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EXHIBIT 10.15
4/98 AMENDED AND RESTATED
SENIOR SECURED CREDIT AGREEMENT
Preamble
This 4/98 Amended and Restated Senior Secured Credit Agreement (the
"4/98 A&R CREDIT AGREEMENT" and as it may be supplemented, amended or restated,
the "CREDIT AGREEMENT" or, within itself, this "AGREEMENT"), whose effective
date (the "EFFECTIVE DATE") is April 13, 1998, among LONG BEACH MORTGAGE COMPANY
(the "COMPANY"), a Delaware corporation with its principal office at ▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION ("CHASE TEXAS"), a national banking association acting
herein as a lender and agent and Representative of the lenders and Eligible
Assignees (in that capacity, Chase Texas is called the "AGENT"), and such other
lenders as may from time to time be party to this Agreement;
W I T N E S S E T H :
Recitals
Under date of April 14, 1997, the Company (which was then named
Ameriquest Mortgage Corporation), the Agent (which was then named Texas Commerce
Bank National Association) and certain lenders entered into a 4/97 Senior
Secured Credit Agreement to establish and govern a $200 million revolving
mortgage warehouse line of credit with revolving sublines for specified uses and
purposes.
The Company has asked the Lenders and the Agent to increase, modify
and rearrange and (as so changed) to continue a $300 million senior, secured,
revolving line of credit with revolving sublines for (i) warehousing the
Company's 1- to 4-family residential mortgage loans, (ii) financing principal
and interest advances receivables made in respect of the Company's servicing
portfolio, (iii) financing the Company's fundings of recoverable advances made
to preserve, restore and protect property securing Company-serviced first and
junior mortgage loans that are in default, in foreclosure or have been
foreclosed by the Company, enforce remedies in respect of them, manage and
liquidate property acquired through their foreclosure or similar proceedings and
maintain property insurance and keep taxes current on such property and (iv)
financing the Company's acquisition and collection of, or other realizations on,
defaulted serviced mortgage loans, and the Lenders and the Agent have agreed to
do so on the terms and subject to the conditions of this Agreement.
In addition, Chase Texas has agreed to provide a separate revolving
swing line of credit to initially and temporarily finance the Company's
borrowings pending their funding by all of the Lenders pursuant to this
Agreement.
The Lenders' and Agent's agreement to establish and continue the
credit line and its sublines, and Chase Texas' agreement to establish and
continue the swing line, are each made upon and subject to the terms and
conditions of this Agreement. If there is any conflict or inconsistency between
any of the terms or provisions of this Agreement and any of the other Facilities
Papers, this Agreement shall govern and control. If there is any conflict
between any provision of this Agreement and any later supplement, amendment,
restatement or replacement of it, then the latter shall govern and control.
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AGREEMENTS
In consideration of the premises, the mutual agreements stated below
and other good and valuable consideration paid by each party to each other party
to this Agreement, the receipt and sufficiency of which each hereby
acknowledges, the parties hereby agree as follows.
1. DEFINITIONS
1.1 Defined Terms. Except where otherwise specifically stated, capitalized terms
used in this Agreement and the other Facilities Papers have the meanings
assigned to them below or elsewhere in this Agreement.
1.2 Definitions of General Application. The terms defined in this Section are
generally applicable. For convenience of reference, defined terms relating only
to the calculation and payment of interest are defined in SECTION 1.3.
"4/98 A&R CREDIT AGREEMENT" is defined in this Agreement's preamble.
"ACCELERATION DATE" is defined in the definition of "Maturity Date".
"ADVANCE" means a disbursement by the Lenders under the Loan --
including initial disbursements, readvances of funds previously advanced to the
Company and repaid to the Lenders and protective advances made without any
requirement for any Request for Borrowing -- and is a correlative of
"BORROWING": a Borrowing from the Lenders' and the Agent's point of view. Where
the name of a Subline prefaces "ADVANCE", then it means an Advance under that
Subline. Where the term "Swing Line" prefaces "ADVANCE", then it means an
Advance by Chase Texas under the Swing Line.
"AFFILIATE" means and includes, with respect to a specified Person,
any other Person:
(a) that directly or indirectly through one or more intermediaries
Controls, is Controlled by or is under common Control with the specified Person
(in this definition only, the term "CONTROL" means having the power to set or
direct management policies, directly or indirectly);
(b) that is a director, trustee, partner, member or officer of the
specified Person or serves in a similar capacity in respect of the specified
Person;
(c) of which the specified Person is a director, trustee, partner,
member or officer or with respect to which the specified Person serves in a
similar capacity and over whom the specified Person, either alone or together
with one or more other Persons similarly situated, has Control;
(d) that, directly or indirectly through one or more intermediaries,
is the beneficial owner of ten percent (10%) or more of any class of equity
securities -- which does not include any Structured Securities -- of the
specified Person; or
(e) of which the specified Person is directly or indirectly the owner
of ten percent (10%) or more of any class of equity securities of the specified
Person.
"AGENT" is defined in this Agreement's preamble.
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"AGENT'S FEE" is defined in SECTION 5.7.
"AGGREGATE COMMITTED SUM" means, on any day, the lesser of (a) the
Maximum Aggregate Commitment for that day as stated in SCHEDULE MAC in effect
for that day, and (b) the aggregate of the Lenders' individual Committed Sums
for that day as stated in the definition of "Committed Sum" below.
"AGREEMENT" is defined in this Agreement's preamble.
"BASIC PAPERS" means all of the Loan Papers that must be delivered to
the Custodian -- in the case of Bridged Loans, on or before the fifth (5th)
Business Day after the related Advance -- in order for any particular item of
Debt Collateral to be Eligible Collateral and have Collateral Value. The Custody
Agreement lists the Basic Papers for each such category of Collateral, and
reference is here made to the Custody Agreement for those listings.
"BOOK COLLATERAL VALUE" is defined in the definition of "Collateral
Value", under its bulleted subhead "Single-family Collateral Value".
"BORROWING" is a correlative of "Advance": an Advance from the
Company's point of view. Where the name of a Subline prefaces "Borrowing", then
it means a Borrowing under that Subline. Where the term "Swing Line" prefaces
Borrowing, then it means a Borrowing from Chase Texas under the Swing Line.
"BORROWING BASE" means, the "SINGLE-FAMILY WAREHOUSE BORROWING BASE"
for the Single-family Warehouse Subline, the "P&I ADVANCES BORROWING BASE" for
the P&I Advances Subline, the "SERVICING ADVANCES BORROWING BASE" for the
Servicing Advances Subline and the "RECOVERIES BORROWING BASE" for the
Recoveries Subline and those terms mean, respectively and on any day, the
respective sums of the Collateral Values of all Eligible Single-family
Collateral, Eligible P&I Advances Collateral, Eligible Servicing Advances
Collateral and Eligible Recoveries Collateral then Pledged to the Agent.
"BRIDGED LOAN" means a Pledged Loan acquired and owned by the
Company:
(a) that would qualify without exception as Eligible Single-family
Collateral except that some or all of its Basic Papers have not been fully
executed, organized or delivered to the Custodian so as to satisfy all
requirements to permit the Company to borrow against it pursuant to this
Agreement without restriction;
(b) that the Company reasonably expects to fully qualify as Eligible
Collateral when the original Basic Papers have been executed and delivered;
(c) as to which the Company actually and reasonably expects that such
full qualification can and will be achieved on or before five (5) Business Days
after an Advance against such item of Collateral is requested and made under
this Agreement (and the Company hereby agrees to take such steps as are
reasonably necessary to ensure it achieves full qualification as Eligible
Collateral); and
(d) for which the Company has delivered to the Agent a copy of a
dated summary schedule (by telecopy on or before the date of the related
Advance) duly executed by an authorized
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Company officer and in form acceptable to the Agent, (1) listing the Bridged
Loans being Pledged to the Agent (i) by Company loan number and showing for each
(ii) the Customer name, (iii) the loan date (or, if it has not yet closed, its
scheduled closing date), (iv) the loan amount, (v) the loan interest rate and
(vi)whether or not it has been closed, (2) certifying that, for each such
Bridged Loan, the Basic Papers have been executed and delivered by all
appropriate Persons and such Bridged Loan has been originated, closed, funded
and (if applicable) sold and assigned to the Company -- or, in the case of each
Bridged Loan listed as not yet having been closed, that it will have been
originated, closed, funded and (if applicable) acquired by the Company before or
when the proceeds of the Wet Warehousing Advance requested to fund such Bridged
Loan are disbursed from the closing escrow -- and (3) certifying that the
complete file as to such item of Collateral, including the Basic Papers, is in
the possession of its closer, the Company or the Company's Servicer for such
Pledged Loan, or that such file has been shipped to the Custodian (submission to
the Agent of each summary schedule shall be deemed to constitute a certification
by the officer executing it as stated in CLAUSES (2) and (3) above, whether or
not such certifications are actually recited in such summary schedule).
Each Bridged Loan that satisfies the foregoing requirements shall be an Eligible
Mortgage Loan subject to the condition subsequent of physical delivery of its
Mortgage Note, Mortgage and all other Mortgage Loan Documents to the Custodian
within five (5) Business Days after funding of the related Borrowing. Each
Bridged Loan against which the Company requests an Advance shall be irrevocably
deemed Pledged to the Agent and shall automatically become pledged Collateral
effective on the date of the related Request for Borrowing, and the Company
shall take all steps necessary or appropriate to cause the pledge to the Agent
and the delivery of such Bridged Loan and its Basic Papers to the Custodian to
be completed, perfected and continued in all respects, including causing the
original promissory note evidencing such pledged Collateral to be physically
delivered to the Agent or to its designated bailee (usually, the Custodian)
within five (5) Business Days after the funding of the Advance and, if requested
by the Agent, to give written notice to any Person in possession of the Basic
Papers for such Collateral of the Agent's security interest in it and its
security. Upon delivery to the Custodian of the original Basic Papers relative
to a Bridged Loan and the Custodian's issuance of its Custodian's Certification
as to such Bridged Loan in accordance with SECTION 7.2(B), such Collateral shall
no longer be subject to this Agreement's limitations applicable to Bridged
Loans.
"BUSINESS DAY" means any day excluding Saturday, Sunday, any day on
which any Lender is required or permitted to be closed and any day that is a
legal holiday under the laws of the State of Texas or the State of California
and, with regard to Fixed Rate Borrowings, a day when there is interbank trading
of U.S. dollar deposits in London between banks.
"CENTRAL ELEMENTS" means and includes the value of any Collateral;
the prospects for repayment of each portion of the Loan, both principal and
interest, when due; the validity or enforceability of this Agreement, any Senior
Credit Note or other Facilities Papers and, as to any Person referred to in any
reference to the Central Elements, such Person's property, business operations,
financial condition and ability to fulfill its obligations under this Agreement
or any other Facilities Papers, each taken as a whole, and such Person's
prospects of continuing in business as a going concern.
"CHASE TEXAS" is defined in this Agreement's preamble.
"CHANGE OF CONTROL" in respect of the Company means and includes:
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o a sale of substantially all of the Company's assets to any Person
or related group of Persons.
o without the Agent's prior written consent, any merger or
consolidation of the Company with or into another Person with the effect that
Long Beach Financial holds less than one hundred percent (100%) of the total
voting power entitled to vote in the election of directors, managers or trustees
of the survivor of such merger or consolidation.
o the occurrence of any other event after which Long Beach Financial
no longer owns one hundred percent (100%) of the total voting power entitled to
vote in the election of the Company's directors.
o the Company's own liquidation or dissolution.
"COLLATERAL" is any or all collateral (as the context requires) for
the Obligations, consisting of:
o the "SINGLE-FAMILY COLLATERAL", which means pledged Single-family
Mortgage Loans, their security, their related Loan Papers and the right to
recover under the related Hazard Insurance Policies.
o the "P&I ADVANCES COLLATERAL", which means pledged claims and
receivables arising out of or produced by the Company's P&I Advances made
pursuant to a right or obligation as Servicer of the related Mortgage Loans to
make such P&I Advances, all related insurance or guaranties and their related
papers.
o the "SERVICING ADVANCES COLLATERAL", which means pledged claims and
receivables arising out of or produced by the Company's Servicing Advances made
pursuant to a right or obligation as Servicer of the related Mortgage Loans to
make such Servicing Advances, all related insurance or guaranties and their
related papers.
o the "RECOVERIES COLLATERAL", which means Mortgage Loans other than
Eligible Single-family Collateral and claims and receivables in respect of
delinquent or foreclosed Mortgage Loans, that are owned by the Company and
Pledged to the Agent.
"COLLATERAL VALUE" means the value of Eligible Collateral for
purposes of this Agreement. Collateral (i) that is not duly Pledged to the
Agent, (ii) in which the Agent does not have a first and prior perfected Lien
(except that in the case of Bridged Loans Pledged to the Agent for five (5) or
less Business Days, the fact that the Agent does not have possession, directly
or through the Custodian, of the Basic Papers therefor shall not affect such
Bridged Loans' Collateral Value) or (iii) that is not Eligible Collateral
because it does not satisfy in all material respects one or more of the
conditions to eligibility stated for it in this Agreement, shall have zero
Collateral Value, and Collateral that at one time satisfied all conditions for
eligibility but for which a Disqualifying Event has occurred shall have zero
Collateral Value from the date of that Disqualifying Event unless and until the
Company has cured all applicable Disqualifying Events or the Agent has waived
them in writing; provided that the reduction for any reason of the Collateral
Value of any Collateral that is Pledged to the Agent shall not itself affect or
impair the Agent's security interest in that Collateral. Collateral Values of
the various types of eligible Collateral, duly Pledged to the Agent with the
Agent having Lien priority and perfection as aforesaid and as to which no such
uncured or unwaived Disqualifying Event has occurred shall be determined as
follows:
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o The "SINGLE-FAMILY COLLATERAL VALUE" on any day of any pledged
Single-family Mortgage Loan (whether or not a Bridged Loan) shall be its "BOOK
COLLATERAL VALUE", which is ninety-eight percent (98%) -- except that
ninety-five percent (95%) shall be the percentage factor to be applied for
Second Lien Mortgage Loans and High LTV Mortgage Loans -- of the least of:
(i) such Pledged Loan's Principal Balance on that day;
(ii) for a Company-originated Pledged Loan, the loan amount at
origination less discount points received by the Company, as stated on the
Pledged Loan's HUD-1 Settlement Statement, or for a Company-purchased Pledged
Loan, the net cash amount the Company paid for it (without regard, however, to
any servicing release premium paid by the Company); or
(iii) the purchase price that the investor will pay for such Pledged
Loan as provided for in the Purchase Commitment covering it (if any -- Purchase
Commitments are required only for Second Lien Mortgage Loans and High LTV
Mortgage Loans);
provided that if the Agent shall elect to ▇▇▇▇ it to market, such Pledged Loan's
Single-family Collateral Value for that day shall be the lesser of (i) its Book
Collateral Value or (ii) ninety-five percent (95%) of its Market Value on that
day.
o The "P&I ADVANCES COLLATERAL VALUE" on any day for any pledged
Eligible P&I Advances Collateral shall be ninety-five percent (95%) of the
amount of the Company's Servicing Claim for P&I Advances.
o The "SERVICING ADVANCES COLLATERAL VALUE" on any day for any
pledged Eligible Servicing Advances Collateral shall be the percentage stated
below for the following categories of Eligible Servicing Advances Collateral:
- eighty-five percent (85%) of the amount of the Company's
Servicing Claim for T&I Advances.
- eighty-five percent (85%) of the amount of the Company's
Servicing Claim for P&I Advances that have not been (or that the Company
believes will not be) collected on or before thirty-three (33) days after their
respective funding dates.
- the lesser of (i) eighty-five percent (85%) of the amount of the
Company's Servicing Claim for Enforcement Advances or (ii) twenty percent (20%)
of the current appraised value -- or written price opinion of value issued by a
local real estate broker selected reasonably and in good faith by the Company --
of the real estate securing the Single-family Residential Mortgage Loans in
respect of which such Enforcement Advances were made, except that the applicable
limit under this CLAUSE (II) shall be sixty-five percent (65%) of such appraised
value or broker's price opinion of value for Enforcement Advances made to buy
out a senior Lien on Property covered by a Serviced Loan to protect that
Serviced Loan from being potentially cut off and extinguished by foreclosure of
the senior Lien purchased.
o The "RECOVERIES COLLATERAL VALUE" on any day for a Single-family
Residential Mortgage Loan owned by the Company and Pledged to the Agent that was
either (1) originated or purchased by the Company but either (i) was not
subsequently sold to an investor, or (ii) was sold to
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an investor but was subsequently repurchased by the Company due to underwriting
errors, delinquencies or breach of representations or warranties made in
connection with such sale or (2) purchased by the Company out of a pool of
Serviced Loans, or from a Whole Loan investor for whose Mortgage Loans the
Company is a Servicer, pursuant to the Company's (or an Affiliate's) obligation
or election as Servicer to do so, shall be seventy-five percent (75%) of the
lesser of:
(i) such Pledged Loan's Principal Balance; or
(ii) the net cash amount paid for such Pledged Loan by the Company
(without regard, however, to any servicing release premium paid by the Company);
provided, that if the Agent shall elect to ▇▇▇▇ such Pledged Loan to market,
whichever of the Market Value of the Pledged Loan itself or of the real estate
securing it the Agent shall determine is the better measure of its Market Value.
Each determination by the Agent of Collateral Value (and of each element of each
such determination, including Market Value) may be computed using any reasonable
averaging, interpolation and attribution method and, absent manifest error,
shall be conclusive and binding. The Recoveries Collateral Value of any other
Recoveries Collateral shall be seventy-five percent (75%) of its Market Value as
determined by the Agent.
"COMMITTED SUM" means, for any day, the maximum amount a Lender is
committed on that day to lend to the Company (or for its account) on a revolving
credit basis pursuant to this Agreement, on its terms and subject to its
conditions. From the Effective Date of this Agreement until the Termination Date
or such other date (if any) when all or any of them is changed by operation of
the provisions of any agreement or Legal Requirement, the Committed Sums for the
Lenders are as set forth on SCHEDULE LC, as it may be amended and restated from
time to time. If and when some or all of the Lenders then party to this
Agreement agree in writing to change their Committed Sums, or when a new Lender
becomes party to this Agreement, the Agent shall execute an updated SCHEDULE LC
reflecting the Committed Sums of all Lenders then in effect and deliver it to
the Company and the Lenders, and that updated SCHEDULE LC shall thereupon be
substituted for and supersede the prior SCHEDULE LC.
"COMMITMENT" means, for each Lender, its commitment under SECTION 2.1
to fund its Funding Share of Advances under the Credit Line and its Sublines,
limited (i) in the aggregate, to such Lender's Committed Sum and (ii) for each
Subline, to such Lender's Subline Funding Limit. Such term also includes Chase
Texas' Commitment under SECTION 2.7 to fund the Swing Line, limited to the Swing
Line Limit, upon and subject to the terms of this Agreement.
"COMMITMENT FEE" is defined in SECTION 5.6.
"COMMITMENTS CANCELLATION DATE" is defined in the definition of
"Termination Date".
"COMPANY" is defined in this Agreement's preamble.
"COMPANY UNDERWRITING GUIDELINES" means the Company's Loan
underwriting guidelines for Single-family Mortgage Loans from time to time in
effect as summarily described in the Company's "Non-Conforming Ratesheets",
current examples of which are reproduced as SCHEDULE UG-SSF.
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"CREDIT LINE" means the revolving line of credit established by this
Agreement and governed by it and the other Facilities Papers, and its Sublines.
Borrowings under the Credit Line are available only as Borrowings under its
Sublines.
"CUSTODIAN" means Chase Texas, as Custodian under the Custody
Agreement, or any successor custodian under the Custody Agreement.
"CUSTODIAN'S CERTIFICATION" means a certification by the Custodian in
the form of the relevant exhibit to the Custody Agreement that the Custodian has
received and holds all of the Basic Papers for a particular item or items of
Collateral identified in the certification.
"CUSTODIAN'S FEES" is defined in the Custody Agreement.
"CUSTODY AGREEMENT" means the Custody Agreement dated as of April 13,
1998 between the Company and Chase Texas, as Custodian, as it may hereafter be
supplemented, amended or restated from time to time.
"CUSTOMER" means and includes each maker of a Mortgage Note and each
cosigner, guarantor, endorser, surety and assumptor thereof, whether or not such
Person has personal liability for its payment in whole or in part.
"DEBT" means, with respect to any Person, on any day, the sum of the
following (without duplication):
(a) all of that Person's debt or other obligations which, in
accordance with GAAP, should be included in determining total liabilities as
shown on the liabilities side of that Person's balance sheet for that day;
(b) all of that Person's debt or other obligations for borrowed money
or for the deferred purchase price of property or services, except that
non-recourse Structured Securities Debt shall be excluded;
(c) all of any other Person's debt or other obligations for borrowed
money or for the deferred purchase price of property or services in respect of
which such Person is liable -- contingently or otherwise -- to pay or advance
money or property as guarantor, surety, endorser or otherwise (excluding the
subject Person's contingent liability as endorser of negotiable instruments for
collection in the ordinary course of business), or which such Person has agreed
to purchase or otherwise acquire; and
(d) all debt for borrowed money or for the deferred purchase price of
property or services secured by a Lien on any property owned or being purchased
by that Person (even though that Person has not assumed or otherwise become
liable for the payment of such debt) to the extent that such debt would not be
otherwise counted as a liability for purposes of determining that Person's net
worth and to the extent that such debt is less than or equal to the net book
value of such property;
provided that, for purposes of this Agreement, there shall be excluded from the
calculation of Debt for that day, such Person's obligations to pay to another
Person any sums collected and held by the subject Person (as loan servicer,
escrow agent or collection agent or in a similar capacity) for the account of
such other Person.
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"DEBT COLLATERAL" means Single-family Collateral.
"DEBTOR LAWS" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization
and similar laws from time to time in effect that affect the rights of creditors
generally.
"DEFAULT" means the occurrence of any event or existence of any
condition that, but for the giving of notice, the lapse of time or both, would
constitute an Event of Default.
"DISQUALIFYING EVENT" means any of the following events, after the
occurrence of which (i) for so long as the material effects of such event shall
continue and shall not have been waived or declared cured in writing by the
Agent and (ii) except to the extent otherwise specified in this definition, the
Collateral Value of the affected Collateral shall be zero for Borrowing Base
purposes:
(any Collateral)
o any event occurs, or is discovered to have occurred, after which
the affected Collateral fails to satisfy every element of whichever of the
following definitions is most applicable to such Collateral: Eligible
Single-family Collateral, Eligible P&I Advances Collateral, Eligible Servicing
Advances Collateral or Eligible Recoveries Collateral.
o in respect of any item of Collateral, for any reason whatsoever any
of the Company's special representations concerning Collateral set forth in
SECTION 8.16 applicable to that type of Collateral shall become untrue, or shall
be discovered to be untrue, in any respect that is material to the value or
collectibility of that item of Collateral, considered either by itself or
together with other items of Collateral.
(Pledged Single-family Mortgage Loans)
o Any Pledged Loan shipped to an investor shall not be paid for or
returned to the Custodian or the Agent (whichever shipped it) on or before
forty-five (45) days after it is shipped.
o five (5) Business Days shall have elapsed after an Advance shall
have been funded against the Collateral Value of a Bridged Loan without all of
the Bridged Loan's Basic Papers having been received by the Custodian.
o any Basic Paper for any Pledged Loan returned to the Company or its
designee for correction, collection or other action shall not be returned to the
Agent or the Custodian (whichever shipped it) on or before ten (10) days after
it is so returned.
o on any day that is not one of the first or last five (5) Business
Days of a calendar month, the sum of the Collateral Values of all pledged
Single-family Loans that are Bridged Loans shall exceed an amount equal to
twenty-five percent (25%) of the Single-family Sublimit on that day -- in which
event the aggregate Collateral Value for that day of all pledged Single-family
Mortgage Loans that are Bridged Loans shall be the amount that is equal to
twenty-five percent (25%) of such Sublimit.
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o on any day that is one of the first or last five (5) Business Days
of a calendar month, the sum of the Collateral Values of all pledged
Single-family Loans that are Bridged Loans shall exceed an amount equal to forty
percent (40%) of the Single-family Sublimit on that day -- in which event the
aggregate Collateral Value for that day of all pledged Single-family Mortgage
Loans that are Bridged Loans shall be the amount that is equal to forty percent
(40%) of such Sublimit.
o on any day, the sum of the Collateral Values of all pledged
Single-family Mortgage Loans that are Second Lien Mortgage Loans shall exceed
Fifteen Million Dollars ($15,000,000) -- in which event the aggregate Collateral
Value for that day of all pledged Single-family Mortgage Loans that are Second
Lien Mortgage Loans shall be Fifteen Million Dollars ($15,000,000).
o on any day, the sum of the Collateral Values of all pledged
Single-family Loans that are High LTV Mortgage Loans shall exceed Ten Million
Dollars ($10,000,000) -- in which event the aggregate Collateral Value for that
day of all pledged Single-family Mortgage Loans that are High LTV Mortgage Loans
shall be Ten Million Dollars ($10,000,000).
o on any day, the sum of the Collateral Values of all pledged
Holdback Mortgage Loans shall exceed Fifteen Million Dollars ($15,000,000) -- in
which event the aggregate Collateral Value for that day of all pledged Holdback
Mortgage Loans shall be Fifteen Million Dollars ($15,000,000).
o on any day, the sum of the Collateral Values of all pledged
Townhouse or Condo Mortgage Loans shall exceed Thirty Million Dollars
($30,000,000) -- in which event the aggregate Collateral Value for that day of
all pledged Townhouse or Condo Mortgage Loans shall be Thirty Million Dollars
($30,000,000).
o on any day, the sum of the Collateral Values of all pledged Jumbo
Mortgage Loans shall exceed an amount equal to twenty-five percent (25%) of the
Single-family Sublimit on that day -- in which event the aggregate Collateral
Value for that day of all pledged Jumbo Mortgage Loans shall be the amount that
is equal to twenty-five percent (25%) of such Sublimit.
o any Single-family Mortgage Loan shall be In Default.
o on any day, the sum of the Collateral Values of all Single-family
Mortgage Loans that have been Pledged to the Agent for more than one hundred
twenty (120) days but less than one hundred eighty-one (181) days shall exceed
an amount equal to five percent (5%) of the Single-family Sublimit on that day
-- in which event the aggregate Collateral Value for that day of all
Single-family Mortgage Loans Pledged to the Agent between 120 and 181 days shall
be the amount that is equal to five percent (5%) of such Sublimit.
o any Single-family Mortgage Loan shall have been Pledged to the
Agent for more than one hundred eighty (180) days.
(Pledged Second Lien Mortgage Loans)
o any Second Lien Mortgage Loan shall cease to be covered by a
Purchase Commitment issued by a Qualified Second Lien Mortgage Investor.
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o any Second Lien Mortgage Loan shall have been Pledged to the Agent
for more than ninety (90) days.
(Pledged High LTV Mortgage Loans)
o any High LTV Mortgage Loan shall cease to be covered by a Purchase
Commitment issued by a Qualified High LTV Mortgage Investor.
o any High LTV Mortgage Loan shall have been Pledged to the Agent for
more than ninety (90) days.
(P&I Advances Collateral)
o the Company's claim under any P&I Receivable is rejected,
repudiated, stayed, held back or disputed by the trustee or holder of a related
Structured Security or serviced Whole Loan (or anyone claiming by, through or
under any of them) or attached, garnisheed or sequestered by any court of
competent jurisdiction, or the Company learns of any grounds for any such
rejection, repudiation, stay, holdback, dispute, attachment, garnishment or
sequestration; provided, that if such a claim is actually so rejected in part
but is also confirmed in part, then the P&I Advances Collateral Value of that
P&I Receivable shall thenceforth be ninety-five percent (95%) of the portion of
the claim so confirmed (instead of zero).
o the Company shall default in the performance of any of its
obligations under the Servicing Agreement related to any P&I Advances Collateral
if such default continues beyond any period of grace provided under the
Servicing Agreement, if the effect of such default is to cause -- or to permit
the Person for whom the Company performs servicing under such Servicing
Agreement (or a trustee or custodian on behalf of such Person) to cause -- the
Company's right to collect all or any material part of its P&I Advances
Collateral under such Servicing Agreement to be materially diminished, delayed
or impaired;
(Servicing Advances Collateral)
o the Company's claim under any T&I Receivable, any P&I Receivable
that is Servicing Advances Collateral or any Enforcement Receivable is rejected,
repudiated, stayed, held back or disputed by the trustee or holder of a related
Structured Security or serviced Whole Loan (or anyone claiming by, through or
under any of them) or attached, garnisheed or sequestered by any court of
competent jurisdiction, or the Company learns of any grounds for any such
rejection, repudiation, stay, holdback, dispute, attachment, garnishment or
sequestration; provided that if such a claim is actually so rejected in part but
is also confirmed in part, then the Servicing Advances Collateral Value of that
T&I Receivable, P&I Receivable or Enforcement Receivable shall thenceforth be
eighty-five percent (85%) of the portion of the claim so confirmed (instead of
zero).
o the Company shall default in the performance of any of its
obligations under the Servicing Agreement related to any T&I Receivable, P&I
Receivable that is Servicing Advances Collateral or Enforcement Receivable if
such default continues beyond any period of grace provided under the Servicing
Agreement, if the effect of such default is to cause -- or to permit the Person
for whom the Company performs servicing under such Servicing Agreement (or a
trustee or custodian on behalf of such Person) to cause -- the Company's right
to collect all or any material part of its
12
Enforcement Receivables, P&I Receivables or T&I Receivables under such Servicing
Agreement to be materially diminished, delayed or impaired;
o on any day, the sum of the Collateral Values of all pledged T&I
Receivables that have been Pledged to the Agent for more than one hundred eighty
(180) days shall exceed an amount equal to fifty percent (50%) of the Servicing
Advances Sublimit on that day -- in which event the aggregate Collateral Value
for that day of all pledged T&I Receivables that have been Pledged to the Agent
for more than one hundred eighty (180) days shall be the amount that is equal to
fifty percent (50%) of such Sublimit.
o it shall become reasonably apparent to the Company that the
prospects for collection of any T&I Receivable, any P&I Receivable that is
Servicing Advances Collateral or any Enforcement Receivable are materially
impaired;
o the Agent reasonably determines that the prospects for payment of
any T&I Receivable, any P&I Receivable that is Servicing Advances Collateral or
any Enforcement Receivable are materially impaired, gives the Company written
notice of that determination and the bases for it and the Company is unable to
furnish the Agent, on or before fifteen (15) days after such notice, evidence
reasonably sufficient to convince the Agent that such prospects are not
materially impaired.
o any T&I Receivable shall have been Pledged to the Agent for more
than three hundred sixty (360) days plus such extension(s), if any, as the Agent
may approve on a case-by-case basis.
(Recoveries Collateral)
o it shall become reasonably apparent to the Company that the
prospects for collection of any Recoveries Collateral are materially impaired.
o the Agent reasonably determines that the prospects for payment of
any Recoveries Collateral are materially impaired, gives the Company written
notice of that determination and the bases for it and the Company is unable to
furnish the Agent, on or before fifteen (15) days after such notice, evidence
reasonably sufficient to convince the Agent that such prospects are not
materially impaired.
"EFFECTIVE DATE" is defined in this Agreement's preamble.
"ELIGIBLE ASSIGNEE" is defined in SECTION 13.17(B).
"ELIGIBLE COLLATERAL" means Collateral that is Pledged to the Agent,
eligible to be borrowed against under this Agreement and has Collateral Value,
as determined pursuant to this definition. Each item of Collateral that fails or
ceases to qualify as Eligible Collateral for any reason shall automatically have
zero Collateral Value from and after the date when the first Disqualifying Event
occurs and for so long as it remains disqualified pursuant to the above
definition of "Disqualifying Event".
The several categories of Eligible Collateral are as follows:
"ELIGIBLE SINGLE-FAMILY COLLATERAL" or "ELIGIBLE MORTGAGE LOAN" means
an amortizing Single-family Mortgage Loan (whether or not its payment schedule
includes any balloon payment)
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with an original term to its stated maturity of thirty (30) years or less and
that satisfies all applicable requirements of this Agreement for a Single-family
Mortgage Loan. It must be secured by a first or second priority Lien on its
related real estate. It may bear interest at a fixed interest rate, at a
fluctuating interest rate or at a fixed or fluctuating interest rate for part of
its term followed, respectively, by a fluctuating or fixed interest rate for the
remainder of its term. Even though it has been Pledged to the Agent and is
therefore Collateral, no Single-family Mortgage Loan shall be an Eligible
Mortgage Loan:
o unless and until the Custodian has issued its Custodian's Certification
concerning it;
o that does not satisfy the Company Underwriting Guidelines for a Single-family
Mortgage Loan in all material respects;
o whose security is a mobile home or a cooperative apartment, or that would not
qualify for purchase by FNMA even if (or despite the fact that) such Mortgage
Loan's credit quality is "A" because its security is a manufactured home that
does not satisfy FNMA's acceptable collateral standards;
o that contains or is otherwise subject to any contractual restriction or
prohibition on the free transferability of such Mortgage Loan, all Liens
securing it and all related rights (other than Legal Requirements requiring
notification to is obligor(s) of any transfer of it or of its servicing or
administration), either absolutely or as security;
o whose Mortgage Note date is earlier than one hundred twenty (120) days before
such Mortgage Loan is first Pledged to the Agent (whether or not it is
subsequently released and thereafter repledged);
o whose related real estate is not covered by a Hazard Insurance Policy;
o that has an "A" credit grade under the Company Underwriting Guidelines and is
not covered by a Purchase Commitment;
o that is a Second Lien Mortgage Loan and that is not covered by a Purchase
Commitment issued by a Qualified Second Lien Mortgage Investor;
o that is a High LTV Mortgage Loan and that is not covered by a Purchase
Commitment issued by a Qualified High LTV Mortgage Investor; or
o that is a Holdback Mortgage Loan for which the amount of the loan proceeds
held back exceeds Ten Thousand Dollars ($10,000) unless the Agent has
specifically determined, on a case-by-case basis, to permit a higher holdback
amount for that Holdback Mortgage Loan.
"ELIGIBLE P&I ADVANCES COLLATERAL" means an account or general
intangible (a "P&I RECEIVABLE") owned by the Company whose holder has a
Servicing Claim produced by the Company's making a P&I Advance:
o that, at inception, the Company has no actual knowledge will not be collected
on or before thirty-three (33) days after the day that the Company makes the
related (producing) P&I Advance;
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o that the debtor(s) under the related Mortgage(s) are already obligated to pay
to (or to the order of) the holder of that Mortgage Loan (or its servicer) when
the related (producing) P&I Advance is made;
o for which the Company has the indefeasible right under the applicable
Servicing Agreement to reimburse itself as provided in the definition of "P&I
Advance" out of sums thereafter collected from such debtor(s) or realized from
the security for the related Mortgage Loan;
o with respect to which there is no bona fide pending claim against the Company
for any credit, allowance or adjustment;
o that the Company believes is enforceable without offset, bona fide
counterclaim or bona fide defense;
o for the full recoverability of which the Company has no reasonable basis for
doubt; and
o in which the Agent (as a Lender and as agent for the other Lenders) has been
granted (pursuant to SECTION 6.1 or otherwise) and continues to hold a readily
enforceable, first priority perfected Lien.
"ELIGIBLE SERVICING ADVANCES COLLATERAL" means an account or general
intangible owned by the Company whose holder has a Servicing Claim:
o produced by the Company's making a T&I Advance (an account or general
intangible so produced being herein called a "T&I RECEIVABLE"):
o for which the Company has the indefeasible right under the applicable
Servicing Agreement to reimburse itself as provided in the definition
of "T&I Advance" out of sums thereafter collected from such debtor(s)
or realized from the security for the related Serviced Loan;
o with respect to which there is no bona fide pending claim against the
Company for any credit, allowance or adjustment;
o that is enforceable without offset, bona fide counterclaim or bona
fide defense;
o for the full recoverability of which there is no reasonable basis for
doubt; and
o in which the Agent has been granted (pursuant to SECTION 3.1 or
otherwise) and continues to hold a readily enforceable, first
priority perfected Lien;
o produced by the Company's making a P&I Advance and that would qualify
as Eligible P&I Advance Collateral except that the Company believes
that such P&I Receivable will not be collected on or before
thirty-three (33) days after the funding date of the related
(producing) P&I Advance; or
o produced by the Company's funding an Enforcement Advance (such an
account or general intangible being herein call an "ENFORCEMENT
RECEIVABLE"):
15
o for which the Company has the indefeasible right under the applicable
Servicing Agreement to reimburse itself as provided in the definition
of "Enforcement Advance" out of sums thereafter collected from such
debtor(s) or realized from the security for the related Serviced
Loan;
o with respect to which there is no bona fide pending claim against the
Company for any credit, allowance or adjustment;
o that is enforceable without offset, bona fide counterclaim or bona
fide defense;
o for the full recoverability of which there is no reasonable basis for
doubt; and
o in which the Agent has been granted (pursuant to SECTION 3.1 or
otherwise) and continues to hold a readily enforceable, first
priority perfected Lien.
"ELIGIBLE RECOVERIES COLLATERAL" means and includes (i) Single-family
Mortgage Loans and recovery rights (including rights to proceeds of disposition
of the Mortgage Loans themselves or property realized through foreclosure or
conveyances in lieu of foreclosure of Mortgage Loans) and reimbursement claim
receivables for delinquent or foreclosed Single-family Mortgage Loans that were
either (1) originated or purchased by the Company but either (i) was not
subsequently sold to an investor, or (ii) was sold to an investor but was
subsequently repurchased by the Company due to underwriting errors,
delinquencies or breach of representations or warranties made in connection with
such sale or (2) purchased by the Company out of a pool of Serviced Loans, or
from a Whole Loan investor for whose Mortgage Loans the Company is a Servicer,
pursuant to the Company's (or an Affiliate's) obligation or election as Servicer
to do so, and which Mortgage Loans the Company is actively engaged in
liquidating through foreclosure and sale of foreclosure realizations or sale or
other disposition of such Mortgage Loans themselves, and (ii) such unmarketable
Single-family Mortgage Loans and other mortgage banking-related Collateral, if
any, as the Agent shall from time to time approve to be Eligible Recoveries
Collateral.
"ENFORCEMENT ADVANCE" means a cash advance that is both (1) made by
the Company pursuant to the Company's contractual obligation or right under the
relevant Servicing Agreement to make such advance to pay customary, reasonable
and necessary out-of-pocket costs and expenses incurred to (i) preserve, restore
and protect the real estate securing a Serviced Loan, (ii) enforce liens, rights
and remedies, including judicial or nonjudicial note and mortgage enforcement
proceedings and foreclosures, in respect of a Serviced Loan or (iii) manage and
liquidate properties acquired through a Serviced Loan's foreclosure or similar
proceedings and (2) fully recoverable by the Company out of sums that are both
required and expected to be paid to the Company in the ordinary course of its
servicing of the Serviced Loans under such Servicing Agreement, on a first
priority of (reimbursement) payment basis (i.e., before any payment from or on
account of those sums to or for the account of the holder(s) of the relevant
Structured Securities or whole Serviced Loans or to any other Person).
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any successor statute, as amended from time to time, and all rules and
regulations promulgated under it.
"EVENT OF DEFAULT" means the occurrence of any of the conditions or
events described or referred to in SECTION 11.
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"FACILITIES" means the credit facilities provided for in this
Agreement, and in its singular form, "FACILITY", means either (i) the senior
secured revolving line of credit provided for herein, including its
Single-family Warehouse Subline, its P&I Advances Subline, its Servicing
Advances Subline, its Recoveries Subline and the Swing Line or (ii) such line of
credit, one of such sublines or the Swing Line, whichever the context requires.
"FACILITIES PAPERS" means and includes this Agreement, the Senior
Credit Line Notes (including the Swing Line Note), the Guaranty, the Custody
Agreement and all security agreements, financing statements and other papers now
or hereafter executed evidencing, securing or otherwise relating to the
Facilities, and any renewal, extension, rearrangement, increase, supplement,
modification or restatement of any of them.
"FHA" means the Federal Housing Administration and any successor.
"FHLMC" means the Federal Home Loan Mortgage Corporation and any
successor.
"FICA" means the Federal Insurance Contributions Act.
"FILE" means a file in the possession of the Custodian or its
designee (other than the Company or a Company Affiliate) containing all of the
Basic Papers for the relevant type of Collateral.
"FINANCIAL STATEMENTS" is defined in SECTION 8.4.
"FNMA" means the Federal National Mortgage Association and any
successor.
"FOLLOW-UP NOTICE OF CUSTODIAN'S RECEIPT" means an instrument
substantially in the form of the relevant exhibit (named that) to the Custody
Agreement.
"FUNDING SHARE" means, for each Lender, that proportion of each
Advance under a particular Facility that bears the same ratio to the total
amount of the Advances under that Facility as the portion of that Lender's
Committed Sum applicable to that Facility bears to the aggregate Committed Sums
of all Lenders for that Facility.
"GAAP" means, for any day, generally accepted accounting principles,
applied on a consistent basis, stated in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants, or in statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by another entity or entities as may
be approved by a significant segment of the accounting profession, that are
applicable to the circumstances for that day. The requirement that such
principles be applied on a consistent basis means that the accounting principles
observed in a current period shall be comparable in all material respects to
those applied in an earlier period, with the exception of changes in application
to which the Company's independent certified public accountants have agreed and
which changes and their effects are summarized in the subject company's
financial statements following such changes. If (a) during the term of this
Agreement any change(s) in such principles occur(s) which materially changes the
meaning or effect of any provision of this Agreement and (b) the Company or the
Majority Lenders regard such change(s) as adverse to their respective interests,
then upon written notice by the Company to the Agent, the parties to this
Agreement shall negotiate promptly and in good faith a supplement or amendment
to this Agreement to achieve as nearly as possible
17
preservation and continuity of the business substance of this Agreement in light
of such change; provided that neither the Agent nor any of the Lenders shall be
obligated to commence, continue or conclude any such negotiation or to execute
any such supplement or amendment after any Default has occurred (other than a
Default caused by such change) and before it has been cured or after any Event
of Default has occurred (other than an Event of Default caused by such change)
which the Agent has not declared in writing to have been cured or waived.
"GAAP NET WORTH" has the meaning set forth in the definition of
"Tangible Net Worth".
"GNMA" means the Government National Mortgage Association and any
successor.
"GOVERNMENTAL AUTHORITY" means any foreign governmental authority,
the United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court or other tribunal.
"GUARANTOR" means Long Beach Financial.
"GUARANTY" means the Guarantor's written, absolute and irrevocable
guaranty to the Lenders and the Agent of payment of the Obligations, in form and
substance satisfactory to the Guarantor and the Agent, duly executed and
delivered by the Guarantor to the Agent.
"HAZARD INSURANCE POLICY" means, with respect to each Pledged Loan,
the policy of fire and extended coverage insurance (and federal flood insurance,
if the related real estate is located in a federally-designated special flood
area) required by SECTION 9.17(B) of this Agreement to be maintained for the
related real estate's improvements and which may be a blanket mortgage
impairment policy maintained by such Pledged Loan's Servicer in accordance with
the terms and conditions of said SECTION 9.17(B).
"HIGH LTV MORTGAGE LOAN" means a loan that would qualify as an
Eligible Mortgage Loan except that (i) its loan-to-collateral value ratio is up
to 125% or (ii) it has any other characteristic for which the Company
Underwriting Guidelines require that it be classified in the same category as
its 125% loan-to-collateral value ratio Mortgage Loans.
"HOLDBACK MORTGAGE LOAN" means a Mortgage Loan that is Eligible
Single-family Collateral but as to which the Company (or its originator, if it
was not originated by the Company) has either not funded a portion of its
proceeds or has funded such a portion in escrow, with the disbursement of such
portion conditioned upon the satisfaction of the requirements of a written
agreement specifying one or more conditions relating to the completion, repair
or refurbishment of property covered by the Mortgage.
"HUD" mean the U.S. Department of Housing and Urban Development or
any successor.
"IN DEFAULT" means, on any day, more than one Mortgage Note payment
or escrow payment default has occurred on a Mortgage Loan, or another material
default has occurred, including the pendency of foreclosure proceedings or the
pendency of a case in bankruptcy for any Customer under such Mortgage Loan.
"INDEMNIFIED LIABILITIES" is defined in SECTION 12.5.
18
"INDEMNIFIED PARTIES" is defined in SECTION 12.5.
"INSURANCE PROCEEDS" means proceeds paid by any insurer pursuant to
any insurance policy or contract.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986 or
any subsequent federal income tax law or laws, as amended from time to time.
"JUMBO MORTGAGE LOAN" means a Single-family Mortgage Loan the
outstanding principal balance of which is more than Five Hundred Thousand
Dollars ($500,000) and -- unless the Agent shall approve a higher principal
amount therefor on a case-by-case basis after advice from the Company that such
Mortgage Loan is covered by a Purchase Commitment issued by a Qualified Investor
identified to the Agent -- not more than One Million Dollars ($1,000,000).
"LAW" means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other determination, direction or requirement
(including any of the foregoing which relate to environmental standards or
controls, energy regulations and occupational safety and health standards or
controls) of any (domestic or foreign) arbitrator, court or other Governmental
Authority.
"LEGAL REQUIREMENT" means any law, statute, ordinance, decree,
ruling, requirement, order, judgment, rule or regulation (or interpretation of
any of them) of any Governmental Authority, and the terms of any license,
permit, consent or approval issued by any Governmental Authority.
"LENDER" means each of Chase Texas, Guaranty Federal Bank, F.S.B.,
Bank United, BankBoston, N.A., The Bank of New York, Bank One, Texas, N.A.,
Comerica Bank-California, Bank of Scotland, Hibernia National Bank, National
City Bank of Kentucky and such other Persons, if any, as from time to time shall
be a party to this Agreement as a lender.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"LINE" means a line of credit under this Agreement: the Credit Line
or the Swing Line.
"LINE LIMIT" means the maximum principal amount that the Company may
borrow and have outstanding under the relevant Line.
"LOAN" means the loan under this Agreement -- the sum of all Advances
under every Subline of the Warehouse Line and under the Swing Line outstanding
from time to time -- all of which shall be treated and considered as one loan.
"LOAN MODIFICATION" means, with respect to a Mortgage Loan, a change
in the terms of such Mortgage Loan or the valuation of the property covered by
the relevant Mortgage ordered by a bankruptcy court in a case filed under
Chapter 7, 11 or 13 of the federal Bankruptcy Code.
"LOAN PAPERS" means the Mortgage Note and all of the other papers
related to the establishment of a Pledged Loan and the creation, perfection and
maintenance of its lien and lien priority for a particular item of Debt
Collateral, including its Basic Papers and its Supplemental
19
Papers and including any papers securing, guaranteeing or otherwise related to
or delivered in connection with any Pledged Loan, in a form acceptable to the
Agent (including any guaranties, lien priority agreements, security agreements,
mortgages, deeds of trust, collateral assignments of the Company's interest in
underlying obligations or security, subordination agreements, negative pledge
agreements, loan agreements and title, mortgage, pool and casualty insurance
policies), as any such Loan Paper may be supplemented, amended, restated or
replaced from time to time.
"LONG BEACH FINANCIAL" means Long Beach Financial Corporation, a
Delaware corporation.
"MAJORITY LENDERS" means, for any day, the holders of Senior Credit
Line Notes evidencing sixty-six and two-thirds percent (66-2/3%) or more of (a)
the Aggregate Committed Sum if on that day the Lenders are committed to lend
under this Agreement or (b) the aggregate principal amount of the Loan
outstanding if on or before that day the Lenders' Commitments have expired or
have been terminated and have not been reinstated.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MARKET VALUE" of (i) any Mortgage Loan means, on any day, the
average of the prices obtained from three (3) brokerage firms reasonably
selected by the Agent as the bid price offered for its mandatory delivery within
thirty (30) days, or if the Agent, using its customary methods, systems and
procedures, is unable to obtain such bid prices, then its Market Value shall be
what the Agent reasonably determines its market value to be or (ii) any other
property means, on any day, what the Agent reasonably determines its market
value to be (or to have been) on that day.
"MATURITY DATE" means April 13, 2000, or the earlier date (the
"ACCELERATION DATE"), if any, to which maturity of the Senior Credit Line Notes
is accelerated pursuant to this Agreement, by order of any Governmental
Authority or by operation of law.
"MAXIMUM AGGREGATE COMMITMENT" means the maximum amount of principal
that the Company may have borrowed and outstanding under this Agreement on any
day, being the amount set forth in SCHEDULE MAC in effect for that day. The
Maximum Aggregate Commitment on the Effective Date is Three Hundred Million
Dollars ($300,000,000), the amount shown on SCHEDULE MAC attached to this
Agreement. If and when some or all of the Lenders then party to this Agreement
agree in writing to increase their Committed Sums so that the Aggregate
Committed Sum exceeds the Maximum Aggregate Commitment then in effect, the Agent
shall execute an updated SCHEDULE MAC reflecting the new Maximum Aggregate
Commitment (as an amount equal to the new Aggregate Committed Sum) and deliver
it to the Company and the Lenders, and that updated SCHEDULE MAC shall thereupon
be substituted for and supersede the prior SCHEDULE MAC.
"MBS" means a mortgage-backed security based on and backed by, or
represented by, a pool that includes Serviced Loans, and includes a mortgage
pass-through certificate.
"MORTGAGE" means a mortgage, deed of trust, deed to secure debt,
security deed or other mortgage instrument or similar evidence of lien legally
effective in the U.S. jurisdiction where the real property is located to create
and constitute a valid and enforceable Lien, subject only to Permitted
Encumbrances, on the fee simple or long term ground leasehold estate in improved
real property.
20
"MORTGAGE ASSIGNMENT" means an assignment of a Mortgage, in form
sufficient under the laws of the U.S. jurisdiction where the real property
covered by the Mortgage is located to give notice to the world of the assignment
of the Mortgage, perfect the assignment and establish its priority relative to
other transactions in respect of the Mortgage assigned.
"MORTGAGE LOAN" means any loan evidenced by a Mortgage Note.
"MORTGAGE NOTE" means a promissory note secured by a Mortgage.
"MORTGAGOR BANKRUPTCY LOSS" means, with respect to a Mortgage Loan,
the present value (as determined in accordance with industry standards) of the
amount by which a Loan Modification has reduced the remaining scheduled monthly
payments of such Mortgage Loan.
"MULTIEMPLOYER PLAN" means any "multiemployer plan", as defined in
Section 4001(a)(3) of ERISA, which is maintained for employees of the Company or
any Subsidiary of either.
"NOTE PAYMENT ACCOUNT" means the Company's non-interest bearing
demand checking account no. 0010-▇▇▇▇▇▇▇ to be maintained with Chase Texas and
to be used for (a) the Agent's deposits of proceeds of Advances made by the
Lenders to the Company, including any Swing Line Advances funded by Chase Texas,
and payments constituting the proceeds of principal from any Collateral (other
than regular principal and interest payments on the Debt Collateral); (b) the
Agent's deposits of principal and interest payments for the repayment of
Advances received from the Company or for the Company's account and (c) only if
and when (i) no Default has occurred unless it has been either cured by the
Company or waived in writing by the Agent and (ii) no Event of Default has
occurred unless the Agent has declared in writing that it has been cured or
waived, the Company's withdrawal of proceeds of Advances for the purposes
permitted under this Agreement and the Agent's transfer from the Note Payment
Account to the Company's own account (or to a controlled disbursement account
maintained by the Company with the Agent) of proceeds of sales or other
dispositions of released Collateral in excess of the Advance(s) borrowed and
then outstanding against such released Collateral. The Note Payment Account is
(and shall continuously be) part of the Collateral for the Obligations. The Note
Payment Account shall be subject to setoff by the Agent for Pro Rata
distribution to the Lenders. The Company shall not have any right to directly
withdraw funds from the Note Payment Account, but instead such funds may be
withdrawn or paid out only against the order of an authorized officer of the
Agent, although under the circumstances described in CLAUSE (C) of the first
sentence of this definition and subject to the conditions specified in that
clause, the Agent shall use diligent and reasonable efforts to cause Advances
and excess Collateral proceeds that are received as therein described and that
are deposited to the Note Payment Account before 3:00 PM on a Business Day to be
transferred to an account on which the Company does have withdrawal order
authority on that same Business Day.
"NOTICE OF CUSTODIAN'S RECEIPT" means a certification by the
Custodian in the relevant form of the "Notice of Custodian's Receipt" exhibit to
the current Custody Agreement that the Custodian has received from (or on behalf
of) the Company and holds, as custodian, Files for all of the Collateral
described in the Submission List(s) attached to the Notice of Custodian's
Receipt. The Custodian will not issue a Notice of Custodian's Receipt for any
Bridged Loan until the Custodian receives the Basic Papers for it (and it has
therefore ceased to be a Bridged Loan).
"NOTICE" means a written notice given in accordance with SECTION 14.
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"OBLIGATIONS" means all of the Company's present and future debt,
obligations and liabilities under or related to this Agreement, any Senior
Credit Note or any of the other Facilities Papers, whether for principal,
interest, premium, fees, costs, attorneys' fees or other obligation or
liability, and whether absolute or contingent, and all renewals, extensions,
modifications and increases of any of them.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of the
Company or another relevant Person by its (or if it is a partnership, its
general partner's) Board of Director's Chairman, President, Chief Financial
Officer, Treasurer, any of its Senior Vice Presidents, its Controller or such
other officer as shall be acceptable to the Agent.
"PERMITTED ENCUMBRANCES" means in respect of the real property
securing a Pledged Loan or any real estate that is direct Collateral under this
Agreement (i) the lien of current but nondelinquent real property taxes and
assessments and (ii) covenants, conditions and restrictions, rights of way,
easements and other matters to which like properties are commonly subject that
do not prohibit or materially interfere with the use of the property as it is
currently being used; provided that any encumbrance not permitted pursuant to
the standards of any relevant Purchase Commitment to which the subject Pledged
Loan is dedicated (or which the Company has directly or indirectly represented
to the Agent covers the Pledged Loan) shall not be a Permitted Encumbrance.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, registered limited liability
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations -- whether or not legal entities -- and
governments and agencies and political subdivisions of them.
"P&I ADVANCE" means a cash monthly payment that is both (1) made by
the Company as Servicer to (or to a trustee for the account of) the holders of
MBSs or whole Serviced Loans in an amount equal to the sum of the monthly
payments (excluding any principal prepayments) due on the Serviced Loans in the
preceding month but not received by the close of business on its last day -- or,
where so provided under the applicable Servicing Agreement, due on or before the
first day of the current month but not received by the date that the monthly
payment, if received, is required to be remitted to (or to a trustee for the
account of) such MBS's or whole Serviced Loan's holder -- with the interest
portion of the payment adjusted to the mortgage loan rate less the relevant
servicing fee rate and trustee fee rate (if applicable) for that same pool --
and (2) fully recoverable by the Company from Serviced Loan recoveries paid to
the Company on either a first priority of (reimbursement) payment basis (or
second in right of payment only to the right of full repayment to the Company of
any outstanding T&I Advances and Enforcement Advances in respect of that pool
but in all events before any payment from or on account of those Serviced Loan
recoveries to or for the account of the holder(s) of the relevant MBSs or whole
Serviced Loans or to or for the account of any other Person).
"P&I ADVANCES COLLATERAL" means and includes Collateral that is or
was Eligible P&I Advances Collateral without regard to whether it is currently
Eligible Collateral.
"P&I ADVANCES SUBLIMIT" is defined in the definition of "Sublines",
under its subhead "P&I Advances ▇▇▇▇▇▇▇".
▇▇
"▇&▇ RECEIVABLE" is defined in the definition of "Eligible
Collateral".
"PLAN" means an employee pension benefit plan of a type described in
Section 3(2) of ERISA and which is subject to Title IV of ERISA in respect of
which the Company is an "employer" as defined in Section 3(5) of ERISA.
"PLEDGED LOAN" means a pledged Mortgage Loan.
"PLEDGED LOANS CURTAILMENT REPORT" means a written report from the
Company to the Agent reflecting principal payments and prepayments made on
Pledged Loans (separately categorized by either Warehouse Subline or Recoveries
Subline) in the preceding month and their resulting new Principal Balances.
"PLEDGED TO THE AGENT" means mortgaged or pledged to the Agent, as
agent and Representative of the Lenders.
"PRINCIPAL BALANCE" means, for any day, the advanced and unpaid
principal balance of a Pledged Loan on that day. If a Pledged Loan is listed in
the most current Pledged Loans Curtailment Report, then for purposes of this
Agreement, the Principal Balance for that Pledged Loan (absent manifest error)
shall be its principal balance as shown in that Pledged Loans Curtailment
Report.
"PRO RATA" means in accordance with the Lenders' respective ownership
interests in the Loan. On any day, the Lenders will each own that portion of the
Loan, both principal and accrued interest, and a corresponding undivided
interest in all Collateral and all rights to Collateral proceeds equal to that
Lender's ownership interest in the Loan, that bears the same ratio to the entire
advanced and unpaid principal of the Loan then outstanding as that Lender's
Committed Sum bears to the Aggregate Committed Sum, subject to this adjustment:
if at any time or times, any Lender fails to fund any of its Funding Share(s) of
any Advance and one or more of the other Lenders funds it (electively in
accordance with the provisions of SECTION 2.1), then:
(a) the respective ownership interests of both (i) the Lender that
failed or refused to fund its Funding Share(s) and (ii) the Lender (or Lenders)
that funded such Funding Share(s), shall be proportionately decreased and
increased, respectively, to the same extent as if their respective Committed
Sums were changed in direct proportion to the unreimbursed balance outstanding
from time to time thereafter of the amount so funded;
(b) the non-funding Lender's share of all future distributions of any
payments and prepayments on the Senior Credit Line Notes shall be paid -- pro
rata among them in accordance with their respective unrecovered balances of such
non-funding Lender's Funding Share(s) -- to the Lender(s) that so funded such
non-funding Lender's Funding Share(s) until all such funding Lender(s) have been
fully repaid the amount so funded; and
(c) such adjustment shall remain in effect until such time as the
Lender(s) that funded such Funding Share(s) have been so fully repaid.
If no other Lender funds the share of the Lender who fails to fund its Funding
Share(s) of any Advance, then the Pro Rata ownership interest in the Loan of the
Lenders shall be changed, in that case so that each Lender's Pro Rata ownership
interest in the Loan is equal to the ratio of that Lender's aggregate
outstanding Advances to the aggregate outstanding Advances for all Lenders.
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Notwithstanding the change in the Lenders' Pro Rata ownership interests in the
Loan due to any Lender's failure to fund its Funding Share(s) of any Advance(s),
such failure to fund shall not diminish any Lender's Funding Share(s) of
subsequent Advances.
"PROPERTY" means any interest of a Person in any kind of property,
whether real, personal or mixed, tangible or intangible, including the
Collateral.
"PUHC ACT" means the Public Utility Holding Company Act of 1935, as
amended.
"PURCHASE COMMITMENT" means a written commitment held by the Company
from a Qualified Investor to buy Collateral and that specifies the type or
item(s) of Collateral, a purchase date or purchase deadline date and a purchase
price (or a formula from which the purchase price can be determined).
"QUALIFIED INVESTOR" means GNMA, FNMA, FHLMC and any of the Persons
listed on SCHEDULE QI, as it may be supplemented or amended from time to time by
agreement of the Company and the Agent; provided that if the Agent shall give
written notice to the Company of the Agent's (or the Majority Lenders')
reasonable disapproval of any Qualified Investor(s) named in the notice, the
investor(s) named shall no longer be (a) Qualified Investor(s) from and after
the time when the Agent sends that notice to the Company.
"QUALIFIED HIGH LTV MORTGAGE INVESTOR" means a Qualified Investor or
any of the Persons listed as Qualified High LTV Mortgage Investors on SCHEDULE
QI, as it may be supplemented or amended from time to time by agreement of the
Company and the Agent; provided that if the Agent shall give written notice to
the Company of the Agent's (or the Majority Lenders') reasonable disapproval of
any Qualified High LTV Mortgage Investor(s) named in the notice, the investor(s)
named shall no longer be (a) Qualified High LTV Mortgage Investor(s) from and
after the time when the Agent sends that notice to the Company.
"QUALIFIED SECOND LIEN MORTGAGE INVESTOR" means a Qualified Investor
or any of the Persons listed as Qualified Second Lien Mortgage Investors on
SCHEDULE QI, as it may be supplemented or amended from time to time by agreement
of the Company and the Agent; provided that if the Agent shall give written
notice to the Company of the Agent's (or the Majority Lenders') reasonable
disapproval of any Qualified Second Lien Mortgage Investor(s) named in the
notice, the investor(s) named shall no longer be (a) Qualified Second Lien
Mortgage Investor(s) from and after the time when the Agent sends that notice to
the Company.
"RECOVERIES COLLATERAL" means and includes Collateral that is or was
Eligible Recoveries Collateral without regard to whether it is currently
Eligible Collateral.
"RECEIVABLES COLLATERAL VALUE REDUCTION REPORT" is defined in SECTION
9.4(I).
"RECOVERIES SUBLINE ADVANCES" is defined in the definition of
"Sublines", under its bulleted subhead "Recoveries Subline".
"RECOVERIES SUBLIMIT" is defined in the definition of "Sublines",
under its bulleted subhead "Recoveries Subline".
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"REDEMPTION AMOUNT" means an amount equal to the then-current
Collateral Value of any item of Collateral to be redeemed, but not less than the
amount of the outstanding Advance made with respect to the Collateral being
redeemed, as determined by the Agent.
"REGULATION Q" means Part 217 of Title 12 of the Code of Federal
Regulations, or any other regulation when promulgated to replace the prior
Regulation Q and having substantially the same function.
"REGULATION U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation when promulgated to replace the prior Regulation U and having
substantially the same function.
"REGULATION X" means Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any other
regulation when promulgated to replace the prior Regulation X and having
substantially the same function.
"REIMBURSEMENT RIGHTS" is defined in SECTION 6.1(D).
"REPURCHASED DEFAULTED MORTGAGE" means a defaulted Single-family
Mortgage repurchased by the Company from an investor or out of a pool of
Mortgage Loans pursuant to the Company's contractual obligation or election as
seller or Servicer to do so.
"REPRESENTATIVE" means the Agent, as representative of the Lenders
within the meaning of the term "representative" as used in UCC Section
9.105(13); provided that the Agent is not, and shall not be deemed or held to
be, a trustee or fiduciary for the Lenders, the Company or any Person claiming
by, through or under any of them.
"REQUEST FOR BORROWING" means a request for a Borrowing in the form
of EXHIBIT B (or in another form approved by the Agent) appropriate to the type
of Borrowing being requested, duly completed, with all required attachments and
signed by the Company.
"SEC" means the U.S. Securities and Exchange Commission.
"SECOND LIEN MORTGAGE LOAN" means a Single-family Mortgage Loan that
is secured by a second priority Lien on the real estate securing it.
"SECURITY INSTRUMENTS" means any and all papers now or hereafter
executed and delivered by the Company or any other Person as security for the
Obligations, or otherwise in connection with them, as those papers may be
supplemented, amended, restated or replaced from time to time.
"SENIOR CREDIT NOTES" means (a) promissory notes dated the date of
this Agreement, each to be in substantially the form attached as EXHIBIT A-1,
executed and delivered by the Company, payable to the order of a Lender and in a
face principal amount equal to that Lender's Committed Sum, and that shall
evidence the Company's obligation to repay to the order of that note's
Lender-payee all Advances funded by that Lender and outstanding from time to
time, plus accrued interest on that principal, and (b) all renewals,
modifications, extensions, increases and rearrangements of such promissory notes
and all substitutions or replacements for them or any of them. The Swing Line
Note is a Senior Credit Note.
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"SERVICED LOANS" means all Mortgage Loans serviced or required to be
serviced by the Company under any Servicing Agreement, irrespective of whether
the actual servicing is done by another Person (a subservicer) retained by the
Company for that purpose.
"SERVICER" means either (i) a Person (a subservicer) retained by the
Company to service the relevant Mortgage Loans under a Servicing Agreement or
(ii) the Company if the Company itself services the relevant Mortgage Loans.
"SERVICING AGREEMENT" means, with respect to any Person, the
arrangement -- whether or not in writing -- pursuant to which that Person acts
as servicer of Mortgage Loans, whether owned by that Person or by others.
"SERVICING ADVANCE" means a P&I Advance, a T&I Advance, an
Enforcement Advance or whatever combination of them the context requires.
"SERVICING ADVANCES COLLATERAL" means and includes Collateral that is
or was Eligible Servicing Advances Collateral without regard to whether it is
currently Eligible Collateral.
"SERVICING ADVANCES SUBLIMIT" is defined in the definition of
"Sublines", under its bulleted subhead "Servicing Advances Subline".
"SERVICING CLAIM" means an enforceable and liquidated money claim of
the Company against (i) the trustee of MBSs backed by Serviced Loans, or the
holder of serviced Whole Loans, in respect of which the Company made the related
Servicing Advance(s), (ii) such Serviced Loans' Customers and their accounts,
(iii) an insurer of such Serviced Loans or (iv) another identified Person, for
reimbursement of the relevant type(s) of Servicing Advance(s) made by the
Company pursuant to its obligation or right as Servicer to do so under a
Servicing Agreement.
"SINGLE-FAMILY" is a preface that means that a Mortgage Loan is
secured by a Mortgage covering real property improved by a one-, two-, three- or
four-family residence.
"STATEMENT DATE" means February 14, 1997, the date of the Company's
pro forma financial statements upon which the Agent and the Lenders are relying
in entering into this Agreement.
"STATEMENT DATE FINANCIAL STATEMENTS" is defined in SECTION 8.4.
"STRUCTURED SECURITIES" means collateralized mortgage obligations and
other MBSs.
"SUBLIMIT" means the Single-family Sublimit, the P&I Advances
Sublimit, the Servicing Advances Sublimit, the Recoveries Sublimit, or whatever
combination of them the context requires.
"SUBLINE FUNDING LIMIT" means the maximum amount that a Lender is
committed to lend under a Subline.
"SUBLINES" means the four (4) subdivisions of the Credit Line,
consisting of:
o the "SINGLE-FAMILY WAREHOUSE SUBLINE" of up to one hundred percent
(100%) of the Aggregate Committed Sum (the "SINGLE-FAMILY SUBLIMIT") of
principal that may borrowed (as "SINGLE-FAMILY WAREHOUSE ADVANCES") by the
Company and outstanding from time to time -- with a
26
Wet Warehousing Sublimit to finance Single-family Mortgage Loans that are
Bridged Loans -- to acquire and accumulate Eligible Single-family Collateral to
hold pending their transfers and assignments from time to time either (i) as
Whole Loans sold for cash to investors or (ii) as pools of Mortgage Loans sold
to issuers of Structured Securities to be based on and backed by those Mortgage
Loans in exchange for proceeds of the sale of those Structured Securities to
investors, with the sale proceeds in each case to be paid to the Agent for
concurrent deposit in the Note Payment Account and to be applied toward
repayment to the Lenders of such Advances, with any remaining balance (in the
absence of a Default or Event of Default) to be transferred by the Agent to the
Company's own account with the Agent.
o the "P&I ADVANCES SUBLINE" of up to ten percent (10%) of the
Aggregate Committed Sum (the "P&I ADVANCES Sublimit") of principal that may be
borrowed by the Company (as "P&I SUBLINE ADVANCES") and outstanding from time to
time to finance P&I Receivables produced by the Company's P&I Advances.
o the "SERVICING ADVANCES SUBLINE" of up to five percent (5%) of the
Aggregate Committed Sum (the "SERVICING ADVANCES SUBLIMIT") of principal that
may be borrowed by the Company (as "SERVICING SUBLINE ADVANCES") and outstanding
from time to time to finance receivables produced by the Company's cash advances
made from time to time pursuant to its obligation to do so as Servicer of first
and junior lien Single-family Mortgage Loans to pay:
- T&I Advances;
- P&I Advances that are not collected, or that the Company believes
will not be collected, on or before thirty-three (33) days after their
respective funding dates; and
- Enforcement Advances.
o the "RECOVERIES SUBLINE" of up to five percent (5%)of the Aggregate
Committed Sum (the "RECOVERIES SUBLIMIT") of principal that may be borrowed (as
"RECOVERIES SUBLINE ADVANCES") by the Company and outstanding from time to time
to finance (a) Single-family Mortgage Loans (1) originated or purchased by the
Company but either (i) were not subsequently sold to an investor, or (ii) were
sold to an investor but was subsequently repurchased by the Company due to
underwriting errors, delinquencies or breach of representations or warranties
made in connection with such sale or (2) purchased by the Company out of a pool
of Serviced Loans, or from a Whole Loan investor for whose Mortgage Loans the
Company is a Servicer, pursuant to the Company's (or an Affiliate's) obligation
or election as Servicer to do so, and (b) such unmarketable Single-family
Mortgage Loans and other mortgage banking-related Collateral owned by the
Company as shall be approved by the Agent on a case-by-case basis.
"SUBMISSION LIST" means a listing and description in the form of the
appropriate attachment to EXHIBIT B of Collateral Pledged to the Agent -- and,
for Debt Collateral, whose Basic Papers are being sent to the Custodian -- by or
on behalf of the Company pursuant to this Agreement.
"SUBORDINATED DEBT" means Debt of the Company to any Person (i) the
papers evidencing, securing, governing or otherwise related to which Debt impose
covenants and conditions on the debtor under them that are no more restrictive
or onerous than the covenants and conditions imposed on the Company by this
Agreement and (ii) that is subordinated to the Obligations pursuant to a
currently effective and irrevocable Subordination Agreement, including
standstill and blockage provisions, approved by the Agent.
27
"SUBORDINATION AGREEMENT" means a written subordination agreement in
the form of EXHIBIT C or in other form and substance satisfactory to and
approved by the Agent that subordinates (x) all present and future debts and
obligations owing by the Company to the Person signing the Subordination
Agreement to (y) the Obligations under this Agreement and the other Facilities
Papers, in both right of payment and lien priority.
"SINGLE-FAMILY WAREHOUSE ADVANCES" is defined in the definition of
"Sublines", under its bulleted subhead "Single-family Subline".
"SINGLE-FAMILY SUBLIMIT" is defined in the definition of "Sublines",
under its bulleted subhead "Single-family Subline".
"SUBSIDIARY" means any corporation, association or other business
entity (including a trust) in which any Person (directly or through one or more
other Subsidiaries or other types of intermediaries), owns or controls:
(a) more than fifty percent (50%) of the total voting power or shares
of stock entitled to vote in the election of its directors, managers or
trustees; or
(b) more than ninety percent (90%) of the total assets and more than
ninety percent (90%) of the total equity through the ownership of capital stock
(which may be non-voting) or a similar device or indicia of equity ownership.
"SUPPLEMENTAL PAPERS" means the Loan Papers for a particular item of
Debt Collateral other than its Basic Papers.
"SWING LINE" means the short term revolving credit facility provided
for in SECTION 2.8 under which the Company may borrow (as "SWING LINE ADVANCES")
from Chase Texas to bridge the Company's daily borrowing requirements under the
Credit Line.
"SWING LINE BORROWING DUE DATE" for each Swing Line Borrowing means
the fifth (5th) Business Day, or such other Business Day, whether before or
after such fifth (5th) Business Day, as Chase Texas in its sole discretion shall
elect, following the Business Day when Chase Texas funds such Borrowing under
the Swing Line; provided that Chase Texas agrees not to exercise such discretion
to choose a due date in a manner that would materially affect the Company's
ability to borrow under this Agreement unless a Default has occurred that has
not been cured by the Company or declared in writing by the Agent to have been
waived or any Event of Default has occurred that the Agent has not declared in
writing to have been cured or waived.
"SWING LINE LIMIT" means Fifty Million Dollars ($50,000,000), the
maximum principal that may be borrowed and outstanding from time to time under
the Swing Line.
"SWING LINE NOTE" is defined in SECTION 2.8(E). The Swing Line Note
evidences and shall evidence the Company's obligation to repay to the order of
Chase Texas the principal of all Borrowings funded under the Swing Line and
outstanding from time to time, plus accrued interest on that principal.
"T&I ADVANCE" means a cash advance that is both (1) made by the
Company pursuant to the Company's contractual obligation or right under the
relevant Servicing Agreement to make such
28
advance to pay taxes, assessment or maintenance fees or maintain hazard and
flood insurance on the real estate securing Serviced Loans and (2) fully
recoverable by the Company out of sums that are both required and expected to be
paid to the Company in the ordinary course of its servicing of the Serviced
Loans under such Servicing Agreement, on a first priority of (reimbursement)
payment basis (i.e., before any payment from or on account of those sums to or
for the account of the holder(s) of the relevant Structured Securities or whole
Serviced Loans or to any other Person).
"T&I RECEIVABLE" is defined in the definition of "Eligible
Collateral".
"TANGIBLE NET WORTH" means, with respect to any Person on any day,
the excess of that Person's total assets over total liabilities on that day,
each being determined in accordance with GAAP consistent with the accounting
principles applied in the preparation of the Financial Statements referred to in
SECTION 8.4 (herein called "GAAP NET WORTH");
minus (i) intangible assets;
minus (ii) loans or advances to Affiliates made in compliance with SECTION 10.7
to the extent that the same exceed One Million Dollars ($1,000,000), other than
loans and advances to the Guarantor made pursuant to (and subject to the limit
specified in) SECTION 10.7(B);
minus (iii) net deferred tax assets (i.e., the excess, if any, of deferred tax
assets over deferred tax liabilities and valuation allowances);
minus (iv) advances to shareholders or officers, investments in Affiliates
(exclusive of investments in Subsidiaries), capitalized excess service fees, all
other intangible assets and all other assets that would be deemed by HUD to be
unacceptable for the purpose of calculating adjusted net worth in accordance
with its requirements in effect as of such day, as such requirements appear in
the "Audit Guide for Audit of Approved Non-supervised Mortgagees";
plus (x) (1) loan loss reserves, (2) reserves to hedge against the effect on
that Person's earnings caused by periodic caps on that Person's investments in
ARM Securities and (3) that portion of Subordinated Debt that is not due within
one (1) year of that day;
plus (y) net unrealized holding losses, if any, (and minus net unrealized
holding gains, if any) for available-for-sale debt securities and equity
securities owned (including those classified as current assets) that are
required by FASB 115 to be reported as a net amount in a separate component of
shareholders' equity until realized.
"TAXES" means taxes, levies, deductions, imposts, charges or
withholdings, excluding, in the case of each Lender, taxes imposed on its net
income, and franchise taxes imposed on it, under the laws of any applicable
Governmental Authority.
"TERMINATION DATE" means the earlier of (i) April 13, 2000, or (ii)
the date (if any) when the Lenders' Commitment to fund Advances under this
Agreement is terminated pursuant to this Agreement or by operation of law (the
"COMMITMENTS CANCELLATION DATE").
"TOWNHOUSE OR CONDO MORTGAGE LOAN" means a Mortgage Loan secured by
real property improved with a single townhouse or secured by a single
condominium unit and its related undivided interest in common elements of the
condominium regime.
29
"UCC" means the Uniform Commercial Code or similar laws of the
applicable jurisdiction, as amended from time to time.
"UNDERWRITER'S EXCUSE PROVISO" is defined in SECTION 11.1(F)(4).
"VA" means the Department of Veterans Affairs and any successor.
"WET WAREHOUSING" means lending to finance Bridged Loans.
"WET WAREHOUSING SUBLIMIT" means the maximum amount of principal that
may be borrowed and outstanding on any day before the Termination Date to
finance Bridged Loans, being:
o forty percent (40%) of the Single-family Sublimit during either (i)
the last five (5) Business Days or (ii) the first five (5) Business Days of such
calendar month.
o twenty-five percent (25%) of the Single-family Sublimit on every
other day.
"WHOLE LOANS" means Mortgage Loans that are sold or intended to be
sold to investors as whole loans, instead of being part of a pool from which
Structured Securities are to be created and sold.
1.3 Definitions for Interest Calculations. For convenience of
reference, definitions used in provisions relating to calculation and payment of
interest are grouped together in this Section.
"ABR FLOATING RATE" means, with respect to each ABR Floating Rate
Tranche, a rate per annum that on any day is equal to the lesser of:
(a) the sum of (i) the Alternate Base Rate for that day plus (ii) the
Applicable ABR Margin for each class of Borrowing within that tranche; and
(b) the Ceiling Rate for that day.
The ABR Floating Rate shall be computed on the basis of a calendar year applied
for the actual number of days that the relevant Borrowing is outstanding and
bears interest at the ABR Floating Rate (i.e., on the 365/365 -- 366/366 in a
leap year -- day basis). Each determination by the Agent of the ABR Floating
Rate may be computed using any reasonable method and, absent manifest error,
shall be conclusive and binding.
"ADJUSTED LIBOR FIXED RATE" means, with respect to each Fixed Rate
Interest Period, a rate per annum equal to the lesser of:
(a) the sum of (i) the quotient of (x) LIBOR for the LIBOR Business
Day that is two (2) LIBOR Business Days before the first day of that Fixed Rate
Interest Period divided by (y) 1.00 minus the Eurodollar Reserve Requirement for
such Fixed Rate Interest Period, plus (ii) the Applicable LIBOR/BAR Margin for
each class of Borrowing within the relevant tranche, rounded upwards, if
necessary, to the nearest one-eighth percent (1/8%); and
(b) the Ceiling Rate for that day.
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Each Adjusted LIBOR Fixed Rate shall be computed on the basis of a year of three
hundred sixty (360) days applied for the actual number of days in the relevant
Fixed Rate Interest Period (i.e., on the 365/360 -- 366/360 in a leap year --
day basis). Each determination by the Agent of an Adjusted LIBOR Fixed Rate may
be computed using any reasonable method and, absent manifest error, shall be
conclusive and binding.
"ADJUSTED LIBOR FLOATING RATE" means, with respect to each LIBOR
Floating Rate Tranche, a rate per annum that on any day is equal to the lesser
of:
(a) the sum of (i) the quotient of (x) LIBOR for that day divided by
(y) 1.00 minus the Eurodollar Reserve Requirement for one (1) day loans, plus
(ii) the Applicable LIBOR/BAR Margin for each class of Borrowing within the
relevant tranche, rounded upwards, if necessary, to the nearest one-eight
percent (c%); and
(b) the Ceiling Rate for that day.
Each Adjusted LIBOR Floating Rate shall be computed on the basis of a year of
three hundred sixty (360) days applied for the actual number of days that the
relevant Borrowing is outstanding and bears interest at an Adjusted LIBOR
Floating Rate (i.e., on the 365/360 -- 366/360 in a leap year -- day basis).
Each determination by the Agent of an Adjusted LIBOR Floating Rate may be
computed using any reasonable method and, absent manifest error, shall be
conclusive and binding.
"ALTERNATE BASE RATE" means a rate per annum that on any day is equal
to the lesser of:
(a) the sum of (i) the greater of (x) the Prime Rate in effect on
such day and (y) the Federal Funds Effective Rate in effect for such day plus
one-half percent (-1/2%), plus (ii) the Applicable ABR Margin for the relevant
class of Borrowing, rounded upwards, if necessary, to the nearest one-eighth
percent (c%); and
(b) the Ceiling Rate for that day.
Any change in the Alternate Base Rate due to (a) a change in the Prime Rate
shall be effective on the effective date of such change in the Prime Rate or (b)
a change in the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Federal Funds Effective Rate. Each determination by
the Agent of the Alternate Base Rate may be computed using any reasonable method
and, absent manifest error, shall be conclusive and binding. If for any reason
the Agent shall have reasonably determined that it is unable to ascertain the
Federal Funds Effective Rate for any day, including the Agent's inability or
failure to obtain sufficient bids or publications in accordance with these
terms, the Alternate Base Rate shall be the lesser of (x) the Prime Rate plus
the applicable ABR Margin and (y) the Ceiling Rate, until the circumstances
giving rise to that inability no longer exist.
"APPLICABLE ABR MARGIN" means:
o for outstanding Single-family Warehouse Advances that are not also
Wet Warehousing Advances, one-fourth percent (1/4%).
o for outstanding Single-family Warehouse Advances that are also Wet
Warehousing Advances, one-half percent (1/2%).
31
o for outstanding Swing Line Advances, one and one-half percent
(1-1/2%).
o for outstanding P&I Advances Subline Advances, three-fourths
percent (3/4%).
o for outstanding Servicing Advances, three-fourths percent (3/4%).
o for outstanding Recoveries Subline Advances, one percent (1%).
"APPLICABLE LIBOR/BAR MARGIN" means:
o for outstanding Single-family Warehouse Advances that are not also
Wet Warehousing Advances, one and one-fourth percent (1-1/4%).
o for outstanding Single-family Warehouse Advances that are also Wet
Warehousing Advances, one and one-half percent (1-1/2%).
o for outstanding Swing Line Advances, one and one-half percent
(1-1/2%).
o for outstanding P&I Advances Subline Advances, one and
three-fourths percent (1-3/4%).
o for outstanding Servicing Advances, one and three-fourths percent
(1-3/4%).
o for outstanding Recoveries Subline Advances, two percent (+2%).
"BALANCE ADJUSTED RATE" means, with respect to each BAR Floating Rate
Tranche, a rate per annum that on any day is equal to the lesser of:
o the Applicable LIBOR/BAR Margin for each class of Borrowing within
that tranche; and
o the Ceiling Rate for that day.
Each Balance Adjusted Rate shall be computed on the basis of a year of three
hundred sixty (360) days applied for the actual number of days that the relevant
Borrowing is outstanding and bears interest at the Balance Adjusted Rate (i.e.,
on the 365/360 -- 366/360 in a leap year -- day basis). Each determination by
the Agent of a Balance Adjusted Rate may be computed using any reasonable method
and, absent manifest error, shall be conclusive and binding.
"BAR FLOATING RATE TRANCHE" means each portion of the principal
balance of the Loan bearing interest at any time at the Balance Adjusted Rate.
"CEILING RATE" means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas law
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that applicable Texas law establishes the Ceiling Rate, the Ceiling Rate
shall be the "weekly ceiling" (as defined in Section303 of the Texas Finance
Code -- the "TEXAS FINANCE CODE" -- and Chapter 1D of Title 79, Texas Rev. Civ.
Stats. 1925 -- "CHAPTER 1D", as amended, respectively) for that day. Any Lender
may from time to time, as to current and
32
future balances, implement any other ceiling under Chapter One by notice to the
Company, if and to the extent permitted by, Chapter 1D.
"CHAPTER 1D" is defined in the definition of "Ceiling Rate".
"CHASE TEXAS BALANCES" means, for any calendar month, the average
aggregate outstanding principal balances of the Senior Credit Notes (including
the Swing Line Note) held by Chase Texas.
"EURODOLLAR RESERVE REQUIREMENTS" means for the time that each LIBOR
Floating Rate Tranche is outstanding and for the Fixed Rate Interest Period for
each Fixed Rate Tranche, respectively, the stated maximum rate (expressed as a
decimal fraction) for all reserves required to be maintained during that time or
period (including basic, supplemental, marginal and emergency reserves) against
"eurocurrency liabilities", as defined in Regulation D, all as specified by any
Governmental Authority, including those imposed under Regulation D. Each
determination of Eurodollar Reserve Requirements by the Agent may be computed
using any reasonable method and, absent manifest error, shall be conclusive and
binding.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for that
day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three (3) federal funds
brokers of recognized standing selected by the Agent. If for any reason the
Agent shall determine (and its determination shall be conclusive absent manifest
error) that it is unable to ascertain for any reason -- including the Agent's
inability or failure to obtain sufficient quotations in accordance with the
immediately preceding sentence -- the Federal Funds Effective Rate for any day,
then for each such day that such circumstances exist, the Federal Funds
Effective Rate shall be deemed to be equal to the Prime Rate for that day minus
one percent (-1%). Any rate of interest based on the Federal Funds Effective
Rate shall be (a) computed on the basis of a 360-day year applied for the actual
number of days for which the principal amount to which it applies is outstanding
and bears interest in accordance with this Agreement at such rate of interest
based on the Federal Funds Effective Rate (i.e., on the 365/360 -- 366/360 in a
leap year -- day basis) and (b) adjusted as of the effective date of each change
in the Federal Funds Effective Rate.
"FIXED RATE" means an Adjusted LIBOR Fixed Rate duly elected by the
Company to apply to any portion of the principal balance of the Loan for a
specified Fixed Rate Interest Period in accordance with SECTION 5.2.
"FIXED RATE INTEREST PERIOD" means, with respect to a Fixed Rate
Tranche, a period of from two (2) days to sixty (60) days commencing:
o on the date of such Fixed Rate Tranche's initial establishment by
the Company's election made in accordance with SECTION 5.2, or
o on the last day of the immediately preceding Fixed Rate Interest
Period in the case of a rollover to a successive Fixed Rate Interest Period,
and ending from two (2) days to sixty (60) days thereafter, as validly elected
by the Company in accordance with SECTION 5.2; provided that (i) any Fixed Rate
Interest Period that would otherwise
33
end on a day that is not a Business Day shall be extended to the next succeeding
Business Day unless that day is in a different calendar month, in which case the
Fixed Rate Interest Period shall instead end on the last Business Day before the
non-Business Day when it would otherwise end and (ii) no Fixed Rate Interest
Period shall ever extend beyond the Maturity Date.
"FIXED RATE TRANCHE" means each portion of the principal balance of
the Loan bearing interest at any time at a Fixed Rate.
"FLOATING RATE" means either the ABR Floating Rate that applies, or
any Adjusted LIBOR Floating Rate or the Balance Adjusted Rate duly elected by
the Company to apply, to any portion of the principal balance of the Loan in
accordance with SECTION 5.2, as the context requires.
"FLOATING RATE TRANCHE" means each portion of the Loan bearing
interest at any time at a Floating Rate.
"FREE ADJUSTED BALANCES" means, for any calendar month, that month's
daily average of all collected balances in all demand deposit accounts
maintained by the Company (or maintained by the Company's Affiliates at the
Company's request) with Chase Texas during that month (although neither the
Company nor any of its Affiliates shall have any obligation whatsoever to
maintain any deposits with Chase Texas) less amounts required and applied (or to
be applied) (a) to satisfy reserve and deposit insurance requirements allocable
to that month and (b) to compensate Chase Texas for (i) services rendered to the
Company or any of its Affiliates for that month if and to the extent, if any,
that such services are not separately billed and paid for, or (ii) any agreed
reductions in interest, fees and/or other normal banking charges other than
interest and fees that are part of the Obligations to Chase Texas, with each
element calculated in accordance with Chase Texas' system of allocating reserve
and deposit insurance requirements, charges for services and reductions in other
normal banking charges, and as that system may be changed from time to time
without notice.
"INTEREST RATE OPTION" means whichever of the ABR Floating Rate, an
Adjusted LIBOR Fixed Rate or the Balance Adjusted Rate the Company has validly
selected to apply to a portion of the outstanding principal of the Loan, or for
Loan principal for which the Company has not validly made any other interest
rate selection, the Adjusted LIBOR Floating Rate.
"INTEREST RATE SELECTION CONFIRMATION" is defined in SECTION 5.2.
"LIBOR" means, for each day, the rate of interest per annum that is
equal to the rate per annum determined by The Chase Manhattan Bank (an Affiliate
of Chase Texas) to be the average of the interest rates available to it in
accordance with the then-existing practices in the Interbank Market in London,
England at approximately 11:00 a.m. London time for that day for the offering to
The Chase Manhattan Bank by leading dealers in such Interbank Market for
delivery on that day of U. S. Dollar deposits -- or if for any reason the Agent
cannot determine such rate for any day, then LIBOR for that day shall be the
rate of interest per annum that is equal to the arithmetic mean of the rates
appearing on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on that
day for the offering by such institutions as are named therein to prime banks in
the Interbank Market in London, England, for delivery on that day of U.S. dollar
deposits:
o where the term is used in respect of a LIBOR Floating Rate, of one
(1) month United States dollar deposits of One Million Dollar ($1,000,000); or
34
o where the term is used in respect of a Fixed Rate, each for a term
and in an amount that are fairly comparable, respectively, to the term of the
relevant Fixed Rate Period and the amount of the relevant Fixed Rate Tranche.
The Agent's determination of LIBOR for each day shall be conclusive and binding,
absent manifest error. For purposes of this Agreement and all Senior Credit Line
Notes and other Facilities Papers, LIBOR shall fluctuate upward and downward
automatically and concurrently with day-to-day changes in such arithmetic mean,
and in the amount of the change.
"LIBOR BUSINESS DAY" means any Business Day when there is interbank
trading of U.S. dollar deposits in London between banks.
"PAST DUE RATE" means, on any day, a rate per annum equal to the
lesser of (i) the Prime Rate for that day plus two percent (+2%) per annum or
(ii) the Ceiling Rate for that day.
"PRIME RATE" means, on any day, the prime rate for that day as
announced by Chase Texas. The Prime Rate is a reference rate and does not
necessarily represent Chase Texas' best or lowest rate or a favored rate, and
Chase Texas disclaims any statement, representation or warranty to the contrary.
Any rate of interest based on the Prime Rate shall be adjusted as of the
effective date of each change in the Prime Rate. Should any issue ever arise in
any forum or under any circumstances as to the amount of the Prime Rate for any
then-current or past day, a certificate of Chase Texas' chief credit officer
stating the Prime Rate for that day shall conclusively establish what the Prime
Rate was for that day, absent manifest error.
"REUTERS SCREEN LIBO PAGE" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service or such other internationally
recognized service as the Agent shall select from time to time, or such other
page, if any, as shall replace the LIBO page on any such selected service for
the purpose of displaying London interbank offered rates of major banks.
"STATED RATE" means:
o for each tranche of each Borrowing outstanding on any day, the
Interest Rate Option selected (or deemed selected pursuant to SECTION 5.2(A))
for (i) that tranche, (ii) that day and (iii) Advances of that type
(Single-family Warehouse Advances, P&I Subline Advances, Servicing Subline
Advances or Recoveries Subline Advances), computed in accordance with the
provisions of this Agreement;
o for each such Borrowing as a whole, the weighted average of the
Interest Rate Options applicable to each of its constituent tranches; and
o for the Loan as a whole, the weighted average of the Stated Rates
applicable to each outstanding Borrowing;
provided that if on any day the applicable rate for any such tranche, any such
Borrowing as a whole or the Loan as a whole shall exceed the relevant Ceiling
Rate for that day, then the Stated Rate therefor shall be reset to equal the
Ceiling Rate on that day and shall be set to equal the Ceiling Rate for each day
thereafter until the total amount of interest accrued at the Stated Rate on the
unpaid balance of that tranche, that Borrowing or the Loan (as applicable)
equals the total amount of interest that would have accrued on it if there were
no Ceiling Rate.
35
1.4 Other Definitional Provisions.
(a) Accounting terms not otherwise defined shall have the
meanings given them under GAAP.
(b) Defined terms may be used in the singular or the
plural, as the context requires.
(c) Except where otherwise specified, all times of day used
in the Facilities Papers are local times in
Houston, Texas.
(d) Wherever the word "including" or a similar word is used
in the Facilities Papers, it shall be read as
if it were written, "including by way of example but without in any way limiting
the generality of the foregoing concept or description".
2. THE LENDERS' COMMITMENTS
2.1 The Lenders' Commitments to Lend. Subject to the terms and conditions of
this Agreement and provided no Default or Event of Default has occurred that the
Agent has not declared in writing to have been cured or waived (or, if one has
occurred and not been so declared cured or waived, if all of the Lenders, in
their sole discretion and with or without waiving the Default or Event of
Default, have elected in writing that lending under this Agreement shall
continue nonetheless) the Lenders agree to make revolving credit Advances to the
Company under the Sublines before the Termination Date, which the Company may
borrow, repay and (having repaid) reborrow in aggregate principal amounts
outstanding on any day of up to the respective Sublimits and, in the aggregate,
up to the Aggregate Committed Sum, for that day. The Lenders' respective
Commitments and their respective Subline Funding Limits for each Subline are set
forth on SCHEDULE LC in effect for that day, as it may have been amended or
restated pursuant to this Agreement. The fractions to be applied to determine
the respective Funding Shares of the Lenders that are parties to this Agreement
on the Effective Date are the fractions of each Advance set forth opposite the
Lenders' respective names on SCHEDULE FS in effect for that day, as it may have
been amended or restated pursuant to this Agreement. If and when some or all of
the Lenders then party to this Agreement agree in writing to change their
Committed Sums, or when a new Lender becomes party to this Agreement, the Agent
shall execute an updated SCHEDULE FS reflecting the Funding Shares of all
Lenders then in effect and deliver it to the Company and the Lenders, and that
updated SCHEDULE FS shall thereupon be substituted for and supersede the prior
SCHEDULE FS. Each Lender shall be obligated to fund only that Lender's own
Funding Share(s) of any Advance requested, and no Lender shall be obligated to
the Company or any other Lender to fund a greater share of any Advance. No
Lender shall be excused from funding its applicable Funding Share(s) of any
Advance merely because any other Lender has failed or refused to fund its
relevant Funding Share(s) of that or any other Advance. If any Lender fails to
fund its Funding Share(s) of any Advance under any Facility, the other Lenders
who are willing to do so shall have the right (but no obligation) to do so in
the proportion that the Commitment of each bears to the sum of the Commitments
of all Lenders that have funded (or are funding) their own Funding Shares of
that Advance and that are willing to fund part of the Funding Share(s) of such
Lender that so failed to fund, and regardless of whether the other Lenders fund
the Funding Share(s) of the Lender who has failed to fund, the respective
ownership interests of the Lenders in the Loan shall be adjusted as provided in
the definition of "Pro Rata". All Advances under this Agreement shall constitute
a single debt and all of the Collateral shall be security for all of
36
the Senior Credit Line Notes and the Obligations. If the unpaid balance of the
Loan should ever exceed the Aggregate Committed Sum, the Maximum Committed
Amount or any other limitation set forth in this Agreement, such excess shall
nevertheless constitute part of the Obligations that are secured by the
Collateral and entitled to all benefits thereof.
2.2 Request for Increase in Maximum Committed Amount. If the Company shall
request in writing to the Agent an increase in the Maximum Committed Amount to a
specified amount up to Four Hundred Million Dollars ($400,000,000), the Agent
shall use reasonable and good faith efforts to obtain increased Commitments from
existing Lenders, new Commitments from prospective new Lenders or such
combination thereof as the Agent shall elect, to achieve such requested
increase; provided that (i) the Agent shall first offer the opportunity to the
then-existing Lenders to proportionately increase their Commitments before
offering prospective new Lenders the opportunity to join the syndicate of
Lenders, and will next offer the opportunity to the then-existing Lenders who
have agreed to increase their Commitments to further proportionately increase
them to include any Commitment increase offered to but not accepted by any of
the other then-existing Lenders, (ii) such written request by the Company is
delivered to the Agent at least forty-five (45) days before the requested
effective date of the increase and (iii) no Default has occurred that has not
been cured before it has become an Event of Default, and no Event of Default has
occurred that the Agent has not declared in writing to have been waived or
cured. If an increase in the Maximum Committed Amount is achieved, then (i) the
Pro Rata ownership interest in the Loan of each Lender (if any) that does not
proportionately increase its Commitment shall automatically be reduced and
adjusted proportionately and (ii) each of SCHEDULES LC, FS and MAC shall be
updated and the updates executed and delivered by the Agent to each of the
Company and the Lenders and, effective as of the date specified on such updates,
shall automatically supersede and replace each then-existing corresponding
Schedules for all purposes.
2.3 Expiration or Termination of the Commitments. Unless extended in writing or
terminated earlier in accordance with this Agreement, the Lenders' Commitments
to lend under this Agreement and the other Facilities Papers (including Chase
Texas' Swing Line Commitment) shall automatically expire at the close of
business on the Termination Date, without any requirement for notice or any
other action by the Agent, any of the Lenders or any other Person.
2.4 Advances Outstanding May Not Exceed Limits. On any day, the aggregate amount
of Advances outstanding under (i) the Loan shall in no event exceed the
Aggregate Committed Sum for that day or (ii) any Subline shall in no event
exceed either (x) the Subline Limit for that Subline or (y) that Subline's
Borrowing Base for that day. If any such excess shall exist on any day and for
any reason, the Company shall immediately repay it.
2.5 Advances May Be Used Only for Specific Purposes. The Company may use
Advances proceeds (including Swing Line Advances proceeds) only for the stated
purpose(s) for which they were requested and may request Advances only for the
following purposes:
o Single-family Warehouse Advances shall be used solely to fund or
acquire Eligible Mortgage Loans concurrently Pledged to the Agent.
o P&I Advances Subline Advances shall be used solely to finance the
Company's cash advances that produce Eligible P&I Advances Collateral
concurrently Pledged to the Agent. The Company shall request P&I Advances
Subline Advances fundings to be made -- and shall accept fundings of Advances to
produce P&I Advance Receivables -- only on or after the Business Day
37
that the related P&I Advance is made by the Company, and in any event not on any
of the fifth (5th) through the ninth (9th) calendar days of any calendar month
(except that the Company may request and accept the initial P&I Advances Subline
Advances funding to finance its P&I Advances that are outstanding on the date of
that initial funding).
o Servicing Advances Subline Advances shall be used solely to finance
the Company's cash advances made on or before the date of the requested
Borrowing and that produce Eligible T&I Advances Collateral or Eligible
Enforcement Advances Collateral Pledged to the Agent by the Company on or before
the date of the Borrowing.
o Recoveries Subline Advances shall be used solely to finance (a)
Single-family Mortgage Loans (1) originated or purchased by the Company but
either (i) was not subsequently sold to an investor, or (ii) was sold to an
investor but was subsequently repurchased by the Company due to underwriting
errors, delinquencies or breach of representations or warranties made in
connection with such sale or (2) purchased by the Company out of a pool of
Serviced Loans, or from a Whole Loan investor for whose Mortgage Loans the
Company is a Servicer, pursuant to the Company's (or an Affiliate's) obligation
or election as Servicer to do so, each of which Mortgage Loans is Pledged to the
Agent, or to finance such unmarketable Single-family Mortgage Loans and other
mortgage banking-related Collateral as shall be approved by the Agent on a
case-by-case basis and as shall be Pledged to the Agent.
2.6 When P&I Advances Subline Advances Are Available. The Company may not
request that funding of a P&I Advances Subline Advance be made (or obtain
funding thereof) on any of the fifth (5th), sixth (6th), seventh (7th), eighth
(8th) or ninth (9th) calendar days of any calendar month.
2.7 Swing Line Commitment. In addition to its Commitment under SECTION 2.1,
Chase Texas agrees to fund revolving credit Swing Line Advances to the Company
in principal amounts which do not on any day exceed the Swing Line Limit for the
purpose of initially funding requested Borrowings under the Sublines.
2.8 Swing Line Borrowings. The Company shall have the right to borrow and
reborrow under the Swing Line:
(a) only if the Swing Line Borrowing fully qualifies in all respects
for funding as an ordinary Borrowing under this Agreement;
(b) provided that no Default has occurred that has not been cured
before it has become an Event of Default, and no Event of Default has occurred
that the Agent has not declared in writing to have been waived or cured;
(c) so long as the Swing Line Limit is not exceeded;
(d) provided that the Request for Borrowing against which the Swing
Line Borrowing is to be funded is received by Chase Texas by no later than 4:00
PM on the Business Day such Borrowing is to be funded; and
(e) provided that neither the Company nor Chase Texas is aware of any
reason why the Borrowing requested by the Request for Borrowing against which
the Swing Line Borrowing is to be funded cannot or will not be fully funded by
the Lenders on the fifth (5th) Business Day (or such
38
other Business Day as shall be designated by Chase Texas) following the Business
Day on which the Request for Borrowing is received by Chase Texas.
All Swing Line Borrowings shall be evidenced by the "SWING LINE NOTE" of the
Company dated the date of this Agreement, payable to the order of Chase Texas
and in the form attached as EXHIBIT A-2 and shall bear interest from the date
funded until the date repaid (and accrued interest on them shall be due and
payable) at the same rate(s) and on the same days as would be applicable if such
Swing Line Borrowings had been funded by the Lenders, instead of having been
funded by Chase Texas alone as Swing Line Borrowings.
3. GENERAL BORROWING PROCEDURES
3.1 Requests for Borrowings. Each Request for Borrowing shall constitute a
request for both (1) a Swing Line Borrowing to be funded by Chase Texas on the
Business Day on which the Agent receives the Request for Borrowing before 4:00
PM (Requests for Advance received by the Agent after 4:00 PM shall be deemed
received when Chase Texas opens for commercial banking business on the next
succeeding Business Day) and (2) the Borrowing actually requested by the text of
the Request for Borrowing to be funded by the Lenders on the Swing Line
Borrowing Due Date for that Swing Line Borrowing and to refinance that Swing
Line Borrowing.
3.2 Initial Funding of Advances under the Swing Line; Refinancing of Swing Line
Advances. Chase Texas shall fund each Borrowing requested by a Request for
Borrowing by making a Swing Line Advance on the same Business Day the Borrowing
is requested if the requirements of SECTION 2.8 are satisfied (Chase Texas shall
have no obligation to fund that Borrowing as a Swing Line Advance if and to the
extent that such requirements are not satisfied, although it shall be funded on
the next succeeding Business Day either (if Chase Texas so elects) as a Swing
Line Advance or (otherwise) as a regular Advance by the Lenders, if and to the
extent that all conditions to its funding are then satisfied -- to the extent
that satisfaction of any of the conditions to funding a requested Borrowing as a
Swing Line Advance is within the Agent's control, the Agent agrees to use
reasonable efforts to cause them to be satisfied). Each Swing Line Borrowing
shall be repaid on its Swing Line Borrowing Due Date by the Agent's paying over
to Chase Texas out of the Note Payment Account, and Chase Texas' applying
against such Swing Line Borrowing, an amount equal to the proceeds of the
Borrowings funded by all of the Lenders on that day against the same Request for
Borrowing that was initially funded by such Swing Line Advance. If at the time
such Swing Line Advance was funded, Chase Texas reasonably believed that no
Default or Event of Default had occurred and was then continuing and that all of
the other conditions set forth in SECTION 2.8 for such Swing Line Advance were
satisfied in all material respects, the other Lenders shall be unconditionally
and irrevocably obligated to timely fund their respective Funding Shares of the
Advance that was so initially funded as a Swing Line Advance, to repay to Chase
Texas (and thereby refinance) on the relevant Swing Line Borrowing Due Date all
of that Swing Line Advance except only Chase Texas' Funding Share of it,
irrespective of whether in the meantime any Default or Event of Default has
occurred or been discovered, and irrespective of whether in the meantime some or
all of the Lenders' Commitments have lapsed, expired or been canceled,
rescinded, terminated with or without cause, waived, released or excused for any
reason whatsoever, so that (i) the principal of the Swing Line is paid down by
the required amount on each Swing Line Borrowing Due Date -- all accrued
interest on Swing Line Borrowings shall be due and payable by the Company to the
Agent (for distribution from the Note Payment Account to Chase Texas) on the
later of (x) the fifteenth (15th) day of the next month (with the first interest
payment due May 15, 1998) or (y) two (2) Business Days after the Agent bills the
Company for such accrued interest, (ii) all Swing Line
39
Borrowings are converted to Borrowings from the Lenders under the applicable
Subline(s) and (iii) those Borrowings are evidenced by the Senior Credit Notes
other than the Swing Line Note.
3.3 Requests for Borrowing Due by 4 PM. A separate Request for Borrowing shall
be made for each Borrowing, which, when appropriately completed and with
appropriate schedules attached, may include requests for Advances under one or
more Sublines and/or Wet Warehousing Advances. On each Business Day that (i) the
Agent shall have received a Request for Borrowing before 4:00 PM and (ii) if
additional Collateral is required to support the Borrowing as discussed in
SECTION 3.4, the Agent shall have received the Submission List(s), and the
Custodian shall have received the Basic Papers for any items of new Debt
Collateral, required by the terms of SECTION 3.4 -- the Agent shall fund the
requested Borrowing as a Swing Line Advance, and shall thereafter give notice to
each Lender of that requested Borrowing and that Lender's Funding Share(s) of
the requested Advance before 2:00 PM on the Swing Line Borrowing Due Date for
that Swing Line Advance, and each Lender shall cause its Funding Share(s)
thereof to be transferred to the Agent within two (2) hours after receiving such
notice from the Agent or by 4:00 PM, whichever is later, so that the Agent
receives it in good collected Houston funds on that same Business Day, and the
Agent shall deposit those shares of the Advance into the Note Payment Account
when received and shall repay the related Swing Line Advance from the Note
Payment Account (or, if a Lender other than Chase Texas advises the Agent by
telephone and confirms the advice by telecopy that the Lender has placed all of
its Funding Share(s) on the federal funds wire to the Agent, the Agent shall
continue to keep the Swing Line Advance outstanding to the extent of that
Lender's Funding Share(s) so wired until the Agent has actually received such
share -- whereupon the Agent shall deposit such share when received into the
Note Payment Account and repay that still-outstanding portion of the Swing Line
Advance from the Note Payment Account -- except that the Agent shall have no
obligation to continue such portion of any Swing Line Advance outstanding if and
to the extent, if any, that doing so would cause the amount funded by the Agent
and outstanding under any one or more Sublines to exceed either the Swing Line
Limit or the Agent's Subline Funding Limit for any Subline.)
3.4 Submission List(s) and New Collateral Papers (If Any) Due by 12:30 PM or 4
PM on the Day of a Requested Borrowing. Unless the relevant Borrowing Base(s)
(each) already has sufficient Collateral Value to support both (i) the requested
Borrowing and (ii) all other outstanding Borrowings under the relevant
Subline(s), by 12:30 PM (in order for the requested Borrowing to qualify for
funding on that same day by all of the Lenders, whether or not it is actually
funded as a Swing Line Advance) or by 4:00 PM (to qualify only for Swing Line
funding, if and to the extent that Swing Line funding is available therefor) on
the Business Day on which the Company requests that an Advance be funded, the
Company shall (1) deliver to the Agent one or more signed Submission Lists
describing the additional Collateral then being pledged to the Agent and (2)
except for Wet Warehousing Advances, cause to be delivered to the Custodian all
of the Basic Papers relating to the items of new Debt Collateral listed in those
Submission List(s). If, after giving effect to a requested Advance, the
outstanding Advances under any Subline would exceed its Borrowing Base, or if
the Agent or the Custodian determines that any such Submission List or Basic
Papers submitted to it are incomplete or incorrect in any material respect,
then:
(a) the Agent may withhold the entire Advance until the Company shall
have demonstrated to the Agent's reasonable satisfaction that the Submission
Lists submitted -- and, for Debt Collateral, the Company shall have demonstrated
to the Custodian's reasonable satisfaction that all required Basic Papers
submitted -- are in fact not (or are no longer) incomplete or incorrect in any
material respect; or
40
(b) in the case of any Borrowing Base insufficiency, unless the
Company instructs the Agent in writing not to fund any of the requested
Borrowing, and subject to the provisions and limitations of SECTIONS 2.1 and
2.7, the Agent will fund such lesser amount(s) as the Agent shall determine is
(are) supported by the relevant Borrowing Base(s) and will notify the Company of
such insufficiency, including the Agent's calculation of such insufficiency set
forth in reasonable detail.
3.5 If a Request for Borrowing or New Collateral Papers are Received Late;
Waiver of Claim for Any Late Funding. If either a Request for Borrowing or the
Basic Papers for the new Collateral (other than Bridged Loans) and its related
Submission List(s) are submitted late, the Agent will use reasonable efforts to
make the requested Advance as a Swing Line Advance on the same day it is
requested, although neither the Company nor any other Person shall have any
claim or cause of action against the Agent or any of the Lenders if that funding
(or any other funding) does not occur on the same day it is requested.
4. THE SENIOR CREDIT LINE NOTES
To evidence the Advances to be made by the Lenders pursuant to this
Agreement, the Company agrees to execute and deliver to each Lender a Senior
Credit Note in a face principal amount equal to that Lender's Committed Sum and
dated the same date as this Agreement (or dated with such other appropriate date
as shall be agreed upon by the Company, that Lender and the Agent if the
effective date of that Lender's joinder in this Agreement is after its Effective
Date), and to evidence the Swing Line Advances to be made by Chase Texas, the
Company agrees to execute and deliver to Chase Texas the Swing Line Note in face
principal amount equal to the Swing Line Limit. If any Lender's Committed Sum
shall be increased for any reason after the Company shall have issued that
Lender its Senior Credit Note, then the Company agrees to execute and deliver to
that Lender upon its request a renewal Senior Credit Note in a face principal
amount equal to the portion of that Lender's new Committed Sum and dated the
same date that such applicable Committed Sum change becomes (or became)
effective.
5. INTEREST, PRINCIPAL AND FEES PAYMENTS
5.1 Interest. Each Borrowing shall bear interest on its advanced and unpaid
principal balance at the interest rate determined in accordance with SECTION 5.2
from the date of the Borrowing until due or repaid (whichever occurs first), and
such interest shall be calculated through the last day of each month and shall
be due and payable monthly in arrears on the later of (i) the fifteenth (15th)
day of the next month (with the first interest payment due April 15, 1998) or
(ii) two (2) Business Days after the Agent bills the Company for such accrued
interest, and all accrued interest then unpaid shall be fully, finally and
absolutely due and payable on the Maturity Date. All past due principal,
interest, fees or other sums shall bear interest at the Past Due Rate from their
respective due dates until paid, or at such lesser rate (if any) -- although not
less than the Stated Rate -- as the Agent shall elect to be applicable for any
one or more days of such period. Without duplication, from the earlier of the
Maturity Date or the date of the occurrence (if any) of an Event of Default
described in SECTION 11.1(F), 11.1(G), 11.1(K) or 11.1(O), all advanced and
unpaid Loan principal shall bear interest at the Past Due Rate, or at such
lesser rate (if any) -- although not less than the Stated Rate -- as the Agent
shall elect to be applicable for any one or more days of such period. Except as
otherwise specified in this Agreement or any relevant Facilities Papers,
interest on any Borrowing is to be calculated on the basis of the actual number
of days elapsed on the basis of a year of 360 days (i.e., on the 365/360 -- or
366/360 in a leap year -- day basis), unless that would cause the Ceiling Rate
for any day to be exceeded, in which event and to the extent necessary to
eliminate or minimize
41
that result, interest shall be calculated on the 365/365 -- or 366/366 in a leap
year -- day basis. All interest rate determinations and calculations by the
Agent, absent manifest error, shall be conclusive.
5.2 Interest Rates. The unpaid amount of each Borrowing shall bear interest from
the date such Advance is funded until repaid in full at the simple interest rate
(compounded annually) specified by this Section for the Interest Rate Option
selected (or deemed to have been selected) by the Company pursuant to this
Section to apply to such Borrowing. The Company may select a single Interest
Rate Option for a Borrowing or different Interest Rate Options for the
constituent portions (tranches) of the Borrowing, either at the time the
Borrowing is requested or from time to time thereafter, although on any
particular day, no portion of the Loan principal shall be included in more than
one tranche and only one Interest Rate Option shall be applicable for that day
to any particular tranche. In order to select an Interest Rate Option, the
Company shall give the Agent telephonic notice not later than 10:00 AM on -- or
for a Fixed Rate Option selection, not later than 10:00 AM two (2) LIBOR
Business Days before -- the effective date for which an Interest Rate Option is
being selected, specifying:
(1) the Business Day (which must be a LIBOR Business Day for Fixed
Rate Borrowings) when the selection is to become effective;
(2) the principal amount of the Borrowing for which the selection
is being made (provided that the Company may select the Balance Adjusted Rate
Option without specifying a principal amount, after which the Agent shall apply
it to Loan principal equal to the Free Adjusted Balances from time to time
outstanding); and
(3) the Interest Rate Option selected and, if a Fixed Rate is being
selected, its Fixed Rate Interest Period;
The Company shall confirm the telephonic notice in writing by not later than the
close of business on the same day, by forwarding to the Agent a completed and
signed confirmation (the "INTEREST RATE SELECTION CONFIRMATION") in the form of
EXHIBIT G. Confirmation shall be made by telecopy and a signed original shall be
mailed the same day.
(a) If as to any portion of any Borrowing (whether to be made or
outstanding) no other Interest Rate Option is selected by the Company in
accordance with SECTION 5.2, or if after an Interest Rate Option is selected by
telephonic notice, an Interest Rate Selection Confirmation for it is not sent by
the Company to the Agent on the same day, then the Company shall be conclusively
deemed to have selected the Adjusted LIBOR Floating Rate for that portion, and
thereafter (until a different Interest Rate Option is duly selected and
confirmed in accordance with this SECTION 5.2), the outstanding principal
balance of that portion that is not past due shall bear interest at the Adjusted
LIBOR Floating Rate.
(b) All past due amounts shall bear interest as provided in SECTION
5.2(D)(1).
(c) The Company's right to select the Balance Adjusted Rate is
subject to the following conditions, terms and limitations:
(1) the Balance Adjusted Rate shall not be applicable to (i) any
Loan principal outstanding on any day in excess of the Free Adjusted Balances
for that day, (ii) any past due Loan
42
principal or (iii) after the occurrence of an Event of Default (unless and until
the Event of Default has been declared in writing by the Agent to have been
cured or waived), any Loan principal;
(2) to the extent that the portion of Loan principal designated to
bear interest at the Balance Adjusted Rate exceeds the Chase Texas Balances, the
Agent will pay to the Lenders other than Chase Texas, ratably, interest on such
excess at a rate per annum equal to the Applicable LIBOR/BAR Margin plus the
Federal Funds Effective Rate (and the Lenders hereby agree that payment of such
interest at that rate is satisfactory); provided that if doing so would violate
Regulation Q, on demand made by the Agent -- which demand the Agent may make on
its own initiative and will make upon the request of any Lender -- the Company
shall gross-up and pay to the Agent the interest on that designated portion so
that the Agent will have the funds to pay the interest due to the other
Lender(s) without violating Regulation Q. In no event will the Agent ever be
obligated to make any payment that would violate Regulation Q;
(3) without the express consent of Chase Texas, the Company may not
select the Balance Adjusted Rate if a Default has occurred that has not been
cured or if an Event of Default has occurred that has not been declared in
writing by the Agent to have been cured or waived; and
(4) if the Agent, acting in its sole discretion, determines that
application or use of the Balance Adjusted Rate does or would violate any Legal
Requirement or any rule, regulation, guideline or directive of any Governmental
Authority applicable to any Lender or the Agent, whether or not having the force
of law, then the Agent shall suspend the availability of the Balance Adjusted
Rate Option, and the portion of Loan principal that would otherwise bear
interest at the Balance Adjusted Rate shall instead bear interest from the
effective date of such suspension at the Adjusted LIBOR Floating Rate, unless
and until the Lender shall thereafter declare in writing that it has made a
contrary determination.
(d) From the date of occurrence of any Event of Default and until it
and its material consequences (if any) have been wholly cured:
(1) each Floating Rate Tranche shall bear interest until paid in
full at the Past Due Rate; and
(2) each Fixed Rate Tranche shall bear interest through the last
day of the applicable Fixed Rate Interest Period at the lesser of (x) the rate
otherwise applicable to such Fixed Rate Tranche plus three percent (+3%) per
annum or (y) the Ceiling Rate, and thereafter at the Past Due Rate.
(e) All Fixed Rate Tranche elections are subject to the following
limitations:
(1) each Fixed Rate Tranche shall have a Fixed Rate Interest Period
of from two (2) days to sixty (60) days, as elected by the Company and specified
in its telephonic notice of such Interest Rate Option selection and its Interest
Rate Selection Confirmation;
(2) if a Fixed Rate Interest Period would end on a day that is not
a Business Day, such Fixed Rate Interest Period shall instead end on the next
succeeding Business Day, unless such next succeeding Business Day is in a
different calendar month, in which event the Fixed Rate Interest Period shall
instead end on the immediately preceding Business Day;
43
(3) each Fixed Rate Tranche shall bear interest from and including
the first day of its Fixed Rate Interest Period to but excluding the last day of
such Fixed Rate Interest Period at the interest rate determined by the Agent
pursuant to this Agreement to be applicable to such Fixed Rate Tranche;
(4) no Fixed Rate Interest Period may be elected that would end
after the Maturity Date;
(5) the Company may have no more than three (3) Fixed Rate Tranches
outstanding at any one time;
(6) each Fixed Rate Tranche shall be in the minimum amount of Ten
Million Dollars ($10,000,000);
(7) the Company may not select a Fixed Rate Tranche if a Default
has occurred that has not been cured or if an Event of Default has occurred that
has not been declared in writing by the Agent to have been cured or waived;
(8) if the Company selects a Fixed Rate Tranche for any portion of
a Borrowing that is funded as a Swing Line Loan, then the Company shall be
deemed to have selected a LIBOR Floating Rate Tranche for that portion of such
Borrowing for the time that the Borrowing is outstanding as a Swing Line Loan,
and to have selected a Fixed Rate Tranche for the Fixed Rate Interest Period
designated by the Company, with that Fixed Rate Interest Period commencing,
however, on the first day that it is funded as an Advance by all Lenders;
(9) if any payment of all or any part of a Fixed Rate Tranche
occurs on a day that is not the last day of the applicable Fixed Rate Interest
Period, whether because of acceleration, prepayment or another cause, the
Company will indemnify the Lenders and the Agent for any reasonable loss or cost
they incur resulting from such prepayment, including any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Fixed Rate
Tranche (such loss or cost to be calculated by each Lender so affected and its
calculation to be conclusive and binding, absent manifest error); and
(10) if the Agent, acting in its sole discretion, determines:
(i) that maintenance of any Fixed Rate Tranche would violate
any Legal Requirement or any rule, regulation, guideline or directive of any
Governmental Authority applicable to any Lender or the Agent, whether or not
having the force of law; or
(ii) prior to the commencement of a Fixed Rate Interest Period
after exerting reasonable efforts to obtain them, that deposits of a type and
maturity appropriate to match fund a Fixed Rate Tranche are not available to any
one or more of the Lenders; then the Agent shall suspend the availability of the
Interest Rate Option for any Fixed Rate Tranche affected by such determination
and any Fixed Rate Tranche outstanding under every affected Interest Rate Option
shall automatically convert to the Adjusted LIBOR Floating Rate.
(f) From the date of occurrence of any Event of Default and until it
and its material consequences (if any) have been wholly cured:
44
(1) each Floating Rate Tranche shall bear interest until paid in
full at the Past Due Rate; and
(2) each Fixed Rate Tranche shall bear interest through the last
day of the applicable Fixed Rate Interest Period at the lesser of (x) the rate
otherwise applicable to such Fixed Rate Tranche plus three percent (+3%) per
annum or (y) the Ceiling Rate, and thereafter at the Past Due Rate.
(g) Interest shall be calculated through the last day of each month
and shall be due and payable monthly in arrears on the later of (x) the
fifteenth (15th) day of the next month (with the first interest payment due May
15, 1998) or (y) two (2) Business Days after the Agent bills the Company for
such accrued interest. On the Maturity Date all principal and accrued interest
then unpaid shall be finally due and payable without notice or demand.
5.3 Rate of Return Maintenance Covenant. If at any time after the date of this
Agreement, any Lender that is a bank determines that (a) any applicable law,
rule or regulation regarding capital adequacy has been adopted or changed since
February 15, 1998 or (b) its interpretation or administration by any
Governmental Authority, central bank or comparable agency has changed since
February 15, 1998 and determines that such change or such Lender's compliance
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on that
Lender's capital as a consequence of its obligations under this Agreement or any
of the other Facilities Papers to a level below that which that Lender would
have achieved but for such adoption, change or compliance (taking into
consideration the Lender's own capital adequacy policies) by an amount the
Lender deems to be material, then upon notice to the Company by that Lender or
the Agent summarizing the facts triggering the increase and calculations of the
increase, the interest rate on the principal of that Lender's portion of the
Loan funded and outstanding from time to time shall be increased to a rate
sufficient to provide that Lender with a rate of return on its capital equal to
that which would have been achieved but for such adoption, change or compliance
(taking into consideration that Lender's own capital adequacy policies), but in
no event to exceed the Ceiling Rate. In determining the increase in interest
rate required to achieve that result, each affected Lender may employ such
assumptions and make such allocations of costs and expenses fairly applicable to
the Loan as that Lender reasonably elects and may use any reasonable averaging
and attribution method. Any Lender claiming compensation under this Section
shall furnish the Company its certificate setting forth the amount or amounts
(calculated pursuant to the above-described methods) necessary to compensate the
Lender as specified in this Section.
5.4 Chief Credit Officer's Certificate Conclusive. The certificate of Chase
Texas' chief credit officer stating the Prime Rate, the Federal Funds Effective
Rate, the Floating Rate or the Fixed Rate applicable to one or more Advances,
the Past Due Rate and/or the Free Adjusted Balances in effect from time to time,
absent manifest error, shall be conclusive.
5.5 Principal. The Advances' outstanding principal amount shall be due and
payable in full without notice or demand on the Maturity Date. Before then, the
Company agrees to pay the following principal payments to the Agent immediately
upon the occurrence of the following events, in each case without notice or
demand but without duplication of payment:
(a) Promptly upon the Company's becoming entitled and able to collect
the proceeds of any sale or other disposition of Debt Collateral (including
proceeds of sales of Structured Securities
45
created from Debt Collateral), a principal amount equal to the amount so
collectable shall be due and payable by the Company to the Agent -- although,
pursuant to the provisions of SECTION 6.6, the Agent's security interest in such
Debt Collateral or its proceeds shall not be released unless and until the Agent
has received for deposit into the Note Payment Account the Redemption Amount for
such Debt Collateral -- and the Company shall cause the entirety of all
available Debt Collateral disposition proceeds to be paid to the Agent (or if
the Company receives them, the Company shall pay them over to the Agent), with
each such payment to be applied first against the principal of Borrowings
outstanding under the relevant Subline(s) -- the Single-family Warehouse Subline
and, if applicable, the Wet Warehousing Subline and with the remaining balance
(if any) to be transferred from the Note Payment account into the Company's own
account with Chase Texas (unless either (i) any payment of principal or interest
on the Obligations shall then be past due, in which event the Agent may first
apply such excess to pay such past due amount and transfer only the balance, if
any, remaining after such application to the Company's own account, or (ii) an
Event of Default has occurred that the Agent has not declared in writing to have
been either waived or cured, in which event the Agent shall hold such excess as
Collateral and apply it in accordance with the provisions of SECTION 11.5.
(b) Promptly after the Company collects any sum on or in respect of
any P&I Advances Collateral, the Company shall repay principal of P&I Advances
Subline Advances to the Agent in an amount equal to the lesser of (x) the amount
collected or (y) the balance of all P&I Subline Advances then outstanding.
(c) Each P&I Advances Subline Advance not sooner due pursuant to
SECTION 5.5(B) shall be due and payable on the fifth (5th) day of the calendar
month following the month in which such Advance was funded -- all outstanding
P&I Advances Subline Advances shall be due and payable on the fifth (5th) day of
each calendar month.
(d) As and when the Company collects any sums on or in respect of any
Servicing Advances Collateral, and no less often than weekly before the Maturity
Date nor later than six (6) days after their collection, the Company shall pay
to the Agent as a mandatory principal prepayment for Pro Rata distribution to
the Lenders and application to the Obligations in accordance with the other
provisions of this Agreement, an amount equal to the lesser of (i) the aggregate
amounts collected by the Company in respect of its Servicing Advances Collateral
less the sum of such collections previously remitted to the Agent or (ii) the
then-outstanding principal balance of all Servicing Subline Advances.
(e) Each Servicing Subline Advance not sooner due pursuant to SECTION
5.5(B) or SECTION 5.5(C) shall be due and payable three hundred sixty (360) days
after the day when such Advance was funded.
(f) Each Recoveries Subline Advance not sooner due pursuant to the
provisions of the definition of "Disqualifying Event" shall be due and payable
three hundred sixty (360) days after the day when such Advance was funded.
(g) As and when the Company collects any sums on or in respect of any
Recoveries Collateral, and no less often than weekly before the Maturity Date
nor later than six (6) days after their collection, the Company shall pay to the
Agent as a mandatory principal prepayment for Pro Rata distribution to the
Lenders and application to the Obligations in accordance with the other
provisions of this Agreement, an amount equal to the lesser of (i) the aggregate
amounts collected by
46
the Company in respect of its Recoveries Collateral less the sum of such
collections previously remitted to the Agent or (ii) the then-outstanding
principal balance of the Recoveries Subline Advances.
(h) If any Disqualifying Event occurs in respect of any item of
Collateral, unless the Borrowing Base in which such item of Collateral was
included still equals or exceeds the sum of all Borrowings outstanding under
that Borrowing Base's related Subline, the Company shall repay Loan principal to
the Agent in an amount -- or, unless an Event of Default has occurred that the
Agent has not declared in writing to have been cured or waived, furnish
substitute Collateral of the same type and having Collateral Value at least --
equal to that item's Collateral Value on the day when the first Advance under
that Subline was made after that item of Collateral was most recently Pledged to
the Agent.
(i) If for any reason on any day, the Borrowings outstanding under
any Subline exceed that Subline's Borrowing Base, then the Company shall repay
Loan principal to the Agent in an amount equal to such excess, unless both (i)
no Event of Default has occurred which the Agent has not declared in writing to
have been cured or waived and (ii) the Company shall have pledged substitute
Collateral of the same type and having Collateral Value at least equal to such
excess on or before three (3) Business Days after the Company first learned of
the existence of such excess.
5.6 Commitment Fee. The Company agrees to pay to the Agent, for the account of
the Lenders (and for the Agent to distribute to them), ratably according to
their respective Committed Sums, a cash commitment fee (the "COMMITMENT FEE") in
an amount equal to one-fourth percent (-1/4%) per annum of the Aggregate
Committed Sum for the period from the Effective Date to the Termination Date.
The Commitment fee shall be due and payable annually in advance on the Effective
Date and on each anniversary (if any) of the Effective Date before the
Termination Date. The Commitment Fee is compensation to each Lender for
committing to make funds available for revolving credit Advances on the terms
and subject to the conditions of this Agreement, and is not compensation for the
use or forbearance or detention of money, although this Section (as well as
every other Section of this Agreement) is subject to the provisions of SECTION
15.3. Each calculation by the Agent of the amount of the Commitment Fee shall be
conclusive, absent manifest error. The Company shall pay to the Agent on demand
any deficiency in payment by the Company of the Commitment Fee.
5.7 Agent's Fee. The Company agrees to pay to the Agent an agent's fee (the
"AGENT'S FEE") as provided for in the letter agreement between the Company and
the Agent executed substantially concurrently with this Agreement, as such
letter agreement may be supplemented or amended from time to time.
5.8 Prepayments. The Company shall have the right to prepay the outstanding
Borrowings in whole or in part, from time to time and without premium or
penalty; provided that prepayment (whether optional or mandatory) of Fixed Rate
Borrowings shall be subject to the provisions of SECTION 5.2(E)(9).
5.9 Payments.
(a) Except as otherwise specifically provided in this Agreement, all
payments under this Agreement, on the Senior Credit Notes (including the Swing
Line Note) and under the other Facilities Papers shall be paid (i) to the Agent
for deposit in the Note Payment Account, (ii) by not later than 2:00 PM on the
day when due (unless the Agent shall agree to a payment's being made
47
before a specific later deadline) and (iii) without set-off, counterclaim or
deduction, in lawful money of the United States of America in immediately
available funds at the office of the Agent, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, or by fed funds wire transfer to:
Chase Bank of Texas, Account number 0010-▇▇▇▇▇▇▇
National Association Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or
ABA number ▇▇▇▇-▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Further Credit -- Long Beach Mortgage Company Phone: (▇▇▇) ▇▇▇-▇▇▇▇ or ▇▇▇-▇▇▇▇
or at such other place as the Agent shall designate from time to time. Whenever
any payment to be made under this Agreement, any Senior Credit Note or any of
the other Facilities Papers shall be stated to be due on a day that is not a
Business Day, the due date for that payment shall be automatically extended to
the next day that is a Business Day, and with respect to principal, interest at
the applicable rate (determined in accordance with this Agreement) shall
continue to accrue during the period of such extension. Unless the Agent, acting
in its sole discretion, shall agree otherwise, funds received by the Agent after
2:00 PM on a Business Day shall be deemed for all purposes to have been paid by
the Company on the next succeeding Business Day, except that if, after so
deeming, any applicable Ceiling Rate would be exceeded, then solely for the
purpose of calculating interest accrued, such funds shall be deemed paid on the
date received.
(b) If and to the extent any payment is not made when due under this
Agreement, any Senior Credit Note (including the Swing Line Note) or any of the
other Facilities Papers, the Company authorizes the Agent and each Lender (for
the Pro Rata account and benefit of all of the Lenders) then or at any time
thereafter to charge any amounts so due and unpaid against any or all of the
Company's accounts with the Agent or any of the Lenders; provided that such
right to charge the Company's accounts shall not apply to any escrow, trust or
other deposit accounts designated as being held by the Company on behalf of
third party owners of the escrowed funds other than Affiliates of the Company.
(c) Any and all payments by the Company made pursuant to this
Agreement or under any Senior Credit Note or other Facilities Papers shall be
made free and clear of and without deduction for any and all present or future
Taxes. If the Company shall be required by law to deduct any Taxes from or in
respect of any sum payable pursuant to this Agreement or under any Senior Credit
Note or other Facilities Paper, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions, such Lender receives an
amount equal to the sum it would have received had no such deductions been made,
and (ii) the Company agrees to pay the Taxes to the relevant Governmental
Authority.
(d) Each payment received by the Agent in accordance with this
Agreement is valid and effective to satisfy and discharge the Company's
liability under the Facilities Papers to the extent of the payment.
5.10 Pro Rata Distribution of Payments. All payments and prepayments of the
Senior Credit Notes, including the Swing Line Note, (whether voluntary or
involuntary and from whatever source) received by the Agent shall be distributed
by the Agent to the Lenders Pro Rata with their respective ownership interests
in the Loan as of the date the payment is credited against the Senior Credit
Notes in accordance with this Agreement. The distribution from the Agent to each
Lender shall be made by wire transfer in immediately available funds directly to
the Lender or to such account at another financial institution as is designated
from time to time by the Lender in writing, and shall be made on
48
the same Business Day received (or deemed received) by the Agent. If the Agent
shall fail or refuse to make the distribution on the same Business Day as the
payment was received, then the Agent shall pay the affected Lender(s) interest
on the undistributed funds at the Federal Funds Effective Rate.
5.11 Chapter 346 Inapplicable. The Company agrees that Chapter 346, Subtitle 79,
Revised Civil Statutes of Texas, 1925, as amended (which regulates certain
revolving credit loan accounts and revolving triparty accounts), does not apply
to the Obligations.
6. COLLATERAL
6.1 Grant of Security Interest. As security for the payment of the Loan and for
the payment and performance of all of the Obligations, the Company hereby GRANTS
to the Agent, as agent and Representative of the Lenders, a first priority
security interest in all of the Company's present and future estate, right,
title and interest in and to the following described Collateral (although
neither the Lenders nor the Agent assumes any of the Company's or any other
liability or obligation under or in respect of any Collateral):
(a) all Pledged Loans including all principal thereof and interest
thereon from time to time outstanding or paid and Loan Papers evidencing,
securing or otherwise relating to such Pledged Loans, whether or not they
initially qualify or continue to qualify as Eligible Collateral, (i) that from
time to time are Pledged to the Agent or repledged to, deposited with, delivered
to, caused to be delivered (or sent) by the Company to, or held by or for, the
Agent or the Custodian pursuant to this Agreement or the Custody Agreement
(including all Pledged Loans held for the Agent by any financial intermediaries,
securities intermediaries or bailees and also including all Bridged Loans
against which any part of any Advance is funded, both before and after the Basic
Papers evidencing such Bridged Loan come into possession of the Custodian or any
other financial intermediary, securities intermediary or bailee for the Agent),
(ii) in respect of which an Advance has been made either (1) at the Company's
request (whether written or oral) or (2) to preserve Collateral or the priority
of the Agent's Lien against Collateral or to otherwise protect the interests of
the Lenders in accordance with this Agreement or the other Facilities Papers and
(iii) that have not been specifically redeemed by the Company (or its designee)
in accordance with SECTION 6.7 or sold to and fully paid for by an investor in
accordance with SECTION 6.6 (although it is not the exclusive method or basis
for determining that an Advance has been made against a Pledged Loan, the
Agent's inclusion of the Collateral Value of any Pledged Loan in any Borrowing
Base at any time when any Advance is outstanding under the related Subline shall
be conclusive evidence (absent manifest error) that an Advance has been funded
against that Pledged Loan);
(b) all Loan Papers related to, and all private mortgage insurance
on, any Pledged Loans, and all renewals, extensions, modifications and
replacements of any of them; all rights, liens, security interests, guaranties,
insurance agreements and assignments accruing or to accrue to the benefit of the
Company in respect of any of the Pledged Loans; all of the Company's rights,
powers, privileges, benefits and remedies under each and every paper now or
hereafter securing, insuring, guaranteeing or otherwise relating to or delivered
in connection with any of the Pledged Loans, including all guaranties, lien
priority agreements, security agreements, deeds of trust, collateral
assignments, subordination agreements, negative pledge agreements, loan
agreements, management agreements, development agreements, design professional
agreements, payment, performance or completion bonds, title and casualty
insurance policies and mortgage guaranty or insurance contracts; all of the
Company's rights, to the extent assignable, in, to and under any and all
commitments (including all Purchase Commitments) issued by (i) GNMA, FNMA,
FHLMC, another
49
mortgage company or any other investor or any lender or securities issuer to
guarantee, purchase or invest in any of the Pledged Loans or any Structured
Security based on or backed by any of them or (ii) any broker or investor to
purchase any Structured Security, whether evidenced by book entry or
certificate, representing or secured by any interest in any of the Pledged
Loans, together with the proceeds arising from or pursuant to any and all such
commitments; all rights under every Hazard Insurance Policy relating to real
estate securing a Pledged Loan for the benefit of the creditor of such Pledged
Loan , the proceeds of all errors and omissions insurance policies and all
rights under any blanket hazard insurance policies to the extent they relate to
any Pledged Loan or its security; all hazard insurance or condemnation proceeds
paid or payable with respect to any of the Pledged Loans and/or any of the
property securing payment of any of the Pledged Loans or covered by any related
instrument; all of the Company's rights now or hereafter existing in, to or
under any Structured Securities secured by or representing any interest in any
of the Pledged Loans, whether evidenced by book entry or certificate (the
Agent's Lien against each Structured Security created from, based on or backed
by Pledged Loans shall automatically attach to, cover and affect all of the
Company's right, title and interest in that Structured Security when issued and
its proceeds and the Agent's Lien against the Pledged Loans from which such
Structured Security was so created shall automatically be released when the
Structured Security is issued, subject to automatic reinstatement if such
issuance is voided or set aside by any court of competent jurisdiction); all
proceeds of any nature paid or payable by any governmental, quasi-governmental
or private mortgage guarantor or insurer (including VA, FHA or any other Person)
with respect to any of the Pledged Loans; all tax, insurance, maintenance fee
and other escrow deposits or payments made by the Customers under such Pledged
Loans (the Agent and the Lenders acknowledge that the Company's rights in such
deposits are limited to the rights of an escrow agent and such other rights, if
any, in and to such deposits as are accorded by the Pledged Loans and related
papers); any and all personal property, contract rights, accounts, general
intangibles, instruments and proceeds of whatever kind relating to the Pledged
Loans and all other papers delivered to the Agent or the Custodian and all other
rights transferred to the Agent in respect of any of the Pledged Loans,
including the right to receive all insurance proceeds (including casualty
insurance, pool insurance and title insurance proceeds) and condemnation awards
or payments in lieu of condemnation which may be or become payable in respect of
the premises encumbered or intended to be encumbered by any Pledged Loan;
(c) all files, papers, documents, instruments, surveys, certificates,
correspondence, appraisal reports, computer programs, tapes, disks, cards,
accounting records and other records, information and data relating to any of
the Pledged Loans or any of their Loan Papers, including any of the foregoing
necessary or useful for the Company or any other Servicer to service or
administer any of the Pledged Loans or their Loan Papers;
(d) all present and future rights ("REIMBURSEMENT RIGHTS") of the
Company to have, demand, receive, recover, obtain and retain payments and
prepayments of principal, interest or both, prepayment penalties and tax,
assessment, maintenance fee and insurance escrow payments, owing, paid or due to
be paid to the Company by or for the account of any makers, endorsers, sureties,
assumptors or other Persons obligated, with or without personal liability, on,
under or in respect of any Serviced Loans, including all accounts and general
intangibles from time to time owned by the Company under which its holder has an
enforceable and liquidated claim against a Mortgagor and his accounts, an
insurer or another identified Person under any Mortgage Loan serviced by the
Company for reimbursement of advances made by the Company pursuant to its
obligation to do so as servicer of that Mortgage Loan to fund any P&I Advance
(i.e., a P&I Receivable) or to fund any T&I Advance (i.e., a T&I Receivable) or
Enforcement Advance (i.e., an Enforcement Receivable). Collateral also includes
all of the Company's present and future rights to have, demand, receive,
50
recover, obtain and retain payment, reimbursement or indemnity for (or for
making) P&I Advances, T&I Advances or Enforcement Advances, from any other
source or sources, including (1) any other Servicer, whether or not affiliated
or bound by any contract with the Company, (2) any owner or holder of any
Serviced Loan which was the subject of any such unrepaid advances, (3) any
investor (whether pursuant to an express or implied advances reimbursement
covenant under a contract between such investor and the Company -- or any
predecessor -- contained in or executed pursuant to any mortgage or
mortgage-backed securities selling or servicing guide, pursuant to any other
agreement between the Company -- or any predecessor -- and such investor or by
operation of any legal or equitable rule or principle, including subrogation),
(4) any governmental or private mortgage insurer or guarantor, (5) any proceeds
of realization on any security for or guaranties or insurance of Serviced Loans
which are the subject of any unrecovered Advance, (6) any title insurance, (7)
any insurance on property or property rights covered by any Serviced Loan which
is the subject of any such unrecovered Advance and (8) any other source
whatsoever;
(e) all present and future Company claims and rights of the Company
to have, demand, receive, recover, obtain and retain payments from VA, FHA, any
other governmental or private insurer or guarantor or any other Person, for or
in respect of any sum paid or other consideration given by or on behalf of the
Company (i) to pay costs associated with the servicing, collection, enforcement,
foreclosure or realization on any security for -- or any insurance, bond,
endorsement or guarantee of, for or in respect of -- any Mortgage Loan (or its
proceeds) at any time serviced by the Company or any of its Affiliates or (ii)
to fund the purchase or other acquisition by or on behalf of the Company
pursuant to any right, option or obligation of the Company or any of its
Affiliates as Servicer, to purchase or otherwise directly or indirectly acquire
any Mortgage Loan from its owner or out of a pool of Mortgage Loans serviced by
the Company or any of its Affiliates, including all accounts and general
intangibles from time to time owned by the Company under which the Company has
such a claim, together with all of the Company's present and future rights to
have, demand, receive, recover, obtain and retain payment, reimbursement or
indemnity for (or for making) such costs payments or purchase fundings from any
other source or sources, including (1) any other Servicer, whether or not
affiliated, or bound by any contract, with the Company, (2) any owner or holder
of any Serviced Loan which was the subject of any such costs payment or
purchase, (3) any investor (whether pursuant to an express or implied advances
reimbursement covenant under a contract between such investor and the Company --
or any predecessor -- contained in or executed pursuant to any mortgage or
Structured Securities selling or servicing guide, pursuant to any other
agreement between the Company -- or any predecessor -- and such investor or by
operation of any legal or equitable rule or principle, including subrogation or
assignment) or (4) any proceeds or realization on any security for or guaranties
or insurance or any purchased or acquired Mortgage Loan or its proceeds;
(f) any other Property acceptable to the Agent and Pledged to the
Agent;
(g) the Note Payment Account and all sums from time to time on
deposit on it;
(h) all of the Company's files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other information and data directly relating to any of the
Collateral described or referred to above;
(i) all rights to have and receive any of the foregoing and all
proceeds of any of the foregoing, including all present and future accounts,
general intangibles, instruments, real or personal property, books records,
contract rights, documents (including all documents of title),
51
chattel paper and proceeds relating to, arising from or by virtue of or
collections with respect to, or comprising part of, any of the foregoing,
including all insurance and claims for insurance affected or held for the
benefit of the Company, the Lenders, the Agent or the Custodian in respect of
any of the foregoing;
(j) all other rights and interests now owned or hereafter acquired by
the Company in, under or relating to any of the Collateral described or referred
to above and all proceeds of sale or other disposition of, such Collateral and
all contracts and agreements, whether oral or written, relating thereto, and any
instruments, documents or writings evidencing any monetary obligation, contract
right, general intangible, account or security interest in any of such
Collateral, or its proceeds, whether now existing or hereafter arising, accruing
or accrued. Collateral also includes all other rights and interests in and to
any and all security for or claims against others in respect of any of the
Collateral described or referred to above, or proceeds of sale or other
disposition of, any of such Collateral; and
(k) all accessions or additions to, substitutions for and proceeds of
any and all of the foregoing, together with all renewals and replacements of any
of the foregoing.
Provided, that the Agent's security interest in the Pledged Loans does not
extend to, cover or affect any of the mortgage loan Servicer's right, title or
interest in, to or under (a) any Servicing Agreement that the Company, as owner
or investor, has entered into, or may hereafter enter into, in good faith with
any Person that is not an Affiliate of the Company, as mortgage loan Servicer,
to service Mortgage Loans now or hereafter owned or held by the Company, whether
or not such Mortgage Loans were heretofore, or are now or hereafter, Pledged to
the Agent or (b) the mortgage loan servicing rights under any such mortgage loan
servicing agreement between the Company and a contractual mortgage loan Servicer
that is not an Affiliate of the Company; provided further, that nothing in this
sentence shall be construed to waive, disclaim, impair or otherwise affect the
Agent's security interest (as agent and Representative of the Lenders) in any of
such Mortgage Loans themselves, including the Agent's security interest in and
to all of the Company's right, title and interest under each such Mortgage Loan
Servicing Agreement to the extent (if any) that it covers, affects or relates to
Pledged Loans.
6.2 Further Assurances Concerning Collateral. In furtherance of the foregoing,
the Company (i) hereby agrees to perform, or cause to be performed, such acts
and duly to authorize, execute, acknowledge, deliver, file and record (or cause
such actions to be taken with respect to) such financing statements,
assignments, security agreements, deeds of trust, mortgages, bond powers and
supplements, modifications or amendments to any of them, and such other papers
as the Agent may reasonably request in order to establish and preserve the
priority of, perfect and protect the Liens granted or intended to be granted to
the Agent in and to any and all such Collateral and to preserve and protect the
Agent's rights in respect of all present and future Collateral for the
Obligations.
6.3 Delivery of Additional Collateral or Mandatory Prepayment. At least once a
week during the term of this Agreement (or more often in the discretion of the
Agent if it reasonably determines that market conditions warrant) and whenever a
Request for Borrowing is made by the Company (except that the Agent shall have
no obligation to make such determination more frequently than once per day), the
Agent shall (i) determine pursuant to SECTION 1.2 the aggregate Collateral
Values for the Borrowing Base for each type of Collateral (including any
Collateral pledged on that day) Pledged to the Agent under this Agreement, (ii)
issue to the Lenders a current certificate stating separately the Agent's
determination of the Borrowing Base for each type of Collateral for which the
52
Agent has made such determination (the Agent shall be required to make such
determination when a Request for Borrowing is made only as to the Borrowing
Base(s) relevant to that Request for Borrowing) and (iii) provide a copy of that
certificate to the Company. If the Agent shall determine on any day that any
Borrowing Base is less than the outstanding Advances under the related Subline,
then the Company shall immediately (by no later than the next Business Day after
the Agent's request) either:
(a) Pledge to the Agent additional Collateral of the relevant type
and deliver to the Custodian all Basic Papers for such Collateral (such delivery
to the Custodian may be deferred for up to five (5) Business Days for any
Bridged Loans Pledged to the Agent as additional Collateral) and/or;
(b) after giving effect to the Collateral Value of any additional
Collateral Pledged to the Agent and delivered to the Agent pursuant to SECTION
6.3(A), pay to the Agent cash for Pro Rata distribution to the Lenders, in
aggregate amounts sufficient to cover the sum of the excess of each of (i) the
sum of all Advances outstanding under each Subline over (ii) the Collateral
Value of all Eligible Collateral Pledged to the Agent for borrowing against
under that same Subline.
provided, that the Company may not elect under the provisions of SECTION 6.3(A)
(and instead must make a cash paydown pursuant to SECTION 6.3(B)) if any Default
or Event of Default has occurred that the Agent has not declared in writing to
have been cured or waived.
6.4 Mortgaging of Real Property Collateral. The Company hereby GRANTS to the
Agent a Lien against, and hereby agrees to duly Pledge to the Agent by
executing, acknowledging sufficiently for recording and delivering to the Agent
or (where appropriate) to a trustee designated by the Agent, a recordable
mortgage, deed of trust or security deed (whichever form of real property
mortgage instrument is appropriate to the jurisdiction in which the real
property is located) -- on the standard FNMA/FHLMC form, modified appropriately
for the purpose, or in another form approved by the Agent -- and in substance
approved by the Agent, to cover each lot, parcel, tract or leasehold estate (as
the case may be) of present or future Collateral that constitutes real property
under the law of the U.S. jurisdiction where it is located, each of which shall
describe the mortgagee or grantee as "Chase Bank of Texas, National Association,
as a Lender and as Agent for certain other Lenders" and shall describe the Debt
it secures substantially as follows:
All present and future debts and obligations of Long Beach Mortgage
Company to Chase Bank of Texas, National Association, as a Lender and
as Agent for the other Lenders named therein, and to such other
Lenders, under or pursuant to the 4/98 Amended and Restated Senior
Secured Credit Agreement dated as of April 13, 1998, the principal
debt under which credit agreement has a final stated maturity of
April 13, 2000, as such credit agreement may have been or may from
time to time be supplemented, amended or restated; provided that the
principal debt hereby secured shall in no event exceed [state here
the amount that is equal to 120% of the current appraised value or
broker's opinion of value of the mortgaged real estate].
While the Agent does not initially intend to record any of such mortgages, deeds
of trust or security deeds, the Agent may elect to record any or all of them at
any time or times, and all costs of filing and recordation shall be paid for by
the Company, either directly or as reimbursement to the Agent, whichever the
Agent shall elect.
53
6.5 Collection and Servicing Rights. So long as no Event of Default shall have
occurred that the Agent has not declared in writing to have been cured or
waived, the Company shall be entitled to service, receive and collect directly
-- or cause to be serviced, received and collected through a Servicer or
Servicers under one or more Servicing Agreements -- all sums payable to the
Company in respect of the Collateral (excluding, however sums arising from sales
or other dispositions of Collateral, which SECTION 6.6 requires to be paid to
the Agent for application as therein stated). After the occurrence of any Event
of Default that the Agent has not declared in writing to have been cured or
waived, the Agent shall have the following rights (but no obligations):
(a) in its discretion, to demand, ▇▇▇ for, collect or receive and
receipt for (in its own name, in the name of the Company or otherwise) any money
or property at any time payable or receivable on account of any of the
Collateral, in consideration of its transfer or in exchange for it;
(b) to direct -- and to take any and all other steps necessary to
cause -- any Servicer of any of the Collateral to pay over directly to the Agent
for the account of the Company (instead of to the Company or any other Person)
all sums from time to time due to the Company and to take any and all other
actions that the Company or the Agent has the right to take under the Company's
contract with such Servicer; and
(c) to request that the Company forthwith pay to the Agent at its
principal office all amounts thereafter received by the Company upon or in
respect of any of the Collateral, advising the Agent as to the sources of such
funds, and if the Agent does so request, then the Company shall diligently and
continuously thereafter comply with such request.
All amounts so received and collected by the Agent shall be paid over to the
Lenders for application to pay (i) fees owing under the Facilities Papers (pro
rata in the ratio that the fees then owed to each Lender bear to the fees then
owed to all Lenders), (ii) the reasonable costs and expenses incurred by the
Agent or the Lenders (pro rata in the ratio that the unreimbursed costs and
expenses incurred by each of them and then outstanding bears to the unreimbursed
costs and expenses incurred by all of them and then outstanding) in collecting
or enforcing the Senior Credit Notes and the other Facilities Papers, defending
against any claims made in respect of the Facilities Papers or any related
transactions, protecting or realizing on Collateral and (iii) accrued and unpaid
interest on and principal of the Senior Credit Notes (for interest, pro rata in
the ratio that the then-accrued and unpaid interest due on each Senior Credit
Note bears to the then-accrued and unpaid interest due on all Senior Credit
Notes, and for principal, pro rata in the ratio that the outstanding balance of
each Senior Credit Note bears to the outstanding balances of all Senior Credit
Notes).
6.6 Sale and Agent's Delivery of Debt Collateral to Investor. The Company may
direct the Custodian to ship or deliver to any Qualified Investor, under cover
of a bailee letter substantially in the form therefor prescribed by the
Custodial Agreement, any Pledged Loan for which that investor has issued a Whole
Loans Purchase Commitment, and the Agent's security interest in such Pledged
Loan shall automatically terminate upon payment to the Agent of the greater of
(i) the purchase price for that Pledged Loan determined in accordance with the
terms of the relevant Purchase Commitment or (ii) the Redemption Amount of that
Pledged Loan, and at the Company's request and expense, the Agent will execute
such UCC-3 (or UCC-2, as applicable) Partial Release and such other confirmation
of such release as the Qualified Investor shall require. The Company may direct
the Custodian to ship or deliver to any issuer of Structured Securities, under
cover of a bailee letter substantially in the form therefor prescribed by the
Custodial Agreement, any Pledged Loan(s) as all or part of a pool from which
Structured Securities will be created that are covered by a Structured
54
Securities Purchase Commitment issued by a Qualified Investor, and the Agent's
security interest in those Pledged Loans shall automatically terminate when the
Structured Securities are created from such pool, although the Agent's security
interest granted by this Agreement in and to -- and the Company hereby
specifically declares its intent that Collateral covered by this Agreement
includes -- all of the Company's present and future (i) right, title and
interest in and to the Structured Securities so created and (ii) rights to
demand, have, receive and receipt for such Structured Securities and their
proceeds shall automatically attach when such Pledged Loans are so securitized
and the Agent's security interest in them is thereby automatically terminated,
as aforesaid. When the sale is settled of any Whole Loan or of any Structured
Securities created from a pool that includes any Pledged Loan, the Company shall
cause the investor purchasing such Whole Loan or Structured Securities to pay
the purchase price therefor directly to the Agent, for application as a
mandatory prepayment on the Senior Credit Notes and as a repayment of
outstanding Advances under the relevant Subline, and the Agent's security
interest in such Whole Loan or such proceeds of the Pledged Mortgages in such
securitized pool (whichever the case may be) shall terminate and be released
upon the Agent's receipt (for deposit in the Note Payment Account) of an amount
equal to the greater of (x) the contractual purchase price to be paid by the
investor for that Pledged Whole Loan or the Company's share of the proceeds of
the sale of such Structured Securities (whichever the case may be), as
determined in accordance with the terms of the relevant Purchase Commitment or
(y) the Redemption Amount for that Pledged Loan or the sum of the Redemption
Amounts for such Pledged Loans in such securitized pool of Mortgage Loans. Upon
shipment or delivery of Pledged Loans to be securitized and pending such payment
to the Agent on the sale of the resulting Structured Securities, the Company
agrees to take all steps necessary to:
(a) cause all such Structured Securities, if and when they are issued
before payment of their sale proceeds is made to the Agent, to be duly
registered in the Agent's name and delivered to the Agent; or
(b) in the case of uncertificated or book-entry securities held by a
financial intermediary in a state that has not adopted the National Conference
of Commissioners on Uniform State Laws-approved 1994 amendments to Article 8 and
1994 conforming amendments to Articles 1, 4, 5, 9 and 10 of the UCC (the
"RELEVANT 1994 UCC AMENDMENTS"), cause those Structured Securities, if issued
before payment of their sale proceeds is made to the Agent, to be duly
registered as owned by the Agent, as agent and Representative of the Lenders, on
the books of the financial intermediary that is shown as their record owner on
the books of the fiscal agent for the issuer of such securities; or
(c) in the case of securities held by a financial intermediary in
Texas or in another state that has also adopted, without relevant substantial
variations, the Relevant 1994 UCC Amendments, if such securities are issued
before payment of their sale proceeds is made to the Agent, to cause the Agent,
as agent and Representative of the Lenders, to be identified in the records of
the relevant securities intermediary as the only holder of securities
entitlements in respect of such securities or (at the Agent's written election)
to cause such securities intermediary to agree that it will act on entitlement
orders to dispose of such securities and/or to pay the proceeds to a designated
Person or apply them as directed in the entitlement order only if such
entitlement order is issued by the Agent; and to cause such arrangements to
remain in effect until such payment of the sales proceeds of such Structured
Securities has been made to the Agent. The Company hereby APPOINTS the Agent as
its attorney-in-fact to take all such steps in its name and behalf as are
necessary or appropriate to (i) obtain and maintain control of such Structured
Securities, (ii) establish, maintain or continue perfection of its security
interests in such Structure Securities and/or (as the context requires) (iii)
55
enforce, collect or otherwise realize upon such interests, and such appointment
shall be deemed a power coupled with an interest and shall be irrevocable for so
long as any of the Obligations shall be unpaid or any of the Lenders shall have
any outstanding commitment to lend or to extend any other financial
accommodations to or for the account of the Company.
6.7 Right of Redemption From Pledge. Provided no Event of Default has occurred
that the Agent has not declared in writing to have been cured or waived
(provided that the Agent may elect to allow redemption even if an uncured and
unwaived Event of Default has occurred if the Agent reasonably believes at that
time that doing so would be in the Lenders' interest), the Company may from time
to time redeem one or more items of Collateral from pledge by either:
(a) paying, or causing to be paid, to the Agent for deposit in Note
Payment Account, for application to the outstanding balance of Advances under
the relevant Subline(s) and Pro Rata distribution to the Lenders for their
application to prepayment of the principal balances of the Senior Credit Notes,
including the Swing Line Note, the Redemption Amount for the item(s) of
Collateral to be released; or
(b) delivering substitute Collateral that both (a) is Eligible
Collateral of the same type(s) as the Collateral being redeemed and (b) will,
when included with the existing Collateral of the same type(s), increase the
relevant Borrowing Base(s) for the relevant Subline(s) to a value at least equal
to the aggregate outstanding Advances under such Subline(s).
The Agent's Lien against the items of Collateral redeemed shall automatically be
terminated upon the Agent's receipt of the redeeming payment or redeeming
substitute Collateral, and the Agent will direct the Custodian to release the
Basic Papers and other items evidencing or comprising (or otherwise relating to)
the redeemed Collateral to the Company against the Company's written request and
will execute UCC partial release(s) -- or otherwise appropriately confirm such
release in writing -- prepared at the Company's expense if, when and in such
form as the Company may reasonably request.
6.8 Return of Collateral at End of Commitment. If (i) the Lenders' Commitments
to lend shall have expired or been terminated, and (ii) all Advances, interest
or other amounts evidenced by the Senior Credit Notes or owing to any of the
Lenders or the Agent under this Agreement, the Senior Credit Notes and the other
Facilities Papers shall be fully paid and satisfied, then the Agent shall
release the Collateral to the Company or its designee promptly upon written
request made by the Company and at its cost, and the Company shall promptly
receipt -- or shall cause its designee to promptly receipt -- for such released
Collateral in writing to the Agent. Acceptance by the Company of any Collateral
delivered to it pursuant to any provision of this Agreement (whether or not the
recipient issues a receipt for it) or shipping by the Agent of Collateral in
substantial compliance with shipping instructions given by the Company or its
designee shall be a complete and full acquittance for the Collateral so
delivered or shipped, and the Agent shall thereby be released and discharged
from any and all liability or responsibility for it arising then or thereafter.
7. CONDITIONS PRECEDENT.
7.1 Initial Advance. The obligations of the Lenders to fund their respective
Funding Shares of the initial Advance under this Agreement are subject to the
Company's fulfillment of the following conditions precedent:
56
(a) The Agent shall have received the following, all of which must be
satisfactory in form and content to the Agent in its sole discretion:
(1) This Agreement duly executed by all parties;
(2) The Senior Credit Notes, each duly executed by the
Company;
(3) The Guaranty, duly executed by the Guarantor;
(4) UCC financing statements for the Collateral covered by
this Agreement, each duly executed by the Company;
(5) a UCC search report for the Company;
(6) The Custody Agreement duly executed by the Company and
Chase Texas as Custodian;
(7) Certified copies of the Company's articles of
incorporation and bylaws;
(8) A favorable written opinion of counsel to the Company
dated on or before the date of the initial Advance, addressed to the Lenders and
the Agent and in form and substance reasonable satisfactory to the Agent and its
legal counsel (opinions required to be included therein are set forth in EXHIBIT
H);
(9) Original resolutions of the Company's board of directors,
certified as of the date of the initial Advance by the Company's corporate
secretary, authorizing the execution, delivery and performance by the Company of
this Agreement, the Senior Credit Notes, the Custody Agreement and all other
Facilities Papers to be delivered by the Company pursuant to this Agreement;
(10) A certificate of the Company's corporate secretary as to
(i) the incumbency of the officers of the Company executing this Agreement, the
Senior Credit Notes, the Custody Agreement, each applicable Request for
Borrowing and all other Facilities Papers executed or to be executed by or on
behalf of the Company and (ii) the authenticity of their signatures -- and
specimens of their signatures shall be included in such certificate or set forth
on an exhibit attached to it -- (the Agent and the Lenders shall be entitled to
rely on that certificate until the Company has furnished a new certificate to
the Agent);
(11) An Officer's Certificate for the Company dated the date
of the initial Advance and certifying truthfully that, after giving effect to
that Advance, no Default or Event of Default will exist under this Agreement and
that there has been no material adverse change since the Statement Date in any
of the Central Elements relative to the Company; and
(12) Copies of an errors and omissions insurance policy or
mortgage impairment insurance policy and blanket bond coverage policy, or
certificates in lieu of policies, providing such insurance coverage as is
customary for members of the Company's industry, all in form and content
reasonably satisfactory to the Agent.
57
(13) Payment to the Agent of the Facility Fee (for deposit in
the Note Payment Account and Pro Rata distribution to the Lenders, the Agent's
Fee, the Custodian's Fee and all other fees and expenses (including the
disbursements and reasonable fees of the Agent's and the Lenders' attorneys,
subject to the limitation specified in SECTION 12.1) of the Agent and the
Lenders accrued and billed for to the date of the Company's execution and
delivery of this Agreement.
(b) All directors and officers of the Company, all shareholders of
the Company and all Affiliates of the Company or any parent or Subsidiary of the
Company, to whom or which the Company shall be obligated (excluding obligations
for officer or employee salary, bonuses or other compensation) either for
borrowed money or for any other obligation of Fifty Thousand Dollars ($50,000)
or more as of the date of this Agreement, shall have caused such Debt --
excluding only the debts and obligations described on SCHEDULE 7.1(B) -- to be
Subordinated Debt, as defined in this Agreement, by executing and causing to be
delivered to the Agent a Subordination Agreement substantially in the form of
EXHIBIT C and taking all other steps, if any, required to cause such Debt to be
Subordinated Debt, as so defined, and the corporate secretary of the Company
shall have certified each such Subordination Agreement executed to satisfy the
requirements of this Subsection to be true, complete and in full force and
effect as of the date of the Advance.
7.2 Each Advance. The obligations of the Lenders to fund their respective
Funding Shares of the initial Advance and each subsequent Advance under this
Agreement are also subject to the satisfaction, in the sole discretion of the
Agent, as of the date of each such Advance, of the following additional
conditions precedent:
(a) The Company shall have delivered to the Agent a Request for
Borrowing and (if any relevant Borrowing Base is insufficient to support all or
part of the Advance) shall have delivered to the Agent one or more Submission
List(s) and to the Custodian (except for Wet Warehouse Advances) a copy of the
relevant Submission List(s) together with the Basic Papers for any Debt
Collateral required to cause any relevant Borrowing Base to at least equal its
related Subline's outstanding Advances after giving effect to the requested
Advance.
(b) Unless the requested Advance is comprised only of a Wet
Warehousing Advance, the Custodian shall have issued its Custodian's
Certification relating to the Collateral comprising the Borrowing Base(s) for
the Advance (and the Agent agrees not to unreasonably withhold or delay issuing
any such Custodian's Certification).
(c) The Agent shall have received evidence reasonably satisfactory to
it as to the making and/or continuation of any book entry or the due filing and
recording in all appropriate offices of all financing statements and other
instruments as may be necessary to perfect the Agent's security interest in the
Collateral and give the Agent "control" of such of the Collateral as shall be
"investment property" under the UCC of the State of Texas or other applicable
law.
(d) The representations and warranties of the Company contained in
SECTION 8 shall be true and correct in all material respects as if made on and
as of the date of each Advance unless specifically stated to relate to an
earlier date.
(e) The Company shall have performed all agreements to be performed
by it under this Agreement, the Custody Agreement and all other Facilities
Papers, as well as under all Purchase
58
Commitments, and after giving effect to the requested Advance, no Default or
Event of Default will exist under this Agreement or any of the other Facilities
Papers.
(f) The Agent shall have received from counsel for the Company, if
reasonably requested by all of the Lenders, an updated favorable opinion or
opinions, in form and substance satisfactory to the Agent addressed to the
Lenders and/or the Agent (whichever the Agent shall specify) and dated as of the
date of such Advance, covering and updating such matters that were originally
addressed in the opinion issued pursuant to SECTION 7.1(A)(8) as the Agent may
request.
(g) The Company shall have paid the Commitment Fee and Agent's Fee
then due and payable in accordance with SECTIONS 5.6 and 5.7 and the Custodian's
fee pursuant to the Custody Agreement.
8. REPRESENTATIONS.
The Company hereby represents and warrants to the Agent and the
Lenders both (a) as of the date of this Agreement and (b) except as to those
specified to relate only to a specific date, again as of the date of each
Request for Borrowing, that:
8.1 Organization; Good Standing; Subsidiaries. The Company is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware. The Company has furnished to the Agent a true and complete copy of the
Company's charter or articles of incorporation and its bylaws or corporate
regulations, and all amendments to each made on or before the date of this
Agreement, and agrees to furnish to the Agent a true and complete copy of any
amendment adopted after the effective date of this Agreement. The Company
warrants and represents that the Company and its Subsidiaries each has the full
legal power and authority to own its properties and to carry on its business as
currently conducted and each is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which the ownership of
its property or the transaction of its business makes such qualification
necessary, except in jurisdictions, if any, where a failure to be in good
standing has no material adverse effect on any of the Central Elements. The
Company does not have any Subsidiaries (other than single-purpose finance
Subsidiaries all of whose indebtedness for borrowed money or other material
indebtedness is nonrecourse Structured Securities Debt) except as set forth on
EXHIBIT D or as have been subsequently disclosed by the Company to the Agent in
writing. EXHIBIT D states the name of each such Subsidiary as of the Effective
Date (other than such single-purpose finance Subsidiaries), place of
incorporation, each state in which it is qualified as a foreign corporation and
the percentage ownership of the capital stock of each such Subsidiary by the
Company.
8.2 Authorization and Enforceability. The Company has the power and authority to
execute, deliver and perform this Agreement, the Senior Credit Notes, the
Custody Agreement and all other Facilities Papers to which it is a party or in
which it joins or has joined. The execution, delivery and performance by the
Company of this Agreement, the Senior Credit Notes, the Custody Agreement and
all other Facilities Papers to which it is a party and the borrowing of the Loan
have been duly and validly authorized by all necessary corporate action on the
part of the Company (none of which has been modified or rescinded, and all of
which are in full force and effect) and do not and will not conflict with or
violate any Legal Requirement or the articles of incorporation or bylaws of the
Company, conflict with or result in a breach of or constitute a default under
any agreement, instrument or indenture binding on the Company or require any
consent under any such agreement, instrument or indenture where the conflict,
breach, default or nonconsent could reasonably be
59
expected to have a material adverse effect on any of the Central Elements, or
result in the creation of any Lien upon any property or assets of the Company
except the Lien securing the Obligations, or result in or permit the
acceleration of any debt of the Company pursuant to any agreement, instrument or
indenture to which the Company is a party or by which the Company or its
property may be bound or affected. This Agreement, the Senior Credit Notes, the
Custody Agreement and all other Facilities Papers constitute the legal, valid,
and binding obligations of the Company, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other such laws
affecting the enforcement of creditors' rights generally.
8.3 Approvals. Neither the execution and delivery of this Agreement, the Senior
Credit Notes, the Custody Agreement and all other Facilities Papers nor the
performance of the Company's obligations under such Facilities Papers requires
any license, consent, approval or other action of any state or federal agency or
governmental or regulatory authority other than (i) those that have been
obtained or will be obtained by the time required and which remain in full force
and effect, (ii) those for which the Company's failure to obtain them will not
have a material adverse effect on any of the Central Elements in respect of the
Company and (iii) the filing of the Security Instruments.
8.4 Financial Condition. Since the Statement Date, (i) there has been no
material adverse change in any of the Central Elements related to the Company
(and its Subsidiaries), nor is the Company aware of any state of facts which
(with or without notice, the lapse of time or both) would or could result in any
such material adverse change, and (ii) there have been no material unrealized or
anticipated losses from any loans, advances or other commitments of the Company,
except for the material adverse changes and losses (if any) that are summarized
on SCHEDULE 8.4. The following representations shall be deemed made for the
first time when the Company first furnishes a first balance sheet to the Agent
pursuant to SECTION 9.2(A): the balance sheet of the Company (and, to the extent
applicable, its Subsidiaries, on a consolidated basis) and the related
statements of income, changes in stockholders' equity and cash flows ("FINANCIAL
STATEMENTS") for the fiscal period just ended fairly present the financial
condition of the Company (and its Subsidiaries) as at their date and the results
of their operations for the fiscal period ended on that date, and such Financial
Statements were prepared in accordance with GAAP. On their date, the Company did
not have any known material liabilities -- direct or indirect, fixed or
contingent, matured or unmatured -- or liabilities for sales, long-term leases
or unusual forward or long-term commitments not disclosed by such Financial
Statements or reserved against in them.
8.5 Litigation. Except as disclosed in the most recent Financial Statements
furnished to the Agent, there are no actions, claims, suits or proceedings
pending, or to the knowledge of the Company, threatened or reasonably
anticipated against or affecting the Company or any of its Subsidiaries in any
court, before any other Governmental Authority or before any arbitrator or in
any other dispute resolution forum which, if adversely determined, could
reasonably be expected to result in a material and adverse effect on any of the
Central Elements relative to the Company.
8.6 Licensing. The Company and the Servicers (if any) of its Mortgage Loans are
duly registered as mortgage lenders and servicers in each state in which
Mortgage Loans have been or are from time to time originated, to the extent such
registration is required by any applicable Legal Requirement, except where the
failure to register could not reasonably be expected to result in an material
and adverse effect on any of the Central Elements in respect of the Company..
8.7 Compliance with Laws. Neither the Company nor any of its Subsidiaries is in
violation of any provision of any law, or any judgment, award, rule, regulation,
order, decree, writ or injunction
60
of any court, other Governmental Authority or public regulatory body that could
reasonably be expected to have a material adverse effect on any of the Central
Elements relative to the Company.
8.8 Regulation U. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no part of the proceeds of any Advances
will be used to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.
8.9 Investment Company Act. The Company is not subject to the rules governing an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
8.10 Public Utility Holding Company Act. Neither the Company nor any of its
Subsidiaries is an "affiliate" or a "subsidiary company" of a "public utility
company", or a "holding company", or an "affiliate" or a "subsidiary company" of
a "holding company", as such terms are defined in the PUHC Act. Further, none of
the transactions contemplated under this Agreement shall cause or constitute a
violation of any of the provisions, rules, regulations or orders, of or under
the PUHC Act and the PUHC Act does not in any manner impair the legality,
validity or enforceability of the Senior Credit Notes, the Loan, any of the
Facilities Papers or any of the Agent's Liens.
8.11 Payment of Taxes. The Company has filed (or caused to be filed) all
required federal, state and local income, excise, property and other tax returns
with respect to its and its Subsidiaries' operations, all of such returns are
true and correct and the Company has paid or caused to be paid -- or is
protesting by appropriate proceedings diligently pursued and has established
adequate reserves therefor -- all taxes which are due and owing under applicable
law or as shown on any assessment to the extent such taxes have become due,
including all applicable FICA payments and withholding taxes. The amounts
reserved as a liability for income taxes and other taxes payable in the
financial statements heretofore furnished to the Agent and the Lenders are
sufficient for payment of all unpaid federal, state and local income, excise,
property and other taxes -- whether or not disputed -- of the Company and its
Subsidiaries accrued for or applicable to the period and on the dates of such
financial statements and all prior years and periods, and for which the Company
and its Subsidiaries may be liable in their own right or as transferee of the
assets of other Person or as successor to any other Person.
8.12 Agreements. Neither the Company nor any of its Subsidiaries is a party to
any agreement, instrument or indenture or subject to any restriction materially
and adversely affecting any of the Central Elements except as disclosed in
SCHEDULE 8.4 or in the Company's Financial Statements most recently furnished to
the Agent. Neither the Company nor any such Subsidiary is in default in the
performance, observance or fulfillment of any of its obligations, covenants or
conditions contained in any agreement, instrument or indenture that could
reasonably be expected to have a material adverse effect on any of the Central
Elements in respect of the Company or any such Subsidiary. No holder of the
Company's or any such Subsidiary's debt or other obligations has given notice of
any asserted default. No liquidation or dissolution of the Company or any such
Subsidiary is pending or, to the Company's knowledge, threatened. No
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Company or any such Subsidiary or any of their
properties is pending, or to the Company's knowledge, threatened.
8.13 Title to Properties. The Company and each of its Subsidiaries has good,
valid, insurable (in the case of real property) and marketable title to (i) all
of its material assets that are included in "premises and equipment" or "prepaid
expenses and other assets" on its balance sheet and (ii) (for
61
fiscal periods commencing on or after the first day of the month next following
the month in which the ninetieth (90th) day after the Effective Date falls) all
of its properties and assets (whether real or personal, tangible or intangible)
reflected or referred to in the Financial Statements most recently furnished to
the Agent, except for such properties and assets as have been disposed of since
the date of such current Financial Statements either in the ordinary course of
business or because they were no longer used or useful in the conduct of its
business, and all such properties and assets are free and clear of all Liens
except for (i) the lien of current real property taxes and assessments, (ii)
covenants, conditions and restrictions, rights of way, easements and other
matters to which like properties are commonly subject that do not materially
interfere with the use of the property as it is currently being used and (iii)
such other Liens, if any, as are disclosed in such Financial Statements and
Permitted Encumbrances.
8.14 The Company's Address. The Company represents that its chief executive
office and principal place of business are at ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other address as shall have been set
forth in a written notice to the Agent given subsequent to the Effective Date
and at least thirty (30) days before such notice's effective date accompanied
(if the Company's new address is in a different state) by a UCC-3 Financing
Statement signed by the Company to amend each Financing Statement required by
this Agreement to reflect the Company's change of address.
8.15 ERISA. The Company does not maintain any Plans except the Plans listed on
SCHEDULE 8.15 and agrees to notify the Agent in advance of forming any Plans.
The Plans listed on SCHEDULE 8.15 and all other Company employee welfare
benefits plans (as defined under Section 3(1) of ERISA) are in material
compliance with all applicable laws (including ERISA). The Company is not an
employer under any Multiemployer Plan or any other Plan subject to Title IV of
ERISA. For the purposes of this Section, "in material compliance" means that the
Company is not liable for any relevant liability in excess of Twenty-five
Thousand Dollars ($25,000).
8.16 Special Representations Concerning Collateral. The Company hereby
represents and warrants to the Lenders and the Agent, as of the date of this
Agreement and as of the date of each Request for Borrowing, that (except as
otherwise disclosed by the Company to the Agent in respect of particular items
of Recoveries Collateral when they are Pledged to the Agent):
(a) The Company is the legal and equitable owner, free and clear of
all Liens other than Permitted Encumbrances, of the Collateral. All Debt
Collateral, including all pledged Bridged Loans, has been duly (i) authorized
and validly issued, (ii) endorsed or assigned to the Company and (iii) endorsed
or assigned by the Company in blank and delivered (or in the case of Bridged
Loans, are in the process of being delivered) to the Custodian or endorsed in a
manner acceptable to the Agent. The Company represents that all of the
Collateral, individually and collectively, complies with all of the requirements
of this Agreement and the Custody Agreement. All information concerning each
grouping of Debt Collateral set forth on the Submission List furnished to the
Agent/Custodian pursuant to which such Debt Collateral was, is or will be (as
applicable) transmitted to the Custodian was, is and/or shall be (as applicable)
true and complete in all material respects as of the date of such Submission
List. All Basic Papers for each such item of Debt Collateral (except for Bridged
Loans) will be transmitted to the Custodian with the Submission List with which
it is submitted. Each assignment to the Agent of the Lien securing any Debt
Collateral will be in proper and sufficient form for recording in the
appropriate government office in the U.S. jurisdiction where the underlying
property (land and improvements) covered by such Lien is located. Upon and after
delivery to the Agent of the Mortgage Note evidencing the particular item of
Debt Collateral, the
62
Agent on behalf of the Lenders will have a duly perfected first priority
security interest in such Debt Collateral and for so long as the Agent, the
Custodian or another bailee for the Agent retains possession of such note, or
takes such other action as is necessary for it to have and maintain a perfected
security interest in such note under the UCC, the Agent will have a duly
perfected first priority security interest in such Debt Collateral.
(b) The Company has and will continue to have the full right, power
and authority to pledge the Collateral Pledged to the Agent and to be Pledged to
the Agent by the Company under this Agreement or pursuant to it, and such
Collateral may be further assigned without any requirement for the consent of
any other party to the Collateral.
(c) The Company will maintain the Lien on the real estate described
in, or referred to as covered by, each Pledged Loan as a first Lien -- or, in
respect of Second Lien Mortgage Loans, as a second priority Lien -- until all of
the Obligations have been fully paid and satisfied and the Lenders have no
further Commitments outstanding.
(d) All pledged Mortgage Loans and all related papers included in the
Collateral (including all pledged Bridged Loans):
(1) were originated by the Company, a duly licensed mortgage
lender in the ordinary course of its business and, if not originated by the
Company, were sold by their respective originators and purchased by the Company,
acting in the ordinary course of their respective businesses;
(2) have been made in compliance with all applicable
requirements of the Real Estate Settlement Procedures Act, the Equal Credit
Opportunity Act, the federal Truth-In-Lending Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, related statutes and regulations and all
applicable Legal Requirements under usury, truth-in-lending, equal credit
opportunity and all other Laws, and the continued compliance of the Pledged
Loans is not affected by their pledge to the Agent, as agent and Representative
of the Lenders;
(3) are the legal, valid and binding obligations of the
respective Customers who made them and are and will continue to be valid and
enforceable in accordance with their terms, without any claim, right of
rescission, counterclaim, defense or offset, including any claim or defense of
usury, except as such enforceability may be limited by bankruptcy and other laws
affecting the rights of creditors generally and by principles of equity, and
neither the operation of any of their respective contract terms nor the exercise
of any right thereunder will render any of them partly or wholly unenforceable
or subject to any such claim, right of rescission, counterclaim, defense or
offset, and no such claim, right of rescission, counterclaim, defense or setoff
has been asserted;
(4) have not been modified or amended and none of their
requirements has been waived, except as expressly and completely reflected in
the applicable Loan Papers furnished to the Agent or the Custodian;
(5) comply and will continue to comply with the terms of this
Agreement and the Custody Agreement;
63
(6) were not originated in, and are not subject to the laws of
, any jurisdiction whose laws (i) make unlawful their pledge to the Agent
pursuant to this Agreement, or their ownership by the Agent or the Lenders
following foreclosure of the Agent's Lien, or conveyance in lieu of foreclosure
after any Event of Default or (ii) render the Pledged Loans unenforceable;
(7) are in full force and effect and have not been satisfied
or subordinated in whole or in part or rescinded, and the residential real
property securing the pledged Mortgage Loan has not been partially or completely
released from the Lien of the Pledged Loan;
(8) evidence and are each secured by a valid first Lien in
favor of the Company on real property securing the amount owed by the
Customer(s) under the related Mortgage, subject only to Permitted Encumbrances;
the Company has pledged and collaterally assigned all of the Company's right,
title and interest in such Pledged Loan and related Mortgage, and the Agent has
and will have a valid and perfected and enforceable first priority security
interest in such Pledged Loan;
(9) are executed with the genuine original signature of the
Customer(s) obligated on such Pledged Loan, and all parties to it had full legal
capacity to execute it; and
(10) (for Pledged Loans purchased by the Company) were
purchased for fair value and the Company took possession of them in the ordinary
course of its business, without knowledge that the Pledged Loan was subject to
any security interest other than the Lien of the Agent, as agent and
Representative of the Lenders; the Company has not sold, assigned or pledged any
of such Pledged Loans to any person and the Company has good and marketable
title to them free and clear of any encumbrance, equity, loan, pledge, charge,
claim or security interest other than the Agent's Lien, and is the sole owner
thereof with full right to pledge them to the Agent.
(e) As to each Pledged Loan and its Loan Papers:
(1) the Company has not waived any default, breach, violation
or event permitting acceleration except payment delinquencies that have not been
outstanding long enough to cause the Pledged Loan to be In Default; as of the
Effective Date, the related residential real property is, to the best of the
Company's knowledge, free of damage and in good repair and no such residential
real estate has suffered hurricane or earthquake damage that is not covered by a
Hazard Insurance Policy;
(2) as of the Effective Date, to the best of the Company's
knowledge, no liens or claims which have been filed for work, labor or materials
affecting the related real property which are or may be prior or equal in
priority to the Lien of the Pledged Loan;
(3) the Loan Papers contain customary and enforceable
provisions so as to render the rights and remedies of their holder adequate for
the realization against the collateral for the Pledged Loan of the benefits of
the security intended to be provided by it;
(4) there is only one original executed Mortgage Note, and
(except in the case of Bridged Loans) that original has been delivered to the
Custodian;
64
(f) Each Mortgage is a first or second Lien on the premises and
property described in it and the description in each Mortgage is legally
adequate, and, except as to Holdback Loans, each item of Debt Collateral has
been fully advanced in its face amount.
(g) No default, and no event that with notice or lapse of time or
both would become a default, has occurred and is continuing under any item of
Collateral other than pledged Single-family Mortgage Loans, and as to each
pledged Single-family Mortgage Loan, it is not In Default, and the Company will
promptly notify the Agent of any such pledged Single-family Mortgage Loan that
is In Default.
(h) The Company has complied and will continue to comply with all
Legal Requirements relating to each item of Collateral.
(i) All Hazard Insurance Policies covering the premises encumbered by
each item of Debt Collateral:
(1) name and will continue to name the Company or its Servicer
as the insured under a standard mortgagee clause;
(2) are and will continue to be in full force and effect; and
(3) afford and will continue to afford insurance against fire
and such other risks as are usually insured against in the broad form of
extended coverage insurance from time to time available, as well as insurance
against flood hazards if required by the terms of any applicable private
mortgage insurance or by any applicable Legal Requirement.
(j) Premises securing Debt Collateral and located in a special flood
hazard area designated as such by the Secretary of HUD are and shall continue to
be covered by special flood insurance as required by the National Flood
Insurance Program.
8.17 Survival. All representations and warranties by the Company shall survive
delivery of the Facilities Papers and the making of Advances, and any
investigation at any time made by or on behalf of the Agent or any Lender shall
not diminish the Agent's or such Lender's right to rely on them.
9. AFFIRMATIVE COVENANTS.
The Company agrees that, for so long as the Commitments are
outstanding or any of the Company's obligations remain to be paid or performed
under this Agreement, the Senior Credit Notes or any of the other Facilities
Papers, the Company shall, to the extent applicable:
9.1 Pay Senior Credit Notes. Punctually pay or cause to be paid when due the
principal of, interest on and all other amounts now or hereafter owing under
this Agreement, the Senior Credit Notes and the other Facilities Papers in
accordance with their respective terms.
9.2 Financial Statements. Deliver to the Agent and to each of the Lenders:
(a) As soon as available and in any event within forty-five (45) days
after the end of each month, statements of income and changes in its
stockholders' equity (and, if applicable, those
65
of its Subsidiaries, on a consolidated basis) for the month just ended, and the
related balance sheet as at the end of such month, all in reasonable detail, and
certified by its chief financial officer that, to the best of his or her
knowledge, such financial statements were prepared in accordance with GAAP and
present fairly the financial condition and the results of operations for the
period covered, subject, however, to year-end audit adjustments and the omission
of notes to the Financial Statements.
(b) As soon as available and in any event within forty-five (45) days
after the close of each of the first three (3) fiscal quarters in each of its
fiscal years, statements of income and changes in its stockholders' equity and
cash flows (and, if applicable, those of its Subsidiaries, on a consolidated
basis) for the period from the beginning of such fiscal year to the end of such
fiscal quarter, and the related balance sheet as at the end of such fiscal
quarter, all in reasonable detail, with all notes and certified by its chief
financial officer that, to the best of his or her knowledge, such financial
statements were prepared in accordance with GAAP and present fairly the
financial condition and the results of operations and cash flows for the period
covered, subject, however, to year-end audit adjustments and the omission of
notes to the Financial Statements.
(c) As soon as available and in any event within ninety (90) days
after the close of each of its fiscal years, statements of income, changes in
its stockholder's equity and cash flows (and, if applicable, those of its
Subsidiaries, on a consolidated basis) for such year, and the related balance
sheet as at the end of such year (setting forth in comparative form the
corresponding figures for the preceding fiscal year), all in reasonable detail,
prepared in accordance with GAAP and with all notes, and accompanied by:
(1) a report and opinion of an accounting firm reasonably
satisfactory to the Agent, or other independent certified public accountants of
recognized standing selected by it and acceptable to the Agent, stating that
such accountants have conducted audits of such financial statements in
accordance with generally accepted auditing standards and that, in their
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company (as applicable) as of the date thereof and the
results of its operations and cash flows for the periods covered thereby in
conformity with GAAP;
(2) if applicable, a report and opinion of a firm of
independent public accountants that is a member of the American Institute of
Certified Public Accountants, stating that such firm has examined selected
documents and records relating to the servicing of Mortgage Loans, including the
Pledged Loans covered by this Agreement, in accordance with the Mortgage Bankers
Association of America's Uniform Single Audit Program for Mortgage Bankers, or
any successor uniform program, and that, on the basis of such examination, such
servicing has been conducted in compliance with the minimum servicing standards
identified therein, except for such significant exceptions or errors in records
that, in the opinion of such firm, generally accepted auditing standards
requires it to report (the Company will use reasonable efforts to obtain such a
report and opinion in respect of each subservicer for the Company and will
furnish those obtained to the Agent); and
(3) a certificate signed by the chief financial officer of the
Company, as applicable, stating that said financial statements fairly present
its financial condition and results of operations (and, if applicable, those of
its Subsidiaries) as at the end of, and for, such year.
(d) As soon as available and in any event within forty-five (45) days
after the close of each of the first three (3) fiscal quarters in each of its
fiscal years, a copy of Long Beach Financial's
66
Form 10-Q, together with all attached schedules and exhibits, as filed with the
Securities and Exchange Commission.
(e) As soon as available and in any event within ninety (90) days
after the close of each of its fiscal years, a copy of Long Beach Financial's
Form 10-K, together with all attached schedules and exhibits, as filed with the
Securities and Exchange Commission.
The Company also agrees to provide to the Agent such other information related
to such annual reports as the Agent may from time to time reasonably request.
(f) Together with each of the monthly, quarterly and annual financial
statements required by SECTIONS 9.2(A), 9.2(B), 9.3 and 9.2(C) above, a
certificate of the Company's chief financial officer (i) setting forth in
reasonable detail all calculations necessary to show that the Company is in
compliance with the requirements of SECTIONS 10.5 and 10.6 of this Agreement or,
if the Company is not in compliance, showing the extent of noncompliance and
specifying the period of noncompliance and what actions the Company proposes to
take with respect thereto and (ii) stating that the terms of this Agreement have
been reviewed by such officer or under his or her supervision, and that he or
she has made or caused to be made under his or her supervision, a review in
reasonable detail of the transactions and the condition of the Company during
the accounting period covered by such financial statements and that such review
does not disclose the existence during or at the end of such accounting period
-- and that such chief financial officer does not have knowledge of the
existence as of the date of the Officer's Certificate -- of any Event of Default
or Default or, if any Event of Default or Default existed or exists, specifying
the nature and period of its existence and what action the Company has taken, is
taking and proposes to take with respect to it. Each such Officer's Certificate
shall show, in reasonable detail, the computations supporting compliance (or
showing noncompliance) with the provisions of SECTIONS 10.5 and 10.6. EXHIBIT E
is a sample form for showing such computations.
9.3 Financial Statements Will Fairly Present Financial Condition. All financial
statements and reports of auditors furnished to the Lenders and the Agent
hereunder shall be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as at, and
for the period then ended (except to the extent otherwise required to conform to
good accounting practice), and will fairly present the financial condition of
the Company subject, however -- for financial statements other than year-end
statements -- to year-end audit adjustments and the omission of notes to the
Financial Statements.
9.4 Other Reports. The Company will promptly furnish to the Agent (for
distribution to the Lenders) from time to time information regarding the
business and affairs of the Company, including the following and such other
information as the Agent may from time to time reasonably request:
(a) A copy of each new Purchase Commitment promptly after its receipt
by the Company (the details of which the Agent will maintain in a confidential
file to which the other Lenders shall not have access unless an Event of Default
occurs that the Agent has not declared in writing to have been cured or waived).
(b) A report of Debt Collateral prepaid in full, on or before two (2)
Business Days after prepayment of any one or more items of Debt Collateral is
reported to the Company internally or by any Servicer (and the Company, as
applicable, will require each such Servicer to promptly make such reports to the
Company, as applicable).
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(c) Weekly, a hedging coverage report showing, in reasonable detail
and in form and substance acceptable to and approved by the Company and the
Agent, the Company's hedging coverage of (i) all Pledged Loans and (ii) all
Mortgage Loans then committed to be funded or purchased by the Company.
(d) Monthly, a report summarizing notices received by the Company
requesting or demanding that the Company repurchase (or pay indemnity or other
compensation in respect of) Mortgage Loans previously sold or otherwise disposed
of by the Company to any investor or other Person pursuant to any express or
implied repurchase or indemnity obligation (whether absolute or contingent and
whether or not the Company is contesting or intends to contest the request or
demand).
(e) Monthly, a delinquent mortgage loan report listing Debt
Collateral (categorized as being in either the Warehouse Subline or the
Recoveries Subline, as the case may be) that is (i) In Default and categorized
by age of delinquency for 30, 60, 90 and 120 or more days, (ii) in foreclosure
or (iii) in bankruptcy.
(f) Monthly, a delinquent mortgage loan report listing Serviced Loans
(i) in default for thirty (30) days or more and categorized by age of
delinquency for 30, 60, 90 and 120 or more days, (ii) in foreclosure or (iii) in
bankruptcy.
(g) Monthly, mortgage loan production reports reflecting the
Company's monthly mortgage loan production and acquisition volumes, as well as
its mortgage loan pipeline.
(h) Monthly, a Pledged Loans Curtailment Report for each type of Debt
Collateral (categorized by its related Subline).
(i) Monthly, a report (a "RECEIVABLES COLLATERAL VALUE REDUCTION
REPORT") listing each item of P&I Advances Collateral, Servicing Advances
Collateral and Recoveries Collateral then Pledged to the Agent (separately
categorized into one of such three categories) the Collateral Value of which has
been diminished or impaired by any Disqualifying Event and stating its new
Collateral Value, as determined in accordance with the definition of
"Disqualifying Event".
(j) Quarterly, copies of any changed pages to the Company
Underwriting Guidelines to update the copies of the Company Underwriting
Guidelines furnished to the Agent before, on or about the Effective Date (and
which are described in Schedule UG-SSF.)
(k) Such other reports by the Company in respect of the Collateral,
in such detail and at such times as the Agent in its reasonable discretion or at
the reasonable direction of a Lender may request at any time or from time to
time.
(l) As soon as available and in any event within ten (10) days of the
date distributed, copies of all definitive prospectuses relating to (i) any
security offerings by the Company or any of its Subsidiaries (including
single-purpose finance Subsidiaries) or (ii) any securities to be based on,
backed by or created from any Collateral and to be offered by the Company or any
of its Subsidiaries.
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(m) As soon as available and in any event within ten (10) days after
filing, copies of (ii) all press releases issued by the Guarantor, the Company
or any of its Subsidiaries, (ii) all regular or periodic financial reports, and
copies of all extraordinary or non-routine filings, if any, that shall be filed
with the U.S. Securities and Exchange Commission or any successor agency by or
on behalf of the Guarantor, the Company or any of its Subsidiaries (including
single-purpose finance Subsidiaries) and (iii) all such filings relating to any
securities that are or are to be based on, backed by or created from any
Collateral and which filings are made by or in respect of the Company or any of
its Subsidiaries.
9.5 Maintain Existence and Statuses; Conduct of Business. Preserve and maintain
its corporate existence in good standing and all of its rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business except where the failure to maintain such rights, privileges, licenses
or franchises would not have a material adverse effect on any of the Central
Elements in respect of the Company, and conduct the business of the Company in
an orderly and efficient manner and remain in the residential mortgage business
as its principal and core business.
9.6 Hedge Investments in Mortgage Loans. Maintain a prudent hedge position in
respect of (i) Pledged Loans and Mortgage Loans that the Company has originated
or purchased and (ii) Mortgage Loans that the Company is committed to fund or
purchase, as reflected on the Company's most current hedge position reports,
which the Company agrees to provide to the Agent, in form, substance and detail
reasonably satisfactory to the Agent.
9.7 Compliance with Applicable Laws. Comply with all applicable Legal
Requirements, the breach of which could materially adversely affect any of the
Central Elements, except where contested in good faith and by appropriate
proceedings and where reserves adequate (in accordance with GAAP) in the
judgment of its board of directors have been set aside on its books.
9.8 Inspection of Properties and Books; Protection of Proprietary Information.
Permit authorized representatives of the Agent to discuss its business,
operations, assets and financial condition and its Subsidiaries with their
officers, employees and independent accountants and to examine their books of
account and make copies or extracts of them, all at such reasonable times as the
Agent may request. The Agent will notify the Company before the Agent contacts
its accountants and the Company may have a representative in attendance at any
meetings between the officers or other representatives of the Agent and such
accountants held in accordance with this authorization. The Agent and the
Lenders agree that, until the occurrence of a Default, they will take reasonable
steps to prevent disclosure to third parties of any proprietary information
obtained from any such inspections and discussions or from any financial
statements or reports furnished by the Company to the Agent or the Lenders
pursuant to this Agreement; provided that this restriction shall not apply to
information that (i) at the time in question has already entered the public
domain, (ii) is required to be disclosed by any Legal Requirement (including
pursuant to any examination, inspection or investigation by any Governmental
Authority having regulatory jurisdiction over the Agent or a Lender) or (iii) is
furnished by the Agent or any Lender to purchasers or prospective purchasers of
participations or interests in the Obligations or any Senior Credit Note so long
as such purchasers and prospective purchasers have agreed to be subject to
restrictions substantially identical to those contained in this sentence.
9.9 Notice of Suits, Etc. and Notice and Approval of Proposed Servicing
Transfers. Give prompt written notice to the Agent of:
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(a) any material action, suit or proceeding instituted by or against
the Company or any of its Subsidiaries or the Guarantor in any federal or state
court or before any commission, regulatory body or Governmental Authority or if
any such proceedings are threatened against the Company or any of its
Subsidiaries or the Guarantor, in a writing containing the applicable details;
(b) the filing, recording or assessment of any material federal,
state or local tax lien against the Company, any of its Subsidiaries or the
Guarantor or any assets of any of them;
(c) the occurrence of any Event of Default hereunder;
(d) the occurrence of any Default which continues for five (5) days;
(e) the transfer or loss of any Servicing Agreement that relates to
any Pledged Loans and to which the Company is a party, or which is for the
Company's benefit, and the reason for such transfer or loss, if known to the
Company; provided that no such notice to the Agent shall be required in respect
of transfer of any Servicing Agreement resulting from the Company's sale of
Mortgage Loans on a servicing-released basis and in the ordinary course of its
business; and
(f) the occurrence of (i) any event which, with or without notice or
lapse of time or both, would constitute a default under any other agreement,
instrument or indenture to which the Company or any or its Subsidiaries or the
Guarantor is a party or to which any of them or any of their properties or
assets may be subject which may lead to or result in a material adverse effect
on any of the Central Elements in respect of the Company or the Guarantor, or
(ii) any other action, event or condition of any nature which may lead to or
result in such an effect.
To the extent the Company has approval rights concerning transfers of any
Servicing Agreement relating to any Pledged Loans, it agrees not to approve or
acquiesce in any transfer of such servicing to a Servicer that has not been
approved by the Agent.
9.10 Payment of Taxes, etc. Pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and governmental charges or levies imposed upon
it or its Subsidiaries or upon their respective income, receipts or properties
before they become past due, as well as all lawful claims for labor, materials
and supplies or other things which, if unpaid, could reasonably be expected to
become (or result in the placement of) a Lien or charge upon any part of such
properties; provided that it and its affected Subsidiaries shall not be required
to pay taxes, assessments or governmental charges or levies or claims for labor,
materials or supplies that are being contested in good faith and by proper
proceedings being reasonably and diligently pursued, execution or enforcement of
which has been effectively stayed (by the posting of a bond or other security
sufficient to achieve that result, or by any other fully effective means), and
for which reserves determined to be adequate (in accordance with GAAP in all
material respects) by its -- or its affected Subsidiary's -- board of directors
have been set aside on its books.
9.11 Insurance. Maintain liability insurance protecting the Company and fire and
other hazard insurance on its respective properties from which it conducts its
business, with responsible insurance companies, in such amounts and against such
risks as is customarily carried by similar businesses operating in the same
vicinity. Cause the Servicers of its Mortgage Loans to maintain -- and if and
after the Company itself first begins servicing Mortgage Loans for others,
maintain for itself -- errors and omissions insurance and blanket bond coverage,
with such companies and in such amounts as satisfy prevailing requirements
applicable to a qualified mortgage originating institution.
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Copies of such policies shall be furnished to the Agent without charge upon the
Agent's request made from time to time and without cost to the Agent.
9.12 Subordination of Certain Indebtedness. Cause any and all debt and
obligations of the Company to any Affiliate of the Company, any Subsidiary of
the Company or any shareholder, director or officer of the Company or any other
Affiliate of the Company or any Subsidiary of the Company -- excluding
obligations for officer or employee salary, bonuses or other compensation and
also excluding those items of Debt (if any) listed in SCHEDULE 7.1(B) -- to be
Subordinated Debt, as defined in this Agreement, by the execution and delivery
by such Affiliate to the Agent of a Subordination Agreement in the form of
EXHIBIT C and the taking of all other steps (if any) required to cause such Debt
to be Subordinated Debt, as defined in this Agreement, and deliver to the Agent
an executed copy of that Subordination Agreement, certified by the corporate
secretary of the Company, as applicable, to be true and complete and in full
force and effect, as to all such present and future debts and obligations of the
Company except only those specifically excluded in SCHEDULE 7.1(B).
9.13 Payment and Performance of Other Loan Obligations. Pay and perform in all
material respects all of its loan obligations which alone or in the aggregate
exceed One Million Dollars ($1,000,000), and cause all of its Subsidiaries'
material obligations to be paid and performed, promptly and in accordance in all
material respects with their terms, under the terms of each loan agreement,
▇▇▇▇, note, bond, mortgage, security agreement, indenture or debt instrument by
which it is bound or to which any of its property is subject, and promptly
notify the Agent in writing of the cancellation or reduction of any of its lines
of credit or agreements with any other lender or financial institution, or with
any Affiliate.
9.14 Maintain Priority and Perfection of Lender's Lien. Do such things as
applicable law requires to maintain the Lender's Lien on the Collateral as a
perfected first priority Lien at all times.
9.15 Use of Proceeds of Advances. Use the proceeds of each Advance solely for
the applicable purpose stated in SECTION 2.4 and for no other purpose.
9.16 Promptly Correct Escrow Imbalances. By no later than seven (7) Business
Days after learning (from any source) of any material imbalance in any escrow
account(s) maintained by the Company (or any subservicer for it), the Company
will fully and completely correct and eliminate such imbalance.
9.17 Special Affirmative Covenants Concerning Collateral.
(a) Until all of the Obligations shall have been fully paid and
satisfied and the Lenders have no obligation to lend or provide any other
financial accommodations to the Company under or in anywise in respect of this
Agreement, the Company warrants and will defend the right, title and interest of
the Agent in and to the Collateral against the claims and demands of all persons
whomsoever.
(b) The Company will ensure that the residential real estate securing
each Pledged Loan is continuously insured against casualty loss as follows:
(1) the Company shall cause to be maintained with respect to
each Pledged Mortgage, one or more Hazard Insurance Policies which provide, at a
minimum, the same coverage
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as a standard form fire and extended coverage insurance policy that is
customarily required by other creditors for residential real estate located in
the same general geographic area and State that secures that Pledged Mortgage,
issued by a company authorized to issue such policies in the state in which the
related residential real estate is located and in an amount not less than (x)
the maximum insurable value of the improvements to such residential real estate
or (y) the principal balance due from the Customer(s) under the related Pledged
Loan, whichever is less; provided that the amount of coverage provided by each
Hazard Insurance Policy shall be sufficient to avoid the application of any
coinsurance clause for partial losses, although such Hazard Insurance Policies
may provide for customary deductible amounts. Each Hazard Insurance Policy shall
contain a standard loss payee clause in favor of the Company and its successors
and assigns. If any Customer obligated on any Pledged Loan fails to pay any
premiums on the Hazard Insurance Policy for the related property, the Company
shall pay such premiums out of its own funds and may separately add the amount
so paid to the relevant Customer's obligation as provided by the Mortgage Loan
papers, but shall not add that amount to the remaining principal balance of the
Pledged Loan; and
(2) the Company may, in lieu of causing individual Hazard
Insurance Policies to be maintained with respect to each residential property
pursuant to SECTION 9.17(B)(1), and shall, to the extent that the related Loan
Papers do not require the Customer(s) obligated on them to maintain a Hazard
Insurance Policy with respect to the related real property , maintain one or
more blanket insurance policies covering losses on the Company's interest in the
Pledged Loans resulting from the absence or insufficiency of individual Hazard
Insurance Policies. Any such blanket policy shall be in the form and the amount
as shall be satisfactory to the Agent. The Company shall pay the premium for
such policy on the basis described therein and shall pay from its own funds any
deductible amount with respect to claims under such blanket insurance policy
relating to the Pledged Loans. However, the Company shall not be required to
deposit any deductible amount with respect to claims under individual Hazard
Insurance Policies maintained pursuant to SECTION 9.17(B)(1). If the insurer
under such blanket insurance policy shall cease to be acceptable to the Company,
the Company shall exercise its best reasonable efforts to obtain from another
insurer a replacement policy comparable to such policy.
(c) The Company agrees to use its best efforts to cause each of its
Servicers to -- and from and after the time when the Company begins actually
servicing Mortgage Loans for others, the Company itself shall -- keep in force
throughout the term of this Agreement (i) a policy or policies of insurance
covering errors and omissions for failure to maintain insurance as required by
this Agreement and (ii) a fidelity bond. Each such policy and fidelity bond
shall be in such form and amount as is generally customary among Persons who
service a portfolio of Mortgage Loans having an aggregate principal amount
comparable to that of the servicing portfolio of such Servicer or the Company,
respectively, and which are generally regarded as servicers acceptable to
institutional investors.
(d) The Company shall execute and deliver to the Agent such UCC
financing statements and continuation statements and shall make or cause to be
made by any Person such book entries and control agreements with respect to the
Collateral as the Agent may reasonably request from time to time to perfect or
continue perfection of the security interests granted or required to be granted
to the Agent (for itself as a Lender and as agent for the other Lenders)
pursuant to this Agreement. The Company shall also execute and deliver to the
Agent such further instruments of sale, pledge or assignment or transfer, and
such powers of attorney, as shall be reasonably required by the Agent from time
to time, and shall do and perform all matters and things necessary or desirable
to be done or observed, for the purpose of effectively creating, maintaining and
preserving the security and
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benefits intended to be afforded the Lenders and the Agent under this Agreement,
the Senior Credit Notes, the Custody Agreement and the other Facilities Papers.
The Agent shall have all the rights and remedies of a secured party (for itself
as a Lender and as agent for the other Lenders) under the UCC of the State of
Texas and any other applicable law, in addition to all rights provided for in
this Agreement or the Custody Agreement.
(e) As soon as they become available, the Company will assemble and
deliver to the Custodian all Basic Loan Papers relating to Bridged Loans.
Without limitation of the foregoing, if original recordation receipts evidencing
the recordation of the Mortgage and Mortgage Assignment included in the Pledged
Loans have not previously been delivered to the Custodian, the Company will
promptly deliver (or cause to be delivered) to the Custodian, either the
original recordation receipts or the original recorded Mortgage or Mortgage
Assignment showing the recordation data thereon.
(f) The Company shall maintain, at its principal office or in a
regional office not disapproved by the Agent, or in the office of a computer
service bureau engaged by the Company and not disapproved by the Agent, and upon
request shall make available to the Agent (or the Custodian, if the Agent ever
ceases to be Custodian) the originals of all Mortgage Loan Documents and related
instruments, and all files, surveys, certificate, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other information
and data relating to the Collateral that are held by or under the direction or
control of the Company or any of its Affiliates and that have not already been
provided to the Agent or the Custodian.
10. NEGATIVE COVENANTS.
The Company agrees that, for so long as the Commitments are
outstanding or any of the Company's obligations remain to be paid or performed
under this Agreement, the Senior Credit Notes (including the Swing Line Note) or
any of the other Facilities Papers, the Company shall not, either directly or
indirectly, without the prior written consent of the Agent:
10.1 Contingent Liabilities. Assume, guarantee, endorse, or otherwise become
liable for the Debt or other obligation of any Person or entity except (a) by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business and (b) under the Company's existing contingent liabilities
described on SCHEDULE 10.1.
10.2 Merger; Sale of Assets; Acquisitions. Liquidate, dissolve, sell assets,
consolidate or merge, nor acquire substantially all of the assets of any other
Person, unless:
(a) (i) in the case of a consolidation or merger, it is with a
mortgage company and the Company is the survivor or (ii) in the case of an
acquisition, it is of assets or securities to be used by the Company in the
direct prosecution of its core mortgage company business, or, if it is not, such
acquisition will not cost the Company more than twenty-five percent (25%) of the
Company's Tangible Net Worth;
(b) in the case of a sale of assets, such sale is in the ordinary
course of the Company's business;
(c) in the case of an acquisition of assets, such acquisition is in
the ordinary course of the Company's business; and
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(d) after giving effect to such a sale, consolidation, merger or
acquisition, no Default or Event of Default would exist under this Agreement or
any of the other Facilities Papers.
10.3 Deferral of Subordinated Debt. Pay in advance of its stated maturity any
Subordinated Debt of the Company, prepay any scheduled installment thereon (for
any term loans) or, if a Default or an Event of Default under this Agreement
shall have occurred, thereafter make any payment of any kind or through any
direct or indirect means or method on such Subordinated Debt unless and until
either (a) every Default (if any) which has occurred has been cured by the
Company or waived in writing by the Agent before becoming an Event of Default
and the Agent shall have declared in a writing signed by a Senior Vice President
or more senior officer of the Agent that all Events of Default (if any) which
have occurred have been duly cured or waived or (b) all of the Obligations have
been paid and performed in full.
10.4 Limitations on Debt. Create, incur, suffer or permit to exist, or assume or
guarantee, either directly or indirectly, or otherwise become or remain liable
with respect to, any Debt (whether under repurchase agreements or otherwise),
whether direct, indirect, absolute, contingent or otherwise, except the
following (without duplication):
(a) Debt to the Lenders and the Agent pursuant to this Agreement
(including Swing Line Debt to Chase Texas);
(b) Other warehouse financing Debt to Chase Texas of up to One
Hundred Million Dollars ($100,000,000) to the extent (if any) that Chase Texas
may from time to time elect to make other warehouse financing facilities
available to the Company;
(c) Other warehouse financing Debt of to up to Two Hundred Million
Dollars ($200,000,000) provided to the Company by one or more
nationally-recognized securities broker-dealers (or their Affiliates), the
collateral for which is held by the Agent, as documents custodian and collateral
agent for such lender(s);
(d) Debt for taxes (including payroll taxes), assessments,
governmental charges and levies to the extent that payment is not due at the
time, including Debt for deferred taxes arising from capitalized excess service
fees;
(e) unsecured accounts payable, not the result of borrowing of money,
to vendors, suppliers and persons providing services, for expenditures for goods
and services normally required by it in the ordinary course of business and on
ordinary trade terms;
(f) Debt of up to Ten Million Dollars ($10,000,000) secured by the
Company's real estate, furniture, fixtures or equipment whose current fair
market value at the time the Debt it secures was incurred exceeded the amount of
such Debt;
(g) Debt secured by the Company's investment grade marketable
securities the whose current fair market value exceeds the amount of the Debt
they secure;
(h) unsecured Debt that is:
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(1) to the Company's officers and employees for salary,
bonuses or other compensation;
(2) to the Company's Affiliates, Subsidiaries or any of their
respective directors or officers and that is either listed on SCHEDULE 7.1(B) or
subordinated pursuant to SECTION 9.12;
(3) incurred in the ordinary course of business pursuant to
Servicing Agreements, information service contracts or other contractual
agreements between the Company and any subservicer, information services
provider or other vendor or provider of goods or services, under any agreement
that has been approved by the Agent on or before the Company's execution and
delivery of this Agreement.
(4) to third parties, incurred in the ordinary course of
business and less than Two Million Dollars ($2,000,000) in the aggregate;
(5) Subordinated Debt with a final maturity date later than
the Maturity Date;
(6) described in the attached SCHEDULE 10.4(H)(6); or
(7) incurred after the Effective Date to one or more third
parties and for which details concerning the identity of such Debt's holder, its
amount, interest rate, payment schedule and any other relevant information
requested by the Agent (which, if requested, shall include copies of all its
loan papers) shall have been furnished to the Agent and which shall have been
specifically approved in writing by the Agent; or
(8) wholly nonrecourse to the Company or any of its
Subsidiaries (whether under repurchase agreements or otherwise).
Without limitation of the generality of the foregoing provisions of this
Section, the Company agrees to not pledge, hypothecate or make subject to any
repurchase agreement or other financing device, or otherwise encumber, any of
the Company's mortgage loan servicing rights under any present or future
Servicing Agreements without the prior written consent of the Majority Lenders.
10.5 The Company's Debt to Tangible Net Worth Ratio. Permit the ratio of Debt
(excluding nonrecourse Debt whether under repurchase agreements or otherwise) to
Tangible Net Worth of the Company and its Subsidiaries, on a consolidated basis,
to exceed 10:1 as at the end of any calendar month or any of the Company's
fiscal quarters or fiscal years.
10.6 The Company's Minimum Tangible Net Worth. On any day, permit the Tangible
Net Worth of the Company (on a consolidated basis with its Subsidiaries) to be
less than the greater of (x) Thirty Million Dollars ($30,000,000) or (y) the sum
of Thirty Million Dollars ($30,000,000) plus twenty-five percent (25%) of the
Company's cumulative positive net income (i.e., specifically excluding any
intervening net losses) from the Effective Date to the date of determination of
Tangible Net Worth for purposes of this covenant; provided that if the Company
shall issue any capital stock in addition to its stock that has been issued and
is outstanding on the Effective Date (or increase its equity capital through any
other means except retention of earnings), the Thirty Million Dollars
($30,000,000) base amount specified in CLAUSES (X) and (Y) above shall be reset
to such amount as the Lenders shall approve in writing -- based on the Agent's
recommendation to the Lenders following the Agent's reasonable negotiations with
the Company of the adjusted base
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amount in light of such change in the Company's equity capital -- such adjusted
base amount to be effective as of the date of issuance of such additional stock
(or the date of such increase through other means in the Company's equity
capital) or such later date as shall be specified in the Agent's written
statement of such new amount and the effective date of such change, which
statement the Agent agrees to deliver to the Company and the Lenders promptly
after such new base amount shall have been so set following such negotiations
with the Company and approval of such new base amount by the Lenders.
10.7 Advances to Affiliates. Make loans or advances to an Affiliate or
Subsidiary except:
(a) loans or advances up to an aggregate principal amount of Ten
Million Dollars ($10,000,000) -- or such greater amount, if any, as shall from
time to time be approved by the Majority Lenders -- for any purpose; and
(b) loans or advances to the Guarantor to fund executive or employee
compensation.
10.8 Serviced Loans Portfolio Delinquencies Level. Suffer or permit Serviced
Loans having aggregate principal balances of more than twelve percent (12%) of
the sum of the principal balances of the Company's Serviced Loans portfolio to
be In Default for more than thirty-one (31) consecutive days.
10.9 Minimum Annual Net Income. Suffer or permit the Company's net income for
any of its fiscal years to be less than One Dollar ($1).
10.10 Fiscal Year. Change the Company's fiscal year to be other than a calendar
year.
10.11 Special Negative Covenants Concerning Collateral and Underwriting
Guidelines.
(a) Except to correct errors or omissions in Loan Papers, without the
written consent of the Agent given on a case-by-case basis, the Company shall
not amend or modify, or waive any of the terms and conditions of any Pledged
Loans, or settle or compromise any claim in respect of them, or accept other
than cash or the exchange of comparable Debt Collateral (which are concurrently
Pledged to the Agent by the Company) in liquidation of any Pledged Loans;
provided that this covenant shall not apply to Recoveries Collateral;.
(b) The Company will not create, incur, grant, assume or suffer to
exist any Lien on any of the Collateral, other than in favor of the Agent
pursuant to this Agreement.
(c) The Company will not make any material change in the Company
Underwriting Guidelines without first providing a copy of the proposed change to
the Agent, or if the Agent shall give the Company a written notice objecting to
such proposed change and summarizing the reason or reasons for the Agent's
objection on or before ten (10) days after receiving a copy of the proposed
change.
11. DEFAULTS AND REMEDIES.
11.1 Events of Default. The occurrence of any of the following conditions or
events shall be an Event of Default.
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(a) Failure by the Company to pay the principal of any Advance when
due pursuant to this Agreement or any Senior Credit Note, whether such Advance
has become due because the Maturity Date has occurred through lapse of time or
acceleration or by operation of another provision of this Agreement or the
Senior Credit Notes; or failure by the Company to pay any installment of
interest on any Advance or any other amount owing under this Agreement on or
before five (5) days after the due date of such interest.
(b) Failure of the Company or any of its Subsidiaries to pay any
other Debt when due, or any default in the payment when due of any principal or
interest on any other Debt or in the payment when due of any contingent
obligation (other than nonrecourse Structured Securities Debt of any Subsidiary
formed for the purpose of issuing such Debt) if such default continues beyond
any period of grace provided under the papers evidencing such obligation; or
breach or default with respect to any other material term of any other debt or
of any promissory note, bond, loan agreement, reimbursement agreement, mortgage,
indenture or other agreement relating thereto, if the effect of any such
failure, default or breach referred to in this SECTION 11.1(B) is to cause, or
to permit the holder or holders of such obligation (or a trustee on behalf of
such holder or holders) to cause, debt of the Company or any of its Subsidiaries
in the aggregate amount of One Million Dollars ($1,000,000) or more to become or
be declared due before its stated maturity.
(c) Failure of the Company to perform or comply with any term or
condition applicable to it contained in any of SECTIONS 9.5, 9.15, 9.16, 9.17(A)
or 10 of this Agreement or to pay timely the Commitment Fee pursuant to SECTION
5.6, the Agent's Fees pursuant to SECTION 5.7, the Custodian's Fee under the
Custody Agreement or any other fees under this Agreement or any other Facilities
Papers.
(d) Any of the Company's representations or warranties made in any of
the Facilities Papers or in any statement or certificate at any time given by
the Company in writing pursuant to this Agreement, the Custody Agreement or any
of the other Facilities Papers or in connection with any of the Facilities
Papers shall be false or misleading in any material respect on the date as of
which made or shall omit to state any information necessary to make the
representations and warranties not materially misleading; provided that if any
of the Company's representations in SECTION 8.16 (titled "Special
Representations Concerning Collateral") for any reason shall be (or shall prove
to have been) untrue or incorrect, then such untruth or incorrectness shall not
constitute a Default or an Event of Default -- although, as provided in the
definition thereof, such untruth or incorrectness will be a Disqualifying Event
for all affected items of Collateral, which will each thereupon have zero
Collateral Value -- unless such untrue or incorrect representation relates to
ten (10) or more Pledged Mortgages, receivables or other items of Collateral and
was made knowingly and willfully by (or at the direction of) a Vice President or
more senior officer of the Company with the intent or for the purpose of
misleading or deceiving the Agent, the Lenders or all of them, in which event
the making of such false representation will constitute an Event of Default.
(e) The Company shall default in the performance of or compliance
with any term contained in this Agreement or any of the Facilities Papers other
than those referred to above in SECTIONS 11.1(A), 11.1(C) or 11.1(D) or shall
default in the performance of or compliance with any term applicable to it
contained in the Custody Agreement and such default shall not have been remedied
or waived on or before thirty (30) days after receipt of notice from the Agent
of such default.
(f) Any of the following occurs:
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(1) a court having jurisdiction shall enter a decree or order
of relief in respect of the Company or any of its Subsidiaries, or the
Guarantor, in an involuntary case under any applicable bankruptcy, insolvency or
other similar federal or state law now or hereafter in effect, which decree or
order is not stayed;
(2) a decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Company or any of its Subsidiaries, or
the Guarantor, or over all or a substantial part of their respective property,
shall have been entered;
(3) an involuntary appointment shall be made by a court of
competent jurisdiction of an interim receiver, trustee or other custodian of the
Company or any of its Subsidiaries, or the Guarantor, for all or a substantial
part of their respective property; or
(4) a warrant of attachment, execution or similar process
against any substantial part of the property of the Company or any of its
Subsidiaries , or the Guarantor, shall have been issued; if any such decree,
order, appointment or warrant shall not be dismissed, bonded off or discharged
on or before sixty (60) days after it first takes effect; provided that this
Section shall not be applicable in the case of a Subsidiary formed for the
limited purpose of issuing Structured Securities that becomes the subject of any
such decree, order of relief, case, appointment or warrant if on or before
thirty (30) days after such a decree, order, appointment or warrant is entered
or such a case is commenced, the Company delivers to the Agent a current letter
addressed to the Agent and the Lenders from a reputable broker-dealer acceptable
to and approved by all of the Lenders that such broker-dealer will continue to
underwrite mortgage-backed securities based on and backed by Pledged Loans
notwithstanding such decree, order, case, appointment or warrant or the pendency
of the related proceedings -- this proviso is called the "UNDERWRITER'S EXCUSE
PROVISO".
(g) The Company or -- also subject to the Underwriter's Excuse
Proviso, applicable to single-purpose finance Subsidiaries only -- any of its
Subsidiaries, or the Guarantor, shall have an order for relief entered with
respect to it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion to
an involuntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; the making by the Company or any of its
Subsidiaries or the Guarantor of any assignment for the benefit of creditors; or
the inability or failure of the Company or any of its Subsidiaries or the
Guarantor, or the admission by the Company or any of its Subsidiaries or the
Guarantor in writing of its inability, to pay its debts as such debts become
due.
(h) The Company shall take or omit to take any act (i) that would
result in the suspension or loss of any of its statuses, once achieved -- or any
of such statuses of its subservicer, in any, of any GNMA, FNMA or FHLMC Mortgage
Loans pools for which the Company is Servicer -- as an FHA- and VA-approved
lender and mortgagee and a GNMA-, FNMA- and FHLMC-approved issuer and servicer,
or (ii) after which the Company or any such relevant subservicer would no longer
be in good standing as such, or (iii) after which the Company or any such
relevant subservicer would no longer currently satisfy all applicable GNMA, FNMA
and FHLMC net worth requirements, if both (x) all of the material effects of
such act or omission shall have not been cured by the Company or waived by the
relevant Person (GNMA, FNMA or FHLMC)
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before termination of such status and (y) it could reasonably be expected to
have a material adverse effect on any of the Central Elements relative to the
Company.
(i) The Company's rights to service Mortgage Loans for any investor
under a Servicing Agreement the value of which rights to the Company (as
reasonably estimated by the Agent) equals or exceeds Twenty-five Million Dollars
($25,000,000) shall be terminated for cause (i.e., on account of act(s) or
omission(s) by the Company for which the holder (or a trustee for the holder) of
the relevant Serviced Loans has the right under such Servicing Agreement to
terminate such Servicing Rights.
(j) Any money judgment, writ or warrant of attachment, or similar
process involving in any case an amount in excess of Two Hundred Fifty Thousand
Dollars ($250,000) shall be entered or filed against the Company or any of its
Subsidiaries, or the Guarantor, or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30)
days or in any event later than five (5) days before the date of any proposed
sale thereunder.
(k) Any order, judgment or decree shall be entered against the
Company or the Guarantor decreeing the dissolution or split up of the Company or
the Guarantor, and such order shall remain undischarged or unstayed for a period
in excess of sixty (60) days or in any event later than five (5) days before the
date when such order, judgment or decree shall become final and nonapplicable,
or if the Company or the Guarantor, as applicable, shall not be diligently
pursuing efforts to have such order discharged, vacated, bonded around or stayed
during that time.
(l) Any Plan maintained by the Company or any of its Subsidiaries or
the Guarantor shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States district court to
administer any such Plan, or the Pension Benefit Guaranty Corporation (or any
successor to it) shall institute proceedings to terminate any such Plan or to
appoint a trustee to administer any such Plan if as of the date thereof the
liability of the Company or any of its Subsidiaries or the Guarantor (after
giving effect to the tax consequences thereof) to the Pension Benefit Guaranty
Corporation (or any successor to it) for unfunded guaranteed vested benefits
under such Plan exceeds the then-current value of assets accumulated in such
Plan by more than Two Hundred Fifty Thousand Dollars ($250,000) (or in the case
of a termination involving the Company or any of its Subsidiaries or the
Guarantor as a "substantial employer", as defined in Section 4001(a)(2) of
ERISA, the withdrawing employer's proportionate share of such excess shall
exceed such amount), unless any such termination, trustee appointment or
proceedings is in respect of any Subsidiary's Plan and has no material adverse
effect on any of the Central Elements in respect of the Company, any of its
Subsidiaries or the Guarantor.
(m) The Company or any of its Subsidiaries or the Guarantor as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding Two
Hundred Fifty Thousand Dollars ($250,000), unless any such termination, trustee
appointment or proceedings is in respect of any Subsidiary's Plan and has no
material adverse effect on any of the Central Elements.
(n) A Change of Control shall occur.
(o) The Company shall repudiate or purport to disavow its obligations
under any of the Facilities Papers or shall contest their validity or
enforceability.
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(p) The Agent's security interest in any material portion of the
Collateral shall become unperfected, of less than a first priority,
unenforceable or otherwise impaired.
11.2 Suspension of Guaranty. Unless a Default or Event of Default shall have
occurred that has not been declared in writing by the Agent to have been cured
or waived, during each period of time (if any) (x) after the date (if ever) when
the Agent shall have declared in writing that the Guaranty has been suspended
pursuant to its provision for suspension if the Company's Tangible Net Worth at
the end of any fiscal quarter shall be at least Fifty Million Dollars
($50,000,000) and (y) before the end of any subsequent fiscal quarter when the
Company's Tangible Net Worth shall be less than Fifty Million Dollars
($50,000,000) and, for that reason, the Guaranty is automatically reinstated in
accordance with its terms, all references to the Guarantor in SECTION 11.1 shall
be disregarded.
11.3 Cure or Waiver. If:
(a) an Event of Default shall occur but subsequently the required
number of Lenders shall waive the rights of the Lenders and the Agent to
exercise remedies on account of such Event of Default (whether temporarily or
permanently and whether conditionally or absolutely); provided that neither the
Lenders nor the Agent shall have any obligation to do so; and
(b) The Company shall request in writing that the Agent declare to
have been cured or waived whichever of those events has occurred;
then the Agent shall make such declaration in writing and shall deliver a copy
of the declaration to each of the Company and each Lender. The Agent shall not
declare in writing that an Event of Default has been waived unless Lenders whose
approval to waive it is required by the applicable provisions of SECTIONS 13.2
or 13.3(E) -- i.e., either all Lenders or the Majority Lenders -- have in fact
done so.
11.4 Remedies.
(a) If any of the Events of Default described in SECTIONS 11.1(F),
11.1(G), 11.1(K) or 11.1(O) shall occur, then the Commitments shall
automatically terminate and the unpaid principal amount of and accrued interest
on the Senior Credit Notes shall automatically become due and payable, without
presentment, demand or other requirements of any kind, all of which are hereby
expressly waived by the Company, unless all of the Lenders, each acting in its
sole discretion, shall otherwise agree in writing either before or after such
automatic event.
(b) At any time after any Event of Default (other than one of those
described in SECTIONS 11.1(F), 11.1(G), 11.1(K) or 11.1(O), each of which has
the automatic effects described in SECTION 11.4(A)) has occurred that has not
been declared in writing by the Agent to have been cured or waived, the Majority
Lenders, by written notice to the Company (which may be given by the Agent), may
electively (1) terminate the Commitments -- in which event the obligation of the
Lenders to make Advances shall immediately terminate -- and/or (2) declare all
or any portion of the Loan to be due and payable -- in which event that portion
of the Loan, both advanced and unpaid principal and accrued and unpaid interest
on it and all other outstanding amounts, shall immediately be and become due and
payable.
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(c) At any time after any Event of Default has occurred which has not
been declared in writing by the Agent to have been cured or waived, the Agent,
with the approval or at the direction of the required number of Lenders, may
also do any of the following:
(1) Foreclose upon or otherwise enforce its security interest
in and Lien on the Collateral, or on such portions or elements of it as the
Agent shall elect to proceed against from time to time.
(2) Notify any or all Servicers (if any) of the Company's
Pledged Loans and, at the Agent's option and in its sole discretion, any or all
Customers obligated under any or all items of Collateral, that the Collateral
has been assigned to the Agent and that all payments thereon are to be made
directly to the Agent or such other Person as may be designated by the Agent;
settle, compromise, or release, in whole or in part, any amounts owing on the
Collateral or any portion of the Collateral, on terms acceptable to the Agent;
enforce payment and performance and prosecute any action or proceeding with
respect to any and all Collateral; and where any such Collateral is in default,
foreclose on and enforce Liens or security interests in, such Collateral by any
available judicial procedure or without judicial process and sell property
acquired as a result of any such foreclosure.
(3) Act, or contract with one or more third Persons to act, as
Servicer of each item of Collateral requiring servicing and perform all
obligations required in connection with any Servicing Agreements to which the
Company is a party, and the Company hereby agrees to pay such third Persons'
fees to the extent (if any) that the Agent is unable, despite reasonable efforts
made by the Agent in light of the necessity that there be no material break in
the continuity of servicing, to contract for such servicing and performance of
such obligations for fees equal to or less than the fees under such Servicing
Agreements.
(4) Exercise all rights and remedies of a secured creditor
under the UCC of the State of Texas and any other relevant State, including
selling the interests of the Company in the Collateral at public or private
sale. The Agent shall give the Company not less than ten (10) days' notice of
any such public sale or of the date after which private sale may be held. The
Company agrees that ten (10) days' notice shall be reasonable notice. At any
such sale any or all of the Collateral may be sold as an entirety or in separate
parts, as the Agent may determine. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. The
Agent is authorized at any such sale, if the Agent deems it advisable so to do,
to restrict the prospective bidders or purchasers to Persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or resale of any of the
Collateral. The Company specifically agrees that any such sale, whether public
or private, of any Collateral pursuant to the commitment of any investor to
purchase such Collateral that was obtained by (or with the approval of) the
Company will be commercially reasonable, and if such sale is for the price
provided for in such commitment, then such sale shall be held to be for value
reasonably equivalent to the value of the Collateral so sold. Upon any such
sale, the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right of whatsoever
kind, including any equity or right of redemption, stay or appraisal which the
Company has or may have under any rule of law or statute now existing or
hereafter adopted. In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by the
Agent until
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the selling price is paid by the purchaser, but the Agent shall not
incur any liability in case of such purchaser's failure to take up and pay for
the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Agent may, however, instead of exercising
the power of sale herein conferred upon it, proceed by a suit or suits at law or
in equity to collect all amounts due upon the Collateral or to foreclose the
pledge and sell the Collateral or any portion of it under a judgment or decree
of a court or courts of competent jurisdiction, or both. Nothing in this
Agreement shall be construed as the Company's waiver of -- or agreement to waive
-- any requirement imposed by applicable law that any sale of the Collateral be
commercially reasonable.
(5) Proceed against the Company on the Senior Credit Notes or
any of them with or without, at the Agent's election, first proceeding against
the Collateral.
(d) Neither the Agent nor any of the Lenders shall incur any
liability as a result of the sale of the Collateral, or any part of it, at any
private sale. The Company hereby waives any claims it may have against the Agent
or the Lenders arising by reason of the fact that the price at which the
Collateral may have been sold at such private sale was less than the price that
might have been obtained at a public sale, less than the price that might have
been obtained had the Collateral been sold pursuant to a Purchase Commitment for
it obtained by the Company, or less than the aggregate amount of the outstanding
Advances and the unpaid interest accrued on them, even if the Agent accepts the
first offer received and does not offer the Collateral to more than one offeree.
(e) The Company waives any right to require the Agent or any Lender
to (1) proceed against any Person, (2) proceed against or exhaust any of the
Collateral or pursue its rights and remedies as against the Collateral in any
particular order, or (3) pursue any other remedy in its power. Except to the
extent, if any, required by applicable Law, the Agent shall not be required to
take any steps necessary to preserve any rights of the Company against holders
of Mortgages or security interests prior in lien to the Lien of any Mortgage
included in the Collateral, to preserve rights against prior parties or to
preserve rights against other parties to Purchase Commitments or Servicing
Agreements.
(f) The Agent and the Lenders may, but shall not be obligated to,
advance any sums or do any act or thing necessary to uphold and enforce the Lien
and priority of any Mortgage or other Lien instrument included in the Collateral
or the security intended to be afforded by it, including payment of delinquent
taxes or assessments and insurance premiums, or to preserve or reinstate any
hedging arrangements or mechanisms. All advances, charges, costs and expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by the
Agent in exercising any right, power or remedy conferred by this Agreement or
any of the other Facilities Papers, or in its enforcement, together with
interest thereon, at the Stated Rate from the time of demand for its payment
until ten (10) days thereafter, and at the Past Due Rate from ten (10) days
after demand until repaid, shall become a part of principal balance outstanding
under the Senior Credit Notes (Pro Rata with the respective principal balances
of the Senior Credit Notes at the time of expenditure) and shall be secured by
all security for the Senior Credit Notes.
(g) No failure on the part of the Agent or any Lender to exercise,
and no delay in exercising, any right, power or remedy provided under any of the
Facilities Papers, at law or in equity shall operate as a waiver of it, nor
shall any single or partial exercise by the Agent or any Lender of any right,
power or remedy provided under any of the Facilities Papers, at law or in equity
preclude any other or further exercise of it or the exercise of any other right,
power or remedy. The
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remedies herein provided are cumulative and are not exclusive of any remedies
provided at law or in equity.
11.5 Application of Proceeds. The proceeds of any sale or other enforcement of
the Agent's security interest in all or any part of the Collateral shall be
applied by the Agent:
First, to the payment of the costs and expenses of such sale or
enforcement, including reasonable compensation to the Agent's counsel and
agents, and all expenses, liabilities and advances made or incurred by or on
behalf of the Agent in connection therewith;
Second, to the payment of any accrued and unpaid fees and other
amounts due (other than principal and interest) under the Senior Credit Notes,
this Agreement, the Custody Agreement or the other Facilities Papers;
Third, to the payment of interest accrued and unpaid on the Senior
Credit Notes, Pro Rata;
Fourth, to the payment of the outstanding principal balances of the
Senior Credit Notes, Pro Rata; and
Finally, to the payment to the Company, or to its successors or
assigns, or as a court of competent jurisdiction may direct, of the surplus, if
any, then remaining from such proceeds.
If the proceeds of any such sale are insufficient to cover the costs and
expenses of such sale, as aforesaid, and the payment in full of the Senior
Credit Notes and all other amounts due under the Facilities Papers, then the
Company shall remain liable for any deficiency, and shall be obligated to pay it
without notice or demand.
11.6 Agent Appointed Attorney-in-Fact. The Agent is hereby APPOINTED the
attorney-in-fact of the Company, with full power of substitution, for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments that the Agent may deem necessary or advisable to
accomplish this Agreement's purposes, which appointment as attorney-in-fact is
coupled with an interest and irrevocable for so long as any of the Obligations
or the Commitments are outstanding, although the Agent agrees not to exercise
its rights under this power of attorney unless, in its opinion or the opinion of
its legal counsel, an Event of Default has occurred that has not been declared
in writing by the Agent to have been cured or waived. Without limiting the
generality of the foregoing, the Agent shall have the right and power, either in
the name of the Company or both, or in its own name, to (a) give notices of its
security interest as agent and Representative of the Lenders in the Collateral
to any Person, (b) endorse in blank, to itself or to a nominee all items of
Collateral that are transferable by endorsement and are payable to the order of
the Company and (c) receive, endorse, collect and receipt for all checks and
other orders made payable to the order of the Company representing any payment
of account of the principal of or interest on any Collateral or their proceeds
(including any securities), or the proceeds of sale of any of the Collateral, or
any payment in respect of any hedging arrangement or device, and to give full
discharge for them.
11.7 Right of Setoff. If the Company shall default in the payment when due and
beyond the applicable grace period, if any, of any Senior Credit Note, any
interest accrued thereon, or any other fees or other sums which may become
payable under any of the Facilities Papers, or in the performance of any of its
other obligations or liabilities under this Agreement or the other Facilities
Papers, the Agent and the Lenders shall each have the right, at any time and
from time to time,
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without notice, to setoff and to appropriate or apply any and all deposits of
money or property or any other indebtedness at any time held or owing by the
Agent or any of the Lenders to or for the credit of the account of the Company
against and on account of the obligations and liabilities of the Company under
the Senior Credit Notes and this Agreement for the ratable benefit of all
Lenders in the proportion that the advanced and unpaid principal balance at the
time of the Senior Credit Note held by each bears to the sum of the outstanding
principal balances of all of the Senior Credit Notes at the time of the setoff,
appropriation or application, irrespective of whether or not the Agent or any
Lender shall have made any demand hereunder and whether or not said obligations
and liabilities shall have matured, provided that such right of setoff shall not
apply to any deposit of escrow monies being held on behalf of the Customers
under Pledged Loans or on behalf of other third Persons that are not Affiliates
of the Company.
12. REIMBURSEMENT OF EXPENSES; INDEMNITY.
The Company agrees to:
12.1 pay all of the Agent's, and up to One Thousand Dollars ($1,000) of each
Lender's, out-of-pocket costs and expenses, including reasonable attorneys'
fees, in connection with the negotiation, documentation, amendment, waiver and
administration of this Agreement, the Senior Credit Notes, the Custody Agreement
and other Facilities Papers;
12.2 pay all of the Agent's and each Lender's, out-of-pocket costs and expenses,
including reasonable attorneys' fees, in connection with the enforcement of this
Agreement, the Senior Credit Notes, the Custody Agreement and other Facilities
Papers and the making and repayment of the Advances and the payment of interest
thereon;
12.3 pay, and hold the Agent, the Lenders and any other owners or holders of any
of the Senior Credit Notes harmless from and against, any and all present and
future stamp, documentary and other similar taxes with respect to the foregoing
matters and save them each harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such taxes;
12.4 pay all of the Agent's Fees and Custodian's Fees under this Agreement, the
Custody Agreement and the other Facilities Papers; and
12.5 indemnify, pay, defend and hold harmless the Agent, each Lender, each
subsequent owner or holder of any of the Senior Credit Notes and any of their
respective officers, directors, employees or agents (the "INDEMNIFIED PARTIES")
from and against the "INDEMNIFIED LIABILITIES", which means any and all claims,
liabilities, obligations, losses, damages, penalties, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' fees and
disbursements) of any kind whatsoever which may be imposed upon, incurred by or
asserted against any of the Indemnified Parties in any way relating to or
arising out of any of the Facilities Papers or any of the transactions
contemplated thereby to the extent that any such Indemnified Liabilities result
(directly or indirectly) from any claims made, or any actions, suits or
proceedings commenced or threatened, by or on behalf of any creditor (excluding
any of the Indemnified Parties), security holder, shareholder, customer
(including any Person having any dealings of any kind with the Company),
trustee, conservator, receiver, director, officer, employee and/or agent of the
Company acting in such capacity, the Company or any Governmental Authority
(excluding the Federal Reserve Board, the Federal Deposit Insurance Corporation,
the Comptroller of the Currency and any other banking regulatory body or
authority having jurisdiction over the Agent or any Lender that is a bank) or
any other Person; provided that to
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the extent, if any, that any of such claims, liabilities, etc. is caused by any
Indemnified Party's gross negligence or willful misconduct, the indemnity
payable to that Indemnified Party shall be equitably and proportionately
reduced, ALTHOUGH TO THE FULL EXTENT PERMITTED UNDER APPLICABLE LAW, SUCH
INDEMNITY SHALL NOT BE REDUCED ON ACCOUNT OF SUCH CLAIMS, LIABILITIES, ETC. TO
ANY EXTENT (I) OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY, OR (II) CAUSED OR CONTRIBUTED TO BY ANY INDEMNIFIED PARTY'S SOLE OR
CONCURRENT SIMPLE NEGLIGENCE THAT DOES NOT AMOUNT TO GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, IT BEING THE COMPANY'S INTENTION TO HEREBY INDEMNIFY THE INDEMNIFIED
PARTIES AGAINST THEIR OWN SOLE OR CONCURRENT SIMPLE NEGLIGENCE.
13. RELATIONSHIPS AMONG THE AGENT AND THE LENDERS.
13.1 Agent's Duties. In its capacity as lead lender and servicer of the Loan and
until the Loan is fully paid and satisfied, the Agent shall:
(a) hold the Facilities Papers (other than the Senior Credit Notes,
each of which shall be held by and belong solely to its payee) and (by the
Custodian's holding the Collateral as bailee for the Agent, as agent and
Representative of the Lenders) the Collateral for the benefit of itself and each
other Lender, and each Lender (including Chase Texas) shall be deemed to have an
interest in the Facilities Papers (other than the Senior Credit Notes, as stated
above) and the Collateral on any day in proportion to its Pro Rata interest in
the Loan on that day;
(b) send timely bills to the Company for accrued interest, the
Commitment Fee and other sums due and receive all payments of principal,
interest and other sums on account of the Loan or with respect to it;
(c) use reasonable diligence to obtain from the Company and promptly
remit to each Lender such Lender's Pro Rata share of interest, principal and
other sums received by the Agent on account of the Loan or with respect to it,
in accordance with this Agreement;
(d) use reasonable diligence to recover from the Company all expenses
incurred that are reimbursable by the Company, and promptly remit to each Lender
its Pro Rata share (if any) thereof;
(e) enforce the terms of this Agreement, including, with the approval
or at the direction of all of the Lenders, the remedies afforded the Lenders
pursuant to SECTION 11.4(C); and
(f) hold all security interests ratably for itself and as agent and
Representative of the other Lender(s).
13.2 Actions Requiring All Lenders' Consent. Without the written consent or
ratification of all Lenders, the Agent shall not:
(a) waive, compromise or settle any material claim against the
Company or the Guarantor or release either of them from any material obligation
or liability under the Facilities Papers.
(b) release any material Lien held under the Facilities Papers other
than in accordance with the Facilities Papers.
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(c) agree to any change in the interest rate or fee provisions --
excluding the Agent's Fee or the Custodian's Fees -- of this Agreement.
(d) increase the Aggregate Committed Sum or increase the maximum
principal amount of the Loan above the Aggregate Committed Sum.
(e) increase any Sublimit.
(f) change any Lender's Pro Rata share of the Loan other than in
accordance with the express provisions of the Facilities Papers (including
SECTION 2.2).
(g) agree to any change in the nature of the Lenders' respective
Commitments from several to joint, in whole or in part.
(h) agree to any material change to any of the conditions precedent
to Advances specified in SECTIONS 7.1 and 7.2.
(i) agree to any change to the definition of "Majority Lenders".
(j) extend the Maturity Date of the Loan or the due date of any
required payment other than in accordance with the express provisions of the
Facilities Papers.
(k) agree to any change in this Section or in SECTION 13.3.
13.3 Actions Requiring Majority Lenders' Consent. Without the written consent or
ratification of the Majority Lenders, the Agent shall not:
(a) notify the Company that the Commitments are terminated or that
the maturity of all or any part of the Loan has been accelerated unless an Event
of Default described in any of SECTIONS 11.1(F), 11.1(G), 11.1(K) or 11.1(O) has
occurred.
(b) exercise any of the remedies for default described in SECTION
11.4(C).
(c) except as otherwise expressly provided for in this Section, cause
or permit any material change in the terms of any affirmative or negative
covenants in this Agreement.
(d) consent to either the Company's or the Guarantor's incurring
contingent liabilities (other than by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business) for more than an
aggregate Five Million Dollars ($5,000,000); provided during each period of time
(if any) (x) after the date (if ever) when the Agent shall have declared in
writing that the Guaranty has been suspended pursuant to its provision for
suspension if the Company's Tangible Net Worth at the end of any fiscal quarter
shall be at least Fifty Million Dollars ($50,000,000) and (y) before the end of
any subsequent fiscal quarter when the Company's Tangible Net Worth shall be
less than Fifty Million Dollars ($50,000,000) and, for that reason, the Guaranty
is automatically reinstated in accordance with its terms, the phrase "or the
Guarantor's" shall be disregarded in this SECTION 13.3(D).
(e) consent, as contemplated in SECTION 10.4(H)(7), to the Company's
incurring material Debt in addition to Debt permitted by the other provisions of
SECTION 10.4 (titled "Limitations on
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Debt"), or to the Guarantor's incurring material debt in addition to Debt
permitted under the parallel provision (also titled "Limitations on Debt") of
the Guaranty; provided that from and after the date (if ever) when Agent shall
have declared in writing that the Guaranty has been terminated as -- and under
the circumstances -- described in SECTION 11.2, the immediately preceding
disjunctive clause shall be deemed deleted from this SECTION 13.3(E).
(f) cause or permit any material change in the eligibility standards
for Collateral hereunder or materially change the definition of any type of
Eligible Collateral, provided that the Agent may in its discretion approve as
eligible Collateral that does not satisfy such eligibility standards that has
aggregate Collateral Value of up to ten percent (10%) of the Aggregate Committed
Sum at the time of approval.
(g) make or consent to any materially adverse amendment, modification
or waiver of any of the terms, covenants, provisions or conditions of the
Facilities Papers.
(h) waive any material Event of Default under the Facilities Papers.
(i) approve any material changes in the Company Underwriting
Guidelines.
(j) approve any Change of Control.
(k) approve any new Qualified Investor, Qualified Second Lien
Mortgage Investor or Qualified High LTV Mortgage Investor proposed by the
Company (i) without first giving written notice to the Lenders of the Company's
request for approval of such new Qualified Investor, Qualified Second Lien
Mortgage Investor or Qualified High LTV Mortgage Investor or (ii) if the
Majority Lenders have given the Agent notice of their disapproval of such
proposed new Qualified Investor, Qualified Second Lien Mortgage Investor or
Qualified High LTV Mortgage Investor on or before three (3) Business Days after
such Agent's notice of the Company's approval request.
13.4 Agent's Discretionary Actions. Except as provided in SECTIONS 13.2 and
13.3, in its capacity as lead lender and servicer and without seeking or
obtaining the consent of any of the other Lenders (although it may elect to
obtain such consent before acting it if deems that desirable), the Agent may:
(a) agree or consent to any change in the handling of the Collateral
which in the Agent's reasonable judgment is unlikely to have a material adverse
effect on any of the Central Elements;
(b) release, reconvey or change, in whole or in part, any Collateral
or Lien which is required to be released or reconveyed in accordance with the
Facilities Paper; and
(c) do or perform any act or thing which, in the Agent's reasonable
judgment, is necessary or appropriate to enable the Agent to properly discharge
and perform its duties under this Agreement or the Custody Agreement, or which
in its reasonable judgment is necessary or appropriate to preserve or protect
the validity, integrity or enforceability of the Facilities Papers, the Liens
created by the Loan Papers, their priority, the Collateral, any of the Central
Elements in respect of the Company or the Guarantor or to preserve and protect
the interest of the Lenders in any of the foregoing.
13.5 Lenders' Cooperation. The Lenders agree to cooperate among themselves and
with the Agent and from time to time upon the Agent's request, to execute and
deliver such papers as may be
87
reasonably necessary to enable the Agent, in its capacity as lead lender and
servicer, to effectively administer and service the Loan and each Lender's
Senior Credit Note in the manner contemplated by this Agreement.
13.6 Lenders' Sharing Arrangement. Each of the Lenders agrees that if it should
receive any amount (whether by voluntary payment, realization upon security, the
exercise of the right of set-off, or otherwise) which is applicable to the
payment of the principal of, or interest or fees on, the Advances, of an amount
that with respect to the related sum or sums received (or receivable) by the
other Lenders is in greater proportion than that Lender's Pro Rata ownership of
the Loan, then such Lender receiving such excess amount shall purchase from the
other Lenders an interest in the obligations of the Company under this Agreement
or any of the Facilities Papers in such amount as shall result in a proportional
participation by all of the Lenders in such excess amount; provided that if all
or any portion of such excess amount is thereafter recovered from such Lender,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery; and further provided that the provisions of this SECTION 13.6
shall not apply to the Agent's Fees under this Agreement or to any fees which
the Agent or successor custodian might be paid pursuant to the Custody
Agreement.
13.7 Lenders' Acknowledgment. Each Lender other than Chase Texas hereby
acknowledges that Chase Texas has made no representations or warranties with
respect to the Loan other than as expressly set forth in this Agreement and that
Chase Texas shall have no responsibility (in its capacity as a Lender, the
Agent, the Custodian or in any other capacity or role) for:
(a) the collectability of the Loan;
(b) the validity, enforceability or any legal effect of any of the
Facilities Papers, any Collateral papers or any insurance, bond or similar
device purportedly protecting any obligation to the Lenders or any Collateral;
or
(c) the financial condition of the Company or any of its Subsidiaries
or Affiliates, the status, health or viability of any industry in which any of
them is involved, the prospects for repayment of the Loan, the value of any
Collateral, the effectiveness of any of the provisions of the Facilities Papers
(including the financial covenants, tests and hedging requirements) or any
aspect of their implementation or administration at any time to reduce or
control risks of any type, to produce returns, profits, yields or spreads or to
reduce or control losses or the accuracy of any information supplied by or to be
supplied in connection with any of the Company or any of its Subsidiaries or
Affiliates, or otherwise with respect to the Loan, any Collateral or any source
of equity or other financing for any of such companies.
13.8 Agent's Representations to Lenders. The Agent hereby represents and
warrants to the Lenders (other than itself) that:
(a) the Agent has delivered to each Lender true copies of the
originals of those Facilities Papers which have been specifically requested by
that Lender; and
(b) the Agent has no current actual knowledge that any Event of
Default has occurred and is continuing on the Effective Date of this Agreement.
88
13.9 Agent's Duty of Care, Express Negligence Waiver and Release. At all times
until the Loan has been paid in full, the Agent shall exercise the same degree
of care in handling the Loan and its Collateral as Chase Texas exercises with
respect to loans that are held solely by Chase Texas for its own account, and
the Agent, in its capacity as lead lender and servicer shall have no
responsibility to the Lenders other than to exercise such standard of care and,
in any event, Chase Texas shall have no liability with respect to any other
Lender's Pro Rata interest in the Loan except for Chase Texas' own gross
negligence or willful misconduct. Except in the case of its own fraud, gross
negligence or willful misconduct, neither the Agent, any Lender, nor any of
their officers, directors, employees, attorneys or agents shall be liable for
any action taken or omitted to be taken by it or them under this Agreement, the
Custody Agreement or any of the other Facilities Papers reasonably believed by
it or them to be within the discretion or power conferred upon it or them by the
Facilities Papers or be responsible for consequences of any error of judgment,
THE LENDERS EXPRESSLY INTENDING TO HEREBY WAIVE AND RELEASE ALL PRESENT AND
FUTURE CLAIMS AND RIGHTS AGAINST THE AGENT FOR DAMAGES OR INJURIES CAUSED BY THE
AGENT'S OWN SOLE OR CONCURRENT SIMPLE NEGLIGENCE. Except as otherwise
specifically and expressly set forth in this Agreement, the Agent shall not be
responsible in any manner to anyone for the effectiveness, enforceability,
genuineness, validity or the due execution of this Agreement, any supplement,
amendment or restatement of it or of any other Facilities Papers or for any
representation, warranty, document, certificate, report or statement made or
furnished in, under or in connection with this Agreement or any of the other
Facilities Papers or be under any obligation to anyone to ascertain or to
inquire as to the performance or observation of any of the terms, covenants or
conditions of this Facilities Agreement or of the other Facilities Papers on the
part of the Company or anyone else. Without limiting the generality of the
foregoing provisions of this Section, the Agent, in its capacities as lead
lender, servicer and Custodian, may seek and rely upon the advice of legal
counsel in taking or refraining to take any action under any of the Facilities
Papers or otherwise in respect of the Loan, its Collateral and its parties, and
shall be fully protected in relying upon such advice.
13.10 Calculations of Shares of Principal and Other Sums. Except as provided to
the contrary in SECTION 5.3 ("Rate of Return Maintenance Covenant"), SECTION 5.7
("Agent's Fee"), SECTION 11.5 ("Application of Proceeds"), SECTION 12
("Reimbursement of Expenses; Indemnity") and Section 6 of the Custody Agreement
("Custodian's Fees"), Chase Texas' and each other Lender's respective shares of
principal, interest and other sums received by the Agent on account of the Loan
or with respect to it shall be calculated on the basis of each Lender's
(including Chase Texas') respective Pro Rata ownership interests in the Loan
from time to time.
13.11 Qualifications of the Agent. The Agent shall at all times be a commercial
bank or trust company organized and doing business under the laws of the United
States of America or any state, district or territory of it authorized under
such laws to exercise corporate trust powers, having a combined capital and
unimpaired surplus of at least One Hundred Million Dollars ($100,000,000),
having -- or if owned by a bank holding company, such bank holding company
having -- either (i) a rating of C or better by Thomson Bank Watch, Inc. or (ii)
a rating of either "A" or better by Standard & Poor's Ratings Group or "A" or
better by ▇▇▇▇▇'▇ Investors Service, Inc. for its most senior class of unsecured
debt and subject to supervision or examination by federal, state, district or
territorial Governmental Authority. If such commercial bank or trust company
publishes reports of conditions at least annually, pursuant to law or to the
requirements of its supervising or examination Governmental Authority, then for
the purposes of this Section, the combined capital and unimpaired surplus of
such commercial bank or trust company shall be deemed to be its combined capital
and unimpaired surplus as set forth in its most recent report of condition so
published. In case the Agent
89
shall cease at any time to be eligible in accordance with the provisions of this
Section, the Agent shall resign immediately in the manner and with the effect
hereinafter specified in this SECTION 13.
13.12 Resignation of the Agent. The Agent, or any agent or agents hereafter
appointed, at any time may resign by giving written notice of resignation to the
Company and the Lenders and complying with the applicable provisions of this
SECTION 13. Upon receiving such notice of resignation or removal, with the
Company's consent, which consent shall not unreasonably be delayed or withheld,
a successor Agent shall be promptly appointed by all of the Lenders by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Agent and one copy to the successor Agent.
13.13 Removal of the Agent. If (a) the Agent shall cease to be eligible in
accordance with the provisions of SECTION 13.11 and shall fail to resign after
written request by all of the Lenders; (b) a receiver of the Agent or of its
property shall be appointed or any Governmental Authority shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation; or (c) the Agent shall be grossly
negligent in the performance of its material duties and obligations under this
Agreement or the Custody Agreement or engage in willful misconduct concerning
any such material duties and obligations, then, in any such case, upon the
unanimous consent of all the Lenders -- excluding for purposes of this Section
the Agent -- the Agent may be removed and a successor Agent appointed by written
instrument, in duplicate, one copy of which shall be delivered to the Agent so
removed and one copy to the successor Agent.
13.14 Effective Date of Resignation or Removal. No resignation or removal of the
Agent shall be effective until a successor agent is appointed pursuant to the
provisions of this SECTION 13 and has accepted the appointment as provided in
this SECTION 13.
13.15 Successor Agent. Any successor Agent appointed as provided in this Section
shall execute and deliver to the Company, the Lenders and to its predecessor
Agent an instrument accepting such appointment, and thereupon the resignation or
removal of the predecessor Agent shall become effective and such successor
Agent, without any further act, deed or conveyance, shall become vested with all
the rights and obligations of its predecessor, with like effect as if originally
named as the Agent; provided that upon the written request of the Company, all
of the Lenders or the successor Agent, the Agent ceasing to act shall execute
and deliver (a) an instrument transferring to such successor Agent all of the
rights of the Agent so ceasing to act and (b) to such successor Agent such
instruments as are necessary to transfer the Collateral to such successor Agent
(including assignments of all Collateral or Facilities Papers). Upon the request
of any such successor Agent made from time to time, the Company shall execute
any and all papers which the successor Agent shall request or require to more
fully and certainly vest in and confirm to such successor Agent all such rights.
No successor Agent shall accept appointment as provided in this Section unless
at the time of such acceptance such successor Agent shall be eligible under the
provisions of SECTION 13.11.
13.16 Merger of the Agent. Any Person into which the Agent may be merged or
converted or with which it may be consolidated, or any Person surviving or
resulting from any merger, conversion or consolidation to which the Agent shall
be a party or any Person succeeding to the commercial banking business of the
Agent, shall be the successor Agent without the execution or filing of any paper
or any further act on the part of any of the parties.
13.17 Participation; Assignment.
90
(a) Participations. Each Lender reserves the rights (i) with notice
to the Company and the Agent but without any requirement for consent from either
the Company or the Agent, to sell to any bank, savings and loan, savings bank,
credit union, other deposit-taking financial institution or commercial lending
institution, participations in all or any part of such Lender's Advances, Senior
Credit Note or Commitment and (ii) without any requirement for notice to or
consent from either the Company or the Agent, to pledge any or all of its
interests under this Agreement to a Federal Reserve Bank. Participants shall
have no rights under the Facilities Papers other than certain voting rights as
provided below. Each Lender shall be entitled to obtain (on behalf of its
participants) the benefits of this Agreement with respect to all participants in
its Advances outstanding from time to time; provided that the Company shall not
be obligated to pay any amount in excess of the amount that would be due to such
Lender calculated as though no participation had been made. No Lender shall sell
any participating interest (1) of less than Five Million Dollars ($5,000,000) or
(2) under which the participant shall have any rights to approve any amendment,
modification or waiver of any Facilities Papers, except to the extent such
amendment, modification or waiver (x) extends the due date for payment of any
amount in respect of principal, interest or fees -- other than the Agent's fees
or Custodian's fees -- under the Facilities Papers or (y) reduces the interest
rate or the amount of principal or fees applicable to the Loan (except such
reductions as are contemplated by this Agreement). In those cases (if any) where
a Lender grants rights to any of its participants to approve amendments,
modifications or waivers of any Facilities Papers pursuant to the immediately
preceding sentence, such Lender must include a voting mechanism as to all such
approval rights in the relevant participation agreement(s) whereby a
readily-determinable fraction of such Lender's portion of the Loan (whether held
by such Lender or participated) shall control the vote for all of such Lender's
portion of the Loan; provided, that if no such voting mechanism is provided for
or is fully and immediately effective, then the vote of such Lender itself shall
be the vote for all of such Lender's portion of the Loan. Except in the case of
the sale of a participating interest to a Lender, the relevant participation
agreement shall not permit the participant to transfer, pledge, assign, sell any
subparticipation in or otherwise alienate or encumber its participation interest
in the Loan.
(b) Assignments. Each Lender may assign any or all of its rights and
obligations under the Facilities Papers to any "ELIGIBLE ASSIGNEE" -- which
means (a) a commercial bank having total assets in excess of One Billion Dollars
($1,000,000,000) or (b) a finance company, insurance company or other financial
institution or fund, acceptable to the Agent, that is regularly engaged in
making, purchasing or investing in loans and has total assets in excess of One
Billion Dollars ($1,000,000,000), in each case with the consent of the Agent and
the Company (which consent shall not be unreasonably withheld or delayed);
provided that (1) no such assignment shall result in a Lender's having an
aggregate Committed Sum of less than Five Million Dollars ($5,000,000), (2)
neither the Company nor the Agent shall have any obligation to consent to there
being more than a total of ten (10) Lenders (a participant is not a Lender), and
(3) each such assignment shall be substantially in the form of EXHIBIT F, with
the assignor to exchange its Senior Credit Note(s) for new Senior Credit Note(s)
and the Eligible Assignee to receive new Senior Credit Note(s) and with the
assignor to have no further right or obligation with respect to the rights and
obligations assigned to and assumed by the Eligible Assignee. The Company agrees
to cooperate with the prompt execution and delivery of documents reasonably
necessary to such assignment process, including the issuance of new Senior
Credit Note(s) to the assignor (if retaining an interest hereunder) and the
Eligible Assignee immediately upon delivery to the Company of the assignor's
Senior Credit Note(s). Upon such assignment, the assignee shall be a Lender for
all purposes under this Agreement and the other Facilities Papers, if the
assignment is an assignment of all of the assignor's interest in the Loan and
its security, the assignor shall be automatically released from all of its
obligations and liabilities hereunder, and, whether it is such a complete
assignment or only a partial
91
assignment, the Committed Sums shall be adjusted appropriately, and the parties
agree to approve in writing revised and updated versions of SCHEDULES LC and FS.
(c) If any interest in this Agreement is so transferred to any Person
that is organized under the Legal Requirements of any jurisdiction other than
the United States of America or any State thereof, the transferor Lender shall
cause such Person, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Company) that under applicable laws no taxes will be required
to be withheld by the Agent, the Company or the transferor Lender with respect
to any payments to be made to such Person under this Agreement, (ii) to furnish
to each of the transferor Lender, the Agent and the Company two duly completed
copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Person claims entitlement to complete
exemption from U. S. federal withholding tax on all interest payments hereunder)
and (iii) to agree (for the benefit of the transferor Lender, the Agent, the
Company) to provide the transferor Lender, the Agent, the Company a new Form
4224 or Form 1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such Person and to
comply from time to time with all applicable Legal Requirements with regard to
such withholding tax exemption.
(d) The Company shall not be required to incur any cost or expense
incident to any sale to a Person of any interest in the Facilities pursuant to
this Section and all such costs and expenses shall be for the account of the
Lender selling its rights in the Loan to such Person.
13.18 The Agent and the Lenders are the only Beneficiaries of this Section.
Other than the provisions of SECTION 13.17, this SECTION 13 is intended to bind
and benefit only Chase Texas and the other Lenders, and does not benefit and
shall not be enforceable by the Company or any other Person whatsoever.
14. NOTICES.
All notices, demands, consents, requests and other communications
required or permitted to be given or made hereunder (collectively, "NOTICES"),
except as otherwise specifically provided in this Agreement, shall be in writing
and shall be either (a) delivered in person, or (b) mailed, by certified,
registered or express mail, postage prepaid, addressed to the respective parties
hereto at their respective addresses specified below, or (c) sent in a prepaid
overnight delivery envelope via a nationally-recognized courier service (such as
Federal Express, Airborne Express, United Parcel Service, Purolator, DHL
Worldwide Express or Network Courier Service) that provides weekday next-day
delivery service to the addressee's location, or (d) telecopied to their
respective telecopy numbers (with a paper copy mailed the same day as aforesaid)
as hereinafter set forth, provided that any party may change its address for
notice by designating such party's new address in a Notice to the sending party
given at least five (5) Business Days before it shall become effective. All
Notices shall be conclusively deemed to have been properly given or served when
received in person, regardless of how sent. Regardless of when received, all
Notices shall be conclusively deemed to have been properly given or served if
addressed in accordance with this Section and (1) if mailed, on the second (2nd)
Business Day after being deposited in the mails, or (2) if sent by
nationally-recognized courier service, on the next Business Day or (3) if
telecopied, when telecopied to the telecopy number set forth below (provided
that a paper copy is mailed on the same day as aforesaid):
92
If to the Company:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent:
Chase Bank of Texas, National Association
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (for messenger deliveries)
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (for mail deliveries)
Attention: Managing Director, Corporate Mortgage
Finance Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to the Lenders:
Chase Bank of Texas, National Association
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (for messenger deliveries)
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (for mail deliveries)
Attention: Managing Director, Corporate Mortgage
Finance Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Guaranty Federal Bank, F.S.B.
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Bank United
93
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇▇▇ Early or ▇▇▇ ▇▇▇▇▇
with another copy to:
Bank United
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BankBoston, N.A.
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Mail Stop 01-10-08
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Financial Institutions
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or Shohak Dekemenjian
The Bank of New York
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇
Bank One, Texas, N.A.
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Comerica Bank-California
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
94
Bank of Scotland
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of Scotland
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇ Tat
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
National City Bank of Kentucky
ABA No. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with fax copy to (▇▇▇) ▇▇▇-▇▇▇▇
attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Hibernia National Bank
ABA No. ▇▇▇▇▇▇▇▇▇
313 Carondelet
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15. MISCELLANEOUS.
15.1 Terms Binding Upon Successors; Survival of Representations. The terms and
provisions of this Agreement shall bind and benefit the parties hereto and their
respective successors and assigns; provided that the Company may not assign or
delegate any of their rights, benefits or duties under any of this Agreement,
and any attempted assignment made without the written consent or written
confirmation of all the Lenders shall be void. All representations, warranties,
covenants and agreements herein contained on the part of the Company shall
survive the making of any Advance and the execution of the Senior Credit Notes
and shall be effective so long as the Commitments are outstanding or any
obligation of the Company hereunder or under the Senior Credit Notes or any of
the other Facilities Papers remains to be paid or performed.
15.2 Items to Be Satisfactory to the Agent or the Custodian. All items required
by this Agreement or the Custody Agreement to be delivered to the Agent or to
the Custodian shall be in form and content satisfactory to the Agent or the
Custodian (as the case may be) and the Agent or the Custodian may reject any of
them that do not meet the requirements of this Agreement or the Custody
Agreement.
95
15.3 Usury Not Intended; Credit or Refund of Any Excess Payments. It is the
intent of the Company, the Agent and the Lenders in the execution and
performance of this Agreement and the other Facilities Papers to contract in
strict compliance with the usury laws of the State of Texas and the United
States of America from time to time in effect. In furtherance of that purpose,
all of the parties to this Agreement stipulate and agree that none of the terms
and provisions contained in this Agreement or the other Facilities Papers shall
ever be construed to create a contract to pay for the use, forbearance or
detention of money with interest at a rate in excess of the Ceiling Rate and
that for purposes hereof "interest" shall include the aggregate of all charges
which constitute interest under such laws that are contracted for, charged,
taken, reserved or received under this Agreement or any of the other Facilities
Papers. In the event that the maturity of any of the Senior Credit Notes is
accelerated by reason of any election of all of the Lenders resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum nonusurious amount permitted by
applicable law, and excess interest, if any, provided for in this Agreement or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on such note (or, if such
note shall have been paid in full, refunded to the payor of such interest). THE
PROVISIONS OF THIS SECTION SHALL PREVAIL AND CONTROL OVER ALL OTHER PROVISIONS
OF THIS AGREEMENT, THE SENIOR CREDIT NOTES AND THE OTHER FACILITIES PAPERS THAT
MAY BE IN APPARENT CONFLICT HEREWITH. In the event the Agent or any of the
Lenders shall ever collect monies which are deemed to constitute interest at a
rate in excess of the Ceiling Rate then in effect, all such sums deemed to
constitute interest in excess of the Ceiling Rate shall be immediately returned
to their payor (or, at the option of the holders of the Senior Credit Notes,
credited against the unpaid principal of the Senior Credit Notes) upon such
determination, and, to the extent permitted by applicable law, the Agent and the
Lenders shall not be subject to any penalties provided by any Legal Requirement
for contracting for, charging, taking, reserving or receiving interest at a rate
in excess of the Ceiling Rate. In determining whether or not the interest paid
or payable under any specific contingency exceeds the Ceiling Rate, to the
maximum extent permitted under applicable Legal Requirements, the Company and
the Agent and the Lenders shall (a) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and their effects and (c) "spread" the total amount of interest
throughout the entire contemplated term of the Senior Credit Notes, and interest
owing on such Senior Credit Notes so that the interest rate is uniform
throughout their entire term.
15.4 No Waiver. No waiver of any Default or Event of Default shall be deemed to
be a waiver of any other Default or Event of Default. No failure to exercise or
delay in exercising any power or right under any Facilities Papers shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. No course of dealing between the Company and the Agent or
any of the Lenders shall operate as a waiver of any rights of the Agent or any
of the Lenders. No amendment, modification or waiver of any provision of any
Facilities Papers nor consent to any departure therefrom shall be effective
unless it is in writing and signed by the Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Except as otherwise specifically provided in this Agreement, no
notice to or demand on the Company or any other Person shall entitle the Company
or any other Person to any other or further notice or demand in similar or other
circumstances.
96
15.5 Counterpart Execution; Amendments. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument. This Agreement may not be amended, modified or supplemented unless
such amendment, modification or supplement is set forth in a writing signed by
the parties hereto.
15.6 Governing Law, Jurisdiction and Venue. THIS AGREEMENT, THE SENIOR CREDIT
NOTES AND THE OTHER FACILITIES PAPERS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REFERENCE TO ITS
CONFLICTS OF LAWS PRINCIPLES) AND THE UNITED STATES OF AMERICA FROM TIME TO TIME
IN EFFECT. The Company, the Agent and the Lenders each hereby irrevocably
submits to the nonexclusive jurisdiction of the United States District Court for
the Southern District of Texas, Houston Division, and the state district courts
of Texas, for purposes of all legal proceedings arising out of or relating to
the Facilities Papers and all related transactions; except that the Lenders do
not submit themselves to Texas jurisdiction in any suit first filed by the
Company. To the fullest extent permitted by applicable law, the Company, the
Agent and the Lenders each irrevocably waives any objection that he, she or it
may now or hereafter have to the laying of venue for any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum and agrees that service of process may
be made upon him, her or it in any such proceeding by registered or certified
mail; except that the Lenders do not waive such objections with regard to any
suit first filed by the Company. ▇▇▇▇▇▇ County, Texas shall be a proper place of
venue for suit hereon. Nothing herein shall affect any applicable right of any
party at any time to initiate any suit in the United States District Court for
the Southern District of Texas, Houston Division, or to remove any pending suit
to that Court. Nothing herein shall affect the right of the Agent to accomplish
service of process in any manner permitted by applicable law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction or court.
15.7 General Purpose of Loan. The Company warrants and represents to the Agent,
Lenders and all other future owners and holders of the Senior Credit Notes that
the Loan and all Advances under it are and will be for business, commercial,
investment or other similar purpose and not primarily for personal, family,
household or agricultural use, as such terms are used in Chapter 1D or in the
Texas Finance Code.
15.8 Waiver of Jury Trial. Each of the Company, the Agent and the Lenders hereby
(i) covenants and agrees not to elect a trial by jury of any issue triable of
right by a jury, and (ii) waives any right to trial by jury fully to the extent
that any such right shall now or hereafter exist. This waiver of right to trial
by jury is separately given, knowingly and voluntarily, by the Company, the
Agent and each Lender, and this waiver is intended to encompass individually
each instance and each issue as to which the right of a jury trial would
otherwise accrue. The Agent is hereby authorized and requested to submit this
Agreement to any court having jurisdiction over the subject matter and the
parties hereto, so as to serve as conclusive evidence of the foregoing waiver of
the right to jury trial. Further, the Company hereby certifies that no
representative or agent of any of the Lenders or the Agent has represented,
expressly or otherwise, to any shareholder, director, officer, agent or
representative of either of them that the Agent or the Lenders will not seek to
enforce this waiver of right to jury trial provision.
15.9 Relationship of the Parties. This Agreement provides for the making of
Advances by the Lenders (through the Agent) in their capacities as lenders, to
the Company, as a borrower, and for the payment of interest and repayment of
principal by the Company to the Lenders (through the Agent).
97
The relationship between (a) the Lenders and the Agent and (b) the Company is
limited to that of creditor and secured party, on the one hand, and debtor, on
the other hand. The provisions in this Agreement and the other Facilities Papers
for compliance with financial covenants and delivery of financial statements are
intended solely for the benefit of the Lenders and the Agent to protect their
interests as lenders and lenders' agent, respectively, in assuring payment of
interest and repayment of principal, and nothing contained in this Agreement or
any of the other Facilities Papers shall be construed as permitting or
obligating any Lender or the Agent to act as a financial or business advisor or
consultant to the Company, as permitting or obligating any Lender or the Agent
to control the Company or to conduct the Company's operations, as creating any
fiduciary obligation on the part of any Lender or the Agent to the Company, or
as creating any joint venture, agency, or other relationship between or among
any of the parties other than as explicitly and specifically stated in this
Agreement. The Company acknowledges that it has had the opportunity to obtain
the advice of experienced counsel of its own choosing in connection with the
negotiation and execution of this Agreement and the other Facilities Papers and
to obtain the advice of such counsel with respect to all matters contained in
the Facilities Papers including the provision for waiver of trial by jury. The
Company further acknowledges that it is experienced with respect to financial
and credit matters and has made its own independent decisions to apply to the
Lenders for credit and to execute and deliver this Agreement and the other
Facilities Papers.
15.10 Notice Pursuant to Tex. Bus. & Comm. Code Section26.02. THIS AGREEMENT AND
THE OTHER FACILITIES PAPERS TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the Effective Date.
LONG BEACH MORTGAGE COMPANY
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as the Agent and as a Lender
By:
Name:
Title:
GUARANTY FEDERAL BANK, F.S.B.,
as a Lender
98
By:
Name:
Title:
BANK UNITED,
as a Lender
By:
Name:
Title:
BANKBOSTON, N.A.
as a Lender
By:
Name:
Title:
THE BANK OF NEW YORK,
as a Lender
By:
Name:
Title:
BANK ONE, TEXAS, N.A.
as a Lender
By:
Name:
Title:
COMERICA BANK-CALIFORNIA,
as a Lender
By:
Name:
Title:
99
BANK OF SCOTLAND,
as a Lender
By:
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By:
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY
as a Lender
By:
Name:
Title:
Exhibits:
Exhibit A-1 - Senior Credit Notes form
Exhibit A-2 - Swing Line Note form
Exhibit B - Requests for Borrowing forms with Submission List forms
Exhibit C - Form of Subordination Agreement Exhibit D - List of the
Company's Subsidiaries
Exhibit E - Form of Officer's Certificate as to compliance or
noncompliance with certain financial covenants
Exhibit F - Form of Assignment and Assumption Agreement
Exhibit G - Form of Interest Rate Selection Confirmation
Exhibit H - Opinions to be included in required opinion of the
Company's legal counsel
Schedules:
Schedule LC - the Lenders' Committed Sums and Subline Funding Limits
Schedule UG-SSF - Company Underwriting Guidelines for Single-family
Mortgage Loans
Schedule QI - List of Qualified Investors, Qualified Second Lien
Mortgage Investors and Qualified High LTV Mortgage
Investors
Schedule FS - the Lenders' Funding Share fractions
Schedule MAC - the Maximum Aggregate Commitment
Schedule 7.1(b) - List of debts to be excluded from the subordination
required by SECTION 7.1(B)
Schedule 8.4 - Summary of material adverse changes and material
unrealized losses since the Statement Date
Schedule 8.15 - the Company's Plans
100
Schedule 10.1 - List of Contingent Liabilities
Schedule 10.4(h)(6) - List of permitted existing unsecured Debt
EXHIBIT A-1
TO 4/98 A&R CREDIT AGREEMENT
(THE "4/98 [LENDER NAME] SENIOR CREDIT NOTE")
$______________________Houston, TexasApril 13, 1998
FOR VALUE RECEIVED, LONG BEACH MORTGAGE COMPANY, a Delaware
corporation ("MAKER" or the "COMPANY"), promises to pay to the order of [LENDER
NAME] ("PAYEE"), a [LENDER ENTITY FORM], at the main branch of Chase Bank of
Texas, National Association, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, or at such other place as the Agent may hereafter designate in writing,
in immediately available funds and in lawful money of the United States of
America, the principal sum of [LENDER'S COMMITTED SUM] (or the unpaid balance of
all principal advanced against this note, if that amount is less), together with
interest on the unpaid principal balance of this note from time to time
outstanding until maturity at the applicable rate(s) provided for in the Credit
Agreement (or at such lesser rate, if any, as the holder of this note -- the
"HOLDER", whether or not Payee is such holder -- may in its sole discretion from
time to time elect to be applicable for any day or days), and interest on all
past due amounts, both principal and accrued interest, at the Past Due Rate;
provided that for the full term of this note the interest rate produced by the
aggregate of all sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the debt evidenced hereby shall not exceed the
Ceiling Rate.
1. Definitions. In addition to the definitions given above, the
definitions given in the 4/98 Amended and Restated Senior Secured Credit
Agreement dated April 13, 1998, as it may be supplemented, amended or restated
from time to time (the "CREDIT AGREEMENT") among (a) Maker, (b) Chase Bank of
Texas, National Association (for itself as a Lender and as Agent for the other
Lenders) and (c) the other Lender(s) party thereto, for capitalized terms that
are used in this note shall apply here as well as there.
2. Rates Change Automatically and Without Notice. Without notice to
Maker or any other Person and to the full extent allowed by applicable law from
time to time in effect, the Stated Rate, the Past Due Rate and the Ceiling Rate
shall each automatically fluctuate upward and downward as and in the amount by
which the interest rate applicable to this note as provided for in the Credit
Agreement, the Past Due Rate as defined in the Credit Agreement and such maximum
nonusurious rate of interest permitted by applicable law, respectively,
fluctuate.
3. Calculation of Interest. Interest on the amount of each advance
against this note shall be computed on the amount of that advance and from the
date it is made. All interest rate determinations and calculations by the
Holder, absent manifest error, shall be conclusive.
4. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, Holder shall refund to the payor
or, at Holder's option, credit against the principal of Senior
101
Credit Note such portion of said interest as shall be necessary to cause the
interest paid on this note to produce a rate equal to the Ceiling Rate.
5. Interest Will be Spread. To the extent (if any) necessary to avoid
violation of applicable usury laws (or to minimize the extent of the violation
if complete avoidance is impossible for any reason, it being the intent and
purpose of Maker and all Holders to comply strictly with all applicable usury
and other laws), all sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.
6. Payment Schedule. Interest on and principal of this note shall be
due and payable as provided in SECTIONS 5.1, 5.5 and 5.9 of the 4/98 A&R Credit
Agreement (as they may have been modified and/or renumbered under the Credit
Agreement).
7. Prepayment. Maker may prepay this note in accordance with and
subject to the provisions of SECTION 5.8 of the 4/98 A&R Credit Agreement (as it
may have been modified and/or renumbered under the Credit Agreement.) All
prepayments shall be applied first to accrued interest, the balance to
principal.
8. The 4/98 A&R Credit Agreement, this Note and its Security. This
note is one of the Senior Credit Notes, as such term is defined in the Credit
Agreement, is issued pursuant to the Credit Agreement (to which reference is
made for all purposes) and may be referred to as the "4/98 [LENDER NAME] SENIOR
CREDIT NOTE", and as it may hereafter be renewed, extended, rearranged,
increased, decreased, modified or replaced in accordance with the Credit
Agreement may be referred to as the "CURRENT [LENDER NAME] SENIOR CREDIT NOTE".
Holder is entitled to the benefits of and security provided for in the Credit
Agreement. Such security includes, among other security, the security interests
granted by SECTION 6.1 of the 4/98 A&R Credit Agreement (as such Section may
have been modified and/or renumbered under the Credit Agreement.)
9. Revolving Credit. Upon and subject to the terms and conditions of
the Credit Agreement, Maker may borrow, repay and reborrow against this note
under the circumstances, in the manner and for the purposes specified in the
Credit Agreement, but for no other purposes. Advances against this note by Payee
or other Holder shall be governed by the terms of the Credit Agreement. The
unpaid principal balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Maker. Absent manifest error, Holder's computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all payments
and permitted prepayments made hereon may be (but are not required to be)
endorsed by or on behalf of Holder on the schedule which is attached as Annex I
hereto (which is hereby made a part hereof for all purposes) or otherwise
recorded in Holder's computer or manual records; provided, that any failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Maker's obligations or any Holder's rights
with respect to that advance or accrual, or (b) any payment or permitted
prepayment of principal or interest shall not cancel, limit or otherwise affect
Maker's entitlement to credit for that payment as of the date of its receipt by
Holder. Maker and Payee expressly agree that Chapter 346 of the Texas Finance
Code (which relates to open-end line of credit revolving loan accounts) shall
not apply to this note or to any loan evidenced by this note.
102
10. Defaults and Remedies. Any Event of Default under the Credit
Agreement or any other Facilities Papers shall constitute an Event of Default
under this note and all other Facilities Papers and shall have the consequences
provided for in the Credit Agreement which may include acceleration of the
indebtedness evidenced hereby. Subject to the terms of the Credit Agreement,
Holder or the Agent may waive any default without waiving any other prior or
subsequent default. Holder or the Agent may remedy any default without waiving
the default remedied. Holder's or the Agent's failure to exercise any right,
power or remedy upon any default shall not be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Holder or the Agent of any
right, power or remedy hereunder shall exhaust it or shall preclude any other or
future exercise of it, and every such right, power or remedy under this note may
be exercised at any time and from time to time. No modification or waiver of any
provision of this note nor consent to any departure by Maker from its terms
shall be effective unless it is in writing and signed by Holder (or, if
authorized for that purpose by the Credit Agreement, the Agent), and then such
waiver or consent shall be effective only in the specific instance given, for
the purposes for which given and to the extent therein specified.
11. Legal Costs. If any Holder or the Agent retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker or anyone claiming
by, through or under Maker sues any Holder in connection with this note or any
such papers and does not prevail, then Maker agrees to pay to each such Holder
and the Agent, respectively, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder or the Agent in trying to
collect this note or in any such suit or proceeding, including reasonable
attorneys' fees. An amount equal to ten percent (10%) of the unpaid principal
and accrued interest owing on this note when and if this note is placed in the
hands of an attorney for collection after default is stipulated to be reasonable
attorneys' fees unless a Holder, the Agent or Maker timely pleads otherwise to a
court of competent jurisdiction.
12. Waivers. Maker and any and all co-makers, endorsers (other than
the Holder or the Payee), guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment for
payment, protest, diligence in collecting and the filing of suit for the purpose
of fixing liability and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
Person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty or security at
any time existing or by any failure to perfect or maintain perfection of any
lien against or security interest in any such security or the partial or
complete unenforceability of any guaranty or other surety obligation, in each
case in whole or in part, with or without notice and before or after maturity.
13. Not Purpose Credit. None of the proceeds of this note shall ever
be used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of reducing or retiring any debt which was
originally incurred to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock or which would
constitute this transaction a "purpose credit" within the meaning of Regulation
U, as now or hereafter in effect.
103
14. Governing Law, Jurisdiction and Venue. This note shall be
governed by and construed in accordance with the laws of the State of Texas and
the United States of America from time to time in effect. Maker and all
endorsers (other than the Holder or the Payee), guarantors and sureties each
hereby irrevocably submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas and the state district courts
of ▇▇▇▇▇▇ County, Texas, for purposes of all legal proceedings arising out of or
relating to this note, the debt evidenced hereby or any loan agreement, security
agreement, guaranty or other papers or agreements relating to this note. To the
fullest extent permitted by law, Maker and all endorsers (other than the Holder
or the Payee), guarantors and sureties each irrevocably waives any objection
which he, she or it may now or hereafter have to the laying of venue for any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. ▇▇▇▇▇▇
County, Texas shall be a proper place of venue for suit on or in respect of this
note. Nothing herein shall affect the right of Maker, the Payee or any Holder at
any time to initiate any suit in the United States District Court for the
Southern District of Texas, Houston Division, or to remove any pending suit to
that Court.
15. General Purpose of Loan. Maker warrants and represents to Payee,
all other Holders and the Agent that all loans evidenced by this note are and
will be for business, commercial, investment or other similar purpose and not
primarily for personal, family, household or agricultural use, as such terms are
used in Chapter 1D or in the Texas Finance Code.
LONG BEACH MORTGAGE COMPANY, as maker
By:
Name:
Title:
ANNEX 1
to $
LONG BEACH MORTGAGE COMPANY
4/98 [LENDER'S NAME] Senior Credit Note
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
Date of Payment Payment Applied on Payment Applied on Name of Person
or Advance (or advance vs.) Principal Interest Principal Balance Interest Paid to Making Notation
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104
EXHIBIT A-2
TO 4/98 A&R CREDIT AGREEMENT
(THE "4/98 SWING LINE NOTE")
$50,000,000
Houston, Texas April 13, 1998
FOR VALUE RECEIVED, LONG BEACH MORTGAGE COMPANY, a Delaware corporation
("MAKER" or the "COMPANY"), promises to pay to the order of CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION ("PAYEE"), a national banking association, at its main
branch, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as the holder (the "HOLDER", whether or not Payee is such holder) of this
note may hereafter designate in writing, in immediately available funds and in
lawful money of the United States of America, the principal sum of Fifty Million
Dollars ($50,000,000) (or the unpaid balance of all principal advanced against
this note, if that amount is less), together with interest on the unpaid
principal balance of this note from time to time outstanding until maturity at
the applicable rate(s) provided for in the Credit Agreement (or at such lesser
rate, if any, as Holder may in its sole discretion from time to time elect to be
applicable for any day or days), and interest on all past due amounts, both
principal and accrued interest, at the Past Due Rate; provided that for the full
term of this note the interest rate produced by the aggregate of all sums paid
or agreed to be paid to Holder for the use, forbearance or detention of the debt
evidenced hereby shall not exceed the Ceiling Rate.
1. Definitions. In addition to the definitions given above, the
definitions given in the 4/98 Amended and Restated Senior Secured Credit
Agreement dated April 13, 1998, as it may be supplemented, amended or restated
from time to time (the "CREDIT AGREEMENT") among (a) Maker, (b) Chase Bank of
Texas, National Association (for itself as a Lender and as Agent for the other
Lenders) and (c) the other Lender(s) party thereto, for capitalized terms that
are used in this note shall apply here as well as there.
2. Rates Change Automatically and Without Notice. Without notice to
Maker or any other Person and to the full extent allowed by applicable law from
time to time in effect, the Stated Rate, the Past Due Rate and the Ceiling Rate
shall each automatically fluctuate upward and downward as and in the amount by
which the interest rate applicable to this note as provided for in the Credit
Agreement, the Past Due Rate as
105
defined in the Credit Agreement and such maximum nonusurious rate of interest
permitted by applicable law, respectively, fluctuate.
3. Calculation of Interest. Interest on the amount of each advance
against this note shall be computed on the amount of that advance and from the
date it is made. All interest rate determinations and calculations by the
Holder, absent manifest error, shall be conclusive.
4. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, Holder shall refund to the payor
or, at Holder's option, credit against the principal of Senior Credit Note such
portion of said interest as shall be necessary to cause the interest paid on
this note to produce a rate equal to the Ceiling Rate.
5. Interest Will be Spread. To the extent (if any) necessary to avoid
violation of applicable usury laws (or to minimize the extent of the violation
if complete avoidance is impossible for any reason, it being the intent and
purpose of Maker and all Holders to comply strictly with all applicable usury
and other laws), all sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.
6. Payment Schedule. Interest on and principal of this note shall be due
and payable as provided in SECTIONS 2.8 and 3.2 of the 4/98 A&R Credit Agreement
(as they may have been modified and/or renumbered under the Credit Agreement.)
7. Prepayment. Maker may prepay this note in accordance with and subject
to the provisions of SECTION 2.5 of the 4/98 A&R Credit Agreement (as it may
have been modified and/or renumbered under the Credit Agreement.) All
prepayments shall be applied first to accrued interest, the balance to
principal.
8. The 4/98 A&R Credit Agreement, this Note and its Security. This note
is the Swing Line Note and one of the Senior Credit Notes, as such terms are
defined in the Credit Agreement, is issued pursuant to the Credit Agreement (to
which reference is made for all purposes) and may be referred to as the "4/98
SWING LINE NOTE", and as it may hereafter be renewed, extended, rearranged,
increased, decreased, modified or replaced in accordance with the Credit
Agreement may be referred to as the "CURRENT SWING LINE NOTE". Holder is
entitled to the benefits of and security provided for in the Credit Agreement.
Such security includes, among other security, the security interests granted by
SECTION 6.1 of the 4/98 A&R Credit Agreement (as such Section may have been
modified and/or renumbered under the Credit Agreement.)
9. Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement, Maker may borrow, repay and reborrow against this Swing Line
Note under the circumstances, in the manner and for the purposes specified in
the Credit Agreement, but for no other purposes. Advances against this note by
Payee or other Holder shall be governed by the terms of the Credit Agreement.
The unpaid principal
106
balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Maker. Absent manifest error, Holder's computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all payments
and permitted prepayments made hereon may be (but are not required to be)
endorsed by or on behalf of Holder on the schedule which is attached as Annex I
hereto (which is hereby made a part hereof for all purposes) or otherwise
recorded in Holder's computer or manual records; provided, that any failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Maker's obligations or any Holder's rights
with respect to that advance or accrual, or (b) any payment or permitted
prepayment of principal or interest shall not cancel, limit or otherwise affect
Maker's entitlement to credit for that payment as of the date of its receipt by
Holder. Maker and Payee expressly agree that Chapter 346 of the Texas Finance
Code (which relates to open-end line of credit revolving loan accounts) shall
not apply to this note or to any loan evidenced by this note.
10. Defaults and Remedies. Any Event of Default under the Credit
Agreement or any other Facilities Papers shall constitute an Event of Default
under this note and all other Facilities Papers and shall have the consequences
provided for in the Credit Agreement which may include acceleration of the
indebtedness evidenced hereby. Subject to the terms of the Credit Agreement,
Holder or the Agent may waive any default without waiving any other prior or
subsequent default. Holder or the Agent may remedy any default without waiving
the default remedied. Holder's or the Agent's failure to exercise any right,
power or remedy upon any default shall not be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Holder or the Agent of any
right, power or remedy hereunder shall exhaust it or shall preclude any other or
future exercise of it, and every such right, power or remedy under this note may
be exercised at any time and from time to time. No modification or waiver of any
provision of this note nor consent to any departure by Maker from its terms
shall be effective unless it is in writing and signed by Holder (or, if
authorized for that purpose by the Credit Agreement, the Agent), and then such
waiver or consent shall be effective only in the specific instance given, for
the purposes for which given and to the extent therein specified.
11. Legal Costs. If any Holder or the Agent retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker or anyone claiming
by, through or under Maker sues any Holder in connection with this note or any
such papers and does not prevail, then Maker agrees to pay to each such Holder
and the Agent, respectively, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder or the Agent in trying to
collect this note or in any such suit or proceeding, including reasonable
attorneys' fees. An amount equal to ten percent (10%) of the unpaid principal
and accrued interest owing on this note when and if this note is placed in the
hands of an attorney for collection after default is stipulated to be reasonable
attorneys' fees unless a Holder, the Agent or Maker timely pleads otherwise to a
court of competent jurisdiction.
107
12. Waivers. Maker and any and all co-makers, endorsers (other than the
Holder or the Payee), guarantors and sureties severally waive notice (including,
but not limited to, notice of intent to accelerate and notice of acceleration,
notice of protest and notice of dishonor), demand, presentment for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability and consent that the time of payment hereof may be extended and
re-extended from time to time without notice to any of them. Each such Person
agrees that his, her or its liability on or with respect to this note shall not
be affected by any release of or change in any guaranty or security at any time
existing or by any failure to perfect or maintain perfection of any lien against
or security interest in any such security or the partial or complete
unenforceability of any guaranty or other surety obligation, in each case in
whole or in part, with or without notice and before or after maturity.
13. Not Purpose Credit. None of the proceeds of this note shall ever be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of reducing or retiring any debt which was
originally incurred to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock or which would
constitute this transaction a "purpose credit" within the meaning of Regulation
U, as now or hereafter in effect.
14. Governing Law, Jurisdiction and Venue. This note shall be governed
by and construed in accordance with the laws of the State of Texas and the
United States of America from time to time in effect. Maker and all endorsers
(other than the Holder or the Payee), guarantors and sureties each hereby
irrevocably submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of Texas and the state district courts
of ▇▇▇▇▇▇ County, Texas, for purposes of all legal proceedings arising out of or
relating to this note, the debt evidenced hereby or any loan agreement, security
agreement, guaranty or other papers or agreements relating to this note. To the
fullest extent permitted by law, Maker and all endorsers (other than the Holder
or the Payee), guarantors and sureties each irrevocably waives any objection
which he, she or it may now or hereafter have to the laying of venue for any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. ▇▇▇▇▇▇
County, Texas shall be a proper place of venue for suit on or in respect of this
note. Nothing herein shall affect the right of Maker, the Payee or any Holder at
any time to initiate any suit in the United States District Court for the
Southern District of Texas, Houston Division, or to remove any pending suit to
that Court.
15. General Purpose of Loan. Maker warrants and represents to Payee, all
other Holders and the Agent that all loans evidenced by this note are and will
be for business, commercial, investment or other similar purpose and not
primarily for personal, family, household or agricultural use, as such terms are
used in Chapter 1D or in the Texas Finance Code.
LONG BEACH MORTGAGE COMPANY, as maker
By:
Name:
Title:
108
ANNEX 1
to $50,000,000
Long Beach Mortgage Company
4/98 Swing Line Note
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
Date of Payment Payment Applied on Payment Applied on Name of Person
or Advance (or advance vs.) Principal Interest Principal Balance Interest Paid to Making Notation
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EXHIBIT B
TO 4/98 A&R CREDIT AGREEMENT
Request for Borrowing
[Letterhead of the Company]
[date]
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director, Corporate Mortgage Finance Group
109
Ladies and Gentlemen:
LONG BEACH MORTGAGE COMPANY (the "COMPANY") and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION as a Lender and as agent (the "AGENT") for the other
Lender(s) who are parties to it as Lenders, and such other Lenders together
executed a 4/98 Amended and Restated Senior Secured Credit Agreement dated April
13, 1998 (which, as it may have been or may hereafter be supplemented, amended
or restated from time to time, is called the "CREDIT AGREEMENT"). Any term
defined in the Credit Agreement and used in this Request for Borrowing shall
have the meaning given to it in the Credit Agreement.
The Company currently qualifies under the Credit Agreement for, and
hereby requests, an Advance in the amount of $ to be made on ,
19 (or, if the Agent is closed that day, on the next day when it is not).
After giving effect as required by the Credit Agreement to the requested
Advance, (i) the outstanding principal balance of the Loan will not exceed the
Aggregate Committed Sum, (ii) the sum of outstanding Advances under each Subline
will not exceed that Subline's Borrowing Base and (iii) no Sublimit will be
exceeded.
If the Credit Agreement requires new Collateral to support the requested
Advance, (i) the Company has attached and submits herewith the relevant
Submission List(s), (ii) the Basic Papers for all items of Collateral described
or referred to therein have been submitted -- or are being submitted
concurrently herewith -- to the Custodian (except that in respect of any Wet
Warehousing Advance hereby requested, the Basic Papers for the relevant items of
Collateral will be delivered to the Custodian on or before five (5) Business
Days after funding of the requested Advance), and (iii) the Company hereby
GRANTS to the Agent a security interest in all such new Collateral and (as to
Debt Collateral) all related Loan Papers, and they are hereby made subject to
the security interest to the Agent created by the Credit Agreement, for the Pro
Rata benefit of the Lenders, effective immediately.
The proceeds of the Advance should be deposited in the Company's Note
Payment Account number 0010-▇▇▇▇▇▇▇ with Chase Bank of Texas, National
Association.
The Company acknowledges that the Agent and the Lenders will rely on the
truth of each statement in this request and its attachments in funding the
requested Advance.
No Default has occurred under the Facilities Papers that has not been
cured by the Company or declared in writing by the Agent to have been waived,
and no Event of Default has occurred under the Facilities Papers that the Agent
has not declared in writing to have been cured or waived.
All items that the Company is required to furnish to the Agent, its
designated custodian or the Lenders for this requested Advance and otherwise
have been delivered, or will be delivered before this requested Advance is
funded, in all respects as required by the Credit Agreement and the other
Facilities Papers. All Collateral papers described
110
or referred to in the Submission List(s) (if any) submitted to the Agent with
this Request for Borrowing conform in all respects with all applicable
requirements of the Credit Agreement and the other Facilities Papers.
The undersigned officer hereby certifies that all of the Company's
representations and warranties (a) in the Credit Agreement and all of the other
Facilities Papers (except only to the extent that (i) such a representation or
warranty speaks to a specific date or (ii) the facts on which a representation
or warranty is based have been changed by transactions or conditions
contemplated or expressly permitted by the Facilities Papers), (b) in this
Request for Borrowing, are true and correct on the date of this Request for
Borrowing and (c) that the Company qualifies for funding of the requested
Advance.
LONG BEACH MORTGAGE COMPANY
By:_________________________________
Name________________________________
1Title:_____________________________
Attached (check relevant items):
Submission List(s) for:
[ ] Single-family Collateral
[ ] P&I Advances Collateral
[ ] T&I Advances Collateral
[ ] Enforcement Advances Collateral
[ ] Recoveries Collateral
SUBMISSION LIST FOR SINGLE FAMILY COLLATERAL
Date:
TO:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Warehouse
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
111
FROM:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Long Beach Mortgage Company submits the following list of Single-family
Mortgage Loans in support of the Request for Borrowing dated to which this
Submission List is attached and hereby pledges them to the Agent (for itself and
as agent for the other Lenders):
NOTE
BRANCH LOAN BORROWER OR NOTE LOAN LOAN
NUMBER NUMBER CUSTOMER NAME DATE AMOUNT TYPE
--------------------------------------------------------------------------------
SUBMISSION LIST FOR P&I ADVANCES COLLATERAL
Date:
TO:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Warehouse
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
FROM:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
112
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Long Beach Mortgage Company submits the following list of P&I Advances
to be funded with the P&I Advances Line Advance requested by the Request for
Borrowing dated___________to which this Submission List is attached, and hereby
Pledged to the Agent are all of the Company's claims, accounts and general
intangibles that funding of such P&I Advances will produce:
P&I ADVANCES
PooP&I ADVANCESl or Whole
Date Investor Loan Number P&I Advance Amount
113
SUBMISSION LIST FOR T&I ADVANCES COLLATERAL
Date:
TO:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Warehouse
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
FROM:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Long Beach Mortgage Company submits the following list of T&I Advances
to be funded with the Servicing Advances Line Advance requested by the Request
for Borrowing dated________________ to which this Submission List is attached,
and hereby Pledged to the Agent are all of the Company's claims, accounts and
general intangibles that funding of such T&I Advances will produce:
T&I ADVANCES
Pool or Whole
Date Investor Loan Number T&I Advance Amount
114
SUBMISSION LIST FOR ENFORCEMENT ADVANCES COLLATERAL
Date:
TO:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Warehouse
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
FROM:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Long Beach Mortgage Company submits the following list of Enforcement
Advances to be funded with the Servicing Advances Line Advance requested by the
Request for Borrowing dated to which this Submission List is attached,
and hereby Pledged to the Agent are all of the Company's claims, accounts and
general intangibles that funding of such Enforcement Advances will produce:
ENFORCEMENT ADVANCES
Pool or Whole
Date Investor Loan Number Enforcement Advance Amount
115
SUBMISSION LIST FOR RECOVERIES COLLATERAL
Date:
TO:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Warehouse
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
FROM:
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇, extension 7415
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Long Beach Mortgage Company submits the following list of Single-family
Mortgage Loans to be financed with the Recoveries Subline Advance requested by
the Request for Borrowing dated to which this Submission List is attached, and
represents that:
[ ] (check if the requested Advance will be used to fund the purchase of
Mortgage Loan(s) serviced by the Company) The Company will use proceeds of the
requested Recoveries Subline Advance to purchase the Mortgage Loans listed below
pursuant to its obligation or election as Servicer thereof to do so, and they
are hereby Pledged to the Agent:
Broker's
opinion of
real
Original Loan Principal Claim vs Claim estate's
Loan date Customer name amount balance (VA/FHA/PMI) amount value
116
[ ] (check if requested Advance will be used to finance or refinance an
unmarketable Single-family Mortgage Loan) The Company will use proceeds of the
requested Recoveries Subline Advance to finance the following unmarketable
Single-family Mortgage Loans owned by the Company, and they are hereby Pledged
to the Agent:
Broker's price opinion of
Loan No. Customer Name Original Note amount Principal balance real estate's value
[ ] (check if requested Advance will be used to finance or refinance
other Collateral approved by the Agent) The other Collateral submitted herewith
is described as follows, and it is hereby Pledged to the Agent:
Description
_______________________________________________________________________________
_______________________________________________________________________________
EXHIBIT C
TO 4/98 A&R CREDIT AGREEMENT
SUBORDINATION OF DEBT AGREEMENT IN
FAVOR OF THE AGENT AND LENDERS
UNDER 4/98 AMENDED AND RESTATED
SENIOR SECURED CREDIT AGREEMENT
______________, 199
TO: Chase Bank of Texas, National Association ("CHASE TEXAS"), as a Lender and
as Agent for other Lenders
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
The undersigned (each of whom is hereinafter referred to as a
"CREDITOR"), creditors of Long Beach Mortgage Company (the "COMPANY"), a
Delaware corporation, desire that Chase Bank of Texas, National Association and
the other Lenders named in the 4/98 Amended and Restated Senior Secured Credit
Agreement dated April 13, 1998 among the Company, Chase Bank of Texas, National
Association as a Lender and as Agent for the other Lenders, and the other
Lender(s) named therein -- Chase Bank of Texas, National Association in its
capacity as a Lender and the other Lender(s) under such Credit Agreement being
hereinafter referred to as the "LENDERS", Chase Bank of
117
Texas, National Association in its capacity as Agent under such Credit Agreement
being hereafter referred to as "AGENT" and such Credit Agreement, as it may have
been or may hereafter be supplemented, amended and/or restated being hereinafter
called the "CREDIT AGREEMENT" -- extend or continue to extend such financial
accommodations to the Company as the Company may request and as the Lenders and
the Agent may deem proper. For the purpose of inducing the Lenders to grant,
continue or renew such financial accommodations, and in consideration thereof,
the undersigned Creditors irrevocably, unconditionally and presently agree as
follows:
1. Amount of the Debt Subordinated Herein. The Company is presently
indebted to the Creditors in the principal amounts set forth below:
Creditor Principal Amount of Company
Debt
$
TOTAL $
2. Subordination. All claims of each Creditor against the Company now or
hereafter existing are and shall be at all times SUBJECT, SUBORDINATE AND
INFERIOR, both in right of payment and lien priority, to any and all claims,
whether now or hereafter existing and however created or evidenced, which the
Agent or the Lenders has or may have against the Company (and all extensions,
renewals, increases, decreases, modifications, replacements and substitutions of
or for any such claims, such claims and all such extensions, etc. being herein
called the "SENIOR OBLIGATIONS"), for so long as any Senior Obligations shall
exist. So long as no Default or Event of Default shall have occurred under the
Credit Agreement and so long as no other default shall have occurred in payment
or performance of any of the Senior Obligations, payments of interest and
principal on the claims of Creditors may be made at their respective scheduled
maturity dates (it being understood that no prepayment shall be made of such
claims and no modification or acceleration, for default or otherwise, of such
maturity dates shall be permitted). If a Default or an Event of Default shall
occur under the Credit Agreement or if any other default shall occur in payment
or performance of any of the Senior Obligations, then and for so long as (a)
such Default shall not have been cured or waived before it has become an Event
of Default or (b) the Agent shall not have declared in writing that such Event
of Default or other default (if any) has been cured or waived, no payment of
interest or premium on any of the claims of Creditors and no payment of
principal of any of the claims of creditors, whether or not then due, shall be
made without the prior written consent of the Agent, and any payment made during
such time shall (i) be held in trust for the benefit of the Lenders, and (ii)
immediately be paid over by its recipient to the Agent for application on the
obligations of the Company to the Lenders and the Agent in accordance with the
provisions of the Credit Agreement, without notice or demand. The subordination
of claims of Creditors made hereby shall remain in effect so long as there shall
be outstanding any Senior Obligation of the Company to any of the Lenders or the
Agent (for this purpose, the Company shall be deemed obligated to the Lenders
and the Agent so long as any of the Lenders shall have outstanding any
commitment under the Credit Agreement or any other Facilities Papers to make any
loan or extend any other financial accommodations to the Company or any
118
of its successors, whether or not any such loan or financial accommodation
shall have been made, advanced or extended).
3. Enforcement or Assignment of Subordinated Debt or Liens. For so long
as any claim of the Agent or any Lender against the Company or any commitment of
any of the Lenders to extend credit or other financial accommodations to the
Company is in existence, the Creditors and each of them will not (i) ▇▇▇ upon,
any claim or claims now or hereafter existing which they or any of them may hold
against the Company or any other party to the Credit Agreement; (ii) sell,
assign, transfer, pledge, hypothecate or encumber such claim or claims except
expressly subject to this Agreement; (iii) enforce any lien they or any of them
may now or in the future have on any property, real or personal, of the Company
or any other party to the Credit Agreement, as security for the payment of any
debt owing by the Company or such party to them or any one or more of them until
the Senior Obligations shall have been fully paid and satisfied and/or (iv) join
in or in any way directly or indirectly induce any petition in bankruptcy,
assignment for the benefit of creditors or creditors' agreement, except as
directed by the Agent or the Lenders.
4. Direction to Pay Over Claims and Assignment. In case of any
assignment by the Company for the benefit of creditors, or in the case of any
bankruptcy proceedings instituted by or against the Company, or in case of the
appointment of any receiver for the Company's business or assets, or in case of
any dissolution or winding up of the affairs of the Company, the Company and any
assignee, trustee in bankruptcy, receiver or other person or persons in charge,
are hereby directed to pay to the Agent the full amount of all of the Agent's
and the Lenders' claims against the Company before making any payment of
principal or interest to the undersigned Creditors, or any of them, and insofar
as it may be necessary to accomplish that purpose, the undersigned Creditors,
and each of them, hereby sell, transfer, set over and assign to the Agent and
the Lenders all claims they may now or hereafter have against the Company and in
any security therefor, and the proceeds thereof, and all rights to any payments,
dividends or other distributions arising therefrom. If any of the undersigned
Creditors does not file a proper claim or proof of debt in the form required in
such proceeding prior to thirty (30) days before the expiration of the time to
file such claim in such proceeding, then the Agent has the right (but no
obligation) to do so and is hereby authorized to file an appropriate claim or
claims for and on behalf of such person.
5. Subrogation. Upon the payment by them in full of all Senior
Obligations, the Creditors shall be subrogated to the rights of the Lenders to
receive payments or distributions of cash, property or securities of the Company
applicable to Senior Obligations until the Creditors' claims shall have been
paid in full, and, for the purposes of such subrogation, no payments or
distributions to the holder or holders of the Senior Obligations of any cash,
property or securities that any Creditor would be entitled to receive but for
the provisions of this Agreement and no payment pursuant to the provisions of
this Agreement to the Lenders by any Creditor shall, as between the Company and
its creditors (other than the holder or holders of the Senior Obligations and
Creditors), be deemed to be a payment by the Company on account of the Senior
Obligations, and no payment or distributions of cash, property or securities to
or for the benefit of the Creditors pursuant to this Agreement which would
otherwise have been paid to the Lenders shall be deemed to be a payment by the
Company to or for the
119
account of the Creditors, it being understood that the provisions of this
Subordination Agreement are solely for the purpose of defining the relative
rights of the Lenders and the Creditors.
If any payment or distribution to which the Creditors would otherwise
have been entitled but for the provisions of this Agreement shall have been
applied, pursuant to the provisions of these terms of subordination, to the
payment of all amounts payable under the Senior Obligations, then and in such
case, the Creditors shall be entitled to receive from the Lenders at the time
outstanding any payments or distributions received by the Lenders in excess of
the amount sufficient to pay all amounts under or in respect of the Senior
Obligations in full.
6. Obligations to Creditors not Impaired; Provisions Define Relative
Rights. The provisions of this Agreement are and are intended solely for the
purpose of defining the relative rights of the Creditors on the one hand and the
Lenders on the other hand. Nothing contained in this Agreement shall (i) impair
or affect, as among the Company and its creditors (other than the Lenders and
the Creditors), the obligation of the Company, which is absolute and
unconditional, to pay the Creditors the principal of and interest on the claims
of the Creditors as of when the same shall become due and payable in accordance
with their terms, or (ii) affect the relative rights against the Company of the
Creditors and the other creditors of the Company (other than the Lenders) or
(iii) prevent any Creditor from exercising all remedies otherwise permitted by
applicable law upon default under the instrument or instruments governing the
Creditors' claims, pursuant to the rights, if any, under this Agreement of the
Lenders to receive cash, property and securities otherwise payable or
deliverable to the Lenders or the Agent.
7. Proofs of Claim. The Creditors may file such proofs of claim and
other papers or documents or may be necessary or advisable in order to have
their claims allowed in any judicial proceedings relative to the Company (or any
other obligor on the Creditors' claims, including any guarantor), its creditors
or its property. If any Creditor has not been paid in full, such Creditor shall
(i) file such claim, proof of claim or similar instrument on behalf of the
Lenders as the Lenders' interests may appear and (ii) take all such other
actions as may be appropriate to insure that all payments and distributions made
in respect of any such proceedings are made to the Lenders as their interests
may appear.
8. Agreement Unaffected by Changes, Etc. Without consent of, notice to
or incurring responsibility to any Creditor and without impairing or releasing
any Creditor's covenants and obligations hereunder, upon or without any terms or
conditions and in whole or in part, the Lenders may (i) change any payment due
date or amount, (ii) renew, change or increase any Senior Obligations or any
aspect of the security therefor, (iii) sell, exchange, release, surrender,
realize upon or otherwise deal in any manner or order any present or future
security for any Senior Obligations, (iv) release anyone in any manner or
capacity liable on or for any Senior Obligations, (v) exercise or not exercise
any rights against the Company, any Creditor or anyone else, (vi) settle or
compromise any of the Senior
120
Obligations or subordinate any part of them to any other part and/or (vii) apply
any sums received from anyone to any part of the Senior Obligations, and the
provisions of this Agreement shall apply to the Senior Obligations as changed,
extended, renewed, altered or increased in any respect and in any manner.
9. Liability. For violation of this Agreement, the undersigned Creditors
shall be jointly and severally liable to the Agent and the Lenders for all loss
and damage sustained by reason of such breach, and upon any such violation, the
Agent and the Lenders may accelerate the maturity of its claims against the
Company, at their option.
10. Automatic Reinstatement. If at any time any payment made on the
Senior Obligations must be returned for any reason (including the order of any
bankruptcy court), this Agreement shall be automatically reinstated to the same
effect as if the affected payment(s) had not been made.
11. Governing Law, Binding Effect and Assignments. This Agreement shall
be governed in all respects by the laws of the State of Texas and shall bind and
benefit the undersigned, the Agent, the Lenders and the Company, their
respective heirs, executors, administrators, personal representatives, trustees,
receivers, conservators, successors and assigns and anyone claiming by, through
or under any of them. This Agreement and any claim or claims of the Agent or any
of the Lenders pursuant hereto may be assigned by the Agent or such Lender (as
the case may be), in whole or in part, at any time, without notice to any of the
undersigned Creditors or the Company.
[The remainder of this page is intentionally blank, signature page(s) follow.]
By:
Name:
Date:___________ Title:
By:
Name:
Date:___________ Title:
By:
Name:
Date:___________ Title:
ACCEPTANCE OF SUBORDINATION OF
DEBT AGREEMENT BY THE COMPANY
121
LONG BEACH MORTGAGE COMPANY (the "Company" in the Subordination of Debt
Agreement set forth on the face hereof), hereby (i) represents and warrants to
the Agent and the Lenders that it is presently indebted to the persons executing
said Subordination of Debt Agreement in the aggregate principal amount of $ ,
(ii) accepts and consents to such Subordination of Debt Agreement, (iii) agrees
to be bound by all of the provisions thereof and (iv) agrees to recognize all
priorities and other rights granted thereby to Chase Bank of Texas, National
Association (in its capacities as a Lender and as the Agent) and the other
Lenders, and their respective successors and assigns, and to perform in
accordance therewith.
LONG BEACH MORTGAGE COMPANY
By:_____________________
Name: __________________
Title:___________________
Dated:________, 19
EXHIBIT D
TO 4/98 A&R CREDIT AGREEMENT
List of Subsidiaries of the Company as of the Effective Date
None
EXHIBIT E
TO 4/98 A&R CREDIT AGREEMENT
FORM OF OFFICER'S CERTIFICATE WITH COMPUTATIONS
TO SHOW COMPLIANCE OR NON-COMPLIANCE WITH
CERTAIN FINANCIAL COVENANTS
OFFICER'S CERTIFICATE
AGENT: Chase Bank of Texas, National Association
COMPANY: Long Beach Mortgage Company
SUBJECT PERIOD:_________________ended________, 199___
DATE:___________________, 199___
122
This certificate is delivered to the Agent under the 4/98 Amended and
Restated Senior Secured Credit Agreement dated as of April 13, 1998 (as
supplemented, amended or restated from time to time, the "CREDIT Agreement"),
among the Company, the Agent and the financial institutions now or hereafter
parties thereto (the "LENDERS"). Unless they are otherwise defined in this
request, terms defined in the Credit Agreement have the same meanings here as
there.
The undersigned officer of the Company certifies to the Agent and the
Lenders that on the date of this certificate that:
1. The undersigned is an incumbent officer of the Company, holding the
title stated below the undersigned's signature below.
2. The Company's consolidated financial statements that are attached to
this certificate were prepared in accordance with GAAP (except that interim --
i.e., other than annual -- financial statements exclude notes to financial
statements and statements of changes to stockholders' equity and are subject to
year-end adjustments) and (subject to the aforesaid proviso as to interim
financial statements) present fairly the Company's consolidated financial
position and results of operations as of and for the (check, as applicable) G
month G one, G two or G three quarter(s) of the Company's fiscal year, as the
case may be, ending on the last day of that period (the "SUBJECT PERIOD").
3. The undersigned officer of the Company supervised a review of the
Company's activities during the Subject Period in respect of the following
matters and has determined the following: (a) to undersigned officer's best
knowledge, except to the extent that (i) a representation or warranty speaks to
a specific date or (ii) the facts on which a representation or warranty is based
have changed by transactions or conditions contemplated or expressly permitted
by the Facilities Papers, the representations and warranties of the Company in
SECTION 8 of the Credit Agreement are true and correct in all material respects,
other than for the changes, if any, described on the attached Annex A; (b) the
Company has complied with all of its obligations under the Facilities Papers,
other than for the deviations, if any, described on the attached ANNEX A; (c) no
Event of Default has occurred that has not been declared by the Agent in writing
to have been cured or waived, and no Default has occurred that has not been
cured before it became an Event of Default, other than those Events of Default
and/or Defaults, if any, described on the attached ANNEX A (d) compliance by the
Company with certain financial covenants in SECTION 10 of the Credit Agreement
is accurately calculated on the attached ANNEX A.
LONG BEACH MORTGAGE COMPANY
By:
Name:
Title:
ANNEX A TO OFFICER'S CERTIFICATE
(a) Describe deviations from compliance with obligations, if any --
CLAUSE 3(B) of attached Officer's Certificate -- if none, so state:
123
(b) Describe Defaults or Events of Default, if any -- CLAUSE 3(C) of
attached Officer's Certificate -- if none, so state:
(c) Calculate compliance with covenants in SECTION 7 (on a consolidated
basis) -- CLAUSE 3(D) of attached Officer's Certificate.
EXHIBIT F
TO 4/98 A&R CREDIT AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "A&A AGREEMENT") dated as
of ________ ___, 199__ among ___________________ (the "ASSIGNOR");
________________ (the "ASSIGNEE"); LONG BEACH MORTGAGE COMPANY (the "COMPANY")
and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Agent (the "AGENT");
W I T N E S S E T H:
Recitals:
The Agent, as agent for the lenders then or thereafter party to it
(collectively, the "LENDERS"); the Assignor, as a Lender, and the Company
executed and delivered the 4/98 Amended and Restated Senior Secured Credit
Agreement dated as of April 13, 1998 (as amended, supplemented and restated, the
"CREDIT AGREEMENT".) The Credit Agreement provides for the Lenders to lend to
the Company pursuant to the terms of the Credit Agreement under a revolving line
of credit and its subline(s) for the purposes set forth therein (collectively,
the line of credit and the subline(s) are referred to as "FACILITIES"). The
Assignor has agreed to make Advances to the Company under one or more of the
Facilities in accordance with the terms of the Credit Agreement, with the
124
maximum aggregate amount of the Assignor's Advances under any Facility
outstanding not to exceed the Funding Share, as applicable for each Facility.
The Assignor proposes to sell and assign to the Assignee, and the Assignee
proposes to buy and accept from the Assignor, an interest (the "ASSIGNED
INTEREST") in the rights and obligations of the Assignor under the Facilities
Papers, with the effect that the Assignee will have a funding share for each
Facility in the amount indicated next to the Assignee's signature block below.
Agreements, Assignment and Assumption:
In consideration of the foregoing and the mutual agreements contained
herein, the parties hereto agree as follows:
1. Definitions. Any term defined in the Credit Agreement and used in
this A&A Agreement shall have the same meaning here as there.
2. Assignments. The Assignor hereby assigns and sells, without recourse
or warranty except as specifically set forth herein, to the Assignee the
Assigned Interest in the rights and obligations of the Assignor under the
Facilities Papers. The Assignee hereby purchases and accepts, without recourse
or warranty except as specifically set forth herein, from the Assignor all of
such rights and obligations of the Assignor, including the corresponding portion
of the principal amount of the Advances made by the Assignor outstanding on the
date of this A&A Agreement. The total so lent by Assignor and outstanding
immediately before this A&A Agreement becomes effective is:
Assignor's principal
Facility advances now outstanding
Single-family Warehouse Subline $_________________
P&I Advances Subline $_________________
Servicing Advances Subline $_________________
Recoveries Subline $_________________
Subject to the execution and delivery of this A&A Agreement by the Assignor, the
Assignee, the Company and the Agent, effective as of its date, (a) the Assignee
shall succeed to the rights and be obligated to perform the obligations of a
Lender under the Facilities Papers with a funding share for each Facility in the
amount shown for it by the Assignee's signature block below and shall be
considered a Lender for all purposes under the Facilities Papers; (b) the
Assignee shall deliver to the Assignor, in immediately available funds, an
amount equal to the sum of the portions of the Assignor's principal Advances
outstanding under each Facility proportionate to the interest in that Facility
hereby assigned and (c) the Assignor's funding share for each Facility and its
share of outstanding Advances under each Facility shall each be reduced by the
funding share and share of outstanding Advances, respectively, acquired by the
Assignee and the Assignor shall be released from its obligations under the
Facilities Papers to the extent that they have been so assigned to and accepted
by the Assignor.
125
3. Payments. Commitment Fees accrued to the date of this A&A Agreement
with respect to the Assignor's funding share for each Facility affected by this
A&A Agreement are for the account of the Assignor and such fees accruing from
and including the date hereof with respect to the Assigned Interest are for the
account of the Assignee. All payments of principal of and accrued interest on
the Advances allocable to the Assigned Interest shall be divided between the
Assignor and the Assignee as their interests may appear, with all interest
accruing on the Advances of the Assignor before the date of this A&A Agreement
to belong to the Assignor. Each of the Assignor and the Assignee hereby agrees
that if it receives any amount from the Company or the Agent under the
Facilities Papers which is for the account of the other of them, it shall
receive such sum for the account of such other party to the extent of such other
party's interest therein and shall promptly pay such sum to such other party.
The rights of the Assignor and the Assignee under this Section are in addition
to other rights and remedies which the Assignor, the Assignee or any other
Lender may have.
4. Consent of the Company and the Agent. This A&A Agreement is
conditioned upon the consent of the Company and the Agent pursuant to SECTION
13.17 of the Credit Agreement. The execution of this A&A Agreement by the
Company and the Agent evidences such consent. Pursuant to the cited Section of
the Credit Agreement, (a) the Assignor agrees to deliver its current Senior
Credit Note(s) to the Company, marked "Renewed" or its equivalent, and (b) the
Company agrees to execute and deliver new Senior Credit Notes payable to the
order of the Assignee and to the Assignor to evidence the assignment and
acceptance provided for herein.
5. The Assignor. The Assignor (a) represents and warrants to the
Assignee that it is the legal and beneficial owner of the interest being
assigned by the Assignor to the Assignee hereunder and that such interest is
free and clear of any Lien and (b) makes no representation or warranty and
assumes no responsibility with respect to (1) any statements, warranties or
representations made in or in connection with the Facilities Papers or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Facilities Papers or any document furnished pursuant to them and (2) the
financial condition of the Company or the performance or observance by the
Company of any of its obligations under the Facilities Papers.
6. The Assignee. The Assignee (a) confirms that it has received a copy
of the Facilities Papers, together with such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this A&A Agreement; (b) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the
Facilities Papers; (c) appoints and authorizes the Agent to take such action as
Agent on behalf of the Assignee and to exercise such powers under the Facilities
Papers as are delegated to the Agent by its terms, together with such powers as
are reasonably incidental thereto; (d) represents and warrants that it is an
Eligible Assignee and (e) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Facilities Papers are
required to be performed by it as a Lender.
126
7. Notices and Payment Instructions. All notices in connection herewith
shall be given in accordance with SECTION 13.17 of the Credit Agreement. The
address of the Assignee for notices hereunder and thereunder, together with
payment instructions for amounts to be paid to the Assignee under the Credit
Agreement, shall be initially as set forth on the signature pages hereof.
8. Miscellaneous. This A&A Agreement, when executed by the Assignor, the
Assignee, the Agent and the Company, (a) shall bind and benefit the Assignor,
the Assignee, all of the Lenders (whether now or hereafter party to the Credit
Agreement), the Company, the Agent and their respective successors, assigns,
receivers and trustees; (b) may be modified or amended only by a writing signed
by each of the parties hereto; (c) shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America;
(d) may be executed in several counterparts, and by the parties hereto on
separate counterparts, and each counterpart, when so executed and delivered,
shall constitute an original agreement, and all such separate counterparts shall
constitute but one and the same agreement; (e) embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, consents and understandings relating to such
subject matter and (f) is one of the Facilities Papers. The headings herein
shall be accorded no significance in interpreting this A&A Agreement.
IN WITNESS WHEREOF, the parties have caused this A&A Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
("Assignor")
By:
Name:
Title:
Funding Shares Assumed:
Single-family Warehouse Subline $_________________
P&I Advances Subline $_________________
P&I Advances Subline $_________________
Recoveries Subline $_________________
("Assignee")
127
By:
Name:
Title:
Attention:
Telecopy No.: ( )
Send payments to:
Reference: Long Beach Mortgage Company
LONG BEACH MORTGAGE COMPANY
By:
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as the Agent
By:
Name:
Title:
EXHIBIT G
TO 4/98 A&R CREDIT AGREEMENT
(Form of Interest Rate Selection Confirmation)
[Letterhead of Long Beach Mortgage Company]
[date]
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
128
Attention: Managing Director, Corporate Mortgage Finance Group
Ladies and Gentlemen:
Long Beach Mortgage Company (the "COMPANY") and Chase Bank of Texas,
National Association, as Agent (the "Agent") for itself as a Lender and for the
other Lenders named or referred to therein, and such other Lenders together
executed a 4/98 Amended and Restated Senior Secured Credit Agreement dated April
13, 1998 (which, as it may have been or may hereafter be amended, supplemented
and restated, is called the "CREDIT AGREEMENT"). Any term defined in the Credit
Agreement and used in this Interest Rate Selection Confirmation shall have the
meaning given to it in the Credit Agreement.
This is an Interest Rate Selection Confirmation, and confirms the
Company's telephonic notice of Interest Rate Option(s) selected on
___________________________, 19___ by ______________________________ of the
Company to ________________________________ of the Agent at approximately ______
__.m., Houston (i.e., Central) time.
In that telephonic notice, the Company selected the following Interest
Rate Option(s):
PRINCIPAL AMOUNT AFFECTED (NOT
REQUIRED FOR BALANCE ADJUSTED FIXED RATE INTEREST
RATE OPTION; MINIMUM $10 PERIOD SELECTED (REQUIRED
EFFECTIVE DATE OF MILLION FOR FIXED RATE ONLY FOR ADJUSTED LIBOR
SELECTION TRANCHES) RATE OPTION SELECTED FIXED RATE OPTIONS
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
The Company hereby warrants and represents to the Agent and the Lenders
that:
(a) no Fixed Rate Option elected (if any) will result in a Fixed Rate
Borrowing with a maturity (i) longer than 60 days or (ii) later than the
Maturity Date;
(b) no Default has occurred that has not been cured;
(c) no Event of Default has occurred that has not been declared in
writing by the Agent to have been cured or waived; and
(d) the Company is currently allowed to make the selection(s) described
above under the terms of the Credit Agreement.
LONG BEACH MORTGAGE COMPANY
By:
Name:
Title:
129
EXHIBIT H
TO 4/98 A&R CREDIT AGREEMENT
(Basic Form of Opinion of Counsel)
[Date]
Chase Bank of Texas,
National Association,
As Agent for the Lenders
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: 4/98 Amended and Restated Senior Secured Credit Agreement dated as of
April 13, 1998 among Long Beach Mortgage Company (the "COMPANY") and
Chase Bank of Texas, National Association, as agent (the "Agent") and a
Lender, and the other Lenders party thereto (collectively, the
"LENDERS")
Gentlemen:
We have acted as special counsel for the Company and Long Beach
Financial Corporation (the "GUARANTOR") in connection with the 4/98 Amended and
Restated Senior Secured Credit Agreement dated as of April 13, 1998 (the "CREDIT
AGREEMENT") among the Company, the Agent and the Lenders and the Guarantor's
Continuing Guaranty of the Company's Obligations (the "GUARANTY"). This opinion
is rendered to you in compliance with SECTION 7.1(A)(8) of the Credit Agreement.
Unless otherwise defined herein or the context otherwise requires, each
capitalized term used herein shall have the meaning ascribed to it in the Credit
Agreement.
In our capacity as such counsel, we have examined the Credit Agreement,
the Custody Agreement and the Senior Credit Notes (collectively, the "PRINCIPAL
FACILITIES PAPERS"), the Guaranty and such other documents and matters as we
have deemed necessary in rendering the opinions hereinafter set forth. We have
been furnished with, and with the Agent's and the Lenders' consent have relied
upon, certificates of and other information supplied by officers of the Company
and the Guarantor with respect to certain factual matters and we have assumed
the accuracy of all representations of fact set forth in the Principal
Facilities Papers and the Guaranty. In addition, we have obtained and relied
upon such certificates and assurances from public officials as we have deemed
necessary. We have also assumed the genuineness of signatures on (other than
those of the Company's representatives on the Facilities Papers and the
Guarantor's
130
representative on the Guaranty), and the authenticity of, all materials so
examined; and we have assumed the conformity with originals of all documents
submitted to us as copies. For purposes of our opinions we have assumed the due
authorization, execution, delivery, and performance of the Credit Agreement and
the Custody Agreement by the Agent and the Lenders.
Based upon the foregoing, and subject to the qualifications herein set
forth, it is our opinion that:
1. The Company (a) is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, (b) has the full
legal power and authority to own its property and carry on its business as
currently conducted, and (c) is, to the best of our knowledge, duly qualified to
transact business as a foreign corporation in each jurisdiction where the nature
of the business transacted or property owned by the Company requires such
qualification, except in such jurisdictions where the failure to be in good
standing has no material adverse effect on the Central Elements relating to the
Company.
2. The Company has the requisite corporate power and authority to
execute, deliver and comply with the terms of the Facilities Papers.
3. The execution, delivery and performance by the Company of the
Facilities Papers (a) have been duly authorized by all necessary corporate
action on the part of the Company, (b) do not conflict with the articles of
incorporation or bylaws of the Company and (c) do not (i) conflict with any
laws, ordinances, regulations or orders of competent governmental authority or
(ii) to the best of our knowledge, conflict with or result in a breach of or
constitute a default or require any consent under, or result in the creation of
any lien upon any property or assets of the Company (except for the liens and
security interests created by the Facilities Papers), or result in or require
the acceleration of any debt of the Company, pursuant to any agreement or
instrument to which the Company is a party or by which the Company or its
property may be bound or affected.
4. The Facilities Papers constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or other such laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
5. The Guarantor (a) is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, (b) has the full
legal power and authority to own its property and carry on its business as
currently conducted, and (c) is, to the best of our knowledge, duly qualified to
transact business as a foreign corporation in each jurisdiction where the nature
of the business transacted or property owned by the Guarantor requires such
qualification, except in such jurisdictions where the failure to be in good
standing has no material adverse effect on the Central Elements relating to the
Guarantor.
6. The Guarantor has the requisite corporate power and authority to
execute, deliver and comply with the terms of the Guaranty.
131
7. The execution, delivery and performance by the Guarantor of the
Guaranty (a) have been duly authorized by all necessary corporate action on the
part of the Guarantor, (b) do not conflict with the articles of incorporation or
bylaws of the Guarantor and (c) do not (i) conflict with any laws, ordinances,
regulations or orders of competent governmental authority or (ii) to the best of
our knowledge, conflict with or result in a breach of or constitute a default or
require any consent under, or result in the creation of any lien upon any
property or assets of any of the Companies (except for the liens and security
interests created by the Facilities Papers), or result in or require the
acceleration of any debt of the Guarantor, pursuant to any agreement or
instrument to which the Guarantor is a party or by which the Guarantor or its
property may be bound or affected.
8. The Guaranty constitutes the legal, valid and binding obligations of
the Guarantor, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other such laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
9. To the best of our knowledge and except as disclosed in the most
recent Financial Statements furnished to the Agent, there is no action, claim,
suit or proceeding pending or threatened or reasonably anticipated against or
affecting the Company, any of its Subsidiaries or the Guarantor in any court,
before any other Governmental Authority or before any arbitrator or in any other
dispute resolution forum which, if adversely determined, could reasonably be
expected to result in a material and adverse effect on any of the Central
Elements relative to the Company or the Guarantor (as the case may be).
10. The Company and the Servicers of its Mortgage Loans or the Mortgage
Loans owned by others for which the Company serves as Servicer are duly
registered as mortgage lenders and servicers in each state in which such
Mortgage Loans have been or are from time to time originated, to the extent such
registration is required by any applicable Legal Requirement, except where the
failure to register could not reasonably be expected to result in any material
and adverse effect on any of the Central Elements in respect of the Company.
11. Neither the Company nor the Guarantor is subject to the rules
governing an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
12. Neither the Company, any of its Subsidiaries nor the Guarantor is an
"affiliate" or a "subsidiary company" of a "public utility company," or a
"holding company," an "affiliate" or a "subsidiary company" of a "holding
company," as such terms are defined in the PUHC Act.
13. None of the transactions contemplated under the Facilities Papers
shall cause or constitute a violation by the Company or the Guarantor of any of
the provisions, rules, regulations or order of or under the PUHC Act, and the
PUHC Act does not in any manner impair the legality, validity or enforceability
of the Facilities Papers or any of the Agent's Liens.
132
14. The Credit Agreement creates a security interest in the Collateral
described therein.
15. The form of the Financing Statement and the description of the
Collateral contained therein comply with all applicable Legal Requirements,
including, without limitation, all applicable filing laws and regulations, and
are adequate and legally sufficient for the purpose of perfecting and
maintaining a Lien on the Collateral.
16. A fully executed counterpart of the Financing Statement should be
filed under the Uniform Commercial Code and all applicable fees paid in
California. Possession by the Agent or its duly designated bailee (other than
the Company) of the Mortgage Notes evidencing the Pledged Loans and such filing
of the Financing Statement will result in a legally valid perfected Lien in the
Collateral (other than any Collateral consisting of real estate) as security of
the Obligations. Except as set forth in the immediately following paragraph, no
other or further action or filing is necessary or appropriate for the purposes
intended to be accomplished by the Financing Statement.
17. After the actions described in the immediately preceding paragraph
have been accomplished, no further or subsequent filing, refiling, recording,
re-recording, registration or registration of the Financing Statement or any
other instrument will be necessary in order to perfect and continue the Liens
created by the Credit Agreement in the Collateral, except that a continuation
statement signed by the secured party of record, identifying the original
Financing Statement by file number and date of filing, and stating that the
original Financing Statement remains effective, must be filed under the Uniform
Commercial Code in each office where such Financing Statement was filed before
the expiration of five (5) years from the date of such filing and subsequent
such continuation statements must be filed within six (6) months before the end
of each subsequent five-year period, and amendments or supplements to the
Financing Statement and/or additional financing statements may be required to be
filed in the event of a change in the name, identity or structure of the debtor
described therein within four (4) months after each such change or in the event
the Financing Statement otherwise becomes inaccurate or incomplete.
18. No state or local registration tax, transfer tax, stamp tax or other
fee, tax or governmental charge is required to be paid in connection with the
execution and delivery of the Facilities Papers or the filing of the Financing
Statement, or any of the transactions contemplated thereby, other than nominal
statutory filing fees which are to be paid upon the filing of the Financing
Statement.
19. The proper foreclosure of part of the Collateral in and of itself
will not restrict, affect or impair the liabilities of the Company and the
Guarantor with respect to the Obligations or the Agent's rights or remedies with
respect to the foreclosure or enforcement of any other Liens securing the
Obligations, to the extent any deficiency remains unpaid after application of
the proceeds of the foreclosure.
20. No franchise, income, sales, gross receipts, profits or other like
taxes are payable in the State of California by the Agent or any Lender solely
by reason of the
133
transactions described in the Facilities Papers or the interest conveyed or
assigned by the Facilities Papers.
21. Neither the Agent or any Lender is required to qualify as a foreign
entity in the State of California or to register or make any filing with or to
obtain the consent of any federal or California Governmental Authority in order
to make the Loan or to exercise its rights under the Facilities Papers.
22. The execution and delivery of the Facility Papers, and the
performance of the Company's obligations thereunder, do not require any license,
consent, approval, or other action of any court or other governmental authority
other than those which have been obtained and remain in full force and effect.
Please also be advised that the foregoing opinions relate only to the
laws of the States of Texas, California and Delaware and applicable federal law
and no opinion is to be inferred beyond that stated herein.
This opinion is rendered to you for your benefit in your capacity as
Agent and Custodian, the benefit of you and the other Lenders, participants and
Eligible Assignees of any of the Senior Credit Notes and your and their legal
counsel in connection with the above transaction and may not be relied upon by
any other Person or for any other purpose without our prior written consent.
This opinion is rendered as of the date hereof and we hereby disclaim any
obligation to advise you or any other party entitled to rely hereon of any
change in any matter set forth herein.
Very truly yours,
SCHEDULE LC
TO 4/98 A&R Credit Agreement
The Lenders' Committed Sums and
Subline Funding Limits,
(in dollars)
(Updates of this Schedule are effective only if signed by a
Vice President or more senior officer of Chase Bank of Texas,
National Association, Agent)
Single-family
Lender Committed Sum Warehouse Servicing Advances Recoveries Advances
Subline P&I Advances Subline Subline Subline Funding
Funding Limit Funding Limit Funding Limit Limit
Chase Texas 50,000,000 50,000,000 5,000,000 2,500,000 2,500,000
----------------------------------------------------------------------------------------------------------------------------------
Guaranty Federal Bank, 45,000,000 45,000,000 4,500,000 2,250,000 2,250,000
F.S.B.
----------------------------------------------------------------------------------------------------------------------------------
Bank United 35,000,000 35,000,000 3,500,000 1,750,000 1,750,000
----------------------------------------------------------------------------------------------------------------------------------
BankBoston, N.A. 30,000,000 30,000,000 3,000,000 1,500,000 1,500,000
----------------------------------------------------------------------------------------------------------------------------------
The Bank of New York 30,000,000 30,000,000 3,000,000 1,500,000 1,500,000
----------------------------------------------------------------------------------------------------------------------------------
Bank One, Texas, N.A. 25,000,000 25,000,000 2,500,000 1,250,000 1,250,000
----------------------------------------------------------------------------------------------------------------------------------
Comerica 25,000,000 25,000,000 2,500,000 1,250,000 1,250,000
Bank-California
134
----------------------------------------------------------------------------------------------------------------------------------
Bank of Scotland 20,000,000 20,000,000 2,000,000 1,000,000 1,000,000
----------------------------------------------------------------------------------------------------------------------------------
Hibernia National Bank 20,000,000 20,000,000 2,000,000 1,000,000 1,000,000
----------------------------------------------------------------------------------------------------------------------------------
National City Bank, 20,000,000 20,000,000 2,000,000 1,000,000 1,000,000
Kentucky, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Aggregate Committed Sum 300,000,000
----------------------------------------------------------------------------------------------------------------------------------
Sublimit 300,000,000 30,000,000 15,000,000 15,000,000
----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE UG-SSF
TO 4/98 A&R Credit Agreement
(Summary description of Company Underwriting Guidelines
for Single-family Mortgage Loans)
SCHEDULE QI
TO 4/98 A&R Credit Agreement
(Updates of this Schedule are effective only if signed by
a Vice President or more senior officer of Chase
Bank of Texas, National Association, Agent)
QUALIFIED INVESTORS
Salomon Brothers, Inc.
Bear ▇▇▇▇▇▇▇
Atlantic
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equicredit/NationsBank
First Boston
Greenwich Capital Acceptance, Inc.
Greenwich Capital Markets
Prudential
▇▇▇▇▇▇▇▇▇ Lufkin & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers
AMRESCO Residential Credit Corporation
Fremont Investment & Loan
Household Financial Services, Inc.
ICI Funding Corporation
The CIT Group/Consumer Finance, Inc.
Saxon Mortgage Funding Corp.
Southern Pacific Thrift & Loan Association
Wilshire Financial
Ocwen
Nomura Securities
QUALIFIED HIGH LTV MORTGAGE INVESTORS
All Qualified Investors listed above
135
Master Financial
QUALIFIED SECOND LIEN MORTGAGE INVESTORS
All Qualified Investors listed above
[ ] (check if applicable) This is an update of SCHEDULE QI, effective
from and after ____________, 199_.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Agent
By:______________________________
Name:____________________________
Title:___________________________
SCHEDULE FS
TO 4/98 A&R Credit Agreement
(Updates of this Schedule are effective only if signed by
a Vice President or more senior officer of Chase
Bank of Texas, National Association, Agent)
Single-family
Warehouse P&I Advances Servicing Recoveries Advances
Subline Subline Funding Advances Subline Funding
Funding Share fraction Subline Share fraction
Lender Share Funding
fraction Share
fraction
-------------------------------------------------------------------------------------------------------------------
Chase Texas 50/300 5/30 2.5/15 2.5/15
-------------------------------------------------------------------------------------------------------------------
Guaranty Federal Bank, F.S.B. 45/300 4.5/30 2.25/15 2.25/15
-------------------------------------------------------------------------------------------------------------------
Bank United 35/300 3.5/30 1.75/15 1.75/15
-------------------------------------------------------------------------------------------------------------------
BankBoston, N.A. 30/300 3/30 1.5/15 1.5/15
-------------------------------------------------------------------------------------------------------------------
The Bank of New York 30/300 3/30 1.5/15 1.5/15
-------------------------------------------------------------------------------------------------------------------
Bank One, Texas, N.A. 25/300 2.5/30 1.25/15 1.25/15
-------------------------------------------------------------------------------------------------------------------
Comerica Bank-California 25/300 2.5/30 1.25/15 1.25/15
-------------------------------------------------------------------------------------------------------------------
Bank of Scotland 20/300 2/30 1/15 1/15
-------------------------------------------------------------------------------------------------------------------
Hibernia National Bank 20/300 2/30 1/15 1/15
-------------------------------------------------------------------------------------------------------------------
National City Bank of Kentucky 20/300 2/30 1/15 1/15
-------------------------------------------------------------------------------------------------------------------
Totals 300/300 30/30 15/15 15/15
-------------------------------------------------------------------------------------------------------------------
[ ] (check if applicable) This is an update of SCHEDULE FS, effective
from and after ____________, 199_.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Agent
By:______________________________
Name:____________________________
Title:___________________________
SCHEDULE MAC
136
TO 4/98 A&R Credit Agreement
(Updates of this Schedule are effective only if signed by a
Vice President or more senior officer of
Chase Bank of Texas, National Association, Agent)
The Maximum Aggregate Commitment from and after the following dates is
as follows:
MAXIMUM AGGREGATE UPDATE CERTIFIED EFFECTIVE BY THE UNDERSIGNED OFFICER OF CHASE BANK
COMMITMENT OF TEXAS, NATIONAL ASSOCIATION, AGENT
FROM AND AFTER
-----------------------------------------------------------------------------------------------------------------------------------
$300,000,000 Effective Date of 4/98 Amended and By:
Restated Senior Secured Credit Name:
Agreement Title:
-----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.1(b)
TO 4/98 A&R Credit Agreement
List of debts to be excluded from the
subordination required by SECTION 7.1(B)
None
SCHEDULE 8.4
TO 4/98 A&R Credit Agreement
Summary of material adverse changes and material unrealized losses since the
Statement Date, as referred to in SECTION 8.4
None
SCHEDULE 8.15
TO 4/98 A&R Credit Agreement
The Company's Plans
Long Beach Mortgage Company Health and Welfare Benefit Plan
Long Beach Mortgage Company 401(k) Plan
SCHEDULE 10.1
TO 4/98 A&R Credit Agreement
137
Contingent Liabilities
as of April 13, 1998
Long Beach Mortgage Company's contingent liabilities:
None
SCHEDULE 10.4(h)(6)
TO 4/98 CREDIT AGREEMENT
Unsecured Debt referred to in SECTION 10.4(H)(6):
None
4/98 AMENDED AND RESTATED
SENIOR SECURED
CREDIT AGREEMENT
DATED AS OF APRIL 13, 1998
BY AND AMONG
LONG BEACH MORTGAGE COMPANY
AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
AS AGENT AND AS A LENDER,
AND
THE OTHER LENDER(S) PARTIES HERETO
138
INDEX OF DEFINED TERMS
"4/98 A&R Credit Agreement" ................................ 1
"ABR Floating Rate" ......................................... 33
"Acceleration Date" ......................................... 22
"Adjusted LIBOR Fixed Rate" ................................. 33
"Adjusted LIBOR Floating Rate" .............................. 34
"Advance" ................................................... 2
"Affiliate" ................................................. 2
"Agent's Fee" ............................................... 53
"Agent" ..................................................... 3
"Aggregate Committed Sum" ................................... 3
"Agreement" ................................................. 3
"Alternate Base Rate" ....................................... 34
"Applicable ABR Margin" ..................................... 35
"Applicable LIBOR/BAR Margin" ............................... 35
"Balance Adjusted Rate" ..................................... 35
"BAR Floating Rate Tranche" ................................. 36
"Basic Papers" .............................................. 3
"Book Collateral Value" ..................................... 6
"Borrowing Base" ............................................ 3
"Borrowing" ................................................. 3
"Bridged Loan" .............................................. 4
"Business Day" .............................................. 5
"Ceiling Rate" .............................................. 36
"Central Elements" .......................................... 5
"Change of Control" ......................................... 5
"Chapter 1D" ................................................ 36
"Chase Texas Balances" ...................................... 36
"Chase Texas" ............................................... 1
"Collateral Value" .......................................... 6
"Collateral" ................................................ 5
"Commitment Fee" ............................................ 52
"Commitments Cancellation Date" ............................. 32
"Commitment" ................................................ 8
"Committed Sum" ............................................. 8
"Company Underwriting Guidelines" ........................... 8
"Company" ................................................... 8
"Credit Agreement" .......................................... 1
"Credit Line" ............................................... 9
"Custodian's Fees" .......................................... 9
"Custodian" ................................................. 9
"Custodian's Certification" ................................. 9
"Custody Agreement" ......................................... 9
"Customer" .................................................. 9
"Debt Collateral" ........................................... 10
"Debtor Laws" ............................................... 10
"Debt" ...................................................... 9
"Default" ................................................... 10
"Disqualifying Event" ....................................... 10
"Effective Date" ............................................ 14
"Eligible Assignee" ......................................... 103
139
"Eligible Collateral" ....................................... 14
"Eligible Mortgage Loan" .................................... 14
"Eligible P&I Advances Collateral" .......................... 15
"Eligible Receivables Collateral" ........................... 17
"Eligible Servicing Advances Collateral" .................... 16
"Eligible Single-family Collateral" ......................... 14
"Enforcement Advance" ....................................... 17
"Enforcement Receivable" .................................... 16
"ERISA" ..................................................... 18
"Eurodollar Reserve Requirements" ........................... 36
"Event of Default" .......................................... 18
"Facilities Papers" ......................................... 18
"Facilities" ................................................ 18
"Facility" .................................................. 18
"Federal Funds Effective Rate" .............................. 36
"FHA" ....................................................... 18
"FHLMC" ..................................................... 18
"FICA" ...................................................... 18
"File" ...................................................... 18
"Financial Statements" ...................................... 68
"Fixed Rate Interest Period" ................................ 37
"Fixed Rate Tranche" ........................................ 37
"Fixed Rate" ................................................ 37
"Floating Rate Tranche" ..................................... 37
"Floating Rate" ............................................. 37
"FNMA" ...................................................... 18
"Follow-Up Notice of Custodian's Receipt" ................... 18
"Free Adjusted Balances" .................................... 37
"Funding Share" ............................................. 18
"GAAP Net Worth" ............................................ 32
"GAAP Net Worth" ............................................ 19
"GAAP" ...................................................... 18
"GNMA" ...................................................... 19
"Governmental Authority" .................................... 19
"Guarantor" ................................................. 19
"Guaranty" .................................................. 19
"Hazard Insurance Policy" ................................... 19
"High LTV Mortgage Loan" .................................... 19
"Holdback Mortgage Loan" .................................... 20
"HUD" ....................................................... 20
"In Default" ................................................ 20
"Indemnified Liabilities" ................................... 96
"Indemnified Parties" ....................................... 96
"indicated rate ceiling" .................................... 36
"Insurance Proceeds" ........................................ 20
"Interest Rate Option" ...................................... 38
"Interest Rate Selection Confirmation" ...................... 47
"Internal Revenue Code" ..................................... 20
"Jumbo Mortgage Loan" ....................................... 20
140
"Law" ....................................................... 20
"Legal Requirement" ......................................... 20
"Lender" .................................................... 21
"LIBOR Business Day" ........................................ 38
"LIBOR" ..................................................... 38
"Lien" ...................................................... 21
"Line Limit" ................................................ 21
"Line" ...................................................... 21
"Loan Modification" ......................................... 21
"Loan Papers" ............................................... 21
"Loan" ...................................................... 21
"Long Beach Financial" ...................................... 21
"Majority Lenders" .......................................... 21
"Margin Stock" .............................................. 21
"Market Value" .............................................. 22
"Maturity Date .............................................. 22
"MBS" ....................................................... 22
"Mortgage Assignment" ....................................... 22
"Mortgage Loan" ............................................. 22
"Mortgage Note" ............................................. 22
"Mortgage" .................................................. 22
"Mortgagor Bankruptcy Loss" ................................. 22
"Multiemployer Plan" ........................................ 23
"Note Payment Account" ...................................... 23
"Notice of Custodian's Receipt" ............................. 23
"Notices" ................................................... 105
"Notice" .................................................... 23
"Obligations" ............................................... 23
"Officer's Certificate" ..................................... 24
"P&I Advances Borrowing Base" ............................... 3
"P&I Advances Collateral Value" ............................. 7
"P&I Advances Collateral" ................................... 24
"P&I Advances Sublimit" ..................................... 29
"P&I Advances Subline" ...................................... 29
"P&I Advance" ............................................... 24
"P&I Receivable" ............................................ 15
"P&I Subline Advances" ...................................... 29
"Past Due Rate" ............................................. 38
"Person" .................................................... 24
"Plan" ...................................................... 25
"Pledged Loans Curtailment Report" .......................... 25
"Pledged Loan" .............................................. 25
"Pledged to the Agent" ...................................... 25
"Prime Rate" ................................................ 38
"Principal Balance" ......................................... 25
"Pro Rata" .................................................. 25
"Property" .................................................. 26
"PUHC Act" .................................................. 26
"Purchase Commitment" ....................................... 26
141
"Qualified High LTV Mortgage Investor" ....................... 26
"Qualified Investor" ......................................... 26
"Qualified Second Lien Mortgage Investor" .................... 26
"Receivables Collateral Value Reduction Report" .............. 77
"Receivables Collateral Value" ............................... 7
"Receivables Collateral" ..................................... 6
"Receivables Sublimit" ....................................... 30
"Receivables Subline" ........................................ 30
"Recoveries Borrowing Base" .................................. 3
"Recoveries Collateral" ...................................... 27
"Recoveries Subline Advances" ................................ 30
"Redemption Amount" .......................................... 27
"Regulation Q" ............................................... 27
"Regulation U" ............................................... 27
"Regulation X" ............................................... 27
"Reimbursement Rights" ....................................... 56
"Relevant 1994 UCC Amendments" ............................... 62
"Representative" ............................................. 27
"Repurchased Defaulted Mortgage" ............................. 27
"Request for Borrowing" ...................................... 27
"Reuters Screen LIBO Page" ................................... 39
"Second Lien Mortgage Loan" .................................. 28
"Security Instruments" ....................................... 28
"SEC" ........................................................ 27
"Senior Credit Notes" ........................................ 28
"Serviced Loans" ............................................. 28
"Servicer" ................................................... 28
"Servicing Advances Borrowing Base" .......................... 3
"Servicing Advances Collateral Value" ........................ 7
"Servicing Advances Collateral" .............................. 28
"Servicing Advances Sublimit" ................................ 29
"Servicing Advances Subline" ................................. 29
"Servicing Advance" .......................................... 28
"Servicing Agreement" ........................................ 28
"Servicing Claim" ............................................ 28
"Servicing Subline Advances" ................................. 29
"Single-family Collateral Value" ............................. 6
"Single-family Collateral" ................................... 6
"Single-family Sublimit" ..................................... 29
"Single-family Warehouse Advances" ........................... 29
"Single-family Warehouse Borrowing Base" ..................... 3
"Single-family Warehouse Subline" ............................ 29
"Single-family" .............................................. 29
"Stated Rate" ................................................ 39
"Statement Date" ............................................. 29
"Structured Securities" ...................................... 29
"Sublimit" ................................................... 29
"Subline Funding Limit" ...................................... 29
"Sublines" ................................................... 29
142
"Submission List" ............................................ 30
"Subordinated Debt" .......................................... 30
"Subordination Agreement" .................................... 30
"Subsidiary" ................................................. 30
"Supplemental Papers" ........................................ 31
"Swing Line Advances" ........................................ 31
"Swing Line Borrowing Due Date" .............................. 31
"Swing Line Limit" ........................................... 31
"Swing Line Note" ............................................ 43
"Swing Line" ................................................. 31
"T&I Advance" ................................................ 31
"T&I Receivable" ............................................. 16
"Tangible Net Worth" ......................................... 32
"Taxes" ...................................................... 32
"Termination Date" ........................................... 32
"Townhouse or Condo Mortgage Loan" ........................... 32
"UCC" ........................................................ 32
"Underwriter's Excuse Proviso" ............................... 88
"VA" ......................................................... 33
"weekly ceiling" ............................................. 36
"Wet Warehousing Sublimit" ................................... 33
"Wet Warehousing" ............................................ 33
"Whole Loans" ................................................ 33
TABLE OF CONTENTS
Preamble ....................................................................1
Recitals ....................................................................1
Agreements ..................................................................2
1. DEFINITIONS .............................................................2
1.1 Defined Terms ......................................2
1.2 Definitions of General Application. ................2
1.3 Definitions for Interest Calculations...............33
1.4 Other Definitional Provisions.......................39
2. THE LENDERS' COMMITMENTS ................................................40
2.1 The Lenders' Commitments to Lend ...................40
2.2 Request for Increase in Maximum Committed Amount...41
2.3 Expiration or Termination of the Commitments.......41
2.4 Advances Outstanding May Not Exceed Limits ........41
2.5 Advances May Be Used Only for Specific Purposes ...41
2.6 When P&I Advances Subline Advances Are Available...42
2.7 Swing Line Commitment .............................42
2.8 Swing Line Borrowings .............................42
143
3. GENERAL BORROWING PROCEDURES ............................................43
3.1 Requests for Borrowings ...........................43
3.2 Initial Funding of Advances under the Swing
Line; Refinancing of Swing Line Advances ..........43
3.3 Requests for Borrowing Due by 4 PM.................44
3.4 Submission List(s) and New Collateral Papers (If
Any) Due by 12:30 PM or 4 PM on the Day of a
Requested Borrowing ...............................45
3.5 If a Request for Borrowing or New Collateral
Papers are Received Late; Waiver of Claim for
Any Late Funding ..................................45
4. THE SENIOR CREDIT LINE NOTES ............................................45
5. INTEREST, PRINCIPAL AND FEES PAYMENTS ...................................46
5.1 Interest ..........................................46
5.2 Interest Rates ....................................46
5.3 Rate of Return Maintenance Covenant ...............50
5.4 Chief Credit Officer's Certificate
Conclusive ........................................51
5.5 Principal .........................................51
5.6 Commitment Fee ....................................52
5.7 Agent's Fee .......................................53
5.8 Prepayments .......................................53
5.9 Payments ..........................................53
5.10 Pro Rata Distribution of Payments .................54
5.11 Chapter 346 Inapplicable ..........................54
6. COLLATERAL ..............................................................55
6.1 Grant of Security Interest ........................55
6.2 Further Assurances Concerning Collateral ..........59
6.3 Delivery of Additional Collateral or Mandatory
Prepayment ........................................59
6.4 Mortgaging of Real Property Collateral ............59
6.5 Collection and Servicing Rights ...................60
6.7 Right of Redemption From Pledge ...................63
6.8 Return of Collateral at End of Commitment .........63
7. CONDITIONS PRECEDENT ....................................................63
7.1 Initial Advance ...................................63
7.2 Each Advance ......................................65
8. REPRESENTATIONS .........................................................66
8.1 Organization; Good Standing; Subsidiaries .........66
8.2 Authorization and Enforceability ..................67
8.3 Approvals .........................................67
8.4 Financial Condition ...............................67
8.5 Litigation ........................................68
8.6 Licensing .........................................68
8.7 Compliance with Laws ..............................68
8.8 Regulation U ......................................68
8.9 Investment Company Act ............................68
144
8.10 Public Utility Holding Company Act ................68
8.11 Payment of Taxes ..................................69
8.12 Agreements ........................................69
8.13 Title to Properties ...............................69
8.14 The Company's Address .............................70
8.15 ERISA .............................................70
8.16 Special Representations Concerning Collateral .....70
8.17 Survival ..........................................73
9. AFFIRMATIVE COVENANTS ...................................................74
9.1 Pay Senior Credit Notes ...........................74
9.2 Financial Statements ..............................74
9.3 Financial Statements Will Fairly Present Financial
Condition .........................................76
9.4 Other Reports .....................................76
9.5 Maintain Existence and Statuses; Conduct of
Business ..........................................78
9.6 Hedge Investments in Mortgage Loans ...............78
9.7 Compliance with Applicable Laws ...................78
9.8 Inspection of Properties and Books; Protection of
Proprietary Information ...........................78
9.9 Notice of Suits, Etc. and Notice and Approval
of Proposed Servicing Transfers ...................78
9.10 Payment of Taxes, etc .............................79
9.11 Insurance .........................................79
9.12 Subordination of Certain Indebtedness .............80
9.13 Payment and Performance of Other Loan
Obligations .......................................80
9.14 Maintain Priority and Perfection of Lender's
Lien ..............................................80
9.15 Use of Proceeds of Advances .......................80
9.16 Promptly Correct Escrow Imbalances ................80
9.17 Special Affirmative Covenants Concerning
Collateral ........................................81
10. NEGATIVE COVENANTS ......................................................83
10.1 Contingent Liabilities ............................83
10.2 Merger; Sale of Assets; Acquisitions ..............83
10.3 Deferral of Subordinated Debt .....................83
10.4 Limitations on Debt ...............................83
10.5 The Company's Debt to Tangible Net Worth
Ratio .............................................85
10.6 The Company's Minimum Tangible Net Worth ..........85
10.7 Advances to Affiliates ............................86
10.8 Serviced Loans Portfolio Delinquencies Level ......86
10.9 Minimum Annual Net Income .........................86
10.10 Fiscal Year .......................................86
10.11 Special Negative Covenants Concerning
Collateral and Underwriting Guidelines ............86
11. DEFAULTS AND REMEDIES ...................................................87
11.1 Events of Default .................................87
11.2 Suspension of Guaranty ............................90
11.3 Cure or Waiver ....................................91
11.4 Remedies ..........................................91
145
11.5 Application of Proceeds ...........................94
11.6 Agent Appointed Attorney-in-Fact ..................94
11.7 Right of Setoff ...................................95
12. REIMBURSEMENT OF EXPENSES; INDEMNITY ....................................95
13. RELATIONSHIPS AMONG THE AGENT AND THE LENDERS ...........................96
13.1 Agent's Duties ....................................96
13.2 Actions Requiring All Lenders' Consent ............97
13.3 Actions Requiring Majority Lenders' Consent .......98
13.4 Agent's Discretionary Actions .....................99
13.5 Lenders' Cooperation ..............................99
13.6 Lenders' Sharing Arrangement ......................100
13.7 Lenders' Acknowledgment ...........................100
13.8 Agent's Representations to Lenders ................100
13.9 Agent's Duty of Care, Express Negligence Waiver
and Release .......................................101
13.10 Calculations of Shares of Principal and
Other Sums ........................................101
13.11 Qualifications of the Agent .......................101
13.12 Resignation of the Agent ..........................102
13.13 Removal of the Agent ..............................102
13.14 Effective Date of Resignation or Removal ..........102
13.15 Successor Agent ...................................102
13.16 Merger of the Agent ...............................103
13.17 Participation; Assignment .........................103
13.18 The Agent and the Lenders are the only
Beneficiaries of this Section .....................105
14. NOTICES .................................................................105
15. MISCELLANEOUS ...........................................................109
15.1 Terms Binding Upon Successors; Survival of
Representations ...................................109
15.2 Items to Be Satisfactory to the Agent or
the Custodian .....................................109
15.3 Usury Not Intended; Credit or Refund of Any
Excess Payments ...................................109
15.4 No Waiver .........................................110
15.5 Counterpart Execution; Amendments .................110
15.6 Governing Law, Jurisdiction and Venue .............110
15.7 General Purpose of Loan ...........................111
15.8 Waiver of Jury Trial ..............................111
15.9 Relationship of the Parties .......................111
15.10 Notice Pursuant to Tex. Bus. & Comm. Code
Section 26.02 .....................................112
146
LIST OF DOCUMENTS
for
LONG BEACH MORTGAGE COMPANY
(THE "COMPANY")
4/98 $300 MILLION SENIOR SECURED CREDIT FACILITY
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS A LENDER
AND AS THE AGENT, AND THE OTHER LENDER(S) PARTY THERETO
APRIL 13, 1998
1. 4/98 Senior Secured Credit Agreement with
EXHIBITS:
Exhibit A-1 - Senior Credit Notes form
Exhibit A-2 - Swing Line Note form
Exhibit B - Requests for Borrowing forms with
Submission List forms
Exhibit C - Form of Subordination Agreement
Exhibit D - List of the Company's Subsidiaries
Exhibit E - Form of Officer's Certificate as to
compliance or noncompliance with certain
financial covenants
Exhibit F - Form of Assignment and Assumption Agreement
Exhibit G - Form of Interest Rate Selection Confirmation
Exhibit H - Opinions to be included in required opinion
of the Company's legal counsel
and SCHEDULES:
Schedule LC - the Lenders' Committed Sums and Subline
Funding Limits
Schedule UG-SSF - Company Underwriting Guidelines for
Single-family Mortgage Loans
Schedule QI - List of Qualified Investors
Schedule FS - the Lenders' Funding Share fractions
Schedule 7.1(b) - List of debts to be excluded from the
subordination required by SECTION 7.1(B)
Schedule 8.4 - Summary of material adverse changes and
material unrealized losses since the
Statement Date
Schedule 8.15 - the Company's Plans
Schedule 10.1 - List of Contingent Liabilities
Schedule 10.4(h)(6) - List of permitted existing unsecured Debt
2. 4/98 Senior Credit Notes to:
(a) Chase Texas ($50 million)
(b) Guaranty Federal Bank, F.S.B. ($45 million)
(c) Bank United ($35 million)
(d) BankBoston, N.A. ($30 million)
(e) The Bank of New York ($30 million)
(f) Bank One, Texas, N.A. ($25 million)
(g) Comerica Bank-California ($25 million)
(h) Bank of Scotland ($20 million)
(i) Hibernia National Bank ($20 million)
(j) National City Bank of Kentucky ($20 million)
3. Swing Line Note to Chase Texas ($50,000,000)
147
4. Guaranty of Long Beach Financial Corporation
5. 4/98 Custody Agreement between the Company and Chase Texas
6. Financing Statements filed in California
7. Credit Agreement Section 7.1(a)(11) Officer's Certificate
8. Company's initial Compliance Certificate
9. Company's Secretary's Certificate with authorizing
resolutions, incumbency certificate, and by-laws
10. Long Beach Financial's (Guarantor's) Secretary's
Certificate with authorizing resolutions, incumbency
certificate and by-laws.
11. Delaware Certificate of Existence and Good Standing with Certificate of
Incorporation -- Company
12. Delaware Certificate of Existence and Good Standing with Certificate of
Incorporation -- Long Beach Financial (Guarantor)
13. Certificates of Good Standing
(a) Company
(i) California
(ii) Other states in which Company does business
(b) Guarantor
(i) California
(ii) Other states in which Guarantor does business
14. UCC search report, Long Beach Mortgage Company, debtor, filings in the
California Secretary of State's office
15. UCC search report, Long Beach Mortgage Financial, debtor, filings in the
California Secretary of State's office
16. Errors and Omissions Insurance Policy