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EXHIBIT 10.19A
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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF MAY 20, 1999
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E-LOAN, INC.
AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
AS LENDER
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions and Accounting Matters ................................................... 1
1.01 Certain Defined Terms ................................................................ 1
1.02 Accounting Terms and Determinations .................................................. 18
SECTION 2. Advances, Note and Prepayments ....................................................... 18
2.01 Advances ............................................................................. 18
2.02 Notes ................................................................................ 19
2.03 Procedure for Borrowing .............................................................. 19
2.04 Limitation on Types of Advances; Illegality .......................................... 20
2.05 Repayment of Advances; Interest ...................................................... 21
2.06 Mandatory Prepayments or Pledge ...................................................... 21
2.07 Optional Prepayments ................................................................. 22
2.08 Requirements of Law .................................................................. 23
2.09 Extension of Termination Date ........................................................ 24
2.10 Purpose of Advances .................................................................. 24
SECTION 3. Payments; Computations; Taxes; Commitment Fee ........................................ 24
3.01 Payments ............................................................................. 24
3.02 Computations ......................................................................... 24
3.03 U.S. Taxes ........................................................................... 24
3.04 Commitment Fee ....................................................................... 25
Section 4. Collateral Security .................................................................. 25
4.01 Collateral; Security Interest ........................................................ 25
4.02 Further Documentation ................................................................ 27
4.03 Changes in Locations, Name, etc ...................................................... 27
4.04 Lender's Appointment as Attorney-in-Fact. ............................................ 27
4.05 Performance by Lender of Borrower's Obligations ...................................... 28
4.06 Proceeds ............................................................................. 28
4.07 Remedies ............................................................................. 29
4.08 Limitation on Duties Regarding Presentation of Collateral ............................ 30
4.09 Powers Coupled with an Interest ...................................................... 30
4.10 Release of Security Interest ......................................................... 30
SECTION 5. Conditions Precedent ................................................................. 30
5.01 Initial Advance ...................................................................... 30
5.02 Initial and Subsequent Advances ...................................................... 32
SECTION 6. Representations and Warranties ....................................................... 34
6.01 Existence ............................................................................ 34
6.02 Financial Condition .................................................................. 35
6.03 Litigation ........................................................................... 35
6.04 No Breach ............................................................................ 35
6.05 Action ............................................................................... 35
6.06 Approvals ............................................................................ 36
6.07 Margin Regulations ................................................................... 36
6.08 Taxes ................................................................................ 36
6.09 Investment Company Act ............................................................... 36
6.10 No Legal Bar ......................................................................... 36
6.11 No Default ........................................................................... 36
6.12 Collateral; Collateral Security ...................................................... 36
6.13 Chief Executive Office ............................................................... 37
6.14 Location of Books and Records ........................................................ 37
6.15 True and Complete Disclosure ......................................................... 37
6.16 Tangible Net Worth; Liquidity ........................................................ 37
6.17 ERISA ................................................................................ 38
6.18 Licenses ............................................................................. 38
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6.19 Relevant States ...................................................................... 38
6.20 True Sales ........................................................................... 38
6.21 No Burdensome Restrictions ........................................................... 38
6.22 Subsidiaries ......................................................................... 38
6.23 Origination and Acquisition of Mortgage Loans ........................................ 38
6.24 No Adverse Selection ................................................................. 38
6.25 Borrower Solvent; Fraudulent Conveyance .............................................. 38
6.26 Year 2000 Compliance ................................................................. 39
6.27 Insured Closing Letter ............................................................... 39
6.28 Escrow Agreement ..................................................................... 39
SECTION 7. Covenants of the Borrower ............................................................ 39
7.01 Financial Statements ................................................................. 39
7.02 Litigation ........................................................................... 42
7.03 Existence, Etc ....................................................................... 42
7.04 Prohibition of Fundamental Changes ................................................... 42
7.05 Borrowing Base Deficiency ............................................................ 43
7.06 Notices .............................................................................. 43
7.07 Servicing ............................................................................ 43
7.08 Intentionally Omitted ................................................................ 43
7.09 Underwriting Guidelines .............................................................. 43
7.10 Lines of Business .................................................................... 44
7.11 Transactions with Affiliates ......................................................... 44
7.12 Use of Proceeds ...................................................................... 44
7.13 Limitation on Liens .................................................................. 44
7.14 Limitation on Sale of Assets ......................................................... 44
7.15 Limitation on Distributions .......................................................... 44
7.16 Maintenance of Liquidity. ............................................................ 44
7.17 Maintenance of Tangible Net Worth .................................................... 45
7.18 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth ..................... 45
7.19 Restricted Payments .................................................................. 45
7.20 Servicing Transmission ............................................................... 45
7.21 No Amendment or Waiver ............................................................... 45
7.22 Maintenance of Property; Insurance ................................................... 45
7.23 Further Identification of Collateral ................................................. 45
7.24 Mortgage Loan Determined to be Defective ............................................. 45
7.25 Interest Rate Protection Agreements .................................................. 46
7.26 Year 2000 Compliance ................................................................. 46
7.27 Certificate of a Responsible Officer of the Borrower ................................. 46
7.28 Uncommitted Warehouse Facilities ..................................................... 46
SECTION 8. Events of Default .................................................................... 46
SECTION 9. Remedies Upon Default ................................................................ 49
Section 10. No Duty on Lender's Part ............................................................. 49
SECTION 11. Miscellaneous ........................................................................ 49
11.01 Waiver ............................................................................... 49
11.02 Notices .............................................................................. 50
11.03 Indemnification and Expenses ......................................................... 50
11.04 Amendments ........................................................................... 51
11.05 Successors and Assigns ............................................................... 51
11.06 Survival ............................................................................. 51
11.07 Captions ............................................................................. 51
11.08 Counterparts ......................................................................... 51
11.09 Loan Agreement Constitutes Security Agreement; Governing Law ......................... 51
11.10 SUBMISSION TO JURISDICTION; WAIVERS .................................................. 51
11.11 WAIVER OF JURY TRIAL ................................................................. 52
11.12 Acknowledgments ...................................................................... 52
11.13 Hypothecation or Pledge of Collateral ................................................ 52
11.14 Assignments; Participations .......................................................... 53
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11.15 Servicing ............................................................................ 54
11.16 Periodic Due Diligence Review ........................................................ 55
11.17 Set-Off .............................................................................. 55
11.18 Intent ............................................................................... 56
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Relevant States
SCHEDULE 4 Subsidiaries
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to the Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Reserved
EXHIBIT F Required Fields for Mortgage Loan Data Transmission
EXHIBIT G Form of Collection Account Agreement
EXHIBIT H Form of Confidentiality Agreement
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of May 10, 1999,
between E-LOAN, INC., a Delaware corporation (the "Borrower") and GREENWICH
CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time to
provide interim funding for the origination and acquisition of certain Mortgage
Loans (as defined herein), which Mortgage Loans are to be sold or contributed by
the Borrower to the Lender pursuant to a mortgage loan purchase agreement
between the Borrower and the Lender, to one or more trusts or other entities to
be sponsored by the Borrower or an Affiliate (as defined herein) thereof, or to
third-parties, which Mortgage Loans shall secure Advances (as defined herein) to
be made by the Lender hereunder. The Mortgage Loans shall at all times be
subject to a valid and enforceable Takeout Commitment (as defined herein) unless
such requirement is waived by the Lender.
The Lender has agreed, subject to the terms and conditions of
this Loan Agreement (as defined herein), to provide such financing to the
Borrower, with a portion of the proceeds of the sale of all mortgage-backed
securities issued by any such trust or other entity, together with a portion of
the proceeds of any permitted whole loan sales, together with other funds of the
Borrower, if necessary, being used to repay any Advances made hereunder as more
particularly described herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, accepted and prudent mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the same type as
such Mortgage Loans in the jurisdiction where the related Mortgaged Property is
located and in a manner at least equal in quality to the servicing the Borrower
or the Borrower's designee provides to mortgage loans which they own in their
own portfolio (as applicable).
"Advance" shall mean any Committed Advance or Uncommitted
Advance, as applicable, and collectively "Advances" shall mean the sum of all
Committed Advances and Uncommitted Advances.
"Affiliate" means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For
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purposes of this definition, "control" (together with the correlative meanings
of "controlled by" and "under common control with") means possession, directly
or indirectly, of the power (a) to vote 10% or more of the securities (on a
fully diluted basis) having ordinary voting power for the directors or managing
general partners (or their equivalent) of such Person, or (b) to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agency" means ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or GNMA, as applicable.
"ALTA" means the American Land Title Association.
"Applicable Collateral Percentage" shall mean with respect to
each Advance:
(a) in the case of Dry Loans:
(1) which are 0 to 59 days past due with respect to
scheduled principal and interest payments, 98%, and (2) which are
60 days or more past due with respect to scheduled principal and
interest payments, 0%; and
(b) in the case of Wet Loans:
(1) for which all Required Documents have not been delivered
for 0 to 10 days, 98%, and (2) for which all Required Documents
have not been delivered within 10 days, 0%.
"Applicable Margin" shall mean with respect to Advances that are
Tranche A Advances and Tranche B Advances respectively, and which are secured by
the Mortgage Loans, the applicable rate per annum set forth below for each day
that such Advances shall be so secured:
Tranche A Advances...............................0.95%
Tranche B Advances ..............................1.50%
"Appraised Value" shall mean the value set forth in an appraisal
made in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, an assignment of the Mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect the assignment and
pledge of the Mortgage.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.
"Best's" means Best's Key Rating Guide, as the same shall be
amended from time to time.
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"Borrower" shall have the meaning provided in the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of all
Eligible Mortgage Loans that have been, and remain, pledged to the Lender
hereunder.
"Borrowing Base Certificate" shall mean the certificate prepared
by the Lender in such form as shall be mutually agreed to between the Borrower
and the Lender.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday, or (ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of
90 days or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit and eurodollar time deposits with maturities of 90 days or less from
the date of acquisition and overnight bank deposits of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than seven days with respect to securities
issued or fully guaranteed or insured by the United States Government, (d)
commercial paper of a domestic issuer rated at least A-1 or the equivalent
thereof by Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent
thereof by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and in either case
maturing within 90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Change of Control" means the acquisition by any Person, or two
or more Persons acting in concert, of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of outstanding shares of
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voting stock of the Borrower at any time if after giving effect to such
acquisition (i) such Person or Persons owns twenty percent (20%) or more of such
outstanding voting stock or (ii) the existing shareholders of the Borrower do
not own more than fifty (50%) of such outstanding shares of voting stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" shall have the meaning assigned to such term in
Section 4.01(b) hereof.
"Collateral Value" shall mean with respect to each Mortgage Loan,
the lesser of (x) the Applicable Collateral Percentage times the outstanding
principal balance of such Mortgage Loan, and (y) 98% of the Market Value;
provided, that:
(i) the Collateral Value of a Mortgage Loan originally funded as
a Dry Loan which has a Material Exception with respect thereto shall be
calculated in the same manner as a Wet Loan; and
(ii) the Collateral Value shall be deemed to be zero with respect
to each Mortgage Loan:
(1) in respect of which there is a material breach of a
representation and warranty set forth on Schedule 1 (assuming
each representation and warranty is made as of the date
Collateral Value is determined) or there is a Material Exception
which was not otherwise waived by Lender;
(2) which the Lender determines, in its reasonable discretion, is
not eligible for sale in the secondary market or for
securitization without unreasonable credit enhancement;
(3) which has been released from the possession of the Custodian
under Section 5(a) of the Custodial Agreement to the Borrower or
its bailee for a period in excess of twenty (20) calendar days
(or if such 20th day is not a Business Day, the preceding
Business Day);
(4) which has been released from the possession of the Custodian
(i) under Section 5(b) of the Custodial Agreement under any
Transmittal Letter in excess of the time period stated in such
Transmittal Letter for release, or (ii) under Section 5(c) of the
Custodial Agreement under an Attorney Bailee Letter, from and
after the date such Attorney's Bailee Letter is terminated or
ceases to be in full force and effect;
(5) which has been subject to this Loan Agreement for greater
than 45 days;
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(6) in respect of which (a) the related Mortgaged Property is the
subject of a foreclosure proceeding or (b) the related Mortgage
Note has been extinguished under relevant state law in connection
with a judgment of foreclosure or foreclosure sale or otherwise;
(7) if (a) the related Mortgage Note or the related Mortgage is
not genuine or is not the legal, valid, binding and enforceable
obligation of the maker thereof, subject to no right of
rescission, set-off, counterclaim or defense, or (b) such
Mortgage is not a valid, subsisting, enforceable and perfected
first lien on the Mortgaged Property; (8) in respect of which the
related Mortgagor is the subject of a bankruptcy proceeding;
(9) if the Mortgagor has not made its first payment on the
related Mortgage Loan prior to its next scheduled reset date at
the time of the funding of the related Advance;
(10) that is not covered by a Takeout Commitment; or
(11) that was originated more than 30 days prior to the date such
Mortgage Loan was first subject to the terms of this Loan
Agreement.
"Collection Account" shall mean the segregated account
established at the direction of the Borrower, and maintained in the name of the
Lender and subject to a security interest in favor of the Lender into which all
Collections received by the Servicer or a Subservicer shall be remitted by such
Servicer or Subservicer. The Borrower shall have the right to direct that
withdrawals from such account be made until such time as the Lender, in its sole
discretion, provides notice to the Collection Bank terminating such right of the
Borrower.
"Collection Account Agreement" shall mean an agreement between
the Borrower, the Collection Bank, and the Lender, substantially in the form of
Exhibit G hereto, as the same may be amended, supplemented or otherwise modified
from time to time, in which the Borrower and Collection Bank acknowledge the
Lender's lien on the Collection Account (which lien is hereby consented to by
the Borrower), and the Borrower hereby grants to the Lender the right to assume
at any time during the occurrence of an Event of Default hereunder exclusive
dominion and control over the distribution of all monies in the account, which
control may be exercised by the Borrower prior to such assumption of control by
the Lender.
"Collection Bank" shall be mutually determined by the Lender and
the Borrower.
"Collections" shall mean, collectively, all collections and
proceeds on or in respect of the Mortgage Loans excluding collections required
to be paid to the Servicer or a mortgagor on the Mortgage Loans.
"Commitment Fee" shall have the meaning assigned to such term in
Section 3.04 hereof.
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"Committed Advance" shall have the meaning assigned to such term
in Section 2.01(a) hereof.
"Contractual Obligation" shall mean as to any Person, any
material provision of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound or any
material provision of any security issued by such Person.
"Cooperative Corporation" shall mean with respect to any
Cooperative Loan, the cooperative apartment corporation that holds legal title
to the related Cooperative Project and grants occupancy rights to units therein
to stockholders through Proprietary Leases or similar arrangements.
"Cooperative Loan" shall mean a Mortgage Loan that is secured by
a first lien on and a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project" shall mean with respect to any Cooperative
Loan, all real property and improvements thereto and rights therein and thereto
owned by a Cooperative Corporation including without limitation the land,
separate dwelling units and all common elements.
"Cooperative Shares" shall mean with respect to any Cooperative
Loan, the shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificate.
"Cooperative Unit" shall mean with respect to any Cooperative
Loan, a specific unit in a Cooperative Project.
"Custodial Agreement" shall mean the Custodial Agreement, dated
as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean Bankers Trust Company of California, N.A.,
its successors and permitted assigns.
"Custodian Loan Transmission" shall have the meaning assigned
thereto in the Custodial Agreement.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Disbursement Account" shall have the meaning assigned to such
term in the Custodial Agreement.
"Dollars" and "$" shall mean lawful money of the United States of
America.
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"Dry Loan" shall mean a first lien Mortgage Loan which is
underwritten in accordance with the Underwriting Guidelines which Mortgage File
contains all required Mortgage Loan Documents.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"Due Diligence Review" shall mean the performance by the Lender
of any or all of the reviews permitted under Section 11.16 hereof with respect
to any or all of the Mortgage Loans or the Borrower or related parties, as
desired by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan secured by a
first mortgage lien (as reflected on the Mortgage Loan Data Transmission) on a
residential property and as to which (i) the representations and warranties in
Section 6.12 and 6.23 and Schedule 1 hereof are correct, (ii) was originated or
acquired by the Borrower in accordance with the Borrower's or Lender approved
third party's Underwriting Guidelines and (iii) such other customary criteria
for eligibility determined by the Lender shall have been satisfied; provided,
however, that the definition of Eligible Mortgage Loan may include Second Lien
Mortgage Loans at such time as the Lender and the Borrower mutually agree upon
the Applicable Collateral Percentage which shall apply to Advances secured by
such Second Lien Mortgage Loans.
"Equity Event" shall mean the date upon which the Borrower,
through an initial public offering, has raised equity capital in an amount
reasonably acceptable to the Lender.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Borrower is a member.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the Mortgagee pursuant to the Mortgage or any other document.
"Event of Default" shall have the meaning provided in Section 8
hereof.
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"Exception Report" shall mean the exception report prepared by
the Custodian pursuant to the Custodial Agreement.
"▇▇▇▇▇▇ ▇▇▇" means ▇▇▇▇▇▇ Mae, formerly the Federal National
Mortgage Association, or any successor thereto.
"First Lien" shall mean with respect to each Mortgaged Property,
the lien of the mortgage, deed of trust or other instrument securing a mortgage
note which creates a first lien on the Mortgaged Property.
"First Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
secured by a first priority lien on the related Mortgaged Property, subject to
Permitted Exceptions.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, formerly the Federal Home Loan
Mortgage Corporation, or any successor thereto.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"GNMA" means the Government National Mortgage Association, or any
successor thereto.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Subsidiaries or any of its properties.
"Gross Margin" means with respect to each adjustable rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise),
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance, or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
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"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
Indebtedness of others Guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; (i) Indebtedness of general partnerships of which such Person is
a general partner; and (j) any other indebtedness of such Person by a note,
bond, debenture or similar instrument.
"Index" means with respect to each adjustable rate Mortgage Loan,
the index set forth in the related Mortgage Note for the purpose of calculating
the interest rate thereon.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Insured Closing Letter" shall have the meaning assigned to such
term in the Custodial Agreement.
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to such
Advance and ending on the calendar day prior to the next succeeding Reset Date,
and (ii) thereafter, each period commencing on the Reset Date of a month and
ending on the calendar day prior to the Reset Date of the next succeeding month.
Notwithstanding the foregoing, no Interest Period may end after the Termination
Date.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Interest Rate Protection Agreement" shall mean with respect to
any or all of the Mortgage Loans and/or Advances, any interest rate swap, cap or
collar agreement or any other applicable hedging arrangements providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies entered
into by the Borrower and reasonably acceptable to the Lender.
"Lender" shall have the meaning assigned thereto in the heading
hereto.
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"LIBO Base Rate" shall mean with respect to each day an Advance
is outstanding (or if such day is not a Business Day, the next succeeding
Business Day), the rate per annum equal to the rate published by Bloomberg or if
such rate is not available, the rate appearing at page 3750 of the Telerate
Screen as one-month LIBOR on such date, and if such rate shall not be so quoted,
the rate per annum at which the Lender is offered Dollar deposits at or about
11:00 A.M., eastern time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Advances are then being conducted for delivery on
such day for a period of one month and in an amount comparable to the amount of
the Advances to be outstanding on such day.
"LIBO Rate" shall mean with respect to each Interest Period
pertaining to an Advance, a rate per annum determined by the Lender in its sole
discretion in accordance with the following formula (rounded upwards to the
nearest l/100th of one percent), which rate as determined by the Lender shall be
conclusive absent manifest error by the Lender:
LIBO Base Rate
--------------------------------
1.00 - LIBO Reserve Requirements
The LIBO Rate shall be calculated each Funding Date and Reset
Date commencing with the first Funding Date.
"LIBO Reserve Requirements" shall mean for any Interest Period
for any Advance, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements applicable to the Lender in effect
on such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto), dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such Governmental Authority. As of
the Effective Date, the LIBO Reserve Requirements shall be deemed to be zero.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Master Loan and Security
Agreement, as may be amended, supplemented or otherwise modified from time to
time as mutually agreed by the parties in writing.
"Loan Documents" shall mean collectively, this Loan Agreement,
the Note, the Custodial Agreement and the Collection Account Agreement.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
16
"Market Value" shall mean the value, determined by the Lender in
its sole reasonable discretion, of the Mortgage Loans if sold in their entirety
to a single third-party purchaser. The Lender's determination of Market Value
shall be conclusive upon the parties, absent manifest error on the part of the
Lender. The Lender shall have the right to ▇▇▇▇ to market the Mortgage Loans on
a daily basis which Market Value may be determined to be zero. The Borrower
acknowledges that the Lender's determination of Market Value is for the limited
purpose of determining Collateral Value for lending purposes hereunder without
the ability to perform customary purchaser's due diligence and is not
necessarily equivalent to a determination of the fair market value of the
Mortgage Loans achieved by obtaining competing bids in an orderly market in
which the Borrower is not in default and the bidders have adequate opportunity
to perform customary loan and servicing due diligence.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the property, business, operations, financial condition or prospects of the
Borrower, (b) the ability of the Borrower to perform in all material respects
its obligations under any of the Loan Documents or any other gestation,
financing or repurchase documents entered into between Lender and Borrower to
which it is a party, (c) the validity or enforceability in all material respects
of any of the Loan Documents, (d) the rights and remedies of the Lender under
any of the Loan Documents, (e) the timely payment of the principal of or
interest on the Advances or other amounts payable in connection therewith or (f)
the Collateral (other than changes in Market Value due to market conditions).
"Material Exception" shall have the meaning assigned thereto in
the Custodial Agreement.
"Maximum Committed Amount" shall mean $100 million.
"Maximum Credit" shall mean prior to an Equity Event, the Maximum
Committed Amount (reduced by the amount outstanding under any other gestation,
financing or repurchase documents entered into between Lender and Borrower) and
following an Equity Event, the sum of the Maximum Committed Amount and the
Maximum Uncommitted Amount (reduced by the amount outstanding under any other
gestation, financing or repurchase documents entered into between Lender and
Borrower); provided, however, the following limitations on Maximum Credit shall
apply:
(1) the Maximum Credit for Mortgage Loans which are Dry Loans
that are 30 to 59 days delinquent with respect to scheduled
payments of principal and interest may not exceed $3 million at
any time;
(2) the Maximum Credit for Mortgage Loans which are Wet Loans may
not exceed $25 million at any time; and
(3) the Maximum Credit for Mortgage Loans which are Second Lien
Mortgage Loans that are subject to Takeout Commitments may not
exceed $5 million at any time.
17
"Maximum Uncommitted Amount" shall mean $100 million.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Mortgage Loan as adjusted in accordance with changes
in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note
for an adjustable rate Loan other than a Cooperative Loan, Mortgage Loan.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument, which creates a first or second lien (as indicated on the Mortgage
Loan Data Transmission) on either (i) with respect to a Mortgage Loan other than
a Cooperative Loan, the fee simple or leasehold estate in such real property or
(ii) with respect to a Cooperative Loan, the Proprietary Lease and related
Cooperative Shares, which in either case secures the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Interest Rate" means the annual rate of interest borne
on a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
"Mortgage Loan" shall mean a conforming mortgage loan (including
jumbo mortgage loans of "A" credit quality) or Cooperative Loan which the
Custodian has been instructed to hold for the Lender pursuant to the Custodial
Agreement, and which Mortgage Loan includes, without limitation, (i) a Mortgage
Note, the related Mortgage and all other Mortgage Loan Documents and (ii) all
right, title and interest of the Borrower in and to the Mortgaged Property
covered by such Mortgage.
"Mortgage Loan Data Transmission" shall mean a computer-readable
magnetic or other electronic format incorporating the fields identified on
Exhibit F.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage
Loan, the documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan List" shall mean the hard copy report provided by
the Borrower which shall include with respect to each Mortgage Loan to be
included as Collateral the items set forth on Exhibit D-1 hereto.
"Mortgage Note" shall mean the original executed promissory note
or other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
"Mortgaged Property" means the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
18
"Mortgagee" means either the Borrower or any subsequent holder of
a Mortgage Loan.
"Mortgagor" means the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been or are required
to be made by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA.
"Net Cash Proceeds" shall mean the gross cash proceeds of the
Borrower from an Equity Event less the out-of-pocket expenses of the Borrower
incurred in connection with such Equity Event.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period as determined in accordance with GAAP.
"Net Worth" shall mean, with respect to any Person, the excess of
total assets of such Person, over total liabilities of such Person, determined
in accordance with GAAP.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Advances and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Notice of Borrowing and Pledge" shall have the meaning assigned
to such term in Section 2.03(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Exceptions" shall mean the exceptions to lien priority
including but not limited to: (i) the lien of current real property taxes and
assessments not yet due and payable; (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy delivered to
the originator of the Mortgage Loan and (A) referred to or otherwise considered
in the appraisal (if any) made for the originator of the Mortgage Loan or (B)
which do not adversely affect the appraised value of the Mortgaged Property set
forth in such appraisal; (iii) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property; and (iv) in the case of a
Second Lien Mortgage Loan, a First Lien on the related Mortgaged Property.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
19
"Plan" shall mean an employee benefit or other plan established
or maintained by either the Borrower or any ERISA Affiliate and that is covered
by Title IV of ERISA, other than a Multiemployer Plan.
"PMI Policy" or "Primary Insurance Policy" means a policy of
primary mortgage guaranty insurance issued by a Qualified Insurer.
"Post-Default Rate" shall mean, in respect of any principal of
any Advance or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2% per annum, plus (a)(i) the
interest rate otherwise applicable to such Advance or other amount, or (ii) if
no interest rate is otherwise applicable, the LIBO Rate plus (b) the Applicable
Margin.
"Property" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Proprietary Lease" shall mean the lease on a Cooperative Unit
evidencing the possessory interest of the owner of the Cooperative Shares in
such Cooperative Unit.
"Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac and whose claims paying ability is rated in the two
highest rating categories by any of the rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's with
respect to hazard and flood insurance.
"Qualified Originator" shall mean (a) the Borrower and (b) any
other originator of Mortgage Loans as may be approved by the Lender in writing
from time to time.
"Regulations G, T, U and X" shall mean Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System (or any successor), as
the same may be modified and supplemented and in effect from time to time.
"Requirement of Law" shall mean as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other 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.
"Required Documents" shall mean those documents identified in
Section 2(I) of the Custodial Agreement.
"Rescission" shall mean the right of a Mortgagor to rescind the
related Mortgage Note and related documents pursuant to applicable law and
applicable Agency guides.
20
"Reset Date" shall mean the first day of each calendar month, or
if such day is not a Business Day, the next succeeding Business Day.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated by a certificate of corporate resolution.
"Restricted Payments" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"Second Lien" shall mean with respect to each Mortgaged Property,
the lien of the mortgage, deed of trust or other instrument securing a mortgage
note which creates a second lien on the Mortgaged Property.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
secured by the lien on the Mortgaged Property, subject to one prior lien on such
Mortgaged Property securing financing obtained by the related Mortgagor and to
Permitted Exceptions.
"Secured Obligations" shall have the meaning assigned thereto in
Section 4.01(c) hereof.
"Securitization Letter" shall mean that certain letter agreement
by and between the Borrower and the Lender dated the date hereof, outlining
rights and obligations with respect to securitizations and whole loan sales of
mortgage loans that are similar to the Mortgage Loans subject to this Loan
Agreement.
"Servicer" shall mean the Borrower in its capacity as servicer or
master servicer of the Mortgage Loans.
"Servicing Agreement" shall have the meaning provided in Section
11.15(c) hereof.
"Servicing File" means with respect to each Mortgage Loan, the
file retained by the Borrower consisting of originals of all material documents
in the Mortgage File which are not delivered to the Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
"Servicing Records" shall have the meaning assigned thereto in
Section 11.15(b) hereof.
21
"Servicing Transmission" shall mean a computer-readable magnetic
or other electronic format mutually acceptable to the parties.
"Settlement Agent" shall have the meaning provided in the
Custodial Agreement.
"Subservicer" shall have the meaning provided in Section 11.15(c)
hereof.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"Takeout Commitment" shall mean, with respect to any Mortgage
Loan, an irrevocable commitment issued by a Takeout Investor in favor of the
Borrower pursuant to which such Takeout Investor agrees to purchase such
Mortgage Loan at a specific price on a forward delivery basis acceptable to the
Lender in its sole discretion.
"Takeout Investor" shall mean a third party which has agreed to
purchase Mortgage Loans pursuant to a Takeout Commitment.
"Tangible Net Worth" shall mean, with respect to any Person, as
of any date of determination, the consolidated Net Worth of such Person and its
Subsidiaries, less the consolidated net book value of all assets of such Person
and its Subsidiaries (to the extent reflected as an asset in the balance sheet
of such Person or any Subsidiary at such date) which will be treated as
intangibles under GAAP, including, without limitation, such items as deferred
financing expenses, net leasehold improvements, good will, trademarks, trade
names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense; provided, that residual securities issued by such Person
or its Subsidiaries shall not be treated as intangibles for purposes of this
definition.
"Termination Date" shall mean 364 days following the Effective
Date of this Agreement, or such earlier date on which this Loan Agreement shall
terminate in accordance with the provisions hereof or by operation of law as
same may be extended pursuant to Section 2.09.
"Total Indebtedness" shall mean with respect to any Person, for
any period, the aggregate Indebtedness of such Person and its Subsidiaries
during such period, less the amount of any nonspecific consolidated balance
sheet reserves maintained in accordance with GAAP.
"Tranche A Advances" shall mean Advances so long as, and to the
extent that, they are secured by Dry Loans.
22
"Tranche B Advances" shall mean Advances so long as, and to the
extent that, they are secured by Wet Loans.
"Trust Status" shall mean the determination by the Custodian and
confirmed by the Lender whether a Mortgage Loan delivered as a Wet Loan has
become a Dry Loan.
"Uncommitted Advance" shall have the meaning assigned to such
term in Section 2.01(b) hereof.
"Underwriting Guidelines" shall mean either (i) with respect to
Eligible Mortgage Loans that are agency-conforming mortgage loans except with
respect to outstanding principal balance, the underwriting guidelines of the
Borrower, which shall be subject to the prior written approval of the Lender
(such approval not to be unreasonably withheld) and which shall delivered to the
Lender prior to making any Advances to be secured by Mortgage Loans underwritten
pursuant to such underwriting guidelines and/or the applicable Takeout
Investor's underwriting requirements or (ii) with respect to agency-conforming
Eligible Mortgage Loans, the underwriting guidelines of ▇▇▇▇▇▇ Mae.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Wet Loan" shall mean a wet-funded first lien Mortgage Loan which
is underwritten in accordance with the Underwriting Guidelines and does not
contain all the required Mortgage Loan Documents in the Mortgage File, which in
order to be deemed an Eligible Mortgage Loan shall have the following additional
characteristics:
(a) the proceeds thereof have been funded (or, on the date of the
Advance supported by a Notice of Borrowing and Pledge are being funded) by wire
transfer or cashier's check, cleared check or draft or other form of immediately
available funds to the Settlement Agent for such Wet Loan;
(b) the Borrower expects such Wet Loan to close and become a valid lien
securing actual indebtedness by funding to the order of the Mortgagor
thereunder;
(c) the proceeds thereof have not been returned to the Lender from the
Settlement Agent for such Wet Loan;
(d) the Borrower has not learned that such Wet Loan will not be closed
and funded to the order of the Mortgagor; and
23
(e) upon recordation such Mortgage Loan will constitute a first lien on
the premises described therein.
"Wire Instruction Data" as defined in the Custodial Agreement.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
SECTION 2. Advances, Note and Prepayments.
2.01 Advances.
(a) Subject to fulfillment of the conditions precedent set forth
in Sections 5.01 and 5.02 hereof, and provided that no Default shall have
occurred and be continuing hereunder, the Lender agrees from time to time, on
the terms and conditions of this Loan Agreement, to make loans (individually, a
"Committed Advance"; collectively, the "Committed Advances") to the Borrower in
Dollars, on any Business Day from and including the Effective Date to but
excluding the Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the lesser of (i) the Maximum Committed
Amount (which shall be further subject to the limitations in the definition of
Collateral Value) and (ii) the Borrowing Base as in effect from time to time.
(b) In addition to the foregoing, subject to the successful
completion of an Equity Event, and provided that no Default shall have occurred
and be continuing hereunder, the Lender may from time to time in its sole
discretion, on the terms and conditions of this Loan Agreement, make loans
(individually, an "Uncommitted Advance"; collectively, the "Uncommitted
Advances") to the Borrower in Dollars, on any Business Day from and including
the date of such Equity Event to but excluding the Termination Date in an
aggregate principal amount at any one time outstanding up to but not exceeding
the lesser of (i) the Maximum Uncommitted Amount (which shall be further subject
to the limitations in the definition of Collateral Value) and (ii) the Borrowing
Base as in effect from time to time. Unless otherwise agreed by the parties, in
determining whether Advances secured by Eligible Mortgage Loans are Committed
Advances or Uncommitted Advances, such Advances shall first be deemed Committed
Advances up to the Maximum Committed Amount, and then the remainder shall be
deemed Uncommitted Advances.
(c) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder.
(d) In no event shall an Advance be made when any Default or
Event of Default has occurred and is continuing.
(e) The minimum amount of any Advance made by the Lender
hereunder shall be $1,000,000.
24
2.02 Notes.
(a) The Advances made by the Lender shall be evidenced by a
single promissory note of the Borrower substantially in the form of Exhibit A
hereto (the "Note"), dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Maximum Credit as originally in effect and
otherwise duly completed. The Lender shall have the right to have its Note
subdivided, by exchange for promissory notes of lesser denominations or
otherwise.
(b) The date, amount and interest rate of each Advance made by
the Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, noted by the Lender on the grid attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or notation shall not affect the obligations of the Borrower to make
a payment when due of any amount owing hereunder or under the Note in respect of
the Advances.
2.03 Procedure for Borrowing.
(a) Borrowing Procedure for Requesting an Advance. The Borrower
may request a borrowing to be secured by any Mortgage Loans hereunder, on any
Business Day during the period from and including the Effective Date to the
Termination Date, by delivering to the Lender, with a copy to the Custodian, a
Mortgage Loan Data Transmission, an irrevocable Notice of Borrowing and Pledge
substantially in the form of Exhibit D hereto (a "Notice of Borrowing and
Pledge"), appropriately completed, Wire Instruction Data, an Escrow Letter and
an Insured Closing Letter, each of which must be received no later than 6:00 p.m
(eastern time) one Business Day prior to the requested Funding Date for any
Advance to be made by 9:00 a.m. on the Funding Date and no later than 2:00 p.m.
on the requested Funding Date with respect to an Advance to be made by 4:00 p.m.
on the Funding Date. Such Notice of Borrowing and Pledge shall clearly indicate
those Mortgage Loans that are intended to be Wet Loans and Dry Loans and include
a Mortgage Loan List in respect of the Eligible Mortgage Loans that the Borrower
proposes to pledge to the Lender and to be included in the Borrowing Base in
connection with such borrowing; provided, however, to the extent that any such
requested borrowing shall constitute an Uncommitted Advance, the Lender may, at
its sole option, elect not to make such Uncommitted Advance. Upon the Lender's
request, the Borrower will deliver to the Lender a Takeout Commitment
confirmation and assignment acknowledged by the Takeout Investor for each
Mortgage Loan to be pledged to the Lender hereunder. The Borrower agrees to
immediately report to the Custodian and the Lender by facsimile transmission
within one Business Day of discovery that any Wet Loans that were previously
pledged to the Borrower do not close for any reason including, but not limited
to, a Rescission. The Custodian will deliver a notice of intent to issue a Trust
Receipt to Lender after the Custodian has reviewed the documents contained in
Section 2(a)II of the Custodial Agreement.
(b) Pursuant to the Custodial Agreement, the Custodian shall
review any Required Documents delivered by 2:00 p.m. (eastern time) as specified
in the Custodial Agreement on any Business Day in time to include the related
Mortgage Loans in such Borrowing Base determination on the same day. Not later
than 4:00 p.m. (eastern time) on each Business Day, the Custodian shall deliver
to the Lender, via electronic transmission acceptable to
25
the Lender, the Custodian Loan Transmission showing the status of all Mortgage
Loans then held by the Custodian, including but not limited to the Wet Loans and
Dry Loans which are subject to document exceptions, and the time the related
Mortgage Loan Documents have been released pursuant to Section 5(a) or 5(b) of
the Custodial Agreement. Not later than 4:30 p.m. (eastern time) on each
Business Day, the Lender shall calculate the Borrowing Base of all Mortgage
Loans that are held by the Custodian and forward to the Borrower by facsimile
transmission a copy of the Borrowing Base Certificate. In addition, the
Custodian shall deliver to the Lender no later than 4:30 p.m. (eastern time) by
facsimile transmission on each Funding Date, one or more Trust Receipts (as
defined in the Custodial Agreement) relating to either Wet Loans or Dry Loans.
The original copies of such Trust Receipts shall be delivered to Chase Manhattan
Bank at Four New York Plaza, Ground Floor, Outsourcing Department, New York, New
York 10004, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇ for the account of Greenwich Capital
Financial Products, Inc. (telephone number (▇▇▇) ▇▇▇-▇▇▇▇), as agent for the
Lender by overnight delivery using a nationally recognized insured overnight
delivery service.
(c) Upon the Borrower's request for a borrowing pursuant to
Section 2.03(a) above, the Lender shall, assuming all conditions precedent set
forth in this Section 2.03 and in Section 5.01 and 5.02 have been met, and
provided no Default shall have occurred and be continuing (in accordance with
Section 2.01), make an Advance to the Disbursement Account (as determined by
Lender) not later than 9:00 a.m. on the requested Funding Date with respect to
an Advance requested in a Notice of Borrowing and Pledge delivered to the Lender
by 6:00 p.m. on the day immediately preceding the Funding Date and not later
than 4:00 p.m. for Advances requested in a Notice of Borrowing and Pledge
delivered to the Lender by 2:00 p.m. on the requested Funding Date in an amount
which would not cause the aggregate amount of Advances then outstanding to
exceed the lesser of (i) the Maximum Credit or (ii) the Borrowing Base shown on
the latest Borrowing Base Certificate of the Lender. Subject to the foregoing,
such borrowing will be made available to the Borrower by the Lender transferring
to the Disbursement Account, via wire transfer, in the aggregate amount of such
borrowing for remittance by the Custodian to the Settlement Agent in accordance
with Section 3(c) of the Custodial Agreement. The Borrower hereby agrees to
deposit into the Disbursement Account any shortfall created to the extent that
any Advance made by the Lender is less than the amount of the payments required
to be made to Settlement Agents.
2.04 Limitation on Types of Advances; Illegality. Anything herein
to the contrary notwithstanding, if, on or prior to the determination of any
LIBO Base Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO Base Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Advances as
provided herein; or
(b) the Lender determines, which determination shall be
conclusive, that the Applicable Margin plus the relevant rate of
interest referred to in the definition of "LIBO Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for Advances is
to be determined is not likely adequately to cover the cost to the
Lender of making or maintaining Advances; or
26
(c) it becomes unlawful for the Lender to honor its obligation to
make or maintain Advances hereunder using a LIBO Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances, and the Borrower shall, at its option, either prepay
such Advances or pay interest on such Advances at a rate per annum as determined
by the Lender taking into account the increased cost to the Lender of making the
Advances.
2.05 Repayment of Advances; Interest.
(a) The Borrower shall repay in full on the Termination Date the
then aggregate outstanding principal amount of the Advances (as evidenced by the
Note). The Lender and the Borrower acknowledge that it is the intent of each
such party that, not later than 1:00 p.m. on each Business Day, the Lender may
buy eligible mortgage loans pursuant to the separate gestation program entered
into between the Borrower and the Lender. The Borrower shall sell to the Lender
pursuant to such gestation program any Dry Mortgage Loan as
identified/authorized by the Borrower and approved by the Lender.
(b) No later than the Business Day prior to each Reset Date, the
Lender shall provide to the Borrower a report which shall state the interest
amount due for the current interest period on the Advance.
(c) The Borrower shall pay to the Lender interest on the unpaid
principal amount of each Advance for the period from and including the date of
such Advance to but excluding the date such Advance shall be paid in full, at a
rate per annum equal to the LIBO Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Borrower shall pay to the Lender interest at
the applicable Post-Default Rate on any principal of any Advance and on any
other amount payable by the Borrower hereunder or under the Note, that shall not
be paid in full when due (whether at stated maturity, by acceleration or by
mandatory prepayment or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full. Accrued
interest on each Advance as calculated in Section 2.05(b) above shall be payable
monthly on each Reset Date (except to the extent the Lender, in its sole
discretion, consents to a later date) and on the Termination Date, except that
interest payable at the Post-Default Rate shall accrue daily and shall be
payable promptly upon receipt of invoice. Promptly after the determination of
any interest rate provided for herein or any change therein, the Lender shall
give written notice thereof to the Borrower.
(d) The Borrower and the Lender acknowledge that the proceeds of
Collateral may be held in the Collection Account pursuant to the Collection
Account Agreement. The Lender agrees that if no Event of Default shall have
occurred and be continuing, on each Reset Date, the Collection Bank shall be
permitted to remit such amounts then held in such Collection Account at the
direction of the Borrower until notified to the contrary by the Lender.
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2.06 Mandatory Prepayments or Pledge.
On each Advance Date or other date on which there is a change in
the Mortgage Loans held by the Custodian, the Custodian shall deliver to the
Lender and the Borrower the Custodian Loan Transmission. The Lender shall
deliver to the Borrower a Borrowing Base Certificate by 4:30 p.m. (eastern
time), the calculation in such certificate to be based on the delinquency status
and principal balance of the Eligible Mortgage Loans as of the later of the
funding date balance or the last calendar day of the prior month. Such
information shall be ascertained from the Servicing Transmission which shall be
delivered or caused to be delivered by the Borrower in accordance with Section
7.20 and shall include all Mortgage Loans which were funded on or prior to the
last date of any Advance. In the event that such Borrowing Base Certificate
indicates or if at any time the aggregate outstanding principal amount of
Advances exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
determined by the Lender and notified to the Borrower on any Business Day, the
Borrower shall no later than one Business Day after receipt of such written
notice, either prepay the Advances in part or in whole or pledge additional
Eligible Mortgage Loans (which Collateral shall be in all respects acceptable to
the Lender) to the Lender, such that after giving effect to such prepayment or
pledge the aggregate outstanding principal amount of the Advances does not
exceed the Borrowing Base.
2.07 Optional Prepayments.
(a) The Advances are prepayable without premium or penalty, in
whole or in part, after providing not less than one (1) Business Days prior
notice (except as specified in Section 2.05(a)). The Advances are prepayable at
any other time, in whole or in part, in accordance herewith and subject to
clause (b) below. Any amounts prepaid shall be applied to repay the outstanding
principal amount of any Advances (together with interest thereon) until paid in
full. Amounts repaid may be reborrowed in accordance with the terms of this Loan
Agreement. If such notice is given, the amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial prepayments shall be in an aggregate
principal amount of at least $100,000.
(b) If the Borrower makes a prepayment of the Advances other than
as provided in Section 2.07(a) above, the Borrower shall indemnify the Lender
and hold the Lender harmless from any actual loss or expense which the Lender
may sustain or incur arising from (a) the reemployment of funds obtained by the
Lender to maintain the Advances hereunder or from (b) fees payable to terminate
the deposits from which such funds were obtained, in either case, which actual
loss or expense shall be equal to an amount equal to the excess, as reasonably
determined by the Lender, of (i) its cost of obtaining funds for such Advances
for the period from the date of such payment through the following Reset Date
over (ii) the amount of interest likely to be realized by such Lender in
redeploying the funds not utilized by reason of such payment for such period.
This Section 2.07 shall survive termination of this Loan Agreement and payment
of the Note.
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2.08 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments
to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory Advance or similar requirement against assets held
by deposits or other liabilities in or for the account of advances.
Advances or other extensions of credit by, or any other acquisition of
funds by any office of the Lender which is not otherwise included in the
determination of the LIBO Base Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable thereafter incurred.
(b) If the Lender shall have determined that the adoption of or
any change in any Requirement of Law (other than with respect to any amendment
made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrower shall promptly
pay to the Lender such additional amount or amounts as will thereafter
compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower of
the event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by the Lender
to the Borrower shall be conclusive in the absence of manifest error.
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2.09 Extension of Termination Date.
At the request of Borrower, at least thirty (30) days prior to
the then Termination Date, the Lender may in its sole discretion extend the
Termination Date for a period of 364 days by giving written notice of such
extension to the Borrower no later than twenty (20) days, but in no event more
than thirty (30) days, prior to the then current Termination Date.
2.10 Purpose of Advances.
Each Advance shall be used to finance the origination or purchase
of Eligible Mortgage Loans identified to the Lender in writing on each Mortgage
Loan Schedule as such Mortgage Loan Schedule may be amended from time to time.
SECTION 3. Payments; Computations; Taxes; Commitment Fee.
3.01 Payments.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the
following account maintained by the Lender at The Chase Manhattan Bank: Account
Number 140095961, For the A/C of Greenwich Capital Financial Products, Inc.,
ABA# ▇▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, not later than 1:00 p.m., eastern time, on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day). The Borrower acknowledges that it has no rights of withdrawal
from the foregoing account.
3.02 Computations. Interest on the Advances shall be computed on
the basis of a 360-day year for the actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable.
3.03 U.S. Taxes.
(a) The Borrower agrees to pay to the Lender such additional
amounts as are necessary in order that the net payment of any amount due to the
Lender hereunder after deduction for or withholding in respect of any U.S. Tax
(as defined below) imposed with respect to such payment (or in lieu thereof,
payment of such U.S. Tax by the Lender), will not be less than the amount stated
herein to be then due and payable; provided, that the foregoing obligation to
pay such additional amounts shall not apply:
(i) to any payment to the Lender hereunder unless the Lender is
entitled to submit a Form 1001 (relating to the Lender and entitling it
to a complete exemption from withholding on all interest to be received
by it hereunder in respect of the Advances) or Form 4224 (relating to
all interest to be received by the Lender hereunder in respect of the
Advances), or
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(ii) to any U.S. Tax imposed solely by reason of the failure by
the Lender to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of the Lender if such compliance is required by statute or
regulation of the United States of America as a precondition to relief
or exemption from such U.S. Tax.
For the purposes of this Section 3.03(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), and (y) "U.S. Taxes" shall mean any present or
future tax, assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof or therein.
(b) Within 30 days after paying any such amount to the Lender,
and within 30 days after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrower that on
the date hereof the Lender is either incorporated under the laws of the United
States or a State thereof or is entitled to submit a Form 1001 (relating to the
Lender and entitling it to a complete exemption from withholding on all interest
to be received by it hereunder in respect of the Advances) or Form 4224
(relating to all interest to be received by the Lender hereunder in respect of
the Advances).
3.04 Commitment Fee. Subject to Section 5.02(i) hereof, the
Borrower agrees to pay to the Lender, on the Termination Date, a commitment fee
equal to (a) 12.5 basis points (0.125%) multiplied by (b) the Maximum Committed
Amount (the "Commitment Fee"), such payment to be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Lender.
SECTION 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to the terms of the Custodial Agreement and shall deliver to the Lender
Trust Receipts with Exception Reports (as such terms are defined in the
Custodial Agreement) to the effect that it has reviewed such Mortgage Loan
Documents in the manner required by the Custodial Agreement and identifying any
deficiencies in such Mortgage Loan Documents as so reviewed.
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(b) Each of the following items or types of property, whether now
owned or hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Collateral":
(i) all Mortgage Loans identified on a Notice of Borrowing and
Pledge delivered by the Borrower to the Lender and the Custodian from
time to time;
(ii) all Mortgage Loan Documents, including without limitation
all promissory notes, and all Servicing Records (as defined in Section
11.15(b) below), and any other collateral pledged or otherwise relating
to such Mortgage Loans, together with all files, material documents,
instruments, surveys (if available), certificates, correspondence,
appraisals, computer records, computer storage media, Mortgage Loan
accounting records and other books and records relating thereto;
(iii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loans and all claims and payments
thereunder;
(iv) all other insurance policies and insurance proceeds relating
to any Mortgage Loans or the related Mortgaged Property;
(v) all Interest Rate Protection Agreements relating to any or
all of the foregoing;
(vi) any purchase agreements or other agreements or contracts
relating to or constituting any or all of the foregoing;
(vii) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(viii) all "accounts", "chattel paper" and "general intangibles"
as defined in the Uniform Commercial Code relating to or constituting
any or all of the foregoing; and
(ix) any and all replacements, substitutions, distributions on or
proceeds of any or all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a security
interest to the Lender in all of its right, title and interest in, to and under
all the Collateral, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located, to secure the repayment of principal of
and interest on all Advances and all other amounts owing to the Lender
hereunder, under the Note and under the other Loan Documents (collectively, the
"Secured Obligations"). The Borrower agrees to ▇▇▇▇ their computer records and
tapes to evidence the security interests granted to the Lender hereunder.
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4.02 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver, or will promptly cause
to be executed and delivered, such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby. The
Borrower also hereby authorizes the Lender to file any such financing or
continuation statement without the signature of the Borrower to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed reasonably necessary by the Lender to continue its perfected status in
the Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
mortgage insurance or with respect to any other Collateral and to file
any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Lender for the purpose
of collecting any and all such moneys due under any such mortgage
insurance or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
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(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for all
purposes, and to do, at the Lender's option and the Borrower's expense,
at any time, or from time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon the Collateral and
the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and from
time to time, to execute, in connection with the sale provided for in Section
4.07 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its material agreements
contained in the Loan Documents and the Lender may itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
out-of-pocket expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Post-Default Rate, shall be payable by the Borrower to the Lender
on demand and shall constitute Secured Obligations.
4.06 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the
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exact form received by the Borrower (duly endorsed by the Borrower to the
Lender, if required) and (b) any and all such proceeds received by the Lender
will be applied by the Lender against, the Secured Obligations. Any balance of
such proceeds remaining after the Secured Obligations shall have been paid in
full and this Loan Agreement shall have been terminated shall be promptly paid
over to the Borrower or to whomsoever may be lawfully entitled to receive the
same. For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions and at
prices that are consistent with the prevailing market for similar collateral as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The Lender
shall act in good faith to obtain the best execution possible under prevailing
market conditions. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Borrower, which right or equity is hereby waived
or released. The Borrower further agrees, at the Lender's request, to assemble
the Collateral and make it available to the Lender at places which the Lender
shall reasonably select, whether at the Borrower's premises or elsewhere. The
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required or
permitted by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by the Lender of any of its rights hereunder,
other than those claims, damages and demands arising from the gross negligence
or willful misconduct of the Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
35
disposition. The Borrower shall remain liable for any deficiency (plus accrued
interest thereon as contemplated pursuant to Section 2.05(b) hereof) if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by the Lender to collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of Collateral.
The Lender's duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither
the Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this Loan
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral; provided that if any payment,
or any part thereof, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, until such
payments have been made.
4.11 Establishment of the Collection Amount.
(a) The Borrower shall establish and maintain the Collection
Account, which shall be entitled "Greenwich Capital Financial Products, Inc."
The Borrower shall not change the name of the account without the prior written
consent of the Lender. Such Collection Account shall be subject to a Collection
Account Agreement.
(b) The Borrower shall and shall cause each Subservicer to
deposit all Collections in the Collection Account in accordance with the
applicable Servicing Agreement.
SECTION 5. Conditions Precedent.
5.01 Initial Advance. The obligation of the Lender to make its
initial Advance hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Advance, of the following conditions
precedent:
(a) Loan Agreement. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of the Borrower.
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(b) Loan Documents. The Lender shall have received the following
documents, each of which shall be satisfactory to the Lender in form and
substance:
(i) Note. The Note, duly completed and executed; and
(ii) Custodial Agreement. The Custodial Agreement, duly
executed and delivered by the Borrower and the Custodian. In
addition, the Borrower shall have filed all Uniform Commercial
Code and related filings and performed under the Custodial
Agreement and taken such other action as the Lender shall have
requested in order to perfect the security interests created
pursuant to the Loan Agreement.
(c) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of
the Borrower and of all corporate or other authority for the Borrower
with respect to the execution, delivery and performance of the Loan
Documents and each other document to be delivered by the Borrower from
time to time in connection herewith (and the Lender may conclusively
rely on such certificate until it receives notice in writing from the
Borrower to the contrary).
(d) Legal Opinion. A legal opinion of counsel to the Borrower,
substantially in the form attached hereto as Exhibit C.
(e) Collection Account Agreement. The Lender shall have received
a Collection Account Agreement substantially in the form of Exhibit G
hereof executed by duly authorized officers of the Borrower and the
Collection Bank.
(f) Filings, Registrations, Recordings. Any documents (including,
without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a
perfected, first-priority security interest in the Collateral, subject
to no Liens other than those created hereunder, shall have been properly
prepared and executed for filing (including the applicable county(ies)
if the Lender determines such filings are necessary in its reasonable
discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest.
(g) Fees and Expenses. The Lender shall have received all fees
and expenses required to be paid by the Borrower on or prior to the
initial Funding Date pursuant to Section 11.03(b) and such fees and
expenses may be netted out of any Advance made by the Lender hereunder.
(h) Financial Statements. The Lender shall have received the
financial statements referenced in Section 7.01(a).
(i) Underwriting Guidelines. The Lender and the Borrower shall
have agreed upon the Underwriting Guidelines for Mortgage Loans and the
Lender shall have received a copy thereof.
37
(j) Consents, Licenses, Approvals, etc. The Lender shall have
received copies certified by the Borrower of all consents, licenses and
approvals, if any, required in connection with the execution, delivery
and performance by the Borrower of, and the validity and enforceability
of, the Loan Documents, which consents, licenses and approvals shall be
in full force and effect.
(k) Insurance. The Lender shall have received evidence in form
and substance satisfactory to the Lender showing compliance by the
Borrower as of such initial Funding Date with Section 7.22 hereof.
(l) Securitization Letter. The Lender shall have received the
Securitization Letter, in form and substance satisfactory to the Lender
and executed by a duly authorized officer of the Borrower.
(m) Warrant. The Lender shall have received an executed Stock
Purchase Warrant, in form and substance satisfactory to the Lender and
executed by a duly authorized officer of the Borrower.
(n) Gestation Documents. The Lender and the Borrower shall have
executed the program documents for a gestation program between the
Borrower and the Lender, in form and substance satisfactory to the
Lender.
(o) Other Documents. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
The Borrower's delivery to the Lender of the items listed in
clauses (a), (b)(i), (c), (k), (l) and (m) of this Section 5.01 shall be a
condition precedent to the execution of this Loan Agreement by the Lender.
5.02 Initial and Subsequent Advances. The making of each Advance
to the Borrower (including the initial Advance) on any Business Day is subject
to the following further conditions precedent, both immediately prior to the
making of such Advance and also after giving effect thereto and to the intended
use thereof:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) both immediately prior to the making of such Advance and also
after giving effect thereto and to the intended use thereof, the
representations and warranties made by the Borrower in Section 6 hereof,
and in each of the other Loan Documents, shall be true and complete on
and as of the date of the making of such Advance in all material
respects (in the case of the representations and warranties in Section
6.23 and Schedule 1, solely with respect to Mortgage Loans included in
the Borrowing Base) with the same force and effect as if made on and as
of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific
date). At the request of the Lender, the Lender shall have received an
officer's certificate signed by a Responsible Officer of the Borrower
certifying as to the truth and accuracy of the above, which certificate
shall specifically include a statement that the Borrower is in
38
compliance with all governmental licenses and authorizations and is
qualified to do business and in good standing in all required
jurisdictions;
(c) the aggregate outstanding principal amount of the Advances
shall not exceed the Borrowing Base or the Maximum Credit;
(d) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 11.16 hereof, the Lender shall
have completed its due diligence view of the Mortgage Loan Documents for
each Advance and such other documents, records, agreements, instruments,
mortgaged properties or information relating to such Advances as the
Lender in its reasonable discretion deems appropriate to review and such
review shall be satisfactory to the Lender in its reasonable discretion;
(e) the Lender shall have received a Notice of Borrowing and
Pledge, Loan List and Mortgage Loan Data Transmission and all other
documents required under Section 2.03;
(f) the Lender shall have received from the Custodian a Custodian
Loan Transmission and one or more Trust Receipts in respect of Mortgage
Loans to be pledged hereunder on such Business Day and an Exception
Report, in each case dated such Business Day and duly completed;
(g) in the event that the Mortgage Loans to be pledged would
cause the aggregate outstanding principal balance of Mortgage Loans
pledged secured by Mortgaged Property from any state to exceed 15% of
the aggregate outstanding principal balance of Mortgage Loans pledged
hereunder, then the Borrower shall, upon request by the Lender, deliver
an opinion of counsel acceptable to the Lender in such state,
substantially in the form of items number 12 and 13 of Exhibit C;
(h) with respect to any Mortgage Loan that was funded in the name
of or acquired by a Qualified Originator which is an Affiliate of the
Borrower, the Lender may, in its sole discretion, require the Borrower
to provide evidence sufficient to satisfy the Lender that such Mortgage
Loan was acquired in a legal sale, including without limitation, an
opinion, in form and substance and from an attorney, in both cases,
acceptable to the Lender in its sole discretion, that such Mortgage Loan
was acquired in a legal sale;
(i) none of the following shall have occurred and/or be
continuing:
(i) a catastrophic event or events shall have occurred
resulting in the effective absence of a "repo market" or
comparable "lending market" for financing debt obligations
secured by mortgage loans or securities for a period of (or
reasonably expected to be) at least 30 consecutive days and the
same has resulted in the Lender not being able to finance any
Advances through the "repo market" or "lending market" with
traditional counterparties at rates which would have been
reasonable prior to the occurrence of such catastrophic event or
events;
39
(ii) a catastrophic event or events shall have occurred
resulting in the effective absence of a "securities market" for
securities backed by mortgage loans for a period of (or
reasonably expected to be) at least 30 consecutive days and the
same results in the Lender not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such catastrophic event or events; or
(iii) there shall have occurred a material adverse change
in the financial condition of the Lender which affects (or can
reasonably be expected to affect) materially and adversely the
ability of the Lender to fund its obligations under this Loan
Agreement and the Lender shall have given notice thereof pursuant
to Section 11.02 hereof to the Borrower at least 30 days prior to
the requested Funding Date;
In the event of an occurrence of any of the events described in
clauses (i), (ii) or (iii) above, the Commitment Fee payable by the Borrower
shall be prorated on the basis of the actual number of days during which this
Loan Agreement was in effect.
(j) if any Mortgage Loans to be pledged hereunder were acquired
by the Borrower, such Mortgage Loans shall conform to the Borrower's
Underwriting Guidelines or the Lender shall have received Underwriting
Guidelines for such Mortgage Loans acceptable to the Lender in its
reasonable discretion; and
(k) the Lender shall have received all information requested from
the Borrower relating to Interest Rate Protection Agreements pursuant to
Section 7.25, and the Lender shall have reasonably determined that such
Interest Rate Protection Agreements adequately protect the Borrower from
interest rate fluctuations.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
SECTION 6. Representations and Warranties. The Borrower
represents and warrants to the Lender that throughout the term of this Loan
Agreement:
6.01 Existence. The Borrower (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a material adverse effect on
its property, business or financial condition, or prospects; and (c) is
qualified to do business and is in good standing in all other jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a material adverse effect on
its property, business or financial
40
condition, or prospects and (d) is in compliance in all material respect with
all Requirements of Law.
6.02 Financial Condition. The Borrower has heretofore furnished
to the Lender a copy of its audited consolidated balance sheets and the audited
consolidated balance sheets of its consolidated Subsidiaries, each as at
December 31, 1998 with the opinion thereon of PricewaterhouseCoopers LLP, a copy
of which has been provided to Lender. The Borrower has also heretofore furnished
to the Lender the related consolidated statements of income and retained
earnings and of cash flows for the Borrower and its consolidated Subsidiaries
for the period, setting forth comparative form the figures for the previous
year. All such financial statements are materially complete and correct and
fairly present the consolidated financial condition of the Borrower and its
Subsidiaries and the consolidated results of their operations for the fiscal
year ended on said date, all in accordance with GAAP applied on a consistent
basis. Since December 31, 1998 there has been no development or event nor any
prospective development or event which has had or should reasonably be expected
to have a Material Adverse Effect.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
the Borrower or any of its Subsidiaries or affecting any of the property thereof
before any Governmental Authority, (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would be
reasonably likely to have a material adverse effect on the property, business or
financial condition, or prospects of the Borrower or (ii) which questions the
validity or enforceability of any of the Loan Documents or any action to be
taken in connection with the transactions contemplated hereby and there is a
reasonable likelihood of a materially adverse effect or decision.
6.04 No Breach. Neither (a) the execution and delivery of the
Loan Documents or (b) the consummation of the transactions therein contemplated
in compliance with the terms and provisions thereof will conflict with or result
in a breach of the charter or by-laws of the Borrower, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which the Borrower, or
any of its Subsidiaries, is a party or by which any of them or any of their
property is bound or to which any of them is subject, or constitute a default
under any such material agreement or instrument, or (except for the Liens
created pursuant to this Loan Agreement) result in the creation or imposition of
any Lien upon any property of the Borrower or any of its Subsidiaries, pursuant
to the terms of any such agreement or instrument.
6.05 Action. The Borrower has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by the Borrower of each of the Loan Documents to which it is a
party has been duly authorized by all necessary corporate or other action on its
part; and each Loan Document has been duly and validly executed and delivered by
the Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
41
6.06 Approvals. No authorizations, approvals or consents of, and
no filings or registrations with, any Governmental Authority, or any other
Person, are necessary for the execution, delivery or performance by the Borrower
of the Loan Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Advance
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X.
6.08 Taxes. The Borrower and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of the Borrower, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to any Federal or state statute or
regulation which limits its ability to incur indebtedness.
6.10 No Legal Bar. The execution, delivery and performance of
this Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
6.11 No Default. Neither the Borrower nor any of its Subsidiaries
is in default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
6.12 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise conveyed
or encumbered any Mortgage Loan to any other Person, and immediately prior to
the pledge of any such Mortgage Loan, the Borrower was the sole owner of such
Mortgage Loan and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released simultaneously with the
Liens granted in favor of the Lender hereunder and no Person other than the
Borrower has any Lien on any Mortgage Loan.
42
(b) The provisions of this Loan Agreement are effective to create
in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note, endorsed
in blank by a duly authorized officer of the Borrower, the Lender shall have a
fully perfected first priority security interest therein, in the Mortgage Loan
evidenced thereby and in the Borrower's interest in the related Mortgaged
Property.
(d) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, which can be perfected by filing under the Uniform
Commercial Code.
6.13 Chief Executive Office; Chief Operating Office. The
Borrower's chief executive office and chief operating office on the Effective
Date is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6.14 Location of Books and Records. The location where the
Borrower keeps its books and records including all computer tapes and records
relating to the Collateral is its chief executive office or chief operating
office or the offices of the Custodian.
6.15 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Borrower to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer that, after
due inquiry, could reasonably be expected to have a Material Adverse Effect that
has not been disclosed herein, in the other Loan Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Lender for use in connection with the transactions contemplated
hereby or thereby.
6.16 Tangible Net Worth; Liquidity. The Borrower's Tangible Net
Worth is not less than the greater of (a)(i) prior to an Equity Event,
$5,000,000, and (ii) following an Equity Event, $5,000,000 plus 30% of Net Cash
Proceeds. The Borrower has Cash Equivalents in an amount not less than
$5,000,000 (including standby liquidity facility availability expiring upon the
occurrence of an Equity Event) prior to an Equity Event and not less than
$10,000,000 following an Equity Event. The ratio of the Borrower's Total
Indebtedness to Tangible Net
43
Worth is not greater than 20:1 prior to an Equity Event and not greater than
10:1 following an Equity Event.
6.17 ERISA. Each Plan to which the Borrower or its Subsidiaries
make direct contributions, and, to the knowledge of the Borrower, each other
Plan and each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which the Borrower would
be under an obligation to furnish a report to the Lender under Section 7.01(d)
hereof.
6.18 Licenses. The Lender will not be required as a result of
financing or taking a pledge of the Mortgage Loans to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.19 Relevant States. Schedule 3 sets forth all of the states or
other jurisdictions (the "Relevant States") in which the Borrower originates
Mortgage Loans in its own name or through brokers on the date of this Loan
Agreement.
6.20 True Sales. Any and all interest of a Qualified Originator
in, to and under any Mortgage funded in the name of or acquired by such
Qualified Originator or seller which is an Affiliate of the Borrower has been
sold, transferred, conveyed and assigned to the Borrower pursuant to a legal
sale and such Qualified Originator retains no interest in such Mortgage Loan,
and if so requested by the Lender, is covered by an opinion of counsel to that
effect in form and substance acceptable to the Lender.
6.21 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
6.22 Subsidiaries. All of the Subsidiaries of the Borrower at the
date hereof are listed on Schedule 4 to this Loan Agreement.
6.23 Origination and Acquisition of Mortgage Loans. The Mortgage
Loans were originated or acquired by the Borrower, and the origination and
collection practices used by the Borrower or Qualified Originator, applicable,
with respect to the Mortgage Loans have been, in all material respects legal,
proper, prudent and customary in the residential mortgage loan servicing
business, and in accordance with the Underwriting Guidelines. With respect to
Mortgage Loans acquired by the Borrower, all such Mortgage Loans are in
conformity with the Underwriting Guidelines. Each of the Mortgage Loans complies
with the representations and warranties listed in Schedule I hereto.
6.24 No Adverse Selection. The Borrower used no selection
procedures that identified the Mortgage Loans as being less desirable or
valuable than other comparable Mortgage Loans owned by the Borrower.
6.25 Borrower Solvent; Fraudulent Conveyance. As of the date
hereof and immediately after giving effect to each Advance, the fair value of
the assets of the Borrower is
44
greater than the fair value of the liability (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of the Borrower in accordance with GAAP)
of the Borrower and the Borrower is and will be solvent, is and will be able to
pay its debts as they mature and does not and will not have an unreasonably
small capital to engage in the business in which it is engaged and proposes to
engage. Borrower does not intend to incur, or believe that it has incurred, debt
beyond its ability to pay such debts as they mature. Borrower is not
contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Borrower or any of its
assets. Borrower is not transferring any Mortgage Loans with any intent to
hinder, delay or defraud any of its creditors.
6.26 Year 2000 Compliance. The Borrower has made a full and
complete assessment of all issues which may be related to the occurrence of the
year 2000, including all issues related to its computer program and software and
the computer program and software of the Subservicer (the "Year 2000 Issues"),
and both the Borrower and the Subservicer have realistic and achievable programs
for remediating the Year 2000 Issues on a timely basis (the "Year 2000
Program"). Based on such assessment and on the Year 2000 Program, the Borrower
does not reasonably anticipate that Year 2000 Issues will have a material
adverse affect on the Borrower's or the Subservicer's operations or financial
condition.
6.27 Insured Closing Letter. As of the date hereof and as of the
date of each delivery of a Mortgage Loan, the Settlement Agent has obtained an
Insured Closing Letter, closing protection letter or similar authorization
letter from a nationally recognized title insurance company approved by the
Lender, copies of which shall be delivered by the Borrower to the Custodian
prior to the Funding Date.
6.28 Escrow Agreement. As of the date hereof and as of the date
of each delivery of a Mortgage Loan, the Settlement Agent has executed an escrow
agreement or letter stating that in the event of a Rescission or any other
reason the Mortgage Loan fails to fund on a given day, the party conducting the
closing is holding all funds which would have been disbursed on behalf of the
Mortgagor as agent for and for the benefit of the Lender and such funds shall be
redeposited in the Disbursement Account for benefit of the Lender not later than
one Business Day after the date of Rescission or other failure of the Mortgage
Loan to fund on a given day.
SECTION 7. Covenants of the Borrower. The Borrower covenants and
agrees with the Lender that, so long as any Advance is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to the
Lender:
(a)(i) as soon as available and in any event within 15 days after
the end of each month, the consolidated balance sheets of the Borrower
and its consolidated Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income and retained
earnings and of cash flows for the Borrower and its consolidated
Subsidiaries for such month and the portion of the fiscal year through
the end of such month, setting forth in each case in comparative form
the figures for the previous year,
45
accompanied by a certificate of a Responsible Officer of the Borrower,
which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Subsidiaries in accordance
with GAAP, consistently applied, as at the end of, and for, such month
(subject to normal year-end audit adjustments);
(ii) as soon as available and in any event within 45 days after
the end of each of the first three quarterly fiscal periods of each
fiscal year of the Borrower, the consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of income and retained
earnings and of cash flows for the Borrower and its consolidated
Subsidiaries for such period and the portion of the fiscal year through
the end of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a certificate of a
Responsible Officer of the Borrower, which certificate shall state that
said consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries in accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the consolidated balance
sheets of the Borrower and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated statements of income
and retained earnings and of cash flows for the Borrower and its
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall not be qualified as to
scope of audit or going concern and shall state that said consolidated
financial statements fairly present the consolidated financial condition
and results of operations of the Borrower and its consolidated
Subsidiaries at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default;
(c) from time to time such other information regarding the
financial condition, operations, or business of the Borrower as the
Lender may reasonably request; and
(d) as soon as reasonably possible, and in any event within
thirty (30) days after a Responsible Officer knows, or with respect to
any Plan or Multiemployer Plan to which the Borrower or any of its
Subsidiaries makes direct contributions, has reason to believe, that any
of the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a
senior financial officer of the Borrower setting forth details
respecting such event or condition and the action, if any, that the
Borrower or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given
to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
46
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a
Plan, as to which PBGC has not by regulation or otherwise waived
the requirement of Section 4043(a) of ERISA that it be notified
within thirty (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, including, without
limitation, the failure to make on or before its due date a
required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the
Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower
or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Borrower or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust
of which such Plan is a part if the Borrower or an ERISA
Affiliate fails to timely provide security to such Plan in
accordance with the provisions of said Sections.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Loan Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate
47
(and, if any Default or Event of Default has occurred and is continuing,
describing the same in reasonable detail and describing the action the Borrower
has taken or proposes to take with respect thereto).
7.02 Litigation. The Borrower will promptly, and in any event
within 7 days after service process on any of the following, give to the Lender
notice of all legal or arbitrable proceedings affecting the Borrower or any of
its Subsidiaries that questions or challenges the validity or enforceability of
any of the Loan Documents or as to which there is a reasonable likelihood of
adverse determination which would result in a Material Adverse Effect.
7.03 Existence, Etc. Each of the Borrower and its Subsidiaries
will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, truth in lending, real estate settlement procedures and all
environmental laws) if failure to comply with such requirements would be
reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office or chief operating office
from the addresses referred to in Section 6.13 unless it shall have
provided the Lender 30 days prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; and
(f) permit representatives of the Lender, during normal business
hours upon three (3) Business Days' prior written notice at a mutually
desirable time, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by
the Lender.
7.04 Prohibition of Fundamental Changes. The Borrower shall not
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that the
Borrower may merge or consolidate with (a) any wholly owned subsidiary of the
Borrower, or (b) any other Person if the Borrower is the surviving corporation;
and provided further, that if after giving effect thereto, no Default would
exist hereunder.
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7.05 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. The Borrower shall give notice to the Lender
promptly:
(a) upon the Borrower becoming aware of, and in any event within
one (1) Business Day after, the occurrence of any Default or Event of
Default or any Event of Default or Default under any other material
agreement of the Borrower;
(b) upon, and in any event within three (3) Business Days after,
service of process on the Borrower or any of its Subsidiaries, or any
agent thereof for service of process, in respect of any legal or
arbitrable proceedings affecting the Borrower or any of its Subsidiaries
(i) that questions or challenges the validity or enforceability of any
of the Loan Documents or (ii) in which the amount in controversy exceeds
$500,000;
(c) upon the Borrower becoming aware of any default related to
any Collateral, any Material Adverse Effect and any event or change in
circumstances which should reasonably be expected to have a Material
Adverse Effect;
(d) upon the Borrower becoming aware during the normal course of
its business that the Mortgaged Property in respect of any Mortgage Loan
or Mortgage Loans with an aggregate unpaid principal balance of at least
$500,000 has been damaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, or otherwise damaged so as
to materially and adversely affect the Collateral Value of such Mortgage
Loan;
(e) upon the entry of a judgment or decree in an amount in excess
of $500,000.
Each notice pursuant to this Section 7.06 (other than 7.06(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken or proposes to take with respect thereto.
7.07 Servicing. Except as provided in Section 11.15(c), the
Borrower shall not permit any Person other than the Borrower to service Mortgage
Loans without the prior written consent of the Lender, which consent shall not
be unreasonably withheld.
7.08 Intentionally Omitted.
7.09 Underwriting Guidelines. The Borrower shall notify the
Lender in writing of any material modifications to the Underwriting Guidelines
prior to implementation of such change, and unless the Lender objects in writing
within 5 Business Days of receipt of notice, the proposed modifications shall be
deemed acceptable.
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7.10 Lines of Business. The Borrower will not engage to any
substantial extent in any line or lines of business activity other than the
businesses generally carried on by it as of the Effective Date.
7.11 Transactions with Affiliates. The Borrower will not enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (a) otherwise permitted under this Loan Agreement,
(b) in the ordinary course of the Borrower's business and (c) upon fair and
reasonable terms no less favorable to the Borrower than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate, or
make a payment that is not otherwise permitted by this Section 7.11 to any
Affiliate.
7.12 Use of Proceeds. The Borrower will use the proceeds of the
Advances solely to originate, fund, manage and service Eligible Mortgage Loans.
7.13 Limitation on Liens. The Borrower will not, nor will it
permit or allow others to, create, incur or permit to exist any Lien, security
interest or claim on or to any of its Property, except for (i) Liens (not
otherwise permitted hereunder) which are created in connection with the purchase
of fixed assets and equipment necessary in the ordinary course of the Borrower's
business or to finance residual certificates issued in connection with
securitizations of mortgage loans completed by the Borrower which are financed
solely based on a pledge of such residual certificates; and (ii) Liens on the
Collateral created pursuant to this Loan Agreement. The Borrower will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Loan Agreement, and the Borrower will
defend the right, title and interest of the Lender in and to any of the
Collateral against the claims and demands of all persons whomsoever.
7.14 Limitation on Sale of Assets. The Borrower shall not convey,
sell, lease, assign, transfer or otherwise dispose of (collectively,
"Transfer"), all or substantially all of its Property, business or assets
(including, without limitation, receivables and leasehold interests) whether now
owned or hereafter acquired or allow any Subsidiary to Transfer substantially
all of its assets to any Person; provided, that the Borrower may after prior
written notice to the Lender allow such action with respect to any Subsidiary
which is not a material part of the Borrower's overall business operations.
7.15 Limitation on Distributions. Without the Lender's consent,
the Borrower shall not make any payment on account of, or set apart assets for a
sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any stock or senior or subordinate debt of
the Borrower, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower.
7.16 Maintenance of Liquidity. The Borrower shall insure that, as
of the end of each calendar month, it has Cash Equivalents in an amount of not
less than (a) $5,000,000 prior to an Equity Event (including standby liquidity
facility availability expiring upon the occurrence of an Equity Event) or (b)
$10,000,000 following an Equity Event.
50
7.17 Maintenance of Tangible Net Worth. The Borrower shall not
permit Tangible Net Worth at any time to be less than (a) prior to an Equity
Event $5,000,000 and (b) following an Equity Event $5,000,000 plus 30% of Net
Cash Proceeds.
7.18 Maintenance of Ratio of Total Indebtedness to Tangible Net
Worth. The Borrower shall not permit the ratio of Total Indebtedness to Tangible
Net Worth at any time to be greater than 20:1 prior to an Equity Event or
greater than 10:1 following an Equity Event.
7.19 Restricted Payments. The Borrower shall not make any
Restricted Payments following an Event of Default.
7.20 Servicing Transmission. The Borrower shall provide to the
Lender within two (2) Business Days of the Lender's written request (i) the
Servicing Transmission, on a loan-by-loan basis and in the aggregate, with
respect to the Mortgage Loans serviced hereunder by the Borrower which were
funded prior to the first day of the current month, summarizing the Borrower's
delinquency and loss experience with respect to Mortgage Loans serviced by the
Borrower (including, in the case of the Mortgage Loans, the following
categories: current, 30-59, and 60+) and (ii) any other information reasonably
requested by the Lender with respect to the Mortgage Loans.
7.21 No Amendment or Waiver. The Borrower will not, nor will it
permit or allow others to amend, modify, terminate or waive any provision of any
Mortgage Loan to which the Borrower is a party in any manner which shall
reasonably be expected to materially and adversely affect the value of such
Mortgage Loan as Collateral.
7.22 Maintenance of Property; Insurance. The Borrower shall keep
all property useful and necessary in its business in good working order and
condition. The Borrower shall maintain errors and omissions insurance and/or
mortgage impairment insurance and blanket bond coverage in such amounts as are
in effect on the Effective Date (as disclosed to Lender in writing) and shall
not reduce such coverage without the written consent of the Lender, and shall
also maintain such other insurance with financially sound and reputable
insurance companies, and with respect to property and risks of a character
usually maintained by entities engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such entities.
7.23 Further Identification of Collateral. The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.
7.24 Mortgage Loan Determined to be Defective. Upon discovery by
the Borrower or the Lender of any breach of any representation or warranty
listed on Schedule 1 hereto applicable to any Mortgage Loan, the party
discovering such breach shall promptly give notice of such discovery to the
other.
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7.25 Interest Rate Protection Agreements. Upon the Lender's
request, the Borrower shall deliver to the Lender any and all information
relating to Interest Rate Protection Agreements.
7.26 Year 2000 Compliance. (a) The Borrower shall take and shall
cause each of its Affiliates and any Sub-servicer to take all such actions as
are reasonably necessary to successfully implement the Year 2000 Program and to
assure that the Year 2000 Issues will not have a material adverse effect on the
Borrower's operations or financial condition. At the request of the Lender, the
Borrower will provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto. The Borrower shall provide the
Lender with immediate notice in writing in the event that the Borrower has
reason to believe that the occurrence of the year 2000 will adversely affect the
Borrower's business or any Advances executed in connection herewith.
(b) By September 1, 1999, the Borrower shall be required to
provide written assurance to the Lender that it is year 2000 compliant. If
satisfactory assurance can not be made on such date, the Lender shall have no
obligation to make any additional Advances under this Agreement. In addition,
the failure of the Borrower to provide satisfactory assurance of year 2000
compliance within thirty days thereafter shall constitute an Event of Default
under this Agreement.
7.27 Certificate of a Responsible Officer of the Borrower. At the
time that the Borrower delivers financial statements to the Lender in accordance
with Section 7.01 hereof, the Borrower shall forward to the Lender a certificate
of a Responsible Officer of the Borrower which demonstrates that the Borrower is
in compliance with the covenants set forth in Sections 7.16, 7.17 and 7.18
above.
7.28 Uncommitted Warehouse Facilities. The Borrower shall at all
times have available under uncommitted revolving facilities (other than with the
Lender) at least $40,000,000.
SECTION 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
(a) the Borrower shall default in the payment of any principal of
or interest on any Advance when due (whether at stated maturity, upon
acceleration or at mandatory prepayment); or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after
notification by the Lender of such default, and such default shall have
continued unremedied for three Business Days; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Loan Document by the Borrower or any
certificate furnished to the Lender pursuant to the provisions thereof,
shall prove to have been false or misleading in any material respect as
of the time made or furnished (other than the representations and
warranties set forth in Schedule 1 which shall be considered solely for
the purpose of
52
determining the Collateral Value of the Mortgage Loans; unless Borrower
shall have made any such representations and warranties with knowledge
that they were materially false or misleading at the time made); or
(d) the Borrower shall fail to comply with the requirements of
Section 7.03(a), Section 7.04, Section 7.06 (a) or (c), Sections 7.12
through 7.19 Section 7.22(b), Section 7.26 or Section 7.28 hereof; or
the Borrower shall default in the performance of its obligations under
Section 7.05 hereof, and such default shall continue unremedied for a
period of one (1) Business Day; or the Borrower shall otherwise fail to
observe or perform any other agreement contained in this Loan Agreement
or any other Loan Document and such failure to observe or perform shall
continue unremedied for a period of five (5) Business Days; or
(e) a final judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate (to the extent that it is, in the
reasonable determination of the Lender, uninsured and provided that any
insurance or other credit posted in connection with an appeal shall not
be deemed insurance for these purposes) shall be rendered against the
Borrower or any of its Subsidiaries by one or more courts,
administrative tribunals or other bodies having jurisdiction over them
and the same shall not be discharged (or provision shall not be made for
such discharge) or bonded, or a stay of execution thereof shall not be
procured, within 60 days from the date of entry thereof and the Borrower
or any such Subsidiary shall not, within said period of 60 days, or such
longer period during which execution of the same shall have been stayed
or bonded, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(f) the Borrower shall admit in writing its inability to pay its
debts as such debts become due; or
(g) the Borrower or any of its Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under
the Bankruptcy Code, (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take
any corporate or other action for the purpose of effecting any of the
foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower or any of its Subsidiaries, in
any court of competent jurisdiction, seeking (i) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or
any such Subsidiary or of all or any substantial part of its property,
or (iii) similar relief in respect of the Borrower or any such
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization,
53
winding-up, or composition or adjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for
relief against the Borrower or any such Subsidiary shall be entered in
an involuntary case under the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for
whatever reason (including an event of default thereunder) be terminated
or the lien on the Collateral created by this Agreement or Borrower's
material obligations hereunder shall cease to be in full force and
effect, or the enforceability thereof shall be contested by the
Borrower; or
(j) any materially adverse change in the Properties, business or
financial condition, or prospects of the Borrower or any of its
Subsidiaries or Affiliates, in each case as determined by the Lender in
its sole discretion, or the existence of any other condition which, in
the Lender's sole discretion, constitutes a material impairment of the
Borrower's ability to perform its obligations under this Loan Agreement,
the Note or any other Loan Document; or
(k) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any material "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Lenders,
likely to result in the termination of such Plan for purposes of Title
IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Lenders is likely to, incur
any liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect; or
(l) any Change of Control of the Borrower shall have occurred
without the prior consent of the Lender; or
(m) the Borrower shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on
the Collateral in favor of the Lender or shall be Liens in favor of any
Person other than the Lender; or
(n) the Lender shall reasonably request, specifying the reasons
for such request, information, and/or written responses to such
requests, regarding the financial
54
well-being of the Borrower and such information and/or responses shall
not have been provided within three Business Days of such request; or
(o) the Borrower shall default under, or fail to materially
perform as requested under any other transaction with the Lender or its
Affiliates.
SECTION 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default (subject
to the expiration of the applicable cure period contained therein) other
than those referred to in Section 8(g) or (h), the Lender may
immediately declare the principal amount of the Advances then
outstanding under the Note to be immediately due and payable, together
with all interest thereon and reasonable fees and out-of-pocket expenses
accruing under this Loan Agreement; provided that upon the occurrence of
an Event of Default referred to in Sections 8(g) or (h), such amounts
shall immediately and automatically become due and payable without any
further action by any Person. Upon such declaration or such automatic
acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived
by the Borrower and may thereupon exercise any remedies available to it
at law and pursuant to the Loan Documents including, but not limited to,
the transfer of servicing or the liquidation of the Collateral on a
servicing released basis.
(b) Upon the occurrence of one or more Events of Default, the
Lender shall have the right to obtain physical possession of the
Servicing Records and all other files of the Borrower relating to the
Collateral and all documents relating to the Collateral which are then
or may thereafter come in to the possession of the Borrower or any third
party acting for the Borrower and the Borrower shall deliver to the
Lender such assignments as the Lender shall request. The Lender shall be
entitled to specific performance of all agreements of the Borrower
contained in this Loan Agreement.
SECTION 10. No Duty on Lender's Part. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
SECTION 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
55
11.02 Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
herein and under the Custodial Agreement (including, without limitation, any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including, without limitation, by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof); or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement and except
for notices given under Section 2 (which shall be effective only on receipt),
all such communications shall be deemed to have been duly given when transmitted
by telex or telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender harmless from and
indemnify the Lender against all liabilities, losses, damages, judgments, costs
and expenses of any kind which may be imposed on, incurred by, or asserted
against the Lender, relating to or arising out of, this Loan Agreement, the
Note, any other Loan Document or any transaction contemplated hereby or thereby,
or any amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Lender's gross negligence or willful misconduct. In any
suit, proceeding or action brought by the Lender in connection with any Mortgage
Loan for any sum owing thereunder, or to enforce any provisions of any Mortgage
Loan, the Borrower will save, indemnify and hold the Lender harmless from and
against all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrower. The Borrower also agrees to reimburse the
Lender as and when billed by the Lender for all the Lender's reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
the preservation of the Lender's rights under this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, including
without limitation the reasonable fees and disbursements of its counsel. The
Borrower hereby acknowledges that, notwithstanding the fact that the Note is
secured by the Collateral, the obligation of the Borrower under the Note is a
recourse obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender
all of the out-of pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith.
The Borrower agrees to pay as and when billed by the Lender all of the
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby
including, without limitation, (i) all the reasonable fees, disbursements and
expenses of counsel to the Lender, (ii) all the due diligence, inspection,
testing and review costs and expenses incurred by the Lender with respect
56
to Collateral under this Loan Agreement, including, but not limited to, those
costs and expenses incurred by the Lender in connection with the approval of any
Takeout Commitments and pursuant to Sections 11.03(a), 11.14 and 11.16 hereof
other than any costs and expenses incurred in connection with the Lender's
rehypothecation of the Mortgage Loans prior to an Event of Default and (iii)
initial and ongoing fees and expenses incurred by the Custodian and any trustee
with respect to the Mortgage Loans. All of the foregoing amounts shall be paid
promptly by the Borrower or may be netted out of any Advance made by the Lender
hereunder.
11.04 Amendments. Except as otherwise expressly provided in this
Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under Sections
3.03 and 11.03 hereof shall survive the repayment of the Advances and the
termination of this Loan Agreement. In addition, each representation and
warranty made, or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any
Advance, any Default that may arise by reason of such representation or warranty
proving to have been false or misleading, notwithstanding that the Lender may
have had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Advance was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement; Governing
Law. This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine (but with reference to Section 5-1401 of the New York
General Obligations Law, which by its terms applies to this Loan Agreement), and
shall constitute a security agreement within the meaning of the Uniform
Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND
57
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NONEXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE
SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Loan Agreement, the Note and the other Loan
Documents to which it is a party;
(b) the Lender has no fiduciary relationship to the Borrower, and
the relationship between the Borrower and the Lender is solely that of
debtor and creditor; and
(c) no joint venture exists among or between the Lender and the
Borrower.
11.13 Hypothecation or Pledge of Collateral. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging,
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transferring, hypothecating, or rehypothecating the Collateral. Nothing
contained in this Loan Agreement shall obligate the Lender to segregate any
Collateral delivered to the Lender by the Borrower.
11.14 Assignments; Participations.
(a) The Borrower may assign any of its rights or obligations
hereunder or under the Note with the prior written consent of the Lender which
consent shall not be unreasonably withheld. The Lender may assign or transfer to
any bank or other financial institution that makes or invests in loans or any
Affiliate of the Lender all or any of its rights or obligations under this Loan
Agreement and the other Loan Documents.
(b) The Lender may, in accordance with applicable law, at any
time sell to one or more lenders or other entities ("Participants")
participating interests in any Advance, the Note, its commitment to make
Advances, or any other interest of the Lender hereunder and under the other Loan
Documents. In the event of any such sale by the Lender of participating
interests to a Participant, the Lender's obligations under this Loan Agreement
to the Borrower shall remain unchanged, the Lender shall remain solely
responsible for the performance thereof, the Lender shall remain the holder of
the Note for all purposes under this Loan Agreement and the other Loan
Documents, and the Borrower and the Lender shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Loan Agreement and the other Loan Documents. The Borrower agrees that
if amounts outstanding under this Loan Agreement and the Note are due or unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Loan Agreement and the Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Loan
Agreement or the Note; provided, that such Participant shall only be entitled to
such right of set-off if it shall have agreed in the agreement pursuant to which
it shall have acquired its participating interest to share with the Lender the
proceeds thereof. The Lender also agrees that each Participant shall be entitled
to the benefits of Sections 2.07 and 11.03 with respect to its participation in
the Advances outstanding from time to time; provided, that the Lender and all
Participants shall be entitled to receive no greater amount in the aggregate
pursuant to such Sections than the Lender would have been entitled to receive
had no such transfer occurred.
(c) The Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants) only after notifying the Borrower in writing and securing signed
confidentiality statements (a form of which is attached hereto as Exhibit H) and
only for the sole purpose of evaluating participations and for no other purpose.
(d) The Borrower agrees to cooperate with the Lender in
connection with any such assignment and/or participation, to execute and deliver
such replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation. The
Borrower further agrees to furnish to any Participant identified by the Lender
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to the Borrower copies of all reports and certificates to be delivered by the
Borrower to the Lender hereunder, as and when delivered to the Lender.
11.15 Servicing.
(a) The Borrower covenants to maintain or cause the servicing of
the Mortgage Loans to be maintained in conformity with Accepted Servicing
Practices. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing contract shall
terminate automatically upon the earliest of (i) an Event of Default, or (ii)
the date on which all the Secured Obligations have been paid in full, or (iii)
the transfer of servicing to any entity approved by the Lender.
(b) During the period the Borrower is servicing the Mortgage
Loans, (i) the Borrower agrees that Lender has a first priority perfected
security interest in all servicing records, including but not limited to any and
all servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of such Mortgage Loans (the
"Servicing Records"), and (ii) the Borrower grants the Lender a security
interest in all servicing fees and rights relating to the Mortgage Loans and all
Servicing Records to secure the obligation of the Borrower or its designee to
service in conformity with this Section and any other obligation of Borrower to
the Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request. It is understood and agreed by the parties that prior to
an Event of Default, the Borrower shall retain the servicing fees with respect
to the Mortgage Loans.
(c) If the Mortgage Loans are serviced by any other third party
servicer (such third party servicer, the "Subservicer"), the Borrower shall
provide a copy of the related servicing agreement to the Lender at least three
(3) Business Days prior to the applicable Funding Date or the date on which the
Subservicer shall begin subservicing the Mortgage Loans, which shall be in the
form and substance acceptable to Lender (the "Servicing Agreement") and shall
have obtained the written consent of the Lender for such Subservicer to
subservice the Mortgage Loans.
(d) The Borrower agrees that upon the occurrence of an Event of
Default, the Lender may terminate the Borrower in its capacity as servicer and
terminate any Servicing Agreement and transfer such servicing to the Lender or
its designee, at no cost or expense to the Lender. The Borrower agrees to
cooperate with the Lender in connection with the transfer of servicing.
(e) After the Funding Date, until the pledge of any Mortgage Loan
is relinquished by the Custodian, the Borrower will have no right to modify or
alter the terms of the Mortgage Loan or consent to the modification or
alteration of the terms of any Mortgage Loan, and the Borrower will have no
obligation or right to repossess any Mortgage Loan or substitute another
Mortgage Loan, except as provided in any Custodial Agreement.
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(f) The Borrower shall permit the Lender to inspect upon
reasonable prior written notice (which shall be no more than five (5) Business
Days prior to such date) at a mutually convenient time, the Borrower's or its
Affiliate's servicing facilities, as the case may be, for the purpose of
satisfying the Lender that the Borrower or its Affiliate, as the case may be,
has the ability to service the Mortgage Loans as provided in this Loan
Agreement. In addition, with respect to any Subservicer which is not an
Affiliate of the Borrower, the Borrower shall use its best efforts to enable the
Lender to inspect the servicing facilities of such Subservicer.
11.16 Periodic Due Diligence Review. The Borrower acknowledges
that the Lender has the right to perform continuing due diligence reviews with
respect to the Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice to the Borrower, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, make copies of, and make extracts of, the Mortgage Files and any and
all documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of the Borrower and/or
the Custodian. The Borrower also shall make available to the Lender a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Mortgage Files and the Mortgage Loans. Without limiting
the generality of the foregoing, the Borrower acknowledges that the Lender shall
make Advances to the Borrower based solely upon the information provided by the
Borrower to the Lender in the Mortgage Loan Data Transmission and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right, at any time to conduct a partial or complete due
diligence review on some or all of the Mortgage Loans securing such Advance,
including, without limitation, ordering new credit reports, new appraisals on
the related Mortgaged Properties and otherwise re-generating the information
used to originate such Mortgage Loan. The Lender may underwrite such Mortgage
Loans itself or engage a mutually agreed upon third party underwriter to perform
such underwriting. The Borrower agrees to cooperate with the Lender and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in the possession, or under the control, of the Borrower.
In addition, the Lender has the right to perform continuing Due Diligence
Reviews of the Borrower and its Affiliates, directors, officers, employees and
significant shareholders. The Borrower and Lender further agree that all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.16 shall be paid for as agreed
by such parties.
11.17 Set-Off. In addition to any rights and remedies of the
Lender provided by this Loan Agreement and by law, upon the occurrence of an
Event of Default, the Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
Property and deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any Affiliate
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thereof to or for the credit or the account of the Borrower. The Lender agrees
promptly to notify the Borrower after any such set-off and application made by
the Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application.
11.18 Intent. The parties recognize that each Advance is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
E-LOAN, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopier No.:
Telephone No.:
With a copy to:
Attention: Vice President/Treasury
Telecopier No.:
Telephone No.:
LENDER
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
---------------------------------------
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Eligible Mortgage Loans
As to each Mortgage Loan that forms part of the Collateral
hereunder (and the related Mortgage, Mortgage Note, Assignment of Mortgage and
Mortgaged Property), the Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Value is determined:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Data Transmission with respect to the Mortgage Loan is complete,
true and correct in all material respects.
(b) Payments Current. The first Monthly Payment shall have been
made prior to the second scheduled Monthly Payment becoming due.
(c) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the title insurance policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor in respect of the Mortgage Loan has been released, in
whole or in part, except in connection with an assumption agreement approved by
the title insurer, to the extent required by such policy, and which assumption
agreement is part of the Mortgage File delivered to the Custodian and the terms
of which are reflected in the Mortgage Loan Schedule.
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, setoff, counterclaim or defense, including without limitation the
defense of usury, nor will the
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operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto, and no
Mortgagor in respect of the Mortgage Loan was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated.
(f) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against earthquake and
other risks insured against by Persons operating like properties in the locality
of the Mortgaged Property, in an amount not less than the greatest of (i) 100%
of the replacement cost of all improvements to the Mortgaged Property, (ii)
either (A) the outstanding principal balance of the Mortgage Loan with respect
to each First Lien Mortgage Loan or (B) with respect to each Second Lien
Mortgage Loan, the sum of the outstanding principal balance of the First Lien
Mortgage Loan and the outstanding principal balance of the Second Lien Mortgage
Loan, (iii) the amount necessary to avoid the operation of any co-insurance
provisions with respect to the Mortgaged Property, and consistent with the
amount that would have been required as of the date of origination in accordance
with the Underwriting Guidelines or (iv) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis. If any portion of the Mortgaged Property
is in an area identified by any federal Governmental Authority as having special
flood hazards, and flood insurance is available, a flood insurance policy
meeting the current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of the
Mortgage Loan, (2) the full insurable value of the Mortgaged Property, and (3)
the maximum amount of insurance available under the Flood Disaster Protection
Act of 1973, as amended. All such insurance policies (collectively, the "hazard
insurance policy") contain a standard mortgagee clause naming the Borrower, its
successors and assigns (including without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled
without 30 days' prior written notice to the mortgagee. No such notice has been
received by the Borrower. All premiums due and owing on such insurance policy
have been paid. The related Mortgage obligates the Mortgagor to maintain all
such insurance and, at such Mortgagor's failure to do so, authorizes the
mortgagee to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from such Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer
and is in full force and effect. The Borrower has not engaged in, and has no
knowledge of the Mortgagor's having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement provided
for herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Borrower.
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(g) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Lender, and shall deliver to the Lender, upon two
Business Days' request, evidence of compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole-or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission other than in the case
of a release of a portion of the land comprising a Mortgaged Property or a
release of a blanket Mortgage which release will not cause the Mortgage Loan to
fail to satisfy the Underwriting Guidelines. The Borrower has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is located in the state identified in the Mortgage Loan Schedule and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
condominium unit in a condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development, provided, however,
that any condominium unit or planned unit development shall conform with the
applicable ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac requirements regarding such dwellings,
that a de minimus percentage of the Mortgage Loans may be Cooperative Loans and
that no residence or dwelling is a mobile home or a manufactured dwelling. No
portion of the Mortgaged Property is used for commercial purposes.
(j) Valid Lien. The Mortgage is a valid, subsisting, enforceable
and perfected (A) first lien and first priority security interest with respect
to each Mortgage Loan which is indicated by the Borrower to be a First Lien
Mortgage Loan (as reflected on the Mortgage Loan Data Transmission) or (B)
second lien and second priority security interest with respect to each Mortgage
Loan which is indicated by the Borrower to be a Second Lien (as reflected on the
Mortgage Loan Data Transmission), in either case, on the real property included
in the Mortgaged Property, including all buildings on the Mortgaged Property and
all installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to the foregoing and
with respect to Cooperative Loans, including the Proprietary Lease and the
Cooperative Shares. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not
yet due and payable;
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(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally
and specifically referred to in the Lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) referred to or
otherwise considered in the appraisal made for the originator of the
Mortgage Loan or (b) which do not adversely affect the Appraised Value
of the Mortgaged Property set forth in such appraisal;
(3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property; and
(4) with respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Data Transmission), a First Lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting and enforceable (A) first lien and first priority
security interest with respect to each Mortgage Loan which is indicated by the
Borrower to be a First Lien Mortgage Loan (as reflected on the Mortgage Loan
Data Transmission or (B) second lien and second priority security interest with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan (as reflected on the Mortgage Loan Data Transmission), in
either case, on the property described therein and the Borrower has full right
to pledge and assign the same to the Lender. The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage.
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken placed on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan.
The Borrower has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein.
(l) Full Disbursement of Proceeds. The proceeds of the Mortgage
Loan have been fully disbursed (or shall be fully disbursed pursuant to the
terms of the Custodial Agreement) and there is no further requirement for future
advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of
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any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.
(m) Ownership. The Borrower is the sole owner and holder of the
Mortgage Loan. All Mortgage Loans acquired by the Borrower from third parties
(including affiliates) were acquired in a true and legal sale pursuant to which
such third party sold, transferred, conveyed and assigned to the Borrower all of
its right, title and interest in, to and under such Mortgage Loan and retained
no interest in such Mortgage Loan. In connection with such sale, such third
party received reasonably equivalent value and fair consideration and, in
accordance with GAAP and for federal income tax purposes, reported the sale of
such Mortgage Loan to the Borrower as a sale of its interests in such Mortgage
Loan. The Mortgage Loan is not assigned or pledged, and the Borrower has good,
indefeasible and marketable title thereto, and has full right to transfer,
pledge and assign the Mortgage Loan to the Lender free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Loan Agreement and following the
pledge of each Mortgage Loan, the Lender will hold such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest except any such security interest created pursuant to
the terms of this Loan Agreement.
(n) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(i) in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, and (ii) either (A)
organized under the laws of such state, (B) qualified to do business in such
state, (C) a federal savings and loan association, a savings bank or a national
bank having a principal office in such state or (D) not doing business in such
state.
(o) LTV. As of the date of origination of the Mortgage Loan, the
LTV is identified on the Mortgage Loan Data Transmission.
(p) Title Insurance. The Mortgage Loan is covered by either (i)
an attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
Lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Borrower, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan (or to the extent a Mortgage Note provides for negative amortization, the
maximum amount of negative amortization in accordance with the Mortgage),
subject only to the exceptions contained in clauses (1), (2), (3) and, with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan (as reflected on the Mortgage Loan Data Transmission), (4) of
paragraph (j) of this Part I of
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Schedule 1, and in the case of adjustable rate Mortgage Loans, against any loss
by reason of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Mortgage Interest
Rate and Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such Lender's title insurance policy
affirmatively insures ingress and egress and against encroachments by or upon
the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Borrower, its successors and assigns, are the sole insureds of such Lender's
title insurance policy, and such Lender's title insurance policy is valid and
remains in full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this Loan Agreement. No claims
have been made under such Lender's title insurance policy, and no prior holder
or servicer of the related Mortgage, including the Borrower, has done, by act or
omission, anything which would impair the coverage of such Lender's title
insurance policy, including, without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other Person, and no
such unlawful items have been received, retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or event
of acceleration existing under the Mortgage or the Mortgage Note and no event
has occurred which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration, and neither the Borrower nor its predecessors have waived
any default, breach, violation or event of acceleration. With respect to each
Mortgage Loan which is indicated by the Borrower to be a Second Lien Mortgage
Loan (as reflected on the Mortgage Loan Data Transmission) (i) the First Lien is
in full force and effect, (ii) there is no default, breach, violation or event
of acceleration existing under such First Lien mortgage or the related mortgage
note, (iii) no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder, and either (A) the First Lien
mortgage contains a provision which allows or (B) applicable law requires, the
mortgagee under the second lien Mortgage Loan to receive notice of, and affords
such mortgagee an opportunity to cure any default by payment in full or
otherwise under the First Lien Mortgage Loan.
(r) No Mechanics' Liens. At origination, there were no mechanics'
or similar liens or claims which have been filed for work, labor or material
(and no rights are outstanding that under the law could give rise to such liens)
affecting the Mortgaged Property which are or may be liens prior to, or equal or
coordinate with the lien of the Mortgage.
(s) Location of Improvements: No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.
69
(t) Origination: Payment Terms. The Mortgage Loan was originated
by or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than sixty (60) days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with
respect to adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date
to equal the Index plus the Gross Margin (rounded up or down to the nearest .125
%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable on
the day set forth in the Mortgage Note in equal monthly installments of
principal and interest, which installments of interest, with respect to
adjustable rate Mortgage Loans, are subject to change due to the adjustments to
the Mortgage Interest Rate on each Interest Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than 30
years from commencement of amortization. The Due Date of the first payment under
the Mortgage Note is no more than 60 days from the date of the Mortgage Note.
(u) Customary Provisions. The Mortgage Note has a stated
maturity. The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage.
(v) Conformance with Underwriting Guidelines and Agency
Standards. The Mortgage Loan was underwritten in accordance with the applicable
Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to
those used by ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae and the Borrower has not made any
representations to a Mortgagor that are inconsistent with the mortgage
instruments used.
(w) Occupancy of the Mortgaged Property. As of the Funding Date
the Mortgaged Property is either vacant or lawfully occupied under applicable
law. All inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities. The Borrower has not received written
notification from any governmental authority that the Mortgaged Property is in
material non-compliance with such laws or regulations, is being used, operated
or occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be. The Borrower has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate. Except as otherwise set forth in the Mortgage
Loan Data
70
Transmission, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence.
(x) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in clause (j) above.
(y) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under applicable law to serve
as such, has been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses are or will become payable by the
Custodian or the Lender to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(z) Delivery of Mortgage Documents. If the Mortgage Loan is a Dry
Loan, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Custodian. The Borrower or its agent is
in possession of a complete, true and materially accurate Mortgage File in
compliance with the Custodial Agreement, except for such documents the originals
of which have been delivered to the Custodian.
(aa) Transfer of Mortgage Loans. If the Mortgage Loan is a Dry
Loan, the Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located.
(bb) Due-On-Sale. The Mortgage contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder.
(cc) No Buydown Provisions: No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Borrower, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(dd) Consolidation of Future Advances. Any future advances made
to the Mortgagor prior to the origination of the Mortgage Loan have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having (A) first lien priority with
respect to each Mortgage Loan which is indicated by the Borrower to be a First
Lien Mortgage Loan (as reflected on the Mortgage Loan Data Transmission) or (B)
second lien priority with respect to each Mortgage Loan which is indicated by
the Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Data Transmission), in either case, by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest
71
or by other title evidence acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan.
(ee) Mortgaged Property Undamaged. The Mortgaged Property (and
with respect to any Cooperative Loan, the Cooperative Unit) is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Borrower
has no knowledge of any such proceedings.
(ff) Collection Practices: Escrow Deposits: Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and the Borrower with respect to the Mortgage
Loan have been in all material respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in all respects legal
and proper. With respect to escrow deposits and Escrow Payments (other than with
respect to each Mortgage Loan which is indicated by the Borrower to be a Second
Lien Mortgage Loan and for which the mortgagee under the First Lien Mortgage
Loan is collecting Escrow Payments (as reflected on the Mortgage Loan Data
Transmission), all such payments are in the possession of, or under the control
of, the Borrower and there exist no deficiencies in connection therewith for
which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the Borrower have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited.
(gg) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(hh) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has
not notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(ii) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower or the
Qualified Originator, who had no interest,
72
direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and the appraisal and appraiser both satisfy the
requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
(jj) Disclosure Materials. The Mortgagor has executed a statement
to the effect that the Mortgagor has received all disclosure materials required
by applicable law with respect to the making of adjustable rate mortgage loans,
and the Borrower maintains such statement in the Mortgage File.
(kk) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(ll) No Defense to Insurance Coverage. No action has been taken
or failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of the Borrower, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay.
(mm) Capitalization of Interest. The Mortgage Note does not by
its terms provide for the capitalization or forbearance of interest.
(nn) No Equity Participation. No document relating to the
Mortgage Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(oo) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 10 days (or if such tenth day
was not a Business Day, the next succeeding Business Day).
(pp) No Exception. Other than as noted by the Custodian on the
Exception Report; no Material Exception exists (as defined in the Custodial
Agreement) with respect to the
73
Mortgage Loan which would materially adversely affect the Mortgage Loan or the
Lender's security interest, granted by the Borrower, in the Mortgage Loan as
determined by the Lender in its sole discretion.
(qq) Qualified Originator. The Mortgage Loan has been originated
by, and, if applicable, purchased by the Borrower from, a Qualified Originator.
(rr) Mortgage Submitted for Recordation. The Mortgage has been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
(ss) Acceptable Investment. No specific circumstances or
conditions exist with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that should reasonably be expected
to (i) cause private institutional investors which invest in Mortgage Loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable
investment, (ii) cause the Mortgage Loan to be more likely to become past due in
comparison to similar Mortgage Loans, or (iii) adversely affect the value or
marketability of the Mortgage Loan in comparison to similar Mortgage Loans.
(tt) Environmental Matters. The Mortgaged Property is free from
any and all toxic or hazardous substances and there exists no violation of any
local, state or federal environmental law, rule or regulation.
(uu) Ground Leases. With respect to each ground lease to which
the Mortgaged Property is subject (a "Ground Lease"): (i) the Mortgagor is the
owner of a valid and subsisting interest as tenant under the Ground Lease; (ii)
the Ground Lease is in full force and effect, unmodified and not supplemented by
any writing or otherwise; (iii) all rent, additional rent and other charges
reserved therein have been paid to the extent they are payable to the date
hereof; (iv) the Mortgagor enjoys the quiet and peaceful possession of the
estate demised thereby, subject to any sublease; (v) the Mortgagor is not in
default under any of the terms thereof and there are no circumstances which,
with the passage of time or the giving of notice or both, would constitute an
event of default thereunder; (vii) the lessor under the Ground Lease is not in
default under any of the terms or provisions thereof on the part of the lessor
to be observed or performed; (vii) the lessor under the Ground Lease has
satisfied all of its repair or construction obligations, if any, to date
pursuant to the terms of the Ground Lease; and (ix) the execution, delivery and
performance of the Mortgage do not require the consent (other than those
consents which have been obtained and are in full force and effect) under, and
will not contravene any provision of or cause a default under, the Ground Lease.
(vv) Value of Mortgage Property. The Borrower has no knowledge of
any circumstances existing that should reasonably be expected to adversely
affect the value or the marketability of the Mortgaged Property or the Mortgage
Loan or to cause the Mortgage Loan to prepay during any period materially faster
or slower than the Mortgage Loans originated by the Borrower generally.
74
(ww) Section 32 Mortgages; Overages. The Borrower has provided
the related Mortgagor with all disclosure materials required by Section 226.32
of the Federal Reserve Board Regulation Z with respect to any Mortgage Loans
subject to such Section of the Federal Reserve Board Regulation Z. The Borrower
has not made or caused to be made any payment in the nature of an "overage" or
"yield spread premium" to a mortgage broker or like Person which has not been
fully disclosed to the Mortgagor.
(xx) Cooperative Loans. With respect to each Cooperative Loan,
each original UCC financing statement, continuation statement or other
governmental filing or recordation necessary to create or preserve the
perfection and priority of the first priority lien and security interest in the
Cooperative Shares and Proprietary Lease has been timely and properly made. Any
security agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Borrower or its designee establishes in
the Borrower a valid and subsisting perfected first lien on and security
interest in the Mortgaged Property described therein, and the Borrower has full
right to sell and assign the same.
(yy) Takeout Commitment. Each Mortgage Loan is subject to a
Takeout Commitment which is a valid, binding and subsisting obligation
enforceable in accordance with its terms unless otherwise waived by the Lender.
(zz) First Lien Consent. With respect to each Mortgage Loan which
is a Second Lien Mortgage Loan, (i) if the related first lien provides for
negative amortization, the LTV was calculated at the maximum principal balance
of such first lien that could result upon application of such negative
amortization feature, and (ii) either no consent for the Mortgage Loan is
required by the holder of the first lien or such consent has been obtained and
is contained in the Mortgage File.
75
SCHEDULE 2
76
SCHEDULE 3
77
SCHEDULE 4
78
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$____________
[Month] __, ____
New York, New York
FOR VALUE RECEIVED, _____________________, a ________ corporation
(the "Borrower"), hereby promises to pay to the order of GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC. (the "Lender"), at the principal office of the Lender
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in lawful money of the
United States, and in immediately available funds, the principal sum of
[_______________] ($___________) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Advances made by the Lender to the
Borrower under the Loan Agreement), on the dates and in the principal amounts
provided in the Loan Agreement, and to pay interest on the unpaid principal
amount of each such Advance, at such office, in like money and funds, for the
period commencing on the date of such Advance until such Advance shall be paid
in full, at the rates per annum and on the dates provided in the Loan Agreement.
The date, amount and interest rate of each Advance made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of this Note, endorsed by the Lender on the schedule attached hereto or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Loan Agreement or
hereunder in respect of the Advances made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of [Month] __, ____ (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement") between the
Borrower, and the Lender, and evidences Advances made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection
and enforcement (including reasonable attorneys' fees and disbursements of
Lender's counsel) in respect of this Note when incurred, including, without
limitation, reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any indorsers or guarantors hereof, (a)
severally waive diligence, presentment, protest and demand and also notice of
protest, demand, dishonor and nonpayments of this Note, (b) expressly agree that
this Note, or any payment hereunder, may be
79
extended from time to time, and consent to the acceptance of further Collateral,
the release of any Collateral for this Note, the release of any party primarily
or secondarily liable hereon, and (c) expressly agree that it will not be
necessary for the Lender, in order to enforce payment of this Note, to first
institute or exhaust the Lender's remedies against the Borrower or any other
party liable hereon or against any Collateral for this Note. No extension of
time for the payment of this Note, or any installment hereof, made by agreement
by the Lender with any person now or hereafter liable for the payment of this
Note, shall affect the liability under this Note of the Borrower, even if the
Borrower is not a party to such agreement; provided, however, that the Lender
and the Borrower, by written agreement between them, may affect the liability of
the Borrower.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
Any enforcement action relating to this Note may be brought by
motion for summary judgment in lieu of a complaint pursuant to Section 3213 of
the New York Civil Practice Law and Rules. The Borrower hereby submits to New
York jurisdiction with respect to any action brought with respect to this Note
and waives any right with respect to the doctrine of forum non conveniens with
respect to such transactions.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE BUT WITH
REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH BY
ITS TERMS APPLIES TO THIS NOTE) WHOSE LAWS THE BORROWER EXPRESSLY ELECTS TO
APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO
ENFORCE OR ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE SUPREME COURT OF THE
STATE OF NEW YORK, BOROUGH OF MANHATTAN, OR IN ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW YORK.
-----------------------------------------
By:
Name:
Title:
80
SCHEDULE OF LOANS
This Note evidences Advances made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount Amount Paid Unpaid Principal Notation
Date Made of Loan or Prepaid Amount Made by
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81
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
82
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE BORROWER]
(date)
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to
_______________, a ________ corporation, (the "Borrower"), with respect to
certain matters in connection with that certain Master Loan and Security
Agreement, dated as of [Month] __, ____ (the "Loan and Security Agreement"), by
and between the Borrower and Greenwich Capital Financial Products, Inc. (the
"Lender"), being executed contemporaneously with a Promissory Note dated ____ _,
____ from the Borrower to the Lender (the "Note"), a Custodial Agreement, dated
as of [Month] __, ____ (the "Custodial Agreement"), by and among the Borrower,
_____________ (the "Custodian"), and the Lender. Capitalized terms not otherwise
defined herein have the meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
(1) the Loan and Security Agreement;
(1) the Note;
(1) Custodial Agreement;
(1) unfiled copies of the financing statements listed on Schedule 1
(collectively, the "Financing Statements") naming the Borrower as Debtor and the
Lender as Secured Party and describing the Collateral (as defined in the Loan
and Security Agreement) as to which security interests may be perfected by
filing under the Uniform Commercial Code of the States listed on Schedule 1 (the
"Filing Collateral"), which I understand will be filed in the filing offices
listed on Schedule 1 (the "Filing Offices");
(1) the reports listed on Schedule 2 as to UCC financing statements
(collectively, the "UCC Search Report"); and
(1) such other documents, records and papers as we have deemed necessary and
relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Borrower contained in
the Loan and Security Agreement. [We] [I] have assumed the authenticity of all
documents submitted to me as
83
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
(1) The Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the state of [state] and is qualified to transact
business in, duly licensed and is in good standing under, the laws of each state
in which any Mortgaged Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of each Mortgage Loan
pursuant to the Loan and Security Agreement.
(1) The Borrower has the corporate power to engage in the transactions
contemplated by the Loan and Security Agreement, the Note, and the Custodial
Agreement and all requisite corporate power, authority and legal right to
execute and deliver the Loan and Security Agreement, the Note, and the Custodial
Agreement and observe the terms and conditions of such instruments. The Borrower
has all requisite corporate power to borrow under the Loan and Security
Agreement and to grant a security interest in the Collateral pursuant to the
Loan and Security Agreement.
(1) The execution, delivery and performance by the Borrower of the Loan and
Security Agreement, the Note, and the Custodial Agreement, and the borrowings by
the Borrower and the pledge of the Collateral under the Loan and Security
Agreement have been duly authorized by all necessary corporate action on the
part of the Borrower. Each of the Loan and Security Agreement, the Note and the
Custodial Agreement have been executed and delivered by the Borrower and are
legal, valid and binding agreements enforceable in accordance with their
respective terms against the Borrower, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Lender's
security interest in the Mortgage Loans.
(1) No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of the Advance and Security Agreement, the Note and the
Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral, pursuant to the Loan and Security Agreement.
(1) The execution, delivery and performance by the Borrower of, and the
consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Custodial Agreement do not and will not (a) violate
any provision of the Borrower's charter or by-laws, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to the Borrower of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which I have knowledge (after due
inquiry) to which the Borrower is a party or by which it is bound or to
84
which it is subject, or (except for the Liens created pursuant to the Loan and
Security Agreement) result in the creation or imposition of any Lien upon any
Property of the Borrower pursuant to the terms of any such agreement or
instrument.
(1) There is no action, suit, proceeding or investigation pending or, to the
best of [our] [my] knowledge, threatened against the Borrower which, in [our]
[my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business
substantially as now conducted or in any material liability on the part of the
Borrower or which would draw into question the validity of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the transactions contemplated
thereby, or which would be reasonably likely to impair materially the ability of
the Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Custodial Agreement or the Mortgage Loans.
(1) The Loan and Security Agreement is effective to create, in favor of the
Lender, a valid security interest under the Uniform Commercial Code in all of
the right, title and interest of the Borrower in, to and under the Collateral as
collateral security for the payment of the Secured Obligations (as defined in
the Loan and Security Agreement), except that (a) such security interests will
continue in Collateral after its sale, exchange or other disposition only to the
extent provided in Section 9-306 of the Uniform Commercial Code, (b) the
security interests in Collateral in which the Borrower acquires rights after the
commencement of a case under the Bankruptcy Code in respect of the Borrower may
be limited by Section 552 of the Bankruptcy Code.
(1) When the Mortgage Notes are delivered to the Custodian, endorsed in blank by
a duly authorized officer of the Borrower, the security interest referred to in
paragraph 7 above in the Mortgage Notes will constitute a fully perfected first
priority security interest in all right, title and interest of the Borrower
therein, in the Mortgage Loan evidenced thereby and in the Borrower's interest
in the related Mortgaged Property.
(1) (a) Upon the filing of financing statements on Form UCC-1 naming the Lender
as "Secured Party" and the Borrower as "Debtor", and describing the Collateral,
in the jurisdictions and recording offices listed on Schedule 1 attached hereto,
the security interests referred to in paragraph 8 above will constitute fully
perfected security interests under the Uniform Commercial Code in all right,
title and interest of the Borrower in, to and under such Collateral, which can
be perfected by filing under the Uniform Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices
and the proper debtors necessary to identify those Persons who
have on file in the jurisdictions listed on Schedule 1 financing
statements covering the Filing Collateral as of the dates and
times specified on Schedule 2. Except for the matters listed on
Schedule 2, the UCC Search Report identifies no Person who has
filed in any Filing Office a financing statement describing the
Filing Collateral prior to the effective dates of the UCC Search
Report.
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(1) The Assignments of Mortgage are in recordable form, except for the insertion
of the name of the assignee, and upon the name of the assignee being inserted,
are acceptable for recording under the laws of the state where each related
Mortgaged Property is located.
(1) The Borrower is duly registered as a [____________] in each state in which
Mortgage Loans were originated to the extent such registration is required by
applicable law, and has obtained all other licenses and governmental approvals
in each jurisdiction to the extent that the failure to obtain such licenses and
approvals would render any Mortgage Loan unenforceable or would materially and
adversely affect the ability of the Borrower to perform any of its obligations
under, or the enforceability of, the Loan Documents.
(1) Assuming that all other elements necessary to render a Mortgage Loan legal,
valid, binding and enforceable were present in connection with the execution,
delivery and performance of each Mortgage Loan (including completion of the
entire Mortgage Loan fully, accurately and in compliance with all applicable
laws, rules and regulations) and assuming further that no action was taken in
connection with the execution, delivery and performance of each Mortgage Loan
(including in connection with the sale of the related Mortgaged Property) that
would give rise to a defense to the legality, validity, binding effect and
enforceability of such Mortgage Loan, nothing in the forms of such Mortgage
Loans, as attached hereto as Exhibit A, would render such Mortgage Loans other
than legal, valid, binding and enforceable.
(1) Assuming their validity, binding effect and enforceability in all other
respects (including completion of the entire Mortgage Loan fully, accurately and
in compliance with all applicable laws, rules and regulations), the forms of
Mortgage Loans attached hereto as Exhibit A are in sufficient compliance with
________ law and Federal consumer protection laws so as not to be rendered void
or voidable at the election of the Mortgagor thereunder.
Very truly yours,
86
EXHIBIT D
[FORM OF NOTICE OF BORROWING AND PLEDGE]
[insert date]
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
Notice of Borrowing and Pledge No.:_____________________
Ladies/Gentlemen:
Reference is made to the Master Loan and Security Agreement,
dated as of _______________, 199_ (the "Loan Agreement"; capitalized terms used
but not otherwise defined herein shall have the meaning given them in the Loan
Agreement), between ________________ (the "Borrower") and Greenwich Capital
Financial Products, Inc. (the "Lender").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you, the Lender, make Advances to us
in connection with our deliver of Mortgage Loans on ____________________ [insert
requested Funding Date,], in connection with which we shall pledge to you as
Collateral the Mortgage Loans (along with all previous pledges defined as
Eligible Mortgage Loans for such date) set forth on the Mortgage Loan Schedule
attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing
on the date hereof nor will occur after giving effect to such Advance as
a result of such Advance;
(b) each of the representations and warranties made by the
Borrower in or pursuant to the Loan Documents is true and correct in all
material respects on and as of such date (in the case of the
representations and warranties in respect of Mortgage Loans, solely with
respect to Mortgage Loans being included the Borrowing Base on the
Funding Date) as if made on and as of the date hereof (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date);
87
(c) the Borrower is in compliance with all governmental licenses
and authorizations and is qualified to do business and is in good
standing in all required jurisdictions; and
(d) the Borrower has satisfied all conditions precedent in
Section 5.02 of the Loan Agreement and all other requirements of the
Loan Agreement.
The undersigned duly authorized officer of Borrower further represents
and warrants that (1) the documents constituting the Custodial File (as defined
in the Custodial Agreement) with respect to the Mortgage Loans that are the
subject of the Advance requested herein and more specifically identified on the
mortgage loan schedule or computer readable magnetic transmission delivered to
both the Lender and the Custodian in connection herewith (the "Receipted
Mortgage Loans") [WITH RESPECT TO DRY LOANS: have been or are hereby submitted]
[WITH RESPECT TO WET LOANS: shall be delivered, within ten (10) days of the date
of the execution of this Notice of Borrowing and Pledge,] to Custodian and such
Required Documents are to be held by the Custodian subject to Lender's first
priority security interest thereon, (2) all other documents related to such
Receipted Mortgage Loans (including, but not limited to, mortgages, insurance
policies, loan applications and appraisals) have been or will be created and
held by Borrower in trust for Lender, (3) all documents related to such
Receipted Mortgage Loans withdrawn from Custodian shall be held in trust by
Borrower for Lender, and Borrower will not attempt to pledge, hypothecate or
otherwise transfer such Receipted Mortgage Loans to any other party until the
Advance to which such Receipted Mortgage Loans are related has been paid in full
by Borrower and (4) Borrower has granted a first priority perfected security
interest in and lien on the Receipted Mortgage Loans.
Borrower hereby represents and warrants that (x) the Receipted Mortgage Loans
have an unpaid principal balance as of the date hereof of $__________ and (y)
the number of Receipted Mortgage Loans is ______.
Very truly yours,
By:
----------------------------------
Name:
Title:
88
EXHIBIT D-1
TO NOTICE OF BORROWING AND PLEDGE
[MORTGAGE LOANS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
MORTGAGE LOAN LIST
Type of Transaction: Cash Window Transaction
------------------------------------------------------------------------------------------------------
# OF
REF. LAST FACE MONTHS TO NOTE TAKEOUT SALE COMMIT-
NO. LOAN # NAME AMOUNT MATURITY RATE INVESTOR PRICE MENT #
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Conduit Transaction
-----------------------------------------------------------------------------
COMMIT-
MENT CONFIRM- ▇▇▇▇-
REF. EXPIRATION DELIVERY RELEASE ATION HOUSE
NO. DATE DATE PAYMENT NUMBER LENDER
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
89
EXHIBIT E
RESERVED
90
EXHIBIT F
[INTENTIONALLY OMITTED]
91
EXHIBIT F
REQUIRED FIELDS FOR MORTGAGE LOAN DATA TRANSMISSION
(1) The Borrower's reference number;
(2) The name of the Borrower's applicable program;
(3) The Mortgage Loan number;
(4) The last name of the Mortgagor;
(5) The face amount of the Mortgage Note;
(6) The original number of months to maturity of the Mortgage Loan;
(7) The original interest rate borne by the Mortgage Note;
(8) The name of the Takeout Investor;
(9) The sale price of the Mortgage Loan to the Takeout Investor;
(10) The commitment number;
(11) The expiration date of the Takeout Commitment;
(12) The date the Mortgage Loan is scheduled to be delivered to the Takeout Investor;
(13) The Release Payment;
(14) The name of the Warehouse Lender, if any;
(15) The Agency's payee number, if applicable;
(16) The name of the Settlement Agent;
(17) The address of the Mortgaged Property;
(18) The original maturity date; and
(19) A code indicating whether such Mortgage Loan is a Cooperative Mortgage Loan.
92
EXHIBIT G
[FORM OF COLLECTION ACCOUNT AGREEMENT]
_______________, 199_
[Bankers Trust]
-----------------------------------
-----------------------------------
Attn:
------------------------------
Re: Account Established by Greenwich Capital Financial Products, Inc.
("Lender"), pursuant to that certain Master Loan and Security
Agreement (as amended, supplemented or otherwise modified from time
to time, the "Loan Agreement"), dated as of May 10, 1999, by and
among the Lender, [Bankers Trust] (the "Collection Bank"), and
E-Loan, Inc. ("Borrower")
Ladies and Gentlemen:
We refer to the collection account established by the Borrower
pursuant to the Loan Agreement, at the Collection Bank, [CITY, STATE], Account
No. [ACCOUNT #], ABA# [ABA #], [sub]account identified with respect to Eligible
Assets pledged to the Lender (the "Collection Account"), which the Borrower
maintains in accordance with the Loan Agreement.
From time to time, certain third-party servicers (each a
"Subservicer") will deposit funds received in accordance with a related
servicing agreement into the Collection Account. Greenwich Capital Financial
Products, Inc. (the "Lender") has established a secured loan arrangement with
the Borrower. By its execution of this letter, the Collection Bank and the
undersigned Borrower acknowledges that the Borrower has granted a security
interest in all of the Borrower's right, title and interest in and to the
Collection Account and any funds from time to time on deposit therein with
respect to such Eligible Assets, that such funds are received by the Collection
Bank in trust for the benefit of the Lender and, except as provided below, are
for application against the Borrower's liabilities to the Lender.
By the Collection Bank's and the undersigned Borrower's execution
of this letter, each party agrees: (a) that all funds from time to time
hereafter in the Collection Account are the property of the Borrower held in
trust for the benefit of, and subject to a security interest in favor of, the
Lender; (b) that neither the Collection Bank nor the Borrower will exercise any
right of set-off, banker's lien or any similar right in connection with such
funds provided, that in the event any check is returned to the Collection Bank
or the Borrower because of insufficient funds (or is otherwise unpaid) such
party shall be entitled to set off the amount of any such returned check; (c)
that following such time as the Lender shall provide notice to the Collection
Bank in writing, in its sole discretion, revoking the Borrower's ability to make
withdrawals from the Collection Account, the Borrower will not withdraw, nor
shall the Collection Bank permit the Borrower or any other person or entity to
withdraw or transfer funds from the Collection Account; and (d) that if the
Lender shall notify the Collection Bank that an event of default has
93
occurred and is continuing under the Lender's secured lending arrangement with
the Borrower, the Collection Bank shall cause or permit withdrawals from the
Collection Account in any other manner as the Lender may instruct.
All bank statements in respect to the Collection Account shall be
sent to the Borrower with copies to:
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
94
Kindly acknowledge your agreement with the terms of this
agreement by signing the enclosed copy of this letter and returning it to the
undersigned.
Very truly yours,
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
Name:
Title:
Agreed and acknowledged:
E-LOAN, INC.
By:
Name:
Title:
Agreed and acknowledged:
[BANKERS TRUST]
By:
Name:
Title:
95
EXHIBIT H
[FORM OF CONFIDENTIALITY AGREEMENT]
In connection with your consideration of a possible or actual
acquisition of a participating interest (the "Transaction") in an advance, note
or commitment of Greenwich Capital Financial Products, Inc. ("Greenwich")
pursuant to a Master Loan and Security Agreement between Greenwich and
____________________ (the "Borrower"") dated _____________, ____, you have
requested the right to review certain non-public information regarding the
Borrower that is in the possession of Greenwich. In consideration of, and as a
condition to, furnishing you with such information and any other information
(whether communicated in writing or communicated orally) delivered to you by
Greenwich or its affiliates, directors, officers, employees, advisors, agents or
"controlling persons" (within the meaning of the Securities Exchange Act of
1934, as amended (the "1934 Act")) (such affiliates and other persons being
herein referred to collectively as Greenwich "Representatives") in connection
with the consideration of a Transaction (such information being herein referred
to as "Evaluation Material"), Greenwich hereby requests your agreement as
follows:
(1) The Evaluation Material will be used solely for the purpose of evaluating a
possible Transaction with Greenwich involving you or your affiliates, and unless
and until you have completed such Transaction pursuant to a definitive agreement
between you or any such affiliate and Greenwich, such Evaluation Material will
be kept strictly confidential by you and your affiliates, directors, officers,
employees, advisors, agents or controlling persons (such affiliates and other
persons being herein referred to collectively as "your Representatives"), except
that the Evaluation Material or portions thereof may be disclosed to those of
your Representatives who need to know such information for the purpose of
evaluating a possible Transaction with Greenwich (it being understood that prior
to such disclosure your Representatives will be informed of the confidential
nature of the Evaluation Material and shall agree to be bound by this
Agreement). You agree to be responsible for any breach of this Agreement by your
Representatives.
1. The term "Evaluation Material" does not include any information which (i) at
the time of disclosure or thereafter is generally known by the public (other
than as a result of its disclosure by you or your Representatives) or (ii) was
or becomes available to you on a nonconfidential basis from a person not
otherwise bound by a confidential agreement with Greenwich or its
Representatives or is not otherwise prohibited from transmitting the information
to you. As used in this Agreement, the term "person" shall be broadly
interpreted to include, without limitation, any corporation, company, joint
venture, partnership or individual.
1. In the event that you receive a request to disclose all or any part of the
information contained in the Evaluation Material under the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction, you
agree to (i) immediately notify Greenwich and the Borrower of the existence,
terms and circumstances surrounding such a request, (ii) consult with the
Borrower on the advisability of taking legally available steps to resist or
narrow such request, and (iii) if disclosure of such information is required,
exercise your
96
best efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such information.
1. Unless otherwise required by law in the opinion of your counsel, neither you
nor your Representative will, without our prior written consent, disclose to any
person the fact that the Evaluation Material has been made available to you.
1. You agree not to initiate or maintain contact (except for those contacts made
in the ordinary course of business) with any officer, director or employee of
the Borrower regarding the business, operations, prospects or finances of the
Borrower or the employment of such officer, director or employee, except with
the express written permission of the Borrower.
1. You understand and acknowledge that the Borrower is not making any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material or any other information provided to you
by Greenwich. The Borrower, its respective affiliates or Representatives, nor
any of its respective officers, directors, employees, agents or controlling
persons (within the meaning of the ▇▇▇▇ ▇▇▇) shall have any liability to you or
any other person (including, without limitation, any of your Representatives)
resulting from your use of the Evaluation Material.
1. You agree that neither Greenwich or the Borrower has not granted you any
license, copyright, or similar right with respect to any of the Evaluation
Material or any other information provided to you by Greenwich.
1. If you determine that you do not wish to proceed with the Transaction, you
will promptly deliver to Greenwich all of the Evaluation Material, including all
copies and reproductions thereof in your possession or in the possession of any
of your Representatives.
1. Without prejudice to the rights and remedies otherwise available to the
Borrower, the Borrower shall be entitled to equitable relief by way of
injunction if you or any of your Representatives breach or threaten to breach
any of the provisions of this Agreement. You agree to waive, and to cause your
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedy.
1. The validity and interpretation of this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
applicable to agreements made and to be fully performed therein (excluding the
conflicts of law rules). You submit to the jurisdiction of any court of the
State of New York or the United States District Court for the Southern District
of the State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement.
1. The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto, and the obligations and liabilities assumed in
this Agreement by the parties hereto shall be binding upon the respective
successors and assigns.
1. If it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the
97
remaining terms and provisions hereof shall be unimpaired and shall remain in
full force and effect and (ii) the invalid or unenforceable provision or term
shall be replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of such invalid or unenforceable term
or provision.
1. This Agreement embodies the entire agreement and understanding of the parties
hereto and supersedes any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No alteration,
waiver, amendments, or change or supplement hereto shall be binding or effective
unless the same is set forth in writing by a duly authorized representative of
each party and may be modified or waived only by a separate letter executed by
the Borrower and you expressly so modifying or waiving such Agreement.
1. For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall be,
and shall be deemed to be, an original instrument, but all such counterparts
taken together shall constitute one and the same Agreement.
98
Kindly execute and return one copy of this letter which will constitute
our Agreement with respect to the subject matter of this letter.
By:
Greenwich Capital Financial Products, Inc.
Confirmed and agreed to this _____ day of _____________, 199_.
By:________________________________
Name
Title: