EXHIBIT 10.22
-------------
-------------------------------------------------------------------------------
CREDIT AGREEMENT
___________________________
CH MORTGAGE COMPANY I, LTD.
Borrower,
U.S. BANK NATIONAL ASSOCIATION
as Agent and a Lender
and
the other Lenders referred to herein
___________________________
August 13, 1999
-------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.01 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . .1
Section 1.02 OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . 14
Section 1.03 EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . 15
Section 1.04 CALCULATIONS AND DETERMINATIONS. . . . . . . . . . . . . 15
ARTICLE II TERMS OF CREDITS . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.01 COMMITMENTS AND DISCRETIONARY SWINGLINE COMMITMENT . . . 15
Section 2.02 PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . . 16
Section 2.03 OBTAINING LOANS; REFINANCING OF SWINGLINE LOANS. . . . . 16
Section 2.04 INTEREST; BALANCES DEFICIENCY FEES; CONTINUATIONS
AND CONVERSIONS. . . . . . . . . . . . . . . . . . . . . 18
Section 2.05 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.06 MANDATORY REPAYMENTS . . . . . . . . . . . . . . . . . . 21
Section 2.07 PAYMENTS TO LENDERS. . . . . . . . . . . . . . . . . . . 21
Section 2.08 INCREASED CAPITAL REQUIREMENTS . . . . . . . . . . . . . 22
Section 2.09 PROVISIONS RELATING TO EURODOLLAR RATE ADVANCES
AND BALANCE FUNDED RATE ADVANCES . . . . . . . . . . . . 22
ARTICLE III CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.01 INITIAL BORROWING. . . . . . . . . . . . . . . . . . . . 25
Section 3.02 ALL BORROWINGS . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV BORROWER REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 26
Section 4.01 ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . 26
Section 4.02 AUTHORIZATION AND POWER. . . . . . . . . . . . . . . . . 27
Section 4.03 NO CONFLICTS OR CONSENTS . . . . . . . . . . . . . . . . 27
Section 4.06 FINANCIAL CONDITION OF BORROWER. . . . . . . . . . . . . 27
Section 4.07 FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 28
Section 4.08 NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.09 NO LITIGATION. . . . . . . . . . . . . . . . . . . . . . 28
Section 4.10 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.11 PRINCIPAL OFFICE, ETC. . . . . . . . . . . . . . . . . . 28
Section 4.12 COMPLIANCE WITH ERISA. . . . . . . . . . . . . . . . . . 28
Section 4.13 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.14 INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.15 PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.16 STATUS UNDER CERTAIN FEDERAL STATUTES. . . . . . . . . . 29
Section 4.17 NO APPROVALS REQUIRED. . . . . . . . . . . . . . . . . . 29
ii
Section 4.18 INDIVIDUAL MORTGAGE LOANS. . . . . . . . . . . . . . . . 29
Section 4.19 YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . 31
ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.01 FINANCIAL STATEMENT AND REPORTS. . . . . . . . . . . . . 31
Section 5.02 TAXES AND OTHER LIENS. . . . . . . . . . . . . . . . . . 32
Section 5.03 MAINTENANCE. . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.04 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . 33
Section 5.05 REIMBURSEMENT OF EXPENSES. . . . . . . . . . . . . . . . 33
Section 5.06 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.07 ACCOUNTS AND RECORDS . . . . . . . . . . . . . . . . . . 34
Section 5.08 RIGHT OF INSPECTION. . . . . . . . . . . . . . . . . . . 34
Section 5.09 NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . . 34
Section 5.10 PERFORMANCE OF CERTAIN OBLIGATIONS AND INFORMATION
REGARDING INVESTORS. . . . . . . . . . . . . . . . . . . 35
Section 5.11 USE OF PROCEEDS; MARGIN STOCK. . . . . . . . . . . . . . 35
Section 5.12 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . 35
Section 5.13 COMPLIANCE WITH LOAN DOCUMENTS . . . . . . . . . . . . . 35
Section 5.14 OPERATIONS AND PROPERTIES. . . . . . . . . . . . . . . . 35
Section 5.15 YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . 35
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.01 NO MERGER. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.02 LIMITATION ON GAAP INDEBTEDNESS AND CONTINGENT
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.03 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.04 LIQUIDATIONS, DISPOSITIONS OF SUBSTANTIAL ASSETS . . . . 37
Section 6.05 LOANS, ADVANCES, AND INVESTMENTS . . . . . . . . . . . . 37
Section 6.06 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . 37
Section 6.07 ACTIONS WITH RESPECT TO MORTGAGE COLLATERAL. . . . . . . 38
Section 6.08 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . 38
Section 6.09 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.10 ERISA PLANS. . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.11 CHANGE OF PRINCIPAL OFFICE; FISCAL YEAR. . . . . . . . . 38
Section 6.12 LIMITATION ON DISTRIBUTIONS AND REDEMPTIONS. . . . . . . 39
Section 6.13 TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . 39
Section 6.14 TANGIBLE NET WORTH RATIO . . . . . . . . . . . . . . . . 39
Section 6.15 NET INCOME . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.16 CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.01 NATURE OF EVENT. . . . . . . . . . . . . . . . . . . . . 39
Section 7.02 DEFAULT REMEDIES . . . . . . . . . . . . . . . . . . . . 41
iii
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.01 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 42
Section 8.02 LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . 42
ARTICLE IX AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.01 APPOINTMENT AND AUTHORIZATION. . . . . . . . . . . . . . 42
Section 9.02 NOTE HOLDERS . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.03 CONSULTATION WITH COUNSEL. . . . . . . . . . . . . . . . 43
Section 9.04 DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.05 AGENT AND AFFILIATES . . . . . . . . . . . . . . . . . . 43
Section 9.06 ACTION BY AGENT. . . . . . . . . . . . . . . . . . . . . 43
Section 9.07 CREDIT ANALYSIS. . . . . . . . . . . . . . . . . . . . . 44
Section 9.08 NOTICES OF EVENT OF DEFAULT, ETC . . . . . . . . . . . . 44
Section 9.09 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 44
Section 9.10 PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.11 SHARING OF SET-OFFS AND OTHER PAYMENTS . . . . . . . . . 45
Section 9.12 SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . 46
Section 9.13 NOTICE OF NEW INVESTORS . . . . . . . . . . . . . . . . 46
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.01 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.02 AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . 47
Section 10.03 INVALIDITY . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.04 SURVIVAL OF AGREEMENTS . . . . . . . . . . . . . . . . . 48
Section 10.05 RENEWAL, EXTENSION OR REARRANGEMENT. . . . . . . . . . . 48
Section 10.06. WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.07 CUMULATIVE RIGHTS. . . . . . . . . . . . . . . . . . . . 48
Section 10.08 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.09 LIMITATION ON INTEREST . . . . . . . . . . . . . . . . . 49
Section 10.10 BANK ACCOUNTS; OFFSET. . . . . . . . . . . . . . . . . . 50
Section 10.11 ASSIGNMENTS, PARTICIPATIONS, COMMITMENT AMOUNT
INCREASES AND NEW LENDERS. . . . . . . . . . . . . . . . 50
Section 10.12 EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.13 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS . . . . . . 52
Section 10.14 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.15 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 52
Section 10.16 TERMINATION; LIMITED SURVIVAL. . . . . . . . . . . . . . 52
Section 10.17 CONFIDENTIALITY OF INFORMATION . . . . . . . . . . . . . 52
Section 10.18 JURY WAIVER. . . . . . . . . . . . . . . . . . . . . . . 53
iv
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT is made and entered into as of August 13, 1999,
between CH Mortgage Company I, Ltd., a Texas limited partnership ("BORROWER"),
U.S. Bank National Association, as agent ("Agent") and Lenders referred to
below ("Lenders").
The parties hereto hereby agree as follows:
ARTICLE I
---------
GENERAL TERMS
-------------
Section 1.01 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings.
"ADJUSTED EURODOLLAR RATE" means on any date of determination, the rate
(rounded upward, if necessary, to the next higher one hundredth of one percent)
determined by dividing the Eurodollar Rate for such date by 1.00 minus the
Eurodollar Reserve Percentage.
"ADVANCE" means (a) a Reference Rate Advance, (b) a Balance Funded Rate
Advance or (c) a Eurodollar Rate Advance.
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.
"AGENT" has the meaning assigned to such term in the preamble hereof.
"AGGREGATE COMMITMENT AMOUNTS" means the total of the Commitment Amounts
of the Lenders, which is $175,000,000 initially, subject to increase in
accordance with Section 10.11(d), but not to exceed $250,000,000.
"AGREEMENT" means this Credit Agreement, as the same may from time to time
be amended, modified or supplemented.
"APPLICABLE MARGIN" means, with respect to:
(a) Reference Rate Advances, 0%, and
(b) Eurodollar Rate Advance, 1.00%
"BALANCE CALCULATION PERIOD" means each calendar month.
"BALANCE FUNDED AMOUNT" means with respect to any Lender for any Balance
Calculation Period, the average of the Qualifying Balances of such Lender for
such Balance Calculation Period. As used in this paragraph, "QUALIFYING
BALANCES"' shall mean, with respect to any Lender, for any day the lesser of
(a) the amount of such Lender's Loans on such day, and (b) the sum of the
collected balances in all identified non-interest bearing accounts of
Borrower maintained with such Lender less (i) amounts necessary to satisfy
reserve and deposit insurance requirements and (ii) amounts required to
compensate such Lender for services rendered in accordance with such Lender's
system of charges for services to similar accounts.
"BALANCE FUNDED RATE" means a rate of 1.125% per annum.
"BALANCE FUNDED RATE ADVANCE" means an outstanding Loan that bears
interest as provided in Section 2.04(a)(i).
"BALANCES DEFICIENCY" as defined in Section 2.04(a)(i).
"BALANCES DEFICIENCY FEE" as defined in Section 2.04(a)(i).
"BALANCES SURPLUS" as defined in Section 2.04(a)(i).
"BORROWER" shall have the meaning assigned to such term in the preamble
hereof.
"BORROWER'S CONSOLIDATED TANGIBLE NET WORTH" means, as of any date, the
remainder of (a) all assets of Borrower and the Restricted Subsidiaries on a
Consolidated basis MINUS (b) the sum of (i) all GAAP Indebtedness and all
Contingent Indebtedness of Borrower and the Restricted Subsidiaries, (ii) all
assets of Borrower and the Restricted Subsidiaries which would be classified
as intangible assets under GAAP, including Capitalized Servicing Rights,
goodwill (whether representing the excess cost over book value of assets
acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises, deferred charges and intercompany receivables, and (iii)
investments in and advances to Unrestricted Subsidiaries PLUS (c) the Market
Value of Borrower's servicing rights.
"BORROWING BASE" means at any date the Collateral Value of all Eligible
Mortgage Loans which have been delivered to and held by Agent or otherwise
identified as Mortgage Collateral.
"BORROWING BASE CERTIFICATE" means a certificate in the form attached
hereto as Exhibit C.
"BORROWING DATE" means the Business Day specified by Borrower in a
Borrowing Request as the date on which it requests the Lender to make Loans.
2
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Minneapolis,
Minnesota and on which the federal wire system is open.
"CAPITALIZED SERVICING RIGHTS" means as of any Person, all rights to
service Mortgage Loans which would be capitalized under GAAP (regardless of
whether such rights result from asset securitizations, whole loan sales or
originations of Mortgage Loans).
"CASH EQUIVALENTS" means (a) securities Issued or directly and fully
guaranteed or Insured by the United States Government or any agency or
instrumentality thereof which mature within 90 days from the date of
acquisition, (b) time deposits, which mature within 90 days from date of
acquisition, with, and certificates of deposit, which mature within 90 days
from the date of acquisition, of, Agent or any Lender or any other domestic
commercial bank having capital and surplus in excess of $200,000,000, which
has, or the holding company of which has, a commercial paper rating of at
least A-1 or the equivalent thereof by Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or P-1 or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc., or (c) overnight investments in money market mutual
funds registered under the 1940 Act.
"CHANGE OF CONTROL" means the occurrence of Parent not owning, directly
or indirectly, all of the issued and outstanding ownership interests of
Borrower.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, together with the regulations from time to time promulgated with
respect thereto.
"COLLATERAL" has the meaning given to it in the Security Agreement.
"COLLATERAL ACCOUNT" means account number 104756234365 of Borrower with
Agent.
"COLLATERAL VALUE" means:
(a) with respect to each Eligible Mortgage Loan that is a Conforming
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%)
of the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Conforming Mortgage Loan; (ii) the amount at which an
Investor has committed to purchase the Conforming Mortgage Loan pursuant to a
Take-out Commitment or the weighted average commitment price under the
applicable Take-Out Commitment; or (iii) at the election of the Agent, the
Market Value of the Mortgage Note constituting such Mortgage Loan; and
(b) with respect to each Eligible Mortgage Loan that is a Jumbo
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%)
of the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Jumbo Mortgage Loan; (ii) the amount at which an Investor
has committed to purchase the Jumbo Mortgage Loan pursuant to a Take-
3
Out Commitment or the weighted average commitment price under the applicable
Take-Out Commitment; or (iii) at the election of the Agent, the Market Value
of the Mortgage Note constituting such Jumbo Mortgage Loan.
(c) with respect to each Eligible Mortgage Loan that is a Nonconforming
Mortgage Loan and included in the Borrowing Base, ninety-eight percent (98%)
of the least of: (i) the outstanding principal balance of the Mortgage Note
constituting such Nonconforming Mortgage Loan; (ii) the amount at which an
Investor has committed to purchase the Nonconforming Mortgage Loan pursuant
to a Take-Out Commitment or the weighted average commitment price under the
applicable Take-Out Commitment; and (iii) at the election of the Agent, the
Market Value of the Mortgage Note constituting such Nonconforming Mortgage
Loan.
"COMMITMENT" means, as to any Lender, the obligation of such Lender to
make Loans to Borrower pursuant to Section 2.01 hereof in an aggregate amount
not to exceed such Lender's Commitment Amount.
"COMMITMENT AMOUNT" means, as to any Lender, the amount set opposite
such Lender's name as its Commitment Amount on Schedule 5.
"CONFIRMATION" means a Confirmation of Borrowing/Paydown/ Conversion in
the form of Exhibit B.
"CONFORMING MORTGAGE LOAN" means a first priority Mortgage Loan that has
been FHA-insured or VA-guaranteed or that has been underwritten in accordance
with ▇▇▇▇▇▇ Mae guidelines and/or meets all applicable requirements for sale
to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac or for guaranty by ▇▇▇▇▇▇ Mae.
"CONSOLIDATED" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries excluding all
Unrestricted Subsidiaries. References herein to a Person's Consolidated
financial statements refer to the consolidated financial statements of such
Person and its properly consolidated subsidiaries excluding all Unrestricted
Subsidiaries.
"CONTINGENT INDEBTEDNESS" of any Person at a particular date means the
sum (without duplication) at such date of (a) all obligations of such Person
in respect of letters of credit, acceptances, or similar obligations issued
or created for the account of such Person, (b) all obligations of such Person
under any contract, agreement or understanding of such Person pursuant to
which such Person guarantees, or in effect guarantees, any indebtedness or
other obligations of any other Person in any matter, whether directly or
indirectly, contingently or absolutely, in whole or in part, (c) all
liabilities secured by any Lien on any property owned by such Person, whether
or not such Person has assumed or otherwise become liable for the payment
thereof and (d) any liability of such Person or any Affiliate thereof in
respect of unfunded vested benefits under in ERISA Plan, excluding any GAAP
Indebtedness.
4
"DEBTOR LAWS" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization
or similar laws from time to time in effect affecting the rights of creditors
generally and general principles of equity.
"DEFAULT" means any of the events specified in Section 7.01 hereof,
whether or not any requirement for notice or lapse or time or any other
condition has been satisfied.
"DISTRIBUTION" means (a) any cash dividend or any other cash
distribution made by a Person on, or in respect of, any stock, partnership
interest, or other equity interest in such Person and (b) any and all funds,
cash or other payments made in respect of the purchase, redemption,
acquisition or retirement of any beneficial interest, stock, partnership
interest, or other equity interest in such Person.
"DRAWDOWN TERMINATION DATE" means the earlier of August 15, 2000, or the
day on which the Notes first become due and payable in full.
"ELIGIBLE MORTGAGE LOAN" means a Mortgage Loan as described in Schedule 1
attached hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with the regulations from time to time
promulgated with respect thereto.
"ERISA AFFILIATION" means all members of the group of corporations and
trades or businesses (whether or not incorporated) which, together with
Borrower, are treated as a single employer under Section 414 of the Code.
"ERISA PLAN" means any pension benefit plan subject to Title IV of ERISA
or Section 412 of the Code maintained or contributed to by Borrower or any
ERISA Affiliate with respect to which Borrower has a fixed or contingent
liability.
"EURODOLLAR BUSINESS DAY": a Business Day which is also a day for
trading by and between banks in United States dollar deposits in the
interbank Eurodollar market and a day on which banks are open for business in
New York City.
"EURODOLLAR RATE": on any date of determination, the average offered
rate for deposits in United States dollars having a maturity of thirty days
(rounded upward, if necessary, to the nearest 1/16 of 1%) for delivery of
such deposits on such date of determination, or if such date is not a
Eurodollar Business Day, on the first preceding Eurodollar Business Day,
which appears on the Reuters Screen LIBO page as of 11:00 a.m., London time
(or such other time as of which such rate appears), on such date of
determination, or the rate for such deposits determined by Agent at such time
based on such other published service of general application as shall be
selected by Agent for such purpose; provided, that in lieu of determining the
rate in the foregoing
5
manner, Agent may determine the rate based on rates at which thirty day
United States dollar deposits are offered to the entity which is Agent in the
interbank Eurodollar market at such time for delivery in immediately available
dollars on the second Business Day after such date of determination in an
amount approximately equal to the advance as made by the entity which is
Agent to which such rate is to apply (rounded upward, if necessary, to the
nearest 1/16 of 1%). "Reuters Screen LIBO page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rate Screen (or such other page
as may replace the LIBO page on such service for the purpose of displaying
London interbank offered rates of major banks for United States dollar
deposits).
"EURODOLLAR RATE ADVANCE": an outstanding Loan that bears interest as
provided in Section 2.04(a)(iii).
"EURODOLLAR RESERVE PERCENTAGE": on any date of determination, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System, with deposits comparable in amount to those
held by U.S. Bank, in respect of "Eurocurrency Liabilities" (or in respect of
any other category of liabilities which includes deposits by reference to
which the interest rate on Eurodollar Rate Advances is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of a bank to United States residents).
"EVENT OF DEFAULT" means any of the events specified in Section 7.01
hereof, provided that any requirement in connection with such event for the
giving of notice or the lapse of time, or the happening of any further
condition, event or act has been satisfied.
"▇▇▇▇▇▇ ▇▇▇" means ▇▇▇▇▇▇ Mae, a corporation created under the laws of the
United States, and any successor thereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of Minneapolis on the
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if
such rate is not so published for any day, the Federal Funds Rate for such
day shall be the average rate quoted to Agent on such day on such
transactions as determined by Agent.
"FHA" means the Federal Housing Administration and any successor thereto.
6
"FISCAL QUARTER" means each period of three calendar months ending December
31, March 31, June 30 and September 30 of each year.
"FISCAL YEAR" means each period of twelve calendar months ending September
30 of each year.
"FOUR QUARTER PERIOD" means as of the end of any Fiscal Quarter, the period
of four consecutive Fiscal Quarters then ended.
"▇▇▇▇▇▇▇ MAC" means ▇▇▇▇▇▇▇ Mac, a corporation created under the laws of
the United States, and any successor thereto.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower, are applied
for all periods after the date hereof in a manner consistent with the manner in
which such principles and practices were applied to the financing statements
described in Section 4.06. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board (or any such
successor) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and financial statements
required hereunder with respect to Borrower or with respect to Borrower and its
Consolidated subsidiaries may be prepared in accordance with such change, but
all calculations and determinations to be made hereunder may be made in
accordance with such change only after notice of such change is given to each
Lender and Majority Lenders agree to such change insofar as it affects the
accounting of Borrower.
"GAAP INDEBTEDNESS" of any Person at a particular date mean the sum
(without duplication) at such date of (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services or
which is evidenced by a note, bond, debenture, or similar instrument, and (b)
all obligations of such Person under any lease required by GAAP to be
capitalized on the balance sheet of such Person.
"GENERAL PARTNER" means the general partner of Borrower which on the date
hereof is CH Mortgage Company GP, Inc., a Delaware corporation.
"▇▇▇▇▇▇ ▇▇▇" means the Government National Mortgage Association, or any
successor thereto.
"GOOD FUNDS WIRE CLEARING ACCOUNT" means account number 104756234340 of
Borrower with Agent.
"GOVERNMENTAL AUTHORITY" means any nation or government, any agency,
department, state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
7
"GOVERNMENT REQUIREMENT" means any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other direction or requirement (including, without
limitation, any of the foregoing which relate to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls) of any arbitrator, court or other Governmental Authority, which
exercises jurisdiction over Borrower and its Restricted Subsidiaries or any of
its Property.
"INVESTOR" means any Person listed on Schedule 2 and any other Person
approved in writing by Agent who agrees to purchase Mortgage Collateral pursuant
to a Take-Out Commitment.
"JUMBO MORTGAGE LOAN" means a Mortgage Loan which would in all respects be
a Conforming Loan but for the fact that the original unpaid principal amount of
the underlying Mortgage Note is greater than $240,000 (but does not exceed
$500,000).
"JUMBO SUBLIMIT" means fifteen percent (15%) of the Aggregate Commitment
Amounts.
"LENDERS" means each signatory hereto (other than Borrower) including U.S.
Bank in its capacity as a Lender hereunder rather than as Agent, and the
successors of each as holder of a Note (or a portion thereof) that has been
transferred in accordance with Section 10.11.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory or otherwise), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"LOAN" has the meaning given it in Section 2.01.
"LOAN DOCUMENT" means any, and "LOAN DOCUMENTS" shall mean all, of this
Agreement, the Notes, the Security Instruments and any and all other agreements
or instruments now or hereafter executed and delivered by Borrower or any other
Person in connection with, or as security for the payment or performance of any
or all of the Obligations, as any of such may be renewed, amended or
supplemented from time to time.
"MAJORITY LENDERS" means (i) if there are less than three Lenders,
Lenders collectively having Percentage Shares totaling in the aggregate one
hundred percent (100%); and (ii) if there are three or more Lenders, Lenders
collectively having Percentage Shares totaling in the aggregate at least
sixty-six and two-thirds percent (66 2/3%).
8
"MARKET VALUE" means at any date with respect to any Mortgage Loan, the bid
price quoted in writing to the Agent as of the computation date by two
nationally recognized dealers selected by the Agent who at the time are making a
market in similar Mortgage Loans, multiplied, in any case, by the outstanding
principal amount thereof.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on (a) the
validity or enforceability of this Agreement, the Notes or any other Loan
Document, (b) the business, operations, total Property or financial condition of
Borrower and its Restricted Subsidiaries on a Consolidated basis, (c) the
collateral under the Security Agreement, or (d) the ability of Borrower to
fulfill its obligations under this Agreement, the Notes, or any other Loan
Document to which it is a party.
"MAXIMUM RATE" means, with respect to each Lender, the maximum nonusurious
rate of interest that such Lender is permitted under applicable law to contract
for, take, charge, or receive with respect to its Loans. All determinations
herein of the Maximum Rate, or of any interest rate determined by reference to
the Maximum Rate, shall be made separately for each Lender as appropriate to
assure that the Loan Documents are not construed to obligate any Person to pay
interest to any Lender at a rate in excess of the Maximum Rate applicable to
such Lender.
"MORTGAGE" means a mortgage or deed of trust, on standard forms in form and
substance satisfactory to Agent, securing a Mortgage Note and granting a
perfected first or second priority lien on residential real property consisting
of land and a single-family dwelling thereon which is completed and ready for
occupancy.
"MORTGAGE ASSIGNMENT" means an instrument duly executed and in recordable
form assigning a Mortgage, in blank and all like intervening instruments that
have been executed with respect to such Mortgage and which is in form acceptable
to Agent and satisfies all Requirements of Law.
"MORTGAGE COLLATERAL" all Mortgage Notes (a) which are made payable to the
order of Borrower or have been endorsed (without restriction or limitation)
payable to the order of Borrower, (b) in which Agent has been granted and
continues to hold a perfected first priority security interest, (c) which are in
form and substance acceptable to Agent in its reasonable discretion, (d) which
are secured by Mortgages, and (e) with respect to Eligible Mortgage Loans,
conform in all respects with all the requirements for purchase of such Mortgage
Notes under the Take-Out Commitments and are valid and enforceable in accordance
with their respective terms.
"MORTGAGE LOAN" means a one-to-four-family mortgage loan which is evidenced
by a Mortgage Note and secured by a Mortgage, together with the rights and
obligations of a holder thereof and payments thereon and proceeds therefrom.
"MORTGAGE NOTE" means the Note or other evidence of indebtedness evidencing
the indebtedness of an Obligor under a Mortgage Loan.
9
"MORTGAGE-BACKED SECURITY" shall mean (a) any security (including, without
limitation, a participation certificate) guaranteed by ▇▇▇▇▇▇ ▇▇▇ that
represents an interest in a pool of mortgages, deeds of trust or other
instruments creating a Lien on Property which is improved by a completed single
family residence, including but not limited to a condominium, planned unit
development or townhouse, (b) a security (including a participation certificate)
issued by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac that represent interests in such a pool, and
(c) a privately-placed security representing undivided interests in or otherwise
supported by such a pool.
"NONCONFORMING MORTGAGE LOAN" means a Mortgage Loan that (a) is neither a
Conforming Mortgage Loan nor a Jumbo Mortgage Loan,(b) generally meets Standard
& Poor's Ratings Group (a division of McGraw Hill, Inc.) underwriting guidelines
for Subprime Mortgage Loans, (c) has a FICO score equal to or in excess of the
requirements of the Investor under the applicable Take-Out Commitment for such
Mortgage Loan, (d) has a combined loan-to-value ratio of not more than 100%, and
(e) has a face amount of no more than $100,000, in the case of a Mortgage Loan
made pursuant to a home equity line of credit, and no more than $250,000, in the
case of any other Mortgage Loan.
"NONCONFORMING SUBLIMIT" means fifteen percent (15%) of the Aggregate
Commitment Amounts.
"NOTE" means any promissory note delivered by Borrower to a Lender pursuant
to Section 2.02 in the form attached hereto as Exhibit A, and all renewals,
modifications and extensions thereof. "NOTES" means collectively each Lender's
Note.
"OBLIGATIONS" means all present and future GAAP Indebtedness and Contingent
Indebtedness, obligations, and Liabilities of Borrower to Agent or any Lender,
and all renewals and extensions thereof, or any part thereof, arising pursuant
to this Agreement or any other Loan Document, and all interest accrued thereon,
and reasonable attorneys' fees and other costs incurred in the drafting,
negotiation, enforcement or collection thereof, regardless of whether such
indebtedness, obligations, and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several.
"OBLIGOR" means the Person or Persons obligated to pay the indebtedness
which is the subject of a Mortgage Loan.
"OPERATING ACCOUNT" means the non-interest bearing demand checking account
established by Borrower with Agent to be used for Borrower's operations.
"PARENT" means ▇.▇. ▇▇▇▇▇▇, Inc., a Delaware Corporation, which owns
indirectly through one or more of its wholly-owned Subsidiaries, one hundred
percent (100%) of the general and limited partnership interests in Borrower.
10
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to any of its functions.
"PERCENTAGE SHARE" means, with respect to any Lender (a) when used in
Section 2.01, in any Borrowing Request or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Schedule 5,
and (b) when used otherwise, the percentage obtained by dividing (i) the sum of
the unpaid principal balance of such Lender's Loans at the time in question by
(ii) the sum of the aggregate unpaid principal balance of all Loans at such
time.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, Governmental Authority, or any other form of
entity.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"REFERENCE RATE" means at the time of any determinations thereof, the rate
per annum which is most recently publicly announced by U.S. Bank as its
"reference rate", which may be a rate at, above or below the rate at which U.S.
Bank lends to other Persons.
"REFERENCE RATE ADVANCE" means an outstanding Loan that bears interest as
provided in Section 2.04(a)(ii).
"REGULATION D" means Regulation D issued by the Board of Governors of the
Federal Reserve system as in effect from time to time.
"REGULATION T" means Regulation T issued by the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REGULATION U" means Regulation U issued by the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REGULATION X" means Regulation X issued by the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REGULATORY CHANGE" means any change after the date hereof in United States
federal, state or foreign laws or regulations or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including any Lender under any United States federal, state or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
11
"REPORTABLE EVENT" means (a) a reportable event described in Sections
4043(b)(5) or (6) of ERISA or the regulations promulgated thereunder, or (b) any
other reportable event described in Section 4043(b) of ERISA or the regulations
promulgated thereunder other than a reportable event not subject to the
provision for 30-day notice to the PBGC pursuant to a waiver by the PBGC under
Section 4043(a) of ERISA.
"REQUIRED MORTGAGE DOCUMENTS" means as to any Mortgage Loan, the items
described in Section 4.02 of the Security Agreement.
"REQUIREMENT OF LAW" as to any Person means the charter and by-laws or
other organizational or governing documents of such Person, and any law,
statute, code, ordinance, order, rule, regulation judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including, without limitation, any of the foregoing
which relate to environmental standards or controls, energy regulations and
occupational, safety and health standards or controls) of any arbitrator, court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.
"RESTRICTED SUBSIDIARY" means any subsidiary of Borrower in existence on
the date hereof and any Subsidiary hereafter acquired or formed by Borrower
which Borrower does not designate as an Unrestricted Subsidiary.
"RISK RATING" means the risk rating of a Mortgage Loan determined by the
underwriting guidelines of Borrower or other applicable standards of an Investor
to which such Mortgage Loan is to be sold by Borrower under a Take-Out
Commitment, provided that such underwriting guidelines or other applicable
standards comply with industry standards in the sole judgment of Agent.
"SECURITY AGREEMENT" means the Pledge and Security Agreement of even date
herewith between Borrower and Agent, as the same may from time to time be
further supplemented, amended or restated.
"SECURITY INSTRUMENT" means (a) the Security Agreement and (b) such other
executed documents as are or may be necessary to grant to Agent a perfected
first prior and continuing security interest in and to all Mortgage collateral,
and any and all other agreements or instruments now or hereafter executed and
delivered by Borrower in connection with, or as security for the payment or
performance of, all or any of the Obligations, including Borrower's obligations
under the Notes and this Agreement, as such agreements may be amended, modified
or supplemented from time to time.
"SUBPRIME MORTGAGE LOANS" means any loans with credit characteristics which
do not fit the traditional requirements for a Risk Rating of "A" (as defined by
Standard & Poor's Rating
12
Group), generally due to the overall underlying credit quality, credit bureau
score, loan-to-value ratio, lack of credit history, etc.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through out or more
intermediaries) controlled by or owned fifty percent (50%) or more by such
Person.
"SWINGLINE COMMITMENT" means the discretionary revolving credit facility
provided by U.S. Bank to Borrower described in Section 2.01.
"SWINGLINE LOAN" means a loan made by U.S. Bank to Borrower pursuant to
Section 2.10.
"TAKE-OUT COMMITMENT" means with respect to any Mortgage Loan shall mean a
bona fide current, unused and unexpired whole loan commitment or forward sale
Mortgage-Backed Security commitment issued in favor of and held by the Company
made by an Approved Investor, under which such Approved Investor agrees prior to
the expiration thereof, upon the satisfaction of certain terms and conditions
therein, to purchase such Mortgage Loan or related Mortgage-Backed Security at a
specified price, which commitment is not subject to any term or condition which
is not customary in commitments of like nature or which, in the reasonably
anticipated course of events, cannot be fully complied with prior to the
expiration thereof.
"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA Plan
of a Reportable Event, (b) the withdrawal of Borrower or any ERISA Affiliate
from a plan during a plan year in which it was a "substantial employer", as
defined in Section 4001(a)(2) of ERISA, (c) the distribution to affected parties
of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA
plan amendment as a termination under Section 4041 of ERISA, (d) the institution
of proceedings to terminate any ERISA Plan by the PBGC under Section 4042 of
ERISA, or (e) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any ERISA Plan.
"UCC" means the Texas Uniform Commercial Code, as the same may hereafter be
amended.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of Borrower that at the
time of acquisition or formation of such Subsidiary by Borrower shall be
designated as an Unrestricted Subsidiary by the Board of Directors of Borrower
in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the General Partner may designate any
newly acquired or formed Subsidiary to be an Unrestricted Subsidiary, provided
that no Default or Event of Default shall have occurred and be continuing at the
time of or, after giving effect to such designation. The Board of Directors may
designate any Unrestricted
13
Subsidiary to be a Restricted Subsidiary by delivering written notice of such
designation to Agent together with a compliance certificate signed by the
President, Accounting Director or Chief Financial Officer of General Partner
which shall certify to Agent and Lenders that at the date of and, after
giving effect to such designation, Borrower shall be in compliance with all
covenants set forth in the Loan Documents and no Default or Event of Default
shall have Occurred and be continuing.
"VA" means the U.S. Department of Veterans Affairs and any successor
thereto.
"WET WAREHOUSING LOANS" means Eligible Mortgage Loans which are included in
the Borrowing Base, but for which the Required Mortgage Documents have not been
delivered to Agent.
"WET WAREHOUSING SUBLIMIT" means fifty percent (50%) of the Aggregate
Commitment Amounts during the last three (3) Business Days in any calendar month
and the first four (4) Business Days in the next succeeding calendar month or
thirty percent (30%) of the Aggregate Commitment Amounts at any other time.
Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the above-defined meanings when used in the Notes or any
other Loan Document, certificate, report or other document made or delivered
pursuant hereto.
(b) Each term defined in the singular form in Section 1.01 means the
plural thereof when the plural form of such term is used in this Agreement, the
Notes or any other Loan Document, certificate, report or other document made or
delivered pursuant hereto, and each term defined in the plural form in Section
1.01 shall mean the singular thereof when the singular form of such term is used
herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, subsection, schedule and
exhibit references herein are references to sections, subsections, schedules and
exhibits to this Agreement unless otherwise specified. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation."
(d) Unless the context otherwise requires or unless otherwise provided
herein the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments and restatements of such agreement,
instrument or document, provided that nothing contained in this section shall be
construed to authorize any such renewal, extension, modification, amendment or
restatement.
14
(e) As used herein, in the Notes or in any other Loan Document,
certificate or report or other document made or delivered pursuant hereto,
accounting terms relating to any Person and not specifically defined in this
Agreement or therein shall have the respective meanings given to them under
GAAP.
Section 1.03 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
to this Agreement are a part hereof for all purposes.
Section 1.04 CALCULATIONS AND DETERMINATIONS. All calculations under the
Loan Documents of interest and of fees shall be made on the basis of actual days
elapsed and a year of 360 days. Each determination by Agent or a Lender of
amounts to be paid under Sections 2.07 and 2.08 or any other matters which are
to be determined hereunder by Agent or a Lender (such as any Eurodollar Rate,
Adjusted Eurodollar Rate or Business Day) shall, in the absence of manifest
error, be conclusive and binding. Unless otherwise expressly provided herein or
unless Agent otherwise consents all financial statements and reports furnished
to Agent or any Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance with
GAAP.
ARTICLE II
TERMS OF CREDITS
Section 2.01 COMMITMENTS AND DISCRETIONARY SWINGLINE COMMITMENT.
(a) COMMITMENTS. Subject to the terms and conditions contained in this
Agreement, each Lender agrees to make loans ("Loans") to Borrower on a revolving
credit basis from time to time on any Business Day from the date of this
Agreement through the Drawdown Termination Date. The aggregate principal amount
of any Lender's Loans at any time outstanding (after giving effect to the other
transactions contemplated by the Borrowing Request pursuant to which a Loan is
requested) shall not exceed the lesser of: (i) such Lender's Percentage Share
of the Borrowing Base or (ii) such Lender's Commitment Amount. At no time shall
the aggregate amount of all Loans outstanding at any time exceed the lesser of
(A) the Borrowing Base, and (B) the Aggregate Commitment Amounts at such time.
Loans may be requested as Reference Rate Advances, Eurodollar Rate Advances,
Balance Funded Rate Advances or any combination of the foregoing.
(b) DISCRETIONARY SWINGLINE COMMITMENT. Upon the terms and subject to the
conditions of this Agreement, until the Drawdown Termination Date, U.S. Bank, in
its sole discretion, may lend to Borrower loans (each such loan, a "Swingline
Loan") at such times and in such amounts as Borrower shall request, up to an
aggregate principal amount at any time outstanding equal to the amount by which
U.S. Bank's Commitment Amount exceeds the principal amount outstanding under
U.S. Bank's Note; PROVIDED, that U.S. Bank will not make a Swingline Loan if (i)
after giving effect thereto, any of the limitations set forth in Section 2.01(a)
would be
15
exceeded or (ii) U.S. Bank has received written notice from Borrower or any
Lender that one or more of the conditions precedent set forth in Article III
for the making of a Loan have not been satisfied.
Section 2.02 PROMISSORY NOTES. The Loans made by each Lender pursuant to
this Article II shall be evidenced by a Note payable to the order of such
Lender.
Section 2.03 OBTAINING LOANS; REFINANCING OF SWINGLINE LOANS.
(a) NOTICE AND MANNER OF OBTAINING LOANS. Borrower shall give Agent
telephonic notice of each request for Loans not later am 1:00 p.m. (Minneapolis,
Minnesota time) on the requested Borrowing Date and of each request for
Swingline Loans not later than 3:00 p.m. (Minneapolis, Minnesota time) on the
requested Borrowing Date. Each request for Loans or Swingline Loans shall
specify the aggregate amount of Loans or Swingline Loans requested and whether
such Loans to be made by each Lender are to be funded as Reference Rate
Advances, Eurodollar Rate Advances or Balance Funded Rate Advances; provided,
that any portion of a Loan not so designated shall be funded as a Eurodollar
Rate Advance. Agent shall notify each Lender via facsimile and telephone by not
later than 2:00 P.M. (Minneapolis, Minnesota time) on the date it receives such
request of each request for Loans received from Borrower, of such Lenders's
Percentage Share of the Loans requested and whether such Lender's Loans are to
funded as Reference Rate Advances, Eurodollar Rate Advances or Balance Funded
Rate Advances. Borrower, shall not later than the following Business Day,
confirm any such request by delivering to Agent a Confirmation. Each request
for Loans shall be irrevocable and binding on Borrower. If all conditions
precedent to such Loan have been met, each Lender shall deposit into the
Collateral Account in immediately available dollars by not later than 4:00 P.M.
(Minneapolis, Minnesota time) on the Borrowing Date the amount of such Lender's
Loan and upon receipt of such funds, Agent shall promptly make such funds
available to Borrower by depositing such funds in the Good Funds Wire Clearing
Account or the Operating Account, as requested by Borrower. On the Borrowing
Date of requested Swingline Loans, U.S. Bank may deposit into the Collateral
Account in Immediately Available Funds by not later than 4:00 p.m. (Minneapolis,
Minnesota time) on the requested Borrowing Date the amount of the requested
Swingline Loans. Unless Agent shall have received notice from a Lender prior to
3:00 P.M. (Minneapolis, Minnesota time) on any Borrowing Date that such Lender
will not make available to Agent such Lender's Loan, Agent may in its discretion
assume that such Lender has made such Loan available to Agent in accordance with
this section and Agent may if it chooses, in reliance upon such assumption make
such Loan available to Borrower. If and to the extent such Lender shall not so
make its Loan available to Agent, such Lender shall, on demand, pay to Agent the
amount of such Loan together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is paid or
repaid to Agent at the Federal Funds Rate. If such Lender does not pay such
amount promptly upon Agent's demand therefor, Agent shall notify Borrower and
Borrower shall immediately repay such amount to Agent together with accrued
interest thereon at the applicable rate or rates provided in Section 2.04.
Agent shall use its best efforts to demand any such amount from both such Lender
and
16
Borrower, provided, that any failure by Agent to make any such demand on both
such Lender and Borrower shall not in any manner affect such Lender's and
Borrower's obligation to pay or repay such amount, with interest, as set
forth herein. The failure of any Lender to make any Loan to be made by it
hereunder shall not relieve any other Lender of its obligation hereunder, if
any, to make its Loan, but no Lender shall be responsible for the failure of
any other Lender to make any Loan to be made by such other Lender. Each
request for Loans or Swingline Loans shall be deemed to be a representation
by Borrower that (i) no Event of Default or Default has occurred or will
exist upon the making of the requested Loans or Swingline Loans and (ii) the
representations and warranties contained in Section 4 hereof and in Section 5
of the Security Agreement are true and correct with the same force and effect
as if made on and as of the date of such request.
(b) REFINANCING OF SWINGLINE LOANS.
(i) PERMITTED REFINANCINGS OF SWINGLINE LOANS. U.S. Bank, at any
time in its sole and absolute discretion, may, upon notice given to each
other Lender by not later than 2:00 P.M. (Minneapolis, Minnesota time) on
any Business Day, request that each Lender (including U.S. Bank) make a
Loan in an amount equal to its Percentage Share of a portion of the
aggregate unpaid principal amount of any outstanding Swingline Loans for
the purpose of refinancing such Swingline Loans. Such Loans shall be made
as Eurodollar Advances, unless Borrower specifies otherwise.
(ii) MANDATORY REFINANCINGS OF SWINGLINE LOANS. Not later than 2:00
P.M. (Minneapolis time) at least on a weekly basis, U.S. Bank will notify
each other Lender of the aggregate amount of Swingline Loans which are then
outstanding and the amount of Loans required to be made by each Lender
(including U.S. Bank) to refinance such outstanding Swingline Loans (which
shall be in the amount of each Lender's Percentage Share of such
outstanding Swingline Loans). Such Loans shall be made as Eurodollar
Advances, unless Borrower specifies otherwise.
(iii) LENDERS' OBLIGATION TO FUND REFINANCINGS OF SWINGLINE LOANS.
Upon the giving of notice by U.S. Bank under Section 2.03(b)(i) or
2.03(b)(ii), each Lender (including U.S. Bank) shall make a Loan in an
amount equal to its Percentage Share of the aggregate principal amount of
Swingline Loans to be refinanced, and provide proceeds of such Loans, in
immediately available funds, by not later than 3:00 P.M. (Minneapolis time)
on the date such notice was received; PROVIDED, HOWEVER, that a Lender
shall not be obligated to make any such Loan unless (A) U.S. Bank believed
in good faith that all conditions to making the subject Swingline Loan were
satisfied at the time such Swingline Loan was made, or (B) if the
conditions to such Swingline Loan were not satisfied, such Lender had
actual knowledge, by receipt of the statements furnished to it pursuant to
Section 4.01 or otherwise, that any such condition had not been satisfied
and failed to notify U.S. Bank in a writing received by U.S. Bank prior to
the time it made such Swingline Loan that U.S. Bank was not authorized to
make a
17
Swingline Loan until such condition had been satisfied, or U.S. Bank was
obligated to give notice of the occurrence of an Event of Default or a
Default to Lenders pursuant to Section 8.08 and failed to do so, or (C)
any conditions to the making of such Swingline Loan that were not
satisfied had been waived in writing by Majority Lenders prior to or at
the time such Swingline Loan was made. The proceeds of Loans made
pursuant to the preceding sentence shall be paid to U.S. Bank (and not
to Borrower) and applied to the payment of principal of the outstanding
Swingline Loans, and Borrower authorizes Agent to charge the Collateral
Account or any other account (other than escrow or custodial accounts)
maintained by Borrower with Agent (up to the amount available therein)
in order to immediately pay U.S. Bank the principal amount of such
Swingline Loans to the extent Loans made by the Lenders are not
sufficient to repay in full the principal of the outstanding Swingline
Loans requested or required to be refinanced. Upon the making of a Loan
by a Lender pursuant to this Section 2.03(b)(iii), the amount so funded
shall become due under such Lender's Note and the outstanding principal
amount of the Swingline Loans shall be correspondingly reduced. If any
portion of any Loan made by Lenders pursuant to this Section
2.03(b)(iii) should be recovered by or on behalf of Borrower from U.S.
Bank in bankruptcy or otherwise, the loss of the amount so recovered
shall be ratably shared among all Lenders in the manner contemplated by
Section 9.11. Each Lender's obligation to make Loans referred to in
this Section 2.03(b) shall, subject to the proviso to the first sentence
of this Section 2.03(b)(iii), be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (1)
any setoff, counterclaim, recoupment, defense or other right which such
Lender may have against U.S. Bank, Borrower or anyone else for any
reason whatsoever; (2) the occurrence or continuance of a Default or an
Event of Default; (3) any adverse change in the condition (financial or
otherwise) of Borrower; (4) any breach of this Agreement by Borrower,
the Agent or any Lender; or (5) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing;
PROVIDED, that in no event shall a Lender be obligated to make a Loan
if, after giving effect thereto, the outstanding principal balance of
such Lender's Note would exceed its Commitment Amount.
Section 2.04 INTEREST; BALANCES DEFICIENCY FEES; CONTINUATIONS AND
CONVERSIONS.
(a) INTEREST RATES; BALANCES DEFICIENCY FEES. Borrower will pay the Agent
monthly in arrears, within two Business Days of each month after receipt of
Agent's statement therefor, interest on the unpaid principal balance of each
Advance of each Lender from time to time outstanding as follows:
(i) with respect to Balance Funded Rate Advances, at the Balance
Funded Rate; PROVIDED, that if for any Balance Calculation Period the
Balance Funded Amount maintained by Borrower with any Lender is less than
an amount equal to the average daily aggregate unpaid principal balance of
the Balance Funded Rate Advances owed to such Lender during such Balance
Calculation Period (such deficiency being herein
18
referred to as the "Balances Deficiency"), Borrower will pay such
Lender a fee (the "Balances Deficiency Fee") for said Balance
Calculation Period on the Balances Deficiency at a per annum rate equal
to the average daily Eurodollar Rate PLUS Applicable Margin in effect
during said Balance Calculation Period; and PROVIDED FURTHER, that if
the Balance Funded Amount maintained by Borrower with any Lender for any
Balance Calculation Period exceeds the weighted average daily aggregate
unpaid principal balance of the Balance Funded Rate Advances owed to
such Lender during such Balance Calculation Period (such excess being
defined herein as the "Balances Surplus"), then such Balances Surplus,
or, if Borrower and such Lender shall so agree, the charges reduction
benefit for such Balances Surplus (as determined by such Lender), may be
carried forward and applied to succeeding Balance Calculation Periods
(but not to any Balance Calculation Period occurring in any subsequent
calendar year);
(ii) with respect to Reference Rate Advances, the Reference Rate PLUS
the Applicable Margin, as adjusted automatically on and as of the effective
date of any change in the Reference Rate;
(iii) with respect to Eurodollar Rate Advance the Adjusted Eurodollar
Rate PLUS the Applicable Margin, as adjusted automatically on and as of the
effective date of any change in the Adjusted Eurodollar Rate; and
(iv) with respect to any Obligations not paid when due (A) consisting
of Balance Funded Rate Advances, a rate per annum equal to the Balance
Funded Rate PLUS 4.0% per annum, (B) consisting of Eurodollar Rate
Advances, a rate per annum equal to the Adjusted Eurodollar Rate PLUS 4.0%
per annum, (C) consisting of Reference Rate Advances, a rate per annum
equal to the Reference Rate PLUS 4.0% per annum, and (D) consisting of
other Obligations, a rate per annum equal to the Reference Rate PLUS the
Applicable Margin PLUS 4.0% for the period from the date such Obligations
were due until the same are paid.
(b) PAYMENT OF INTEREST AND FEES. Agent shall use its best efforts to
provide Borrower with a statement for interest on the Notes, the facility fees
with respect to the Commitments and the collateral handling fees with respect to
Mortgage Loans pledged under the Pledge and Security Agreement, in each case
accrued through the last day of each calendar month, on or before the third
Business Day (and in any case, no later than the tenth Business Day), of the
next succeeding calendar month, but shall have no liability to Borrower for its
failure to do so. Interest on the Notes, facility fees and collateral handling
fees accrued through the last day of each calendar month shall be due and
payable on the second Business Day after the date Borrower receives such
statement from Agent; PROVIDED, that interest payable at the rates provided for
in Section 2.04(a)(iv) shall be payable on demand. Any Balances Deficiency Fee
payable hereunder shall be due and payable quarterly after each Balance
Calculation Period within two Business Days after receipt by Borrower from any
Lender of a statement therefor (a copy of which shall be provided to Agent)
containing the calculations made to determine such
19
Balances Deficiency Fee, which statement shall be conclusive absent manifest
error.
(c) DESIGNATION AND CONVERSIONS OF OUTSTANDING ADVANCES. Subject to the
terms and conditions of this Agreement, Borrower shall designate, on any
Borrowing Date, all or portions of the Loans to be made on such Borrowing Date
as one or more Eurodollar Rate Advances, Balance Funded Rate Advances or
Reference Rate Advances. Any portion of an outstanding Loan not designated as a
Reference Rate Advance or a Balance Funded Rate Advance shall be funded as a
Eurodollar Rate Advance. Thereafter, subject to the terms and conditions of
this Agreement, Borrower shall have the option to convert all or any portion of
any outstanding Advance consisting of Loans into Advances of another type (i.e.,
Eurodollar Rate Advances, Balance Funded Rate Advances or Reference Rate
Advances); PROVIDED, HOWEVER, that (i) no Advance may be requested as or
converted into a Balance Funded Rate or, [without the written consent of the
Lenders to which it is owed (a copy of which shall be provided to Agent) a
Balance Funded Rate Advance if an Event of Default or Default has occurred and
is continuing on the proposed date of conversion, and (ii) no Advance owed to
any Lender may be requested as or converted into a Balance Funded Rate Advance
without the prior consent of such Lender, which shall be confirmed to Agent in
writing by such Lender, if the Balance Funded Amount maintained by Borrower at
such Lender is less than the aggregate amount of Balance Funded Rate Advances
owed to such Lender, after giving effect to such conversion. Borrower shall
provide Agent with telephonic notice of each proposed conversion not later than
1:00 P.M. (Minneapolis, Minnesota time) on the date of any conversion, which
notice shall set forth the proposed date therefor. Each such notice shall
specify (A) the amount to be converted, and (B) the date for the conversion.
Any notice given by Borrower under this Section 2.04(c) shall be irrevocable.
Borrower shall promptly confirm any such proposed conversion by delivering to
Agent a duly completed and executed Confirmation. Agent shall notify each
Lender affected by such proposed conversion by not later than 2:00 P.M.
(Minneapolis, Minnesota time) on the date it receives such notice of the
Advances of such Lender being converted and the types of Advances into which
such Advances are being converted.
Section 2.05 FEES.
(a) The Borrower shall pay to the Agent, on behalf of each Lender, a
facility fee ("Facility Fee") in the amount of .125% per annum of each Lender's
Commitment Amount. The Facility Fee shall be payable monthly in arrears on the
first Business Day of each month commencing September 1, 1999 and shall be
computed on the basis of a 360-day year and applied to the actual number of days
elapsed in such month; provided, that on September 1, 1999, the Borrower shall
pay the prorated portion of the Facility Fee due from the date the Credit
Agreement is executed by all parties thereto (the "Closing Date") to August 31,
1999. If the Credit Agreement terminates on any date other than the last of the
then current month, the Borrower shall pay the prorated portion of the Facility
Fee due from the beginning of the then current month to and including the date
on which the Credit Agreement terminates.
(b) The Borrower shall pay to the Agent on behalf of each Lender an
upfront fee
20
("Upfront Fee") calculated according to each Lender's Commitment Amount
as follows:
Commitment Amount Upfront Fee
----------------- -----------
$45,000,000 or above .075%
$30,000,000 - $44,999,999 .06%
$15,000,000 - $29,999,999 .05%
The Upfront Fee shall be paid by the Borrower to the Agent, on behalf of each
Lender, on or before the date of closing.
(c) Borrower shall pay to the Agent for its own account, an Agent fee and
collateral handling fees agreed to in that certain letter agreement dated of
even date herewith between Borrower and Agent.
Section 2.06 MANDATORY REPAYMENTS. The unpaid principal amount of each
Note, together with all interest accrued thereon, shall be due and payable on
the Drawdown Termination Date. In addition, if at any time the aggregate
outstanding principal amount of all Loans exceeds the Borrowing Base, Borrower
shall repay the amount of such excess within twenty-four hours after having
knowledge thereof or receiving notice thereof from Agent.
Section 2.07 PAYMENTS TO LENDERS. All payments of Interest on the
Notes, all payments of principal, including any principal payment made with
proceeds of Mortgage Collateral, and fees hereunder shall be made directly to
Agent for prompt distribution to the applicable Lenders to whom such payment is
owed in federal or other immediately available funds before 1:00 p.m.
(Minneapolis, Minnesota time) on the respective dates when due via wire transfer
to the Collateral Account. Any payment received by Agent after such time will
be deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, in
the case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be payable at the place provided therein and, if no specific place of
payment is provided, shall be payable at the place of payment of the Notes.
When Agent collects or receives money on account of the Obligations, Agent shall
distribute the money so collected or received, and Agent and Lenders shall apply
all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due, and if
such money is insufficient to pay all such Obligations, (i) first to any
reimbursements due Agent under Section 5.05, (ii) second to the payment of any
Swingline Loans then outstanding, (iii) third to the payment of the Loans then
due, and (iv) then to the partial payment of all other Obligations then
21
due in proportion to the amounts thereof, or as Lenders shall otherwise
agree;
(b) then for the prepayment of amounts owing under the Loan Documents if
so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied
first to any Interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest. All
distributions of amounts described in any of subsections (b), (c) or (d) above
shall be made by Agent pro rata to Agent and each Lender then owed Obligations
described in such subsection in proportion to all amounts owed all Lenders which
are described in such subsection.
Section 2.08 INCREASED CAPITAL REQUIREMENTS. In the event that, as a
result of any Regulatory Change, compliance by any Lender with any applicable
law or governmental rule, requirement, regulation, guideline or order (whether
or not having the force of law) regarding capital adequacy has the effect of
reducing the rate of return on such Lender's capital as a consequence of such
Lender's Commitment or amounts outstanding under such Lender's Note to a level
below that which such Lender would have achieved but for such compliance (taking
into consideration such Lender's policies with respect to capital adequacy),
then from time to time Borrower shall pay to such Lender, within thirty days
after written demand by such Lender, such additional amount or amounts as will
compensate such Lender for such reduction; PROVIDED, that Borrower shall not be
obligated to pay any such additional amount (i) unless such Lender shall first
have notified Borrower in writing that it intends to seek such compensation
pursuant to this Section, or (ii) to the extent such additional amount is
attributable to the period ending 91 days prior to the date of the first such
notice with respect to such Regulatory Change (the "Excluded Period"), except to
the extent any amount is attributable to the Excluded Period as a result of the
retroactive application of the applicable Regulatory Change. A certificate,
which shall be conclusive except for manifest error, as to the amount of any
such reduction (including calculations in reasonable detail showing how such
Lender computed such reduction and a statement that such Lender has not
allocated to its Commitment or amounts outstanding under its Note a
proportionately greater amount of such reduction than is attributable to each of
its other commitments to lend or to each of its other outstanding credit
extensions that are affected similarly by such compliance by such Lender,
whether or not such Lender allocates any portion of such reduction to such other
commitments or credit extensions) shall be furnished promptly by such Lender to
Borrower.
Section 2.09 PROVISIONS RELATING TO EURODOLLAR RATE ADVANCES AND BALANCE
FUNDED RATE ADVANCES.
22
(a) INTEREST RATE NOT ASCERTAINABLE, ETC. If, on the date for determining
the Adjusted Eurodollar Rate in respect of any Eurodollar Rate Advance, any
Lender determines (which determination shall be conclusive and binding, absent
error) that the Adjusted Eurodollar Rate will not adequately and fairly reflect
the cost to such Lender of funding such Eurodollar Rate Advance, then such
Lender shall notify Agent, and Agent shall notify Borrower, of such
determination, whereupon the obligation of such Lender to make, or to convert
any Advances to, Eurodollar Rate Advances shall be suspended until such Lender
notifies Agent, and Agent notifies Borrower, that the circumstances giving rise
to such suspension no longer exist. Outstanding Eurodollar Rate Advances owed
to such Lender shall thereupon automatically be converted to bear interest at a
rate equal to (i) the Federal Funds Rate PLUS 0.50%, and in such event, Borrower
will thereafter be entitled to designate subsequent Advances to bear interest at
the Federal Funds Rate plus 0.50%.
(b) INCREASED COST. If, after the date hereof, any Regulatory Change or
compliance with any request or directive (whether or not having the force of
law) of any governmental authority, central bank or comparable agency:
(i) shall subject any Lender to any tax, duty or other charge with
respect to Eurodollar Rate Advances or Balance Funded Rate Advances, its
Note, or its obligation to make Eurodollar Rate Advances or Balance Funded
Rate Advances, or shall change the basis of taxation of payment to such
Lender of the principal of or interest on Eurodollar Rate Advances or
Balance Funded Rate Advances or any other amounts due under this Agreement
in respect of Eurodollar Rate Advances or Balance Funded Rate Advances or
its obligation to make Eurodollar Rate Advances or Balance Funded Rate
Advances (except for changes in the rate of tax on the overall net income
of such Lender imposed by the laws of the United States or any jurisdiction
in which such Lender's principal office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit, capital requirement or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding any such requirement to the extent
included in calculating the Adjusted Eurodollar Rate) against assets of,
deposits with or for the account of, or credit extended by, any Lender or
shall impose on any Lender or on the interbank Eurodollar market any other
condition affecting Eurodollar Rate Advances or Balance Funded Rate
Advances, such Lender's Note, or its obligation to make Eurodollar Rate
Advances or Balance Funded Rate Advances;
and the result of any of the foregoing is to increase the cost to such Lender
of making or maintaining any Eurodollar Rate Advance or Balance Funded Rate
Advance, or to reduce the amount of any sum received or receivable by such
Lender under this Agreement or under its Note, then, within 30 days after
written demand by such Lender, Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
increased
23
cost or reduction; PROVIDED, that Borrower shall not be obligated to pay any
such additional amount (i) unless such Lender shall first have notified
Borrower in writing that it intends to seek such compensation pursuant to
this Section, or (ii) to the extent such additional amount is attributable to
the period ending 91 days prior to the date of the first such notice with
respect to such Regulatory Change (the "Excluded Period"), except to the
extent any amount is attributable to the Excluded Period as a result of the
retroactive application of the applicable Regulatory Change. A certificate
of any Lender claiming compensation under this Section 2.09(b), setting forth
the additional amount or amounts to be paid to it hereunder and stating in
reasonable detail the basis for the charge and the method of computation
(including a statement that such Lender has not allocated to its Commitment
or amounts outstanding under its Note a proportionately greater amount of
such compensation than is attributable to each of its other commitments to
lend or to each of its other outstanding credit extensions that are affected
by such compliance by such Lender, whether or not such Lender allocates any
portion or such compensation to such other commitments or credit extensions),
shall be conclusive in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
Failure on the part of any Lender to demand compensation for any increased
costs or reduction in amounts received or receivable with respect to any
period shall not constitute a waiver of such Lender's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable in any subsequent period.
(c) ILLEGALITY. If, after the date of this Agreement, the adoption of, or
any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for such Lender to make, maintain or
fund Eurodollar Rate Advances or Balance Funded Rate Advances, such Lender shall
notify Borrower and Agent, whereupon the obligation of such Lender to make or
convert Advances into Eurodollar Rate Advances or Balance Funded Rate Advances,
shall be suspended until such Lender notifies Borrower and Agent that the
circumstances giving rise to such suspension no longer exist. If any Lender
determines that it may not lawfully continue to maintain any Eurodollar Rate
Advances or Balance Funded Rate Advances, all of the affected Advances shall be
automatically converted as of the date of such Lender's notice to bear interest
at a rate equal to the Federal Funds Rate PLUS 0.50% and, in such event,
Borrower will thereafter be entitled to designate subsequent Advances to bear
interest at the Federal Funds Rate plus 0.50%.
ARTICLE III
CONDITIONS PRECEDENT
The obligation of each Lender to make Loans hereunder is subject to
fulfillment of the conditions precedent stated in this Article III.
24
Section 3.01 INITIAL BORROWING. The obligation of each Lender to fund
any Loan hereunder shall be subject to, in addition to the conditions precedent
specified in Section 3.02, delivery to Agent of the following (each of the
following documents being duly executed and delivered and in form and substance
satisfactory to Agent, and, with the exception of the Notes, each in a
sufficient number of originals that Agent, its counsel and each Lender may have
an executed original of each document);
(a) an executed counterpart of this Agreement and of all instruments,
certificates and opinions referred to in this Article III not theretofore
delivered (except the Borrowing Request which is to be delivered at the time
provided in Subsection 3.02(a) hereof);
(b) the Notes;
(c) the Security Agreement dated of even date herewith,
(d) a certificate of the Secretary or Assistant Secretary of General
Partner setting forth (i) resolutions of its board of directors authorizing the
execution, delivery, and performance of the Loan Documents to which it is a
party and identifying the officers authorized to sign such instruments, (ii)
specimen signatures of the officers so authorized, (iii) articles of
incorporation of General Partner certified by the appropriate Secretary of State
as of a recent date acceptable to the Agent in its sole discretion, (iv) bylaws
of General Partner, certified as being accurate and complete and (v) limited
partnership agreement of Borrower, certified as being accurate and complete;
(e) a certificate of the existence and good standing for each of Borrower
and General Partner in their respective states of incorporation or organization
dated as of a recent date acceptable to the Agent in its sole discretion;
(f) an opinion of counsel for Borrower in form and substance acceptable to
Agent;
(g) a Borrowing Base Certificate dated as of the date of the first
Borrowing, certified by the President, Accounting Director or Chief Financial
Officer of General Partner; and
(h) such other documents as Agent may reasonably request at any time at or
prior to the date of the initial Borrowing hereunder.
Section 3.02 ALL BORROWINGS. The obligation of each Lender to fund any
Loan pursuant to this Agreement is subject to the following further conditions
precedent:
(a) Borrower shall make a request for such Loan in accordance with Section
2.03 (and thereafter deliver to Agent a Confirmation with respect thereto, as
required by Section 2.03) accompanied by the Required Mortgage Documents, if
applicable;
25
(b) all Property in which Borrower has granted a Lien to Agent shall have
been physically delivered to the possession of Agent or a bailee acceptable to
Agent to the extent that such possession is required under this Agreement or
appropriate for the purpose of perfecting the Lien of Agent in such Collateral;
(c) the representations and warranties of Borrower and each Restricted
Subsidiary contained in this Agreement or any Security Instrument (other than
those representations and warranties which are by their terms limited to the
date of the agreement in which they are initially made) shall be true and
correct in all material respects on and as of the date of such Loan;
(d) no Default or Event of Default shall have occurred and be continuing
and no change or event which constitutes a Material Adverse Effect shall have
occurred as of the date of such Loan;
(e) the Collateral Account and the Operating Account shall be established
and in existence;
(f) the making of such Loan shall not be prohibited by any Governmental
Requirement;
(g) the delivery to Agent of such other documents and opinions of counsel,
including such documents as may be necessary or desirable to perfect or maintain
the priority of any Lien granted or intended to be granted hereunder or
otherwise and including favorable written opinions of counsel with respect
thereto, as Agent may reasonably request; and
(h) the aggregate amount of all Loans and Swingline Loans outstanding,
after giving effect to such Loan, does not exceed the lesser of (i) the
Borrowing Base and (ii) the Aggregate Commitment Amount.
The making of any request for any Loan or Swingline Loan by Borrower shall
be deemed to constitute a representation and warranty by Borrower on the date
thereof and on the date on which such Loan or Swingline Loan is made as to the
facts specified in Subsections (c) and (d) of this Section 3.02.
ARTICLE IV
BORROWER REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
Section 4.01 ORGANIZATION AND GOOD STANDING. Borrower (a) is a limited
partnership duly formed and existing in good standing under the laws of the
jurisdiction of its formation, (b)
26
is duly qualified as a foreign limited partnership and in good standing in
all jurisdictions in which its failure to be so qualified could have a
Material Adverse Effect, (c) has the partnership power and authority to own
its properties and assets and to transact the business in which it is engaged
and is or will be qualified in the jurisdictions wherein it proposes to
transact business in the future and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, have a Material Adverse Effect.
Section 4.02 AUTHORIZATION AND POWER. Borrower has the requisite
partnership power and authority to execute, deliver and perform the Loan
Documents to which it is a party; Borrower is duly authorized to and has taken
all action necessary to authorize it to, execute, deliver and perform the
Documents to which it is a party and is and will continue to be duly authorized
to perform such Loan Documents.
Section 4.03 NO CONFLICTS OR CONSENTS. Neither the execution and
delivery by Borrower of the Loan Documents, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or with the terms and provisions thereof, will (a) materially
contravene or conflict with any Requirement of Law to which Borrower is subject,
or any indenture, mortgage, deed of trust, or other agreement or instrument to
which Borrower is a party or by which Borrower may be bound, or to which the
Property of Borrower may be subject, or (b) result in the creation or imposition
of any Lien, other than the Lien of the Security Agreement, on the Property of
Borrower. All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, from any Governmental Authority
that are necessary in connection with the transactions contemplated by the Loan
Documents have been obtained.
Section 4.04 ENFORCEABLE OBLIGATIONS. This Agreement, the Notes and the
other Loan Documents are the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as limited by
Debtor Laws.
Section 4.05 NO LIENS. Borrower has good and indefeasible title to the
Mortgage Collateral free and clear of all Liens and other adverse claims of any
nature, other than Liens in the Mortgage Collateral in favor of Agent.
Section 4.06 FINANCIAL CONDITION OF BORROWER. Borrower has delivered to
Agent and each Lender copies of its unaudited Consolidated balance sheet as of
June 30, 1999; such financial statements fairly present the financial condition
of Borrower as of such date and have been prepared in accordance with GAAP; as
of the date thereof, there were no material obligations, liabilities or GAAP
Indebtedness or Contingent Indebtedness (including material contingent and
indirect liabilities and obligations or unusual forward or long-term
commitments) of Borrower which are not reflected in such financial statements
and no change which constitutes a Material Adverse Effect his occurred in the
financial condition or business of Borrower since May 31, 1999. Borrower has
also delivered to Agent and each Lender management reports for
27
the month ended June 30, 1999; such reports fairly and accurately present
Borrower's commitment position, pipeline position, servicing and production
as of the end of such months and for the fiscal year to date for the periods
ending on such dates.
Section 4.07 FULL DISCLOSURE. Each material fact or condition relating
to the Loan Documents or the financial condition, business, or property of
Borrower that is a Material Adverse Effect has been disclosed in writing to
Agent. All information previously furnished by Borrower and its Restricted
Subsidiaries to Agent in connection with the Loan Documents was and all
information furnished in the future by Borrower and its Restricted Subsidiaries
to Agent or Lenders will be true and accurate in all material respects or based
on reasonable estimate on the date the information is stated or certified. To
the best knowledge of Borrower, neither the financial statements referred to in
Section 4.07 hereof, nor any Borrowing Request, officer's certificate or
statement delivered by Borrower and its Restricted Subsidiaries to Agent and
each Lender in connection with this Agreement, contains any untrue statement of
material fact.
Section 4.08 NO DEFAULT. Neither Borrower nor any Restricted Subsidiary
is in default under any loan agreement, mortgage, security agreement or other
material agreement or obligation to which it is a party or by which any of its
Property is bound.
Section 4.09 NO LITIGATION. There are no material actions, suits or
legal, equitable, arbitration or administrative proceedings pending, or to the
knowledge of Borrower, threatened, against Borrower or any Restricted Subsidiary
the adverse determination of which could constitute a Material Adverse Effect.
Section 4.10 TAXES. All tax returns required to be filed by Borrower and
each Restricted Subsidiary in any jurisdiction have been filed or extended and
all taxes, assessments, fees and other governmental charges upon Borrower and
each Restricted Subsidiary or upon any of its properties, income or franchises
have been paid prior to the time that such taxes could give rise to a Lien
thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on the
books of Borrower or such Restricted Subsidiary. Neither Borrower nor any
Restricted Subsidiary has any knowledge of any proposed tax assessment against
Borrower or any Restricted Subsidiary.
Section 4.11 PRINCIPAL OFFICE, ETC. The principal office, chief
executive office and principal place of business of Borrower and each Restricted
Subsidiary is at the address set forth in Section 10.01.
Section 4.12 COMPLIANCE WITH ERISA. None of Borrower, any Restricted
Subsidiary or any ERISA Affiliate of Borrower or any Restricted Subsidiary
currently maintains, contributes to, is required to contribute to or has any
liability, whether absolute or contingent, with respect to an ERISA Plan. With
respect to all other employee benefit plans maintained or contributed to by
Borrower and each Restricted Subsidiary, Borrower and each Restricted Subsidiary
is in material compliance with ERISA.
28
Section 4.13 SUBSIDIARIES. Neither Borrower nor any Restricted
Subsidiary presently has any Subsidiary or owns any stock in any other
corporation or association except those listed in Schedule 3. As of the date
hereof, Borrower and each Restricted Subsidiary owns, directly or indirectly,
the equity interest in each of its Subsidiaries which is indicated in Schedule
3.
Section 4.14 INDEBTEDNESS. Borrower has no indebtedness outstanding
other than the GAAP Indebtedness and Contingent Indebtedness permitted by
Section 6.02.
Section 4.15 PERMITS. Borrower and each Restricted Subsidiary has all
permits and licenses necessary for the operation of its business.
Section 4.16 STATUS UNDER CERTAIN FEDERAL STATUTES. Neither Borrower nor
any Restricted Subsidiary is (a) a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, (b) a "public utility",
as such term is defined in the Federal Power Act, as amended, (c) an "investment
company", or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1949, as amended or (d) a "rail
carrier", or a "person controlled by or affiliated with a rail carrier", within
the meaning of Title 49, U.S.C., and neither Borrower nor any Restricted
Subsidiary is a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable.
Section 4.17 NO APPROVALS REQUIRED. Other than consents and approvals
previously obtained and actions previously taken, neither the execution and
delivery of the Loan Documents, nor the consummation of any of the transactions
contemplated hereby or thereby requires the consent or approval of the giving of
notice to, or the registration, recording or filing by Borrower or any
Restricted Subsidiary of any document with, or the taking of any other action in
respect of, any Governmental Authority which has jurisdiction over Borrower or
any Restricted Subsidiary or any of its Property, except for (a) the filing of
the Mortgages, Uniform Commercial Code financing statements and other similar
filings; to perfect the interest of Agent in the Collateral, and (b) such other
consents, approvals, notices, registrations, filings or action as may be
required in the ordinary course of business of Borrower and Restricted
Subsidiaries in connection with the performance of the obligations of Borrower
hereunder.
Section 4.18 INDIVIDUAL MORTGAGE LOANS. Borrower hereby represents with
respect to each Mortgage Note and Mortgage Loan that is part of the Collateral:
(a) Borrower has good and marketable title to each Mortgage Note and
Mortgage, was the sole owner thereof and had full right to pledge the Mortgage
Loan to Agent free and clear of any other Lien except any such Lien which has
been disclosed to Agent in writing and which is permitted hereunder;
(b) To the best knowledge of Borrower, other than the permitted thirty
(30) day
29
delinquency period for payments permitted by the definition of Eligible
Mortgage Loan, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note and
there is no event which, with the passage of time or with notice and/or the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration and no such default, breach, violation or
event of acceleration has been waived;
(c) To the best of the knowledge of Borrower, the physical condition of
the Property subject to the Mortgage has not deteriorated since the date of
origination of the related secured Mortgage Loan (normal wear and tear excepted)
and there is no proceeding pending for the total or partial condemnation of any
Mortgaged Property;
(d) Each Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the related Property subject to the Mortgage of the benefits
of the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise, by
judicial foreclosure;
(e) Each Mortgage Loan is a first or second lien one-to-four-family loan
which is not a construction loan, has been underwritten by the originator,
investor or mortgage insurer thereof in accordance with such originator's,
investor's or mortgage insurer's then current underwriting guidelines, and is a
Conforming Loan, a Nonconforming Loan, an FHA loan, a VA loan or Jumbo Mortgage
Loan;
(f) Each Mortgage Note is payable in monthly installments of principal and
interest, with interest payable in arrears, and no Mortgage Note provides for
any extension of the original term;
(g) No Mortgage Loan is a loan in respect of the purchase of a
manufactured home or mobile home or the land on which a manufactured home or
mobile home will be placed; no Mortgage securing a Mortgage Loan secures
commercial property;
(h) The origination practices used by the originator of the Mortgage Loans
and the collection practices used by Borrower with respect to each Mortgage
Loan have been in all material respects legal, proper, prudent and customary in
the loan origination and servicing business; and
(i) To the best knowledge of Borrower, each Mortgage Loan was originated
in compliance with all applicable laws and no fraud or misrepresentation was
committed by any Person in connection therewith.
(j) Each Mortgage Loan matures within thirty (30) years after the date of
origination thereof.
30
Section 4.19 YEAR 2000 COMPLIANCE. Borrower has, and has caused its
Subsidiaries to, review and assess its business operations and computer
systems with respect to the "year 2000 problem" (that is, that computer
applications and equipment may not be able to properly perform date-sensitive
functions before, during and after January 1, 2000) and, based on those
reviews and inquiries, Borrower has no reason to believe that the year 2000
problem will result in a material adverse change in the business, condition
(financial or otherwise), operations or prospects of Borrower and its
Subsidiaries, or Borrower's ability to repay Lenders.
Section 4.20 ▇▇▇▇▇▇ ▇▇▇, FHA, VA, ▇▇▇▇▇▇ MAE AND ▇▇▇▇▇▇▇ MAC
ELIGIBILITY OF THE BORROWER. The Borrower is (a) an FHA-approved,
non-supervised mortgagee in good standing and an eligible lender under the VA
loan guaranty program, meeting all requirements of law and governmental
regulation so as to be eligible to originate, purchase, hold and service
FHA-insured Mortgage Loans, VA-guaranteed Mortgage Loans and conventional
Mortgage Loans and to issue Mortgage-Backed Securities guaranteed by ▇▇▇▇▇▇
Mae; (b) an approved seller/servicer of Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇ and to
▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac regions in which it operates, meeting all
applicable ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac regulations so as to be able to service
Mortgage Loans for ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac; and (c) a ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇
Mac and ▇▇▇▇▇▇ Mae-approved servicer of Mortgage-Backed Securities, meeting
all applicable regulations of ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac and ▇▇▇▇▇▇ Mae so as to
be able to service the Mortgage Loans that secure Mortgage-Backed Securities.
ARTICLE V
AFFIRMATIVE COVENANTS
Borrower and each Restricted Subsidiary shall at all times comply with
the covenants contained in this Article V, from the due hereof and for so
long as any part of the Obligations or any Commitment is outstanding unless
Majority Lenders have agreed otherwise.
Section 5.01 FINANCIAL STATEMENT AND REPORTS. Borrower shall furnish
to Agent and each Lender the following, all in form and detail reasonably
satisfactory to Agent:
(a) Promptly after becoming available, and in any event within ninety
(90) days after the close of each Fiscal Year of Borrower, the audited
balance sheet of Borrower as of the end of such year, and the audited related
statements of income, partners' equity and cash flows of Borrower for such
year, setting forth in each case in comparative form the corresponding
figures for the preceding Fiscal Year, accompanied by the related report of
independent certified public accountant of national standing prepared on a
GAAP basis;
(b) Promptly after becoming available, and in any event within thirty
(30) days after the end of each month, including the twelfth month in the
Fiscal Year of Borrower, a balance sheet of Borrower as of the end of such
month and the related statements of income, partners' equity and cash flows
of Borrower for such month and the period from the first day of the then
31
current fiscal year of Borrower through the end of such month, certified by
the Chief Financial Officer, Accounting Director or President of General
Partner to have been calculated on a GAAP basis;
(c) Promptly upon receipt thereof, a copy of each other report
submitted to Borrower by independent accountants in connection with any
annual, interim or special audit of the books of Borrower;
(d) Promptly and in any event within thirty (30) days after the end of
each calendar month in each Fiscal Year of Borrower, and within fifteen (15)
days after the completion of each year-end audit by Borrower's independent
public accountants, a completed Officer's Certificate in the form of Exhibit
D hereto, executed by the President, Chief Financial Officer or Accounting
Director of General Partner;
(e) Promptly and in any event within thirty (30) days after the end of
each month, a Borrowing Base Certificate substantially in the form of Exhibit
C hereto;
(f) Promptly and in any event within thirty (30) days after the end of
each month, a management report regarding (i) Borrower's pipeline and
commitment position, including investor type, amount and rate of committed
Mortgage Loans and expiration date and (ii) Borrower's production statistics,
including type of product and or origination source (retail or correspondent)
and geographic concentration in each case in form and detail as reasonably
required by Agent, prepared as of the end of such month and for the Fiscal
Year to date;
(g) Promptly and in any event by not later than the first Business Day
of each week, a commitment position report as of the last Business Day of the
preceding week (delivered to Agent only);
(h) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the Parent's
shareholders, and copies of all registration statements, periodic reports and
other documents filed by the Parent with the Securities and Exchange
Commission (or any successor thereto) or any national securities exchange; and
(i) Such other information concerning the business, properties or
financial condition of Borrower and its Restricted Subsidiaries as Agent or
any Lender may reasonably request.
Section 5.02 TAXES AND OTHER LIENS. Borrower and each Restricted
Subsidiary shall pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any
of its Property as all claims of any kind (including claims for labor,
materials, supplies and rent) which, if unpaid, might become a Lien upon any
or all of its Property; provided, however, Borrower and each Restricted
Subsidiary shall not be required to pay any such tax, assessment, charge,
levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings diligently
conducted
32
by or on behalf of Borrower or such Restricted Subsidiary and if Borrower or
such Restricted Subsidiary shall have set up reserves therefor adequate under
GAAP.
Section 5.03 MAINTENANCE. Each of Borrower and Restricted
Subsidiaries shall (a) maintain its corporate or partnership existence,
rights and franchises; (b) observe and comply in all material respects with
all Governmental Requirements, and (c) maintain its Properties (and any
Properties leased by or consigned to it or held under title retention or
conditional sales contracts) in good and workable condition at all times and
make all repairs, replacements, additions, betterments and improvements to
its Properties as are needful and proper so that the business carried on in
connection therewith may be conducted properly and efficiently at all times.
Section 5.04 FURTHER ASSURANCES. Borrower shall, within three (3)
Business Days after the request of Agent, cure any defects in the execution
and delivery of the Notes, this Agreement or any other Loan Document and
Borrower shall, at its expense, promptly execute and deliver to Agent upon
request all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of Borrower
and each Restricted Subsidiary in this Agreement and in the other Loan
Documents or to further evidence and more fully describe the collateral
intended as security for the Notes, or to correct any omissions in this
Agreement or the other Loan Documents, or more fully to state the security
for the obligations set out herein or in any of the other Loan Documents, or
to make any recordings, to file any notices, or obtain any consents.
Section 5.05 REIMBURSEMENT OF EXPENSES. Borrower shall pay (a) all
reasonable legal fees (including, without limitation, allocated costs for
in-house legal service) incurred by Agent in connection with the preparation,
negotiation or execution of this Agreement, the Notes and the other Loan
Documents and any amendments, consents or waivers executed in connection
therewith, (b) all fees, charges or taxes for the recording or filing of the
Security Instruments, (c) all out-of-pocket expenses of Agent in connection
with the legal administration of this Agreement, the Notes and the other Loan
Documents, including courier expenses incurred in connection with the
Mortgage Collateral, and (d) all amounts expended, advanced or incurred by
Agent to satisfy any obligation of Borrower under this Agreement or any of
the other Loan Documents or to collect the Notes, or to enforce the rights of
Agent or any Lender under this Agreement or any of the other Loan Documents
or to collect the Note, or to enforce the rights of Agent or any Lender under
this Agreement or any of the other Loan Documents, which amounts shall
include all underwriting expenses, collateral liquidation costs, court costs,
attorneys' fees (including, without limitation, for trial, appeal or other
proceedings), fees of auditors and accountants, and investigation expenses
reasonably incurred by Agent or any Lender in connection with any such
matters, together with interest at the post-maturity rate specified in the
Note on each item specified in clause (a) through (d) from thirty (30) days
after the date of written demand or request for reimbursement until the date
of reimbursement.
Section 5.06 INSURANCE. Borrower shall maintain with financially
sound and reputable
33
insurers, insurance with respect to its properties and business against such
liabilities, casualties, risks and contingencies and in such types and
amounts as is customary in the case of Persons engaged in the same or similar
businesses and similarly situated, including, without limitation, a fidelity
bond or bonds with financially sound and reputable insurers with such
coverage and in such amounts as is customary in the case of Persons engaged
in the same or similar business and similarly situated. The improvements on
the land covered by each Mortgage shall be kept continuously insured at all
times by responsible insurance companies against fire and extended coverage
hazard under policies, binders, letters, or certificates of insurance, with a
standard mortgagee clause in favor of Borrower and its assigns. Each such
policy must be in an amount equal to the lesser of the maximum insurable
value of the improvements or the original principal amount of the Mortgage
Note, without reduction by reason of any co-insurance, reduced rate
contribution, or similar clause of the policies or binders. Upon request of
Agent, Borrower shall furnish or cause to be furnished to Agent from time to
time a summary of the insurance coverage of Borrower in form and satisfactory
to Agent and if requested shall furnish Agent copies of the applicable
policies.
Section 5.07 ACCOUNTS AND RECORDS. Borrower and each Restricted
Subsidiary shall keep books of record and account in true and correct entries
will be made of all dealings or transactions in relation to its business and
activities, in accordance with GAAP. Borrower and each Restricted Subsidiary
shall maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate all records pertaining
to the performance of Borrower's or such Restricted Subsidiary's obligations
under any servicing agreements in the event of the destruction of the
originals of such records) and keep and maintain all documents, books,
records, computer tapes and other information reasonably necessary or
advisable for the performance by Borrower and each Restricted Subsidiary of
its obligations under any servicing agreements.
Section 5.08 RIGHT OF INSPECTION. Borrower shall permit authorized
representatives of Agent or any Lender to examine their servicing records and
books of records and account and make copies or extracts thereof and to visit
and inspect any of the Properties of Borrower, all upon reasonable notice
during normal business hours, provided that if no Event of Default has
occurred and is continuing, such visits and Inspections at Borrower's
premises shall be limited to periods of no more than two (2) consecutive days
on two occasions (total of four days) during each twelve-month period. Such
visits and inspections shall be at Agent's or such Lender's expense unless an
Event of Default has occurred and is continuing, in which case it shall be at
Borrower's expense. Borrower shall permit authorized representatives of Agent
or any Lender to discuss the business, operations, assets and financial
condition of Borrower and the Restricted Subsidiaries with its officers at
any time.
Section 5.09 NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify
Agent and each Lender upon (a) the receipt of any notice from, or the taking
of any other action by, the holder of any promissory note, debenture or other
evidence of GAAP Indebtedness and Contingent Indebtedness of Borrower or any
Restricted Subsidiary with respect to a claimed default, together
34
with a detailed statement by a responsible officer of Borrower specifying the
notice given or other action taken by such holder and the nature of the
claimed default and what action Borrower is taking or proposes to take with
respect thereto; (b) the commencement of, or any determination in, any legal,
judicial or regulatory proceedings between Borrower or any Restricted
Subsidiary and any Governmental Authority or any other Person which, if
adversely determined, could have a Material Adverse Effect; (c) any material
adverse change in the business, operations, prospects or financial condition
of Borrower or any Restricted Subsidiary, including, without limitation, the
insolvency of Borrower or any Restricted Subsidiary, (d) any event or
condition which could have a Material Adverse Effect or (e) the occurrence of
any Termination Event.
Section 5.10 PERFORMANCE OF CERTAIN OBLIGATIONS AND INFORMATION
REGARDING INVESTORS. Borrower shall perform and observe in all material
respects each of the provisions of each Take-Out Commitment and any servicing
agreement on its part to be performed or observed and will cause all things
to be done which are necessary to have each item of Mortgage Collateral
covered by a Take-Out Commitment comply with the requirements of such
Take-Out Commitment. Borrower will deliver to Agent financial information
concerning any Person Lenders are reviewing to determine whether to approve
such Person as an Investor.
Section 5.11 USE OF PROCEEDS; MARGIN STOCK. The proceeds of all
Borrowings shall be used by Borrower solely for the origination or
acquisition of Mortgage Loans in the ordinary course of Borrower's business.
None of such proceeds shall be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U, or for the purpose of reducing
or retiring any GAAP Indebtedness and Contingent Indebtedness which was
originally incurred to purchase or carry margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation U.
Section 5.12 NOTICE OF DEFAULT. Borrower shall furnish to Agent and
each Lender immediately upon becoming aware of the existence of any Default
or Event of Default, a written notice specifying the nature and period of
existence thereof and the action which Borrower is taking or proposes to take
with respect thereto.
Section 5.13 COMPLIANCE WITH LOAN DOCUMENTS. Borrower shall cause
each Restricted Subsidiary to promptly comply with any and all covenants and
provisions of the Loan Documents to be complied with by such Person.
Section 5.14 OPERATIONS AND PROPERTIES. Borrower and each Restricted
Subsidiary shall comply with all rules, regulations and guidelines applicable
to it. Borrower shall act prudently and in accordance with customary
industry standards in managing and operating its Property.
Section 5.15 YEAR 2000 COMPLIANCE. Borrower agrees to take, and to
cause each of its Subsidiaries to take, all actions reasonably necessary to
ensure that the representations set forth in Section 4.19 remain true, and
Borrower agrees to notify Agent promptly if, at any time during the term of
this Agreement, Borrower becomes aware of facts or circumstances such that
the
35
representations set forth in Section 4.19 has become or may become untrue or
this Section has been or may be breached. Borrower will promptly deliver to
Agent such information relating to the representation in Section 4.19 and the
agreement set forth in this Section as Agent requests from time to time,
including, without limitation, any information pertaining to the review and
assessment set forth in Section 4.19.
Section 5.16 MAINTENANCE OF QUALIFICATIONS. The Borrower will
maintain its status as an FHA-approved mortgagee, as an approved lender under
the VA guarantee program, as an approved seller/servicer of Mortgage Loans to
▇▇▇▇▇▇ ▇▇▇ and to ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac regions in which it operates
and as an FHA-approved direct endorsement mortgagee, and its eligibility to
issue Mortgage-Backed Securities or to service the Mortgage Loan pools formed
with respect to Mortgage-Backed Securities.
ARTICLE VI
NEGATIVE COVENANTS
Borrower and each Restricted Subsidiary shall at all times comply with
the covenants contained in this Article VI, from the date hereof and for so
long as any part of the Obligations or any Commitment is outstanding unless
Majority Lenders have agreed otherwise:
Section 6.01 NO MERGER. Borrower shall not merge or consolidate with
or into any Person, if immediately prior to any such merger or consolidation
a Default or Event of Default exists or would occur as a result thereof, or
if as a result of any such merger or consolidation a Change of Control would
occur.
Section 6.02 LIMITATION ON GAAP INDEBTEDNESS AND CONTINGENT INDEBTEDNESS.
At no time shall Borrower or any Restricted Subsidiary incur, create, contract,
assume, have outstanding, guarantee or otherwise be or become, directly or
indirectly, liable in respect of any GAAP Indebtedness or Contingent
Indebtedness except:
(a) the Obligations;
(b) trade debt, equipment leases, loans for the purchase of equipment
used in the ordinary course of Borrower's business and liens for taxes and
assessments not yet due and payable owed in the ordinary course of business;
(c) unsecured GAAP Indebtedness or unsecured Contingent Indebtedness
owing to Parent or any Affiliate of Parent; and
(d) Contingent Indebtedness to Persons other than Parent or Affiliate
of Parent.
Section 6.03 BUSINESS. Borrower shall not, directly or indirectly,
other than through an
36
Unrestricted Subsidiary, engage in any business which differs materially from
that currently engaged in by Borrower or any other business customarily
engaged in by other Persons in the mortgage banking business.
Section 6.04 LIQUIDATIONS, DISPOSITIONS OF SUBSTANTIAL ASSETS. Except
as expressly provided below in this section, neither Borrower nor any
Restricted Subsidiary shall dissolve or liquidate or sell, transfer, lease or
otherwise dispose of any material portion of its property or assets or
business. Borrower and the Restricted Subsidiaries may sell Mortgage Loans
and the right to service Mortgage Loans in the ordinary course of their
business, any Restricted Subsidiary may sell its property, assets or business
to Borrower or another Restricted Subsidiary, and any Restricted Subsidiary
may liquidate or dissolve if at the time thereof and immediately thereafter,
Borrower and the Restricted Subsidiaries are in compliance with all covenants
set forth in the Loan Documents and no Default or Event of Default shall have
occurred and be continuing.
Section 6.05 LOANS, ADVANCES, AND INVESTMENTS. Neither Borrower nor
any Restricted Subsidiary shall make any loan (other than Mortgage Loans),
advance, or capital contribution to, or investment in (including any
investment in any Restricted Subsidiary, joint venture or partnership), or
purchase or otherwise acquire any of the capital stock, securities, ownership
interests, or evidences of indebtedness of, any Person (collectively,
"Investment"), or otherwise acquire any interest in, or control of, another
Person, except for the following:
(a) Cash Equivalents;
(b) Any acquisition of securities or evidences of indebtedness of
others when acquired by Borrower in settlement of accounts receivable or
other debts arising in the ordinary course of its business, so long as the
aggregate amount of any such securities or evidences of indebtedness is not
material to the business or condition (financial or otherwise) of Borrower;
(c) Mortgage Notes acquired in the ordinary course of Borrower's
business; and
(d) Investment in any Subsidiary; provided that at the time any such
investment is made and immediately thereafter, Borrower and the Restricted
Subsidiaries are in compliance with all covenants set forth in the Loan
Documents and no Default or Event of Default shall have occurred and be
continuing.
(e) Loans to officers or employees in an aggregate amount not to exceed
$300,000.
Section 6.06 USE OF PROCEEDS. Borrower shall not permit the proceeds
of the Loans to be used for any purpose other than those permitted by Section
5.11 hereof. Borrower shall not, directly or indirectly, use any of the
proceeds of the Loans for the purpose, whether immediate, incidental or
ultimate, of buying any "margin stock" or of maintaining, reducing or
retiring any GAAP Indebtedness and Contingent Indebtedness originally
incurred to purchase a stock that is
37
currently any "margin stock", or for any other purpose which might constitute
this transaction a "purpose credit", in each case within the meaning of
Regulation U or otherwise take or permit to be taken any action which would
involve a violation of Regulation U, Regulation T or Regulation X or any
other regulation of the Board of Governors of the Federal Reserve System.
Section 6.07 ACTIONS WITH RESPECT TO MORTGAGE COLLATERAL. Borrower
shall not:
(a) Compromise, extend, release, or adjust payments on any Mortgage
Collateral, accept a conveyance of mortgaged property in full or partial
satisfaction of any Mortgage Collateral, or release any Mortgage securing or
underlying any Mortgage Collateral;
(b) Agree to the amendment or termination of any Take-Out Commitment in
which Agent has a security interest or to substitution of a Take-out
Commitment for a Take-Out Commitment in which Agent has a security interest
hereunder, if such amendment, termination or substitution may reasonably be
expected (as determined by Majority Lenders in their sole discretion) to have
a Material Adverse Effect; or
(c) Transfer, sell, assign, or deliver any Mortgage Collateral pledged
to Agent to any Person other than Agent, except pursuant to a Take-Out
Commitment.
Section 6.08 TRANSACTIONS WITH AFFILIATES. Borrower shall not enter
into any transactions including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate other than a Restricted Subsidiary unless such transactions are
otherwise permitted under this Agreement and are in the ordinary course of
Borrower's business.
Section 6.09 LIENS. Borrower shall not grant, create, incur, assume,
permit or suffer to exist any Lien, upon any of its Mortgage Notes or
Servicing Rights or any property related thereto, including but not limited
to the mortgages securing such Mortgages Notes and the proceeds of the
Mortgage Notes and Servicing Rights (whether or not part of the Mortgage
Collateral), other than (a) Liens in an aggregate amount not to exceed
$2,000,000, (b) Liens which secure payment of the Obligations, (c) such
non-consensual Liens as may be deemed to arise as a matter of law pursuant to
any Take-Out Commitment and (d) Liens described on Schedule 4.
Section 6.10 ERISA PLANS. Neither Borrower nor any Restricted
Subsidiary shall adopt or agree to maintain or contribute to ERISA Plan.
Borrower and promptly notify Agent and each Lender in writing in the event an
ERISA Affiliate adopts an ERISA Plan.
Section 6.11 CHANGE OF PRINCIPAL OFFICE; FISCAL YEAR. Borrower shall
not move its principal office, executive office or principal place of
business from the address set forth in Section 10.01 or change its Fiscal
Year, without prior written notice to Agent and each Lender.
38
Section 6.12 LIMITATION ON DISTRIBUTIONS AND REDEMPTIONS. Borrower
will not make any Distribution, except as expressly provided in this section.
Distributions may be made by Borrower, within sixty (60) days after the end
of each Fiscal Quarter ending March 31 and September 30, to the extent that
the aggregate value of all Distributions Made by Borrower in the Four Quarter
Period ending on the last day of such Fiscal Quarter does not exceed
Borrower's profit for such Four Quarter Period, so long as (a) no Default or
Event of Default exists at the time such Distribution is made, or will occur
as a result of the making thereof and (b) such Distribution will not reduce
Borrower's Consolidated Tangible Net Worth to less than $14,600,000.
Section 6.13 TANGIBLE NET WORTH. As of the end of each calendar month,
Borrower's Consolidated Tangible Net Worth shall not be less than $14,600,000.
Section 6.14 TANGIBLE NET WORTH RATIO. The ratio of (i) the sum of
GAAP Indebtedness and Contingent Indebtedness to (ii) Borrower's Consolidated
Tangible Net Worth shall not be more than 12.0 to 1.0 as of the end of each
calendar month.
Section 6.15 NET INCOME. As of the end of each Fiscal Quarter,
Borrower's Consolidated income, calculated in accordance with GAAP, for the
two consecutive Fiscal Quarters then ended shall not be less than $1.00.
Section 6.16 CUSTODIAN. Borrower will not appoint any collateral
agent or custodian for its Mortgage Loans other than U.S. Bank.
Section 6.17 PAYMENTS TO PARENT. Upon the occurrence and continuation
of an Event of Default, Borrower shall not make any payment on any
indebtedness owed by it to Parent or any Affiliate of Parent.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01 NATURE OF EVENT. An Event of Default shall exist if any
one or more of the following occurs:
(a) Borrower fails to make any payment of principal of or interest on
any Note or any fee or other amount required to be paid to Agent or any
Lender pursuant to this Agreement or any other Loan Document within two (2)
calendar days after notice of such failure is given by Agent to Borrower;
(b) Default is made in the due observance or performance by Borrower or
any of its Restricted Subsidiaries of any covenant or agreement set forth in
Article VI or Section 5.01 and such default continues unremedied for thirty
(30) calendar days;
39
(c) Default is made in the due observance or performance by Borrower or
any of its Restricted Subsidiaries of any covenant or agreement set forth in
any Loan Document (other than as referred to in subsections (a) or (b) above)
and such default continues unremedied for thirty (30) calendar days after
notice of such default is given by Agent to Borrower;
(d) Any material statement, warranty or representation by or on behalf
of Borrower contained in any Loan Document or in any Borrowing Request,
proves to have been incorrect or misleading in any material respect as of the
date made or deemed made;
(e) Borrower or any Restricted Subsidiary:
(i) suffers the entry against it of a judgment, decree or order for
relief by a court of competent jurisdiction in an involuntary proceeding
commenced under any applicable bankruptcy, insolvency or other similar law
of any jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such proceeding
commenced against it which remains undismissed for a period of sixty (60)
days; or
(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended; or applies for or consents
to the entry of any order for relief in an involuntary case under any such
law; or makes a general assignment for the benefit of creditors; or fails
generally to pay (or admits in writing its inability to pay) its debts as
such debts become due; or takes partnership action, corporate action or
other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or similar official
of all or a substantial part of its assets or of any part of the Mortgage
Collateral in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor discharged
within sixty (60) days after the making thereof, or such appointment or
taking possession is it any time consented to, requested by, or acquiesced
to by it; or
(iv) suffers the entry against it of a final judgment for the payment
of money in excess of $500,000 (not covered by insurance satisfactory to
Agent in its discretion), unless the same is discharged within thirty (30)
days after the date of carry thereof or an appeal or appropriate proceeding
for review thereof is taken within such period and a stay of execution
pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar process to
be issued by any court against all or any substantial part of its assets or
any pan of the Mortgage Collateral;
40
provided, however, if any event set forth in this Section 7.01(e) occurs with
respect to any Restricted Subsidiary, the occurrence of such event shall not
constitute an Event of Default unless it could have a Materially Adverse
Effect.
(f) Borrower or any Restricted Subsidiary fails to make when due or within
any applicable grace period (after giving effect to any applicable notice
requirement), any payment on any GAAP Indebtedness and Contingent Indebtedness
(other than the Obligations); or any event or condition occurs under any
provision contained in any agreement under which such obligation is governed,
evidenced or secured (or any other material breach or default under such
obligation or agreement occurs) if a Material Adverse Effect is caused thereby;
(g) Any Loan Document shall for any reason cease to be in full force
and effect, or be declared null and void or unenforceable in whole or in part
as the result of any action initiated by any Person other than Agent or any
Lender; or the validity or enforceability of any such document shall be
challenged or denied by any Person other than Agent or any Lender;
(h) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Code in excess of $25,000 exists with respect to any
ERISA Plan, whether or not waived by the Secretary of the Treasury or his
delegate, or (ii) any Termination Event occurs with respect to any ERISA Plan
and the then current value of such ERISA Plan's benefits guaranteed under
Title IV of ERISA exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefits by more than $10,000 (or in the
case of a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such excess
exceeds such amount) or (iii) Borrower or any of its Restricted Subsidiaries
or any ERISA Affiliate withdraws from a multiemployer plan resulting in
liability under Title IV of ERISA of an amount in excess of $10,000; or
(i) A Change of Control occurs.
Section 7.02 DEFAULT REMEDIES. Upon the occurrence of an Event of
Default, Agent may (and upon written instructions from Majority Lenders,
Agent shall) declare the Commitments to be terminated and/or declare the
entire principal and all interest accrued on the Notes to be, and the Notes,
together with all Obligations, shall thereupon become, forthwith due and
payable, without any presentment, demand, protest, notice of protest and
nonpayment, notice of acceleration or of intent to accelerate or other notice
of any kind, all of which hereby are expressly waived. Notwithstanding the
foregoing, if an Event of Default specified in Subsections 7.01(e)(i), (ii)
or (iii) above occurs with respect to Borrower, the Commitments shall
automatically and immediately terminate and the Notes and all other
Obligations shall become automatically and immediately due and payable, both
as to principal and interest, without any action by Agent or any Lender and
without presentment, demand, protest, notice of protest and nonpayment,
notice of acceleration or of intent to accelerate, or any other notice of any
kind, all of which are hereby expressly waived, anything contained herein or
in any Notes to the contrary notwithstanding.
41
ARTICLE VIII
INDEMNIFICATION
Section 8.01 INDEMNIFICATION. Borrower agrees to indemnify Agent and each
Lender and each director, officer, agent, attorney, employee, representative and
Affiliate of Agent and each Lender (each in "Indemnified Party"), upon demand,
from and against any and all liabilities, obligations, claims, losses, damages,
penalties, actions, judgments, Suits, costs, expenses or disbursements
(including reasonable fees of attorneys, accountants, experts and advisors) of
any kind or nature whatsoever (in this Section 8.01 collectively called
"liabilities and costs") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against any Indemnified Party growing out
of, resulting from or in any other way associated with any of the Mortgage
Collateral, the Loan Documents and the transactions and events (including the
enforcement or defense thereof) at any time associated therewith or contemplated
therein.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES
AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER
ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR PART, BY
ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY SUCH INDEMNIFIED PARTY,
provided only that such Indemnified Party shall be not entitled under this
section to receive Indemnification for that portion, if any, of any liabilities
and costs which is proximately caused by its own individual gross negligence or
willful misconduct. The foregoing provisions of this Section 8.01 shall not
apply to liabilities and costs incurred by any Lender (unless such Lender is
Agent) which may be imposed on or asserted against such Lender by any other
Lender.
Section 8.02 LIMITATION OF LIABILITY. None of Agent, Lenders, their
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement.
THE FOREGOING EXCULPATION SHALL APPLY TO ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY ANY SUCH PERSON, PROVIDED THAT SUCH PERSON SHALL BE LIABLE FOR ITS OWN
INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
ARTICLE IX
AGENT
Section 9.01 APPOINTMENT AND AUTHORIZATION. Each Lender appoints and
authorizes Agent to take such actions as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Neither Agent nor any of its directors, officers
or employees shall be liable for any action taken or omitted to be taken by it
42
or them under or in connection with this Agreement or the other Loan
Documents, WHETHER OR NOT AMOUNTING TO SIMPLE NEGLIGENCE, except for its or
their own gross negligence or willful misconduct; PROVIDED, HOWEVER, that
Agent shall be protected in acting or refraining from acting upon the
instruction of the requisite Lenders under Section 9.06; and PROVIDED,
FURTHER, that Agent shall not be required to take any action that exposes it
to personal liability or is contrary to any Loan Document, other agreement or
applicable law. Agent shall act as an independent contractor in performing
its obligations as Agent hereunder and under the other Loan Documents and
nothing herein contained shall be deemed to create a fiduciary relationship
among or between Agent, Borrower or Lenders.
Section 9.02 NOTE HOLDERS. Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed
with it signed by such payee.
Section 9.03 CONSULTATION WITH COUNSEL. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
Section 9.04 DOCUMENTS. Agent shall not be under a duty to examine
into or pass upon the validity, effectiveness, genuineness or value of the
Notes, the other Loan Documents or any other instrument or document furnished
pursuant thereto or thereunder. Agent makes no representation or warranty to
any Lender, nor shall Agent be responsible for any representations,
warranties or statements made in connection with this Agreement or any other
Loan Document. Agent shall be entitled to assume that this Agreement and the
other Loan Documents are valid, effective and genuine and what they purport
to be. Agent (i) shall execute and deliver the Security Agreement, whereupon
each provision thereof which is contemplated to be binding upon Lenders shall
be binding upon Lenders and each of them; and (ii) shall not waive, amend or
otherwise modify any provision of the Pledge and Security Agreement without
the written consent of Lenders required pursuant to Section 10.02.
Section 9.05 AGENT AND AFFILIATES. With respect to its Commitments
and the Loans made by it in its capacity as a Lender, the entity that is
Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though
it were not Agent, and the entity that is Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business
with Borrower or any Subsidiary as if it were not Agent.
Section 9.06 ACTION BY AGENT. Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, this Agreement and the other Loan Documents. Agent shall incur
no liability under or in respect of this Agreement or any of the other Loan
Documents by acting upon any notice, consent, certificate, warranty or other
paper or instrument believed by it to be genuine or authentic or to be signed
by the proper party or parties, or with respect to anything which it may do
or
43
refrain from doing in the reasonable exercise of its judgment, or which may
seem to it to be necessary or desirable in the premises. Agent may employ
agents and attorneys-in-fact in carrying out its responsibilities under the
Loan Documents, and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact as long as Agent was not grossly
negligent in selecting or directing such agents or attorneys-in-fact, EVEN IF
SUCH SELECTION AMOUNTED TO SIMPLE NEGLIGENCE.
Section 9.07 CREDIT ANALYSIS. Each Lender has made, and shall continue
to make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of Borrower in
connection with its Commitments and Loans and has made its own appraisal of the
creditworthiness of Borrower. Except as explicitly provided herein, Agent has
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect to such operations,
business, property, condition or creditworthiness, whether such information
comes into its possession on or before the first Event of Default or at any time
thereafter.
Section 9.08 NOTICES OF EVENT OF DEFAULT, ETC. In the event that any
Lender shall have acquired actual knowledge of any Event of Default or Default,
other than as a result of its receipt of financial statements delivered to it
pursuant to Section 5.01, such Lender shall promptly give notice thereof to
Agent. Agent shall, promptly upon receipt of any such notice provide a copy
thereof to the other Lenders. Upon receipt from any Lender of a request that
Agent give notice to Borrower of the occurrence of an Event of Default or
Default under Article 7, Agent shall promptly forward such request to the other
Lenders and will take such action and assert such rights under this Agreement
and the other Loan Documents as Majority Lenders shall direct in writing.
Section 9.09 INDEMNIFICATION. Each Lender agrees to indemnify Agent
(to the extent not reimbursed by Borrower), ratably according to its
Percentage Share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out
of this Agreement or the other Loan Documents or any action taken or omitted
by Agent under this Agreement or the other Loan Documents, WHETHER OR NOT
AGENT'S SIMPLE NEGLIGENCE CAUSES THE SAME IN WHOLE OR IN PART; PROVIDED that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its Percentage Share (determined under clause (l) of
the definition thereof) of any out-of-pocket expenses (including counsel
fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and the other
Loan Documents, to the extent that Agent is not reimbursed for such expenses
by Borrower, WHETHER OR NOT SUCH OUT-OF-POCKET EXPENSES RESULTED, IN WHOLE OR
IN PART, FROM AGENT'S SIMPLE NEGLIGENCE; PROVIDED,
44
that no Lender shall be liable for any portion of any such expenses resulting
from Agent's gross negligence or willful misconduct.
Section 9.10 PAYMENTS. All payments of principal of the Notes and all
other funds received by Agent in respect of any payments made by Borrower
pursuant to this Agreement, the Notes or the other Loan Documents, other than
payments under Sections 2.08 and 2.09, and subject to the effect of Section
9.11, shall be distributed forthwith by Agent (in like currency and funds) to
Lenders on the date received or deemed received pursuant to Section 2.07, in
accordance with Section 2.04(b) in the case of payments of interest and
Balances Deficiency Fees, and ratably according to each Lender's Percentage
Share in the case of any other payment received by Agent. If Agent does not
make any such distribution (or provide Federal Reserve Bank reference numbers
for the wire transfer of the amount thereof) on the date any such payment is
received or deemed received pursuant to Section 2.07, Agent will pay interest
to each Lender entitled to receive a portion of such distribution on the
amount distributable to it at the Federal Funds Rate from such date until the
date such distribution is made, such interest to be payable with such
distribution. Notwithstanding any of the foregoing or any other provision of
this Agreement, upon and after the occurrence of an Event of Default or
Default, (a) all proceeds received by Agent from the sale or other
disposition of the Collateral shall be applied in accordance with Section 17
of the Security Agreement.
Section 9.11 SHARING OF SET-OFFS AND OTHER PAYMENTS. The Agent
agrees, and each Lender agrees, that if it shall, whether through the
exercise of rights under Security Instruments or rights of banker's lien,
set-off, or counterclaim against Borrower or otherwise, obtain payment of a
portion of the aggregate Obligations owed to it which, taking into account
all distributions made by Agent under Section 2.07, causes Agent or such
Lender to have received more than it would have received had such payment
been received by Agent and distributed pursuant to Section 2.07, then (a) it
shall be deemed to have simultaneously purchased and shall be obligated to
purchase interests in the Obligations as necessary to cause Agent and all
Lenders to share all payments as provided for in Section 2.07, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lenders share all payments of Obligations as
provided in Section 2.07; provided, however, that nothing herein contained
shall in any way affect the right of Agent or any Lender to obtain payment
(whether by exercise of rights of banker's lien, set-off or counterclaim or
otherwise) of indebtedness other than the Obligations. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted
by law exercise any and all rights of banker's lien, set-off, or counterclaim
as fully as if such holder were a holder of the Obligations in the amount of
such interest or other participation. If all or any part of any funds
transferred pursuant to this section is thereafter recovered from a Lender
under this section which received the same, the purchase provided for in this
section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to
court order to be paid on account of the possession of such funds prior to
such recovery.
45
Section 9.12 SUCCESSOR AGENT. Agent may resign at any time by giving
ten days written notice thereof to Lenders and Borrower. The Majority
Lenders may remove Agent for acts constituting gross negligence or willful
misconduct by giving notice thereto to Agent, Lenders and Borrower. Upon any
such resignation or removal, the Borrower shall have the right to appoint a
successor Agent, which successor Agent shall be reasonably acceptable to
Majority Lenders; provided, however if an Event of Default has occurred and
is continuing or if no successor Agent shall have been so appointed by
Borrower and so accepted by Majority Lenders within 15 days after the
retiring Agent's giving of notice of its resignation of Agent or after the
Majority Lenders' giving of notice of the removal of such Agent, then the
Majority Lenders shall have the right to appoint a successor Agent, which
successor Agent shall be reasonably acceptable to Borrower (unless an Event
of Default has occurred and is continuing). If no successor Agent shall have
be so appointed by the Majority Lenders and so accepted by the Borrower
within 30 days after the retiring Agent's giving of notice of its resignation
of Agent or after the Majority Lenders' giving of notice of the removal of
such Agent, then the retiring Agent or the Agent being removed, as the case
may be, may, on behalf of Lenders, appoint an Agent or custodian which shall
be a Lender or a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $100,000,000 and which shall be reasonably acceptable to
Borrower (unless an Event of Default has occurred and is continuing). Any
such resignation or removal shall be effective upon the appointment of a
successor Agent. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent or the Agent being removed, as the
case may be, shall be discharged from its duties and obligations, under this
Agreement and the other Loan Documents. After any Agent's resignation or
removal hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
acting as Agent under this Agreement and any other Loan Document.
Section 9.13 NOTICE OF NEW INVESTORS. Agent shall use reasonable
efforts to provide prompt notice to each Lender (which notice may be
telephonic) of its approval of any new Investor after the date hereof;
PROVIDED, HOWEVER, that Agent shall have no liability to any Lender or other
Person for its failure to provide the notice described in this Section 9.13.
ARTICLE X
MISCELLANEOUS
Section 10.01 NOTICES. Any notice or request required or permitted to
be given under or in connection with this Agreement, the Notes or the other
Loan Documents (except as may otherwise be expressly required therein) shall
be in writing and shall be mailed by first class or express mail, postage
prepaid, or sent by telex, telegram, telecopy or other similar form of rapid
transmission, confirmed by mailing (by first class or express mail, postage
prepaid) written confirmation at substantially the same time as such rapid
transmission, or personally delivered to
46
an officer of the receiving party. All such communications shall be mailed,
sent or delivered to the parties hereto at their respective addresses as
follows:
Borrower: CH Mortgage Company I, Ltd.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Present ▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ FAX: (▇▇▇) ▇▇▇-▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇ TEL: (512) 345-4656 ext. 1390
With copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. Harbour
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: U.S. Bank National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other addresses or to such individual's or department's attention
as any party may have furnished the other party in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed, except that requests for loans, Confirmations and other
communications related thereto shall not be effective until actually received
by Agent or Borrower, as the case may be; and any notice so sent by rapid
transmission shall be deemed to be given when receipt of such transmission is
acknowledged, and any communication so delivered in person shall be deemed to
be given when receipted for by, or actually received by, an authorized
officer of Borrower or Agent, as the case may be.
Section 10.02 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, the Security Instruments, the Notes, or any other Loan
Document, nor consent to any departure by Borrower or any Restricted
Subsidiary from the terms thereof, shall in any event be effective unless (a)
the same shall be in writing and signed by (i) if such party is Borrower, by
Borrower, (ii) if such party is Agent, by Agent and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the written
consent of Majority Lenders (or without further consent than that already
provided herein in the circumstances provided in Section 10.16) and (b) in
the case of an amendment other than the first and second amendment and other
than annual
47
renewals or temporary extensions related to annual renewals, the Agent, on
behalf of each Lender executing such amendment, shall have received an
amendment fee from the Borrower in the amount of one thousand five hundred
dollars ($1,500) for each Lender executing such amendment. Notwithstanding
the foregoing or anything to the contrary herein, Agent shall not, without
the prior consent of each individual Lender, execute and deliver on behalf of
such Lender any waiver or amendment which would: (i) waive any of the
conditions specified in Article III (provided that Agent may in its
discretions withdraw any request it has made under Section 3.02(g)), (ii)
increase the Percentage Share of the Commitment of such Lender or subject
such Lender to any additional obligations, (iii) reduce any fees hereunder,
or the principal of, or interest on, such Lender's Note, (iv) amend the
definition herein of "Majority Lenders" or otherwise change the aggregate
amount of Percentage Shares which is required for Agent, Lenders or any of
them to take any particular action under the Loan Documents, (v) release
Borrower from its obligation to pay such Lender's Note, (vi) amend the
definitions of "Collateral Value," "Drawdown Termination Date," and "Mortgage
Collateral," (vii) release any Collateral except in accordance with and
pursuant to the Loan Documents, or (viii) change the date on which any
payments of principal, interest or fees are due hereunder.
Section 10.03 INVALIDITY. In the event that any one or more of the
provisions contained in the Notes, this Agreement or any other Loan Document
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of such document.
Section 10.04 SURVIVAL OF AGREEMENTS. All covenants and agreements
herein and in any other Loan Document not fully performed before the date
hereof or the date thereof, and all representations and warranties herein or
therein, shall survive until payment in full of the Obligations and
termination of the Commitments.
Section 10.05 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of
this Agreement and of the other Loan Documents shall apply with equal force
and effect to each and all promissory notes hereafter executed which In whole
or in part represent a renewal, extension for any period, increase or
rearrangement of any part of the Obligations originally represented by the
Notes or of any part of such other Obligations.
Section 10.06. WAIVERS. No course of dealing on the part of Agent or
any Lender, or any of its employees, consultants or agents, nor any failure
or delay by Agent or such Lender with respect to exercising any right, power
or privilege of Agent or any Lender under the Notes, this Agreement or any
other Loan Document shall operate as a waiver thereof, except as otherwise
provided in Section 10.02 hereof.
Section 10.07 CUMULATIVE RIGHTS. The rights and remedies of Agent and
each Lender under the Notes, this Agreement, and any other Loan Document
shall be cumulative, and the exercise or partial exercise of any such right
or remedy shall not preclude the exercise of any other right or remedy.
48
Section 10.08 CONSTRUCTION. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL
LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS AND OTHER BANKS.
Section 10.09 LIMITATION ON INTEREST. Agent, Lenders, Borrower, each
Restricted Subsidiary and any other parties to the Loan Documents intend to
contract in strict compliance with applicable usury law from time to time in
effect. In furtherance thereof such Persons stipulate and agree that none of
the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention
of money, interest in excess of the maximum amount of interest permitted to
be charged by applicable law from time to time in effect. None of Borrower,
any Restricted Subsidiary, any present or future guarantors, endorsers, or
other Persons hereafter becoming liable for payment of any Obligation shall
ever be liable for unearned interest thereon or shall ever be required to pay
interest thereon in excess of the maximum amount that may be lawfully charged
under applicable law from time to time in effect, and the provisions of this
section shall control over all other provisions of the Loan Documents which
may be in conflict or apparent conflict herewith. Agent and Lenders
expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated, if (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or
(c) Agent or any Lender or any other holder of any or all of the Obligations
shall otherwise collect moneys which are determined to constitute interest
which would otherwise increase the interest on any or all of the Obligations
to an amount in excess of that permitted to be charged by applicable law then
in effect, then all such sums determined to constitute interest in excess of
such legal limit shall, without penalty, be promptly applied to reduce the
then outstanding principal of the related Obligations or, at Agent's or such
Lender's or such holder's option, promptly returned to Borrower and each
Restricted Subsidiary or the other payor thereof upon such determination. In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable law,
Agent, Lenders and Borrower and Restricted Subsidiaries (and any other payors
thereof) shall to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the instruments
evidencing the Obligations in accordance with the amounts outstanding from
time to time thereunder and the legal rate of interest from time to time in
effect under applicable law in order to lawfully charge the maximum amount of
interest permitted under applicable law. In the event applicable law
provides for an interest ceiling under Section 303 of the Texas Finance Code,
that ceiling shall be the weekly rate ceiling.
Section 10.10 BANK ACCOUNTS; OFFSET. To secure the repayment of the
Obligations
49
Borrower hereby grants to Agent, each Lender and to each financial
institution which hereafter acquires a participation or other interest in the
Loans or Notes (in this section called a "Participant") a security interest,
a lien, and a right of offset, each of which shall be in addition to all
other interest, liens, and rights of Agent, say Lender or Participant at
common law, under the Loan Documents, or otherwise, and each of which shall
be upon and against (a) any and all moneys, securities or other property (and
the proceeds therefrom) of Borrower now or hereafter held or received by or
in transit to Agent, any Lender or Participant from or for the account
Borrower, whether for safekeeping, custody pledge, transmission, collection
or otherwise, (b) any and all deposits (general or special, time or demand,
provisional or final) of Borrower with Agent, any Lender or Participant, and
(c) any other credits and claims of Borrower at any time existing against
Agent, any Lender or Participant, including claims under certificates of
deposit. Upon the occurrence of any Event of Default, each of Agent, Lenders
and Participants is hereby authorized to foreclose upon, offset, appropriate,
and apply, at any time and from time to time, without notice to Borrower, any
and all items hereinabove referred to against the Obligations then due and
payable.
Section 10.11 ASSIGNMENTS, PARTICIPATIONS, COMMITMENT AMOUNT INCREASES
AND NEW LENDERS.
(a) ASSIGNMENTS. Each Lender shall have the right to sell, assign or
transfer all or any part of such Lender's Note, Loans and rights and the
associated rights and obligations under all Loan Documents to one or more
financial institutions, pension plans, investment funds, or similar
purchasers; PROVIDED, that each such sale, assignment, or transfer shall be
with the consent of Agent, and the assignee, transferee or recipient shall
have, to the extent of such sale, assignment, or transfer, the same rights,
benefits and obligations as it would if it were such Lender and a holder of
such Note, including, without limitation, the right to vote on decisions
requiring consent or approval of all Lenders or Majority Lenders and the
obligation to fund its Percentage Share of any Loan directly to Agent;
PROVIDED FURTHER, that (i) each Lender in making each such sale, assignment,
or transfer must dispose of a pro rata portion of each Loan made by such
Lender, (ii) each such sale, assignment, or transfer shall be in a principal
amount not less than $15,000,000, (iii) each Lender shall at all times
maintain Loans then outstanding in an aggregate amount at least equal to
$15,000,000, (iv) each Lender may not offer to sell its Note and Loan or
Interests therein in violation of any securities laws, and (v) no such
assignments shall become effective until (1) the assigning Lender delivers to
Agent copies of all written assignments and other documents evidencing any
such assignment or related thereto and (2) the assignee Lender becomes a
party to this Agreement. Notwithstanding the provisions of clauses (ii) and
(iii) above, a Lender may make a sale, assignment or transfer, or maintain
Loans then outstanding, in an amount which is less than that required above
provided that Borrower and such Lender have agreed to modify such
requirements and have delivered to Agent prior written evidence of their
agreement to make such modification, An assignment fee in the amount of
$2,500 for each such assignment will be payable to Agent by assignor or
assignee. Within five (5) Business Days after its receipt of notice that
Agent has received copies of any assignment and the other documents relating
thereto, the assignee shall notify Borrower of the outstanding principal
balance of the Notes payable to such
50
Lender and shall execute and deliver to Agent (for delivery to the relevant
assignee) new Notes evidencing such assignee's assigned Loans and, if the
assignor Lender has retained a portion of its Loans, replacement Notes in the
principal amount of the Loans retained by the assignor Lender (such Notes to
be in exchange for, but not in payment of, the Notes held by such Lender).
(b) PARTICIPANTS. Each Lender shall have the right to grant
participations in all or any part of such Lender's Note, Loans and the
associated rights and obligations under all Loan Documents to one or more
pension plans, investment funds, financial institutions or similar
purchasers; provided that (i) each Lender granting a participation shall
retain the right to vote hereunder, and no participant shall be entitled to
vote hereunder on decisions requiring consent or approval of Majority Lenders
(except as set forth in (iii) below), (ii) each Lender and Borrower shall be
entitled to deal with the Lender granting a participation in the same manner
as if no participation had been granted, and (iii) no participant shall ever
have any right by reason of its participation to exercise any of the rights
of Lenders hereunder, except that any Lender may agree with any participant
that such Lender will not, without the consent of such participant, consent
to any amendment or waiver described in Section 10.02 requiring approval of
100% of Lenders.
(c) DISTRIBUTION OF INFORMATION. It is understood and agreed that any
Lender may provide to assignees and participants and prospective assignees
and participants financial information and reports and data concerning
Borrower's properties and operations which was provided to such Lender
pursuant to this Agreement.
(d) COMMITMENT AMOUNT INCREASES; NEW LENDERS. From time to time,
Borrower may agree, with the prior written consent of Agent, to (i) permit a
Lender to increase its Commitment Amount, or (ii) add a bank chartered under
the laws of the United States or any State thereof, an insurance company,
another lender or a mutual fund (a "New Lender") as a "Lender" under this
Agreement with a Commitment, for the purpose of increasing the Aggregate
Commitment Amounts; PROVIDED that upon giving effect to any such new
Commitment, the Commitment Amount of the New Bank shall not be less than
$15,000,000; and PROVIDED, FURTHER, that the Aggregate Commitment Amounts,
after giving effect to any such increase, shall not exceed $250,000,000.
Borrower and each Lender increasing its Commitment Amount or New Lender shall
agree on the date as of which the increased Commitment Amount or New Lender's
Commitment Amount shall become effective, and each New Lender shall execute
and deliver an instrument in the form prescribed by Agent to evidence its
agreement to be bound by this Agreement and the other Loan Documents. Upon
the effective date of an increase in any Lender's Commitment Amount or
inclusion of a New Lender as a Lender under this Agreement, Agent shall
deliver to Borrower and each Lender a revised Schedule 5 reflecting the
revised Aggregate Commitment Amounts and the Borrower shall execute and
deliver to such Lender or such New Bank a Note increasing its Commitment
Amount.
Section 10.12 EXHIBITS. The exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any
of the provisions of such exhibits and the provisions of this
51
Agreement, the provisions of this Agreement shall prevail.
Section 10.13 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All tides
or headings to articles, have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such
other content being controlling as to the agreement between the parties
hereto.
Section 10.14 COUNTERPARTS. This Agreement may be executed in
counterparts, and it shall not be necessary that the signatures of both of
the Parties hereto be contained on any one counterpart hereof; each
counterpart shall be deemed an original, but all counterparts together shall
constitute one and the same instrument.
Section 10.15 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT, AND THE
OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED AS OF EVEN DATE HEREWITH
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
Section 10.16 TERMINATION; LIMITED SURVIVAL. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
notice delivered to Agent to terminate this Agreement. Upon receipt by Agent
of such a notice, if no Obligations are then owing, this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made
by any Person in any Loan Documents, any Obligations, and any obligations
which any Person may have to indemnify or compensate Agent and any Lender
shall survive any termination of this Agreement or any other Loan Document.
At the request and expense of Borrower, Agent shall prepare and execute all
necessary instruments to reflect and effect such termination of the Loan
Documents. Agent is hereby authorized to execute all such instruments on
behalf of all Lenders, without the joinder of or further action by any
Lender.
Section 10.17 CONFIDENTIALITY OF INFORMATION. The Agent and Lenders
shall use reasonable efforts to assure that information about the Borrower
and its operations, affairs and financial condition and about the borrowers
under the Mortgage Loans and their financial condition, not generally
disclosed to the public or to trade and other creditors, which is furnished
to the Agent and any Lender pursuant to the provisions hereof is used only
for the purposes of this Agreement and any other relationship between the
Agent or any Lender and the Borrower and shall not be divulged to any Person
other than the Agent and the Lenders, their Affiliates and their respective
officers, directors, employees and agents, except: (a) to their attorneys and
accountants, (b) in connection with the enforcement of the rights of the
Agent and the Lenders hereunder and under the Notes and the Security
Agreement or otherwise in connection with applicable litigation, (c) in
connection with assignments and participations and the solicitation of
prospective assignees
52
and participants referred to in the immediately preceding Section, and (d) as
may otherwise be required or requested by any regulatory authority having
jurisdiction over the Agent or any Lender or by any applicable law, rule,
regulation or judicial process, the opinion of the Agent's or any Lender's
counsel concerning the making of such disclosure to be binding on the parties
hereto. Neither the Agent nor any Lender shall incur any liability to the
Borrower by reason of any disclosure permitted by this Section 10.17.
SECTION 10.18 JURY WAIVER. BORROWER, AGENT AND EACH LENDER HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) BETWEEN OR AMONG Borrower, AGENT OR ANY LENDER ARISING
OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER RELATED DOCUMENT, OR
ANY RELATIONSHIP BETWEEN AGENT OR ANY LENDER AND BORROWER. THIS PROVISION IS
A MATERIAL INDUCEMENT TO AGENT AND LENDERS TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER LOAN DOCUMENTS.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
53
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the date first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc., its General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer,
Vice President and
Assistant Secretary
U.S. BANK NATIONAL ASSOCIATION, as Agent and Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
RESIDENTIAL FUNDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
HIBERNIA BANK
By: /s/ ▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
S-1
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President, Specialty Finance
NATIONAL CITY BANK OF KENTUCKY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Assistant Vice President
S-2
SCHEDULE 1
ELIGIBLE MORTGAGE LOAN
"Eligible Mortgage Loan" means a Mortgage Loan with respect to which
each of the following statements is accurate and complete (and Borrower by
including such Mortgage Loan in any computation of the Borrowing Base shall
be deemed to so represent to Agent and Lenders at and as of the date of such
computation):
(i) Such Mortgage Loan is a binding and valid obligation of the
Obligor thereon, in full force and effect and enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar terms affecting creditor's
rights in general and by general principles of equity;
(ii) Such Mortgage Loan is genuine in all respects as appearing
on its face and as represented in the books and records of Borrower, and
all information set forth therein is true and correct;
(iii) To the best knowledge of Borrower, such Mortgage Loan is
free of any default (other than as permitted by subparagraph (iv) below)
of any party thereto (including Borrower), counterclaims, offsets and
defenses, including the defense of usury, and from any rescission,
cancellation or avoidance, and all right thereof, whether by operation of
law or otherwise;
(iv) No payment under such Mortgage Loan is more than thirty (30)
days past due the payment due date set forth in the underlying Mortgage
Note and Mortgage;
(v) Such Mortgage Loan contains the entire agreement of the
parties thereto with respect to the subject matter thereof, has not been
modified or amended in any respect not expressed in writing therein and is
free of concessions or understandings with the Obligor thereon of any kind
not expressed in writing therein;
(vi) Such Mortgage Loan is in all respects in accordance with
all Requirements of Law applicable thereto, including, without
limitation, the federal Consumer Credit Protection Act and the
regulations promulgated thereunder and all applicable usury laws and
restrictions, and all notices, disclosures and other statements or
information required by law or regulation to be given, and any other act
required by law or regulation to be performed, in connection with such
Mortgage Loan have been given and performed as required;
(vii) All advance payments and other deposits on such Mortgage
Loan have been paid in cash, and no part of said sums has been loaned,
directly or indirectly, by Borrower to the Obligor, and, other than as
disclosed to Agent in writing, there have been no prepayments;
(viii) Such Mortgage Loan was originated, purchased by Borrower or
converted from a variable rate Mortgage Loan to a fixed rate Mortgage
Loan, whichever is latest not more than ninety (90) days prior to the
inclusion of such Mortgage Loan in any computation of the Borrowing Base
and matures within 30 years after such date of origination;
(ix) At all times such Mortgage Loan will be free and clear of
all Liens, except in favor of Agent for the benefit of Lenders and any
other Lien which has been disclosed to Agent in writing and is permitted
hereunder;
(x) The Property covered by such Mortgage Loan is insured
against loss or damage by fire and all other hazards normally included
within standard extended coverage in accordance with the provisions of
such Mortgage Loan with Borrower named as a loss payee thereon;
(xi) The Required Mortgage Documents have been delivered to Agent
prior to the inclusion of such Mortgage Loan in any computation of the
Borrowing Base or, if such items have not been delivered to Agent on or
prior to the date such Mortgage Loan is first included in any
computation of the Borrowing Base, (1) Borrower has agreed to pledge and
deliver all Required Mortgage Documents pursuant to an Agreement to
Pledge delivered to Agent prior to such inclusion, and (2) the
Collateral Value of such Mortgage Loan when added to the Collateral
Value of all other Mortgage Loans for which Agent has not received the
Required Mortgage Documents does not exceed the Wet Warehousing
Sublimit, PROVIDED THAT, all Required Documents with respect to such
Mortgage Loan shall be delivered to Agent within seven (7) Business Days
after the date of the Borrowing Request with respect thereto and all
other documents requested by Agent pursuant to Section 4.02 of the
Security Agreement shall be delivered to Agent within five Business Days
after such request.
(xii) If such Mortgage Loan is included in the Borrowing Base and
has been withdrawn from the possession of Agent on terms and subject to
conditions set forth in the Security Agreement:
(1) If such Mortgage Loan was withdrawn by Borrower
for purposes of correcting clerical or other non-substantive
documentation problems, the promissory note and other documents
relating to such Mortgage Loan are returned to Agent within
twenty-one (21) calendar days from the date of withdrawal; and the
Collateral Value of such Mortgage Loan when added to the Collateral
Value of other Mortgage Loans which have been similarly released to
Borrower and have not been returned does not exceed $2,500,000;
(2) If such Mortgage Loan was shipped by Agent directly to
a permanent investor for purchase or to a custodian for the formation
of a pool, the
-2-
full purchase price therefor has been received by Agent (or such
Mortgage Loan has been returned to Agent) within forty-five (45)
days days (seventy-five (75) days in the case if such Mortgage Loan
is included in a housing bond program) from the date of shipment by
Agent.
(xiii) If such Mortgage Loan is a Jumbo Mortgage Loan, the
Collateral Value of such Mortgage Loan when added to the Collateral Value
of all other Jumbo Mortgage Loans does not exceed the Jumbo Sublimit.
(xiv) If such Mortgage Loan is a Nonconforming Mortgage Loan, the
Collateral Value of such Mortgage Loan when added to the Collateral Value
of all the Nonconforming Mortgage Loans does not exceed the Nonconforming
Sublimit;
(xv) Such Mortgage Loan has not been included in the Borrowing
Base for more than (A) ninety (90) days, if such Mortgage Loan is a
Nonconforming Mortgage Loan, (B) one hundred twenty (120) days, if such
Mortgage Loan is a Jumbo Mortgage Loan, (C) one hundred twenty (120) days,
if such Mortgage Loan is a Conforming Mortgage Loan or (D) one hundred
eighty (180) days, if such Mortgage Loan is included in a housing bond
program;
(xvi) Such Mortgage Loan is covered by a Take-Out Commitment which
is in full force and effect, and Borrower and such Mortgage Loan are in
full compliance therewith;
(xvii) Such Mortgage Loan is secured by a first or second Mortgage
on Property consisting of a completed one-to-four unit single family
residence which is not used for commercial purposes and which is not a
construction loan; and
(xviii) The face amount of the Mortgage Note underlying such
Mortgage Loan does not exceed $500,000.
Agent may, in its discretion, waive one or more of the foregoing
eligibility requirements with respect to any Mortgage Loan, provided that the
aggregate Collateral Value of all Mortgage Loans with respect to which such
eligibility requirements have been waived shall not at any time exceed
$1,000,000.
-3-
SCHEDULE 2
INVESTORS
Norwest
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ #▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇
Countrywide
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Homeside Lending
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
#▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
501-664-4411- ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇ ▇'▇▇▇▇▇▇▇
RBMG
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇
Principal
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇
Leader Mortgage (Bond)
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
First Nationwide
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
-1-
Fleet Mortgage
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
Chase MMC
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇
PHH
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
Bank of America
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇
GMAC-RFC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Ohio Savings
▇▇▇▇ ▇. ▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Sebring Capital
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇▇
Fidelity Funding
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-2-
Guarantee Federal
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇ - TBD
▇▇▇▇▇▇ Mae
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Mac
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ - ▇▇▇▇ ▇▇▇▇
-3-
SCHEDULE 3
SUBSIDIARIES
▇.▇. ▇▇▇▇▇▇, Inc. - Los Angeles, a Delaware corporation (100% interest
held by Borrower)
DRH Mortgage Company, LLC, a Texas limited liability company (50% interest
held by ▇.▇. ▇▇▇▇▇▇, Inc. - Los Angeles)
SCHEDULE 4
PERMITTED LIENS
NONE
SCHEDULE 5
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Commitment Percentage
Amount Share
---------- ----------
U.S. Bank National Association $ 50,000,000 28.57%
Residential Funding Corporation $ 50,000,000 28.57%
Hibernia Bank $ 30,000,000 17.14%
First Union National Bank $ 30,000,000 17.14%
National City Bank of Kentucky $ 15,000,000 8.57%
----------- -----
Total $175,000,000 100.00%
EXHIBIT A TO
CREDIT AGREEMENT
FORM OF NOTE
PROMISSORY NOTE
$____________ Minneapolis, Minnesota
,
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited
partnership (the "Borrower"), hereby promises to pay to the order of
________________________ (the "Lender") at the main office of the Agent (as
such term and each other capitalized term used herein are defined in the
Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in
lawful money of the United States of America in immediately available funds,
the principal sum of _____________________ MILLION AND NO/100 DOLLARS
($_____) or the aggregate unpaid principal amount of all Loans [and Swingline
Loans]* made by the Lender pursuant to the Credit Agreement described below,
whichever is less, and to pay interest in like funds from the date hereof on
the unpaid balance thereof at the rates per annum and at such times as are
specified in the Credit Agreement. Interest (computed on the basis of actual
days elapsed and a year of 360 days) shall be payable at said office at the
times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set
forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement
dated as of August 13, 1999, between the Borrower, the Lender, the other lenders
party thereto and U.S. Bank National Association, as Agent (as the same may be
amended, modified or restated from time to time, the "Credit Agreement").
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings given to such terms in the Credit Agreement. This note is subject to
certain mandatory and voluntary prepayments and its maturity is subject to
acceleration, in each case upon the terms provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest,
and notice (except such notice as is required under the Loan Documents) of any
kind whatsoever. The nonexercise by the Lender of any of its rights hereunder
or under the other Loan Documents in any particular instance shall not
constitute a waiver thereof in any subsequent instance.
Borrower reserves the right to prepay the outstanding principal
balance of this Note, in whole or in part at any time and from time to time
without premium or penalty in accordance
-1-
with the terms of the Credit Agreement.
This note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of
default hereunder, the undersigned agrees to pay all costs and expenses of
collection, including but not limited to reasonable attorneys' fees.
[Notwithstanding the foregoing paragraphs and all other provisions of
this note and the Credit Agreement, none of the terms and provisions of this
note or the Credit Agreement shall ever be construed to create a contract to pay
to the Lender, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by the Lender
to the undersigned under applicable state or federal law from time to time in
effect, and the undersigned shall never be required to pay interest in excess of
such maximum amount. If, for any reason, interest is paid hereon in excess of
such maximum amount (whether as a result of the payment of this note prior to
its maturity or otherwise), then promptly upon any determination that such
excess has been paid the Lender will, at its option, either refund such excess
to the undersigned or apply such excess to the principal owing hereunder. All
interest paid shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period of the Borrower's
credit relationship with the Lender until payment in full of the principal
(including the period of any renewal or extension) so that the interest for such
full period shall not exceed the maximum rate of interest permitted by
applicable law.]**
CH MORTGAGE COMPANY I, LTD.
By______________________________
Its____________________________
* Include in Note payable to U.S. Bank.
** Include in Notes payable to Lenders headquartered in the State of Texas.
-2-
EXHIBIT B TO
CREDIT AGREEMENT
FORM OF CONFIRMATION OF
BORROWING/PAYDOWN/CONVERSION
[On Borrower Letterhead]
[Date]
U.S. Bank National Association,
as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Banking Services Division
Re: Confirmation of Borrowing/Paydown/Conversion
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of August 13, 1999
(as said Agreement may be amended, supplemented or restated from time to time,
the "Credit Agreement"), between CH Mortgage Company I, Ltd. (the "Borrower"),
the Lenders party thereto and U.S. Bank National Association ("U.S. Bank") as
Agent for the Lenders (in such capacity, the "Agent"). Each capitalized term
used herein shall have the meaning ascribed to such term in the Credit
Agreement.
The Borrower and the undersigned hereby confirm and certify to the
Agent as follows:
1. The undersigned is authorized to submit this Confirmation of
Borrowing/Paydown/Conversion on behalf of the Borrower.
2. On __________________, ______, the Borrower (a) requested the
Lenders to make Loans in the aggregate principal amount of $__________________ ,
(b) requested U.S. Bank to make a Swingline Loan in the aggregate principal
amount of $_________________ , (c) made principal payments on outstanding
Loans in the aggregate amount of $_______________, or(d) converted
-1-
outstanding Advances to outstanding Advances of another
type,(*) as follows:
Balance
Reference Rate Eurodollar Rate Funded Rate
-------------- --------------- -----------
Advance $_________ $_________ $_________
Payment $_________ $_________ $_________
Net Amount
Outstanding $_________ $_________ $_________
Interest Rate % % 1.125%
3. In connection with any requested Loans or Swingline Loans, please
disburse $__________ as follows [include wire instructions]:
4. In connection with any requested Loans or Swingline Loans: (a)
no Event of Default or Unmatured Event of Default has occurred or will exist
upon the making of any such Loans or Swingline Loans; (b) the representations
and warranties contained in Article IV of the Credit Agreement and in Section 5
of the Security Agreement are true and correct in all material respects with the
same force and effect as if made on and as of the date hereof; and (c) after
giving effect to the Loans or Swingline Loans requested herein, the sum of the
outstanding principal balance under the Notes shall not exceed the Borrowing
Base or the Aggregate Commitment Amounts.
Very truly yours,
CH MORTGAGE COMPANY I, LTD.
By_______________________________
Its_____________________________
---------------------------
* For purposes of this Certificate, Advances being converted shall be
described as principal payments, and the new Advances into which such
Advances are being converted shall be described as new Advances.
-2-
EXHIBIT C TO
CREDIT AGREEMENT
FORM OF
BORROWING BASE CERTIFICATE
[On Borrower Letterhead]
U.S. Bank National Association, as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Banking Services
Division
Ladies and Gentlemen:
We submit this certificate to you in accordance with the terms of the Credit
Agreement dated as of August 13, 1999 (as the same may be amended, supplemented
or restated from time to time, the "Credit Agreement") between CH Mortgage
Company I, Ltd., the lenders party thereto (the "Lenders") and U.S. Bank
National Association, as Agent for the Lenders (in such capacity, the "Agent").
Each capitalized term used herein and not defined herein has the same meaning
ascribed to such term in the Credit Agreement.
The undersigned hereby certifies the following as of the close of business on
__________________,__________, the Borrowing Base was calculated as follows:
Collateral Value
----------------
(a) Pledged Mortgage Loans $_______
Conforming Mortgage Loans $_______
Nonconforming Mortgage Loans $_______
Jumbo Mortgage Loans $_______
Less:
(b) Pledged Mortgage Loans with No
Collateral Value (i.e., not
Eligible Mortgage Loans) $_______
Conforming Mortgage Loans and Jumbo
Mortgage Loans - 120 days or more since
origination or acquisition;
Nonconforming Mortgage Loans-
-1-
90 days or more since origination or
acquisition; and bond program
loans - 180 days or more since
origination or acquisition $_______
Jumbo Mortgage Loans - 120 days
or more since origination or
acquisition $_______
Nonconforming Mortgage Loans - 90 days or
more since origination or acquisition $_______
Pledged more than 90 days $_______
Promissory Note and/or Collateral Documents
not returned or purchased by an Investor
(45 days/75 days for bond program loans) $_______
Collateral Document not returned (21 days) $_______
In default (one full reporting period) $_______
Requested documents not delivered
(5 Business Days) $_______
Promissory Note and/or Collateral Documents
not delivered (wet funding loans;
7 Business Days) $_______
Wet funding loans in excess of sublimit $_______
Wet funding loans not closed $_______
Jumbo Mortgage Loans in excess
of applicable sublimit $_______
Nonconforming Mortgage Loans in excess
of applicable sublimit $_______
Not marketable $_______
Agent does not have perfected, first
priority security interest $_______
-2-
Other ineligible $_______
(c) Eligible Mortgage Loans ((a) - (b)) $_______
(d) 2% of (c) $_______
(e) Total Collateral Value (Borrowing Base)
((c) minus (d)) $_______
Attached hereto is a schedule of the "Pledged Mortgage Loans" (as
defined in the Security Agreement) that have no Collateral Value at the date
hereof.
Dated: ___________, 1999
CH MORTGAGE COMPANY I, LTD.
By ______________________________
Its ______________________________
-3-
EXHIBIT D TO
CREDIT AGREEMENT
FORM OF
COMPLIANCE CERTIFICATE
[On Borrower Letterhead]
U.S. Bank National Association, as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Banking Services
Division
Ladies and Gentlemen:
We submit this certificate to you in accordance with the terms of the
Credit Agreement dated as of August 13, 1999 (as the same may be amended,
supplemented or restated from time to time, the "Credit Agreement") between CH
Mortgage Company I, Ltd., the lenders party thereto (the "Lenders") and U.S.
Bank National Association, as Agent for the Lenders (in such capacity, the
"Agent"). Each capitalized term used herein and not defined herein has the same
meaning ascribed to such term in the Credit Agreement.
The undersigned hereby certifies the following as of the close of
business on ________________, _______, the Borrower's compliance and/or
noncompliance with Sections 6.12, 6.13, 6.14 and 6.15 of the Credit Agreement
was as follows:
Actual (or in
Financial Covenants Required Compliance
------------------- -------- ----------
1) Distributions not more than
(6.12) profit (rolling
four quarters) $________
2) Tangible Net
Worth (6.13) $14,600,000 $________
3) Tangible Net
Worth Ratio (6.14) not more than
12.0 to 1.0 to 1.0
4) Net Income (6.15) not less than $1.00 $________
-1-
The undersigned further certifies as follows:
(a) The undersigned is the duly elected President, Chief Financial Officer or
Accounting Director of the General Partner of Borrower.
(b) The undersigned has reviewed the terms of the Credit Agreement and has
made, or has caused to be made under the supervision of the undersigned, a
detailed review of the transactions and conditions of the Borrower during
the accounting period covered by this Certificate; and
(c) These examinations did not disclose, and the undersigned has no knowledge,
whether arising out of such examinations or otherwise, of the existence of
any condition or event that constitutes an Event of Default or a Default
during or at the end of the accounting period covered by this Certificate,
except as described in a separate attachment to this Certificate, the
exceptions listing, in detail, the nature of the condition or event, the
period during which it has existed and the action that the Borrower has
taken, is taking, or proposes to take with respect to each such condition
or event.
Dated: _____________, _____
CH MORTGAGE COMPANY I, LTD.
By________________________________
Its ______________________________
-2-