Exhibit 10.6
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MASTER LOAN AND SECURITY AGREEMENT
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Dated as of June 26, 2003
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NEW CENTURY MORTGAGE CORPORATION
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
1.01 Certain Defined Terms 1
1.02 Accounting Terms and Determinations 14
Section 2. Advances, Note and Prepayments
2.01 Advances 14
2.02 Notes 15
2.03 Procedure for Borrowing 15
2.04 Limitation on Types of Advances; Illegality 16
2.05 Repayment of Advances; Interest 17
2.06 Mandatory Prepayments or Pledge 17
2.07 Optional Prepayments 17
2.08 Requirements of Law. 18
2.09 Purpose of Advances 19
Section 3. Payments; Computations; Taxes; Commitment Fee;
Non-Utilization Fee; Exit Fee
3.01 Payments 19
3.02 Computations 19
3.03 U.S. Taxes 20
3.04 Commitment Fee 21
Section 4. Collateral Security
4.01 Collateral; Security Interest 21
4.02 Further Documentation 22
4.03 Changes in Locations, Name, etc 23
4.04 Lender's Appointment as Attorney-in-Fact. 23
4.05 Performance by Lender of Borrower's Obligations 24
4.06 Proceeds 24
4.07 Remedies 25
4.08 Limitation on Duties Regarding Presentation of
Collateral 26
4.09 Powers Coupled with an Interest 26
4.10 Release of Security Interest 26
Section 5. Conditions Precedent
5.01 Initial Advance 26
5.02 Initial and Subsequent Advances 28
Section 6. Representations and Warranties
6.01 Existence 30
6.02 Financial Condition 30
6.03 Litigation 30
6.04 No Breach 31
6.05 Action 31
6.06 Approvals 31
6.07 Margin Regulations 31
6.08 Taxes 31
6.09 Investment Company Act 31
6.10 No Legal Bar 32
6.11 No Default 32
6.12 Collateral; Collateral Security 32
6.13 Chief Executive Office 32
6.14 Location of Books and Records 32
6.15 True and Complete Disclosure 33
6.16 Tangible Net Worth; Liquidity 33
6.17 ERISA 33
6.19 Relevant States 33
6.20 True Sales 33
6.21 No Burdensome Restrictions 34
6.22 Subsidiaries 34
6.23 Origination and Acquisition of Mortgage Loans 34
6.24 No Adverse Selection 34
6.25 Borrower Solvent; Fraudulent Conveyance 34
Section 7. Covenants of the Borrower
7.01 Financial Statements 34
7.02 Litigation 36
7.03 Existence, Etc 37
7.04 Prohibition of Fundamental Changes 37
7.05 Borrowing Base Deficiency 37
7.06 Notices 37
7.07 Servicing 38
7.08 Intentionally Omitted 38
7.09 Underwriting Guidelines 38
7.10 Lines of Business 38
7.11 Transactions with Affiliates 38
7.12 Use of Proceeds 39
7.13 Limitation on Liens 39
7.14 Limitation on Sale of Assets 39
7.15 Limitation on Distributions 39
7.16 Maintenance of Liquidity. 39
7.17 Maintenance of Tangible Net Worth 39
7.18 Maintenance of Ratio of Total Indebtedness
to Tangible Net Worth 39
7.19 Restricted Payments 40
7.20 Servicing Transmission 40
7.21 No Amendment or Waiver 40
7.22 Maintenance of Property; Insurance 40
7.23 Further Identification of Collateral 40
7.24 Mortgage Loan Determined to be Defective 40
7.25 Interest Rate Protection Agreements 40
7.26 Certificate of a Responsible Officer of the Borrower 40
Section 8. Events of Default
Section 9. Remedies Upon Default
Section 10. No Duty on Lender's Part
Section 11. Miscellaneous
11.01 Waiver 44
11.02 Notices 44
11.03 Indemnification and Expenses 45
11.04 Amendments 46
11.05 Successors and Assigns 46
11.06 Survival 46
11.07 Captions 46
11.08 Counterparts 46
11.09 Loan Agreement Constitutes Security
Agreement; Governing Law 46
11.10 SUBMISSION TO JURISDICTION; WAIVERS 46
11.11 WAIVER OF JURY TRIAL 47
11.12 Acknowledgments 47
11.13 Hypothecation or Pledge of Collateral 47
11.14 Assignments; Participations 48
11.15 Servicing 48
11.16 Periodic Due Diligence Review 50
11.17 Set-Off 50
11.18 Intent 51
11.19 Replacement by Repurchase Agreement 51
11.20 Entire Agreement 51
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 Underwriting Guidelines
EXHIBIT F Required Fields for Servicing Transmission
EXHIBIT G Required Fields for Mortgage Loan Data Transmission
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Confidentiality Agreement
EXHIBIT J Form of Instruction Letter
MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of June 26, 2003, between
NEW CENTURY MORTGAGE CORPORATION, a California 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 or acquisition of certain conforming and
non-conforming small commercial, mixed use and multifamily Mortgage Loans (as
defined herein), which Mortgage Loans are to be sold or contributed by the
Borrower 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, and which
Mortgage Loans shall secure Advances (as defined herein) to be made by the
Lender hereunder.
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 Borrower's designee provides to mortgage loans which they own in their own
portfolio.
"Advance" shall have the meaning specified in Section 2.01(a) hereof.
"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 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.
"ALTA" means the American Land Title Association.
"Applicable Collateral Percentage" shall mean, 92%.
"Applicable Margin" shall mean 1.75% per annum.
"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.
"Approved Title Insurance Company" shall mean a nationally recognized
title insurance company or any other title insurance company approved by the
Lender in its sole discretion.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form (excluding therefrom the name of the assignee), 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.
"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 substantially in the form of Exhibit H, attached hereto.
"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,
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York, the Custodian or banking and savings and loan institutions in the State of
New York, Connecticut or California or the City of New York or the city or state
in which the Custodian's offices are located are closed, or (iii) a day on which
trading in securities on the New York Stock Exchange or any other major
securities exchange in the United States is not conducted.
"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 voting stock of the Borrower at
any time if after giving effect to such acquisition such Person or Persons owns
twenty percent (20%) or more of such outstanding 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 (a) the product of (x) the Applicable Collateral Percentage and (y)
the outstanding principal balance of such Mortgage Loan, and (b) the product of
(x) 96% and (y) the Market Value; provided, that, 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 ten (10) calendar days (or
if such tenth day is not a Business Day, the next succeeding
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) 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;
(6) 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;
(7) in respect of which the related Mortgagor is the subject of a
bankruptcy proceeding;
(8) as to which the related the Mortgagor has not made the first
contractually due monthly payment thereunder prior to the next
scheduled payment date
(9) which has been subject to this Loan Agreement for more than 180
days;
(10) which was originated more than 60 days prior to the date on which
the initial Advance with respect to the Mortgage Loan was made;
(11) which is 60 or more days past due;
(12) which had an unpaid principal balance at origination of less
than $100,000 or greater than $3,000,000;
(13) which is a fully amortizing, non-yield maintenance loan
("Nonconforming Collateral") and the Collateral Value of such
Nonconforming Collateral,
when added to the Collateral Value of all other Nonconforming
Collateral that secures Advances hereunder exceeds the lesser of
(a) $25,000,000 and (b) 25% of the aggregate outstanding amount
of all Advances;
(14) which is a Wet Loan, and the Collateral Value of such Wet Loan
when added to the Collateral Value of all other Wet Loans that
secure Advances hereunder exceeds $10,000,000; or
(15) which is a Wet Loan as to which all Required Documents have not
been delivered to the Custodian within ten (10) days.
"Commitment Fee" shall have the meaning assigned to such term in
Section 3.04 hereof.
"Contractual Obligation" shall mean as to any Person, any material
provision of any agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound or any material
provision of any security issued by such Person.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
the date hereof, among the Borrower, the Custodian and the Lender, substantially
in the form of Exhibit B hereto, as the same shall be modified and supplemented
and in effect from time to time.
"Custodian" shall mean Deutsche Bank Trust Company Americas, its
successors and permitted assigns.
"Custodian Loan Transmission" shall have the meaning assigned thereto
in the Custodial Agreement.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Dry Loan" shall mean a first lien Mortgage Loan which is underwritten
in accordance with the Underwriting Guidelines and the Mortgage File for which
contains all of the documents specified in Annex 15 of the Custodial Agreement.
"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, 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 on a type of 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, (iii) the Mortgage File
contains all required Mortgage Loan Documents without Material Exceptions unless
otherwise waived by Lender and (iv) such other customary criteria for
eligibility determined by the Lender shall have been satisfied.
"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 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 Borrower is
a member.
"Escrow Agreement" shall mean an escrow agreement or letter, which may
be substantially in the form attached hereto as Exhibit K, substantially 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 will return all funds
which would have been disbursed in connection with such Mortgage Loan.
"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.
"Exception Report" shall mean the exception report prepared by the
Custodian pursuant to the Custodial Agreement.
"Exit Fee" shall have the meaning assigned to such term in Section
3.06 hereof.
"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
primary dealers (other than an Affiliate of the Lender).
"FHLMC" means ▇▇▇▇▇▇▇ Mac, formerly known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.
"FNMA" means ▇▇▇▇▇▇ Mae, formerly known as the Federal National
Mortgage Association, 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.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision, agency or instrumentality 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 or other obligations in respect of a Mortgaged Property.
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.
"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 evidenced by a
note, bond, debenture or similar instrument; provided that, for the purpose of
calculating Indebtedness, the following shall not be included:
(A) debt obligations consisting of structured securities for which recourse is
solely to the assets underlying such structured securities; (B) obligations of
such Person to pay another Person any sums collected and held by the subject
Person (as loan servicer, escrow agent or collection agent) for the account of
such other Person; and (C) intercompany indebtedness.
"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.
"Instruction Letter" shall mean a letter agreement between the
Borrower and each Subservicer substantially in the form of Exhibit J attached
hereto, in which such Persons acknowledge the Lender's security interest in the
Mortgage Loans, and agree to remit any collections with respect to the Mortgage
Loans as the Lender may so direct from time to time, which Instruction Letter
may be delivered by Lender to such Subservicer in its sole discretion.
"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" means a letter substantially in the form
attached hereto as Exhibit K, or a letter of indemnification from an Approved
Title Insurance Company addressed to a Borrower with coverage that is
customarily acceptable to Persons engaged in the origination of mortgage loans,
identifying the Settlement Agent covered thereby, which may be in the form of a
blanket letter of indemnification, acceptable to the Lender.
"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 Payment Date of the next
succeeding month, and (ii) thereafter, each period commencing on the Payment
Date of a month and ending on the calendar day prior to the Payment 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 Data Transmission, 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
Borrower and reasonably acceptable to the Lender.
"Lender" shall have the meaning provided in the heading hereof.
"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 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
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1.00 - LIBO Reserve Requirements
The LIBO Rate shall be calculated each Funding Date and Payment 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 it 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 and the Custodial 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 not more than 12
months prior to the origination of the Mortgage Loan, the purchase price of the
Mortgaged Property.
"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 with respect to one or more of the Mortgage Loans 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 originator/servicer is not in default
under a revolving debt facility 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 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.
"Material Exception" shall have the meaning assigned thereto in the
Custodial Agreement.
"Maximum Credit" shall mean $100,000,000.
"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 Mortgage Loan.
"Mortgage" shall mean with respect to a Mortgage Loan, the mortgage,
deed of trust or other instrument, which creates a first lien on the fee simple
or a leasehold estate in such real property securing 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 mortgage 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 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: (i) the
Mortgage Loan number, (ii) the Mortgagor's name, (iii) the original principal
amount of the Mortgage Loan and (iv) the current principal balance of the
Mortgage Loan.
"Mortgage Loan Data Transmission" shall mean a computer-readable
magnetic or other electronic format incorporating the fields identified on
Exhibit G.
"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 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.
"Mortgagee" means either 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 Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"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.
"Non-Utilization Fee" shall have the meaning assigned to such term in
Section 3.05 hereof.
"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).
"Payment Date" shall mean the fifth (5th) day of each calendar month,
or if such day is not a Business Day, the next succeeding Business Day.
"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 in respect of the real property
securing a Mortgage Loan, 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; and (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.
"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).
"Plan" shall mean an employee benefit or other plan established or
maintained by either 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 3% per annum, plus (a) the
interest rate otherwise applicable to such Advance or other amount, or (b) if no
interest rate is otherwise applicable, (i) the LIBO Rate plus (ii) 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.
"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 FNMA
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; provided, however, the Lender shall have the right
to reject an originator (in its reasonable discretion) by delivering written
notice to the Borrower 15 days prior to ceasing to accept Collateral originated
by such person.
"Regulations T, U and X" shall mean Regulations 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 Annex 15
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.
"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.
"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 Borrower and Lender dated the date hereof, outlining rights and
obligations with respect to securitizations and whole loan sales of Mortgage
Loans subject to this Loan Agreement from time to time.
"Servicer" shall mean the Borrower in its capacity as servicer or
master servicer of the Mortgage Loans.
"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 a 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.
"Servicing Transmission" shall mean a computer-readable magnetic or
other electronic format acceptable to the parties containing the information
identified on Exhibit F.
"Settlement Agent" shall mean, with respect to any Wet Loan, the
Person specified in the Notice of Borrowing and Pledge (which may be a title
company, escrow company or attorney in accordance with local law and practice in
the jurisdiction where the
related Wet Loan is being originated) to whom the Borrower has advanced the
amounts necessary to fund the related Wet Loan and (i) who is covered by an
Insured Closing Letter (except to the extent such document is not customarily
provided in the state in which the related Mortgaged Property is located) and
(ii) who the Lender has not designated as an unapproved settlement agent in a
written notice to the Borrower.
"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.
"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 June 25, 2004, or such earlier date on
which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"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.
"Underwriting Guidelines" shall mean collectively, the underwriting
guidelines of Borrower attached as Exhibit E hereto as amended from time to time
in accordance with Section 7.09.
"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 as of the
related Funding Date does not contain all the documents specified in Annex 15 to
the Custodial Agreement in the Mortgage File, which in order to be deemed to be
an Eligible Mortgage Loan shall have the following additional characteristics:
() the proceeds thereof have been funded by the Borrower 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;
() 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;
() the proceeds thereof have not been returned to the Borrower from
the Settlement Agent for such Wet Loan and the Borrower has not learned
that such Wet Loan will be rescinded by the Mortgagor; and
() upon recordation such Mortgage Loan will constitute a first lien
on the premises described therein.
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, an
"Advance"; collectively, the "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 Credit (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) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder.
(c) In no event shall an Advance be made when any Default or Event
of Default has occurred and is continuing.
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.
(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 and an irrevocable Notice of Borrowing and
Pledge substantially in the form of Exhibit D hereto (a "Notice of Borrowing and
Pledge"), appropriately completed, which must be received no later than 5:00 p.m
(eastern time) two Business Days prior to the requested Funding Date. Such
Notice of Borrowing and Pledge shall 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. 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. 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 Recission.
(b) Pursuant to the Custodial Agreement, the Custodian shall review
any Required Documents delivered prior to 12:00 p.m. (eastern time) on any
Business Day in time to include the related Mortgage Loans in such Borrowing
Base determination on the next day. Not later than 3:00 p.m. (eastern time) on
each day on which an Advance is made or there is a change in the Mortgage Loans
held by the Custodian, the Custodian shall deliver to the Lender, via electronic
transmission acceptable to the Lender, the Custodian Loan Transmission and an
Exception Report 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 number of days the related Mortgage Loan
Documents have been released pursuant to Section 5(a) or 5(b) of the Custodial
Agreement. From time to time, 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 the form of
Exhibit H. In addition, the Custodian shall deliver to the Lender no later than
4:00 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 JPMorgan Chase Bank at Four New York Plaza, Ground Floor,
Outsourcing Department, New York, New York 10004, Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇ for the account of Greenwich Capital Markets (telephone number (212)
▇▇▇-▇▇▇▇), as agent for the Lender by overnight delivery using a nationally
recognized 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, not later than 5:00 p.m. (eastern
time) on the requested Funding Date make the requested Advance provided that
such Advance does 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, via wire transfer (pursuant to wire transfer instructions provided
by the Borrower on or prior to such Funding Date), in the aggregate amount of
such borrowing in funds immediately available to the Borrower.
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
(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 the Borrower shall, at its option,
either prepay all outstanding Advances or pay interest on such Advances at a
rate per annum as reasonably determined by the Lender taking into account the
increased cost to the Lender of maintaining 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).
(b) No later than the Business Day prior to each Payment 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. The calculation on
such report shall be based upon information provided in the Servicing
Transmission and the report provided pursuant to Section 7.20.
(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 Payment 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. The interest rate applicable to the
Advances hereunder shall be reset on each Funding Date and on each Payment Date.
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. In accordance with Section
2.03(b), the Lender shall deliver to the Borrower a Borrowing Base Certificate
in the form attached hereto as Exhibit H, 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 calendar day of the previous month. 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 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 on each Payment Date. 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 the
Borrower intends to prepay an Advance in whole or in part from any source, the
Borrower shall give two (2) Business Days' prior written notice thereof to the
Lender. 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 on any day
which is not a Payment Date, 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 re-employment 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. This Section 2.07 shall survive
termination of this Loan Agreement and payment of the Note.
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 taxes on the Lender's net income) 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 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; or
(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.
2.09 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 Data Transmission as such Mortgage Loan Data Transmission may be amended
from time to time.
Section 3. Payments; Computations; Taxes; Commitment Fee;
Non-Utilization Fee; Exit 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 JPMorgan Chase 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
(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 (excluding
franchise taxes and taxes on the net income of the Lender).
(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. The Borrower agrees to pay to the Lender, a
commitment fee equal to $400,000, such payment to be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Lender no later than the
Effective Date. The Lender may, in its sole discretion, net such Commitment Fee
from the proceeds of any Advance made to the Borrower. The Lender hereby agrees
to refund to the Borrower a pro rata portion of the Commitment Fee for any
period during which the Lender has invoked its right not to lend pursuant to
Section 5.02(i).
3.05 Non-Utilization Fee. On the Payment Dates in May, August,
November and February and on the Termination Date, the Lender shall determine
the average quarterly utilization during the preceding three calendar months (or
with respect to the Termination Date, during the period from the date through
which the last non-utilization fee calculation has been made to the Termination
Date) by the Borrower by dividing (a) the sum of the Advances outstanding on
each day during such period by (b) the number of days in such period. If such
average amount determined for any period as a percentage of the Maximum Credit
(the "Utilization Percentage") is less than 50% (or, with respect to the second
quarter following the effective date of the Facility, 25%) the Borrower shall
pay to the Lender on such Payment Date or Termination Date, a non-utilization
fee equal to the product of (i) 0.25% per annum, times (ii) the Maximum Credit,
times (iii) 1 minus the Utilization Percentage (the "Non-Utilization Fee). The
Non-Utilization Fee shall not be payable with respect to the first quarter
following the effective date. All payments shall be made to the Lender in
Dollars, in immediately available funds, without deduction, setoff or
counterclaim. The Lender may, in its sole discretion, net such Non-Utilization
Fee from the proceeds of any Advance made to the Borrower hereunder, if not
previously paid by the Borrower. Notwithstanding the foregoing, the Borrower
shall not be required to pay the Non-Utilization Fee during any period during
which the Lender has invoked its right not to lend pursuant to Section 5.02(i).
3.06 Exit Fee. In the event that any of the Mortgage Loans subject to
this Agreement are sold to a third party buyer (other than (i) the Lender, any
affiliate of the Lender or ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc. or (ii) pursuant
to a transaction in which the Lender or any affiliate of the Lender is acting as
the exclusive broker on terms acceptable to the Lender or are securitized
pursuant to a transaction in which the Lender or its affiliate is an underwriter
and which securitization commences within 90 days following the date such
Mortgage Loans are removed from the terms of this Loan Agreement), the Borrower
shall pay the Lender a fee equal to 0.175% of the outstanding principal balance
of such Mortgage Loan as of the date of the sale to such third party buyer or
securitization. The Lender may in its sole discretion, net such exit fee from
the proceeds of any Advance made to the Borrower.
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.
(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;
(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) any purchase agreements relating to any or all of the Mortgage
Loans;
(vi) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(vii) 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
(viii) 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 ▇▇▇▇ its computer records and
tapes to evidence the security interests granted to the Lender hereunder.
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.
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, (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, or (iii) reincorporate or reorganize
under the laws of another jurisdiction 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 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
(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 part 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 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 (whether matured or unmatured), such
application to be in such order as the Lender shall elect. 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 a Default shall occur and be continuing, the
Lender may, at its option, enter into one or more Interest Rate Protection
Agreements covering all or a portion of the Mortgage Loans pledged to the Lender
hereunder, and the Borrower shall be responsible for all 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 such Interest Rate Protection
Agreements; including without limitation any losses resulting from such Interest
Rate Protection Agreements. 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,
presentments, protests, 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 and 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 under this Section 4.07, 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 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. Because the Borrower recognizes that
it may not be possible to purchase or sell all of the Collateral on a particular
Business Day, or in a transaction with the same purchaser, or in the same manner
because the market for such Collateral may not be liquid, the Borrower agrees
that liquidation of the Collateral does not require a public purchase or sale
and that a good faith private purchase or sale shall be deemed to have been made
in a commercially reasonable manner. Accordingly, the Lender may elect, in its
sole discretion, the time and manner of liquidating any Collateral and nothing
contained herein shall (A) obligate the Lender to liquidate any Collateral on
the occurrence of an Event of Default or to liquidate all Collateral in the same
manner or on the same Business Day or (B) constitute a waiver of any of the
Lender's rights or remedies.
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.
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.
(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
reasonably 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) 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.
(f) Filings, Registrations, Recordings. (i) 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; and
(ii) UCC lien searches in such jurisdictions as shall be applicable
to the Borrower and the Collateral, the results of which shall be
satisfactory to the Lender.
(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 Borrower's current Underwriting Guidelines for Mortgage
Loans and the Lender shall have received a copy thereof.
(j) Consents, Licenses, Approvals, etc. The Lender shall have been
provided access to and the opportunity to review 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) Instruction Letter. The Lender shall have received an
Instruction Letter in the form attached hereto as Exhibit J executed by the
Borrower.
(m) Other Documents. The Lender shall have received such other
documents as the Lender may reasonably request.
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 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;
(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 review of the Mortgage Loan Documents for each
prior 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 10% of the aggregate
outstanding principal balance of Mortgage Loans pledged hereunder, then the
Borrower shall, upon reasonable 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) an event or events resulting in the inability of the
Lender to finance any Advances with traditional counterparties at
rates which would have been reasonable prior to the occurrence of such
catastrophic event or events or 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 or otherwise comply with the terms of
this Loan Agreement; or
(ii) any other event beyond the control of the Lender which
the Lender reasonably determines may result in the Lender's inability
to perform its obligations under this Loan Agreement including,
without limitation, acts of God, strikes, lockouts, riots, acts of war
or terrorism, epidemics, nationalization, expropriation, currency
restrictions, fire, communication line failures, computer viruses,
power failures, earthquakes, or other disasters of a similar nature to
the foregoing;.
(j) if any Mortgage Loans to be pledged hereunder were not
originated 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;
(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; and
(l) the Lender shall have received, no later than 10:00 a.m. three (3)
days prior to the requested Funding Date, an Instruction Letter, executed
by the Borrower, with the related Servicing Agreement (as defined in
Section 11.15(c)) attached thereto, which such Servicing Agreement shall be
in form and substance acceptable to Lender.
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 conducted 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 condition, or prospects and (d) is in
compliance in all material respects 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, 2002 with the opinion thereon of KPMG, 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 one year period
ending December 31, 2002, 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, 2002 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 their respective
properties 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
as to which there is a reasonable likelihood of a materially adverse effect or
decision.
6.04 No Breach. Neither (a) the execution and delivery by the
Borrower of the Loan Documents nor (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, 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.
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 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.
(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 payee or last endorsee, 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 on the Effective Date is located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the chief operating office 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 at the
direction 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 at the direction 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 all material respects, 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, would 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 (other than general economic trends and conditions affecting
the national economy generally).
6.16 Tangible Net Worth; Liquidity. The Borrower's Tangible Net
Worth is not less than $250,000,000 and the Borrower has Cash Equivalents in an
amount not less than $20,000,000. The Borrower shall at all times have cash,
Cash Equivalents and unused borrowing capacity on unencumbered assets that could
be drawn against (taking into account required haircuts) under committed
warehouse and repurchase facilities in an amount equal to not less than
$30,000,000. The ratio of the Borrower's Total Indebtedness to Tangible Net
Worth is not greater than 10:1.
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 is currently not 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 interests 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, as
applicable, with respect to the Mortgage Loans have been, in all material
respects legal, proper, prudent and customary in the 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 1 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 greater than the fair value of the liabilities
(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, debts 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 Insured Closing Letter. With respect to each Wet 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 made
available to the Lender upon request.
6.27 Escrow Agreement. With respect to each Wet Loan, the Settlement
Agent has executed an escrow agreement or letter stating that in the event of a
Rescission of 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 remitted to 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 30 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, 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 and to the omission of
footnotes);
(ii) as soon as available and in any event within 50 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 and to the omission of footnotes);
(b) as soon as available and in any event within 105 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):
(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 (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 [Reserved]
7.03 Existence, Etc. The Borrower 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 if after giving effect thereto, no Default would exist hereunder.
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 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;
(c) 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
$1,000,000 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;
(d) upon the entry of an uninsured judgment or decree in an amount
in excess of $1,000,000;
(e) that questions or challenges the validity or enforceability of
any of the Loan Documents; or
(f) in which the amount in controversy is $2,000,000 or more,
but less than $5,000,000, and as to which, in Borrower's
reasonable judgment, the Borrower is not reasonably likely to
prevail, or in any event, in which the amount in controversy is
$5,000,000 or more.
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
requesting any Advance with respect to any Mortgage Loan which is affected by
such modification. In the event that the Lender determines, in its sole
discretion, that any such modification is not acceptable, the Lender will have
no obligation to finance any Mortgage Loans that are originated pursuant to the
modified Underwriting Guidelines. In the event that the Borrower makes any
amendment or modification to the Underwriting Guidelines, the Borrower shall
promptly deliver to the Lender a complete copy of the amended or modified
Underwriting Guidelines.
7.10 Lines of Business. The Borrower will not, without the Lender's
consent, which shall not be unreasonably withheld, engage to any substantial
extent in any line or lines of business activity which is materially different
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, purchase, 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 the Collateral except for 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 and
the Borrower shall be permitted to conduct secondary market sales and
securitizations of the mortgage loans it owns in its portfolio on terms and
conditions reasonably determined by the Borrower.
7.15 Limitation on Distributions. Following a Default of Event of
Default, 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 $20,000,000. The Borrower shall insure that it has Cash Equivalents and
unused borrowing capacity on unencumbered assets that could be drawn against
(taking into account required haircuts) under committed warehouse and repurchase
facilities in an amount equal to not less than $30,000,000.
7.17 Maintenance of Tangible Net Worth. The Borrower shall not
permit Tangible Net Worth at any time to be less than $250,000,000.
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 10:1.
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 on a monthly basis no later than 11:00 a.m. eastern time two (2) Business
Days prior to each Payment Date (or such other day requested by Lender) (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, 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 used 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.
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 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.
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 Section 6.23 or Schedule 1 which shall be considered solely
for the purpose of determining the Collateral Value of the Mortgage Loans;
unless (i) the Borrower shall have made any such representations and
warranties with knowledge that they were materially false or misleading at
the time made or (ii) any such representations and warranties have been
determined by the Lender in its reasonable discretion to be materially
false or misleading on a regular basis); 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, or Section 7.22 (b) 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) final judgment or judgments for the payment of money in
excess of $2,000,000 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, or taking of possession
by, 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, liquidation, dissolution, arrangement or 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 Loan 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 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, would 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 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 or any Subsidiary of the Borrower shall default
under, or fail to perform as required under, or shall otherwise materially
breach the terms of any instrument, agreement or contract between the
Borrower or such other entity, on the one hand, and the Lender or any of
the Lender's Affiliates on the other; or the Borrower or any Subsidiary of
the Borrower shall default under, or fail to perform as requested under,
the terms of any repurchase agreement, loan and security agreement or
similar credit facility or agreement for borrowed funds in an amount of
$10,000,000 or more entered into by the Borrower or such other entity and
any third party, which default or failure entitles any party to require
acceleration or prepayment of any indebtedness thereunder.
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.
(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.
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, and its Affiliates and
their respective officers, directors, employees, agents and advisors (each an
"Indemnified Party") harmless from and indemnify any Indemnified Party against
all liabilities, losses, damages, judgments, costs and expenses of any kind
which may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, the "Costs") 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 any Indemnified Party's gross negligence or willful misconduct. Without
limiting the generality of the foregoing, the Borrower agrees to hold any
Indemnified Party harmless from and indemnify such Indemnified Party against all
Costs with respect to all Mortgage Loans relating to or arising out of any
violation or alleged violation of any environmental law, rule or regulation or
any consumer credit laws, including without limitation laws with respect to
unfair or deceptive lending practices and predatory lending practices, the Truth
in Lending Act and/or the Real Estate Settlement Procedures Act, that, in each
case, results from anything other than such Indemnified Party's gross negligence
or willful misconduct. In any suit, proceeding or action brought by an
Indemnified Party 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 such Indemnified Party 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 an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party's costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party'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 and (ii) all the due diligence, inspection,
testing and review costs and expenses incurred by the Lender with respect to
Collateral under this Loan Agreement, including, but not limited to, those costs
and expenses incurred by the Lender pursuant to Sections 11.03(a), 11.14 and
11.16 hereof. The Lender may net any expense amounts or fees due to the Lender
or its Affiliates against any Advances otherwise to be made to the Borrower.
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 ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NONEXCLUSIVE PERSONAL 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 DELIVERY), 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, 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 only with the prior written consent of the Lender.
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;
provided that, the Lender shall not assign its obligation to make Advances
hereunder to any third party which is not an Affiliate of the Lender without the
prior consent of the Borrower.
(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 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 I) 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 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. The Lender shall reimburse the Borrower for any of
the out of pocket costs incurred by the Borrower pursuant to this Section
11.14(d).
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 with a properly executed
Instruction Letter 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. Initially, the Borrower shall not employ a Subservicer.
(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. In addition, the Borrower
shall provide to the Lender an Instruction Letter from the Borrower to the
effect that upon the occurrence of an Event of Default, the Lender may terminate
any Subservicer or Servicing Agreement and direct that collections with respect
to the Mortgage Loans be remitted in accordance with the Lender's instructions.
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.
(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 three (3) 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 at reasonable times 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 by the
Borrower; provided that, prior to the occurrence of a Default or Event of
Default, such costs and expenses shall not exceed $20,000 in any calendar year
unless the Lender shall have determined that in good faith that any change in
the Borrower or the Collateral shall require additional due diligence.
11.17 Set-Off. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, 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
thereof to or for the credit or the account of the Borrower. The Lender may
set-off cash, the proceeds of the liquidation of any Collateral and all other
sums or obligations owed by the Lender or its Affiliates to Borrower against all
of Borrower's obligations to the Lender or its Affiliates, whether under this
Loan Agreement or under any other agreement between the parties or between
Borrower and any affiliate of the Lender, or otherwise, whether or not such
obligations are then due, without prejudice to the Lender's or its Affiliate's
right to recover any deficiency. 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.
11.19 Replacement by Repurchase Agreement. The Borrower hereby
acknowledges and agrees that this Loan Agreement may at any time and without any
further cost to the Borrower, in the sole discretion of the Lender, be replaced
by a repurchase facility with substantially similar terms as those contained in
this Loan Agreement. The Borrower hereby agrees to take such action and execute
such documents and instruments as is necessary to effectuate such conversion.
11.20 Entire Agreement. This Loan 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 hereto.
[SIGNATURE PAGES FOLLOW]
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.
NEW CENTURY MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Title: Senior Vice President
Address for Notices:
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Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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e-mail: ▇▇▇▇▇▇@▇▇▇▇.▇▇▇
With a copy to: Legal Department
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇@▇▇▇▇.▇▇▇
LENDER
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GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.
By : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Vice President
Address for Notices:
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With a copy to:
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇