EXHIBIT 10.41
LOAN AGREEMENT
By and Among:
CH FUNDING, LLC
As the Borrower,
---------------
ATLANTIC ASSET SECURITIZATION CORP.
As the Issuer,
-------------
CREDIT LYONNAIS NEW YORK BRANCH
As the Administrative Agent and as a Bank
-----------------------------------------
and
CH MORTGAGE COMPANY I, LTD.
As the Servicer
---------------
Dated as of July 9, 2002
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I GENERAL TERMS............................................................ 2
1.1. Certain Definitions.................................................... 2
1.2. Other Definitional Provisions.......................................... 26
ARTICLE II AMOUNT AND TERMS OF COMMITMENT.......................................... 26
2.1. Maximum Facility Amount................................................ 26
2.2. Promissory Notes....................................................... 27
2.3. Notice and Manner of Obtaining Borrowings.............................. 27
2.4. Fees................................................................... 30
2.5. Prepayments............................................................ 30
2.6. Business Days.......................................................... 30
2.7. Payment Procedures..................................................... 31
2.8. The Reserve Account.................................................... 34
2.9. Interest Allocations................................................... 36
2.10. Interest Rates......................................................... 36
2.11. Quotation of Rates..................................................... 36
2.12. Default Rate........................................................... 36
2.13. Interest Recapture..................................................... 36
2.14. Interest Calculations.................................................. 37
2.15. Interest Period........................................................ 37
2.16. Additional Costs....................................................... 38
2.17. Additional Interest on Advances Bearing a Eurodollar Rate.............. 39
2.18. Consequential Loss..................................................... 40
2.19. Taxes.................................................................. 40
2.20. Replacement Banks...................................................... 42
ARTICLE III COLLATERAL............................................................. 42
3.1. Collateral............................................................. 42
3.2. Delivery of Collateral to Collateral Agent............................. 42
3.3. Redemption of Mortgage Collateral...................................... 44
3.4. Correction of Mortgage Notes........................................... 47
3.5. Collateral Reporting................................................... 47
3.6. Take-Out Commitment Reporting.......................................... 47
3.7. Servicer Monthly Reporting............................................. 48
3.8. Servicer Annual Pipeline Reporting..................................... 48
3.9. Administrative Agent Reporting......................................... 48
ARTICLE IV CONDITIONS PRECEDENT.................................................... 49
4.1. Initial Borrowing...................................................... 49
4.2. All Borrowings......................................................... 51
4.3. All Disbursements of Funds............................................. 52
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................... 52
5.1. Representations of the Borrower and the Servicer....................... 52
i
5.2. Additional Representations of the Borrower............................. 55
5.3. Additional Representations and Warranties of the Servicer.............. 56
5.4. Survival of Representations............................................ 57
ARTICLE VI AFFIRMATIVE COVENANTS................................................... 57
6.1. Financial Statements and Reports....................................... 58
6.2. Taxes and Other Liens.................................................. 60
6.3. Maintenance............................................................ 60
6.4. Further Assurances..................................................... 60
6.5. Compliance with Laws................................................... 60
6.6. Insurance.............................................................. 61
6.7. Accounts and Records................................................... 61
6.8. Right of Inspection.................................................... 61
6.9. Notice of Certain Events............................................... 62
6.10. Performance of Certain Obligations..................................... 62
6.11. Use of Proceeds; Margin Stock.......................................... 62
6.12. Notice of Default...................................................... 63
6.13. Compliance with Transaction Documents.................................. 63
6.14. Compliance with Material Agreements.................................... 63
6.15. Operations and Properties.............................................. 63
6.16. ▇.▇. ▇▇▇▇▇▇ Credit Rating.............................................. 63
6.17. Take-Out Commitments................................................... 63
6.18. Collateral Proceeds.................................................... 64
6.19. Environmental Compliance............................................... 64
6.20. Closing Instructions................................................... 64
6.21. Special Affirmative Covenants Concerning Collateral.................... 64
6.22. Corporate Separateness................................................. 65
ARTICLE VII NEGATIVE COVENANTS..................................................... 66
7.1. Limitations on Mergers and Acquisitions................................ 66
7.2. Fiscal Year............................................................ 66
7.3. Business............................................................... 66
7.4. Use of Proceeds........................................................ 66
7.5. Actions with Respect to Collateral..................................... 67
7.6. Liens.................................................................. 67
7.7. Employee Benefit Plans................................................. 67
7.8. Change of Principal Office............................................. 68
7.9. No Commercial, A&D, Etc. Loans......................................... 68
7.10. Maximum Leverage....................................................... 68
7.11. Indebtedness........................................................... 68
7.12. Deposits to Collection Account......................................... 68
7.13. Transaction Documents.................................................. 68
7.14. Distributions, Etc..................................................... 69
7.15. Articles of Organization............................................... 69
ARTICLE VIII EVENTS OF DEFAULT..................................................... 69
8.1. Nature of Event........................................................ 69
ii
8.2. Default Remedies....................................................... 74
8.3. Paydowns............................................................... 74
8.4. Waivers of Notice, Etc................................................. 75
8.5. Advance Cessation Trigger.............................................. 75
ARTICLE IX THE ADMINISTRATIVE AGENT................................................ 75
9.1. Authorization.......................................................... 75
9.2. Reliance by Agent...................................................... 76
9.3. Agent and Affiliates................................................... 76
9.4. Lender Decision........................................................ 76
9.5. Rights of the Administrative Agent..................................... 77
9.6. Indemnification of Administrative Agent................................ 77
9.7. UCC Filings............................................................ 77
ARTICLE X INDEMNIFICATION.......................................................... 77
10.1. Indemnities by the Borrower............................................ 77
ARTICLE XI ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS......................... 78
11.1. Designation of Servicer................................................ 78
11.2. Duties of Servicer..................................................... 78
11.3. Certain Rights of the Administrative Agent............................. 79
11.4. Rights and Remedies.................................................... 80
11.5. Indemnities by the Servicer............................................ 80
ARTICLE XII MISCELLANEOUS.......................................................... 81
12.1. Notices................................................................ 81
12.2. Amendments, Etc........................................................ 83
12.3. Invalidity............................................................. 84
12.4. Restrictions on Informal Amendments.................................... 84
12.5. Cumulative Rights...................................................... 84
12.6. Construction; Governing Law............................................ 84
12.7. Interest............................................................... 85
12.8. Right of Offset........................................................ 85
12.9. Successors and Assigns................................................. 86
12.10. Survival of Termination................................................ 87
12.11. Exhibits............................................................... 87
12.12. Titles of Articles, Sections and Subsections........................... 88
12.13. Counterparts........................................................... 88
12.14. No Proceedings......................................................... 88
12.15. Confidentiality........................................................ 88
12.16. Recourse Against Directors, Officers, Etc.............................. 89
12.17. Waiver of Jury Trial................................................... 89
12.18. Consent to Jurisdiction; Waiver of Immunities.......................... 89
12.19. Costs, Expenses and Taxes.............................................. 90
12.20. Entire Agreement....................................................... 90
12.21. Excess Funds........................................................... 91
iii
SCHEDULES AND EXHIBITS
Schedule I Bank Commitments and Percentages - (S)3.2(b)
Schedule II Approved Investors - (S)3.2(b)
Schedule III UCC Search- (S)3.2(b)
Schedule IV Litigation - (S)5.1(g)(i)
Exhibit A Form of Assignment and Acceptance - (S)1.1
Exhibit B Form of Subordination Agreement - (S)4.1(f)
Exhibit C Form of Borrowing Report - (S)2.3(a)(i)
Exhibit D Collateral Agency Agreement - (S)1.1
Exhibit D-1 Definitions - (S)1
Exhibit D-2 Security Agreement - (S)3.1(a)
Exhibit D-3 Assignment of Account - (S)3.1(b)
Exhibit D-4 Assignment - (S)3.1(c) and (S)3.2(a)
Exhibit D-5 Form of Transfer Request - (S) 3.3(a)
Exhibit D-5A Form of Shipping Request -(S)3.3(b)
Exhibit D-6(a) Bailee and Security Agreement Letter -(S) 3.4(b)(i)
Exhibit D-6(b) Bailee and Security Agreement Letter for Pool Custodian
(S) 3.4(b)(i)
Exhibit D-7 Trust Receipt and Security Agreement for Approved Investors -
(S)3.5
Exhibit D-8 Collateral Agent Daily Report -(S)3.5
Exhibit D-9 Borrowing Report
Exhibit D-10 UCC Financing Statements - (S)3.1(d)
Exhibit D-11 Substitution Request
Exhibit D-12 Assignment of Trade
Exhibit E Form of Promissory Note - (S) 2.2
Exhibit F Form of Servicer Monthly Report - (S) 3.7
Exhibit G-1 [Reserved]
iv
Exhibit G-2 [Reserved]
Exhibit H-1 CH Mortgage Quarterly Officer's Certificate - (S) 6.1(e)
Exhibit H-2 Borrower's Quarterly Officer's Certificate - (S) 6.1(e)
Exhibit I-1 Form of Opinion of Counsel to Borrower, Originator and ▇.▇.
▇▇▇▇▇▇ on Corporate Matters - (S) 4.1(i)
Exhibit I-2 Form of Opinion of Counsel to Borrower and Originator on
Security Interest Matters - (S) 4.1(i)
Exhibit J Form of Opinion of Counsel to Originator on Bankruptcy Matters
- (S) 4.1(j)
Exhibit K Form of Hedge Report - (S) 3.6
Exhibit L [Reserved]
Exhibit M Form of Administrative Agent Report - (S) 3.9
v
LOAN AGREEMENT
Dated as of July 9, 2002
THIS LOAN AGREEMENT, among CH FUNDING, LLC, a Delaware limited
liability company (hereinafter, together with its successors and assigns, the
"Borrower"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation
(hereinafter, together with its successors and assigns, "Atlantic"), CREDIT
LYONNAIS NEW YORK BRANCH ("CL New York"), as a Bank and the Administrative
Agent, and CH MORTGAGE COMPANY I, LTD., a Texas limited partnership
(hereinafter, together with its successors and assigns, "CH Mortgage"), as
Servicer.
RECITALS
1. Capitalized terms used in these Recitals and not defined in the
preamble above have the meanings set forth in Article I.
2. The Originator is engaged in the business of originating, acquiring,
investing in, marketing and selling, for its own account, mortgage loans that
are made either to finance the purchase of one- to four-family owner-occupied
homes or to refinance loans secured by such properties.
3. The Borrower has purchased, and may continue to purchase, Eligible
Mortgage Loans from the Originator, as determined from time to time by the
Borrower and the Originator.
4. In order to finance such purchases, the Borrower has requested that
the Lenders provide the Borrower with credit in the form of revolving loans on
the terms and conditions set forth herein.
5. The Issuer may, in its sole discretion, and the Banks shall, in each
case subject to the terms and conditions contained in this Agreement, make
Advances to the Borrower secured by a lien on, and security interest in, the
Mortgage Loans and certain other Collateral.
6. The Lenders have appointed the Administrative Agent as their agent
to perform certain administrative duties for the Lenders including, among other
things, the administration of the funding of the transactions hereunder and the
making of certain determinations hereunder and in connection herewith.
AGREEMENTS
In consideration of the recitals and the representations, warranties,
conditions, covenants and agreements made in this Agreement, the sufficiency of
which are acknowledged by all parties hereto, the Borrower, the Lenders and the
Administrative Agent, intending to be legally bound, hereby establish a
warehouse line of credit in the amount of the Maximum Facility Amount.
Accordingly, the Borrower, the Lenders, the Administrative Agent and the
Servicer covenant and agree as follows:
ARTICLE I
GENERAL TERMS
1.1. Certain Definitions.
As used in this Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"ABR Allocation" means all or any portion of Principal Debt if interest
thereon is calculated by reference to the Eurodollar Rate or the Alternate Base
Rate.
"Adjusted Liabilities" means, with respect to the Originator, without
duplication, and at any time, the sum of (a) all amounts that should be
reflected as liabilities on its balance sheet, plus (b) its total direct and
indirect guaranty and other obligations in respect of borrowed money
Indebtedness of others (calculated at the maximum amount of those obligations
that is stated in the relevant documents or, if not so stated, that may
reasonably be anticipated in good faith) plus (c) to the extent not already
included in clause (a) above, its total funding obligations to originate or
acquire Mortgage Loans that, in either case, are closed but not funded, minus
(d) its total trade payables and accrued expenses incurred in the ordinary
course of its business but unrelated to originating or acquiring any specific
Mortgage Loan (including, without limitation, trade payables and accrued
expenses owed to its Affiliates but excluding advances by its Affiliates and
interest on those advances), minus (e) the Originator's total
deferred-federal-income tax liabilities.
"Adjusted Net Worth" means, for the Originator, without duplication,
and at any time, the sum of (a) its stockholders' equity reflected on its
balance sheet, plus (b) the remainder of (A) the income that Originator has
deferred, for accounting purposes, pending the sale of Mortgage Loans in
accordance with Statement of Financial Accounting Standards Number 91 and Number
122, as each is published by the Financial Accounting Standards Board as of the
date of this Agreement, minus (B) reasonable reserves for the federal income tax
liabilities related to that deferred income.
"Administrative Agent" means CL New York, in its capacity as
administrative agent for the Lenders, or any successor administrative agent.
"Administrative Agent Report" is defined in Section 3.9.
"Administrative Agent Fee Letter" is defined in Section 2.4(a).
"Advance" means any amount disbursed by the Lenders to the Borrower,
whether such amount constitutes an original disbursement of funds to the
Borrower under this Agreement or a continuation of an amount outstanding.
"Advance Cessation Trigger" means (a) when, based on ▇.▇. ▇▇▇▇▇▇'▇ most
recent annual or quarterly report on Form 10-K or Form 10-Q or, if applicable,
Form 8-K, filed with the Securities and Exchange Commission, ▇.▇. ▇▇▇▇▇▇ (i) has
a Leverage Ratio greater than
2
2.10:1, (ii) has a Consolidated Net Worth less than $1,250,000,000 or (iii) has
an EBITDA/Fixed Charge Ratio less than 2. 65:1 or (b) when ▇.▇. ▇▇▇▇▇▇ ceases to
have the Required Ratings.
"Advance Rate" means (i) with respect to a Conforming Loan or a Jumbo
Loan, ninety-eight percent (98%) and (ii) with respect to a Subprime Loan or an
Alt-A Loan, ninety-seven percent (97%).
"Affected Party" means each Lender, the Administrative Agent, each bank
party to the Liquidity Agreement and any permitted assignee or participant of
any such bank, and any holding company of an Affected Party.
"Affiliate" of any Person means (a) any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person, or (b) any other Person who is a director, officer or employee (i) of
such Person, or (ii) of any Person described in the preceding clause (a). For
purposes of this definition, the term "control" (and the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession or ownership, directly or indirectly, of the power either (x) to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise, or (y) vote 10% or more of the securities
having ordinary power in the election of directors of such Person.
"Agent's Account" means, the special account (account number
▇▇-▇▇▇▇▇-▇▇▇▇ ABA No. ▇▇▇▇▇▇▇▇▇) of CL New York maintained at the office of
Credit Lyonnais New York Branch at 1301 Avenue of the Americas, New York, New
York.
"Agreement" or the "Loan Agreement" means this Loan Agreement, as
amended, modified or supplemented from time to time.
"Alt-A Loan" means a Mortgage Loan (other than a Conforming Loan or a
Jumbo Loan) that (1) does not conform to the conventional underwriting standards
of ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae but that is underwritten by an Approved
Investor (other than ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae), within guidelines
generally acceptable to industry norms for "Alt-A" loans, (2) has a demonstrated
secondary market and are readily securitizable, and (3) matches all applicable
requirements for purchase under the requirements of a Take-Out Commitment
specifically issued for the purchase of such Mortgage Loan.
"Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of:
(a) the rate of interest most recently announced by CL New York as its
base rate; or
(b) the Federal Funds Rate (as defined below) most recently determined
by the Administrative Agent plus 1.0% per annum.
For purposes of this definition, "Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal (for each day during such period) to
(i) the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York; or
(ii) if such
3
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by CL New York in connection with extensions of credit.
"Approved Investor" means:
(a) ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae, or
(b) any Person with short-term ratings of at least A-1, P-1 and F1 from
S&P, ▇▇▇▇▇'▇ and Fitch, respectively, or long-term unsecured debt ratings (or in
the case of a bank without such ratings that is the principal subsidiary of a
bank holding company, the rating of the bank holding company) of at least AA,
Aa2 and AA from S&P, ▇▇▇▇▇'▇ and Fitch, respectively, or
(c) all other Persons as may be approved by the Administrative Agent,
which approvals may be subject to certain concentration limits;
provided that (i) except for an Approved Investor defined above in section (c),
if an Approved Investor has a short-term rating or a long-term unsecured debt
rating at the time such Person becomes an "Approved Investor" and such Person's
short-term ratings or long-term unsecured debt ratings are subsequently
downgraded or withdrawn, such Person shall cease to be an "Approved Investor";
provided, further, that with respect to any Take-Out Commitments issued by such
Person prior to the date of such downgrade or withdrawal, such Person shall
cease to be an "Approved Investor" 60 days following such downgrade or
withdrawal; and (ii) if an Approved Investor does not have a short-term rating
or a long-term unsecured debt rating, such Person shall cease to be an "Approved
Investor" upon prior written notice from the Administrative Agent if the
Administrative Agent has good faith concerns about the future performance of
such Person; provided, further, that with respect to any Take-Out Commitments
issued by such Person prior to such notice, such Person shall cease to be an
"Approved Investor" 60 days following such notice; provided, further, that the
Collateral Agent may assume that the Approved Investors are listed on the
Schedule II hereto most recently distributed to the Collateral Agent by the
Administrative Agent.
As of the date of this Agreement, Schedule II hereto sets forth the Approved
Investors pursuant to the preceding clause (c) (and any applicable concentration
limits). Schedule II shall be updated from time to time as Approved Investors
are added or deleted or concentration limits are changed pursuant to the
preceding clauses (b) and (c); provided, further, that the Collateral Agent may
assume that the Approved Investors are listed on the Schedule II hereto most
recently distributed to the Collateral Agent by the Administrative Agent.
"Articles of Organization" means the Borrower's articles of
organization, as amended through the date of this Agreement.
"Assignment" is defined in the Collateral Agency Agreement.
"Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Bank, an Eligible Assignee and the Administrative
Agent, pursuant to which such
4
Eligible Assignee may become a party to this Agreement, in substantially the
form of Exhibit A hereto.
"Assignment of Account" is defined in the Collateral Agency Agreement.
"Atlantic" has the meaning set forth in the preamble to this Agreement.
"Atlantic Program Agent" means CL New York, in its capacity as the
collateral agent pursuant to a security agreement made by Atlantic for the
benefit of certain creditors of Atlantic, and any successor to CL New York in
such capacity.
"Availability" means, at the time determined, the Maximum Facility
Amount minus the Principal Debt.
"Available Collateral Value" means, at the time determined, the excess
of the Collateral Value of all Eligible Collateral over the Primary Obligations.
"Bailee and Security Agreement Letter" is defined in Section 3.4(b)(i)
of the Collateral Agency Agreement.
"Bank" means CL New York and each Eligible Assignee that shall become a
party to this Agreement pursuant to an Assignment and Acceptance.
"Bank Commitment" means, for any Bank, (a) with respect to CL New York,
the amount set forth on Schedule I hereto, and (b) with respect to a Bank that
has entered into an Assignment and Acceptance, the amount set forth therein as
such Bank's Bank Commitment, in each case as such amount may be reduced by each
Assignment and Acceptance entered into between such Bank and an Eligible
Assignee, and as may be further reduced (or terminated) pursuant to the next
sentence. Any reduction (or termination) of the Maximum Facility Amount pursuant
to the terms of this Agreement shall (unless otherwise agreed by all the Banks)
reduce ratably (or terminate) each Bank's Bank Commitment. At no time shall the
aggregate Bank Commitments of all Banks exceed the Maximum Facility Amount.
"Bank Commitment Percentage" means, for any Bank as of any date, the
amount obtained by dividing such Bank's Bank Commitment on such date by the
aggregate Bank Commitments of all Banks on such date. As of the date of this
Agreement, the Bank Commitment Percentage for each Bank is as set forth on
Schedule I hereto.
"Bank Spread" means 1.00%.
"Base Rate Advance" means an Advance that bears interest at a rate per
annum determined on the basis of the Alternate Base Rate.
"Borrower" has the meaning specified in the preamble of this Agreement.
"Borrowing" means Advances by the Lenders under this Agreement.
5
"Borrowing Date" means the date, identified by the Borrower in the
relevant Borrowing , as the date on which a Borrowing is to be made.
"Borrowing Report" means a request, in the form of Exhibit C to this
Agreement, for a Borrowing pursuant to Article II.
"Business Day" means (a) a day on which (i) commercial banks in New
York City, New York, are not authorized or required to be closed and (ii)
commercial banks in the State in which the Collateral Agent has its principal
office are not authorized or required to be closed, and (b) if this definition
of "Business Day" is utilized in connection with a Eurodollar Advance, a day on
which dealings in United States dollars are carried out in the London interbank
market.
"CH Funding, LLC" has the meaning set forth in the preamble to this
Agreement.
"CH Mortgage Company I, Ltd.," has the meaning set forth in the
preamble to this Agreement.
"CL New York" has the meaning set forth in the preamble of this
Agreement and its successors and assigns.
"Closing Protection Rights" means any rights of the Originator or the
Borrower to or under (i) a letter issued by a title insurance company to the
Originator assuming liability for certain acts or failure to act on behalf of a
named closing escrow agent, approved attorney or similar Person in connection
with the closing of a Mortgage Loan transaction, (ii) a bond, insurance or trust
fund established to protect a mortgage lender against a loss or damage resulting
from certain acts or failure to act of a closing escrow agent, approved
attorney, title insurance company or similar Person, or (iii) any other right or
claim that the Originator or the Borrower may have against any Person for any
loss or damage resulting from such Person's acts or failure to act in connection
with the closing of a Mortgage Loan and the delivery of the related Mortgage
Loan Collateral to the Collateral Agent, the Originator or to the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means Property that is subject to a Lien for the benefit
of the holders of the Obligations.
"Collateral Agency Agreement" means the Collateral Agency Agreement,
dated as of the date hereof, among the Borrower, the Collateral Agent and the
Administrative Agent, substantially in the form of Exhibit D hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Collateral Agent" means U.S. Bank National Association, and its
successors and assigns.
"Collateral Agent Daily Report" is defined in Section 3.8(a) of the
Collateral Agency Agreement.
6
"Collateral Deficiency" means, at any time, the amount by which the
related Primary Obligations exceed the lesser of either (a) the Collateral Value
of all Eligible Mortgage Collateral or (b) if the Collateral Agent holds no
Eligible Mortgage Collateral, zero.
"Collateral Proceeds" means all amounts received by the Borrower, the
Servicer, the Administrative Agent, the Lenders, the Collateral Agent or any
other Person, in respect of the Collateral, whether in respect of principal,
interest, fees or other amounts, including, without limitation, (i) all amounts
received pursuant to Take-Out Commitments, and (ii) with respect to any Mortgage
Loan, all funds that are received from or on behalf of the related Obligors in
payment of any amounts owed (including, without limitation, purchase prices,
finance charges, interest and all other charges) in respect of such Mortgage
Loan, or applied to such amounts owed by such Obligors (including, without
limitation, insurance payments that Borrower or Servicer applies in the ordinary
course of its business to amounts owed in respect of such Mortgage Loan and net
proceeds of sale or other disposition of Property of the Obligor or any other
party directly or indirectly liable for payment of such Mortgage Loan and
available to be applied thereon).
"Collateral Value" means
(A) with respect to each Eligible Mortgage Loan and at all times, an
amount equal to the Advance Rate for such Mortgage Loan times the least of:
(1) the original principal amount of such Eligible Mortgage Loan;
(2) with respect to which there is a loan level Take-Out
Commitment, the price of that Take-Out Commitment;
(3) with respect to which there is no loan level Take-Out
Commitment, a ratable amount determined by multiplying (a) the weighted average
purchase price (expressed as a percentage of par) that Approved Investors are
obligated to pay, pursuant to Take-Out Commitments, for all Eligible Mortgage
Loans, as shown on the most recent Collateral Agent Daily Report, times (b) the
outstanding principal amount of such Eligible Mortgage Loan; and
(4) while a Default or Event of Default is continuing, the Market
Value of such Eligible Mortgage Loan; and
(B) with respect to the Collection Account, the balance of collected
funds therein that is not subject to any Lien in favor of any Person other than
the Lien in favor of the Administrative Agent for the benefit of the holders of
the Obligations;
provided, however, that
(a) at any time, the portion of total Collateral Value that may be
attributable to Jumbo Loans shall not exceed twenty percent (20%) of the Maximum
Facility Amount;
(b) at any time, the portion of total Collateral Value that may be
attributable to Super Jumbo Loans shall not exceed ten percent (10%) of the
Maximum Facility Amount;
7
(c) at any time, the portion of total Collateral Value that may be
attributable to Alt-A Loans shall not exceed fifteen percent (15%) of the
Maximum Facility Amount;
(d) at any time, the portion of total Collateral Value that may be
attributable to Subprime Loans shall not exceed five (5%) of the Maximum
Facility Amount; provided, that (i) no more than 10% (by Collateral Value) of
the Subprime Loans shall have Borrowers with Mortgagor Credit Ratings of C or
lower, (ii) at least 70% (by Collateral Value) of the Subprime Loans shall have
Borrowers with Mortgagor Credit Ratings of A- and (iii) 100% of the Subprime
Loans shall have a weighted average Loan-to-Value Ratio of no more than 80%;
(e) at any time, the portion of total Collateral Value that may be
attributable to Mortgage Loans for which the Mortgage Notes have been withdrawn
for correction pursuant to Section 3.4 shall not exceed $5,000,000 as determined
in accordance with said Section 3.4;
(f) at any time, the portion of the total Collateral Value that may be
attributable to any single Approved Investor listed on Schedule II pursuant to
one or more Take-Out Commitments shall not exceed the concentration limit for
such Approved Investor as set forth on Schedule II;
(g) at any time, the portion of total Collateral Value that may be
attributable to Mortgage Loans that have been Eligible Mortgage Loans owned by
the Borrower (A) for more than 120 days shall not exceed ten percent (10%) of
the Maximum Facility Amount or (B) for more than 180 days shall be zero;
(h) a Mortgage Loan that ceases to be an Eligible Mortgage Loan shall
have a Collateral Value of zero;
(i) at any time, (A) except the first five and last five Business Days
of any month, the portion of total Collateral Value that may be attributable to
Special Mortgage Loans with respect to which the related Principal Mortgage
Documents have not been delivered to the Collateral Agent within nine (9)
Business Days after the date the Assignment was delivered to the Collateral
Agent shall not exceed thirty percent (30%) of the Maximum Facility Amount, and
(B) during the first five and last five Business Days of any month, the portion
of total Collateral Value that may be attributable to Special Mortgage Loans
with respect to which the related Principal Mortgage Documents have not been
delivered to the Collateral Agent within nine (9) Business Days after the date
the Assignment was delivered to the Collateral Agent shall not exceed fifty
percent (50%) of the Maximum Facility Amount;
(j) at any time, a Mortgage Loan with respect to which to the related
obligor is 90 days or more in payment default, shall have a Collateral Value of
zero.
"Collection Account" means the account established by the Borrower with
the Collateral Agent or another Eligible Institution acceptable to the
Administrative Agent pursuant to Section 2.7(b) of the Loan Agreement and
designated therein as the "Collection Account."
"Collection Period" means, initially, the period commencing on the
Effective Date and ending on July 30, 2002, and thereafter, each calendar month,
beginning on the first day of each month and including the last day of the
month.
8
"Collections" means, with respect to any Mortgage Asset, all cash
collections (other than in respect of escrows for taxes and insurance premiums
payable under the related Mortgage Loan) and other cash proceeds of such
Mortgage Asset.
"Commercial Paper Notes" means short-term promissory notes issued or to
be issued by the Issuer to fund or maintain its Advances or investments in other
financial assets.
"Commercial Paper Rate" for any Interest Period for the related Advance
means: (a) a rate per annum equal to the sum of (i) the rate or, if more than
one rate, the weighted average of the rates, determined by converting to an
interest-bearing equivalent rate per annum the discount rate (or rates) at which
Commercial Paper Notes having a term equal to such Interest Period and to be
issued to fund or to maintain such Advance by Atlantic (including, without
limitation, Principal Debt and accrued and unpaid interest), may be sold by any
placement agent or commercial paper dealer selected by the Administrative Agent,
as agreed between each such agent or dealer and the Administrative Agent, plus
(ii) the commissions and charges charged by such placement agent or commercial
paper dealer with respect to such Commercial Paper Notes expressed as a
percentage of such face amount and converted to an interest-bearing equivalent
rate per annum, provided the commissions and charges by the agent or dealer must
in the Administrative Agent's good faith judgment be within market range; plus
(iii) the Conduit Spread; or (b) such other rate as Atlantic and the Borrower
shall agree to in writing.
"Conduit Spread" means the margin set forth in the Administrative Agent
Fee Letter.
"Conforming Loan" means (i) a Mortgage Loan that complies with all
applicable requirements for purchase under a ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or similar
Governmental Authority standard form of conventional mortgage loan purchase
contract, then in effect, or (ii) an FHA Loan or a VA Loan.
"Consequential Loss" means any loss (measured by the diminution in
yield to the Affected Party as a result of a prepayment) and/or expense (such as
any transaction costs incurred in connection with the reinvestment of a
prepayment or any cost associated with the issuance of commercial paper in
anticipation of a Borrowing Reported but not accepted by the Borrower) that any
Affected Party may reasonably incur in respect of a Borrowing as a consequence
of (a) any failure or refusal of Borrower (for any reasons whatsoever other than
a default by the Administrative Agent, any Lender or any Affected Party) to take
such Borrowing after Borrower shall have requested it under this Agreement, (b)
any prepayment or payment of such Borrowing that is a Eurodollar Advance or an
Advance bearing interest by reference to the Commercial Paper Rate on a day
other than the last day of the Interest Period applicable to such Borrowing, (c)
any prepayment of any Borrowing that is not made in compliance with the
provisions of Section 2.5(a); provided, that so long as an Event of Default
shall not have occurred, the Borrower shall not be responsible for any
Consequential Loss resulting from changes in the Settlement Date made by the
Administrative Agent, as described in the proviso contained in the definition of
"Settlement Date," or (d) Borrower's failure to make a prepayment after giving
notice under Section 2.5(a) that a prepayment will be made.
"Consolidated Net Worth" means the aggregate assets of ▇.▇. ▇▇▇▇▇▇ and
its Subsidiaries less the aggregate liabilities of ▇.▇. ▇▇▇▇▇▇ and its
Subsidiaries as reported on ▇.▇. ▇▇▇▇▇▇'▇
9
most recent annual or quarterly report on Form 10-K or Form 10-Q filed with the
Securities and Exchange Commission.
"CP Allocation" means all or any portion of Principal Debt if interest
thereon is calculated by reference to the Commercial Paper Rate.
"CP Borrowing" means a Borrowing bearing interest by reference to the
Commercial Paper Rate.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, fraudulent transfer or conveyance, moratorium, arrangement,
receivership, insolvency, reorganization or similar laws from time to time in
effect affecting the rights of creditors generally.
"Default" means any condition or event that, with the giving of notice
or lapse of time or both and unless cured or waived, would constitute an Event
of Default.
"Default Rate" means a per annum rate of interest equal from day to day
to the lesser of (a) the sum of the Alternate Base Rate plus two percent and (b)
the Maximum Rate.
"Default Ratio" means as of the end of any Collection Period, the ratio
of (i) the principal amount of all Mortgage Loans that were Defaulted Mortgage
Loans at such time, to (ii) the aggregate principal amount of all Mortgage Loans
at such time.
"Defaulted Mortgage Loan" means a Mortgage Asset under which the
Obligor is 30 or more days in payment default or has taken any action, or
suffered any event of the type described in Section 8.1(f), (g) or (h) or is in
foreclosure.
"Deferred Income" means the amount of income that the Originator or
Borrower has deferred, for accounting purposes, pending the sale of Mortgage
Loans, in accordance with Statement of Financial Accounting Standards Number 91
("SFAS 91") and Statement of Financial Accounting Standards Number 122 ("SFAS
122"), each as currently published by the Financial Accounting Standards Board.
"▇.▇. ▇▇▇▇▇▇" means ▇.▇. ▇▇▇▇▇▇, Inc., a Delaware corporation, and its
successors and assigns.
"Drawdown Termination Date" means the earliest to occur of (a) July 4,
2003, unless such date shall be extended pursuant to Section 2.1(b) then the
date specified in such Extension Request, (b) the date on which the Maximum
Facility Amount is terminated by the Borrower pursuant to Section 2.1(d), and
(c) the date, on or after the occurrence of an Event of Default, determined
pursuant to Section 8.1.
"EBITDA" means, for ▇.▇. ▇▇▇▇▇▇ and its Restricted Subsidiaries for the
twelve (12) months period ending on any date of determination, an amount equal
to (a) consolidated net income for such period, plus (b) cash dividends from
Unrestricted Subsidiaries paid to ▇.▇. ▇▇▇▇▇▇ during such period, minus (c)
gains from extraordinary items for such period, to the extend included in the
calculation of consolidated net income for such period in accordance with GAAP,
but without duplication, plus (d) the sum of (i) any provision for income taxes
for such
10
period, (ii) Interest Expense deducted in the calculation of consolidated net
income for such period in accordance with GAAP (including, without duplication,
previously capitalized Interest Expense which would be included in "costs of
goods sold" and deducted from consolidated revenues in determining consolidated
net income), (iii) the amount of depreciation and amortization for such period
and (iv) the amount of any item of extraordinary loss not paid in cash in such
period, in each case to the extent included in the calculation of consolidated
net income for such period in accordance with GAAP, but without duplication. In
the case of any Subsidiary of ▇.▇. ▇▇▇▇▇▇ that becomes a Restricted Subsidiary
during any period of calculation, EBITDA shall, for the purposes of the
foregoing calculations, be adjusted by increasing, if positive, or decreasing,
if negative, EBITDA by the EBITDA of such Subsidiary during such period of
calculation occurring prior to the date such Subsidiary became a Restricted
Subsidiary.
"EBITDA/Fixed Charge Ratio" means, with respect to ▇.▇. ▇▇▇▇▇▇, the
ratio of (i) EBITDA and (ii) Fixed Charges.
"Effective Date" means July 9, 2002.
"Eligible Assignee" means (i) CL New York or any of its Affiliates,
(ii) any Person managed by CL New York or any of its Affiliates, or (iii) any
financial or other institution that is acceptable to the Administrative Agent.
"Eligible Institution" means any depository institution, organized
under the laws of the United States or any state, having capital and surplus in
excess of $200,000,000, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation and that is
subject to supervision and examination by federal or state banking authorities;
provided that such institution also must have a rating of A or higher with
respect to long-term deposit obligations from ▇▇▇▇▇'▇, A2 or higher with respect
to long-term deposit obligations from S&P and AA or higher with respect to
long-term deposit obligations from Fitch. If such depository institution
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
"Eligible Mortgage Collateral" means Eligible Mortgage Loans and the
Collection Account.
"Eligible Mortgage Loan" means a Mortgage Loan:
(a) that (i) is a closed and funded Mortgage Loan, (ii) has a maximum
term to maturity of 30 years and the proceeds of which were used either to
finance a portion of the purchase price of a Property encumbered by the related
Mortgage or to refinance a loan secured by such Property, and (iii) is secured
by a perfected first-priority Lien on residential real Property consisting of
land and a one-to-four family dwelling thereon which is completed and ready for
owner occupancy, including townhouses and condominiums;
(b) that is a Conforming Loan, a Jumbo Loan, a Subprime Loan or an
Alt-A Loan;
11
(c) in which the Administrative Agent has been granted and continues to
hold a perfected (other than actual delivery of the Mortgage Note to the
Collateral Agent for Special Borrowings), first-priority, security interest for
the benefit of the holders of the Obligations;
(d) for which the Mortgage Note is payable to or endorsed (without
recourse) in blank and each of such Mortgage Loan and the related Mortgage Note
is a legal, valid and binding obligation of the Obligor thereof;
(e) for which, other than in respect of Special Mortgage Loans, the
Principal Mortgage Documents have been received by the Collateral Agent and are
in form and substance acceptable to the Collateral Agent;
(f) that is either (i) eligible (in the case of Conforming Loans), or
(ii) designated (in the case of Non-Conforming Loans), for delivery under a
Take-Out Commitment from an Approved Investor; provided that no more than 45
days have lapsed since the date on which any documentation was shipped to the
related Approved Investor;
(g) that, upon pledge thereof under this Agreement and application of
any related Advance to pay off any prior lienholder as required by the
Collateral Agency Agreement and hereunder, together with the related Mortgage
Loan Collateral, is owned beneficially by Borrower free and clear of any Lien of
any other Person other than the Administrative Agent for the benefit of the
holders of the Obligations;
(h) that, together with the related Mortgage Loan Collateral, does not
contravene any Governmental Requirements applicable thereto (including, without
limitation, the Real Estate Settlement Procedures Act of 1974, as amended, and
all laws, rules and regulations relating to usury, truth-in-lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection
practices, privacy and other applicable federal and state consumer protection
laws) and with respect to which no party to the related Mortgage Loan Collateral
is in violation of any Governmental Requirements (or procedure prescribed
thereby) if such violation would impair the collectability of such Mortgage Loan
or the saleability of such Mortgage Loan under the applicable Take-Out
Commitment;
(i) that, (i) is not an Uncovered Mortgage Loan; (ii) is not a
Defaulted Mortgage Loan at the time it is transferred to the Borrower pursuant
to the Repurchase Agreement; (iii) has not previously been sold to an Approved
Investor and repurchased by Borrower; (iv) is not a Mortgage Loan with respect
to which the Principal Mortgage Documents relating to such Mortgage Loan were
not delivered to the Collateral Agent within the time periods provided in
Section 2.3(c); provided, however, that upon delivery of such Principal Mortgage
Documents to the Collateral Agent, such Mortgage Loans may subsequently qualify
as Eligible Mortgage Loans to support Borrowings subsequent to such delivery;
(v) has not been rejected by the Collateral Agent under Section 3.2(c) of the
Collateral Agency Agreement; or (vi) has an original principal balance not in
excess of $1,000,000.00;
(j) that if the Mortgage Loan Collateral has been withdrawn for
correction pursuant to Section 3.4 such Mortgage Loan Collateral has been
returned to the Collateral Agent within 14 calendar days after withdrawal as
required by Section 3.4;
12
(k) that is denominated and payable in U.S. dollars in the United
States and the Obligor of which is a natural person who is a U.S. citizen or
resident alien or a corporation or other legal entity organized under the laws
of the United States or any State thereof or the District of Columbia;
(l) that is not subject to any right of rescission, setoff,
counterclaim or other dispute whatsoever;
(m) that was acquired by the Borrower from the Originator within 60
days after its Mortgage Origination Date;
(n) that is covered by the types and amounts of insurance required by
Section 6.6(b);
(o) that is not underwritten on a "no-income - no asset" verification
basis or in a manner such that the Obligor credit information contained in the
related Mortgage Loan application was not corroborated by credit underwriting
standards generally acceptable within the mortgage underwriting business;
(p) with respect to which all representations and warranties made by
the related Originator in the Repurchase Agreement are true and correct in all
material respects and with respect to which all loan level covenants made in the
Repurchase Agreement have been complied with;
(q) that is subjected to the following "Quality Control" measures by
personnel of the Originator before the Mortgage Note is funded by the
Originator:
(i) for those Mortgage Loans not originated by the Originator,
is underwritten by the Originator prior to funding thereof and after performance
of all underwriting procedures, is submitted to the Originator for closing where
it is reviewed for thoroughness and compliance (including truth-in-lending, good
faith estimates and other disclosures) and a verbal verification of employment
and in-file credit report are obtained; and
(ii) with respect to which, all Mortgage Loan Collateral is
prepared by the Originator and submitted to the closing agent at the time of
funding the related Mortgage Loans.
For the purpose of this definition:
(x) A Conforming Loan is "eligible for delivery" under a Take-Out
Commitment if (i) the underwriting criteria utilized and the Mortgage Loan
Collateral either match, or are in respect of interest rates (which rates must
bear a reasonable relationship to prevailing current market rates of interest
for loans with similar maturities), term, product type and delivery period
representative of the terms for purchase that are specified in a Take-Out
Commitment, and (ii) the aggregate outstanding principal of all Conforming Loans
is not more than the aggregate Take-Out Commitments' unutilized amount (i.e.
taking in account all Conforming Loans already allocated to the aggregate
Take-Out Commitments for purposes of determining Eligible Mortgage Loans whether
or not already delivered by the Borrower to the Collateral Agent).
13
(y) A Non-Conforming Loan is "designated for delivery" under a Take-Out
Commitment if the underwriting criteria utilized in approving such Mortgage Loan
conform to the underwriting criteria, and the terms of repayment (including
interest rate and "term to maturity") and other terms and conditions of the
Mortgage Loan Collateral match the specifications of that specific Take-Out
Commitment that designates that particular Non-Conforming Loan for purchase.
"Employee Plan" means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by the Originator or any ERISA
Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any corporation, trade or business that is,
along with ▇.▇. ▇▇▇▇▇▇, treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code, or Section 4001 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board, as in effect from time to time.
"Eurodollar Advance" means an Advance that bears interest at a rate per
annum determined on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period for any Eurodollar
Advance, for each Lender, an interest rate per annum (expressed as a decimal and
rounded upwards, if necessary, to the nearest one hundredth of a percentage
point) equal to the offered rate per annum for deposits in U.S. Dollars in a
principal amount of not less than $10,000,000 for such Interest Period as of
11:00 A.M., London time, two Business Days before (and for value on) the first
day of such Interest Period, that appears on the display designated as "Page
3750" on the Telerate Service (or such other page as may replace "Page 3750" on
that service for the purpose of displaying London interbank offered rates of
major banks); provided, that if such rate is not available on any date when the
Eurodollar Rate is to be determined, then an interest rate per annum determined
by the Administrative Agent equal to the rate at which it would offer deposits
in United States dollars to prime banks in the London interbank market for a
period equal to such Interest Period and in a principal amount of not less than
$10,000,000 at or about 11:00 A.M. (London time) on the second Business Day
before (and for value on) the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, with respect to any Bank and for
any Interest Period for such Bank's Eurodollar Advance, the reserve percentage
applicable during such Interest Period (or, if more than one such percentage
shall be so applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Federal Reserve Board (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
14
"Event of Default" is defined in Section 8.1.
"Excess Spread" means, as of the last day of each Collection Period, a
percentage equal to the Portfolio Yield for such Collection Period minus the
Eurodollar Rate minus the Conduit Spread or Bank Spread, as applicable, minus
the Servicing Fee for a period equal to such Collection Period.
"▇▇▇▇▇▇ Mae" means the government sponsored enterprise formerly known
as the Federal National Mortgage Association, or any successor thereto.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"FHA" means the Federal Housing Administration, or any successor
thereto.
"FHA Loan" means a Mortgage Loan, the ultimate payment of which is
partially or completely insured by the FHA or with respect to which there is a
current, binding and enforceable commitment for such insurance issued by the
FHA.
"Financial Officer" means (i) with respect to the Servicer or the
Originator, the chief financial officer, treasurer or a vice president having
the knowledge and authority necessary to prepare and deliver the financial
statements and reports required pursuant to Sections 6.1(b) and Section 3.8 and
(ii) with respect to ▇.▇. ▇▇▇▇▇▇, the chief financial officer, the vice
president -assistant comptroller, vice president - assistant treasurer or senior
vice president-comptroller.
"Fitch" means Fitch, Inc., and any successor thereto.
"Fixed Charges" means the aggregate consolidated Interest Incurred by
▇.▇. ▇▇▇▇▇▇ and its Restricted Subsidiaries plus scheduled amortization plus
preferred dividends for the most recently completed four (4) fiscal quarters for
which results have been reported to certain lenders.
"▇▇▇▇▇▇▇ Mac" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"▇▇▇▇▇▇ ▇▇▇" means the Government National Mortgage Association, or any
successor thereto.
"Governmental Authority" means any nation or government, any agency,
department, state or other political subdivision thereof, or any instrumentality
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government. Governmental
Authority shall include, without limitation, each of ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇,
FHA, HUD, VA and ▇▇▇▇▇▇ Mae.
15
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other requirement (including, without
limitation, any of the foregoing that relate to energy regulations and
occupational, safety and health standards or controls and any hazardous
materials laws) of any Governmental Authority that has jurisdiction over either
Originator, the Servicer, the Collateral Agent or the Borrower or any of their
respective Properties.
"Hedge Report" means, with respect to any Conforming Loans included in
the Eligible Mortgage Collateral with respect to which there is no loan-specific
Take-Out Commitment, a report prepared by the Servicer prepared pursuant to
Section 3.6 hereof, showing, as of the close of business on the previous
Business Day, all trades that have been assigned to the Administrative Agent,
and certain information with respect to such trades including information as the
Administrative Agent may request, in the form of Exhibit K hereto.
"HUD" means the Department of Housing and Urban Development, or any
successor thereto.
"Indebtedness" means, for any Person, without duplication, and at any
time, (a) all obligations required by GAAP to be classified on such Person's
balance sheet as liabilities, (b) obligations secured (or for which the holder
of the obligations has an existing contingent or other right to be so secured)
by any Lien existing on property owned or acquired by such Person, (c)
obligations that have been (or under GAAP should be) capitalized for financial
reporting purposes, and (d) all guaranties, endorsements, and other contingent
obligations with respect to obligations of others.
"Indemnified Amounts" is defined in Section 10.1.
"Indemnified Party" is defined in Section 10.1.
"Interest Expense" means, for any period, the interest expense of ▇.▇.
▇▇▇▇▇▇ and its Restricted Subsidiaries calculated on a consolidated basis for
such period in accordance with GAAP.
"Interest Incurred" means, for any period, the aggregate amount (without
duplication and determined in each case in accordance with GAAP) of interest
incurred, whether such interest was expensed or capitalized, paid, accrued or
scheduled to be paid or accrued by ▇.▇. ▇▇▇▇▇▇ and its Restricted Subsidiaries
during such period, including (a) original issue discount and non-cash interest
payments or accruals on any Indebtedness, (b) the interest portion of all
deferred payment obligations, and (c) all commissions, discounts and other fees
and charges owed with respect to bankers' acceptances and letter of credit
financings and financial ▇▇▇▇▇▇, in each case to the extent attributable to such
period. For purposes of this definition, (i) interest on any obligations arising
under any capital lease or sublease which is capitalized on a balance sheet in
accordance with GAAP shall be deemed to accrue at an interest rate reasonably
determined by ▇.▇. ▇▇▇▇▇▇ to be the rate of interest implicit in such
obligations in accordance with GAAP, and (ii) interest expense attributable to
any Indebtedness represented by the guaranty of an obligation of another Period
shall be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
16
"Interest Period" is defined in Section 2.15.
"Issuer" means Atlantic.
"Jumbo Loan" means a Mortgage Loan (other than a Conforming Loan) that
(1) is underwritten by an Approved Investor, (2) matches all applicable
requirements for purchase under the requirements of a Take-Out Commitment issued
for the purchase of such Mortgage Loan, and (3) differs from a Conforming Loan
solely by reason of the size of the principal amount of such Mortgage Loan,
which size is announced by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac from time to time.
"Lenders" means, collectively, the Issuer and the Banks.
"Leverage Ratio" means, with respect to ▇.▇. ▇▇▇▇▇▇, the ratio of (1)
outstanding debt of ▇.▇. ▇▇▇▇▇▇ and the Restricted Subsidiaries (including
undrawn and outstanding financial letters of credit or financial bonds)
including all pari passu, subordinated, or convertible debt less unrestricted
cash and equivalents in excess of $50 million to (2) the Consolidated Net Worth
of ▇.▇. ▇▇▇▇▇▇ and the Restricted Subsidiaries plus 50% of any Indebtedness of
▇.▇. ▇▇▇▇▇▇ or any of its Restricted Subsidiaries that is subordinated to the
Obligations on terms and conditions reasonably acceptable to the Administrative
Agent with maturities 12 months or longer than the subject facility, provided
that the amount added does not exceed the lesser of 20% of Consolidated Net
Worth or $200,000,000.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory, consensual or otherwise), or
other security arrangement of any kind (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the uniform commercial code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Liquidity Agreement" means a liquidity loan agreement, liquidity asset
purchase agreement or similar agreement entered into by a Bank and providing for
the making of loans to the Issuer, or the purchase of Advances (or interests
therein) from the Issuer, to support the Issuer's payment obligations under its
Commercial Paper Notes.
"Loan-to-Value Ratio" means, with respect to any Mortgage Loan, the
fraction, expressed as a percentage found by dividing the original principal
balance of a Mortgage Loan by the value of the Mortgage Loan, such value being
measured by (i) the appraised value of such property at such time, if the
Mortgage Loan is a refinance of an existing lien or (ii) the lower of the sales
price of the related property at the time of origination of the Mortgage Loan or
the appraised value of such property at such time, if the Mortgage Loan is a
purchase money loan.
"Majority Banks" means, at any time, Banks, including Banks that have
become party to this Agreement pursuant to an Assignment and Acceptance, having
outstanding Advances equal to more than 67% of the aggregate outstanding
Advances held by Banks or, if no Advance is then outstanding from any Bank,
Banks having more than 67% of the Bank Commitments.
17
"Market Value" means at the time determined, for any (a) Mortgage Loan
(other than a Non-Conforming Loan), the market value of such Mortgage Loan based
upon the then most recent posted net yield for 30-day mandatory future delivery
furnished by ▇▇▇▇▇▇ Mae and published and distributed by Telerate Mortgage
Services, or, if such posted net yield is not available from Telerate Mortgage
Services, such posted net yield obtained by the Administrative Agent from ▇▇▇▇▇▇
▇▇▇, or (b) Non-Conforming Loan, or any other Mortgage Loan while the posted
rate is not available from ▇▇▇▇▇▇ Mae, the value determined by the
Administrative Agent in good faith.
"Material Adverse Effect" means, with respect to any Person, any material
adverse effect on (i) the validity or enforceability of this Agreement, the
Notes or any other Transaction Document, (ii) the business, operations, total
Property or financial condition of such Person, (iii) the Collateral taken as a
whole, (iv) the enforceability or priority of the Lien in favor of the
Administrative Agent on any significant portion of the Collateral, or (v) the
ability of such Person to fulfill its obligations under this Agreement, the
Notes or any other Transaction Document.
"Maximum Facility Amount" means $100,000,000, as such amount may be
reduced pursuant to Section 2.1(c).
"Maximum Rate" means the maximum non-usurious rate of interest that,
under applicable law, each of the Lenders is permitted to contract for, charge,
take, reserve, or receive on the Obligations.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation.
"MERS Designated Mortgage Loan" means a Mortgage Loan registered to or by
the related Originator on the MERS electronic mortgage registration system.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, and any successor thereto.
"Mortgage" means a mortgage or deed of trust or other security instrument
creating a Lien on real property, on a standard form as approved by ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae or such other form as the Originator determines is
satisfactory for any Approved Investor unless otherwise directed by the
Administrative Agent and communicated to the Collateral Agent.
"Mortgage Assets" means, collectively, all of the Mortgage Loans and all
Take-Out Commitments.
"Mortgage Loan" means a loan evidenced by a Mortgage Note and secured by
a Mortgage, the beneficial interest of which has been acquired by the Borrower
from the Originator by purchase pursuant to the Repurchase Agreement (with the
record owner thereof being the Originator or, in the case of a MERS Designated
Mortgage Loan, MERS as nominee for the Originator, and its successors and
assigns).
"Mortgage Loan Collateral" means all Mortgage Notes and related Principal
Mortgage Documents, Other Mortgage Documents, and other Collateral.
18
"Mortgage Note" means a promissory note, on a standard form approved by
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae or such other form as the Originator
determines is satisfactory for any Approved Investor unless otherwise directed
by the Administrative Agent and communicated to the Collateral Agent.
"Mortgage Origination Date" means, with respect to each Mortgage Loan,
the date (transmitted to the Collateral Agent) that is the later of (1) the date
of the Mortgage Note or (2) the date such Mortgage Loan was funded and disbursed
to or at the direction of the Obligor.
"Multiemployer Plan" means a multiemployer plan defined in Sections 3(37)
or 4001(a)(3) of ERISA or Section 414(f) of the Code to which Borrower or any
ERISA Affiliate is required to make contributions.
"Net Worth" of a Person means, as of any date of determination, the total
stockholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP but
excluding the value of any investment made by such Person in an unconsolidated
Subsidiary.
"Non-Conforming Loan" means a Subprime Loan, a Jumbo Loan or an Alt-A
Loan.
"Note" means each or any of the promissory notes executed by the
Borrower, substantially in the form of Exhibit E hereto, together with all
renewals, extensions, and replacements for any such note.
"Obligations" means any and all present and future indebtedness,
obligations, and liabilities of the Borrower to any of the Lenders, the
Collateral Agent, each Affected Party, each Indemnified Party and the
Administrative Agent, and all renewals, rearrangements and extensions thereof,
or any part thereof, arising pursuant to this Agreement or any other Transaction
Document, and all interest accrued thereon, and attorneys' fees and other costs
incurred in the drafting, negotiation, enforcement or collection thereof,
regardless of whether such indebtedness, obligations, and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several.
"Obligor" means (i) with respect to each Mortgage Note included in the
Collateral, the obligor on such Mortgage Note and (ii) with respect to any other
agreement included in the Collateral, any person from whom the Originator or the
Borrower is entitled to performance.
"Originator" means CH Mortgage Company I, Ltd., a Texas limited
partnership, and its successors and assigns.
"Other Company" means ▇.▇. ▇▇▇▇▇▇ and all of its Subsidiaries except the
Borrower.
"Other Mortgage Documents" is defined in Section 3.2(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
19
"Permitted Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form that evidence any of the following:
(a) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality of the United States
of America, the obligations of which are backed by the full faith and credit of
the United States of America;
(b) (i) demand and time deposits in, certificates of deposits of,
bankers' acceptances issued by, or federal funds sold by, any depository
institution or trust company incorporated under the laws of the United States of
America, any State thereof or the District of Columbia or any foreign depository
institution with a branch or agency licensed under the laws of the United States
of America or any State, subject to supervision and examination by Federal
and/or State banking authorities and having a rating of P-1 by Moody's, a rating
of at least A-1 by S&P and a rating of at least F1 by Fitch at the time of such
investment or contractual commitment providing for such investment or otherwise
approved in writing by each Rating Agency or (ii) any other demand or time
deposit or certificate of deposit that is fully insured by the Federal Deposit
Insurance Corporation;
(c) repurchase obligations with respect to (i) any security described in
clause (a) above or (ii) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (b)(i) above;
(d) short-term securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America
or any State, the short-term unsecured obligations of which have a rating of P-1
by Moody's, a rating of at least A-1 by S&P and a rating of F1 by Fitch at the
time of such investment; provided, however, that securities issued by any
particular corporation will not be Permitted Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held in the Reserve Account to exceed
10% of amounts held in the Reserve Account;
(e) commercial paper having a rating of P-1 by Moody's, a rating of at
least A-1 by S&P and a rating of at least F1 by Fitch at the time of such
investment or pledge as security;
(f) money market funds whose investments consist solely of one of the
foregoing; or
(g) any other investments approved in writing by each Rating Agency.
"Permitted Transferee" is defined in Section 3.3(c).
"Person" means any individual, corporation (including a business trust),
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, Governmental Authority, or any
other form of entity.
"Portfolio Yield" means, with respect to any Collection Period, the
percentage equivalent to the amount computed as of the last day of such
Collection Period by dividing (a) the aggregate
20
amount of interest accrued (whether or not paid) with respect to all Eligible
Mortgage Loans included in the Collateral during such Collection Period by (b)
the daily average outstanding principal amount of all Eligible Mortgage Loans
included in the Collateral during such Collection Period.
"Primary Obligations" means, at the time determined, the sum of Principal
Debt plus accrued and unpaid interest thereon through the end of the then
current Interest Period, plus accrued and unpaid fees under Section 2.4(b).
"Principal Debt" means, at the time determined, the unpaid principal
balance of all Advances under this Agreement.
"Principal Mortgage Documents" is defined in Section 3.2(b).
"Program Documents" means, in the case of the Issuer, the Liquidity
Agreement relating to this Agreement and the other documents executed and
delivered in connection therewith, as each may be amended, supplemented or
otherwise modified from time to time.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Rating Agency" means S&P, ▇▇▇▇▇'▇ and Fitch.
"Regulation T, U, X and Z," respectively, mean Regulation T, U, X and Z
promulgated by the Federal Reserve Board as in effect from time to time, or any
successor regulations thereto.
"Regulatory Change" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, change in the
phase-in or commencement of effectiveness of) any:
(i) United States federal or state law or foreign law applicable
to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such Affected
Party of (A) any court, government authority charged with the interpretation or
administration of any law referred to in clause (a)(i) or (B) any fiscal,
monetary or other authority having jurisdiction over such Affected Party; or
(iii) GAAP or regulatory accounting principles applicable to such
Affected Party and affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above (it being understood that if an Affected Party
elects to make an accounting adjustment prior to the required date for such
adjustment, and such adjustment affects the application to such Affected Party
of any law, regulation, interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above, such adjustment will not
constitute a Regulatory Change until the date on which the adjustment actually
is required to be made);
21
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above;
or
(c) the issuance, publication or release of any regulation,
interpretation, directive, requirement or request of a type described in clause
(a)(ii) above to the effect that the obligations of any Bank under the
applicable Liquidity Agreement are not entitled to be included in the zero
percent category of off-balance sheet assets for purposes of any risk-weighted
capital guidelines applicable to such Bank or any related Affected Party.
"Repurchase Agreement" means the Master Repurchase Agreement and the
Addendum to the Master Repurchase Agreement incorporated therein, each dated as
of the date of this Agreement between the Originator, as Seller, and the
Borrower, as purchaser, as the same may be amended, modified or restated from
time to time.
"Required Ratings" means a rating of BB- or higher by S&P, a rating of
Ba3 or higher by Moody's and a rating of BB- or higher by Fitch.
"Required Reserve Account Amount" means on any date 0.50% of the Maximum
Facility Amount on such date.
"Requirement of Law" as to any Person means the articles of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
determination, direction or requirement (including, without limitation, any of
the foregoing that relate to energy regulations and occupational, safety and
health standards or controls and any hazardous materials laws) of any
Governmental Authority, in each case applicable to or binding upon such Person
or any of its Property or to which such Person or any of its Property is
subject.
"Reserve Account" is defined in Section 2.8.
"Reserve Account Bank" means the institution then holding the Reserve
Account pursuant to Section 2.8.
"Restricted Subsidiaries" means any Subsidiary of ▇.▇. ▇▇▇▇▇▇ which has
been designated as a Restricted Subsidiary by ▇.▇. ▇▇▇▇▇▇ and which is a party
to a guaranty agreement pursuant to which each such Restricted Subsidiary has
guaranteed the full and faithful payment and performance of certain obligations
of ▇.▇. ▇▇▇▇▇▇ and other parties.
"S&P" means Standard & Poor's Rating Services, a Division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and any successor thereto.
"Security Agreement" is defined in the Collateral Agency Agreement.
"Security Instruments" means (a) the Collateral Agency Agreement, (b) the
Security Agreement, (c) the Assignment of Account, and (d) such other executed
documents as are or may be necessary to grant to the Administrative Agent a
perfected first, prior and continuing
22
security interest in and to the Collateral and any and all other agreements or
instruments now or hereafter executed and delivered by or on behalf of the
Borrower in connection with, or as security for the payment or performance of,
all or any of the Obligations, as amended, modified or supplemented.
"Servicer" means at any time the Person then authorized pursuant to
Section 11.1 to administer and collect Mortgage Loans on behalf of the Lenders.
The initial Servicer shall be CH Mortgage Company I, Ltd.
"Servicer Default" means any Event of Default, to the extent relating to
the Servicer, arising under Sections 8.1(a), (b), (c), (d), (e), (f), (g), (h),
(i), (j), (k), (l), (p) or (aa) in each case, without giving effect to any
provisions in such sections that make such sections applicable only so long as
the Servicer and the Originator are the same entities.
"Servicer Fee" is defined in Section 2.4(b).
"Servicer Monthly Report" is defined in Section 3.7.
"Settlement Date" means the 15th day of each calendar month, commencing
July 15, 2002 or, if such day is not a Business Day, the next succeeding
Business Day, provided, however, that on and after the Drawdown Termination
Date, the Administrative Agent may, by notice to the Borrower and the Servicer,
select other days to be Settlement Dates (including days occurring more
frequently than once per month).
"Shipping Request" means the shipping request presented by the Borrower
or the Servicer to the Collateral Agent substantially on the form attached as
Exhibit D-5A (as amended, modified or supplemented from time to time as agreed
to by the Administrative Agent, the Borrower and the Collateral Agent).
"Shortfall Amount" means, with respect to the last day of any Interest
Period or any Settlement Date, the excess, if any, of (a) all amounts due
pursuant to (i) Section 2.7(c)(iii)(B) or Section 2.7(c)(iv)(C) on the last day
of such Interest Period occurring prior to, on or after the Drawdown Termination
Date, as applicable, (ii) Section 2.7(c)(iii)(A), (C), (D), or (F) on any such
Settlement Date occurring prior to the Drawdown Termination Date or (iii)
Section 2.7(c)(iv)(A), (B), (D), (E), or (G) on any such Settlement Date
occurring on or after the Drawdown Termination Date, over (b) the sum of the
collections then held by the Servicer for the Lenders and the Administrative
Agent pursuant to Section 2.7(c)(ii) plus collected funds then on deposit in the
Collection Account.
"Sixty-Day Default Ratio" means as of the end of any Collection Period,
the ratio of (i) the principal amount of all Mortgage Loans with respect to
which the Obligor is 60 or more days in payment default or has taken any action,
or suffered any event of the type described in Section 8.1(f), (g) or (h) or is
in foreclosure at such time, to (ii) the aggregate principal amount of all
Mortgage Loans at such time.
"Special Borrowing" is defined in Section 2.3(c).
"Special Indemnified Amounts" is defined in Section 11.5.
23
"Special Mortgage Loans" is defined in Section 2.3(c).
"Subordination Agreement" means the agreement, substantially in the form
attached as Exhibit B hereto, executed by ▇.▇. ▇▇▇▇▇▇ and certain of its
Affiliates, if applicable, in favor of the Borrower and the Administrative Agent
for the benefit of the holders of the Obligations.
"Subprime Loan" means a Mortgage Loan (other than a Conforming Loan, a
Jumbo Loan, or Alt-A Loan) that (1) is underwritten by an Approved Investor, (2)
matches all applicable requirements for purchase under the requirements of a
Take-Out Commitment specifically issued for the purchase of such Mortgage Loan,
and (3) differs from a Conforming Loan because of the credit quality of the
Obligor, and is originated by the Originator or by a correspondent of the
Originator using the established underwriting guidelines for subprime loans of
the Originator, which are the same underwriting guidelines that the Originator
uses to originate subprime loans for sales into the secondary mortgage market.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which securities having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person, or one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
"Super Jumbo Loan" means a Jumbo Loan having an original principal
balance equal to or in excess of $650,000.
"Take-Out Commitment" means (A) with respect to Mortgage Loans that are
included in the Eligible Mortgage Collateral, a current, valid, binding,
enforceable, written commitment, issued by an Approved Investor, to purchase one
or more Mortgage Loans from the Originator prior to the date that is 120 days
(or 180 days to the extent Collateral Value may include Mortgage Loans that have
been Eligible Mortgage Loans for more than 120 days pursuant to paragraph (g) of
the definition of Collateral Value) from the date that such Mortgage Loan first
becomes Eligible Mortgage Collateral and at a specified price and in amounts,
form and substance satisfactory to the Administrative Agent, which commitment is
not subject to any term or condition (i) that is not customary in commitments of
like nature or (ii) that, in the reasonably anticipated course of events, cannot
be fully complied with prior to the expiration thereof, which commitment has
been assigned to the Borrower (partial assignments being permitted so long as
the amount assigned (together with all other Take-Out Commitments) fully covers
the amount of the Eligible Mortgage Collateral) and in which a perfected and
first-priority security interest has been granted by the Borrower to the
Administrative Agent; provided, that promptly upon receipt of the actual written
confirmation (each, a "trade confirmation") of such trade duly executed by the
Originator and the trade counterparty (such trade confirmation being held in
trust for the Collateral Agent pursuant to Section 3.2(c), the Originator must
provide such trade confirmation upon such receipt to the Administrative Agent,
immediately upon its request, and the Administrative Agent, on behalf of the
Lenders shall have the right, without notice, to review such trade confirmation
at the office of, and with the officers of, the Originator, or (B) with respect
to the Non-Conforming Loans included in the Eligible Mortgage Collateral, a
current, valid, binding, enforceable, written commitment, issued by an Approved
Investor, to purchase loans with characteristics of such Subprime Loans from the
Originator from time to time at a specified price (or a specified spread to an
agreed-upon index) and in amounts, and upon terms,
24
satisfactory to the Administrative Agent, which commitment is not subject to any
term or condition (i) that is not customary in commitments of like nature or
(ii) that, in the reasonably anticipated course of events, cannot be fully
complied with prior to the expiration thereof, the rights but not the
obligations under which commitment have been assigned to the Borrower (partial
assignments being permitted so long as the aggregate amount assigned fully
covers the amount of the Eligible Mortgage Collateral) and in which a perfected
and first-priority security interest has been granted by the Borrower to the
Administrative Agent.
"Take-Out Commitment Documents" means (1) with respect to any Mortgage
Loan, with respect to which there is no loan-specific Take-Out Commitment, an
executed original assignment of trade as described in the definition of
"Take-Out Commitment"; and (2) with respect to any Mortgage Loan, with respect
to which there is a loan-specific Take-Out Commitment, copies of all Take-Out
Commitments.
"Take-Out Commitment Master Agreement" means with respect to which there
is a loan-specific Take-Out Commitment, the master flow sale agreement, investor
bulk sales agreement, or similar agreement setting forth the basic terms of
sales to the related Approved Investor.
"Transaction Document" means any of this Agreement, the Notes, the
Security Instruments, the Collateral Agency Agreement, the Repurchase Agreement,
the Administrative Agent Fee Letter, the Subordination Agreement and any and all
other agreements or instruments now or hereafter executed and delivered by or on
behalf of the Borrower in connection with, or as security for the payment or
performance of any or all of the Obligations, as any of such documents may be
renewed, amended, restated or supplemented from time to time.
"Transfer Request" is defined in Section 3.3(a).
"UCC" means the Uniform Commercial Code as adopted in the applicable
state, as the same may hereafter be amended.
"Uncovered Mortgage Loan" means a Mortgage Loan that would be an Eligible
Mortgage Loan but for the expiration, forfeiture, termination, or cancellation
of, or default under, the relevant Take-Out Commitment.
"Unrestricted Subsidiaries" means Subsidiaries of ▇.▇. ▇▇▇▇▇▇ which are
not Restricted Subsidiaries.
"VA" means the Department of Veterans Affairs, or any successor thereto.
"VA Loan" means a Mortgage Loan, the payment of which is partially or
completely guaranteed by the VA under the Servicemen's Readjustment Act of 1944,
as amended, or Chapter 37 of Title 38 of the United States Code or with respect
to which there is a current binding and enforceable commitment for such a
guaranty issued by the VA.
25
1.2. Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the above-defined meanings when used in the Notes or any other
Transaction Document, certificate, report or other document made or delivered
pursuant hereto.
(b) The words "hereof," "herein," "hereunder" and similar terms
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
(c) As used herein, in the Notes or in any other Transaction
Document, certificate, report or other document made or delivered pursuant
hereto, accounting terms relating to any Person and not specifically defined in
this Agreement or therein shall have the respective meanings given to them under
GAAP.
(d) All accounting and financial terms used -- and compliance with
each financial covenant -- in the Transaction Documents shall be determined
under GAAP; however, unless the Administrative Agent has agreed (in writing) to
the contrary, the determinations concerning the financial covenants found in
Sections 7.1 and 7.10 and the Net Worth of the Servicer (so long as the
Originator is the Servicer), including determinations of Deferred Income under
SFAS 91 and SFAS 122, shall be made under GAAP, and SFAS 91 and SFAS 122, as in
effect on the date of this Agreement. All accounting principles shall be applied
on a consistent basis so that the accounting principles in a current period are
comparable in all material respects to those applied during the preceding
comparable period.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENT
2.1. Maximum Facility Amount.
(a) Subject to the terms of this Agreement and so long as (i) the
total Principal Debt never exceeds the Maximum Facility Amount, (ii) the Primary
Obligations never exceed the total Collateral Value of all Eligible Mortgage
Collateral, (iii) no Borrowing ever exceeds the Availability, and (iv)
Borrowings are only made on Business Days before the Drawdown Termination Date,
the Issuer may, in its sole discretion, and if an Issuer does not make such
Advance, the Banks shall, ratably in accordance with their Bank Commitments,
make Advances to the Borrower from time to time in such amounts as may be
requested by the Borrower pursuant to Section 2.3, so long as each Borrowing is
the least of (x) the Availability, (y) the Available Collateral Value, and (z)
$5,000,000 or an integral multiple of $10,000 in excess thereof. Within the
limits of the Maximum Facility Amount, the Borrower may borrow, prepay (whether
pursuant to Section 2.5 or Section 3.3(a) of this Agreement or otherwise), and
reborrow under this Section 2.1.
(b) The Borrower may, from time to time by written request to the
Lenders and the Administrative Agent (each such notice being an "Extension
Request") given not later
26
than 60 days and not sooner than 90 days prior to the first and second
anniversaries of the Effective Date requesting an extension of such date to the
Business Day falling not more than 360 days after such date. If the Lenders and
the Administrative Agent consent, in their sole discretion, to such Extension
Request within 30 days following their receipt of such Extension Request, then
the date set forth in clause (a) of the definition of Drawdown Termination Date
shall be extended to the date set forth in such Extension Request. Any such
extension (or waiver of the right to terminate the Maximum Facility Amount in
2002 and 2003) may be accompanied by such additional fees as the parties shall
mutually agree. Notwithstanding anything else to the contrary herein, the
Maximum Facility Amount shall terminate automatically as of July 9, 2003 or July
9, 2004 if an Extension Request is not granted beyond such date pursuant to this
Section 2.1(b).
(c) The Borrower may, upon at least thirty (30) days prior
irrevocable notice to the Administrative Agent, but no more than once every
three months, reduce the Maximum Facility Amount; provided, however, that each
partial reduction shall be in the aggregate amount of $10,000,000 or integral
multiples of $1,000,000 in excess thereof; provided further, however that no
such reduction shall reduce the Maximum Facility Amount below the greater of (i)
the total Principal Debt or (ii) $25,000,000.
(d) The Borrower may, upon at least thirty (30) days prior
irrevocable notice to the Administrative Agent, terminate the Maximum Facility
Amount in its entirety upon payment in full of all Obligations.
2.2. Promissory Notes.
The Advances made by each of the Lenders pursuant to this Article II
shall be evidenced by separate Notes each substantially in the form set forth in
Exhibit E hereto, each in the maximum principal amount of its Bank Commitment.
The Administrative Agent on behalf of the Lenders shall record in its records
the date and amount of each Advance to the Borrower and each repayment thereof.
The information so recorded shall be rebutable presumptive evidence of the
accuracy thereof. The failure to so record, in the absence of manifest error,
any such information or any error in so recording any such information shall
not, however, limit or otherwise affect the obligations of the Borrower
hereunder or under the Notes to pay the principal of all Advances, together with
interest accruing thereon.
2.3. Notice and Manner of Obtaining Borrowings.
(a) Borrowings.
(i) The Borrower shall give the Administrative Agent and the
Collateral Agent notice of each request for a Borrowing, pursuant to a Borrowing
Report, and in accordance with the provisions of Section 4.2 hereof. On the
Borrowing Date specified in the Borrowing Report and subject to all other terms
and conditions of this Agreement, the Issuer may, in its discretion, make
available to the Administrative Agent at the office of the Administrative Agent
set forth in Section 12.1, in immediately available funds, the Borrowing.
27
(ii) In the event that the Issuer shall elect not to make
a Borrowing requested by the Borrower, each Bank agrees that it shall, on
the Borrowing Date specified in the Borrowing Report and subject to all
other terms and conditions of this Agreement, make available to the
Administrative Agent at the office of the Administrative Agent set forth
in Section 12.1, in immediately available funds, an amount equal to the
product of (x) such Bank's Bank Commitment Percentage, multiplied by (y)
the portion of such Borrowing that the Issuer has elected not to fund.
(iii) After the Administrative Agent's receipt of funds
pursuant to the preceding paragraph (i) or (ii) and upon fulfillment of
the applicable conditions set forth in Article IV, the Administrative
Agent will make such funds available to the Borrower by crediting
Borrower's operating account with a like amount of immediately available
funds. So long as the Borrower is otherwise entitled to make a specific
Borrowing, Borrowing Reports that are received by the Administrative
Agent and the Collateral Agent by 10:30 a.m. (eastern time) on a Business
Day will be funded on the next Business Day following receipt of the
Borrowing Report.
(iv) Notwithstanding the foregoing, a Bank shall not be
obligated to make Advances under this Section 2.3 at any time to the
extent that the principal amount of all Advances made by such Bank would
exceed such Bank's Bank Commitment less the outstanding and unpaid
principal amount of any loans or purchases made by such Bank under a
Liquidity Agreement. Each Bank's obligation shall be several, such that
the failure of any Bank to make available to the Borrower any funds in
connection with any Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make funds available on the date of such
Borrowing, but no Bank shall be responsible for the failure of any other
Bank to make funds available in connection with any Borrowing.
(b) Type of Loan.
(i) Each Advance by the Issuer shall initially be funded
by the issuance of commercial paper by the Issuer.
(ii) Each Advance by a Bank shall be either a Base Rate
Advance or a Eurodollar Advance, as determined pursuant to Section
2.15(b).
(c) Special Borrowings. The Borrower may from time to time
request that certain Borrowings be funded prior to the delivery to the
Collateral Agent of the corresponding Principal Mortgage Documents
(individually, a "Special Borrowing"; collectively, "Special Borrowings").
Advances in respect of Special Borrowings shall be made in accordance with
Section 2.3(a), subject to the terms and conditions of this Agreement,
including, without limitation, the following additional terms and conditions:
(i) Pursuant to an Assignment, the Borrower shall grant
to the Administrative Agent for the benefit of the holders of the
Obligations, from the Borrowing Date of each Special Borrowing, a
perfected, first-priority security interest in the Mortgage Loans
identified in Schedule III to said Assignment (such Mortgage Loans being
sometimes called "Special Mortgage Loans";
28
(ii) The Assignment in connection with the Borrowing
Report delivered by the Borrower to the Administrative Agent and the
Collateral Agent, pursuant to which the Borrower requests a Special
Borrowing, shall describe the Mortgage Note or Mortgage Notes to be
delivered to the Collateral Agent in connection therewith by the loan
number assigned by the Originator, original principal amount, the amount
funded (minus discount points paid to the Originator) by the Originator,
Obligor's name and interest rate;
(iii) Within nine (9) Business Days after the date that
each Assignment is delivered (and inclusion of the related Special
Mortgage Loan within the computation of Collateral Value as reported on
the Collateral Agent Daily Report), to Collateral Agent, the Borrower
shall deliver to the Collateral Agent the Principal Mortgage Documents
pertaining to any Special Mortgage Loan identified on Schedule III of
such Assignment;
(iv) At any time, (A) except the first five and last five
Business Days of any month, the portion of total Collateral Value that
may be attributable to Special Mortgage Loans with respect to which the
related Principal Mortgage Documents have not been delivered to the
Collateral Agent within nine (9) Business Days after the date the
Assignment was delivered to the Collateral Agent shall not exceed thirty
percent (30%) of the Maximum Facility Amount and (B) during the first
five and last five Business Days of any month, the portion of total
Collateral Value that may be attributable to Special Mortgage Loans with
respect to which the related Principal Mortgage Documents have not been
delivered to the Collateral Agent within nine (9) Business Days after the
date the Assignment was delivered to the Collateral Agent shall not
exceed fifty percent (50%) of the Maximum Facility Amount;
(v) The Borrower shall not request any Special Borrowing,
and no Special Borrowing shall be made, in respect of any Mortgage Loan
that is closed with an escrow agent other than the relevant title
insurance company, unless at the time of such request, the Borrower is
entitled to the benefit of Closing Protection Rights with provisions
substantially similar to one of the prescribed sets of rights set forth
in Exhibit N to this Agreement or as otherwise required by the
Administrative Agent (it being understood that pursuant to the Security
Agreement, the Administrative Agent has a security interest in all
Closing Protection Rights).
Each request by the Borrower for a Special Borrowing shall be automatically
deemed to constitute a representation and warranty by the Borrower to the effect
that immediately before and after giving effect to such Borrowing, the terms and
conditions specified in the foregoing clauses (i) through (v) and in Section 4.2
are and shall be satisfied in full as of the related Borrowing Date.
(d) Failure to Deliver Principal Mortgage Documents. The
failure to deliver Principal Mortgage Documents by the ninth Business Day, as
required by subparagraph (iii) of Section 2.3(c) and elsewhere in this
Agreement, shall not be treated as a Default or an Event of Default so long as
the Administrative Agent is satisfied that each such failure, when considered in
the light of past and other contemporaneous failures, is not sufficient to have
a Material
29
Adverse Effect; however, (i) if any such Principal Mortgage Documents related to
such Special Mortgage Loans are not so delivered on a timely basis, the Borrower
shall make a mandatory prepayment so that after giving effect thereto, the
Collateral Value of Eligible Mortgage Collateral (excluding such Special
Mortgage Loans) shall equal or exceed the Primary Obligations, and (ii) the
Special Mortgage Loan shall not be an Eligible Mortgage Loan and shall have a
Collateral Value of zero until such Principal Mortgage Documents shall have been
delivered to the Collateral Agent in connection with a subsequent Borrowing.
The Borrower diligently shall pursue delivery to the Collateral Agent of
all Principal Mortgage Documents pertaining to any Special Borrowings.
2.4. Fees.
(a) The Borrower shall pay to the Administrative Agent the fees
set forth in a letter agreement dated the date hereof (the "Administrative Agent
Fee Letter"), between the Administrative Agent and the Borrower, such fees to be
payable at such times and in such amounts as shall be specified thereunder.
(b) The Borrower shall pay to the Servicer a fee (the "Servicer
Fee") of 0.25% per annum on the aggregate outstanding principal balance of the
Eligible Mortgage Loans from the date hereof until the Principal Debt is paid in
full, payable monthly in arrears on each Settlement Date. The Servicer Fee shall
be payable only from Collections pursuant to, and subject to the priority of
payments set forth in, Section 2.7(c).
2.5. Prepayments.
(a) Optional Prepayments. The Borrower may, at any time and
from time to time with five (5) Business Days' notice to the Administrative
Agent, prepay the Advances in whole or in part, in the aggregate amount of
$1,000,000 or integral multiples of $100,000 in excess thereof, without premium
or penalty other than Consequential Loss, if any. Notwithstanding the foregoing,
any prepayment made hereunder shall be accompanied by accrued interest on the
principal amount being prepaid. After giving notice that a prepayment will be
made, the Borrower shall be liable to each Affected Party for any Consequential
Loss resulting from such prepayment (including prepayments of Advances bearing
interest at the Commercial Paper Rate or Eurodollar Rate on a day other than the
last day of the related Interest Period) or the failure to make a prepayment
designated in any such notice.
(b) Mandatory Prepayments. The Borrower shall immediately on
demand by the Administrative Agent make a mandatory prepayment if at any time,
and to the extent that, (i) the Principal Debt exceeds the Maximum Facility
Amount or (ii) the Primary Obligations exceed the total Collateral Value of all
Eligible Mortgage Collateral. The Borrower shall be liable for any Consequential
Loss resulting from any such prepayment.
2.6. Business Days.
If the date for any payment under this Agreement falls on a day that is
not a Business Day, then for all purposes of the Notes and this Agreement the
same shall be deemed to have fallen on either (a) the next following Business
Day, and such extension of time shall in such
30
case be included in the computation of payments of interest or (b) if the next
following Business Day is in another calendar month and payment is being made
with respect to a Eurodollar Advance, then on the immediately previous Business
Day.
2.7. Payment Procedures.
(a) In General. Subject to the provisions of this Section 2.7,
all payments on the Principal Debt and interest and fees under the Notes and
this Agreement shall be made by the Borrower (or the Collateral Agent or the
Servicer on behalf of the Borrower) to the Administrative Agent for the account
of the Lenders represented by the Administrative Agent. All such payments shall
be made before 11:00 a.m. (eastern time) on the respective due dates in federal
or other funds immediately available by that time of day and at the Agent's
Account. Funds received after 11:00 a.m. (eastern time) shall be treated for all
purposes as having been received by the Administrative Agent on the Business Day
next following the date of receipt of such funds from the Borrower.
(b) The Borrower shall establish an account (the "Collection
Account") in the name and under the control of the Administrative Agent with the
Collateral Agent (the "Collection Account Bank"), which account shall be titled
"Credit Lyonnais New York Branch, as Administrative Agent, pursuant to the Loan
Agreement dated as of even date herewith among CH Funding, LLC, as Borrower, the
Administrative Agent and certain other parties (Collection Account)." The
Collection Account shall be a fully segregated trust account, unless the
Collection Account Bank shall be an Eligible Institution having short-term debt
ratings from S&P, ▇▇▇▇▇'▇ and Fitch no lower than A-1/P-1/F1 respectively, in
which case the account need not be a trust account. The Collection Account shall
be under the control of the Administrative Agent, and the Borrower shall have no
right, title or interest in, or any right to withdraw any amount from, the
Collection Account except as otherwise contemplated in Section 2.7(c) or Section
3.3(a).
(c) Collections.
(i) The Servicer shall administer Collections in
accordance with the provisions of this Section 2.7.
(ii) The Servicer shall hold, on behalf of the Lenders and
the Administrative Agent, from Collections received by it with respect to
any Mortgage Asset, amounts necessary to make payments on the following
Settlement Date (or end of the related Interest Period) pursuant to
Section 2.7(c)(iii) or (iv), as applicable. Such amounts shall be
deposited into the Collection Account no later than such Settlement Date
or at the end of such Interest Period, or, on or after the Drawdown
Termination Date or upon the occurrence and during the continuation of an
Event of Default, within one Business Day after receipt before 11:00 a.m.
(eastern time) by the Servicer.
(iii) Prior to the Drawdown Termination Date, unless the
most recent Servicer Monthly Report shows that an Advance Cessation
Trigger has occurred and is continuing, the Servicer shall withdraw funds
from the Collection Account (to the extent
31
of collected funds therein) and shall make payments from the Collection
Account at the following times and in the following order of priority:
(A) To the extent not previously paid, on each
Settlement Date, the Servicer shall deposit an amount equal to the
costs, fees and expenses then due and payable to the Collateral
Agent to an account designated by the Collateral Agent.
(B) On the last day of each Interest Period for any
Advance made by Atlantic that bears interest at the Commercial
Paper Rate and on the last day of each Interest Period for any
Eurodollar Advance made by any Lender, the Servicer shall deposit
an amount equal to accrued interest on such Advance to the Agent's
Account. On each Settlement Date, the Servicer shall deposit an
amount equal to accrued interest on each Advance that bears
interest at the Alternate Base Rate to the Agent's Account.
(C) To the extent not previously paid, on each
Settlement Date, the Servicer shall deposit an amount equal to the
fees, costs and expenses then due and payable to the
Administrative Agent under the Administrative Agent Fee Letter to
the Agent's Account.
(D) On each Settlement Date on which the Required
Reserve Account Amount exceeds the amount then on deposit in the
Reserve Account, the Servicer shall deposit an amount equal to
such excess to the Reserve Account.
(E) To the extent not previously paid, on each
Settlement Date, the Servicer shall deposit any amounts, other
than those listed in clauses (A), (B) and (C) above and other than
principal on the Advances, that are then due and payable and of
which the Servicer has received prior written notice, including
without limitation additional costs under Section 2.16, any
additional interest under Section 2.17, Consequential Losses under
Section 2.18, indemnities under Section 10.1 and costs, expenses
and taxes under Section 12.21, to the Agent's Account.
(F) If requested by the Borrower, the Servicer (1)
shall remit the amount of any principal prepayment to be made
hereunder to the Agent's Account, and (2) to the extent not
required to make payments pursuant to clauses (A) through (E) on
any Settlement Date or at the end of any Interest Period occurring
within 30 days after the Borrower's request, to an account
designated by the Borrower to pay for the purchase of Mortgage
Assets by the Borrower.
(G) On each Settlement Date, the Servicer shall
retain for its own account an amount equal to accrued Servicing
Fee then due and payable.
(iv) On the Drawdown Termination Date and thereafter,
unless the most recent servicer Monthly Report shows that an Advance
Cessation Trigger has occurred and is continuing, the Administrative
Agent shall make payments from the
32
Collection Account (to the extent of collected funds therein) at the
following times and in the following order of priority:
(A) On each Settlement Date, if the Servicer is not
the Originator or an Affiliate of the Originator, an amount equal
to accrued Servicing Fee then due and payable shall be paid to the
Servicer.
(B) On the last day of each Interest Period for any
Advance made by Atlantic that bears interest at the Commercial
Paper Rate and on the last day of each Interest Period for any
Eurodollar Advance made by any Lender, an amount equal to accrued
interest on each such Advance shall be paid to the Agent's
Account. On each Settlement Date, an amount equal to accrued
interest on Advances that bear interest at the Alternate Base Rate
shall be paid to the Agent's Account.
(C) To the extent not previously paid, on each
Settlement Date, an amount equal to the costs, fees and expenses
then due and payable to the Collateral Agent shall be paid to an
account designated by the Collateral Agent.
(D) On each Settlement Date, an amount equal to the
unpaid principal balance of all Advances made by Lenders, or such
lesser amount as is available from Collections, shall be paid to
the Agent's Account.
(E) To the extent not previously paid, on each
Settlement Date, an amount equal to the fees then due and payable
to the Administrative Agent under the Administrative Agent Fee
Letter shall be paid to the Agent's Account.
(F) To the extent not previously paid, on each
Settlement Date, any amounts of the type described in Section
2.7(c)(iii)(E) are then due and payable and any other unpaid
Obligations shall be paid to the Agent's Account.
(G) On the Settlement Date on which all Obligations
are paid in full, if the Servicer is the Originator or an
Affiliate of the Originator, an amount equal to accrued Servicing
Fee then due and payable shall be paid to the Servicer.
(v) Upon receipt of funds deposited into the Agent's
Account, the Administrative Agent shall distribute such funds to the
Lenders or to itself for application to the Obligations in accordance
with the order of priority set forth in Section 2.7(c)(iii) or (iv), as
applicable.
(vi) On the Drawdown Termination Date and thereafter,
Issuer shall use commercially reasonable efforts to coordinate Interest
Periods for advances so that Consequential Losses and other expenses
charged to Borrower are mitigated.
(d) Interest Payments. Interest on each Advance made by Atlantic that
bears interest at the Commercial Paper Rate and interest on each Eurodollar
Advance shall be due and payable on the last day of the Interest Period
applicable to such Advance. Interest on each
33
Advance that bears interest at a rate based on the Alternate Base Rate shall be
due and payable in arrears on each Settlement Date, on the Drawdown Termination
Date, and thereafter, on demand.
(e) Payments from Collection Account. To effect payments
(including prepayments) hereunder, the Borrower or the Servicer may request the
Administrative Agent to remit the collected funds (if any) then held on deposit
in the Collection Account.
2.8. The Reserve Account.
(a) Establishment. The Borrower shall establish an account (the
"Reserve Account") in the name and under the control of the Administrative Agent
with U. S. Bank National Association titled "Credit Lyonnais New York Branch, as
Administrative Agent, pursuant to the Loan Agreement dated as of July 9, 2002
among CH Funding, LLC, as Borrower, the Administrative Agent and certain other
parties (Reserve Account)". The Reserve Account shall be a fully segregated
trust account, unless the Reserve Account Bank shall be an Eligible Institution
having short term debt ratings from S&P, ▇▇▇▇▇'▇ and Fitch no lower than
A-1/P-1/F1 respectively. The Reserve Account shall be under the sole dominion
and control of the Administrative Agent, and the Borrower shall have no right to
withdraw any amount from, the Reserve Account.
(b) Taxation. The taxpayer identification number associated
with the Reserve Account shall be that of the Borrower, and the Borrower will
report for federal, state and local income tax purposes the income, if any,
earned on funds in the Reserve Account.
(c) Investments. The Borrower is hereby appointed as the
investment agent, which appointment the Borrower hereby accepts, to act on
behalf of the Administrative Agent for determining investments of cash at any
time on deposit in the Reserve Account. All funds on deposit in the Reserve
Account shall be invested in Permitted Investments (as shall be specified by the
Borrower, as investment agent, in writing to the Reserve Account Bank and the
Administrative Agent; provided, that if the Borrower shall fail to specify such
Permitted Investments in a timely manner, the Administrative Agent may specify
such Permitted Investments) that shall mature not later than the Business Day
preceding the next Settlement Date and shall be held to maturity. All such
investments shall be made in the name of the Reserve Account Bank, as agent, and
held by the Reserve Account Bank, or its nominee, for the benefit of the
Administrative Agent. The Reserve Account Bank shall not be liable for any loss
incurred in connection with any investment in the Reserve Account, except for
losses in respect of investments in any investment issued or guaranteed by the
Reserve Account Bank. Income earned on funds deposited to the Reserve Account,
if any, shall be considered a part of the Reserve Account.
(d) New Reserve Account. In the event the Reserve Account Bank
ceases to be an Eligible Institution, the Borrower shall, within ten days after
learning thereof, establish a new Reserve Account (and transfer any balance and
investments then in the Reserve Account to such new Reserve Account) at another
Eligible Institution.
(e) Statements for Reserve Account. On a monthly basis, the
Reserve Account Bank shall provide the Administrative Agent with a written
statement with respect to
34
the preceding calendar month regarding the Reserve Account in a form customary
for statements provided by the Reserve Account Bank for other accounts held by
it, which statement shall include, at a minimum, the amount on deposit in the
Reserve Account, and the dates and amounts of all deposits, withdrawals and
investment earnings with respect to the Reserve Account. The Reserve Account
Bank shall promptly deliver a copy of each such statement to the Borrower and to
the Servicer.
(f) Payments from Reserve Account.
(i) On the Business Day preceding the last day of each
Interest Period and each Settlement Date, the Servicer will determine
whether any Shortfall Amount will arise with respect to such Interest
Period or Settlement Date and will give the Administrative Agent notice
of the amount thereof by noon New York City time. By 2:00 p.m. New York
City time on the Business Day prior to the last day of each Interest
Period and each Settlement Date on which the amount of the Shortfall
Amount is greater than zero, the Administrative Agent shall notify the
Reserve Account Bank requesting payment thereof. To the extent funds are
available in the Reserve Account, the Reserve Account Bank shall pay the
amount requested to the Agent's Accounts, as specified by the
Administrative Agent, by 11:00 a.m. New York City time on the last day of
such Interest Period or on such Settlement Date.
(ii) On each Settlement Date prior to the Drawdown
Termination Date on which the funds on deposit in the Reserve Account
exceed the Required Reserve Account Amount (after giving effect to any
payments pursuant to Section 2.8(f)(i)), so long as no Advance Cessation
Trigger has occurred and is continuing, the Administrative Agent agrees
to notify the Reserve Bank to pay such excess to the Borrower.
(g) Payments to Reserve Account. On the date hereof, the
Borrower shall deposit $500,000 in immediately available funds into the Reserve
Account. Additional payments shall be deposited to the Reserve Account from time
to time pursuant to Section 2.7(c)(iii)(D).
(h) Pledge. The Borrower hereby pledges and assigns to the
Administrative Agent for the benefit of the Lenders, and hereby grants to the
Administrative Agent for the benefit of the Lenders, a security interest in, all
of the Borrower's right, title and interest in and to the Reserve Account,
including, without limitation, all funds on deposit therein, all investments
arising out of such funds, all interest and any other income arising therefrom,
all claims thereunder or in connection therewith, and all cash, instruments,
securities, rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of such account, such
funds or such investments, and all money at any time in the possession or under
the control of, or in transit to such account, or any bailee, nominee, agent or
custodian of the Reserve Account Bank, and all proceeds and products of any of
the foregoing. Except as provided in the preceding sentence, the Borrower may
not assign, transfer or otherwise convey its rights under this Agreement to
receive any amounts from the Reserve Account.
(i) Termination of Reserve Account. On the date following the
Drawdown Termination Date on which all Obligations have been paid in full, all
funds then on deposit in the Reserve Account shall be paid to the Borrower and
the Reserve Account shall be closed.
35
2.9. Interest Allocations.
The Administrative Agent shall, from time to time and in its sole
discretion, determine whether an Advance shall be part of the "CP Allocation" or
the "ABR Allocation"; provided, however, that each Advance made by a Bank
hereunder shall be allocated to the ABR Allocation. The Administrative Agent
shall provide the Borrower with reasonably prompt notice of the allocations made
by it pursuant to this Section 2.9. Following designation by the Administrative
Agent of any Advance, or any portion thereof, as being a CP Allocation, the
Borrower may, at all times that such designation remains in effect, consult with
the Administrative Agent as to the number and length of Interest Periods
relating to such CP Allocation. In addition, in any Borrowing Report, the
Borrower may request that an Advance be part of the CP Allocation and may
request the length of any related Interest Period. In selecting the Interest
Periods for a CP Allocation, the Administrative Agent shall use reasonable
efforts, taking into account market conditions, to accommodate the Borrower's
preferences; provided, however, that the Administrative Agent shall have the
ultimate authority to make all such selections.
2.10. Interest Rates.
Except where specifically otherwise provided, Borrowings in respect of
any CP Allocation shall bear interest with respect to each Interest Period
comprising such CP Allocation at a rate per annum equal to the Commercial Paper
Rate applicable to such Interest Period, and Borrowings in respect of any ABR
Allocation shall bear interest at either the Eurodollar Rate plus the Bank
Spread, or the Alternate Base Rate; provided, however, that in no event shall
the rate of interest with respect to any Borrowings or portion thereof exceed
the Maximum Rate. Each change in the Alternate Base Rate and Maximum Rate,
subject to the terms of this Agreement, will become effective, without notice to
the Borrower or any other Person, upon the effective date of such change.
2.11. Quotation of Rates.
It is hereby acknowledged that an officer or other individual
appropriately designated by an officer previously identified to the
Administrative Agent in a certificate of incumbency or other appropriately
designated officer of the Borrower may call the Administrative Agent from time
to time in order to receive an indication of the rates then in effect, but such
indicated rates shall neither be binding upon the Administrative Agent nor the
Lenders nor affect the rate of interest which thereafter is actually in effect.
2.12. Default Rate.
So long as any Event of Default exists, all principal and accrued
interest shall bear interest at the Default Rate until paid, regardless of
whether such payment is made before or after entry of a judgment.
2.13. Interest Recapture.
If the designated rate applicable to any Borrowing exceeds the Maximum
Rate, the rate of interest on such Borrowing shall be limited to the Maximum
Rate, but any subsequent
36
reductions in such designated rate shall not reduce the rate of interest thereon
below the Maximum Rate until the total amount of interest accrued thereon equals
the amount of interest that would have accrued thereon if such designated rate
had at all times been in effect. If at maturity (stated or by acceleration), or
at final payment of the Notes, the total amount of interest paid or accrued is
less than the amount of interest that would have accrued if such designated
rates had at all times been in effect, then, at such time and to the extent
permitted by applicable Governmental Requirements, the Borrower shall pay an
amount equal to the difference between (a) the lesser of the amount of interest
that would have accrued if such designated rates had at all times been in effect
and the amount of interest that would have accrued if the Maximum Rate had at
all times been in effect, and (b) the amount of interest actually paid or
accrued on the Notes.
2.14. Interest Calculations.
All computations of interest and any other fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) elapsed. All such determinations and
calculations by the Administrative Agent shall be conclusive and binding absent
manifest error.
2.15. Interest Period.
(a) "Interest Period" means with respect to any Advance
included in the CP Allocation, each period (i) commencing on, and including, the
date that such Advance was initially designated by the Administrative Agent as
comprising a part of the CP Allocation hereunder, or the last day of the
immediately preceding Interest Period for such Advance (whichever is latest);
and (ii) ending on, but excluding, the date that falls such number of days (not
to exceed 30 days) thereafter as the Administrative Agent shall select;
provided, however, that no more than ten Interest Periods shall be in effect at
any one time with respect to Advances included in the CP Allocation.
(b) "Interest Period" means with respect to any Advance
included in the ABR Allocation, a period of one month, which Advance shall be a
Eurodollar Advance, unless:
(i) on or prior to the first day of such Interest Period
the Lender with respect to such Advance shall have notified the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for
such Lender to fund such Advance at the Eurodollar Rate (and such Lender
shall not have subsequently notified the Administrative Agent that such
circumstances no longer exist), or
(ii) the Borrower shall have requested a Base Rate
Advance or an Interest Period shorter than one month, or
(iii) the Administrative Agent does not receive notice, on
or before 12:00 noon (New York City time) on the third Business Day
preceding the first day of such Interest Period, that the related Advance
will not be funded by issuance of commercial paper, or
37
(iv) the principal amount of such Advance is less than
$500,000, or
(v) an Event of Default shall have occurred and be
continuing,
in which case (if any of the foregoing events occurs) such Advance shall be a
Base Rate Advance having a duration not in excess of 31 days as selected by the
Borrower (unless an Event of Default shall exist, in which case such duration
shall be selected by the Administrative Agent).
(c) Notwithstanding any provision in this Agreement to the
contrary, (x) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day (provided,
however, if interest in respect of such Interest Period is computed by reference
to the Eurodollar Rate, and such Interest Period would otherwise end on a day
that is not a Business Day, and there is no subsequent Business Day in the same
calendar month as such day, such Interest Period shall end on the immediately
preceding Business Day); (y) any Interest Period that commences before the
Drawdown Termination Date and would otherwise end after the Drawdown Termination
Date shall end on the Drawdown Termination Date; and (z) the duration of each
Interest Period that commences on or after the Drawdown Termination Date shall
be of such duration as shall be selected by the Administrative Agent and
communicated by notice to the Borrower.
2.16. Additional Costs.
(a) If any Regulatory Change occurring after the date hereof:
(i) shall impose, modify or deem applicable any reserve
(other than reserve requirements referred to in Section 2.17), special
deposit or similar requirement against assets of any Affected Party,
deposits or obligations with or for the account of any Affected Party or
with or for the account of any affiliate (or entity deemed by the Federal
Reserve Board to be an affiliate) of any Affected Party, or credit
extended by any Affected Party; or
(ii) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Affected Party
and such Affected Party determines that the amount of such capital is
increased by or based upon the existence of a commitment to lend or
maintain a loan against Mortgage Collateral hereunder or any commitments
to an Investor related to this Agreement or the bonding thereof or any
related liquidity facility or credit enhancement facility (or any
participation therein) or other commitments of the same type related to
this Agreement; or
(iii) shall impose any other condition affecting any
Advance funded by any Affected Party, or its obligations or rights, if
any, to make Advances or to provide funding therefor;
and the result of any of the foregoing is or would be:
(x) to increase the cost to or impose a cost on (I) an Affected Party
funding or making or maintaining any Advances or any liquidity loan to an Issuer
or any commitment of such
38
Affected Party with respect to any of the foregoing, or (II) the Administrative
Agent for continuing its, or the Borrower's, relationship with the Lenders, or
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement or any Note, or under the Liquidity
Agreement with respect thereto.
then within thirty days after written demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis of such
demand), the Borrower shall pay directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such additional or
increased cost or such reduction to the extent that such Affected Party
reasonably determines such additional or increased cost or such reduction is
fairly allocable to the Borrower.
(b) Each Affected Party will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge that will
entitle such Affected Party to compensation pursuant to this Section 2.16;
provided that if any Affected Party fails to give such notice within 180 days
after it obtains actual knowledge of such an event, such Affected Party shall,
with respect to compensation payable pursuant to Section 2.16 or 2.17 in respect
of any costs or reduction in such rate of return resulting from such event, only
be entitled to payment under such section for costs incurred from and after the
date 180 days prior to the date that such Affected Party does give such notice
and any Affected Party shall use commercially reasonable efforts to mitigate any
such costs or reduction in such rate of return.
(c) In determining any amount provided for or referred to in
this Section 2.16, an Affected Party may use any reasonable averaging and
attribution methods that it (in its sole discretion) shall deem applicable. Any
Affected Party when making a claim under this Section 2.16 shall submit to the
Borrower a statement as to such increased cost or reduced return (including
calculation thereof), which Statement shall be conclusive and binding upon the
Borrower in the absence of manifest error in the case of a claim in an amount
equal to or less than $5,000,000.
2.17. Additional Interest on Advances Bearing a Eurodollar Rate.
The Borrower shall pay to any Affected Party, so long as such Affected
Party shall be required under regulations of the Federal Reserve Board to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
of each Advance or portion thereof made or funded (including fundings to an
Issuer for the purpose of maintaining an Advance) by such Affected Party during
each Interest Period in respect of which interest is computed by reference to
the Eurodollar Rate, for such Interest Period, at a rate per annum equal at all
times during such Interest Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Interest Period from (ii) the rate obtained by
dividing such Eurodollar Rate referred to in clause (i) above by that percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Affected
Party for such Interest Period, payable on each date on which interest is
payable on such Advance. Such additional interest shall be determined by such
Affected Party and notice thereof given to the Borrower (with a copy to the
Administrative Agent) within 30 days after any interest payment is made with
respect to which such additional interest is requested. A certificate as to such
additional interest
39
submitted to the Borrower and the Administrative Agent by such Affected Party
shall be, in the case of a claim in an amount equal to or less than $5,000,000,
conclusive and binding for all purposes, absent manifest error.
2.18. Consequential Loss.
The Borrower shall indemnify each Affected Party against, and shall pay
to the Administrative Agent for such Affected Party within ten days after
request therefor, any Consequential Loss of any Affected Party. When any
Affected Party requests that the Borrower pay any Consequential Loss, it shall
deliver to the Borrower and the Administrative Agent a certificate setting forth
the basis for imposing such Consequential Loss and the calculation of such
amount thereof, which calculation shall be conclusive and binding absent
manifest error.
2.19. Taxes.
(a) All payments made by the Borrower under this Agreement and
the Notes shall be without setoff, deduction or counterclaim, and the Borrower
agrees to pay on demand any present or future stamp or documentary taxes or any
other taxes, levies, imposts, duties, charges, fees or withholdings which arise
from payment made hereunder or under the Notes or from the execution or delivery
or otherwise with respect to this Agreement or the Notes but excluding franchise
taxes and taxes imposed on or measured by all or part of the gross or net income
(but not including any such tax in the nature of a withholding tax) of such
Affected Party by the jurisdiction under the laws of which such Affected Party
is organized or has its applicable lending office or any political subdivision
of any thereof (all such excluded taxes, levies, imposts, deductions, changes,
withholding and liabilities collectively or individually referred to herein as
"Excluded Taxes" and all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities collectively or individually referred to
herein as "Taxes"). If the Borrower shall be required to deduct any Taxes from
or in respect of any sum payable hereunder to any Affected Party: (i) the sum
payable shall be increased by the amount (an "additional amount") necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Affected Party shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) any Borrower shall make such deductions and (iii) any Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) The Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law all taxes, levies, imposts,
deductions, charges, assessments or fees of any kind (including but not limited
to any current or future stamp or documentary taxes or any other excise or
property taxes, charges, or similar levies, but excluding any Excluded Taxes)
imposed upon any Affected Party as a result of the transactions contemplated by
this Agreement or that arise from any payment made hereunder or from the
execution, delivery, or registration of or otherwise similarly with respect to,
this Agreement ("Other Taxes").
(c) Each Lender that is not a U.S. Person (each a "Non-U.S.
Lender") sh all deliver to the Borrower: (i) two copies of either (A) United
States Internal Revenue Service Form W-8BEN (including any successor forms
thereto) or (B) United States Internal Revenue Service Form W-8ECI (including
any successor forms thereto), or (ii) in the case of a Non-U.S.
40
Lender claiming an exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest," a
Form W-8BEN (or any subsequent versions thereof or successors thereto) and a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, in either case properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on payments by each Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Lender before the date it receives its first
payment under this Agreement, and before the date it receives its first payment
under this Agreement occurring after the date, if any, that such Non-U.S. Lender
changes its applicable lending office by designating a different lending office
(a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such
forms promptly after (or, if reasonably practicable, prior to) the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.19(c), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.19(c) that
such Non-U.S. Lender is not legally able to deliver.
(d) Within 30 days after the Borrower pays any amount to any
Affected Party from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, any such
Borrower shall deliver to the Administrative Agent for delivery to such Affected
Party evidence satisfactory to such Person of such deduction, withholding or
payment (as the case may be).
(e) If an Issuer or Agent receives the benefit of a tax refund,
credit or other benefit which is attributable to any Taxes as to which the
Issuer or Agent has been reimbursed by the Borrower, or with respect to which
the Borrower have paid an additional amount hereunder, the Issuer or Agent shall
within 30 days after the date of such receipt pay over the amount of such refund
or credit (to the extent so attributable) to the Borrower, net of all reasonable
out-of-pocket third party expenses of such Issuer or Agent related to claiming
such refund or credit; provided, however, that (i) the Issuer or Agent, as the
case may be, acting in good faith will be the sole judge of the amount of any
such refund, credit or reduction and of the date on which such refund, credit or
reduction is received, (ii) the Issuer or Agent, as the case may be, acting in
good faith shall have absolute discretion as to the order and manner in which it
employs or claims tax refunds, credits, reductions and allowances available to
it, (iii) the Borrower agrees to repay the Issuer or Agent, as the case may be,
upon written request from the Issuer or Agent, as the case may be, the amount of
such refund, credit or reduction received by the Borrower, in the event and to
the extent, the Issuer or Agent is required to repay such refund, credit or
reduction to any relevant Governmental Authority, and (iv) neither the Issuer
nor the Agent shall be required to make available its tax returns or any other
information relating to its taxes and the computation thereof.
(f) Nothing contained in this Section 2.19 shall require an
Affected Party to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
41
2.20. Replacement Banks.
Upon the election of any Affected Party to request reimbursement by the
Borrower for increased costs under Sections 2.16 or 2.17 or for compensation in
respect of withholding taxes under Section 2.19, the Borrower may, upon prior
written notice to the Administrative Agent and such Affected Party, seek a
replacement Bank to whom such additional costs or taxes shall not apply and
which shall be satisfactory to the Administrative Agent (a "Replacement Bank");
provided, however, that the Borrower may not seek a replacement for a Bank
unless the Issuer is also terminated as a party to this Agreement and all of its
outstanding Advances are repaid in full as they become due. Each Affected Party
agrees that, should it be identified for replacement pursuant to this Section
2.20, upon payment in full of all amounts due and owing to such Affected Party
hereunder and under the other Transaction Documents, it will promptly execute
and deliver all documents and instruments reasonably required by the Borrower to
assign such Affected Party's portion of the Borrowings to the applicable
Replacement Bank. Any such replacement shall not relieve the Borrower of its
obligation to reimburse the Affected Party for any such increased costs or taxes
incurred through the date of such replacement.
ARTICLE III
COLLATERAL
3.1. Collateral.
To secure the payment of the Obligations, the Borrower shall execute and
deliver to the Administrative Agent and the Collateral Agent, as applicable:
(a) the Security Agreement,
(b) the Assignment of Account,
(c) the Assignments, and
(d) the UCC Financing Statements;
all as more fully provided for in the Collateral Agency Agreement. The Borrower
further agrees to execute all documents and instruments, and perform all other
acts deemed necessary by the Administrative Agent to create and perfect, and
maintain the security interests and collateral assignments in favor of the
Administrative Agent for the benefit of the holders of the Obligations, as
perfected first priority security interests. Any security interest or collateral
assignments granted to the Administrative Agent under any Transaction Document
is for the benefit of the holders of the Obligations, whether or not reference
is made to such holders.
3.2. Delivery of Collateral to Collateral Agent.
(a) Periodically, the Borrower may deliver Mortgage Loan
Collateral to the Collateral Agent to hold as bailee for the Administrative
Agent. Each delivery shall be made in association with an Assignment to the
Administrative Agent, for the benefit of the holders of the Obligations, in all
Mortgage Loans, Take-Out Commitments and related Collateral delivered
42
with or described in such Assignment or any schedules thereto. The Borrower
shall use the form of Assignment provided for in the Collateral Agency
Agreement.
(b) Each Assignment delivered to the Collateral Agent shall be
accompanied by a completed Schedule II and Schedule III using the forms of such
schedules as prescribed in the Collateral Agency Agreement and, with respect to
each Mortgage Loan described in Schedule II to each Assignment, shall deliver or
cause to be delivered the following items (collectively, the "Principal Mortgage
Documents"):
(i) the original of each Mortgage Note, endorsed in
blank (without recourse) and all intervening endorsements thereto;
(ii) an original executed assignment in blank for each
Mortgage securing such Mortgage Loan, in recordable form, executed by the
Originator, in the case of each Mortgage Loan that is not a MERS
Designated Mortgage Loan, or by an authorized signatory of MERS, in the
case of each MERS Designated Mortgage Loan; and
(iii) a certified copy of the executed Mortgage related to
such Mortgage Note;
(c) The Servicer shall hold in trust for the Administrative
Agent for the benefit of the holders of the Obligations, with respect to each
Mortgage Loan included in the Collateral,
(i) the original filed Mortgage relating to such
Mortgage Loan, provided, however, that, until an original Mortgage is
received from the public official charged with its filing and
recordation, a copy, certified by the closing agent to be a true and
correct copy of the filed and recorded original, may be used by the
Borrower to satisfy this requirement; however, the Borrower shall
thereafter pursue, with reasonable diligence, receipt of the filed and
recorded original Mortgage;
(ii) other than with respect to a HUD repossessed
Property that is sold to a cosumer, a mortgagee's policy of title
insurance (or binding unexpired commitment to issue such insurance if the
policy has not yet been delivered to the Servicer) insuring the
Borrower's perfected, first-priority Lien created by the Mortgage
securing such Mortgage Loan (subject to such title exceptions that
conform to the related Take-Out Commitments) in a policy amount not less
than the principal amount of such Mortgage Loan;
(iii) the original hazard insurance policy, appropriately
endorsed to provide that all insurance proceeds will be paid to the
Originator or its assigns, referred to in Section 6.6(b) hereof which
relate to such Mortgage Loan, or other evidence of insurance acceptable
to the Administrative Agent;
(iv) the form of current appraisal of the Property
described in the Mortgage, prepared by a state licensed appraiser, that
complies with all applicable Governmental Requirements, including all
Governmental Requirements that are
43
applicable to the Lenders or any other Affected Party; provided, however,
that no appraisal shall be required for Mortgage Loans (x) financing HUD
repossessed Property that is sold to a consumer, financed with an FHA
loan, fully insurable and in accordance with FHA guidelines, but for
which an appraisal is not required, or (y) representing so called VA Rate
Reduction or FHA streamline refinances, insurable in accordance with VA
and FHA guidelines, but for which an appraisal is not required ; and
(v) all other original documents (collectively, the "Other
Mortgage Documents").
Upon request of the Administrative Agent, and three Business Days' prior notice
by the Administrative Agent to the Collateral Agent, the Servicer shall
immediately deliver, or shall cause to be delivered, all such items, held in
trust, to the Collateral Agent as bailee for the Administrative Agent or such
other party as may be designated in such notice. Upon instructions from the
Administrative Agent, the Collateral Agent shall reject as unsatisfactory any
items so delivered, noting the rejection on the Schedule of Exceptions,
whereupon the Mortgage Loan shall not be an Eligible Mortgage Loan.
(d) In connection with each Assignment delivered to the Collateral
Agent, the Borrower shall deliver to the Administrative Agent copies of the
related Take-Out Commitment Master Agreements with the related Approved
Investor, with any confidential economic terms redacted (unless a copy of such
agreement or commitment has been delivered previously).
(e) The Servicer shall provide the Collateral Agent and the
Administrative Agent with full access to all Other Mortgage Documents held in
trust for the Administrative Agent at all times.
(f) With respect to each Assignment that is received by the
Collateral Agent, the Collateral Agent shall review such Assignment and make a
written report to the Borrower and the Administrative Agent, all as more fully
provided in the Collateral Agency Agreement.
3.3. Redemption of Mortgage Collateral.
(a) Generally. So long as no Default or Event of Default is
continuing, the Servicer (on behalf of the Borrower) may obtain releases of the
Administrative Agent's security interest in all or any part of the Eligible
Mortgage Collateral (including releases from the Collection Account) at any
time, and from time to time, (i) to the extent that total Collateral Value of
all Eligible Mortgage Collateral (immediately after giving effect to the
requested release) equals or exceeds the Primary Obligations, as shown on the
most recent Borrowing Report, or (ii) by either (A) the Borrower making a
principal payment on account of the Principal Debt in an amount, or (B)
delivering to the Collateral Agent as bailee for the Administrative Agent
substitute Eligible Mortgage Collateral with a Collateral Value, such that after
giving effect to such payment or delivery, the total Collateral Value of all
Eligible Mortgage Collateral will equal or exceed the Primary Obligations.
(b) Redemption Pursuant to Sale. So long as no Default or Event of
Default is continuing, any one of the following may occur: (x) the Borrower, or
the Servicer acting for the Borrower, from time to time may sell or pool
Mortgage Loans either to an Approved Investor
44
pursuant to a Take-Out Commitment or to the Originator under the Repurchase
Agreement; (y) the Borrower may provide Mortgage Loans to the Originator for
sale to an Approved Investor pursuant to a Take-Out Commitment, provided that
payment is directed to the Collection Account and the security interest in the
Mortgage Loan will not be released and the Borrower will not be deemed to have
sold the Mortgage Loans to the Originator until the Purchase Price is received
in the Collection Account; and (z) the Borrower, or the Servicer acting for the
Borrower, may request the Administrative Agent to permit the Borrower to sell
Mortgage Loans, or to pool Mortgage Loans, under such other circumstances as may
be described in the request. Upon the receipt by the Collateral Agent of a
Shipping Request preliminary to a transaction permitted by this Section 3.3,
identifying Collateral to be delivered to an Approved Investor or through the
Originator, and so long as no Default or Event of Default shall be in existence:
(i) The Collateral Agent shall deliver to the Approved
Investor, or its loan servicing provider or custodian, under the
Collateral Agent's "Bailee and Security Agreement Letter" substantially
in the form provided for in the Collateral Agency Agreement, as
appropriate, the items of Mortgage Loan Collateral being sold that are
held by the Collateral Agent as bailee for the Administrative Agent
pursuant to Section 3.2 hereof, with the release of the security interest
in favor of the Administrative Agent for the benefit of the holders of
the Obligations in such items being conditioned upon timely payment to
the Collection Account of the amount described in Section 3.3(b)(iii) or
delivery of additional Eligible Mortgage Collateral;
(ii) The Servicer shall, as agent for the Administrative
Agent, deliver to such Approved Investor, or such Approved Investor's
loan servicing provider or custodian, pursuant to procedures provided for
in the Collateral Agency Agreement, the items held by the Servicer
pursuant to Section 3.2(c) that are related to the Mortgage Loan
Collateral to be transferred on the condition that such Approved Investor
or its loan servicing provider or custodian shall hold or control such
Other Mortgage Documents as bailee for the Administrative Agent (for the
benefit of the holders of the Obligations) until the Approved Investor
has either paid the full purchase price for such Mortgage Loan Collateral
to the Collection Account, as required by the relevant Take-Out
Commitment;
(iii) Within forty-five (45) days after the delivery by the
Collateral Agent to such Approved Investor or its loan servicing provider
or custodian of the items of Mortgage Loan Collateral described in
Section 3.3(b)(i) or (ii) , the Borrower shall make a payment, or shall
cause a payment to be made, to the Collection Account, for distribution
to the Administrative Agent for the account of the Lenders in an amount
equal to at least the full purchase price for such Mortgage Loan
Collateral or shall substitute Eligible Mortgage Collateral as permitted
by this Section 3.3; and
(iv) With respect to each Shipping Request that is
received by the Collateral Agent by 11:30 a.m. (eastern time) on a
Business Day, the Collateral Agent shall use due diligence and efforts to
review such Shipping Request and prepare the Mortgage Loan files
identified in each Shipping Request, for shipment prior to the close of
business on such day.
45
(c) Transfers. So long as no Default or Event of Default is
continuing, the Borrower shall, at any time, be permitted to transfer Mortgage
Loans to any Permitted Transferees (as defined below) by means of its daily
electronic transmissions to the Collateral Agent, together with delivery of a
Transfer Request delivered to the Collateral Agent, identifying each Mortgage
Loan being transferred. The Collateral Agent's sole responsibility with respect
to any such transfers shall be to correctly reflect such transfers on its
computer system and books and records and to indicate, on its Collateral Agent's
Daily Report on the next Business Day, that such transfers have been effected.
"Permitted Transferees" means (i) the related Originator, in connection with any
sale and transfer thereto effected pursuant to the terms of the Repurchase
Agreement and (ii) any Approved Investor approved by the Administrative Agent as
a Permitted Transferee. However, requested transfers will not be made if (A) as
reflected on the most recent Borrowing Report, total Primary Obligations will
equal or exceed the total Collateral Value of Eligible Mortgage Collateral
immediately after giving effect to a requested transfer and any accompanying
substitution of Mortgage Collateral, or (B) the Collateral Agent shall have
received written notice from the Administrative Agent that a Default or Event of
Default has occurred.
(d) Continuation of Lien. Unless released in writing by the
Administrative Agent as herein provided, the security interest in favor of the
Administrative Agent for the benefit of the holders of the Obligations, in all
Mortgage Loan Collateral transmitted pursuant to Section 3.3(b) shall continue
in effect until such time as payment in full of the amount described in Section
3.3(b)(iii) shall have been received.
(e) Application of Proceeds; No Duty. Neither the
Administrative Agent nor the Lenders shall be under any duty at any time to
credit Borrower for any amount due from any Approved Investor in respect of any
purchase of any Mortgage Collateral contemplated under Section 3.3(b) above,
until such amount has actually been received in immediately available funds and
deposited to the Collection Account. Neither the Collateral Agent, nor the
Lenders, nor the Administrative Agent shall be under any duty at any time to
collect any amounts or otherwise enforce any obligations due from any Approved
Investor in respect of any such purchase.
(f) Mandatory Redemption of Mortgage Collateral.
Notwithstanding any provision herein to the contrary, if at any time a
Collateral Deficiency exists, the Borrower shall, immediately upon receipt of
notice (which may be by telephone, promptly confirmed in writing) from either
the Administrative Agent or the Collateral Agent, make a payment to the
Collection Account (or make payment directly to the Administrative Agent) or
pledge, assign and deliver additional or substitute Eligible Mortgage Collateral
to the Administrative Agent for the benefit of the holders of the Obligations,
so that, immediately after giving effect to such payment or pledge and
assignment, total Collateral Value of Eligible Mortgage Collateral shall be
equal or greater than the Principal Debt.
(g) Representation in Connection with Releases, Sales and
Transfers. The Borrower represents and warrants that each request for any
release or transfer pursuant to Section 3.3(a) or Section 3.3(b) shall
automatically constitute a representation and warranty to the effect that
immediately before and after giving effect to such release or Transfer Request,
the Collateral Value of Eligible Mortgage Collateral shall equal or exceed the
Primary Obligations.
46
(h) Limitation on Releases. Notwithstanding any provision to
the contrary, the Collateral Agent shall not release any Collateral unless
payment of the purchase price by the Approved Investor shall have been made in
immediately available funds to the Collection Account; provided, however, that
the foregoing shall not apply if immediately before and after giving effect
thereto, the total Collateral Value of Eligible Mortgage Collateral shall equal
or exceed the Principal Debt.
3.4. Correction of Mortgage Notes.
The Servicer may from time to time request, in writing, that the
Collateral Agent deliver a Mortgage Note that constitutes Mortgage Loan
Collateral so that such Mortgage Note may be replaced by a corrected Mortgage
Note. Upon receipt by the Collateral Agent of such a request from the Servicer,
and so long as no Default or Event of Default shall be in existence, the
Collateral Agent shall deliver to the Servicer, under the Collateral Agent's
"Trust Receipt and Security Agreement Letter", in the form provided for in the
Collateral Agency Agreement, the Mortgage Note to be corrected, such delivery to
be conditioned upon the receipt within fourteen (14) calendar days by the
Collateral Agent of a corrected Mortgage Note acceptable to it; provided, that:
(i) until such time as a corrected Mortgage Note shall
have been delivered to the Collateral Agent, the Collateral Value
attributed to each Mortgage Note delivered to the Servicer to be
corrected in accordance with this Section 3.4 shall be notwithstanding
the preceding clause (i); and
(ii) notwithstanding the preceding clause (i), unless the
corrected Mortgage Note is endorsed in blank (without recourse) within 14
calendar days of the delivery by the Collateral Agent of the Mortgage
Note to be corrected, the Collateral Value attributed to both the
Mortgage Note to be delivered and the corrected Mortgage Note shall be
zero; provided, however, that the Collateral Value attributable to the
corrected Mortgage Note will be reinstated promptly upon the delivery
thereof to the Collateral Agent.
3.5. Collateral Reporting.
Pursuant to the Collateral Agency Agreement, at the commencement of each
Business Day, and in no event later than 1:00 p.m. (eastern time), the
Collateral Agent shall furnish to the Borrower and the Administrative Agent by
facsimile (a hard copy of which shall not subsequently be mailed, sent or
delivered to the Administrative Agent, unless so requested by the Administrative
Agent) a duly completed Collateral Agent Daily Report in the form of Exhibit D-8
to the Collateral Agency Agreement.
3.6. Take-Out Commitment Reporting.
(a) Each Assignment delivered to the Collateral Agent shall
indicate (x) the Approved Investor with respect to the Take-Out Commitment, or
(y) that there is no loan level Take-Out Commitment but that the Mortgage Loan
is hedged.
47
For each Mortgage Loan that, as of the fourth Business Day after delivery
of the Assignment relating to such Mortgage Loan, is covered by a Take-Out
Commitment in the form of a hedge by forward sale commitment but is not covered
by a loan-specific Take-Out Commitment, the Servicer shall furnish to the
Borrower and the Collateral Agent a duly completed Hedge Report in the form of
Exhibit K, no later than 10:00 a.m. (eastern time) on the fifth Business Day
after delivery of such Assignment relating to such Mortgage Loan. In addition,
no later than 10:00 a.m. on the fifth Business Day following the delivery of any
Assignment that reflected one or more Mortgage Loans that were covered by a
Take-Out Commitment in the form of a forward sale commitment hedge, but not a
loan-specific Take-Out Commitment, the Servicer shall furnish the Borrower and
the Collateral Agent with a list of Mortgage Loans that subsequently were
committed pursuant to the loan-specific Take-Out Commitment, with an code
indicating the Investor related to the Take-Out Commitment and an indication of
the price associated with the Take-Out Commitment.
(b) The Borrower shall provide the Administrative Agent with
up-to-date copies of the Take-Out Commitment Master Agreements for each Approved
Investor.
(c) Upon request of the Administrative Agent at any time, the
Servicer shall furnish to the Administrative Agent (x) if there are any Mortgage
Loans not subject to a loan level Take-Out Commitment, a duly completed Hedge
Report in the form of Exhibit K, and (y) a list of loan-specific Take-Out
Commitments, together with copies of any such loan-specific Take-Out Commitments
to the extent not previously delivered to the Administrative Agent.
3.7. Servicer Monthly Reporting.
No later than 10:00 a.m. (eastern time) on the 15th day of each month
(or, if such day is not a Business Day, the next Business Day) and within twenty
(20) days after request by the Administrative Agent, the Servicer shall furnish
the Borrower and the Administrative Agent (by facsimile or electronic
transmission (a hard copy of which shall not subsequently be mailed, sent or
delivered to the Administrative Agent, unless so requested by the Administrative
Agent) a report executed by a Financial Officer of the Servicer or the
Originator, in the form of Exhibit F hereto ("Servicer Monthly Report") which
shall provide as of the last day of the previous month (or of the date of such
request) (i) a computation of the Default Ratio and Sixty-Day Default Ratio,
(ii) delinquency of Mortgage Loans owned by the Borrower that are financed by
the Lenders and constitute Collateral hereunder, and (iii) the other information
provided for therein.
3.8. Servicer Annual Pipeline Reporting.
No later than 10:00 a.m. (eastern time) promptly after becoming
available, and in any event within 90 days after the close of each fiscal year
of the Originator, a report, in form and content acceptable to the
Administrative Agent, on the Originator's "open and pipeline positions" for
Conforming Loans as of the last day of such fiscal year, and the Originator's
Mortgage Loan production for such fiscal year for all Mortgage Loans.
3.9. Administrative Agent Reporting.
At the request of the Borrower and not more often than on each Business
Day that falls on the first day of an Interest Period, the Administrative Agent
shall furnish the Borrower and
48
the Servicer (by facsimile (a hard copy of which shall subsequently be mailed,
sent or delivered to the Servicer or Borrower, only if so requested by such
Person) a duly completed Administrative Agent Report in the form of Exhibit M
(the "Administrative Agent Report") specifying the Maximum Facility Amount and
other information, as more fully provided therein.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Borrowing.
The effectiveness of this Agreement and the making of the initial Advance
hereunder shall not occur until the later of July 9, 2002, or satisfaction of
the conditions precedent specified in Section 4.2 hereof and delivery to the
Administrative Agent of the following (each of the following documents being
duly executed and delivered and in form and substance satisfactory to the
Administrative Agent, and, with the exception of the Notes and the UCC
statement(s), each in a sufficient number of originals that the Administrative
Agent may have an executed original of each document):
(a) an executed counterpart of this Agreement;
(b) the Notes;
(c) the Collateral Agency Agreement, the Security Agreement,
the Assignment of Account and such other Security Instruments as may be
requested by the Administrative Agent;
(d) the Repurchase Agreement;
(e) the Subordination Agreement in the form of Exhibit B;
(f) a certificate of the Secretary or Assistant Secretary of
each of the Borrower, the general partner of the Originator and ▇.▇. ▇▇▇▇▇▇
setting forth (i) resolutions of the Borrower's, the general partner of the
Originator's and ▇.▇. ▇▇▇▇▇▇'▇ board of directors authorizing the execution,
delivery, and performance by each of the Borrower, Originator and ▇.▇. ▇▇▇▇▇▇ of
the Transaction Documents to which they are a party and identifying the officers
of the Borrower, the Originator and ▇.▇. ▇▇▇▇▇▇ who are authorized to sign such
Transaction Documents, and (ii) specimen signatures of the officers so
authorized;
(g) a copy, certified as true by the Secretary or Assistant
Secretary of each of the Borrower, the general partner of the Originator and
▇.▇. ▇▇▇▇▇▇, of the articles of incorporation, articles of limited partnership,
articles of organization, certificate of limited partnership, certificate of
incorporation, certificate of organization and the bylaws, the operating
agreement or the Partnership Agreement of each of the Borrower, the Originator
and ▇.▇. ▇▇▇▇▇▇, respectively, together with all amendments thereto;
(h) a favorable written opinion from counsel to the Borrower,
Originator and ▇.▇. ▇▇▇▇▇▇ on entity matters substantially in the form of
Exhibit I-1 hereto and a favorable
49
written opinion from counsel to the Borrower and the Originator on security
interest matters substantially in the form of Exhibit I-2 hereto.
(i) a favorable written opinion from counsel to the Originator as to
true sale and non-consolidation matters, substantially in the form of Exhibit J
hereto;
(j) a certificate from each of (i) the Secretary of the State of
Delaware, (ii) the Secretary of State of the State of Texas and (iii) an officer
of the Borrower, ▇.▇. ▇▇▇▇▇▇ and the general partner of the Originator with
respect to every state in which the Borrower, ▇.▇. ▇▇▇▇▇▇ and the Originator
conducts business, as to the good standing or existence of the Borrower, ▇.▇.
▇▇▇▇▇▇ and/or the Originator, as applicable, in each state or states for which
each certificate is made;
(k) the Administrative Agent Fee Letter;
(l) evidence of the payment of fees due at closing, as provided in the
Administrative Agent Fee Letter;
(m) a letter agreement between the Borrower and the Collateral Agent
establishing fees for collateral agency, custodial and administrative services,
and a mutually agreeable schedule for payment of such fees shall have been
executed by the Borrower and the Collateral Agent and shall have been approved
by the Administrative Agent;
(n) acknowledgment copies of proper Financing Statements (Form UCC-1),
filed on or prior to the date of the initial Advance, naming (i) the Originator
as the Seller, the Borrower as the secured party/purchaser and the
Administrative Agent as the assignee, and (ii) the Borrower as the debtor and
the Administrative Agent on behalf of the holders of the Obligations as the
secured party, or other, similar instruments or documents, as may be necessary
or, in the opinion of the Administrative Agent, desirable under the UCC or any
comparable law of all appropriate jurisdictions to perfect the ownership and
security interests in the Collateral contemplated by the Repurchase Agreement
and this Agreement;
(o) a search report provided in writing to the Administrative Agent by
the Corporation Service Company, listing all effective financing statements that
name the Borrower or the Originator as debtor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (o) above and in
such other jurisdictions as the Administrative Agent shall request, together
with copies of such financing statements (none of which, except as listed on
Schedule III, shall cover any Mortgage Loans or interests therein or proceeds
thereof);
(p) evidence of the initial deposit to the Reserve Account in the
amount of 0.5% of the Maximum Facility Amount;
(q) such other documents as the Administrative Agent may request at
any time at or prior to the Borrowing Date of the initial Borrowing hereunder;
and
(r) copies of all Take-Out Commitment Master Agreements with Approved
Investors.
50
4.2. All Borrowings.
Each Advance (including, without limitation, the initial Advance)
pursuant to this Agreement is subject to the following further conditions
precedent:
(a) (i) prior to 10:30 a.m. (eastern time) on the Business Day
before the designated Borrowing Date, the Administrative Agent and the
Collateral Agent shall have received a Borrowing Report, verifying that after
giving effect to the requested Advance, the Collateral Value of all Eligible
Mortgage Collateral shall exceed the Primary Obligations (together with any
related Assignment) duly executed and delivered by the Borrower; and (ii) the
Administrative Agent shall have received, no later than 1:00 p.m. (eastern
time), on the proposed date of funding, a Collateral Agent Daily Report,
pursuant to Section 3.8 of the Collateral Agency Agreement;
(b) all Collateral in which the Borrower has granted a security
interest to the Administrative Agent for the benefit of the holders of the
Obligations, with the exception of Special Mortgage Loans pursuant to Section
2.3(c), shall have been physically delivered to the possession of the Collateral
Agent in accordance with Section 3.2;
(c) the representations and warranties of the Borrower, the
Originator and (so long as the Servicer and the Originator are the same entity)
the Servicer contained in this Agreement, any Assignment or Borrowing Report, or
any Security Instrument or other Transaction Document (other than those
representations and warranties that, by their express terms, are limited to the
effective date of the document or agreement in which they are initially made)
shall be true and correct in all respects on and as of the date of such Advance;
(d) no Default, Event of Default, Servicer Default or Advance
Cessation Trigger shall have occurred and be continuing, or would result from
such Advance, and no change or event that constitutes a Material Adverse Effect
shall have occurred and be continuing as of the date of such Advance;
(e) the Collection Account shall be established and in existence
and free from any Lien other than pursuant to the Assignment of Account;
(f) delivery of a sufficient number of originals such that the
Administrative Agent may have an executed original thereof, of such other
documents and opinions of counsel, including such other documents as may be
necessary or desirable to perfect or maintain the priority of any Lien granted
or intended to be granted hereunder or otherwise and including favorable written
opinions of counsel with respect thereto, as the Administrative Agent may
request; and
(g) the Drawdown Termination Date shall not have occurred.
Each Borrowing Report shall be automatically deemed to constitute a
representation and warranty by the Borrower on the Borrowing Date set forth
therein to the effect that all of the conditions of this Section 4.2 are
satisfied as of such Borrowing Date.
51
4.3. All Disbursements of Funds.
Each disbursement of funds to the Borrower in connection with an Advance
(including without limitation, the Initial Advance) pursuant to this Agreement
is subject to the further condition precedent that no Advance Cessation Trigger
shall have occurred and be continuing. This condition precedent shall not
prevent any Advance that constitutes a continuation of an amount outstanding if
no new funds are disbursed to the Borrower. Each Borrowing Report shall be
automatically deemed to constitute a representation and warranty by the Borrower
on the Borrowing Date set forth therein to the effect that all of the conditions
of this Section 4.3 are satisfied as of such Borrowing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations of the Borrower and the Servicer.
The Borrower and the Servicer each represents and warrants, as to itself,
as follows:
(a) Organization and Good Standing. It (i) in the case of the
Borrower, is a limited liability company and, in the case of the Servicer, is a
limited partnership, in each case duly organized and existing in good standing
under the laws of the jurisdiction of its organization, (ii) is duly qualified
to do business and in good standing in all jurisdictions in which its failure to
be so qualified could have a Material Adverse Effect, (iii) has the requisite
entity power and authority to own its properties and assets and to transact the
business in which it is engaged and is or will be qualified in those states
wherein it proposes to transact business in the future and (iv) is in compliance
with all Requirements of Law except, with respect to the Servicer, if the
failure to be so qualified would not have a Material Adverse Effect.
(b) Authorization and Power. It has the requisite entity power and
authority to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party; it is duly authorized to and has
taken all requisite entity action necessary to authorize it to, execute, deliver
and perform this Agreement and the other Transaction Documents to which it is a
party and is and will continue to be duly authorized to perform this Agreement
and such other Transaction Documents.
(c) No Conflicts or Consents. Neither the execution and delivery
by it of this Agreement or the other Transaction Documents to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, will (i) contravene or conflict with any
Requirement of Law to which it is subject, or any indenture, mortgage, deed of
trust, or other agreement or instrument to which it is a party or by which it
may be bound, or to which its Property may be subject, or (ii) result in the
creation or imposition of any Lien, other than the Liens of the Security
Instruments, on the Property of the Borrower.
(d) Enforceable Obligations. This Agreement and the other
Transaction Documents to which it is a party have been duly and validly executed
by it and are its legal, valid
52
and binding obligations, enforceable in accordance with their respective terms,
except as limited by Debtor Laws.
(e) Full Disclosure. Neither its financial statements nor any
Borrowing Report, officer's certificate or statement delivered by it to the
Administrative Agent in connection with this Agreement, contains or will contain
any untrue or inaccurate statement of material fact or omits or will omit to
state a material fact necessary to make such information not misleading.
(f) No Default. It is not in default under any loan agreement,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its Property is bound, if such default would also be a
Default or an Event of Default (or, with notice or passage of time would become
a Default or Event of Default) under either of subparagraphs (e) or (i) of
Section 8.1 of this Agreement.
(g) Litigation.
(i) Except as set forth on Schedule IV, there are no
actions, suits or proceedings, including arbitrations and administrative
actions, at law or in equity, either by or before any Governmental
Authority, now pending or, to its knowledge, threatened by or against it
or any of its Subsidiaries, and pertaining to any Governmental
Requirement affecting its Property or rights or any of its Subsidiaries,
that, if determined adversely to the Borrower or Servicer, would result
in liability of $1,000,000 or more.
(ii) Neither it nor any of its Subsidiaries is in default
with respect to any Governmental Requirements which, with respect to the
Servicer, would have a Material Adverse Effect.
(iii) The Borrower is not liable on any judgment, order or
decree (or any series of judgments, orders, or decrees) having an
aggregate liability of $100,000 or more and that has not been paid,
stayed or dismissed within 30 days.
(h) Taxes. All tax returns required to be filed by it in any
jurisdiction have been filed and all taxes, assessments, fees and other
governmental charges upon it or upon any of its properties, income or franchises
have been paid prior to the time that such taxes could give rise to a Lien
thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on its
books. It has no knowledge of any proposed tax assessment against it that would
have a Material Adverse Effect.
(i) Indebtedness. If the Servicer is the Originator, the
Servicer is in compliance with the maximum leverage test set forth in
Section 7.10.
(j) Permits, Patents, Trademarks, Etc.
(i) It has all permits and licenses necessary for the
operation of its business.
53
(ii) It owns or possesses (or is licensed or otherwise has
the necessary right to use) all patents, trademarks, service marks, trade
names and copyrights, technology, know-how and processes, and all rights
with respect to the foregoing, which are necessary for the operation of
its business, without any conflict with the rights of others. Except,
with respect to the Servicer, to the extent that failure to comply with
any of the foregoing could not reasonably be expected to have a Material
Adverse Effect, the consummation of the transactions contemplated hereby
will not alter or impair any of such rights of it.
(k) Status Under Certain Federal Statutes. It is not (i) a
"holding company", or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company," or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, (ii) a "public utility," as such term is defined in the
Federal Power Act, as amended, (iii) an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, or (iv) a "rail carrier," or a "person
controlled by or affiliated with a rail carrier," within the meaning of Title
49, U.S.C., and it is not a "carrier" to which 49 U.S.C. (S) 11301(b)(1) is
applicable.
(l) Securities Acts. It has not issued any unregistered
securities in violation of the registration requirements of the Securities Act
of 1933, as amended, or of any other Requirement of Law, and is not violating
any rule, regulation, or requirement under the Securities Act of 1933, as
amended, or the Securities and Exchange Act of 1934, as amended. The Borrower is
not required to qualify an indenture under the Trust Indenture Act of 1939, as
amended, in connection with its execution and delivery of the Notes.
(m) No Approvals Required. Other than consents and approvals
previously obtained and actions previously taken, neither the execution and
delivery of this Agreement and the other Transaction Documents to which it is a
party, nor the consummation of any of the transactions contemplated hereby or
thereby requires the consent or approval of, the giving of notice to, or the
registration, recording or filing by it of any document with, or the taking of
any other action in respect of, any Governmental Authority that has jurisdiction
over it or any of its Property, except, with respect to the Servicer, to the
extent that failure to obtain any such consent or approval could not reasonably
be expected to have a Material Adverse Effect.
(n) Environmental Matters. There have been no past, and there
are no pending or threatened, claims, complaints, notices, or governmental
inquiries against it regarding any alleged violation of, or potential liability
under, any environmental laws that could be expected to have a Material Adverse
Effect. It and its properties are in compliance in all material respects with
all environmental laws and related licenses and permits. No conditions exist at,
on or under any Property now or previously owned or leased by it that could give
rise to liability under any environmental law that could be expected to have a
Material Adverse Effect.
(o) Eligibility. The Servicer and the Originator are approved
and qualified and in good standing as a lender or seller/servicer, as follows:
54
(i) Each of the Servicer and the Originator is a ▇▇▇▇▇▇
Mae approved seller/servicer and the Borrower is a ▇▇▇▇▇▇ ▇▇▇ approved
seller (in good standing) of Mortgage Loans, eligible to originate,
purchase, hold, sell and, with respect to the Originator and the
Servicer, service Mortgage Loans to be sold to ▇▇▇▇▇▇ Mae.
(ii) Each of the Servicer and the Originator is a ▇▇▇▇▇▇▇
Mac approved seller/servicer (in good standing) of Mortgage Loans,
eligible to originate, purchase, hold, sell and service Mortgage Loans to
be sold to ▇▇▇▇▇▇▇ Mac.
Each of the Servicer and Originator is an approved FHA servicer, VA servicer and
▇▇▇▇▇▇ ▇▇▇ issuer (in good standing) of mortgage loans, eligible to originate,
purchase, hold, sell and service mortgage loans to be pooled into ▇▇▇▇▇▇ Mae MBS
Pools and to issue ▇▇▇▇▇▇ ▇▇▇ MBS.
5.2. Additional Representations of the Borrower.
The Borrower further represents and warrants as follows:
(a) Activities. The Borrower was formed on June 21, 2002, and
the Borrower did not engage in any business activities prior to the date of this
Agreement. The Borrower will limit its activities to those specified in the
Articles of Organization and has no Subsidiaries.
(b) Solvency. Both prior to and after giving effect to each
Borrowing, (i) the fair value of the property of the Borrower is greater than
the total amount of liabilities, including contingent liabilities, of the
Borrower, (ii) the present fair salable value of the assets of the Borrower is
not less than the amount that will be required to pay all probable liabilities
of the Borrower on its debts as they become absolute and matured, (iii) the
Borrower does not intend to, and does not believe that it will, incur debts or
liabilities beyond the Borrower's abilities to pay such debts and liabilities as
they mature and (iv) the Borrower is not engaged in a business or a transaction,
and is not about to engage in a business or a transaction, for which the
Borrower's property would constitute reasonably small capital.
(c) Purchase of Mortgage Loans. With respect to each Mortgage
Loan, the Borrower shall have purchased such Mortgage Loan from the Originator
in exchange for payment (made by the Borrower to the Originator in accordance
with the provisions of the Repurchase Agreement) of cash, the Deferred Purchase
Price (as such term is defined in the Repurchase Agreement), or a combination
thereof in an amount that constitutes fair consideration and reasonably
equivalent value. Each such sale referred to in the preceding sentence shall not
have been made for or on account of an antecedent debt owed by the Originator to
the Borrower and no such sale is or may be voidable or subject to avoidance
under any section of the Federal Bankruptcy Code.
(d) Priority of Debts and Liens. The Borrower has incurred no
Indebtedness except as expressly incurred hereunder and under the other
Transaction Documents. Upon delivery of an Assignment to the Collateral Agent,
the Administrative Agent will have a valid, enforceable, perfected and
first-priority Lien, for the benefit of the holders of the Obligations, in all
Mortgage Loan Collateral described in or delivered with such Assignment. Upon
delivery of funds for deposit in the Collection Account to the Collateral Agent,
the Administrative Agent
55
will have a valid, enforceable, perfected and first-priority Lien for the
benefit of the holders of the Obligations, on the Collection Account and related
Collateral.
(e) No Liens. The Borrower has (or, as to all Mortgage Loan
Collateral delivered to the Collateral Agent after the date of this Agreement,
will have) good and indefeasible title to all Collateral, and the Mortgage Loan
Collateral and all proceeds thereof are (or, as to all Mortgage Loan Collateral
delivered to the Collateral Agent after the date of this Agreement, will be)
free and clear of all Liens and other adverse claims of any nature, other than
(i) the right of the related Originator to repurchase such Mortgage Loan
Collateral pursuant to the terms of the Repurchase Agreement and/or (ii) Liens
in the Mortgage Loan Collateral or proceeds in favor of the Administrative Agent
for the benefit of the holders of the Obligations.
(f) Financial Condition. The opening pro forma balance sheet of
the Borrower as at June 30, 2002, giving effect to the initial capitalization of
the Borrower and the initial Borrowing to be made under this Agreement, a copy
of which has been furnished to the Administrative Agent, fairly presents the
financial condition of the Borrower as at such date, in accordance with GAAP,
and since June 30, 2002 there has been no material adverse change in the
business, operations, property or financial or other condition of the Borrower.
(g) Principal Office, Etc. The principal office, chief executive
office and principal place of business of the Borrower is at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. CH Mortgage is organized under the laws
of Delaware and not under the laws of any other jurisdiction.
(h) Ownership. CH Mortgage is the owner of all of the issued and
outstanding limited liability company interests of the Borrower.
(i) UCC Financing Statements. Except as set forth on Schedule III,
no effective financing statement or other instrument similar in effect covering
any Mortgage Loan, any interest therein, or the related Collateral with respect
thereto is on file in any recording office except such as may be filed (x) in
favor of the Originator or the Borrower in accordance with the Mortgage Loans,
(y) in favor of the Borrower in connection with the Repurchase Agreement, or (z)
in favor of the Administrative Agent or the holders of the Obligations in
accordance with this Agreement or in connection with a Lien arising solely as
the result of any action taken by the Lenders (or any assignee thereof) or by
the Administrative Agent.
(j) Trade Names. The Borrower is not known by and does not use any
trade name or doing-business-as name.
5.3. Additional Representations and Warranties of the Servicer.
The Servicer represents and warrants as follows:
(a) Financial Condition.
(i) The Servicer has delivered to the Administrative
Agent (x) copies of the Servicer's balance sheet, as of March 31, 2002,
and the related statements of income, stockholder's equity and cash flows
for the year ended on such date, audited by
56
independent certified accountants of recognized national standing and (y)
copies of the Servicer's balance sheet, as of March 31, 2002, and the
related statements of income, stockholder's equity and cash flows for the
nine months ended on such date, ("Interim Statements"); and all such
financial statements fairly present the financial condition of the
Servicer as of their respective dates, subject, in the case of the
Interim Statements, to normal year end adjustments and the results of
operations of the Servicer for the periods ended on such dates and have
been prepared in accordance with GAAP.
(ii) As of the date thereof, there are no obligations,
liabilities or Indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term commitments)
of the Servicer required to be recorded under GAAP that are not reflected
therein.
(iii) No change that constitutes a Material Adverse Effect
has occurred in the financial condition or business of the Servicer since
March 31, 2002.
(b) Employee Benefit Plans. (i) No Employee Plan of the
Servicer or any ERISA Affiliate has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 412 of the Code), (ii) neither
the Servicer nor any ERISA Affiliate has incurred liability under ERISA to the
PBGC, (iii) neither the Servicer nor any ERISA Affiliate has partially or fully
withdrawn from participation in a Multiemployer Plan, (iv) no Employee Plan of
the Servicer or any ERISA Affiliate has been the subject of involuntary
termination proceedings, (v) neither the Servicer nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) that might give rise to a material liability of the
Servicer or any ERISA Affiliate, and (vi) no "reportable event" (as defined in
Section 4043 of ERISA) has occurred in connection with any Employee Plan of the
Servicer or any ERISA Affiliate other than events for which the notice
requirement is waived under applicable PBGC regulations.
(c) Ownership. On the date of this Agreement, ▇.▇. ▇▇▇▇▇▇ has
beneficial ownership of 100% of the issued and outstanding shares of each class
of the stock of the general partner and each limited partner of the Servicer.
The Servicer is the owner of all the limited liability company shares in the
Borrower.
5.4. Survival of Representations.
All representations and warranties by the Borrower and the Servicer
herein shall survive delivery of the Notes and the making of the Advances, and
any investigation at any time made by or on behalf of the Administrative Agent
or the Lenders shall not diminish the right of the Administrative Agent or the
Lenders to rely thereon.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower and the Servicer shall each at all times comply with the
covenants applicable to it contained in this Article VI, from the date hereof
until the later of the Drawdown Termination Date and the date all of the
Obligations are paid in full.
57
6.1. Financial Statements and Reports.
The Servicer, for so long as the Servicer is the Originator, and
thereafter the Borrower, shall furnish to the Administrative Agent the
following, all in form and detail satisfactory to the Administrative Agent:
(a) promptly after becoming available, and in any event within
120 days after the close of each fiscal year of each of the Servicer, the
Originator and ▇.▇. ▇▇▇▇▇▇, such Person's audited consolidated balance sheet as
of the end of such fiscal year, and the related statements of income,
stockholder's equity and cash flows of such Person for such year accompanied by
(i) the related report of independent certified public accountants acceptable to
the Administrative Agent, which report shall be to the effect that such
statements have been prepared in accordance with GAAP applied on a basis
consistent with prior periods except for such changes in such principles with
which the independent public accountants shall have concurred and (ii) if
issued, the auditor's letter or report to management customarily given in
connection with such audit;
(b) promptly after becoming available, and in any event within
60 days after the end of each fiscal quarter, excluding the fourth fiscal
quarter, of each fiscal year of each of the Servicer, the Originator and ▇.▇.
▇▇▇▇▇▇, the unaudited consolidated balance sheet of each of the Servicer, the
Originator and ▇.▇. ▇▇▇▇▇▇ as of the end of such fiscal quarter and the related
statements of income, stockholders' equity and cash flows of each of the
Servicer, the Originator and ▇.▇. ▇▇▇▇▇▇ for such fiscal quarter and the period
from the first day of the then current fiscal year of the Servicer, the
Originator and ▇.▇. ▇▇▇▇▇▇ through the end of such fiscal quarter, certified by
a Financial Officer of the Servicer, the Originator and ▇.▇. ▇▇▇▇▇▇,
respectively, to have been prepared in accordance with GAAP applied on a basis
consistent with prior periods, subject to normal year-end adjustments;
(c) promptly upon receipt thereof, a copy of each other report
submitted to each of the Servicer, the Originator and ▇.▇. ▇▇▇▇▇▇ by independent
accountants in connection with any annual, interim or special audit of the books
of such Person;
(d) promptly and in any event within twenty (20) days after the
request of the Administrative Agent at any time and from time to time, a
certificate, executed by the president or chief financial officer of the
Servicer or the Originator, setting forth all of such Person's warehouse
borrowings and a description of the collateral related thereto;
(e) promptly and in any event within 60 days after the end of
each of the first three (3) quarters in each fiscal year of the Borrower, and
within 120 days after the close of the Borrower's fiscal year, completed
officer's certificates in the form of Exhibit H-1 and H-2 hereto, executed by
the president or chief financial officer of each of the Servicer and the
Borrower, respectively;
(f) promptly and in any event within 60 days after the end of
each quarter (120 days in the case of the fourth quarter), a management report
regarding the Originator's Mortgage Loan production for the prior quarter and
year-to-date, in form and detail as required by the Administrative Agent;
58
(g) promptly furnish copies of all reports and notices with
respect to any "reportable event" defined in Title IV of ERISA that the
Borrower, the Originator or the Servicer files or that the Borrower, Originator
or Servicer is required to file under ERISA with the Internal Revenue Service,
the PBGC or the U.S. Department of Labor or that the Borrower, Originator or
Servicer receives from the PBGC;
(h) immediately after becoming aware of the expiration,
forfeiture, termination, or cancellation of, or default under, any Take-Out
Commitment relating to any Collateral, telephone notice thereof confirmed in
writing within one Business Day, together with a statement as to what action the
Borrower proposes to take with respect thereto; provided that no such notice
need be given if such Take-Out Commitment is replaced by another Take-Out
Commitment;
(i) promptly after becoming available, and in any event within 120
days after the close of each fiscal year of the Borrower, the Borrower's balance
sheet as of the end of such fiscal year, and the related statements of income,
stockholder's equity and cash flows of the Borrower for such year accompanied by
(i) the related report of independent certified public accountants acceptable to
the Administrative Agent, which report shall be to the effect that such balance
sheets have been prepared in accordance with GAAP applied on a basis consistent
with prior periods except for such changes in such principles with which the
independent public accountants shall have concurred and (ii) if issued, the
auditor's letter to report to management customarily given in connection with
such audit;
(j) promptly after becoming available, and in any event within 60
days after the end of each fiscal quarter, excluding the fourth fiscal quarter,
of each fiscal year of the Borrower, the balance sheet of the Borrower as of the
end of such fiscal quarter and the related statements of income, stockholders'
equity and cash flows of the Borrower for such fiscal quarter and the period
from the first day of such fiscal year through the end of such fiscal quarter,
certified by the chief financial officer of the Borrower, to have been prepared
in accordance with GAAP applied on a basis consistent with prior periods,
subject to normal year-end adjustments;
(k) promptly after the Borrower obtains knowledge thereof, notice
of any "Event of Default" or "Facility Termination Date" under the Repurchase
Agreement;
(l) promptly after receipt thereof, copies of all notices received
by the Borrower from the Originator under the Repurchase Agreement;
(m) promptly after the Servicer obtains knowledge thereof, notice
of any Servicer Default or of any condition or event that, with the giving of
notice or lapse of time or both and unless cured or waived, would constitute a
Servicer Default;
(n) such other material information concerning the business,
properties or financial condition of the Borrower or the Originator as the
Administrative Agent may reasonably request; and
(o) (i) promptly upon entering into any Take-Out Commitment Master
Agreement, a copy of such agreement and (ii) upon request by the Administrative
Agent, or if there is an Event of Default, copies of all Take-Out Commitment
Documents with respect to
59
Non-Conforming Loans (if the Take-Out Commitment is made on a confirmation or
supplement to a master agreement and the master agreement has been previously
delivered to the Administrative Agent, only the confirmation or supplement is
required to be delivered pursuant to this clause).
6.2. Taxes and Other Liens.
The Borrower shall pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Property as well as all claims of any kind (including claims for labor,
materials, supplies and rent) that, if unpaid, might become a Lien upon any or
all of its Property; provided, however, the Borrower shall not be required to
pay any such tax, assessment, charge, levy or claim if the amount, applicability
or validity thereof shall currently be contested in good faith by appropriate
proceedings diligently conducted by it or on its behalf and if it shall have set
up reserves therefor adequate under GAAP.
6.3. Maintenance.
The Borrower shall (i) maintain its limited liability company existence,
rights and franchises and (ii) observe and comply with all Governmental
Requirements. The Servicer shall maintain its entity existence. The Borrower
shall maintain its Properties (and any Properties leased by or consigned to it
or held under title retention or conditional sales contracts) in good and
workable condition at all times and make all repairs, replacements, additions,
betterments and improvements to its Properties as are needful and proper so that
the business carried on in connection therewith may be conducted properly and
efficiently at all times.
6.4. Further Assurances.
The Borrower and the Servicer shall, each within three (3) Business Days
(or, in the case of Mortgage Notes, such longer period as provided under Section
3.5 of this Agreement) after the request of the Administrative Agent, cure any
defects in the execution and delivery of the Notes, this Agreement or any other
Transaction Document. The Borrower and the Servicer shall, each at its expense,
promptly execute and deliver to the Administrative Agent, upon the
Administrative Agent's request, all such other and further documents, agreements
and instruments in compliance with or accomplishment of the covenants and
agreements of the Borrower and the Servicer, respectively, in this Agreement and
in the other Transaction Documents or to further evidence and more fully
describe the collateral intended as security for the Notes, or to correct any
omissions in this Agreement or the other Transaction Documents, or more fully to
state the security for the obligations set out herein or in any of the other
Transaction Documents, or to perfect, protect or preserve any Liens created (or
intended to be created) pursuant to any of the other Transaction Documents, or
to make any recordings, to file any notices, or obtain any consents.
6.5. Compliance with Laws.
The Servicer shall comply with all applicable laws, rules, regulations
and orders in connection with servicing the Mortgage Assets.
60
6.6. Insurance.
(a) The Borrower and the Servicer shall each maintain with
financially sound and reputable insurers, insurance with respect to its
Properties and business against such liabilities, casualties, risks and
contingencies and in such types and amounts as is customary in the case of
Persons engaged in the same or similar businesses and similarly situated,
including, without limitation, a fidelity bond or bonds in form and with
coverage and with a company satisfactory to the Administrative Agent and with
respect to such individuals or groups of individuals as the Administrative Agent
may designate. Upon request of the Administrative Agent, the Borrower and the
Servicer shall each furnish or cause to be furnished to the Administrative Agent
from time to time a summary of the insurance coverage of the Borrower and the
Servicer, respectively, in form and substance satisfactory to the Administrative
Agent and if requested shall furnish the Administrative Agent with copies of the
applicable policies.
(b) With respect to Mortgages comprising the Collateral (i) the
Servicer, for as long as the Servicer is the Originator, and thereafter the
Borrower, shall cause the improvements on the land covered by each Mortgage to
be kept continuously insured at all times by responsible insurance companies
against fire and extended coverage hazards under policies, binders, letters, or
certificates of insurance, with a standard mortgagee clause in favor of the
original mortgagee and its successors and assigns or, in the case of a MERS
Designated Mortgage Loan, the beneficial owner of such mortgage loan, and (ii)
the Servicer, for so long as the Servicer is the Originator, and thereafter the
Borrower, shall cause each such policy to be in an amount equal to the lesser of
the maximum insurable value of the improvements or the original principal amount
of the Mortgage, without reduction by reason of any co-insurance, reduced rate
contribution, or similar clause of the policies or binders.
6.7. Accounts and Records.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each keep books of record and account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and activities, in accordance with GAAP. The Borrower
and the Servicer shall each maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate all records
pertaining to the performance of the Borrower's obligations under the Take-Out
Commitments and other agreements made with reference to any Mortgage Loans in
the event of the destruction of the originals of such records) and keep and
maintain all documents, books, records, computer tapes and other information
necessary or advisable for the performance by the Borrower of its Obligations.
The Borrower shall not enter the "loan servicing" business.
6.8. Right of Inspection.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each permit upon reasonable notice (a) any officer,
employee or agent of the Administrative Agent to visit and inspect any of its
Properties, examine its books of record and accounts, telecopies and extracts
therefrom, and discuss its affairs, finances and accounts with its officers,
accountants, and auditors, all during reasonable business hours and as often as
the Administrative Agent may reasonably request and (b) on request of the
Administrative Agent,
61
Ernst & Young LLP to conduct, a review of its books and records. The Borrower
agrees to pay the reasonable costs of reviews and inspections performed pursuant
to this Section 6.8.
6.9. Notice of Certain Events.
The Borrower and, so long as the Servicer and the Originator are the same
entity (other than with respect to clause (g) hereof), the Servicer shall each
promptly notify the Administrative Agent upon (a) the receipt of any notice
from, or the taking of any other action by, the holder of any of its promissory
notes, debentures or other evidences of Indebtedness with respect to a claimed
default, together with a detailed statement by a responsible officer of the
Borrower or the Servicer, as the case may be, specifying the notice given or
other action taken by such holder and the nature of the claimed default and what
action the Borrower or the Servicer is taking or proposes to take with respect
thereto, but only if such alleged default or event of default (if it were true)
would also be a Default or Event of Default under this Agreement; (b) the
commencement of, or any determination in, any legal, judicial or regulatory
proceedings that, if adversely determined, could also be a Default or Event of
Default under this Agreement; (c) any dispute between the Borrower or the
Servicer, as the case may be, and any Governmental Authority or any other Person
that, if adversely determined, could have a Material Adverse Effect; (d) any
adverse change in the business, operations prospects or financial condition of
the Borrower or the Servicer, as the case may be, that is reasonably likely to
result in a Material Adverse Effect, including, without limitation, the
Borrower's or the Servicer's insolvency; (e) any event or condition known to it
that, if adversely determined, would have a Material Adverse Effect; (f) the
receipt of any notice from, or the taking of any other action by any Approved
Investor indicating an intent not to honor, or claiming a default under a
Take-Out Commitment, together with a detailed statement by a responsible officer
of the Borrower specifying the notice given or other action taken by such
Approved Investor and the nature of the claimed default and what action the
Borrower is taking or proposes to take with respect thereto; (g) the receipt of
any notice from, and or the taking of any action by any Governmental Authority
indicating an intent to cancel the Borrower's or the Servicer's right to be
either a seller or servicer of such Governmental Authority's insured or
guaranteed Mortgage Loans; and (h) the receipt of any notice of any final
judgment or order for payment of money applicable to the Borrower or the
Servicer in excess of $1,000,000.
6.10. Performance of Certain Obligations.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each perform and observe each of the provisions of
each Mortgage Loan and Take-Out Commitment on its part to be performed or
observed and will cause all things to be done that are necessary to have each
Mortgage Loan covered by a Take-Out Commitment comply with the requirements of
such Take-Out Commitment.
6.11. Use of Proceeds; Margin Stock.
The proceeds of the Advances shall be used by the Borrower solely for the
acquisition of Mortgage Loans under the Repurchase Agreement. None of such
proceeds shall be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, or for the purpose of reducing or retiring
any Indebtedness that was originally incurred to purchase or carry
62
margin stock or for any other purpose that might constitute this transaction a
"purpose credit" within the meaning of such Regulation U. Neither the Borrower
nor any Person acting on behalf of the Borrower shall take any action in
violation of Regulations U or X or shall violate Section 7 of the Securities
Exchange Act of 1934, as amended, or any rule or regulation thereunder, in each
case as now in effect or as the same may hereafter be in effect.
6.12. Notice of Default.
The Borrower shall furnish to the Administrative Agent immediately upon
becoming aware of the existence of any Default or Event of Default, a written
notice specifying the nature and period of existence thereof and the action that
the Borrower is taking or proposes to take with respect thereto.
6.13. Compliance with Transaction Documents.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each promptly comply with any and all covenants and
provisions of this Agreement applicable to it, the Notes, in the case of the
Borrower, and the other Transaction Documents.
6.14. Compliance with Material Agreements.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each comply in all respects with all agreements,
indentures, Mortgages or documents (including, with respect to the Borrower, the
Articles of Organization) binding on it or affecting its Property or business.
6.15. Operations and Properties.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each act prudently and in accordance with customary
industry standards in managing and operating its Property and shall continue to
underwrite, hedge and sell Mortgage Loans in the same diligent manner it has
applied in the past and take no greater credit or market risks than are
currently being borne by it.
6.16. ▇.▇. ▇▇▇▇▇▇ Credit Rating.
If at any time any of the senior debt of ▇.▇. ▇▇▇▇▇▇, which is publicly
held, shall fail to bear a rating of at least BB by S&P, Ba1 by ▇▇▇▇▇'▇ or BB by
Fitch, the Borrower shall give the Administrative Agent written notice of such
change in rating, within two Business Days of the date on which such change is
announced by either of these rating agencies.
6.17. Take-Out Commitments.
The Borrower shall obtain, and maintain in full force and effect,
Take-Out Commitments reflecting total Approved Investor obligations, as of each
date of determination, with an aggregate purchase price equal to the total of
the original principal balances of the Borrower's entire portfolio of Mortgage
Loans issued as proceeds thereof. Each of such Take-Out
63
Commitments shall reflect only those terms and conditions as are permitted
hereunder or are acceptable to the Administrative Agent. The Borrower shall
obtain, and maintain in full force and effect, forward purchase commitments
(which may include options to sell Mortgage Loans to Approved Investors, so long
as the Approved Investor is bound thereby) issued by Approved Investors and
obligating such Approved Investors to purchase a portion of the Borrower's
subsequently acquired Mortgage Loans.
6.18. Collateral Proceeds.
The Borrower and the Servicer shall instruct all Approved Investors to
cause all payments in respect of Take-Out Commitments on Mortgage Loans to be
deposited directly in the Collection Account.
6.19. Environmental Compliance.
The Borrower and, so long as the Servicer and the Originator are the same
entity, the Servicer shall each use and operate all of its facilities and
properties in compliance with all environmental laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and handle
all hazardous materials in compliance with all applicable environmental laws.
6.20. Closing Instructions.
The Borrower agrees to indemnify and hold the Lenders and the
Administrative Agent harmless from and against any loss, including attorneys'
fees and costs, attributable to the failure of a title insurance company, agent
or approved attorney to comply with the disbursement or instruction letter or
letters of the Borrower or of the Administrative Agent relating to any Mortgage
Loan. The Administrative Agent shall have the right to pre-approve the closing
instructions of the Originator to the title insurance company, agent or attorney
in any case where the Mortgage Loan to be created at settlement is intended to
be warehoused by the Lenders pursuant hereto.
6.21. Special Affirmative Covenants Concerning Collateral.
(a) The Borrower shall at all times warrant and defend the right,
title and interest of the Lenders, the Collateral Agent and the Administrative
Agent in and to the Collateral against the claims and demands of all Persons
whomsoever.
(b) The Borrower and the Servicer shall each service or cause to
be serviced all Eligible Mortgage Loans in accordance with the standard
requirements of the issuers of Take-Out Commitments covering the same and all
applicable ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae requirements, including without
limitation taking all actions necessary to enforce the obligations of the
Obligors under such Eligible Mortgage Loans. The Servicer shall hold all escrow
funds collected in respect of Eligible Mortgage Loans in accordance with
applicable law, and apply the same for the purposes for which such funds were
collected.
(c) The Borrower shall, no less than on an annual basis, review
financial statements, compliance with financial parameters, ▇▇▇▇▇▇ ▇▇▇/▇▇▇▇▇▇▇
Mac approvals (if
64
applicable), and state licenses of all Persons from whom the Originator acquires
Mortgage Loans.
6.22. Corporate Separateness.
(a) The Borrower covenants to take the following actions, and the
Servicer covenants to cause the Borrower to take the following actions: The
Borrower shall at all times maintain at least one Independent Director (as such
term is defined in the Articles of Organization).
(b) The Borrower shall not direct or participate in the management
of any of the operations of the Other Companies.
(c) The Borrower shall allocate fairly and reasonably any overhead
for shared office space. The Borrower shall have stationery and other business
forms separate from that of the Other Companies.
(d) The Borrower shall at all times be adequately capitalized in
light of its contemplated business.
(e) The Borrower shall at all times provide for its own operating
expenses and liabilities from its own funds.
(f) The Borrower shall maintain its assets and transactions
separately from those of the Other Companies and reflect such assets and
transactions in financial statements separate and distinct from those of the
Other Companies and evidence such assets and transactions by appropriate entries
in books and records separate and distinct from those of the Other Companies.
The Borrower shall hold itself out to the public under the Borrower's own name
as a legal entity separate and distinct from the Other Companies. The Borrower
shall not hold itself out as having agreed to pay, or as being liable, primarily
or secondarily, for, any obligations of the Other Companies.
(g) The Borrower shall not maintain any joint account with any Other
Company or become liable as a guarantor or otherwise with respect to any
Indebtedness or contractual obligation of any Other Company.
(h) The Borrower shall not ▇▇▇▇▇ ▇ ▇▇▇▇ on any of its assets to
secure any obligation of any Other Company.
(i) The Borrower shall not make loans, advances or otherwise extend
credit to any of the Other Companies.
(j) The Borrower shall conduct its business in its own name and
strictly comply with all organizational formalities to maintain its separate
existence.
(k) The Borrower shall have bills of sale (or similar instruments of
assignment) and, if appropriate, UCC-1 financing statements, with respect to all
assets purchased from any of the Other Companies.
65
(l) The Borrower shall not engage in any transaction with any of the
Other Companies, except as permitted by this Agreement or the Articles of
Organization and as contemplated by the Repurchase Agreement.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower and the Servicer shall each at all times comply with the
covenants applicable to it contained in this Article VII, from the date hereof
until the later of the Drawdown Termination Date and the date all of the
Obligations are paid in full:
7.1. Limitations on Mergers and Acquisitions.
(a) The Servicer (so long as the Servicer and the Originator are the
same entity) shall not (i) merge or consolidate with or into any corporation
unless the Servicer is the surviving entity of any such merger or consolidation
or (ii) liquidate or dissolve.
(b) The Borrower will not merge with or into or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
or enter into any joint venture or partnership agreement with, any Person, other
than as contemplated by this Agreement and the Repurchase Agreement.
7.2. Fiscal Year.
Neither the Borrower nor, so long as the Servicer and the Originator are
the same entity, the Servicer shall change its fiscal year other than to conform
with changes that may be made to ▇.▇. ▇▇▇▇▇▇'▇ fiscal year and then only after
notice to the Administrative Agent and after whatever amendments are made to
this Agreement as may be required by the Administrative Agent, in order that the
reporting criteria for the financial covenants contained in Articles VI and VII
remain substantially unchanged.
7.3. Business.
The Borrower will not engage in any business other than as set forth in
Article V of the Articles of Organization.
7.4. Use of Proceeds.
The Borrower shall not permit the proceeds of the Advances to be used for
any purpose other than those permitted by Section 6.11 hereof. The Borrower
shall not, directly or indirectly, use any of the proceeds of the Advances for
the purpose, whether immediate, incidental or ultimate, of buying any "margin
stock" or of maintaining, reducing or retiring any Indebtedness originally
incurred to purchase a stock that is currently any "margin stock," or for any
other purpose that might constitute this transaction a "purpose credit," in each
case within the meaning of Regulation U, or otherwise take or permit to be taken
any action that would involve a
66
violation of such Regulation U or of Regulation T or Regulation Z (12 C.F.R.
224, as amended) or any other regulation promulgated by the Federal Reserve
Board.
7.5. Actions with Respect to Collateral.
Neither the Borrower nor the Servicer shall:
(a) Compromise, extend, release, or adjust payments on any Mortgage
Collateral, accept a conveyance of mortgaged Property in full or partial
satisfaction of any Mortgage debt or release any Mortgage securing or underlying
any Mortgage Collateral, except as permitted by the related Approved Investor or
as contemplated in the servicing guidelines distributed thereby;
(b) Agree to the amendment or termination of any Take-Out Commitment
in which the Administrative Agent has a security interest or to substitution of
a Take-Out Commitment for a Take-Out Commitment in which the Administrative
Agent has a security interest hereunder, if such amendment, termination or
substitution may be expected (as determined by the Collateral Agent or the
Administrative Agent in either of their sole discretion) to have a Material
Adverse Effect or to result in a Default or Event of Default;
(c) Transfer, sell, assign or deliver any Mortgage Loan Collateral
pledged to the Administrative Agent to any Person other than the Administrative
Agent, except pursuant to a Take-Out Commitment or pursuant to either Section
3.3 or Section 3.4;
(d) Grant, create, incur, permit or suffer to exist any Lien upon
any Mortgage Loan Collateral except for (i) Liens granted to the Administrative
Agent to secure the Notes and Obligations and (ii) any rights created by the
Repurchase Agreement; or
(e) With respect to any Mortgage Loans constituting Collateral,
permit the payment instructions relating to a Take-Out Commitment to provide for
payment to any Person except directly to the Collection Account.
7.6. Liens.
The Borrower will not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with respect
to, any Mortgage Asset, or upon or with respect to any account to which any
Collections of any Mortgage Asset are sent, or assign any right to receive
income in respect thereof except as contemplated hereby.
7.7. Employee Benefit Plans.
Neither the Borrower nor, so long as the Servicer and the Originator are
the same entity, the Servicer may permit any of the events or circumstances
described in Section 5.3(b) to exist or occur.
67
7.8. Change of Principal Office.
The Borrower shall not move its principal office, executive office or
principal place of business from the address set forth in Section 5.2(g) without
30-days' prior written notice to the Administrative Agent. CH Mortgage shall not
organize under the law of any jurisdiction other than the state under which it
is organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without prior
written notice to the Agent, which shall be accompanied by copies of all
necessary UCC-3 amendments, with evidence of filing thereon, to all UCC-1
financing statements filed in connection with this Agreement.
7.9. No Commercial, A&D, Etc. Loans.
The Borrower shall not make or acquire any direct outright ownership
interest, participation interest or other creditor's interest in any commercial
real estate loan, acquisition and/or development loan, unimproved real estate
loan, personal property loan, oil and gas loan, commercial loan, wrap-around
real estate loan, unsecured loan, acquisition, development or construction loan.
7.10. Maximum Leverage.
If the Servicer is the Originator, the Servicer shall never permit its
Adjusted Liabilities to exceed 14 times its Adjusted Net Worth.
7.11. Indebtedness.
The Borrower will not incur any Indebtedness, other than any Indebtedness
incurred pursuant to this Agreement or the Repurchase Agreement or permitted to
be incurred pursuant to the Articles of Organization.
7.12. Deposits to Collection Account.
Neither the Borrower nor the Servicer shall deposit or otherwise credit, or
cause or permit to be so deposited or credited, to the Collection Account, cash
or cash proceeds other than Collateral Proceeds.
7.13. Transaction Documents.
The Borrower will not amend, waive, terminate or modify any provision of
any Transaction Document to which it is a party (provided that the Borrower may
extend the "Facility Termination Date" or waive the occurrence of any "Event of
Default" under the Repurchase Agreement) without, in each case, the prior
written consent of the Administrative Agent. The Borrower will perform all of
its obligations under each Transaction Document to which it is a party and will
enforce each Transaction Document to which it is a party in accordance with its
terms in all respects.
68
7.14. Distributions, Etc.
The Borrower will not declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any equity ownership interests of the Borrower, or return any capital
to its members as such, or purchase, retire, defease, redeem or otherwise
acquire for value or make any payment in respect of any equity ownership
interests of the Borrower or any warrants, rights or options to acquire any such
interests, now or hereafter outstanding; provided, however, that the Borrower
may declare and pay cash distributions on its equity ownership interests to its
members so long as (a) no Event of Default shall then exist or would occur as a
result thereof, (b) such distributions are in compliance with all applicable law
including the limited liability company law of the state of Borrower's
organization, and (c) such distributions have been approved by all necessary and
appropriate action of the Borrower.
7.15. Articles of Organization.
The Borrower will not amend or delete (a) Articles __ through __ or (b) the
definition of "Independent Manager" set forth in the Articles of Organization.
The Borrower will perform all of its obligations under the Articles of
Organization.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Nature of Event.
An "Event of Default" shall exist if any one or more of the following
occurs:
(a) the Borrower fails (i) to make any payment of principal of or
interest on any of the Notes when due, or (ii) to make any payment when due, of
any fee, expense or other amount due hereunder, under the Notes or under any
other Transaction Document or, so long as the Servicer and the Originator are
the same entity, the Servicer fails to make any payment or deposit to be made by
it under this Agreement when due and (with respect to this clause (ii)), such
failure continues unremedied for one Business Day; or
(b) the Borrower, the Originator or, so long as the Servicer and
the Originator are the same entity, the Servicer fails to keep or perform any
covenant or agreement contained in this Agreement (other than as referred to in
Section 8.1(a)) and such failure continues unremedied beyond the expiration of
any applicable grace or notice period that may be expressly provided for in such
covenant or agreement; or
(c) the Borrower, the Originator or the Servicer (so long as the
Servicer and the Originator are the same entity) defaults in the due observance
or performance of any of the covenants or agreements contained in any
Transaction Document other than this Agreement, and (unless such default
otherwise constitutes a Default or an Event of Default pursuant to other
provisions of this Section 8.1) such default continues unremedied beyond the
expiration of any applicable grace or notice period that may be expressly
provided for in such Transaction Document; or
69
(d) any statement, warranty or representation by or on behalf of the
Borrower, the Originator or the Servicer (so long as the Servicer and the
Originator are the same entity) contained in this Agreement, the Notes or any
other Transaction Document or any Borrowing Report, officer's certificate or
other writing furnished in connection with this Agreement, proves to have been
incorrect or misleading in any material respect as of the date made or deemed
made; or
(e) (i) the Borrower, the Originator or the Servicer (so long as the
Servicer and the Originator are the same entity) fails to make when due or
within any applicable grace period any payment on any other Indebtedness with an
unpaid principal balance of over $1,000,000.00 with respect to the Borrower, the
Originator and the Servicer; or (ii) any event or condition occurs under any
provision contained in any such obligation or any agreement securing or relating
to such obligation (or any other breach or default under such obligation or
agreement occurs) if the effect thereof is to cause or permit with the giving of
notice or lapse of time or both the holder or trustee of such obligation to
cause such obligation to become due prior to its stated maturity that results in
a Material Adverse Effect; or (iii) any such obligation becomes due (other than
by regularly scheduled payments) prior to its stated maturity and such
acceleration results in a Material Adverse Effect; or (iv) any of the foregoing
occurs with respect to any one or more items of Indebtedness of the Borrower,
the Originator or the Servicer (so long as the Servicer and the Originator are
the same entity) with unpaid principal balances exceeding, in the aggregate,
$1,000,000.00 with respect to the Borrower, the Originator and the Servicer; or
(f) the Borrower, the Originator or the Servicer (so long as the
Servicer and the Originator are the same entity) generally shall not pay its
debts as they become due or shall admit in writing its inability to pay its
debts, or shall make a general assignment for the benefit of creditors; or
(g) the Borrower, the Originator or the Servicer (so long as the
Servicer and the Originator are the same entity) shall (i) apply for or consent
to the appointment of a receiver, trustee, custodian, intervenor or liquidator
of it or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy, (iii) file a petition or answer seeking reorganization
or an arrangement with creditors or to take advantage of any Debtor Laws, (iv)
file an answer admitting the allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (v) take action for the purpose of effecting any of
the foregoing; or
(h) an involuntary petition or complaint shall be filed against the
Borrower, the Originator or the Servicer (so long as the Servicer and the
Originator are the same entity) seeking bankruptcy or reorganization of the
Borrower, the Originator or the Servicer or the appointment of a receiver,
custodian, trustee, intervenor or liquidator of the Borrower, the Originator or
the Servicer, or all or substantially all of the assets of either the Borrower,
the Originator or the Servicer, and such petition or complaint shall not have
been dismissed within 60 days of the filing thereof; or an order, order for
relief, judgment or, decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint
seeking reorganization of the Borrower, the Originator or the Servicer (so long
as the Servicer and the Originator are the same entity) or appointing a
receiver, custodian, trustee,
70
intervenor or liquidator of the Borrower, the Originator or the Servicer, or of
all or substantially all of assets of the Borrower, the Originator or the
Servicer; or
(i) the Borrower, the Originator or the Servicer (so long as the
Servicer and the Originator are the same entity) shall fail within 30 days to
pay, bond or otherwise discharge any final judgment or order for payment of
money in excess of $1,000,000.00; or the Borrower, the Originator or, so long as
the Servicer and the Originator are the same entity, the Servicer shall fail
within 30 days to pay, bond or otherwise discharge final judgments or orders for
payment of money which exceed in the aggregate $1,000,000.00; or the Borrower,
the Originator or the Servicer (so long as the Servicer and the Originator are
the same entity) shall fail within 30 days to timely appeal or pay, bond or
otherwise discharge any judgments or orders for payment of money which exceed,
in the aggregate, $1,000,000.00 and which the Borrower, the Originator or the
Servicer may appeal; or
(j) any Person shall levy on, seize or attach all or any material
portion of the assets of the Borrower, the Originator or the Servicer (so long
as the Servicer and the Originator are the same entity) and within thirty (30)
days thereafter the Borrower, the Originator or the Servicer shall not have
dissolved such levy or attachment, as the case may be, and, if applicable,
regained possession of such seized assets; or
(k) if an event or condition specified in Section 5.3(b) shall occur
or exist and results in a Material Adverse Effect; or
(l) the Originator or the Servicer (so long as the Servicer and the
Originator are the same entity) becomes ineligible to originate, sell or service
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae, or ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Mac or ▇▇▇▇▇▇ Mae shall impose any sanctions upon or terminate or revoke any
rights of the Servicer (so long as the Servicer and the Originator are the same
entity) or the Originator; or
(m) if (x) any Governmental Authority cancels the Originator's right
to be either a seller or servicer of such Governmental Authority's insured or
guaranteed Mortgage Loans or mortgage-backed securities, (y) any Approved
Investor cancels for cause any servicing or underwriting agreement between the
Borrower or the Originator and such Approved Investor and such agreement is not
replaced within 30 days or (z) the Originator receives notice from a
Governmental Authority that such Governmental Authority intends to revoke the
Originator's right to be a seller or servicer of such Governmental Authority's
insured or guaranteed Mortgage Loans or mortgaged-backed securities and such
notice is not withdrawn within 30 days of the receipt thereof; or
(n) failure of the Borrower or the Originator to correct an
imbalance in any escrow account established with Borrower or the Originator as
either an originator, purchaser or servicer of Mortgage Loans, which imbalance
may have a Material Adverse Effect, within two (2) Business Days after receipt
of demand by the Administrative Agent or within 30 days after receipt of demand
by the related mortgagee; or
71
(o) this Agreement, the Notes or any other Transaction Document shall
for any reason cease to be in full force and effect, or be declared null and
void or unenforceable; or the validity or enforceability of any such document
shall be repudiated; or
(p) a "change in control," with respect to the ownership of ▇.▇.
▇▇▇▇▇▇ shall have occurred (and as used in this subparagraph, the term "change
in control" shall mean an acquisition by any Person, partnership or group, as
defined under the Securities Exchange Act of 1934, as amended, of a direct or
indirect beneficial ownership of more than 50% of the then-outstanding voting
stock of ▇.▇. ▇▇▇▇▇▇); or ▇.▇. ▇▇▇▇▇▇ shall cease at any time to own, directly
or indirectly, 100% of the stock or membership interests or partnership
interests of the general partner of the Originator and 75% of the stock or
membership interests or partnership interests of the limited partner(s) of the
Originator; or
(q) the total Collateral Value of all Eligible Mortgage Collateral
shall be less than the Primary Obligations, at any time, and the Borrower shall
fail either to provide additional Eligible Mortgage Collateral with a sufficient
Collateral Value, or to pay Principal Debt, in an amount sufficient to correct
the deficiency within two Business Days after notice; or
(r) if, as a result of the Borrower's failure to obtain and deliver
to the Collateral Agent, Principal Mortgage Documents as required by Section
2.3(c), the Administrative Agent shall determine that the continuation of such
condition may have a Material Adverse Effect on the Borrower or the Lenders; or
(s) there shall have occurred any event that adversely affects the
enforceability or collectability of any material portion of the Mortgage Loans
or the Take-Out Commitments (provided that to the extent such event gives rise
to an obligation by the Originator to repurchase such Mortgage Loans pursuant to
the Repurchase Agreement and the Originator does so repurchase in accordance
with the provisions of the Repurchase Agreement, no Event of Default shall occur
under this Section 8.1(s) or there shall have occurred any other event that
adversely affects the ability of the Borrower, the Servicer or the Collateral
Agent to collect a material portion of Mortgage Loans or Take-Out Commitments or
the ability of the Borrower or, so long as the Servicer and the Originator are
the same entity, the Servicer to perform hereunder or a Material Adverse Effect
has occurred in the financial condition or business of the Borrower since
inception or, so long as the Servicer and the Originator are the same entity,
the Servicer since March 31, 2002; or
(t) (i) any litigation, in any amount with respect to the Borrower
and in an aggregate amount greater than $1,000,000 with respect to the
Affiliates of the Borrower, (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings not disclosed in writing by
the Borrower to the Lenders and the Administrative Agent prior to the date of
execution and delivery of this Agreement is pending against the Borrower or any
Affiliate thereof, or (ii) any development not so disclosed as of the date of
this Agreement has occurred in any litigation, in any amount with respect to the
Borrower and in an amount greater than $1,000,000 in aggregate with respect to
any Affiliate of the Borrower (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings so disclosed,
which, in the case of either clause (i) and/or (ii), in the opinion of the
Administrative Agent, is likely to have a Material Adverse Effect on the
financial position or
72
business of the Borrower, the Originator or the Servicer or materially impair
the ability of the Borrower, the Originator or the Servicer to perform its
obligations under this Agreement or any other Transaction Document; or
(u) the Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Code with regard to any of the assets of the Borrower or
the Originator and such lien shall not have been released within 30 days and,
with respect to the Originator only, such lien is in an amount exceeding
$250,000, or the PBGC shall, or shall indicate its intention to, file notice of
a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Borrower or the Originator and as to the Originator only, such lien is or will
be in an amount exceeding $250,000; or
(v) as at the end of any Collection Period, the Default Ratio shall
exceed 1%; or
(w) a successor Collateral Agent shall not have been appointed and
accepted such appointment within 180 days after the retiring Collateral Agent
shall have given notice of resignation pursuant to Section 4.4 of the Collateral
Agreement; or
(x) a "Default" shall occur under the Repurchase Agreement and be
continuing upon the lapse of any grace or cure period, or an "Event of Default"
shall occur under the Repurchase Agreement, or the Repurchase Agreement shall
cease to be in full force and effect; or
(y) all of the outstanding equity ownership interests of the Borrower
shall cease to be owned, directly or indirectly, by ▇.▇. ▇▇▇▇▇▇; or
(z) the Borrower shall cease or otherwise fail to have a good and
valid title to (or, to the extent that Article 9 of the UCC is applicable to the
Borrower's acquisition thereof, a valid perfected security interest in) a
material portion of the Collateral (other than Collateral released in accordance
with Section 3.3) or the Security Instruments shall for any reason (other than
pursuant to the terms hereof) fail or cease to create a valid and perfected
first priority security interest in the Mortgage Loans and the other Collateral
for the benefit of the holders of the Obligations and such Collateral is not
replaced; or
(aa) the Originator's Net Worth shall be less than $25,000,000; or
(bb) as at the end of any Collection Period the amount of the Excess
Spread is less than fifty (50) basis points; or
(cc) as of the Settlement Date following any withdrawal from the
Reserve Account pursuant to Section 2.8(f)(i) (after giving effect to any
deposit to the Reserve Account pursuant to Section 2.7(c)(iii)(D) on such
Settlement Date) the amount on deposit in the Reserve Account shall be less than
the Required Reserve Account Amount; or
(dd) if an Advance Cessation Trigger shall occur or exist.
73
8.2. Default Remedies.
(a) Upon the occurrence and continuation of an Event of Default under
(f), (g) or (h) of this Agreement, the entire unpaid balance of the Obligations
shall automatically become due and payable, the Drawdown Termination Date shall
immediately occur and the Maximum Facility Amount shall immediately terminate,
all without any notice or action of any kind whatsoever.
(b) Upon the occurrence and continuation of an Event of Default under
Sections 8.1 (b) (excluding Events of Default related to any breach of Section
7.5 herein), (c), (d) (l), (m), (u), (v), (aa) and (bb) upon the Borrower or the
Originator, the Administrative Agent may declare the Drawdown Termination Date
to have immediately occurred and terminate the Maximum Facility Amount upon
notice to the Originator and to the Borrower, provided that if such Event of
Default is not cured within 30 days of occurrence, then the Administrative Agent
may proceed under Section 8.2(c).
(c) Upon the occurrence and continuation of an Event of Default under
any provision of Section 8.1 other than those set forth in Section 8.2(a), and
subject to the limitations of Section 8.2(b), the Administrative Agent may do
any one or both of the following: (i) declare the entire unpaid balance of the
Obligations immediately due and payable, whereupon it shall be due and payable;
and (ii) declare the Drawdown Termination Date to have occurred and terminate
the Maximum Facility Amount.
(d) Upon the occurrence of an Event of Default under any provision of
Section 8.1 and the acceleration of the unpaid balance of the Obligations
pursuant to Section 8.2(a) or (c), the Administrative Agent may do any one or
more of the following: (i) reduce any claim to judgment; (ii) exercise the
rights of offset or banker's Lien against the interest of the Borrower in and to
every account and other Property of the Borrower that are in the possession of
the Lenders, the Collateral Agent or the Administrative Agent to the extent of
the full amount of the Obligations (the Borrower being deemed directly obligated
to the Lenders and the Administrative Agent in the full amount of the
Obligations for such purposes); (iii) foreclose or direct the Collateral Agent
to foreclose any or all Liens or otherwise realize upon any and all of the
rights the Administrative Agent may have in and to the Collateral, or any part
thereof; and (iv) exercise any and all other legal or equitable rights afforded
by the Transaction Documents, applicable Governmental Requirements, or
otherwise, including, but not limited to, the right to bring suit or other
proceedings before any Governmental Authority either for specific performance of
any covenant or condition contained in any of the Transaction Documents or in
aid of the exercise of any right granted to the Lenders or the Administrative
Agent in any of the Transaction Documents.
8.3. Paydowns.
Immediately upon the occurrence of an Event of Default, and without any
requirement for notice or demand (including, without limitation, any notice or
demand otherwise required under Section 8.1), the Borrower shall (a) make a
payment to the Administrative Agent equal to the Collateral Deficiency and (b)
deliver to the Collateral Agent additional Take-Out Commitment Documents
relating to Take-Out Commitments in an amount equal to unrepaid
74
Advances that have been made against any Uncovered Mortgage Loans. Take-Out
Commitment Documents for Conforming Loans that are delivered pursuant to clause
(b), above, in addition to conforming with all other criteria of this Agreement,
shall also substantially conform to the interest rates and "terms to maturity"
for all Uncovered Mortgage Loans. Any demand for performance under this Section
8.3 shall not waive or affect the Lenders' or the Administrative Agent's rights
to enforce any security interest in the Collateral, collect a deficiency or to
pursue damages or any other remedy, as herein provided or as permitted at law or
in equity, until all Obligations have been fully paid and performed.
8.4. Waivers of Notice, Etc.
Except as otherwise provided in this Agreement, the Borrower and each
surety, endorser, guarantor and other party liable for payment of any sum or
sums of money that may become due and payable, or the performance or any
undertaking that may be owed, to the Lenders or the Administrative Agent
pursuant to this Agreement, the Notes, or the other Transaction Documents,
including the Obligations, jointly and severally waive demand for payment,
presentment, protest, notice of protest and nonpayment or other notice of
default, notice of acceleration and notice of intention to accelerate, and agree
that its or their liability under this Agreement, the Notes or other Transaction
Documents shall not be affected by any renewal or extension of the time or place
of payment or performance hereof, or any indulgences by the Lenders or the
Administrative Agent, or by any release or change in any security for the
payment of the Obligations, and hereby consent to any and all renewals,
extensions, indulgences, releases or changes, regardless of the number of such
renewals, extensions, indulgences, releases or changes.
8.5. Advance Cessation Trigger.
Upon the occurrence and continuation of an Advance Cessation Trigger, the
Administrative Agent may declare that an Advance Cessation Trigger has occurred
and may terminate the Maximum Facility Amount upon notice to the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1. Authorization.
Each Lender has appointed the Administrative Agent as its agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement), the Administrative Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Bank, and such instructions
shall be binding upon all Lenders; provided, however, that the Administrative
Agent shall not be required to take any action that exposes the Administrative
Agent to personal liability or that is contrary to this Agreement or applicable
law.
75
9.2. Reliance by Agent.
Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, neither the Administrative Agent nor any of its directors,
officers, agents, representatives, employees, attorneys-in-fact or Affiliates
shall be liable for any action taken or omitted to be taken by it or them (in
their capacity as or on behalf of the Administrative Agent) under or in
connection with this Agreement or the other Transaction Documents, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Administrative Agent: (a) may treat the
payee of the Notes as the holder thereof; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it or the Borrower and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants or experts; (c) makes no warranty or representation
to any Lender or the Administrative Agent and shall not be responsible to any
Lender or the Administrative Agent for any statements, warranties or
representations made in or in connection with this Agreement or the other
Transaction Documents; (d) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Borrower or to inspect the Property (including
the books and records) of the Borrower; (e) shall not be responsible to any
Lender or the Administrative Agent for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto or the enforceability or
perfection or priority of any Collateral; and (f) shall incur no liability under
or in respect of this Agreement or any other Transaction Document by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram, cable or telex) believed by the Administrative Agent to be genuine and
signed or sent by the proper Person or party.
9.3. Agent and Affiliates.
With respect to any Advance made by CL New York, CL New York shall have the
same rights and powers under this Agreement as would any Lender and may exercise
the same as though it were not the Administrative Agent. CL New York and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of the Borrower's Affiliates and any Person who may do business with or own
securities of the Borrower or any such Affiliate, all as if CL New York were not
the Administrative Agent and without any duty to account therefor to the
Lenders. If CL New York is removed as Administrative Agent, such removal will
not affect CL New York's rights and interests as a Lender.
9.4. Lender Decision.
Each Lender (including each Lender that becomes a party hereto by
assignment) acknowledges that it has, independently and without reliance on the
Administrative Agent, any of its Affiliates or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance on the
Administrative Agent, any of its Affiliates or any other Lender and based on
such documents and information as
76
it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement.
9.5. Rights of the Administrative Agent.
Each right and remedy expressly provided by this Agreement as being
available to the Administrative Agent shall be exercised by the Administrative
Agent only at the direction of the Majority Banks.
9.6. Indemnification of Administrative Agent.
Each Bank agrees to indemnify the Administrative Agent (to the extent not
reimbursed by or on behalf of the Borrower), ratably according to the respective
principal amounts held by it (or if no Advances are then outstanding, each Bank
shall indemnify the Administrative Agent ratably according to the amount of its
Bank Commitment), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or the other Transaction Documents or any action taken or
omitted by the Administrative Agent under this Agreement or the other
Transaction Documents, provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct.
9.7. UCC Filings.
The Lenders and the Borrower expressly recognize and agree that the
Administrative Agent may be listed as the assignee or secured party of record on
the various UCC filings required to be made hereunder in order to perfect the
security interest in the Collateral granted by the Borrower for the benefit of
the holders of the Obligations and that such listing shall be for administrative
convenience only in creating a record-holder or nominee to take certain actions
hereunder on behalf of the holders of the Obligations.
ARTICLE X
INDEMNIFICATION
10.1. Indemnities by the Borrower.
(a) General Indemnity. Without limiting any other rights that any
such Person may have hereunder or under applicable law, the Borrower hereby
agrees to indemnify each of the Lenders, the Administrative Agent, any Affected
Party, their respective successors, transferees, participants and assigns and
all affiliates, officers, directors, shareholders, controlling persons,
employees and agents of any of the foregoing (each an "Indemnified Party"),
forthwith on demand, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or relating to this Agreement or the exercise or performance of any of its or
77
their powers or duties, in respect of any Mortgage Loan or Take-Out Commitment,
or related in any way to its or their possession of, or dealings with, the
Collateral, excluding, however, Indemnified Amounts to the extent resulting from
gross negligence, willful misconduct, or unlawful collection activity directed
against a borrower under a mortgage loan included in the Collateral on the part
of such Indemnified Party. The foregoing indemnity does not extend to any
damages, losses, claims, liabilities, or costs and expenses, arising solely from
Issuer's sale or issuance of commercial paper.
(b) Contribution. If for any reason the indemnification provided
above in this Section 10.1 is unavailable to an Indemnified Party or is
insufficient to hold an Indemnified Party harmless, then the Borrower shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by such Indemnified Party on the
one hand and Borrower on the other hand but also the relative fault of such
Indemnified Party as well as any other relevant equitable considerations.
ARTICLE XI
ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS
11.1. Designation of Servicer.
The servicing, administration and collection of the Mortgage Assets shall
be conducted by the Servicer so designated hereunder from time to time. Until
the Administrative Agent gives notice to the Borrower and the Originator of the
designation of a new Servicer after the occurrence of a Default or an Event of
Default, the Originator is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Servicer pursuant to the terms hereof. The
Administrative Agent may at any time following the occurrence of a Servicer
Default designate as Servicer any Person (including itself) to succeed the
Originator or any successor Servicer, if such Person shall consent and agree to
the terms hereof, but the Administrative Agent may not designate a new Servicer
unless there is an Event of Default. The Servicer may, with the prior consent of
the Administrative Agent, subcontract with any other Person for the servicing,
administration or collection of the Mortgage Assets. Any such subcontract shall
not affect the Servicer's liability for performance of its duties and
obligations pursuant to the terms hereof.
11.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Mortgage Asset from time to time,
all in accordance with applicable laws, rules and regulations, with care and
diligence, and in accordance with the servicing guide issued by the Governmental
Authority applicable to such Mortgage Asset or, in the case of Non-Conforming
Loans, the servicing criteria specified by the Approved Investor that has issued
a Take-Out Commitment with respect thereto. The Borrower and the Administrative
Agent hereby appoint the Servicer, from time to time designated pursuant to
Section 11.1, as agent for themselves and for the Lenders to enforce their
respective rights and interests in the Mortgage Assets and the Collections
thereof. In performing its duties as Servicer,
78
the Servicer shall exercise the same care and apply the same policies as it
would exercise and apply if it owned such Mortgage Loans and shall act in the
best interests of the Borrower and the Lenders.
(b) The Servicer shall administer the Collections in accordance
with the procedures described in Section 2.7 and shall service the Collateral in
accordance with Section 7.5.
(c) The Servicer shall hold on behalf of the Borrower and the
Lenders, in accordance with their respective interests, all books and records
(including, without limitation, computer tapes or disks) that relate to the
Mortgage Assets.
(d) The Servicer shall, as soon as practicable following
receipt, turn over to the Borrower or the Originator, as appropriate, any cash
collections or other cash proceeds received with respect to Property of the
Borrower not constituting Mortgage Assets.
(e) The Servicer shall, from time to time at the request of the
Administrative Agent, furnish to the Administrative Agent (promptly after any
such request) a calculation of the amounts held for the Lenders pursuant to
Section 2.7(c).
(f) The Servicer shall perform the duties and obligations of the
Servicer set forth in the Collateral Agency Agreement and the other Security
Instruments.
11.3. Certain Rights of the Administrative Agent.
At any time following the designation of a Servicer other than the
Originator pursuant to Section 11.1 or following an Event of Default:
(a) The Administrative Agent may direct the Obligors that all
payments thereunder be made directly to the Administrative Agent or its
designee.
(b) At the Administrative Agent's request and at the Borrower's
expense, the Borrower shall notify each Obligor of the Lien on the Mortgage
Assets and direct that payments be made directly to the Administrative Agent or
its designee.
(c) At the Administrative Agent's request and at the Borrower's
expense, the Borrower and the Servicer shall (i) assemble all of the documents,
instruments and other records (including, without limitation, computer tapes and
disks) that evidence or relate to the Mortgage Assets and Collections and
Collateral, or that are otherwise necessary or desirable to collect the Mortgage
Assets, and shall make the same available to the Administrative Agent at a place
selected by the Administrative Agent or its designee, and (ii) segregate all
cash, checks and other instruments received by it from time to time constituting
Collections in a manner acceptable to the Administrative Agent and, promptly
upon receipt, remit all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Administrative Agent or its
designee.
(d) The Borrower authorizes the Administrative Agent to take any
and all steps in the Borrower's name and on behalf of the Borrower that are
necessary or desirable, in
79
the determination of the Administrative Agent, to collect amounts due under the
Mortgage Assets, including, without limitation, endorsing the Borrower's name on
checks and other instruments representing Collections and enforcing the Mortgage
Assets and the other Collateral.
11.4. Rights and Remedies.
(a) If the Servicer fails to perform any of its obligations
under this Agreement, the Administrative Agent may (but shall not be required
to) itself perform, or cause performance of, such obligation; and the
Administrative Agent's costs and expenses incurred in connection therewith shall
be payable by the Servicer.
(b) With respect to each Mortgage Loan, the Servicer shall
follow procedures (including collection procedures) that the Servicer
customarily employs and exercises in servicing and administering mortgage loans
for its own account and that are in accordance with accepted mortgage servicing
practices of prudent lending institutions servicing mortgage loans of the same
type as the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located. The exercise by the Administrative Agent on behalf of
the Lenders of their rights under this Agreement shall not release the Servicer
from any of their duties or obligations with respect to any Mortgage Loans.
Neither the Administrative Agent, nor the Lenders shall have any obligation or
liability with respect to any Mortgage Loans, nor shall any of them be obligated
to perform the obligations of the Borrower thereunder.
(c) In the event of any conflict between the provisions of this
Article XI of this Agreement and Article VI of the Repurchase Agreement, the
provisions of this Agreement shall control.
11.5. Indemnities by the Servicer.
Without limiting any other rights that the Administrative Agent, any
Lender or any of their respective Affiliates (each, a "Special Indemnified
Party") may have hereunder or under applicable law, and in consideration of its
appointment as Servicer, the Servicer hereby agrees to indemnify each Special
Indemnified Party from and against any and all claims, losses and liabilities
(including attorneys' fees) (all of the foregoing being collectively referred to
as "Special Indemnified Amounts") arising out of or resulting from any of the
following (so long as such Special Indemnified Party provides notice to the
Servicer within 180 days of the Special Indemnified Party's actual knowledge of
such Special Indemnified Amounts) (excluding, however, (x) Special Indemnified
Amounts to the extent resulting from gross negligence (including gross
negligence in connection with any direct collection actions by the
Administrative Agent as successor servicer hereunder) or willful misconduct on
the part of such Special Indemnified Party, (y) recourse for Mortgage Assets
that are not collected, not paid or uncollectible on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor or (z) any
income taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party arising out of or as a result of this Agreement or the
Borrowings hereunder):
80
(a) any representation or warranty or statement made or deemed
made by the Servicer under or in connection with this Agreement that shall have
been incorrect in any material respect when made;
(b) the failure by the Servicer to comply in any material
respect with any applicable law, rule or regulation with respect to any Mortgage
Asset or the failure of any Mortgage Loan to conform to any such applicable law,
rule or regulation;
(c) the failure to have filed, or any delay in filing, financing
statements, Mortgages or assignments of Mortgages under the applicable laws of
any applicable jurisdiction with respect to any Mortgage Assets and the other
Collateral and Collections in respect thereof, whether at the time of any
purchase under the Repurchase Agreement or at any subsequent time;
(d) any material failure of the Servicer to perform its duties
or obligations in accordance with the provisions of this Agreement;
(e) the commingling of Collections at any time by the Servicer
with other funds;
(f) any action or omission by the Servicer, other than a
Servicer appointed by the Administrative Agent, reducing or impairing the rights
of the Administrative Agent or the Lenders with respect to any Mortgage Asset or
the value of any Mortgage Asset;
(g) any Servicer Fees or other reasonable costs and expenses
payable to any replacement Servicer, to the extent in excess of the Servicer
Fees payable to the Servicer hereunder; or
(h) any claim brought by any Person other than a Special
Indemnified Party arising from any activity by the Servicer or its Affiliates in
servicing, administering or collecting any Mortgage Asset.
ARTICLE XII
MISCELLANEOUS
12.1. Notices.
Any notice, demand or request required or permitted to be given under
or in connection with this Agreement, the Notes or the other Transaction
Documents (except as may otherwise be expressly required therein) shall be in
writing and shall be mailed by first class or express mail, postage prepaid, or
sent by telex, telegram, telecopy or other similar form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid transmission, or
personally delivered to an officer of the receiving party. With the exception of
certain administrative and collateral reports that may be directed to specific
departments of the Administrative Agent, all such communications shall be
mailed, sent or delivered to the parties hereto at their respective addresses as
follows:
81
The Borrower: CH FUNDING, LLC
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with copies of any notices of Event of
Default to:
CH MORTGAGE COMPANY I, LTD.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Issuer: ATLANTIC ASSET SECURITIZATION CORP.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Conduit Securitization
With a copy to the Administrative Agent
(except in the case of notice from the
Administrative Agent).
The Bank: CREDIT LYONNAIS NEW YORK BRANCH
Credit Lyonnais Building
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Conduit Securitization
The Administrative Agent: CREDIT LYONNAIS NEW YORK BRANCH
Credit Lyonnais Building
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telex No.: 62410
(Answerback: CRED A 62410 UW)
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Conduit Securitization
The Originator and Servicer: CH MORTGAGE COMPANY I, LTD.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
82
▇.▇. ▇▇▇▇▇▇: ▇.▇. ▇▇▇▇▇▇, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief
Financial Officer,
Assistant Treasurer
▇▇▇ ▇. Harbour, Vice President,
Assistant Secretary
or at such other addresses or to such officer's, individual's or department's
attention as any party may have furnished the other parties in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed, except with respect to notices and requests given pursuant to Sections
2.3 and 3.3. Borrowing Reports and communications related thereto shall not be
effective until actually received by the Collateral Agent, the Administrative
Agent, the Issuer or the Borrower, as the case may be; and any notice so sent by
rapid transmission shall be deemed to be given when receipt of such transmission
is acknowledged, and any communication so delivered in person shall be deemed to
be given when receipted for by, or actually received by, an authorized officer
of the Borrower, the Collateral Agent, or the Administrative Agent.
12.2. Amendments, Etc.
No amendment or waiver of any provision of this Agreement or consent to
any departure by the Borrower therefrom shall be effective unless in a writing
signed by the Majority Banks, the Administrative Agent (as agent for the Issuer)
and the Administrative Agent (and, in the case of any amendment, also signed by
the Borrower), and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, unless an amendment, waiver or consent shall be
made in writing and signed by each of the Banks and the Administrative Agent,
and each of the Rating Agencies shall confirm that any amendment will not result
in a downgrade or withdrawal of the ratings assigned to any Commercial Paper
Notes, no amendment, waiver or consent shall do any of the following:
(a) amend the definitions of Eligible Mortgage Loan, Collateral
Value, Advance Rate or Majority Banks or
(b) amend, modify or waive any provision of this Agreement in
any way that would:
(i) reduce the amount of principal or interest that is
payable on account of any Advance or delay any scheduled date for
payment thereof or
(ii) impair any rights expressly granted to an assignee or
participant under this Agreement or
83
(c) reduce the fees payable by the Borrower to the
Administrative Agent or the Lenders or delay the dates on which such fees are
payable or
(d) amend or waive the Event of Default set forth in Sections
8.1(f), (g) or (h) relating to the bankruptcy of ▇.▇. ▇▇▇▇▇▇, the Originator or
the Borrower or
(e) amend clause (a) of the definition of Drawdown Termination
Date or
(f) amend this Section 12.2;
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Servicer in addition to the other parties required
above to take such action, affect the rights or duties of the Servicer under
this Agreement. No failure on the part of the Lenders or the Administrative
Agent to exercise, and no delay in exercising, any right thereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right.
12.3. Invalidity.
In the event that any one or more of the provisions contained in the
Notes, this Agreement or any other Transaction Document shall, for any reason,
be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of such
document.
12.4. Restrictions on Informal Amendments.
No course of dealing or waiver on the part of the Administrative Agent,
the Collateral Agent, any Lender or any Affected Party, or any of their
officers, employees, consultants or agents, or any failure or delay by any such
Person with respect to exercising any right, power or privilege under the Notes,
this Agreement or any other Transaction Document shall operate as an amendment
to the express written terms of the Notes, this Agreement or any other
Transaction Document or shall act as a waiver of any right, power or privilege
of any such Person.
12.5. Cumulative Rights.
The rights, powers, privileges and remedies of each of the Lenders, the
Collateral Agent and the Administrative Agent under the Notes, this Agreement,
and any other Transaction Document shall be cumulative, and the exercise or
partial exercise of any such right, power, privilege or remedy shall not
preclude the exercise of any other right or remedy.
12.6. Construction; Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).
84
12.7. Interest.
Any provisions herein, in the Notes, or in any other Transaction
Document, or any other document executed or delivered in connection herewith, or
in any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, the Lenders shall in no event be
entitled to receive or collect, nor shall or may amounts received hereunder be
credited, so that the Lenders shall be paid, as interest, a sum greater than the
maximum amount permitted by applicable law to be charged to the Person primarily
obligated to pay such Note at the time in question. If any construction of this
Agreement, any Note or any other Transaction Document, or any and all other
papers, agreements or commitments indicate a different right given to a Lender
to ask for, demand or receive any larger sum as interest, such is a mistake in
calculation or wording that this clause shall override and control, it being the
intention of the parties that this Agreement, each Note, and all other
Transaction Documents or other documents executed or delivered in connection
herewith shall in all things comply with applicable law and proper adjustments
shall automatically be made accordingly. In the event that any of the Lenders
shall ever receive, collect or apply as interest, any sum in excess of the
maximum nonusurious rate permitted by applicable law (the "Maximum Rate"), if
any, such excess amount shall be applied to the reduction of the unpaid
principal balance of the Note held by such Lender, and if such Note is paid in
full, any remaining excess shall be paid to the Borrower. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
Maximum Rate, if any, the Borrower and each of the Lenders shall, to the maximum
extent permitted under applicable law: (a) characterize any nonprincipal payment
as an expense or fee rather than as interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) "spread" the total amount of interest
throughout the entire term of the respective Note; provided that if any Note is
paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Rate, if any, the respective Lender shall refund to the
Borrower the amount of such excess, or credit the amount of such excess against
the aggregate unpaid principal balance of all Advances made by such Lender
hereunder at the time in question.
12.8. Right of Offset.
The Borrower hereby grants to each of the Lenders and the Administrative
Agent and to any assignee or participant a right of offset, to secure the
repayment of the Obligations, upon any and all monies, securities or other
Property of the Borrower, and the proceeds therefrom now or hereafter held or
received by or in transit to such Person, from or for the account of the
Borrower, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special, time or
demand, provisional or final) and credits of the Borrower, and any and all
claims of the Borrower against such Person at any time existing. Upon the
occurrence of any Event of Default, such Person is hereby authorized at any time
and from time to time, without notice to the Borrower, to offset, appropriate,
and apply any and all items hereinabove referred to against the Obligations.
Notwithstanding anything in this Section 12.8 or elsewhere in this Agreement to
the contrary, the Administrative Agent and the Lenders and any assignee or
participant shall not have any right to offset, appropriate or apply any
accounts of the Borrower that consist of escrowed funds (except and to the
extent of any beneficial interest of the Borrower in such escrowed funds) that
have been so identified by the Borrower in writing at the time of deposit
thereof.
85
12.9. Successors and Assigns.
(a) This Agreement and the Lenders' rights and obligations
herein (including ownership of each Advance) shall be assignable by the Lenders
and their successors and assigns to any Eligible Assignee. Each assignor of an
Advance or any interest therein shall notify the Administrative Agent and the
Borrower of any such assignment.
(b) Each Bank may assign to any Eligible Assignee or to any
other Bank all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Bank Commitment and any
Advances or interests therein owned by it), provided however, that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement,
(ii) the amount being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance
Agreement with respect to such assignment) shall in no event be less
than the lesser of (x) $20,000,000 and (y) all of the assigning Bank's
Bank Commitment,
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance Agreement, together with a
processing and recordation fee of $2,500, and
(iv) concurrently with such assignment, such assignor Bank
shall assign to such assignee Bank an equal percentage of its rights and
obligations under the related Liquidity Agreement.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance Agreement, (x)
the assignee thereunder shall be a party to this Agreement and, to the extent
that rights and obligations hereunder or under this Agreement have been assigned
to it pursuant to such Assignment and Acceptance Agreement, have the rights and
obligations of a Bank hereunder and thereunder and (y) the assigning Bank shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance Agreement, relinquish such rights and
be released from such obligations under this Agreement (and, in the case of an
Assignment and Acceptance Agreement covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party thereto).
(c) The Administrative Agent shall maintain at its address
referred to in Section 12.1 a copy of each Assignment and Acceptance Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Bank Commitment of, and aggregate outstanding
principal of Advances or interests therein owned by, each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Servicer, the
Administrative Agent and the Banks may treat each person whose name is recorded
in the Register as a Bank under this Agreement for all purposes of this
Agreement. The Register shall
86
be available for inspection by the Borrower, the Servicer, the Administrative
Agent or any Bank at any time and from time to time upon prior notice.
(d) Each Bank may sell participations, to one or more banks or
other entities that are Eligible Assignees, in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Bank Commitment and the Advances or interests therein owned
by it); provided, however, that:
(i) such Bank's obligations under this Agreement
(including, without limitation, its Bank Commitment to the Borrower
thereunder) shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other
parties to this Agreement for the performance of such obligations, and
(iii) concurrently with such participation, the selling Bank
shall sell to such bank or other entity a participation in an equal
percentage of its rights and obligations under the related Liquidity
Agreement.
The Administrative Agent, the other Banks, the Servicer and the Borrower shall
have the right to continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement.
(e) The Borrower may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Administrative Agent and each Lender.
(f) The parties hereto acknowledge that Atlantic has granted to
the Atlantic Program Agent for the benefit of holders of its Commercial Paper
Notes, its liquidity banks, and certain other creditors of Atlantic, a security
interest in its right, title and interest in and to the Advances, the
Transaction Documents and the Collateral. Each reference herein or in any of the
other Transaction Documents to the Liens in the Collateral granted to Atlantic
under the Transaction Documents shall be deemed to include a reference to such
security interest of the Atlantic Program Agent.
12.10. Survival of Termination.
The provisions of Article X and Sections 2.12, 11.4, 12.14, 12.15, 12.19
and 12.21 shall survive any termination of this Agreement.
12.11. Exhibits.
The exhibits attached to this Agreement are incorporated herein and
shall be considered a part of this Agreement for the purposes stated herein,
except that in the event of any conflict between any of the provisions of such
exhibits and the provisions of this Agreement, the provisions of this Agreement
shall prevail.
87
12.12. Titles of Articles, Sections and Subsections.
All titles or headings to articles, sections, subsections or other
divisions of this Agreement or the exhibits hereto are only for the convenience
of the parties and shall not be construed to have any effect or meaning with
respect to the other content of such articles, sections, subsections or other
divisions, such other content being controlling as to the agreement between the
parties hereto.
12.13. Counterparts.
This Agreement may be executed in two or more counterparts, and it shall
not be necessary that the signatures of each of the parties hereto be contained
on any one counterpart hereof; each counterpart shall be deemed an original, but
all counterparts together shall constitute one and the same instrument.
12.14. No Proceedings.
The Borrower, the Servicer, the Administrative Agent and each Bank
hereby agrees that it will not institute against the Issuer, or join any other
Person in instituting against the Issuer, any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law so long as any Commercial Paper
Notes issued by the Issuer shall be outstanding or there shall not have elapsed
one year plus one day since the last day on which any such Commercial Paper
Notes shall have been outstanding. The foregoing shall not limit the rights of
the Borrower, the Servicer, the Administrative Agent or any Bank to file any
claim in or otherwise take any action with respect to any insolvency proceeding
that was instituted by any other Person.
12.15. Confidentiality.
The Borrower and the Servicer each hereby agrees that it will maintain
and cause its respective employees to maintain the confidentiality of this
Agreement, and the other Transaction Documents (and all drafts thereof), and
each Lender and the Administrative Agent agrees that it will maintain and cause
its respective employees to maintain the confidentiality of the Collateral and
all other non-public information with respect to the Borrower and the Servicer,
and their respective businesses obtained by such party in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
in each case except (a) as may be required or appropriate in communications with
its respective independent public accountants, legal advisors, or with
independent financial rating agencies, (b) as may be required or appropriate in
any report, statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over it, (c) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, (d) as may be required by or in order to comply with any
law, order, regulation or ruling, (e) in the case of any Bank, any Issuer or the
Administrative Agent, to any Liquidity Bank or provider of credit support to an
Issuer, any dealer or placement agent for the Issuer's commercial paper, and any
actual or potential assignee of, or participant in, any of the rights or
obligations of such Lender, or (f) in the case of any Issuer or the
Administrative Agent, to any Person whom any dealer or placement agent for the
Issuer shall have identified as an actual or potential investor in
88
Commercial Paper Notes; provided that any proposed recipient under clause (e) or
(f) shall, as a condition to the receipt of any such information, agree to
maintain the confidentiality thereof. The Issuer, Administrative Agent and Banks
acknowledge that information regarding borrowers in the Mortgage Loan Collateral
is confidential under federal and state privacy laws and regulations and agree
to observe all such laws and regulations and not to take any action that would
place the Originator, Servicer or Borrower in violation thereof.
12.16. Recourse Against Directors, Officers, Etc.
The Obligations are solely the entity obligations of the Borrower. No
recourse for the Obligations shall be had hereunder against any director,
officer, employee (in its capacity as such, and not as Servicer), trustee, agent
or any Person owning, directly or indirectly, any legal or beneficial interest
in the Borrower (in its capacity as such owner, and not as Servicer or otherwise
as a party to any Transaction Document). This Section 12.16 shall not, however,
(a) constitute a waiver, release or impairment of the Obligations, or (b) affect
the validity or enforceability of any other Transaction Document to which the
Originator, the Servicer, ▇.▇. ▇▇▇▇▇▇ or any of their Affiliates may be a party.
12.17. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, THE NOTES, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT OR DOCUMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING
IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER TRANSACTION DOCUMENT
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
12.18. Consent to Jurisdiction; Waiver of Immunities.
EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT.
89
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO
EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR
IN CONNECTION WITH THIS AGREEMENT.
12.19. Costs, Expenses and Taxes.
In addition to its obligations under Articles II and X, the Borrower
agrees to pay on demand:
(a) (i) all reasonable costs and expenses incurred by the
Administrative Agent and the Lenders, in connection with the negotiation,
preparation, execution and delivery or the administration (including periodic
auditing) of this Agreement, the Notes, the other Transaction Documents, and, to
the extent related to this Agreement, the Program Documents (including any
amendments or modifications of or supplements to the Program Documents entered
into in connection herewith), and any amendments, consents or waivers executed
in connection therewith, including, without limitation, (A) the fees and
expenses of counsel to any of such Persons incurred in connection with any of
the foregoing or in advising such Persons as to their respective rights and
remedies under any of the Transaction Documents or (to the extent related to
this Agreement) the Program Documents, and (B) all out-of-pocket expenses
(including fees and expenses of independent accountants) incurred in connection
with any review of the books and records of the Borrower or the Servicer either
prior to the execution and delivery hereof or pursuant to Section 6.8, and (ii)
all costs and expenses incurred by the Administrative Agent and the Lenders, in
connection with the enforcement of, or any breach of, this Agreement, the Notes,
the other Transaction Documents and, to the extent related to this Agreement,
the Program Documents (including any amendments or modifications of or
supplements to the Program Documents entered into in connection herewith),
including, without limitation, the fees and expenses of counsel to any of such
Persons incurred in connection therewith; and
(b) all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing and recording of
this Agreement, the Notes, the other Transaction Documents or (to the extent
related to this Agreement) the Program Documents, and agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
12.20. Entire Agreement.
THE NOTES, THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS EXECUTED
AND DELIVERED AS OF EVEN DATE HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES HERETO AND THERETO ANY MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
90
12.21. Excess Funds.
The Issuer shall not be obligated to pay any amount pursuant to this
Agreement unless the Issuer has excess cash flow from operations or has received
funds with respect to such obligation which may be used to make such payment and
which funds or excess cash flow are not required to repay when due its
Commercial Paper Note or other short term funding backing its Commercial Paper
Notes. Any amount which the Issuer does not pay pursuant to the operation of the
preceding sentence shall not constitute a claim, as defined in Section 101(5) of
the United States Bankruptcy Code, against the Issuer for any such insufficiency
unless and until the Issuer does have excess cash flow or excess funds.
91
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BORROWER CH FUNDING, LLC
By: /s ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ISSUER ATLANTIC ASSET SECURITIZATION CORP.
By: Credit Lyonnais New York Branch, as
Attorney-in-Fact
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADMINISTRATIVE AGENT CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BANK CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SERVICER CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[CH Mortgage Loan Agreement]
SCHEDULE I
BANK COMMITMENTS AND PERCENTAGES
Bank Bank Commitment Bank Commitment
---- --------------- Percentage
----------
CREDIT LYONNAIS NEW YORK BRANCH $100,000,000 100%
I-1
[CH Mortgage Loan Agreement]
SCHEDULE II
APPROVED INVESTORS
------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇'▇ Investors Service, Equivalent Long-Term Ratings Applicable Concentration Limit
------------------------------------------------------------------------------------------------------------------------
Long-Term Short-Term
--------- ----------
------------------------------------------------------------------------------------------------------------------------
Aaa through A1 P-1 Not applicable
------------------------------------------------------------------------------------------------------------------------
A2 through Baa1 P-2 Not applicable
------------------------------------------------------------------------------------------------------------------------
Baa2 through Baa3 P-3 Not applicable
------------------------------------------------------------------------------------------------------------------------
Below Baa3 Below P-3 25%
------------------------------------------------------------------------------------------------------------------------
Not Rated by Moody's Not Rated 10%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Standard & Poor's Equivalent Long-Term Ratings
------------------------------------------------------------------------------------------------------------------------
Long-Term Short-Term
--------- ----------
------------------------------------------------------------------------------------------------------------------------
AAA through AA- A-1+ Not applicable
------------------------------------------------------------------------------------------------------------------------
A+ A-1 Not applicable
------------------------------------------------------------------------------------------------------------------------
A through BBB+ A-2 Not applicable
------------------------------------------------------------------------------------------------------------------------
BBB through BBB- A-3 Not applicable
------------------------------------------------------------------------------------------------------------------------
Below BBB- Below A-3 25%
------------------------------------------------------------------------------------------------------------------------
Not Rated by S&P Not Rated 10%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Fitch's Equivalent Long-Term Ratings
------------------------------------------------------------------------------------------------------------------------
Long-Term Short-Term
--------- ----------
------------------------------------------------------------------------------------------------------------------------
AAA through AA- F1+ Not applicable
------------------------------------------------------------------------------------------------------------------------
A+ F1 Not applicable
------------------------------------------------------------------------------------------------------------------------
A through BBB+ F2 Not applicable
------------------------------------------------------------------------------------------------------------------------
BBB through BBB- F3 Not applicable
------------------------------------------------------------------------------------------------------------------------
Below BBB- Below F3 25%
------------------------------------------------------------------------------------------------------------------------
Not Rated by Fitch Not Rated 10%
------------------------------------------------------------------------------------------------------------------------
If rating is split, the lower rating will apply.
If only one agency provides a rating, the rating will apply,
II-1
[CH Mortgage Loan Agreement]
--------------------------------------------------------------------------------------------------------------------
Investor Name Concentration Fitch rating ▇▇▇▇▇'▇ rating S&P rating
Limit
--------------------------------------------------------------------------------------------------------------------
Bank of America Mortgage (formerly
Nationsbanc Mortgage Corp.) N/A AA-/F1+ Aa3/P-1 A+/A1
Charter Mortgage ▇/▇ ▇-/▇▇ ▇-▇/▇-▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mortgage Corporation N/A AA- AA2/P-1 AA-/A-1+
Countrywide N/A A/F1 A3/P-2 A/A1
Federal National Mortgage Association N/A NR Aaa/P-1 AAA
First Union Mortgage Corporation N/A A+/F-1 (Natio Bank) A1/P-1 A/A1
Fleet Mortgage group N/A A+/F1 A2 A+
GMAC Mortgage N/A NR NR AAA
Greenpoint Mortgage (formerly Headlands
Mortgage) N/A BBB/F2 Baa2 BBB/A-2
Homeside Lending Inc. ▇/▇ ▇▇-/▇▇▇ ▇▇/▇-▇ ▇▇▇/▇▇
National City Mortgage N/A F1+ Aa3/P-1 A
Novastar 10% NR NR NR
PHH Mortgage Service N/A A/F1 Baa1/P-2 A-/A-2
Principle Residential Mortgage ▇/▇ ▇▇ ▇-▇ ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇/▇ AA-/F1+ AA3/P-1 AA-/A-1+
▇▇▇▇▇ Fargo N/A AA/F1+ AA2/P-1 A+/A-1
Colorado Housing and Finance Authority 10% NR NR NR
First Bank of Arizona 10% NR NR NR
First Nationwide Mortgage Corporation 10% NR NR NR
Guaranty Federal 10% NR NR NR
Leader Mortgage Corp. 10% NR NR NR
Ohio Savings Financial Corp. (Ohio Savings
Bank) 10% NR NR NR
Option 1 10% NR NR
Resource Bankshare Mortgage 10% ▇▇
▇▇▇▇▇▇▇ Capital 10% NR NR NR
--------------------------------------------------------------------------------------------------------------------
II-2
[CH Mortgage Loan Agreement]
SCHEDULE III
UCC SEARCH
No Exceptions.
III-1
[CH Mortgage Loan Agreement]
SCHEDULE IV
LITIGATION
None.
IV-1
[CH Mortgage Loan Agreement]
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ________, 20__
Reference is made to the Loan Agreement dated as of July 9, 2002 (the
"Loan Agreement"), among CH FUNDING, LLC, a Delaware limited liability company
(hereinafter, together with its successors and assigns, the "Borrower"),
ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (hereinafter,
together with its successors and assigns, "Atlantic"), CREDIT LYONNAIS NEW YORK
BRANCH ("CL New York"), as a Bank and the Administrative Agent, and CH MORTGAGE
COMPANY I, LTD., a Texas limited partnership (hereinafter, together with its
successors and assigns, "CH Mortgage"), as Servicer.
_______________ (the "Assignor") and ________________ (the "Assignee")
agree as follows:
1. Purchase and Sale of Interest. The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to all of the Assignor's rights and obligations as
a Bank under the Loan Agreement as of the date hereof equal to the Percentage
specified on the signature page hereto of all outstanding rights and obligations
of all Banks under the Loan Agreement. After giving effect to such sale and
assignment, the Assignee's Bank Commitment and the principal amount of Advances
held by the Assignee will be as set forth in Section 2 of the signature page
hereto.
2. Representations and Disclaimers of Assignor. The Assignor
(1) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim;
(2) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto; and
(3) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower,
the Originator, or the Servicer or the performance or observance by the
Borrower, the Originator, or the Servicer of any of its respective
obligations under the Loan Agreement or any other instrument or document
furnished pursuant thereto.
3. Representations and Agreements of Assignee. The Assignee
(1) confirms that it has received a copy of the Loan Agreement,
together with copies of the most recent financial statements referred to
in Section 6.1 thereto and such
A-1
[CH Mortgage Loan Agreement]
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and
Acceptance;
(2) agrees that it will, independently and without reliance upon
the Administrative Agent or the Assignor and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Loan
Agreement;
(3) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Agreement as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
(4) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Agreement are required
to be performed by it as a Bank;
(5) specifies as its address for notices the office set forth
beneath its name on the signature pages hereof;
(6) represents that this Assignment and Acceptance has been duly
authorized, executed and delivered by such Assignee pursuant to its
corporate powers and constitutes the legal, valid and binding obligation
of such Assignee; and
(7) if the Assignee is organized under the laws of a jurisdiction
outside the United States, (a) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Loan Agreement or such other documents as are
necessary to indicate that all such payments are subject to such taxes
at a rate reduced by an applicable tax treaty, and (b) agrees to provide
the Administrative Agent (to the extent permitted by applicable law)
with similar forms for each subsequent tax year of the Assignee in which
payments are to be made to the Assignee under the Loan Agreement.
4. Effectiveness of Assignment. (a) Following the execution of this
Assignment and Acceptance by the Assignor and the Assignee, counterparts will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. The effective date of this Assignment and Acceptance shall
be the date of acceptance thereof by the Administrative Agent, unless otherwise
specified in Section 3 of the signature page hereto (the "Effective Date").
(1) Upon such acceptance and recording by the Administrative Agent as
of the Effective Date, (i) the Assignee shall be a party to the Loan Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Agreement.
A-2
[CH Mortgage Loan Agreement]
(2) Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Loan Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Loan Agreement for periods prior
to the Effective Date directly between themselves.
5. Obligations of the Assignee, Including Confidentiality. The Assignee
agrees to abide by any obligations set forth in the Loan Agreement on the part
of the Bank including, without limitation, the obligations as to confidentiality
set forth in Section 12.15 of the Loan Agreement.
6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF
THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).
[Signatures Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on the
signature page hereto.
Section 1.
Percentage:/2/ ______%
Section 2.
Assignee's Bank Commitment: $______
Aggregate principal amount of
Advances held by
the Assignee: $______
Section 3.
Effective Date:/3/ _______, 20__
------------------
/2/ This percentage must be the same percentage as for the Assignee under
its Liquidity Agreement.
/3/ This date should be no earlier than the date of acceptance by the
Administrative Agent.
A-3
[CH Mortgage Loan Agreement]
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:__________________________ By:__________________________
Title: Title:
A-4
[CH Mortgage Loan Agreement]
EXHIBIT B
FORM OF SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Subordination Agreement") is
entered into as of July ___, 2002, by ▇.▇. ▇▇▇▇▇▇, INC., a Delaware corporation
("▇.▇. ▇▇▇▇▇▇"), in favor of CH FUNDING, LLC, a Delaware limited liability
company, ("Borrower") and CREDIT LYONNAIS NEW YORK BRANCH, as administrative
agent (the "Administrative Agent") under the Loan Agreement referred to below.
RECITALS
A. CH MORTGAGE COMPANY I, LTD., a Texas limited partnership ("CH
Mortgage") (the "Originator") and Borrower have entered into a Master Repurchase
Agreement dated as of June ___, 2002 (as amended or restated from time to time,
the "Repurchase Agreement") pursuant to which the Originator may sell to
Borrower, and Borrower may acquire from the Originator, certain Mortgage Loans
and pursuant to which the Originator may repurchase those Mortgage Loans.
B. Borrower has entered into a Loan Agreement dated as of June ___,
2002 (as amended or restated from time to time, the "Loan Agreement") with the
Administrative Agent and the Banks party thereto, and CH Mortgage, as Servicer,
(in such capacity, the "Servicer"), pursuant to which, and subject to the terms
of which, the Lenders have agreed to make loans to the Borrower secured by
Mortgage Loans and other collateral, and CH Mortgage has agreed to provide
certain administration and collection services.
C. It is a condition precedent to the initial purchase under the
Repurchase Agreement and the initial loan under the Loan Agreement that the
Companies (as defined herein) shall have entered into this Agreement, pursuant
to which all existing and future obligations, except for certain excluded
obligations, of the Originator to ▇.▇. ▇▇▇▇▇▇ or to any Affiliate of ▇.▇. ▇▇▇▇▇▇
or the Originator other than Borrower is subordinated to certain obligations of
the Originator under the Repurchase Agreement and of the Servicer under the Loan
Agreement.
AGREEMENTS
In consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Companies hereby covenant and agree with Borrower and the Administrative Agent
as follows:
1. Terms defined in the Repurchase Agreement or the Loan Agreement have
the same meanings when used in this Subordination Agreement, except that, solely
for the purpose of this Subordination Agreement, the term "Affiliate", when used
in connection with ▇.▇. ▇▇▇▇▇▇, the Companies or the Originator, shall not
include Borrower. As used in this Subordination Agreement:
"Companies" means ▇.▇. ▇▇▇▇▇▇ and any Affiliate of ▇.▇. ▇▇▇▇▇▇ (other
than the Borrower) to which the Originator owes or may owe in the future
any Subordinated Debt.
B-1
[CH Mortgage Loan Agreement]
"Excluded Obligations" means all indebtedness of the Originator to
▇.▇. ▇▇▇▇▇▇ or any Affiliate of the Originator, incurred in the ordinary
course of the Originator's business related to (a) the Originator's payroll
and operating expenses, (b) insurance premiums on policies held by the
Originator, (c) information technology, (d) human resources, (e) the
management fee payable by Originator to ▇.▇. ▇▇▇▇▇▇, (f) office rent and
utility, maintenance and operating costs related to occupancy, (g) real
estate transaction settlement costs paid or advanced by Originator, (h) use
of trade names, trade marks, trade dress, patents, copyrights or other
intellectual property licensed to Originator and (i) the processing or
closing of applications for residential mortgage loans or any mortgage loan
brokerage fee payable by the Originator to ▇.▇. ▇▇▇▇▇▇ or an Affiliate;
provided that any indebtedness in clauses (a) through (i) will cease to be
an Excluded Obligation ninety days after the origination of such
indebtedness unless paid or satisfied by setoff or otherwise.
"Senior Debt" means all obligations for the payment of money which are
or may become due and owing by (a) the Originator under the Repurchase
Agreement, whether for repurchase prices, fees, expenses (including counsel
fees), indemnified amounts or otherwise or (b) the Servicer under the Loan
Agreement, whether for the deposit of collections received by it or for
fees, expenses (including counsel fees), indemnified amounts or otherwise.
"Subordinated Debt" means all present and future indebtedness for
borrowed money, liabilities or obligations of the Originator to ▇.▇. ▇▇▇▇▇▇
or to any Affiliate of the Originator, the Companies or ▇.▇. ▇▇▇▇▇▇, except
for Excluded Obligations, whether (i) principal, interest (before or after
the beginning of any proceedings under any Debtor Law), premium, court
costs, attorneys' fees, or other costs of collection, (ii) direct,
indirect, fixed, contingent, liquidated, unliquidated, joint, several, or
joint and several, (iii) created directly or acquired by assignment or
otherwise, or (iv) whether or not evidenced in writing.
"Senior Liens" means all present and future security interests and
liens, if any, directly or indirectly securing any Senior Debt.
"Subordinated Liens" means all present and future security interests
and liens, if any, directly or indirectly securing any Subordinated Debt.
2. Until the Facility Termination Date under the Repurchase Agreement
and the Drawdown Termination Date under the Loan Agreement have expired and the
Senior Debt has been paid in full, all Subordinated Debt and the proceeds of all
Subordinated Liens are hereby subordinated to all Senior Debt and the proceeds
of all Senior Liens as provided in this Subordination Agreement. For purposes
hereof, Senior Debt shall not be deemed paid in full unless it has been paid in
full for more than 366 days and such payment is final and indefeasible and not
subject to rescission or setting aside for any reason whatsoever.
(a) Unless a Default or an Event of Default under the Repurchase
Agreement or (so long as the Originator is the Servicer) a Servicer Default
(each, a "Senior Debt
B-2
[CH Mortgage Loan Agreement]
Default") is continuing, the Companies may receive payments of principal on
Subordinated Debt, and interest accruing on Subordinated Debt at a
reasonable market rate as agreed upon between the Originator and the
Companies.
(b) While a Senior Debt Default is continuing, the Companies may not
receive any payment directly or indirectly related to any Subordinated Debt
or proceeds of any Subordinated Lien.
3. ▇.▇. ▇▇▇▇▇▇ agrees that (a) all existing and future obligations,
except for Excluded Obligations, of any nature owed or owing by the Originator
to any Affiliates of the Originator or ▇.▇. ▇▇▇▇▇▇ shall also be Subordinated
Debt and (b) it will cause each such Affiliate that may provide credit to, or
otherwise have obligations, except for Excluded Obligations, owing to it by, the
Originator to subordinate its rights of repayment and security therefor to the
rights of the Senior Debt holders, and the priorities and rights of the Senior
Liens, as herein provided, the same as if each such Affiliate was a party to
this Subordination Agreement in like capacity to that of ▇.▇. ▇▇▇▇▇▇, and for
such purpose each reference to ▇.▇. ▇▇▇▇▇▇ in this Agreement (other than this
paragraph 3) shall be deemed to refer to such Affiliate. Nothing herein shall
require ▇.▇. ▇▇▇▇▇▇ to obtain separate documents from its Affiliates agreeing to
subordinate except as may be required for ▇.▇. ▇▇▇▇▇▇ to perform its obligation
to cause its Affiliates to subordinate all existing and future obligations,
except Excluded Obligations, upon a Senior Debt Default.
4. To the extent of the subordination provided in paragraph 2 above, if
any payment or distribution of assets or securities of the Originator of any
kind or character, whether in cash, property or securities, is made or to be
made upon any (a) dissolution or winding up of Originator or (b) total or
partial liquidation of Originator or (c) reorganization of the Originator, any
one of which results in an Event of Default under the Loan Agreement, not timely
cured, if applicable, that permits the acceleration or results in the
acceleration of the payment of Senior Debt, then the provisions of this
paragraph 4 shall apply. Further, this paragraph 4 shall apply whether such
dissolution and winding up, liquidation or reorganization is voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings. If
an event triggers the application of this paragraph 4, then and in any such
event, all principal of and interest then due upon all Senior Debt, whether or
not the Senior Debt is then due or matured, shall first be paid in full, or full
payment thereof provided for in money or money's worth, before a Company, or any
trustee or receiver acting on its or their behalf, shall be entitled to receive
any assets or securities other than (a) shares of stock ("Stock") of the
Originator as reorganized or readjusted or (b) securities ("Subordinated
Securities") of the Originator or any other corporation provided for by a plan
of reorganization or readjustment, junior to (or the payment of which is
subordinated by a written instrument in form and substance satisfactory to and
approved in writing by Borrower and the Administrative Agent, to the payment
of), all Senior Debt which may at the time be outstanding or contemplated, in
payment of, partial or complete compensation for or otherwise in respect of any
of the Subordinated Debt. Upon any such dissolution, winding up, liquidation or
reorganization, any payment or distribution of assets or securities of the
Originator of any kind or character, whether in cash, properties or securities
(other than as aforesaid) which, but for the provisions of this paragraph 4,
would then be made to the Companies or any Affiliate of the Companies shall, to
the extent of the subordination provided in paragraph 2 above, instead be made
by the Originator or by any receiver, trustee in bankruptcy,
B-3
[CH Mortgage Loan Agreement]
liquidating trustee, agent or other person making such payment or distribution,
directly to the holder or holders of Senior Debt, or their representatives, to
the extent necessary to pay all Senior Debt in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
5. If any Company or any Affiliate of the Companies or anyone else acting
on its or their behalf shall receive any payment or distribution of assets or
securities of the Originator of any kind or character, or for the Originator,
whether in cash, property or securities (other than Stock or Subordinated
Securities) before all Senior Debt is paid in full or full payment thereof is
provided for in money or money's worth to the satisfaction of Borrower and the
Administrative Agent, then and in that event, to the extent of the subordination
provided in paragraph 2 above, the recipient of such assets or securities of the
Originator so paid or distributed shall pay over and deliver all such payments
and distributions forthwith to the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person responsible for making payment or distribution of
assets or securities of the Originator, who shall then pay or distribute such
assets or securities to the holders of the Senior Debt for application to the
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Debt. Each Company or anyone
else acting in its behalf will not be required to pay over and deliver any sums
paid to or for the benefit of such Company to the extent that such payments or
distributions were permitted, at the time paid or distributed, under
subparagraph 2(a).
6. Each Company hereby, unconditionally and irrevocably, waives and
releases any and all rights which it now has or may hereafter acquire to be
subrogated to the rights of the holders of the Senior Debt or to receive
payments or distributions of assets or securities of the Originator applicable
to the Senior Debt and to any of the Senior Liens, either before or after all
obligations to the holders of the Senior Debt shall be paid in full, although no
such payments or distributions applicable to Senior Debt shall (as between the
Originator, its creditors other than holders of the Senior Debt and the
Companies) be deemed to be a payment by the Originator to or on account of its
obligations to the Companies or any Affiliate of the Companies. The provisions
of this paragraph 6 are (and are intended solely) for the purpose of defining
the relative rights of the Companies or any Affiliate of the Companies, on the
one hand, and the holders of Senior Debt, on the other hand, and nothing
contained in this paragraph 6 or elsewhere in this Agreement is intended to
impair, or shall impair, as between the Originator and the Companies or any
Affiliate of the Companies, the obligations of the Originator to the Companies
or any Affiliate of the Companies or to affect (except to the extent
specifically provided above in this paragraph 6) the relative rights of the
Companies, the Affiliates of the Companies and creditors of the Originator other
than the holders of Senior Debt. Nothing herein contained shall prevent the
Companies or any Affiliate of the Companies from exercising all remedies
otherwise permitted by applicable law, upon default under the Originator's
obligations to the Companies or the Affiliates of the Companies, subject to the
rights under this Subordination Agreement of the holders of Senior Debt in
respect of assets or securities of the Originator of any kind or character,
whether cash, property or securities, received upon the exercise of any such
remedy.
7. Before the time of the occurrence of any Senior Debt Default, the
Companies and the Affiliates of the Companies shall have the right to receive
and retain payments on Subordinated Debt to the extent provided in paragraph 2
hereof; however, automatically and
B-4
[CH Mortgage Loan Agreement]
without any requirement for notice or any other action by Borrower or the
Administrative Agent, from and after the occurrence of any Senior Debt Default
and until Borrower and the Administrative Agent shall have declared in writing
that such Senior Debt Default has been cured or waived or ceased to exist or
that the Senior Debt has been fully paid and satisfied, no payment shall be
made, directly or indirectly, by the Originator or with any of its funds, or
accepted by such Company or any Affiliate of such Company on, against or on
account of any of the Subordinated Debt, and no remedies against the Originator
or any of its property or interests shall be enforced by or for the account of
such Company or any Affiliate of such Company on account of any Subordinated
Debt.
8. From and after the date of maturity (however it may occur or be
brought about), and until such Senior Debt so matured shall have been fully paid
and satisfied, all of such matured Senior Debt shall first be paid in full
before any payment or distribution is made by Originator or accepted by the
Companies or any Affiliate of the Companies on, against or on account of any
Subordinated Debt and before any remedy against either Originator or any of its
property or interests may be enforced on account of the Subordinated Debt.
Nothing herein requires the payment in full of maturing tranches of Senior Debt
as a condition to the payment of Originator's costs in the ordinary course so
long as the maturing tranche of debt will be paid timely and in the ordinary
course.
9. The subordination provided for in this Subordination Agreement is
unconditional, and no right of any present or future holder of any Senior Debt
to enforce subordination as herein provided shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the
Originator or the Companies or any Affiliate of the Companies or by any act or
failure to act by any holder of any Senior Debt or Borrower or the
Administrative Agent or by any noncompliance by the Originator or the Companies
or any Affiliate of the Companies with the terms, provisions and covenants of
the Transaction Documents, regardless of any knowledge thereof any such holder
might have or be chargeable or charged with. The obligations of the Companies
are unconditional irrespective of the validity or enforceability or
collectability of the Senior Debt or any other circumstance whatsoever which
might constitute a legal or equitable defense of a guarantor or of the Companies
hereunder, any and all such defenses being hereby expressly waived by the
Companies.
10. Borrower or the Administrative Agent or any other holder of Senior
Debt may, at any time without the consent of or notice to the Companies or any
other holder of Subordinated Debt, without incurring responsibility to the
Companies or such other holder of Subordinated Debt, without impairing or
releasing the terms or obligations of this Subordination Agreement, upon or
without any terms or conditions and in whole or in part:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, renew, increase or alter any Senior Debt and the
subordinations herein made and provided for shall apply to the Senior Debt
as so changed, extended, increased, renewed or altered in any manner;
(2) sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property at any time pledged or
mortgaged to secure or securing the Senior Debt or any offset against any
Senior Debt;
B-5
[CH Mortgage Loan Agreement]
(3) exercise, delay exercising or refrain from exercising any rights
against the Originator or others, or otherwise act or refrain from acting;
(4) settle or compromise any Senior Debt.
Notwithstanding any provision hereof to the contrary, or any prior
termination hereof, this Agreement and the obligations of the Companies
hereunder shall be automatically reinstated if at any time any payment,
settlement or compromise of any of the Senior Debt is rescinded, set aside or
vacated by a Governmental Authority or required to be returned or repaid to the
Originator or any Person on its behalf for any reason whatsoever. No delay on
the part of Borrower, the Administrative Agent or any other holder of Senior
Debt in exercising any right under this or any other agreement, including the
Transaction Documents, or failure to exercise any such right shall operate as a
waiver of such right. In no event shall any modification or waiver of the
provisions of this Subordination Agreement be effective unless in writing, nor
shall any such waiver be applicable except in the specific instance for which it
may be given.
Each Company, for itself and all other present and future holders of
Subordinated Debt (including, without limitation, Subordinated Debt held or
originated by Affiliates of the Originator other than such Company), agrees to
execute and deliver to Borrower, the Administrative Agent and to any other
holder or holders of Senior Debt requesting it, such further instruments, and to
take such other action, as may be necessary or appropriate in the reasonable
opinion of Borrower, the Administrative Agent or such other holder or holders of
Senior Debt, and upon request of Borrower, the Administrative Agent or such
other holder or holders, to fully effectuate the subordinations provided for in
this Subordination Agreement and in accordance with its terms.
11. This Subordination Agreement shall bind and benefit the parties hereto
and their respective successors, custodians, receivers, trustees and assigns,
and the provisions of this Subordination Agreement shall be enforceable by
Borrower, the Administrative Agent or directly by the holders of Senior Debt.
Borrower (and any assignee of Borrower) may at any time assign any and all of
its rights hereunder to any other person or entity holding an interest in the
Senior Debt without the consent of any of the Companies, whereupon (i) each
reference herein to Borrower shall mean and be a reference to such assignee and
(ii) such assignee may enforce this Subordination Agreement to the fullest
extent as if it were a named party hereto. Without limiting the generality of
the foregoing, each Company acknowledges and consents to the assignment by
Borrower, under and in connection with the Loan Agreement, of all of Borrower's
right, title and interest in, to and under this Subordination Agreement to the
Administrative Agent for the benefit of the Lenders, and each Company agrees
that at all times that the Loan Agreement shall be in effect (i) any claim made
by Borrower hereunder shall be deemed made for the benefit of the Administrative
Agent and the Lenders and (ii) any payment or remittance to be made hereunder by
any Company in respect of any claim being made by or in respect of Borrower or
Senior Debt due to Borrower under the Repurchase Agreement shall be paid or
remitted to the Administrative Agent for the benefit of the Lenders.
12. THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF,
B-6
[CH Mortgage Loan Agreement]
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
WHICH SHALL APPLY HERETO). Neither acceptance nor execution of this
Subordination Agreement by Borrower, the Administrative Agent or any holder of
Senior Debt shall be necessary to cause this Subordination Agreement to be or
remain in full force and effect from and after the date of its execution and
delivery by the Companies to Borrower and the Administrative Agent, and each
Company's obligations under this Subordination Agreement are unconditional. This
Subordination Agreement may not be revoked or amended except by an instrument in
writing executed by each Company, Borrower and the Administrative Agent. Any
holder of Senior Debt may at any time and without notice waive in whole or in
part any provision of this Subordination Agreement as to all or part of the
Senior Debt held by such holder (but may not affect or impair the rights of any
other holder of Senior Debt), but no such waiver shall be effective unless
expressly stated in a writing signed by such holder.
13. THIS SUBORDINATION AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
14. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK
AND BY EXECUTION AND DELIVERY OF THIS SUBORDINATION AGREEMENT, EACH OF THE
PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION WITH RESPECT TO THIS
SUBORDINATION AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN
CONNECTION WITH THIS SUBORDINATION AGREEMENT.
B-7
[CH Mortgage Loan Agreement]
15. The Administrative Agent agrees and acknowledges that neither the
Administrative Agent nor the Lenders that are parties to the Loan Agreement, nor
any successors or assigns or their successors or assigns have direct or indirect
Recourse to the Companies (other than the Originator or the Borrower) with
respect to the Senior Debt. "Recourse", as used in this paragraph 15, means the
right to demand payment of the Senior Debt as a matter of contract law, but does
not include any claims that sound in tort.
B-8
[CH Mortgage Loan Agreement]
EXECUTED as of the date first stated in this Subordination Agreement.
▇.▇. ▇▇▇▇▇▇, INC.
By:___________________________
Name:______________________
Title:_____________________
Acknowledged and agreed to
as of the date first written above:
CH FUNDING, LLC
By:_________________________
Name:____________________
Title:___________________
CREDIT LYONNAIS NEW YORK BRANCH
By:_________________________
Name:____________________
Title:___________________
B-9
[CH Mortgage Loan Agreement]
ASSIGNMENT OF SUBORDINATION AGREEMENT
The undersigned hereby assigns all of its right, title and interest in and
to the foregoing Subordination Agreement to Credit Lyonnais New York Branch, in
its capacity as administrative agent (the "Administrative Agent") for the
"Lenders" under and as defined in that certain Loan Agreement dated as of July
___, 2002 by and among ▇.▇. ▇▇▇▇▇▇ Funding, Inc. ("Borrower"), certain Banks,
parties thereto, the Issuer, the Administrative Agent and CH Mortgage, as
servicer thereunder, as the same may be amended, restated, supplemented or
otherwise modified from time to time. ▇.▇. ▇▇▇▇▇▇ Corporation ("▇.▇. ▇▇▇▇▇▇"),
for itself and on behalf of the other Companies, acknowledges such assignment
and agrees that the Administrative Agent may further assign, without notice, its
right, title and interest in and to the Subordination Agreement without consent
of any person or entity. The Administrative Agent, as the assignee of Borrower,
shall have the right to enforce the Subordination Agreement and to directly
exercise all of Borrower's rights and remedies under the Subordination
Agreement, and ▇.▇. ▇▇▇▇▇▇ agrees to cooperate fully with the Administrative
Agent in the exercise of such rights and remedies thereunder.
B-10
[CH Mortgage Loan Agreement]
Dated as of: July ___, 2002
▇.▇. ▇▇▇▇▇▇, INC.
By:_____________________________
Name:________________________
Title:_______________________
Acknowledged and agreed to
as of the date first written above:
CH FUNDING, LLC
By:____________________________________
Name:_______________________________
Title:______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Name:_______________________________
Title:______________________________
B-11
[CH Mortgage Loan Agreement]
EXHIBIT C
FORM OF BORROWING REPORT
TO: CREDIT LYONNAIS NEW YORK BRANCH as Administrative Agent under the
Loan Agreement referred to below
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
U.S. BANK NATIONAL ASSOCIATION, as the Collateral Agent for the
Lenders under the Loan Agreement referred to below
1. CH FUNDING, LLC hereby requests the following Borrowing or
Collateral Substitution (the "Requested Borrowing") in the amount
and on the Borrowing Date herein specified, pursuant to the Loan
Agreement (the "Loan Agreement") dated as of July 9, 2002 among CH
FUNDING, LLC, a Delaware limited liability company (hereinafter,
together with its successors and assigns, the "Borrower"),
ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation
(hereinafter, together with its successors and assigns,
"Atlantic"), CREDIT LYONNAIS NEW YORK BRANCH ("CL New York"), as a
Bank and the Administrative Agent, and CH MORTGAGE COMPANY I,
LTD., a Texas limited partnership (hereinafter, together with its
successors and assigns, "CH Mortgage"), as Servicer. Capitalized
terms used and not otherwise defined herein have the meanings
given thereto in the Loan Agreement.
2. Type of Request:
[_] Borrowing, as described in Schedule I.
[_] Collateral Substitution, as described in Schedule I.
3. The undersigned officer of the Borrower hereby represents and
certifies, and the undersigned officer of the Servicer hereby
confirms, for the benefit of the Lenders and the Agent that after
giving effect to the Requested Borrowing/Substitution as described
above, and detailed in the attached Schedule I:
(a) Maximum Facility Amount is $___________
(b) Total Principal Debt is $___________
(c) Availability is $___________
(d) Primary Obligations is $___________
(e) Collateral Value is $___________
4. The undersigned officer of the Borrower hereby represents and
warrants, and the undersigned officer of the Servicer hereby
confirms, for the benefit of the Lenders and the Agent, that:
(1) The Borrower is entitled to receive the Requested
Borrowing under the terms and conditions of the Loan
Agreement (and pursuant to the Assignment, if any,
C-1
executed in connection herewith, the Borrower grants to the
Administrative Agent a security interest in the Collateral
described in such Assignment);
(2) (i) if the Requested Borrowing is not a Special Borrowing, all
Principal Mortgage Documents required under Section 3.2(b) of the
Loan Agreement and that relate to the Mortgage Loans identified on
Schedule II to the Assignment, if any, executed in connection
herewith have been delivered to the Collateral Agent, and (ii) if
the Requested Borrowing is a Special Borrowing, either (A) all
such documents that relate to Schedule III to the Assignment shall
be delivered to the Collateral Agent within 9 Business Days after
the Borrowing Date set forth in item 1(c) above, as required under
Section 2.3(c) of the Loan Agreement, or (B) the Principal Debt
that has been borrowed against such Mortgage Loans shall be repaid
in full as and to the extent required under Section 2.3(d) of the
Loan Agreement;
(3) all Mortgage Loans, Principal Mortgage Documents and Other
Mortgage Documents in which the Administrative Agent is granted a
security interest pursuant to the Assignment, if any, in
connection herewith, comply in all respects with the applicable
requirements set forth in the Loan Agreement and the Security
Agreement;
(4) at all times relevant to this Agreement, total Collateral Value
attributable to the types or categories of Collateral referred to
in the definition of Collateral Value has not, and does not now,
exceed the limitations established in such definition;
(5) no Default or Event of Default has occurred or is continuing;
(6) no change or event that constitutes a Material Adverse Effect as
to the Borrower has occurred;
(7) If at any time the total Collateral Value of all Eligible Mortgage
Collateral is less than the Primary Obligations, the Borrower
either provided additional Eligible Mortgage Collateral with a
sufficient Collateral Value or paid Principal Debt in an amount
sufficient to correct the deficiency within two Business Days
after notice.
5. The representations and warranties of the Borrower and the Servicer
contained in the Loan Agreement and those contained in each other
Transaction Document to which the Borrower or the Servicer is a party
are true and correct in all material respects on and as of the date
hereof.
6. All of the conditions applicable to the Requested Borrowing pursuant to
Section 4.2 of the Loan Agreement are and will be satisfied immediately
before and after giving effect to the Requested Borrowing.
C-2
[CH Mortgage Loan Agreement]
CH FUNDING, LLC,
as the Borrower
Date: ___________________ By: _______________________________
Name: _____________________________
Title: ____________________________
CH MORTGAGE COMPANY I, LTD.
as the Servicer
Date: ___________________ By: CH MORTGAGE COMPANY GP, INC.,
its General Partner
By:
Name: _____________________________
Title: ____________________________
C-3
[CH Mortgage Loan Agreement]
SCHEDULE I
I. Change in Borrowings Requested
------------------------------
---------------------------------------------------------------------------
Current Prior Unmatured Borrowings in Place
---------------------------------------------------------------------------
(1) Amt of Borrowings (maturing) - - -
------------ ------------ ------------
(2) New Borrowing requested - - -
------------ ------------ ------------
(3) Borrowing or Substitution Date
-----------------------------------------------------------------------
(4) Int. Period Maturity/Term (days)
-----------------------------------------------------------------------
-------------------
Jumbo
-----------------------------------------------------------------------
Total Conforming Alt A Sub Prime All Super Only
---------------------------------------------------------------------------
(5) Maximum Facility Amount/Sublimits 100,000,000 100,000,000 15,000,000 5,000,000 20,000,000 10,000,000
---------------------------------------------------------------------------
II. Prior to Request
----------------
---------------------------------------------------------------------------
(10) Collateral Value (mtgs) per CA report - - - - - -
---------------------------------------------------------------------------
(11) Special Mtg Loans (wet) - ** Nine business days from assignment
------------
(12) Non Spec Mtg Loans (dry) -
------------
(13) Collateral Value (Cash Collection) -
=============-------------
(14) Total Collateral Value - - Collateral in pool for over 120 days
=============-------------
(15) Total Borrowings/Principal Debt -
------------
(16) Special Borrowings 0% -
------------
(17) Non Special Borrowings 0% -
------------
(18) Primary Obligations - Total -
------------
III. Substitutions or Change in Borrowings only (Assignments to be attached)
-----------------------------------------------------------------------
------------ ------------- ------------ ------------- ------------ --------
(20) Unpaid Mortgage Loan Balance * -
------------ ------------- ------------ ------------- ------------ --------
(21) Take Out Commitments * -
------------ ------------- ------------ ------------- ------------ --------
(22) Lesser of (20) or (21) -
------------ ------------- ------------ ------------- ------------ --------
(23) Advance Rate 98% 97% 97% 98% 98%
------------ ------------- ------------ ------------- ------------ --------
(24) Collateral Value * - - - - - -
------------ ------------- ------------ ------------- ------------ --------
(25) Special Mtg Loans (wet) *
------------
(26) Non Spec Mtg Loans (dry) *
------------
(27) Collateral Value Cash - Collection * + Amt of Cash Collateral to be (swept) by Collateral Agent
------------
(28) Collateral Value Change * -
------------
(29) Net Borrowings/Principal Debt * -
------------
(30) Special Borrowings * 0% -
------------
(31) Non Special Borrowings * 0% -
------------
(32) Primary Obligations *
------------
* - Denotes net change of new assets less previous assets being
substituted/removed/matured.
IV. Portfolio After Request
-----------------------
---------------------------------------------------------------------------
(40) Collateral Value (mortgages) - - - - - -
---------------------------------------------------------------------------
(41) Special Mtg Loans (wet) -
------------
(42) Non Spec Mtg Loans (dry) -
------------
(43) Collateral Value Cash - Collection -
============
(44) Total Collateral Value -
============
(45) Total Borrowings/Principal Debt -
------------
(46) Special Borrowings 0% - * $50MM if last five or 1st five bus.days of mo., * $30MM
otherwise
------------
(47) Non Special Borrowings 0% -
------------
(48) Primary Obligations - Total -
------------
(49) Overcollateralized (44) - (48) - + Must be ** $0 for Collateral Agent to sweep/substitute.
------------
-----------------------
V. Sublimit Tests Jumbo
--------------
-------------------------------------------------------------------------------------------
Test Spec. ▇▇▇▇. Spec ▇▇▇▇ 50% 120 Day Alt A Sub Prime All Super Only
30%
-------------------------------------------------------------------------------------------
Results OK OK OK OK OK OK OK
* denotes less than
** denotes greater than
C-4
[CH Mortgage Loan Agreement]
EXHIBIT D
COLLATERAL AGENCY AGREEMENT
[Attached hereto.]
D-1
[CH Mortgage Loan Agreement]
EXHIBITS TO COLLATERAL AGENCY AGREEMENT
D-1 through D-12
[Attached hereto.]
D-2
[CH Mortgage Loan Agreement]
EXHIBIT E
FORM OF PROMISSORY NOTE
$100,000,000 July 9, 2002
FOR VALUE RECEIVED, on the Drawdown Termination Date (as defined in
the Loan Agreement referred to below), CH Funding, LLC, a Delaware limited
liability company ("Maker"), promises to pay to the order of [Insert Name of
Lender] ("Payee") at the offices of CREDIT LYONNAIS NEW YORK BRANCH, as
Administrative Agent for Payee ("Agent") at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, the principal sum of $100,000,000 or, if less, the
aggregate unpaid principal amount of Advances made by the Payee to the Maker
pursuant to the terms of the Loan Agreement referred to below, together with
interest, as provided below.
This note is one of the "Notes" described in the Loan Agreement dated
as of July 9, 2002 as amended (the "Loan Agreement"), among Maker, Payee, the
Agent and certain other parties. Terms defined in the Loan Agreement have the
same meanings when used in this Note. The Loan Agreement contains provisions
that affect this Note relating to, among other things, interest rate options,
calculation of interest, voluntary and mandatory prepayments, acceleration of
maturity, exercise of rights, payment of attorneys' fees, court costs, and other
costs of collection, certain waivers by Maker and others, and security for the
payment of this Note.
The unpaid principal balance of Advances under this Note bears
interest at the interest rates set forth in the Loan Agreement. So long as an
Event of Default exists, the unpaid principal and accrued interest shall bear
interest at the Default Rate, until paid.
Each Advance owing to the Payee by the Maker pursuant to the Loan
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Payee and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
Maker:
CH Funding, LLC
By:________________________________
Name:______________________________
Title:_____________________________
E-1
[CH Mortgage Loan Agreement]
ADVANCES AND PAYMENTS OF PRINCIPAL
---------------------------------------------------------------------------------------------
Date Amount of Advance Amount of Principal Unpaid Principal Notation
Paid or Prepaid Balance Made By
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
E-2
[CH Mortgage Loan Agreement]
EXHIBIT F
FORM OF SERVICER MONTHLY REPORT
[Date]
Credit Lyonnais New York Branch,
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance
Re: Loan Agreement dated as of July ___, 2002 among CH FUNDING, LLC (the
"Borrower"), ATLANTIC ASSET SECURITIZATION CORP., CREDIT LYONNAIS NEW YORK
BRANCH, as a Bank and the Administrative Agent and CH MORTGAGE COMPANY I, LTD.
as the Servicer ("CH Mortgage") (such agreement, as from time to time
supplemented, amended, restated or extended, the "Loan Agreement").
Pursuant to Section 3.7 of the Loan Agreement (terms not otherwise defined
herein being used as defined in the Loan Agreement), the Servicer hereby
confirms that as of the date hereof:
1. The Default Ratio does not exceed 1%. Computations of the Default
Ratio and the Sixty-Day Default Ratio are attached on Schedule I hereto.
2. (A) Set forth on Schedule I is (i) delinquency of Mortgage Loans owned
by CH Mortgage as a whole and (ii) delinquency of Mortgage Loans owned by the
Borrower that are financed by the Lenders and constitute Collateral under the
Loan Agreement and (B) and other information set forth on Schedule I is true and
correct.
3. No Default, Event of Default, Servicer Default or Advance Cessation
Trigger exists.
4. The Originator's Net Worth is $_________, which is not less than
$25,000,000.
5. The Excess Spread is ______% and is not less than 0.5%. Computations
of the Excess Spread are attached on Schedule I hereto.
6. The amount of funds in the Reserve Account is $______, and this amount
is not below 0.5% of the Maximum Facility Amount.
7. The Collateral Value is equal to or exceeds the Primary Obligations.
8. Based upon information set forth in ▇. ▇. ▇▇▇▇▇▇'▇ most recently filed
report on form [10-K] [10-Q] [8-K], ▇. ▇. ▇▇▇▇▇▇'▇ Leverage Ratio is ______, and
this ratio is not below 2.10:1.
F-1
[CH Mortgage Loan Agreement]
9. Based upon information set forth in ▇. ▇. ▇▇▇▇▇▇'▇ most recently filed
report on form [10-K] [10-Q] [8-K], ▇. ▇. ▇▇▇▇▇▇'▇ Consolidated Net Worth is
______, and this amount is not below $1,250,000,000.
10. Based upon information set forth in ▇. ▇. ▇▇▇▇▇▇'▇ most recently filed
report on form [10-K] [10-Q] [8-K], ▇. ▇. ▇▇▇▇▇▇'▇ EBITDA/Fixed Charge Ratio is
______, and this ratio is not below 2.65:1.
11. ▇.▇. ▇▇▇▇▇▇ is rated ______ by S&P, ______ by ▇▇▇▇▇'▇, ______ by
Fitch, and thus, has all of the Required Ratings.
12. ▇.▇. ▇▇▇▇▇▇ owns, directly or indirectly, all of the outstanding
equity ownership interests of the Borrower.
Very truly yours,
CH MORTGAGE COMPANY I, LTD.,
as Servicer
By: CH Mortgage Company GP, Inc.,
its General Partner
By:___________________________________
Name:_________________________________
Title:________________________________
F-2
[CH Mortgage Loan Agreement]
SCHEDULE I TO EXHIBIT F
CH Mortgage
Warehouse Facility
Please input blue highlighted cells
-------------------------------------------------------------------
MAXIMUM FACILITY AMOUNT
-------------------------------------------------------------------
Collateral Report
------------------
Reporting period ending:
------------------
-----------
[1] Borrower Default Ratio:
-----------
[2] Borrower Sixty Day Default Ratio:
[3] CH Mortgage Default Ratio:
[4] CH Funding Inc. (SPV) Mortgage Loan Delinquency Data:
[A] [B] [C] [D] [E] [F] [G]
Total 31-60 DPD 61-70 DPD 71-90 DPD 91+ DPD Foreclosure Bankruptcy
[I] # of loans
[ii] Principal amount of Mortgage Loans
-----------------------------------------------------------------------------------
[iii] % of Total Principal Amount of Mortgage
Loans 100%
-----------------------------------------------------------------------------------
[5] CH Mortgage Company I Loan Delinquency Data:
[A] [B] [C] [D] [E] [F] [G]
Total 31-60 DPD 61-70 DPD 71-90 DPD 91+ DPD Foreclosure Bankruptcy
[I] # of loans
[ii] Principal amount of Mortgage Loans
-----------------------------------------------------------------------------------
[iii] % of Total Principal Amount of Mortgage
Loans 100%
-----------------------------------------------------------------------------------
F-3
[CH Mortgage Loan Agreement]
--------------------------------------------------------------------------------------------------------
[6] Excess Spread
-----------------------------------------------------
Portfolio Yield
----------------------------------------
Conduit Spread 0.600%
--------------------
Euro Dollar Rate
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
[7] Reserve Amount
--------------------------------------------------------------------------------------------------------
Required Reserve Amount
--------------------
--------------------
--------------------------------------------------------------------------------------------------------
[8] CH Mortgage Company I Net Worth
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
[9] Total Collateral Value as of the end of reporting period:
Total unpaid Advances as of the end of reporting period:
Total unpaid accrued interest (from Admin Agent Report)
Servicing Fee
Total Primary Obligations
---------------------
Compliance Status
---------------------
--------------------------------------------------------------------------------------------------------
F-4
[CH Mortgage Loan Agreement]
EXHIBIT G-1
[Reserved]
G-1-1
[CH Mortgage Loan Agreement]
EXHIBIT G-2
[Reserved]
G-1-2
[CH Mortgage Loan Agreement]
EXHIBIT H-1
CH MORTGAGE COMPANY I, LTD.
QUARTERLY OFFICER'S CERTIFICATE
FOR THE PERIOD FROM ____________ TO _________________,
Credit Lyonnais New York Branch
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance
Re: Loan Agreement
This Certificate is delivered pursuant to Section 6.1(e) of the Loan
Agreement dated as of July 9, 2002, as amended to date (the "Loan Agreement")
among CH Funding, LLC, Credit Lyonnais New York Branch as Administrative Agent,
the Lenders, CH Mortgage Company I, Ltd. as Originator and Servicer. Capitalized
terms used and not otherwise defined herein have the meanings given thereto in
the Loan Agreement.
I hereby certify to the Agents and the Lenders as follows:
1. I am, and at all times mentioned herein have been, the duly
elected, qualified and acting [president] [chief financial officer] of the
Servicer.
2. I have individually reviewed the provisions of the Loan
Agreement, and a review of the activities of the Servicer during the fiscal
quarter ending as of ___________________, ____ (the "Subject Period") has been
made under my supervision with a view toward determining whether, during the
Subject Period, the Servicer has kept, observed, performed and fulfilled its
obligations under the Loan Agreement.
3. To the best of my knowledge, and based upon the review referred
to in paragraph 2, above, the representations and warranties of the Servicer in
Article V of the Loan Agreement are true and correct in all material respects on
the date hereof as though made on and as of the date hereof, and no Default,
Event of Default, Servicer Default or Event of Termination has occurred and is
continuing or is imminent.
H-1-1
[CH Mortgage Loan Agreement]
4. The Net Worth of the Servicer, as of the last day of the Subject
Period, is:
$____________.
Requirement of Loan Agreement (clause (b) of definition of
Servicer Default): Not less than $__________.
Condition satisfied _______________.
Condition not satisfied ________________.
5. Maximum Leverage - Computation. As of _________________ __,:
(a) Servicer's total liabilities as shown on its balance sheet
are:
$____________.
(b) Servicer's total contingent liabilities for borrowed money
Indebtedness:
$____________.
(c) To the extent not already included in total liabilities,
Servicer's total obligations to fund either the origination
or the purchase of mortgage loans that are closed but not
funded are: $____________.
(d) Subtotal of Items 5(a), (b) and (c) is: $____________.
(e) Servicer's total trade payables and accrued expenses,
arising out of the ordinary course of business and that are
not related to funding or purchasing any specific mortgage
loan:
$____________.
(f) Servicer's total deferred federal income tax liabilities:
$____________.
(g) Adjusted Liabilities (Item 5(d) minus the sum of Item 5(e)
and Item 5(f) is:
$____________.
(h) Servicer's stockholders' equity $____________.
(i) Servicer's deferred income less reasonable adjustments for
reserves for related deferred income tax liabilities is:
$____________.
H-1-2
[CH Mortgage Loan Agreement]
(j) Adjusted Net Worth (Sum of
Items 5(h) and 5(i)) is: $
(k) 15 x Item 5(j) $____________.
(l) Requirement of Loan Agreement ((S)7.10).
Item 5(g) shall not be greater than Item 5(k).
Covenant satisfied _______________.
Covenant not satisfied ________________.
EXECUTED and delivered this ____ day of _______________, ____.
____________________________________
[President][Chief Financial Officer] of
____________________________________
CH MORTGAGE COMPANY I, LTD.
H-1-3
[CH Mortgage Loan Agreement]
EXHIBIT H-2
CH FUNDING, LLC
QUARTERLY OFFICER'S CERTIFICATE
FOR THE PERIOD FROM ____________, _____ TO _________________, _____
Credit Lyonnais New York Branch
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance
Re: Loan Agreement
This Certificate is delivered pursuant to Section 6.1(e) of the Loan
Agreement dated as of July 9, 2002, as amended to date (the "Loan Agreement")
among CH Mortgage Company I, Ltd., a Texas limited partnership, Atlantic Asset
Securitization Corp., a Delaware corporation, as a Bank and the Administrative
Agent and CH Funding, LLC, a Delaware limited liability company, as the
Borrower. Capitalized terms used and not otherwise defined herein have the
meanings given thereto in the Loan Agreement.
I hereby certify to the Agents and the Lenders as follows:
1. I am, and at all times mentioned herein have been, the duly
elected, qualified and acting [president] [chief financial officer] of the
Borrower.
2. I have individually reviewed the provisions of the Loan
Agreement, and a review of the activities of the Borrower during the fiscal
quarter ending as of _______________, _____ (the "Subject Period") has been made
under my supervision with a view toward determining whether, during the Subject
Period, the Borrower has kept, observed, performed and fulfilled its obligations
under the Loan Agreement.
3. To the best of my knowledge, and based upon the review referred
to in paragraph 2, above, the representations and warranties of the Borrower in
Article V of the Loan Agreement are true and correct in all material respects on
the date hereof as though made on and as of the date hereof, and no Default or
Event of Default has occurred and is continuing or is imminent.
H-2-1
[CH Mortgage Loan Agreement]
EXECUTED and delivered this ____ day of _______________, 20__.
________________________________
By:_________________________________
Name:____________________________
Title:___________________________
H-2-2
[CH Mortgage Loan Agreement]
EXHIBIT I-1
Opinion of Counsel
To Borrower, Originator and ▇.▇. ▇▇▇▇▇▇
On Entity Matters
See Tab 29
I-1-1
[CH Mortgage Loan Agreement]
EXHIBIT I-2
Opinion of Counsel
To Borrower and Originator
On Security Interest Matters
See Tab 31
I-2-1
[CH Mortgage Loan Agreement]
EXHIBIT J
Opinion of Counsel
To Originator
On Bankruptcy Matters
See Tab 30
J-1
[CH Mortgage Loan Agreement]
EXHIBIT K
CH MORTGAGE COMPANY I, LTD.
As of:
FORM OF HEDGE REPORT
---------------------------------------------------------------------------------------------------------------------
Price PSA TBA Take-Out
Trade # Trade Date Broker Security Coupon (32nd's) Settle Amount Amount*
---------------------------------------------------------------------------------------------------------------------
TRADES: % $ $
------------- -------------
TRADES: $ $
============= =============
CONFORMING $
COLLATERAL $
AT BANK:
-------------
CUSHION:
=============
* Take-out amount must exceed collateral.
K-1
[CH Mortgage Loan Agreement]
FORM OF HEDGE REPORT
Mortgage Loans in which the Administrative Agent
is Granted a Security Interest for the Benefit of the Holders of the
Obligations and that were Covered by a Take-Out Commitment
in the form of a Forward Sale Commitment Hedge
but not a Loan Specific Take-Out Commitment
----------------------------------------------------------------------------------------
Originator's Loan Number Investor related to Price Associated with
Take-Out Commitment Take-Out Commitment
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
K-1
[CH Mortgage Loan Agreement]
EXHIBIT M
FORM OF ADMINISTRATIVE AGENT REPORT
ATLANTIC ASSET SECURITIZATION CORP.
CH Mortgage
CP Issuance Report
Maximum Facility Amount $100,000,000
Today's Date:
------------------------------------------------------------------------------------------------------------------------------------
New
Issue Issue Maturity Days In Face Discount Principal Discount Equivalent Interest Due
Dealer Tranche Date Date Tenor Amount Amount Debt Rate Yield @ Maturity
------------------------------------------------------------------------------------------------------------------------------------
MS 1
MS 2
- - -
======= ========= =============
At maturity, kindly wire payment to: Credit Lyonnais NY Branch
ABA: ▇▇▇▇▇▇▇▇▇
For Account #
Account Name: Atlantic Asset
Securitization Corp.
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Reference: CH Funding, LLC
M-1