by appropriate proceedings.
Page 21
7.6. INSPECTION OF PROPERTIES AND BOOKS; OPERATIONAL REVIEWS
Permit Lender or any Participant (and their authorized representatives)
to discuss the business, operations, assets and financial condition of
Borrower and its Subsidiaries with Borrower's officers, agents and
employees, and to examine and make copies or extracts of Borrower's and
its Subsidiaries' books of account, all at such reasonable times as
Lender or any Participant may request. Provide its accountants with a
copy of this Agreement promptly after the execution of this Agreement
and must authorize and instruct them to answer candidly all questions
that the officers of Lender or any Participant or any authorized
representatives of Lender or any Participant may address to them in
reference to the financial condition or affairs of Borrower and its
Subsidiaries. Borrower may have its representatives in attendance at
any meetings held between the officers or other representatives of
Lender or any Participant and Borrower's accountants under this
authorization. Permit Lender or any Participant (and their authorized
representatives) access to Borrower's premises and records for the
purpose of conducting a review of Borrower's general mortgage business
methods, policies and procedures, auditing its loan files, and
reviewing the financial and operational aspects of Borrower's business.
7.7. NOTICE
Give prompt Notice to Lender of (a) any action, suit or proceeding
instituted by or against Borrower or any of its Subsidiaries in any
federal or state court or before any commission or other regulatory
body (federal, state or local, domestic or foreign), which action, suit
or proceeding has at issue in excess of $25,000, or any such
proceedings threatened against Borrower or any of its Subsidiaries in a
writing containing the details of that action, suit or proceeding; (b)
the filing, recording or assessment of any federal, state or local tax
Lien against Borrower, or any of its assets or any of its Subsidiaries;
(c) an Event of Default; (d) a Default that continues for more than 4
days; (e) the suspension, revocation or termination of Borrower's
eligibility, in any respect, as approved lender, seller/servicer or
issuer as described under Section 9.1; (f) the transfer, loss,
nonrenewal or termination of any Servicing Contracts to which Borrower
is a party, or which is held for the benefit of Borrower, and the
reason for that transfer, loss, nonrenewal or termination; (g) any
Prohibited Transaction with respect to any Plan, specifying the nature
of the Prohibited Transaction and what action Borrower proposes to take
with respect to it; and (h) any other action, event or condition of any
nature that could lead to or result in a material adverse change in the
business, operations, assets or financial condition of Borrower or any
of its Subsidiaries.
7.8. PAYMENT OF DEBT, TAXES AND OTHER OBLIGATIONS
Pay, perform and discharge, or cause to be paid, performed and
discharged, all of the obligations and indebtedness of Borrower and its
Subsidiaries, all taxes, assessments and governmental charges or levies
imposed upon Borrower or its Subsidiaries or upon their respective
income, receipts or properties before those taxes, assessments and
governmental charges or levies become past due, and all lawful claims
for labor, materials and supplies or otherwise that, if unpaid, could
become a Lien or charge upon any of their respective properties or
assets. Borrower and its Subsidiaries are not required, however, to pay
any taxes, assessments and governmental charges or levies or claims for
labor, materials or supplies for which Borrower or its Subsidiaries
have obtained an adequate bond or insurance or that are being contested
in good faith and by proper proceedings that are being reasonably and
diligently pursued and for which proper reserves have been created.
7.9. INSURANCE
Maintain errors and omissions insurance or mortgage impairment
insurance, and blanket bond coverage, with such companies and in such
amounts as satisfy prevailing requirements
Page 22
applicable to a lender, seller/servicer and issuer described under
Section 9.1, and liability insurance and fire and other hazard
insurance on its properties, in each case with responsible insurance
companies acceptable to Lender, in such amounts and against such risks
as is customarily carried by similar businesses operating in the same
location. Within 30 days after Notice from Lender, obtain such
additional insurance as Lender may reasonably require, all at the sole
expense of Borrower. Copies of such policies must be furnished to
Lender without charge upon request of Lender.
7.10. CLOSING INSTRUCTIONS
Indemnify and hold Lender harmless from and against any loss, including
reasonable attorneys' fees and costs, attributable to the failure of
any title insurance company, agent or approved attorney to comply with
Borrower's disbursement or instruction letter relating to any Mortgage
Loan. Lender has the right to pre-approve Borrower's disbursement or
instruction letter to the title insurance company, agent or approved
attorney in any case in which Borrower intends to obtain a Warehousing
Advance against the Mortgage Loan to be created at settlement or to
pledge that Mortgage Loan as Collateral under this Agreement. In any
event, Borrower's disbursement or instruction letter must include the
following language:
"Residential Funding Corporation has a security interest in
any amounts advanced by it to fund this mortgage loan and in
the mortgage loan funded with those amounts. You must promptly
return any amounts advanced by Residential Funding Corporation
and not used to fund this mortgage loan. You also must
immediately return all amounts advanced by Residential Funding
Corporation if this mortgage loan does not close and fund
within 24 hours of your receipt of those funds."
7.11. SUBORDINATION OF CERTAIN INDEBTEDNESS
Cause any indebtedness of Borrower to any shareholder, director,
officer or Affiliate of Borrower, or to any Guarantor, which
indebtedness has a term of more than 1 year or is in excess of $25,000,
to be subordinated to the Obligations by the execution and delivery to
Lender of a Subordination of Debt Agreement, on the form prescribed by
Lender, certified by the corporate secretary of Borrower to be true and
complete and in full force and effect.
7.12. OTHER LOAN OBLIGATIONS
Perform all material obligations under the terms of each loan
agreement, note, mortgage, security agreement or debt instrument by
which Borrower is bound or to which any of its property is subject, and
promptly notify Lender in writing of a declared default under or the
termination, cancellation, reduction or nonrenewal of any of its other
lines of credit or agreements with any other lender. Exhibit F is a
true and complete list of all such lines of credit or agreements as of
the date of this Agreement. Borrower must give Lender at least 30 days
Notice before entering into any additional lines of credit or
agreements.
7.13. ERISA
Maintain (and, if applicable, will cause each ERISA Affiliate to
maintain) each Plan in compliance with all material applicable
requirements of ERISA and of the Internal Revenue Code and with all
applicable rulings and regulations issued under the provisions of ERISA
and of the Internal Revenue Code, and not permit any ERISA Affiliate
to, (a) engage in any transaction in connection with which Borrower or
any ERISA Affiliate would be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Internal Revenue Code, in either case in an amount exceeding
$25,000 or (b) fail to make full payment when due of
Page 23
all amounts that, under the provisions of any Plan, Borrower or any
ERISA Affiliate is required to pay as contributions to that Plan, or
permit to exist any accumulated funding deficiency (as such term is
defined in Section 302 of ERISA and Section 412 of the Internal Revenue
Code), whether or not waived, with respect to any Plan in an aggregate
amount exceeding $25,000.
7.14. USE OF PROCEEDS OF WAREHOUSING ADVANCES
Use the proceeds of each Warehousing Advance solely for the purpose of
funding Eligible Loans and against the pledge of those Eligible Loans
as Collateral.
END OF ARTICLE 7
Page 24
8. NEGATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed, Borrower must not, either
directly or indirectly, without the prior written consent of Lender:
8.1. CONTINGENT LIABILITIES
Assume, guarantee, endorse or otherwise become contingently liable for
the obligation of any Person except by endorsement of negotiable
instruments for deposit or collection in the ordinary course of
business, and except for obligations arising in connection with the
sale of Mortgage Loans without recourse in the ordinary course of
Borrower's business.
8.2. PLEDGE OF SERVICING CONTRACTS
Pledge or grant a security interest in any existing or future Servicing
Contracts of Borrower other than to Lender; or omit to take any action
required to keep all of Borrower's Servicing Contracts in full force
and effect.
8.3. RESTRICTIONS ON FUNDAMENTAL CHANGES
8.3 (a) Consolidate, merge or enter into any analogous
reorganization or transaction with any Person, except that
Marina Mortgage may merge with and into American Home, and
that either may merge with another Person in a similar line
of business if, immediately after giving effect to such
merger, no Default or Event of Default exists and is
continuing.
8.3 (b) Amend or otherwise modify Borrower's articles of
incorporation or bylaws, except in connection with the
merger with Marina Mortgage with and into American Home.
8.3 (c) Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
8.3 (d) Cease actively to engage in the business of originating or
acquiring Mortgage Loans or make any other material change
in the nature or scope of the business in which Borrower
engages as of the date of this Agreement.
8.3 (e) Sell, assign, lease, convey, transfer or otherwise dispose
of (whether in one transaction or a series of transactions)
all or any substantial part of Borrower's business or
assets, whether now owned or acquired after the Closing
Date, other than, in the ordinary course of business and to
the extent not otherwise prohibited by this Agreement, sales
of (1) Mortgage Loans, (2) Mortgage-backed Securities and
(3) Servicing Contracts.
8.3 (f) Permit any Subsidiary of Borrower to do or take any of the
foregoing actions.
8.3 (g) Purchase or acquire or incur liability for the purchase or
acquisition of any or all of the assets or business of any
Person, other than in the normal course of business as
currently conducted (it being expressly agreed and
understood that the acquisition of non-recourse servicing is
a normal course of business activity and that the
acquisition of recourse servicing is not a normal course of
business activity).
Page 25
8.4. SUBSIDIARIES
Form or acquire, or permit any Subsidiary of Borrower to form or
acquire, any Person that would thereby become a Subsidiary.
8.5. DEFERRAL OF SUBORDINATED DEBT
Pay any Subordinated Debt of Borrower in advance of its stated maturity
or, after a Default or Event of Default under this Agreement has
occurred, make any payment of any kind on any Subordinated Debt of
Borrower until all of the Obligations have been paid and performed in
full and any applicable preference period has expired.
8.6. LOSS OF ELIGIBILITY
Take any action that would cause Borrower to lose all or any part of
its status as an eligible lender, seller/servicer or issuer as
described under Section 9.1.
8.7. ACCOUNTING CHANGES
Make, or permit any Subsidiary of Borrower to make, any significant
change in accounting treatment or reporting practices, except as
required by GAAP, or change its fiscal year or the fiscal year of any
Subsidiary of Borrower.
8.8. LEVERAGE RATIO OF GUARANTOR
Permit Guarantor's Leverage Ratio at any time to exceed 12 to 1.
8.9. MINIMUM TANGIBLE NET WORTH OF GUARANTOR
Permit Guarantor's Tangible Net Worth at any time to be less than
$40,000,000.
8.10. LEVERAGE RATIO OF BORROWER
Permit Borrower's Leverage Ratio (on a combined basis) at any time to
exceed 12 to 1.
8.11. MINIMUM TANGIBLE NET WORTH OF BORROWER
Permit Borrower's Tangible Net Worth (on a combined basis) at any time
to be less than $40,000,000.
8.12. TRANSACTIONS WITH AFFILIATES
Directly or indirectly (a) make any loan, advance, extension of credit
or capital contribution to any of Borrower's Affiliates, if the
aggregate amount thereof would exceed $100,000, provided, that Lender
will not unreasonably withhold its consent to any requested loan,
advance, extension of credit or capital contribution in excess of
$100,000, (b) sell, transfer, pledge or assign any of its assets to or
on behalf of those Affiliates, (c) merge or consolidate with or
purchase or acquire assets from those Affiliates if the aggregate
amount thereof would exceed $100,000, provided, that Lender will not
unreasonably withhold its consent to any requested purchase or
acquisition of
Page 26
assets in excess of $100,000, or (d) pay management fees to or on
behalf of those Affiliates in excess of $100,000, provided, that Lender
will not unreasonably withhold its consent to any requested payment of
management fees in excess of $100,000.
8.13. RECOURSE SERVICING CONTRACTS
Acquire or enter into Servicing Contracts under which Borrower must
repurchase or indemnify the holder of the Mortgage Loans as a result of
defaults on the Mortgage Loans at any time during the term of those
Mortgage Loans.
8.14. GESTATION AGREEMENTS
Directly or indirectly sell or finance a Mortgage Loan under any
Gestation Agreement if the Mortgage Loan is or was previously pledged
to Lender as Collateral under this Agreement, unless the average
monthly outstanding is more than 60% of the Warehousing Commitment
Amount.
END OF ARTICLE 8
Page 27
9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS
CONCERNING COLLATERAL
9.1. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING ELIGIBILITY AS
SELLER/SERVICER OF MORTGAGE LOANS
Borrower represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and
the making of each Warehousing Advance, that Borrower is approved and
qualified and in good standing as a lender or seller/servicer, as set
forth below, and meets all requirements applicable to its status as:
9.1 (a) A HUD-approved mortgagee, eligible to originate, purchase,
hold, sell and service FHA fully insured Mortgage Loans.
9.1 (b) A ▇▇▇▇▇▇ ▇▇▇-approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell and service
Mortgage Loans to be sold to ▇▇▇▇▇▇ Mae.
9.1 (c) A ▇▇▇▇▇▇▇ Mac-approved seller/servicer of Mortgage Loans,
eligible to originate, purchase, hold, sell and service
Mortgage Loans to be sold to ▇▇▇▇▇▇▇ Mac.
9.1 (d) A VA-approved mortgagee and a lender in good-standing under
the VA loan guarantee program, eligible to originate,
purchase, hold, sell and service VA-guaranteed Mortgage
Loans.
9.2. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING WAREHOUSING
COLLATERAL
Borrower represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and
the making of each Warehousing Advance, that:
9.2 (a) Borrower has not selected the Collateral in a manner so as
to affect adversely Lender's interests.
9.2 (b) Borrower is the legal and equitable owner and holder, free
and clear of all Liens (other than Liens granted under this
Agreement), of the Pledged Loans and the Pledged Securities.
All Pledged Loans, Pledged Securities and related Purchase
Commitments have been duly authorized and validly issued to
Borrower, and all of the foregoing items of Collateral
comply with all of the requirements of this Agreement, and
have been and will continue to be validly pledged or
assigned to Lender, subject to no other Liens.
9.2 (c) Borrower has, and will continue to have, the full right,
power and authority to pledge the Collateral pledged and to
be pledged by it under this Agreement.
9.2 (d) Each Mortgage Loan and each related document included in the
Pledged Loans (1) has been duly executed and delivered by
the parties to that Mortgage Loan and that related document,
(2) has been made in compliance with all applicable laws,
rules and regulations (including all laws, rules and
regulations relating to usury), (3) is and will continue to
be a legal, valid and binding obligation, enforceable in
accordance with its terms, without setoff, counterclaim or
defense in favor of the mortgagor under the Mortgage Loan or
any other obligor on the Mortgage Note and (4) has not been
modified, amended or any requirements of which waived,
except in a writing that is part of the
Page 28
Collateral Documents. No party to any Mortgage Loan or
related document is in violation of any applicable law, rule
or regulation if the violation would impair the
collectibility of the Mortgage Loan or the performance by
the mortgagor or any other obligor of its obligations under
the Mortgage Note or any related document.
9.2 (e) Each Pledged Loan is secured by a Mortgage on real property
located in one of the states of the United States or the
District of Columbia.
9.2 (f) Unless Third Party Originated Loans are permitted, each
Pledged Loan has been closed or will be closed and funded
with the Warehousing Advance made against it.
9.2 (g) Except for open-ended Second Mortgage Loans, each Mortgage
Loan has been fully advanced in the face amount of its
Mortgage Note.
9.2 (h) Each First Mortgage is a first Lien on the premises
described in that Mortgage and each Second Mortgage Loan is
secured by a second Lien on the premises described in that
Mortgage. Each Pledged Loan has or will have a title
insurance policy, in ALTA form or equivalent, from a
recognized title insurance company, insuring the priority of
the Lien of the Mortgage and meeting the usual requirements
of Investors purchasing those Mortgage Loans.
9.2 (i) Each Mortgage Loan has been evaluated or appraised in
accordance with Title XI of FIRREA.
9.2 (j) The Mortgage Note for each Pledged Loan is (1) payable or
endorsed to the order of Borrower, (2) an "instrument"
within the meaning of Section 9-105 of the Uniform
Commercial Code of all applicable jurisdictions and (3) is
denominated and payable in United States dollars.
9.2 (k) No default has existed for 60 days or more under any
Mortgage Loan included in the Pledged Loans.
9.2 (l) All fire and casualty policies covering the premises
encumbered by each Mortgage included in the Pledged Loans
(1) name and will continue to name Borrower and its
successors and assigns as the insured under a standard
mortgagee clause, (2) are and will continue to be in full
force and effect and (3) afford and will continue to afford
insurance against fire and such other risks as are usually
insured against in the broad form of extended coverage
insurance generally available.
9.2 (m) Pledged Loans secured by premises located in a special flood
hazard area designated as such by the Director of the
Federal Emergency Management Agency are and will continue to
be covered by special flood insurance under the National
Flood Insurance Program.
9.2 (n) Each Pledged Loan against which a Warehousing Advance is
made on the basis of a Purchase Commitment meets all of the
requirements of that Purchase Commitment, and each Pledged
Security against which a Warehousing Advance is outstanding
meets all of the requirements of the related Purchase
Commitment.
9.2 (o) Pledged Loans that are intended to be exchanged for Agency
Securities comply or, prior to the issuance of the Agency
Securities will comply, with the requirements of any
governmental instrumentality, department or agency issuing
or guaranteeing the Agency Securities.
Page 29
9.2 (p) Pledged Loans that are intended to be used in the formation
of Mortgage-backed Securities (other than Agency Securities)
comply with the requirements of the issuer of the
Mortgage-backed Securities (or its sponsor) and of the
Rating Agencies.
9.2 (q) The original assignments of Mortgage and of UCC financing
statements delivered to Lender for each Pledged Loan are in
recordable form and comply with all applicable laws and
regulations governing the filing and recording of such
documents.
9.2 (r) Each Pledged Loan secured by real property to which a
Manufactured Home is affixed will create a valid Lien on
that Manufactured Home that will have priority over any
other Lien on the Manufactured Home, whether or not arising
under applicable real property law.
9.3. SPECIAL AFFIRMATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under
any other Loan Document, Borrower must:
9.3 (a) Warrant and defend the right, title and interest of Lender
in and to the Collateral against the claims and demands of
all Persons.
9.3 (b) Service or cause to be serviced all Pledged Loans in
accordance with the standard requirements of the issuers of
Purchase Commitments covering them and all applicable HUD,
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac requirements, including taking
all actions necessary to enforce the obligations of the
obligors under such Mortgage Loans. Service or cause to be
serviced all Mortgage Loans backing Pledged Securities in
accordance with applicable governmental requirements and
requirements of issuers of Purchase Commitments covering
them. Hold all escrow funds collected in respect of Pledged
Loans and Mortgage Loans backing Pledged Securities in
trust, without commingling the same with non-custodial
funds, and apply them for the purposes for which those funds
were collected.
9.3 (c) Execute and deliver to Lender such Uniform Commercial Code
financing statements with respect to the Collateral as
Lender may request, and those further instruments of sale,
pledge, assignment or transfer, and those powers of
attorney, as required by Lender, and do and perform all
matters and things necessary or desirable to be done or
observed, for the purpose of effectively creating,
maintaining and preserving the security and benefits
intended to be afforded Lender under this Agreement.
9.3 (d) Notify Lender within 2 Business Days of any default under,
or of the termination of, any Purchase Commitment relating
to any Pledged Loan, Eligible Mortgage Pool, or Pledged
Security.
9.3 (e) Promptly comply in all respects with the terms and
conditions of all Purchase Commitments, and all extensions,
renewals and modifications or substitutions of or to all
Purchase Commitments. Deliver or cause to be delivered to
the Investor the Pledged Loans and Pledged Securities to be
sold under each Purchase Commitment not later than 3
Business Days prior to the mandatory delivery date of the
Pledged Loans or Pledged Securities under the Purchase
Commitment.
9.3 (f) Prior to the origination by Borrower of any Mortgage Loans
for sale to ▇▇▇▇▇▇ ▇▇▇, enter into an agreement among
Borrower, Lender and ▇▇▇▇▇▇ Mae, pursuant to which ▇▇▇▇▇▇
Mae agrees to send all cash proceeds of Mortgage Loans sold
by Borrower to ▇▇▇▇▇▇ ▇▇▇ to the Cash Collateral Account.
Page 30
9.4. SPECIAL NEGATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL
As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed, Borrower must not, either
directly or indirectly, without the prior written consent of Lender:
9.4 (a) Amend or modify, or waive any of the terms and conditions
of, or settle or compromise any claim in respect of, any
Pledged Loans or Pledged Securities.
9.4 (b) Sell, transfer or assign, or grant any option with respect
to, or pledge (except under this Agreement) any of the
Collateral or any interest in any of the Collateral.
9.4 (c) Make any compromise, adjustment or settlement in respect of
any of the Collateral or accept other than cash in payment
or liquidation of the Collateral.
END OF ARTICLE 9
Page 31
10. DEFAULTS; REMEDIES
10.1. EVENTS OF DEFAULT
The occurrence of any of the following is an event of default ("Event
of Default"):
10.1 (a) Borrower fails to pay the principal of any Warehousing
Advance when due, whether at stated maturity, by
acceleration, or otherwise; or fails to pay any installment
of interest on any Warehousing Advance within 10 days after
the date of Lender's invoice or account analysis statement;
or fails to pay, within any applicable grace period, any
other amount due under this Agreement or any other
Obligation of Borrower to Lender; or
10.1 (b) Borrower or any of its Subsidiaries fails to pay, or
defaults in the payment of any principal or interest on, any
other indebtedness or any contingent obligation within any
applicable grace period; breaches or defaults with respect
to any other material term of any other indebtedness or of
any loan agreement, mortgage, indenture or other agreement
relating to that indebtedness, if the effect of that breach
or default is to cause, or to permit the holder or holders
of that indebtedness (or a trustee on behalf of such holder
or holders) to cause, indebtedness of Borrower or its
Subsidiaries in the aggregate amount of $50,000 or more to
become or be declared due before its stated maturity (upon
the giving or receiving of notice, lapse of time, both, or
otherwise); or
10.1 (c) Borrower fails to perform or comply with any term or
condition applicable to it contained in Sections 7.4 or
7.14, or in any Section of Article 8; or
10.1 (d) Any representation or warranty made or deemed made by
Borrower under this Agreement, in any other Loan Document or
in any written statement or certificate at any time given by
Borrower is inaccurate or incomplete in any material respect
on the date as of which it is made or deemed made; or
10.1 (e) Borrower defaults in the performance of or compliance with
any term contained in this Agreement or any other Loan
Document other than those referred to in Sections 10.1 (a),
10.1 (c) or 10.1 (d) and such default has not been remedied
or waived within 30 days after the earliest of (1) receipt
by Borrower of Notice from Lender of that default, (2)
receipt by Lender of Notice from Borrower of that default or
(3) the date Borrower should have notified Lender of that
default under Section 7.7(c) or 7.7(d); or
10.1 (f) A case (whether voluntary or involuntary) is filed by or
against Guarantor, Borrower or any Subsidiary of Borrower
under any applicable bankruptcy, insolvency or other similar
federal or state law; or a court of competent jurisdiction
appoints a receiver (interim or permanent), liquidator,
sequestrator, trustee, custodian or other officer having
similar powers over Guarantor, Borrower or any Subsidiary of
Borrower, or over all or a substantial part of their
respective properties or assets; or Guarantor, Borrower or
any Subsidiary of Borrower (1) consents to the appointment
of or possession by a receiver (interim or permanent),
liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Guarantor, Borrower or
any Subsidiary of Borrower, or over all or a substantial
part of their respective properties or assets, (2) makes an
assignment for the benefit of creditors, or (3) fails, or
admits in writing its inability, to pay its debts as those
debts become due; or
10.1 (g) Borrower fails to perform any contractual obligation to
repurchase Mortgage Loans, if such obligations in the
aggregate exceed $500,000; or
Page 32
10.1 (h) Any money judgment, writ or warrant of attachment or similar
process involving in an amount in excess of $50,000 is
entered or filed against Borrower or any of its Subsidiaries
or any of their respective assets and remains undischarged,
unvacated, unbonded or unstayed for a period of 30 days or 5
days before the date of any proposed sale under that money
judgment, writ or warrant of attachment or similar process;
or
10.1 (i) Any order, judgment or decree decreeing the dissolution of
Borrower is entered and remains undischarged or unstayed for
a period of 20 days; or
10.1 (j) Borrower purports to disavow the Obligations or contests the
validity or enforceability of any Loan Document; or
10.1 (k) Guarantor purports to disavow its obligations under its
Guaranty or contests the validity or enforceability of its
Guaranty; or
10.1 (l) Lender's security interest on any portion of the Collateral
becomes unenforceable or otherwise impaired and, if Lender
agrees in writing to the grace period, all Warehousing
Advances made against any of that Collateral are not paid in
full within 10 days after the date the unenforceability or
impairment begins; or
10.1 (m) A material adverse change occurs in Borrower's financial
condition, business, properties, operations or prospects, or
in Borrower's ability to repay the Obligations; or
10.1 (n) Any Lien for any taxes, assessments or other governmental
charges (1) is filed against Borrower or any of its
property, or is otherwise enforced against Borrower or any
of its property, or (2) obtains priority that is equal or
greater than the priority of Lender's security interest in
any of the Collateral; or
10.1 (o) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ceases to be the Chief Executive Officer of
Borrower; or
10.1 (p) Guarantor ceases to own, directly or indirectly, all of the
issued and outstanding capital stock of Borrower.
10.2. REMEDIES
10.2 (a) If an Event of Default described in Section 10.1 (f) occurs
with respect to Borrower, the Warehousing Commitment will
automatically terminate and the unpaid principal amount of
and accrued interest on the Warehousing Note and all other
Obligations will automatically become due and payable,
without presentment, demand or other Notice or requirements
of any kind, all of which Borrower expressly waives.
10.2 (b) If any other Event of Default occurs, Lender may, by Notice
to Borrower, terminate the Warehousing Commitment and
declare the Obligations to be immediately due and payable.
10.2 (c) If any Event of Default occurs, Lender may also take any of
the following actions:
(1) Foreclose upon or otherwise enforce its security
interest in and Lien on the Collateral to secure all
payments and performance of the Obligations in any
manner permitted by law or provided for in the Loan
Documents.
(2) Notify all obligors under any of the Collateral that
the Collateral has been assigned to Lender (or to
another Person designated by Lender) and that all
payments on that Collateral are to be made directly
to Lender (or such other Person); settle, compromise
or release, in whole or in part, any amounts any
Page 33
obligor or Investor owes on any of the Collateral on
terms acceptable to Lender; enforce payment and
prosecute any action or proceeding involving any of
the Collateral; and where any Collateral is in
default, foreclose on and enforce any Liens securing
that Collateral in any manner permitted by law and
sell any property acquired as a result of those
enforcement actions.
(3) Act, or contract with a third party to act, at
Borrower's expense, as servicer or subservicer of
Collateral requiring servicing, and perform all
obligations required under any Collateral.
(4) Require Borrower to assemble and make available to
Lender the Collateral and all related books and
records at a place designated by Lender.
(5) Enter onto property where any Collateral or related
books and records are located and take possession of
those items with or without judicial process; and
obtain access to Borrower's data processing
equipment, computer hardware and software relating to
the Collateral and use all of the foregoing and the
information contained in the foregoing in any manner
Lender deems necessary for the purpose of
effectuating its rights under this Agreement and any
other Loan Document.
(6) Before the disposition of the Collateral, prepare it
for disposition in any manner and to the extent
Lender deems appropriate.
(7) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of
Minnesota or other applicable law, including selling
or otherwise disposing of all or any portion of the
Collateral at one or more public or private sales,
whether or not the Collateral is present at the place
of sale, for cash or credit or future delivery, on
the terms and in the manner as Lender may determine,
including sale under any applicable Purchase
Commitment. Borrower waives any right it may have to
prior notice of the sale of all or any portion of the
collateral to the extent allowed by applicable law.
If notice is required under applicable law, Lender
will give Borrower not less than 10 days' notice of
any public sale or of the date after which any
private sale may be held. Borrower agrees that 10
days' notice is reasonable notice. Lender may,
without notice or publication, adjourn any public or
private sale one or more times by announcement at the
time and place fixed for the sale, and the sale may
be held at any time or place announced at the
adjournment. In the case of a sale of all or any
portion of the Collateral on credit or for future
delivery, the Collateral sold on those terms may be
may be retained by Lender until the purchaser pays
the selling price or takes possession of the
Collateral. Lender has no liability to Borrower if a
purchaser fails to pay for or take possession of the
Collateral sold on those terms, and in the case of
any such failure, Lender may sell the Collateral
again upon notice complying with this Section.
(8) Instead of or in conjunction with exercising the
power of sale authorized by Section 10.2 (c)(7),
Lender may proceed by suit at law or in equity to
collect all amounts due upon the Collateral, or to
foreclose Lender's Lien on and sell all or any
portion of the Collateral pursuant to a judgment or
decree of a court of competent jurisdiction.
(9) Proceed against Borrower on the Warehousing Note or
against any Guarantor under the Guaranty.
(10) Retain all excess proceeds from the sale or other
disposition of the Collateral, and apply them to the
payment of the Obligations under Section 10.3.
Page 34
10.2 (d) Lender will incur no liability as a result of the
commercially reasonable sale or other disposition of all or
any portion of the Collateral at any public or private sale
or other disposition. Borrower waives (to the extent
permitted by law) any claims it may have against Lender
arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less
than the price that Lender might have obtained at a public
sale, or was less than the aggregate amount of the
outstanding Warehousing Advances, plus accrued and unpaid
interest on the Warehousing Advances, and unpaid fees, even
if Lender accepts the first offer received and does not
offer the Collateral to more than one offeree. Borrower
agrees that any sale of Collateral under the terms of a
Purchase Commitment, or any other disposition of Collateral
arranged by Borrower, whether before or after the occurrence
of an Event of Default, will be deemed to have been made in
a commercially reasonable manner.
10.2 (e) Borrower acknowledges that Mortgage Loans are collateral of
a type that is the subject of widely distributed standard
price quotations and that Mortgage-backed Securities are
collateral of a type that is customarily sold on a
recognized market. Borrower waives any right it may have to
prior notice of the sale of Pledged Securities, and agrees
that Lender may purchase Pledged Loans and Pledged
Securities at a private sale of such Collateral.
10.2 (f) Borrower specifically waives and releases (to the extent
permitted by law) any equity or right of redemption, stay or
appraisal that Borrower has or may have under any rule of
law or statute now existing or adopted after the date of
this Agreement, and any right to require Lender to (1)
proceed against any Person, (2) proceed against or exhaust
any of the Collateral or pursue its rights and remedies
against the Collateral in any particular order, or (3)
pursue any other remedy within its power. Lender is not
required to take any action to preserve any rights of
Borrower against holders of mortgages having priority to the
Lien of any Mortgage included in the Collateral or to
preserve Borrower's rights against other prior parties.
10.2 (g) Lender may, but is not obligated to, advance any sums or do
any act or thing necessary to uphold or enforce the Lien and
priority of, or the security intended to be afforded by, any
Mortgage included in the Collateral, including payment of
delinquent taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by
Lender in exercising any right, power or remedy conferred by
this Agreement, or in the enforcement of this Agreement,
together with interest on those amounts at the Default Rate,
from the time paid by Lender until repaid by Borrower, are
deemed to be principal outstanding under this Agreement and
the Warehousing Note.
10.2 (h) No failure or delay on the part of Lender to exercise any
right, power or remedy provided in this Agreement or under
any other Loan Document, at law or in equity, will operate
as a waiver of that right, power or remedy. No single or
partial exercise by Lender of any right, power or remedy
provided under this Agreement or any other Loan Document, at
law or in equity, precludes any other or further exercise of
that right, power, or remedy by Lender, or Lender's exercise
of any other right, power or remedy. Without limiting the
foregoing, Borrower waives all defenses based on the statute
of limitations to the extent permitted by law. The remedies
provided in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any remedies provided at
law or in equity.
10.2 (i) Lender is hereby granted a license or other right to use,
without charge, Borrower's computer programs, other
programs, labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in advertising for sale
and selling any Collateral and Borrower's rights under all
licenses and all other agreements related to the foregoing
inure to Lender's benefit until the Obligations are paid in
full.
Page 35
10.3. APPLICATION OF PROCEEDS
Lender may apply the proceeds of any sale, disposition or other
enforcement of Lender's Lien on all or any portion of the Collateral to
the payment of the Obligations in the order Lender determines in its
sole discretion. From and after the indefeasible payment to Lender of
all of the Obligations, any remaining proceeds of the Collateral will
be paid to Borrower, or to its successors or assigns, or as a court of
competent jurisdiction may direct. If the proceeds of any sale,
disposition or other enforcement of the Collateral are insufficient to
cover the costs and expenses of that sale, disposition or other
enforcement and payment in full of all Obligations, Borrower is liable
for the deficiency.
10.4. LENDER APPOINTED ATTORNEY-IN-FACT
Borrower appoints Lender its attorney-in-fact, with full power of
substitution, for the purpose of carrying out the provisions of this
Agreement, the Warehousing Note and the other Loan Documents and taking
any action and executing any instruments that Lender deems necessary or
advisable to accomplish that purpose. Borrower's appointment of Lender
as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, Lender may give
notice of its Lien on the Collateral to any Person, either in the name
of Borrower or in its own name, endorse all Pledged Loans or Pledged
Securities payable to the order of Borrower, change or cause to be
changed the book-entry registration or name of subscriber or Investor
on any Pledged Security, or receive, endorse and collect all checks
made payable to the order of Borrower representing payment on account
of the principal of or interest on, or the proceeds of sale of, any of
the Pledged Loans or Pledged Securities and give full discharge for
those transactions.
10.5. RIGHT OF SET-OFF
If Borrower defaults in the payment of any Obligation or in the
performance of any of its duties under the Loan Documents, Lender may,
without Notice to or demand on Borrower (which Notice or demand
Borrower expressly waives), set-off, appropriate or apply any and all
property of Borrower held at any time by Lender, or any indebtedness at
any time owed by Lender to or for the account of Borrower, against the
Obligations, whether or not those Obligations have matured.
END OF ARTICLE 10
Page 36
11. MISCELLANEOUS
11.1. NOTICES
Except where telephonic or facsimile notice is expressly authorized by
this Agreement, all communications required or permitted to be given or
made under this Agreement ("Notices") must be in writing and must be
sent by manual delivery, overnight courier or United States mail
(postage prepaid), addressed as follows (or at such other address as
may be designated by it in a Notice to the other):
If to Borrower: American Home Mortgage Corp. and
Marina Mortgage Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: Residential Funding Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All periods of Notice will be measured from the date of delivery if
delivered manually or by facsimile, from the first Business Day after
the date of sending if sent by overnight courier or from 4 days after
the date of mailing if sent by United States mail, except that Notices
to Lender under Article 2 and Section 3.3 (h) shall be deemed to have
been given only when actually received by Lender. Borrower authorizes
Lender to accept Borrower's bailee pledge agreements, Warehousing
Advance Requests, shipping requests, wire transfer instructions and
security delivery instructions transmitted to Lender by facsimile or
electronic transmission, and those documents, when transmitted to
Lender by facsimile or electronic transmission, have the same force and
effect as the originals.
11.2. REIMBURSEMENT OF EXPENSES; INDEMNITY
Borrower must: (a) pay Lender a document production fee in connection
with the preparation and negotiation of this Agreement; (b) pay such
additional documentation production fees as Lender may require and all
out-of-pocket costs and expenses of Lender, including reasonable fees,
service charges and disbursements of counsel (including allocated costs
of internal counsel), in connection with the amendment, enforcement and
administration of this Agreement, the Warehousing Note, and other Loan
Documents and the making and repayment of the Warehousing Advances, and
the payment of interest thereon; (c) indemnify, pay, and hold harmless
Lender and any other holder of the Warehousing Note from and against,
all present and future stamp, documentary and other similar taxes with
respect to the foregoing matters and save Lender and any other holder
of the Warehousing Note harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to
pay such taxes; and (d) indemnify, pay and hold harmless Lender and any
of its Affiliates, officers, directors, employees or agents and any
subsequent holder of the Warehousing Note (collectively called the
"Indemnitees") from and against all liabilities, obligations, losses,
damages, penalties, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel of the Indemnitees (including allocated
costs of
Page 37
internal counsel) in connection with any investigative, administrative
or judicial proceeding, whether or not the Indemnitees have been
designated as parties to such proceeding) that may be imposed upon,
incurred by or asserted against such Indemnitees in any manner relating
to or arising out of this Agreement, the Warehousing Note, or any other
Loan Document or any of the transactions contemplated hereby or thereby
("Indemnified Liabilities"), except that Borrower has no obligation
under this Agreement with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of any such
Indemnitees. To the extent that the undertaking to indemnify, pay and
hold harmless as set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy,
Borrower must contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them.
The agreement of Borrower contained in this Article survives the
expiration or termination of this Agreement and the payment in full of
the Warehousing Note. Attorneys' fees and disbursements incurred in
enforcing, or on appeal from, a judgment under this Agreement are
recoverable separately from and in addition to any other amount
included in such judgment, and this clause is intended to be severable
from the other provisions of this Agreement and to survive and not be
merged into such judgment.
11.3. FINANCIAL INFORMATION
All financial statements and reports furnished to Lender under this
Agreement must be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as
at the end of and for Borrower's most recent fiscal year (except to the
extent otherwise required to conform to good accounting practice).
11.4. TERMS BINDING UPON SUCCESSORS; SURVIVAL OF REPRESENTATIONS
The terms and provisions of this Agreement are binding upon and inure
to the benefit of Borrower, Lender and their respective successors and
assigns. All of Borrower's representations, warranties, covenants and
agreements survive the making of any Warehousing Advance, and remain
effective for as long as the Warehousing Commitment is outstanding or
there remain any Obligations to be paid or performed.
11.5. ASSIGNMENT
Borrower cannot assign this Agreement. Lender may at any time, without
Notice to or the consent of Borrower, transfer or assign, in whole or
in part, its interest in this Agreement and the Warehousing Note along
with Lender's security interest in any of the Collateral, and any
assignee of Lender may enforce this Agreement, the Warehousing Note and
its security interest in the Collateral assigned.
11.6. AMENDMENTS
Except as otherwise provided in this Agreement, this Agreement may not
be amended, modified or supplemented unless the amendment, modification
or supplement is set forth in a writing signed by both Borrower and
Lender.
11.7. GOVERNING LAW
This Agreement and the other Loan Documents are governed by the laws of
the State of Minnesota, without reference to its principles of
conflicts of laws.
Page 38
11.8. PARTICIPATIONS
Lender may at any time sell, assign or grant participations in, or
otherwise transfer to any other Person ("Participant"), all or part of
the Obligations. Without limiting Lender's exclusive right to collect
and enforce the Obligations, Borrower agrees that each participation
will give rise to a debtor-creditor relationship between Borrower and
the Participant, and Borrower authorizes each Participant, upon the
occurrence of an Event of Default, to proceed directly by right of
setoff, banker's lien, or otherwise, against any assets of Borrower
that may be held by that Participant. Borrower authorizes Lender to
disclose to any prospective Participant and any Participant any and all
information in Lender's possession concerning Borrower, this Agreement
and the Collateral.
11.9. RELATIONSHIP OF THE PARTIES
This Agreement provides for the making and repayment of Warehousing
Advances by Lender (in its capacity as a lender) and Borrower (in its
capacity as a borrower), for the payment of interest on those
Warehousing Advances and for the payment of certain fees by Borrower to
Lender. The relationship between Lender and Borrower is limited to that
of creditor and secured party on the part of Lender and of debtor on
the part of Borrower. The provisions of this Agreement and the other
Loan Documents for compliance with financial covenants and the delivery
of financial statements and other operating reports are intended solely
for the benefit of Lender to protect its interest as a creditor and
secured party. Nothing in this Agreement creates or may be construed as
permitting or obligating Lender to act as a financial or business
advisor or consultant to Borrower, as permitting or obligating Lender
to control Borrower or to conduct Borrower's operations, as creating
any fiduciary obligation on the part of Lender to Borrower, or as
creating any joint venture, agency, or other relationship between
Lender and Borrower other than as explicitly and specifically stated in
the Loan Documents. Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own
choosing in connection with the negotiation and execution of the Loan
Documents and to obtain the advice of that counsel with respect to all
matters contained in the Loan Documents, including the waiver of jury
trial contained in Section 11.15. Borrower further acknowledges that it
is experienced with respect to financial and credit matters and has
made its own independent decisions to apply to Lender for credit and to
execute and deliver this Agreement.
11.10. SEVERABILITY
If any provision of this Agreement is declared to be illegal or
unenforceable in any respect, that provision is null and void and of no
force and effect to the extent of the illegality or unenforceability,
and does not affect the validity or enforceability of any other
provision of the Agreement.
11.11. CONSENT TO CREDIT REFERENCES
Borrower consents to the disclosure of information regarding Borrower
and its Subsidiaries and their relationships with Lender to Persons
making credit inquiries to Lender. This consent is revocable by
Borrower at any time upon Notice to Lender as provided in Section 11.1.
11.12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, and all of which together constitute
one and the same instrument.
Page 39
11.13. ENTIRE AGREEMENT
This Agreement, the Warehousing Note and the other Loan Documents
represent the final agreement among the parties with respect to their
subject matter, and may not be contradicted by evidence of prior or
contemporaneous oral agreements among the parties. There are no oral
agreements among the parties with respect to the subject matter of this
Agreement, the Warehousing Note and the other Loan Documents.
11.14. CONSENT TO JURISDICTION
AT THE OPTION OF LENDER, THIS AGREEMENT, THE WAREHOUSING NOTE AND THE
OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT
WITHIN THE STATE OF MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION
AND VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION
OR VENUE OF ANY OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN
THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR PROCEEDING MAY
BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER BY
FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER'S
CONSENT AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER'S RIGHT
TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER
IN ANY OTHER JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, LENDER AT ITS OPTION MAY
HAVE THE CASE TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE STATE
OF MINNESOTA OR, IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, MAY HAVE BORROWER'S ACTION DISMISSED WITHOUT PREJUDICE.
11.15. WAIVER OF JURY TRIAL
BORROWER AND LENDER EACH PROMISES AND AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY
RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR
HEREAFTER ARISES. THIS WAIVER OF THE RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER AND LENDER,
AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE
RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. LENDER AND BORROWER ARE
EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT
HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS
AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO JURY
TRIAL. FURTHER, BORROWER AND LENDER EACH CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY'S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS
REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO TRIAL BY JURY.
11.16. WAIVER OF PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES FROM LENDER AND ANY OF LENDER'S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL
Page 40
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY BORROWER AGAINST LENDER OR ANY OF LENDER'S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY
BORROWER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR
WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES WOULD OTHERWISE APPLY. LENDER IS AUTHORIZED AND DIRECTED TO
SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT
MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS
WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES.
END OF ARTICLE 11
Page 41
12. DEFINITIONS
12.1. DEFINED TERMS
Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms
in Exhibits to this Agreement:
"Advance Rate" means, with respect to any Eligible Loan, the Advance
Rate set forth in Exhibit H for that type of Eligible Loan.
"Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
"Aged Mortgage Loans" means a Mortgage Loan against which an Advance
has been outstanding for longer than the Standard Warehouse Period,
provided that Aged Mortgage Loans are permitted for such type of
Mortgage Loan.
"Aged Warehouse Period" means the maximum number of days an Advance
against Aged Mortgage Loans of a particular type may remain
outstanding.
"Agency Security" means a Mortgage-backed Security issued or guaranteed
by ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae.
"Agreement" means this Warehousing Credit, Term Loan and Security
Agreement, either as originally executed or as it may be amended,
restated, renewed or replaced.
"Appraised Property Value" means with respect to an interest in real
property, the then current fair market value of the real property and
any improvements on it as of recent date determined in accordance with
Title XI of FIRREA by a qualified appraiser who is a member of the
American Institute of Real Estate Appraisers or other group of
professional appraisers.
"Approved Custodian" means a pool custodian or other Person that Lender
deems acceptable, in its sole discretion, to hold Mortgage Loans for
inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for an
Investor that has issued a Purchase Commitment for those Mortgage
Loans.
"Audited Statement Date" means the date of Borrower's most recent
audited financial statements (and, if applicable, Borrower's
Subsidiaries, on a consolidated basis) delivered to Lender under this
Agreement.
"Bank One" means BANK ONE, NATIONAL ASSOCIATION, Chicago, Illinois, or
any successor bank.
"Borrower" has the meaning set forth in the first paragraph of this
Agreement.
"Business Day" means any day other than Saturday, Sunday or any other
day on which national banking associations are closed for business.
"Calendar Quarter" means the 3 month period beginning on each January
1, April 1, July 1 or October 1.
Page 42
"Cash Collateral Account" means a demand deposit account maintained at
the Funding Bank in Lender's name and designated for receipt of the
proceeds of the sale or other disposition of Collateral.
"Check Disbursement Account" means a demand deposit account maintained
at the Funding Bank in Borrower's name and under the control of Lender
for clearing checks written by Borrower to fund Mortgage Loans funded
by Warehousing Advances.
"Closing Date" has the meaning set forth in the Recitals to this
Agreement.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Documents" means, with respect to each Mortgage Loan, (a)
the Mortgage Note, the Mortgage and all other documents executed in
connection with or relating to the Mortgage Loan, (b) as applicable,
the original lender's ALTA Policy of Title Insurance or its equivalent,
documents evidencing the FHA Commitment to Insure, the VA Guaranty or
private mortgage insurance, the appraisal, the Regulation Z statement,
the environmental assessment, the engineering report, certificates of
casualty or hazard insurance, credit information on the maker of the
Mortgage Note, the HUD-1 or corresponding purchase advice, (c) any
other document listed in Exhibit B, and (d) any other document that is
customarily desired for inspection or transfer incidental to the
purchase of any Mortgage Note by an Investor or that is customarily
executed by the seller of a Mortgage Note to an Investor.
"Committed Purchase Price" means for an Eligible Loan (a) the dollar
price as set forth in the Purchase Commitment or, if the price is not
expressed in dollars, the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in a
Purchase Commitment for the Eligible Loan, or (b) if the Eligible Loan
is to be used to back an Agency Security, the price (expressed as a
percentage) as set forth in a Purchase Commitment for the Agency
Security.
"Compliance Certificate" means a certificate executed on behalf of
Borrower by its chief financial officer or its treasurer or by another
officer approved by Lender, substantially in the form of Exhibit E.
"Credit Score" means a mortgagor's overall consumer credit rating,
represented by a single numeric credit score using the Fair, ▇▇▇▇▇
consumer credit scoring system, provided by a credit repository
acceptable to Lender and the Investor that issued the Purchase
Commitment covering the related Mortgage Loan (if a Purchase Commitment
is required by Exhibit H).
"Debt" means (a) all indebtedness or other obligations of a Person
that, in accordance with GAAP, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of the
Person on the date of determination, plus (b) all indebtedness or other
obligations of the Person for borrowed money or for the deferred
purchase price of property or services. For purposes of calculating a
Person's Debt, Subordinated Debt not due within 1 year of that date and
deferred taxes arising from capitalized excess servicing fees and
capitalized servicing rights may be excluded from a Person's
indebtedness.
"Default" means the occurrence of any event or existence of any
condition that, but for the giving of Notice or the lapse of time,
would constitute an Event of Default.
"Default Rate" means, for any Warehousing Advance, the Interest Rate
applicable to that Warehousing Advance plus 4% per annum. If no
Interest Rate is applicable to a Warehousing Advance, "Default Rate"
means, for that Warehousing Advance, the highest Interest Rate then
applicable to any outstanding Warehousing Advance plus 4% per annum.
Page 43
"Depository Benefit" means the compensation received by Lender,
directly or indirectly, as a result of Borrower's maintenance of
Eligible Balances with a Designated Bank.
"Designated Bank" means any bank designated by Lender as a Designated
Bank, but only for as long as Lender has an agreement under which
Lender receives Depository Benefits from that bank.
"Designated Bank Charges" means any fees, interest or other charges
that would otherwise be payable to a Designated Bank in connection with
Eligible Balances maintained at the Designated Bank, including deposit
insurance premiums, service charges and any other charges that may be
imposed by governmental authorities from time to time.
"Electronic Advance Request" means an electronic transmission through
RFConnects Delivery containing the same information as Exhibit A to
this Agreement.
"Eligible Balances" means all funds of or maintained by Borrower (and,
if applicable, Borrower's Subsidiaries) in non-interest bearing
accounts at a Designated Bank, minus balances to support float, reserve
requirements and any other reductions that may be imposed by
governmental authorities from time to time.
"Eligible Loan" means a Mortgage Loan that satisfies the conditions and
requirements set forth in Exhibit H.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an
Approved Custodian has issued its initial certification, (b) there
exists a Purchase Commitment covering the Agency Security to be issued
on the basis of that certification and (c) the Agency Security will be
delivered to Lender.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
all rules and regulations promulgated under that statute, as amended,
and any successor statute, rules, and regulations.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which Borrower is a member
and that is treated as a single employer under Section 414 of the
Internal Revenue Code.
"Event of Default" means any of the conditions or events set forth in
Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules
and regulations promulgated under that statute, as amended, and any
successor statute, rules, and regulations.
"Exhibit B" means Exhibit B-SF or B-REP, as applicable to the type of
Eligible Loan against which a Warehousing Advance is to be made.
"Fair Market Value" means, at any time for an Eligible Loan or a
related Agency Security (if the Eligible Loan is to be used to back an
Agency Security) as of any date of determination, (a) the Committed
Purchase Price if the Eligible Loan is covered by a Purchase Commitment
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac or the Eligible Loan is to be exchanged
for an Agency Security and that Agency Security is covered by a
Purchase Commitment from an Investor, or (b) otherwise, the market
price for such Eligible Loan or Agency Security, determined by Lender
based on market data for similar Mortgage Loans or Agency Securities
and such other criteria as Lender deems appropriate in its sole
discretion.
"▇▇▇▇▇▇ Mae" means ▇▇▇▇▇▇ ▇▇▇, a corporation created under the laws of
the United States, and any successor corporation or other entity.
Page 44
"FHA" means the Federal Housing Administration and any successor agency
or other entity.
"FICA" means the Federal Insurance Contributions Act, as amended, and
any successor statute.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 and all rules and regulations promulgated under
that statute, as amended, and any successor statute, rules, and
regulations.
"First Mortgage" means a Mortgage that constitutes a first Lien on the
real property covered by the Mortgage.
"First Mortgage Loan" means a Mortgage Loan secured by a First
Mortgage.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, a corporation created under the laws
of the United States, and any successor corporation or other entity.
"Funding Bank" means Bank One or any other bank designated by Lender as
a Funding Bank.
"Funding Bank Agreement" means a letter agreement on the form
prescribed by Lender between the Funding Bank and Borrower authorizing
Lender's access to the Operating Account.
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in statements
and pronouncements of the Financial Accounting Standards Board, or in
opinions, statements or pronouncements of any other entity approved by
a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Gestation Agreement" means an agreement under which Borrower agrees to
sell or finance (a) a Mortgage Loan prior to the date of purchase by an
Investor or (b) a Mortgage Pool prior to the date a Mortgage-backed
Security backed by the Mortgage Pool is issued.
"▇▇▇▇▇▇ Mae" means the Government National Mortgage Association, an
agency of the United States government, and any successor agency or
other entity.
"GMAC-RFC Client Guide" means the applicable loan purchase guide issued
by Lender, as the same may be amended or replaced.
"Government Mortgage Loan" means a closed-end First Mortgage Loan that
is either HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a
Title I Mortgage Loan) or VA guaranteed.
"Guarantor" means AMERICAN HOME MORTGAGE HOLDINGS, INC. and any other
Person that hereafter guarantees all or any portion of Borrower's
Obligations.
"Guaranty" means a guaranty of all or any portion of Borrower's
Obligations. If more than one Guaranty is executed and delivered to
Lender, the term "Guaranty" means each of the Guaranties and all of
them.
"Hedging Arrangements" means, with respect to any Person, any
agreements or other arrangements (including interest rate swap
agreements, interest rate cap agreements and forward sale agreements)
entered into to protect that Person against changes in interest rates
or the market value of assets.
"High LTV Mortgage Loan" has the meaning set forth in Exhibit H.
Page 45
"HUD" means the Department of Housing and Urban Development, and any
successor agency or other entity.
"HUD 203(K) Mortgage Loan" has the meaning set forth in Exhibit H
"Indemnified Liabilities" has the meaning set forth in Section 11.2.
"Indemnitees" has the meaning set forth in Section 11.2.
"Interest Rate" means, for any Warehousing Advance, the floating rate
of interest specified for that Warehousing Advance in Exhibit H.
"Interim Statement Date" means the date of the most recent unaudited
financial statements of Borrower (and, if applicable, Borrower's
Subsidiaries, on a consolidated basis) delivered to Lender under this
Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, Title
26 of the United States Code, the regulations, rulings and
interpretations issued under those statutory provisions and any
subsequent federal income tax law or laws, as amended.
"Investor" means ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or a financially responsible
private institution that Lender deems acceptable, in its sole
discretion, to issue Purchase Commitments with respect to a particular
category of Eligible Loans.
"Lender" has the meaning set forth in the first paragraph of this
Agreement.
"Leverage Ratio" means the ratio of a Person's (and, if applicable, the
Person's Subsidiaries, on a consolidated basis) Debt to Tangible Net
Worth. For purposes of calculating a Person's Leverage Ratio, Debt
arising under Hedging Arrangements, to the extent of assets arising
under those Hedging Arrangements, may be excluded from a Person's Debt.
"LIBOR" means, for each week, the rate of interest per annum that is
equal to the arithmetic mean of the U.S. Dollar London Interbank
Offered Rates for 1 month periods of certain U.S. banks as of 11:00
a.m. (London time) on the first Business Day of each week on which the
London Interbank market is open, as published by Bloomberg L.P. If
those interest rates are not offered or published for any period, then
during that period LIBOR means the London Interbank Offered Rate for 1
month periods as published in The Wall Street Journal in its regular
column entitled "Money Rates" on the first Business Day of each week on
which the London Interbank market is open.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature of
such an agreement and any agreement to give any security interest).
"Loan Documents" means this Agreement, the Warehousing Note, the
Guaranty, any agreement of Borrower relating to Subordinated Debt, and
each other document, instrument or agreement executed by Borrower in
connection with any of those documents, instruments and agreements, as
originally executed or as any of the same may be amended, restated,
renewed or replaced.
"Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a)
the maximum amount that may be borrowed under the Mortgage Loan
(whether or not borrowed) at the time of origination, plus the Mortgage
Note Amounts of all other Mortgage Loans secured by the related
Property, to (b) the Appraised Property Value of the related Property.
Page 46
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System, as amended.
"Miscellaneous Charges" means miscellaneous charges and expenses
incurred by or on behalf of Lender for the handling and administration
of Warehousing Advances and Collateral, including costs for UCC, tax
lien and judgment searches conducted by Lender, filing fees, charges
for wire transfers and check processing charges, charges for security
delivery fees, charges for overnight delivery of Collateral to
Investors, the Funding Bank's service fees and overdraft charges and
Designated Bank Charges.
"Mortgage" means a mortgage or deed of trust on real property that is
improved and substantially completed (including real property to which
a Manufactured Home has been affixed in a manner such that the Lien of
a mortgage or deed of trust would attach to the Manufactured Home under
applicable real property law).
"Mortgage-backed Securities" means securities that are secured or
otherwise backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured
by a Mortgage.
"Mortgage Note" means a promissory note secured by one or more
Mortgages.
"Mortgage Note Amount" means, as of any date of determination, the then
outstanding and unpaid principal amount of a Mortgage Note (whether or
not an additional amount is available to be drawn under that Mortgage
Note).
"Mortgage Pool" means a pool of one or more Pledged Loans on the basis
of which a Mortgage-backed Security is to be issued.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of
Borrower has any obligation with respect to its employees.
"Notices" has the meaning set forth in Section 11.1.
"Obligations" means any and all indebtedness, obligations and
liabilities of Borrower to Lender and Lender's Subsidiaries (whether
now existing or arising after the date of this Agreement, voluntary or
involuntary, joint or several, direct or indirect, absolute or
contingent, liquidated or unliquidated, or decreased or extinguished
and later increased and however created or incurred), including
Borrower's obligations and liabilities to Lender under the Loan
Documents.
"Operating Account" means a demand deposit account maintained at the
Funding Bank in Borrower's name and designated for funding that portion
of each Eligible Loan not funded by a Warehousing Advance made against
that Eligible Loan and for returning any excess payment from an
Investor for a Pledged Loan or Pledged Security.
"Overdraft Advance" has the meaning set forth in Exhibit B.
"Participant" has the meaning set forth in Section 11.8.
"Person" means and includes natural persons, corporations, limited
liability companies, limited liability partnerships, limited liability
limited partnerships, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions of those governments.
Page 47
"Plan" means each employee benefit plan (whether in existence on the
Closing Date or established after that date), as that term is defined
in Section 3 of ERISA, maintained for the benefit of directors,
officers or employees of Borrower or any ERISA Affiliate.
"Pledged Assets" means, collectively, Pledged Loans and Pledged
Securities.
"Pledged Hedging Accounts" has the meaning set forth in Section 4.1
(h).
"Pledged Hedging Arrangements" has the meaning set forth in Section 4.1
(h).
"Pledged Loans" has the meaning set forth in Section 4.1 (b).
"Pledged Securities" has the meaning set forth in Section 4.1 (c).
"Prime Mortgage Loan" has the meaning set forth in Exhibit H.
"Prohibited Transaction" has the meanings set forth for such term in
Section 4975 of the Internal Revenue Code and Section 406 of ERISA.
"Purchase Commitment" means a written commitment, in form and substance
satisfactory to Lender, issued in favor of Borrower by an Investor
under which that Investor commits to purchase Mortgage Loans or
Mortgage-backed Securities.
"Receivables" has the meaning set forth in Section 4.1 (e).
"Rejected Mortgage Loan" has the meaning set forth in Exhibit H.
"Release Amount" has the meaning set forth in Section 4.3 (f).
"Repurchased Mortgage Loan" has the meaning set forth in Exhibit H.
"RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase
Commitment issued by Lender.
"RFConnects Delivery" means Lender's proprietary service to support the
electronic exchange of information between Lender and Borrower,
including Advance Requests, shipping requests, payoff requests,
activity reports and exception reports.
"RFConnects Pledge Agreement" means an agreement (on the then current
form prescribed by Lender) granting Lender a security interest in
Mortgage Loans for which Borrower has requested Warehousing Advances
using RFConnects Delivery.
"Second Mortgage" means a Mortgage that constitutes a second Lien on
the property covered by the Mortgage.
"Second Mortgage Loan" means a Mortgage Loan secured by a Second
Mortgage.
"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, under which that Person has the
right to service Mortgage Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal
balance of Mortgage Loans serviced by that Person under Servicing
Contracts, minus the principal balance of all Mortgage Loans that are
serviced by that Person for others under subservicing arrangements.
Page 48
"Standard Warehouse Period" means, for any Mortgage Loan, the maximum
number of days an Advance against that type of Mortgage Loan, other
than against an Aged Mortgage Loan, may remain outstanding.
"Statement Date" means the Audited Statement Date or the Interim
Statement Date, as applicable.
"Sublimit" means the aggregate amount of Warehousing Advances
(expressed as a dollar amount or as a percentage of the Warehousing
Commitment Amount) that is permitted to be outstanding at any one time
against a specific type of Eligible Loan.
"Subordinated Debt" means (a) all indebtedness of Borrower for borrowed
money that is effectively subordinated in right of payment to all other
present and future Obligations either (1) under a Subordination of Debt
Agreement on the form prescribed by Lender or (2) otherwise on terms
acceptable to Lender, and (b) solely for purposes of Section 8.5, all
indebtedness of Borrower that is required to be subordinated by
Sections 5.1 (b) and 7.11.
"Subprime Mortgage Loan" has the meaning set forth in Exhibit H.
"Subsidiary" means any corporation, partnership, association or other
business entity in which more than 50% of the shares of stock or other
ownership interests having voting power for the election of directors,
managers, trustees or other Persons performing similar functions is at
the time owned or controlled by any Person either directly or
indirectly through one or more Subsidiaries of that Person.
"Tangible Net Worth" means the excess of a Person's (and, if
applicable, the Person's Subsidiaries, on a consolidated basis) total
assets over total liabilities as of the date of determination, each
determined in accordance with GAAP applied in a manner consistent with
the financial statements referred to in Section 5.1 (a)(7), plus that
portion of Subordinated Debt not due within 1 year of that date. For
purposes of calculating a Person's Tangible Net Worth, advances or
loans to shareholders, directors, officers, employees or Affiliates,
investments in Affiliates, assets pledged to secure any liabilities not
included in the Debt of the Person, intangible assets, those other
assets that would be deemed by HUD to be non-acceptable in calculating
adjusted net worth in accordance with its requirements in effect as of
that date, as those requirements appear "Consolidated Audit Guide for
Audits of HUD Programs," and other assets Lender deems unacceptable, in
its sole discretion, must be excluded from a Person's total assets.
"Third Party Originated Loan" means a Mortgage Loan originated and
funded by a third party (other than with funds provided by Borrower at
closing to purchase the Mortgage Loan) and subsequently purchased by
Borrower.
"Trust Receipt" means a trust receipt in a form approved by and under
which Lender may deliver any document relating to the Collateral to
Borrower for correction or completion.
"Warehousing Advance" means a disbursement by Lender under the
Warehousing Commitment.
"Warehousing Advance Request" has the meaning set forth in Section 2.1.
"Warehousing Collateral Value" means, as of any date of determination,
(a) with respect to any Eligible Loan, the lesser of (1) the amount of
any Warehousing Advance made against such Eligible Loan under Exhibit H
or (2) the Fair Market Value of such Eligible Loan; (b) if Eligible
Loans have been exchanged for Agency Securities, the lesser of (1) the
amount of any Warehousing Advances outstanding against the Eligible
Loans backing the Agency Securities or
Page 49
(2) the Fair Market Value of the Agency Securities; and (c) with
respect to cash, the amount of the cash.
"Warehousing Commitment" means the obligation of Lender to make
Warehousing Advances to the Borrower under Section 1.1.
"Warehousing Commitment Amount" means $100,000,000.
Warehousing Commitment Amount" has the meaning set forth in Section
1.1.
"Warehouse Period" means, for any Eligible Loan, the maximum number of
days a Warehousing Advance against that type of Eligible Loan may
remain outstanding as set forth in Exhibit H.
"Warehousing Fee" has the meaning set forth in Section 3.4.
"Warehousing Maturity Date" has the meaning set forth in Section 1.2.
"Warehousing Note" has the meaning set forth in Section 1.3.
"Weighted Average Committed Purchase Price" means the weighted average
of the Committed Purchase Prices of the unfilled Purchase Commitments
(expressed as a percentage) for Mortgage Loans or Mortgage-backed
Securities of the same type, interest rate and term.
"Wire Disbursement Account" means a demand deposit account maintained
at the Funding Bank in Lender's name for clearing wire transfers
requested by Borrower to fund Warehousing Advances.
12.2. OTHER DEFINITIONAL PROVISIONS; TERMS OF CONSTRUCTION
12.2 (a) Accounting terms not otherwise defined in this Agreement
have the meanings given to those terms under GAAP.
12.2 (b) Defined terms may be used in the singular or the plural, as
the context requires.
12.2 (c) All references to time of day mean the then applicable time
in Chicago, Illinois, unless otherwise expressly provided.
12.2 (d) References to Sections, Exhibits, Schedules and like
references are to Sections, Exhibits, Schedules and the like
of this Agreement unless otherwise expressly provided.
12.2 (e) The words "include," "includes" and "including" are deemed
to be followed by the phrase "without limitation."
12.2 (f) Unless the context in which it is used otherwise clearly
requires, the word "or" has the inclusive meaning
represented by the phrase "and/or."
12.2 (g) All incorporations by reference of provisions from other
agreements are incorporated as if such provisions were fully
set forth into this Agreement, and include all necessary
definitions and related provisions from those other
agreements. All provisions from other agreements
incorporated into this Agreement by reference survive any
termination of those other agreements until the Obligations
of Borrower under this Agreement and the Warehousing Note
are irrevocably paid in full and the Warehousing Commitment
is terminated.
Page 50
12.2 (h) All references to the Uniform Commercial Code shall be
deemed to be references to the Uniform Commercial Code in
effect on the Closing Date in the applicable jurisdiction.
12.2 (i) Unless the context in which it is used otherwise clearly
requires, all references to days, weeks and months mean
calendar days, weeks and months.
END OF ARTICLE 12
Page 51
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Its: Director
----------------------------------
AMERICAN HOME MORTGAGE CORP.
a New York corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Its: CFO
-----------------------------------
MARINA MORTGAGE COMPANY, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Its: CFO
-----------------------------------
Page 52