EXHIBIT 10.6
99
SECOND AMENDED AND RESTATED LOAN AGREEMENT
AMONG
NVR MORTGAGE FINANCE, INC.
A VIRGINIA CORPORATION,
BANK ONE, TEXAS, N.A.,
AS AGENT,
AND
THE LENDERS PARTY HERETO
JUNE 13, 1996
AS AMENDED THROUGH AUGUST 23, 1996
100
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND REFERENCES.................................................. 1
1.1 Definitions................................................................. 1
1.2 Time References............................................................. 25
1.3 Other References............................................................ 25
SECTION 2. AMOUNT AND TERMS OF CREDITS................................................. 25
2.1 Commitment.................................................................. 25
2.2 Notes....................................................................... 27
2.3 Notice and Manner of Obtaining Borrowings; Special Borrowings.............. 27
2.4 Fees........................................................................ 29
2.5 Mandatory Repayments........................................................ 29
2.6 Business Days............................................................... 29
2.7 Payment Procedure........................................................... 29
2.8 Payments Not in Full........................................................ 30
2.9 Sharing of Payments, Etc.................................................... 31
2.10 Requirements of Law......................................................... 31
2.11 Overline Indebtedness....................................................... 34
2.12 Interest.................................................................... 34
2.13 Limitation on Types of Advances............................................. 37
SECTION 3. COLLATERAL.................................................................. 37
3.1 Collateral.................................................................. 37
3.2 Eligible Mortgage Loans..................................................... 37
3.3 Power of Attorney........................................................... 38
3.4 Disposition of Mortgage Collateral.......................................... 39
3.5 Correction of Mortgage Notes................................................ 41
3.6 Concerning the Draft Account, the Funding Account and the Operating Account. 42
3.7 Representations and Warranties Regarding Pledged Mortgage Loans Other Than
New Wet Mortgage Loans, Builder Mortgage Loans and Funding Draft Mortgage Loans....... 42
3.8 Representations and Warranties Regarding New Wet Mortgage Loans, Builder
Mortgage Loans, and Funding Draft Mortgage Loans...................................... 43
3.9 Borrower Appointed Agent.................................................... 45
3.10 Review of Mortgage Files; Calculation of Borrowing Base; and Delivery of
Borrowing Base Report................................................................. 45
3.11 Servicing Rights............................................................ 45
3.12 Take-Out Commitments........................................................ 46
SECTION 4. CONDITIONS PRECEDENT........................................................ 46
4.1 Initial Borrowing........................................................... 46
4.2 All Borrowings.............................................................. 47
SECTION 5. BORROWER REPRESENTATIONS
AND WARRANTIES.............................................................. 47
5.1 Organization and Good Standing.............................................. 47
5.2 Authorization and Power..................................................... 48
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5.3 No Conflicts or Consents..................................................... 48
5.4 Enforceable Obligations...................................................... 48
5.5 Priority of Liens............................................................ 48
5.6 No Liens..................................................................... 49
5.7 Financial Condition.......................................................... 49
5.8 Full Disclosure.............................................................. 49
5.9 No Default................................................................... 49
5.10 No Litigation................................................................ 49
5.11 Taxes........................................................................ 49
5.12 Principal Office, etc........................................................ 49
5.13 Compliance with ERISA........................................................ 50
5.14 Ownership.................................................................... 51
5.15 Subsidiaries................................................................. 51
5.16 Indebtedness................................................................. 51
5.17 Permits, Patents, Trademarks, etc............................................ 51
5.18 Status Under Certain Federal Statutes........................................ 51
5.19 Securities Acts and Securities Credit Transaction Regulations................ 51
5.20 Pollution Control............................................................ 51
5.21 No Approvals Required........................................................ 52
5.22 Material Agreements with Affiliates.......................................... 52
5.23 Taxpayer Identification...................................................... 52
5.24 Not an Insider............................................................... 52
5.25 Survival of Representations.................................................. 52
SECTION 6. AFFIRMATIVE COVENANTS........................................................ 52
6.1 Financial Statements and Reports............................................. 52
6.2 Taxes and Other Liens........................................................ 53
6.3 Maintenance.................................................................. 53
6.4 Further Assurances........................................................... 54
6.5 Reimbursement of Expenses.................................................... 54
6.6 Insurance.................................................................... 54
6.7 Accounts and Records; Servicing Records...................................... 54
6.8 Appraisals................................................................... 55
6.9 Right of Inspection.......................................................... 55
6.10 Notice of Certain Events..................................................... 55
6.11 Performance of Certain Obligations........................................... 55
6.12 Use of Proceeds; Margin Stock................................................ 55
6.13 Notice of Default............................................................ 56
6.14 Compliance with Loan Documents............................................... 56
6.15 Compliance with Material Agreements.......................................... 56
6.16 Operations and Properties.................................................... 56
6.17 ERISA and Plans.............................................................. 56
6.18 Benefit Plan Obligations..................................................... 57
6.19 Environmental Matters........................................................ 57
6.20 Take-Out Commitments; Coverage............................................... 57
6.21 FNMA Acknowledgment Agreement................................................ 58
6.22 Failure to Close a Wet Mortgage Loan......................................... 58
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SECTION 7. NEGATIVE COVENANTS........................................................... 58
7.1 No Merger.................................................................... 58
7.2 Limitation on Indebtedness................................................... 58
7.3 Fiscal Year, Method of Accounting............................................ 58
7.4 Business..................................................................... 58
7.5 Liquidations, Consolidations and Dispositions of Substantial Assets.......... 58
7.6 Loans, Advances and Investments.............................................. 59
7.7 Use of Proceeds.............................................................. 59
7.8 Actions with Respect to Collateral........................................... 59
7.9 Net Worth.................................................................... 60
7.10 Adjusted Current Ratio....................................................... 60
7.11 Liabilities to Net Worth Ratios.............................................. 60
7.12 Minimum Servicing Portfolio.................................................. 60
7.13 Restrictions on Dividends, Returns of Capital and Servicing Proceeds
Distributions.......................................................................... 60
7.14 Transactions with Affiliates................................................. 60
7.15 Liens........................................................................ 61
7.16 Compliance with ERISA........................................................ 61
7.17 Change of Principal Office................................................... 61
7.18 Tax Payments................................................................. 61
7.19 Tax Allocation Agreement..................................................... 61
7.20 Permitted Subordinated Indebtedness.......................................... 61
SECTION 8. EVENTS OF DEFAULT............................................................ 62
8.1 Nature of Event.............................................................. 62
8.2 Default Remedies............................................................. 64
SECTION 9. Agent........................................................................ 64
9.1 Authorization and Action..................................................... 64
9.2 Agent's Reliance, Etc........................................................ 64
9.3 Agent and Affiliates......................................................... 65
9.4 Lender Credit Decision....................................................... 65
9.5 Indemnification.............................................................. 65
9.6 Successor Agent.............................................................. 65
9.7 Right of Inspection.......................................................... 66
SECTION 10.....INDEMNIFICATION OF LENDERS................................................... 66
10.1 Indemnification.............................................................. 66
10.2 Limitation of Liability...................................................... 67
SECTION 11.....MISCELLANEOUS................................................................ 67
11.1 Notices...................................................................... 67
11.2 Amendments, Etc.............................................................. 68
11.3 Invalidity................................................................... 69
11.4 Survival of Agreements....................................................... 69
11.5 Renewal, Extension or Rearrangement.......................................... 69
11.6 Waivers...................................................................... 69
11.7 Cumulative Rights............................................................ 69
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11.8 Construction................................................................. 69
11.9 Interest..................................................................... 70
11.10 Right of Offset.............................................................. 70
11.11 Assignments, Additional Lenders, etc......................................... 71
11.12 Lender Covenants, Representations and Warranties............................. 71
11.13 Consent to Jurisdiction...................................................... 72
11.14 Exhibits..................................................................... 72
11.15 Titles of Articles and Sections.............................................. 72
11.16 Counterparts................................................................. 72
11.17 Rights of Individual Lenders to Take Action.................................. 72
11.18 ENTIRE AGREEMENT............................................................. 73
11.19 Agreement Regarding Effective Date........................................... 73
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SCHEDULES AND EXHIBITS
Schedule 1.1(a) Addresses of Lenders and Amount of Commitments
Schedule 1.1(b) Investors
Schedule 1.1(c) Determination of Weighted Average Take-Out Price
Schedule 1.1(d) Contributed Servicing Rights
Schedule 5.10 Litigation
Schedule 5.22 Material Agreements with Affiliates
Exhibit A-1 Form of Warehouse Promissory Note
Exhibit A-2 Form of Swing Promissory Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Borrowing Notice
Exhibit D-1 Form of Collateral Pledge Certificate (Dry)
Exhibit D-2 Form of Collateral Pledge Certificate (Wet, Builder or Funding
Draft)
Exhibit E-1 Form of Mortgage Loan Delivery Request and Allocation Notice
Exhibit E-2 Form of Mortgage Loan Delivery Request
Exhibit E-3 Form of Valuation Election Notice
Exhibit F Form of Mortgage Document Delivery Request (Servicing)
Exhibit G Form of Bailee Letter and Trust Receipt
Exhibit H Form of Bailee Letter and Trust Receipt (Servicing)
Exhibit I Form of Borrowing Base Report
Exhibit J Form of Take-Out Report
Exhibit K Form of NVR Mortgage Finance, Inc. Officer's Certificate
Exhibit L Form of Bank Addition Agreement
Exhibit M Form of Security Agreement
Exhibit N Form of Third Amendment to Acknowledgment Agreement
Exhibit O Form of Tax Allocation Agreement
Exhibit P Form of Subordinated Demand Revolving Credit Note
Exhibit Q Form of Request for Release of Security Interests
Exhibit R Form of Notice of Conversion
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT is made and entered into as of June 13, 1996, between NVR
MORTGAGE FINANCE, INC., a Virginia corporation (the "BORROWER"), the several
Persons listed on the signature pages to this agreement as Lenders, whether as
original signatories or pursuant to SECTION 11.11(C) hereto (collectively, the
"LENDERS" and each individually a "LENDER"), and Bank One, Texas, N.A.
("AGENT"), as agent for Lenders hereunder.
A. Borrower, Agent and Lenders are parties to that certain Loan Agreement
dated as of April 30, 1993 (the "ORIGINAL LOAN AGREEMENT") as modified and
amended by various agreements and amended and restated by the Amended and
Restated Loan Agreement dated as of November 1, 1993 (as modified and amended,
the "EXISTING LOAN AGREEMENT").
B. Borrower, Agent, and Lenders wish to amend and restate the Existing
Loan Agreement in its entirety.
Accordingly, for adequate and sufficient consideration, Borrower, Lenders,
and Agent renew, extend, and entirely amend and restate the Existing Loan
Agreement as follows:
SECTION 1. DEFINITIONS AND REFERENCES. Unless stated otherwise, the following
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provisions apply to each Loan Document and annexes, exhibits, and schedules to
them and certificates, reports, and other writings delivered under them.
1.1 DEFINITIONS.
-----------
ADDITIONAL LENDER means any Person party to this agreement as a Lender
which was not a Lender on the Agreement Date.
ADJUSTED CASH FLOW of Borrower for the twelve-month period ending on
the date of determination means the amount equal to (a) the Cash Flow of
Borrower for such period plus (b) the amount of any non-cash additions
included in the Net Income of Borrower for such period which were
subtracted from such Net Income in determining the Cash Flow of Borrower
for such Period plus (c) 1% of the amount, if any, by which the aggregate
outstanding principal balance of the Mortgage Loans included in the
Servicing Portfolio of Borrower as of the last day of such period exceeds
the aggregate outstanding principal balance of the Mortgage Loans included
in the Servicing Portfolio of Borrower as of the last day of the twelve-
month period ending on the date one year prior to such date of
determination.
ADJUSTED CURRENT RATIO is the ratio referred to in SECTION 7.10.
ADJUSTED EURODOLLAR RATE means, for any Eurodollar Borrowing Period, a
rate per annum (rounded upward, if necessary, to the next higher 1/16 of
1%) equal to the rate obtained by dividing (a) the Eurodollar Rate for such
Eurodollar Borrowing Period by (b) a percentage equal to 1 minus the
average Reserve Requirement for such Eurodollar Borrowing Period, where the
average Reserve Requirement means the sum of Reserve Requirements in effect
for each day in such Eurodollar Borrowing Period divided by the number of
days in such Eurodollar Borrowing Period.
ADJUSTED TANGIBLE NET WORTH of Borrower means, as of any date of
determination, the amount equal to (x) the sum of (i) the Net Worth of
Borrower plus (ii) the amount equal to 1% of the amount equal to the
aggregate outstanding principal balance of Mortgage Loans included in the
Servicing Portfolio of Borrower minus (y) the Intangible Assets of
Borrower, each determined as of such date.
ADVANCE means a Warehouse Advance or a Swing Advance.
AFFILIATE of any Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with,
such Person. For purposes of this definition, the term "control" (and the
terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession or ownership, directly or
indirectly, of the power either to (i) direct or cause the direction of the
management and
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policies of such Person, whether by contract or otherwise, or (ii)
vote 10% or more of the securities having ordinary power for the election
of directors of such Person.
AFFILIATE NOTE means that certain subordinated demand revolving credit
note issued pursuant to the Existing Loan Agreement by Borrower payable on
demand to the order of NVR Financial Services, Inc., dated as of the date
indicated thereon from time to time, as amended, modified, or extended from
time to time, a true and correct copy of which is attached as EXHIBIT P.
AGENCY means FNMA, FHLMC or GNMA.
AGENCY COMMITMENT means a binding and enforceable agreement on the
part of (a) FNMA or FHLMC to issue Mortgage-Backed Securities in exchange
for Mortgage Loans or (b) GNMA to guarantee Mortgage-Backed Securities to
be issued by Borrower. Agency Commitment includes the FNMA Guide, the FHLMC
Guide or the GNMA Guide, as applicable, pursuant to which such Agency
Commitment was issued.
AGENCY CUSTODIAN means Bank One, Texas, N.A. in its capacity as
document custodian on behalf of an Agency.
AGENCY FORMS means forms promulgated by an Agency for use in
connection with the delivery of Mortgage Loans and the issuance or guaranty
of a Mortgage-Backed Security pursuant to an Agency Commitment.
AGENCY SERVICING AGREEMENTS means Servicing Agreements between
Borrower and FNMA, FHLMC, or GNMA pursuant to which Borrower undertakes to
service Mortgage Loans or pools of Mortgage Loans owned, insured or
guaranteed by FNMA, FHLMC or GNMA.
AGENCY SERVICING RECORDS means all Servicing Records which pertain to
the Agency Servicing Agreements.
AGENCY SERVICING RIGHTS means all of Borrower's right, title and
interest in and under the Agency Servicing Agreements, including, without
limitation, the rights of Borrower to income and reimbursement thereunder.
AGENT means, at any time, Bank One, Texas, N.A. -- or its successor
appointed under SECTION 9 -- acting as agent for Lenders under the Loan
Documents. References to Agent in respect of Swing Advances mean that
institution in its individual capacity. Agent is the representative of
Lenders within the meaning of (S)9.105(a)(13) of the UCC for purposes of
the Loan Documents and the UCC.
AGENT FEE LETTER means that certain letter from Agent to Borrower
dated as of the date of this agreement, as agreed to by Borrower and
amended, modified or supplemented from time to time.
AGREEMENT DATE means the date set forth as such on the counterpart
signature page of Agent for this Second Amended and Restated Loan
Agreement.
ALLOCATED has the meaning specified in SECTION 3.4(B).
APPRAISAL means a written statement as to the market value of the
property in which a Lien is granted pursuant to a mortgage to secure a
mortgage loan.
APPRAISAL LAWS AND REGULATIONS means laws set forth in Title XI of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the
Federal Deposit Insurance Corporation Improvement Act of 1991 and
regulations promulgated by the OCC or any other Governmental Authority in
connection therewith regarding Appraisals with respect to loans made by
Persons regulated by the OCC.
AVAILABLE AVERAGE EQUIVALENT AMOUNT means, for a particular
Computation Period, so much of the Average Equivalent Amount for such
Computation Period as has not been allocated to any other agreement to
which Agent and Borrower are parties. For purposes of this definition, the
Average Equivalent Amount shall be deemed to be allocated to an agreement
to which Agent and Borrower are parties to the extent that such Average
Equivalent
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Amount is utilized to reduce the obligat ions payable by Borrower under
such agreement or to create or increase an obligation on the part of Agent
to pay on behalf of Borrower the obligations of Borrower under such
agreement.
AVERAGE AGGREGATE DOMESTIC RATE ADVANCES means, for a particular
Computation Period, the amount equal to (a) the sum of the aggregate
outstanding Domestic Rate Advances of all Lenders for each day in such
Computation Period divided by (b) the number of days in such Computation
Period.
AVERAGE AGGREGATE GESTATION ADVANCES means, for a particular
Computation Period, the least of (a) $35,000,000, (b) the Average Aggregate
Domestic Rate Advances for such Computation Period and (c) the product of
(i) the fraction which is the reciprocal of 0.98 and (ii) the Average
Collateral Value of Eligible Gestation Mortgage Loans for such Computation
Period.
AVERAGE AVAILABLE DEPOSITS means, for a particular Deposit Holding
Lender for a particular Computation Period, the average deposits in the
name of Borrower which may be used to buy down the interest rate payable by
Borrower for such Computation Period pursuant to the Other Writing between
such Deposit Holding Lender and Borrower.
AVERAGE BASE RATE means, for a particular Computation Period, the per
annum rate of interest equal to (a) the sum of the Base Rate for each day
during such Computation Period divided by (b) the number of days in such
Computation Period.
AVERAGE COLLATERAL VALUE OF ELIGIBLE GESTATION MORTGAGE LOANS means,
for a particular Computation Period, the amount equal to (a) the sum of the
Collateral Value of all Eligible Gestation Mortgage Loans for each day
during such Computation Period divided by (b) the number of days in such
Computation Period.
AVERAGE CONSTRUCTION ADVANCES means, for a particular Lender for a
particular Computation Period, the amount equal to (a) the sum of the
Collateral Value of all Construction Loans which are Eligible Mortgage
Loans for each day during such Computation Period divided by (b) the number
of days in such Computation Period.
AVERAGE DOMESTIC RATE ADVANCES means, for a particular Lender for a
particular Computation Period, the amount equal to (a) the sum of the
outstanding Domestic Rate Advances of such Lender for each day in such
Computation Period divided by (b) the number of days in such Computation
Period.
AVERAGE EQUIVALENT AMOUNT means, for a particular Computation Period,
the amount equal to (a) the sum of the Equivalent Amount for each day
during the Computation Period divided by (b) the number of days in such
Computation Period.
AVERAGE FEDERAL FUNDS RATE means, for a particular Computation Period,
the per annum rate of interest equal to (a) the sum of the Federal Funds
Rate for each day during such Computation Period divided by (b) the number
of days in such Computation Period.
AVERAGE GESTATION ADVANCES means, for a particular Lender for a
particular Computation Period, the pro-rata share of such Lender of the
Average Aggregate Gestation Advances for such Computation Period,
calculated on the basis of the Average Domestic Rate Advances of Lenders
for such Computation Period.
AVERAGE REGULAR ADVANCES means, for a particular Lender for a
particular Computation Period, the amount equal to (a) the Average Domestic
Rate Advances of such Lender for such Computation Period minus (b) the
Average Gestation Advances of such Lender for such Computation Period.
BAILEE LETTER AND TRUST RECEIPT means a bailee letter and trust
receipt substantially in the form of EXHIBIT G or such other form,
including any form required by an Agency and acceptable to Agent, as to
which Borrower and Agent may agree.
BAILEE LETTER AND TRUST RECEIPT (SERVICING) means a bailee letter and
trust receipt substantially in the form of EXHIBIT H or such other form as
to which Borrower and Agent may agree.
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BANK ADDITION AGREEMENT means a Bank Addition Agreement in the form
attached hereto as EXHIBIT L, together with such changes as Agent and
Lenders executing a particular Bank Addition Agreement may require. Bank
Addition Agreement with respect to a particular Additional Lender means the
Bank Addition Agreement by which such Additional Lender became a Lender.
BASE RATE means the per annum rate of interest established by Agent
from time to time as its corporate base rate (which rate may not be the
lowest rate of interest charged by Agent on loans similar to the loans
contemplated by this agreement).
BORROWER has the meaning specified in the preamble of this agreement.
BORROWING means a borrowing consisting of (a) Advances (other than a
Swing Advance) by Lenders in connection with a Borrowing Request, or (b) a
Swing Advance by Agent in connection with a Borrowing Request.
BORROWING BASE as of any time of determination means the sum of:
(a) The aggregate Collateral Value of all Eligible Gestation Mortgage
Loans;
(b) the aggregate Collateral Value of all Eligible Mortgage Loans;
(c) the aggregate Collateral Value of all Eligible Wet Mortgage
Loans; and
(d) the aggregate Collateral Value of all Eligible Mortgage-Backed
Securities;
provided, that for purposes of determining the Borrowing Base, the maximum
Collateral Value at any time attributable to (u) Construction Loans shall
be $5,000,000, (v) Jumbo Loans and Super Jumbo Loans (without regard to
Face Amount or whether such Jumbo Loans and Super Jumbo Loans are Eligible
Mortgage Loans or Eligible Wet Mortgage Loans) shall be 20% of the then
Total Commitment, (w) Super Jumbo Loans (without regard to Face Amount or
whether such Super Jumbo Loans are Eligible Mortgage Loans or Eligible Wet
Mortgage Loans) shall be $5,000,000, (x) Wet Mortgage Loans shall be the
then Special Borrowing Limit, (y) Section 107 Mortgage Loans shall be
$5,000,000, and (z) Investment Mortgage Loans shall be $5,000,000, $500,000
of which may be used to finance REO.
BORROWING BASE REPORT means a report substantially in the form of
EXHIBIT I.
BORROWING DATE means the date on which the Advance or Advances in
respect of a Borrowing are to be made, as identified by Borrower in the
relevant Borrowing Request and by Agent in the relevant Borrowing Notice.
BORROWING NOTICE means a notice, substantially in the form of EXHIBIT
C or such other form as to which Agent and Lenders may agree.
BORROWING REQUEST means a request, substantially in the form of
EXHIBIT B (or such other form as to which Borrower and Agent may agree),
for a Borrowing pursuant to SECTION 2.
BUILDER BORROWING means a Borrowing the proceeds of which are to be
wired directly to the builder(s) from whom the mortgagor(s) under the
related Mortgage Loan(s) purchased their residence(s).
BUILDER MORTGAGE LOAN means a Mortgage Loan financed with a Builder
Borrowing.
BUSINESS DAY means any day other than Saturdays, Sundays and other
days on which commercial banks are authorized or required by law to close
in one or more of the State of Texas and the states in which the offices of
Lenders (as set forth in SCHEDULE 1.1(A), as amended from time to time)
then party to this agreement are located.
CASH EQUIVALENTS means Eligible Deposits, Eligible Commercial Paper,
and U.S. Government Securities.
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CASH FLOW of Borrower for the twelve-month period ending on the date
of determination means the amount equal to the Net Income of Borrower for
such period plus all non-cash charges against income (such as deferred
taxes, depreciation and amortization of goodwill and acquisition of
servicing rights) and minus all non-cash additions to income included in
the Net Income of Borrower for such period.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COLLATERAL has meaning specified in SECTION 3.1.
COLLATERAL PLEDGE CERTIFICATE means a Collateral Pledge Certificate
(Dry) or a Collateral Pledge Certificate (Wet, Builder or Funding Draft).
COLLATERAL PLEDGE CERTIFICATE (DRY) means a certificate substantially
in the form of EXHIBIT D-1 or such other form as to which Borrower and
Agent may agree.
COLLATERAL PLEDGE CERTIFICATE (WET, BUILDER OR FUNDING DRAFT) means a
certificate substantially in the form of EXHIBIT D-2 or such other form as
to which Borrower and Agent may agree.
COLLATERAL VALUE means:
(a) With respect to a pool of Eligible Gestation Mortgage Loans, an
amount equal to 99% of the Take-Out Price for such pool of Eligible
Gestation Mortgage Loans; provided, that to the extent that the aggregate
Collateral Value for all pools of Eligible Gestation Mortgage Loans is
greater than $35,000,000, such pools of Eligible Gestation Mortgage Loans
in excess of $35,000,000 Collateral Value shall be attributed Collateral
Value as if they consisted of Eligible Mortgage Loans rather than Eligible
Gestation Mortgage Loans;
(b) (I) with respect to an Eligible Mortgage Loan (other than
Investment Mortgage Loans and Construction Loans), an amount equal to 98%
of the least of (i) the Cost of such Eligible Mortgage Loan, (ii) the
Weighted Average Take-Out Price of such Eligible Mortgage Loan, (iii) the
Face Amount of such Eligible Mortgage Loan, and (iv) if Agent or the
Required Lenders shall so require, the Market Value of such Eligible
Mortgage Loan; (II) with respect to an Investment Mortgage Loan, an amount
equal to 80% of the unpaid principal balance of such Investment Mortgage
Loan, unless such Mortgage Loan has become REO, in which case, an amount
equal to 75% of the lesser of the unpaid principal balance of the
Investment Mortgage Loan or the Appraisal of the REO; and (III) with
respect to a Construction Loan, an amount equal to 90% of the Face Amount
of such Construction Loan to the extent that such amount does not exceed
(i) 80% of the contract price of the subject property or (ii) 90% of hard
cost;
(c) with respect to an Eligible Wet Mortgage Loan, an amount equal to
98% of the least of (i) the Cost of such Eligible Wet Mortgage Loan, (ii)
the Weighted Average Take-Out Price of such Eligible Wet Mortgage Loan,
(iii) the Face Amount of such Eligible Wet Mortgage Loan and (iv) if Agent
or the Required Lenders shall so require, the Market Value of such Eligible
Wet Mortgage Loan; and
(d) with respect to an Eligible Mortgage-Backed Security, an amount
equal to 99% of the Take-Out Price for such Eligible Mortgage-Backed
Security.
Any item of Collateral which ceases to be or is not an Eligible Wet
Mortgage Loan, an Eligible Mortgage Loan, an Eligible Gestation Mortgage
Loan or an Eligible Mortgage-Backed Security shall have a Collateral Value
of zero; provided, that any item of Collateral which ceases to be an
Eligible Wet Mortgage Loan, an Eligible Mortgage Loan or an Eligible
Gestation Mortgage Loan and becomes an Eligible Mortgage Loan, an Eligible
Gestation Mortgage Loan or part of an Eligible Mortgage-Backed Security
shall be valued as whichever of such items it has become.
COMMITMENT as to a Lender means the obligation of such Lender to make
Advances to Borrower pursuant to SECTION 2.1 hereof in an aggregate amount
not to exceed such Lender's Commitment Amount.
COMMITMENT AMOUNT as to a Lender means the amount set forth on
SCHEDULE 1.1(A) as such Lender's Commitment Amount.
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COMPANY CDS NUMBER means the number assigned by Borrower to facilitate
the origination of a Mortgage Loan and the processing of such Mortgage Loan
in cooperation with the branch of Borrower or other Person originating such
Mortgage Loan.
COMPANY LOAN NUMBER means the number assigned by Borrower to a
Mortgage Loan to facilitate the servicing of such Mortgage Loan by Borrower
and the delivery, holding and transfer of Mortgage Documents relevant to
such Mortgage Loan pursuant to this agreement.
COMPUTATION PERIOD means a calendar month during the term of this
agreement, or if applicable for the first month during the term of this
agreement and the month which includes the Termination Date, the period
during such month when one or more of the Commitments is in effect.
CONFORMING LOAN means a loan, excluding FHA Loans and VA Loans, which
complies with all applicable requirements for purchase under the FNMA or
FHLMC standard form of conventional mortgage purchase contract then in
effect.
CONSTRUCTION LOAN means a Mortgage Loan that is otherwise an Eligible
Mortgage Loan but (i) which may be partially funded if fewer than four
Advances have been made with respect to the promissory note for the subject
property, (ii) which may be included in the Collateral for up to 360 days
(not more than 180 days as a Construction Loan), and (iii) for which
Borrower has delivered Construction Loan Documents.
CONSTRUCTION LOAN DOCUMENTS means, in addition to Principal Mortgage
Documents and Other Mortgage Documents, (i) a copy of an Appraisal on the
subject property, (ii) a copy of the contract for sale on the subject
property, and (iii) a copy of the builder's draw request/non-start of
construction affidavit.
CONTRIBUTED SERVICING RIGHTS means the rights to service the Mortgage
Loans and pools of Mortgage Loans identified on SCHEDULE 1.1(D).
CORRECTION NOTE has the meaning specified in SECTION 3.5.
COST with respect to Mortgage Loan means, as applicable, the actual
out-of-pocket cost to Borrower of such Mortgage Loan or, if such Mortgage
Loan was originated by Borrower, the original principal amount of such
Mortgage Loan minus any discount points paid to Borrower in respect of such
Mortgage Loan.
CUSTODIAL FEE LETTER means that certain letter from Agent to Borrower
dated as of the date of this agreement, as agreed to by Borrower and
amended, modified, or supplemented from time to time.
DEBTOR LAWS means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization, fraudulent conveyance or similar laws from time to time in
effect affecting the rights of creditors generally.
DEFAULT means any condition or event which, with the giving of notice
or lapse of time or both and unless cured or waived, would constitute an
Event of Default.
DELINQUENT with respect to any Mortgage Loan means that any payment in
respect of such Mortgage Loan is more than 30 days past due.
DEPOSIT HOLDING LENDERS means Lenders other than Bank One, Texas, N.A.
which both (a) hold deposits in accounts in the name of Borrower and (b)
have entered into an Other Writing with Borrower.
DIVIDENDS means: (a) Cash distributions or any other distributions on,
or in respect of, any class of equity security of Borrower, except for (i)
distributions made solely in shares of securities of the same class and
(ii) Permitted Returns of Capital and Permitted Servicing Proceeds
Distributions; and (b) any and all funds, cash or other payments made in
respect of the redemption, repurchase or acquisition of (i) such securities
or (ii) any option, warrant, or other right to purchase any of such
securities.
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DOCUMENT DELIVERY TIME has the meaning specified in SECTION
2.3(B)(III).
DOLLARS means lawful money of the United States of America.
DOMESTIC RATE ADVANCE means any Advance which bears interest in
accordance with the provisions of SECTION 2.12(B) or 2.12(C).
DRAFT ACCOUNT means the non-interest bearing demand deposit account
(Account Number 9300000040) established by Borrower with Agent to be used
for (i) the deposit of money in accordance with SECTION 3.6(F) and the
Funding Draft Procedures; (ii) disbursements on behalf of Borrower in
accordance with the Funding Draft Procedures; and (iii) the payment of the
Obligations.
ELIGIBLE COMMERCIAL PAPER means commercial paper and other short-term
money market instruments which are rated at least A-1 or the equivalent
thereof by Standard & Poors and P-1 or the equivalent thereof by Moody's.
ELIGIBLE DEPOSITS means time deposits and certificates of deposit of
any Lender or of any domestic commercial bank or savings bank having
capital and surplus in excess of $200,000,000, in all such cases which has
a short-term certificate of deposit rating of at least A-1 or the
equivalent thereof by Standard & Poors and a short-term bank deposit rating
of least P-1 or the equivalent thereof by Moody's, or (ii) a rating of C or
better from ▇▇▇▇▇▇▇▇ Bank Watch, Inc. or 75 or better from I.D.C. Financial
Publishing, as applicable.
ELIGIBLE GESTATION MORTGAGE LOAN means a Mortgage Loan: (a) In which
Agent has a perfected first-priority security interest for the benefit of
Lenders to secure the Obligations; (b) which (i) has been Allocated to an
Agency Commitment; (ii) is part of a pool which the Agency Custodian has
certified (or initially certified) to the Agency obligated under such
Agency Commitment; and (iii) together with the other Mortgage Loans which
have been Allocated to such Agency Commitment, satisfies all requirements
for delivery under such Agency Commitment; (c) with respect to which the
Mortgage-Backed Security to be issued or guaranteed pursuant to such Agency
Commitment will, upon the issuance thereof, constitute an Eligible
Mortgage-Backed Security; and (d) with respect to which Borrower has
elected pursuant to SECTION 3.4(B) to have the pool which includes such
Mortgage Loan attributed Collateral Value as a pool of Eligible Gestation
Mortgage Loans rather than as individual Eligible Mortgage Loans.
ELIGIBLE MORTGAGE-BACKED SECURITY means a Mortgage-Backed Security:
(a) in which Agent has a perfected first-priority security interest for the
benefit of Lenders to secure the Obligations; (b) which (i) evidences an
undivided interest in a pool of Mortgage. Loans which constituted Eligible
Gestation Mortgage Loans or Eligible Mortgage Loans immediately prior to
the issuance of such Mortgage-Backed Security; (ii) has been Allocated to a
Take-Out Commitment; (iii) satisfies all requirements for delivery under
such Take-Out Commitment and (iv) has not been owned by Borrower for more
than five (5) Business Days; and (c) with respect to which the Investor
under the Take-Out Commitment to which such Mortgage-Backed Security has
been Allocated is not in default or in breach of its obligations under such
Take-Out Commitment.
ELIGIBLE MORTGAGE LOAN means a Mortgage Loan (other than an
Eligible Gestation Mortgage Loan): (a) in which Agent has been granted and
continues to hold a perfected first-priority security interest for the
benefit of Lenders; (b) which (i) has been fully funded except in the case
of Construction Loans, (ii) is "covered" (within the meaning given to such
term in SECTION 6.20) by a Take-Out Commitment, except in the case of
Investment Mortgage Loans and Construction Loans, (iii) has not been
included in the Collateral for more than 120 days, except in the case of
Investment Mortgage Loans and Construction Loans, (iv) has not previously
been sold to an Investor and repurchased by Borrower other than pursuant to
a Section 107 Repurchase and (v) except in the case of Investment Mortgage
Loans, is not Delinquent or, to Borrower's knowledge, otherwise in default;
and (c) with respect to which (i) except in the case of Investment Mortgage
Loans and Construction Loans, no more than 210 days have elapsed since the
funding of such Mortgage Loan or, if such Mortgage Loan has been
repurchased by Borrower pursuant to a Section 107 Repurchase, no more than
210 days have elapsed since the date of such ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, (▇▇)
there is an Appraisal which complies with all applicable Appraisal Laws and
Regulations and (iii) Agent holds the Principal Mortgage Documents or, if
any of such Principal Mortgage Documents have been delivered to an Investor
pursuant to SECTION 3.4(D) or the Mortgage Note has been delivered to
Borrower pursuant to SECTION 3.5, no more
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than 45 days have elapsed since the delivery of such Principal Mortgage
Documents or no more than 15 days have elapsed since the delivery of such
Mortgage Note. A Funding Draft Mortgage Loan shall not constitute an
Eligible Mortgage Loan until such time, if any, as Final Payment of the
related Funding Draft has occurred and each of the other requirements set
forth in the preceding sentence is satisfied.
ELIGIBLE WET MORTGAGE LOAN means a Wet Mortgage Loan with respect to
which the Document Delivery Time has not passed and which, but for the fact
that the Principal Mortgage Documents have not been delivered to Agent (and
if not already fully funded, upon the full funding thereof) would
constitute an Eligible Mortgage Loan.
EQUIVALENT AMOUNT for any day means the amount equal to (a) the sum of
the collected balances in the Qualified Accounts less (b) the sum of (i)
amounts necessary to satisfy reserve and deposit insurance requirements,
(ii) amounts required to compensate Agent for services rendered in
accordance with Agent's system of charges for services to similar accounts,
and (iii) amounts required to compensate Agent for other services or
products provided by Agent to Borrower, in each case for such day.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
EURODOLLAR BORROWING PERIOD means a period commencing, in the case of
the first Eurodollar Borrowing Period applicable to a Eurodollar Rate
Advance, on the date of the making of, or conversion into, such Advance,
and, in the case of each subsequent, successive Eurodollar Borrowing Period
applicable thereto, on the last day of the immediately preceding Eurodollar
Borrowing Period, and ending, depending on the Type of Advance, on the same
day in the first, second, or third calendar month thereafter, except that
(a) any Eurodollar Borrowing Period that would otherwise end on a day that
is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Eurodollar Borrowing Period
shall end on the next preceding Eurodollar Business Day and (b) any
Eurodollar Borrowing Period that begins on the last Eurodollar Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month in which such Eurodollar Borrowing
Period ends) shall end on the last Eurodollar Business Day of a calendar
month.
EURODOLLAR BUSINESS DAY means any Business Day on which dealings in
Dollar deposits are carried on in the London interbank market and on which
commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
EURODOLLAR LENDING OFFICE with respect to a Lender means the office of
such Lender set forth on SCHEDULE 1.1(A) of this agreement or such other
office of such Lender as it may identify in writing to Agent and Borrower.
EURODOLLAR RATE means, for any Eurodollar Borrowing Period, the rate
per annum (rounded upward, if necessary, to the next higher of 1/16 of 1%)
determined by Agent as the rate per annum reported by the Knight Ridder
system, for London interbank market deposits in Dollars in amounts
comparable to the aggregate amount of Eurodollar Rate Advances to which
such Eurodollar Borrowing Period applies, for a period equal to such
Eurodollar Borrowing Period, at 11:00 a.m. (London time) on the second
Eurodollar Business Day before the first day of such Eurodollar Borrowing
Period, or, if such rate is not so reported, such rate as reported by any
other internationally recognized reporting service selected by Agent or, if
no such other service is available, such rate as determined by Agent based
on rate information furnished to it by two or more banks selected by it
which participate in the market for such deposits.
EURODOLLAR RATE ADVANCE means any Advance the interest on which is, or
is to be, as the context may require, computed on the basis of the Adjusted
Eurodollar Rate.
EVENT OF DEFAULT has the meaning specified in SECTION 8.1.
EXCESS DRY COLLATERAL VALUE at any time means the amount equal to (a)
the aggregate Collateral Value of all Eligible Gestation Mortgage Loans,
all Eligible Mortgage Loans and all Eligible Mortgage-Backed Securities at
such time minus (b) the aggregate outstanding principal amount of all
Borrowings (other than Special Borrowings with respect to which the
Principal Mortgage Documents have not yet been delivered to Agent).
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EXCESS SPECIAL BORROWING means circumstances in which the Special
Borrowing Amount is greater than the Special Borrowing Limit.
EXISTING LOAN AGREEMENT has the meaning specified in the preamble.
FACE AMOUNT means: (a) in the case of a Mortgage Loan, the stated
principal amount of the Mortgage Note which evidences such Mortgage Loan,
without giving effect to any payments thereon; and (b) in the case of a
Mortgage-Backed Security, the par value of such Mortgage-Backed Security.
FEDERAL FUNDS RATE means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York and distributed by
the Knight Ridder system, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received from three Federal funds brokers of recognized
standing selected by Agent.
FEE AND INTEREST PAYMENT DATE in respect of a particular Computation
Period or Quarterly Computation Period means the earlier to occur of (a)
the Termination Date and (b) the 15th day of the subsequent Computation
Period or Quarterly Computation Period, as applicable.
FHA means the Federal Housing Administration, or any successor
thereto.
FHA LOAN means a loan, payment of which is partially or completely
insured by the FHA or with respect to which there is a current, binding and
enforceable commitment for such insurance issued by the FHA.
FHLMC means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
FHLMC ACKNOWLEDGMENT means the form of acknowledgment agreement
required by FHLMC to be executed as a condition to the creation of a
security interest in Agency Servicing Rights pertaining to FHLMC.
FHLMC GUIDE means the FHLMC Sellers' & Servicers' Guide as amended,
modified, or supplemented from time to time.
FHLMC SECURITIES means participation certificates representing
undivided interests in mortgage loans purchased by FHLMC pursuant to the
Emergency Home Finance Act of 1970, as amended.
FINAL PAYMENT has the meaning given to such term in (S)4.213(a) of the
UCC.
FNMA means the Federal National Mortgage Association, or any successor
thereto.
FNMA ACKNOWLEDGMENT means the form of acknowledgment agreement
required by FNMA to be executed as a condition to the creation of a
security interest in Agency Servicing Rights pertaining to FNMA.
FNMA GUIDE means the FNMA Selling Guide and the FNMA Servicing Guide
as amended, modified or supplemented from time to time.
FNMA SECURITIES means modified pass-through mortgage-backed
certificates guaranteed by FNMA pursuant to the National Housing Act, as
amended.
FUNDING ACCOUNT means the non-interest bearing demand deposit account
(Account Number 0100131507) established by Borrower with Agent to be used
for (i) the deposit of proceeds of Advances and proceeds from the sale of
Mortgage Loans and Mortgage-Backed Securities, (ii) disbursements to or on
behalf of Borrower in accordance with SECTION 3.6, and (iii) the payment of
the Obligations.
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FUNDING DRAFT means a payable through draft issued by Borrower against
the Draft Account, which payable through draft was issued by Borrower in
lieu of cash payment by or on behalf of Borrower or delivery of a certified
check by or on behalf of Borrower in connection with the closing of a
Mortgage Loan.
FUNDING DRAFT BORROWING means a Borrowing the proceeds of which are to
be used by Agent to make Final Payment of a Funding Draft in accordance
with the Funding Draft Procedures. A Funding Draft Borrowing with respect
to which the corresponding Principal Mortgage Documents have not been
delivered to Agent shall constitute a Special Borrowing as well as a
Funding Draft Borrowing.
FUNDING DRAFT MORTGAGE LOAN means a Mortgage Loan with respect to
which Borrower delivered a Funding Draft to cover amounts due from Borrower
in respect of the closing of such Mortgage Loan.
FUNDING DRAFT PROCEDURES means such procedures regarding Funding
Drafts as to which Borrower and Agent may from time to time agree. As
between Borrower and Agent, this agreement and the other Loan Documents,
the terms of the Funding Draft Procedures shall be controlling.
GAAP means generally accepted accounting principles in effect in the
United States on the Agreement Date.
GNMA means the Government National Mortgage Association, or any
successor thereto.
GNMA GUIDE means the GNMA I and GNMA II Mortgage-Backed Securities
Guides, GNMA Handbooks 5500.1 and 5500.2, as amended, modified or
supplemented from time to time.
GNMA SECURITIES means modified pass through mortgage backed
certificates guaranteed by GNMA pursuant to Section 306(g) of the National
Housing Act, as amended.
GOVERNMENTAL AUTHORITY means any nation or government, any agency,
department, state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
GUARANTY OBLIGATION of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or
in effect guarantees, any Indebtedness, lease, dividend or other
obligation, including any Mortgage Loan (the "PRIMARY OBLIGATION") of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, contingently or absolutely, in whole or in part, including,
without limitation, agreements:
(a) to purchase (or repurchase) such Primary Obligation or any
property constituting direct or indirect security therefore;
(b) to advance or supply funds (x) for the purchase or payment of any
such Primary Obligation, or (y) to maintain working capital or other
balance sheet conditions of the Primary Obligor or otherwise to maintain
the net worth or solvency of the Primary Obligor;
(c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such Primary Obligation of the ability
of the Primary Obligor to make payment of such Primary Obligation; or
(d) otherwise to assure or hold harmless the owner of any such
Primary Obligation against loss in respect thereof;
provided, that Guaranty Obligation shall not include (x) endorsements in
the ordinary course of business of negotiable instruments or documents for
deposit or collection, (y) obligations under the FNMA Guide, the FHLMC
Guide, the GNMA Guide and the related Servicing Agreements to make payments
due to the holders of Mortgage-Backed Securities from the Primary Obligors
on the Mortgage Loans to which such Mortgage-Backed Securities relate prior
to the receipt of such payments from such Primary Obligors, or (z) Ordinary
Recourse Obligations. The amount of any Guaranty Obligation shall be deemed
to be the maximum amount for which the guarantor may be liable pursuant to
the agreement that governs such Guaranty Obligation, unless such maximum
amount is not stated
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or determinable, in which case the amount of such obligation shall be the
maximum reasonably anticipated liability thereon, as determined by such
guarantor in good faith.
INDEBTEDNESS of any Person means, without duplication, (i)
indebtedness of such Person for borrowed money; (ii) obligations of such
Person (a) evidenced by a note, bond, debenture, or similar instrument, (b)
to pay the deferred purchase price of property or services (other than
trade payables incurred and timely paid in the ordinary course of
business), (c) created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person, (d)
as lessee under any lease which has been or, in accordance with GAAP,
should be classified as a capital lease, (e) upon which interest is paid or
accrued, or (f) in respect of letters of credit, acceptances, or similar
obligations issued or created for the account of such Person, (iii)
Guaranty Obligations of such Person, (iv) liabilities secured by any Lien
on any property owned by such Person, whether or not such Person has
assumed or otherwise become liable for the payment thereof, (v) liabilities
of such Person or any related Person in respect of unfunded vested benefits
under a Plan as determined in accordance with ERISA and (vi) obligations of
such Person in respect of interest rate protection agreements entered into
in connection with any of the items described in clauses (i), (ii), (iii),
(iv) or (v) of this definition; provided, that (x) Indebtedness does not
include any Ordinary Recourse Obligations, (y) the amount of Indebtedness
attributable to any Guaranty Obligation shall be determined as set forth in
the definition of Guaranty Obligation and (z) the amount of Indebtedness
attributed to liabilities secured by any Lien on any property owned by any
Person which liabilities are non-recourse to such Person shall be the
lesser of (i) the market value of such property, as determined by such
Person in good faith, and (ii) the outstanding amount of the liabilities so
secured.
INTANGIBLE ASSETS of Borrower means those assets of Borrower which are
(i) deferred assets, (ii) contract rights to service mortgage loans,
capitalized excess servicing, patents, copyrights, trademarks, trade names,
franchises, goodwill, experimental expenses, and other similar assets which
would be classified as intangible on a balance sheet of Borrower prepared
in accordance with GAAP, (iii) unamortized debt discount and expense, and
(iv) assets located, and notes and receivables due from obligors domiciled,
outside the United States of America.
INVESTMENT has the meaning specified in SECTION 7.6.
INVESTMENT LINE OF CREDIT INDEBTEDNESS means Indebtedness of Borrower
which satisfies each of the following criteria:
(i) the payee with respect thereto is a Lender;
(ii) the proceeds thereof are used solely to purchase Cash
Equivalents with a current maturity of 31 days or less;
(iii) the repayment of such Indebtedness is secured by a Lien on
the Cash Equivalents purchased with the proceeds thereof and by no
other Lien on the Property of Borrower; and
(iv) the aggregate principal amount of such Indebtedness at any
one time outstanding to all Lenders does not exceed the amount equal
to the Total Commitment at such time.
INVESTMENT MORTGAGE LOAN means a Mortgage Loan that is otherwise an
Eligible Mortgage Loan but (i) for which there is no applicable Take-Out
Commitment, (ii) which may be included in the Collateral for up to 364
days, (iii) which may be Delinquent; and (iv) in respect of which more than
210 days may have lapsed since the funding of such Mortgage Loan.
INVESTOR means each Person listed on SCHEDULE 1.1(B), as the same may
be amended or supplemented from time to time pursuant to SECTION 11.2(B).
JUMBO LOAN means a Mortgage Loan, the original principal amount of
which is greater than the Maximum Conforming Amount but no greater than
$500,000, which complies with all applicable requirements for purchase
under either (a) the FNMA or FHLMC standard form of conventional mortgage
purchase contract then in effect, except that the amount of such loan is
greater than the maximum loan amount under such requirements, or (b) a
Take-Out Commitment.
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LENDER and LENDERS shall have the meanings specified in the preamble
of this agreement.
LENDER GESTATION FINANCING AGREEMENT means an agreement between
Borrower and any Lender pursuant to which Borrower finances Mortgage Loans
which have been or are ready to be certified to back Mortgage-Backed
Securities, including without limitation that certain Uncommitted Gestation
Financing Agreement, dated as of March 15, 1996, between Borrower and Bank
One, Texas, N.A.
LENDER GESTATION FINANCING AGREEMENT INDEBTEDNESS means Indebtedness
under any Lender Gestation Financing Agreement.
LENDER GESTATION FINANCING AGREEMENT LIENS means Liens granted
pursuant to a Lender Gestation Financing Agreement on Mortgage Loans (and
the proceeds thereof) sold by Borrower thereunder and on no other property
of Borrower.
LIEN means any mortgage, pledge hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory, consensual or
otherwise), or other security arrangement of any kind (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and any financing statement filed under the uniform commercial
code or comparable law of any jurisdiction in respect of any of the
foregoing).
LOAN DOCUMENT means any and LOAN DOCUMENTS means the collective
reference to each of this agreement, the Notes, the Security Instruments
and any and all other agreements or instruments now or hereafter executed
and delivered by or on behalf of Borrower in connection with, or as
security for the payment or performance of any or all of the Obligations,
as any of such documents may be renewed, amended or supplemented from time
to time. Notwithstanding anything to the contrary in any Lender Gestation
Financing Agreement, a Lender Gestation Financing Agreement is not a Loan
Document.
MARKET VALUE means:
(a) With respect to any Mortgage Loan other than a Jumbo Loan or a
Super Jumbo Loan, the market value of such Mortgage Loan as determined by
Agent based upon the then most recent posted net yield for thirty-day
mandatory future delivery furnished by FNMA and published and distributed
by Telerate Mortgage Services or, if such posted net yield is not available
from Telerate Mortgage Services, obtained from FNMA by Agent; and
(b) with respect to any Mortgage Loan (including any Jumbo Loan or
any Super Jumbo Loan) for which the posted net yield for thirty-day
mandatory future delivery is not furnished by FNMA, the bid price for
thirty-day mandatory future delivery quoted by a broker of recognized
standing selected by Agent.
MATERIAL ADVERSE EFFECT means any material adverse effect on (i) the
validity or enforceability of this agreement, any Note or any other Loan
Document, (ii) the business, operations, total Property or financial
condition of Borrower, (iii) the collateral under any Security Instrument,
(iv) the enforceability or priority of the Lien in favor of Agent for the
benefit of Lenders on the collateral under any Security Instrument, or (v)
the ability of Borrower timely to perform the Obligations.
MAXIMUM CONFORMING AMOUNT for a particular Mortgage Loan means the
maximum principal amount for any Mortgage Loan which is eligible for
purchase by whichever of FNMA or FHLMC has the higher maximum principal
amount for Mortgage Loans secured by Mortgages on property located in the
state or region where the property covered by the Mortgage related to the
Mortgage Loan in question is located.
MAXIMUM CORRECTION AMOUNT means $2,000,000.
MAXIMUM RATE has the meaning specified in SECTION 11.9.
MOODY'S means ▇▇▇▇▇'▇ Investors Service, Inc.
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MORTGAGE means a mortgage or deed of trust, on a standard form
approved by VA, FHA, FNMA or FHLMC or other form approved in writing by the
Required Lenders, which grants, as security for a Mortgage Loan, a
perfected first-priority lien on residential real property consisting of
land and a one-to-four family dwelling thereon which is completed and ready
for occupancy.
MORTGAGE-BACKED SECURITIES means FNMA Securities, FHLMC Securities and
GNMA Securities.
MORTGAGE COLLATERAL means, at any time, Mortgage Loans and Mortgage-
Backed Securities then subject to a Lien in favor of Agent for the benefit
of Lenders.
MORTGAGE DOCUMENT DELIVERY REQUEST (SERVICING) means a request
substantially in the form of EXHIBIT F or such other form as to which
Borrower and Agent may agree.
MORTGAGE DOCUMENTS means, for any Mortgage Loan, the Principal
Mortgage Documents, the Other Mortgage Documents, and, if applicable, the
Construction Loan Documents relevant thereto.
MORTGAGE FILE means the Mortgage File Summary and the Principal
Mortgage Documents relevant to a Pledged Mortgage Loan.
MORTGAGE FILE SUMMARY means a summary setting forth the pertinent
information for the Principal Mortgage Documents relevant to a Pledged
Mortgage Loan.
MORTGAGE LOAN means an FHA Loan, VA Loan, Conforming Loan, Investment
Mortgage Loan, Construction Loan, Jumbo Loan or Super Jumbo Loan (i) which
is secured by a Mortgage and has a maximum term to maturity of thirty years
and (ii) is not a commercial loan or -- except as otherwise permitted by
this agreement -- a construction loan.
MORTGAGE LOAN DELIVERY REQUEST means a request substantially in the
form of EXHIBIT E-2 or such other form as to which Borrower and Agent may
agree.
MORTGAGE LOAN DELIVERY REQUEST AND ALLOCATION NOTICE means a request
substantially in the form of EXHIBIT E-1 or such other form as to which
Borrower and Agent may agree.
MORTGAGE NOTE means a promissory note, on a standard form approved by
VA, FHA, FNMA or FHLMC or other form approved in writing by the Required
Lenders, which evidences a Mortgage Loan.
MULTIEMPLOYER PLAN means a "multiemployer plan," as defined in Section
4001(a)(3) or Section 3(37) of ERISA or Section 414 of the Code, which is
maintained for the benefit of employees of Borrower or any Related Person.
NET INCOME of Borrower for any period means the net income (after
taxes) which would appear on an income statement of Borrower for such
period prepared in accordance with GAAP.
NET WORTH of Borrower means, as of any date of determination, the sum
of (a) the total stockholder's equity which would appear on a balance sheet
of Borrower prepared as of such date in accordance with GAAP and (b) the
outstanding principal amount of Permitted Subordinated Indebtedness on such
date.
NEW WET MORTGAGE LOAN means a Mortgage Loan identified as a New Wet
Mortgage Loan on a Collateral Pledge Certificate (Wet, Builder or Funding
Draft).
NOTES means the Warehouse Promissory Notes and the Swing Promissory
Note.
NOTICE OF CONVERSION has the meaning specified in SECTION 2.12(K)(IV).
OBLIGATIONS means all of the present and future indebtedness,
obligations, and liabilities of Borrower to Agent and Lenders, and all
renewals, rearrangements and extensions thereof, or any part thereof,
arising pursuant to
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this agreement or any other Loan Document, and all interest accrued
thereon, and reasonable attorneys' fees and other reasonable costs incurred
in the drafting, negotiation, enforcement or collection thereof, regardless
of whether such indebtedness, obligations, and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several.
OCC means the Office of the Comptroller of the Currency of the United
States of America and any Governmental Authority succeeding to the
functions of such office.
OPERATING ACCOUNT means the non-interest bearing demand deposit
account (Account Number 0100131515) established by Borrower with Agent,
which account, subject to the provisions of SECTION 3.6, is subject to the
sole dominion and control of Borrower.
ORDINARY RECOURSE OBLIGATION means an obligation of Borrower to
purchase a Mortgage Loan serviced by Borrower pursuant to a Servicing
Agreement in the event that:
(a) a material representation or warranty given by Borrower at
the time of the sale of such Mortgage Loans proves to have been false
or incorrect in any material respect when given;
(b) Borrower fails timely to perform its servicing obligations
with respect thereto;
(c) such Mortgage Loan is being serviced on behalf of FNMA or
FHLMC and the obligor on such Mortgage Loan fails timely to make any
payment due in connection therewith in the four-month period
commencing on the date of funding of such Mortgage Loan;
(d) such Mortgage Loan is an adjustable rate Mortgage Loan which
is being serviced on behalf of FNMA and the obligor on such Mortgage
Loan is exercising its right to convert the interest rate on such
Mortgage Loan to a fixed rate; or
(e) such Mortgage Loan is being serviced on behalf of GNMA and
the obligor on such Mortgage Loan fails timely to make any payment due
in connection therewith in the four-month period commencing on the
date of issuance of the GNMA Security backed by such Mortgage Loan.
ORIGINAL LOAN AGREEMENT has the meaning specified in the preamble.
OTHER MORTGAGE DOCUMENTS has the meaning specified in SECTION 3.2.
OTHER WRITING has the meaning specified in SECTION 2.12(G).
OVERLINE INDEBTEDNESS means Indebtedness of Borrower provided that (i)
the payee with respect thereto is a Lender or Lenders; and (ii) the
aggregate principal amount of such Overline Indebtedness to all Lenders
does not exceed $20,000,000.
PARENT means NVR, Inc., a Virginia corporation.
PBGC means the Pension Benefit Guaranty Corporation or any successor
thereto.
PERMITTED DIVIDENDS means Dividends the declaration and payment of
which is permitted under SECTION 7.13.
PERMITTED INTERCOMPANY PAYABLES means amounts due to Affiliates of
Borrower in respect of Permitted Intercompany Transactions and the
Permitted Subordinated Indebtedness.
PERMITTED INTERCOMPANY TRANSACTIONS Borrower means transactions with
Affiliates of Borrower (a) which comply in all respects with SECTION 7.14
without regard to the proviso to such Section, and are identified on
SCHEDULE 5.22, and (b) with respect to which the aggregate consideration
paid by Borrower in any month does not exceed the amount for each type of
transaction set forth on SCHEDULE 5.22.
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PERMITTED INVESTMENT means an Investment permitted pursuant to SECTION
7.6.
PERMITTED LIENS means:
(a) Liens on the Collateral which secure payment of the
Obligations (including Liens granted on the Collateral pursuant to the
Security Agreement in connection with the Original Loan Agreement or
the Existing Loan Agreement);
(b) Liens on the Collateral permitted under SECTION 7.8(D) and
Liens on Take-Out Commitments no longer included in the Collateral
permitted under SECTIONS 3.12 and 7.8(C);
(c) rights of FNMA, FHLMC and GNMA in each case in the Agency
Servicing Rights in connection with the Agency Servicing Agreements
under which Borrower services Mortgage Loans on behalf of such Person,
arising under the FNMA Guide, the FHLMC Guide or the GNMA Guide, as
applicable, and rights of any Person counterpart to a Servicing
Agreement other than an Agency Servicing Agreement in the Servicing
Rights arising thereunder;
(d) tax and other Liens permitted under SECTION 6.2;
(e) Liens in respect of office equipment (including without
limitation computers) leased or purchased by Borrower for an aggregate
amount no greater than $1,500,000;
(f) Liens in respect of claims regarding labor, materials,
services and supplies provided in connection with REO;
(g) Liens on REO of the type permitted as exceptions under Part
IV, Section 105.05 of the FNMA Guide (Selling) and Section 1704 of the
FHLMC Guide;
(h) Liens to secure obligations of Borrower in respect of
workers compensation and other labor laws;
(i) Liens in respect of appeal or performance bond reimbursement
obligations of Borrower undertaken in the ordinary course of business;
(j) Repurchase Agreement Liens;
(k) Lender Gestation Financing Agreement Liens;
(1) Liens on Property not included in the Collateral which
secure Investment Line of Credit Indebtedness incurred to finance the
acquisition of such Property; and
(m) Liens to secure the Overline Indebtedness.
provided, that Liens described in clauses (f), (h) and (i) of this
definition shall not constitute Permitted Liens to the extent that the
failure of Borrower timely to perform the underlying obligations,
individually or in the aggregate, would constitute a Material Adverse
Effect.
PERMITTED RETURNS OF CAPITAL means Returns of Capital which are
permitted under SECTION 7.13.
PERMITTED SERVICING PROCEEDS DISTRIBUTIONS means Servicing Proceeds
Distributions which are permitted under SECTION 7.13.
PERMITTED SUBORDINATED INDEBTEDNESS means Indebtedness under the
Affiliate Note.
PERMITTED SUBSIDIARIES means Subsidiaries which are engaged in some
aspect of the mortgage banking business, including, without limitation,
title companies and with respect to which the aggregate capital contributed
by Borrower to all such Subsidiaries does not exceed $400,000.
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PERMITTED TAX PAYMENTS means payments to or on behalf of the Parent or
any Affiliate in respect of taxes, which payments are permitted under
SECTION 7.18.
PERSON means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
Governmental Authority, or other form of entity.
PLAN means an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by Borrower or any of its Related
Persons, or an employee pension benefit plan as to which Borrower or any of
its Related Persons would be treated as a contributory sponsor under Title
IV of ERISA if it were to be terminated.
PLEDGED MORTGAGE LOAN means a Mortgage Loan identified in a Collateral
Pledge Certificate as a Mortgage Loan in which Borrower is granting Agent a
security interest for the benefit of Lenders to secure the Obligations.
PRINCIPAL MORTGAGE DOCUMENTS has the meaning specified in SECTION 3.2.
PROPERTY means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
QUALIFIED ACCOUNTS means non-interest bearing accounts maintained in
the name of Borrower with Agent with respect to which the sums on deposit
from time to time therein do not constitute demand deposits, as such term
is defined in Regulation Q of the Board of Governors of the Federal Reserve
System.
QUARTERLY COMPUTATION PERIOD means (a) for the first Quarterly
Computation Period hereunder, the period commencing on the Agreement Date
and ending on the earlier to occur of (i) June 30, 1996 and (ii) the
Termination Date, and (b) for any other Quarterly Computation Period, the
period commencing on the day after the last day of the preceding Quarterly
Computation Period and ending on the earlier to occur of (i) the last day
of the third calendar month in such Quarterly Computation Period and (ii)
the Termination Date.
REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System.
RELATED PERSON means any Person that is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of
the Code) as Borrower or is under common control (within the meaning of
Section 414(c) of the Code or Section 4001 of ERISA) with Borrower or is a
member of any affiliated service group (within the meaning of Section
414(m) of the Code) which includes Borrower or is otherwise treated as part
of the controlled group which includes Borrower (within the meaning of
Section 414(o) of the Code).
RELEASED NOTE has the meaning specified in SECTION 3.5.
REO means real estate owned by Borrower as the result of foreclosure
or other process in lieu of foreclosure on a Mortgage which secured a
Mortgage Loan.
REPURCHASE AGREEMENT means an agreement with an Investor pursuant to
which Borrower sells and agrees to repurchase interests in Mortgage Loans.
REPURCHASE AGREEMENT LIENS means Liens granted pursuant to a
Repurchase Agreement on Mortgage Loans (and the proceeds thereof) sold by
Borrower thereunder and on no other property of Borrower.
REQUEST FOR RELEASE OF SECURITY INTEREST means a request for release
of security interest substantially in the form of EXHIBIT O or such other
form as to which Borrower and Agent may agree.
REQUIRED LENDERS means at any time Lenders whose Commitment Amounts
represent at least 66 and 2/3% of the then Total Commitment; provided, that
for purposes of determining Required Lenders when some but not all
Commitments have terminated, any Lender with outstanding Advances whose
Commitment has terminated shall be deemed to have a Commitment Amount equal
to its outstanding Advances.
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REQUIRED MORTGAGE DOCUMENTS means Mortgage Documents required to be
reviewed by the Agency Custodian in connection with the issuance or
guaranty of a Mortgage-Backed Security pursuant to an Agency Commitment.
REQUIREMENT OF LAW as to any Person means the articles of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other determination, direction or requirement
(including, without limitation, any of the foregoing which relate to energy
regulations and occupational, safety and health standards or controls and
environmental, hazardous materials use or disposal and pollution standards
or controls) of any Governmental Authority, in each case applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
RESERVE REQUIREMENT means, for any day, the rate at which reserves
(including any marginal, supplemental or emergency reserve) are required to
be maintained under Regulation D by Agent against "Eurocurrency
liabilities," as that term is used in Regulation D, on such day.
RETURNS OF CAPITAL means any and all payments made by Borrower to NVR
Financial Services, Inc. or the Parent which represent a return of cash
capital contributions made by such Person to Borrower at any time on or
after the Agreement Date.
SCHEDULED TERMINATION DATE means June 12, 1997.
SECTION 107 MORTGAGE LOAN means a Mortgage Loan which has been
repurchased by Borrower pursuant to a Section 107 Repurchase.
SECTION 107 REPURCHASE means the repurchase by Borrower pursuant to
the FNMA Guide (Servicing) Part III, Section 107 of an adjustable rate
Mortgage Loan serviced by Borrower (which Mortgage Loan backs a FNMA
Security) in connection with the conversion of the interest rate on such
Mortgage Loan to a fixed rate.
SECURITIES CREDIT TRANSACTION REGULATIONS means Regulations G, T, U
and X issued by the Board of Governors of the Federal Reserve System as in
effect from time to time.
SECURITY AGREEMENT means that certain Security Agreement dated as of
April 30, 1993, as amended, between Borrower and Agent entered into
pursuant to the Original Loan Agreement and confirmed by Borrower pursuant
to SECTION 3.1, as amended through the Agreement Date and as the same may
from time to time be further amended, modified or supplemented.
SECURITY INSTRUMENTS means (i) the Security Agreement and (ii) such
other executed documents as are or may be necessary to grant to Agent a
perfected first, prior and continuing security interest in and to the
collateral described in the definition of "Collateral" set forth in the
Security Agreement, and any and all other agreements or instruments now or
hereafter executed and delivered by or on behalf of Borrower in connection
with, or as security for the payment or performance of, all or any of the
Obligations, including Borrower's obligations under the Notes and this
agreement, as such documents may be amended, modified or supplemented from
time to time.
SERVICING AGREEMENTS means all agreements between Borrower and Persons
other than Borrower pursuant to which Borrower undertakes to service
Mortgage Loans or pools of Mortgage Loans owned, insured or guaranteed by
such Persons; "Servicing Agreements" does not include any subservicing
agreements.
SERVICING PORTFOLIO of Borrower means at any time all Mortgage Loans
with respect to which Borrower acts as servicer pursuant to Servicing
Agreements.
SERVICING PROCEEDS DISTRIBUTIONS means any and all payments made by
Borrower to NVR Financial Services, Inc. representing a distribution of
cash proceeds (not included in Borrower's Net Income) received upon the
sale of all or any part of the Contributed Servicing Rights. For purposes
of determining the cash proceeds (not included in Borrower's Net Income)
received upon the sale of all or any part of the Contributed Servicing
Rights, the
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book value of all such Contributed Servicing Rights shall be allocated
among each part of the Contributed Servicing Rights in accordance with
SCHEDULE 1.1(D).
SERVICING RECORDS means all contracts and other documents, books,
records and other information (including without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) maintained with respect to the Servicing Agreements
and the Servicing Portfolio.
SERVICING RIGHTS means all of Borrower's right, title and interest in
and under the Servicing Agreements, including, without limitation, the
rights of Borrower to income and reimbursement thereunder.
SPECIAL BORROWING has the meaning specified in SECTION 2.3(B).
SPECIAL BORROWING AMOUNT at any time means the greater of (i) zero and
(ii) the amount equal to (a) the aggregate principal amount of all Special
Borrowings outstanding with respect to which the Principal Mortgage
Documents have not yet been delivered to Agent, after giving effect to any
Special Borrowing in connection with which the Special Borrowing Amount is
being calculated minus (b) the Excess Dry Collateral Value at such time.
SPECIAL BORROWING LIMIT means (a) during the period commencing on the
third to last Business Day of any calendar month (e.g., September 27 for
the month of September 1995) and running through and including the fourth
business day of the following calendar month (e.g., October 5 for the month
of October 1995), 30% of the then Total Commitment and (b) at any other
time, 20% of the then Total Commitment.
STANDARD & POORS means Standard & Poor's Ratings Services.
SUBSIDIARY of any Person (the "first Person") means any Person which
is properly treated as a subsidiary of the first Person under GAAP.
SUPER JUMBO LOAN means a Mortgage Loan, the original principal amount
of which is greater than $500,000 but no greater than $750,000 (or such
greater amount as Agent, in its sole discretion, may permit on a case-by-
case basis), which complies with all applicable requirements for purchase
under either (a) the FNMA or FHLMC standard form of conventional mortgage
purchase contract then in effect, except that the amount of such loan is
greater than the maximum loan amount under such requirements, or (b) a
Take-Out Commitment.
SWING ADVANCE means an advance by Agent to Borrower pursuant to
SECTION 2.1(C).
SWING ADVANCE LIMIT means $25,000,000.
SWING PROMISSORY NOTE means the promissory note delivered by Borrower
to Agent pursuant to the second sentence of SECTION 2.2 in the form
attached hereto as EXHIBIT A-2 and all renewals, extensions, modifications
and rearrangements thereof.
TAKE-OUT COMMITMENT means a current, valid, binding and enforceable
written commitment by an Investor to purchase from Borrower Mortgage Loans
or Mortgage-Backed Securities of specific characteristics within a specific
period at a specific price or yield.
TAKE-OUT PRICE means:
(a) With respect to a pool of Eligible Gestation Mortgage Loans,
the Take-Out Price of the Mortgage-Backed Security to be issued or
guaranteed pursuant to the Agency Commitment to which such pool has
been Allocated; and
(b) with respect to an Eligible Mortgage-Backed Security, the
price for such Eligible Mortgage-Backed Security under the Take-Out
Commitment to which such Eligible Mortgage-Backed Security has been
Allocated.
TAKE-OUT REPORT means the report substantially in the form of EXHIBIT
J hereto (or such other forms as to which Borrower and Agent may agree),
delivered by Borrower pursuant to SECTION 6.1(F).
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TAX ALLOCATION AGREEMENT means that certain Amended and Restated Tax
Allocation Agreement dated as of March 7, 1996, among the Parent, Borrower
and certain Affiliates of Borrower, a true and correct copy of which is
attached as EXHIBIT O.
TERMINATION DATE means the Scheduled Termination Date or the earlier
date of termination in whole of the Commitments pursuant to SECTION 8.2.
TOTAL COMMITMENT at any time means the sum of the Commitment Amounts
in effect at such time.
TOTAL LIABILITIES of Borrower means, as of any date of determination,
all amounts which would be included as liabilities on a balance sheet of
Borrower as of such date prepared in accordance with GAAP.
TYPE means, with respect to Advances, any of the following, each of
which shall be deemed to be a different "Type" of Advance: Domestic Rate
Advances, Eurodollar Rate Advances having a one-month Eurodollar Borrowing
Period, Eurodollar Rate Advances having a two-month Eurodollar Borrowing
Period, and Eurodollar Rate Advances having a three-month Eurodollar
Borrowing Period. Any Eurodollar Rate Advance having a Eurodollar Borrowing
Period that differs from the duration specified for a Type of Eurodollar
Rate Advance listed above solely as a result of the operation of clauses
(a) and (b) of the definition of "Eurodollar Borrowing Period" shall be
deemed to be an Advance of such above-listed Type notwithstanding such
difference in duration of Eurodollar Borrowing Periods.
UCC means the Uniform Commercial Code as adopted in the State of
Texas, Tex. Bus. & Com. Code ▇▇▇. (S) 1.101 et seq. (▇▇▇▇▇▇ 1968 and Supp.
1992), as amended from time to time.
U.S. GOVERNMENT SECURITIES means securities of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States and have a current maturity of ninety days or
less.
VA means the Department of Veterans Affairs, or any successor thereto.
VA LOAN means a Mortgage Loan the payment of which is partially or
completely guaranteed by the VA under the Servicemen's Readjustment Act of
1944, as amended, or Chapter 37 of Title 38 of the United States Code or
with respect to which there is a current binding and enforceable commitment
for such a guaranty issued by the VA.
VALUATION ELECTION NOTICE means a valuation election notice in the
form of EXHIBIT E-3 or such other form as to which Borrower and Agent may
agree.
WAREHOUSE ADVANCE means an advance by a Lender to Borrower pursuant to
SECTION 2.1(B) or 2.1(D).
WAREHOUSE PROMISSORY NOTES means the promissory notes delivered by
Borrower to Lenders pursuant to the first sentence of SECTION 2.2 each in
the form attached hereto as EXHIBIT A-1 and all renewals, extensions,
modifications and rearrangements thereof.
WEIGHTED AVERAGE TAKE-OUT PRICE means, with respect to a Mortgage
Loan, the weighted average Take-Out Commitment price, expressed as a
percentage, determined as set forth on SCHEDULE 1.1(C).
WELFARE PLAN means an employee welfare benefit plan (as defined in
Section 3(1) of ERISA) or a group health plan (as defined in Section
4980B(g)(2) of the Code) which is or has been established or maintained, or
to which contributions are or have been made, by Borrower or any of its
Related Persons.
WET MORTGAGE LOAN means a Mortgage Loan which was identified by
Borrower as a New Wet Mortgage Loan at the time when Agent was first
granted a security interest in such Mortgage Loan for the benefit of
Lenders.
1.2 TIME REFERENCES. Time references (e.g., 9:30 a.m.) are to time in
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Dallas, Texas. In calculating a period from one date to another, the word "from"
means "from and including" and the word "to" or "until" means "to but
excluding."
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1.3 OTHER REFERENCES. Where appropriate, the singular includes the plural
----------------
and vice versa, and words of any gender include each other gender. Heading and
caption references may not be construed in interpreting provisions. Monetary
references are to currency of the United States of America. Section, paragraph,
annex, schedule, exhibit, and similar references are to the particular Loan
Document in which they are used. References to "telecopy," "facsimile," "fax,"
or similar terms are to facsimile or telecopy transmissions. References to any
Person include that Person's heirs, personal representatives, successors,
trustees, receivers, and permitted assigns. References to any Requirement of Law
include every amendment or supplement to it, rule and regulation adopted under
it, and successor or replacement for it. References to any Loan Document or
other document include every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it. The words "hereof,"
"herein," "hereunder" and similar terms when used in this agreement shall refer
to this agreement as a whole and not to any particular provision of this
agreement.
SECTION 2. AMOUNT AND TERMS OF CREDITS
---------------------------
2.1 COMMITMENT.
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(a) Advances in General. Subject to the terms and conditions
-------------------
contained in this agreement, each Lender severally agrees to make Warehouse
Advances (including Warehouse Advances to refinance Swing Advances) to or
for the account of Borrower on a revolving credit basis from time to time
on any Business Day from the Agreement Date through the earlier to occur of
the Termination Date and the Business Day preceding the Scheduled
Termination Date in an amount not to exceed at any one time outstanding the
Commitment Amount of such Lender. Subject to the terms and conditions
contained in this agreement, Agent may elect to fund Swing Advances on a
revolving credit basis from time to time on any Business Day from the
Agreement Date through the earlier to occur of the Termination Date and the
Business Day preceding the Scheduled Termination Date in an amount not to
exceed at any one time outstanding the Swing Advance Limit. Subject to
SECTION 2.12(K), SECTION 2.13 and the other terms and conditions of this
agreement, Warehouse Advances may, at the option of Borrower, be made as,
and from time to time continued as or converted into, Domestic Rate
Advances or Eurodollar Rate Advances of any permitted Type, or any
combination thereof. Swing Advances may only be made as and continued as
Domestic Rate Advances and no Swing Advance may be made or converted into a
Eurodollar Rate Advance of any Type.
(b) Warehouse Advances. Each Borrowing under this SECTION 2.1(B)
------------------
shall be in an aggregate amount of not less than $100,000 and shall consist
of Warehouse Advances made on the Borrowing Date by Lenders ratably
according to their respective Commitment Amounts, provided, that:
(i) the aggregate amount of Warehouse Advances at any time
outstanding shall not exceed the amount equal to the Total Commitment
minus the aggregate amount of Swing Advances then outstanding; and
(ii) the sum of the aggregate amount of Warehouse Advances
outstanding and the aggregate amount of Swing Advances outstanding
shall not at any time exceed the Borrowing Base.
Within the limits of each Lender's Commitment and subject to the other
terms and conditions hereof, Borrower may borrow, repay (whether pursuant
to SECTION 2.5 of this agreement or otherwise), and reborrow under this
SECTION 2.1(B).
(c) Swing Advances. Each Borrowing under this SECTION 2.1(C) shall
--------------
be funded solely by Agent and shall consist of a Swing Advance by Agent on
the Borrowing Date, PROVIDED, THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AGENT SHALL HAVE NO
OBLIGATION, WHETHER TO BORROWER, ANY LENDER OR ANY OTHER PERSON, TO FUND
ANY SWING ADVANCE, the funding of any Swing Advance being entirely in the
discretion of Agent subject only to the limitations that Agent shall not
fund any Swing Advance if:
(i) The aggregate amount of Swing Advances outstanding after
giving effect to such Swing Advance would exceed the lesser of:
(A) The Swing Advance Limit; and
(B) the amount equal to the Total Commitment minus the
aggregate amount of Warehouse Advances then outstanding;
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(ii) the sum of the aggregate amount of Warehouse Advances
outstanding and the aggregate amount of Swing Advances outstanding
after giving effect to such Swing Advance would exceed the Borrowing
Base;
(iii) Agent has not received a duly executed Borrowing Request;
(iv) Agent has received written notice from Borrower or any
Lender that a Default, Event of Default or Excess Special Borrowing
exists and such Default, Event of Default or Excess Special Borrowing
has not been waived or cured in accordance with this agreement; or
(v) the employee of Agent authorizing such Swing Advance has
actual knowledge that a Default, Event of Default or Excess Special
Borrowing exists or would result from the funding thereof.
Notwithstanding the provisions of SECTION 4.2(A) regarding the timing of
delivery of Borrowing Requests, Borrower may request a Swing Advance at any
time on any Business Day by delivering a Borrowing Request at such time;
provided, that Agent shall have no obligation to receive or consider any
Borrowing Request which is delivered after 3:00 p.m. on the Borrowing Date
stated therein. In the event that Agent receives a Borrowing Request which
seeks a Swing Advance prior to 11:00 a.m. on the Borrowing Date stated
therein and Agent elects not to make the requested Swing Advance, such
Borrowing Request shall be deemed to constitute a request for Warehouse
Advances on such Borrowing Date in an aggregate amount equal to the Swing
Advance requested and Agent shall notify each Lender of such Borrowing
Request no later than 12:00 noon on such Borrowing Date.
(d) Mandatory Refinancing or Purchase of Participations in Swing
------------------------------------------------------------
Advances. Subject only to compliance by Agent with the provisions of
--------
clauses (i) through (v) of SECTION 2.1(C) and the further proviso that no
Lender shall be required to make Warehouse Advances to refinance Swing
Advances if the sum of such Warehouse Advances and the outstanding
Warehouse Advances of such Lender would exceed such Lender's Commitment
Amount, and notwithstanding the termination of such Lender's Commitment
pursuant to SECTION 8.2, the existence or imminence of any Default or Event
of Default or any other fact or circumstance, upon the request of Agent
(which request shall be given no less frequently than once in each calendar
week) each Lender absolutely, irrevocably and unconditionally agrees to
make Warehouse Advances ratably according to its share of the Total
Commitment in an amount (assuming funding by each Lender of its ratable
share) sufficient to repay any Swing Advances then outstanding. Borrower
and each Lender hereby irrevocably authorize (i) Agent to request Warehouse
Advances on behalf of Borrower for the purpose of refinancing Swing
Advances as contemplated by this SECTION 2.L(D) and (ii) Agent to disburse
the proceeds of any Warehouse Advances so requested and funded to Agent for
payment of the Swing Advances then outstanding. Notwithstanding the
foregoing provisions of this SECTION 2.1(D), if Agent shall request that
each Lender purchase participations in the outstanding Swing Advances in
lieu of making Warehouse Advances to refinance such Swing Advances, each
Lender absolutely, irrevocably and unconditionally agrees to purchase from
Agent such participations in the Swing Advances owing as shall be necessary
to cause such purchasing Lender to share in the Swing Advances ratably
(according to its share of the Total Commitment) with each of Lenders.
Borrower agrees that any Lender so purchasing a participation from Agent
pursuant to this SECTION 2.L(D) may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation.
2.2 NOTES. The Warehouse Advances made by each Lender pursuant to SECTION
-----
2.1(B) and SECTION 2.1(D) shall be evidenced by a Warehouse Promissory Note
payable to such Lender in the principal amount of the Commitment Amount of such
Lender. Such Swing Advances as may be made by Agent in its sole discretion
(subject only to the limitations on such discretion set forth in clauses (i)
through (v) of SECTION 2.1(C)) shall be evidenced by the Swing Promissory Note
payable to Agent in the principal amount of the Swing Advance Limit. Each Note
shall be payable and bear interest as set forth in SECTIONS 2.5, 2.12 and 11.9.
2.3 NOTICE AND MANNER OF OBTAINING BORROWINGS; SPECIAL BORROWINGS.
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(A Borrowings Generally.
--------------------
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(I Borrower shall request each Borrowing by delivering a
Borrowing Request to Agent in accordance with the provisions of
SECTION 4.2. If such Borrowing Request is not for a Swing Advance (or
if such Borrowing Request is for a Swing Advance but Agent has elected
not to fund the requested Swing Advance), then not later than 12:00
noon following receipt by it of such Borrowing Request, Agent shall
notify each Lender of the Warehouse Advance to be made by such Lender
in connection with such Borrowing Request by telecopying a Borrowing
Notice to such Lender. Not later than 1:00 p.m. on the Borrowing Date
specified in the Borrowing Notice, and subject to the terms and
conditions of this agreement, each Lender shall make available to
Agent at the office of Agent set forth in SECTION 11.1, in immediately
available funds, such Lender's Warehouse Advance by wire transfer of
federal funds or deposit of other immediately available funds to the
Funding Account.
(II Notwithstanding the foregoing, unless Agent shall have
received notice from a Lender prior to 1:00 p.m. on the Borrowing Date
that such Lender will not make available to Agent such Lender's
Advance, Agent may assume that such Lender has made the full amount of
its Advance available to Agent in accordance with this SECTION 2.3(A)
and Agent may, in reliance upon such assumption, make available to
Borrower at such time such amount in same day funds. If and to the
extent that such Lender shall have not so made the requested Advance
available to Agent and Agent, in reliance upon such assumption, has
made available to Borrower the amount of such Advance, such Lender and
Borrower severally agree to repay Agent forthwith on demand such
amount together with interest thereon (provided, that Agent shall only
be entitled to repayment of the amount so funded by it plus interest
on such amount), for each day from the date such amount is made
available to Borrower until the date such amount is repaid to Agent,
at (i) for so much of such amount as is repaid by Borrower, the
interest rate at the time applicable hereunder if such amount had been
an additional Advance by Agent in its capacity as a Lender hereunder
and (ii) for so much of such amount as is repaid by such Lender, the
Federal Funds Rate. To the extent that such Lender repays Agent the
amount of the requested Advance, such amount so repaid shall
constitute such Lender's Advance as part of such Borrowing for
purposes of this agreement and all interest on such Advance shall
accrue to and be payable to such Lender.
(III The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Advance on the Borrowing
Date, but neither Agent nor any Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by such
other Lender on the Borrowing Date.
(IV If a Borrowing Request is for a Swing Advance and Agent
elects to fund the Swing Advance so requested, Agent shall, as soon as
practicable after such election, notify Borrower and deposit the Swing
Advance in immediately available funds in the Funding Account.
(B Special Borrowings. Borrower may from time to time request that
------------------
certain Borrowings (to consist of Warehouse Advances, or, subject to the
limitations on Agent's discretion to fund Swing Advances set forth in
clauses (i), (ii) and (iii) of SECTION 2.1(C), Swing Advances) be funded
prior to the delivery to Agent of the corresponding Principal Mortgage
Documents (individually, a "SPECIAL BORROWING"; collectively, "SPECIAL
BORROWINGS"). Lenders agree to make Warehouse Advances in respect of
Special Borrowings in accordance with SECTION 2.3(A) (and agree that Agent
may, subject to the provisions of SECTION 2.1(C), if it so elects make
Swing Advances in respect of Special Borrowings) subject to the terms and
conditions of this agreement, including, without limitation, the following
terms and conditions:
(I No Special Borrowing shall be made if, after the making of
such Special Borrowing, the Special Borrowing Amount would exceed the
Special Borrowing Limit in effect on the Borrowing Date of such
Special Borrowing;
(II Borrower shall grant to Agent, from the date of the
Collateral Pledge Certificate (Wet, Builder or Funding Draft) on which
each New Wet Mortgage Loan is identified, a perfected, first-priority
security interest in the Mortgage Loans so identified and in all
Principal Mortgage Documents and Other Mortgage Documents related
thereto;
(III Borrower shall deliver to Agent, no later than 10:00 a.m.
on the sixth Business Day after the date of the Collateral Pledge
Certificate (Wet, Builder or Funding Draft) on which each New Wet
127
Mortgage Loan is identified (the "DOCUMENT DELIVERY TIME" for each
such New Wet Mortgage Loan), the Principal Mortgage Documents relevant
to each such New Wet Mortgage Loan so identified; and
(IV the Collateral Pledge Certificate (Wet, Builder or Funding
Draft) delivered by Borrower to Agent, pursuant to which Borrower
identifies each New Wet Mortgage Loan, shall describe the Mortgage
Note or Mortgage Notes to be delivered to Agent in connection
therewith by Company Loan Number, Company CDS Number, maker, interest
rate, loan type, Face Amount, Cost, warehoused amount, date and
whether or not such New Wet Mortgage Loan is a SECTION 107 Mortgage
Loan, a Funding Draft Mortgage Loan or a Builder Mortgage Loan.
2.4 FEES.
----
(A Facility Fees. Borrower agrees to pay to Agent for the account
-------------
of each Lender a facility fee on such Lender's average Commitment Amount in
an amount equal to .125% per annum of such average Commitment Amount, which
fee shall be payable in arrears on the Fee and Interest Period Payment
Dates for each Quarterly Computation Period.
(B Agency Fee. In consideration of Agent serving as Agent for
----------
Lenders under this agreement and the other Loan Documents, Borrower agrees
to pay Agent agency fees. Such fees shall be determined in accordance with
and shall be due and payable as provided in the Agent Fee Letter.
(C Custodian Fee. In consideration of Agent serving as custodian
-------------
for the Collateral, Borrower agrees to pay Agent custodial fees. Such fees
shall be determined in accordance with and shall be due and payable as
provided in the Custodial Fee Letter.
(D Usage Fee. In connection with the Construction Loan sublimit,
---------
Borrower agrees to pay a per annum amount equal to the product of .25%
multiplied by the outstanding amount of Advances in connection with
Construction Loans as indicated from time to time on the Borrowing Request.
Such Fees shall be payable in arrears on the Fee and Interest Payment
Dates.
2.5 MANDATORY REPAYMENTS. Borrower shall repay all outstanding Advances
--------------------
on the Termination Date. If at any time the aggregate amount of Advances
outstanding exceeds either the total Commitment or the Borrowing Base, Borrower,
upon the demand of Agent or any Lender, shall repay so much of the outstanding
Advances as may be necessary to eliminate such excess. If at any time an Excess
Special Borrowing exists, Borrower, upon the demand of Agent or any Lender,
shall repay so much of the outstanding Special Borrowings with respect to which
the Principal Mortgage Documents have not yet been delivered to Agent as may be
necessary to eliminate such Excess Special Borrowing.
2.6 BUSINESS DAYS. If the scheduled date for any payment hereunder falls
-------------
on a day which is not a Business Day, then for all purposes of the Notes and
this agreement the same shall be deemed to have fallen on the next following
Business Day, and, except for such payments as to which interest had ceased to
accrue prior to the scheduled date for payment, such extension of times shall be
included in the computation of payments of interest.
2.7 PAYMENT PROCEDURE.
-----------------
(A In General. All payments of the principal of and interest and
----------
fees upon the Notes shall be made by Borrower to Agent before 1:00 p.m. on
the respective dates when due in federal or other immediately available
funds at Agent's address set forth in SECTION 11.1. Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or fees ratably to Lenders according to their
interests therein and like funds relating to the payment of any other
amount payable to any Lender to such Lender, in each case to be applied in
accordance with terms of this agreement. Funds received after 1:00 p.m.
shall be treated for all purposes as having been received by Agent on the
Business Day next following the date of receipt of such funds.
(B Order and Notice of Payments. Contemporaneously with the making
----------------------------
of any payments in respect of the Advances, Borrower shall give Agent
telephonic notice of the amount being repaid. If no Event of Default exists
and is continuing, Borrower shall repay any Domestic Rate Advances
consisting of Swing Advances outstanding prior to repaying any Domestic
Rate Advances consisting of Warehouse Advances then outstanding and, except
to the extent of any Eurodollar Rate Advances as to which the applicable
Eurodollar Borrowing Period ends on
128
the date of such payment (which Eurodollar Rate Advances shall, unless
being continued as Eurodollar Rate Advances pursuant to SECTION 2.12(K), be
repaid prior to the repayment of any Domestic Rate Advances on such date),
Borrower shall repay Domestic Rate Advances outstanding prior to repaying
any Eurodollar Rate Advances outstanding. Subject to the preceding
sentence, if no Event of Default exists and is continuing, payments in
respect of the Obligations shall be applied to specific types of
Obligations (e.g., fees, expenses, principal and interest) as Borrower
directs. At any time when an Event of Default exists and is continuing, all
payments in respect of the Obligations shall (unless Agent and Lenders
shall otherwise unanimously agree) be applied FIRST to all reasonable
costs, expenses, fees and reasonable attorneys' fees incurred by, and
agency or custodian fees due to, Agent arising out of or in connection with
this agreement, the Notes or the other Loan Documents, including, without
limitation, all reasonable costs, expenses, fees and reasonable attorneys'
fees arising out of or in connection with the negotiation, preparation and
enforcement of such documents; SECOND, to the payment of all expenses due
and payable under SECTION 6.5 ratably among Lenders in accordance with such
amounts; THIRD, to the payment of fees due and payable under SECTION 2.4(A)
and 2.4(D), ratably in accordance with such amounts; FOURTH, to the payment
of interest then due and payable under the Notes, ratably in accordance
with the amount of interest owed to each Lender; and FIFTH, to the payment
of principal of the Notes ratably in accordance with the outstanding
Advances of each Lender; provided, that (x) payments due under the
preceding clause FOURTH to any Lender which has failed to make any Advance
or purchase any participation required to be made or purchased by such
Lender under SECTION 2.L(D) shall be allocated first to the payment of
interest then due and payable under the Swing Promissory Note and then to
such Lender and (y) payments due under the preceding clause FIFTH to any
Lender which has failed to make any Advance or purchase any participation
required to be made or purchased by such Lender under SECTION 2.1(D) shall
be allocated first to the payment of principal of the Swing Promissory Note
and then to such Lender. Agent shall promptly notify Borrower and each of
Lenders of the application of any payment to anything other than the
principal of or interest on the Notes.
2.8 PAYMENTS NOT IN FULL. Unless Agent shall have received notice from
--------------------
Borrower prior to the date on which any payment is to be made to Agent for the
account of Lenders hereunder that Borrower will not make such payment in full,
Agent may assume that Borrower has made such payment in full to Agent on such
date and Agent may, in reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent that Borrower shall have not so made such payment in full
to Agent and Agent, in reliance on such assumption, has distributed such amounts
to Lenders, each Lender shall repay to Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to Agent, at the Federal Funds Rate.
2.9 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
------------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances owing to it (other than pursuant to
SECTIONS 2.1(D), 2.7, OR 2.10) in excess of its ratable portion of payments on
account of the Advances obtained by all Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Advances owing to
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratable with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, each
such purchase shall be rescinded, and each Lender from which such a purchase was
made shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this SECTION 2.9 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
2.10 REQUIREMENTS OF LAW.
-------------------
(A In the event that the adoption of any new Requirement of Law or
any change in any existing Requirement of Law (other than any change in the
articles of incorporation, by-laws or other organizational or governing
documents of the relevant Lender) or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority issued after the Agreement Date:
(I shall subject any Lender to any tax of any kind whatsoever
with respect to this agreement, any Note or any Advance made by it, or
change the basis of taxation of payments to such Lender
129
of principal, facility fee, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net
income of such Lender and changes in the computation of the overall
net income of such Lender that do not specifically involve payments to
Lender under this agreement, any Note, or any Advance, even though
such changes have the effect of increasing the effective rate of tax
imposed on income of such Lender);
(II shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
commitments, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender which are not
otherwise included in the determination of any interest rate under
such Lender's note;
(III shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by any amount which such Lender deems to be material, of making,
renewing or maintaining its Commitment or Advances or to reduce any amount
receivable hereunder, in each case, in respect of its Advances, then,
Borrower shall promptly pay such Lender, upon its written demand setting
forth the basis for such demand, any additional amounts necessary to
compensate such Lender for such additional cost or reduced amount
receivable. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by such Lender, through Agent, to Borrower
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this agreement and payment of the Notes.
(B In the event that any Lender shall have determined that the
adoption of any new law, rule, regulation or guideline regarding capital
adequacy, or any change therein or in the interpretation or application
thereof or compliance by any Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or Governmental
Authority issued after the Agreement Date, including, without limitation,
the issuance of any final rule, regulation or guideline, does or shall have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then Borrower shall
promptly pay such Lender, upon its written demand setting forth the basis
for such demand, any additional amounts necessary to compensate such Lender
or such corporation for such reduced rate of return. A certificate as to
any additional amounts payable pursuant to the foregoing sentence submitted
by such Lender, through Agent, to Borrower shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of
this agreement and payment of the Notes.
(c) Mandatory Suspensions and Conversions of Eurodollar Rate
--------------------------------------------------------
Advances. A Lender's obligations to make or continue or convert Warehouse
--------
Advances into Eurodollar Rate Advances of any Type shall be suspended, all
such Lender's outstanding Warehouse Advances of that Type shall be
converted on the last day of their applicable Eurodollar Borrowing Periods
(or, if earlier, in the case of clause (iii) below, on the last day such
Lender may lawfully continue to maintain Warehouse Advances of that Type)
into, and all pending requests for the making or continuation of or
conversion into Warehouse Advances of such Type by such Lender shall be
deemed requests for, Domestic Rate Advances, if:
(i) on or prior to the determination of an interest rate for a
Eurodollar Rate Advance of that Type for any Eurodollar Borrowing
Period, Agent determines that appropriate information is not available
to it for purposes of determining the Adjusted Eurodollar Rate for
such Eurodollar Borrowing Period;
(ii) on or prior to the first day of any Eurodollar Borrowing
Period for a Eurodollar Rate Advance of that Type, such Lender
determines that the Adjusted Eurodollar Rate as determined by Agent
for such Eurodollar Borrowing Period would not accurately reflect the
cost to such Lender of making, continuing, or converting Warehouse
Advances into, a Eurodollar Rate Advance of such Type for such
Eurodollar Borrowing Period; or
(iii) at any time such Lender determines that any new
Requirement of Law or any change in any Requirement of Law existing on
the Agreement Date (other than any change in the articles of
130
incorporation, by-laws or other organizational or governing documents
of the relevant Lender) or in the interpretation or application
thereof or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or
other Governmental Authority issued after the Agreement Date makes it
unlawful or impossible for such Lender to make, continue, or convert a
Warehouse Advance into, any Type of Eurodollar Rate Advance, or to
comply with its obligations hereunder in respect thereof.
If, as a result of this SECTION 2.10(C), any Warehouse Advance of any
Lender that would otherwise be made or maintained as or converted into a
Eurodollar Rate Advance of any Type for any Eurodollar Borrowing Period is
instead made or maintained as or converted into a Domestic Rate Advance,
then, unless the corresponding Warehouse Advance of each of the other
Lenders is also to be made or maintained as or converted into a Domestic
Rate Advance, such Warehouse Advance shall be treated as being a Eurodollar
Rate Advance of such Type for such Eurodollar Borrowing Period for all
purposes of this agreement (including the timing, application and proration
among Lenders of interest payments, conversions and prepayments) except for
the calculation of the interest rate borne by such Warehouse Advance. Agent
shall promptly notify Borrower and each Lender of the existence or
occurrence of any condition or circumstance specified in clause (i) above,
and each Lender shall promptly notify Borrower, through Agent, and Agent of
the existence or occurrence of any condition or circumstance specified in
clause (ii) or (iii) above applicable to such Lender's Warehouse Advances,
but the failure by Agent or such Lender to give any such notice shall not
affect such Lender's rights hereunder.
(d) Funding Losses. Borrower shall pay to each Lender, upon request,
--------------
such amount or amounts as such Lender reasonably determines are necessary
to compensate it for any funding loss, cost or expense incurred by it as a
result of (i) any payment, prepayment or conversion of a Eurodollar Rate
Advance on a date other than the last day of the Eurodollar Borrowing
Period for such Eurodollar Rate Advance or (ii) a Eurodollar Rate Advance
for any reason not being made or converted, or any payment not being made,
on the date therefor determined in accordance with the applicable
provisions of this agreement. At the election of such Lender, and without
limiting the generality of the foregoing, but without duplication, such
compensation on account of losses may include an amount equal to the excess
of (x) the interest that would have been received from Borrower under this
agreement on any amounts to be reemployed during an Eurodollar Borrowing
Period or its remaining portion over (y) the interest component of the
return that such Lender reasonably determines it could have obtained had it
placed such amount on deposit in the interbank Dollar market selected by it
for a period equal to such Eurodollar Borrowing Period or its remaining
portion.
(e) Payment of Additional Amounts. Any additional amounts payable
-----------------------------
pursuant to this SECTION 2.10 shall be payable, in the case of those
applicable to prior periods, within 15 days after request by such Lender
for such payment and, in the case of those applicable to future periods, on
the dates specified, or determined in accordance with a method specified,
by such Lender.
(f) Certain Determinations; Notice. In making the determinations
------------------------------
contemplated by SECTIONS 2.10(A), (B), (C), and (D), each Lender may make
such estimates, assumptions, allocations and the like that such Lender in
good faith determines to be appropriate, and such Lender's selection
thereof in accordance with this SECTION 2.10(F), and the determinations
made by such Lender on the basis thereof, shall be final, binding and
conclusive upon Borrower, except, in the case of such determinations, for
manifest errors in computation or transmission. Each Lender shall furnish
to Borrower, through Agent, a certificate outlining in reasonable detail
the computation of any amounts claimed by it under SECTION 2.10(A), (B),
(C), and (D) and the assumptions underlying such computations. Each Lender
will promptly notify Borrower, through Agent, of any determination made by
it referred to in SECTION 2.10(A), (B), (C), and (D) above, but the failure
to give such notice shall not affect such Lender's right to compensation.
(g) Change of Eurodollar Lending Office, etc. If an event occurs with
-----------------------------------------
respect to any Lender that entitles such Lender to make a claim under
SECTION 2.10(A) or (B), or which makes operable the provisions of SECTION
2.10(C)(III), such Lender shall, if requested by Borrower, use reasonable
efforts to take any reasonable action (including the designation of a new
Eurodollar Lending Office) to reduce the amount such Lender is so entitled
to claim or reduce such operability; provided, that no Lender shall be
obligated to take any action under this SECTION 2.10(G) if such action, in
the sole and absolute judgment of such Lender would be otherwise than
immaterially disadvantageous to such Lender or in any manner contrary to
such Lender's policies. Except in the case of a change in Eurodollar
Lending Office made at the request of Borrower, the designation of a new
Eurodollar Lending Office by
131
any Lender shall not obligate Borrower to pay any amount to such Lender
under SECTION 2.10(A), (B), or (C) if such claim or the operability of such
clause results solely from such designation and not from a change in any
Requirement of Law after the Second Amendment Agreement Date.
2.11 OVERLINE INDEBTEDNESS. Notwithstanding the provisions of SECTIONS
---------------------
2.1, 2.7 and 2.9 or any other provision of the Loan Documents to the contrary,
if an Overline Indebtedness exists and until such time as all outstanding
Overline Indebtedness has been paid in full, all repayments of outstanding
Advances shall be applied, FIRST, to repayment of any outstanding Overline
Indebtedness, and SECOND, pro-rata to the outstanding Warehouse Advances.
2.12 INTEREST.
--------
(a) In General. Borrower shall pay interest on the Domestic Rate
----------
Advances for each Computation Period on the Fee and Interest Payment Date
for such Computation Period.
(b) Average Gestation Advances. The Average Gestation Advances of
--------------------------
each Lender for each Computation Period shall bear interest at the lesser
of (i) the per annum rate of interest equal to the sum of (A) the Average
Federal Funds Rate for such Computation Period and (B) 0.85% per annum and
(ii) the Maximum Rate.
(c) Average Regular Advances. The Average Regular Advances of each
------------------------
Lender for each Computation Period shall bear interest at the lesser of (i)
the sum of (a) the Average Federal Funds Rate for such Computation Period
and (b) 1.25% per annum and (ii) the Maximum Rate.
(d) Average Construction Advances. The Average Construction
-----------------------------
Advances of each Lender for each Computation Period shall bear interest at
the lesser of (i) the sum of (a) the Average Federal Funds Rate for such
Computation Period and (b) 2.0% per annum and (ii) the Maximum Rate.
(e) Overdue Amounts. Overdue principal, interest and other amounts
---------------
shall bear interest for each day that such amounts are overdue (after, as
well as before, judgment) at the lesser of (i) the sum of 4.00% and the
Base Rate and (ii) the Maximum Rate. Interest payable on overdue amounts
shall be payable on demand.
(f) Notice of Amounts and Rates, etc. (i) As soon as practicable
---------------------------------
after the end of each Computation Period, Agent shall notify Borrower and
each Lender of Average Federal Funds Rate for such Computation Period and
the Average Domestic Rate Advances, the Average Gestation Advances and the
Average Regular Advances for such Lender for such Computation Period. (ii)
As soon as practicable after the end of each Computation Period, and in any
event no later than the eighty day of the following Computation Period,
each Deposit Holding Lender shall give Agent and Borrower notice of any
interest credits due Borrower on the Domestic Rate Advances of such Lender
under the applicable Other Writing.
(g) Other Writings. If they so elect, Borrower and any Deposit
--------------
Holding Lender may enter into additional written agreements (each an OTHER
WRITING) providing for alternative calculations of interest on the Domestic
Rate Advance of such Deposit Holding Lender and the carry forward of
credits for account balances; provided, that (i) in no event shall such
alternative calculation result in more interest being due such Deposit
Holding Lender for the period from the initial Advance by such Deposit
Holding Lender through the date of determination than would be payable
hereunder; (ii) nothing in such Other Writing shall modify the
circumstances under which interest due such Deposit Holding Lender shall be
paid to Agent for the account of such Deposit Holding Lender, as set forth
in SECTION 2.7(A); (iii) upon the written request of Agent following the
occurrence of any Event of Default, Borrower and each Deposit Holding
Lender shall deliver to Agent a certified copy of such Deposit Holding
Lender's Other Writing, and Borrower and each Lender which is not a Deposit
Holding Lender shall certify to Agent the absence of any such Other
Writing; and (iv) the provisions of this SECTION 2.12(G) shall be
controlling in the event of any conflict between such provisions and any
such Other Writing.
(h) 360 Day Year; Maximum Rate. For purposes of calculating any
--------------------------
interest rate that is either a fixed rate or a rate which is based on the
Base Rate, any Eurodollar Rate, or the Federal Funds Rate, interest shall
be calculated on the basis of the actual number of days elapsed over a 360-
day year. For purposes of calculating any fees on a per annum basis, fees
shall be calculated on the basis of the actual number of days elapsed over
a 360-day year. Any fees or other sums contracted for or received which
constitute interest under applicable law shall be included in any
calculation of interest at the Maximum Rate. For purposes of calculating
interest at the Maximum Rate, interest
132
shall be calculated on the basis of the actual number of days elapsed over
whichever of a 365-day or 366-day year is applicable. Reference is made to
SECTION 11.9 for certain provisions limiting the rate of interest which may
be charged under this agreement and the other Loan Documents. The
provisions of SECTION 11.9 shall be controlling in the event of any
conflict between such provisions and (i) the provisions of this SECTION
2.12, (ii) any provisions of SECTION 2.4, (iii) any other provision of this
agreement, or (iv) any provision of any other Loan Document.
(i) Payment of Interest on behalf of Borrower. To the extent
-----------------------------------------
permitted under applicable Requirements of Law from time to time in effect,
Bank One, Texas, N.A. shall pay on behalf of Borrower and on the date
specified in SECTION 2.12(A), interest due to Lenders pursuant to SECTIONS
2.12(B) and (C) in an amount, for each Computation Period, equal to the
product of (i) the lesser of (A) the Average Federal Funds Rate and (B) the
Maximum Rate and (ii) the lesser of (A) the Average Aggregate Domestic Rate
Advances and (B) the Maximum Rate and (ii) the lesser of (A) the Average
Aggregate Domestic Rate Advances and (B) the Available Average Equivalent
Amount for such Computation Period.
(j) Eurodollar Rate Advances. Borrower shall pay interest on each
------------------------
Eurodollar Rate Advance (i) on the last day of the applicable Eurodollar
Borrowing Period (and, if such Eurodollar Borrowing Period is longer than
one month, at intervals of one month after the first day of such Eurodollar
Borrowing Period), (ii) on any prepayment in full of any Eurodollar Rate
Advance and (iii) at maturity (whether by acceleration or otherwise). Each
Eurodollar Rate Advance shall bear interest at the lesser of (x) the sum of
(i) the Adjusted Eurodollar Rate for the Eurodollar Borrowing Period
relevant thereto and (ii) 1.25% per annum and (y) the Maximum Rate.
(k) Conversion and Continuation; Funding as Eurodollar Rate Advances.
----------------------------------------------------------------
(i) All or any part of the principal amount of Warehouse
Advances of any Type may, on any Business Day, be converted into any
other Type or Types of Warehouse Advances, except that (A) Warehouse
Advances that are Eurodollar Rate Advances may be converted only on
the last day of the applicable Eurodollar Borrowing Period and (B)
Warehouse Advances that are Domestic Rate Advances may be converted
into Eurodollar Rate Advances only on a Eurodollar Business Day.
(ii) Warehouse Advances that are Domestic Rate Advances shall
continue as Domestic Rate Advances unless and until such Advances are
converted into Advances of another Type. Warehouse Advances that are
Eurodollar Rate Advances of any Type shall continue as Advances of
such Type until the end of the then current Eurodollar Borrowing
Period therefor, at which time they shall be automatically converted
into Domestic Rate Advances unless Borrower shall have given Agent
notice in accordance with SECTION 2.12(K)(IV) requesting either that
such Advances continue as Advances of such Type for another Eurodollar
Borrowing Period or that such Advances be converted into Advances of
another Type at the end of such Eurodollar Borrowing Period.
(iii) Notwithstanding anything to the contrary contained in
SECTION 2.12(J)(I) or (II), during a Default, Agent may notify
Borrower that Warehouse Advances may only be made, continued as or
converted into Domestic Rate Advances and, thereafter, until no
Default shall continue to exist, Warehouse Advances may not be made,
continued as or converted into Eurodollar Rate Advances.
(iv) Borrower shall give Agent notice (which shall be
irrevocable) of each conversion of Warehouse Advances or continuation
of Warehouse Advances that are Eurodollar Rate Advances no later than
11:00 a.m. on, in the case of a conversion into Domestic Rate
Advances, the Business Day, and, in the case of a conversion into or
continuation of Eurodollar Rate Advances, the third Eurodollar
Business Day, before the requested date of such conversion or
continuation. Each notice of conversion or continuation shall be in
the form of EXHIBIT R or such other form as to which Borrower and
Agent may agree (each a "NOTICE OF CONVERSION") and shall specify (A)
the requested date of such conversion or continuation, (B) the amount
and Type and, in the case of Warehouse Advances that are Eurodollar
Rate Advances, the last day of the applicable Eurodollar Borrowing
Period of the Warehouse Advances to be converted or continued and (C)
the amount and Type or Types of Warehouse Advances into which such
Warehouse Advances are to be continued. Promptly upon receipt of any
Notice of Conversion in which a conversion or continuation is
requested and in any event no later than 2:00 p.m. on the date of such
receipt, Agent shall notify each Lender of (x) the contents thereof,
(y) the amount and Type and, in the case of Warehouse Advances that
are Eurodollar Rate Advances, the last day of the applicable
Eurodollar Borrowing Period of
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each Warehouse Advance to be converted or continued by such Lender and
(z) the amount and Type or Types of Warehouse Advances into which such
Warehouse Advances are to be converted or as which such Warehouse
Advances are to be continued.
(v) Borrower shall give Agent notice (which shall be
irrevocable) of each election to have Warehouse Advances funded (as
opposed to converted or continued) as Eurodollar Rate Advances no
later than 11:00 a.m. on the third Eurodollar Business Day before the
Borrowing Date for such Advances. Each notice of such funding shall be
by Notice of Conversion with the blanks appropriately completed.
Promptly upon receipt of any Notice of Conversion in which a funding
is requested and in any event no later than 2:00 p.m. on the date of
such receipt, Agent shall notify each Lender of (x) the contents
thereof and (y) the amount and Type of Eurodollar Rate Advances to be
funded by such Lender and the Borrowing Date therefor.
2.13 LIMITATION ON TYPES OF ADVANCES. Notwithstanding anything to the
-------------------------------
contrary contained in this agreement, Borrower shall borrow, prepay, convert and
continue Advances in a manner such that (a) the aggregate principal amount of
its Eurodollar Rate Advances of the same Type and having the same Eurodollar
Borrowing Period shall at all times be no less than $2,000,000 and (b) there
shall not be, at any one time, more than three Eurodollar Borrowing Periods in
effect.
SECTION 3. COLLATERAL
----------
3.1 COLLATERAL.
----------
(A In General. Pursuant to the Original Loan Agreement, the
----------
Existing Loan Agreement and the Security Agreement, and to secure the
payment of the "Obligations," as such term is defined in the Original Loan
Agreement, Borrower granted Agent a security interest for the benefit of
Lenders in and to certain "Collateral," as such term is defined in the
Security Agreement. Borrower hereby confirms such grant in all respects and
acknowledges and agrees that:
(I) This agreement as amended, modified, restated, or extended
constitutes the "Loan Agreement" as defined in the Security Agreement;
(II) the Obligations (as defined herein) constitute
"Obligations" secured by the security interests granted under the
Security Agreement; and
(III) each of the Lenders party to this agreement constitutes a
"Lender" (as defined in the Security Agreement) for all purposes of
the Security Agreement.
(B) Additional Collateral. From time to time Borrower may grant
---------------------
Agent for the benefit of Lenders a security interest in additional
collateral pursuant to this agreement and the Security Agreement. Borrower
hereby agrees to execute all documents and instruments, and perform all
other acts reasonably deemed necessary by Agent or the Required Lenders, to
perfect the security interest of Agent for the benefit of Lenders in and to
the collateral identified in the granting clause of the Security Agreement.
3.2 ELIGIBLE MORTGAGE LOANS. Each Collateral Pledge Certificate shall
-----------------------
include a schedule identifying the Mortgage Loans in which Agent is thereby
granted a security interest for the benefit of Lenders as security for the
Obligations. Each Collateral Pledge Certificate shall be accompanied by the
following items (collectively, the "PRINCIPAL MORTGAGE DOCUMENTS") with respect
to each Pledged Mortgage Loan (other than Pledged Mortgage Loans identified as
New Wet Mortgage Loans) identified therein:
(A) the original Mortgage Note which evidences such Mortgage Loan,
indorsed in blank;
(B) the original or a copy of the Mortgage which secures such
Mortgage Loan (in either case bearing evidence of recordation or
certification by Borrower that such Mortgage has been sent to the
appropriate Governmental Authority for recordation);
134
(C) an original executed assignment in blank for such Mortgage Note
and the Mortgage securing such Mortgage Note, in recordable form, and
otherwise in form satisfactory to Agent; and
(D) if Borrower is not the named payee on the face of such Mortgage
Note, copies (bearing evidence of recordation or certification by Borrower
that such intervening assignment has been sent to the appropriate
Governmental Authority for recordation) of all intervening assignments of
such Mortgage Note and the related Mortgage.
Borrower shall (x) hold in trust for Agent and Lenders, with respect to
each Pledged Mortgage Loan identified on a Collateral Pledge Certificate
(other than Pledged Mortgage Loans identified as New Wet Mortgage Loans),
the original recorded Mortgage relating to such Mortgage Loan, a mortgagee
policy of title insurance (or binding and unexpired commitment to issue
such insurance if the policy has not yet been delivered to Borrower)
insuring Borrower's perfected, first-priority Lien created by the Mortgage
securing such Mortgage Loan (subject only to exceptions permitted by Part
IV, Section 105.05 of the FNMA Guide [Selling] and Section 1704 of the
FHLMC Guide), any Appraisals and any insurance policies which relate to
such Mortgage Loan, and all other original documents, including any Take-
Out Commitment, executed in connection with such Mortgage Loan and not
delivered to Agent (all such undelivered documents are referred to
collectively as the "OTHER MORTGAGE DOCUMENTS"), and (y) upon request of
Agent or the Required Lenders, immediately deliver to Agent the Other
Mortgage Documents together with an index specifically identifying each
such item thereof. Agent in its reasonable discretion may reject as
unsatisfactory any items so delivered by written notice to Borrower
specifying the reasons therefor, whereupon Borrower agrees promptly to use
all reasonable efforts to correct any defects therein identified by Agent
and whereupon any Pledged Mortgage Loan with respect to which any such
defect may not be corrected and any Pledged Mortgage Loan with respect to
which any such defect which may be corrected but for which such defect is
not corrected within fifteen (15) days after the request for such
correction by Agent shall have a Collateral Value of zero. Borrower shall
hold in trust for Agent and Lenders, and shall deliver to Agent in
accordance with SECTION 2.3(B) and this SECTION 3.2 all Principal Mortgage
Documents, Construction Loan Documents, and all Other Mortgage Documents
with respect to each New Wet Mortgage Loan identified on a Collateral
Pledge Certificate (Wet, Builder or Funding Draft).
3.3 POWER OF ATTORNEY. Effective upon the occurrence of an Event of
-----------------
Default, Borrower hereby irrevocably appoints Agent its attorney-in-fact, with
full power of substitution, for and on behalf and in the name of Borrower, to
(i) indorse and deliver to any Person any check, instrument or other paper
coming into Agent's or any Mortgage Note or Mortgage-Backed Security included in
the Collateral or in respect of any other collateral for the Obligations
including any Take-Out Commitment; (ii) prepare, complete, execute, deliver and
record any assignment to Agent or to any other Person of any Mortgage relating
to any Mortgage Note included in the Collateral; (iii) indorse and deliver any
Mortgage Note or Mortgage-Backed Security included in the Collateral and do
every other thing necessary or desirable to effect transfer of all or any part
of the Collateral to Agent or to any other Person; (iv) take all necessary and
appropriate action with respect to all Obligations and the items of Collateral
to be delivered to Agent or held by Borrower in trust for Agent and Lenders
including, without limitation, instruct any title company or closing agent to
deliver any Mortgage Note or Mortgage Document held by it directly to Agent or
its agent; (v) commence, prosecute, settle, discontinue, defend, or otherwise
dispose of any claim relating to any Take-Out Commitment or any other part of
the Collateral; and (vi) sign Borrower's name wherever appropriate to effect the
performance of this agreement. This section shall be liberally, not
restrictively, construed so as to give the greatest latitude to Agent's power,
as Borrower's attorney-in-fact, to collect, sell, and deliver any of the
Collateral and all other documents relating thereto. The powers and authorities
herein conferred on Agent may be exercised by Agent through any Person who, at
the time of the execution of a particular instrument, is an authorized officer
of Agent. The power of attorney conferred by this SECTION 3.3 shall become
effective upon the occurrence, and remain effective during the continuance, of
an Event of Default and is granted for a valuable consideration and is coupled
with an interest and irrevocable so long as the Obligations, or any part
thereof, shall remain unpaid or any Commitment is outstanding. All Persons
dealing with Agent, any officer thereof, or any substitute attorney, acting
pursuant hereto shall be fully protected in treating the powers and authorities
conferred by this SECTION 3.3 as existing and continuing in full force and
effect until advised by Agent that the Obligations have been fully and finally
paid and satisfied and the Commitments have terminated.
3.4 DISPOSITION OF MORTGAGE COLLATERAL.
----------------------------------
(a) Generally. If no Default, Event of Default or Excess Special
---------
Borrowing exists or would result therefrom, Borrower may obtain the release
of the security interest in favor of Agent for the benefit of Lenders in
all
135
or any part of the Mortgage Collateral at any time, and from time to time,
by (i) paying to Agent for distribution to Lenders, as a repayment
hereunder, the Collateral Value of the Mortgage Collateral to be so
released or (ii) delivering to Agent in the manner specified in SECTION 3.2
Mortgage Loans (other than Wet Mortgage Loans) with an aggregate Collateral
Value no less than the Collateral Value of the Mortgage Collateral to be so
released.
(b) Allocation of Mortgage Loans; Election as to Valuation. From time
------------------------------------------------------
to time Borrower may, and prior to the delivery of any Pledged Mortgage
Loans into an Agency Commitment Borrower shall, by execution and delivery
of a Mortgage Loan Delivery Request and Allocation Notice, allocate
specific Pledged Mortgage Loans to specific Agency Commitments and allocate
the Mortgage-Backed Securities to be issued or guaranteed pursuant to such
Agency Commitments to specific Take-Out Commitments. Pledged Mortgage Loans
so allocated to a specific Agency Commitment shall be deemed to have been
"Allocated" to such Agency Commitment and Mortgage-Backed Securities so
allocated to a specific Take-Out Commitment shall be deemed to have been
"Allocated" to such Take-Out Commitment. Each Mortgage Loan Delivery
Request and Allocation Notice shall be accompanied by any Required Mortgage
Documents not then in Agent's possession and the relevant Agency Forms,
duly completed (but for certification by the Agency Custodian, where
applicable) and in sufficient quantity to satisfy applicable Agency
requirements. Borrower may, in its sole discretion, choose whether to have
a pool of Eligible Mortgage Loans which has been Allocated pursuant to this
SECTION 3.4(B) and which otherwise satisfies the requirements for Eligible
Gestation Mortgage Loans attributed Collateral Value as a pool of Eligible
Gestation Mortgage Loans or as a pool of Eligible Mortgage Loans. In the
event that Borrower elects to have such a pool attributed Collateral Value
as a pool of Eligible Gestation Mortgage Loans at the time it is Allocated,
Borrower shall so indicate by checking the appropriate box on the Mortgage
Loan Delivery Request and Allocation Notice by which such Allocation is
made. In the event that Borrower does not elect to have such a pool of
Mortgage Loans attributed Collateral Value as a pool of Eligible Gestation
Mortgage Loans at the time such Allocation is made, Borrower may later
choose to have such pool of Mortgage Loans attributed Collateral Value as a
pool of Eligible Gestation Mortgage Loans by executing and delivering to
Agent a duly completed Valuation Election Notice. Once Borrower has elected
to have Collateral Value attributed to a pool of Mortgage Loans as Eligible
Gestation Mortgage Loans Borrower may not elect to have Collateral Value
attributed to such pool of Mortgage Loans as Eligible Mortgage Loans.
(c) Disposition Pursuant to Agency Commitments. Subject to the
------------------------------------------
provisions of this agreement and compliance with the FNMA Guide, the FHLMC
Guide or the GNMA Guide, as applicable, Agent shall deliver the Mortgage
Documents which relate to Pledged Mortgage Loans Allocated to a particular
Agency Commitment to or for the account of the relevant Agency and shall
release the security interest of Agent to secure the Obligations therein.
Borrower shall complete each Agency Form such that the Mortgage-Backed
Security to be issued or guaranteed pursuant to an Agency Commitment is
issued in the name of Agent or its designee, or, if issued in the name of
Borrower, is issued to an account subject to the sole dominion and control
of Agent or its designee and shall take such other steps as may be
requested by Agent to cause the security interest of Agent in and to any
Mortgage-Backed Security which constitutes Proceeds of one or more Pledged
Mortgage Loans to be a perfected, first-priority, security interest.
Without limiting the generality of the preceding sentence, unless otherwise
instructed by Agent, Borrower shall complete each GNMA form Schedule of
Subscribers such that "Manuf/Cust/FAO/Agent" appears as the Subscriber/PTC
Participant; complete each FNMA form Delivery Schedule such that "Bank One,
Texas/Cust" appears as the Depository Institution and Telegraphic
Abbreviation and "111 000 614" appears as the ABA Number and "NVR Mortgage
Finance, Inc./310435" appears as the Owners Account Name/Account Number;
and shall complete each FHLMC form Warehouse Lender Release of Security
Interests and FHLMC form Guarantor Program: Security Settlement Information
and Delivery Authorization such that "Bank One, Texas/Cust/NVR Mortgage
Finance, Inc./310435" appears as the Depository Institution/Type of
Account/Beneficiary/Account Number and such that "111 000 614 " appears as
the ABA Number. Upon completion by the Agency Custodian of its review of
the Required Mortgage Documents and the Agency Forms relevant to a
particular Agency Commitment, Agent and the Agency Custodian shall deliver
such Agency Forms to the applicable Agency and shall deliver the Required
Mortgage Documents to or for the account of such Agency under a bailee
letter or such other form of transmittal letter as such Agency may require;
provided, that the release of the security interest in favor of Agent in
such Required Mortgage Documents and the Mortgage Loans evidenced thereby
shall be conditioned upon receipt by Agent or its designee of Mortgage-
Backed Securities in the amount specified in the relevant Agency
Commitment.
(d) Disposition of MBS Pursuant to Take-Out Commitments. Mortgage-
---------------------------------------------------
Backed Securities included in the Collateral shall be sold pursuant to the
Take-Out Commitments to which such Mortgage-Backed Securities have been
Allocated. Borrower agrees to take all steps necessary to satisfy the
conditions to the sale of any
136
Mortgage-Backed Security pursuant to the Take-Out Commitment to which it
has been Allocated. Mortgage-Backed Securities from time to time included
in the Collateral shall be sold versus payment (and not "free").
(e) Disposition of Mortgage Loans Pursuant to Take-Out Commitments or
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Repurchase Agreements. Borrower may request that Lenders permit the sale
---------------------
or other disposition of Mortgage Collateral pursuant to a Take-Out
Commitment or Repurchase Agreement by delivering a Mortgage Loan Delivery
Request together with a completed (but for execution by Agent and the
Investor) Bailee Letter and Trust Receipt. Upon the receipt by Agent of
such Mortgage Loan Delivery Request and Bailee Letter and Trust Receipt
from Borrower, and provided that no Default, Event of Default or Excess
Special Borrowing exists or would result therefrom:
(i) Agent shall deliver to the Investor or its agent, under the
Bailee Letter and Trust Receipt, so many of the Principal Mortgage
Documents and so many of any Other Mortgage Documents relevant to the
Mortgage Loans being sold as are held by Agent pursuant to SECTION 3.2
as may be required by the Investor; and
(ii) Borrower may, as agent for Agent and Lenders, deliver to
such Investor or its agent such Other Mortgage Documents as are held
by Borrower pursuant to SECTION 3.2 as may be required by the
Investor:
provided, that (x) the release of the security interest in favor of Agent
for the benefit of Lenders in any Mortgage Loans (and the Mortgage Notes
relevant thereto) so delivered shall be conditioned upon payment to Agent
of an amount no less than the Collateral Value of such Mortgage Loans
within 45 days after the delivery by Agent to such Investor of the items of
Collateral described in clause (i) above, (y) in the event that such
payment or delivery is not made within the period set forth in the
preceding clause (x) the Collateral Value of the Mortgage Loans and other
items so delivered shall be zero, and (z) at no time shall more than
$10,000,000 of Collateral (or such larger amounts as Agent may from time to
time in its sole discretion permit in writing for particular Investors) be
delivered to any single Investor other than FNMA, FHLMC or GNMA unless
Agent shall have first been paid the Collateral Value of such Collateral.
(f) Continuation of Lien. The security interest in favor of Agent for
--------------------
the benefit of Lenders in all Collateral transmitted pursuant to SECTION
3.4(E) shall continue in effect until such time as Agent shall have
received payment in the amount specified in SECTION 3.4(E).
(g) Application of Proceeds; No Duty. Neither Agent nor Lenders shall
--------------------------------
be under any duty at any time to credit Borrower for any amounts due from
any Investor in respect of any purchase of any Collateral contemplated
under SECTIONS 3.4(D) and (E) above, until Agent has actually received
immediately available funds. Any funds so received will be treated as
payments under and processed and applied in accordance with SECTION 2.7.
Neither Agent nor Lenders shall be under any duty at any time to collect
any amounts or otherwise enforce any obligations due from any Investor in
respect of any such purchase.
(h) Subsequent to an Event of Default. Reference is made to SECTIONS
---------------------------------
3.3 and 8.2 and to the Security Agreement (collectively, the "OTHER
PROVISIONS") for certain rights of Agent and Lenders to dispose of the
Collateral upon the occurrence of an Event of Default. In the event of any
conflict between the Other Provisions and the provisions of this SECTION
3.4, the Other Provisions shall be controlling.
3.5 CORRECTION OF MORTGAGE NOTES. Borrower may from time to time request
----------------------------
that Agent release a Mortgage Note (the "RELEASED NOTE") that constitutes
Collateral so that such Mortgage Note may be replaced by a corrected Mortgage
Note (the "CORRECTION NOTE") by delivering to Agent a Mortgage Document Delivery
Request (Servicing) which identifies the Released Note. Upon receipt by Agent
of such a request, and so long as no Default or Event of Default shall be in
existence, Agent shall deliver to Borrower, under a Bailee Letter and Trust
Receipt (Servicing) the Released Note to be corrected, with the release of the
Lien in favor of Agent for the benefit of Lenders being conditioned upon the
receipt by Agent of a Correction Note acceptable to it; provided, that (i) at no
time shall the outstanding principal balance of all Released Notes which have
not been replaced with Correction Notes exceed the Maximum Correction Amount and
(ii) unless the Correction Note is delivered to Agent indorsed in blank within
fifteen (15) days of the release by Agent of the Released Note, the Collateral
Value attributed to both the Released Note and the Correction Note shall be
zero.
137
3.6 CONCERNING THE DRAFT ACCOUNT, THE FUNDING ACCOUNT AND THE OPERATING
-------------------------------------------------------------------
ACCOUNT. Borrower hereby expressly acknowledges that each of the Draft Account,
-------
the Funding Account and the Operating Account are subject in all respects to the
right of offset in favor of Agent granted under SECTION 11.10. Further, it is
expressly agreed that:
(A) The Funding Account shall be subject to the sole dominion and
control of Agent who shall disburse amounts from time to time on deposit
therein in accordance with the terms of this agreement and the Draft
Account shall, subject to the Funding Draft Procedures, be subject to the
sole dominion and control of Agent who shall disburse amounts from time to
time on deposit therein in accordance with the Funding Draft Procedures;
(B) subject to the right of offset in favor of Agent, the Operating
Account shall be subject to the sole dominion and control of Borrower;
(C) nothing other than proceeds of Advances and proceeds from the
sale or other disposition of Collateral shall be deposited in the Funding
Account;
(D) proceeds of Advances other than in respect of Special Borrowings
and Builder Borrowings shall be disbursed by Agent from the Funding Account
to the Operating Account for use by Borrower in accordance with the terms
of this agreement;
(E) proceeds of Advances in respect of Special Borrowings other than
Builder Borrowings and Funding Draft Borrowings shall be wired directly
from the Funding Account to such title company or other closing agent as
Borrower may identify;
(F) proceeds of Advances in respect of Builder Borrowings shall be
wired directly to the account of the builder of the residences financed
under the related Builder Mortgage Loans; and
(G) proceeds of Advances in respect of Special Borrowings which are
Funding Draft Borrowings shall be transferred from the Funding Account (and
in furtherance thereof Borrower hereby expressly authorizes Agent to
transfer any such sums deposited in the Funding Account) to the Draft
Account.
3.7 REPRESENTATIONS AND WARRANTIES REGARDING PLEDGED MORTGAGE LOANS OTHER
---------------------------------------------------------------------
THAN NEW WET MORTGAGE LOANS, BUILDER MORTGAGE LOANS AND FUNDING DRAFT MORTGAGE
------------------------------------------------------------------------------
LOANS. Upon the delivery of the Collateral Pledge Certificate on which such
-----
Pledged Mortgage Loan is identified, Borrower represents and warrants with
respect to each Pledged Mortgage Loan (other than Pledged Mortgage Loans
identified on such Collateral Pledge Certificate as New Wet Mortgage Loans,
Builder Mortgage Loans (Dry) or Funding Draft Mortgage Loans (Dry)) that:
(A) Borrower (and, if Borrower did not originate such Pledged
Mortgage Loan, the originator of such Pledged Mortgage Loan) complied, and
the Principal Mortgage Documents and Other Mortgage Documents relevant to
such Pledged Mortgage Loan comply, in all material respects with all
applicable Requirements of Law, including, without limitation, (i) any
usury laws, (ii) the Real Estate Settlement Procedures Act of 1974, as
amended, (iii) the Equal Credit Opportunity Act, as amended, (iv) the
Federal Truth in Lending Act, as amended, (v) Regulation Z of the Board of
Governors of the Federal Reserve System, as amended, and (vi) any consumer
protection laws;
(B) except in the case of Construction Loans, the full Face Amount of
such Pledged Mortgage Loan (less any discount points paid by or on behalf
of the borrower under such Pledged Mortgage Loan) has been fully funded to
or for the account of the borrower thereunder;
(C) except in the case of Investment Mortgage Loans and Construction
Loans, such Pledged Mortgage Loan is "covered," within the meaning of
SECTION 6.20, by a Take-Out Commitment and was underwritten in compliance
with the requirements of the Investor under such Take-Out Commitment;
(D) the Mortgage related to such Pledged Mortgage Loan creates a
perfected first-priority lien (subject only to exceptions permitted by Part
IV, Section 105.05 of the FNMA Guide [Selling] and Section 1704 of the
FHLMC Guide) on residential real property consisting of land and, if
applicable, a one-to-four family dwelling thereon which is completed and
ready for occupancy and such Mortgage, the other Principal Mortgage
Documents, the title policy relevant thereto other than with respect to
Construction Loans, and the Other Mortgage Documents
138
relevant thereto comply in all respects with the requirements of the
Investor under the Take-Out Commitment by which such Pledged Mortgage Loan
is "covered", if any;
(E) such Pledged Mortgage Loan is an Eligible Mortgage Loan; and
(F) Borrower has all requisite power and authority to grant Agent a
security interest for the benefit of Lenders in such Pledged Mortgage Loan.
3.8 REPRESENTATIONS AND WARRANTIES REGARDING NEW WET MORTGAGE LOANS,
----------------------------------------------------------------
BUILDER MORTGAGE LOANS, AND FUNDING DRAFT MORTGAGE LOANS. Upon the delivery
--------------------------------------------------------
of the Collateral Pledge Certificate (Wet, Builder or Funding Draft) on which
such New Wet Mortgage Loan is identified, Borrower represents and warrants with
respect to each New Wet Mortgage Loan which is not a Builder Mortgage Loan or a
Funding Draft Mortgage Loan that:
(A) Borrower (and, if Borrower is not the originator of such New Wet
Mortgage Loan, the originator of such Mortgage Loan) complied (or if such
New Wet Mortgage Loan has not been funded upon such funding will have
complied), and the Principal Mortgage Documents and Other Mortgage
Documents relevant to such Mortgage Loan comply (or upon funding will
comply), in all material respects with all applicable Requirements of Law,
including, without limitation, (i) any usury laws, (ii) the Real Estate
Settlement Procedures Act of 1974, as amended, (iii) the Equal Credit
Opportunity Act, as amended, (iv) the Federal Truth in Lending Act, as
amended, (v) Regulation Z of the Board of Governors of the Federal Reserve
System, as amended, and (vi) any consumer protection laws;
(B) the full Face Amount of such Mortgage Loan (less any discount
points paid or to be paid by or on behalf of the borrower under such
Mortgage Loan) has either already been fully funded to or for the account
of the borrower thereunder or will be so funded on the date such Collateral
Pledge Certificate is delivered to Agent;
(C) such Mortgage Loan is "covered," within the meaning of SECTION
6.20, by a Take-Out Commitment and was underwritten in compliance with the
requirements of the Investor under such Take-Out Commitment;
(D) the Mortgage related to such Mortgage Loan creates a perfected
first priority lien (subject only to exceptions permitted by Part IV,
Section 105.05 of FNMA Guide [Selling] and Section 1704 of the FHLMC Guide)
on residential real property consisting of land and a one-to-four family
dwelling thereon which is completed and ready for occupancy and such
Mortgage, the other Principal Mortgage Documents, the title policy relevant
thereto and the Other Mortgage Documents relevant thereto comply in all
respects with the requirements of the Investor under the Take-Out
Commitment by which such Mortgage Loan is "covered;"
(E) upon the acquisition or funding, as applicable, of any such New
Wet Mortgage Loan, such New Wet Mortgage Loan will be an Eligible Wet
Mortgage Loan; and
(F) Borrower has all requisite power and authority to grant Agent a
security interest for the benefit of Lenders in such New Wet Mortgage Loan.
Upon the time, if any, at which Final Payment of the Funding Draft
relevant to a Funding Draft Mortgage Loan identified on a Collateral Pledge
Certificate or wire transfer to or for the account of the builder relevant
to a Builder Mortgage Loan identified on a Collateral Pledge Certificate,
as applicable, has occurred, Borrower represents and warrants with respect
to such Mortgage Loan that:
(u) Borrower (and, in the case of a Funding Draft Mortgage Loan, if
Borrower is not the originator of such Funding Draft Mortgage Loan, the
originator of such Mortgage Loan) complied (or if any such Mortgage Loan
has not been funded, upon such funding or Final Payment will have
complied), and the Principal Mortgage Documents and Other Mortgage
Documents relevant to such Mortgage Loan comply (or upon funding or Final
Payment will comply), in all material respects with all applicable
Requirements of Law, including, without limitation, (i) any usury laws,
(ii) the Real Estate Settlement Procedures Act of 1974, as amended, (iii)
the Equal Credit Opportunity Act, as amended, (iv) the Federal Truth in
Lending Act, as amended, (v) Regulation Z of the Board of governors of the
Federal Reserve System, as amended, and (vi) any consumer protection laws;
139
(v) the full Face Amount of such Mortgage Loan (less any discount
points paid or to be paid by or on behalf of the borrower under such
Mortgage Loan) has been fully funded to or for the account of the borrower
thereunder;
(w) such Mortgage Loan is "covered," within the meaning of SECTION
6.20, by a Take-Out Commitment and was underwritten in compliance with the
requirements of the Investor under such Take-Out Commitment;
(x) the Mortgage related to such Mortgage Loan creates a perfected
first priority lien (subject only to exceptions permitted by Part IV,
Section 105.05 of FNMA Guide [Selling] and Section 1704 of the FHLMC Guide)
on residential real property consisting of land and a one-to-four family
dwelling thereon which is completed and ready for occupancy and such
Mortgage, the other Principal Mortgage Documents, the title policy relevant
thereto and the Other Mortgage Documents relevant thereto comply in all
respects with the requirements of the Investor under the Take-Out
Commitment by which such Mortgage Loan is "covered;"
(y) such Funding Draft Mortgage Loan is an Eligible Mortgage Loan;
and
(z) Borrower has all requisite power and authority to grant Agent a
security interest for the benefit of Lenders in such Funding Draft Mortgage
Loan.
3.9 BORROWER APPOINTED AGENT. Each Lender hereby appoints Borrower (and,
------------------------
in the case of any Pledged Mortgage Loan originated by a Person other than
Borrower also appoints such other Person) as its agent at the sole cost and
expense of Borrower for purposes of (a) obtaining Appraisals with respect to the
property covered by the Mortgages which relate to the Pledged Mortgage Loans and
(b) otherwise complying with Appraisal Laws and Regulations.
3.10 REVIEW OF MORTGAGE FILES; CALCULATION OF BORROWING BASE; AND DELIVERY
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OF BORROWING BASE REPORT.
------------------------
(A) Review of Principal Mortgage Documents. Promptly upon receipt
--------------------------------------
of a Collateral Pledge Certificate, and in any event no later than 10:00
a.m. on the Business Day following receipt thereof (or as soon as
practicable if more than 200 Mortgage Files are delivered on a single day),
Agent shall examine the contents of the Mortgage Files received pursuant to
such Collateral Pledge Certificate to determine whether such Mortgage Files
contain the Principal Mortgage Documents for each Mortgage Loan identified
on such Collateral Pledge Certificate and to determine if such Principal
Mortgage Documents appear to be regular on their face. Agent shall not have
any duty to examine any Other Mortgage Documents received by it.
(B) Calculations of Borrowing Base; Unexamined Mortgage Files.
---------------------------------------------------------
Unless Agent (by notice to Borrower) or the Required Lenders (by notice to
Agent and Borrower) shall otherwise require, for purposes of determining
the Borrowing Base Agent shall assume that Mortgage Files received and not
yet examined by Agent are in order and that the contents of such Mortgage
Files are as represented and warranted by Borrower in the Collateral Pledge
Certificate pursuant to which such Mortgage Files were delivered. Agent
shall be fully protected in relying upon such assumption and such
representations and warranties.
(C) Limitations on Agent's Review. Except as expressly provided in
-----------------------------
this agreement, Agent shall not be responsible for the form or substance or
the validity, genuineness, effectiveness, legality, enforceability or
priority of any Mortgage Documents delivered to Agent. Without limiting
the scope of the preceding sentence, Agent shall not be responsible for
ascertaining that the signature on any document is authentic, that the
person signing any document had the legal capacity or authority to do so,
that the form of any document complies with the requirements of this
agreement or of FHMA, FHLMC, GNMA, FHA, VA or any other Governmental
Authority or that any document is the current form of FNMA, FHLMC, GNMA,
FHA, VA or any other Governmental Authority, that any document has been
properly recorded with the appropriate Governmental Authority, or that any
Mortgage creates a Lien of any priority.
(D) Borrowing Base Reports. No later than 11:00 a.m. on the first
----------------------
Business Day of each calendar week Agent shall (a) complete the Borrowing
Base Report as of the close of business on the preceding Business Day and
(b) deliver a copy of such Borrowing Base Report by telecopy to Borrower
and to each Lender.
140
3.11 SERVICING RIGHTS. At any time and from time to time, and provided
----------------
that no Default or Event of Default exists or would result therefrom, Borrower
may obtain the release of the security interest in favor of Agent for the
benefit of Lenders in any Servicing Rights in connection with the sale thereof
upon written request to Agent (which shall be in the form of a Request for
Release of Security Interest) setting forth the Servicing Rights to be so sold,
demonstrating compliance with SECTION 7.12 and certifying that no Default or
Event of Default exists or would result from the requested release. In
connection with any such release, Agent shall, at Borrower's request and
expense, execute such form UCC-3 amendments and/or terminations as may be
reasonably necessary (in light of maintaining the perfection and priority of any
continuing security interests) to release the security interest of Agent for the
benefit of Lenders in the relevant Servicing Rights.
3.12 TAKE-OUT COMMITMENTS. At any time and from time to time, and
--------------------
provided that no Default or Event of Default exists or would result therefrom,
Borrower may obtain the release of the security interest in favor of Agent for
the benefit of Lenders in any Take-Out Commitment or specific commitment under a
master Take-Out Commitment in connection with the refinancing of specific
Mortgage Loans upon written request to Agent setting forth the Mortgage Loans to
be refinanced and the Take-Out Commitment(s) to be released, demonstrating
compliance with SECTION 6.20 and certifying that no Default or Event of Default
exists or would result from the requested release. In connection with any such
release, Agent shall, at Borrower's request and expense, execute such form UCC-3
amendments and/or terminations as may be reasonably necessary (in light of
maintaining the perfection and priority of any continuing security interests)
release the security interest of Agent for the benefit of Lenders in the
relevant Take-Out Commitments.
SECTION 4. CONDITIONS PRECEDENT
--------------------
The obligation of each Lender to make Advances hereunder is subject to
fulfillment of the conditions precedent stated in this SECTION 4.
4.1 INITIAL BORROWING. The obligation of each Lender to make its initial
-----------------
Advance hereunder shall be subject to, in addition to the conditions precedent
specified in SECTION 4.2 hereof, delivery to Agent of the following (each of the
following documents being duly executed and delivered by each of the parties
thereto (except for the Third Amendment to FNMA Acknowledgment Agreement which,
subject to SECTION 6.21, need not be executed by FNMA) and in form and substance
satisfactory to Agent and Lenders, and, with the exception of the Notes, each in
a sufficient number of originals that each Lender may have an executed original
of each document):
(A) this agreement;
(B) the Notes;
(C) a copy of the articles of incorporation of Borrower as amended
through the Agreement Date and as certified by the Secretary of State of
the Commonwealth of Virginia as of a date no earlier than June 1, 1996;
(D) a certificate of the Secretary or Assistant Secretary of
Borrower, dated as of the Agreement Date and certifying as to (i)
resolutions of the board of directors of Borrower which authorize the
execution and delivery on behalf of Borrower by certain officers of
Borrower of this agreement and the Notes, (ii) the incumbency of such
officers, (iii) the validity of specimen signatures of such officers, (iv)
the absence of any amendments to or rescission of the articles of
incorporation of Borrower since June 1, 1996, and since the date of the
copy thereof certified by the Secretary of State of the Commonwealth of
Virginia, and (v) the completeness and validity of the copy of the by-laws
of Borrower (as amended through the Agreement Date) attached as an exhibit
to such certificate;
(E) a certificate from the Secretary of State of the Commonwealth of
Virginia as to (i) the good standing of Borrower of a date no earlier than
June 1, 1996, and (ii) the existence of Borrower as of a date no earlier
than June 1, 1996;
(F) a certificate from the Secretary of the Commonwealth of
Pennsylvania as to (i) the good standing of Borrower of a date no earlier
than June 1, 1996, and (ii) the authority of Borrower to do business in
Pennsylvania as of a date no earlier than June 1, 1996; and
(G) such other documents Agent or any Lender may reasonably request
at any time at or prior to the Borrowing Date of the initial Borrowing
hereunder.
141
4.2 ALL BORROWINGS. The obligation of each Lender to make any Advance
--------------
and to fund any Borrowing pursuant to this agreement is subject to the following
further conditions precedent:
(A) prior to 11:00 a.m. on the Borrowing Date, Borrower shall
deliver to Agent a duly executed Borrowing Request (and, to the extent that
such Borrowing is to consist of Warehouse Advances funded as Eurodollar
Rate Advances, prior to 11:00 a.m. on the third Eurodollar Business Day
preceding the Borrowing Date, Borrower shall have notified Agent in writing
of the amounts and Types of Warehouse Advance to constitute such
Borrowing);
(B) subject to the provisions of SECTION 2.3(B), all Property in
which Borrower has granted a Lien to Agent for the benefit of Lenders shall
have been physically delivered to the possession of Agent or any bailee
acceptable to Agent to the extent that such possession is necessary or
appropriate for the purpose of perfecting the Lien of Agent for the benefit
of Lenders in such collateral;
(C) the representations and warranties of Borrower contained in this
agreement or any other Loan Document (other than those representations and
warranties which are by their terms limited to the date of the agreement in
which they are initially made) shall be true and correct in all material
respects on and as of the Borrowing Date;
(D) no Default, Event of Default or Excess Special Borrowing shall
have occurred and be continuing and no change or event which constitutes a
Material Adverse Effect shall have occurred as of the Borrowing Date; and
(E) the Draft Account, the Funding Account and the Operating Account
shall be established and in existence.
Each Borrowing Request shall be deemed to constitute a representation and
warranty by Borrower on the Borrowing Date set forth therein as to the
facts specified in SECTIONS 4.2(C) and (D).
SECTION 5. BORROWER REPRESENTATIONS AND WARRANTIES
---------------------------------------
Borrower represents and warrants as follows:
5.1 ORGANIZATION AND GOOD STANDING. Borrower (a) is a corporation duly
------------------------------
incorporated and existing in good standing under the laws of the jurisdiction of
its incorporation, (b) is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which its failure to be so qualified could have
a Material Adverse Effect, (c) has the corporate power and authority to own its
properties and assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein it proposes to transact business in
the future and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.2 AUTHORIZATION AND POWER. Borrower has the corporate power and
-----------------------
requisite authority to execute, deliver and perform this agreement, the Notes
and the other Loan Documents to which it is a party; Borrower is duly authorized
to and has taken all corporate action necessary to authorize it to, execute,
deliver and perform this agreement, the Notes and the other Loan Documents to
which it is a party and is and will continue to be duly authorized to perform
this agreement, the Notes and such other Loan Documents.
5.3 NO CONFLICTS OR CONSENTS. Neither the execution and delivery by
------------------------
Borrower of this agreement, the Notes or the other Loan Documents to which it is
a party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, will (a) materially contravene or conflict with
any Requirement of Law to which Borrower is subject, or any indenture, mortgage,
deed of trust, or other agreement or instrument to which Borrower is a party or
by which Borrower may be bound, or to which the Property of Borrower may be
subject, or (b) result in the creation or imposition of any Lien, other than the
Liens granted to Agent for the benefit of Lenders pursuant to the Security
Agreement and this agreement, on the Property of Borrower.
5.4 ENFORCEABLE OBLIGATIONS. This agreement, the Notes and the other
-----------------------
Loan Documents to which Borrower is a party are the legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms,
except as limited by Debtor Laws.
142
5.5 PRIORITY OF LIENS. Agent has a valid, enforceable, perfected, first
-----------------
priority Lien and security interest for the benefit of Lenders in (i) each
Mortgage Loan heretofore identified on a Collateral Pledge Certificate delivered
to Agent and not subsequently released by Agent pursuant to the Original Loan
Agreement or the Existing Loan Agreement, or this agreement, (ii) the Agency
Servicing Rights of Borrower and the Servicing Rights of Borrower other than
Agency Servicing Rights heretofore granted by Borrower to Agent pursuant to the
Security Agreement and not subsequently released by Agent pursuant to the
Original Loan Agreement, or the Existing Loan Agreement, or this agreement, and
(iii) each Take-Out Commitment of Borrower. Upon delivery to Agent of a
Collateral Pledge Certificate identifying a New Wet Mortgage Loan and the
funding by Lenders of the Warehouse Advances (or by Agent of the Swing Advance)
requested in connection therewith, Agent will have valid, enforceable,
perfected, first priority Liens and security interests for the benefit of
Lenders in such New Wet Mortgage Loan and in all Mortgage Documents related
thereto. Upon delivery to Agent of each Collateral Pledge Certificate and the
Mortgage Notes which evidence the Mortgage Loans (other than New Wet Mortgage
Loans) identified therein, Agent will have valid, enforceable, perfected, first
priority Liens and security interests for the benefit of Lenders in such
Mortgage Loans and in all Mortgage Documents related thereto. Upon the creation
of any Agency Servicing Rights relevant to FNMA on or after the Agreement Date,
Agent will have a valid, enforceable, perfected first priority Lien and security
interest in such Agency Servicing Rights, subject only to the rights of FNMA
under the applicable Agency Servicing Agreements (including the FNMA Guide).
Upon the creation of any Agency Servicing Rights relevant to FHLMC on or after
the Agreement Date, Agent will have a valid, enforceable, perfected, first
priority Lien and security interest in such Agency Servicing Rights, subject
only to the rights of FHLMC under the applicable Agency Servicing Agreements
(including the FHLMC Guide). Upon the creation of any Servicing Rights other
than Servicing Rights relevant to FNMA or FHLMC on or after the Agreement Date,
Agent will have a valid, enforceable, perfected, first priority Lien and
security interest in all such Servicing Rights other than Servicing Rights
relevant to FNMA or FHLMC, subject only to the rights of Persons counterparty
under the applicable Servicing Agreements (including, if applicable, the GNMA
Guide).
5.6 NO LIENS. Borrower has good and indefeasible title to the Collateral
--------
other than the Servicing Agreements, Servicing Records and Servicing Rights and
has good title, subject only to the rights of FHMA, FHLMC, GNMA and other
Persons counter parties to the Servicing Agreements, to all Servicing
Agreements, Servicing Records and Servicing Rights. All of the Collateral is
free and clear of all Liens and other adverse claims of any nature, other than
Liens of the type set forth in CLAUSES (A), (B), (C), (D) and (K) of the
definition of Permitted Liens.
5.7 FINANCIAL CONDITION. Borrower has delivered to Agent and Lenders
-------------------
copies of the balance sheet of Borrower as of December 31, 1995, and the related
statements of income, stockholders' equity and cash flows for the fiscal year
ended such date; such financial statements fairly present the financial
condition of Borrower as of such date and the results of operations of Borrower
for the period ended on such date and have been prepared in accordance with
GAAP; except as has been disclosed in writing to Agent and Lenders, as of the
date thereof, there were no material obligations, liabilities or Indebtedness
(including material contingent and indirect liabilities and obligations and
forward or long-term commitments) of Borrower which are not reflected in such
financial statements; and no change which constitutes a Material Adverse Effect
has occurred in the financial condition or business of Borrower since the date
of such financial statements. Borrower has also delivered to Agent and Lenders
copies of the balance sheet of Borrower dated as of March 31, 1996 and the
related statements of income, and cash flows as of such date; such financial
statements fairly present the financial condition of Borrower as of such date
and have been prepared in accordance with GAAP, subject to normal year-end
adjustments; except as has been disclosed in writing to Agent and Lenders as of
the date thereof, there were no material obligations, liabilities or
Indebtedness (including material contingent and indirect liabilities and
obligations and forward or long-term commitments) of Borrower which are not
reflected in such financial statements; and no change which constitutes a
Material Adverse Effect has occurred in the financial condition or business of
Borrower since the date of such financial statements.
5.8 FULL DISCLOSURE. There is no material fact that Borrower has not
---------------
disclosed to Agent and Lenders which could have a Material Adverse Effect.
Neither the financial statements referred to in SECTION 5.7 hereof, nor any
Borrowing Request, officer's certificate or statement delivered by Borrower to
Agent or any Lender in connection with this agreement, contains any untrue
statement of material fact.
5.9 NO DEFAULT. Borrower is not in default under any loan agreement,
----------
mortgage, security agreement or other material agreement or obligation to which
it is a party or by which any of its Property is bound.
5.10 NO LITIGATION. Except as set forth on SCHEDULE 5.10, there are no
-------------
material actions, suits or legal, equitable, arbitration or administrative
proceedings pending, or to the knowledge of Borrower threatened, against
Borrower the adverse determination of which could constitute a Material Adverse
Effect.
143
5.11 TAXES. All tax returns required to be filed by Borrower in any
-----
jurisdiction have been filed and all taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, income or
franchises have been paid prior to the time that such taxes could give rise to a
Lien thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on the
books of Borrower. Borrower has no knowledge of any proposed or threatened tax
assessment against Borrower.
5.12 PRINCIPAL OFFICE, ETC. The principal office, chief executive office
----------------------
and principal place of business of Borrower is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of Fairfax.
5.13 COMPLIANCE WITH ERISA.
---------------------
(A) Borrower has not violated the fiduciary responsibility rules of
Subtitle B of Title I of ERISA with respect to any Plan or any Welfare Plan
in a manner that could subject Borrower to, or cause Borrower to incur,
liability in respect of an action or a suit for damages, or a penalty,
under ERISA, or an excise tax under Section 4975 of the Code, which action,
suit, penalty or tax, in any case, would be materially adverse to Borrower.
(B) Each of Borrower and each Related Person has fulfilled its
obligations under the minimum funding standards of Section 412 of the Code
and Section 302 of ERISA with respect to each Plan; neither Borrower nor
any Related Person has incurred, nor are any of them aware of facts which
would cause them reasonably to conclude that any of them are likely to
incur any material liability to the PBGC, other than for the payment of
premiums; and neither Borrower nor any Related Person has incurred, nor are
any of them aware of facts which would cause them reasonably to conclude
that any of them are likely to incur, any material liability to any Plan or
any Welfare Plan, other than for the payment of contributions in the
ordinary course. Each Plan and each Welfare Plan is in compliance in all
respects with, and has been operated and administered in accordance with
the applicable provisions of, ERISA, the Code and each other applicable
Federal or state law except to the extent the failure to so comply, or to
so operate or administer any such Plan and any such Welfare Plan, would not
be materially adverse to Borrower. No event or condition is occurring or
exists and neither Borrower nor any Related Person is aware of any facts
which would cause them reasonably to conclude that any event or condition
will likely occur or exist with respect to any Plan concerning which
Borrower would be under an obligation to furnish a report to Agent in
accordance with SECTION 6.17 hereof.
(C) Full payment has been timely made of all amounts which Borrower
or any Related Person is required under applicable law, the terms of each
Plan or any applicable collective bargaining agreement to have paid as
contributions to each Plan and no accumulated funding deficiency under
Section 412 of the Code or Section 302 of ERISA, whether or not waived,
exists or is expected to exist with respect to any Plan. As of the most
recent valuation date of each Plan, each Plan was "fully funded." For
purposes of this SECTION 5.13, "fully funded" means that the fair market
value of the assets of each Plan (determined separately for each Plan and
not in the aggregate) is not less than the present value of the accrued
benefits of all participants in each Plan (determined separately for each
Plan and not in the aggregate), computed on a Plan termination basis by
more than $2,000,000.
(D) Neither Borrower nor any Related Person is or has ever been
obligated to contribute to any "multiple employer plan" (within the meaning
of Section 4063 of ERISA) or to any Multiemployer Plan.
(E) The present value (determined in accordance with FAS 106 and
using actuarial and other assumptions which are reasonable in respect of
the benefits provided and the participants) of the liability of Borrower
and each Related Person for post-retirement benefits under any and all
Welfare Plans, whether written or unwritten, which are or have been
established or maintained, or to which contributions are or have been made,
by Borrower or any of its Related Persons does not materially exceed the
assets under all such Welfare Plans allocable to such benefits.
(F) No failure to comply with Code Section 4980B or Part 6 of Title
I of ERISA exists or has occurred with respect to any Welfare Plan.
5.14 OWNERSHIP. The Parent owns, beneficially, of record and either
---------
directly or indirectly, 100% of the issued and outstanding shares of capital
stock of Borrower. Neither any "person" nor any "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as
amended) is the "beneficial owner" (as defined in
144
Rule 13d-3 under such act) of more than 50% of the total aggregate voting power
of all classes of voting stock of the Parent and/or warrants or options to
acquire such voting stock, calculated on a fully diluted basis.
5.15 SUBSIDIARIES. Borrower has no Subsidiaries other than Permitted
------------
Subsidiaries. Neither Borrower nor any Subsidiary has any interest in any joint
venture, partnership or other Person, except to the extent that such an interest
is a Permitted Investment.
5.16 INDEBTEDNESS. Borrower has no Indebtedness outstanding other than
------------
the Obligations and the other Indebtedness permitted by SECTION 7.2.
5.17 PERMITS, PATENTS, TRADEMARKS, ETC.
----------------------------------
(A) Borrower has all permits, licenses and governmental
authorization necessary for the operation of its business. All such
permits, licenses and governmental authorizations are in good standing and
Borrower is in compliance with all material terms of such permits, licenses
and governmental authorizations.
(B) Borrower owns or possesses (or is licensed or otherwise has the
necessary right to use) all patents, trademarks, service marks, trade names
(including the name "NVR Mortgage Finance, Inc.") and copyrights,
technology, know-how and processes, and all rights with respect to the
foregoing, which are necessary for the operation of its business, without
any known material conflict with the rights of others. The consummation of
the transactions contemplated hereby will not alter or impair in any
material respect any of such rights of Borrower.
5.18 STATUS UNDER CERTAIN FEDERAL STATUTES. Borrower is not (a) a
-------------------------------------
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, (b) a "public utility," as such term is defined in the Federal
Power Act, as amended, (c) an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended, or (d) a "rail carrier," or a "person controlled by or
affiliated with a rail carrier," within the meaning of Title 49, U.S.C., or a
"carrier" to which 49 U.S.C. (S)11301(b)(1) is applicable.
5.19 SECURITIES ACTS AND SECURITIES CREDIT TRANSACTION REGULATIONS.
-------------------------------------------------------------
Borrower has not issued any unregistered securities in violation of the
registration requirements of the Securities Act of 1933, as amended, or of any
other Requirement of Law, and is not violating any rule, regulation, or
requirement under the Securities Act of 1933, as amended, or the Securities and
Exchange Act of 1934, as amended. Borrower is not required to qualify an
indenture under the Trust Indenture Act of 1939, as amended, in connection with
its execution and delivery of the Notes. Borrower is not a party, whether as a
customer or a creditor, to any transaction that is subject to the Securities
Credit Transaction Regulations.
5.20 POLLUTION CONTROL. Borrower is in compliance with, and to the best
-----------------
of Borrower's knowledge, Borrower has, at all times since its incorporation,
been in material compliance with, all Requirements of Law relating to the
environment, hazardous material or pollution control.
5.21 NO APPROVALS REQUIRED. Other than consents and approvals previously
---------------------
obtained and actions previously taken, neither the execution and delivery of
this agreement, the Notes and the other Loan Documents to which Borrower is a
party, nor the consummation of any of the transactions contemplated hereby or
thereby requires the consent or approval of, the giving of notice to, or the
registration, recording or filing by Borrower of any document with, or the
taking of any other action in respect of, any Governmental Authority which has
jurisdiction over Borrower or any of its Property.
5.22 MATERIAL AGREEMENTS WITH AFFILIATES. Except as set forth on SCHEDULE
-----------------------------------
5.22, Borrower is not party to any material agreement, whether written or oral,
with the Parent or any other Affiliate of Borrower. As used in the preceding
sentence, "material agreement" includes any agreement in which the fair value of
the consideration paid or performance due any party exceeds $100,000 and "with
the Parent or any other Affiliate of Borrower" includes any direct or indirect
agreement with the Parent or any other Affiliate of Borrower.
5.23 TAXPAYER IDENTIFICATION. The Federal tax employer identification
-----------------------
number of Borrower is ▇▇-▇▇▇▇▇▇▇.
5.24 NOT AN INSIDER. Neither Borrower nor the Parent, or any other
--------------
Affiliate of Borrower is, and no person having "control" as defined in 12 U.S.C.
(S)375(b)(9) of Borrower or of any of the Parent or any other Affiliate of
Borrower is,
145
an "executive officer," "director," or "principal shareholder" (as such terms
are defined in 12 U.S.C. (S)375(b)(9) and the regulations promulgated pursuant
thereto) of any Lender, of any bank holding company of which any Lender is a
Subsidiary, or of any Subsidiary of any bank holding company of which any Lender
is a Subsidiary.
5.25 SURVIVAL OF REPRESENTATIONS. All representations and warranties by
---------------------------
Borrower herein shall survive delivery of the Notes and the making of the
Advances, and any investigation at any time made by or on behalf of Agent or any
Lender shall not diminish the right of Agent or any Lender to rely thereon.
SECTION 6. AFFIRMATIVE COVENANTS
---------------------
Borrower shall at all times comply with the covenants contained in this
SECTION 6, from the date hereof and for so long as any part of the Obligations
or any Commitment is outstanding.
6.1 FINANCIAL STATEMENTS AND REPORTS. Borrower shall furnish to each
--------------------------------
Lender the following, all in form and detail reasonably satisfactory to Lenders:
(A) Promptly after becoming available, and in any event within 90
days after the close of each fiscal year of Borrower, the consolidated
balance sheet of Borrower and its Subsidiaries, if any, as of the end of
such year, and the related consolidated statement of income of Borrower and
its Subsidiaries accompanied by the related report of independent certified
public accountants reasonably acceptable to the Required Lenders which
report shall be unqualified and to the effect that such statements have
been prepared in accordance with GAAP applied on a basis consistent with
prior periods except for such changes in such principles with which the
independent public accountants shall have concurred, and accompanied by
audited financials (including balance sheets, profit and loss statements,
statements of cash flow, and any other financial statements, reports, or
information specified by Agent) of NVR Financial Services, Inc., reflecting
the corresponding figures as of the end of and for the preceding fiscal
year in comparative form, together with the related report prepared by an
independent certified public accountant reasonably acceptable to Required
Lenders;
(B) Promptly after becoming available, and in any event within 30
days after the end of each month, a consolidated balance sheet of Borrower
and its Subsidiaries, if any, as of the end of such month and the related
consolidated statements of income, stockholders' equity and cash flows of
Borrower and its Subsidiaries, if any, for such month and the period from
the beginning of the current fiscal year of Borrower through the end of
such month, (i) certified by the chief financial officer of Borrower to
have been prepared in accordance with GAAP applied on a basis consistent
with prior periods, subject to normal year-end adjustments, and (ii)
accompanied by a completed Officer's Certificate in the form of EXHIBIT K
hereto, executed by the president or chief financial officer of Borrower;
(C) Promptly (i) upon receipt thereof, a copy of each other report
submitted to Borrower or any affiliate of Borrower by independent
accountants in connection with any annual, interim or special audit of the
books of such Person and (ii) upon preparation thereof, a copy of each
audit report regarding Borrower submitted to FNMA, FHLMC or GNMA;
(D) Simultaneously with the delivery of the financial information
set forth in SECTION 6.1(B), a report in detail satisfactory to Agent
setting forth, for the calendar month to which such financial information
relates, all Permitted Intercompany Payables, all receivables from
Affiliates, all transactions of Borrower which give rise to Permitted
Intercompany Payables, all receivables from affiliates, all transactions of
Borrower which give rise to Permitted Intercompany Payables and all
transactions of Borrower with any Affiliate of Borrower;
(E) Promptly and in any event within 30 days after the end of each
month, management report regarding Borrower's commitment position, pipeline
position, mortgage servicing/delinquency and production;
(F) No later than 11:00 a.m. on each Business Day, a Take-Out
Report, properly completed by an officer of Borrower, setting forth, as of
the close of business on the preceding Business Day, the Weighted Average
Take-Out Price; and
(G) Such other information concerning the business, Properties or
financial condition of Borrower, any Affiliate or any Investor as Agent or
any Lender may request.
146
6.2 TAXES AND OTHER LIENS. Borrower shall pay and discharge promptly all
---------------------
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or upon any of its Property as well as all claims of any kind
(including claims for labor, materials, supplies and rent) which, if unpaid,
might become a Lien upon any or all of its Property; provided, however, that
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted by or on
behalf of Borrower and if Borrower shall have set up reserves therefor which are
adequate under GAAP.
6.3 MAINTENANCE. Borrower shall (i) maintain its corporate existence,
-----------
rights and franchises; (ii) observe and comply in all material respects with all
Requirements of Law, and (iii) maintain its Properties (and any Properties
leased by or consigned to it or held under title retention or conditional sales
contracts) in good and workable condition at all times and make all repairs,
replacements, additions, betterments and improvements to its Properties as are
needful and proper so that the business carried on in connection therewith may
be conducted properly and efficiently at all times.
6.4 FURTHER ASSURANCES. Borrower shall, within 3 Business Days (or, in
------------------
the case of Mortgage Notes, such longer period as provided under SECTION 3.5 of
this agreement) after the request of Agent or any Lender, cure any defects in
the execution and delivery of any Note, this agreement or any other Loan
Document and Borrower shall, at its expense, promptly execute and deliver to
Agent and Lenders upon request all such other and further documents, agreements
and instruments in compliance with or accomplishment of the covenants and
agreements of Borrower in this agreement and in the other Loan Documents or to
further evidence and more fully describe the collateral intended as security for
the Notes, or to correct any omissions in this agreement or the other Loan
Documents, or more fully to state the security for the Obligations set out
herein or in any of the other Loan Documents, or to perfect, protect or preserve
any Liens created (or intended to be created) pursuant to any of the other Loan
Documents, or to make any recordings, to file any notices, or obtain any
consents.
6.5 REIMBURSEMENT OF EXPENSES. Borrower shall, within 10 Business Days
-------------------------
of notice of the amount thereof (which notice shall include appropriate evidence
of the amount of such reimbursable item) pay (i) all reasonable legal fees
incurred by Agent in connection with the preparation, negotiation or execution
of this agreement, the Notes and the other Loan Documents and any amendments,
consents or waivers executed in connection therewith, (ii) all fees, charges or
taxes for the recording or filing of the Security Instruments, (iii) all
shipping, postage and transfer costs incurred by Agent in connection with the
administration of this agreement, the Notes and the other Loan Documents,
including courier expenses incurred in connection with the Collateral as
provided in the Custodial Fee Letter, and (iv) all amounts expended, advanced or
incurred by Agent or any Lender to satisfy any obligation of Borrower under this
agreement or any of the other Loan Documents or to collect any Note, or to
enforce the rights of Agent or any Lender under this agreement or any of the
other Loan Documents, which amounts shall include all court costs, attorneys'
fees (including, without limitation, for trial, appeal or other proceedings),
fees of auditors and accountants, and investigation expenses, reasonably
incurred by Agent or any Lender in connection with any such matters, together
with interest at the post-maturity rate specified in each Note on each item
specified in clauses (i) through (iv) from 30 days after the date of written
demand or request for reimbursement until the date of reimbursement.
6.6 INSURANCE. Borrower shall maintain with financially sound and
---------
reputable insurers, insurance with respect to its Properties and business
against such liabilities, casualties, risks and contingencies and in such types
and amounts as is customary in the case of Persons engaged in the same or
similar businesses and similarly situated, including, without limitation, a
fidelity bond or bonds with financially sound and reputable insurers with such
coverage and in such amounts as is customary in the case of Persons engaged in
the same or similar businesses and similarly situated. Borrower shall cause the
improvements on the land covered by each Mortgage relevant to Mortgage Loans
included in the Mortgage Collateral to be kept continuously insured at all times
by responsible insurance companies against fire and extended coverage hazards
under policies, binders, letters or certificates of insurance, with a standard
mortgagee clause in favor of Borrower and its assigns. Each such policy must be
in an amount no less than the lesser of the maximum insurable value of the
improvements or the original principal amount of the relevant Mortgage Loan,
without reduction by reason of any co-insurance, reduced rate contribution, or
similar clause of the policies or binders. Upon request of Agent or any Lender,
Borrower shall furnish or cause to be furnished to Agent from time to time a
summary of the insurance coverage of Borrower in form satisfactory to the Person
requesting such summary and if requested shall furnish Agent copies of the
applicable policies. Agent shall promptly distribute copies of any summaries
and policies received by it under this SECTION 6.6 to any Lender which so
requests.
6.7 ACCOUNTS AND RECORDS; SERVICING RECORDS. Borrower shall keep books
---------------------------------------
of record and account in which full, true and correct entries will be made of
all dealings or transactions in relation to its business activities, in
accordance with GAAP. Borrower shall implement and maintain administrative and
operating procedures (including without limitation, an ability to recreate all
material records pertaining to the performance of Borrower's obligations under
the Servicing Agreements
147
in the event of the destruction of the originals of such records) and keep and
maintain all documents, books, records, computer tapes and other information
reasonably necessary or advisable for the performance by Borrower of its
obligations under the Servicing Agreements.
6.8 APPRAISALS. Borrower shall obtain and maintain a copy of an
----------
Appraisal with respect to the underlying property covered by the Mortgage which
relates to each Pledged Mortgage Loan, shall require that all Appraisals
delivered to it in connection with the Pledged Mortgage Loans (whether
originated by Borrower or purchased by it) comply in all respects with the
Appraisal Laws and Regulations, shall implement and maintain administrative and
operating procedures which permit Borrower, Agent and Lenders to verify such
compliance, and shall permit and shall use all reasonable efforts to cause each
Person from whom it purchases Mortgage Loans to permit any officer, employee or
agent of Agent or any Lender to visit and inspect the Properties of Borrower and
such Person relevant to such compliance, to inspect the records of Borrower and
such Person relevant to such compliance, to take copies and extracts therefrom,
and to discuss the Appraisals relevant to the Mortgage Loans from time to time
pledged to Agent for the benefit of Lenders with the responsible officers,
employees and agents (including any third party appraisers) of Borrower and such
Person, at all such reasonable times (which may include unannounced "spot"
checks) and as often as Agent or any Lender may desire.
6.9 RIGHT OF INSPECTION. Borrower shall permit any officer, employee or
-------------------
agent of Agent or any Lender to visit and inspect any of the Properties of
Borrower, examine Borrower's Servicing Records and books of record and accounts,
take copies and extracts therefrom, and discuss the affairs, finances and
accounts of Borrower with Borrower's officers, accountants and auditors, all at
such reasonable times upon reasonable notice and as often as Agent or any Lender
may desire.
6.10 NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify Agent and
------------------------
each Lender (i) the receipt of any notice from, or the taking of any other
action by, the holder of any promissory note, debenture or other evidence of
Indebtedness of Borrower with respect to a claimed default, together with a
detailed statement by a responsible officer of Borrower specifying the notice
given or other action taken by such holder and the nature of the claimed default
and what action Borrower is taking or proposes to take with respect thereto;
(ii) the commencement of, or any determination in, any legal, judicial or
regulatory proceedings which, if adversely determined, could have a Material
Adverse Effect; (iii) the occurrence of any dispute between Borrower and any
Governmental Authority or any other Person which, if adversely determined, could
have a Material Adverse Effect; (iv) the occurrence of any event or condition
which, if adversely determined, would have a Material Adverse Effect; or (v)
obtaining knowledge of any event or condition if the effect thereof is to cause
or permit with the giving of notice or lapse of time or both the holder of any
promissory note, debenture or other evidence of Indebtedness of Borrower to
cause such Indebtedness to become due prior to its stated maturity.
6.11 PERFORMANCE OF CERTAIN OBLIGATIONS. Borrower shall perform and
----------------------------------
observe in all material respects each of the provisions of each Agency
Commitment, each Take-Out Commitment and each of the Servicing Agreements on its
part to be performed or observed and will cause all things to be done which are
necessary to have each item of Mortgage Collateral "covered" (within the meaning
given such term in SECTION 6.20) by an Agency Commitment or a Take-Out
Commitment comply with the requirements thereof.
6.12 USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Advances shall be
-----------------------------
used by Borrower solely for the funding and acquisition of Mortgage Loans in the
ordinary course of Borrower's business, including the refinancing of Eligible
Mortgage Loans funded or acquired by Borrower in the ordinary course of business
with its own funds. None of such proceeds shall be used for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System, or for the purpose of reducing
or retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of such Regulation U. Neither Borrower nor
any Person acting on behalf of Borrower shall (i) take any action in violation
of Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System, (ii) violate Section 7 of the Securities Exchange Act of 1934, as
amended, or any rule or regulation thereunder, or (iii) engage in any
transaction which is subject to the Securities Credit Transaction Regulations.
6.13 NOTICE OF DEFAULT. Borrower shall furnish to Agent and to each
-----------------
Lender immediately upon becoming aware of the existence of any Default or Event
of Default, a written notice specifying the nature and period of existence
thereof and the action which Borrower is taking or proposes to take with respect
thereto.
6.14 COMPLIANCE WITH LOAN DOCUMENTS. Borrower shall promptly comply with
------------------------------
any and all covenants and provisions of this agreement, the Notes and the other
Loan Documents.
148
6.15 COMPLIANCE WITH MATERIAL AGREEMENTS. Borrower shall comply in all
-----------------------------------
material respects with all material agreements, indentures, or documents binding
on it or affecting its Property or business.
6.16 OPERATIONS AND PROPERTIES. Borrower shall act prudently and in
-------------------------
accordance, in all material respects, with all Requirements of Law and customary
industry standards in managing and operating its Property.
6.17 ERISA AND PLANS. As soon as practicable, and in any event within 10
---------------
days after an officer of Borrower or any Related Person knows or reasonably
should know that any of the events or conditions specified below has occurred or
exists, or is expected to occur or exist, Borrower shall deliver to Agent an
officer's certificate executed by the president or any vice president of
Borrower and setting forth details respecting such event or condition and the
action, if any, that Borrower or any Related Person proposes to take with
respect thereto (and a copy of any notice or report filed with, given to or
received from the PBGC, the Internal Revenue Service or the Department of Labor
with respect to such event or condition);
(A) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which the
PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waivers in accordance with Section 412(d)
of the Code and shall be required to be reported pursuant to this
subsection (a));
(B) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan or the amendment of any
Plan in a manner which would be treated as a termination of such Plan under
Section 4041(e) of ERISA;
(C) a substantial cessation of operations within the meaning of
Section 4062(e) of ERISA under circumstances which could result in the
treatment of Borrower or any Related Person as a substantial employer under
a "multiple employer Plan" or the application of the provisions of Section
4062, 4063 or 4064 of ERISA to Borrower or any Related Person;
(D) the institution by the PBGC of proceedings under Section 4062 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Borrower or any Related Person of a
notice from a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan;
(E) the complete or partial withdrawal by Borrower or any Related
Person under Section 4063, 4203 or 4205 or ERISA from a Plan which is a
"multiple employer Plan" or a Multiemployer Plan, or the receipt by
Borrower or any Related Person of notice from a Multiemployer Plan that it
is in reorganization or it is insolvent pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate under Section 4041A of ERISA or from
a "multiple employer Plan" that it intends to terminate; and
(F) any event or series of events occurs or exists which could
reasonably by expected to result in (i) a material liability on the part of
Borrower or any Related Person under Title IV of ERISA, (ii) the
institution of a proceeding against Borrower or any Related Person to
enforce Section 515 of ERISA, or (iii) the imposition of a Lien on any
Property of Borrower or any Related Person pursuant to Section 4068 of
ERISA or Section 412(n) of the Code.
6.18 BENEFIT PLAN OBLIGATIONS. Borrower shall reduce future contributions
------------------------
or benefits to each Plan to which it has an obligation to contribute if and to
the extent necessary to avoid the occurrence of an Event of Default hereunder,
to the extent such reduction may be effected without causing a "partial
termination", as that term is used in Section 411(d) of the Code and the
regulations promulgated pursuant thereto, or may otherwise be effected without
causing the Plan to become disqualified or violating the provisions of ERISA or
the Code.
6.19 ENVIRONMENTAL MATTERS. Borrower shall comply in all material
---------------------
respects with all Requirements of Law relating to the environment, hazardous
materials or pollution control and shall furnish to Agent and to each Lender
immediately upon becoming aware of any claim under any such Requirement of Law,
a written notice specifying the nature of such claim, the Person bringing such
claim and the action which Borrower is taking or proposes to take with respect
thereto.
6.20 TAKE-OUT COMMITMENTS; COVERAGE. Borrower shall enter into and
------------------------------
maintain Agency Commitments and Take-Out Commitments sufficient at all times to
cover each Mortgage Loan (except Investment Mortgage Loans and
149
Construction Loans) and Mortgage-Backed Security included in the Mortgage
Collateral (including any Mortgage-Backed Security to be issued or guaranteed
pursuant to an Agency Commitment by which Mortgage Loans included in the
Collateral are covered). For purposes of this agreement, a Mortgage Loan or
Mortgage-Backed Security shall be "covered" by an Agency Commitment or a Take-
Out Commitment if and only if (i) such Mortgage Loan or Mortgage-Backed Security
is of a type, including as to amount, maturity and rate or yield, which
satisfies the requirements of such Agency Commitment or Take-Out Commitment,
(ii) the sum of the principal amount of such Mortgage Loan or Mortgage-Backed
Security and the principal amounts of the Mortgage Loans or Mortgage-Backed
Securities previously assigned to such Agency Commitment or Take-Out Commitment
for purposes of determining coverage do not exceed the maximum amount thereof,
(iii) with respect to Mortgage Loans, the documentation and underwriting of each
such Mortgage Loan complies in all respects with the requirements of such Agency
Commitment or Take-Out Commitment and (iv) with respect to Mortgage Loans
covered by an Agency Commitment, any Mortgage-Backed Security to be issued or
guaranteed pursuant thereto is covered by a Take-Out Commitment. For purposes of
SECTIONS 3.7 and 3.8 and the Collateral Pledge Certificates, a Mortgage Loan
shall be "covered" by a Take-Out Commitment only if it is either (x) saleable
directly into a Take-Out Commitment as a Mortgage Loan rather than as part of a
Mortgage-Backed Security or (y) covered by both an Agency Commitment and a Take-
Out Commitment.
6.21 FNMA ACKNOWLEDGMENT AGREEMENT. On or before the 45th day following
-----------------------------
the Agreement Date, Borrower shall deliver to Agent a counterpart original Third
Amendment to FNMA Acknowledgment duly executed by FNMA.
6.22 FAILURE TO CLOSE A WET MORTGAGE LOAN. Borrower shall make a
------------------------------------
mandatory repayment in an amount equal to the Collateral Value (determined as if
such Wet Mortgage Loan had closed) of any Wet Mortgage Loan listed in a
Collateral Pledge Certificate (Wet, Builder or Funding Draft) within one (1)
Business Day of the date such Mortgage Loan was to have closed, if (i) such Wet
Mortgage Loan shall not have closed before the close of business on the Business
Day after the date of delivery of such Collateral Pledge Certificate (Wet,
Builder or Funding Draft) and (ii) Borrower shall have received Advances to fund
the payment of the proceeds of such Mortgage Loan. Borrower shall give Agent
notice of each repayment pursuant to this SECTION 6.22, which notice shall
identify the Wet Mortgage Loan which has not closed, contemporaneously with the
making of such repayment.
SECTION 7. NEGATIVE COVENANTS
------------------
Borrower shall at times comply with the covenants contained in this SECTION
7, from the date hereof and for so long as any part of the Obligations or any
Commitment is outstanding.
7.1 NO MERGER. Borrower shall not merge or consolidate with or into any
---------
corporation, nor shall Borrower acquire by purchase or otherwise all or
substantially all of the assets (except to the extent that such assets consist
solely of Mortgage Notes, Mortgage-Backed Securities and rights to service
Mortgage Loans) or capital stock of any Person.
7.2 LIMITATION ON INDEBTEDNESS. Borrower shall not incur, create,
--------------------------
contract, assume, have outstanding, guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness except (a)
Repurchase Agreements, (b) Lender Gestation Financing Agreements, (c) Permitted
Intercompany Payables, (d) Indebtedness, including the Obligations, secured by
Permitted Liens and by no other Liens on the Property of Borrower, (e)
liabilities in respect of unfunded vested benefits under a Plan as determined in
accordance with ERISA, to the extent permitted under SECTION 7.16, (f)
liabilities as lessee under leases which have been or, in accordance with GAAP,
should be classified as capitalized leases in an aggregate amount not greater
than $1,000,000, (g) Investment Line of Credit Indebtedness, (h) Overline
Indebtedness, only if the Warehouse Advances equal the Total Commitments, and
(i) other Indebtedness in an aggregate amount at any time outstanding not
greater than $250,000.
7.3 FISCAL YEAR, METHOD OF ACCOUNTING. Borrower shall not change its
---------------------------------
fiscal year or method of accounting.
7.4 BUSINESS. Borrower shall not, directly or indirectly, engage in any
--------
business other than that currently engaged in by Borrower or any other business
customarily engaged in by other Persons in the mortgage banking business.
7.5 LIQUIDATIONS, CONSOLIDATIONS AND DISPOSITIONS OF SUBSTANTIAL ASSETS.
-------------------------------------------------------------------
Borrower shall not dissolve or liquidate or sell, transfer, lease or otherwise
dispose of any material portion of its property or assets or business; provided,
however, that subject to SECTION 3.4(B) hereof nothing in this SECTION 7.5 shall
be construed to prohibit Borrower from selling Servicing Rights, Mortgage Notes
or Mortgage-Backed Securities in the ordinary course of its business.
150
7.6 LOANS, ADVANCES AND INVESTMENTS. Borrower shall not make any loan
-------------------------------
(other than loans made in the ordinary course of its business as a mortgage
company), advance, or capital contribution to, or investment in (including any
investment in any Subsidiary, joint venture or partnership), or purchase or
otherwise acquire any of the capital stock, securities, or evidences of
indebtedness of, any Person (collectively, "INVESTMENT"), or otherwise acquire
any interest in, or control of, another Person, except for the following:
(A) Cash Equivalents;
(B) Any acquisition of securities or evidences of indebtedness of
others when acquired by Borrower in settlement of accounts receivable or
other debts arising in the ordinary course of its business, so long as the
aggregate amount of any such securities or evidence of indebtedness is not
material to the business or financial condition of Borrower;
(C) Mortgage-Backed Securities and Mortgage Notes acquired in the
ordinary course of Borrower's business;
(D) Loans and advances to (i) employees, officers and directors of
Borrower or any Affiliate of Borrower or (ii) the Parent and other
Affiliates of Borrower which are neither Subsidiaries nor Persons which
would, if organized as a corporation and Borrower owned a sufficient
interest therein, constitute a Subsidiary of Borrower, in an aggregate
principal amount outstanding at any one time not to exceed $250,000 (or
such larger amount as Agent may, in its sole discretion, approve in writing
prior to the making thereof); and
(E) Capital contributions to Permitted Subsidiaries, and other
Persons which would, if organized as a corporation and Borrower owned a
sufficient interest therein, constitute a Permitted Subsidiary in an
aggregate amount not greater than $400,000.
7.7 USE OF PROCEEDS. Borrower shall not permit the proceeds of the
---------------
Advances to be used for any purpose other than those permitted by SECTION 6.12.
Borrower shall not, directly or indirectly, use any of the proceeds of the
Advances for the purpose of engaging in any transaction which is subject to the
Securities Credit Transaction Regulations.
7.8 ACTIONS WITH RESPECT TO COLLATERAL. Borrower shall not:
----------------------------------
(A) Compromise, extend, release, or adjust payments on any Mortgage
Loan included in the Collateral, accept a conveyance of mortgaged property
in full or partial satisfaction of any such Mortgage Loan, or release any
Mortgage securing any Mortgage Loan;
(B) other than pursuant to pair-offs in the ordinary course of
business, agree to the amendment or termination of any Take-Out Commitment
included in the Collateral or to the substitution of any Take-Out
Commitment for such a Take-Out Commitment without the consent of Agent;
(C) transfer, sell, assign, or deliver any Collateral pledged to
Agent to any Person other than Agent, except in accordance with SECTION 3;
or
(D) grant, create, incur, permit or suffer to exist any Lien upon
any Mortgage Collateral except for (i) Liens granted to Agent for the
benefit of Lenders to secure the Obligations, (ii) such non-consensual
Liens may be deemed to arise as a matter of law pursuant to any Take-Out
Commitment, (iii) Liens permitted under SECTION 6.2 to the extent that such
Liens constitute Permitted Liens, (iv) Liens which constitute Permitted
Liens under clauses (f) and (g) of the definition of Permitted Liens.
7.9 NET WORTH. The Net Worth of Borrower at any date shall not be less
---------
than $10,000,000.
7.10 ADJUSTED CURRENT RATIO. The ratio of the current assets (determined
----------------------
in accordance with GAAP) to the current liabilities (determined in accordance
with GAAP except that the amount of any Permitted Subordinated Indebtedness
shall be excluded from the determination thereof) of Borrower at any date shall
not be less than 1.02 to 1.0 at any time.
7.11 LIABILITIES TO NET WORTH RATIOS.11LIABILITIES TO NET WORTH RATIOS.
-------------------------------
151
(A) The ratio of (i) the Total Liabilities (excluding (x) net
deferred taxes, (y) Advances to the extent of the aggregate Collateral
Value of all Eligible Gestation Mortgage Loans, and (z) obligations of
Borrower in respect of Repurchase Agreements) of Borrower to (ii) the
greater of (A) the Adjusted Tangible Net Worth of Borrower and (B) the Net
Worth of Borrower shall not be more than 10.0 to 1.0 at any time.
(B) The ratio of (i) the Total Liabilities (including all
obligations of Borrower under Repurchase Agreements, whether or not such
obligations constitute liabilities under GAAP, and excluding only (x) net
deferred taxes and (y) Advances to the extent of the aggregate Collateral
Value of all Eligible Gestation Mortgage Loans) of Borrower to (ii) the
greater of (A) the Adjusted Tangible Net Worth of Borrower and (B) the Net
Worth of Borrower shall not be more than 12.0 to 1.0 at any time.
08/23/96
7.12 MINIMUM SERVICING PORTFOLIO. THE AGGREGATE OUTSTANDING PRINCIPAL
---------------------------
BALANCE OF THE MORTGAGE LOANS INCLUDED IN THE SERVICING PORTFOLIO OF BORROWER
SHALL NOT BE LESS THAN $350,000,000 AT ANY TIME.
7.13 RESTRICTIONS ON DIVIDENDS, RETURNS OF CAPITAL AND SERVICING PROCEEDS
--------------------------------------------------------------------
DISTRIBUTIONS. Borrower shall not directly or indirectly declare or make, or
-------------
incur any liability to make, any Dividend, Return of Capital or Servicing
Proceeds Distribution unless, prior thereto, Borrower shall have submitted to
Agent a certificate of its President or Chief Financial Officer certifying that
no Default or Event of Default exists or would result therefrom and, in the case
of any Return of Capital or any Servicing Proceeds Distribution, demonstrating
the amount and source of such return or distribution.
7.14 TRANSACTIONS WITH AFFILIATES.
----------------------------
(A) Borrower shall not enter into any transactions, including,
without limitation, any purchase, sale, lease or exchange of property or
services with or the incurring of Indebtedness to any Affiliate unless such
transactions are otherwise permitted under this agreement, are in the
ordinary course of Borrower's business and are upon fair and reasonable
terms no less favorable to Borrower than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate; and
(B) the aggregate amount paid or payable by Borrower to Affiliates
of Borrower exclusive of Permitted Dividends, Permitted Tax Payments,
payments in respect of Permitted Intercompany Payables, Permitted Returns
of Capital, and Permitted Servicing Proceeds Distributions shall not exceed
$250,000 in the aggregate in any twelve month period.
7.15 LIENS. Borrower shall not grant, create, incur, assume, permit or
-----
suffer to exist any Lien which is not a Permitted Lien upon any of its Property,
including without limitation any and all of Borrower's Mortgage Loans, Mortgage-
Backed Securities (except as permitted under SECTION 7.8(D)) and Servicing
Rights and the proceeds from any thereof.
7.16 COMPLIANCE WITH ERISA. Borrower shall not, and shall not permit any
---------------------
Related Person to:
(A) (i) engage in any transaction in connection with which Borrower
or any Related Person could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, (ii) fail to make full payment when due of all amounts which would be
deductible by Borrower or any Related Person and which, under the
provisions of any Plan, applicable law or applicable collective bargaining
agreement, Borrower or any Related Person is required to pay as
contributions thereto, or (iii) permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan (other than a
Multiemployer Plan or a "multiple employer Plan"), if, in the case of any
of clause (i), (ii) or (iii) above such penalty or tax, or the failure to
make such payment, or the existence of such deficiency, as the case may be,
will likely have a material adverse effect on the financial position of
Borrower;
(B) permit the amount of unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) under each Plan maintained,
established or contributed to at such time by Borrower or any of its
Related Persons (other than Multiemployer Plans or "multiple employer
plans") to exceed $2,000,000; or
(C) permit the aggregate complete or partial withdrawal liability
under Title IV of ERISA with respect to all Plans which are "multiple
employer plans" and all Multiemployer Plans incurred by Borrower or any
Related Person to exceed $50,000.
152
7.17 CHANGE OF PRINCIPAL OFFICE. Borrower shall not (a) change the
--------------------------
location of its principal office, chief executive office and principal place of
business from that specified in SECTION 5.12 or (b) change its name, identity or
corporate structure to such an extent that any financing statement filed by
Agent in connection with this agreement would become seriously misleading,
unless it shall have given Agent at least 30 days prior written notice thereof
and prior to effecting any such change, taken such steps as Agent or the
Required Lenders may deem necessary or desirable to continue the perfection and
priority of the Liens in favor of Agent for the benefit of Lenders granted in
connection herewith.
7.18 TAX PAYMENTS. Except in accordance with the Tax Allocation
------------
Agreement, Borrower shall not make any payments to or on behalf of the Parent or
any Affiliate of Borrower in respect of taxes.
7.19 TAX ALLOCATION AGREEMENT. Borrower shall not permit the amendment or
------------------------
modification of the Tax Sharing Agreement in any way which has an adverse effect
on Borrower.
7.20 PERMITTED SUBORDINATED INDEBTEDNESS. Borrower shall not increase the
-----------------------------------
outstanding amount of the Permitted Subordinated Indebtedness, modify or amend
the Affiliate Note without providing a copy of the Affiliate Note, as modified,
to Agent within 20 days after execution of the Affiliate Note, or make any
payment in respect of the Affiliate Note; provided, that so long as no Default
or Event of Default exists or would result therefrom, Borrower may borrow, repay
and reborrow under the Affiliate Note.
SECTION 8. EVENTS OF DEFAULTSECTION ▇.▇▇▇▇▇▇ OF DEFAULT
-----------------
8.1 NATURE OF EVENT. An Event of Default shall exist if any one or more
---------------
of the following occurs:
(A) Borrower fails to make any payment of principal of or interest
on any Note, or payment of any fee, expense or other amount due hereunder,
under any of the Notes or under any other Loan Document, on or before the
date such payment is due;
(B) Borrower fails to observe or perform (i) any term, covenant or
agreement set forth in SECTIONS 2.3(B)(III), 2.5, 6.13, 6.17, 6.20, 6.21 or
6.22 or SECTION 7 (other than SECTIONS 7.9 through 7.12, inclusive, SECTION
7.18 and SECTION 7.16, which SECTION 7.16 is governed by SECTION 8.1(L) or
(II) any term, covenant or agreement set forth in SECTIONS 7.9 through 7.12
or SECTION 7.18 if such failure shall remain unremedied for 20 days, or
(iii) any other term, covenant or agreement in this agreement on its part
to be performed or observed if the failure to perform or observe such other
term, covenant or agreement shall remain unremedied for 20 days after
written notice thereof shall have been given to Borrower by Agent or the
Required Lenders;
(C) Borrower fails to observe or perform any of the covenants or
agreements contained in any other Loan Document, and (unless such default
otherwise constitutes a Default pursuant to other provisions of this
SECTION 8.1) such default continues unremedied beyond the expiration of any
applicable grace period which may be expressly allowed under such other
Loan Document;
(D) any material statement, warranty or representation by or on
behalf of Borrower contained in this agreement, the Notes or any other Loan
Document or any Borrowing Request, officer's certificate or other writing
furnished in connection with this agreement, proves to have been incorrect
or misleading in any material respect as of the date made or deemed made;
(E) Borrower fails to make when due or within any applicable grace
period any payment on any Indebtedness with an unpaid principal balance of
over $500,000.00; or any event or condition occurs under any provision
contained in any such obligation or any agreement securing or relating to
such obligation (or any other breach or default under such obligation or
agreement occurs) if the effect thereof is to cause or permit the holder or
trustee of such obligation to cause such obligation to become due prior to
its stated maturity; or any such obligation becomes due (other than by
regularly scheduled payments) prior to its stated maturity; or any of the
foregoing occurs with respect to any one or more items of Indebtedness of
Borrower with unpaid principal balances exceeding, in the aggregate,
$500,000.00;
(F) Borrower shall generally not pay its debts as they become due or
shall admit in writing its inability to pay its debts, or shall make a
general assignment for the benefit of creditors;
153
(G) Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor or liquidator of it or of all or a
substantial part of its assets, (ii) file a voluntary petition in
bankruptcy, (iii) file a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any Debtor Laws, (iv)
file an answer admitting the material allegations of, or consent to, or
default in answering, a petition filed against it in any bankruptcy
reorganization or insolvency proceeding, or (v) take corporate action for
the purpose of effecting any of the foregoing;
(H) an involuntary petition or complaint shall be filed against
Borrower seeking bankruptcy or reorganization of Borrower or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such petition or
complaint shall not have been dismissed within 60 days of the filing
thereof; or an order, order for relief, judgment or decree shall be entered
by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of Borrower or
appointing a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or of all or substantially all of its assets;
(I) Borrower fails within 30 days to pay, bond or otherwise
discharge any final judgment or order for payment of money in excess of
$250,000.00 or Borrower fails within 30 days to pay, bond or otherwise
discharge final judgments or orders for payment of money which exceed in
the aggregate $250,000.00, or Borrower fails within 30 days to timely
appeal or pay, bond or otherwise discharge any judgments or orders for
payment of money which exceed, in the aggregate, $250,000.00 and which
Borrower may appeal;
(J) any default or event of default occurs under any other
Indebtedness of Borrower to any Lender;
(K) any Person levies on, seizes or attaches all or any material
portion of the assets of Borrower and within 30 days thereafter Borrower
shall not have dissolved such levy or attachment, as the case may be, and,
if applicable, regained possession of such seized assets;
(L) an event or condition specified in SECTION 7.16 occurs or exists
and, as a result of such event or condition, together with all other such
events or conditions, Borrower or any Related Person incurs or is
reasonably likely to incur a liability to a Plan, a participant or the PBGC
(or any combination of the foregoing) that is material in relation to the
financial position of Borrower;
(M) any change in the senior management of Borrower shall occur;
(N) Borrower shall cease to be an eligible seller or servicer under
the FNMA Guide or the FHLMC Guide, or FNMA or FHLMC shall impose any
sanctions upon or take any action to terminate or revoke any servicing of
Borrower, or FNMA or FHLMC shall take any action to initiate the transfer
of any servicing from Borrower to another Person (including, without
limitation, the giving of notice to Borrower that it intends to terminate
or transfer any servicing) or FNMA or FHLMC shall seek any judicial relief
with respect to Borrower;
(O) GNMA shall revoke or terminate any servicing of Borrower, or
GNMA shall issue a letter of extinguishment under any GNMA guaranty
agreement or GNMA shall notify Borrower that it intends to revoke or
terminate any servicing of Borrower or issue a letter of extinguishment, or
GNMA shall seek any judicial relief with respect to Borrower;
(P) the Parent shall cease to own beneficially, of record and either
directly or indirectly, 100% of the issued and outstanding shares of
capital stock of Borrower, or any "person" or "group" (within the meaning
of Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended) shall become the "beneficial owner" (as defined in Rule 13d-3
under such act) of more than 50% of the total aggregate voting power of all
classes of the voting stock of the Parent and/or warrants or options to
acquire such stock, calculated on a fully diluted basis; or
(Q) any provision of this agreement, the Notes or any other Loan
Document shall for any reason cease to be in full force and effect, or be
declared null and void or unenforceable in whole or in part; or the
validity or enforceability of any such document shall be challenged or
denied.
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8.2 DEFAULT REMEDIES. Upon the occurrence of an Event of Default, Agent,
----------------
at the request of the Required Lenders, provided such Event of Default has not
been previously cured by Borrower, may (i) declare each of the Commitments to be
terminated and/or declare the entire principal of and all interest accrued on
the Notes to be, and the Notes, together with all Obligations, shall thereupon
become, forthwith due and payable, without presentment, demand, protest, notice
of protest and nonpayment, notice of acceleration or of intent to accelerate or
other notice of any kind, all of which hereby are expressly waived and (ii)
exercise any other right or remedy available at law or pursuant to any Loan
Document. Notwithstanding the foregoing, if an Event of Default specified in
SECTION 8.1(F), (G), (H) or (P) above occurs, the Commitment of each Lender
shall automatically and immediately terminate and the Notes and all other
Obligations shall become automatically and immediately due and payable, both as
to principal and interest, without any action by Agent or any Lender and without
presentment, demand, protest, notice of protest and nonpayment, notice of
acceleration or of intent to accelerate, or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in any Note to
the contrary notwithstanding.
SECTION 9. AGENT
-----
9.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints Bank One,
------------------------
Texas, N.A., as Agent under this agreement and the other Loan Documents and
authorizes Agent to take such action on its behalf and to exercise such powers
and perform such duties as are expressly delegated to Agent by the terms of this
agreement and such other Loan Documents, together with such powers as are
reasonably incidental thereto. As to any matter not expressly provided for by
this agreement (including, without limitation, enforcement or collection of the
Notes), Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of the Notes; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this agreement or applicable law. Agent agrees to give to each
Lender prompt notice of each notice given to it by Borrower pursuant to the
terms of this agreement.
9.2 AGENT'S RELIANCE, ETC.. Notwithstanding anything to the contrary in
----------------------
this agreement or any other Loan Document, neither Agent nor any of its
directors, officers, agents, employees, attorneys-in-fact or Affiliates shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this agreement or the other Loan Documents, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof; (b) may consult with legal counsel (including counsel for
Borrower), independent public accountants and other experts selected by it or
Borrower and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this agreement; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this agreement on the part of Borrower or to inspect
the property (including the books and records) of Borrower, except receipt of
delivery of the items required under SECTIONS 3.2, 4.1, 4.2, and 6.1; (e) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this agreement or any other
instrument or document furnished pursuant hereto; and (f) shall incur no
liability under or in respect of this agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopy)
believed by it to be genuine and signed or sent by the proper party or parties.
9.3 AGENT AND AFFILIATES. With respect to its Commitment, the Advances
--------------------
made by it and the Notes issued to it, Agent shall have the same rights and
powers under this agreement and the other Loan Documents as any other Lender and
may exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Agent in its
individual capacity. Agent and the Affiliates of Agent may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, Borrower, any of its Affiliates and any Person who
may do business with or own securities of Borrower or any of its Affiliates, all
as if Agent were not Agent and without any duty to account therefor to Lenders.
9.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in SECTIONS 5.7 and 6.1 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter this agreement. Each Lender also acknowledges
that it will, independently and without reliance upon Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, to make its own credit decisions in taking or not taking action under this
agreement.
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9.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent not
---------------
reimbursed by Borrower), ratably according to their respective Commitments, from
and against any and all liabilities, obligations, losses, damages, penalties,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this agreement or any action taken or
omitted by Agent under this agreement (including any of same which may result
from the negligence, but not gross negligence, of Agent), provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including counsel
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this agreement, to the extent that Agent is
not reimbursed for such expenses by Borrower.
9.6 SUCCESSOR AGENT. Agent may resign at any time by giving written
---------------
notice thereof to Lenders and Borrower and may be removed at any time with or
without cause by the Required Lenders. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of Lenders, appoint a successor Agent,
which shall be a commercial bank or savings bank organized under the laws of the
United States of America or of any State thereof which has a combined capital
and surplus of at least $200,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from any
further duties and obligations under this agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this SECTION 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this agreement. The appointment of a Successor Agent
shall not release the retiring Agent from any liability it may have for any
actions taken or omitted to be taken by it while it was Agent under this
agreement.
9.7 RIGHT OF INSPECTION. Agent shall permit any officer, employee or
-------------------
agent of Borrower or any Lender which may so request to visit and inspect the
premises on which the custodial duties of Agent hereunder are performed, examine
the books and records of Agent which pertain to such custodial duties, take
copies and extracts therefrom, and discuss the performance of such custodial
duties with the officers, accountants and auditors of Agent that are responsible
therefor, all at such reasonable times and as often as Borrower or any Lender
may desire.
SECTION 10. INDEMNIFICATION OF LENDERS
--------------------------
10.1 INDEMNIFICATION.
---------------
(A) Borrower will indemnify and hold harmless each Lender, each
Lender's directors, officers, employees and each Person, if any, who is
deemed to control any Lender (any and all whom are referred to as the
"Indemnified Party") from and against any and all losses, claims, damages
and liabilities, joint or several (including all losses, claims, damages
and liabilities resulting from the negligence, but not the gross negligence
of such Indemnified Party, and including all legal fees or other expenses
reasonably incurred by any Indemnified Party in connection with the
preparation for or defense of any pending or threatened claim, action or
proceeding, whether or not resulting in any liability), to which such
Indemnified Party may become subject (whether or not such Indemnified Party
is a party thereto) under any applicable Federal, state or local law or
otherwise caused by or arising out of, or allegedly caused by or arising
out of, this agreement or any transaction contemplated hereby, including,
without limitation, any liability or penalty arising out of any fact or
circumstance which causes the representations or warranties set forth in
Section 3.7 or 3.8 to be false or incorrect, excepting only losses, claims,
damages or liabilities arising from the gross negligence or willful
misconduct or fraud of such Indemnified Party.
(B) Promptly after receipt by an Indemnified Party of notice of any
claim or proceeding with respect to which an Indemnified Party is entitled
to indemnity hereunder, such Indemnified Party will notify Borrower of such
claim or the commencement of such action or proceeding, provided that the
failure of an Indemnified Party to give notice as provided herein shall not
relieve Borrower of its obligations under this SECTION 10.1 with respect to
such Indemnified Party, except to the extent that Borrower is actually
prejudiced by such failure. Borrower will assume
156
the defense of such claim, action or proceeding and will employ counsel
reasonably satisfactory to the Indemnified Party and will pay the
reasonable fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party will be entitled, at the expense of
Borrower, to employ counsel separate from counsel for Borrower and for any
other party in such action if the Indemnified Party reasonably determines
that a conflict of interest or other reasonable basis exists which makes
representations by counsel chosen by Borrower not advisable, provided that
Borrower shall not be obligated to pay for the fees and expenses of more
than one counsel for all Indemnified Parties in respect of a particular
controversy. In the event an Indemnified Party appears as a witness in any
action or proceeding brought against Borrower or any of its Subsidiaries
(or any of its officers, directors or employees) in which an Indemnified
Party is not named as a defendant, Borrower agrees to reimburse such
Indemnified Party for all reasonable expenses incurred by it (including
reasonable fees and expenses of counsel) in connection with its appearing
as a witness.
10.2 Limitation of Liability. Neither any Lender nor the directors,
-----------------------
officers, agents or employees of any Lender shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this agreement,
except for such actions taken or omitted to be taken as constitute gross
negligence or willful misconduct on the party of such Lender or its directors,
officers, agents or employees.
SECTION 11. MISCELLANEOUS
-------------
11.1 NOTICES. Any notice or request required or permitted to be given
-------
under or in connection with this agreement, the Notes or the other Loan
Documents (except as may otherwise be expressly required therein) shall be in
writing and shall be mailed by first class or express mail or overnight
messenger, postage prepaid, or sent by telex, telegram, telecopy or other
similar form of rapid transmission, confirmed by mailing (by first class or
express mail, postage prepaid) written confirmation at substantially the same
time as such rapid transmission, or personally delivered to an officer of the
receiving party. All such communications shall be mailed, sent or delivered to
the parties hereto at their respective addresses as follows:
Borrower: NVR Mortgage Finance, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: Bank One, Texas, National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders: The address listed for each Lender
on SCHEDULE 1.1(A)
or at such other addresses or to such individual's or department's attention as
any party may have furnished the other parties in writing. Any communications
so addressed and mailed shall be deemed to be given when so mailed, sent or
delivered, except that communications given pursuant to SECTIONS 2.5 and 6.13,
Borrowing Requests and Collateral Pledge Certificates and communications related
thereto shall not be effective until actually received by Agent, a Lender or
Borrower, as the case may be, any communication mailed by first class shall be
deemed to have been given on the third day following the day it is mailed, any
communication sent by rapid transmission shall be deemed to be given when
receipt of such transmission is confirmed, and any communication delivered in
person shall be deemed to be given when receipted for by, or actually received
by, an officer of Borrower, Agent or a Lender, as the case may be.
11.2 AMENDMENTS, ETC.
----------------
(A) In General. Neither this agreement, any Note or any other Loan
----------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this SECTION 11.2.
With the written consent of the Required Lenders, Agent and Borrower may,
from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provisions to this
agreement, the Notes, or the other Loan Documents to which Borrower is a
party or changing in any manner the rights of Lenders or
157
of Borrower hereunder or thereunder or waiving, on such terms and
conditions as Agent may specify in such instrument, any of the requirements
of this agreement or the Notes or the other Loan Documents to which
Borrower is a party or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i)(A) waive any condition set forth in
SECTION 4, (B) extend the maturity of any Note or any installment thereof,
or reduce the rate or extend the time of payment of interest thereon, or
reduce the principal amount thereof, (C) reduce any fee payable to any
Lender under this agreement, (D) change any Lender's Commitment Amount, (E)
amend, modify or waive any provision of this SECTION 11.2, (F) consent to
the assignment or transfer by Borrower of any of its rights and obligations
under this agreement, (G) waive any Event of Default specified in SECTION
8.1 (F), (G), (H) or (P), (H) amend, supplement or modify the definition of
Borrowing, Borrowing Base, Collateral Value, Eligible Gestation Mortgage
Loan, Eligible Mortgage Loan, Eligible Wet Mortgage Loan, Jumbo Loan, Super
Jumbo Loan or Required Lenders or of any component of any thereof, or any
provision of SECTION 2.1 or SECTION 6.12, (I) change the several nature of
Lenders' obligations under this agreement, (J) release any Collateral
except as expressly permitted by the Loan Documents, or (K) change any
release provision in any Loan Document, in each of the foregoing cases
without the written consent of all Lenders, (ii) amend, modify or waive any
provision pertaining to Swing Advances without the written consent of
Agent, or (iii) amend, modify or waive any provision of SECTION 4 without
the written consent of all Persons then serving or having served as Agent;
and provided, further, Borrower and Agent may, without the approval of the
Required Lenders, add Additional Lenders pursuant to SECTION 11.11(C);
provided, that such addition does not result in the Total Commitment
exceeding $200,000,000. Any such waiver and any such amendment, supplement
or modification shall apply equally to each of Lenders and shall be binding
upon Borrower, Lenders, Agent and all future holders of the Notes. In the
case of the waiver of any Default or Event of Default, Borrower, Lenders
and Agent shall be restored to their former position and rights hereunder
and under the outstanding Notes, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair
any right consequent thereon.
(B) Regarding Investors. Notwithstanding anything in SECTION
-------------------
11.2(A) to the contrary:
(I) The Required Lenders may, at any time and from time to
time, without the consent of Borrower but effective upon thirty (30)
days' prior written notice by Agent to Borrower, amend SCHEDULE
1.1(B) to delete any Person which, in the sole discretion of the
Required Lenders, is no longer acceptable as an Investor; provided,
that (A) any Investor with respect to which any proceeding of the
types described in SECTIONS 9.1(G) and (H) has been commenced shall,
immediately upon notice to Borrower from Agent or any Lender (with a
copy to Agent) be automatically deleted from SCHEDULE 1.1(B) without
the necessity for any other action (including prior written notice
of any duration to Borrower) by Agent or any lender and (B) upon any
Investor being deleted from SCHEDULE 1.1(B), Borrower shall not
enter into any new Take-Out Commitments or Repurchase Agreements
with such Investor; and
(II) At any time and from time to time at the request of
Borrower and with the consent of Agent and notice to each Lender,
SCHEDULE 1.1(B) may be supplemented to include any Person not then
an Investor which, in the sole discretion of Agent, is acceptable as
an Investor.
(C) Commitment Amount. Notwithstanding anything in SECTION
-----------------
11.2(A) to the contrary, Borrower, Agent and any Lender (the "INCREASING
LENDER") may, at any time and from time to time, without the consent of any
other Lender or Lenders but by written agreement with notice to each
Lender, increase the Commitment Amount of such Increasing Lender for up to
one hundred and twenty days; provided, that after giving effect to such
increase, the Total Commitment at such time does not exceed the Total
Commitment on the Agreement Date by more than $50,000,000.
11.3 INVALIDITY. In the event that any one or more of the provisions
----------
contained in any Note, this agreement or any other Loan Document shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of such document.
11.4 SURVIVAL OF AGREEMENTS. All covenants and agreements herein and in
----------------------
any other Loan Document not fully performed before the date hereof or the date
thereof, and all representations and warranties herein or therein, shall survive
until payment in full of the Obligations and termination of all of the
Commitments.
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11.5 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of this
-----------------------------------
agreement and of the other Loan Documents shall apply with equal force and
effect to each and all promissory notes hereafter executed which in whole or in
part represent a renewal, extension for any period, increase or rearrangement of
any part of the Obligations originally represented by the Notes or any part of
such other Obligations.
11.6 WAIVERS. No course of dealing on the part of Agent or any Lender, or
-------
any of their officers, employees, consultants or agents, nor any failure or
delay by Agent or any Lender with respect to exercising any right, power or
privilege of Agent or any Lender under the Notes, this agreement or any other
Loan Document shall operate as a waiver thereof, except as otherwise provided in
SECTION 11.2.
11.7 CUMULATIVE RIGHTS. The rights and remedies of Lenders and Agent
-----------------
under the Notes, this agreement, and any other Loan Document shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
11.8 CONSTRUCTION. THIS AGREEMENT, EACH NOTE AND EACH OTHER LOAN DOCUMENT
------------
IS A CONTRACT MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF TEXAS, AS SUCH LAWS
ARE NOW IN EFFECT, EXCEPT AS OTHERWISE SPECIFIED HEREIN OR THEREIN, AND, WITH
RESPECT TO USURY LAWS, IF ANY, APPLICABLE TO LENDERS AND TO THE EXTENT ALLOWED
THEREBY, AS SUCH LAWS MAY HEREAFTER BE IN EFFECT WHICH ALLOW A HIGHER MAXIMUM
NONUSURIOUS INTEREST RATE THAN SUCH LAWS NOW ALLOW. TEX. REV. CIV. STAT. ▇▇▇.
ART. ▇▇▇▇, ▇▇. 15 (WHICH REGULATES CERTAIN REVOLVING LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR ANY NOTE.
11.9 INTEREST. Any provisions herein, in any Note, or in any other Loan
--------
Document, or any other document executed or delivered in connection herewith, or
in any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, no Lender shall in any event be
entitled to receive or collect, nor shall or may amounts received hereunder be
credited, so that such Lender shall be paid, as interest, a sum greater than the
maximum amount permitted by applicable law to be charged to the Person primarily
obligated to pay such Note at the time in question. If any construction of this
agreement, any Note or any other Loan Document, or any and all other papers,
agreements or commitments indicate a different right given to any Lender to ask
for, demand or receive any larger sum as interest, such is a mistake in
calculation or wording which this clause shall override and control, it being
the intention of the parties that this agreement, each Note, and all other Loan
Documents or other documents executed or delivered in connection herewith shall
in all things comply with applicable law and proper adjustments shall
automatically be made accordingly. In the event that any Lender shall ever
receive, collect or apply as interest, any sum in excess of the maximum
nonusurious rate permitted by applicable law (the "MAXIMUM RATE"), if any, such
excess amount shall be applied to the reduction of the unpaid principal balance
of the Note or Notes held by such Lender, and if the same be paid in full, any
remaining excess shall be paid to Borrower. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Maximum
Rate, if any, Borrower and each Lender shall, to the maximum extent permitted
under the applicable law: (a) characterize any nonprincipal payment as an
expense or fee rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) "spread" the total amount of interest throughout
the entire term of such Lender's Note or Notes; provided that if a Note is paid
and performed in full prior to the end of the full contemplated term hereof, and
if the interest received for the actual period of existence thereof exceeds the
Maximum Rate, if any, the Lender holding such Note shall refund to Borrower the
amount of such excess.
To the extent that Tex. Rev. Civ. Stat. ▇▇▇. art 5069-1.04, as amended (the
"ACT"), is relevant to the holder of a Note for purposes of determining the
Maximum Rate, each such holder elects to determine such applicable legal rate
under the Act pursuant to the "indicated rate ceiling", from time to time in
effect, as referred to and defined in article 1.04(a)(1) of the Act; subject,
however, to the limitations on such applicable ceiling referred to and defined
in article 1.04(b)(2) of the Act, and further subject to any right such holder
may have subsequently, under applicable law, to change the method of determining
the Maximum Rate.
11.10 RIGHT OF OFFSET. Borrower hereby grants to Agent, to each Lender
---------------
and to any assignee or participation of any Lender a right of offset, to secure
the repayment of Obligations, upon any and all monies, securities or other
property of Borrower, and the proceeds therefrom now or hereafter held or
received by or in transit to such Person, from or for the account of Borrower,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposits (general or special, time or demand,
provisional or final) and credits of Borrower, and any and all claims of
Borrower against such Person at any time existing. Upon the occurrence of any
Event of Default, such Person is hereby authorized at any time and from time to
time, without notice to Borrower, to offset, appropriate, and apply any and all
items hereinabove referred to
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against the Obligations. Notwithstanding anything in this SECTION 11.10 or
elsewhere in this agreement to the contrary, Agent, Lenders and any assignee or
participant of any Lender shall not have any right to offset, appropriate or
apply any accounts of Borrower which consist of escrowed funds (except and to
the extent of any beneficial interest of Borrower in such escrowed funds) on
deposit in accounts which accounts have been identified on the books and records
of the Person with whom such accounts are maintained as containing escrowed
funds.
11.11 ASSIGNMENTS, ADDITIONAL LENDERS, ETC.
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(A) Assignments and Participations. All covenants and agreements by
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or on behalf of Borrower in the Notes, this agreement, or any other Loan
Document shall bind Borrower's successors and assigns and shall inure to
the benefit of Agent and Lenders and their successors and assigns. Borrower
shall not, however, have the right to assign its rights or obligation under
this agreement or any interest herein, without the prior written consent of
Agent and each Lender. Each Lender may assign to one or more Persons all or
any part of, and may grant Participations to one or more Persons in all or
any part of, its rights and obligations under this agreement (including
without limitation, its Commitment, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) such Lender's obligations
under this agreement (including without limitation, its Commitment to
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) whether or not such Lender shall remain the holder of
any such Note, such Lender shall retain all voting rights with respect to
such Note, the Advances thereunder and the Commitment relevant thereto and
Borrower, Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this agreement and in connection with any rights or
obligation of the holder of any such Note.
(B) Confidentiality. Any Lender may, in connection with any
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assignment or participation or proposed assignment or participation
pursuant to this SECTION 11.11, disclose to the actual or proposed assignee
or participant any information relating to Borrower furnished to such
Lender by or on behalf of Borrower; provided, that prior to any such
disclosure, the actual or proposed assignee or participant shall agree to
preserve the confidentiality of any information relating to Borrower that
has been identified in writing by Borrower to be confidential.
(C) Additional Lenders. From time to time additional lenders may be
------------------
added hereto upon (i) the request of Borrower and the consent of Agent and
(ii) execution by Borrower, Agent and such additional lenders of a Bank
Addition Agreement. Each Lender hereby agrees to execute each Bank Addition
Agreement for purposes of acknowledging the terms and provisions thereof.
(D) NBD Assignment to First Chicago. Borrower, Agent, each Lender,
--------------------------------
and NBD Bank ("NBD") acknowledge and agree that on and as of the Agreement
Date, NBD shall sell and assign to The First National Bank of Chicago
("FNBC"), and FNBC shall purchase and take from NBD, all Obligations held
by and owed to NBD under this agreement. On and after the Agreement Date
(i) FNBC shall have the rights and obligations of a Lender under this
Agreement and the other Loan Documents, (ii) FNBC shall assume 100% of the
Commitment held by NBD, and (iii) NBD shall cease to be a Lender under this
agreement and shall have no rights or corresponding obligations (other than
in respect of indemnity obligations as they may exist or arise under the
Original or Existing Loan Agreement in respect of matters before Agreement
Date) under this agreement and the other Loan Documents.
11.12 LENDER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Lender
------------------------------------------------
severally covenants to return its Note or Notes to Borrower upon receipt of its
replacement Notes. Each Lender severally represents and warrants that it:
(A) is either a banking association duly organized and validly
existing under the laws of the United States of America or a State therein,
or is a Federal savings bank duly organized and validly existing under the
laws of the United States of America;
(B) has the power and authority to own its properties and assets
and to transact the business in which it is engaged;
(C) has the power and requisite authority to execute, deliver and
perform this agreement and the other Loan Documents to which it is a party,
and is duly authorized to, and has taken all action necessary to authorize
it to, execute, deliver and perform this agreement and the other Loan
Documents to which it is a party and will continue to be authorized to so
perform; and
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(D) will continuously maintain all components of this agreement and
the other Loan Documents as an official record of such Lender.
11.13 CONSENT TO JURISDICTION. Borrower hereby agrees that any action or
-----------------------
proceeding under this agreement or any other Loan Document may be commenced
against it in any court of competent jurisdiction within the State of Texas, by
service of process upon Borrower by first-class registered or certified mail,
return receipt requested, addressed to Borrower at its address last known to
Agent. Borrower agrees that any such suit, action, or proceeding arising out of
or relating to this agreement or any other Loan Document may be instituted in
the courts of the State of Texas, or in the United States District Court for the
Northern District of Texas, at the option of any Lender; and Borrower hereby
waives any objection to the venue of any such suit, action, or proceeding.
Nothing herein shall affect the right of each Lender to accomplish service of
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Borrower in any other jurisdiction or court.
11.14 EXHIBITS. The exhibits attached to this agreement are incorporated
--------
herein and shall be considered a part of this agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this agreement, the provisions of this
agreement shall prevail.
11.15 TITLES OF ARTICLES AND SECTIONS. All titles or headings to
-------------------------------
articles, sections, or other divisions of this agreement or the exhibits hereto
are only for the convenience of the parties and shall not be construed to have
any effect or meaning with respect to the other content of such articles,
sections, subsections or other divisions, such other content being controlling
as to the agreement between the parties hereto.
11.16 COUNTERPARTS. This agreement may be executed in two or more
------------
counterparts, and it shall not be necessary that the signatures of each of the
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all counterparts together shall constitute one
and the same instrument.
11.17 RIGHTS OF INDIVIDUAL LENDERS TO TAKE ACTION. Notwithstanding any
-------------------------------------------
provision in the Loan Documents to the contrary, no Lender shall have any right
by virtue of (or by availing itself of) any provision of this agreement or any
other Loan Document to institute any action or proceedings at law or in equity
or otherwise (excluding any actions in bankruptcy and the exercise of any rights
of offset) upon or under or with respect to this agreement or any other Loan
Document or for the appointment of a receiver or for any other remedy unless
after an Event of Default has occurred and before Agent has declared in writing
that it has been cured or waived, (a) the Required Lenders have (i) made a
written request that Agent institute such action or proceeding in its own name
as agent under this agreement and (ii) offered to Agent such reasonable
indemnity as it may require against any costs, expenses and liabilities to be
incurred therein or thereby, and (b) Agent, for 30 days after its receipt of
such request and offer of indemnity, shall have failed to institute any such
action or proceedings and no direction inconsistent with such request shall have
been given to Agent by the Required Lenders. Lenders intend and mutually
covenant that no one or more of Lenders or other holders of the Notes shall have
any right in any manner whatever to affect, disturb or prejudice the rights of
any other Lender or to obtain or seek to obtain priority over or preference to
any other Lender, or to enforce any right under this agreement or any other Loan
Document, except in the manner provided in this agreement and for the ratable
benefit of all Lenders. For the protection and enforcement of this SECTION
11.17, Agent and each Lender shall be entitled to such relief as can be given
either at law or in equity.
11.18 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT, AND THE OTHER LOAN
----------------
DOCUMENTS EXECUTED AND DELIVERED AS OF EVEN DATE HEREWITH REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
11.19 AGREEMENT REGARDING EFFECTIVE DATE. Notwithstanding the date of
----------------------------------
this agreement or any other Loan Document, this agreement and the other Loan
Documents dated as of November 1, 1993 are being executed and delivered on the
Agreement Date and each of the terms and provisions of this agreement and of
each of the other Loan Documents shall become effective on the Agreement Date
and not prior thereto.
[REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the Agreement Date below.
Agreement Date: June 13, 1996
BORROWER: NVR MORTGAGE FINANCE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
AGENT BANK ONE, TEXAS, N.A.
AND
LENDER:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
LENDERS: FIRST BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
THE FIRST NATIONAL BANK OF CHICAGO, N.A.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Dominus
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. Dominus, Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Vice President
162
This signature page is to be executed for the purpose of Assignment to the First
National Bank of Chicago pursuant to Section 11.11.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
163