EXHIBIT 10.9
WORKING CAPITAL FINANCING AGREEMENT
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between
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FC CAPITAL CORP.,
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as the Lender
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and
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MORTGAGE PLUS EQUITY AND LOAN CORP.
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as the Borrower
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$250,000
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Dated as of December __, 1997
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. DEFINITIONS 1
ARTICLE II. THE WORKING CAPITAL LOANS 5
Section 2.01. Conditions Precedent and Other Provisions Applicable to All Obligations 5
Section 2.02. Additional Provisions and Conditions Precedent to Working Capital Advances 6
Section 2.03. Application of Payments 6
Section 2.04. Interest Payments 6
Section 2.05. Principal Payments 7
Section 2.06. Renewal Notice 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES 7
Section 3.01. Representations and Warranties of the Borrower 7
Section 3.02. Representations and Warranties of the Lender 10
ARTICLE IV. COVENANTS OF THE BORROWER 11
Section 4.01. Affirmative Covenants of the Borrower 11
Section 4.02. Negative Covenants of the Borrower 14
ARTICLE V. SECURITY AGREEMENT 16
Section 5.01. Grant of Security Interest 16
Section 5.02. Security for the Borrower's Obligations 17
Section 5.03. Intention of Parties 17
ARTICLE VI. INDEMNIFICATION 17
ARTICLE VII. EVENTS OF DEFAULT 18
Section 7.01. Occurrence of an Event of Default 18
Section 7.02. Effect of an Event of Default 19
ARTICLE VIII. GENERAL PROVISIONS 19
Section 8.01. Cooperation, Confidentiality. Etc. 19
Section 8.02. Amendment; Waivers 20
Section 8.03. Taxes 20
Section 8.04. Other Transactions 20
Section 8.05. Opinion of Counsel to the Borrower 20
Section 8.06. Costs and Expenses 20
ARTICLE IX. CONSTRUCTION 21
Section 9.01. Entire Agreement 21
Section 9.02. Severability Clause 21
Section 9.03. Counterparts 21
Section 9.04. Governing Law; Agreement Constitutes Security Agreement; Consent to
Forum; Immunities 21
Section 9.05. Recitals 22
Section 9.06. Rules of Interpretation 22
Section 9.07. Good Faith 22
Section 9.08. Waiver of Trial by Jury and Other Waivers by Borrower 22
ARTICLE X. MISCELLANEOUS 23
Section 10.01. Notices 23
Section 10.02. Further Agreements 24
Section 10.03. Third-Party Rights; Assignment 24
Section 10.04. Summary Judgment 24
Section 10.05. Reproduction of Documents 24
Section 10.06. Right of Set-Off 24
Section 10.07. Advice from Independent Counsel 25
EXHIBITS
Exhibit A Working Capital Note
Exhibit B Form of Borrower's Counsel Opinion
Exhibit C Form of Working Capital Advance Request
SCHEDULES
Schedule I Annual Operating and Capital Budget
WORKING CAPITAL FINANCING AGREEMENT
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This WORKING CAPITAL FINANCING AGREEMENT (this "Agreement"), dated as of
December __, 1997, between Mortgage Plus Equity and Loan Corp., a New York
corporation, as the Borrower and FC Capital Corp., a New York corporation, as
the Lender.
WHEREAS, the Borrower wishes to obtain a working capital financing facility
from the Lender and the Lender wishes to make available such facility, subject
to the terms and conditions set forth herein; and
WHEREAS, the Borrower intends to pledge certain of its assets from time to
time to secure the financing facility described herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Unless otherwise specified, the following terms shall have the following
meanings when used in this Agreement:
"Accrual Period" means, with respect to any Advance, (i) with respect to
the initial Accrual Period relating thereto, the period commencing on the date
of the initial Funding Date and ending on the last day of the calendar month in
which such initial Funding Date occurs and, (ii) with respect to any subsequent
Accrual Period, the calendar month following the calendar month of the prior
Accrual Period; provided, however, that for any Accrual Period in which the
Working Capital Advance Balance was equal to zero for at least one full Business
Day during such Accrual Period the actual number of days from the date of the
previous Accrual Period ending on the day the Working Capital Advance Balance is
paid in full.
"Advance" means a Working Capital Advance.
"Affiliate" means any Person: (a) which directly or indirectly controls, or
is controlled by, or is under common control with the Borrower; (b) which
directly or indirectly beneficially owns or holds five percent (5%) or more of
the voting stock of the Borrower; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Borrower. The term control means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Working Capital Advance Balance" means, with respect to any date
of determination, the aggregate amount of all Working Capital Advances at such
date.
"Borrower" means Mortgage Plus Equity and Loan Corp., a New York
corporation.
"Business Day" means any day on which commercial banks are open in New York
for the transaction of business other than a Saturday or Sunday, that is neither
a legal holiday, nor a day on which banking institutions are authorized or
required by Law or regulation to close, in the City of New York.
"Closing Date" means December _______, 1997.
"Collateral" has the meaning as set forth Section 5.01.
"Consolidated Tangible Equity" means the aggregate "assets" of the Borrower
and its Subsidiaries less the aggregate "liabilities" of the Borrower and its
Subsidiaries and less all intangible assets, with the term "asset" having the
meaning ascribed to such term by GAAP and the term "liability" being those
obligations or liabilities of the Borrower and its Subsidiaries which, in
accordance with GAAP, would be included in the liability side of the Borrower's
balance sheet (either long-term or short term) on a consolidated basis.
"Default Rate" means the related Interest Rate plus 5.00%.
"Determination Date" means, with respect to any Accrual Period, the second
Business Day following the end of such Accrual Period.
"Event of Default" has the meaning set forth in Article VII hereof.
"FHA" means the Federal Housing Administration.
"FHLMC" means the Federal Home Loan Mortgage Corporation or any successor
thereto.
"FNMA" means The Federal National Mortgage Association or any successor
thereto.
"Funding Date" means, with respect to any Advance, the date on which such
Advance is made.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranty Agreement" means a guaranty agreement between the Lender and the
Guarantor.
"Guarantor" means Mortgage Plus Equity and Loan Holdings Corp.
"HUD" means the United States Department of Housing and Urban Development.
"Indemnified Party" has the meaning ascribed thereto in Article 6 of this
Agreement.
"Interest Rate" means, with respect to any Accrual Period, the Prime Rate
with respect to such Accrual Period, determined as the Prime Rate on the first
Business Day of such period, plus 3.00%.
"IPO" means the first public offering by the Guarantor of Guarantor's
common stock pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, which is an
offering of no fewer than 1 million shares of common stock generating at least 3
million dollars in net proceeds to Guarantor.
"Law" means any federal, state or local statute, law, rule, regulation,
ordinance, order, code, policy or rule of common law, now or hereafter in
effect, and in each case, as amended, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent, decree or judgment.
"Lender" means FC Capital Corp., a New York corporation, its successors in
interest and its permitted assigns.
"Maximum Working Capital Advance Aggregate Amount" means $250,000.00.
"Monetary Default" means:
(a) a failure to pay interest due on any Payment Date as required by
Section 2.04 of this Agreement;
(b) a failure to pay any amount due on any date as required by Section 2.05
of this Agreement;
(c) a breach of the covenant set forth in Section 4.01(a) of this
Agreement;
(d) a failure by the Borrower to pay any Taxes and a failure to reimburse
the Lender for any losses due to Taxes as required by Section 8.03 of this
Agreement; and/or
(e) a breach of any of the representations or warranties set forth in
Section 3.01 herein which causes the Borrower to be unable to make any payments
due under this Agreement.
"Mortgage Warehouse Credit Agreement" means that certain credit agreement
to be executed by and between Lender and Borrower for the purpose of financing
various mortgage loans.
"New York UCC" means the Uniform Commercial Code of the State of New York.
"Non-Monetary Default" means:
(a) a breach of any of the representations and warranties set forth in
Section 3.01 of this Agreement (other than a breach that causes the Borrower to
be unable to make any payments due under this Agreement); and/or
(b) a breach of any of the covenants set forth in Section 4.01 or 4.02
of this Agreement (other than the covenant set forth in Section 4.01(a)).
"Obligation" means the Working Capital Loan and all other loans, advances,
debts, liabilities, and obligations for the performance of covenants, tasks, or
duties or for payments of monetary amounts owing now or in the future by the
Borrower to Lender, and all covenants and duties regarding such amounts, of any
kind or nature present and future, whether or not evidenced by any note,
agreement, or other instrument. This term includes, without limitation, all
principal and interest (including, without limitation, interest which accrues
after the commencement of any case or proceeding referred to in SECTION 7.01(D)
on the Working Capital Loan, all charges, expenses, attorneys' fees and any
other sum chargeable to the Borrower under any agreement.
"Payment Date" means, with respect to any Accrual Period, the fifth
Business Day of the month following the month in which such Accrual Period ends.
"Person" means an individual, general partnership, limited partnership,
limited liability partnership, corporation, business trust, joint stock company,
limited liability company, trust, unincorporated association, joint venture,
Governmental Authority, or other entity of whatever nature.
"Prime Rate" means the interest rate set forth in the Wall Street Journal
as the prime rate.
"Shareholders" means each of ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Significant Documents" means this Agreement, the Guaranty Agreements and
the Working Capital Note.
"Stated Working Capital Maturity Date" means the earliest to occur of the
(x) first anniversary of the issuance date of the Working Capital Note or (y)
date on which any person (other than the Lender or any Affiliate of Lender or
any person who was a shareholder of the Borrower as of the date of this
Agreement) (i) acquires all or a majority of the issued and outstanding capital
stock of the Borrower, (ii) acquires all or substantially all of the assets of
Borrower or (iii) obtains, whether by contract or any other means, effective
control over the operations and management of Borrower or (z) the date which is
30 days after the date hereof if, by such date, Lender shall not have obtained a
first priority security interest in all of the assets of the Borrower other than
the Mortgage Obligations, the collateral securing such loans and related
documentation pledged to Summit Bank pursuant to the warehouse facility with
Summit Bank.
"Subsidiaries" means those entities in which any Person has an ownership
interest sufficient to cause the assets and liabilities of such entities to be
consolidated with those of such Person in the preparation of a consolidated
balance sheet of such Person in accordance with GAAP.
"Taxes" has the meaning set forth in Section 8.03 hereof.
"Term Loan and Security Agreement" means that certain agreement by and
between Lender and Borrower, dated as of the date hereof.
"Working Capital Advance" means an amount of funds borrowed by the Borrower
pursuant to the provisions relating to the Working Capital Loan as provided in
this Agreement, which is secured through the grant to the Lender by the Borrower
of a general security interest in the assets of the Borrower.
"Working Capital Advance Balance" means, with respect to any Working
Capital Advance and any date of determination, the sum of (a) the outstanding
principal balance of such Advance, determined as the difference between (i) all
amounts of principal lent by the Lender to the Borrower with respect to such
Working Capital Advance through the close of the date of determination and (ii)
the sum of all amounts of principal repaid by the Borrower with respect to such
Working Capital Advance through the close of the date prior to the date of
determination, (b) the interest accrued and unpaid on such Working Capital
Advance which is due and payable prior to such date of determination, and (c)
all reasonable attorneys' fees and other reasonable costs incurred in the
enforcement or collection thereof.
"Working Capital Advance Maturity Date" means the earliest to occur of (a)
the Stated Working Capital Maturity Date or (b) the date of a declaration of
acceleration by the Lender pursuant to Section 7.02(a).
"Working Capital Loan" means the aggregate of the sums borrowed by the
Borrower from the Lender pursuant to all Working Capital Advances Balances which
remain unpaid, together with accrued and unpaid interest thereon.
"Working Capital Note" means any secured promissory note evidencing the
Working Capital Loan, in the form attached hereto as Exhibit B hereto.
ARTICLE II.
THE WORKING CAPITAL LOANS
Section 2.01. Conditions Precedent and Other Provisions Applicable to All
Obligations. With respect to each Advance, the following conditions precedent
shall have been met as of the related Funding Date:
(a) the Borrower shall have executed each of the Significant Documents;
(b) all of the representations and warranties of the Borrower in this
Agreement shall be true and correct in all material respects as of such Funding
Date;
(c) neither a Monetary Default nor a Non-Monetary Default shall have
occurred and be continuing and no Events of Default shall have occurred;
(d) prior to requesting an Advance hereunder, the Borrower shall have
delivered to the Lender an annual operating and capital budget acceptable to
Lender in full compliance with Section 4.01(s);
(e) the Borrower shall have executed and delivered that certain Warrant
Agreement for Common Stock of Mortgage Plus Equity and Loan Holdings Corp. in
favor of Lender, dated as of the date hereof.
(f) the Borrower shall have delivered to the Lender such documents as the
Lender shall deem necessary or convenient to perfect its first priority security
interest in the Collateral, including, without limitation, the filing or
amendment of all necessary UCC Statements in all applicable jurisdictions and
any signature guarantees and such other documents as the Lender shall deem
necessary or convenient to perfect its security interest in the Collateral
including, without limitation the filing or amendment of all necessary UCC
Statements in all applicable jurisdictions and any signature guarantees; and
(g) the Borrower hereby acknowledges that, notwithstanding the fact that
the Working Capital Note is secured by the Collateral, the obligations of the
Borrower under the Working Capital Note are recourse obligations of the
Borrower.
Section 2.02. Additional Provisions and Conditions Precedent to Working
Capital Advances.
(a) Lender's obligation to make Working Capital Advances to the Borrower
shall terminate on the Working Capital Advance Maturity Date.
(b) The Borrower shall not request a Working Capital Advance from the
Lender with an initial Working Capital Advance Balance less than $25,000.
(c) The Lender shall be obligated to make each such Advance not more than
two Business Days following the date of receipt by the Lender of a written
request of such Advance from the Borrower, substantially in the form of Exhibit
C, and satisfaction of the requirements of Sections 2.01 and 2.02.
(d) A Working Capital Advance hereunder may only be requested if the
Borrower certifies in the request relating to such Working Capital Advances that
the proceeds of such Working Capital Advances will be used for a purpose within
the scope of the annual operating and capital budget attached hereto as Schedule
I.
(e) The Lender shall not be obligated to make a Working Capital Advance if
the aggregate amount due to Lender under all outstanding Working Capital
Advances together with the requested Working Capital Advance would exceed the
Maximum Working Capital Advance Aggregate Amount.
(f) The Borrower shall not request a Working Capital Advance more
frequently than once a week.
Section 2.03. Application of Payments.
Any payment made under this Agreement shall, unless otherwise specified
herein, be applied (i) first, to pay any unpaid fees, costs, expenses or
obligations which (A) arise hereunder, (B) are to be paid by the Borrower, and
(C) are due and payable, (ii) second, to pay any accrued and unpaid interest on
the Advances pursuant to Section 2.04 which is due and payable on or prior to
the date of such payment, and (iii) third, to reduce the Working Capital Advance
Balance pursuant to Section 2.05.
Section 2.04. Interest Payments.
(a) Interest shall accrue daily with respect to each Working Capital
Advance on each day during each Accrual Period at a rate equal to the product of
(i) 1/360, (ii) the related Interest Rate, and (iii) the related Working Capital
Advance Balance on such day. With respect to each Accrual Period, the Lender
shall notify the Borrower on the related Determination Date of the amount of
interest which accrued on the Working Capital Advances during such Accrual
Period and such accrued interest shall be due and payable on the related Payment
Date. The Lender's failure to notify the Borrower of the accrued interest due
on any Determination Date shall not affect the Borrower's obligation to pay the
interest due on the related Payment Date.
(b) If any payment with respect to any Working Capital Advance which is due
under the terms of this Agreement is not paid when due, then commencing on the
day such payment is not made and continuing until the day such payment is
finally made, all interest payments thereon shall be calculated using the
Default Rate rather than the Interest Rate.
(c) It is intended that the rate of interest on any Working Capital Advance
hereunder shall never exceed the maximum rate, if any, which may be legally
charged on Working Capital Loans, and if the provisions for interest hereunder
would result in a rate higher than such maximum rate, interest shall
nevertheless be limited to such maximum rate and any amounts which may be paid
toward interest in excess of such maximum rate shall be applied to the reduction
of principal, or, at the option of the Lender, returned to the Borrower.
Section 2.05. Principal Payments.
(a) Each Working Capital Advance shall mature and the related Working
Capital Advance Balance shall be due and payable, together with all interest
accrued and unpaid thereon, on the Working Capital Advance Maturity Date.
(b) The Borrower may at any time voluntarily prepay any Working Capital
Advance from its own funds; provided that if such prepayment is not made on a
Payment Date the amount of prepayment must be $25,000 or greater unless the
Working Capital Advance Balance is being reduced to zero.
(c) The principal amount of any Working Capital Advance prepaid by the
Borrower shall once again be available for borrowing until the Working Capital
Advance Maturity Date, subject to the terms and conditions of this Working
Capital Financing Agreement and the Working Capital Note.
Section 2.06. Renewal Notice. The Lender shall give the Borrower prior
written notice, at least 30 days prior to the Stated Working Capital Maturity
Date, of its intention to renew or not renew the Working Capital Loan prior to
the Stated Working Capital Maturity Date. If no such notice is given by Lender
to Borrower, the Working Capital Advance Balance shall be due and payable,
together with all accrued and unpaid interest, and other expenses, on the
Working Capital Advance Maturity Date. If Borrower wants to request a renewal,
the Borrower shall give the Lender written notice at least 60 days prior to the
Stated Working Capital Maturity Date of its request that the Working Capital
Loan be renewed.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Borrower.
(a) The Borrower hereby makes the following representations and warranties,
as of the date of this Agreement and as of each Funding Date:
(i) the Borrower has been duly organized and is validly existing as a
corporation under the Laws of the State of New York;
(ii) the Borrower is duly licensed where required as a "Licensee" or
is otherwise qualified in each state in which it transacts business and is
not in default of such state's applicable Laws, rules and regulations;
(iii) subject to Section 5.01, the Borrower has the requisite power
and authority and legal right to own and ▇▇▇▇▇ ▇ ▇▇▇▇ on all of its right,
title and interest in and to the Collateral and the Borrower has the
requisite power and authority and legal right to execute and deliver,
engage in the transactions contemplated by, and perform and observe the
terms and conditions of, the Significant Documents;
(iv) the Borrower is able to meet its obligations when they become due
and is not in default (beyond any applicable cure period) under any
mortgage, borrowing agreement or other instrument or agreement pertaining
to indebtedness for borrowed money, and the execution and delivery by the
Borrower of the Significant Documents will not result in any violation of
any such mortgage, instrument or agreement to which the Borrower is a party
or by which its property is bound;
(v) (A) all audited and unaudited financial statements, budgets and
certificates of the Borrower or any of its officers furnished to the Lender
are true and complete and do not omit to disclose any material liabilities,
contingent or otherwise, or other-facts relevant to the condition of the
Borrower; and (B) all such audited financial statements have been prepared
in accordance with GAAP;
(vi) no consent, approval, authorization or order of, registration or
filing with, or notice to any Governmental Authority or court is required
under applicable Law in connection with the execution, delivery and
performance by the Borrower of the Significant Documents;
(vii) there is no action, proceeding or investigation pending or, to
the best knowledge of the Borrower, threatened against it before any court,
administrative agency or other tribunal (A) asserting the invalidity of any
of the Significant Documents, (B) seeking to prevent the consummation of
any of the transactions contemplated by any of the Significant Documents,
or (C) which might materially and adversely affect the performance by the
Borrower of its obligations under, or the validity or enforceability of,
any of the Significant Documents;
(viii) since the date of this Agreement, there has been no material
adverse change in the business, operations, financial condition, properties
or business plan of the Borrower, taken as a whole;
(ix) the person or persons signatory to this Agreement and any
document executed pursuant to it on behalf of the Borrower have full power
and authority to bind the Borrower;
(x) each of the Significant Documents has been duly authorized and
executed by the Borrower and is a legal, valid and binding agreement and is
enforceable against the Borrower in accordance with its terms;
(xi) the execution, delivery and performance of any of the Significant
Documents, and the exhibits attached thereto, if any, and the other
documents contemplated herein, and the performance by it of all
transactions contemplated herein and therein, (A) have been duly authorized
by all necessary and appropriate corporate action on the part of the
Borrower, (B) will not violate any provision of the Certificate of
Incorporation or Bylaws of the Borrower, (C) does not conflict with any
term or provision of any other agreement to which the Borrower is a party,
and (D) will not cause a breach of any applicable federal, state or
municipal governmental Law or regulations, or any order, judgment, writ,
award, injunction or decree of any court or Governmental Authority which is
binding upon the Borrower;
(xii) the Borrower has not pledged the Collateral to any entity or
person other than to the Lender except for the Collateral pledged to Summit
Bank as provided in Section 9.1(d)(ii) of the Mortgage Warehouse Loan and
Security Agreement, dated as of __________________, 19____, between the
Lender and the Borrower;
(xiii) there has been no (A) filing against the Borrower of a
petition for liquidation, reorganization, arrangement or adjudication as a
bankrupt or similar relief under the bankruptcy, insolvency or similar laws
of the United States or any state or territory thereof or of any foreign
jurisdiction as to which the Borrower fails to secure dismissal within 60
days of such filing, or (B) commencement by the Borrower of a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Borrower to the entry of an
order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the
Borrower or of any substantial part of its property, or the making by the
Borrower of any general assignment for the benefit of creditors, or the
failure of the Borrower generally to pay its debts as such debts become
due, or the taking of corporate action by the Borrower in furtherance of
any of the foregoing.
(xiv) all business correspondence of the Borrower and other
communications are conducted in the Borrower's own name, on its own
stationery and through a separately listed telephone number;
(xv) all representations and warranties made pursuant to this
Agreement, the Term Loan and Security Agreement, the Mortgage Warehouse
Credit Agreement (if applicable), and any Significant Documents are and
will be true and correct at the time
when made and at all times thereafter, whether or not such specific
agreement is still in effect (so long as any Obligation of Borrower remains
outstanding) or, if limited to a specific date, as of the date to which
they refer;
(xvi) to the knowledge of the Borrower, all written information and
documents or copies of documents furnished to the Lender pursuant to or in
connection with this Agreement and any Significant Documents are and will
be true and correct in all material respects at the time when made and at
all times thereafter under this Agreement and any Significant Documents or,
if limited to a specific date, as of the date to which they refer; and
(xvii) except as permitted by Section 5.01, immediately after the
pledge, assignment and transfer to the Lender as herein contemplated, all
necessary action will have been taken to grant a valid and enforceable
first priority perfected security interest in the Collateral (including the
filing or amendment of UCC Statements in all applicable jurisdictions, if
necessary) free and clear of all liens and encumbrances, except for those
subsequent liens which, by operation of law take priority over a previously
perfected security interested.
(b) The Borrower agrees and acknowledges that each of the representations
and warranties set forth in subsection (a) hereof (i) is material and being
relied upon by the Lender, (ii) is true in all respects as of the date of this
Agreement, and (iii) shall survive the execution, termination and expiration of
this Agreement.
Section 3.02. Representations and Warranties of the Lender.
(a) The Lender hereby makes the following representations and warranties as
of the date of this Agreement:
(i) the Lender has been duly organized and is validly existing as a
corporation under the Laws of the State of New York;
(ii) the Lender has the requisite power and authority and legal right
to execute and deliver, engage in the actions contemplated by, and perform
and observe the terms and conditions of, this Agreement to be performed by
it;
(iii) no consent, approval, authorization or order of, registration
or filing with, or notice to any Governmental Authority or court is
required under applicable Law in connection with the execution and delivery
by the Lender of this Agreement;
(iv) the person or persons signatory to this Agreement and any
document executed pursuant to it on behalf of the Lender have full power
and authority to bind the Lender;
(v) this Agreement is valid, binding and enforceable against the
Lender in accordance with its terms; and
(vi) the execution, delivery and performance of this Agreement, and
the exhibits attached hereto and the other documents contemplated herein to
which the
Lender is a party, and the performance by the Lender of all transactions
contemplated herein and therein (A) have been duly authorized by all
necessary and appropriate corporate action on the part of the Lender, (B)
will not violate any provision of the Certificate of Incorporation of the
Lender, (C) does not conflict with any term or provision of any other
agreement to which the Lender is a party, and (D) will not cause a breach
of any applicable federal, state or municipal governmental Law or
regulations, or any order, judgment, writ, award, injunction or decree of
any court or Governmental Authority which is binding upon the Lender.
(b) The Lender agrees and acknowledges that each of the representations and
warranties set forth in subsection (a) hereof (i) is material and being relied
upon by the Borrower, (ii) is true in all respects as of the date of this
Agreement, and (iii) shall survive the execution and termination of this
Agreement.
ARTICLE IV.
COVENANTS OF THE BORROWER
Section 4.01. Affirmative Covenants of the Borrower. The Borrower
covenants and agrees with the Lender as follows:
(a) the Borrower shall timely make any payment of interest, principal, or
fees and expenses, or any other sum, which has become due whether by
acceleration or otherwise (including the failure to make a mandatory
prepayment), under the terms of this Agreement and the Working Capital Note and
under any other document evidencing or securing indebtedness of the Borrower to
the Lender or any of its Affiliates;
(b) the Borrower shall on a quarterly basis following the initial Funding
Date, as long as any principal or interest amount is outstanding on the
Obligation, deliver a completed certificate, executed by the President or the
Chief Financial Officer of the Borrower which states the current assets to
current liabilities ratio of the Borrower under GAAP for such month;
(c) the Borrower will notify the Lender in writing of any of the following
within one Business Day after a responsible officer of the Borrower learns of
the occurrence thereof, but in no event later than three Business Days following
the occurrence thereof, describing the same and, if applicable, further
notifying the Lender, within two Business Days after learning of the occurrence
thereof, of any remedial steps being taken with respect thereto:
(i) the occurrence or likelihood of occurrence of an Event of Default
hereunder;
(ii) the institution of any litigation, arbitration proceeding or
governmental proceeding with the amount in contest being greater than
$10,000 in the aggregate;
(iii) the entry of any judgment or decree against the Borrower if the
aggregate amount of all judgments and decrees then outstanding against the
Borrower exceeds $10,000 after deducting (i) the amount with respect to
which the Borrower is insured and with respect to which the insurer has
assumed responsibility in writing, and
(ii) the amount for which the Borrower is otherwise indemnified if the
terms of such indemnification are reasonably satisfactory to the Lender; or
(iv) an event of default under any material agreement of the Borrower
if such event of default could materially and adversely affect the
condition (financial or otherwise) or the operation of the Borrower or its
assets or could materially and adversely affect the performance of its
obligations and duties hereunder;
(d) in the event of a filing against the Borrower of a petition for
liquidation, reorganization, arrangement or adjudication as a bankrupt or
similar relief under the bankruptcy, insolvency or similar Laws of the United
States or any state or territory thereof or of any foreign jurisdiction or there
shall be appointed a receiver, conservator, liquidator, assignee, custodian,
trustee, sequestrator or other similar official of the Borrower or any
substantial part of the property of the Borrower or the ordering of the winding-
up or liquidation of the Borrower's affairs, dismissal of such filing,
appointment or order shall be secured within 30 days of such filing;
(e) the Borrower shall maintain, at all times, Consolidated Tangible Equity
at an amount greater than: (i) $300,000 before the occurrence of an IPO and (ii)
$3,000,000 after the occurrence of an IPO, from the date of execution of this
Agreement through the Working Capital Advance Maturity Date and the Borrower
shall certify to the Lender on a quarterly basis, within 30 days following each
such quarter, in the form of a certificate from the chief financial officer or
chief executive officer of the Borrower, that the Borrower satisfies such
Consolidated Tangible Equity requirement as set forth herein in this clause (e);
(f) (i) the Borrower shall, promptly upon preparation, but in no event
later than 15 days following the end of each month, deliver to the Lender its
unaudited company-prepared consolidated and consolidating financial statements
as of the end of such month, prepared in accordance with GAAP consistently
applied and certified by the chief financial officer of the Borrower; (ii) the
Borrower shall, promptly upon preparation, but in no event later than 90 days
following the end of its fourth fiscal quarter, deliver to the Lender (A) its
audited and certified consolidated and consolidating financial statements,
including the consolidated and consolidating balance sheets of the Borrower and
the related statements of income and cash flows and stating in comparative form
the figures for the corresponding date and period in the previous fiscal year,
all in reasonable detail and prepared in accordance with GAAP consistently
applied, as of the end of the most recently ended fiscal year, and (B) a
certificate from the accountants preparing the Borrower's audited financial
statements stating that in the course of preparing the audited financial
statements nothing came to their attention indicating that the Borrower was not
in compliance with the terms of this Agreement; and (iii) in all cases,
consolidated and consolidating financial statements shall include, without
limitation, balance sheets, profit and loss statements and statements of cash
flows;
(g) the Borrower shall in writing, promptly upon a responsible officer of
the Borrower learning of any breach of any representation, warranty, covenant or
material obligation under this Agreement, notify the Lender thereof;
(h) as requested by the Lender by written notice from time to time, the
Borrower shall, promptly upon filing, deliver to the Lender such requested
copies of all public filings made by the Borrower with any Governmental
Authority or quasi-governmental body;
(i) the Borrower shall comply with all Laws, ordinances, governmental rules
and regulations to which the Borrower is subject, and obtain and keep in force
any and all licenses, permits, franchises, or other governmental authorizations
from, give all such notices promptly to, register, enroll or file promptly all
such agreements, instruments or documents required by applicable Laws with, and
promptly take all such other legally required action with respect to, any
Governmental Authority or regulatory authority, agency or official, as is
required under any provision of any applicable Law and that it is necessary (i)
for the continued operation of any of the Borrower's activities or business or
the performance by the Borrower of any of its agreements or obligations under
this Agreement or (ii) to ensure the continuing legality, validity, binding
effect or enforceability of this Agreement or any of the obligations hereunder
of the Borrower necessary to the ownership of its properties or to the conduct
of its businesses;
(j) the Borrower shall do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation, in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to maintain such authority would not have a material adverse
effect on the ability of the Borrower to conduct its business or to perform its
obligations under the Significant Documents in the reasonable judgment of the
Lender;
(k) at all times during which this Agreement is in effect, the Borrower
shall possess sufficient net capital and liquid assets to satisfy its
obligations as they become due in the normal course of business;
(l) upon five days' prior written notice (or on the next business day if an
Event of Default exists), the Borrower shall permit the Lender or its
accountants, attorneys or other agents access to all of its books and records
for inspection and copying, at the Lender's expense, during normal business
hours at all places where the Borrower conducts business. During the term of
this Agreement, the Borrower shall furnish the Lender such periodic, special or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable and appropriate in respect of the purposes of this
Agreement;
(m) the Borrower shall pay and discharge all taxes, assessments and
governmental charges upon it, its income and properties as and when such taxes,
assessments and charges are due and payable, except and to the extent only that
such taxes, assessments and charges are being actively contested in good faith
and by appropriate proceedings, and the Borrower shall maintain adequate
reserves on its books therefor;
(n) the Borrower shall furnish to Lender all necessary information to
enable the Lender to prepare all federal, state and local Tax returns and other
reports that the Borrower is required by Law to file and maintain adequate
reserves for the payment of all taxes, assessments, governmental charges, and
levies imposed upon it, its income, or its profits, or upon any property
belonging to it;
(o) the Borrower shall maintain thereafter, at its own expense, an errors
and omissions policy of insurance and a blanket fidelity bond with broad
coverage on all officers, directors, employees and agents of the Borrower or its
Affiliates with responsible companies with a rating of "A" or better by AM Best.
Any such fidelity bond shall protect the Borrower and the Lender against losses,
including forgery, theft, embezzlement and fraud of such persons.
The insurance policy and the bond shall each show the Lender as an additional
insured and shall provide that the insurers or bonding company shall give the
Lender thirty (30) days' written notice prior to any cancellation. This
provision shall not diminish or relieve the Borrower from its duties and
obligations as set forth in this Agreement. The minimum coverage under (i) any
such errors and omissions policy of insurance shall be two hundred fifty
thousand dollars ($250,000), or such greater coverage amount as FNMA or FHLMC
may require for the Borrower and (ii) any such fidelity bond shall be at least
equal to two hundred fifty thousand dollars ($250,000), or such greater coverage
amount as FNMA or FHLMC may require for the Borrower. The deductible amount on
such errors and omissions policy of insurance and such fidelity bond shall not
exceed $25,000, without the written consent of the Lender;
(p) the Borrower shall furnish to the Lender, periodically upon request,
good standing certificates and officer's certificates to assure the Lender of
the Borrower's continued authority to perform the Borrower's obligations under
this Agreement;
(q) the Borrower shall at all times maintain the ratio of its current
assets to its current liabilities at 1.05 or greater (each as determined by
GAAP);
(r) except for the indebtedness to Summit Bank that is permitted to be
incurred pursuant to Section 4.02(r), which indebtedness shall rank pari passu
with all indebtedness of Borrower to Lender, the Borrower shall (i) subordinate
any other debt (the "Subordinated Debt") to the Obligation and all other
indebtedness due from Borrower to Lender under any other agreement, either
individually or collectively, so long as the Obligation and such other debt is
outstanding; and (ii) not make any payments of principal (and, if the Obligation
and such other debt is in default, interest, premium or penalty) with respect to
any Subordinated Debt so long as the Obligation and such other debt is
outstanding;
(s) the Borrower shall prepare annual operating and capital budgets for its
operations, and the Borrower shall promptly furnish copies of such budgets to
the Lender each year at least ninety (90) days before the commencement of any of
the Borrower's fiscal years;
(t) the Borrower shall at all times comply with all representations,
warranties, and covenants (affirmative and negative) set forth in the Term Loan
and Security Agreement and the Mortgage Warehouse Credit Agreement (if
applicable), whether or not such agreement is still in full force and effect, so
long as any Obligation of Borrower remains outstanding; and
(u) the Borrower shall take all actions reasonably requested by the Lender,
from time to time, as the Lender may request in order to perfect, maintain or
release any security interest of the Lender.
Section 4.02. Negative Covenants of the Borrower. The Borrower covenants
and agrees with the Lender as follows:
(a) the Borrower shall not (i) assign or attempt to assign this Agreement
or any rights hereunder, without first obtaining the specific written consent of
the Lender, or (ii) grant any security interest, lien or other encumbrance on
any Collateral, (A) to the Lender or any of its Affiliates or (B) with respect
to taxes and assessments related thereto which are not yet due and payable, or
which are being contested in good faith;
(b) the Borrower shall not commence a voluntary case under any applicable
bankruptcy, insolvency or other similar Law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under any
such Law or to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Borrower, or of any substantial part of its property, and the
Borrower shall not make any general assignment for the benefit of creditors, or
fail generally to pay debts as such debts become due, and shall not take
corporate action in furtherance of any of the foregoing;
(c) the Borrower shall not amend its Certificate of Incorporation or
Bylaws, without the prior written consent of the Lender;
(d) the Borrower shall not suffer any materially adverse change in its
financial condition, operations, business, properties or business plan, or the
existence of any other condition which, in the Lender's sole judgment,
constitutes an impairment of the Borrower's ability to perform its obligations
under any of the Significant Documents and which condition is not remedied
within 10 days after written notice to the Borrower thereof or, if the condition
cannot be fully remedied within said ten days, substantial progress (which shall
be in the Lender's sole judgment) has not been made within said ten days, or
such other period as may be mutually agreed upon, toward remedy of the
condition;
(e) the Borrower shall not default under any term or provision of any other
agreement between (i) the Borrower and (ii) the Lender or any of its Affiliates
or any third parties, which default shall not have been cured within an
applicable cure period, if any, and which default has, or with the passage of
time will have, a material adverse effect on the Borrower or its business. For
the purposes of this subsection, both (x) a final judgement for the payment of
money in excess of $10,000 in the aggregate rendered against the Borrower and
remaining in force unpaid, unbonded, undismissed, undischarged and unstayed
after the expiration of the period which is the longer of ten days or the
payment plan for such judgment and (y) the failure to make any payment in excess
of $10,000 to a third party pursuant to the terms of any other agreement, and
such failure is not cured within any applicable cure period, shall be deemed
material;
(f) except for mortgage loans acquired with the intent of sale the Borrower
shall not purchase, lease or otherwise acquire all or substantially all of the
assets or properties of, or acquire any capital stock, equity interest, debt or
other securities of any other entity without the prior written consent of the
Lender, which consent shall not be unreasonably withheld;
(g) the Borrower shall not, in the aggregate, make or commit to make
capital expenditures in excess of ten percent (10%) over the budgets submitted
to the Lender in accordance with Section 4.01(s) hereof;
(h) the Borrower shall not enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate, except as the Lender may otherwise approve through
prior written notice;
(i) the Borrower shall not, except as the Lender may otherwise approve
through prior written notice, guarantee, endorse or otherwise in any way become
or be responsible for any obligations of any other person, entity or Affiliate,
including, without limitation, whether directly or indirectly by agreement to
purchase the indebtedness of any other person or through
the purchase of goods, supplies or services, or maintenance of working capital
or other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purposes of paying or discharging
any indebtedness or obligation of such other person or otherwise; provided,
however, that nothing contained herein shall prevent the Borrower from
indemnifying its officers, directors and agents pursuant to its bylaws and its
articles of incorporation;
(j) the Borrower will not commit any act in violation of applicable Laws,
or regulations promulgated pursuant thereto that relate to the Borrower or that
materially and adversely affect the operations or financial condition of the
Borrower;
(k) the Borrower shall not pledge or transfer any of its securities other
than to the Lender, except as the Lender may otherwise approve through prior
written notice;
(1) during the term of this Agreement, the Borrower shall not engage in any
business other than as a residential mortgage or consumer loan originator or as
a provider of related ancillary services or products;
(m) the Borrower shall not adopt annual operating and capital budgets for
its operations that are materially different than the operating and capital
budgets in effect on the date hereof as such operating and capital budgets may
be adjusted to reflect the IPO;
(n) the Borrower shall not change its current accounting firm unless such
firm is replaced by another nationally-recognized accounting firm acceptable to
Lender;
(o) the Borrower shall not declare or authorize any dividends or other
distributions on any capital stock or other securities of the Borrower to any
Person;
(p) the Borrower shall not do anything which is prohibited in the Term Loan
and Security Agreement or the Mortgage Warehouse Credit Agreement (if
applicable) whether or not such agreement is still in full force and effect, so
long as any Obligation of Borrower remains outstanding;
(q) the Borrower shall not pay aggregate bonuses in any twelve month period
to its employees in excess of 20% of the pre-tax income of the Borrower
(determined in accordance with GAAP) during such period; and
(r) the Borrower shall not borrow from anyone other than Lender except for
borrowings pursuant to a warehouse facility from Summit Bank, provided such
facility is for less than $15 million dollars and further provided that, within
30 days of the date hereof, only the mortgage loans, the collateral securing
such loans and related documentation are secured under such facility.
ARTICLE V.
SECURITY AGREEMENT
Section 5.01. Grant of Security Interest.
(a) To secure the repayment of the Obligation (subject to Section 5.01(b)
below), the Borrower hereby grants a first priority security interest to the
Lender, in all of the Borrower's right, title and interest in all assets of the
Borrower (the "Collateral") (and such grant shall survive the Working Capital
Advance Maturity Date until such time as all Obligations of Borrower to Lender
under this Agreement or any other agreement are fully repaid) including, without
limitation, the following:
(i) all mortgage loans and other loans originated or purchased by the
Borrower other than the mortgage loans pledged to Summit Bank pursuant to
its warehouse facility with Borrower;
(ii) all securities held by the Borrower, including, without
limitation, the securities of any subsidiary of the Borrower;
(iii) all equipment in all of its forms, wherever located, including,
without limitation, all furniture, furnishings, fixtures, office supplies
and all other similar types of tangible personal property and all parts
thereof and all accessions thereto, together with all parts, fittings,
alterations, substitutions, additions, accessories, replacements and
accessions thereto (any and all such equipment, parts and accessions being
the "Equipment");
(iv) all approvals, permits, licenses, franchises, certificates that
are, by their terms or pursuant to applicable Law, assignable without the
consent of the Governmental Authority or the counter party thereto, as the
case may be;
(v) all contracts or agreements to which the Borrower is a party;
(vi) all leases, real property and leasehold interests;
(vii) all general intangibles, including, but not limited to,
goodwill and tax refunds;
(viii) all bank accounts now or hereafter held by the Borrower and
all funds in such accounts together with all monies (other than monies used
to pay taxes), proceeds or sums due or to become due thereon or therefrom
(all such bank accounts, the "Bank Accounts"), and all documents or
instruments (including, but not limited to, passbooks, certificates of
deposit and receipts necessary to be presented to withdraw funds or
investments held in the Bank Accounts (the "Account Documents"); and
(ix) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute property of the
types described in any of the paragraphs of this Section 5.01 and, to the
extent not otherwise included, all payments under insurance (whether or not
the Lender is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral.
(b) With respect to the assets set forth in clauses (ii) through (ix) of
Section 5.01(a), during the 30 days immediately following the date of this
Agreement Lender shall only hold a security interest subject only to the
interests, if any, of Summit Bank in such Collateral, and from
and after such 30-day period Lender shall hold a first priority security
interest in all such Collateral.
Section 5.02. Security for the Borrower's Obligations'. Pursuant to this
Agreement, the Collateral secures the prompt and complete payment when due of
the Obligation, including the Working Capital Loan outstanding under this
Agreement.
Section 5.03. Intention of Parties. This Agreement is intended by the
parties hereto to constitute a security agreement within the meaning of the New
York UCC.
ARTICLE VI.
INDEMNIFICATION
If, in connection with the matters that are the subject of this Agreement,
the Lender becomes involved in any capacity in any action or legal proceeding
involving claims by any third party, the Borrower agrees to reimburse the
Lender, its Affiliates and their respective directors, officers, employees,
agents and controlling persons (each, an "Indemnified Party") promptly upon
request for all reasonable expenses (including the fees and disbursements of
legal counsel, and the cost of investigation and preparation) as they are
incurred, regardless of whether such actions or proceedings are brought by the
Borrower, its Affiliates or third parties. The Borrower also agrees to
indemnity and hold each Indemnified Party harmless against all losses, claims,
damages or liabilities of any kind, joint or several, which such Indemnified
Party may become subject to in connection with, or relating to, or arising out
of this Agreement or the Working Capital Notes, or any transactions contemplated
hereby; provided, however, that the Borrower shall not be liable under the
foregoing indemnity agreement in respect of any loss, claim, damage or liability
to the extent that a court having jurisdiction shall have determined by a final
judgment (not subject to further appeal) that such loss, claim, damage or
liability resulted primarily and directly from the willful misconduct or gross
negligence of such Indemnified Party.
The agreements of the Borrower in this Article 6 shall be in addition to
any liabilities that the Borrower may otherwise have and shall apply whether or
not the Lender or any other Indemnified Party is a formal party to any lawsuit,
claim or other proceeding. Solely for purposes of enforcing such agreements,
the Borrower hereby consents to personal jurisdiction, service and venue in any
court in which any claim or proceeding which relates to the services or matters
that are the subject of this Agreement is brought against the Lender or other
Indemnified Party.
Each Indemnified Party shall provide the Borrower written notice within 20
days after receipt of written notice of the commencement of any action, claim or
proceeding against such Indemnified Party in respect of which indemnity may be
sought from the Borrower, but the failure to notify the Borrower of the
commencement of any such action, claim or proceeding shall not relieve the
Borrower from any liability it may have to such Indemnified Party except to the
extent that its rights hereunder may be materially and adversely prejudiced by
such failure.
ARTICLE VII.
EVENTS OF DEFAULT
Section 7.01. Occurrence of an Event of Default. An "Event of Default"
shall occur:
(a) immediately upon the occurrence of a Monetary Default; provided,
however, that if the Borrower fails to pay the interest due on any Payment Date,
an "Event of Default" shall occur only if the Borrower has not paid such
interest within one Business Day following such Payment Date;
(b) five days after the occurrence of a Non-Monetary Default; provided,
however, that an "Event of Default" will not occur until ten calendar days after
the occurrence of a Non-Monetary Default if the ability to cure, and substantial
effort towards curing, such Non-Monetary Default can be demonstrated in writing
satisfactory to the Lender in its sole discretion; provided, further, that if it
is not possible or practicable within ten calendar days to cure a Non-Monetary
Default, an "Event of Default" shall be deemed to have occurred immediately upon
the occurrence of such Non-Monetary Default; or
(c) immediately upon the declaration (i) by the Lender of a breach by the
Borrower (or any Shareholders, as applicable), or Guarantor under any of the
Significant Documents (other than this Agreement) or any other agreement,
instrument or note evidencing any portion of the Obligation; or (ii) by the
Lender of an event of default under the Term Loan and Security Agreement, the
Mortgage Warehouse Credit Agreement (if applicable) or any other agreement which
may in the future be executed by Borrower in favor of Lender; or (iii) by any
other lender to the Borrower of an "event of default" under any other material
agreement, including, but not limited to, any warehouse agreement, credit
agreement, custody agreement, or financing agreement to which the Borrower is a
party; or
(d) immediately, if the Borrower, any Shareholder, or Guarantor shall
generally not pay any of its or his respective debts as such debts become due,
or the Borrower, any Shareholder, or Guarantor shall admit in writing its or his
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower, any Shareholder, or Guarantor seeking to adjudicate it or him a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or any of its
or his debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order of relief or the
appointment of a conservator, receiver, trustee, custodian or other similar
official for it or him or for any substantial part of its or his property, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Borrower or Guarantor shall take any corporate
action to authorize any of the actions set forth in this subsection.
Section 7.02. Effect of an Event of Default. Upon the occurrence of an
Event of Default:
(a) the Lender may declare the principal of the Working Capital Note then
outstanding, together with all interest accrued thereon and any other amounts
accruing under this Agreement, to be immediately due and payable, and all such
amounts shall become immediately due and payable without presentation, demand or
further notice of any kind to the Borrower;
(b) the Lender shall have the right to obtain physical possession of the
Collateral, all files of the Borrower relating to the Collateral and all
documents relating to the Collateral which are then or may thereafter come into
the possession of the Borrower or any third party acting for the Borrower and
the Lender shall be entitled to specific performance of all agreements of the
Borrower contained in this Agreement; and
(c) the Lender shall have the right to dispose of the Collateral as
provided herein, or as provided in the other documents executed in connection
herewith, or in any commercially reasonable manner, or as provided by Law. Once
the Lender has been reimbursed for all principal and interest on the Obligation
and any related expenses, any amounts remaining shall be transferred to the
Borrower.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.01. Cooperation, Confidentiality. Etc.
(a) Upon reasonable notice, the Borrower shall furnish, and shall use its
best efforts to cause other relevant parties to furnish, the Lender with all
information and data reasonably requested by the Lender in connection with its
activities on the Borrower's behalf to carry out the terms of this Agreement,
and shall provide the Lender reasonable access to the Borrower's officers,
directors, employees and professional advisers.
(b) The Borrower recognizes and confirms that the Lender in acting pursuant
to this Agreement may use information in reports and other information provided
by others, including, without limitation, information provided by the Borrower,
and that the Lender does not assume responsibility for and may rely, without
independent verification, on the accuracy and completeness of any such reports
and information. The Borrower agrees that any advice or information rendered by
the Lender in connection with this Agreement is for the confidential use of the
Borrower only and, except as otherwise required by Law or applicable regulatory
authority, the Borrower will not, and will not permit any third party to,
disclose such advice or information to others or summarize or refer to such
advice or information or to the Lender's engagement hereunder without, in each
case, the Lender's prior written consent. The Lender agrees to keep
confidential any information furnished to it by the Borrower which is clearly
labeled as proprietary to the Borrower, is not otherwise publicly available to
the Lender and the disclosure of which is not required by applicable Law or
judicial or administrative process.
(c) Neither the Lender nor the Borrower may place public announcements or
advertisements describing this or any part of this Agreement without the prior
written consent of the other party.
Section 8.02. Amendment; Waivers. This Agreement may be amended from time
to time only by written agreement of the parties. No failure on the part of the
Lender to exercise,
and no delay in exercising, any right, power, or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right under this Agreement preclude any other or further exercise thereof or
the exercise of any other right. No term or provision of this Agreement may be
waived or modified unless such waiver or modification is in writing and signed
by the party against whom such waiver or modification is sought to be enforced.
Section 8.03. Taxes. All payments made by the Borrower to the Lender on
account of any Obligation which are due hereunder shall be made free and clear
of, and without reduction by reason of, any taxes, levies, imposts, deductions,
charges or withholdings of any nature, including, without limitation, any
withholding taxes (but excluding any taxes imposed on the overall net income of
the Lender) and all liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges, withholding and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by Law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Working
Capital Note, the sum payable shall be increased as may be necessary so that
after making all required deductions (including as applicable to additional sums
payable under this subsection) the Lender receives an amount equal to the sum it
would have received had no such deductions been made.
Section 8.04. Other Transactions. The Borrower acknowledges that the
Lender and its Affiliates compete, directly and indirectly in the business in
which the Borrower engages and proposes to engage; provided, however, that the
Borrower shall not compete with respect to any transaction, the terms of which
are revealed to the Borrower by the Lender. The Borrower acknowledges that the
Lender and its Affiliates have and will in the future have business dealings
with parties other than the Borrower, which parties compete, directly or
indirectly with the Borrower. Although the Lender and its Affiliates may, in
their normal course of business, acquire information about the mortgage market,
particular transactions or such other parties, the Lender shall have no
obligation to disclose such information to the Borrower. The Borrower
acknowledges that the Lender and its Affiliates may engage in their businesses
and otherwise compete with the Borrower without regard to their relationship to
the Borrower hereunder.
Section 8.05. Opinion of Counsel to the Borrower. Upon the execution of
this Agreement, the Borrower shall deliver to the Lender a legal opinion from
their special counsel in the form attached hereto as Exhibit C hereto, together
with such other certificates and documents as the Lender shall require.
Section 8.06. Costs and Expenses. The Lender and the Borrower will each
be solely responsible for and bear all of their own respective expenses
(including, without limitation, the expenses of legal counsel), including,
without limitation, accountants and other advisers, incurred at any time in
connection with pursuing or consummating the Significant Documents and the
transactions contemplated thereby.
ARTICLE IX.
CONSTRUCTION
Section 9.01. Entire Agreement. This Agreement, together with the
Significant Documents, including the Exhibits and the Schedules thereto,
contains the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all prior
agreements between them, whether oral or written, of any nature whatsoever with
respect to such subject matter.
Section 9.02. Severability Clause. Any part or provision of this
Agreement that is prohibited or that is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part or provision of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable Law, the parties
hereto waive any provision of Law that prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part or provision
of this Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good faith, to
develop a structure, the economic effect of which is as close as possible to the
economic effect of this Agreement, without regard to such invalidity.
Section 9.03. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.
Section 9.04. Governing Law; Agreement Constitutes Security Agreement;
Consent to Forum; Immunities. This Agreement has been negotiated, executed and
delivered at and shall be deemed to have been made in New York, New York. This
Agreement shall be governed by and construed in accordance with the internal
Laws of the State of New York, without giving effect to the conflict of laws
rules therein, and shall constitute a security agreement within the meaning of
the New York UCC. The parties hereto hereby consent and agree that the Supreme
Court of New York County, New York or, at the Lender's option, the United States
District Court for the Southern District of New York, shall have exclusive
jurisdiction to hear and determine any claims or disputes between the parties
hereto pertaining to this Agreement or to any matter arising out of or related
to this Agreement. The parties hereto expressly submit and consent in advance
to such jurisdiction in any action or suit commenced in any such court, and
hereby waive any objection which it may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens and hereby consent to the
granting for such legal or equitable relief as is deemed appropriate by such
court. Each party hereto irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Section 10.01 hereof. Nothing in this Agreement shall be deemed or
operate to affect the right of the Lender to serve legal process in any other
manner permitted by Law, or to preclude the enforcement by the Lender of any
judgement or order obtained in such forum or the taking of any action under this
Agreement to enforce the same in any other appropriate forum or jurisdiction.
To the extent that the Borrower has or may hereafter acquire any immunity
from the jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to the Borrower or the Borrower's property,
the Borrower hereby irrevocably waives such immunity in respect of its
obligations under this Agreement. The parties hereto waive any and all
consequential, punitive, exemplary or similar damages arising out of or related
to this Agreement.
Section 9.05. Recitals. The recitals of this Agreement are not intended
to constitute substantive provisions hereof.
Section 9.06. Rules of Interpretation. Except as otherwise expressly
provided in this Agreement, the following rules shall apply hereto:
(a) the singular includes the plural and the plural includes the singular;
(b) "or" is not exclusive and "include" and "including" are not limiting;
(c) a reference to any agreement or other contract includes permitted
supplements, amendments and other modifications;
(d) a reference to a law (or Law) includes any amendment or modification of
such law (or Law) and the rules or regulations issued thereunder;
(e) a reference to a Person includes its permitted successors and assigns
in the applicable capacity;
(f) a reference in this Agreement to an Article, Section, clause, recital
or Exhibit is to the Article, Section, clause, recital or Exhibit of this
Agreement unless otherwise expressly provided;
(g) words such as "hereunder," "hereto," "hereof," and "herein" and other
words of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement and not to any particular
Article, Section or clause hereof;
(h) all obligations under this Agreement are continuing obligations
throughout the term of this Agreement;
(i) any right in this Agreement may be exercised at any time and from time
to time;
(j) the headings of the Articles and Sections are for convenience and shall
not affect the meaning of this Agreement; and
(k) time is of the essence in performing all obligations.
Section 9.07. Good Faith. The Borrower and the Lender shall implement the
terms and provisions of this Agreement in good faith in accordance with
applicable Law.
Section 9.08. Waiver of Trial by Jury and Other Waivers by Borrower. The
Borrower waives (i) the right to trial by jury (which Lender hereby also waives)
in any action, suit, proceeding or counterclaim of any kind arising out of or
related to this Agreement; (ii) presentment, demand and protest and notice of
presentment, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all accounts, contract rights,
documents, instruments, chattel paper and guaranties any time held by Lender on
which Borrower may in any way be liable and hereby ratifies and confirms
whatever Lender may do in this regard; (iii) notice prior to taking possession
or control of the Collateral or any bond or
security which might be required by any court prior to allowing Lender to
exercise any of Lender's remedies; (iv) the benefit of all valuation,
appraisement and exemption laws; and (v) notice of acceptance hereof. Borrower
each acknowledges that the foregoing waivers are a material inducement to
Lender's entering into this Agreement and that Lender is relying upon the
foregoing waivers in its future dealings with Borrower. Borrower warrants and
represents that it has knowingly and voluntarily waived its jury trial rights
following consultation with legal counsel. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
ARTICLE X.
MISCELLANEOUS
Section 10.01. Notices. All demands, notices, requests for consent and
other communications hereunder shall be in writing and personally delivered,
mailed by certified mail, return receipt requested, or telecopied, and shall be
deemed to have been duly given upon receipt;
if to the Borrower:
Mortgage Plus Equity and Loan Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
if to the Lender:
FC Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to any party, at such other address or telecopy number as shall be
designated by such party in a written notice to each other party.
Section 10.02. Further Agreements. The Borrower and the Lender each agree
to execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 10.03. Third-Party Rights; Assignment. This Agreement is for the
exclusive benefit of the parties hereto and their respective successors and
assigns and shall not be deemed to give any legal or equitable right to any
other Person. The Borrower may neither assign its rights nor delegate its
obligations under this Agreement without the prior written consent of the
Lender. The Lender may assign its rights and/or delegate its obligations under
this Agreement to an Affiliate or to any successor to all or substantially all
of the Lender's or such Affiliates business, in each case, without the consent
of the Borrower.
Section 10.04. Summary Judgment. The Borrower hereby acknowledges and
agrees that any enforcement action relating to this Agreement or any Working
Capital Note may be brought by motion for summary judgment in lieu of a
complaint pursuant to Section 3213 of the New York Civil Practice Law and Rules.
Section 10.05. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 10.06. Right of Set-Off. Upon the occurrence of any Event of
Default hereunder, the Lender is hereby authorized then or at any time or times
thereafter, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness (including without limitation whole loan premiums) at any time
owing by the Lender to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing
hereunder, irrespective of whether or not the Lender shall have made any demand
hereunder. The Lender agrees promptly to notify the
Borrower after any such set-off and application made by the Lender; provided
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lender under this Section 10.07
are in addition to other rights and remedies which the Lender may have.
Section 10.07. Advice from Independent Counsel. The parties hereto
understand that this Agreement and each of the other Significant Documents to
which either of them is a party are legally binding agreements that may affect
such party's rights. Each party represents to the other that it has received
legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and each of the other Significant Documents to
which it is a party and that it is satisfied with its legal counsel and the
advice received from such counsel.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
representative to execute this Agreement as of the date first above written.
MORTGAGE PLUS EQUITY AND LOAN CORP.
By:
-----------------------------------------
Name:
Title:
FC CAPITAL CORP.
By:
-----------------------------------------
Name:
Title:
[Signature Page to Working Capital Financing Agreement]
EXHIBIT A
WORKING CAPITAL NOTE
Maximum Working Capital
Advance Aggregate Amount: $250,000 December _____, 1997
FOR VALUE RECEIVED, the undersigned, MORTGAGE PLUS EQUITY AND LOAN CORP., a
New York corporation, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the order of FC
CAPITAL CORP., a New York corporation, whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Lender"), on or before the Working Capital
Advance Maturity Date (as defined herein), in lawful money of the United States
of America, the principal sums plus interest at the times and in the amounts and
manner as provided in the Agreement (as defined herein).
MAXIMUM RATE OF INTEREST: It is intended that the rate of interest hereon
shall never exceed the maximum rate, if any, which may be legally charged on
this Obligation evidenced by this Working Capital Note ("Maximum Rate"), and if
the provisions for interest contained in this Working Capital Note would result
in a rate higher than the Maximum Rate, interest shall nevertheless be limited
to the Maximum Rate and any amounts which may be paid toward interest in excess
of the Maximum Rate shall be applied to the reduction of principal, or, at the
option of the Lender, returned to the Borrower.
DUE DATE: All indebtedness evidenced hereby not paid before the Working
Capital Advance Maturity Date shall be due and payable on the Working Capital
Advance Maturity Date.
PLACE OF PAYMENT: All payments hereon shall be made, and all notices to
the Lender required or authorized hereby shall be given, at the office of the
Lender at the address designated in the heading of this Working Capital Note, or
to such other place as the Lender may from time to time direct by written notice
to the Borrower.
PAYMENT AND EXPENSES OF COLLECTION: All amounts payable hereunder are
payable by wire transfer in immediately available funds to the account number
specified by the Lender, in lawful money of the United States. Payments
remitted by the Borrower via wire transfer initiated after 2:00 p.m. New York
City time shall be deemed to be received on the next Business Day. The Borrower
agrees to pay all costs of collection when incurred, including, without limiting
the generality of the foregoing, reasonable attorneys' fees through appellate
proceedings, and to perform and comply with each of the covenants, conditions,
provisions and agreements contained in every instrument now evidencing or
securing said indebtedness. If any suit or action be instituted to enforce this
Working Capital Note, the Borrower promises to pay, in addition to the cost and
disbursements otherwise allowed by Law, such sums as the court may adjudge
reasonable attorneys' fees in such suit or action.
SECURITY: This Working Capital Note is issued pursuant to that certain
Working Capital Financing Agreement, dated as of December ______, 1997 (the
"Agreement") between the Lender and the Borrower, and is secured by a security
interest in the Collateral pledged under the
Agreement and described therein. Notwithstanding the pledge of the Collateral,
Borrower hereby acknowledges, admits and agrees that Borrower's obligations
under this Working Capital Note are recourse obligations of the Borrower to
which the Borrower pledges its full faith and credit. Any capitalized term used
herein and not otherwise defined herein shall have the meaning for such term set
forth in the Agreement.
DEFAULTS: Upon the happening of an Event of Default (as defined in
the Agreement), the Lender shall have all rights and remedies set forth in the
Agreement.
The failure to exercise any of the rights and remedies set forth in the
Agreement shall not constitute a waiver of the right to exercise the same or any
other option at any subsequent time in respect of the same event or any other
event. The acceptance by the Lender of any payment hereunder which is less than
payment in full of all amounts due and payable at the time of such payment shall
not constitute a waiver of the right to exercise any of the foregoing rights and
remedies at that time or at any subsequent time or nullify any prior exercise of
any such rights and remedies without the express consent of Lender, except as
and to the extent otherwise provided by Law.
WAIVERS: The Borrower waives diligence, presentment, protest and
demand and also notice of protest, demand, dishonor and nonpayment of this
Working Capital Note, and expressly agrees that this Working Capital Note, or
any payment hereunder, may be extended from time to time, and consents to the
acceptance of further Collateral from Borrower by the Lender, the release of any
Collateral for this Working Capital Note, the release of any party primarily or
secondarily liable hereon, and that it will not be necessary for the Lender, in
order to enforce payment of this Working Capital Note, to first institute or
exhaust Lender's remedies against the Borrower or any other party liable hereon
or against any Collateral for this Working Capital Note. None of the foregoing
shall affect the liability of the Borrower and any endorsers or guarantors
hereof. No extension of time for the payment of this Working Capital Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Working Capital Note, shall affect the
liability under this Working Capital Note of the Borrower, even if the Borrower
is not a party to such agreement; provided, however, the Lender and the
Borrower, by written agreement between them, may affect the liability of the
Borrower.
TERMINOLOGY: Any reference herein to the Lender shall be deemed to
include and apply to every subsequent holder of this Working Capital Note.
Words of masculine or neuter import shall be read as if written in the neuter or
masculine or feminine when appropriate.
SUMMARY JUDGMENT: The Borrower hereby acknowledges and agrees that any
enforcement action relating to this Working Capital Note or any Working Capital
Note may be brought by motion for summary judgment in lieu of a complaint
pursuant to Section 3213 of the New York Civil Practice Law and Rules.
AGREEMENT: Reference is made to the Agreement for provisions as to
payments, collateral and acceleration.
THIS WORKING CAPITAL NOTE IS GOVERNED BY THE PROVISIONS OF THE AGREEMENT WHICH
IS INCORPORATED HEREIN BY REFERENCE, AND IN THE EVENT ANY TERMS OF THIS WORKING
CAPITAL NOTE ARE INCONSISTENT WITH
THE TERMS OF THE AGREEMENT, THE TERMS OF THE AGREEMENT SHALL GOVERN THIS WORKING
CAPITAL NOTE. NOTWITHSTANDING THE FOREGOING SENTENCE, NO REFERENCE HEREIN TO THE
AGREEMENT AND NO PROVISION OF THIS WORKING CAPITAL NOTE OR OF THE AGREEMENT
SHALL ALTER OR IMPAIR THE OBLIGATION OF THE BORROWER WHICH IS ABSOLUTE AND
UNCONDITIONAL, TO PAY THE PRINCIPAL OF AND INTEREST ON THIS WORKING CAPITAL NOTE
AT THE RESPECTIVE TIMES AND AT THE RATES HEREIN PRESCRIBED.
APPLICABLE LAW: This Working Capital Note has been negotiated, executed and
delivered at and shall be deemed to have been made in New York, New York. This
Working Capital Note shall be governed by and construed in accordance with the
internal Laws of the State of New York, without giving effect to the conflict of
laws rules therein. The parties hereto hereby consent and agree that the
Supreme Court of New York County, New York or, at the Lender's option, the
United States District Court for the Southern District of New York, shall have
exclusive jurisdiction to hear and determine any claims or disputes between the
parties hereto pertaining to this Working Capital Note or to any matter arising
out of or related to this Working Capital Note. The parties hereto expressly
submit and consent in advance to such jurisdiction in any action or suit
commenced in any such court, and hereby waive any objection which it may have
based upon lack of personal jurisdiction, improper venue or forum non conveniens
and hereby consent to the granting for such legal or equitable relief as is
deemed appropriate by such court. Each party hereto irrevocably consents to the
service of process by registered or certified mail, postage prepaid, to it at
its address given pursuant to Section 10.01 of the Agreement. Nothing in this
Working Capital Note shall be deemed or operate to affect the right of the
Lender to serve legal process in any other manner permitted by Law, or to
preclude the enforcement by the Lender of any judgement or order obtained in
such forum or the taking of any action under this Working Capital Note to
enforce same in any other appropriate forum or jurisdiction.
To the extent that the Borrower has or may hereafter acquire any immunity
from the jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgement, attachment in aid of
execution, execution or otherwise) with respect to the Borrower or the
Borrower's property, the Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Working Capital Note.
Each party hereto waives the right to trial by jury in any action, suit,
proceeding or counterclaim of any kind arising out of or related to this Working
Capital Note. In the event of litigation, this Working Capital Note may be
filed as a written consent to a trial by the court.
MORTGAGE PLUS EQUITY AND LOAN CORP.
By:
----------------------------------------
Name:
Title:
EXHIBIT B
[REVISE TO INCORPORATE OPINIONS WITH RESPECT TO THE TERM LOAN AGREEMENT, TERM
NOTE, FINANCING STATEMENT, GUARANTY AND THE GUARANTOR]
FORM OF BORROWER'S COUNSEL OPINION
December ____, 1997
FC Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Working Capital Financing Agreement
-----------------------------------
Ladies and Gentlemen:
We are counsel to Mortgage Plus Equity and Loan Corp. ("Borrower") and have
examined an executed copy of the Working Capital Financing Agreement, between
Borrower and you, dated as of December ____, 1997 (the "Agreement").
Capitalized terms used herein, but not defined, shall have the meanings
assigned to them in the Agreement.
We have further examined original, photostatic or certified copies of all
such corporate records of Borrower, and such certificates of public officials,
certificates of corporate officers, and other documents, and such questions of
law, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. In making my examinations and rendering the opinions
herein expressed I have made the following assumptions:
(1) The parties to the Agreement (other than Borrower) have the power
to enter into and perform all of their obligations thereunder;
(2) The due authorization, execution and delivery of the Agreement by
the parties thereto (other than Borrower), and the validity and
binding effect on the parties thereto (other than Borrower) of the
Agreement;
(3) The genuineness of all signatures;
(4) The authenticity of all documents submitted to us as originals and
the conformity to originals of all documents submitted to us as
copies.
The opinions expressed in numbered paragraph 2 below with respect to the
enforceability of the Agreement are subject to the following additional
qualifications:
(a) The effect of bankruptcy, insolvency, reorganization, moratorium,
receivership, or other similar laws of general applicability relating to or
affecting creditors' rights generally; and
(b) The application of general principles of equity, including, but not
limited to, the right to specific performance (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Based upon the foregoing and subject to the last paragraph hereof, we are
of the opinion that:
(1) Borrower has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware
and is qualified to do business in each state necessary to enable it
to perform its obligations under the Agreement. Borrower has the
requisite power and authority to execute and deliver, engage in the
transactions contemplated by, and perform and observe the conditions
of, the Agreement.
(2) The Agreement and each of the other Significant Documents
have been duly and validly authorized, executed and delivered by
Borrower, all requisite corporate action has been taken with respect
thereto, and the Agreement and each of the other Significant Documents
constitute valid, legal and binding agreements of Borrower,
enforceable against Borrower in accordance with their respective
terms.
(3) The execution, delivery or performance by Borrower of the
Agreement and each of the other Significant Documents does not
conflict or will not conflict with or result in a breach of, or does
not constitute or will not constitute a default under (i) any term or
provision of the certificate of incorporation or bylaws of Borrower;
(ii) any term or provision of any agreement, contract, instrument or
indenture, to which Borrower is a party or is bound; or (iii) any
order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction over
Borrower.
(4) No consent, approval, authorization or order of, registration
or filing with, or notice to, any court, governmental agency or body
or other tribunal is required for the execution, delivery and
performance by Borrower of the Agreement or any of the other
Significant Documents or the consummation of any other transactions
contemplated by the Agreement or any of the other Significant
Documents, except such which have been obtained.
(5) There are no actions, proceedings or investigations pending
or, to our knowledge, threatened against Borrower before any court,
governmental agency or body or other tribunal asserting the
invalidity of the Agreement or any of the other Significant Documents
which would materially and adversely affect the performance by
Borrower of its obligations under, or the validity or enforceability
of, the Agreement or any of the other Significant Documents.
This Opinion is furnished at the request of the Company and is being
delivered solely for the benefit of the addressee hereof. It may not be relied
upon by or distributed to any other person or for any other purpose without our
prior written consent.
Very truly yours,
EXHIBIT C
FORM OF WORKING CAPITAL ADVANCE REQUEST
FC Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ____________________
Pursuant to the Working Capital Financing Agreement dated as of December
______, 1997 between FC Capital Corp. (the "Lender") and the undersigned (as
amended from time to time, the "Agreement"), the undersigned hereby gives notice
of its election to borrow from the Lender a Working Capital Advance (each
capitalized term used herein shall have the meaning specified therefor in the
Agreement):
1. The Funding Date of this Working Capital Advance shall be ,
199___.
2. The amount of this Working Capital Advance shall be $ .
The undersigned hereby certifies (i) that each of the conditions precedent
to a Working Capital Advance listed in Sections 2.01, 2.02 and 3.01 of the
Agreement are true and correct on the date hereof and shall be true and correct
on the date of the Working Capital Advance requested herein, before and after
giving effect thereto, (ii) that such Working Capital Advance is within the
scope of the annual operating and capital budget approved by the Lender pursuant
to Section 4.01(s) of the Agreement and (iii) that such Working Capital Advance
is to be used for one or more of the purposes set forth on Schedule I to the
Agreement.
MORTGAGE PLUS EQUITY AND LOAN CORP.
By:
----------------------------------------
Name:
Title:
Date: , 199
------------ --
ACKNOWLEDGED:
FC CAPITAL CORP.
By:
----------------------------
Name:
Title:
Date:
Schedule I
ANNUAL OPERATING AND CAPITAL BUDGET