EXHIBIT 10.3
________________________________________________
________________________________________________
WAREHOUSING CREDIT AND SECURITY AGREEMENT
(SINGLE-FAMILY MORTGAGE LOANS)
BETWEEN
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
_____________________________
Dated as of January 19, 1996
________________________________________________
________________________________________________
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS............................................................ 1
1.1 Defined Terms..................................................... 1
1.2 Other Definitional Provisions..................................... 15
2. THE CREDIT............................................................. 15
2.1 The Warehousing Commitment........................................ 15
2.2 Procedures for Obtaining Advances................................. 17
2.3 Notes............................................................. 19
2.4 Interest.......................................................... 20
2.5 Principal Payments................................................ 22
2.6 Expiration of Commitment.......................................... 25
2.7 Method of Making Payments......................................... 25
2.8 Commitment Fees................................................... 26
2.9 Warehousing Fees.................................................. 26
2.10 Miscellaneous Charges............................................. 26
2.11 Interest Limitation............................................... 27
2.12 Increased Costs; Capital Requirements............................. 27
3. COLLATERAL............................................................. 29
3.1 Grant of Security Interest........................................ 29
3.2 Release of Security Interest in Collateral........................ 32
3.3 Delivery of Additional Collateral or Mandatory Prepayment......... 34
i
3.4 Release of Collateral........................................... 34
3.5 Collection and Servicing Rights................................. 35
3.6 Return of Collateral at End of Commitment....................... 35
4. CONDITIONS PRECEDENT................................................. 36
4.1 Initial Advance................................................. 36
4.2 Each Advance.................................................... 38
5. REPRESENTATIONS AND WARRANTIES....................................... 40
5.1 Organization; Good Standing; Subsidiaries....................... 40
5.2 Authorization and Enforceability................................ 40
5.3 Approvals....................................................... 41
5.4 Financial Condition............................................. 41
5.5 Litigation...................................................... 42
5.6 Compliance with Laws............................................ 42
5.7 Regulations G and U............................................. 43
5.8 Investment Company Act.......................................... 43
5.9 Payment of Taxes................................................ 43
5.10 Agreements...................................................... 43
5.11 Title to Properties............................................. 44
5.12 ERISA........................................................... 44
5.13 Eligibility..................................................... 45
5.14 Place of Business............................................... 45
5.15 Special Representations Concerning Collateral................... 45
5.16 Servicing....................................................... 48
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5.17 Special Representations Concerning Pledged Servicing Contracts.. 48
6. AFFIRMATIVE COVENANTS................................................ 51
6.1 Payment of Notes................................................ 51
6.2 Financial Statements and Other Reports.......................... 51
6.3 Maintenance of Existence; Conduct of Business................... 53
6.4 Compliance with Applicable Laws................................. 54
6.5 Inspection of Properties and Books.............................. 54
6.6 Notice.......................................................... 54
6.7 Payment of Debt, Taxes, etc..................................... 55
6.8 Insurance....................................................... 56
6.9 Closing Instructions............................................ 56
6.10 Subordination of Certain Indebtedness........................... 56
6.11 Other Loan Obligations.......................................... 57
6.12 Use of Proceeds of Advances..................................... 57
6.13 Special Affirmative Covenants Concerning Collateral............. 57
6.14 Servicing Collateral Value...................................... 59
7. NEGATIVE COVENANTS................................................... 59
7.1 Contingent Liabilities.......................................... 59
7.2 Sale or Pledge of Servicing Contracts........................... 59
7.3 Merger; Sale of Assets; Acquisitions............................ 60
7.4 Deferral of Subordinated Debt................................... 60
7.5 Loss of Eligibility............................................. 60
iii
7.6 Debt to Adjusted Tangible Net Worth............................. 59
7.7 Minimum Adjusted Tangible Net Worth............................. 60
7.8 Liquidity....................................................... 60
7.9 Acquisition of Recourse Servicing Contracts..................... 60
7.10 Special Negative Covenants Concerning Collateral................ 61
8. DEFAULTS; REMEDIES................................................... 61
8.1 Events of Default............................................... 61
8.2 Remedies........................................................ 67
8.3 Application of Proceeds......................................... 71
8.4 Lender Appointed Attorney-in-Fact............................... 72
8.5 Right of Set-Off................................................ 72
9. NOTICES.............................................................. 73
10. REIMBURSEMENT OF EXPENSES; INDEMNITY................................. 74
11. FINANCIAL INFORMATION................................................ 75
12. MISCELLANEOUS........................................................ 75
12.1 Terms Binding Upon Successors; Survival of Representations...... 75
12.2 Assignment...................................................... 76
12.3 Amendments...................................................... 76
12.4 Governing Law................................................... 76
12.5 Participations.................................................. 76
12.6 Relationship of the Parties..................................... 76
12.7 Severability.................................................... 77
iv
12.8 Operational Reviews........................................... 77
12.9 Consent to Credit References.................................. 78
12.10 Consent to Jurisdiction....................................... 78
12.11 Counterparts.................................................. 78
12.12 Entire Agreement.............................................. 78
12.13 Waiver of Jury Trial.......................................... 79
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EXHIBITS
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Exhibit A-1 Warehousing Promissory Note
Exhibit A-2 Working Capital Promissory Note
Exhibit B (INTENTIONALLY OMITTED)
Exhibit C-SF Request for Advance Against Single Family Mortgage Loans
Exhibit C-WC Working Capital Advance Request
Exhibit D-SF Procedures and Documentation for Warehousing Single Family
Mortgage Loans
Exhibit E-1 Schedule of Servicing Portfolio
Exhibit E-2 Schedule of Pledged Servicing Contracts
Exhibit F Subordination of Debt Agreement
Exhibit G Subsidiaries
Exhibit H Legal Opinion
Exhibit I-SF Officer's Certificate
Exhibit J Schedule of Existing Warehouse Lines
Exhibit K-1 Funding Bank Agreement (Wire)
Exhibit K-2 Funding Bank Agreement (Checks)
Exhibit L Commitment Summary Report
Exhibit M Bailee Pledge Agreement
Exhibit N Litigation Matters
vi
THIS WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of January 19,
1996, between NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the
"Company"), having its principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation (the "Lender"), having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Company and the Lender desire to set forth herein the terms
and conditions upon which the Lender shall provide warehouse financing and
working capital financing to the Company;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or elsewhere in this
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Agreement (including the Exhibits hereto) shall have the following meanings:
"Acknowledgment Agreement" has the meaning set forth in Section 8.2(i)
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hereof.
"Adjustable Rate Mortgage Loan" means a Single-family Mortgage Loan that
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bears interest at a fluctuating rate and that is eligible for purchase by an
Investor.
"Adjusted Servicing Portfolio" means, for any Person, the Servicing
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Portfolio of such Person, but excluding the principal balance of Mortgage Loans
included in the Servicing Portfolio at such date (a) which are past due for
principal or interest for ninety (90) days or more or are in foreclosure, (b)
with respect to which such Person is obligated to repurchase delinquent Mortgage
Loans or indemnify the holder of the Mortgage Loans serviced thereunder against
losses as a result of defaults on the Mortgage Loans at any time during the term
of such Mortgage Loans, without proof of fraud or misrepresentation, (c) for
which the Servicing Contracts are not owned by such Person free and clear of all
Liens (other than in favor of the Lender), or (d) which are serviced by the
Company for others under subservicing arrangements.
1
"Adjusted Tangible Net Worth" means with respect to any Person at any date,
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the Tangible Net Worth of such Person at such date, excluding capitalized excess
servicing fees and capitalized servicing rights, plus one percent (1%) of the
----
Adjusted Servicing Portfolio, and plus deferred taxes arising from capitalized
----
excess servicing fees.
"Advance" means a disbursement by the Lender pursuant to Article 2 of this
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Agreement. For the purposes hereof, the term "Advances" shall mean Warehousing
Advances, Wet Settlement Advances, Working Capital Advances and readvances of
funds previously advanced to the Company and repaid to the Lender.
"Advance Balance" means, with respect to any Warehousing Advance (and the
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related Pledged Mortgage(s)), the original amount of such Warehousing Advance
minus all principal payments and prepayments thereof.
"Advance Request" means a Warehousing Advance Request or a Working Capital
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Advance Request.
"Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules
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and Regulations under the Exchange Act.
"Agreement" means this Warehousing Credit and Security Agreement (Single
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Family Mortgage Loans), either as originally executed or as it may from time to
time be supplemented, modified or amended.
"Appraisal" means a certificate of independent certified public accountants
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or independent financial consultants selected by the Company and reasonably
satisfactory to the Lender as to the Appraised Value of the Servicing Contracts
included in the Servicing Collateral, which shall evaluate such Servicing
Contracts based upon reasonably determined categories of the Mortgage Loans
contained therein and give effect to any subservicing agreement to which any
such Mortgage Loan is or will be subject, which certificate shall be in form,
substance and detail reasonably satisfactory to the Lender.
"Appraised Value" means, at the date of any Appraisal, with respect to the
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Servicing Contracts included in the Servicing Collateral, the fair market value
of the Company's right to
2
service Mortgage Loans pursuant to such Servicing Contracts, calculated as a
percentage of the unpaid principal amount of each category of Mortgage Loans
serviced pursuant thereto.
"Approved Custodian" means a pool custodian or other Person which is deemed
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acceptable to the Lender from time to time in its sole discretion to hold a
Mortgage Loan for inclusion in a Mortgage Pool or to hold a Mortgage Loan as
agent for an Investor who has issued a Purchase Commitment for such Mortgage
Loan.
"Bailee Pledge Agreement" has the meaning set forth in Section 2.2(b)
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hereof.
"Business Day" means any day excluding Saturday or Sunday and excluding any
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day on which national banking associations are closed for business.
"Cash Collateral Account" means a demand deposit account maintained at the
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Funding Bank in the name of the Lender and designated for receipt of the
proceeds of the sale or other disposition of the Collateral.
"Closing Date" means January 19, 1996.
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"Collateral" has the meaning set forth in Section 3.1 hereof.
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"Collateral Documents" has the meaning set forth in Section 2.2(a) hereof.
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"Collateral Value" means (a) with respect to any Mortgage Loan as of the
----------------
date of determination, the lesser of (i) the amount of any Advance made against
such Mortgage Loan under Section 2.1(c) hereof; or (ii) the Fair Market Value of
such Mortgage Loan; or (b) in the event Pledged Mortgages have been exchanged
for Pledged Securities, the aggregate Fair Market Value of the Mortgage Loans
backing such Pledged Securities; or (c) with respect to cash, the amount of such
cash.
"Commitment" has the meaning set forth in Section 2.1(a) hereof.
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3
"Commitment Amount" means Twenty-One Million One Hundred Thousand Dollars
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($21,100,000).
"Commitment Fee" means the Warehousing Commitment Fee or the Working
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Capital Commitment Fee.
"Committed Purchase Price" means for a Mortgage Loan the product of the
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Mortgage Note Amount multiplied by (a) the price (expressed as a percentage) as
set forth in or calculated in accordance with the parameters set forth in a
Purchase Commitment for such Mortgage Loan or for a pool of Mortgage Loans in
which the Company intends to include such Mortgage Loan, or (b) in the event
such Mortgage Loan is to be used to back a Mortgage-backed Security for which a
Purchase Commitment has been issued to the Company, the price (expressed as a
percentage) as set forth in a Purchase Commitment for such Mortgage-backed
Security.
"Company" has the meaning set forth in the first paragraph of this
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Agreement.
"Conforming Mortgage Loan" means a First Mortgage Loan which is either (a)
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an FHA insured (other than a HUD 203(K) Mortgage Loan or Title I Mortgage Loan)
or VA guaranteed Mortgage Loan or (b) a Conventional Mortgage Loan which is
underwritten substantially in accordance with FNMA or FHLMC underwriting
standards and the principal amount of which is less than or equal to the maximum
amount eligible for purchase by FNMA or FHLMC.
"Conventional Mortgage Loan" means a First Mortgage Loan, other than an FHA
--------------------------
insured or VA guaranteed Mortgage Loan.
"Debt" means, with respect to any Person, at any date (a) all indebtedness
----
or other obligations of such Person which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; provided that for purposes of this Agreement, there
shall be excluded from Debt at any date loan loss reserves, Subordinated Debt
not due within one year of such date, and deferred taxes arising from
capitalized excess servicing fees.
4
"Default" means the occurrence of any event or existence of any condition
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which, but for the giving of Notice, the lapse of time, or both, would
constitute an Event of Default.
"Depository Benefit" shall mean the compensation received by the Lender,
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directly or indirectly, as a result of the Company's maintenance of Eligible
Balances with a Designated Bank.
"Designated Bank" means any bank(s) designated from time to time by the
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Lender to be a Designated Bank with whom the Lender has an agreement under which
the Lender can receive a Depository Benefit.
"Eligible Balances" means all funds of or maintained by the Company and its
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Subsidiaries in accounts at a Designated Bank, less balances to support fees,
interest or other amounts that would otherwise be payable to the Designated
Bank, reduction in interest payable under the RFC Conduit Credit Agreement or
other loan agreements to which the Company and the Lender are parties, float,
reserve requirements, Federal Deposit Insurance Corporation insurance premiums
and such other reductions as may be imposed by governmental authorities from
time to time.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an Approved
----------------------
Custodian has issued its initial certification (on the basis of which a Pledged
Security is to be issued), (b) there exists a Purchase Commitment covering such
Pledged Security, and (c) such Pledged Security will be delivered to the Lender.
"ERISA" means the Employee Retirement Income Security Act of 1974 and all
-----
rules and regulations promulgated thereunder, as amended from time to time and
any successor statute.
"Event of Default" means any of the conditions or events set forth in
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Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
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time to time, and any successor statute.
"Fair Market Value" means at any date with respect to any Mortgage Loan
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covered by a valid Purchase Commitment, the Committed Purchase Price, or in the
absence of a valid Purchase Commitment for a Mortgage Loan or the related
Mortgage-backed
5
Security (if such Mortgage Loan is to be used to back a Mortgage-backed
Security), (a) with respect to Conforming Mortgage Loans and Jumbo Mortgage
Loans, the market price (expressed as a percentage of the outstanding principal
balance) for thirty (30) day mandatory future delivery of such Mortgage Loan or
Mortgage-backed Security published by ▇▇▇▇▇▇-▇▇▇▇▇▇, Inc. on its MoneyCenter
system or, if not so published, the average bid price (expressed as a percentage
of the outstanding principal balance) quoted in writing to the Lender as of the
computation date by any two nationally recognized dealers selected by the Lender
who at the time are making a market in similar Mortgage Loans or Mortgage-backed
Securities, multiplied, in the case of Mortgage Loans, by the outstanding
principal balance thereof and, in the case of Mortgage-backed Securities, by the
product of the pool factor of such Mortgage-backed Security times the face
amount of such Mortgage-backed Security, and (b) with respect to Nonconforming
Mortgage Loans or the related Mortgage-backed Security (if such Nonconforming
Mortgage Loan is to be used to back a Mortgage-backed Security), the market
price for such Nonconforming Mortgage Loan or Mortgage-backed Security
determined by the Lender based on market data for similar Nonconforming Mortgage
Loans or Mortgage-backed Securities and such other criteria as the Lender
reasonably deems appropriate.
"FHA" means the Federal Housing Administration and any successor thereto.
---
"FHLMC" means the Federal Home Loan Mortgage Corporation and any successor
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thereto.
"FICA" means the Federal Insurance Contributions Act.
----
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement
------
Act of 1989, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"First Mortgage" means a Mortgage which constitutes a first Lien on the
--------------
property covered thereby.
"First Mortgage Loan" means a Mortgage Loan secured by a First Mortgage.
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6
"FNMA" means the Federal National Mortgage Association and any successor
----
thereto.
"Funding Bank" means The First National Bank of Chicago or any other bank
------------
designated from time to time by the Lender.
"Funding Bank Agreement" means the letter agreement substantially in the
----------------------
form of Exhibit K hereto.
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"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, which are applicable to the
circumstances as of the date of determination.
"GNMA" means the Government National Mortgage Association and any successor
----
thereto.
"Home Equity Loan" means an open-ended revolving line of credit that is a
----------------
Mortgage Loan secured by a Mortgage.
"HUD" means the Department of Housing and Urban Development and any
---
successor thereto.
"Indemnified Liabilities" has the meaning set forth in Article 10 hereof.
-----------------------
"Internal Revenue Code" means the Internal Revenue Code of 1986, or any
---------------------
subsequent federal income tax law or laws, as any of the foregoing have been or
may from time to time be amended.
"Investor" means FNMA, FHLMC or a financially responsible private
--------
institution which is deemed acceptable by the Lender from time to time in its
reasonable discretion.
"Jumbo Mortgage Loan" means a Conventional Mortgage Loan which is
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underwritten substantially in accordance with FNMA or FHLMC underwriting
standards, but the principal amount of which is in excess of the maximum amount
eligible for purchase by FNMA or FHLMC, and which meets all eligibility
requirements for purchase by an Investor.
7
"Lender" has the meaning set forth in the first paragraph of this
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Agreement.
"LIBOR" means, for each calendar week, the rate of interest per annum which
-----
is equal to the arithmetic mean of the U.S. Dollar London Interbank Offered
Rates for one (1) month periods as of 11:00 a.m. London time on the first
Business Day of each week on which the London Interbank market is open, as
published by ▇▇▇▇▇▇-▇▇▇▇▇▇, Inc. on its MoneyCenter system. LIBOR shall be
rounded, if necessary, to the next higher one sixteenth of one percent (1/16%).
If such U.S. dollar LIBOR rates are not so offered or published for any period,
then during such period LIBOR shall mean the London Interbank Offered Rate for
one (1) month periods published on the first Business Day of each week on which
the London Interbank market is open, in the Wall Street Journal in its regular
column entitled "Money Rates."
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"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
----
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Liquid Assets" means, with respect to any Person at any date, the
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following unrestricted and unencumbered assets owned by such Person on such
date: cash, funds on deposit in any bank located in the United States,
investment grade commercial paper, money market funds, marketable securities and
the excess, if any, of Mortgage Loans and Mortgage-backed Securities held for
sale (valued in accordance with GAAP) over the outstanding aggregate principal
amount of notes or other debt instruments against which such Mortgage Loans or
Mortgage-backed Securities are pledged as Collateral.
"Loan Documents" means this Agreement, the Note, any agreement of the
--------------
Company relating to Subordinated Debt, and each other document, instrument or
agreement executed by the Company in connection herewith or therewith, as any of
the same may be amended, restated, renewed or replaced from time to time.
"Margin Stock" has the meaning assigned to that term in Regulations G and U
------------
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
8
"Maturity Date" shall mean the earlier of: (a) the close of business on
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July 31, 1996, as such date may be extended from time to time in writing by the
Lender, in its sole discretion, on which date the Commitment shall expire of its
own term, and without the necessity of action by the Lender, and (b) the date
the obligation of the Lender to make further Advances hereunder is terminated
pursuant to Section 8.1 below.
"Miscellaneous Charges" has the meaning set forth in Section 2.10 hereof.
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"Mortgage" means a first mortgage or first deed of trust on improved real
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property.
"Mortgage-backed Securities" means GNMA, FNMA or FHLMC securities that are
--------------------------
backed by Mortgage Loans, and other securities that are backed by Mortgage Loans
and that Lender, in the reasonable exercise of its discretion, determines are
satisfactory from a credit and liquidity standpoint.
"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured by
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a Mortgage.
"Mortgage Note" means a promissory note secured by a Mortgage.
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"Mortgage Note Amount" means, as of the date of determination, the then
--------------------
outstanding unpaid principal amount of a Mortgage Note.
"Mortgage Pool" means a pool of one or more Pledged Mortgages on the basis
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of which there is to be issued a Mortgage-backed Security.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA which is maintained for employees of the Company or a
Subsidiary of the Company.
"Nonconforming Mortgage Loan" means a Conventional Mortgage Loan which is
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not a Conforming Mortgage Loan or a Jumbo Mortgage Loan, and which is
underwritten and approved for purchase by an Investor prior to funding if its
original principal amount exceeds Six Hundred Thousand Dollars ($600,000).
9
"Note" has the meaning set forth in Section 2.3 hereof.
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"Notices" has the meaning set forth in Article 9 hereof.
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"Obligations" means any and all indebtedness, obligations and liabilities
-----------
of the Company to the Lender (whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred), arising out of or related to the Loan Documents.
"Officer's Certificate" means a certificate executed on behalf of the
---------------------
Company by its chief financial officer or its treasurer or by such other officer
as may be designated herein and substantially in the form of Exhibit I-SF
------------
attached hereto.
"Operating Account" means a demand deposit account maintained at the
-----------------
Funding Bank in the name of the Company and designated for funding the discount
portion of each Advance and for returning any excess payment from an Investor
for a Pledged Mortgage or Pledged Security.
"Participant" has the meaning set forth in Section 12.5 hereof.
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"Person" means and includes natural persons, corporations, limited
------
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Plans" has the meaning set forth in Section 5.12 hereof.
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"Pledged Mortgages" has the meaning set forth in Section 3.1(a) hereof.
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"Pledged Securities" has the meaning set forth in Section 3.1(b) hereof.
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10
"Purchase Commitment" means a written commitment, in form and substance
-------------------
reasonably satisfactory to the Lender, issued in favor of the Company by an
Investor pursuant to which that Investor commits to purchase Mortgage Loans or
Mortgage-backed Securities from the Company.
"Receivables" has the meaning set forth in Section 3.1(g) hereof.
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"Received Period" means the period of time from the date an Advance made
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against a Pledged Mortgage ceases to be a Wet Settlement Advance until the date
the Advance against such Pledged Mortgage is paid in full.
"Received Rate" means a floating rate of interest equal to two percent
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(2.00%) per annum over LIBOR. The Received Rate shall be adjusted on and as of
the effective date of each weekly change in LIBOR. The Lender's determination
of the Received Rate as of any date of determination shall be conclusive and
binding, absent manifest error.
"Release Amount" has the meaning set forth in Section 3.2(g) hereof.
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"RFC" means Residential Funding Corporation, a Delaware corporation, and
---
any successor thereto.
"RFC Conduit Credit Agreement" means that certain First Amended and
----------------------------
Restated Warehousing Credit and Security Agreement dated as of March 7, 1995,
among the Company, B First Mortgage Company Limited Partnership and the Lender,
as the same has been and may from time to time hereafter be supplemented,
modified restated or otherwise amended.
"Second Mortgage Loan" means a closed-end Mortgage Loan secured by a Second
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Mortgage.
"Servicing Collateral" means the Collateral described in Sections 3.1(d)
--------------------
(subject to the proviso thereof), 3.1(e) and 3.1(f) hereof, and all Collateral
described in Sections 3.1(h) and 3.1(i) and 3.1(j) hereof that constitutes
proceeds of or is related to such Collateral.
11
"Servicing Collateral Value" means as of the date of determination, the
--------------------------
lesser of: (a) seventy percent (70%) of the most recent Appraised Value of the
Servicing Contracts included in the Servicing Collateral, or (b) one percent
(1.00%) of the outstanding principal balance of the Mortgage Loans serviced
pursuant to the Servicing Contracts included in the Servicing Collateral;
provided, that for purposes of calculating the Servicing Collateral Value, the
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following Mortgage Loans shall be excluded: (i) Mortgage Loans excluded in
calculating the Adjusted Servicing Portfolio (ii) Mortgage Loans in respect of
which the Company has commenced foreclosure proceedings, and (iii) Mortgage
Loans in respect of which any obligor is the subject of a bankruptcy proceeding.
"Servicing Contract" means, with respect to any Person, the arrangement,
------------------
whether or not in writing, pursuant to which such Person has the right to
service Mortgage Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal balance
-------------------
of Mortgage Loans whose Servicing Contracts are owned by such Person.
"Single-family Mortgage Loan" means a Mortgage Loan secured by a Mortgage
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covering improved real property containing one to four family residences.
"Statement Date" means the date of the most recent financial statements of
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the Company (and, if applicable, its Subsidiaries, on a consolidated basis)
delivered to the Lender under the terms of this Agreement.
"Subordinated Debt" means all indebtedness of the Company, for borrowed
-----------------
money, which is, by its terms (which terms shall have been approved by the
Lender and which shall be conclusively deemed to have been approved by the
Lender if a Subordination of Debt Agreement in the form of Exhibit F hereto has
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been executed and delivered with respect to such indebtedness), effectively
subordinated in right of payment to all other present and future Obligations,
solely for purposes of Section 7.4 hereof, and all indebtedness of the Company
which is required to be subordinated by Section 4.1(b) or Section 6.10 hereof.
12
"Subsidiary" means any corporation, association or other business entity in
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which more than fifty percent (50%) of the total voting power or shares of stock
entitled to vote in the election of directors, managers or trustees thereof is
at the time owned or controlled, directly or indirectly, by any Person or one or
more of the other Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means with respect to any Person at any date, the
------------------
excess of the total assets over total liabilities of such Person on such date,
each to be determined in accordance with GAAP consistent with those applied in
the preparation of the financial statements referred to in Section 4.1(a)(5)
hereof, plus loan loss reserves and that portion of Subordinated Debt not due
within one year of such date, provided that, for purposes of this Agreement,
there shall be excluded from total assets advances or loans to shareholders,
officers or Affiliates, investments in Affiliates, assets pledged to secure any
liabilities not included in the Debt of such Person, intangible assets, those
other assets which would be deemed by HUD to be non-acceptable in calculating
adjusted net worth in accordance with its requirements in effect as of such
date, as such requirements appear in the "Audit Guide for Audit of Approved Non-
Supervised Mortgagees" and other assets deemed unacceptable by the Lender in its
reasonable discretion.
"Trust Receipt" means a trust receipt in a form approved by and pursuant to
--------------
which the Lender may deliver any document relating to the Collateral to the
Company for correction or completion.
"VA" means the U.S. Department of Veterans Affairs and any successor
--
thereto.
"Warehousing Advance" means an Advance made against a Conforming Mortgage
-------------------
Loan, a Jumbo Mortgage Loan or a Nonconforming Mortgage Loan that is subject to
a Purchase Commitment in accordance with the terms of this Agreement.
"Warehousing Commitment Fee" has the meaning set forth in Section 2.8
--------------------------
hereof.
13
"Warehousing Fee" has the meaning set forth in Section 2.9 hereof.
---------------
"Warehousing Promissory Note" means the promissory note evidencing the
---------------------------
Company's Obligations with respect to Warehousing Advances in the form of
Exhibit A-1 attached hereto.
-----------
"Wet Settlement Advance" means an Advance pursuant to Section 2.2(b) of
----------------------
this Agreement, in respect of the closing or settlement of a Mortgage Loan,
based upon delivery to the Lender of the Bailee Pledge Agreement, pending
subsequent delivery of the Collateral Documents as provided in such Section.
After delivery to Lender of the Collateral Documents in respect of a Wet
Settlement Advance and review and approval thereof by the Lender, such Advance
shall no longer be classified as a Wet Settlement Advance.
"Wet Settlement Period" means the period of time from the date a Wet
---------------------
Settlement Advance is made against a Pledged Mortgage until the earlier of (a)
the date the Collateral Documents for such Pledged Mortgage, as set forth in
Exhibit D-SF hereto, have been delivered to and examined by the Lender, or (b)
------------
the date the Wet Settlement Advance made against such Pledged Mortgage is paid
in full.
"Wet Settlement Rate" means a floating rate of interest which is equal to
-------------------
two and one-quarter percent (2.25%) per annum over LIBOR. The Wet Settlement
Rate shall be adjusted on and as of the effective date of each weekly change in
LIBOR. The Lender's determination of the Wet Settlement Rate as of any date of
determination shall be conclusive and binding, absent manifest error.
"Working Capital Advance" means a disbursement by the Lender under the
-----------------------
Working Capital Commitment pursuant to Section 2.3 of this Agreement.
"Working Capital Advance Request" has the meaning set forth in Section
-------------------------------
2.2(b) hereof.
"Working Capital Rate" means a floating rate of interest which is equal to
--------------------
two and three-quarters percent (2.75%) per annum over LIBOR. The Working
Capital Rate shall be adjusted on
14
and as of the effective date of each weekly change in LIBOR. The Lender's
determination of the Working Capital Rate as of any date of determination shall
be conclusive and binding, absent manifest error.
"Working Capital Sublimit" has the meaning set forth in Section 2.1(b)(4)
------------------------
hereof.
1.2 Other Definitional Provisions.
-----------------------------
1.2(a) Accounting terms not otherwise defined herein shall have the
meanings given the terms under GAAP.
1.2(b) Defined terms may be used in the singular or the plural, as
the context requires.
1.2(c) All references to time of day shall mean the then applicable
time in Chicago, Illinois, unless expressly provided to the contrary.
2. THE CREDIT.
2.1 The Warehousing Commitment.
--------------------------
2.1(a) Subject to the terms and conditions of this Agreement and
provided no (i) Event of Default or (ii) Default that the Lender, in the
reasonable exercise of its discretion, determines to be material has
occurred and is continuing, the Lender agrees from time to time during the
period from the Closing Date, to, but not including, the Maturity Date, to
make Advances to the Company, provided the total aggregate principal amount
outstanding at any one time of all such Advances shall not exceed the
Commitment Amount. The obligation of the Lender to make Advances hereunder
up to the Commitment Amount, is hereinafter referred to as the
"Commitment." Within the Commitment, the Company may borrow, repay and
reborrow. All Advances under this Agreement shall constitute a single
indebtedness, and all of the Collateral shall be security for the
Promissory Notes and for the performance of all the Obligations.
2.1(b) Warehousing Advances shall be used by the Company solely for
the purpose of funding the acquisition or
15
origination of Mortgage Loans and shall be made at the request of the
Company, in the manner hereinafter provided in Section 2.2 hereof, against
the pledge of such Mortgage Loans as Collateral therefor. Working Capital
Advances shall be used by the Company solely for short term working capital
purposes. The following limitations on the Advances shall be applicable:
(1) No Warehousing Advance shall be made against a Mortgage Loan
other than a Single Family Mortgage Loan that is a Nonconforming
Mortgage Loan, a Conforming Mortgage Loan or a Jumbo Mortgage Loan
covered by a Purchase Commitment.
(2) The aggregate amount of Wet Settlement Advances outstanding
at any one time shall not exceed Six Million Dollars ($6,000,000).
(3) No Warehousing Advance shall be made against any Mortgage
Loan which was closed more than ninety (90) days prior to the date of
the requested Advance, except with the Lender's prior written consent.
(4) The aggregate amount of Working Capital Advances outstanding
at any one time shall not exceed One Million One Hundred Thousand
Dollars ($1,100,000) (the "Working Capital Sublimit").
2.1(c) No Warehousing Advance shall exceed the following amount
applicable to the type of Collateral at the time it is pledged:
(1) For a Nonconforming Mortgage Loan pledged hereunder, the
lesser of (i) the Mortgage Note Amount or (ii) ninety-eight percent
(98%) of the Committed Purchase Price.
16
2.2 Procedures for Obtaining Advances.
---------------------------------
2.2(a) The Company may obtain an Advance hereunder, subject to the
satisfaction of the conditions set forth in Sections 4.1 and 4.2 hereof,
upon compliance with the procedures set forth in this Section 2.2 and in
Exhibit D-SF with respect to Warehousing Advances, attached hereto and made
------------
a part hereof including the delivery of all documents listed in Exhibit D-
---------
SF (the "Collateral Documents") to the Lender within the time frames
--
provided for in such Exhibit. Requests for Advances shall be initiated by
the Company by delivering to the Lender, no later than (i) in the case of a
request for a Wet Settlement Advance, 10:30 a.m. (Pacific time) on the
Business Day the Company desires to borrow hereunder, and (ii) in the case
of any other Advance, one (1) Business Day prior to any Business Day that
the Company desires to borrow hereunder, a completed and signed request for
an Advance on the then current form approved by the Lender. The current
forms in use by the Lender are Exhibit C-SF (a "Warehousing Advance
------------
Request") for Warehousing Advances and Exhibit C-WC (a "Working Capital
------------
Advance Request") for Working Capital Advances, each of which is attached
hereto and made a part hereof. The Lender shall have the right, on not
less than three (3) Business Days' prior Notice to the Company, to modify
any of said Exhibits to conform to current legal requirements or Lender
practices, and, as so modified, said Exhibits shall be deemed a part
hereof.
2.2(b) In the case of a Wet Settlement Advances, the Company shall
follow the procedures set forth in Section 2.2(a) hereof and, at or prior
to the Lender's making of such Wet Settlement Advance, shall deliver to the
Lender the documents set forth in Exhibit D-SF hereto as documents that are
------------
required to be provided to the Lender at or prior to the time of a Wet
Settlement Advance, together with a completed and executed Bailee Pledge
Agreement in the form of Exhibit M hereto. In the case of a Mortgage Loan
---------
financed through a Wet Settlement Advance, the Company shall cause all
Collateral Documents that are required to be delivered to the Lender within
seven (7) Business Days after the date of
17
the Wet Settlement Advance relating thereto to be so delivered.
2.2(c) Before funding, the Lender shall have a reasonable time
(consistent with the time frames provided for in Section 2.2(a) and Exhibit
-------
D-SF under ordinary circumstances) to examine such Advance Request and the
----
Collateral Documents to be delivered prior to such requested Advance, as
set forth in the applicable Exhibit hereto, and may reject such of them as
do not meet the requirements of this Agreement or of the related Purchase
Commitment.
2.2(d) The Company shall hold in trust for the Lender, and, except
as otherwise provided below, the Company shall deliver to the Lender
promptly upon request, or within one hundred twenty (120) days from the
date an Advance was made against a Pledged Mortgage, if the Pledged
Mortgage is not being held by an Investor for purchase or has not been
redeemed from pledge, the following: (1) the originals of the Collateral
Documents for which copies are required to be delivered to the Lender
pursuant to Exhibit D-SF (if being understood that delivery of such
------------
documents to the Lender shall only be required to the extent such documents
have been made available by the applicable public recording office at the
time of such request or within such 120-day period), (2) the original
lender's ALTA Policy of Title Insurance or an equivalent thereto (if being
understood that delivery of such documents to the Lender shall only be
required to the extent such policy or the equivalent has been delivered to
the Company at the time of such request or within such 120-day period), and
(3) any other documents relating to a Pledged Mortgage which the Lender may
reasonably request, including, without limitation, documentation evidencing
the FHA Commitment to Insure or the VA Guaranty of any Pledged Mortgage
which is either FHA insured or VA guaranteed, the appraisal, Private
Mortgage Insurance Certificate, if applicable, the Regulation Z Statement,
certificates or other evidence of casualty or hazard insurance, credit
information on the maker of each such Mortgage Note, a copy of a HUD-1 or
corresponding purchase advice and other documents of all kinds which are
customarily desired for inspection or transfer incidental to
18
the purchase of any Mortgage Note by an Investor and any additional
documents which are customarily executed by the seller of a Mortgage Note
to an Investor.
2.2(e) To make a Warehousing Advance, the Lender shall cause the
Funding Bank to credit an account of the Company with the Funding Bank,
which account shall be under the exclusive control of the Lender, and shall
cause the Funding Bank to disburse the amount of such Warehousing Advance
and any other amounts required to fund the related Mortgage Loan(s) as
provided under this Agreement and Exhibit D-SF, upon compliance by the
------------
Company with the terms of this Agreement. To make a Working Capital
Advance, the Lender shall cause the Funding Bank to credit the Company's
account with the Funding Bank upon compliance by the Company with the terms
of this Agreement.
2.2(f) If, pursuant to the authorization given by the Company in
the Funding Bank Agreement, for the purpose of financing a Mortgage Loan
against which the Lender has made a Warehousing Advance in accordance with
a Request for Advance (i) the Lender debits the Company's Operating Account
at the Funding Bank to the extent necessary to cover a wire to be initiated
by the Lender, or (ii) the Lender directs the Funding Bank to honor a check
drawn by the Company on its Operating Account or other check disbursement
account at the Funding Bank, and such debit or direction results in an
overdraft, the Lender may make an additional Warehousing Advance to fund
such overdraft.
2.3 Notes. The Company's Obligations in respect of Warehousing Advances
-----
shall be evidenced by a Warehousing Promissory Note of the Company substantially
in the form of Exhibit A-1 attached hereto, and the Company's Obligations in
-----------
respect of Working Capital Advances shall be evidenced by a Working Capital
Promissory Note of the Company substantially in the form of Exhibit A-2 attached
-----------
hereto, each note dated as of the date hereof (Warehousing Promissory Note and
Working Capital Promissory Note are collectively referred to as the "Notes").
The terms "Warehousing Promissory Note", "Working Capital Promissory Note",
"Note" or "Notes" shall include all extensions, renewals and modifications of
the Notes and all substitutions
19
therefor. All terms and provisions of the Notes are hereby incorporated herein.
2.4 Interest.
--------
2.4(a) Prior to the occurrence of an Event of Default, (i) the
unpaid amount of each Warehousing Advance shall bear interest during its
Wet Settlement Period at the Wet Settlement Rate, and (ii) the unpaid
amount of each Warehousing Advance shall bear interest during its Received
Period at the Received Rate.
2.4(b) Prior to the occurrence of an Event of Default, the unpaid
amount of each Working Capital Advance shall bear interest, from the date
of such Advance until paid in full, at the Working Capital Rate.
2.4(c) The Company is entitled to receive a benefit in the form of
an "Earnings Credit" on the portion of the Eligible Balances maintained in
time deposit accounts with a Designated Bank, and the Company is entitled
to receive a benefit in the form of an "Earnings Allowance" on the portion
of the Eligible Balances maintained in demand deposit accounts with a
Designated Bank. Any Earnings Allowance shall be used first and any
Earnings Credit shall be used second as a credit against accrued
Miscellaneous Charges and fees, including, but not limited to Commitment
Fees and Warehousing Fees, and may be used, at the Lender's option, to
reduce accrued interest. Any Earnings Allowance not used during the month
in which the benefit was received shall be accumulated for use and must be
used during the calendar year in which the benefit was received. Any
Earnings Credit not used during the month in which the benefit was received
shall be used to provide a cash benefit to the Company. The Lender's
determination of the Earnings Credit and the Earnings Allowance for any
month shall be determined by the Lender in its sole discretion and shall be
conclusive and binding absent manifest error. In no event shall the benefit
received by the Company exceed the Depository Benefit.
Either party hereto may terminate the benefits provided for in this
Section effective immediately upon Notice to the
20
other party, if the terminating party shall have determined (which
determination shall be conclusive and binding absent manifest error) at any
time that any applicable law, rule, regulation, order or decree or any
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by
such party with any request or directive (whether or not having the force
of law) of any such authority, shall make it unlawful or impossible for
such party to continue to offer or receive the benefits provided for in
this Section.
2.4(d) Interest shall be computed on the basis of a 360-day year
and applied to the actual number of days elapsed in each interest
calculation period and shall be payable monthly in arrears, on the tenth
day of each month for the preceding month, commencing with the first month
following the Closing Date and on the Maturity Date. Except with respect to
interest due on the Maturity Date, the Lender shall provide the Company
with a statement of interest due no later than five (5) days before the
date such interest is due.
2.4(e) If, for any reason, no interest is due on an Advance, the
Company agrees to pay to the Lender an administrative fee equal to one day
of interest on such Advance at the rate applicable to such Advances under
the applicable section hereof, as in effect on the date of such Advance.
Administrative and other fees shall be due and payable in the same manner
as interest is due and payable hereunder.
2.4(f) Upon and after the occurrence and during the continuation of
an Event of Default hereunder, the Lender may give Notice to the Company
that the unpaid amount of each Advance shall bear interest, until paid in
full, at a rate of interest (the "Default Rate") equal to four percent (4%)
per annum over the applicable rate provided in the applicable subsection of
this Section 2.4 or, if no rate is applicable, the highest rate then
applicable to any outstanding Advance pursuant to Section 2.4(a) or Section
2.4(b) above.
21
2.5 Principal Payments.
------------------
2.5(a) The outstanding principal amount of all Advances shall be
payable in full on the Maturity Date.
2.5(b) The Company shall have the right to prepay the outstanding
Advances in whole or in part, from time to time, without premium or
penalty.
2.5(c) All payments of outstanding Advances from the proceeds of
the sale or other disposition of Pledged Mortgages and Pledged Securities
shall be paid directly by the Investor to the Cash Collateral Account to be
applied against the Obligations.
2.5(d) The Company shall be obligated to pay to the Lender, without
the necessity of prior demand or notice from the Lender, and the Company
authorizes the Lender to cause the Funding Bank to charge the Company's
account for, the amount of any outstanding Warehousing Advance against a
specific Pledged Mortgage, upon the earliest occurrence of any of the
following events:
(1) One hundred eighty (180) days elapse from the date of the
initial Warehousing Advance made by the Lender against such Pledged
Mortgage, whether or not such Pledged Mortgage is included in an
Eligible Mortgage Pool.
(2) Sixty (60) days elapse from the date the Pledged Mortgage
was delivered to an Investor for examination and purchase, without the
purchase being made, or upon rejection of the Pledged Mortgage as
unsatisfactory by an Investor.
(3) One (1) Business Day elapses from the date a Wet Settlement
Advance was made and the Pledged Mortgage which was to have been
funded by such Wet Settlement Advance is not closed and funded.
(4) Seven (7) Business Days elapse from the date a Wet
Settlement Advance was made without receipt by the Lender of all
Collateral Documents relating to such
22
Pledged Mortgage required to be delivered to the Lender within such
seven (7) Business Day period pursuant to Exhibit D-SF hereto, or such
------------
Collateral Documents, upon examination by the Lender, are found not to
be in compliance with the requirements of this Agreement or the
related Purchase Commitment.
(5) Ten (10) Business Days elapse from the date a Collateral
Document was delivered to the Company for correction or completion
under a Trust Receipt, without being returned to the Lender, and one
(1) Business Day elapses after the Lender's demand in writing to the
Company for payment of such Advance.
(6) On the date on which a Pledged Mortgage is determined to
have been originated based on untrue, incomplete or inaccurate
information that the Lender determines, in the reasonable exercise of
its judgement, to be material, whether or not the Company had
knowledge of such misrepresentation or incorrect information, or the
Pledged Mortgage is defaulted and remains in default for a period of
sixty (60) days or more.
(7) For any Pledged Mortgage, the Company fails to deliver to
the Lender all documents required to be delivered under Section 2.2(d)
hereof within the time frame specified in such Section, or such items,
upon examination by the Lender, are found not to be in compliance with
the requirements of this Agreement or the related Purchase Commitment.
(8) Three (3) Business Days after the mandatory delivery date of
the related Purchase Commitment and the specific Pledged Mortgage was
not delivered under the Purchase Commitment prior to such mandatory
delivery date, or the Purchase Commitment is terminated; unless in
each case, such Pledged Mortgage is eligible for delivery to an
Investor under a comparable Purchase Commitment acceptable to the
Lender.
23
(9) Upon sale, maturity or other disposition of the Pledged
Mortgage.
(10) If the Pledged Mortgage is included in a Mortgage Pool,
then, if the Mortgage Pool is an Eligible Mortgage Pool, upon sale of
the Mortgage-backed Security, or if the Mortgage Pool is not an
Eligible Mortgage Pool, within two (2) Business Days after delivery of
the Pledged Mortgages to the pool custodian.
2.5(e) The outstanding amount of any Advance made pursuant to
Section 2.2(f) shall be payable in full within one (1) Business Day after
the date of such Advance.
2.5(f) In addition to the payments required pursuant to Section
2.7(d), the Company shall be obligated to pay to the Lender, without the
necessity of prior demand or notice from the Lender, the amount of any
prepayment in whole or in part of a Pledged Mortgage while an Advance is
outstanding against such Pledged Mortgage, within three (3) Business Days
after such prepayment, and the Company authorizes the Lender to cause the
Funding Bank to charge the Company's account for the amount of such
prepayment, to be applied to such Advance, if such prepayment is not made
within such three (3) Business Day period.
2.5(g) The Company shall give Notice to the Lender (telephonically,
to be followed by written notice) of the Pledged Mortgages or Pledged
Securities for which proceeds have been received. Upon receipt of such
Notice the Advances against such Pledged Mortgages or Pledged Securities
shall be repaid and such Pledged Mortgages or Pledged Securities shall be
considered to have been redeemed from pledge, whereupon the Lender shall
execute any instruments or documents prepared by the Company and presented
to the Lender for execution in order to effect the release of the related
Pledged Mortgage or Pledged Security from the Lender's Lien, as reasonably
requested by the Company, and shall deliver such executed instruments or
documents to the Company or its designee. The Lender is entitled to rely
upon the Company's affirmation that deposits in the Cash Collateral Account
24
represent payment from Investors for the purchase of Pledged Mortgages or
Pledged Securities as specified by the Company. In the event that the
payment from an Investor for the purchase of Pledged Mortgages or Pledged
Securities is less than the outstanding Advances against such Pledged
Mortgages or the Mortgage Loans backing Pledged Securities, the Lender is
authorized to cause the Funding Bank to charge the Company's account for an
amount equal to such deficiency. Provided no Event of Default exists, the
Lender shall return any excess payment from an Investor for Pledged
Mortgages or Pledged Securities to the Company.
2.6 Expiration of Commitment. The Commitment shall expire on the Maturity
------------------------
Date.
2.7 Method of Making Payments.
-------------------------
2.7(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Lender not later than the close of
business on the date when due unless such date is a non-Business Day, in
which case, such payment shall be due on the first Business Day thereafter,
and shall be made in lawful money of the United States of America in
immediately available funds transferred via wire to accounts designated by
the Lender in writing to the Company from time to time.
2.7(b) Upon an Event of Default, and without the necessity of prior
demand or notice from the Lender, the Company authorizes the Lender to
cause the Funding Bank to charge the Company's account for any Obligations
due and owing the Lender.
2.8 Commitment Fees. The Company agrees to pay to the Lender a Commitment
---------------
Fee in the amount of one-quarter percent (1/4%) per annum of the Commitment
Amount, which Commitment Fee may be paid quarterly in advance and shall be
computed on the basis of a 365-day year and applied to the actual number of days
elapsed in such calendar quarter. On the Closing Date, the Company shall pay the
prorated portion of the quarterly Commitment Fee due from the Closing Date to
the last day of the current calendar quarter. Thereafter, the Company shall make
quarterly payments of the Commitment Fee on the first (1st) day
25
of each calendar quarter. If the Maturity Date is other than the last day of a
calendar quarter, the Company shall pay the prorated portion of the quarterly
Commitment Fee due from the beginning of the then current calendar quarter to
and including the Maturity Date. For the purposes hereof, calendar quarters
shall be defined as the three (3) month periods beginning on each April 1, July
1, October 1 and January 1. The Company shall not be entitled to a reduction in
the amount of the Commitment Fee in the event the Commitment Amount is reduced
or in the event that the Commitment is terminated at the request of the Company
or as a result of an Event of Default. If the Commitment terminates at the
request of the Company or as a result of an Event of Default, the unpaid balance
of the Commitment Fee shall be due and payable in full on the date of such
termination.
2.9 Warehousing Fees. The Company agrees, at the time of each Advance, to
----------------
pay to the Lender a Warehousing Fee in the amount of Twenty-Five Dollars
($25.00) for each Mortgage Loan pledged as Collateral for such Advance.
Warehousing Fees are due when incurred, but shall not be delinquent if paid
within fifteen (15) days after receipt of an invoice or an account analysis
statement from the Lender.
2.10 Miscellaneous Charges. The Company agrees to reimburse the Lender for
---------------------
miscellaneous charges and expenses (collectively, "Miscellaneous Charges")
incurred by or on behalf of the Lender in connection with the handling and
administration of Advances, and to reimburse the Lender for Miscellaneous
Charges incurred by or on behalf of the Lender in connection with the handling
and administration of the Collateral. For the purposes hereof, Miscellaneous
Charges shall include, but not be limited to, charges for wire transfers,
charges for security delivery fees, charges for overnight delivery of Collateral
to Investors, Funding Bank's service charges and Designated Bank's service
charges. Miscellaneous Charges are due when incurred, but shall not be
delinquent if paid within fifteen (15) days after receipt of an invoice or an
account analysis statement from the Lender.
2.11 Interest Limitation. All agreements between the Company and the
-------------------
Lender are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of this Agreement or
the Note or
26
otherwise, shall the amount paid or agreed to be paid to the Lender for the use,
forbearance, loaning or retention of the Advances secured by this Agreement
exceed the maximum permissible under applicable law. If from any circumstances
whatsoever, fulfillment of any provisions hereof or of the Note, or any other
document securing this Agreement at any time given shall involve transcending
the limit of validity prescribed by law, then, the obligation to be fulfilled
shall automatically be reduced to the limit of such validity, and if from any
circumstances the Lender should ever receive as interest an amount which would
exceed the highest lawful rate of interest, such amount which would be in excess
of interest shall be applied to the reduction of the principal balance secured
by the Note and not to the payment of interest thereunder. This provision shall
control every other provision of all agreements between the Company and Lender
and shall also be binding upon and available to any subsequent holder of the
Note.
2.12 Increased Costs; Capital Requirements. In the event any applicable
-------------------------------------
law, order, regulation or directive issued by any governmental or monetary
authority, or any change therein or in the governmental or judicial
interpretation or application thereof, or compliance by the Lender with any
request or directive (whether or not having the force of law) by any
governmental or monetary authority:
2.12(a) Does or shall subject the Lender to any tax of any kind
whatsoever with respect to this Agreement or any Advances made hereunder,
or change the basis of taxation on payments to the Lender of principal,
fees, interest or any other amount payable hereunder (except for change in
the rate of tax on the overall gross or net income of the Lender by the
jurisdictions in which the Lender's principal office is located);
2.12(b) Does or shall impose, modify or hold applicable any reserve,
capital requirement, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of the Lender which
27
are not otherwise included in the determination of the interest rate as
calculated hereunder;
and the result of any of the foregoing is to increase the cost to the
Lender of making, renewing or maintaining any Advance or to reduce any
amount receivable in respect thereof or to reduce the rate of return on the
capital of the Lender or any Person controlling the Lender as it relates to
credit facilities in the nature of that evidenced by this Agreement, then,
in any such case, the Company shall promptly pay any additional amounts
necessary to compensate the Lender for such additional cost or reduced
amounts receivable or reduced rate of return as determined by the Lender
with respect to this Agreement or Advances made hereunder. If the Lender
becomes entitled to claim any additional amounts pursuant to this Section,
it shall notify the Company of the event by reason of which it has become
so entitled and the Company shall pay such amount within fifteen (15) days
thereafter. A certificate as to any additional amount payable pursuant to
the foregoing sentence containing the calculation thereof in reasonable
detail submitted by the Lender to the Company shall be conclusive in the
absence of manifest error. The obligations of the Company under this
Section shall survive the payment of all other Obligations and the
termination of this Agreement.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment of the Notes
--------------------------
and for the performance of all of the Company's Obligations, the Company hereby
grants a security interest to the Lender in the following described property
(the "Collateral"):
3.1(a) All Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans, which from time to time are
delivered or caused to be delivered to the Lender (including delivery to a
third party on behalf of the Lender), come into the possession, custody or
control of the Lender for the purpose of assignment or pledge or in respect
of which an Advance has been made by the Lender hereunder, including
without limitation all Mortgage Loans
28
in respect of which Wet Settlement Advances have been made by the Lender,
but not including any Mortgage Loan with respect to which the Release
Amount has been paid in full (the "Pledged Mortgages").
3.1(b) All Mortgage-backed Securities which are from time to time
created in whole or in part on the basis of the Pledged Mortgages or are
delivered or caused to be delivered to, or are otherwise in the possession
of the Lender or its agent, bailee or custodian as assignee, or pledged to
the Lender, or for such purpose are registered by book-entry in the name of
the Lender (including delivery to or registration in the name of a third
party on behalf of the Lender) hereunder or in respect of which from time
to time an Advance has been made by the Lender hereunder, but not including
any Pledged Security with respect to which the Release Amount has been paid
in full (the "Pledged Securities").
3.1(c) All private mortgage insurance and all commitments issued by
the FHA or VA to insure or guarantee any Mortgage Loans included in the
Pledged Mortgages; all Purchase Commitments held by the Company covering
the Pledged Mortgages or the Pledged Securities and all proceeds resulting
from the sale thereof to Investors pursuant thereto; and all personal
property, contract rights, servicing and servicing fees and income or other
proceeds, amounts and payments payable to the Company as compensation or
reimbursement, accounts and general intangibles of whatsoever kind relating
to the Pledged Mortgages, the Pledged Securities, said FHA commitments or
VA commitments and the Purchase Commitments, and all other documents or
instruments relating to the Pledged Mortgages and the Pledged Securities,
including, without limitation, any interest of the Company in any fire,
casualty or hazard insurance policies and any awards made by any public
body or decreed by any court of competent jurisdiction for a taking or for
degradation of value in any eminent domain proceeding as the same relate to
the Pledged Mortgages.
3.1(d) All Servicing Contracts of the Company listed on Exhibit E-2
hereto; provided, however, that such assignment and security interest shall
-------- -------
not take effect until
29
the date on which an Acknowledgment Agreement covering such Servicing
Contracts has been executed and delivered by the Company, the Lender and
FNMA.
3.1(e) All rights of the Company to receive payments under or by
virtue of the Servicing Contracts described in Section 3.1(d) (without
giving effect to the proviso at the end thereof) and the Acknowledgment
Agreements, whether as servicing fees, servicing income, damages, amounts
payable upon the cancellation or termination of any such Servicing
Contract, interests on the foregoing, or otherwise.
3.1(f) Any agreement pursuant to which any Servicing Contract
described in Section 3.1(d) (without giving effect to the proviso at the
end thereof) was acquired or is sold by the Company, and all documents and
instruments executed or delivered in connection with any such acquisition
or sale.
3.1(g) All accounts or general intangibles owned by the Company
("Receivables") for the payment of money against (i) VA under a VA guaranty
of, FHA or a private mortgage insurer under an FHA or private insurer's
mortgage insurance policy insuring payment of, or any other Person under
any other agreement (including a Servicing Contract) relating to, all or
part of a defaulted Mortgage Loan repurchased by the Company from an
investor or out of a pool of Mortgage Loans serviced by the Company, (ii)
obligors and their accounts, FNMA, FHLMC, GNMA or any other investor under
a Servicing Contract covering, or out of the proceeds of any sale of or
foreclosure sale in respect of, any Mortgage Loan (A) repurchased by the
Company out of a pool of Mortgage Loans serviced by the Company, or (B)
being serviced by the Company, in either case, for the reimbursement of
real estate taxes or assessments, or casualty or liability insurance
premiums, paid by the Company in connection with Mortgage Loans, and (iii)
obligors and their accounts, or FNMA, FHLMC, GNMA or any other investor
under or in respect of any Mortgage Loans serviced by the Company for
repayment of advances made by the Company to cover shortages in principal
and interest payments.
30
3.1(h) All right, title and interest of the Company in and to all
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records (including all information, records, tapes, data,
programs, discs and cards necessary or helpful in the administration or
servicing of the Collateral) and other information and data of the Company
relating to the Collateral.
3.1(i) All now existing or hereafter acquired cash delivered to or
otherwise in the possession of the Lender or its agent, bailee or custodian
or designated on the books and records of the Company as assigned and
pledged to the Lender.
3.1(j) All cash and non-cash proceeds of the Collateral, including
all dividends, distributions and other rights in connection with, and all
additions to, modifications of and replacements for, the Collateral, and
all products and proceeds of the Collateral, together with whatever is
receivable or received when the Collateral or proceeds thereof are sold,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, including, without limitation, all rights to
payment with respect to any cause of action affecting or relating to the
Collateral or proceeds thereof.
3.2 Release of Security Interest in Collateral.
------------------------------------------
3.2(a) Pledged Mortgages shall be released from the Lender's security
interest only against payment to the Lender of the Release Amount in
connection with such Pledged Mortgages.
3.2(b) If Pledged Mortgages are to be transferred to a pool custodian
or to FHLMC or FNMA for inclusion in a Mortgage Pool, the Lender's security
interest in such Pledged Mortgages shall be released only against payment
to the Lender of the Release Amount in connection with such Pledged
Mortgages. If the Lender's security interest in the Pledged Mortgages
comprising the Mortgage Pool is not released prior to the issuance of the
Mortgage-backed Security, then the Mortgage-backed Security, when issued,
shall be a Pledged Security. The Lender's security interest shall continue
in
31
such Pledged Mortgages and the Pledged Security. The Lender shall be
entitled to possession of such Pledged Security in the manner provided
below.
3.2(c) If Pledged Mortgages are transferred to an Approved Custodian
and included in an Eligible Mortgage Pool, the Lender's security interest
in the Pledged Mortgages comprising the Eligible Mortgage Pool shall be
released upon the issuance of the related Mortgage-backed Security, which
shall be a Pledged Security. The Lender's security interest in such
Pledged Security shall be released only against payment to the Lender of
the Release Amount in connection with the Pledged Mortgages backing such
Pledged Security. The Lender shall be entitled to possession of such
Pledged Security in the manner provided below.
3.2(d) The Lender shall have the exclusive right to the possession of
the Pledged Securities or, if the Pledged Securities are not to be issued
in certificated form or are to be issued in certificated form and
registered exclusively in the name of, and held by, a clearing agency or
its nominee, shall have the right to have the book entries for the Pledged
Securities issued in the Lender's name or the name or names of its
designees, and the Lender shall have the right to cause delivery of the
Pledged Securities to be made to the Investor or the book entries
registered in the name of the Investor or the Investor's designee only
against payment of the Release Amount for the underlying Mortgage Loans.
The Company acknowledges that the Lender may enter into one or more
standing arrangements with other financial institutions for the issuance of
Pledged Securities in book entry form in the name of such other financial
institutions, as agent or financial intermediary for the Lender, and the
Company agrees upon request of the Lender, to execute and deliver to such
other financial institutions the Company's written concurrence in any such
standing arrangements.
3.2(e) Prior to the occurrence of an Event of Default, the Company
may redeem a Pledged Mortgage or Pledged Security from the Lender's
security interest by notifying the Lender of its intention to redeem such
Pledged Mortgage or Pledged Security from pledge and either (a) paying, or
32
causing an Investor to pay, to the Lender, for application to prepayment of
the principal balance of the Note, the Release Amount in connection with
such Pledged Mortgage or Pledged Security, or (b) delivering substitute
Collateral which, in addition to being acceptable to the Lender in its sole
discretion will, when included with the Collateral, result in a Collateral
Value of all Collateral held by the Lender which is at least equal to the
aggregate outstanding Advances.
3.2(f) Following the occurrence of a Default or Event of Default, the
Lender may, with no liability to the Company or any Person, continue to
release its security interest in any Pledged Mortgage or Pledged Security
against payment of the Release Amount in connection with such Pledged
Mortgage or Pledged Security.
3.2(g) The Release Amount in connection with any Pledged Mortgage
shall be (i) prior to the occurrence of an Event of Default, the Advance
Balance of the Advances made against such Pledged Mortgage, and (ii) from
and after the occurrence and during the continuance of an Event of Default,
the Committed Purchase Price of such Pledged Mortgage or, if there is no
Purchase Commitment therefor, the amount paid to the Lender in a
commercially reasonable disposition thereof.
3.3 Delivery of Additional Collateral or Mandatory Prepayment. At any
---------------------------------------------------------
time that the aggregate Collateral Value of the Pledged Mortgages and Pledged
Securities then pledged hereunder is less than the aggregate Advance Balance of
the Warehousing Advances then outstanding hereunder, the Lender may request, and
the Company shall within two (2) Business Days after Notice by the Lender (a)
deliver to the Lender for pledge hereunder additional Mortgage Loans and/or
cash, with a Collateral Value sufficient to cover the difference between the
Collateral Value of the Pledged Mortgages and Pledged Securities pledged and the
aggregate Advance Balance of Warehousing Advances outstanding hereunder, and/or
(b) repay the Warehousing Advances in an amount sufficient to reduce the
aggregate balance thereof outstanding to or below the Collateral Value of the
Pledged Mortgages and Pledged Securities pledged hereunder.
3.4 Release of Collateral.
---------------------
33
3.4(a) The Lender may deliver documents relating to the Pledged
Mortgages to the Company for correction or completion pursuant to a Trust
Receipt.
3.4(b) Prior to the occurrence of a Default or Event of Default, upon
delivery by the Company to the Lender of shipping instructions pursuant to
Exhibit D-SF, the Lender will transmit Pledged Mortgages or Pledged
------------
Securities and all related loan documents or pool documents to the
applicable Investor, Approved Custodian or other party.
3.4(c) Upon payment to the Lender of the Release Amount for Pledged
Mortgage, all Warehousing Advances made by the Lender against such Pledged
Mortgage shall be deemed repaid in full, the Lender shall release the
Collateral Documents and any other documents in its possession with respect
to such Pledged Mortgage to the Company or its designee, and the Lender
shall execute any instruments or other documents prepared by the Company
and presented to the Lender for execution in order to effect the release of
the related Pledged Mortgage from the Lender's Lien, as reasonably
requested by the Company, and shall deliver such executed instruments or
documents effecting release to the Company or its designee. The Company
may pay the Release Amount for a Pledged Mortgage at any time.
3.5 Collection and Servicing Rights. So long as no Event of Default shall
-------------------------------
have occurred and be continuing, the Company shall be entitled to service and
receive and collect directly all sums payable to the Company in respect of the
Collateral other than proceeds of any Purchase Commitment or proceeds of the
sale of any Collateral. Following the occurrence of any Event of Default, the
Lender or its designee shall thereafter be entitled to service and receive and
collect all sums payable to the Company in respect of the Collateral, and in
such case (a) the Lender or its designee in its discretion may, in its own name,
in the name of the Company or otherwise, demand, ▇▇▇ for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so, (b) the
Company shall, if the Lender so requests, hold in trust for the benefit of the
Lender and forthwith pay to the Lender at its office designated by
34
Notice hereunder, all amounts thereafter received by the Company upon or in
respect of any of the Collateral, advising the Lender as to the source of such
funds, and (c) all amounts so received and collected by the Lender shall be held
by it as part of the Collateral.
3.6 Return of Collateral at End of Commitment. If (a) the Commitment
-----------------------------------------
shall have expired or been terminated, and (b) no Advance Balance, interest or
other Obligations shall be outstanding and unpaid, the Lender shall deliver or
release its security interest and shall deliver all Collateral in its possession
to the Company or its designee at the Company's expense, and shall execute and
deliver instruments effecting release of such Collateral as described in Section
3.4(c) hereof. The receipt of the Company or its designee for any Collateral
released or delivered to the Company or its designee pursuant to any provision
of this Agreement shall be a complete and full acquittance for the Collateral so
returned, and the Lender shall thereafter be discharged from any liability or
responsibility therefor.
4. CONDITIONS PRECEDENT.
4.1 Initial Advance. The obligation of the Lender to make the initial
---------------
Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, on or before the date thereof of the following
conditions precedent:
4.1(a) The Lender shall have received the following, all of which
must be satisfactory in form and content to the Lender, in its sole
discretion:()
(1) The Notes and this Agreement duly executed by the Company.
(2) The Company's articles of incorporation as certified by the
Secretary of State of Colorado, bylaws certified by the corporate
secretary of the Company, or a Certificate of the Company stating that
there has been no change in either the articles of incorporation or
bylaws since those delivered in connection with the RFC Conduit Credit
Agreement and certificates of good
35
standing dated no less recently than ninety (90) days prior to the
date of this Agreement.
(3) A resolution of the board of directors of the Company,
certified as of the date of this Agreement by its corporate secretary,
authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents, and all other instruments or documents
to be delivered by the Company pursuant to this Agreement.
(4) A certificate of the Company's corporate secretary as to the
incumbency and authenticity of the signatures of the officers of the
Company executing this Agreement and the other Loan Documents and each
Advance Request and all other instruments or documents to be delivered
pursuant hereto (the Lender being entitled to rely thereon until a new
such certificate has been furnished to the Lender).
(5) Financial statements of the Company (and, if applicable, its
Subsidiaries, on a consolidated basis) containing a balance sheet as
of December 31, 1994, and related statements of income, changes in
stockholders' equity and cash flows for the period ended on such date,
all prepared in accordance with GAAP applied on a basis consistent
with prior periods and audited by independent certified public
accountants of recognized standing acceptable to the Lender.
(6) Financial statements of the Company (and, if applicable, its
Subsidiaries, on a consolidated basis) containing a balance sheet as
of October 31, 1995, related statements of income and changes in
stockholders' equity for the period ended on such date prepared in
accordance with GAAP applied on a basis consistent with the Company's
most recent audited financial statements.
(7) A favorable written opinion of counsel to the Company, dated
as of the date of this Agreement substantially in the form of Exhibit
-------
H attached hereto, addressed to the Lender.
-
36
(8) A Uniform Commercial Code, tax lien and judgment search of
the appropriate public records for the Company, which search shall not
have disclosed the existence of any prior Lien on the Collateral other
than in favor of the Lender or as permitted hereunder.
(9) Copies of the certificates, documents or other written
instruments which evidence the Company's eligibility described in
Section 5.13 hereof, all in form and substance satisfactory to the
Lender.
(10) Copies of the Company's errors and omissions insurance
policy or mortgage impairment insurance policy and blanket bond
coverage policy, or certificates in lieu of policies, all in form and
content satisfactory to the Lender, showing compliance by the Company
as of the date of this Agreement with the related provisions of
Section 6.8 hereof.
(11) Executed financing statements in recordable form covering
the Collateral and ready for filing in all jurisdictions required by
the Lender.
(12) Receipt by the Lender of any fees due on the date hereof,
including, but not limited to, Commitment Fees and document production
fees.
(13) Evidence that all accounts necessary into which Advances
will be funded have been established at the Funding Bank and receipt
of a fully executed Funding Bank Agreement.
(14) A copy of an Acknowledgment Agreement from FNMA in form and
substance satisfactory to the Lender, acknowledging the validity of
the Lender's security interest in the Servicing Contracts included in
the Servicing Collateral, duly executed by the Company and FNMA.
4.1(b) All directors, officers and shareholders of the Company,
all Affiliates of the Company or of any Subsidiary of the Company, to
whom or to any of whom the Company shall be indebted as of the date of
this
37
Agreement, which indebtedness has a term of more than one (1) year or
is in excess of One Hundred Thousand Dollars ($100,000) shall have
subordinated such indebtedness to the Obligations, by executing a
Subordination of Debt Agreement, in the form of Exhibit F hereto; and
---------
the Lender shall have received an executed copy of any such
Subordination of Debt Agreement, certified by the corporate secretary
of the Company to be true and complete and in full force and effect as
of the date of the Advance.
4.2 Each Advance. The obligation of the Lender to make the initial and
------------
each subsequent Advance under this Agreement is subject to the satisfaction, in
the reasonable discretion of the Lender, as of the date of each such Advance, of
the following additional conditions precedent:
4.2(a) The Company shall have delivered to the Lender the Advance
Request, and documents required to be delivered to the Lender at the time
of such Advance pursuant to Section 2.2 hereof, and shall have satisfied
the procedures set forth in, Section 2.2 hereof and the applicable Exhibits
hereto described in that Section, according to the type of the requested
Advance. All items delivered to the Lender shall be satisfactory to the
Lender in form and content, and the Lender may reject such of them as do
not meet the requirements of this Agreement or of the related Purchase
Commitment.
4.2(b) The Lender shall have received evidence satisfactory to it as
to the making and/or continuation of any book entry or the due filing and
recording in all appropriate offices of all financing statements and other
instruments as may be necessary to perfect the security interest of the
Lender in the Collateral under the Uniform Commercial Code of Minnesota or
other applicable law.
4.2(c) The representations and warranties of the Company contained in
Article 5 hereof shall be accurate and complete in all material respects as
if made on and as of the date of each Advance.
38
4.2(d) The Company shall have performed all agreements to be
performed by it hereunder, and after giving effect to the requested
Advance, there shall exist no (i) Event of Default or (ii) Default that the
Lender, in the reasonable exercise of its discretion, determines to be
material, hereunder.
4.2(e) The Company shall not have incurred any material liabilities,
direct or contingent, other than in the ordinary course of its business or
any liabilities to the Lender under this Agreement, since the most recent
Statement Date.
4.2(f) The Lender shall have received from counsel for the Company,
if requested by the Lender in its sole discretion, an updated opinion, in
form and substance satisfactory to the Lender, addressed to the Lender and
dated as of the date of such Advance, covering such of the matters as the
Lender may reasonably request.
Delivery of an Advance Request by the Company shall be deemed a
representation by the Company that all conditions set forth in this Section
4.2 shall have been satisfied as of the date of such Advance.
5. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Lender, as of the date of
this Agreement and as of the date of each Advance Request and the making of each
Advance, that:
5.1 Organization; Good Standing; Subsidiaries. The Company and each
-----------------------------------------
Subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
the full legal power and authority to own its property and to carry on its
business as currently conducted and is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no material
adverse effect on the business, operations, assets or financial condition of the
Company or any such Subsidiary. For the purposes hereof,
39
good standing shall include qualification for any and all licenses and payment
of any and all taxes required in the jurisdiction of its incorporation and in
each jurisdiction in which the Company transacts business. The Company has no
Subsidiaries except as set forth on Exhibit G hereto. Exhibit G sets forth with
--------- ---------
respect to each such Subsidiary, its name, address, place of incorporation, each
state in which it is qualified as a foreign corporation, and the percentage
ownership of its capital stock by the Company.
5.2 Authorization and Enforceability. The Company has the power and
--------------------------------
authority to execute, deliver and perform this Agreement, the Notes and all
other Loan Documents to which the Company is party and to make the borrowings
hereunder. The execution, delivery and performance by the Company of this
Agreement, the Notes and all other Loan Documents to which the Company is party
and the making of the borrowings hereunder and thereunder, have been duly and
validly authorized by all necessary corporate action on the part of the Company
(none of which actions has been modified or rescinded, and all of which actions
are in full force and effect) and do not and will not conflict with or violate
any provision of law, of any judgments binding upon the Company, or of the
articles of incorporation or by-laws of the Company, conflict with or result in
a breach of or constitute a default or require any consent under, or result in
the creation of any Lien upon any property or assets of the Company other than
the Lien on the Collateral granted hereunder, or result in or require the
acceleration of any indebtedness of the Company pursuant to any agreement,
instrument or indenture to which the Company is a party or by which the Company
or its property may be bound or affected. This Agreement, the Notes and all
other Loan Documents contemplated hereby or thereby constitute legal, valid, and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors' rights, and by general principles
of equity, whether considered in a proceeding at law or in equity.
5.3 Approvals. The execution and delivery of this Agreement, the Notes
---------
and all other Loan Documents and the performance of the Company's obligations
hereunder and thereunder
40
and the validity and enforceability hereof and thereof do not require any
license, consent, approval or other action of any state or federal agency or
governmental or regulatory authority other than those which have been obtained
and remain in full force and effect.
5.4 Financial Condition. The balance sheet of the Company (and, if
-------------------
applicable, its Subsidiaries, on a consolidated basis) as at the Statement Date,
and the related statements of income and changes in stockholders' equity for the
fiscal period ended on the Statement Date, heretofore furnished to the Lender,
fairly present the financial condition of the Company (and its Subsidiaries) as
at the Statement Date and the results of its operations for the fiscal period
ended on the Statement Date. The Company had, on the Statement Date, no known
material liabilities, direct or indirect, fixed or contingent, matured or
unmatured, or liabilities for taxes, long-term leases or unusual forward or
long-term commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of the Company except as heretofore disclosed to the Lender in writing. Said
financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved. Since the Statement Date,
there has been no material adverse change in the business, operations, assets or
financial condition of the Company (and its Subsidiaries), nor is the Company
aware of any state of facts which (with or without notice or lapse of time or
both) would or could result in any such material adverse change.
5.5 Litigation. Except as set forth in Exhibit N hereto, there are no
---------- ---------
actions, claims, suits or proceedings pending or, to the knowledge of the
Company, threatened or reasonably anticipated against or affecting the Company
or any Subsidiary of the Company in any court or before any arbitrator or before
any government commission, board, bureau or other administrative agency which,
if adversely determined, may reasonably be expected to result in any material
and adverse change in the business, operations, assets or financial condition of
the Company as a whole, or which would affect the validity or enforceability of
this Agreement, the Notes or any other Loan Document.
41
5.6 Compliance with Laws. Neither the Company nor any Subsidiary of the
--------------------
Company is in violation of any provision of any law, or of any judgment, award,
rule, regulation, order, decree, writ or injunction of any court or public
regulatory body or authority which might have a material adverse effect on the
business, operations, assets or financial condition of the Company as a whole or
which would affect the validity or enforceability of this Agreement, the Notes
or any other Loan Document.
5.7 Regulations G and U. The Company is not engaged principally, or as
-------------------
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock, and no part of the proceeds of
any Advances made hereunder will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
5.8 Investment Company Act. The Company is not an "investment company" or
----------------------
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
5.9 Payment of Taxes. The Company and each of its Subsidiaries has filed
----------------
or caused to be filed all federal, state and local income, excise, property and
other tax returns with respect to the operations of the Company and its
Subsidiaries which are required to be filed, all such returns are true and
correct, and the Company and each of its Subsidiaries has paid or caused to be
paid all taxes as shown on such returns or on any assessment, to the extent that
such taxes have become due, including, but not limited to, all FICA payments and
withholding taxes, if appropriate. The amounts reserved, as a liability for
income and other taxes payable, in the financial statements described in Section
5.4 hereof are sufficient for payment of all unpaid federal, state and local
income, excise, property and other taxes, whether or not disputed, of the
Company and its Subsidiaries accrued for or applicable to the period and on the
dates of such financial statements and all years and periods prior thereto and
for which the Company and its Subsidiaries may be liable in its own right or as
transferee of the assets of, or as successor to, any other Person.
42
5.10 Agreements. Neither the Company nor any Subsidiary of the Company is
----------
a party to any agreement, instrument or indenture or subject to any restriction
materially and adversely affecting its business, operations, assets or financial
condition, except as disclosed in the financial statements described in Section
5.4 hereof. Neither the Company nor any Subsidiary of the Company is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or indenture
which default could have a material adverse effect on the business, operations,
properties or financial condition of the Company as a whole. No holder of any
indebtedness of the Company or of any of its Subsidiaries has given notice of
any asserted default thereunder, and no liquidation or dissolution of the
Company or of any of its Subsidiaries and no receivership, insolvency,
bankruptcy, reorganization or other similar proceedings relative to the Company
or of any of its Subsidiaries or any of its properties is pending, or to the
knowledge of the Company, threatened.
5.11 Title to Properties. The Company and each Subsidiary of the Company
-------------------
has good, valid, insurable (in the case of real property) and marketable title
to all of its properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described in Section 5.4
hereof, except for such properties and assets as have been disposed of since the
date of such financial statements as no longer used or useful in the conduct of
its business or as have been disposed of in the ordinary course of business, and
all such properties and assets are free and clear of all Liens except as
disclosed in such financial statements.
5.12 ERISA. All plans ("Plans") of a type described in Section 3(3) of
-----
ERISA in respect of which the Company or any Subsidiary of the Company is an
"Employer," as defined in Section 3(5) of ERISA, are in substantial compliance
with ERISA, and none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Internal Revenue Code, and neither the Company nor any Subsidiary of the
Company has incurred any material liability (including any material contingent
liability) to or on account of any such Plan pursuant to Sections 4062, 4063,
4064, 4201 or 4204 of ERISA; and no proceedings have been instituted to
43
terminate any such Plan, and no condition exists which presents a material risk
to the Company or a Subsidiary of the Company of incurring a liability to or on
account of any such Plan pursuant to any of the foregoing Sections of ERISA. No
Plan or trust forming a part thereof has been terminated since September 1,
1974.
5.13 Eligibility. The Company is approved and qualified and in good
-----------
standing as a lender or seller/servicer, as set forth below, and meets all
requirements applicable to its status as such:
5.13(a) GNMA approved seller/servicer of Mortgage Loans and issuer of
Mortgage-backed Securities guaranteed by GNMA.
5.13(b) FNMA approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell, and service Mortgage Loans to be sold to
FNMA.
5.13(c) FHLMC approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell and service Mortgage Loans to be sold to
FHLMC.
5.13(d) Lender in good standing under the VA loan guarantee program
eligible to originate, purchase, hold, sell and service VA-guaranteed
Mortgage Loans.
5.13(e) HUD approved mortgagee, eligible to originate, purchase,
hold, sell and service FHA fully insured Mortgage Loans.
5.14 Place of Business. The principal place of business of the Company is
-----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
5.15 Special Representations Concerning Collateral. The Company hereby
---------------------------------------------
represents and warrants to the Lender, as of the date of this Agreement and as
of the date of each Advance Request and the making of each Advance, that:
5.15(a) The Company is the legal and equitable owner and holder, free
and clear of all Liens (other than Liens
44
granted hereunder), of the Pledged Mortgages and the Pledged Securities.
All Pledged Mortgages, Pledged Securities and Purchase Commitments have
been duly authorized and validly issued to or filed by the Company, and all
of the foregoing items of Collateral comply with all of the requirements of
this Agreement, and have been and will continue to be validly pledged or
assigned to the Lender, subject to no other Liens.
5.15(b) The Company has, and will continue to have, the full right,
power and authority to pledge the Collateral pledged and to be pledged by
it hereunder.
5.15(c) Any Mortgage Loan and any related document included in the
Pledged Mortgages (1) has been duly executed and delivered by the parties
thereto at a closing held not more than ninety (90) days prior to the date
of the Advance Request for such Mortgage Loan, (2) has been made in
compliance with all requirements of the Real Estate Settlement Procedures
Act, Equal Credit Opportunity Act, the federal Truth-In-Lending Act and all
other applicable laws and regulations, (3) is and will continue to be valid
and enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights, and by general principles of equity, whether considered
in a proceeding at law or in equity, without defense or offset, (4) has not
been modified or amended except in writing, which writing is part of the
Collateral Documents, nor any requirements thereof waived, (5) has been
evaluated or appraised in accordance with Title XI of FIRREA, and (6)
complies and will continue to comply with the terms of this Agreement and,
if applicable, with the related Purchase Commitment held by the Company.
Each Mortgage Loan has been fully advanced in the face amount thereof and
each Mortgage is a first Lien on the premises described therein, and there
has been or will be issued a title insurance policy, in American Land Title
Association form or equivalent thereof, from a recognized title insurance
company, insuring the priority of the Lien of the Mortgage and meeting the
usual requirements of Investors purchasing such Mortgage Loans; provided,
that an attorney's certificate of title shall suffice in the case of any
45
Mortgage Loan secured by a Mortgage on property located in the State of
Iowa.
5.15(d) No default has occurred and is continuing for more than sixty
(60) days under any Mortgage Loan included in the Pledged Mortgages without
the Advance against such Pledged Mortgage having been repaid in accordance
with Section 2.5(d)(6) hereof, provided, however, that with respect to
Pledged Mortgages which have already been pledged as Collateral hereunder,
if any default has occurred, the Company will promptly notify the Lender.
5.15(e) The Company has complied and will continue to comply with all
laws, rules and regulations in respect of the FHA insurance or VA guaranty
of each Mortgage Loan included in the Pledged Mortgages designated by the
Company as an FHA insured or VA guaranteed Mortgage Loan, and such
insurance or guarantee is and will continue to be in full force and
effect. All such FHA insured and VA guaranteed Mortgage Loans comply and
will continue to comply in all respects with all applicable requirements
for purchase under the FNMA standard form of selling contract for FHA
insured and VA guaranteed loans and any supplement thereto then in effect.
5.15(f) All fire and casualty policies covering the premises
encumbered by each Mortgage included in the Pledged Mortgages (1) name and
will continue to name the originator of such Pledged Mortgage and its
successors and assigns as the insured under a standard mortgagee clause,
(2) are and will continue to be in full force and effect, and (3) afford
and will continue to afford insurance against fire and such other risks as
are usually insured against in the broad form of extended coverage
insurance from time to time available.
5.15(g) Pledged Mortgages secured by premises located in a special
flood hazard area designated as such by the Director of the Federal
Emergency Management Agency are and shall continue to be covered by special
flood insurance under the National Flood Insurance Program.
5.15(h) Each Pledged Mortgage, against which an Advance is made on
the basis of a Purchase Commitment, meets all requirements of such Purchase
Commitment. The Company
46
shall assure that Pledged Mortgages which are intended to be used in the
formation of Mortgage-backed Securities shall comply or, prior to the
formation of any such Mortgage-backed Security, shall comply with the
requirements of the governmental instrumentality, department or agency
guaranteeing such Mortgage-backed Security.
5.15(i) For Pledged Mortgages which will be used to back GNMA
Mortgage-backed Securities, the Company has received from GNMA a
Confirmation Notice or Confirmation Notices for Request Additional
Commitment Authority and for Request Pool Numbers, and there remains
available thereunder a commitment on the part of GNMA sufficient to permit
the issuance of GNMA Mortgage-backed Securities in an amount at least equal
to the amount of such Pledged Mortgages designated by the Company as the
Mortgage Loans to be used to back such GNMA Mortgage-backed Securities;
each such Confirmation Notice is in full force and effect; each of such
Pledged Mortgages has been assigned by the Company to one of such Pool
Numbers and a portion of the available GNMA Commitment has been allocated
thereto by the Company, in an amount at least equal to such Pledged
Mortgages; and each such assignment and allocation has been reflected in
the books and records of the Company.
5.16 Servicing. Attached hereto as Exhibit E-1 is a true and complete list
---------
of the Company's Servicing Portfolio. All of the Company's Servicing Contracts
are in full force and effect and, except as otherwise indicated, are
unencumbered by Liens. No default exists under any such Servicing Contract that
would permit any other party to such Servicing Contract presently, as a result
of the default, to terminate the same.
5.17 Special Representations Concerning Pledged Servicing Contracts.
--------------------------------------------------------------
Attached hereto as Exhibit E-2 is a true and complete list of the Company's FNMA
-----------
Servicing Contracts included in the Servicing Collateral as of the Closing Date.
The Company hereby represents and warrants to the Lender, as of the date of this
Agreement and as of the date of Advance Request and the making of each Advance,
that:
47
5.17(a) The Company is the legal and equitable owner and holder,
free and clear of all Liens (other than Liens granted hereunder), of the
Servicing Contracts pledged hereunder and such Servicing Contracts will be
validly pledged or assigned to the Lender, subject to no other Liens.
5.17(b) Subject to the limitations set forth in Section 3.1(d), the
Company has, and will continue to have, the full right, power and authority
to pledge the Servicing Contracts pledged and to be pledged by it
hereunder.
5.17(c) All of the servicing rights under the Servicing Contracts
pledged hereunder in which a security interest is granted hereby constitute
direct servicing rights.
5.17(d) Each Servicing Contract pledged hereunder is in full force
and effect, each Servicing Contract pledged hereunder is legal, valid and
enforceable in accordance with its terms (subject to bankruptcy, insolvency
and other similar laws affecting creditors' rights and to general
principles of equity, whether considered in a proceeding at law or in
equity) and no default exists under any such Servicing Contract that would
permit any other party to such Servicing Contract to presently, as a result
of the default, terminate the same.
5.17(e) Each right to the payment of money under the Servicing
Contracts pledged hereunder is genuine and enforceable in accordance with
its terms against the parties obligated to pay the same ("Obligor"), except
as limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, whether considered in a proceeding at law or in
equity. The terms of such rights to payment have not been modified or
waived in any material respect or to any material extent from the from the
terms thereof that existed on the date of this Agreement, except with the
prior written consent of the Lender.
5.17(f) To the best of the Company's knowledge, the amount
represented by the Company to the Lender as owing by
48
an Obligor under each Mortgage Loan being serviced under a Servicing
Contract pledged hereunder is the correct amount actually and
unconditionally owing by such Obligor.
5.17(g) To the best of the Company's knowledge, no Obligor has any
defense, set off, claim or counterclaim against the Company which can be
asserted against the Lender, whether in any proceeding to enforce the
Lender's rights in the related Mortgage Loan or otherwise.
5.17(h) The Company has not sold, assigned or otherwise transferred
any rights associated with the Mortgage Loans being serviced under a
Servicing Contract pledged hereunder, including, without limitation, any
rights to place escrow deposits with respect thereto.
5.17(i) No consent of any Obligor or any other Person is required
for the grant of the security interest provided herein by the Company in
any of the Servicing Collateral including, without limitation, the
Servicing Contracts pledged hereunder, or any computer software being
utilized by the Company pursuant to license, lease or otherwise, other than
consents which have been obtained, nor will any consent need to be obtained
upon the occurrence of an Event of Default for the Lender to exercise its
rights with respect to any of the Servicing Collateral except as set forth
in the Acknowledgment Agreements.
5.17(j) Each Mortgage Loan being serviced under a Servicing Contract
pledged hereunder that is owned by FNMA or FHLMC or is included in a FNMA
or FHLMC pool is covered by an Acknowledgment Agreement with such agency in
form and substance satisfactory to the Lender.
5.17(k) It is expressly understood that the sole remedy of the
Lender for a breach of any of the representations and warranties set forth
in this Section 5.17 with respect to any particular Servicing Contract
included in the Servicing Collateral shall be to exclude the Mortgage Loans
covered by such Servicing Contract in determining the Servicing Collateral
Value.
49
6. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees that, so long as the Commitment is
outstanding or there remain any Obligations to be paid or performed under this
Agreement or under any other Loan Document, the Company shall:
6.1 Payment of Notes. Punctually pay or cause to be paid all Obligations
----------------
payable hereunder and under the Notes in accordance with the terms hereof and
thereof.
6.2 Financial Statements and Other Reports. Deliver to the Lender:
--------------------------------------
6.2(a) As soon as available and in any event within twenty (20)
days after the end of each calendar month, statements of income and changes
in stockholders' equity of the Company (and, if applicable, its
Subsidiaries, on a consolidated basis) for the immediately preceding month
and for the period from the beginning of the then-current fiscal year to
the end of such calendar month, and the related balance sheet as at the end
of such calendar month, all in reasonable detail and certified as to the
fairness of presentation by the chief financial officer of the Company,
subject, however, to year-end audit adjustments.
6.2(b) As soon as available and in any event within ninety (90)
days after the close of each fiscal year of the Company, statements of
income, changes in stockholders' equity and cash flow of the Company (and,
if applicable, its Subsidiaries, on a consolidated basis) for such year,
and the related balance sheet as at the end of such year (setting forth in
comparative form the corresponding figures for the preceding fiscal year),
all in reasonable detail and accompanied by an opinion in form and
substance satisfactory to the Lender and prepared by an accounting firm
reasonably satisfactory to the Lender, or other independent certified
public accountants of recognized standing selected by the Company and
acceptable to the Lender, as to said financial statements and a certificate
signed by the chief financial officer of the Company stating that said
financial statements fairly present the financial condition and results of
operations of the Company (and, if applicable, its
50
Subsidiaries, on a consolidated basis) as at the end of, and for, such
year.
6.2(c) Together with each delivery of financial statements required
in this Section 6.2, an Officer's Certificate substantially in the form of
Exhibit I-SF hereto: (1) setting forth in reasonable detail all
------------
calculations necessary to show that the Company is in compliance with the
requirements of Sections 6.14, 7.6, 7.7 and 7.8 hereof as of the end of
such month or year (or, if the Company is not in compliance, showing the
extent of non-compliance and specifying the period of non-compliance and
what actions the Company has taken, is taking or proposes to take with
respect thereto); (2) certifying that the Company was, as of the end of the
period, in compliance and in good standing with applicable HUD, GNMA, or
Investor net worth requirements; and (3) stating that the signers have
reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the transactions
and conditions of the Company (and, if applicable, its Subsidiaries) during
the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as of the date of the Officer's Certificate, of any Default or
Event of Default, or if any Default or Event of Default existed or exists,
specifying the nature and period of the existence thereof and what action
the Company has taken, is taking and proposes to take with respect thereto.
6.2(d) Weekly or more frequently as the Lender may from time to
time request, a commitment summary and pipeline report substantially in the
form of Exhibit L (the "Commitment Summary Report") dated as of the close
---------
of business on the last Business Day of each week and provided to the
Lender by facsimile by 10:00 a.m. on the next succeeding Business Day of
the following week, and the signed original thereof shall be sent to the
Lender by first class mail on such next succeeding Business Day.
51
6.2(e) As soon as available and in any event within twenty (20)
days after the end of each calendar month, a consolidated report (the
"Servicing Portfolio Report") as of the end of the calendar month
detailing, as to all Mortgage Loans the servicing rights to which are owned
by the Company (specified by investor type, recourse and non-recourse)
regardless of whether such Mortgage Loans are Pledged Mortgages and which
report shall indicate Mortgage Loans which (A) are current and in good
standing, (B) are more than 30, 60 or 90 days past due, respectively, (C)
are, for Mortgage Loans serviced with recourse, more than three hundred
sixty (360) days past due, (D) are the subject of pending bankruptcy or
foreclosure proceedings, or (E) have been converted (through foreclosure or
other proceedings in lieu thereof) by the Company into real estate owned by
the Company.
6.2(f) Reports in respect of the Pledged Mortgages, the Pledged
Securities and the Servicing Collateral, in such detail and at such times
as the Lender in its discretion may reasonably request at any time or from
time to time.
6.2(g) Copies of all regular or periodic financial and other
reports, if any, which the Company shall file with the Securities and
Exchange Commission or any governmental agency successor thereto, copies of
any audits completed by GNMA, FNMA or FHLMC and copies of the Mortgage
Bankers' Financial Reporting Forms (FHLMC Form 1055/FNMA Form 1002) which
the Company shall have filed with FNMA or FHLMC.
6.2(h) From time to time, with reasonable promptness, such further
information regarding the business, operations, properties or financial
condition of the Company as the Lender may reasonably request.
6.2(i) Annually, or more frequently as the Lender may from time to
time reasonably request, an Appraisal.
6.3 Maintenance of Existence; Conduct of Business. Preserve and maintain
---------------------------------------------
its corporate existence in good standing and all of its rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business, including, without limitation, its eligibility as lender,
52
seller/servicer and issuer described under Section 5.13 hereof; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required by FHA, GNMA, FNMA or FHLMC at any and all times for
maintaining the Company's status as a FHA, FNMA or FHLMC approved mortgagee or
GNMA issuer; and make no change in the nature or character of its business or
engage in any non-Mortgage related business in which it was not engaged on the
date of this Agreement that would materially impair its ability to perform under
this Agreement without the prior written consent of the Lender.
6.4 Compliance with Applicable Laws. Comply with the requirements of all
-------------------------------
applicable laws, rules, regulations and orders of any governmental authority, a
breach of which could materially adversely affect its business, operations,
assets, or financial condition, except where contested in good faith and by
appropriate proceedings.
6.5 Inspection of Properties and Books. Permit authorized representatives
----------------------------------
of the Lender or any Participant to discuss the business, operations, assets and
financial condition of the Company and its Subsidiaries with its officers and
employees and to examine its books of account and make copies or extracts
thereof, all at such reasonable times as the Lender or any Participant may
request. The Company will provide its accountants with a copy of this Agreement
promptly after the execution hereof and will instruct its accountants to answer
candidly any and all questions that the officers of the Lender or any
Participant or any authorized representatives of the Lender or any Participant
may address to them in reference to the financial condition or affairs of the
Company and its Subsidiaries. The Company may have its representatives in
attendance at any meetings between the officers or other representatives of the
Lender or any Participant and the Company's accountants held in accordance with
this authorization. The Lender will provide the Company with Notice before
contacting the Company's accountants for any purpose hereunder.
6.6 Notice. Give prompt written notice to the Lender, upon the Company's
------
discovery thereof, of (a) any action, suit or proceeding instituted by or
against the Company or any of its Subsidiaries in any federal or state court or
before any
53
commission or other regulatory body (federal, state or local, domestic or
foreign) which action, suit or proceeding has at issue in excess of One Hundred
Thousand Dollars ($100,000), or any such proceedings threatened against the
Company or any of its Subsidiaries in a writing containing the details thereof,
(b) the filing, recording or assessment of any federal, state or local tax Lien
against the Company, or any of its assets or any of its Subsidiaries, (c) the
occurrence of any Event of Default hereunder or the occurrence of any Default or
other breach of a representation or warranty and continuation thereof for five
(5) days, (d) the suspension, revocation or termination of the Company's
eligibility, in any respect, as approved lender, seller/servicer or issuer as
described under Section 5.13 hereof, (e) the transfer, loss or termination of
any Servicing Contract for Mortgage Loans with an aggregate unpaid principal
balance of $10,000,000 or more to which the Company is a party, or which is held
for the benefit of the Company, and the reason for such transfer, loss or
termination, if known to the Company, and (f) any other action, event or
condition of any nature which may lead to or result in a material adverse effect
upon the business, operations, assets, or financial condition of the Company and
its Subsidiaries or which constitutes an event of default under any other
agreement, instrument or indenture to which the Company or any of its
Subsidiaries is a party or to which the Company or any of its Subsidiaries, its
properties, or assets may be subject as a result of which any other party
thereto is presently entitled to exercise remedies against the Company in
accordance with the terms of such agreement.
6.7 Payment of Debt, Taxes, etc. Pay and perform all obligations and
---------------------------
indebtedness of the Company, and cause to be paid and performed all obligations
and indebtedness of its Subsidiaries, promptly and in accordance with the terms
thereof and pay and discharge or cause to be paid and discharged promptly all
taxes, assessments and governmental charges or levies imposed upon the Company
or its Subsidiaries or upon their respective income, receipts or properties
before the same shall become past due, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might become a Lien or
charge upon such properties or any part thereof; provided, however, that the
Company and its Subsidiaries shall not be required to pay taxes, assessments or
governmental charges or
54
levies or claims for labor, materials or supplies for which the Company or its
Subsidiaries shall have obtained an adequate bond or adequate insurance or which
are being contested in good faith and by proper proceedings which are being
reasonably and diligently pursued and for which proper reserves have been
created.
6.8 Insurance. Maintain (a) errors and omissions insurance or mortgage
---------
impairment insurance and blanket bond coverage, with such companies and in such
amounts as satisfy prevailing FNMA, FHLMC and GNMA requirements applicable to a
qualified mortgage originating institution, and (b) liability insurance and fire
and other hazard insurance on its properties, with responsible insurance
companies approved by the Lender (which approval shall be presumed to exist in
the absence of written notice to the contrary, and which approval may not be
unreasonably withheld), in such amounts and against such risks as is customarily
carried by similar businesses operating in the same vicinity; and (c) within
thirty (30) days after Notice from the Lender, obtain such additional insurance
as the Lender shall reasonably require, all at the sole expense of the Company.
Copies of such policies shall be furnished to the Lender without charge upon
request of the Lender.
6.9 Closing Instructions. Indemnify and hold the Lender harmless from and
--------------------
against any loss, including reasonable attorneys' fees and costs, attributable
to the failure of a title insurance company, agent or approved attorney to
comply with the disbursement or instruction letter or letters of the Company
relating to any Mortgage Loan.
6.10 Subordination of Certain Indebtedness. Cause any indebtedness of the
-------------------------------------
Company, incurred after the date of this Agreement, to any shareholder, director
or officer of the Company, or to any Affiliate of the Company or of any
Subsidiary of the Company, which indebtedness has a term of more than one (1)
year or is in excess of One Hundred Thousand Dollars ($100,000) to be
subordinated to all Obligations by the execution of a Subordination of Debt
Agreement in the form of Exhibit F hereto and deliver to the Lender an executed
---------
copy of said Agreement, certified by the corporate secretary of the Company to
be true and complete and in full force and effect.
55
6.11 Other Loan Obligations. Perform all material obligations under the
----------------------
terms of each loan agreement, note, mortgage, security agreement or debt
instrument having an original principal balance of $1,000,000 or more by which
the Company is bound or to which any of its property is subject, and promptly
notify the Lender in writing of a declared default (such that any other party
thereto is presently entitled to accelerate the Company's indebtedness
thereunder) under or the termination, cancellation, reduction or nonrenewal of
any of its other lines of credit or agreements with any other lender. Exhibit J
---------
hereto is a true and complete list of all such lines of credit or agreements as
of the date hereof for the Company and the Company hereby agrees to give the
Lender at least thirty (30) days Notice before entering into any additional
lines of credit or agreements having an original principal balance of $1,000,000
or more.
6.12 Use of Proceeds of Advances. Use the proceeds of each Advance solely
---------------------------
for the purpose set forth in Section 2.1(b) or Section 2.3(b) for Advances of
that type.
6.13 Special Affirmative Covenants Concerning Collateral. The Company
---------------------------------------------------
shall:
6.13(a) Warrant and defend the right, title and interest of the
Lender in and to the Collateral against the claims and demands of all
Persons whomsoever, except to the extent such claim arose as a result of
the Lender's failure to use reasonable care in the custody and preservation
of Collateral Documents in its possession.
6.13(b) Service or cause to be serviced all Mortgage Loans in
accordance with standards customary in the industry and in accordance with
all material provisions of the applicable Servicing Contract and, in the
case of Conforming Mortgage Loans, the standard requirements of the issuers
of Purchase Commitments covering the same and all applicable FHA and VA
requirements, including without limitation taking all actions necessary to
enforce the obligations of the obligors under such Mortgage Loans. The
Company shall service or cause to be serviced all Mortgage Loans backing
Pledged Securities in accordance with applicable governmental requirements
and requirements of issuers of Purchase
56
Commitments covering the same. The Company shall hold all escrow funds
collected in respect of Pledged Mortgages and Mortgage Loans backing
Pledged Securities in trust, without commingling the same with non-
custodial funds, and apply the same for the purposes for which such funds
were collected.
6.13(c) Execute and deliver to the Lender such Uniform Commercial
Code financing statements with respect to the Collateral as the Lender may
reasonably request. The Company shall also execute and deliver to the
Lender such further instruments of sale, pledge or assignment or transfer,
and such powers of attorney, as reasonably required by the Lender, and
shall do and perform all matters and things necessary or desirable to be
done or observed, for the purpose of effectively creating, maintaining and
preserving the security and benefits intended to be afforded the Lender
under this Agreement. The Lender shall have all the rights and remedies of
a secured party under the Uniform Commercial Code of Minnesota, or any
other applicable law, in addition to all rights provided for herein.
6.13(d) Notify the Lender within three (3) Business Days of any
event that would presently permit the termination of, or of the termination
of, any Purchase Commitment relating to any Pledged Mortgage, Eligible
Mortgage Pool or Pledged Security.
6.13(e) Promptly comply in all material respects with the terms and
conditions of all Purchase Commitments, and all extensions, renewals and
modifications or substitutions thereof or thereto. The Company will cause
to be delivered to the Investor the Pledged Mortgages and Pledged
Securities to be sold under each Purchase Commitment not later than the
mandatory delivery date thereof.
6.13(f) Maintain, at its principal office or in a regional office
approved by the Lender, or in the office of a computer service bureau
engaged by the Company and approved by the Lender, and, upon request, make
available to the Lender the originals, or copies in any case where the
originals have been delivered to the Lender or to an Investor, of its
Mortgage Notes and Mortgages included in
57
Pledged Mortgages, Mortgage-backed Securities delivered to the Lender as
Pledged Securities, Purchase Commitments, and all related Mortgage Loan
documents and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records and other information and data relating to the
Collateral.
6.14 Servicing Collateral Value. Maintain the Servicing Collateral Value
--------------------------
at not less than One Million One Hundred Thousand Dollars ($1,100,000) or, if
the Servicing Collateral Value is less than One Million One Hundred Thousand
Dollars ($1,100,000), maintain at all times the sum of (a) the Servicing
Collateral Value plus (b) the aggregate Collateral Value of the Pledged
Mortgages and the Pledged Securities then pledged hereunder at not less than the
aggregate Advance Balance of all Advances then outstanding hereunder.
7. NEGATIVE COVENANTS.
The Company hereby covenants and agrees that, so long as the Commitment is
outstanding or there remain any Obligations to be paid or performed, the Company
shall not, either directly or indirectly, without the prior written consent of
the Lender:
7.1 Contingent Liabilities. Assume, guarantee, endorse, or otherwise
----------------------
become contingently liable for the obligation of any Person except by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
7.2 Sale or Pledge of Servicing Contracts. Sell, pledge or grant a
-------------------------------------
security interest in any existing or future Servicing Contracts of the Company
other than to the Lender, except as otherwise expressly permitted in this
Agreement, or omit to take any action required to keep all such Servicing
Contracts in full force and effect; provided, however, that (a) the Company may
at any time sell Pledged Mortgages or other Mortgage Loans on a servicing-
released basis, provided that, in the case of Pledged Mortgages, the Release
Amount with respect to each Pledged Mortgage is paid to the Lender, and (b) if
no Default or Event of Default has occurred and is continuing under Section
8.1(a) or 8.1(c)(ii) hereof, Servicing Contracts not included in the Servicing
Collateral may be sold and pledged.
58
7.3 Merger; Sale of Assets; Acquisitions. Liquidate, dissolve,
------------------------------------
consolidate or merge or sell any substantial part of its non-Mortgage related
assets, or acquire any substantial part of the non-Mortgage related assets of
another, if such acquisition or sale would have a material adverse effect on the
financial condition of the Company.
7.4 Deferral of Subordinated Debt. Pay or modify any Subordinated Debt
-----------------------------
otherwise than in compliance with the applicable Subordination of Debt Agreement
in substantially the form of Exhibit F hereto.
---------
7.5 Loss of Eligibility. Lose all or any part of its status as an
-------------------
eligible lender, seller/servicer and issuer as described under Section 5.13
hereof.
7.6 Debt to Adjusted Tangible Net Worth Ratio. Permit the ratio of Debt
-----------------------------------------
to Adjusted Tangible Net Worth of the Company (and its Subsidiaries, on a
consolidated basis) at any time to exceed 20 to 1.
7.7 Minimum Adjusted Tangible Net Worth. Permit Adjusted Tangible Net
-----------------------------------
Worth of the Company (and its Subsidiaries, on a consolidated basis) at any time
to be less than Five Million Dollars ($5,000,000).
7.8 Liquidity. Permit the Liquid Assets of the Company (and its
---------
Subsidiaries, on a consolidated basis) at any time to be less than One Million
Dollars ($1,000,000).
7.9 Acquisition of Recourse Servicing Contracts. Acquire Servicing
-------------------------------------------
Contracts under which the Company is obligated to repurchase delinquent Mortgage
Loans serviced thereunder or indemnify the holder of the Mortgage Loans as a
result of defaults on the Mortgage Loans serviced thereunder against losses
associated with delinquent Mortgage Loans serviced thereunder without proof of
fraud or misrepresentation.
7.10 Special Negative Covenants Concerning Collateral.
------------------------------------------------
7.10(a) The Company shall not amend or modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect of,
any Pledged Mortgages or
59
Pledged Securities except in a non-material manner in the ordinary course
of business.
7.10(b) The Company shall not sell, assign, transfer or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber (except pursuant to this Agreement or as permitted herein) any of
the Collateral or any interest therein.
7.10(c) The Company shall not make any compromise, adjustment
or settlement in respect of any of the Collateral or accept payment
other than in cash in payment or liquidation of the Collateral except
in a non-material manner in the ordinary course of business.
8. DEFAULTS; REMEDIES.
8.1 Events of Default. The occurrence of any of the following conditions
-----------------
or events shall be an event of default ("Event of Default"):
8.1(a) Failure by the Company to pay the principal of any
Advance Balance when due, whether at stated maturity, by acceleration,
or otherwise; or failure by the Company to pay any installment of
interest on any Advance or any other amount due under this Agreement
within ten (10) days after the due date; or failure to pay, within any
applicable grace period, the principal or interest on any other
indebtedness of the Company due the Lender coupled with, in each case,
the continuance of such failure for one Business Day after Notice of
such failure shall have been delivered to the Company by the Lender;
or
8.1(b) Failure of the Company or any of its Subsidiaries to
pay, or any default in the payment of any principal or interest on,
any other indebtedness or in the payment of any contingent obligation
within any period of grace provided in connection with such
indebtedness; breach or default with respect to any other material
term of any other indebtedness or of any loan agreement, mortgage,
indenture or other agreement
60
relating thereto, and the passage of any applicable time period or
cure period, if the effect of such failure, breach or default and the
passage of such time or cure period is to cause, or to permit the
holder or holders thereof (or a trustee on behalf of such holder or
holders) to cause, indebtedness of the Company or its Subsidiaries in
the aggregate amount of One Hundred Thousand Dollars ($100,000) or
more to become or be declared due prior to its stated maturity; or
8.1(c) Failure of the Company to perform or comply with any
term or condition applicable to it contained in (i) Sections 6.3,
6.12, 6.13(b) or (d), 7.1, 7.2, 7.3, 7.4, 7.5, 7.9 or 7.10 of this
Agreement, or (ii) Section 7.6, 7.7 or 7.8 of this Agreement if such
failure has not been cured to the reasonable satisfaction of the
Lender before the date on which the financial statements indicating
the existence of such failure to comply are required to be delivered
to the Lender pursuant to Section 6.2(a) hereof; or
8.1(d) Any of the Company's representations or warranties made
or deemed made herein or in any other Loan Document, or in any
statement or certificate at any time given by the Company in writing
pursuant hereto or thereto shall be inaccurate or incomplete in any
material respect on the date as of which made or deemed made;
provided, however, that such event shall not constitute an Event of
Default hereunder with respect to a breach of a representation or
warranty made under Section 5.15 above if the Company delivers to the
Lender the Release Amount for each Mortgage Loan affected by such
breach within five Business Days after the earliest of (i) receipt by
the Company of Notice from the Lender of such breach, (ii) receipt by
the Lender of Notice from the Company of such breach, or (iii) the
date the Company should have notified the Lender of such breach
pursuant to Section 6.6(c) hereof; and, provided, further, that the
sole remedy applicable in the case of a breach of a representation or
warranty contained in Section 5.17 above as to any Servicing Contract
included in the Servicing Collateral
61
shall be the exclusion of the Mortgage Loans covered by such Servicing
Contract in calculating the Servicing Collateral Value; or
8.1(e) The Company shall default in the performance of or
compliance with any term contained in this Agreement or any other Loan
Document other than those referred to above in Subsections 8.1(a),
8.1(c) or 8.1(d) and such default shall not have been remedied or
waived within thirty (30) days after the earliest of (i) receipt by
the Company of Notice from the Lender of such default, (ii) receipt by
the Lender of Notice from the Company of such default, or (iii) the
date the Company should have notified the Lender of such default
pursuant to Section 6.6(c); or
8.1(f) (1) A court having jurisdiction shall enter a decree or
order for relief in respect of the Company, any Subsidiary of the
Company in an involuntary case under any applicable bankruptcy,
insolvency or other similar law in respect of the Company, any
Subsidiary of the Company now or hereafter in effect, which decree or
order is not stayed; the Company, any Subsidiary of the Company shall
consent to the entry of any such decree or order; or a filing of a
voluntary case under any applicable bankruptcy, insolvency or other
similar law in respect of the Company, any Subsidiary of the Company
has occurred; or any other similar relief shall be granted under any
applicable federal or state law; or (2) the filing of an involuntary
case in respect of the Company, any Subsidiary of the Company under
any applicable bankruptcy, insolvency or other similar law; or a
decree or order of a court having jurisdiction for the appointment of
a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Company, any Subsidiary of the
Company, or over all or a substantial part of their respective
property, shall have been entered; or the involuntary appointment of
an interim or permanent receiver, trustee or other custodian of the
Company, any Subsidiary of the Company for all or a substantial part
of their respective property; or the issuance of a
62
warrant of attachment, execution or similar process against any
substantial part of the property of the Company, any Subsidiary of the
Company, and the continuance of any such events in Subsection (2)
above for sixty (60) days unless stayed, dismissed, bonded off or
discharged; or
8.1(g) The Company, any Subsidiary of the Company shall
consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its
property; the making by the Company, any Subsidiary of the Company of
any assignment for the benefit of creditors; or the inability or
failure of the Company, any Subsidiary of the Company, or the
admission by the Company, any Subsidiary of the Company in writing of
its inability, to pay its debts as such debts become due; or
8.1(h) Failure of the Company to perform any contractual
obligations which it may have to repurchase Mortgage Loans, if such
obligations in the aggregate exceed One Million Dollars ($1,000,000);
or
8.1(i) Any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of Two
Hundred Fifty Thousand Dollars ($250,000) shall be entered or filed
against the Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded
or unstayed for a period of thirty (30) days or in any event later
than five (5) days prior to the date of any proposed sale thereunder;
or
8.1(j) Any order, judgment or decree shall be entered against
the Company decreeing the dissolution or split up of the Company and
such order shall remain undischarged or unstayed for a period in
excess of twenty (20) days; or
8.1(k) Any Plan maintained by the Company or any of its
Subsidiaries shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States
district
63
court to administer any Plan, or the Pension Benefit Guaranty
Corporation (or any successor thereto) shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan if
as of the date thereof the Company's liability or any such
Subsidiary's liability (after giving effect to the tax consequences
thereof) to the Pension Benefit Guaranty Corporation (or any successor
thereto) for unfunded guaranteed vested benefits under the Plan
exceeds the then current value of assets accumulated in such Plan by
more than Two Hundred Fifty Thousand Dollars ($250,000) (or in the
case of a termination involving the Company or any of its Subsidiaries
as a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA) the withdrawing employer's proportionate share of such excess
shall exceed such amount); or
8.1(l) The Company or any of its Subsidiaries as employer under
a Multiemployer Plan shall have made a complete or partial withdrawal
from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount
exceeding Two Hundred Fifty Thousand Dollars ($250,000); or
8.1(m) The Company shall purport to disavow its obligations
hereunder or shall contest the validity or enforceability hereof; or
the Lender's security interest in any portion of the Collateral shall
become unenforceable or otherwise impaired; provided that, subject to
the Lender's approval, no Event of Default shall occur as a result of
such impairment if all Advances made against any such Collateral shall
be paid in full within ten (10) days of the date of the Company's
receipt of Notice from Lender of such impairment; or
8.1(n) ▇▇▇▇▇▇ ▇▇▇▇▇▇ (or a trust or other entity of which ▇▇▇▇▇▇
▇▇▇▇▇▇ owns the majority of the voting rights) shall cease owning,
directly or
64
indirectly, ninety percent (90%) or more of the capital stock of the
Company; or
8.1(o) There shall be a material adverse change in the financial
condition, business or operations of the Company that would materially
impair the Company's ability to perform its Obligations hereunder.
8.2 Remedies.
--------
8.2(a) Upon the occurrence of any Event of Default described in
Sections 8.1(f) or 8.1(g), the Commitment shall be terminated and the
unpaid principal amount of and accrued interest on the Notes and all other
Obligations shall automatically become due and payable, without
presentment, demand or other requirements of any kind, all of which are
hereby expressly waived by the Company.
8.2(b) Upon the occurrence of any Event of Default, other than those
described in Sections 8.1(f) and 8.1(g), the Lender may, by Notice to the
Company, terminate the Commitment and/or declare all Obligations to be
immediately due and payable, whereupon the same shall forthwith become due
and payable, together with all accrued interest thereon, and the obligation
of the Lender to make any Advances shall thereupon terminate.
8.2(c) Upon the occurrence of any Event of Default, the Lender may
also do any of the following:
(1) Foreclose upon or otherwise enforce its security interest in
and Lien on the Collateral to secure all payments and performance of
the Obligations in any manner permitted by law or provided for
hereunder.
(2) Notify all obligors in respect of Collateral that the
Collateral has been assigned to the Lender and that all payments
thereon are to be made directly to the Lender or such other party as
may be designated by the Lender; settle, compromise, or release, in
whole or in part, any amounts owing on the Collateral, any such
obligor or any Investor or any portion of the
65
Collateral, on terms acceptable to the Lender; enforce payment and
prosecute any action or proceeding with respect to any and all
Collateral; and where any such Collateral is in default, foreclose on
and enforce security interests in such Collateral by any available
judicial procedure or without judicial process and sell property
acquired as a result of any such foreclosure.
(3) Act, or contract with a third party to act, as servicer or
subservicer of each item of Collateral requiring servicing and perform
all obligations required in connection with Servicing Contracts and
Purchase Commitments, such third party's fees to be paid by the
Company.
(4) Require the Company to assemble the Collateral and/or books
and records relating thereto and make such available to the Lender at
a place to be designated by the Lender.
(5) Enter onto property where any Collateral or books and
records relating thereto are located and take possession thereof with
or without judicial process.
(6) Prior to the disposition of the Collateral, prepare it for
disposition in any manner and to the extent the Lender deems
appropriate.
(7) Exercise all rights and remedies of a secured creditor under
the Uniform Commercial Code of Minnesota or other applicable law,
including, but not limited to, selling or otherwise disposing of the
Collateral, or any part thereof, at one or more public or private
sales, whether or not such Collateral is present at the place of sale,
for cash or credit or future delivery, on such terms and in such
manner as the Lender may determine, including, without limitation,
sale pursuant to any applicable Purchase Commitment. If notice is
required under such applicable law, the Lender will give the Company
not less than ten (10) days' notice of any such public sale or of the
date after which any private sale may be held. The Company agrees
that ten (10) days' notice shall be reasonable notice. The
66
Lender may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained
by the Lender until the selling price is paid by the purchaser
thereof, but the Lender shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be
sold upon like notice. The Lender may, however, instead of exercising
the power of sale herein conferred upon it, proceed by a suit or suits
at law or in equity to collect all amounts due upon the Collateral or
to foreclose the pledge of and sell the Collateral or any portion
thereof under a judgment or decree of a court or courts of competent
jurisdiction, or both.
(8) Proceed against the Company on the Notes; provided, that the
Lender shall use its best efforts to sell the Pledged Mortgages and
Pledged Securities, to the extent the same are readily salable within
a reasonable period, in a commercially reasonable manner before
proceeding against the Company on the Notes.
8.2(d) The Lender shall incur no liability as a result of the sale
or other disposition of the Collateral, or any part thereof, at any public
or private sale or disposition in a commercially reasonable manner. The
Company hereby waives (to the extent permitted by law) any claims it may
have against the Lender arising by reason of the fact that the price at
which the Collateral may have been sold at such private sale was less than
the price which might have been obtained at a public sale or was less than
the aggregate amount of the outstanding Advances and the unpaid interest
accrued thereon, even if the Lender accepts the first offer received and
does not offer the Collateral to more than one offeree, as long as such
sale was conducted in a commercially reasonable manner. Any sale of
Collateral
67
pursuant to the terms of a Purchase Commitment shall be deemed to have been
made in a commercially reasonable manner.
8.2(e) The Company acknowledges that Mortgage Loans and Mortgage-
backed Securities are collateral of a type which is customarily sold on a
recognized market. The Company waives any right it may have to prior notice
of the sale of any Pledged Mortgage or Pledged Security, and agrees that
the Lender may purchase any Mortgage Loans or Mortgage-backed Securities at
a private sale of such Collateral.
8.2(f) The Company specifically waives and releases (to the extent
permitted by law) any equity or right of redemption, all rights of
redemption, stay or appraisal which the Company has or may have under any
rule of law or statute now existing or hereafter adopted, and any right to
require the Lender to (1) proceed against any Person, (2) proceed against
or exhaust any of the Collateral or pursue its rights and remedies as
against the Collateral in any particular order, or (3) pursue any other
remedy in its power. The Lender shall not be required to take any steps
necessary to preserve any rights of the Company against holders of
mortgages prior in lien to the Lien of any Mortgage included in the
Collateral or to preserve rights against prior parties.
8.2(g) The Lender may, but shall not be obligated to, advance any
sums or do any act or thing necessary to uphold and enforce the Lien and
priority of, or the security intended to be afforded by, any Mortgage
included in the Collateral, including, without limitation, payment of
delinquent taxes or assessments and insurance premiums. All advances,
charges, costs and expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Lender in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement hereof,
together with interest thereon, at the Default Rate, from the time of
payment until repaid, shall become a part of the principal balance
outstanding hereunder and under the Notes.
68
8.2(h) No failure on the part of the Lender to exercise, and no delay
in exercising, any right, power or remedy provided hereunder, at law or in
equity shall operate as a waiver thereof; nor shall any single or partial
exercise by the Lender of any right, power or remedy provided hereunder, at
law or in equity preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. Without intending to limit
the foregoing, all defenses based on the statute of limitations are hereby
waived by the Company to the extent permitted by law. The remedies herein
provided are cumulative and are not exclusive of any remedies provided at
law or in equity.
8.2(i) The Company acknowledges that the Company and the Lender have
entered into, and may from time to time hereafter enter into, agreements
("Acknowledgment Agreements") with FNMA, FHLMC or any other Investor in
order to obtain the consent of FNMA, FHLMC or any other Investor to the
assignment of and security interest granted in the Servicing Contracts
pursuant to Section 3 hereof, as the same may be amended from time to time.
The Company further acknowledges that the Acknowledgment Agreements may
contain certain provisions concerning the enforcement by the Lender of the
security interest of the Secured Parties in the Servicing Contracts subject
thereto. The Company agrees that the disposition of its rights in any
Servicing Contract pursuant to the terms of the applicable Acknowledgment
Agreement shall be deemed commercially reasonable within the meaning of
Section 9-504(3) of the Uniform Commercial Code of Minnesota. The Company
hereby waives any claims it might otherwise have against the Lender as a
result of the Lender's compliance with the terms of any Acknowledgment
Agreement.
8.3 Application of Proceeds. The proceeds of any sale, disposition or
-----------------------
other enforcement of the Lender's security interest in all or any part of the
Collateral shall be applied by the Lender:
First, to the payment of the costs and expenses of such sale or
-----
enforcement, including reasonable compensation to the Lender's agents and
counsel, and all expenses,
69
liabilities and advances made or incurred by or on behalf of the Lender in
connection therewith;
Second, to the payment of interest accrued and unpaid on the Notes;
------
Third, to the payment of any other Obligations due (other than
-----
principal and interest) under the this Agreement and the Loan Documents;
Fourth, to the payment of the outstanding principal balance of the
------
Notes; and
Finally, to the payment to the Company, or to its successors or
-------
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
If the proceeds of any such sale, disposition or other enforcement are
insufficient to cover the costs and expenses of such sale, as aforesaid,
and the payment in full of all Obligations, the Company shall remain liable
for any deficiency.
8.4 Lender Appointed Attorney-in-Fact. The Lender is hereby appointed the
---------------------------------
attorney-in-fact of the Company, with full power of substitution, for the
purpose of carrying out the provisions hereof and taking any action and
executing any instruments which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Lender shall have the right and power to give notices of its
security interest in the Collateral to any Person, either in the name of the
Company or in its own name, to endorse all Pledged Mortgages or Pledged
Securities payable to the order of the Company, to change or cause to be changed
the book-entry registration or name of subscriber or Investor on any Pledged
Security, or to receive, endorse and collect all checks made payable to the
order of the Company representing any payment on account of the principal of or
interest on, or the proceeds of sale of, any of the Pledged Mortgages or Pledged
Securities and to give full discharge for the same.
70
8.5 Right of Set-Off. If the Company shall default in the payment of the
----------------
Notes, any interest accrued thereon, or any other sums which may become payable
hereunder when due, or in the performance of any of its other obligations or
liabilities under this Agreement, the Lender shall have the right, at any time
and from time to time, without notice, to set-off and to appropriate or apply
any and all property or indebtedness of any kind at any time held or owing by
the Lender to or for the credit or the account of the Company against and on
account of the Obligations of the Company under the Notes and this Agreement,
irrespective of whether or not the Lender shall have made any demand hereunder
and whether or not said Obligations shall have matured.
9. NOTICES.
All notices, demands, consents, requests and other communications required
or permitted to be given or made hereunder (collectively, "Notices") shall,
except as otherwise expressly provided hereunder, be in writing and shall be
delivered in person or telecopied or mailed, first class or delivered by
overnight courier, return receipt requested, postage prepaid, addressed to the
respective parties hereto at their respective addresses hereinafter set forth
or, as to any such party, at such other address as may be designated by it in a
Notice to the other. All Notices shall be conclusively deemed to have been
properly given or made when duly delivered, in person or by overnight courier,
or if mailed, on the date of receipt as noted on the return receipt, or where
telecopied, if the transmitting machine has provided an electronic confirmation
of such transmission and such telecopy is followed by delivery of a hard copy,
addressed as follows:
if to the Company: National Mortgage Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, COO/EVP
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Lender: Residential Funding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
Director
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Residential Funding Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.
The Company shall: (a) pay a documentation production fee of Five Hundred
Dollars ($500) and all reasonable out-of-pocket costs and expenses of Lender,
including, without limitation, reasonable fees and disbursements of counsel, in
connection with the preparation and negotiation of this Agreement; (b) pay such
additional documentation production fees, as the Lender may require and all
reasonable out-of-pocket costs and expenses of the Lender, including, without
limitation, reasonable fees and disbursements of counsel (including allocated
costs of internal counsel), in connection with the amendment, enforcement and
administration of this Agreement, the Notes, and other Loan Documents and the
making and repayment of the Advances and the payment of interest thereon; (c)
indemnify, pay, and hold harmless the Lender and any holder of the Notes from
and against, any and all present and future stamp, documentary and other similar
taxes with respect to the foregoing matters and save the Lender and the holder
or holders of the Notes harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes; and (d)
indemnify, pay and hold harmless the Lender and any of its officers, directors,
employees or agents and any subsequent holder of the Notes (collectively called
the "Indemnitees") from and against any and all liabilities, obligations,
losses, damages, penalties, judgments, suits, reasonable costs, reasonable
expenses and reasonable disbursements of any kind or nature whatsoever
(including without limitation, the reasonable fees and disbursements of counsel
of the Indemnitees (including reasonable allocated costs of internal counsel) in
connection with any
72
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto) which may be imposed upon,
incurred by or asserted against such Indemnitees in any manner relating to or
arising out of this Agreement, the Notes, or any other Loan Document or any of
the transactions contemplated hereby or thereby (the "Indemnified Liabilities")
asserted by a third party; provided, however, that the Company shall have no
obligation hereunder with respect to Indemnified Liabilities arising from the
negligence, gross negligence, reckless disregard or willful misconduct of any
such Indemnitees. To the extent that the undertaking to indemnify, pay and hold
harmless as set forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them. The agreement of the Company contained in this
Subsection (d) shall survive the expiration or termination of this Agreement and
the payment in full of the Notes. Attorneys' fees and disbursements incurred in
enforcing, or on appeal from, a judgment pursuant hereto shall be recoverable
separately from and in addition to any other amount included in such judgment,
and this clause is intended to be severable from the other provisions of this
Agreement and to survive and not be merged into such judgment.
11. FINANCIAL INFORMATION.
All financial statements and reports furnished to the Lender hereunder
shall be prepared in accordance with GAAP, applied on a basis consistent with
that applied in preparing the financial statements as at the end of and for the
last fiscal year ended (except to the extent otherwise required to conform to
good accounting practice).
12. MISCELLANEOUS.
12.1 Terms Binding Upon Successors; Survival of Representations. The terms
----------------------------------------------------------
and provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. All
73
representations, warranties, covenants and agreements herein contained on the
part of the Company shall survive the making of any Advance and the execution of
the Notes, and shall be effective so long as the Commitment is outstanding
hereunder or there remain any Obligations to be paid or performed.
12.2 Assignment. This Agreement may not be assigned by the Company. This
----------
Agreement and the Notes, along with the Lender's security interest in any or all
of the Collateral, may, at any time, be transferred or assigned, in whole or in
part, by the Lender, and any assignee thereof may enforce this Agreement, the
Notes and such security interest.
12.3 Amendments. Except as otherwise provided in this Agreement, this
----------
Agreement may not be amended, modified or supplemented unless such amendment,
modification or supplement is set forth in a writing signed by the parties
hereto.
12.4 Governing Law. This Agreement and the other Loan Documents shall be
-------------
governed by the laws of the State of Minnesota, without reference to its
principles of conflicts of laws.
12.5 Participations. The Lender may at any time sell, assign or grant
--------------
participations in, or otherwise transfer to any other Person (a "Participant"),
all or part of the Obligations. Without limitation of the exclusive right of the
Lender to collect and enforce such Obligations, the Company agrees that each
disposition will give rise to a debtor-creditor relationship of the Company to
the Participant in accordance with the terms of this Agreement, and the Company
authorizes each Participant, upon the occurrence of an Event of Default, to
proceed directly by right of setoff, banker's lien, or otherwise, against any
assets of the Company which may be in the hands of such Participant in
accordance with the terms of this Agreement. The Company authorizes the Lender
to disclose to any prospective Participant and any Participant any and all
information in the Lender's possession concerning the Company, this Agreement
and the Collateral.
12.6 Relationship of the Parties. This Agreement provides for the making
---------------------------
of Advances by the Lender, in its capacity as a lender, to the Company, in its
capacity as a borrower, and for
74
the payment of interest, repayment of principal by the Company to the Lender,
and for the payment of certain fees by the Company to the Lender. The
relationship between the Lender and the Company is limited to that of
creditor/secured party, on the one hand, and debtor, on the other hand. The
provisions herein for compliance with financial covenants and delivery of
financial statements are intended solely for the benefit of the Lender to
protect its interests as lender in assuring payments of interest and repayment
of principal and payment of certain fees, and nothing contained in this
Agreement shall be construed as permitting or obligating the Lender to act as a
financial or business advisor or consultant to the Company, as permitting or
obligating the Lender to control the Company or to conduct the Company's
operations, as creating any fiduciary obligation on the part of the Lender to
the Company, or as creating any joint venture, agency, or other relationship
between the parties hereto other than as explicitly and specifically stated in
this Agreement. The Company acknowledges that it has had the opportunity to
obtain the advice of experienced counsel of its own choosing in connection with
the negotiation and execution of this Agreement and to obtain the advice of such
counsel with respect to all matters contained herein. The Company further
acknowledges that it is experienced with respect to financial and credit matters
and has made its own independent decisions to apply to the Lender for credit and
to execute and deliver this Agreement.
12.7 Severability. If any provision of this Agreement shall be declared
------------
to be illegal or unenforceable in any respect, such illegal or unenforceable
provision shall be and become absolutely null and void and of no force and
effect as though such provision were not in fact set forth herein, but all other
covenants, terms, conditions and provisions hereof shall nevertheless continue
to be valid and enforceable.
12.8 Operational Reviews. From time to time upon reasonable advance
-------------------
request, the Company shall permit the Lender or its representative access to its
premises and records, for the purpose of conducting a review of the Company's
general mortgage business methods, policies, and procedures, auditing loan files
and reviewing financial and operational aspects of the Company's
75
business, in such a manner that does not materially interfere with the Company's
ability to conduct its business.
12.9 Consent to Credit References. The Company hereby consents to the
----------------------------
disclosure of information regarding the Company and its credit relationships
with the Lender to Persons making credit inquiries concerning the Company to the
Lender. This consent is revocable by the Company at any time upon Notice to the
Lender as provided in Section 9 hereof.
12.10 Consent to Jurisdiction. The Company hereby agrees that any action
-----------------------
or proceeding under the Loan Documents, the Notes or any document delivered
pursuant hereto may be commenced against it in any court of competent
jurisdiction within the State of Minnesota, by service of process upon the
Company by first class registered or certified mail, return receipt requested,
addressed to the Company at its address last known to the Lender. The Company
agrees that any such suit, action or proceeding arising out of or relating to
this Agreement or any other such document may be instituted in the Hennepin
County State District Court or in the United States District Court for the
District of Minnesota at the option of the Lender; and the Company hereby waives
any objection to the jurisdiction or venue of any such court with respect to, or
the convenience of any court as a forum for, any such suit, action or
proceeding. Nothing herein shall affect the right of the Lender to accomplish
service of process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction
or court.
12.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument.
12.12 Entire Agreement. This Agreement, the Notes and the other Loan
----------------
Documents represent the final agreement among the parties hereto and thereto
with respect to the subject matter hereof and thereof, and may not be
contradicted by evidence of prior or contemporaneous oral agreements among such
parties. There are no oral agreements among the parties with respect to the
subject matter hereof and thereof.
76
12.13 WAIVER OF JURY TRIAL. THE COMPANY AND THE LENDER EACH HEREBY (a)
--------------------
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY THE COMPANY AND THE
LENDER, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT OF A JURY TRIAL WOULD OTHERWISE ACCRUE. THE
LENDER AND THE COMPANY IS EACH HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS
AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER HEREOF AND
THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING
WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, THE COMPANY AND THE LENDER EACH
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING
THE OTHER PARTY'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF
ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.
77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By:____________________________
Its:___________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:_____________________________
Its: Director
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public, personally appeared
________________________________, the _________________________ of NATIONAL
MORTGAGE CORPORATION, a Colorado corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
78
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public, personally appeared
________________________________, the Director of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
(SEAL) My Commission Expires:
79
FIRST AMENDMENT TO
-------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS FIRST AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 11th day of July 1996, by and between
NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the "Company") and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-One
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans as evidenced by a Warehousing Promissory Note
in the principal sum of Twenty-One Million One Hundred Thousand Dollars
($21,100,000), dated as of January 19, 1996, a Working Capital Promissory Note
in the principal sum of One Million One Hundred Thousand Dollars ($1,100,000)
dated as of January 19, 1996 (the "Notes"), and by a Warehousing Credit and
Security Agreement dated as of January 19, 1996, as the same may have been
amended or supplemented (the "Agreement"); and
WHEREAS, the Company has requested the Lender to extend the period for
which the Commitment under the Agreement has been made, and the Lender has
agreed to such extension subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement.
2. The definition of Maturity Date in Section 1.1 of the Agreement shall
be amended by inserting the date "October 31, 1996" in place of "July 31, 1996"
wherever it appears in such definition.
-1-
3. The Effective Date of this Amendment shall be 7/24/96, the date on
which the Company has complied with all the terms and conditions of this
Amendment.
4. Upon execution of this Amendment, the Company agrees to pay to the
Lender the pro rata Commitment Fee on the portion of the Commitment Amount for
the time period from August 1, 1996 to and including September 30, 1996.
5. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed Certificate of Secretary with corporate
resolutions; (c) a Two Hundred Fifty Dollar ($250) document production fee; and
(d) the Commitment Fee for the months of August and September.
6. The Company represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Company enforceable in accordance with their terms, as modified herein, (c) the
Lender is not in default under any of the Loan Documents and the Company has no
offset or defense to its performance or obligations under any of the Loan
Documents, (d) the representations contained in the Loan Documents remain true
and accurate in all respects, and (e) there has been no material adverse change
in the financial condition of the Company from the date of the Agreement to the
date of this Amendment.
7. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
8. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
-2-
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed on their behalf by their duly authorized officers as of the
day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By: __________________________________
Its: _________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: __________________________________
Its: _________________________________
-3-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _____________________, 1996, before me, a Notary Public, personally
appeared ___________________________________, the ________________________ of
NATIONAL MORTGAGE CORPORATION, a Colorado corporation, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public
(SEAL) My Commission Expires:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On __________________________, 1996, before me, a Notary Public, personally
appeared ___________________________________, the Vice President of RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public
(SEAL) My Commission Expires:
-4-
SECOND AMENDMENT TO
--------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS SECOND AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 31st day of October 1996, by and between
NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the "Company") and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-One
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans as evidenced by a Warehousing Promissory Note
in the principal sum of Twenty-One Million One Hundred Thousand Dollars
($21,100,000), dated as of January 19, 1996, a Working Capital Promissory Note
in the principal sum of One Million One Hundred Thousand Dollars ($1,100,000),
dated as of January 19, 1996 (the "Notes"), and by a Warehousing Credit and
Security Agreement dated as of January 19, 1996, as the same may have been
amended or supplemented (the "Agreement");
WHEREAS, the Company has requested the Lender to extend the period for
which the Commitment under the Agreement has been made, and to amend certain
other terms of the Agreement and the Lender has agreed to such extension and
amendment of the Agreement subject to the terms and conditions of this
Amendment;
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement.
-1-
2. The effective date ("Effective Date") of this Amendment shall be
October 31, 1996, the date on which the Company has complied with all the terms
and conditions of this Amendment.
3. Section 1.1 of the Agreement shall be amended by adding the following
definitions in the appropriate alphabetical order:
"HUD 203(K) Mortgage Loan" means an FHA insured Mortgage Loan secured by a
------------------------
First Mortgage, a portion of which will be used for the purpose of
rehabilitating and/or repairing the related single family property, and which
satisfies the definition of "rehabilitation loan" under 24 C.F.R. Section
203.50(a).
"RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase Commitment
-----------------
issued by RFC.
"Title I Mortgage Loan" means an FHA co-insured Mortgage Loan secured by a
---------------------
Mortgage which is underwritten in accordance with HUD underwriting standards for
the Title I Property Improvement Program as set forth in and which is reported
for insurance under the Mortgage Insurance Program authorized and administered
under Title I of the National Housing Act of 1934, as amended and the
regulations promulgated thereunder.
4. Section 1.1 of the Agreement shall be amended to delete the
definitions of "Adjusted Tangible Net Worth", "Collateral Value," "Debt,"
"Nonconforming Mortgage Loan," and "Operating Account" in their entirety,
replacing them with the following definitions:
"Adjusted Tangible Net Worth" means with respect to any Person at any date,
---------------------------
the Tangible Net Worth of such Person at such date, excluding capitalized excess
servicing fees and capitalized servicing rights, plus one percent (1%) of the
----
Adjusted Servicing Portfolio, and plus deferred taxes arising from capitalized
----
excess servicing fees and capitalized servicing rights.
"Collateral Value" means (a) with respect to any Mortgage Loan as of the
----------------
date of determination, the lesser of (i) the amount of any Advance made against
such Mortgage Loan under Section 2.1(c); or (ii) the Fair Market Value of such
Mortgage Loan; or (b) in the event Pledged Mortgages have been exchanged for
Pledged Securities, the Fair Market Value of the Mortgage
-2-
Loans backing such Pledged Securities; or (c) with respect to cash, the amount
of such cash.
"Debt" means, with respect to any Person, at any date (a) all indebtedness
----
or other obligations of such Person which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; provided that for purposes of this Agreement, there
shall be excluded from Debt at any date loan loss reserves, Subordinated Debt
not due within one year of such date, and deferred taxes arising from
capitalized excess servicing fees and capitalized servicing rights.
"Nonconforming Mortgage Loan" means a Conventional Mortgage Loan which is
---------------------------
not a Conforming Mortgage Loan or a Jumbo Mortgage Loan, which has a credit risk
rating D or better (determined using the underwriting standards of the Company
as in effect on November 12, 1996, or as revised from time to time thereafter,
provided, that any material revision is acceptable to the Lender in its
reasonable judgment (and the Lender's failure to respond within two weeks after
the Company requests approval of any such revision shall be deemed acceptance of
such revision)), and which is underwritten and approved for purchase by an
Investor prior to funding if its original principal amount exceeds Six Hundred
Thousand Dollars ($600,000).
"Operating Account" means a demand deposit account maintained at the
-----------------
Funding Bank in the name of the Company and designated for funding that portion
of each Mortgage Loan not funded by an Advance made against such Mortgage Loan
and for returning any excess payment from an Investor for a Pledged Mortgage or
Pledged Security.
5. The definition of "Maturity Date" in Section 1.1 of the Agreement
shall be amended by inserting the date "August 31, 1997" in place of "October
31, 1996" wherever it appears in such definition.
6. Section 2.1(b) of the Agreement is hereby amended to add the following
sections immediately after Section 2.1(b)(4)
-3-
(5) No Advance shall be made against a Title I Mortgage Loan or
a HUD 203(K) Mortgage Loan.
7. Section 2.4 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
2.4 Interest.
--------
2.4(a) Except as otherwise provided in Section 2.4(f), (i) the unpaid
amount of each Warehousing Advance shall bear interest during its Wet Settlement
Period at the Wet Settlement Rate and (ii) the unpaid amount of each Warehousing
Advance shall bear interest during its Received Period at the Received Rate.
2.4(b) Except as otherwise provided in Section 2.4(f), the unpaid amount
of each Working Capital Advance shall bear interest, from the date of such
Advance until paid in full, at the Working Capital Rate.
2.4(c) The Company shall be entitled to receive certain benefits based
on the average monthly Eligible Balances of the Company maintained at a
Designated Bank. For the purposes hereof, all Advances shall be called the
"Applicable Advances". After the end of each calendar month, the Lender will
calculate the interest due for the applicable month, by electing a portion
("Balance Funded Portion") of the Applicable Advances which is equal to the
lesser of (a) the Applicable Advances outstanding during such month or (b) the
average amount of Eligible Balances on deposit in non-interest bearing accounts
with a Designated Bank during such month. The Balance Funded Portion of the
Applicable Advances shall bear interest at balance funded rates of (a) two and
one-quarter percent (2.25%) per annum for the Balance Funded Portion of Advances
outstanding during the Wet Settlement Period and (b) two percent (2.00%) per
annum for the Balance Funded Portion of Advances outstanding during the Received
Period.
The Balance Funded Portion of the Applicable Advances outstanding for a
month shall be determined by (a) first, deducting the average amount of Advances
outstanding during the Wet Settlement Period for a month from the average amount
of Eligible Balances on deposit in non-interest bearing accounts during such
month, but only to the extent of the average amount of such Eligible Balances
and (b) second, to the extent Eligible
-4-
Balances on deposit in non-interest bearing accounts remain for such month,
deducting the average amount of Advances outstanding during the Received Period
for a month from the remaining average amount of such Eligible Balances during
such month, but only to the extent of the remaining average amount of such
Eligible Balances.
If, for any month, (i) a portion of the average amount of Eligible Balances
on deposit in non-interest bearing accounts remains ("Remainder") after the
Balance Funded Portion has been deducted or (ii) the Company has Eligible
Balances on deposit in interest bearing accounts in respect of which the Lender
has received a Depository Benefit, the Lender shall provide a benefit in the
form of an "Earnings Credit" on the Eligible Balances maintained in time deposit
accounts with a Designated Bank, and the Lender shall provide a benefit in the
form of an "Earnings Allowance" on the Eligible Balances maintained in demand
deposit accounts with a Designated Bank. Any Earnings Allowance shall be used
first and any Earnings Credit shall be used second as a credit against accrued
Miscellaneous Charges and fees, including, but not limited to Commitment Fees
and Warehousing Fees, and may be used, at the Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the month in which the benefit
was received shall be accumulated for use and must be used during the calendar
year in which the benefit was received. Any Earnings Credit not used during the
month in which the benefit was received shall be used to provide a cash benefit
to the Company.
The Lender's determination of the Balance Funded Portion, the Earnings
Credit and the Earnings Allowance for any month shall be determined by the
Lender in its sole discretion and shall be conclusive and binding absent
manifest error. In no event shall the aggregate amount of the benefits received
by the Company under this Section exceed the Depository Benefit.
Either party hereto may terminate the benefits provided for in this
Section, in whole or in part, effective immediately upon Notice to the other
party, if the terminating party shall have determined (which determination shall
be conclusive and binding absent manifest error) at any time that any applicable
law, rule, regulation, order or decree or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by
-5-
such party with any request or directive (whether or not having the force of
law) of any such authority, shall make it unlawful or impossible for such party
to continue to offer or receive all or any part of the benefits provided for in
this Section.
2.4(d) Interest shall be computed on the basis of a 360-day year and
applied to the actual number of days elapsed in each interest calculation period
and shall be payable monthly in arrears, on the tenth day of each month for the
preceding month, commencing with the first month following the Closing Date and
on the Maturity Date. Except with respect to interest due on the Maturity Date,
the Lender shall provide the Company with a statement of interest due no later
than five (5) days before the date such interest is due.
2.4(e) If, for any reason, no interest is due on an Advance, the Company
agrees to pay to the Lender an administrative fee equal to one day of interest
on such Advance at the rate applicable to such Advances under the applicable
section hereof, as in effect on the date of such Advance. Administrative and
other fees shall be due and payable in the same manner as interest is due and
payable hereunder.
2.4(f) Upon demand of the Lender and upon Notice to the Company, after
the occurrence and during the continuation of an Event of Default, the unpaid
amount of each Advance shall bear interest until paid in full at a per annum
rate of interest (the "Default Rate") equal to four percent (4%) in excess of
the rate of interest otherwise applicable to such Advance pursuant to any other
subsection of this Section 2.4 or, if no rate is applicable, the highest rate
then applicable to any outstanding Advances.
8. Section 2.10 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
2.10 Miscellaneous Charges. The Company agrees to reimburse the Lender for
---------------------
miscellaneous charges and expenses (collectively, "Miscellaneous Charges")
incurred by or on behalf of the Lender in connection with the handling and
administration of Advances, and to reimburse the Lender for Miscellaneous
Charges incurred by or on behalf of the Lender in connection with the handling
and administration of the Collateral. For the purposes hereof, Miscellaneous
Charges shall include, but not be limited to,
-6-
charges for wire transfers, check processing charges, charges for security
delivery fees, charges for overnight delivery of Collateral to Investors,
Funding Bank's service charges and Designated Bank's service charges.
Miscellaneous Charges are due when incurred, but shall not be delinquent if paid
within fifteen (15) days after receipt of an invoice or an account analysis
statement from the Lender.
9. Section 7.8 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
7.8 Liquidity. Permit the Liquid Assets of the Company (and its
---------
Subsidiaries, on a consolidated basis) at any time to be less than Five Hundred
Thousand Dollars ($500,000).
10. Upon execution of this Amendment, the Company agrees to pay to the
Lender the pro rata Commitment Fee on the Commitment Amount for the time period
from the Effective Date to and including December 31, 1996.
11. Exhibits C-SF and D-SF to the Agreement are hereby deleted in their
entirety and replaced with the new Exhibits C-SF and D-SF attached to this
Amendment. All references in the Agreement to Exhibits C-SF and D-SF shall be
deemed to refer to the new Exhibits C-SF and D-SF.
12. Exhibit I-SF to the Agreement is deleted in its entirety and replaced
with the new Exhibit I-SF attached to this Amendment. All references in this
Amendment and the Agreement to Exhibit I-SF shall be deemed to refer to the new
Exhibit I-SF.
13. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed Certificate of Secretary with corporate
resolutions; (c) a current certified tax, lien and judgment search of the
appropriate public records for the Company, including a search of Uniform
Commercial Code financing statements, which search shall not have disclosed the
existence of any prior Lien on the Collateral other than in favor of the Lender
or as permitted hereunder; (d) current Certificates of Good Standing of the
Company; (e) current insurance information; (f) the Commitment Fee for the
months of November and December, 1996; and (g) a Two Hundred Fifty Dollar ($250)
document production fee.
-7-
14. The Company represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Company enforceable in accordance with their terms, as modified herein, (c) the
Lender is not in default under any of the Loan Documents and the Company has no
offset or defense to its performance or obligations under any of the Loan
Documents, (d) the representations contained in the Loan Documents remain true
and accurate in all respects, and (e) there has been no material adverse change
in the financial condition of the Company from the date of the Agreement to the
date of this Amendment.
15. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
16. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
-8-
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed on their behalf by their duly authorized officers as of the
day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By:_____________________________________
Its: ___________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:_____________________________________
Its: ___________________________________
-9-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public, personally appeared
___________________________________, the ____________________ of NATIONAL
MORTGAGE CORPORATION, a Colorado corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public
(SEAL) My Commission Expires:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1996, before me, a Notary Public, personally appeared
________________________________, the Director of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public
(SEAL) My Commission Expires:
-10-
THIRD AMENDMENT TO
------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS THIRD AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 11th day of April 1997, by and between
NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the "Company") and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-One
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans as evidenced by a Warehousing Promissory Note
in the principal sum of Twenty-One Million One Hundred Thousand Dollars
($21,100,000), dated January 19, 1996, a Working Capital Promissory Note in the
principal sum of One Million One Hundred Thousand Dollars ($1,100,000), dated
January 19, 1996 (the "Notes"), and by a Warehousing Credit and Security
Agreement dated as of January 19, 1996, as the same may have been amended or
supplemented (the "Agreement"); and
WHEREAS, the Company has requested the Lender to temporarily increase the
Commitment Amount, and the Lender has agreed to such increase subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement.
2. The effective date ("Effective Date") of this Amendment shall be
4/16/97, the date on which the Company has complied with all the terms and
conditions of this Amendment.
-1-
3. Section 1.1 of the Agreement is hereby amended by adding the following
definitions:
"Commitment Amount" means Twenty-One Million One Hundred Thousand Dollars
($21,100,000). Notwithstanding the foregoing, during the period from April 14,
1997 to and including April 30, 1997, the Commitment Amount shall be temporarily
increased to Thirty Million One Hundred Thousand Dollars ($30,100,000). On the
first Business Day following the expiration of the temporary increase of the
Commitment Amount, the Company shall repay to the Lender the amount by which the
outstanding Advances exceed the Commitment Amount.
4. Upon execution of this Amendment, the Company agrees to pay to the
Lender the pro rata Commitment Fee on the increase portion of the Commitment
Amount for the time period from the Effective Date to and including April 30,
1997.
5. Exhibit A-1 to the Agreement is deleted in its entirety and Exhibit
----------- -------
A-1 attached to this Amendment is substituted in lieu thereof. The Warehousing
---
Promissory Note is amended and restated in its entirety as set forth in the
First Amended and Restated Warehousing Promissory Note, in the form of Exhibit
-------
A-1 attached to this Amendment. All references in this Amendment and in the
---
Agreement to the Warehousing Promissory Note shall be deemed to refer to the
First Amended and Restated Warehousing Promissory Note delivered in connection
with this Amendment.
6. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed original of the First Amended and Restated
Warehousing Promissory Note; (c) a Certificate of Secretary with Corporate
Resolutions; (d) the Commitment Fee on the increase portion of the Commitment
Amount; and (e) a Two Hundred Fifty Dollar ($250) document production fee.
7. The Company represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Company enforceable in accordance with their terms, as modified herein, (c) the
Lender is not in default under any of the Loan Documents and the Company has no
offset or defense to its performance or obligations under any of the Loan
Documents, (d) the
-2-
representations contained in the Loan Documents remain true and accurate in all
respects, and (e) there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date of this
Amendment.
8. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
9. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed on their behalf by their duly authorized officers as of the
day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By:___________________________________
Its: _________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:___________________________________
Its: _________________________________
-3-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On __________________________, 1997, before me, a Notary Public, personally
appeared __________________________________, the ______________________ of
NATIONAL MORTGAGE CORPORATION, a Colorado corporation, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________________
Notary Public
(SEAL) My Commission Expires:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _____________________________, 1997, before me, a Notary Public, personally
appeared __________________________________, the Director of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________________
Notary Public
(SEAL) My Commission Expires:
-4-
FOURTH AMENDMENT TO
-------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS FOURTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 16th day of May 1997, by and between
NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the "Company") and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-One
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans as evidenced by a First Amended and Restated
Warehousing Promissory Note in the principal sum of Thirty Million One Hundred
Thousand Dollars ($30,100,000), dated April 10, 1997, a Working Capital
Promissory Note in the principal sum of One Million One Hundred Thousand Dollars
($1,100,000), dated January 19, 1996 (the "Notes"), and by a Warehousing Credit
and Security Agreement dated as of January 19, 1996, as the same may have been
amended or supplemented (the "Agreement"); and
WHEREAS, the Company has requested the Lender to temporarily increase the
Commitment Amount, and the Lender has agreed to such increase subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement.
2. The effective date ("Effective Date") of this Amendment shall be
5/16/97, the date on which the Company has complied with all the terms and
conditions of this Amendment.
-1-
3. Section 1.1 of the Agreement is hereby amended to delete the definition
of "Commitment Amount" in its entirety and to substitute the following in lieu
thereof:
"Commitment Amount" means Twenty-One Million One Hundred Thousand
-----------------
Dollars ($21,100,000). Notwithstanding the foregoing, during the period
from May 16, 1997 to and including June 30, 1997, the Commitment Amount
shall be temporarily increased to Forty-One Million One Hundred Thousand
Dollars ($41,100,000). On the first Business Day following the expiration
of the temporary increase of the Commitment Amount, the Company shall
repay to the Lender the amount by which the outstanding Advances exceed
the Commitment Amount.
4. Upon execution of this Amendment, the Company agrees to pay to the
Lender the pro rata Commitment Fee on the increase portion of the Commitment
Amount for the time period from May 16, 1997, to and including June 30, 1997.
5. Exhibit A-1 to the Agreement is deleted in its entirety and Exhibit A-1
----------- -----------
attached to this Amendment is substituted in lieu thereof. The First Amended
and Restated Warehousing Promissory Note is amended and restated in its entirety
as set forth in the Second Amended and Restated Warehousing Promissory Note, in
the form of Exhibit A-1 attached to this Amendment. All references in this
-----------
Amendment and in the Agreement to the First Amended and Restated Warehousing
Promissory Note shall be deemed to refer to the Second Amended and Restated
Warehousing Promissory Note delivered in connection with this Amendment.
6. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed original of the Second Amended and Restated
Warehousing Promissory Note; (c) a Certificate of Secretary with Corporate
Resolutions; (d) the Commitment Fee on the increase portion of the Commitment
Amount; and (e) a Two Hundred Fifty Dollar ($250) document production fee.
7. The Company represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid
-2-
and binding agreements and obligations of the Company enforceable in accordance
with their terms, as modified herein, (c) the Lender is not in default under any
of the Loan Documents and the Company has no offset or defense to its
performance or obligations under any of the Loan Documents, (d) the
representations contained in the Loan Documents remain true and accurate in all
respects, and (e) there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date of this
Amendment.
8. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
9. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed on their behalf by their duly authorized officers as of the
day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By:_____________________________________
Its:____________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:_____________________________________
Its:____________________________________
-3-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1997, before me, a Notary Public, personally appeared
________________________________, the _____________________ of NATIONAL MORTGAGE
CORPORATION, a Colorado corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________________
Notary Public
(SEAL) My Commission Expires:
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1997, before me, a Notary Public, personally appeared
________________________________, the Director of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_____________________________________
Notary Public
(SEAL) My Commission Expires:
-4-
FIFTH AMENDMENT TO
------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS FIFTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 12th day of August 1997, by and between
NATIONAL MORTGAGE CORPORATION, a Colorado corporation (the "Company") and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-One
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans as evidenced by a Second Amended and Restated
Warehousing Promissory Note in the principal sum of Forty-One Million One
Hundred Thousand Dollars ($41,100,000), dated May 16, 1997, and a Working
Capital Promissory Note in the principal sum of One Million One Hundred Thousand
Dollars ($1,100,000), dated January 19, 1996 (the "Notes"), and by a Warehousing
Credit and Security Agreement dated January 19, 1996, as the same may have been
amended or supplemented (the "Agreement");
WHEREAS, the Company has requested the Lender to extend the period for
which the Commitment under the Agreement has been made and to amend certain
other terms of the Agreement, and the Lender has agreed to such extension and
amendment of the Agreement subject to the terms and conditions of this
Amendment;
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement.
2. The effective date ("Effective Date") of this Amendment shall be
9/2/97, the date on which the Company has complied with all the terms and
conditions of this Amendment.
-1-
3. Section 1.1 of the Agreement shall be amended by adding the following
definitions in the appropriate alphabetical order:
"Designated Bank Charges" means any fees, interest or other charges that
-----------------------
would otherwise be payable to a Designated Bank, including Federal Deposit
Insurance Corporation insurance premiums, service charges and such other charges
as may be imposed by governmental authorities from time to time.
"High LTV Mortgage Loan" means a Mortgage Loan of which the sum of the
----------------------
maximum amount available to be borrowed thereunder (whether or not borrowed), at
the time of origination plus the Mortgage Note Amounts of all other Mortgage
Loans secured by the related improved real property exceeds one hundred percent
(100%) of the appraised value of such related improved real property.
"Manufactured Home" means a structure that is built on a permanent chassis
-----------------
(steel frame) with the wheel assembly necessary for transportation in one or
more sections to a permanent site or semi-permanent site and which has been
built in compliance with the National Manufactured Housing Construction and
Safety Standards established by HUD.
"Receivables" has the meaning set forth in Section 3.1(g) hereof.
-----------
"Rejected Mortgage Loan" means a Mortgage Loan which was warehoused by the
----------------------
Lender under the terms of this Agreement and committed for purchase under a
Purchase Commitment, but which has been rejected for purchase by an Investor, or
for inclusion in a Mortgage Pool by the pool custodian.
"Repurchase Advance" means an Advance made against a Repurchased Mortgage
------------------
Loan or a Rejected Mortgage Loan. The Lender shall pre-approve each Repurchase
Advance.
"Repurchased Mortgage Loan" means a Mortgage Loan which has been
-------------------------
repurchased from an investor or a Mortgage Pool pursuant to a Servicing Contract
or sales contract, or for which the Company has paid the Release Amount to the
Lender as required under Sections 2.5(d) or 8.1(d) using the proceeds of a
Repurchase Advance, or is in the process of foreclosure.
-2-
"Repurchase Rate" means a floating rate of interest equal to two and one-
---------------
quarter percent (2.25%) per annum over LIBOR. The Repurchase Rate shall be
adjusted on and as of the effective date of each weekly change in LIBOR. The
Lender's determination of the Repurchase Rate as of any date of determination
shall be conclusive and binding, absent manifest error.
"RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase Commitment
-----------------
issued by RFC.
4. Section 1.1 of the Agreement shall be amended to delete the definitions
of "Conventional Mortgage Loan," "Debt," "Eligible Balances," "Fair Market
Value," "Home Equity Loan," "Maturity Date," "Mortgage," "Mortgage Note Amount,"
"Second Mortgage Loan" and "Warehousing Advance" in their entirety, replacing
them with the following definitions:
"Conventional Mortgage Loan" means a closed-end First Mortgage Loan other
--------------------------
than an FHA insured Mortgage Loan, a VA guaranteed Mortgage Loan or a High LTV
Mortgage Loan.
"Debt" means, with respect to any Person, at any date (a) all indebtedness
----
or other obligations of such Person which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; provided that for purposes of this Agreement, there
shall be excluded from Debt at any date loan loss reserves, Subordinated Debt
not due within one year of such date, and deferred taxes arising from
capitalized excess servicing fees and capitalized servicing rights.
"Eligible Balances" means all funds of or maintained by the Company and its
-----------------
Subsidiaries in accounts at a Designated Bank, less balances to support float,
reserve requirements, and such other reductions as may be imposed by
governmental authorities from time to time.
"Fair Market Value" means at any time for a Mortgage Loan or the related
-----------------
Mortgage-backed Security (if such Mortgage Loan is to be used to back a
Mortgage-backed Security), (a) if such Mortgage Loan or the related Mortgage-
backed Security is covered by a Purchase Commitment, the Committed Purchase
Price, or (b)
-3-
otherwise, the market price for such Mortgage Loan or Mortgage-backed Security,
determined by the Lender based on market data for similar Mortgage Loans or
Mortgage-backed Securities and such other criteria as the Lender deems
appropriate.
"Home Equity Loan" means an open-ended revolving line of credit that is a
----------------
Mortgage Loan secured by either a First Mortgage or a Second Mortgage, which is
not a High LTV Mortgage Loan or a Title I Mortgage Loan.
"Liquid Assets" means, with respect to any Person at any date, the
-------------
following assets owned by such Person on such date: cash, funds on deposit in
any bank located in the United States, investment grade commercial paper, money
market funds, marketable securities and the excess, if any, of Mortgage Loans
and Mortgage-backed Securities held for sale (valued in accordance with GAAP)
over the outstanding aggregate principal amount of notes or other debt
instruments against which such Mortgage Loans or Mortgage-backed Securities are
pledged as Collateral.
"Maturity Date" shall mean the earlier of: (a) the close of business on
-------------
August 31, 1998, as such date may be extended from time to time in writing by
the Lender, in its sole discretion, on which date the Commitment shall expire of
its own term, and without the necessity of action by the Lender, and (b) the
date the Advances become due and payable pursuant to Section 8.2 below.
"Mortgage" means a mortgage or deed of trust on improved real property
--------
(including, without limitation, real property to which a Manufactured Home has
been affixed in a manner such that the Lien of a mortgage or deed of trust would
attach to such Manufactured Home under applicable real property law). A
Mortgage may be a First Mortgage or a Second Mortgage.
"Mortgage Note Amount" means, as of the date of determination, the then
--------------------
outstanding unpaid principal amount of a Mortgage Note (whether or not an
additional amount is available to be drawn thereunder).
"Second Mortgage Loan" means a closed-end Mortgage Loan secured by a Second
--------------------
Mortgage, which is not a Title I Mortgage Loan or a High LTV Mortgage Loan.
-4-
"Warehousing Advance" means an Advance made against a Conforming Mortgage
-------------------
Loan, a Jumbo Mortgage Loan, a Nonconforming Mortgage Loan that is subject to a
Purchase Commitment in accordance with the terms of this Agreement, a Rejected
Mortgage Loan, or a Repurchased Mortgage Loan.
5. Section 2.1(b) of the Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:
2.1(b) Warehousing Advances other than Repurchase Advances shall be used
by the Company solely for the purpose of funding the acquisition or origination
of Mortgage Loans. Repurchase Advances shall be used by the Company solely for
the purpose of repurchasing Repurchase Mortgage Loans from an investor or
Mortgage Pool or repaying a Warehousing Advance outstanding against a Rejected
Mortgage Loan. All Warehousing Advances shall be made at the request of the
Company, in the manner hereinafter provided in Section 2.2 hereof, against the
pledge of such Mortgage Loans as Collateral therefor. Working Capital Advances
shall be used by the Company solely for short term working capital purposes. The
following limitations on the Advances shall be applicable:
(1) No Warehousing Advance shall be made against a Mortgage Loan
other than a Single Family Loan, a Conforming Mortgage Loan or a Jumbo
Mortgage Loan, and no Warehousing Advance other than a Repurchase
Advance shall be made against a Mortgage Loan that is not covered by a
Purchase Commitment.
(2) The aggregate amount of Wet Settlement Advances outstanding
at any one time shall not exceed Six Million Dollars ($6,000,000).
(3) No Warehousing Advance other than a Repurchase Advance shall
be made against any Mortgage Loan which was closed more than ninety
(90) days prior to the date of the requested Advance, except with the
Lender's prior written consent.
(4) The aggregate amount of Working Capital Advances outstanding
at any one time shall not exceed One Million One Hundred Thousand
Dollars ($1,100,000) (the "Working Capital Sublimit").
-5-
(5) No Advance shall be made against a Title I Mortgage Loan, a
HUD 203(K) Mortgage Loan or a High LTV Mortgage Loan.
(6) The aggregate amount of Repurchase Advances outstanding at
any one time shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000).
6. Section 2.1(c) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
2.1(c) No Warehousing Advance shall exceed the following amount
applicable to the type of Collateral at the time it is pledged:
(1) For a Conforming Mortgage Loan, a Jumbo Mortgage Loan or a
Nonconforming Mortgage Loan, pledged hereunder, other than an RFC
Mortgage Loan, the lesser of (i) ninety-eight percent (98%) of the
Committed Purchase Price or (ii) the Mortgage Note Amount.
(2) For a Repurchased Mortgage Loan pledged hereunder, ninety-
five percent (95%) of the Mortgage Note Amount.
7. Section 2.4 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
2.4 Interest.
--------
2.4(a) Except as otherwise provided in Section 2.4(g) hereof, (i) the
unpaid amount of each Warehousing Advance other than a Repurchase Advance shall
bear interest during the Wet Settlement Period at the Wet Settlement Rate, and
(ii) the unpaid amount of each Warehousing Advance other than a Repurchase
Advance shall bear interest during the Received Period at the Received Rate.
2.4(b) Except as otherwise provided in Section 2.4(g) hereof, the unpaid
amount of each Working Capital Advance shall bear interest, from the date of
such Advance, until paid in full, at the Working Capital Rate.
-6-
2.4(c) Except as otherwise provided in Section 2.4(g) hereof, the unpaid
amount of each Repurchase Advance shall bear interest, from the date of such
Advance, until paid in full, at the Repurchase Rate.
2.4(d) The Company is entitled to receive a benefit in the form of an
"Earnings Credit" on the portion of the Eligible Balances maintained in time
deposit accounts with a Designated Bank, and the Company is entitled to receive
a benefit in the form of an "Earnings Allowance" on the portion of the Eligible
Balances maintained in demand deposit accounts with a Designated Bank. Any
Earnings Allowance shall be used first and any Earnings Credit shall be used
second as a credit against accrued Designated Bank Charges, any other
Miscellaneous Charges and fees, including, but not limited to Commitment Fees
and Warehousing Fees, and may be used, at the Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the month in which the benefit
was received shall be accumulated for use and must be used within six (6) months
of the month in which the benefit was received. Any Earnings Credit not used
during the month in which the benefit was received shall be used to provide a
cash benefit to the Company. The Lender's determination of the Earnings Credit
and the Earnings Allowance for any month shall be determined by the Lender in
its sole discretion and shall be conclusive and binding absent manifest error.
In no event shall the benefit received by the Company exceed the Depository
Benefit.
Either party hereto may terminate the benefits provided for in this Section
effective immediately upon Notice to the other party, if the terminating party
shall have determined (which determination shall be conclusive and binding
absent manifest error) at any time that any applicable law, rule, regulation,
order or decree or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by such party with any request or directive (whether or
not having the force of law) of any such authority, shall make it unlawful or
impossible for such party to continue to offer or receive the benefits provided
for in this Section.
2.4(e) Interest shall be computed on the basis of a 360-day year and
applied to the actual number of days elapsed in
-7-
each interest calculation period and shall be payable monthly in arrears, on the
tenth day of each month for the preceding month, commencing with the first month
following the Effective Date and on the Maturity Date. Except with respect to
interest due on the Maturity Date, the Lender shall provide the Company with a
statement of interest due no later than five (5) days before the date such
interest is due.
2.4(f) If, for any reason, no interest is due on an Advance, the Company
agrees to pay to the Lender an administrative fee equal to one day of interest
on such Advance at the rate applicable to such Advances under the applicable
section hereof, as in effect on the date of such Advance. Administrative and
other fees shall be due and payable in the same manner as interest is due and
payable hereunder.
2.4(g) Upon Notice to the Company, after the occurrence and during the
continuation of an Event of Default, the unpaid amount of each Advance shall
bear interest until paid in full at a per annum rate of interest (the "Default
Rate") equal to four percent (4%) in excess of the rate of interest otherwise
applicable to such Advance pursuant to any other subsection of this Section 2.4
or, if no rate is applicable, the highest rate then applicable to any
outstanding Advances.
8. Section 2.5(d) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
2.5(d) The Company shall be obligated to pay to the Lender, without the
necessity of prior demand or notice from the Lender, and the Company authorizes
the Lender to cause the Funding Bank to charge the Company's account for, the
amount of any outstanding Warehousing Advance against a specific Pledged
Mortgage, upon the earliest occurrence of any of the following events:
(1) For a Pledged Mortgage with respect to which a longer or
shorter period is not prescribed elsewhere in the Section 2.5(d), one
hundred eighty (180) days elapse from the date of the initial
Warehousing Advance made by the Lender against such Pledged Mortgage,
whether or not such Pledged Mortgage is included in an Eligible
Mortgage Pool.
-8-
(2) Sixty (60) days elapse from the date the Pledged Mortgage
was delivered to an Investor for examination and purchase, without the
purchase being made, or upon rejection of the Pledged Mortgage as
unsatisfactory by an Investor.
(3) One (1) Business Day elapses from the date an Advance was
made and the Pledged Mortgage which was to have been funded by such
Advance is not closed and funded.
(4) Seven (7) Business Days elapse from the date a Wet
Settlement Advance was made without receipt by the Lender of all
Collateral Documents relating to such Pledged Mortgage required to be
delivered to the Lender within such seven (7) Business Day period
pursuant to Exhibit D-SF, or such Collateral Documents, upon
examination by the Lender, are found not to be in compliance with the
requirements of this Agreement or the related Purchase Commitment;
provided, however, if the Wet Settlement Advance was made against a
Repurchased Mortgage Loan, twenty (20) days elapse from the date of
such Advance without receipt by the Lender of all Collateral Documents
relating to such Pledged Mortgage, or such Collateral Documents, upon
examination by the Lender, are found not to be in compliance with the
requirements of this Agreement.
(5) Ten (10) Business Days elapse from the date a Collateral
Document was delivered to the Company for correction or completion
under a Trust Receipt, without being returned to the Lender, and one
(1) Business Day elapses after the Lender's demand in writing to the
Company for payment of such Advance.
(6) On the date on which a Pledged Mortgage is determined to
have been originated based on untrue, incomplete or inaccurate
information, whether or not the Company had knowledge of such
misrepresentation or incorrect information, or the Pledged Mortgage is
defaulted and remains in default for a period of sixty (60) days or
more.
-9-
(7) For any Pledged Mortgage other than a Repurchased Mortgage
Loan or a Rejected Mortgage Loan, one hundred twenty (120) days elapse
from the date an Advance was made against a Pledged Mortgage without
receipt of the items required in Section 2.2(d) hereof, or such items,
upon examination by the Lender, are found not to be in compliance with
the requirements of this Agreement or the related Purchase Commitment.
(8) If the outstanding Warehousing Advances (other than
Repurchase Advances) against Pledged Mortgages of the specific
Mortgage Loan type of such Pledged Mortgage exceed the aggregate
Purchase Commitments for such Mortgage Loan type.
(9) For a Mortgage Loan, other than a Repurchased Mortgage Loan
or Rejected Mortgage Loan, three (3) Business Days after the mandatory
delivery date of the related Purchase Commitment and the specific
Pledged Mortgage was not delivered under the Purchase Commitment prior
to such mandatory delivery date, or the Purchase Commitment is
terminated; unless in each case, such Pledged Mortgage is eligible for
delivery to an Investor under a comparable Purchase Commitment
acceptable to the Lender.
(10) Upon sale, maturity or other disposition of the Pledged
Mortgage.
(11) Three hundred sixty (360) days elapse from the date of the
initial Advance made by the Lender against a Repurchased Mortgage Loan
or a Rejected Mortgage Loan.
(12) One (1) Business Day immediately preceding the date
scheduled for the foreclosure or trustee sale of the premises securing
a Rejected Mortgage Loan or Repurchased Mortgage Loan.
(13) If the Pledged Mortgage is included in a Mortgage Pool,
then, if the Mortgage Pool is an Eligible Mortgage Pool, upon sale of
the Mortgage-backed Security, or if the Mortgage Pool is not an
Eligible Mortgage Pool, within two (2) Business Days
-10-
after delivery of the Pledged Mortgages to the pool custodian.
9. Section 2.5 of the Agreement is further amended to add the following
section immediately after Section 2.5(g):
2.5(h) In addition to the payments required pursuant to Section 2.5(d),
the Company shall be obligated to pay to the Lender, without the necessity of
prior demand or notice from the Lender, and the Company authorizes the Lender to
cause the Funding Bank to charge the Company's account for, the following
amounts in respect of outstanding Advances in the following circumstances:
(1) If the principal amount of any Pledged Mortgage is prepaid
in whole or in part while an Advance is outstanding against such
Pledged Mortgage, the amount of such prepayment to be applied to such
Advance.
(2) On the fifteenth day of each month occurring more than sixty
(60) days after the date of the initial Advance made by the Lender
against a Repurchased Mortgage Loan or Rejected Mortgage Loan pledged
hereunder (whether or not initially made as a Repurchase Advance), the
Company shall prepay the outstanding principal amount of such
Repurchase Advance by five percent (5%) of the Mortgage Note Amount.
10. Section 2.10 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
2.10 Miscellaneous Charges. The Company agrees to reimburse the Lender
---------------------
for miscellaneous charges and expenses (collectively, "Miscellaneous Charges")
incurred by or on behalf of the Lender in connection with the handling and
administration of Advances, and to reimburse the Lender for Miscellaneous
Charges incurred by or on behalf of the Lender in connection with the handling
and administration of the Collateral. For the purposes hereof, Miscellaneous
Charges shall include, but not be limited to, charges for wire transfers, check
processing charges, charges for security delivery fees, charges for overnight
delivery of Collateral to Investors, Funding Bank's service charges and
Designated Bank Charges. Miscellaneous Charges are due when
-11-
incurred, but shall not be delinquent if paid within fifteen (15) days after
receipt of an invoice or an account analysis statement from the Lender.
11. Section 3.2(d) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
3.2(d) The Lender shall have the exclusive right to the possession of the
Pledged Securities or, if the Pledged Securities are issued in book-entry form
or issued in certificated form and delivered to a clearing corporation (as such
term is defined in the Uniform Commercial Code of Minnesota) or its nominee, the
Lender shall have the right to have the Pledged Securities registered in the
name of a securities intermediary (as such term is defined in the Uniform
Commercial Code of Minnesota) in an account containing only customer securities
for the account of the Lender, and the Lender shall have the right to cause
delivery of the Pledged Securities to be made to the Investor or the book
entries registered in the name of the Investor or the Investor's designee only
against payment therefor. The Company acknowledges that the Lender may enter
into one or more standing arrangements with other financial institutions for the
issuance of Pledged Securities in book entry form in the name of such other
financial institutions, as agent or securities intermediary for the Lender, and
the Company agrees upon request of the Lender, to execute and deliver to such
other financial institutions the Company's written concurrence in any such
standing arrangements.
12. Section 5.15(d) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
5.15(d) Except as set forth in the loan history of any Rejected Mortgage
Loan or Repurchased Mortgage Loan, no default has occurred and is continuing for
more than sixty (60) days under any Mortgage Loan included in the Pledged
Mortgages without the Advance against such Pledged Mortgage having been repaid
in accordance with Section 2.6(d)(6) hereof, provided, however, that with
respect to Pledged Mortgages which have already been pledged as Collateral
hereunder, if any default has occurred, the Company will promptly notify the
Lender.
-12-
13. Section 5.15 of the Agreement shall be further amended to add the
following section immediately after Section 5.15(i):
5.15(j) Each Pledged Mortgage secured by real property to which a
Manufactured Home is affixed will create a valid Lien on such manufactured home
that will have priority over any other Lien on such Manufactured Home, whether
or not arising under applicable real property law.
14. Section 7.7 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
7.7 Minimum Adjusted Tangible Net Worth. Permit Adjusted Tangible Net
-----------------------------------
Worth of the Company (and its Subsidiaries, on a consolidated basis) at any time
to be less than Seven Million Dollars ($7,000,000).
15. Upon execution of this Amendment, the Company agrees to pay to the
Lender the pro rata Commitment Fee on the portion of the Commitment Amount for
the month of September 1997.
16. Exhibits C-REP, C-SF, D-REP and D-SF to the Agreement are hereby
deleted in their entirety and replaced with the new Exhibits C-REP, C-SF, D-REP
and D-SF attached to this Amendment. All references in the Agreement to
Exhibits C-REP, C-SF, D-REP and D-SF shall be deemed to refer to the new
Exhibits C-REP, C-SF, D-REP and D-SF.
17. Exhibit I-SF to the Agreement is deleted in its entirety and replaced
with the new Exhibit I-SF attached to this Amendment. All references in this
Amendment and the Agreement to Exhibit I-SF shall be deemed to refer to the new
Exhibit I-SF.
18. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed Certificate of Secretary with corporate
resolutions; (c) an executed Funding Bank Agreement; (d) a current certified
tax, lien and judgment search of the appropriate public records for the Company,
including a search of Uniform Commercial Code financing statements, which search
shall not have disclosed the existence of any prior Lien on the Collateral other
than in favor of the Lender or as permitted hereunder; (e) current Certificates
of Good Standing of the Company; (f) current insurance information; and (g) the
Commitment Fee for the month of September 1997.
-13-
19. The Company represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Company enforceable in accordance with their terms, as modified herein, (c) the
Lender is not in default under any of the Loan Documents and the Company has no
offset or defense to its performance or obligations under any of the Loan
Documents, (d) the representations contained in the Loan Documents remain true
and accurate in all respects, and (e) there has been no material adverse change
in the financial condition of the Company from the date of the Agreement to the
date of this Amendment.
20. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
21. The Company and the Lender hereby acknowledge and agree that the First
Amended and Restated Warehousing Credit and Security Agreement dated as of March
7, 1995 between them has been terminated.
22. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
-14-
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed on their behalf by their duly authorized officers as of the
day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By:____________________________________
Its:___________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By:____________________________________
Its:___________________________________
-15-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________________, 1997, before me, a Notary Public, personally
appeared __________________________, the ____________________ of NATIONAL
MORTGAGE CORPORATION, a Colorado corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
___________________________________________
Notary Public
(SEAL) My Commission Expires:_____________________
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _________________, 1997, before me, a Notary Public, personally appeared
___________________________, the Director of RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
___________________________________________
Notary Public
(SEAL) My Commission Expires:_____________________
-16-
SIXTH AMENDMENT TO
-------------------
WAREHOUSING CREDIT AND SECURITY AGREEMENT
-----------------------------------------
THIS SIXTH AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 30th day of January, 1998 by and among
NATIONAL MORTGAGE CORPORATION, a Colorado corporation ("National"), NATIONAL
MORTGAGE SALES CORPORATION, a Delaware corporation ("NMSC") (National and NMSC
are hereinafter referred to as the "Borrowers") and RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, National and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Twenty-one
Million One Hundred Thousand Dollars ($21,100,000), to finance the origination
and acquisition of Mortgage Loans, as evidenced by a Second Amended and Restated
Warehousing Promissory Note in the principal sum of Forty-one Million One
Hundred Thousand Dollars ($41,100,000), dated May 16, 1997 and a Working Capital
Promissory Note in the principal sum of One Million One Hundred Thousand Dollars
($1,100,000), dated January 19, 1996 (the "Notes"), and by a Warehousing Credit
and Security Agreement dated January 19, 1996, as the same may have been amended
or supplemented (the "Agreement");
WHEREAS, National owns ninety-five percent (95%) of the issued and
outstanding capital stock of NMSC; and
WHEREAS, National has requested the Lender to add NMSC as a co-borrower
under the Agreement and to amend certain other terms of the Agreement, and the
Lender has agreed to such request subject to the terms and conditions of this
Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
their respective meanings set forth in the Agreement
-1-
2. The effective date ("Effective Date") of this Amendment shall be
January 30, 1998, the date on which the Company has complied with all the terms
and conditions of this Amendment.
3. Except as otherwise provided in this Amendment, all references in the
Agreement to "the Company" shall mean and refer to "the Borrowers," "either
Borrower" or "each Borrower," as the context may require; provided, that the
representations and warranties set forth in Section 5.4 and the covenants set
forth in Sections 6.14, 7.6, 7.7 and 7.8 shall apply to the Borrowers (and any
other consolidated Subsidiary of National) on a consolidated basis, and any
representations, warranties and covenants relating to Servicing Contracts on the
servicing of Pledged Mortgages shall apply only to National.
4. Section 1.1 of the Agreement shall be amended by adding the following
definitions in the appropriate alphabetical order:
"National" means National Mortgage Corporation, a Colorado corporation.
--------
"NMSC" means National Mortgage Sales Corporation, a Colorado corporation.
----
"NMSC Advance" means an Advance outstanding against an NMSC Mortgage Loan,
------------
from and after the date the Pledged Mortgage against which such Advance is
outstanding becomes an NMSC Mortgage Loan.
"NMSC Mortgage Loan" means a Pledged Mortgage that is transferred by
------------------
National to NMSC subject to the Lien in favor of the Lender created hereunder.
"Wire Disbursement Account" means a demand deposit account maintained at
-------------------------
the Funding Bank in the name of the Lender for the clearing of wire transfers
requested by the Company to fund the closing of Pledged Mortgages.
5. Section 2.1(a) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
2.1(a) Subject to the terms and conditions of this Agreement and provided
no (i) Event of Default or (ii) Default that the Lender, in the reasonable
exercise of its discretion,
-2-
determines to be material, has occurred and is continuing, the Lender agrees
from time to time during the period from the Closing Date, to, but not
including, the Maturity Date, to make Advances to National, provided the total
aggregate principal amount outstanding at any one time of all Advances shall not
exceed the Commitment Amount. The obligation of the Lender to make Advances
hereunder up to the Commitment Amount, is hereinafter referred to as the
"Commitment." Within the Commitment, National may borrow, repay and reborrow.
All Advances under this Agreement shall constitute a single indebtedness, and
notwithstanding the limitation on NMSC's liability for the Obligations set forth
in Section 2.1(d) hereof, all of the Collateral shall be security for the
Promissory Notes and for the performance of all the Obligations.
6. Section 2.1(b)(1) of the Agreement is hereby amended to add the
following section immediately after Section 2.1(b)(6):
(7) The aggregate amount of Warehousing Advances outstanding at
any one time against Conforming Mortgage Loans shall not exceed twenty
percent (20%) of the Commitment Amount.
7. All references to "the Company" in Sections 2.1(b), 2.2(a), 2.2(b),
2.2(e), 2.2(f), 4.1(a) (except as incorporated into Section 18 below), 4.2(a),
5.4, 5.13, 5.16, 5.17, 6.2, 6.14, 7.5, 7.6, 7.7 and 7.8 of the Agreement shall
mean and refer to National.
8. Section 2.1 of the Agreement is further amended to add the following
subsection immediately after Section 2.1(c):
2.1(d) National shall be liable for all Obligations under this Agreement.
NMSC shall be jointly and severally liable for the principal amount of and
interest accrued on each NMSC Advance (in the case of interest, whether accrued
before or after such Advance became an NMSC Advance), all costs and expenses of
enforcement related to the collection of any NMSC Advance or the enforcement of
the Lender's Lien on any NMSC Mortgage Loan, and all other fees, costs, expenses
and other Obligations (not including Advances and interest thereon) arising
hereunder or under any Loan Document; provided, that there shall be no
--------
duplication of such fees, costs and expenses.
-3-
9. Section 2.2(e) of the Agreement shall be deleted in its entirety and
the following shall be substituted in lieu thereof:
2.2(e) To make an Advance, the Lender shall cause the Funding
Bank to credit the Wire Disbursement Account upon compliance by
National with the terms of the Loan Documents. The Lender shall
determine in its sole discretion the method by which Advances and
other amounts on deposit in the Wire Disbursement Account are
disbursed by the Funding Bank to or for the account of National.
10. Section 2.3 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
"2.3 Note. The Obligations of National and NMSC shall be evidenced
----
by the Third Amended and Restated Promissory Note dated as of January 30,
1998 and the Working Capital Promissory Note of National dated as of
January 19, 1996 (the "Notes"). The term "Notes" shall include all
extensions, renewals and modifications of the Notes and all substitutions
therefor. All terms and provisions of the Notes are hereby incorporated
herein."
11. Section 2.5(d) of the Agreement shall be amended to add the following
subsections immediately after subsection 2.5(d)(10):
(11) Three (3) Business Days elapse from the time any
Pledged Mortgage is transferred by National to NMSC, unless the
Lender has received Notice of such transfer.
(12) For a Conforming Mortgage Loan, one hundred twenty
(120) days elapse from the date of the initial Warehousing
Advance made by the Lender against such Conforming Mortgage Loan,
whether or not such Conforming Mortgage Loan is included in an
Eligible Mortgage Pool.
12. All reference in Section 5.1 of the Agreement to the "Company" shall
mean and refer to "National," and Section 5.1 of
-4-
the Agreement shall be herewith amended to add the following at the end thereof:
NMSC is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has
the full legal power and authority to own its property and to carry on
its business as currently conducted and is duly qualified as a foreign
corporation to do business and is in good standing in each
jurisdiction in which the transaction of its business makes such
qualification necessary, except in jurisdictions, if any, where a
failure to be in good standing has no material adverse effect on the
business, operations, assets or financial condition of National or any
such Subsidiary. For the purposes hereof, good standing shall include
qualification for any and all licenses and payment of any and all
taxes required in the jurisdiction of its incorporation and in each
jurisdiction in which NMSC or its Subsidiaries transact business. NMSC
has no Subsidiaries.
13. Section 6.3 of the Agreement shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
6.3 Maintenance of Existence; Conduct of Business. Preserve and maintain
---------------------------------------------
its corporate existence in good standing and all of its rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business, including, without limitation, in the case of National, its
eligibility as lender, seller/servicer and issuer described under Section 5.13
hereof; conduct its business in an orderly and efficient manner; in the case of
National, maintain a net worth of acceptable assets as required by FHA, GNMA,
FNMA or FHLMC at any and all times for maintaining its status as a FHA, FNMA or
FHLMC approved mortgagee or GNMA issuer; and make no change in the nature or
character of its business or engage in any non-Mortgage related business in
which it was not engaged on the date of this Agreement that would materially
impair its ability to perform under this Agreement without the prior written
consent of the Lender.
14. Section 8.1 of the Agreement shall be amended by adding the following
section immediately after Section 8.1(o):
-5-
"8.1(p) National shall cease owning at least ninety-five percent (95%) of
each class of the capital stock of NMSC.
15. Exhibit A-1 to the Agreement is deleted in its entirety and Exhibit A-
----------- ---------
1 attached to this Amendment is substituted in lieu thereof. The Second Amended
-
and Restated Warehousing Promissory Note is amended and restated in its entirety
as set forth in the Third Amended and Restated Warehousing Promissory Note in
the form of Exhibit A-1 attached to this Amendment. All references in this
-----------
Amendment and in the Agreement to the Second Amended and Restated Warehousing
Promissory Note shall be deemed to refer to the Third Amended and Restated
Warehousing Promissory Note delivered in connection with this Amendment.
16. Exhibit I-SF to the Agreement is deleted in its entirety and replaced
------------
with the new Exhibit I-SF attached to this Amendment. All references in this
------------
Amendment and the Agreement to Exhibit I-SF shall be deemed to refer to the new
------------
Exhibit I-SF.
------------
17. The Lender acknowledges and agrees that the ownership of each NMSC
Mortgage Loan has been transferred from National to NMSC, and agrees that, as
between National and NMSC, NMSC has assumed National's Obligations under the
Agreement with respect to Advances outstanding against the NMSC Mortgage Loans.
Notwithstanding the foregoing, no agreements between National and the Lender
shall be affected by the transfer of the NMSC Mortgage Loans and assumption of
the related liabilities, and National shall remain liable for such Obligations
as provided in the Agreement, as amended hereby.
18. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed original of the Third Amended and Restated
Warehousing Promissory Note; (c) an executed original of the First Amended and
Restated Working Capital Promissory Note; (d) an executed Certificate of
Secretary of National with corporate resolutions; (e) with respect to NMSC, each
of the items in Sections 4.1(a)(2) (without references to the RFC Conduit Credit
Agreement), (3), (4), (7), (8), (10) and (11) of the Agreement, and (f) a Two
Hundred Fifty Dollar ($250) document production fee, and all reasonable out-of-
pocket costs and expenses of Lender, including without limitation, fees and
services charges of counsel, in connection with the preparation and negotiation
of this Amendment.
-6-
19. The Borrowers represent, warrant and agree that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan Documents
continue to be the legal, valid and binding agreements and obligations of the
Borrowers enforceable in accordance with their terms, as modified herein, (c)
the Lender is not in default under any of the Loan Documents and the Borrowers
have no offset or defense to its performance or obligations under any of the
Loan Documents, (d) the representations contained in the Loan Documents remain
true and accurate in all respects, and (e) there has been no material adverse
change in the financial condition of National from the date of the Agreement to
the date of this Amendment.
20. Except as hereby expressly modified, the Agreement shall otherwise be
unchanged and shall remain in full force and effect, and the Company ratifies
and reaffirms all of its obligations thereunder.
21. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
-7-
IN WITNESS WHEREOF, National, NMSC and the Lender have caused this
Amendment to be duly executed on their behalf by their duly authorized officers
as of the day and year above written.
NATIONAL MORTGAGE CORPORATION,
a Colorado corporation
By: _____________________________________________
Its: ____________________________________________
NATIONAL MORTGAGE SALES CORPORATION,
a Colorado corporation
By: _____________________________________________
Its: ____________________________________________
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: _____________________________________________
Its: ____________________________________________
-8-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On _______________, 1998, before me, a Notary Public, personally appeared
____________________________________, the _______________________ of NATIONAL
MORTGAGE CORPORATION, a Colorado corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
___________________________________________
(SEAL) Notary Public
My Commission Expires: ___________________
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On ________________, 1998, before me, a Notary Public, personally appeared
________________________________________, the ________________________________
of NATIONAL MORTGAGE SALES CORPORATION, a Colorado corporation, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he/she executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
___________________________________________
(SEAL) Notary Public
My Commission Expires:
-9-
STATE OF _______________ )
) ss
COUNTY OF ______________ )
On ___________________________, 1998, before me, a Notary Public,
personally appeared _______________________________, the Director of RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
___________________________________________
Notary Public
(SEAL) My Commission Expires:_____________________
-10-