EXHIBIT 10.23
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SECOND AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
(SYNDICATED AGREEMENT)
BETWEEN
▇▇▇▇▇▇▇▇.▇▇▇, INC.,
f/k/a First Mortgage Network, Inc.
a Florida corporation
AND
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
AND
CERTAIN OTHER LENDERS THERETO
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Dated as of November 12, 1999
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TABLE OF CONTENTS
PAGE
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1. DEFINITIONS ......................................................... 1
1.1 DEFINED TERMS.................................................... 1
1.2 OTHER DEFINITIONAL PROVISIONS ...................................13
2. THE CREDIT...........................................................13
2.1 CREDIT LIMIT ................................................13
2.2 SWINGLINE FACILITY AMOUNT ..................................14
2.3 PROCEDURES FOR OBTAINING ADVANCES ...........................15
2.5 NOTES.......................................................18
2.6 INTEREST PAYMENTS............................................18
.
2.7 PRINCIPAL PAYMENTS...........................................19
2.8 FEES.........................................................23
2.9 WAREHOUSING FEES.............................................24
2.10 MISCELLANEOUS CHARGES ......................................24
2.11 INTEREST LIMITATION .........................................24
2.12 INCREASED COSTS; CAPITAL REQUIREMENTS .......................25
2.13 BILLING AND PAYMENT .........................................26
2.14 EXPIRATION OF COMMITMENTS ..................................27
3 . COLLATERAL...........................................................27
3.1 APPOINTMENT OF COLLATERAL AGENT .............................27
3.2 DELIVERY OF COLLATERAL ......................................27
3.3 GRANT OF SECURITY INTEREST ..................................27
3.4 RELEASE OF SECURITY INTEREST IN COLLATERAL ..................29
i
3.5 DELIVERY OF ADDITIONAL COLLATERAL OR MANDATORY PREPAYMENT....31
3.6 RELEASE OF COLLATERAL........................................31
3.7 COLLECTION AND SERVICING RIGHTS..............................32
3.8 RETURN OF COLLATERAL AT MATURITY ............................32
4. CONDITIONS PRECEDENT.................................................33
4.1 INITIAL ADVANCE..............................................33
4.2 EACH ADVANCE.................................................35
5 . REPRESENTATIONS......................................................36
5.1 ORGANIZATION; GOOD STANDING; SUBSIDIARIES....................36
5.2 AUTHORIZATION AND ENFORCEABILITY.............................37
5.3 APPROVALS....................................................37
5.4 FINANCIAL CONDITION..........................................37
5.5 LITIGATION...................................................38
5.6 COMPLIANCE WITH LAWS.........................................38
5.7 REGULATION U ................................................38
5.8 INVESTMENT COMPANY ACT.......................................38
5.9 PAYMENT OF TAXES.............................................39
5.10 AGREEMENTS...................................................39
5.11 TITLE TO PROPERTIES..........................................39
5.12 ERISA........................................................40
5.13 ELIGIBILITY..................................................40
5.14 PLACE OF BUSINESS............................................41
5.15 SPECIAL REPRESENTATIONS CONCERNING COLLATERAL................41
5.16 SERVICING....................................................43
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5.17 NO ADVERSE SELECTION.........................................43
5.18 YEAR 2000 COMPLIANCE.........................................43
5.19 ASSUMED NAMES................................................43
6. AFFIRMATIVE COVENANTS................................................44
6.1 PAYMENT OF NOTES ............................................44
6.2 FINANCIAL STATEMENTS AND OTHER REPORTS.......................44
6.3 MAINTENANCE OF EXISTENCE: CONDUCT OF BUSINESS................46
6.4 COMPLIANCE WITH APPLICABLE LAWS..............................46
6.5 INSPECTION OF PROPERTIES AND BOOKS...........................46
6.6 NOTICE.......................................................47
6.7 PAYMENT OF DEBT, TAXES, ETC .................................47
6.8 INSURANCE....................................................48
6.9 CLOSING INSTRUCTIONS.........................................48
6.10 SUBORDINATION OF CERTAIN INDEBTEDNESS........................48
6.11 OTHER LOAN OBLIGATIONS.......................................49
6.12 USE OF PROCEEDS OF ADVANCES..................................49
6.13 SPECIAL AFFIRMATIVE COVENANTS CONCERNING COLLATERAL..........49
6.14 TRANSFER OF FHA INSURANCE ON TITLE I MORTGAGE LOANS..........50
7. NEGATIVE COVENANTS...................................................51
7.1 CONTINGENT LIABILITIES.......................................51
7.2 SALE OR PLEDGE OF SERVICING CONTRACTS........................51
7.3 MERGER; SALE OF ASSETS; ACQUISITIONS.........................51
7.4 DEFERRAL OF SUBORDINATED DEBT................................51
7.5 LOSS OF ELIGIBILITY..........................................51
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7.6 DEBT TO TANGIBLE NET WORTH RATIO ............................51
7.7 MINIMUM TANGIBLE NET WORTH .................................52
7.8 MINIMUM CURRENT RATIO ......................................52
7.9 LOSS LIMITATION ............................................52
7.10 DIVIDENDS ..................................................52
7.11 ACQUISITION OF RECOURSE SERVICING CONTRACTS ................52
7.12 GESTATION FACILITIES .......................................52
7.13 TRANSACTIONS WITH AFFILIATES ...............................52
7.14 SPECIAL NEGATIVE COVENANTS CONCERNING COLLATERAL.............53
8. DEFAULTS; REMEDIES ..................................................53
8.1 EVENTS OF DEFAULT ..........................................53
8.2 REMEDIES ...................................................57
8.3 APPLICATION OF PROCEEDS ....................................61
8.4 CREDIT AGENT APPOINTED ATTORNEY-IN-FACT ....................62
8.5 RIGHT OF SETOFF ............................................62
8.6 SHARING OF PAYMENTS .........................................63
9. THE CREDIT AGENT ....................................................63
9.1 APPOINTMENT ................................................63
9.2 DUTIES OF CREDIT AGENT .....................................64
9.3 STANDARD OF CARE ...........................................64
9.4 DELEGATION OF DUTIES .......................................64
9.5 EXCULPATORY PROVISIONS .....................................65
9.6 RELIANCE BY CREDIT AGENT ...................................65
9.7 NON-RELIANCE ON CREDIT AGENT OR OTHER LENDERS ..............66
9.8 CREDIT AGENT IN INDIVIDUAL CAPACITY ........................66
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9.9 SUCCESSOR CREDIT AGENT .....................................67
10. NOTICES .............................................................67
11. REIMBURSEMENT OF EXPENSES; INDEMNITY ................................68
11.1 REIMBURSEMENT OF EXPENSES AND INDEMNIFICATION BY THE COMPANY..68
11.2 INDEMNIFICATION BY THE LENDERS ..............................69
12. FINANCIAL INFORMATION ...............................................69
13. MISCELLANEOUS .......................................................69
13.1 TERMS BINDING UPON SUCCESSORS; SURVIVAL OF REPRESENTATIONS ...69
13.2 LENDERS IN INDIVIDUAL CAPACITY ..............................70
13.3 PARTICIPATION AND ASSIGNMENTS ...............................70
13.4 COMMITMENT INCREASES ........................................71
13.5 AMENDMENTS ...................................................71
13.6 OPERATIONAL REVIEWS .........................................72
13.7 GOVERNING LAW ...............................................73
13.8 RELATIONSHIP OF THE PARTIES .................................73
13.9 SEVERABILITY ................................................73
13.10 COUNTERPARTS ................................................73
13.11 CONSENT TO CREDIT REFERENCES ................................74
13.12 CONSENT TO JURISDICTION .....................................74
13.13 COUNTERPARTS .................................................74
13.14 ENTIRE AGREEMENT .............................................74
13.15 WAIVER OF JURY TRIAL .........................................74
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EXHIBITS
Exhibit A-1 Warehousing Promissory Note
Exhibit A-2 Swingline Promissory Note
Exhibit B Commitment Amounts
Exhibit C-SF Request for Advance Against Single
Family Mortgage Loans
Exhibit D-SF Procedures and Documentation for
Warehousing Single-Family Mortgage
Loans
Exhibit E Schedule of Servicing Contracts
Exhibit F Subordination of Debt Agreement
Exhibit G Subsidiaries
Exhibit H Legal Opinion
Exhibit I-SF Officer's Certificate
Exhibit J Schedule of Existing Warehouse Lines
Exhibit K-1 Funding Bank Agreement (Wire)
Exhibit K-2 Funding Bank Agreement (Checks)
Exhibit L Collateral Agency Agreement
Exhibit M Terms Applicable to Advances
Against Eligible Loans
Exhibit N Advance Certificate
Exhibit 0 Commitment Summary Report
Exhibit P RFConnects Pledge Agreement
Exhibit Q Assumed Names
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THIS SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY
AGREEMENT, dated as of November 12, 1999, by and among ▇▇▇▇▇▇▇▇.▇▇▇, INC., a
Florida corporation, f/k/a First Mortgage Network, Inc. (the "Company"), having
its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("RFC"), and BANK
UNITED, a federal savings bank ("Bank United") (RFC, Bank United and any
Additional Lender as may from time to time become parties hereto being referred
to individually as a "Lender" and collectively as the "Lenders"), and RFC as
credit agent for the Lenders (in such capacity, the "Credit Agent").
WHEREAS, the Company and RFC have entered into a First Amended and
Restated Warehousing Credit and Security Agreement dated June 8, 1998, as
amended by the First Amendment to Warehousing Credit and Security Agreement
dated as of June 30, 1998, the Second Amendment to First Amended and Restated
Warehousing Credit and Security Agreement dated as of July 31, 1998, the Third
Amendment to First Amended and Restated Warehousing Credit and Security
Agreement dated as of December 29, 1998, and the Fourth Amendment to First
Amended and Restated Warehousing Credit and Security Agreement dated as of March
26, 1999 (as so amended, the "Prior RFC Credit Agreement"); and
WHEREAS, the Company and the Lenders desire to amend and restate the
Prior RFC Credit Agreement to add Bank United as a party thereto and set forth
the terms and conditions upon which the Lenders shall provide warehouse
financing to the Company;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. Capitalized terms defined below or
elsewhere in this Agreement (including the Exhibits hereto) shall have
the following meanings:
"ADDITIONAL LENDER" means a Person admitted as a Lender under
the Agreement by the terms of an amendment hereto.
"ADVANCE" means a disbursement by the Lenders pursuant to
Section 2.1 of this Agreement.
"ADVANCE CERTIFICATE" has the meaning set forth in Section 2.2
hereof.
"ADVANCE REQUEST" has the meaning set forth in Section 2.3(a)
hereof.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
1
"AGENCY SECURITY" means a Mortgage-backed Security issued or
guarantied by ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae.
"AGREEMENT" means this Second Amended and Restated Warehousing
Credit and Security Agreement, either as originally executed or as it
may from time to time be supplemented, modified or amended.
"APPROVED CUSTODIAN" means a pool custodian or other Person
which is deemed acceptable to the Credit Agent from time to time in its
sole discretion to hold a Mortgage Loan for inclusion in a Mortgage
Pool or to hold a Mortgage Loan as agent for an Investor who has issued
a Purchase Commitment for such Mortgage Loan.
"BUSINESS DAY" means any day excluding Saturday or Sunday and
excluding any day on which national banking associations are closed for
business.
"CALENDAR QUARTER" means the 3-month period beginning on any
January 1, April 1, July 1, or October 1.
"CASH COLLATERAL ACCOUNT" means a demand deposit account
maintained at the Funding Bank in the name of the Credit Agent for the
benefit of the Lenders, and designated for receipt of the proceeds of
the sale or other disposition of the Collateral.
"CHECK DISBURSEMENT ACCOUNT" means a demand deposit account
maintained at the Funding Bank in the name of the Company and under the
control of the Credit Agent for the clearing of checks written by the
Company to fund the closing of Pledged Mortgage Loans.
"CLOSING DATE" means November __, 1999.
"COLLATERAL" has the meaning set forth in Section 3.3 hereof.
"COLLATERAL AGENCY AGREEMENT" means the agreement dated as of
the date hereof between the Company, the Credit Agent, and the
Collateral Agent substantially in the form of EXHIBIT L hereto, as the
same may be amended or modified from time to time.
"COLLATERAL AGENT" means RFC, in its capacity as collateral
agent for the Credit Agent under the Collateral Agency Agreement.
"COLLATERAL DOCUMENTS" means, with respect to each Mortgage
Loan: (a) the Mortgage Note, the Mortgage, and all other documents
executed in connection with or otherwise relating to the Mortgage Loan,
(b) as applicable, the original lender's ALTA
2
Policy of Title Insurance or its equivalent, documents evidencing the
FHA Commitment to Insure or the VA Guaranty, the appraisal, Private
Mortgage Insurance, the Regulation Z Statement, certificates of
casualty or hazard insurance, credit information on the maker(s) of the
Mortgage Note, the HUD-1 or corresponding purchase advice, and (c) any
other documents that are customarily desired for inspection or transfer
incidental to the purchase of any Mortgage Note by an Investor or which
are customarily executed by the seller of a Mortgage Note to an
Investor.
"COLLATERAL VALUE" means (a) with respect to any Eligible Loan
as of the date of determination, the lesser of (i) the amount of any
Advance made against such Eligible Loan under Section 2.1(c) hereof or
(ii) the Fair Market Value of such Eligible Loan; or (b) in the event
Pledged Mortgages have been exchanged for Agency Securities, the lesser
of (i) the amount of any Advances outstanding against the Eligible
Loans backing such Agency Securities or (ii) the Fair Market Value of
such Pledged Securities; and (c) with respect to cash, the amount of
such cash.
"COMMITMENT FEE" means a fee payable by the Company in
consideration of each Lenders' issuance of its Maximum Commitment. The
amount of the Commitment Fee, if any, is set forth in Section 2.8(a)
hereof.
"COMMITMENT SUMMARY REPORT" has the meaning set forth in
Section 6. 2 (d).
"COMMITTED PURCHASE PRICE" means for an Eligible Loan, the
product of the Mortgage Note Amount multiplied by (a) the price
(expressed as a percentage), as set forth in a Purchase Commitment for
such Eligible Loan, or (b) in the event such Mortgage Loan is to be
used to back an Agency Security, the price (expressed as a percentage),
as set forth in a Purchase Commitment for such Agency Security.
"COMPANY" has the meaning set forth in the first paragraph of
this Agreement.
"CREDIT AGENT" means RFC, in its capacity as credit agent for
the Lenders hereunder, and any successor pursuant to Section 9.9
hereof.
"CREDIT LIMIT" means at any date the sum of the Maximum
Commitments of the Lenders at such date, with the initial Credit Limit
being $90,000,000.
"CREDIT SCORE" means a mortgagor's overall consumer credit
rating, represented by a single numeric credit score calculated
3
using the Fair, ▇▇▇▇▇ consumer credit scoring system, as provided by a
credit repository acceptable to the Credit Agent and the Investor that
issued the Purchase Commitment covering the related Mortgage Loan.
"CURRENT RATIO" means the ratio of the current assets of the
Company (and its Subsidiaries, on a consolidated basis) to the current
liabilities of the Company (and its Subsidiaries, on a consolidated
basis), each determined in accordance with GAAP; provided, however,
current assets shall not include assets that were originated or
acquired by the Company more than one year prior to the date of
calculation of the current ratio.
"DEBT" means, with respect to any Person at any date, the sum
of (a) all indebtedness or other obligations of such Person which, in
accordance with GAAP, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of such
Person at such date, (b) all indebtedness or other obligations of such
Person for borrowed money or for the deferred purchase price of
property or services, and (c) to the extent not reflected on its
financial statements, all amounts financed by such Person for the sale
of Mortgage Loans, participation interests, and other assets under a
repurchase agreement, participation agreement, Gestation Agreement, or
other temporary financing arrangement; provided that for purposes of
this Agreement, there shall be excluded from Debt at any date
Subordinated Debt not due within one year of such date and deferred
taxes arising from capitalized excess servicing fees and capitalized
servicing rights.
"DEFAULT" means the occurrence of any event or existence of
any condition which, but for the giving of Notice, the lapse of time,
or both, would constitute an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.6(e)
hereof.
"DEPOSITORY BENEFIT" shall mean the compensation received by a
Lender, directly or indirectly, as a result of the Company's
maintenance of Eligible Balances with such Lender as its Designated
Bank.
"DESIGNATED BANK" means any bank(s) designated from time to
time by a Lender as a Designated Bank, but only for as long as the
Lender has an agreement under which such Lender can receive a
Depository Benefit.
"ELECTRONIC ADVANCE REQUEST" means an electronic transmission
through RFConnects Delivery containing the same
4
information as EXHIBIT C-SF to this Agreement, together with the
RFConnects Pledge Agreement, duly executed by the Company, and a list
of the Mortgage Loans (including mortgagor's name, loan number and loan
amount) to be funded with the Advance sent to the Lender by facsimile.
"ELIGIBLE BALANCES" means all funds of or maintained by the
Company and its Subsidiaries in accounts at a Lender or Designated
Bank, less balances to support float, reserve requirements, and such
other reductions as may be imposed by governmental authorities from
time to time.
"ELIGIBLE LOAN" means a Single Family Mortgage Loan secured by
a Mortgage on real property located in one of the states of the United
States or the District of Columbia that is designated as such on
EXHIBIT M attached hereto and made a part hereof.
"ELIGIBLE MORTGAGE POOL" means a Mortgage Pool for which (a)
an Approved Custodian has issued its initial certification (on the
basis of which an Agency Security is to be issued), (b) there exists a
Purchase Commitment covering such Agency Security, and (c) such Agency
Security will be delivered to the Collateral Agent.
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated thereunder, as amended
from time to time and any successor statute.
"EVENT OF DEFAULT" means any of the conditions or events set
forth in Section 8.1 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"FAIR MARKET VALUE" means at any time for an Eligible Loan or
the related Agency Security (if such Eligible Loan is to be used to
back an Agency Security), (a) if such Eligible Loan or the related
Agency Security is covered by a Purchase Commitment, the Committed
Purchase Price, or (b) otherwise, the market price for such Eligible
Loan or Agency Security, determined by the Credit Agent based on market
data for similar Mortgage Loans or Agency Securities and such other
criteria as the Lender deems appropriate.
"▇▇▇▇▇▇ MAE" means ▇▇▇▇▇▇ ▇▇▇, a corporation created under the
laws of the United States, and any successor thereto.
"FHA" means the Federal Housing Administration and any
successor thereto.
5
"FICA" means the Federal Insurance Contributions Act.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"FIRST MORTGAGE" means a Mortgage which constitutes a first
Lien on the property covered thereby.
"FIRST MORTGAGE LOAN" means a Mortgage Loan secured by a First
Mortgage.
"▇▇▇▇▇▇▇ MAC" means ▇▇▇▇▇▇▇ Mac, a corporation created under
the laws of the United States, and any successor thereto.
"FUNDING BANK" means Bank One, NA or any other bank designated
from time to time by the Credit Agent.
"FUNDING BANK AGREEMENT" means the letter agreement
substantially in the form of EXHIBIT K-1 hereto, or the letter
agreement substantially in the form of EXHIBIT K-2 hereto.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"GESTATION AGREEMENT" means an agreement under which the
Company agrees to sell or finance (a) a Pledged Mortgage prior to the
date of purchase by an Investor, or (b) a Mortgage Pool prior to the
date an Agency Security backed by such Mortgage Pool is issued.
"▇▇▇▇▇▇ MAE" means the Government National Mortgage
Association, an agency of the United States government, and any
successor thereto
"HEDGING ARRANGEMENTS" means, with respect to any Person, any
agreements or other arrangement (including, without limitation,
interest rate swap agreements, interest rate cap agreements and forward
sale agreements) entered into by such Person to protect itself against
changes in interest rates or the market value of assets.
"HUD" means the Department of Housing and Urban Development
and any successor thereto.
6
"HUD 203(K) MORTGAGE LOAN" means an FHA insured closed-end
First Mortgage Loan secured by a First Mortgage, of which a portion
will be used for the purpose of rehabilitating and/or repairing the
related single family property, and which satisfies the definition of
"rehabilitation loan" under 24 C.F.R. Section 203.50(a).
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section
11.1 hereof.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, or any subsequent federal income tax law or laws, as any of the
foregoing have been or may from time to time be amended.
"INVESTOR" means ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or a financially
responsible private institution which is deemed acceptable by the
Credit Agent from time to time in its sole discretion with respect to a
particular category of Pledged Mortgages.
"LENDER" has the meaning set forth in the first paragraph of
this Agreement.
"LIBOR" means, for each calendar week, the rate of interest
per annum which is equal to the arithmetic mean of the U.S. Dollar
London Interbank Offered Rates for one (1) month periods of certain
U.S. banks as of 11:00 a.m. London time on the first Business Day of
each week on which the London Interbank market is open, as published by
Bloomberg L.P. LIBOR shall be rounded, if necessary, to the next higher
one sixteenth of 1/160. If such U.S. dollar LIBOR rates are not so
offered or published for any period, then during such period LIBOR
shall mean the London Interbank Offered Rate for one (1) month periods
published on the first Business Day of each week on which the London
Interbank market is open, in the Wall Street Journal in its regular
column entitled "MONEY RATES."
"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).
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Collateral Agency Agreement, any agreement of the Company relating to
Subordinated Debt, and each other document, instrument or agreement
executed by the Company in connection herewith or therewith, as any of
the same may be amended, restated, renewed or replaced from time to
time.
7
"MAJORITY LENDERS" means at any date, one or more Lenders
whose aggregate Percentage Shares are at least 66.67%. Notwithstanding
the foregoing, if there are only 2 Lenders the term "Majority Lenders"
shall, except for purposes of Section 8.2(c), include both of the
Lenders.
"MANUFACTURED HOME" means a structure that is built on a
permanent chassis (steel frame) with the wheel assembly necessary for
transportation in one or more sections to a permanent site or
semi-permanent site and which has been built in compliance with the
National Manufactured Housing Construction and Safety Standards
established by HUD.
"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.
"MATURITY DATE" shall mean the earlier of: (a) the close of
business on August 31, 2000, as such date may be extended from time to
time in writing by all the Lenders, in their sole discretion, on which
date the Maximum Commitments shall expire of their own terms, and
without the necessity of action by the Lenders, and (b) the date the
Advances become due and payable pursuant to Section 8.1 below.
"MAXIMUM COMMITMENT" means, for any Lender at any date, that
dollar amount designated as such opposite such Lender's name on EXHIBIT
B hereto, as the same may be amended from time to time in accordance
with this Agreement.
"MISCELLANEOUS CHARGES" has the meaning set forth in Section
2.10 hereof.
"MORTGAGE" means a mortgage or deed of trust on improved and
substantially completed real property (including, without limitation,
real property to which a Manufactured Home has been affixed in a manner
such that the Lien of a mortgage or deed of trust would attach to such
manufactured home under applicable real property law).
"MORTGAGE-BACKED SECURITIES" means securities that are secured
or otherwise backed by Mortgage Loans.
"MORTGAGE LOAN" means any loan evidenced by a Mortgage Note
and secured by a Mortgage.
"MORTGAGE NOTE" means a promissory note secured by a Mortgage.
8
"MORTGAGE NOTE AMOUNT" means, as of the date of determination,
the then outstanding unpaid principal amount of a Mortgage Note
(whether or not an additional amount is available to be drawn
thereunder).
"MORTGAGE POOL" means a pool of one or more Pledged Mortgages
on the basis of which there is to be issued a Mortgage-backed Security.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is maintained for employees of the
Company or a Subsidiary of the Company.
"NASDAQ" means National Association of Securities Dealers
Automated Quotation system.
"NOTES" has the meaning set forth in Section 2.5 hereof.
"NOTICES" has the meaning set forth in Article 10 hereof.
"OBLIGATIONS" means any and all indebtedness, obligations and
liabilities of the Company to the Lenders, the Credit Agent and the
Collateral Agent (whether now existing or hereafter arising, voluntary
or involuntary, whether or not jointly owned with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later
increased, created or incurred), arising out of or related to the Loan
Documents.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf
of the Company by its chief financial officer or its treasurer or by
such other officer as may be acceptable to the Credit Agent and
substantially in the form of EXHIBIT I-SF attached hereto.
"OPERATING ACCOUNT" means a demand deposit account maintained
at the Funding Bank in the name of the Company and designated for
funding that portion of each Eligible Loan not funded by an Advance
made against such Eligible Loan and for returning any excess payment
from an Investor for a Pledged Mortgage or Pledged Security.
"PARTICIPANT" has the meaning set forth in Section 13.3
hereof.
"PERCENTAGE SHARE" means, for any Lender at any date, that
percentage which such Lender's Maximum Commitment bears to the Credit
Limit.
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"PERSON" means and includes natural persons, corporations,
limited liability companies, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts
or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"PLANS" has the meaning set forth in Section 5.12 hereof.
"PLEDGED MORTGAGES" has the meaning set forth in Section
3.3(a) hereof.
"PLEDGED SECURITIES" has the meaning set forth in Section 3 .
3(b) hereof.
"PRIOR RFC CREDIT AGREEMENT" has the meaning set forth in the
recitals hereto.
"PURCHASE COMMITMENT" means a written commitment, in form and
substance satisfactory to the Credit Agent, issued in favor of the
Company by an Investor pursuant to which that Investor commits to
purchase Mortgage Loans or Mortgage-backed Securities.
"RELEASE AMOUNT" has the meaning set forth in Section 3.4(g)
hereof.
"RFC" means Residential Funding Corporation, a Delaware
corporation, and any successor thereto.
"RFCONNECTS DELIVERY" means the Lender's proprietary service
to support the electronic exchange of information between the Lender
and the Company, including, but not limited to, Advance Requests,
shipping requests, payoff requests, activity reports and exception
reports.
"RFCONNECTS PLEDGE AGREEMENT" means a pledge agreement in the
form of Exhibit P to the Agreement.
"SECOND MORTGAGE" means a Mortgage which constitutes a second
Lien on the property covered thereby.
"SECOND MORTGAGE LOAN" means a closed-end Mortgage Loan
secured by a Second Mortgage, which is not a Title I Mortgage Loan or a
High LTV Mortgage Loan.
"SECURED PARTIES" has the meaning set forth in Section 3.1
hereof.
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"SERVICING CONTRACT" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person
has the right to service Mortgage Loans.
"SERVICING PORTFOLIO" means, as to any Person, the unpaid
principal balance of Mortgage Loans serviced by such Person under
Servicing Contracts.
"SINGLE FAMILY MORTGAGE LOAN" means a Mortgage Loan secured by
a Mortgage covering improved real property containing one to four
family residences.
"STATEMENT DATE" means the date of the most recent financial
statements of the Company (and, if applicable, its Subsidiaries, on a
consolidated basis) delivered to the Lenders under the terms of this
Agreement.
"SUBLIMIT" means the aggregate amount of Advances (expressed
as a dollar amount or as a percentage of the Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of
Eligible Loan.
"SUBORDINATED DEBT" means (a) all indebtedness of the Company
for borrowed money which is effectively subordinated in right of
payment to all other present and future Obligations either (i) pursuant
to a Subordination of Debt Agreement in the form of EXHIBIT F hereto or
(ii) otherwise on terms acceptable to the Credit Agent, and (b) solely
for purposes of Section 7.4 hereof, all indebtedness of the Company
which is required to be subordinated by Section 4.1(b) or Section 6.10
hereof.
"SUBSIDIARY" means any corporation, association or other
business entity in which more than 50% of the total voting power or
shares of stock entitled to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of
that Person or a combination thereof.
"SWINGLINE ADVANCE" means an Advance made by the Swingline
Lender under Section 2.2 hereof.
"SWINGLINE FACILITY AMOUNT" means the maximum amount of
Swingline Advances to be made by the Swingline Lender from time to
time, but not to exceed the then undisbursed portion of the aggregate
Maximum Commitment of all the Lenders.
"SWINGLINE LENDER" means RFC.
"SWINGLINE NOTE" has the meaning set forth in Section 2.5
hereof.
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"TANGIBLE NET WORTH" means with respect to any Person at any
date, the excess of the total assets of such Person over total
liabilities of such Person on such date, each to be determined in
accordance with GAAP consistent with those applied in the preparation
of the financial statements referred to in Section 6.2 hereof, plus
that portion of Subordinated Debt not due within one year of such date;
provided that, for purposes of calculating Tangible Net Worth, there
shall be excluded from total assets advances or loans to shareholders,
officers, employees or Affiliates, investments in Affiliates, assets
pledged to secure any liabilities not included in the Debt of such
Person, intangible assets, those other assets which would be deemed by
HUD to be non-acceptable in calculating adjusted net worth in
accordance with its requirements in effect as of such date, as such
requirements appear in the "Audit Guide for Audit of Approved
Non-Supervised Mortgagees" and other assets deemed unacceptable by the
Majority Lenders in their sole discretion.
"TITLE I MORTGAGE LOAN" means an FHA co-insured closed-end
First Mortgage Loan or Second Mortgage Loan which is underwritten in
accordance with HUD underwriting standards for the Title I Property
Improvement Program as set forth in and which is reported for insurance
under the Mortgage Insurance Program authorized and administered under
Title I of the National Housing Act of 1934, as amended and the
regulations promulgated thereunder.
"TRUST RECEIPT" means a trust receipt in a form approved by
the Credit Agent and pursuant to which the Collateral Agent may deliver
any document relating to the Collateral to the Company for correction
or completion.
"VA" means the U.S. Department of Veterans Affairs and any
successor thereto.
"WAREHOUSING FEE" has the meaning set forth in Section 2.9
hereof.
"WAREHOUSE PERIOD" means, for any Eligible Loan, the maximum
number of days an Advance against that type of Eligible Loan is
permitted to remain outstanding as set forth on EXHIBIT M attached to
this Agreement.
"WAREHOUSING PROMISSORY NOTE" means the promissory note
evidencing the Company's Obligations with respect to Advances made
against Eligible Loans, in the form of EXHIBIT A-1 attached hereto.
"WET SETTLEMENT ADVANCE" means an Advance pursuant to Section
2.3(b) of this Agreement, in respect of the closing or
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settlement of a Mortgage Loan, for which the Collateral Documents have
not yet been delivered to the Collateral Agent; however, the term "Wet
Settlement Advance" shall no longer apply to the Advance once the
Lender has received all of the Collateral Documents as provided in
Section 2.2 (b) and the applicable Exhibit referenced therein.
"WIRE DISBURSEMENT ACCOUNT" means a demand deposit account
maintained at the Funding Bank in the name of the Credit Agent for the
clearing of wire transfers requested by the Company to fund the closing
of Pledged Mortgages.
"YEAR 2000 PROBLEM" means the risk that computer applications
may not be able to properly perform date-sensitive functions after
December 31, 1999.
1.2 OTHER DEFINITIONAL PROVISIONS.
1.2(a) Accounting terms not otherwise defined herein shall
have the meanings given the terms under GAAP.
1.2(b) Defined terms may be used in the singular or the
plural, as the context requires.
1.2(c) All references to time of day shall mean the then
applicable time in Chicago, Illinois, unless expressly provided to the
contrary.
2. THE CREDIT.
2.1 CREDIT LIMIT.
2.1(a) Subject to the terms and conditions of this Agreement
and provided no Default or Event of Default has occurred and is
continuing, the Lenders agree, severally, and not jointly, from time to
time during the period from the Closing Date, but not including, the
Maturity Date, to make Advances to the Company, pro rata in accordance
with their respective Percentage Shares, provided the total aggregate
principal amount outstanding at any one time of all such Advances shall
not exceed the Credit Limit. Within the Credit Limit, the Company may
borrow, repay and reborrow. All Advances under this Agreement shall
constitute a single indebtedness, and all of the Collateral shall be
security for the Notes and for the performance of all the Obligations.
On the date of this Agreement, the Company shall be deemed to have
requested Advances in an amount sufficient to repay in full the
outstanding principal amount of the loans outstanding under the Prior
RFC Credit Agreement.
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2.1(b) Advances shall be used by the Company solely for the
purpose of funding the acquisition or origination of Eligible Loans and
shall be made at the request of the Company, in the manner hereinafter
provided in Section 2.3 hereof, against the pledge of such Eligible
Loans as Collateral therefor. The limitations on the use of Advances
set forth on EXHIBIT M attached hereto and made a part hereof shall be
applicable. In addition, the following limitations on the use of
Advances shall be applicable:
(1) No Advance shall be made against any Mortgage
Loan which was closed more than 60 days prior to the date of
the requested Advance.
(2) No Advance shall be made against a Mortgage Loan
other than a Mortgage Loan secured by a Mortgage on real
property located in one of the states of the United States or
the District of Columbia.
2.1(c) No Advance shall exceed the following amount applicable
to the type of Eligible Loan at the time it is pledged to secure an
Advance hereunder:
(1) For an Eligible Loan pledged hereunder, the
amount set forth on EXHIBIT M attached hereto and made a part
hereof.
2.2 SWINGLINE FACILITY AMOUNT. On the terms and subject to the
conditions set forth herein, the Swingline Lender agrees that from time
to time up to, but not including, the Maturity Date, it may agree to
make Advances requested by the Company in amounts not to exceed the
Swingline Facility Amount. Such Swingline Advances shall be evidenced
by the Swingline Note. A Swingline Advance shall bear interest, from
the date of such Swingline Advance, until paid in full, at the Floating
Rate. The Lenders hereby agree to purchase from the Swingline Lender an
undivided participation interest in all outstanding Swingline Advances
held by the Swingline Lender at any time in an amount equal to each
Lender's Percentage Share of such Swingline Advances. The Swingline
Lender may at any time in its sole and absolute discretion (and shall
no less frequently than weekly and upon the acceleration of the
Obligations following an Event of Default) request the Lenders to make
Advances in principal amounts equal to their Percentage Shares in the
aggregate amount necessary to repay the outstanding Swingline Advances;
each Lender absolutely and unconditionally agrees to fund such
Advances, regardless of any Default or Event of Default or other
condition that would otherwise excuse such Lender from funding
Advances, provided that no Lender shall be required to make Advances to
repay Swingline Advances which would cause such
14
Lender's aggregate Advances then outstanding to exceed the amount of
such Lender's Maximum Commitment. Each Lender shall deliver each such
Advance directly to the Swingline Lender in immediately available funds
at the office of the Credit Agent by 12:00 noon on the day of the
request therefor by the Swingline Lender, if such request is made on or
before 11:00 a.m., or by 9:00 a.m. on the first (1st) Business Day
following such request therefor, if such request is made after 11:00
a.m., and each such Advance shall be promptly applied against the
outstanding Swingline Advances. At any time following the receipt of
funds from all the Lenders, and no less than weekly, the Credit Agent
shall deliver to each Lender a certificate in the form of EXHIBIT N
attached hereto (the "Advance Certificate"), certified by the Credit
Agent.
2.3 PROCEDURES FOR OBTAINING ADVANCES.
2.3(a) The Company may obtain an Advance hereunder,
subject to the satisfaction of the conditions set forth in
Sections 4.1 and 4.2 hereof, upon compliance with the
procedures set forth in this Section 2.3 and in EXHIBIT D-SF
with respect to Advances, attached hereto and made a part
hereof including the delivery of all documents listed in
EXHIBIT D-SF, as applicable (the "Collateral Documents") to
the Collateral Agent. Requests for Advances shall be initiated
by the Company by delivering to the Credit Agent, with a copy
to the Collateral Agent (unless they are the same Person), no
later than 1 Business Day prior to any Business Day that the
Company desires to borrow hereunder, a completed and signed
request for an Advance (an "Advance Request") on the then
current form approved by the Credit Agent. The current forms
in use by the Credit Agent is EXHIBIT C-SF for Advances,
attached hereto and made a part hereof. The Credit Agent shall
have the right, on not less than 3 Business Days' prior Notice
to the Company, to modify any of said Exhibits to conform to
current legal requirements or Credit Agent practices, and, as
so modified, said Exhibits shall be deemed a part hereof. If
the Credit Agent and the Collateral Agent are the same Person,
the Company shall only be required to be deliver the Advance
Request to the Credit Agent.
2.3(b) In the case of any Wet Settlement Advance, the
Company shall follow the procedures and, at or prior to the
Lenders' making of such Wet Settlement Advance, shall deliver
to the Collateral Agent the documents set forth in EXHIBIT
D-SF hereto. In the case of a Mortgage Loan financed through a
Wet Settlement Advance, the Company shall cause all Collateral
Documents required to be delivered to
15
the Collateral Agent within 7 Business Days after the date of
the Wet Settlement Advance relating thereto.
2.3(c) The Collateral Agent shall have 1 Business Day
under ordinary circumstances to (i) examine the Collateral
Documents (ii)reject Collateral that does not meet the
requirements of this Agreement and (iii) verify the Advance
amount. Unless the Collateral Agent and the Credit Agent are
the same Person, before the Credit Agent funds any requested
Advance, the Credit Agent shall have received from the
Collateral Agent Notice (telephonic followed by written
notice) of the amount that may be advanced pursuant to Section
2.1(c).
2.3(d) The Company shall hold in trust for the
Lenders, and the Company shall deliver to the Collateral Agent
promptly upon request, or if the recorded Collateral Documents
have not yet been returned from the recording office,
immediately upon receipt by the Company of such recorded
Collateral Documents, and the Pledged Mortgage is not being
held by an Investor for purchase or has not been redeemed from
pledge, the following: (1) the originals of the Collateral
Documents for which copies are required to be delivered to the
Collateral Agent pursuant to EXHIBIT D-SF, (2) the original
lender's ALTA Policy of Title Insurance or an equivalent
thereto, and (3) any other documents relating to a Pledged
Mortgage which the Collateral Agent or Credit Agent may
request, including, without limitation, documentation
evidencing the FHA Commitment to Insure or the VA Guaranty of
any Pledged Mortgage which is either FHA insured or VA
guaranteed, the appraisal, Private Mortgage Insurance
Certificate, if applicable, the Regulation Z Statement,
certificates of casualty or hazard insurance, credit
information on the maker of each such Mortgage Note, a copy of
a HUD-1 or corresponding purchase advice and other documents
of all kinds which are customarily desired for inspection or
transfer incidental to the purchase of any Mortgage Note by an
Investor and any additional documents which are customarily
executed by the seller of a Mortgage Note to an. Investor.
2.3(e) Neither the Credit Agent nor the Collateral
Agent nor any Lender shall incur any liability to the Company
in acting upon any telephone notice, referred to in this
Agreement, that the Credit Agent, the Collateral Agent or such
Lender believes in good faith to have been given by a duly
authorized officer or other Person authorized to borrow on
behalf of the Company or for otherwise acting in good faith
under this Section. Upon the funding of Advances by the
Lenders in accordance with this Agreement pursuant to
16
any telephonic notice, the Company shall have effected
borrowings hereunder. Once made in any form permitted
hereunder, an Advance Request shall be irrevocable, and the
Company shall be bound to accept an Advance in accordance
therewith. However, the Company may ask to revoke the Advance
Request by giving telephone notice, electronic notice or other
Notice to both the Credit Agent and the Collateral Agent;
then, if both the Credit Agent and the Collateral Agent (each
acting in its sole and absolute discretion) concur, they may
consider the Advance Request revoked.
2.3(f) To make an Advance, the Credit Agent shall
cause the Funding Bank to credit either the Wire Disbursement
Account or the Check Disbursement Account upon compliance by
the Company with the terms of the Loan Documents. The Credit
Agent shall determine in its sole discretion the method by
which Advances and other amounts on deposit in the Wire
Disbursement Account are disbursed by the Funding Bank to or
for the account of the Company.
2.3(g) If, pursuant to the authorization given by
the Company in the Funding Bank Agreement, for the purpose of
funding a Mortgage Loan against which the Credit Agent has
made an Advance in accordance with a Request for Advance (i)
the Credit Agent debits the Company's Operating Account at the
Funding Bank to the extent necessary to cover a wire to be
initiated by the Credit Agent, or (ii) the Credit Agent
directs the Funding Bank to honor a check drawn by the Company
on its Check Disbursement Account at the Funding Bank, and
such debit or direction results in an overdraft, the Swingline
Lender may make an additional Swingline Advance to fund such
overdraft.
2.3(h) Upon an Event of Default, and without the
necessity of prior demand or notice from the Credit Agent, the
Company authorizes the Credit Agent to cause the Funding Bank
to charge the Company's Operating Account for any Obligations
due and owing the Lenders.
2.4 NON-RECEIPT OF FUNDS BY THE CREDIT AGENT. If the Credit
Agent receives notice from a Lender that such Lender does not intend to
make its Percentage Share of any Advance, neither the Credit Agent nor
any other Lender shall have any obligation to fund such Lender's
Percentage Share. Notwithstanding the foregoing, unless a Lender
notifies the Credit Agent by 12:00 noon on the date of a proposed
Advance that it does not intend to make its Percentage Share of such
Advance at such time and on such date available to the Credit Agent,
the Credit Agent may assume that such Lender will make such amount
available to the
17
Credit Agent to be advanced to the Company, and in reliance on such
assumption, the Credit Agent may, at its option, make a corresponding
amount available to the Company.
2.4(a) If the Credit Agent makes such corresponding
amount available to the Company and such amount is not made
available to the Credit Agent by such Lender by close of
business on the date of the Advance, such Lender shall pay
such amount to the Credit Agent upon demand plus interest to
the date of payment at the rate per annum equal to per annum
over the Federal Funds Rate.
2.4(b) If such Lender fails to pay as provided
herein, the Company shall pay such amount to the Credit Agent
upon demand plus interest (at the rate applicable to the
Company for such Advance) to the date of repayment.
2.4(c) Nothing in this Subsection shall relieve any
Lender from its obligation to fund its Percentage Share of any
Advance, or prejudice any rights the Company may have against
any Lender as a result of such Lender's failure to make its
Percentage Share of any Advance available to the Company.
2.5 NOTES. The Company's Obligations in respect of Advances
shall be evidenced by Warehousing Promissory Notes of the Company in
favor of each Lender, substantially in the form of EXHIBIT A-1 attached
hereto, and a promissory note (the "Swingline Note") of the Company in
favor of the Swingline Lender in the form of EXHIBIT A-2 attached
hereto (collectively, the "Notes"). The terms "Warehousing Promissory
Note," "Swingline Note," "Note" or "Notes" shall include all
extensions, renewals and modifications of the Notes and all
substitutions therefor. All terms and provisions of the Notes are
hereby incorporated herein.
2.6 INTEREST PAYMENTS.
2.6(a) Except as otherwise provided in Section 2.6(d)
or Section 2.6(e) hereof, the unpaid amount of each Advance
against an Eligible Loan shall bear interest at the rate(s)
per annum set forth on EXHIBIT M attached hereto and made a
part hereof.
2.6(b) [intentionally omitted]
2.6(c) Interest shall be computed on the basis of a
360-day year and applied to the actual number of days elapsed
in each interest calculation period and shall be payable
monthly in arrears, on the first day of each month,
18
commencing with the first month following the Closing Date and
on the Maturity Date.
2.6(d) If, for any reason, no interest is due on an
Advance, the Company agrees to pay to the Credit Agent an
administrative fee equal to 1 day of interest on such Advance
at the rate of interest applicable to such Advance, as in
effect on the date of such Advance. Administrative and other
fees shall be due and payable in the same manner as interest
is due and payable hereunder.
2.6(e) Upon Notice to the Company, after the
occurrence and during the continuation of an Event of Default,
the Credit Agent may give Notice to the Company that the
unpaid amount of each Advance shall bear interest until paid
in full at a per annum rate of interest (the "Default Rate")
equal to 4% in excess of the rate of interest otherwise
applicable to the Advance or, if no rate is applicable, the
highest rate then applicable to any outstanding Advances.
2.6(f) The floating rates of interest provided for in
this Agreement will be adjusted as of the effective date of
each change in the applicable index. The Lender's
determination of such rates as of any date of determination
shall be conclusive and binding, absent manifest error.
2.7 PRINCIPAL PAYMENTS.
2.7(a) The outstanding principal amount of all
Advances shall be payable in full on the Maturity Date.
2.7(b) The Company shall have the right to prepay the
outstanding Advances in whole or in part, from time to time,
without premium or penalty.
2.7(c) The Company shall be obligated to pay to the
Credit Agent for the pro rata benefit of the Lenders, without
the necessity of prior demand or notice from the Credit Agent,
and the Company authorizes the Credit Agent to cause the
Funding Bank to charge the Company's Operating Account for,
the amount of any outstanding Advance against a specific
Pledged Mortgage, upon the earliest occurrence of any of the
following events:
(1) One (1) Business Day elapses from the
date an Advance was made and the Pledged Mortgage
which was to have been funded by such Advance is not
closed and funded.
19
(2) Ten (10) Business Days elapse from the
date a Collateral Document was delivered to the
Company for correction or completion under a Trust
Receipt, without being returned to the Credit Agent.
(3) On the date on which a Pledged Mortgage
is determined to have been originated based on
untrue, incomplete or inaccurate information, whether
or not the Company had knowledge of such
misrepresentation or incorrect information, or the
Pledged Mortgage is defaulted and remains in default
for a period of 60 days or more.
(4) For a Mortgage Loan covered by a
Purchase Commitment at the time pledged hereunder, 3
Business Days after the mandatory delivery date of
the related Purchase Commitment and the specific
Pledged Mortgage or the Pledged Security backed
thereby was not delivered under the Purchase
Commitment prior to such mandatory delivery date, or
the Purchase Commitment is terminated; unless in each
case, such Pledged Mortgage or Pledged Security is
eligible for delivery to an Investor under a
comparable Purchase Commitment acceptable to the
Lender.
(5) Upon sale or other disposition of the
Pledged Mortgage or, if a Pledged Mortgage is
included in an Eligible Mortgage Pool, upon sale or
other disposition of the related Agency Securities.
(6) On the date on which the Company knows,
or has reason to know, or receives notice from the
Lender, that one or more of the representations and
warranties set forth in Section 5.15 were inaccurate
or incomplete in any material respect on any date
when made or deemed made.
2.7(d) Upon Notice to the Company by the Credit Agent, the
Company shall be obligated to pay to the Credit Agent for the pro rata
benefit of the Lenders, and the Company authorizes the Credit Agent to
cause the Funding Bank to charge the Company's Operating Account for,
the amount of any outstanding Advance against a specific Pledged
Mortgage, upon the earliest occurrence of any of the following events:
(1) For any Pledged Mortgage, the number of
days set forth for the applicable type of Eligible
Loan on EXHIBIT M attached hereto and made a part
hereof as the "Warehouse Period" elapse from the date
of the initial
20
Advance made by the Credit Agent against such Pledged
Mortgage.
(2) For any Pledged Mortgage secured by a
Second Mortgage, payment of any lien prior to such
Pledged Mortgage is delinquent, and remains
delinquent for a period of 60 days or more.
(3) Forty-five (45) days elapse from the
date the Pledged Mortgage was delivered to an
Investor or an Approved Custodian for examination and
purchase or inclusion in a Mortgage Pool, without the
purchase being made or an Eligible Mortgage Pool
being initially certified, or upon rejection of the
Pledged Mortgage as unsatisfactory by an Investor or
an Approved Custodian.
(4) Seven (7) Business Days elapse from the
date a Wet Settlement Advance was made without
receipt by the Collateral Agent of all Collateral
Documents relating to such Pledged Mortgage, or such
Collateral Documents, upon examination by the
Collateral Agent, are found not to be in compliance
with the requirements of this Agreement or the
related Purchase Commitment.
(5) With respect to any Pledged Mortgage,
any of the items described in Section 2.2(d), upon
examination by the Collateral Agent, are found not to
be in compliance with the requirements of this
Agreement or the related Purchase Commitment.
2.7(e) The outstanding amount of any Advance made
pursuant to Section 2.3(g) shall be payable in full within 1
Business Day after the date of such Advance.
2.7(f) In addition to the payments required pursuant
to Sections 2.7(c), 2.7(d), if the principal amount of any
Pledged Mortgage is prepaid in whole or in part while an
Advance is outstanding against such Pledged Mortgage, the
Company shall be obligated to pay to the Credit Agent, without
the necessity of prior demand or notice from the Credit Agent,
and the Company authorizes the Credit Agent to cause the
Funding Bank to charge the Company's Operating Account for the
amount of such prepayment, to be applied to such Advance.
2.7(g) The proceeds of the sale or other disposition
of Pledged Mortgages and Pledged Securities shall be paid
directly by the Investor to the Cash Collateral Account. The
Company shall give Notice to the Collateral Agent of the
Pledged Mortgages or Pledged Securities for which proceeds
21
have been received. The Company may give the Notice through
RFConnects Delivery; otherwise, the Notice shall be by
telephone, followed by written confirmation thereof. Upon
receipt of such Notice, the Advances against such Pledged
Mortgages or the Pledged Securities shall be repaid from such
proceeds and such Pledged Mortgages or Pledged Securities
shall be considered to have been redeemed from pledge. The
Credit Agent is entitled to rely upon the Company's
affirmation that deposits in the Cash Collateral Account
represent payment from Investors for the purchase of Pledged
Mortgages or Pledged Securities as specified by the Company.
In the event that the payment from an Investor for the
purchase of Pledged Mortgages or Pledged Securities is less
than the outstanding Advances against such Pledged Mortgages
or the Mortgage Loans backing Pledged Securities, the Credit
Agent is authorized to cause the Funding Bank to charge the
Company's Operating Account for an amount equal to such
deficiency. Provided no Default or Event of Default exists,
the Credit Agent shall return any excess payment from an
Investor for Pledged Mortgages or Pledged Securities to the
Company.
2.7(h) Prior to the occurrence of an Event of Default
and acceleration of all Advances outstanding hereunder or
termination of the commitments of the Lenders to make Advances
hereunder, amounts received by the Credit Agent as proceeds of
the sale or other disposition of Pledged Mortgages or Pledged
Securities and, including without limitation, all amounts from
time to time deposited in the Cash Collateral Account, shall
be allocated among the Lenders as follows:
(1) First, to the Swingline Lender until the
principal amount of the Swingline Advances have been
paid in full; and
(2) Second, pro rata to the Lenders in
accordance with their respective Percentage Shares,
until the principal amount of the Advances initially
made against such Pledged Mortgages has been paid in
full;
Unless the Advances outstanding against such sold or disposed
of Pledged Mortgages or Pledged Securities are Swingline
Advances, the application of repayment amounts to the
Swingline Advances under this Section 2.7 (h) shall be deemed
to be (i) a repayment by the Company of the Advances
outstanding against such Pledged Mortgages or Pledged
22
Securities and (ii) a refunding by the Lenders of other
Swingline Advances through Advances made by the Lenders in
accordance with Section 2.2 hereof.
2.7(i) Following the occurrence of an Event of
Default and acceleration of any Obligations outstanding
hereunder or termination of the commitments of the Lenders to
make Advances hereunder, all amounts received by the Credit
Agent on account of the Obligations shall be disbursed by the
Credit Agent in accordance with the provisions of Section 8.3
hereof.
2.8 FEES. The Company shall pay the following fees:
2.8(a) To each Lender, through the Credit Agent, a
Commitment Fee in the amount of 1/8% per annum of the amount
of such Lender's Maximum Commitment, which Commitment Fee
shall be paid quarterly in advance and shall be computed on
the basis of a 365-day year and applied to the actual number
of days elapsed in such Calendar Quarter. On the Closing Date,
the Company shall pay the prorated portion of the quarterly
Commitment Fee due from the Closing Date to the last day of
the current Calendar Quarter. If any Lender increases its
Maximum Commitment, or if an Additional Lender becomes a party
hereto, the Company shall pay the Commitment Fee on the amount
of such increase or the amount of such Additional Lender's
Maximum Commitment from the effective date thereof to the last
day of the current Calendar Quarter. In all other cases, the
Company shall make quarterly payments of the Commitment Fee on
the first day of each Calendar Quarter. If the Maturity Date
is other than the last day of a Calendar Quarter, the Company
shall pay the prorated portion of the quarterly Commitment Fee
due from the beginning of the then current Calendar Quarter to
and including the Maturity Date. The Company shall not be
entitled to a reduction in the amount of the Commitment Fee in
the event the amount of any Lender's Maximum Commitment is
reduced at the request of the Company, or in the event that
any Lender's Maximum Commitment is terminated prior to its
stated expiration date as a result of an Event of Default
hereunder. If the commitments of the Lenders hereunder
terminate prior to the Maturity Date, the unpaid balance of
the Commitment Fee shall be due and payable in full on the
date of such termination. However, if there has been no
Default and the Commitment is terminated, upon Company's
payment of the outstanding obligations, at Company's request,
no additional Commitment Fee installment will be due.
Nonetheless, the Company will not be entitled to a refund of a
Commitment Fee installment once paid,
23
Despite any early termination or reduction of the Commitment.
2.8(b) To the Collateral Agent, for its own account,
such fees as shall be required under the Collateral Agency
Agreement.
2.8(c) To the Credit Agent, for its own account, such
fees as shall be separately agreed between the Company and the
Credit Agent.
2.8(d) To the Credit Agent for the benefit of the
Lenders, such fees as shall be separately agreed between the
Company and the Lenders.
2.9 WAREHOUSING FEES. The Company agrees, at the time of each
Advance, to pay to the Collateral Agent a Warehousing Fee for each such
Mortgage Loan pledged as Collateral for such Advance in such amount as
shall be separately agreed between the Company and the Collateral
Agent.
2.10 MISCELLANEOUS CHARGES. In addition to all fees payable
pursuant to Section 2.8 hereof, the Company agrees to reimburse the
Credit Agent for miscellaneous charges and expenses (collectively,
"Miscellaneous Charges") incurred by or on behalf of the Credit Agent
in connection with the handling and administration of Advances, and to
reimburse the Collateral Agent for Miscellaneous Charges incurred by or
on behalf of the Collateral Agent in connection with the handling and
administration of the Collateral. For the purposes hereof,
Miscellaneous Charges shall include, but not be limited to, costs for
UCC, tax lien and judgment searches conducted by the Lender, filing
fees, charges for wire transfers, check processing charges, charges for
security delivery fees, charges for overnight delivery of Collateral to
Investors, the Funding Bank's service charges and Designated Bank
Charges. Miscellaneous Charges are due when incurred, but shall not be
delinquent if paid within 30 days after receipt of an invoice or an
account analysis statement from the Credit Agent or the Collateral
Agent, as the case may be.
2.11 INTEREST LIMITATION. All agreements between the Company
and the Lenders are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of acceleration of maturity of
this Agreement or the Notes or otherwise, shall the amount paid or
agreed to be paid to the Lenders for the use, forbearance, loaning or
retention of the Advances secured by this Agreement exceed the maximum
permissible under applicable law. If from any circumstances whatsoever,
fulfillment of any provisions hereof or of the Notes, or any other
document securing this Agreement at any time given shall
24
involve transcending the limit of validity prescribed by law, then, the
obligation to be fulfilled shall automatically be reduced to the limit
of such validity, and if from any circumstances the Lenders should ever
receive as interest an amount which would exceed the highest lawful
rate of interest, such amount which would be in excess of interest
shall be applied to the reduction of the principal balance secured by
the Notes and not to the payment of interest thereunder. This provision
shall control every other provision of all agreements between the
Company and Lenders and shall also be binding upon and available to any
subsequent holder of the Notes.
2.12 INCREASED COSTS; CAPITAL REQUIREMENTS. In the event any
applicable law, order, regulation or directive issued by any
governmental or monetary authority, or any change therein or in the
governmental or judicial interpretation or application thereof, or
compliance by any Lender with any request or directive (whether or not
having the force of law) by any governmental or monetary authority:
2.12(a) Does or shall subject any Lender to any tax
of any kind whatsoever with respect to this Agreement or any
Advances made hereunder, or change the basis of taxation on
payments to such Lender of principal, fees, interest or any
other amount payable hereunder (except for change in the rate
of tax on the overall gross or net income of such Lender by
the jurisdiction in which such Lender's principal office is
located);
2.12(b) Does or shall impose, modify or hold
applicable any reserve, capital requirement, special deposit,
compulsory loan or similar requirement against assets held by,
or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender which
are not otherwise included in the determination of the
interest rate as calculated hereunder;
and the result of any of the foregoing is to increase the cost
to such Lender of making, renewing or maintaining any Advance or to
reduce any amount receivable in respect thereof or to reduce the rate
of return on the capital of such Lender or any Person controlling such
Lender as it relates to credit facilities in the nature of that
evidenced by this Agreement, then, in any such case, the Company shall
promptly pay any additional amounts necessary to compensate such Lender
for such additional cost or reduced amounts receivable or reduced rate
of return as determined by such Lender with respect to this Agreement
or Advances made hereunder. If a Lender becomes entitled to claim
25
any additional amounts pursuant to this Section, it shall notify the
Company through the Credit Agent of the event by reason of which it has
become so entitled and the Company shall pay such amount within 15 days
thereafter. A certificate as to any additional amount payable pursuant
to the foregoing sentence containing the calculation thereof in
reasonable detail submitted by a Lender, through the Credit Agent, to
the Company shall be conclusive in the absence of manifest error. The
obligations of the Company under this Section shall survive the payment
of all other obligations and the termination of this Agreement.
2.13 BILLING AND PAYMENT.
2.13(a) The Credit Agent shall on or before the 5th
Business Day of each month deliver to the Company ▇▇▇▇▇▇▇▇ for
interest due and payable. On or before the 10th Business Day
of each month, the Company shall pay to the Credit Agent the
full amount of interest and fees billed for the immediately
preceding month.
2.13(b) All payments made on account of the
Obligations shall be made by the Company to the Credit Agent
for distribution to the Lenders, except for Balance Deficiency
Fees, which shall be made directly to the applicable Lender,
and fees payable to the Credit Agent or the Collateral Agent
for its own account. All payments made on account of the
Obligations shall be made without setoff or counterclaim, free
and clear of and without deduction for any taxes, fees or
other charges of any nature whatsoever imposed by any taxing
authority, and must be received by the Credit Agent by 12:00
noon on the day of payment, it being expressly agreed and
understood that if a payment is received after 12:00 noon by
the Credit Agent such payment will be considered to have been
made on the next succeeding Business Day and interest thereon
shall be payable by the Company at the then applicable rate
during such extension. No principal payments resulting from
the sale of Pledged Mortgages or Pledged Securities shall be
deemed to have been received by the Credit Agent until the
Collateral Agent has also received the Notice required under
Section 2.7 (g) hereof. All payments shall be made in lawful
money of the United States of America in immediately available
funds transferred via wire to accounts designated by the
Credit Agent from time to time. If any payment required to be
made by the Company hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest
shall be payable on Advances so extended at the then
applicable rate during such extension.
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2.13(c) All amounts received by Credit Agent on
account of the Obligations (except amounts received in respect
of fees or expenses payable hereunder to the Credit Agent or
the Collateral Agent for their own accounts or amounts payable
to the Swingline Lender for Swingline Advances) shall be
disbursed to the Lenders by wire transfer on the date of
receipt if received by Credit Agent by the applicable
deadlines for payment thereof as specified in Section 2.13(b)
hereof, or if received later, by 12:00 noon on the next
succeeding Business Day, without any interest payable by the
Credit Agent thereon.
2.14 EXPIRATION OF COMMITMENTS. Unless extended or terminated
earlier as permitted hereunder, the Commitments shall expire of their
own terms; and without the necessity of action by the Credit Agent, at
the close of business on the Maturity Date.
3. COLLATERAL.
3.1 APPOINTMENT OF COLLATERAL AGENT. Pursuant to the
Collateral Agency Agreement, RFC has been appointed as Collateral Agent
to act as agent, bailee, and custodian for the exclusive benefit of the
Lenders and the Credit Agent (collectively, the "Secured Parties") with
respect to the Collateral.
3.2 DELIVERY OF COLLATERAL. As described in Section 2.3 hereof
and in the Collateral Agency Agreement, from time to time the Company
shall deliver Collateral or cause Collateral to be delivered to the
Collateral Agent hereunder.
3.3 GRANT OF SECURITY INTEREST. As security for the payment of
the Notes and for the performance of all of the Company's Obligations,
the Company hereby assigns and transfers to the Credit Agent, for the
pro rata benefit of the Secured Parties, all right, title and interest
in and to, and grant a security interest to the Credit Agent, for the
pro rata benefit of the Secured Parties, in, the following described
property (the "Collateral"):
3.3(a) All Mortgage Loans, including all Mortgage
Notes and Mortgages evidencing or securing such Mortgage
Loans, which from time to time are delivered or caused to be
delivered to the Collateral Agent (including delivery to a
third party on behalf of the Collateral Agent), come into the
possession, custody or control of any of the Lenders, the
Credit Agent or the Collateral Agent for the purpose of
assignment or pledge or in respect of which an Advance has
been made by the Lenders hereunder, including without
limitation all Mortgage Loans in respect of which Wet
27
Settlement Advances have been made by the Credit Agent (the
"Pledged Mortgages").
3.3(b) All Mortgage-backed Securities which are from
time to time created in whole or in part on the basis of the
Pledged Mortgages or are delivered or caused to be delivered
to, or are otherwise in the possession of the Collateral Agent
or its agent, bailee or custodian as assignee, or pledged to
the Collateral Agent, or for such purpose are registered by
book-entry in the name of, the Collateral Agent (including
delivery to or registration in the name of a third party on
behalf of the Lender) hereunder or in respect of which from
time to time an Advance has been made by the Lenders hereunder
(the "Pledged Securities").
3.3(c) All private mortgage insurance and all
commitments issued by the FHA or VA to insure or guarantee any
Mortgage Loans included in the Pledged Mortgages; all Purchase
Commitments held by the Company covering the Pledged Mortgages
or the Pledged Securities and all proceeds resulting from the
sale thereof to Investors pursuant thereto; and all personal
property, contract rights, servicing and servicing fees and
income or other proceeds, amounts and payments payable to the
Company as compensation or reimbursement, accounts, and
general intangibles of whatsoever kind relating to the Pledged
Mortgages, the Pledged Securities, said FHA commitments or VA
commitments and the Purchase Commitments, and all other
documents or instruments relating to the Pledged Mortgages and
the Pledged Securities, including, without limitation, any
interest of the Company in any fire, casualty or hazard
insurance policies and any awards made by any public body or
decreed by any court of competent jurisdiction for a taking or
for degradation of value in any eminent domain proceeding as
the same relate to the Pledged Mortgages.
3.3(d) All right, title and interest of the Company
in and to all escrow accounts, documents, instruments, files,
surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records (including
all information, records, tapes, data, programs, discs and
cards necessary or helpful in the administration or servicing
of the Collateral) and other information and data of the
Company relating to the Collateral.
3.3(e) All right, title and interest of the Company
in and to any Hedging Arrangements entered into to protect the
Company against changes in the value of the Collateral,
including without limitation, all rights to payment arising
under such Hedging Arrangements.
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3.3 (f) All now existing or hereafter acquired cash
delivered to or otherwise in the possession of the Credit
Agent, the Collateral Agent or their agents, bailee or
custodian or designated on the books and records of the
Company as assigned and pledged to the Credit Agent,
including, without limitation, all cash deposited in the Cash
Collateral Account.
3.3(g) All cash and non-cash proceeds of the
Collateral, including all dividends, distributions and other
rights in connection with, and all additions to, modifications
of and replacements for, the Collateral, and all products and
proceeds of the Collateral, together with whatever is
receivable or received when the Collateral or proceeds thereof
are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary,
including, without limitation, all rights to payment with
respect to any cause of action affecting or relating to the
Collateral or proceeds thereof.
3.4 RELEASE OF SECURITY INTEREST IN COLLATERAL.
3.4 (a) Pledged Mortgages shall be released from the
Credit Agent's security interest only against payment to the
Credit Agent of the Release Amount in connection with such
Pledged Mortgages.
3.4 (b) If Pledged Mortgages are to be transferred to
a pool custodian or to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae for inclusion
in a Mortgage Pool, the Credit Agent's security interest in
such Pledged Mortgages shall be released only against payment
to the Credit Agent of the Release Amount in connection with
such Pledged Mortgages. If the Credit Agent's security
interest in the Pledged Mortgages comprising the Mortgage Pool
is not released prior to the issuance of the Mortgage-backed
Security, then the Mortgage-backed Security, when issued,
shall be a Pledged Security. The Credit Agent's security
interest shall continue in such Pledged Mortgages and the
Pledged Security. The Credit Agent shall be entitled to
possession of such Pledged Security in the manner provided
below.
3.4(c) If Pledged Mortgages are transferred to an
Approved Custodian and included in an Eligible Mortgage Pool,
the Credit Agent's security interest in the Pledged Mortgages
comprising the Eligible Mortgage Pool shall be released upon
the issuance of the Mortgage-backed Security, which shall be a
Pledged Security. The Credit Agent's security interest in such
Pledged Security shall be released only against payment to the
Credit Agent of the Release
29
Amount in connection with the Pledged Mortgages backing such
Pledged Security. The Credit Agent shall be entitled to
possession of such Pledged Security in the manner provided
below.
3.4(d) The Collateral Agent shall have the exclusive
right to the possession of the Pledged Securities or, if the
Pledged Securities are issued in book-entry form or issued in
certificated form and delivered to a clearing corporation (as
such term is defined in the Uniform Commercial Code of
Minnesota) or its nominee, the Credit Agent shall have the
right to have the Pledged Securities registered in the name of
a securities intermediary (as such term is defined in the
Uniform Commercial Code of Minnesota) in an account containing
only customer securities and credited to an account of the
Credit Agent. The Credit Agent shall have the right to cause
delivery of the Pledged Securities to be made to the Investor
or the Pledged Securities credited to the account of the
Investor or the Investor's designee only against payment
therefor. The Company acknowledges that the Credit Agent may
enter into one or more standing arrangements with other
financial institutions with respect to Pledged Securities
issued in book entry form or issued in certificated form and
delivered to a clearing corporation, pursuant to which such
Pledged Securities are registered in the name of such
financial institution, as agent or securities intermediary for
the Credit Agent, and the Company agrees upon request of the
Lender, to execute and deliver to such other financial
institutions the Company's written concurrence in any such
standing arrangements.
3.4 (e) Prior to the occurrence of an Event of
Default, the Company may redeem a Pledged Mortgage or Pledged
Security from the Credit Agent's security interest by
notifying the Credit Agent of its intention to redeem such
Pledged Mortgage or Pledged Security from pledge and either
(a) paying, or causing an Investor to pay, to the Credit
Agent, for application to prepayment of the principal balance
of the Notes, the Release Amount in connection with such
Pledged Mortgage or Pledged Security, or (b) delivering
substitute Collateral which, in addition to being acceptable
to the Collateral Agent in its sole discretion will, when
included with the Collateral, result in a Collateral Value of
all Collateral held by the Collateral Agent which is at least
equal to the aggregate outstanding Advances.
3.4(f) Following the occurrence of a Default or Event
of Default, unless otherwise instructed by the Majority
Lenders, the Credit Agent may, with no liability to the
Company or any Person, continue to release its security
30
interest in any Pledged Mortgage or Pledged Security against
payment of the Release Amount in connection with such Pledged
Mortgage or Pledged Security. Following the occurrence of a
Default or Event of Default, at the direction of all the
Lenders and with no liability to Company or any Person, the
Credit Agent shall refuse to release its security interest in
any item of Collateral and shall instruct the Collateral Agent
to cease the delivery of Collateral to the Company or any
Person.
3.4 (g) The Release Amount in connection with any
Pledged Mortgage shall be (i) prior to the occurrence of an
Event of Default and the receipt by the Credit Agent of
instructions from the Majority Lenders to exercise its
remedies as provided in Section 8.2 hereof, the principal
amount of the Advances made against such Pledged Mortgage, and
(ii) from and after the occurrence and during the continuance
of an Event of Default and receipt by the Credit Agent of
instructions from the Majority Lenders to exercise its
remedies as provided in Section 8.2 hereof, the Committed
Purchase Price of such Pledged Mortgage or, if there is no
Purchase Commitment therefor, the amount paid to the Credit
Agent in a commercially reasonable disposition thereof.
3.5 DELIVERY OF ADDITIONAL COLLATERAL OR MANDATORY PREPAYMENT.
At any time that the aggregate Collateral Value of the Pledged
Mortgages and Pledged Securities then pledged hereunder is less than
the aggregate amount of the Advances then outstanding hereunder, the
Credit Agent may request, and the Company shall within 2 Business Days
after Notice by the Credit Agent (a) deliver to the Collateral Agent
for pledge hereunder additional Mortgage Loans and/or cash, with a
Collateral Value sufficient to cover the difference between the
Collateral Value of the Pledged Mortgages and Pledged Securities
pledged and the aggregate amount of Advances outstanding hereunder,
and/or (b) repay the Advances in an amount sufficient to reduce the
aggregate balance thereof outstanding to or below the Collateral Value
of the Pledged Mortgages and Pledged Securities pledged hereunder.
3.6 RELEASE OF COLLATERAL.
3.6(a) The Collateral Agent may deliver documents
relating to the Collateral to the Company for correction or
completion pursuant to a Trust Receipt and Section 4.3 of the
Collateral Agency Agreement.
3.6(b)Prior to the occurrence of a Default or Event
of Default, upon delivery by the Company to the Collateral
31
Agent of shipping instructions pursuant to EXHIBIT D-SF, the
Collateral Agent will transmit Pledged Mortgages or Pledged
Securities and all related loan documents or pool documents to
the applicable Investor, Approved Custodian or other party in
accordance with Section 4.4 of the Collateral Agency
Agreement.
3.6(c) Upon receipt of Notice from the Company under
Section 2.7 (g) hereof, and repayment of the Release Amount
with respect to a Pledged Mortgage identified by the Company,
any Collateral Documents relating to the redeemed Pledged
Mortgage or Mortgage Loan backing a Pledged Security which
have not been delivered to an Investor or Approved Custodian
shall be released by the Collateral Agent to the Company.
3.7 COLLECTION AND SERVICING RIGHTS. So long as no Event of
Default shall have occurred and be continuing, the Company shall be
entitled to service and receive and collect directly all sums payable
to the Company in respect of the Collateral other than proceeds of any
Purchase Commitment or proceeds of the sale of any Collateral.
Following the occurrence of any Event of Default, the Credit Agent or
its designee shall thereafter be entitled to service and receive and
collect all sums payable to the Company in respect of the Collateral,
and in such case (a) the Credit Agent or its designee in its sole
discretion may, in its own name, in the name of the Company or
otherwise, demand, ▇▇▇ for, collect or receive any money or property at
any time payable or receivable on account of or in exchange for any of
the Collateral, but shall be under no obligation to do so, (b) the
Company shall, if the Credit Agent so requests, hold in trust for the
benefit of the Lenders and forthwith pay to the Credit Agent at its
office designated by Notice hereunder, all amounts thereafter received
by the Company upon or in respect of any of the Collateral, advising
the Credit Agent as to the source of such funds, and (c) all amounts so
received and collected by the Credit Agent shall be held by it as part
of the Collateral.
3.8 RETURN OF COLLATERAL AT MATURITY. If (a) the commitments
of the Lenders evidenced hereby shall have expired or been terminated,
and (b) no Advances, interest or other Obligations shall be outstanding
and unpaid, the Credit Agent shall deliver or release its security
interest and the Collateral Agent shall deliver all Collateral in its
possession to the Company at the Company's expense. The receipt of the
Company for any Collateral released or delivered to the Company
pursuant to any provision of this Agreement shall be a complete and
full acquittance for the Collateral so returned, and the Secured
Parties shall thereafter be discharged from any liability or
responsibility therefor.
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4. CONDITIONS PRECEDENT.
4.1 INITIAL ADVANCE. The obligation of the Lenders to make the
initial Advance under this Agreement is subject to the satisfaction, in
the sole discretion of the Lenders, on or before the date thereof of
the following conditions precedent:
4.1(a) The Credit Agent shall have received the following, all
of which must be satisfactory in form and content to the Lenders, in
their sole discretion:
(1) A copy of this Agreement duly executed by all
parties hereto.
(2) The notes duly executed by the Company.
(3) A copy of the Collateral Agency Agreement duly
executed by all parties thereto.
(4) The Company's articles of incorporation as
certified by the Secretary of State of the Company's
incorporation, bylaws certified by the corporate secretary of
the Company, or a Certificate of the Company stating that
there has been no change in either the articles of
incorporation or bylaws since those delivered in connection
with that certain Prior RFC Credit Agreement, and certificates
of good standing dated no less recently than 90 days prior to
the date of this Agreement.
(5) A resolution of the board of directors of the
Company, certified as of the date of this Agreement by its
corporate secretary, authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents,
and all other instruments or documents to be delivered by the
Company pursuant to this Agreement.
(6) A certificate of the Company's corporate
secretary as to the incumbency and authenticity of the
signatures of the officers of the Company executing this
Agreement and the other Loan Documents and each Advance
Request and all other instruments or documents to be delivered
pursuant hereto (the Credit Agent being entitled to rely
thereon until a new such certificate has been furnished to the
Credit Agent).
(7) A favorable written opinion of counsel to the
Company (or of separate counsel at the option of the Company),
dated as of the date of this Agreement
33
substantially in the form of EXHIBIT H attached hereto,
addressed to the Credit Agent for the benefit of the Lenders.
(8) Uniform Commercial Code, tax lien and judgment
searches of the appropriate public records for the Company,
which searches shall not have disclosed the existence of any
prior Lien on the Collateral other than in favor of the Credit
Agent or as permitted hereunder.
(9) Copies of the certificates, documents or other
written instruments which evidence the Company's eligibility
described in Section 5.13 hereof, all in form and substance
satisfactory to the Credit Agent.
(10) Copies of the Company's errors and omissions
insurance policy or mortgage impairment insurance policy and
blanket bond coverage policy, or certificates in lieu of
policies, all in form and content satisfactory to the Credit
Agent, showing compliance by the Company as of the date of
this Agreement with the related provisions of Section 6.8
hereof.
(11) Executed financing statements in recordable form
covering the Collateral and ready for filing in all
jurisdictions required by the Credit Agent.
(12) Receipt by the Credit Agent of all Fees due on
the date hereof, including but not limited to, Commitment Fees
and document production fees, due the Credit Agent and the
Lenders on or prior to the date of this Agreement.
(13) Evidence that all accounts necessary into which
Advances will be funded have been established at the Funding
Bank and receipt of a fully executed Funding Bank Agreement.
(14) An agreement among the Company, the Credit Agent
and ▇▇▇▇▇▇ Mae, pursuant to which ▇▇▇▇▇▇ ▇▇▇ agrees to send
all cash proceeds of Mortgage Loans sold by the Company to
▇▇▇▇▇▇ Mae to the Cash Collateral Account.
(15) Assumed Name Certificate dated no less recently
than 90 days prior to the date of this Agreement for any
assumed name used by the Company in the conduct of its
business.
34
4.1(b) All directors, officers and shareholders of
the Company, all Affiliates of the Company or of any
Subsidiary of the Company, to whom or to any of whom the
Company shall be indebted as of the date of this Agreement,
which indebtedness has a term of more than 1 year or is in
excess of $25,000 shall have subordinated such indebtedness to
the Obligations, by executing a Subordination of Debt
Agreement, in the form of EXHIBIT F hereto; and the Credit
Agent shall have received an executed copy of any such
Subordination of Debt Agreement, certified by the corporate
secretary of the Company to be true and complete and in full
force and effect as of the date of the Advance.
4.2 EACH ADVANCE. The obligation of the Lenders to make the
initial and each subsequent Advance under this Agreement is subject to
the satisfaction, in the sole discretion of the Credit Agent, as of the
date of each such Advance, of the following additional conditions
precedent:
4.2(a) The Company shall have delivered to the Credit
Agent the original Advance Request, and the Company shall have
delivered to the Collateral Agent a copy of the Advance
Request, a current Commitment Summary Report, the Collateral
Documents, and documents relating to Wet Settlement Advances,
called for under, and shall have satisfied the procedures set
forth in, Section 2.3 hereof and the applicable Exhibits
hereto described in that Section, according to the type of the
requested Advance. All items delivered to the Credit Agent or
the Collateral Agent, as the case may be, shall be
satisfactory to the Credit Agent or the Collateral Agent, in
form and content, and the Credit Agent or the Collateral
Agent, as the case may be, may reject such of them as do not
meet the requirements of this Agreement or of the related
Purchase Commitment.
4.2(b) The Collateral Agent shall have given
telephonic notice to the Credit Agent of the Mortgage Loans
against which Advances may be made, followed by a Loans
Warehoused Report as provided for and defined in the
Collateral Agency Agreement.
4.2(c) The Credit Agent shall have received evidence
satisfactory to it as to the making and/or continuation of any
book entry or the due filing and recording in all appropriate
offices of all financing statements and other instruments as
may be necessary to perfect the security interest of the
Credit Agent in the Collateral under the Uniform Commercial
Code or other applicable law.
35
4.2(d) The representations and warranties of the Company
contained in Article 5 hereof shall be accurate and complete in all
material respects as if made on and as of the date of each Advance.
4.2(e) The Company shall have performed all agreements to be
performed by it hereunder, and after giving effect to the requested
Advance, there shall exist no Default or Event of Default hereunder.
4.2(f) The Company shall not have incurred any material
liabilities, direct or contingent, other than in the ordinary course of
its business, since the Statement Date.
4.2(g) The .Credit Agent shall have received from counsel for
the Company, if requested by the Credit Agent in its sole discretion,
an updated opinion, in form and substance satisfactory to the Credit
Agent, addressed to the Credit Agent on behalf of the Lenders and dated
as of the date of such Advance, covering such of the matters as the
Credit Agent may reasonably request.
Delivery of an Advance Request by the Company shall be deemed
a representation by the Company that all conditions set forth in this
Section 4.2 shall have been satisfied as of the date of such Advance.
5. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Lenders, as
of the date of this Agreement, the date of each Advance Request and the
date of the making of each Advance, that:
5.1 ORGANIZATION; GOOD STANDING; SUBSIDIARIES. The Company and
each Subsidiary of the Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the full legal power and authority to own its
property and to carry on its business as currently conducted and is
duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which the transaction of its business
makes such qualification necessary, except in jurisdictions, if any,
where a failure to be in good standing has no material adverse effect
on the business, operations, assets or financial condition of the
Company or any such Subsidiary. For the purposes hereof, good standing
shall include qualification for any and all licenses and payment of any
and all taxes required in the jurisdiction of its incorporation and in
each jurisdiction in which the Company, transacts business. The Company
has no
36
Subsidiaries except as set forth on EXHIBIT G hereto. EXHIBIT G sets
forth with respect to each such Subsidiary, its name, address, place of
incorporation, each state in which it is qualified as a foreign
corporation, and the percentage ownership of its capital stock by the
Company.
5.2 AUTHORIZATION AND ENFORCEABILITY. The Company has the
power and authority to execute, deliver and perform this Agreement, the
Notes and all other Loan Documents to which the Company is party and to
make the borrowings hereunder. The execution, delivery and performance
by the Company of this Agreement, the Notes and all other Loan
Documents to which the Company is party and the making of the
borrowings hereunder and thereunder, have been duly and validly
authorized by all necessary corporate action on the part of the Company
(none of which actions has been modified or rescinded, and all of which
actions are in full force and effect) and do not and will not conflict
with or violate any provision of law, of any judgments binding upon the
Company, or of the articles of incorporation or by-laws of the Company,
conflict with or result in a breach of or constitute a default or
require any consent under, or result in the creation of any Lien upon
any property or assets of the Company other than the Lien on the
Collateral granted hereunder, or result in or require the acceleration
of any indebtedness of the Company pursuant to any agreement,
instrument or indenture to which the Company is a party or by which the
Company or its property may be bound or affected. This Agreement, the
Notes, the Collateral Agency Agreement and all other Loan Documents
contemplated hereby or thereby constitute legal, valid, and binding
obligations of the Company enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other
such laws affecting the enforcement of creditors' rights and by general
principles of equity.
5.3 APPROVALS. The execution and delivery of this Agreement,
the Notes and all other Loan Documents and the performance of the
Company's obligations hereunder and thereunder and validity and
enforceability hereof and thereof do not require any license, consent,
approval or other action of any state or federal agency or governmental
or regulatory authority other than those which have been obtained and
remain in full force and effect.
5.4 FINANCIAL CONDITION. The balance sheet of the Company
(and, if applicable, its Subsidiaries, on a consolidated basis) as of
the Statement Date, and the related statements of income and changes in
stockholders' equity for the fiscal period ended on the Statement Date,
heretofore furnished to each Lender, fairly present the financial
condition of the Company (and its Subsidiaries) as of the Statement
Date and the results of its
37
operations for the fiscal period ended on the Statement Date. The
Company had, on the Statement Date, no known material liabilities,
direct or indirect, fixed or contingent, matured or unmatured, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no
material unrealized or anticipated losses from any loans, advances or
other commitments of the Company except as heretofore disclosed to the
Lenders in writing. Said financial statements were prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved. Since the Statement Date, there has been no material
adverse change in the business, operations, assets or financial
condition of the Company (and its Subsidiaries), nor is the Company
aware of any state of facts which (with or without notice or lapse of
time or both) would or could result in any such material adverse
change.
5.5 LITIGATION. There are no actions, claims, suits or
proceedings pending or, to the knowledge of the Company, threatened or
reasonably anticipated against or affecting the Company or any
Subsidiary of the Company in any court or before any arbitrator or
before any government commission, board, bureau or other administrative
agency which, if adversely determined, may reasonably be expected to
result in any material and adverse change in the business, operations,
assets or financial condition of the Company as a whole, or which would
affect the validity or enforceability of this Agreement, the Notes or
any other Loan Document.
5.6 COMPLIANCE WITH LAWS. Neither the Company nor any
Subsidiary of the Company is in violation of any provision of any law,
or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority which
might have a material adverse effect on the business, operations,
assets or financial condition of the Company as a whole or which would
affect the validity or enforceability of this Agreement, the Notes or
any other Loan Document.
5.7 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 made hereunder will be used to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
5.8 INVESTMENT COMPANY ACT. The Company is not an "investment
company" or controlled by an "investment company"
38
within the meaning of the Investment Company Act of 1940, as amended.
5.9 PAYMENT OF TAXES. The Company and each of its Subsidiaries
has filed or caused to be filed all federal, state and local income,
excise, property and other tax returns with respect to the operations
of the Company and its Subsidiaries which are required to be filed, all
such returns are true and correct, and the Company and each of its
Subsidiaries has paid or caused to be paid all taxes as shown on such
returns or on any assessment, to the extent that such taxes have become
due, including, but not limited to, all FICA payments and withholding
taxes, if appropriate. The amounts reserved, as a liability for income
and other taxes payable, in the financial statements described in
Section 5.4 hereof are sufficient for payment of all unpaid federal,
state and local income, excise, property and other taxes, whether or
not disputed, of the Company and its Subsidiaries accrued for or
applicable to the period and on the dates of such financial statements
and all years and periods prior thereto and for which the Company and
its Subsidiaries may be liable in their own right or as transferee of
the assets of, or as successor to, any other Person. No tax Liens have
been filed and no material claims are being asserted with respect to
any such taxes, fees or charges.
5.10 AGREEMENTS. Neither the Company nor any Subsidiary of the
Company is a party to any agreement, instrument or indenture or subject
to any restriction materially and adversely affecting its business,
operations, assets or financial condition, except as disclosed in the
financial statements described in Section 5.4 hereof. Neither the
Company nor any Subsidiary of the Company is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or
indenture which default could have a material adverse effect on the
business, operations, properties or financial condition of the Company
as a whole. No holder of any indebtedness of the Company or of any of
its Subsidiaries has given notice of any asserted default thereunder,
and no liquidation or dissolution of the Company or of any of its
Subsidiaries and no receivership, insolvency, bankruptcy,
reorganization or other similar proceedings relative to the Company or
of any of its Subsidiaries or any of its properties is pending, or to
the knowledge of the Company, threatened.
5.11 TITLE TO PROPERTIES. The Company and each Subsidiary of
the Company has good, valid, insurable (in the case of real property)
and marketable title to all of its properties and assets (whether real
or personal, tangible or intangible) reflected on the financial
statements described in Section 5.4 hereof, except for such properties
and assets as have been
39
disposed of since the date of such financial statements as no longer
used or useful in the conduct of its business or as have been disposed
of in the ordinary course of business, and all such properties and
assets are free and clear of all Liens except as disclosed in such
financial statements.
5.12 ERISA. All plans ("Plans") of a type described in Section
3(3) of ERISA in respect of which the Company or any Subsidiary of the
Company is an "Employer," as defined in Section 3(5) of ERISA, are in
substantial compliance with ERISA, and none of such Plans is insolvent
or in reorganization, has an accumulated or waived funding deficiency
within the meaning of Section 412 of the Internal Revenue Code, and
neither the Company nor any Subsidiary of the Company has incurred any
material liability (including any-material contingent liability) to or
on account of any such Plan pursuant to Sections 4062, 4063, 4064, 4201
or 4204 of ERISA; and no proceedings have been instituted to terminate
any such Plan, and no condition exists which presents a material risk
to the Company or a Subsidiary of the Company of incurring a liability
to or on account of any such Plan pursuant to any of the foregoing
Sections of ERISA. No Plan or trust forming a part thereof has been
terminated since September 1, 1974.
5.13 ELIGIBILITY. The Company is approved and qualified and in
good standing as a lender or seller/ servicer, as set forth below, and
meets all requirements applicable to its status as such:
5.13(a) ▇▇▇▇▇▇ ▇▇▇ approved seller/servicer of
Mortgage Loans and issuer of Mortgage-backed Securities
guaranteed by ▇▇▇▇▇▇ Mae.
5.13(b) ▇▇▇▇▇▇ ▇▇▇ approved seller/servicer of
Mortgage Loans eligible to originate, purchase, hold, sell,
and service Mortgage Loans to be sold to ▇▇▇▇▇▇ Mae.
5.13(c) ▇▇▇▇▇▇▇ Mac approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to ▇▇▇▇▇▇▇ Mac.
5.13(d) Lender in good standing under the VA loan
guarantee program eligible to originate, purchase, hold, sell
and service VA-guaranteed Mortgage Loans.
5.13(e) HUD approved mortgagee, eligible to
originate, purchase, hold, sell and service FHA fully insured
Mortgage Loans.
5.14 PLACE OF BUSINESS. The principal place of business of the
Company is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
40
5.15 SPECIAL REPRESENTATIONS CONCERNING COLLATERAL. The
Company hereby represents and warrants to the Lenders, as of the date
of this Agreement and as of the date of each Advance Request and the
making of each Advance, that:
5.15(a) The Company is the legal and equitable owner
and holder, free and clear of all Liens (other than Liens
granted hereunder), of the Pledged Mortgages and the Pledged
Securities. All Pledged Mortgages, Pledged Securities and
Purchase Commitments have been duly authorized and validly
issued to the Company, and all of the foregoing items of
Collateral comply with all of the requirements of this
Agreement, and have been and will continue to be validly
pledged or assigned to the Credit Agent, subject to no other
Liens.
5.15(b) The Company has, and will continue to have,
the full right, power and authority to pledge the Collateral
pledged and to be pledged by it hereunder.
5.15(c) Any Mortgage Loan and any related document
included in the Pledged Mortgages (1) has been duly executed
and delivered by the parties thereto at a closing held not
more than 90 days prior to the date of the Advance Request for
such Mortgage Loan, (2) has been made in compliance with all
requirements of the Real Estate Settlement Procedures Act,
Equal Credit Opportunity Act, the federal Truth-In-Lending Act
and all other applicable laws and regulations, (3) is and will
continue to be valid and enforceable in accordance with its
terms, without defense or offset, (4) has not been modified or
amended except in writing, which writing is part of the
Collateral Documents, nor any requirements thereof waived, (5)
has been evaluated or appraised in accordance with Title XI of
FIRREA, and (6) complies and will continue to comply with the
terms of this Agreement and, if applicable, with the related
Purchase Commitment held by the Company. Each Mortgage Loan,
other than an open-ended Pledged Loan secured by a Second
Mortgage, has been fully advanced in the face amount thereof,
each First Mortgage is a first Lien on the premises described
therein and each Second Mortgage is secured by a second Lien
on the premises described therein, and has or will have a
title insurance policy, in American Land Title Association
form or equivalent thereof, from a recognized title insurance
company, insuring the priority of the Lien of the Mortgage and
meeting the usual requirements of Investors purchasing such
Mortgage Loans.
5.15(d) No default has occurred and is continuing for
more than 60 days under any Mortgage Loan included in the
41
Pledged Mortgages without the Advance against such Pledged
Mortgage having been repaid in accordance with Section
2.7(c)(3) hereof; provided, however, that, with respect to
Pledged Mortgages which have already been pledged as
Collateral hereunder, if any default has occurred, the Company
will promptly notify the Credit Agent.
5.15(e) The Company has complied and will continue to
comply with all laws, rules and regulations in respect of the
FHA insurance or VA guaranty of each Mortgage Loan included in
the Pledged Mortgages designated by the Company as an FHA
insured or VA guaranteed Mortgage Loan, and such insurance or
guarantee is and will continue to be in full force and effect.
5.15(f) All fire and casualty policies covering the
premises encumbered by each Mortgage included in the Pledged
Mortgages (1) name and will continue to name the Company and
its successors and assigns as the insured under a standard
mortgagee clause, (2) are and will continue to be in full
force and effect, and (3) afford and will continue to afford
insurance against fire and such other risks as are usually
insured against in the broad form of extended coverage
insurance from time to time available.
5.15 (g) Pledged Mortgages secured by premises
located in a special flood hazard area designated as such by
the Director of the Federal Emergency Management Agency are
and shall continue to be covered by special flood insurance
under the National Flood Insurance Program.
5.15 (h) Each Pledged Mortgage against which an
Advance is made on the basis of a Purchase Commitment meets
all requirements of such Purchase Commitment. The Company
shall assure that Pledged Mortgages which are intended to be
used in the formation of Mortgage-backed Securities shall
comply or, prior to the formation of any such Mortgage-backed
Security, shall comply with the requirements of the
governmental instrumentality, department, agency or other
Person issuing or guaranteeing such Mortgage-backed Security.
The Company shall assure that Uncommitted Mortgage Loans
pledged hereunder meet all requirements of one or more
Investors with which the Company has agreements or other
arrangements to sell similar Mortgage Loans.
5.15(i) For Pledged Mortgages which will be used to
back ▇▇▇▇▇▇ ▇▇▇ Mortgage-backed Securities, the Company has
received from ▇▇▇▇▇▇ Mae a Confirmation Notice or Confirmation
Notices for Request Additional Commitment Authority and for
Request Pool Numbers, and there remains
42
available thereunder a commitment on the part of ▇▇▇▇▇▇ ▇▇▇
sufficient to permit the issuance of ▇▇▇▇▇▇ Mae
Mortgage-backed Securities in an amount at least equal to the
amount of such Pledged Mortgages designated by the Company as
the Mortgage Loans to be used to back such ▇▇▇▇▇▇ ▇▇▇
Mortgage-backed Securities; each such Confirmation Notice is
in full force and effect; each of such Pledged Mortgages has
been assigned by the Company to one of such Pool Numbers and a
portion of the available ▇▇▇▇▇▇ Mae Commitment has been
allocated thereto by the Company, in an amount at least equal
to such Pledged Mortgages; and each such assignment and
allocation has been reflected in the books and records of the
Company.
5.15(j) Each Pledged Mortgage secured by real
property to which a Manufactured Home is affixed will create a
valid Lien on such Manufactured Home that will have priority
over any other Lien on such Manufactured Home, whether or not
arising under applicable real property law.
5.16 SERVICING. Attached hereto as EXHIBIT E is a true and
complete list of the Company's Servicing Portfolio. All of the
Company's Servicing Contracts are in full force and effect and, except
as otherwise indicated, are unencumbered by Liens. No default or event
which, with notice or lapse of time or both, would become a default,
exists under any such Servicing Contract.
5.17 NO ADVERSE SELECTION. The Company has not selected the
Collateral in a manner so as to affect adversely the Lender's
interests.
5.18 YEAR 2000 COMPLIANCE. The Company has conducted a
comprehensive review and assessment of the Company's computer
applications and made inquiry of the Company's key suppliers, vendors,
customers, and Investors with respect to the "Year 2000 Problem" and,
based on that review and inquiry, the Company does not believe the Year
2000 Problem will result in a material adverse change in the Company's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
5.19 ASSUMED NAMES. The Company does not originate Mortgage
Loans or otherwise conduct business under any names other than its
legal name and the assumed name(s) set forth on EXHIBIT O attached
hereto and made a part hereof. The Company has made all filings and
taken all other action as may be required under the laws of any
jurisdiction in which it originates Mortgage Loans or otherwise
conducts business under any assumed name. The Company's use of assumed
name(s) set forth herein does not conflict with any other Person's
legal rights to any such
43
name(s), nor otherwise give rise to any liability by the Company to any
other Person.
6. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees with the Lenders that,
so long as the commitments of the Lenders are outstanding or there
remain any Obligations to be paid or performed under this Agreement or
under any other Loan Document, the Company shall:
6.1 PAYMENT OF NOTES. Punctually pay or cause to be paid all
obligations payable hereunder and under the Notes in accordance with
the terms hereof and thereof.
6.2 FINANCIAL STATEMENTS AND OTHER REPORTS. Deliver to each
Lender:
6.2 (a) As soon as available and in any event within
30 days after the end of each calendar month of the Company,
statements of income and changes in stockholders' equity of
the Company (and, if applicable, its Subsidiaries, on a
consolidated basis) for the immediately preceding month and
for the period from the beginning of the fiscal year to the
end of such calendar month, and the related balance sheet as
of the end of the immediately preceding month, all in
reasonable detail and certified as to the fairness of
presentation by the chief financial officer of the Company,
subject, however, to year-end audit adjustments.
6.2 (b) As soon as available and in any event within
90 days after the close of each fiscal year of the Company,
statements of income, changes in stockholders' equity and cash
flow of the Company (and, if applicable, its Subsidiaries, on
a consolidated basis) for such year, and the related balance
sheet as of the end of such year (setting forth in comparative
form the corresponding figures for the preceding fiscal year),
all in reasonable detail and accompanied by an opinion (which
opinion shall not be qualified due to possible failure to take
all appropriate steps to successfully address Year 2000
Problem) in form and substance satisfactory to the Lenders and
prepared by an accounting firm reasonably satisfactory to the
Lenders, or other independent certified public accountants of
recognized standing selected by the Company and acceptable to
the Lenders, as to said financial statements and a certificate
signed by the chief financial officer of the Company stating
that said financial statements fairly present the financial
condition and results of operations of the Company (and, if
applicable, its Subsidiaries) as of the end of, and for, such
year.
44
6.2(c) Together with each delivery of financial
statements required in this Section 6.2, an Officer's
Certificate substantially in the form of EXHIBIT I-SF hereto
(1) setting forth in reasonable detail all calculations
necessary to show that the Company is in compliance with the
requirements of Sections 7.6, 7.7, 7.8, 7.9, 7.10 and 7.13
hereof as of the end of such month or year (or, if the Company
is not in compliance, showing the extent of noncompliance and
specifying the period of non-compliance and what actions the
Company has taken, is taking or proposes to take with respect
thereto); (2) certifying that the Company was, as of the end
of the period, in compliance and in good standing with
applicable HUD, ▇▇▇▇▇▇ ▇▇▇, or Investor net worth
requirements; (3) certifying that the representation set forth
in Section 5.18 hereof is true and correct as of the date of
such certificate or, if such representation is not true and
correct as of such date, specifying the nature of the problem
and what action the Company has taken, is taking and proposes
to take with request thereto; and (4) stating that the
signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review
in reasonable detail of the transactions and conditions of the
Company (and, if applicable, its Subsidiaries) during the
accounting period covered by such financial statements and
that such review has not disclosed the existence during or at
the end of such accounting period, and that the signers do not
have knowledge of the existence as of the date of the
Officer's Certificate, of any Default or Event of Default, or
if any Default or Event of Default existed or exists,
specifying the nature and period of the existence thereof and
what action the Company has taken, is taking and proposes to
take with respect thereto.
6.2(d) As soon as available and in any event within
30 days after the end of each calendar month, a commitment
summary and pipeline report substantially in the form of
EXHIBIT O (the "Commitment Summary Report") dated as of the
end of such month.
6.2(e) Reports in respect of the Pledged Mortgages
and Pledged Securities, in such detail and at such times as
any Lender in its discretion may reasonably request at any
time or from time to time.
6.2(f) Copies of any audits completed by ▇▇▇▇▇▇ Mae,
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, and copies of the Mortgage Bankers'
Financial Reporting Forms (▇▇▇▇▇▇▇ Mac Form 1055/▇▇▇▇▇▇ ▇▇▇
Form 1002) which the Company is required to have filed, as any
Lender may reasonably request.
45
6.2(g) Within 1 day of any filing of any document
regarding the Company with the Securities and Exchange
Commission, a notice describing the SEC form used for the
filing, and either: (1) the exact World Wide Web address at
which the document is located or (2) if the document is not
immediately available on the World Wide Web, a complete and
accurate copy of the document.
6.2(h) From time to time, with reasonable promptness,
such further information regarding the business, operations,
properties or financial condition of the Company as any Lender
may reasonably request.
6.3 MAINTENANCE OF EXISTENCE: CONDUCT OF BUSINESS. Preserve
and maintain its corporate existence in good standing and all of its
rights, privileges, licenses and franchises necessary or desirable in
the normal conduct of its business, including, without limitation, its
eligibility as lender, seller/servicer and issuer described under
Section 5.13 hereof; conduct its business in an orderly and efficient
manner; maintain a net worth of acceptable assets as required for
maintaining the Company's eligibility as lender, seller/servicer and
issuer described under Section 5.13 hereof; and make no change in the
nature or character of its business or engage in any business in which
it was not engaged on the date of this Agreement; and not change its
name, state of incorporation or principal place of business.
6.4 COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of
any governmental authority, a breach of which could materially
adversely affect its business, operations, assets, or financial
condition, except where contested in good faith and by appropriate
proceedings.
6.5 INSPECTION OF PROPERTIES AND BOOKS. Permit authorized
representatives of the Credit Agent, the Collateral Agent, any Lender
or any Participant to discuss the business, operations, assets and
financial condition of the Company and its Subsidiaries with their
officers and employees and to examine their books of account and make
copies or extracts thereof, all at such reasonable times as the Credit
Agent, the Collateral Agent, any Lender or any Participant may request.
The Company will provide its accountants with a copy of this Agreement
promptly after the execution hereof and will instruct its accountants
to answer candidly any and all questions that the officers of the
Credit Agent, the Collateral Agent, any Lender or any Participant or
any authorized representative of any Lender or any Participant may
address to them in reference to the financial condition or affairs of
the Company and its Subsidiaries. The
46
Company may have its representatives in attendance at any meetings
between the officers or other representatives of the Credit Agent, the
Collateral Agent, any Lender or any Participant and the Company
accountants held in accordance with this authorization.
6.6 NOTICE. Give prompt Notice to the Credit Agent of (a) any
action, suit or proceeding instituted by or against the Company or any
of its Subsidiaries in any federal or state court or before any
commission or other regulatory body (federal, state or local, domestic
or foreign) which action, suit or proceeding has at issue in excess of
$25,000, or any such proceedings threatened against the Company or any
of its Subsidiaries in a writing containing the details thereof, (b)
the filing, recording or assessment of any federal, state or local tax
Lien against the Company, or any of its assets or any of its
Subsidiaries, (c) the occurrence of any Event of Default hereunder or
the occurrence of any Default and continuation thereof for 5 days, (d)
the suspension, revocation or termination of the Company's eligibility,
in any respect, as approved lender, seller/servicer or issuer as
described under Section 5.13 hereof, (e) the transfer, loss or
termination of any Servicing Contract to which the Company is a party,
or which is held for the benefit of the Company, and the reason for
such transfer, loss or termination, if known to the Company, and (f)
any other action, event or condition of any nature which may lead to or
result in a material adverse effect upon the business, operations,
assets, or financial condition of the Company and its Subsidiaries or
which, 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 of its Subsidiaries is a party or to which
the Company or any of its Subsidiaries, its properties, or assets may
be subject.
6.7 PAYMENT OF DEBT TAXES ETC. Pay and perform all obligations
and indebtedness of the Company, and cause to be paid and performed all
obligations and indebtedness of its Subsidiaries, promptly and in
accordance with the terms thereof and pay and discharge or cause to be
paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon the Company or its Subsidiaries or upon
their respective income, receipts or properties before the same shall
become past due, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might become a Lien or charge
upon such properties or any part thereof; provided, however, that the
Company and its Subsidiaries shall not be required to pay taxes,
assessments or governmental charges or levies or claims for labor,
materials or supplies for which the Company or its Subsidiaries shall
have obtained an adequate bond or adequate insurance or which are being
contested in good faith
47
and by proper proceedings which are being reasonably and diligently
pursued and for which proper reserves have been created.
6.8 INSURANCE. Maintain (a) errors and omissions insurance or
mortgage impairment insurance and blanket bond coverage, naming Credit
Agent as the loss payee, with such companies and in such amounts as
satisfy prevailing requirements applicable to a lender, seller/servicer
and issuer described under Section 5.13 hereof, and (b) liability
insurance and fire and other hazard insurance on its properties, with
responsible insurance companies approved by the Lender, in such amounts
and against such risks as is customarily carried by similar businesses
operating in the same vicinity; and (c) within 30 days after Notice
from the Lender, obtain such additional insurance as the Credit Agent
shall reasonably require, all at the sole expense of the Company.
Copies of such policies shall be furnished to the Credit Agent without
charge upon request of the Credit Agent.
6.9 CLOSING INSTRUCTIONS. Indemnify and hold the Secured
Parties harmless from and against any loss, including reasonable
attorneys' fees and costs, attributable to the failure of a title
insurance company, agent or approved attorney to comply with the
disbursement or instruction letter or letters of the Company relating
to any Mortgage Loan. The Collateral Agent shall have the right to
pre-approve the closing instructions of the Company to the title
insurance company, agent or attorney in any case where the Mortgage
Loan to be created at settlement is intended to be warehoused by the
Company to be included as Collateral pursuant hereto.
6.10 SUBORDINATION OF CERTAIN INDEBTEDNESS. Cause any
indebtedness of the Company, incurred after the date of this Agreement,
to any shareholder, director or officer of the Company, or to any
Affiliate of the Company or of any Subsidiary of the Company, which
indebtedness has a term of more than 1 year or is in excess of $25,000
to be subordinated to all Obligations by the execution of a
Subordination of Debt Agreement in the form of EXHIBIT F hereto and
deliver to the Credit Agent an executed copy of said Agreement,
certified by the corporate secretary of the Company to be true and
complete and in full force and effect.
6.11 OTHER LOAN OBLIGATIONS. Perform all material obligations
under the terms of each loan agreement, note, mortgage, security
agreement or debt instrument by which the Company is bound or to which
any of its property is subject, and promptly notify the Credit Agent in
writing of a declared default under or the termination, cancellation,
reduction or non-renewal of any of its other lines of credit or
agreements with any other lender. EXHIBIT J hereto is a true and
complete list of all such
48
lines of credit or agreements as of the date hereof and the Company
hereby agrees to give the Credit Agent at least 30 days Notice before
entering into any additional lines of credit or agreements.
6.12 USE OF PROCEEDS OF ADVANCES. Use the proceeds of each
Advance solely for the purpose set forth in Section 2.1 (b) for
Advances of that type.
6.13 SPECIAL AFFIRMATIVE COVENANTS CONCERNING COLLATERAL.
6.13(a) Warrant and defend the right, title and
interest of the Secured Parties in and to the Collateral
against the claims and demands of all Persons whomsoever.
6.13 (b) Service or cause to be serviced all Mortgage
Loans in accordance with the standard requirements of the
issuers of Purchase Commitments covering the same and all
applicable FHA and VA requirements, including without
limitation taking all actions necessary to enforce the
obligations of the obligors under such Mortgage Loans. The
Company shall service or cause to be serviced all Mortgage
Loans backing Pledged Securities in accordance with applicable
governmental requirements and requirements of issuers of
Purchase Commitments covering the same. The Company shall hold
all escrow funds collected in respect of Pledged Mortgages and
Mortgage Loans backing Pledged Securities in trust, without
commingling the same with non-custodial funds, and apply the
same for the purposes for which such funds were collected.
6.13(c) Execute and deliver to the Credit Agent such
Uniform Commercial Code financing statements with respect to
the Collateral as the Credit Agent may request. The Company
shall also execute and deliver to the Credit Agent such
further instruments of sale, pledge or assignment or transfer,
and such powers of attorney, as required by the Credit Agent,
and shall do and perform all matters and things necessary or
desirable to be done or observed, for the purpose of
effectively creating, maintaining and preserving the security
and benefits intended to be afforded the Secured Parties under
this Agreement. The Credit Agent shall have all the rights and
remedies of a secured party under the Uniform Commercial Code
of Minnesota, or any other applicable law, in addition to all
rights provided for herein.
6.13(d) Notify the Collateral Agent within 2 Business
Days of any default under, or of the termination of, any
49
Purchase Commitment relating to any Pledged Mortgage, Eligible
Mortgage Pool or Pledged Security.
6.13(e) Promptly comply in all respects with the
terms and conditions of all Purchase Commitments, and all
extensions, renewals and modifications or substitutions
thereof or thereto. The Company will cause to be delivered to
the Investor the Pledged Mortgages and Pledged Securities to
be sold under each Purchase Commitment not later than 3
Business Days prior to the mandatory delivery date thereof.
6.13(f) Maintain, at its principal office or in a
regional office approved by the Credit Agent, or in the office
of a computer service bureau engaged by the Company and
approved by the-Credit Agent, and, upon request, shall make
available to the Collateral Agent, the originals, or copies in
any case where the originals have been delivered to the
Collateral Agent or to an Investor, of its Mortgage Notes and
Mortgages included in Pledged Mortgages, Mortgage-backed
Securities delivered to the Collateral Agent as Pledged
Securities, Purchase Commitments, and all related Mortgage
Loan documents and instruments, and all files, surveys,
certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information
and data relating to the Collateral.
6.14 TRANSFER OF FHA INSURANCE ON TITLE I MORTGAGE LOANS. At
any time while a Title I Advance is outstanding against a Title I
Mortgage Loan pledged hereunder, the Credit Agent may, by Notice to the
Customer, direct the Customer to submit to the FHA a "transfer of note"
report with respect to the Pledged Mortgage, reporting the transfer of
the Pledged Mortgage to the Credit Agent or a Person designated by the
Credit Agent in such Notice (either, a "Transferee"), provided, that,
the transfer of the Pledged Mortgage by the Customer to the Transferee
satisfies the applicable FHA regulations. Upon the giving of such
Notice, the Customer promptly (and in any event within 10 days) shall
submit such "transfer of note" report to the FHA with respect to the
Pledged Mortgage and shall cause the FHA, as promptly as possible, to
transfer the FHA insurance relating to such Title I Mortgage Loan
pledged hereunder to the Transferee.
7. NEGATIVE COVENANTS.
The Company hereby covenants and agrees with Lenders that, so
long as the commitments of the Lenders are outstanding or there remain
any Obligations to be paid or performed, the Company shall not, either
directly or indirectly, without the prior written consent of all the
Lenders:
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7.1 CONTINGENT LIABILITIES. Assume, guarantee, endorse, or
otherwise become contingently liable for the obligation of any Person
except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business.
7.2 SALE OR PLEDGE OF SERVICING CONTRACTS. Sell, pledge or
grant a security interest in any existing or future Servicing Contracts
of the Company other than to the Credit Agent for the benefit of the
Secured Parties, except as otherwise expressly permitted in this
Agreement, or omit to take any action required to keep all such
Servicing Contracts in full force and effect; provided, however, that
if no Default or Event of Default has occurred and is continuing,
servicing on individual Mortgage Loans may be sold concurrently with
and incidental to the sale of such Mortgage Loans (with servicing
released) in the ordinary course of the Company's business.
7.3 MERGER; SALE OF ASSETS ACQUISITIONS. Liquidate, dissolve,
consolidate or merge or sell any substantial part of its assets, or
acquire any substantial part of the assets of another.
7.4 DEFERRAL OF SUBORDINATED DEBT. Pay in advance of the
stated maturity thereof any Subordinated Debt of the Company or, if a
Default or Event of Default hereunder shall have occurred, make any
payment of any kind thereafter on such Subordinated Debt until all
Obligations have been paid and performed in full and any applicable
preference period has expired.
7.5 LOSS OF ELIGIBILITY. Take any action that would cause the
Company to lose all or any part of its status as an eligible lender,
seller/servicer and issuer as described under Section 5.13 hereof.
7.6 DEBT TO TANGIBLE NET WORTH RATIO. Permit the ratio of Debt
(excluding, for this purpose only, Debt arising under the Hedging
Arrangements, to the extent of assets arising under the same Hedging
Arrangements) to Tangible Net Worth of the Company (and its
Subsidiaries, on a consolidated basis) at any time to exceed 10 to 1.
7.7 MINIMUM TANGIBLE NET WORTH. Permit Tangible Net Worth of
the Company (and its Subsidiaries, on a consolidated basis) at any time
to be less than $20,000,000.
7.8 MINIMUM CURRENT RATIO. Permit the Current Ratio to be less
than 1.05 to 1 on the last day of any month of the Company.
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7.9 LOSS LIMITATION. In any fiscal quarter permit the net loss
of the Company and its Subsidiaries for that quarter (determined on a
consolidated basis in accordance with GAAP), to exceed the amount set
forth below for such fiscal quarter:
-----------------------------------------------------------------------
Fiscal Quarter Ended Maximum Loss
-----------------------------------------------------------------------
December 1999 $12,514,000
March 2000 $10,920,000
June 2000 $10,131,000
Thereafter $0
-----------------------------------------------------------------------
7.10 DIVIDENDS. For each fiscal year, declare or make any
distributions to the shareholders in excess of 1000 of the Company's
net after-tax income earned in such fiscal year (as determined on a
fiscal year-to-date basis), less distributions previously declared or
authorized in such fiscal year. Any distributions declared or
authorized based on the Company's income for any fiscal year must be
paid by the end of the second quarter of the next succeeding fiscal
year.
7.11 ACQUISITION OF RECOURSE SERVICING CONTRACTS. Acquire
Servicing Contracts under which the Company is obligated to repurchase
or indemnify the holder of the Mortgage Loans as a result of defaults
on the Mortgage Loans at any time during the term of such Mortgage
Loans.
7.12 GESTATION FACILITIES. Directly or indirectly sell or
refinance Pledged Mortgages under any Gestation Agreements or other
warehousing facility, other than a repurchase agreement with Greenwich
Capital Financial Products, Inc. and a $10,000,000 warehouse line with
Superior Bank, FSB.
7.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly (a)
make any loan, advance, extension of credit or capital contribution to
any of its Affiliates, (b) transfer, sell, pledge, assign or otherwise
dispose of any of its assets to or on behalf of such Affiliates, (c)
merge or consolidate with or purchase or acquire assets from such
Affiliates, or (d) pay management fees to or on behalf of such
Affiliates.
7.14 SPECIAL NEGATIVE COVENANTS CONCERNING COLLATERAL.
7.14 (a) The Company shall not amend or modify, or
waive any of the terms and conditions of, or settle or
52
compromise any claim in respect of, any Pledged Mortgages or
Pledged Securities.
7.14(b) The Company shall not sell, assign, transfer
or otherwise dispose of, or grant any option with respect to,
or pledge or otherwise encumber (except pursuant to this
Agreement or as permitted herein) any of the Collateral or any
interest therein.
7.14(c) The Company shall not make any compromise,
adjustment or settlement in respect of any of the Collateral
or accept other than cash in payment or liquidation of the
Collateral.
8. DEFAULTS; REMEDIES.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):
8.1(a) Failure to pay the principal of any Advance
when due, whether at stated maturity, by acceleration, or
otherwise; or failure to pay any installment of interest on
any Advance or any other amount due under this Agreement
within 10 days after the due date; or failure to pay, within
any applicable grace period, any other Obligations of the
Company due the Lenders; or
8.1(b) Failure of the Company or any of its
Subsidiaries to pay, or any default in the payment of any
principal or interest on, any other indebtedness or in the
payment of any contingent obligation within any period of
grace provided; breach or default with respect to any other
material term of any other indebtedness or of any loan
agreement, mortgage, indenture or other agreement relating
thereto, if the effect of such breach or default is to cause,
or to permit the holder or holders thereof (or a trustee on
behalf of such holder or holders) to cause, indebtedness of
the Company or its Subsidiaries in the aggregate amount of
$50,000 or more to become or be declared due prior to its
stated maturity (upon the giving or receiving of notice, lapse
of time, both, or otherwise); or
8.1(c) Failure of the Company to perform or comply
with any term or condition applicable to it contained in
Sections 6.3, 6.12 and 6.13 or in any Section of Article 7 of
this Agreement; or
53
8.1(d) Any of the Company's representations or
warranties made or deemed made herein or in any other Loan
Document (other than the representations and warranties set
forth in Section 5.15 hereof), or in any statement or
certificate at any time given by the Company in writing
pursuant hereto or thereto shall be inaccurate or incomplete
in any material respect on the date as of which made or deemed
made; or
8.1(e) The Company shall default in the performance
of or compliance with any term contained in this Agreement or
any other Loan Document other than those referred to above in
Subsections 8.1(a), 8.1(c) or 8.1(d) and such default shall
not have been remedied or waived within 30 days after the
earliest of (i) receipt by the Company of Notice from the
Credit Agent of such default, (ii) receipt by the Credit Agent
of Notice from the Company of such default, or (iii) the date
the Company should have notified the Credit Agent of such
default pursuant to Section 6.6(c); or
8.1(f) (1) A court having jurisdiction shall enter a
decree or order for relief in respect of the Company, any
Subsidiary of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law in
respect of the Company, any Subsidiary of the Company now or
hereafter in effect, which decree or order is not stayed; the
Company, any Subsidiary of the Company shall consent to the
entry of any such decree or order; or a filing of a voluntary
case under any applicable bankruptcy, insolvency or other
similar law in respect of the Company, any Subsidiary of the
Company has occurred; or any other similar relief shall be
granted under any applicable federal or state law; or (2) the
filing of an involuntary case in respect of the Company, any
Subsidiary of the Company under any applicable bankruptcy,
insolvency or other similar law; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer
having similar powers over the Company, any Subsidiary of the
Company, or over all or a substantial part of their respective
property, shall have been entered; or the involuntary
appointment of an interim or permanent receiver, trustee or
other custodian of the Company, any Subsidiary of the Company
for all or a substantial part of their respective property; or
the issuance of a warrant of attachment, execution or similar
process against any substantial part of the property of the
Company, any Subsidiary of the Company, and the
54
continuance of any such events in Subsection (2) above for 60
days unless dismissed, bonded off or discharged; or
8.1(g) The Company, any Subsidiary of the Company
shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial
part of its property; the making by the Company, any Subsidiary
of the Company of any assignment for the benefit of creditors;
or the inability or failure of the Company, any Subsidiary of
the Company, or the admission by the Company, any Subsidiary of
the Company in writing of its inability, to pay its debts as
such debts become due; or
8.1(h) Failure of the Company to perform any
contractual obligations which it may have to repurchase
Mortgage Loans, if such obligations in the aggregate exceed
$500,000; or
8.1(i) Any money judgment, writ or warrant of
attachment, or similar process involving in any case an amount
in excess of $25,000 shall be entered or filed against the
Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 30 days or in any event later than 5
days prior to the date of any proposed sale thereunder; or
8.1 (j) Any order, judgment or decree shall be
entered against the Company decreeing the dissolution or split
up of the Company and such order shall remain undischarged or
unstayed for a period in excess of 20 days; or
8.1(k) Any Plan maintained by the Company or any of
its Subsidiaries shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an
appropriate United States District Court to administer any
Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate
any Plan or to appoint a trustee to administer any Plan if as
of the date thereof the Company's liability or any such
Subsidiary's liability (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty
Corporation (or any successor thereto) for unfunded guaranteed
vested benefits under the Plan exceeds the then current value
of assets accumulated in such Plan by more than $25,000 (or in
the case of a termination
55
involving the Company or any of its Subsidiaries as a
"substantial employer" (as defined in Section 4001(a)(2) of
ERISA) the withdrawing employer's proportionate share of such
excess shall exceed such amount); or
8.1(1) The Company or any of its Subsidiaries as
employer under a Multiemployer Plan shall have made a complete
or partial withdrawal from such Multiemployer Plan and the
plan sponsor of such Multiemployer Plan shall have notified
such withdrawing employer that such employer has incurred a
withdrawal liability in an annual amount exceeding $25,000; or
8.1(m) The Company shall purport to disavow its
obligations hereunder or shall contest the validity or
enforceability hereof; or the Credit Agent's security interest
on any portion of the Collateral shall become unenforceable or
otherwise impaired; provided that, subject to the Majority
Lenders' approval, no Event of Default shall occur as a result
of such impairment if all Advances made against any
such Collateral shall be paid in full within 10 days of the
date of such impairment; or
8.1(n) ▇▇▇▇ ▇▇▇▇▇▇ shall cease to be the chief
executive officer of the Company; or
8.1(0) The Company's common stock is no longer traded
on NASDAQ; or
8.1 (p) Any Lien for any taxes, assessments or other
governmental charges (i) is filed against the Company or any
of its property, or is otherwise enforced against the Company
or any of its property, or (ii) obtains priority that is equal
or greater than the priority of the Lender's security interest
in any of the Collateral; or
8.1 (q) A material adverse change occurs, or is
reasonably likely to occur, in the business condition
(financial or otherwise),operations, properties or prospects
of the Company, or in the ability of the Company to repay the
Obligations.
56
8.2 REMEDIES.
8.2(a) If a Lender shall have knowledge of a Default
or an Event of Default, it shall forthwith give Notice thereof
to the Credit Agent. If the Credit Agent shall have knowledge
of a Default or an Event of Default, it shall forthwith give
Notice thereof to each Lender and to the Company. The Credit
Agent shall not be deemed to have knowledge or Notice of the
occurrence of a Default or an Event of Default unless the
Credit Agent has received Notice from a Lender or the Company.
8.2(b) Upon the occurrence of any Event of Default
described in Sections 8.1 (f) or 8.1(g), the Commitments of
the Lenders shall be terminated and all unpaid principal
amounts of and accrued interest on the Notes and all other
Obligations shall automatically become due and payable,
without presentment, demand or other requirements of any kind,
all of which are hereby expressly waived by the Company.
8.2(c) Upon the occurrence of any Event of Default,
other than those described in Sections 8.1 (f) and 8.1(g), the
Majority Lenders may, by Notice to the Company, terminate the
Commitments of all the Lenders and/or declare all Obligations
to be immediately due and payable, whereupon the same shall
forthwith become due and payable, together with all accrued
interest thereon, and the obligation of the Lenders to make
any Advances shall thereupon terminate.
8.2(d) Upon the occurrence of any Event of Default,
the Credit Agent, on behalf of the Secured Parties, may also
do any of the following:
(1) Foreclose upon or otherwise enforce its
security interest in and Lien on the Collateral to
secure all payments and performance of the
Obligations in any manner permitted by law or
provided for hereunder.
(2) Notify all obligors in respect of
Collateral that the Collateral has been assigned to
the Credit Agent, on behalf of the Secured Parties,
and that all payments thereon are to be made directly
to the Credit Agent or such other party as may be
designated by the Credit Agent; settle, compromise,
or release, in whole or in part, any amounts owing on
the Collateral, any such obligor or any Investor or
any portion of the
57
Collateral, on terms acceptable to the Credit Agent;
enforce payment and prosecute any action or proceeding
with respect to any and all Collateral; and where any
such Collateral is in default, foreclose on and
enforce security interests in such Collateral by any
available judicial procedure or without judicial
process and sell property acquired as a result of any
such foreclosure.
(3) Act, or contract with a third party to
act, as servicer or subservicer of each item of
Collateral requiring servicing and perform all
obligations required in connection with Servicing
Contracts and Purchase Commitments, such third
party's fees to be paid by the Company.
(4) Require the Company to assemble the
Collateral and/or books and records relating thereto
and make such available to the Credit Agent at a
place to be designated by the Credit Agent.
(5) Enter onto property where any Collateral
or books and records relating thereto are located and
take possession thereof with or without judicial
process; and obtain access to the Company's data
processing equipment, computer hardware and software
relating to the Collateral and to use all of the
foregoing and the information contained therein in
any manner the Credit Agent deems necessary for the
purpose of effectuating its rights under this
Agreement and any other Loan Document.
(6) Prior to the disposition of the
Collateral, prepare it for disposition in any manner
and to the extent the Credit Agent deems appropriate.
(7) Exercise all rights and remedies of a
secured creditor under the Uniform Commercial Code of
Minnesota or other applicable law, including, but not
limited to, selling or otherwise disposing of the
Collateral, or any part thereof, at one or more
public or private sales, whether or not such
Collateral is present at the place of sale, for cash
or credit or future delivery, on such terms and in
such manner as the Credit Agent may determine,
including, without limitation, sale
58
pursuant to any applicable Purchase Commitment. If
notice is required under such applicable law, the
Credit Agent will give the Company not less than 10
days' notice of any such public sale or of the date
after which any private sale may be held. The Company
agrees that 10 days' notice shall be reasonable
notice. The Credit 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. 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 Credit Agent until the selling price
is paid by the purchaser thereof, but the Credit
Agent shall not incur any liability in case of the
failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice.
The Credit 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 thereof
under a judgment or decree of a court or courts of
competent jurisdiction, or both.
(8) Proceed against the Company on the
Notes.
The Credit Agent shall follow the instructions of the
Majority Lenders in exercising or not exercising its
rights under this Section 8.2(d), but (i) the Credit
Agent shall have no obligation to take or not to take
any action which it believes may expose it to any
liability, and (ii) the Credit Agent may, but shall
be under no obligation to, await instructions from
the Majority Lenders before exercising or not
exercising its rights under this Section 8.2(d).
8.2(e) Neither the Credit Agent nor any
other Secured Party shall incur any liability as a
result of the sale or other disposition of the
Collateral, or any part thereof, at any public or
private sale or disposition. The Company hereby
waives (to the extent permitted by law) any claims it
may have against the Credit Agent and each other
Secured Party arising by
59
reason of the fact that the price at which the
Collateral may have been sold at such private sale
was less than the price which might have been
obtained at a public sale or was less than the
aggregate amount of the outstanding Advances and the
unpaid interest accrued thereon, even if the Credit
Agent accepts the first offer received and does not
offer the Collateral to more than one offeree. Any
sale of Collateral pursuant to the terms of a
Purchase Commitment, or any other disposition of
Collateral arranged by the Company, whether before or
after the occurrence of an Event of Default, shall be
deemed to have been made in a commercially reasonable
manner.
8.2(f) The Company acknowledges that
Mortgage Loans and Mortgage-backed Securities are
collateral of a type which is customarily sold on a
recognized market. The Company waives any right it
may have to prior notice of the sale of any Pledged
Mortgage or Pledged Security, and agrees that the
Credit Agent may purchase any Pledged Mortgages or
Pledged Securities at a private sale of such
Collateral.
8.2(g) The Company specifically waives and
releases (to the extent permitted by law) any equity
or right of redemption, all rights of redemption,
stay or appraisal which the Company has or may have
under any rule of law or statute now existing or
hereafter adopted, and any right to require the
Credit Agent to (1) proceed against any Person, (2)
proceed against or exhaust any of the Collateral or
pursue its rights and remedies as against the
Collateral in any particular order, or (3) pursue any
other remedy in its power. The Credit Agent shall not
be required to take any steps necessary to preserve
any rights of the Company against holders of
mortgages prior in lien to the Lien of any Mortgage
included in the Collateral or to preserve rights
against prior parties.
8.2(h) The Credit Agent may, but shall not
be obligated to, advance any sums or do any act or
thing necessary to uphold and enforce the Lien and
priority of, or the security intended to be afforded
by, any Mortgage included in the Collateral,
including, without limitation, payment of delinquent
taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements,
incurred or paid by the Credit Agent or any Lender in
exercising any right, power or remedy conferred by
this Agreement, or in the enforcement
60
hereof, together with interest thereon, at the Default Rate,
from the time of payment until repaid, shall become a part of
the principal balance outstanding hereunder and under the
Notes.
8.2(i) No failure on the part of the Credit Agent or
any other Secured Party to exercise, and no delay in
exercising, any right, power or remedy provided hereunder, at
law or in equity shall operate as a waiver thereof; nor shall
any single or partial exercise by the Credit Agent or any
other Secured Party of any right, power or remedy provided
hereunder, at law or in equity preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. Without intending to limit the foregoing, all defenses
based on the statute of limitations are hereby waived by the
Company to the extent permitted by law. The remedies herein
provided are cumulative and are not exclusive of any remedies
provided at law or in equity.
8.2(j) The Credit Agent is hereby granted a license
or other right to use, without charge, the Company's computer
programs, other programs, labels, patents, copyrights, rights
of use of any name, trade secrets, trade names, trademarks,
service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral, and the
Company's rights under all licenses and all other agreements
related to the foregoing shall inure to the Lenders' benefit
until the Obligations are paid in full.
8.3 APPLICATION OF PROCEEDS. The proceeds of any sale,
disposition or other enforcement of the Secured Parties' security
interest in all or any part of the Collateral shall be applied by the
Credit Agent as follows:
FIRST, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Credit Agent's
and Collateral Agent's agents and counsel, and all expenses,
liabilities and advances made or incurred by or on behalf of the Credit
Agent and Collateral Agent in connection therewith; and all fees due
and owing the Collateral Agent;
SECOND, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Lenders'
agents and counsel, and all expenses,
61
liabilities and advances made or incurred by or on behalf of any Lender
in connection therewith;
THIRD, to the Swingline Lenders, until all principal, interest
and Balance Deficiency fees (if any) in respect of the Swingline
Advances have been paid in full;
FOURTH, to the Lenders, pro rata in accordance with the amount
of accrued interest (and fees under Section 2.6) owed to each of them,
until interest at the following rates is paid in full: (a) prior to
acceleration of all Obligations of the Company, at the applicable
interest rates pursuant to Section 2.6, and (b) following such
acceleration, at the Default Rate;
FIFTH, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until the principal amounts of all
Advances outstanding are paid in full;
SIXTH, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all fees and other Obligations
accrued by or due each Lender and the Credit Agent are paid in full;
and
FINALLY, to the payment to the Company, or to its successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
If the proceeds of any such sale, disposition or other
enforcement are insufficient to cover the costs and expenses of such
sale, as aforesaid, and the payment in full of all Obligations, the
Company shall remain liable for any deficiency.
8.4 CREDIT AGENT APPOINTED ATTORNEY-IN-FACT. The Credit Agent
is hereby appointed the attorney-in-fact of the Company, with full
power of substitution, for the purpose of carrying out the provisions
hereof and taking any action and executing any instruments which the
Credit Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the
foregoing, the Credit Agent shall have the right and power to give
notices of its security interest in the Collateral to any Person,
either in the name of the Company or in its own name, to endorse all
Pledged Mortgages or Pledged Securities payable to the order of the
Company, to change or cause to be changed the book-entry registration
or name of subscriber or Investor on any Pledged Security, or
62
to receive, endorse and collect all checks made payable to the order of
the Company representing any payment on account of the principal of or
interest on, or the proceeds of sale of, any of the Pledged Mortgages
or Pledged Securities and to give full discharge for the same.
8.5 RIGHT OF SETOFF. The Company hereby grants to the Credit
Agent, to each Lender and to any assignee or Participant of any Lender
a right of setoff, to secure the repayment of the Obligations, upon any
and all monies, securities, or other property of the Company, and the
proceeds thereof, now or hereafter held or received by or in transit to
such Person, from or for the account of the Company, whether for
safekeeping, custody, pledge, transmission, collection or otherwise,
and all deposits (general or special, time or demand, provisional or
final) and credits of the Company and any and all claims of the Company
against such Person at any time existing. Upon the occurrence and
during the continuance of any Event of Default, such Person is hereby
authorized, at any time and from time to time, without notice, to
setoff and to appropriate or apply any and all items hereinabove
described against and on account of the Obligations, irrespective of
whether or not the Lenders shall have made any demand hereunder and
whether or not said Obligations shall have matured.
8.6 SHARING OF PAYMENTS. If upon the occurrence of an Event of
Default and acceleration of the Obligations any Lender shall hold or
receive and retain any payment, whether by setoff, application of
deposit balance or security, or otherwise, in respect of the
Obligations, then such Lender shall purchase from the other Lenders for
cash and at face value and without recourse, such participation in the
Obligations held by them as shall be necessary to cause such payment to
be shared ratably as aforesaid with each of them; provided, that if
such payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders shall
be rescinded ratably and the purchase price restored as to the portion
of such excess payment so recovered, but without interest thereon
unless the purchasing Lender is required to pay interest on such
amounts to the Person recovering such payment, in which case with
interest thereon, computed at the same rate, and on the same basis, as
the interest that the purchasing Lender is required to pay. If any
Lender receives a payment from the Company not in respect of the
Obligations, but relating to another relationship of such Lender and
the Company, such Lender may apply the payment first to the
indebtedness
63
arising out of the other relationship and then against the Obligations
as provided for above.
9. THE CREDIT AGENT.
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Credit Agent as the agent of such Lender under the Loan
Documents and each such Lender hereby irrevocably authorizes the Credit
Agent to take such action on its behalf under the provisions of the
Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Credit Agent by the terms of the Loan
Documents, together with such other powers as are reasonably incidental
thereto. The Credit Agent hereby accepts such appointment and agrees to
act in accordance with this Agreement.
9.2 DUTIES OF CREDIT AGENT. The provisions of the Loan
Documents set forth the exclusive duties of the Credit Agent and no
implied duties or obligations shall be read into the Loan Documents
against the Credit Agent. The Credit Agent shall not be bound in any
way by any agreement or contract other than the Loan Documents and any
other agreement to which it is a party.
9.3 STANDARD OF CARE. The Credit Agent shall act in accordance
with customary standards for those engaged as credit agents of
commercial transactions in similar capacities.
9.3(a) The Credit Agent shall not be required to
ascertain or inquire as to the performance or observance of
any of the conditions or agreements to be performed or
observed by any other party, except as specifically provided
in the Loan Documents. The Credit Agent disclaims any
responsibility for the validity or accuracy of the recitals to
this Agreement and any representations and warranties
contained herein, unless specifically identified as recitals,
representations or warranties of the Credit Agent.
9.3(b) The Credit Agent shall have no responsibility
for ascertaining the value, collectibility, insurability,
enforceability, effectiveness or suitability of any
Collateral, the title of any party therein, the validity or
adequacy of the security afforded thereby, or the validity of
this Agreement (except as to Credit Agent's authority to enter
into this Agreement and to perform its obligations hereunder).
64
9.3(c) No provision of this Agreement shall require
the Credit Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or
powers, if, in its sole judgment, it shall believe that
repayment of such funds or adequate indemnity against such
risk or liability is not assured to it.
9.3(d) The Credit Agent is not responsible for
preparing or filing any reports or returns relating to
federal, state or local income taxes with respect to this
Agreement, other than for the Credit Agent's compensation or
for reimbursement of expenses.
9.4 DELEGATION OF DUTIES. The Credit Agent may execute any of
its duties under the Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning
all matters pertaining to such duties. The Credit Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
9.5 EXCULPATORY PROVISIONS. Neither the Credit Agent nor any
of its respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except for its or such Person's own
gross negligence or willful misconduct), or (b) responsible in any
manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Company or any officer
thereof contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received
by the Credit Agent under or in connection with, the Loan Documents or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Loan Documents or for any failure of the Company to
perform its obligations under any Loan Document. The Credit Agent shall
not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in,
or conditions of, the Loan Documents or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
9.6 RELIANCE BY CREDIT AGENT. The Credit Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certification, affidavit,
letter, cablegram,
65
telegram, telecopy, telex or teletype message, statement, order or
other document or conversation reasonably believed by it to be correct
and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and other
experts selected by the Credit Agent. The Credit Agent may deem and
treat the payee of any Note as the owner thereof for all purposes. As
to the Lenders: (a) the Credit Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless
it shall first receive such advice or concurrence of the Majority
Lenders or all of the Lenders, as appropriate, or it shall first be
indemnified to its satisfaction by the Lenders ratably in accordance
with their respective Percentage Shares against any and all liability
and expense which may be incurred by it by reason of taking or
continuing to take any action (except for liabilities and expenses
resulting from the Credit Agent's gross negligence or willful
misconduct), and (b) the Credit Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan
Documents in accordance with a request of the Majority Lenders or all
of the Lenders, as appropriate, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the
Lenders.
9.7 NON-RELIANCE ON CREDIT AGENT OR OTHER LENDERS. Each Lender
expressly acknowledges that neither the Credit Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to such Lender
and that no act by the Credit Agent hereafter taken, including any
review of the affairs of the Company, shall be deemed to constitute any
representation or warranty by the Credit Agent to any Lender. Each
Lender represents to the Credit Agent that it has, independently and
without reliance upon the Credit Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the
Company and made its own decision to enter into and make Advances under
the Credit Agreement. Each Lender also represents that it will,
independently and without reliance upon the Credit Agent 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 analysis,
appraisals and decisions in taking or not taking action under the
Credit Agreement, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial
and other
66
condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly required to be furnished to the
Lenders by the Credit Agent hereunder, the Credit Agent shall have no
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial or
other condition or creditworthiness of the Company or any Subsidiary
which may come into the possession of the Credit Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
9.8 CREDIT AGENT IN INDIVIDUAL CAPACITY. The Credit Agent may
make loans to, accept deposits from and generally engage in any kind of
business with the Company as though the Credit Agent was not the Credit
Agent hereunder. With respect to the Advances made or renewed by them
and any Note issued to them, the Credit Agent shall have the same
rights and powers under the Loan Documents as any Lender and may
exercise the same as though it were not the Credit Agent, and the terms
"Lender" and "Lenders" shall include the Credit Agent in its individual
capacity.
9.9 SUCCESSOR CREDIT AGENT. The Credit Agent may resign as
such at any time upon giving 60 days Notice to the Company and the
Lenders. The Credit Agent may be removed immediately with cause or at
any time upon 10 days Notice from the Majority Lenders to the Credit
Agent and the Company. Upon Notice of such resignation or removal, the
Majority Lenders may appoint a successor Credit Agent (which successor
Credit Agent, assuming that no Default or Event of Default exists,
shall be reasonably acceptable to the Company). The date on which the
Company, the Collateral Agent and Lenders have received Notice from
such successor of its acceptance of appointment as the Credit Agent
shall constitute the effective date of resignation or removal of the
resigning or removed Credit Agent. If no successor Credit Agent
shall have been so appointed by the Majority Lenders, and shall have
accepted such appointment within the allotted time period, then, upon 5
days' Notice to the Company, the resigned or removed Credit Agent may,
on behalf of the Lenders, appoint a successor. Upon the effective date
of resignation or removal of the resigning or removed Credit Agent,
such successor will thereupon succeed to and become vested with all the
rights, powers, privileges, and duties of the resigning or removed
Credit Agent, but the resigning or removed Credit Agent shall not be
discharged from any liability as a result of its or its directors',
officers', agents', or employees' gross negligence or willful
misconduct in the performance of its duties and obligations under this
Agreement prior to the effective date
67
of its resignation or removal. Upon the effective date of its
resignation or removal, the Credit Agent shall assign all of its right,
title and security interest in and to all Collateral to its successor,
without recourse, warranty or representation, express or implied.
10. NOTICES.
All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder
(collectively, "Notices") shall, except as otherwise expressly provided
hereunder, be in writing and shall be delivered in person or
telecopied, or mailed, first class or delivered by overnight courier,
return receipt requested, postage prepaid, addressed to the respective
party hereto at its address set forth opposite the name of such party
on the signature pages of this Agreement or, as to any such party, at
such other address as may be designated by it in a Notice to the other.
All Notices shall be conclusively deemed to have been properly given or
made when duly delivered, in person, by telecopy or by overnight
courier, or if mailed, on the date of receipt as noted on the return
receipt.
11. REIMBURSEMENT OF EXPENSES; INDEMNITY.
11.1 REIMBURSEMENT OF EXPENSES AND INDEMNIFICATION BY THE
COMPANY. The Company shall: (a) pay such additional documentation
production fees as the Credit Agent may require and all out-of-pocket
costs and expenses of the Credit Agent and the Collateral Agent and
each Lender, including, without limitation, reasonable fees, service
charges and disbursements of counsel (including allocated costs of
internal counsel), in connection with the preparation, negotiation,
amendment, enforcement and administration of this Agreement, the Notes,
and other Loan Documents and the making and repayment of the Advances
and the payment of interest thereon; (b) indemnify, pay, and hold
harmless the Lenders and any holder of the Notes from and against, any
and all present and future stamp, documentary and other similar taxes
with respect to the foregoing matters and save the Lenders and the
holder or holders of the Notes harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to
pay such taxes; (c) indemnify, pay and hold harmless the Credit Agent,
the Collateral Agent and each Lender and any of their respective
officers, directors, employees or agents and any subsequent holder of
the Notes (collectively called the "Indemnitees") from and against any
and all liabilities, obligations, losses, damages,
68
penalties, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including without limitation, the reasonable
fees and disbursements of counsel of the Indemnitees (including
allocated costs of internal counsel) in connection with any
investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto) which may be
imposed upon, incurred by or asserted against such Indemnitees in any
manner relating to or arising out of this Agreement, the Notes, or any
other Loan Document or any of the transactions contemplated hereby or
thereby (the "Indemnified Liabilities"); provided, however, that the
Company shall have no obligation hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of
any such Indemnitees. To the extent that the undertaking to indemnify,
pay and hold harmless as set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the
Company shall contribute the maximum portion which it is permitted to
pay and satisfy under applicable law, to the payment and satisfaction
of all Indemnified Liabilities incurred by the Indemnitees or any of
them. The agreement of the Company contained in this Subsection (c)
shall survive the expiration or termination of this Agreement and the
payment in full of the Notes. Attorneys' fees and disbursements
incurred in enforcing, or on appeal from, a judgment pursuant hereto
shall be recoverable separately from and in addition to any other
amount included in such judgment, and this clause is intended to be
severable from the other provisions of this Agreement and to survive
and not be merged into such judgment.
11.2 INDEMNIFICATION BY THE LENDERS. The Lenders agree to
indemnify each of the Credit Agent and the Collateral Agent in its
respective capacity as such (to the extent not reimbursed by the
Company and without limiting the obligation of the Company to do so),
ratably according to the respective amounts of their Percentage Shares,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without
limitation at any time following the payment of the Obligations) be
imposed on, incurred by or asserted against the Credit Agent or the
Collateral Agent in any way relating to or arising out of the Loan
Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Credit Agent or the Collateral Agent
under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion
69
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Credit Agent's or the Collateral Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of
the Obligations and the termination of this Agreement. Attorneys' fees
and disbursements incurred in enforcing, or on appeal from, a judgment
pursuant hereto shall be recoverable separately from and in addition to
any other amount included in such judgment, and this clause is intended
to be severable from the other provisions of this Agreement and to
survive and not be merged into such judgment.
12. FINANCIAL INFORMATION.
All financial statements and reports furnished to the Credit
Agent hereunder shall be prepared in accordance with GAAP, applied on a
basis consistent with that applied in preparing the financial
statements as at the end of and for the last fiscal year ended (except
to the extent otherwise required to conform to good accounting
practice).
13. MISCELLANEOUS.
13.1 TERMS BINDING UPON SUCCESSORS; SURVIVAL OF
REPRESENTATIONS. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. All representations, warranties,
covenants and agreements herein contained on the part of the Company
shall survive the making of any Advance and the execution of the Notes,
and shall be effective so long as any Lender's commitment is
outstanding hereunder or there remain any Obligations to be paid or
performed.
13.2 LENDERS IN INDIVIDUAL CAPACITY. The Lenders and their
Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Company, any Subsidiary, regardless of
the capacity of the Lenders hereunder. The Lenders may disclose to the
other Lenders information regarding other relationships which they may
have with the Company and the Company hereby consents to these
disclosures.
13.3 PARTICIPATION AND ASSIGNMENTS. This Agreement and the
Obligations of the Company may not be assigned by the Company. Any
Lender may, subject to the limitations set forth below, assign or
transfer, in whole or in part, this Agreement and the other Loan
Documents and further may sell participations in all or any part of its
Advances or Maximum
70
Commitment or any other interest in the Obligations or any of its
obligations hereunder to another Person, in which event: (a) in the
case of an assignment, upon notice thereof by such Lender to the
Company and consent of the Credit Agent, the assignee shall have, to
the extent of such assignment (unless otherwise provided thereby), the
same rights and benefits as it would have if it were a "Lender"
hereunder, and, if the assignee has expressly assumed, for the benefit
of the Company, such Lender's obligations hereunder, such Lender shall
be relieved of its obligations hereunder to the extent of such
assignment and assumption, provided that the Credit Agent shall have no
obligation to consent to there being more than a total of 4 Lenders (a
Participant is not a Lender); and (b) in the case of a participation,
the participating Person's (a "Participant") rights against the Lender
from whom it has purchased such participation in respect of such
participation are those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto. Such Lender shall
remain solely responsible to the other parties hereto for the
performance of such Lender's obligations under the Loan Documents,
whether or not such Lender shall remain the holder of any Note. Such
Lender shall retain all voting rights with respect to such Note, the
Advances hereunder and the Lender's Maximum Commitment. The Company,
the Credit Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights
and obligations under the Loan Documents. Notwithstanding the
foregoing, nothing contained herein shall in any manner or to any
extent affect the right of any Lender to assign its Note and its right
to receive and retain payments on its Note provided such Lender remains
primarily and directly liable pursuant to the terms and conditions of
this Agreement to keep, observe and perform all of its obligations
under this Agreement, and all such assignments shall be treated,
considered and administered as a sale of a participation and not as an
assignment and shall be subject to and governed by the provisions of
this Section. Any Lender may furnish any information concerning the
Company in the possession of such Lender from time to time to
Affiliates of such Lender and to assignees and Participants (including
prospective assignees and Participants) and the Company hereby consents
to the provision of such information.
13.4 COMMITMENT INCREASES.
13.4 (a) At any time and from time to time after the
Closing Date, the Credit Limit may be increased either by an
Additional Lender establishing a Maximum Commitment or by one
or more then existing Lender ("Increase Lender") increasing
its Maximum Commitment
71
(each such increase by either means, a "Commitment Increase")
provided that no Commitment Increase shall become effective
unless and until (i) the Company, the Credit Agent and the
Additional Lender or the Increase Lender shall have executed
and delivered an amendment to this Agreement with respect to
such Commitment Increase, and (ii) if, after giving effect
thereto, the Credit Limit would exceed $200,000,000, such
Commitment Increase shall have been consented to by each of
the other Lenders. Prior to the effective date ("Effective
Date") of any Commitment Increase, the Company shall issue a
promissory note to the Additional Lender, or to an Increase
Lender, against surrender of its existing Note, in the amount
of such Lender's Maximum Commitment after giving effect to
such Commitment Increase. Such new promissory note or notes
shall constitute a "Note" or "Notes" for the purposes of the
Loan Documents.
13.4(b) On the Effective Date of such Commitment
Increase, the Credit Agent shall recompute the Percentage
Share for each Lender based on the new Credit Limit which
results from the Commitment Increase, and within two (2)
Business Days, the Credit Agent shall request Advances from or
shall direct prepayments to each Lender so that the total
amount of all then outstanding Advances are shared pro rata
with each Lender, pursuant to Section 2.1 hereof.
13.5 AMENDMENTS.
13.5(a) This Agreement may not be amended or terms or
provisions hereof waived unless such amendment or waiver is in
writing and signed by the Majority Lenders, the Credit Agent
and the Company; provided, however, that without the prior
written consent of 1000 of the Lenders, no amendment or waiver
shall: (1) waive or amend any term or provision of `Section
6.3, 6.12, 6.13, 7.6, 7.7, 7.8, 7.9 or 7.10 hereof or the
definition of any type of Collateral or the provisions of
Section 3.5 hereof, (2) reduce the principal of, or rate of
interest or fees on, the Advances or any Lender's Maximum
Commitment, (3) modify the Credit Limit, (4) except as
expressly contemplated by Sections 13.3 and 13.4 hereof,
modify any Lender's Percentage Share of the Credit Limit, (5)
modify the definition of "Majority Lenders," (6) extend the
Maturity Date, (7) amend any part of EXHIBIT M, or (7) amend
this Section. It is expressly agreed and understood that the
failure by the Majority Lenders to elect to accelerate amounts
outstanding hereunder or to terminate the obligation of the
Lenders to make Advances
72
hereunder shall not constitute an amendment or waiver of any
term or provision of this Agreement.
13.5(b) The Company hereby agrees that it shall, upon
requesting any amendment of this Agreement or any other Loan
Document or any waiver of any material term or provision of
this Agreement or any other Loan Document (except an extension
of the Maturity Date), pay at the time of such request a
modification fee (1) to the Credit Agent in a minimum amount
of $1,000 or such greater amount as may be notified to the
Company by the Credit Agent in its sole discretion and (2) to
each Lender (except any Lender which becomes party to the
Agreement by virtue of such amendment) in a minimum amount of
$500 or such greater amount as may be notified to the Company
by the Majority Lenders, acting through the Credit Agent, in
their sole discretion. The payment of such modification fees
shall be in addition to and shall not limit the Company's
reimbursement obligations pursuant to Article 11 hereof, and
any other fee or charge imposed by the Administrative Agent or
the Lenders as a condition to any amendment.
13.6 OPERATIONAL REVIEWS. From time to time upon request, the
Company shall permit the Credit Agent, any Lender or their
representative access to its premises and records for the purpose of
conducting a review of the Company's general mortgage business methods,
policies, and procedures, auditing loan files and reviewing financial
and operational aspects of the Company's business.
13.7 GOVERNING LAW. This Agreement and the other Loan
Documents shall be governed by the laws of the State of Minnesota,
without reference to its principles of conflicts of laws.
13.8 RELATIONSHIP OF THE PARTIES. This Agreement provides for
the making of Advances by the Lenders, in their capacities as lenders,
to the Company, in its capacity as a borrower, and for the payment of
interest and repayment of principal by the Company to the Lenders, and
for the payment of certain fees by the Company to the Lenders, the
Credit Agent and the Collateral Agent. The relationship between the
Secured Parties and the Company is limited to that of creditor/secured
party, on the one hand, and debtor, on the other hand. The provisions
herein for compliance with financial covenants and delivery of
financial statements are intended solely for the benefit of the Secured
Parties to protect their interests in assuring payments of interest and
repayment of principal and payment of certain fees, and
73
nothing contained in this Agreement shall be construed as permitting or
obligating any Secured Party to act as a financial or business advisor
or consultant to the Company, as permitting or obligating any Secured
Party to control the Company or to conduct the Company's operations, as
creating any fiduciary obligation on the part of the Lenders to the
Company, or as creating any joint venture, agency, or other
relationship between or among any parties hereto other than as
explicitly and specifically stated in this Agreement. The Company
acknowledges that it has had the opportunity to obtain the advice of
experienced counsel of its own choosing in connection with the
negotiation and execution of this Agreement and to obtain the advice of
such counsel with respect to all matters contained herein. The Company
further acknowledges that it is experienced with respect to financial
and credit matters and has made its own independent decisions to apply
to the Lenders for credit and to execute and deliver this Agreement.
13.9 SEVERABILITY. If any provision of this Agreement shall be
declared to be illegal or unenforceable in any respect, such illegal or
unenforceable provision shall be and become absolutely null and void
and of no force and effect as though such provision were not in fact
set forth herein, but all other covenants, terms, conditions and
provisions hereof shall nevertheless continue to be valid and
enforceable.
13.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute but one and the same
instrument.
13.11 CONSENT TO CREDIT REFERENCES. The Company hereby
consents to the disclosure of information regarding the Company and its
relationships with the Lenders to Persons making credit inquiries to
the Lenders. This consent is revocable by the Company at any time upon
Notice to the Lenders as provided in Section 10 hereof.
13.12 CONSENT TO JURISDICTION. The Company, the Credit Agent
and each of the Lenders hereby agree that any action or proceeding
under the Loan Documents, the Notes or any document delivered pursuant
hereto may be commenced against it in any court of competent
jurisdiction within the State of Minnesota, by service of process upon
the Company by first class registered or certified mail, return receipt
requested, addressed to such Person at its address last designated
under the Notices provisions herein. The Company, the Credit Agent and
each of the Lenders agree that any such suit, action or proceeding
arising out of or relating to this
74
Agreement or any other such document may be instituted in the Hennepin
County, State District Court or in the United States District Court for
the District of Minnesota at the option of the Lender; and the Company,
the Credit Agent and each of the Lenders hereby waive any objection to
the jurisdiction or venue of any such court with respect to, or the
convenience of any court as a forum for, any such suit, action or
proceeding. Nothing herein shall affect the right of the Lender to
accomplish service of process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Company
in any other jurisdiction or court.
13.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute but one and the same
instrument.
13.14 ENTIRE AGREEMENT. This Agreement, the Notes and the
other Loan Documents represent the final agreement among the parties
hereto and thereto with respect to the subject matter hereof and
thereof, and may not be contradicted by evidence of prior or
contemporaneous oral agreements among such parties. There are no oral
agreements among the parties with respect to the subject matter hereof
and thereof.
13.15 WAIVER OF JURY TRIAL. THE COMPANY, THE CREDIT AGENT AND
EACH OF THE LENDERS HEREBY (a) COVENANTS AND AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (b) FULLY
WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW
EXISTS OR HEREAFTER ARISES. THE COMPANY, AGENT AND EACH OF THE LENDERS
GIVES THIS WAIVER OF RIGHT OF JURY TRIAL KNOWINGLY AND VOLUNTARILY.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY
AND VOLUNTARILY, BY THE COMPANY, THE CREDIT AGENT AND EACH OF THE
LENDERS, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT OF A JURY TRIAL WOULD
OTHERWISE ACCRUE. THE CREDIT AGENT, THE LENDERS AND THE COMPANY ARE
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 THIS WAIVER OF THE RIGHT TO JURY
TRIAL. FURTHER, THE CREDIT AGENT, THE COMPANY AND EACH OF THE LENDERS
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF ANY OF THEM,
RESPECTIVELY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF THE
UNDERSIGNED THAT THE CREDIT AGENT, THE COMPANY OR ANY OF THE LENDERS
WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
COMPANY:
▇▇▇▇▇▇▇▇.▇▇▇, INC.,
a Florida corporation,
f/k/a First Mortgage Network, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Its: SVP and General Counsel
------------------------------------------
Notice Address:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇,
CFO
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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CREDIT AGENT:
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /S/ ▇▇▇ ▇▇▇▇▇
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Its: Director
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Director
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDERS:
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /S/ ▇▇▇ ▇▇▇▇▇
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Its: Director
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Director
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
76
BANK UNITED,
a federa1 savings bank
By: /S/ ▇▇▇▇ ▇▇▇▇
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Its: Director
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
STATE OF FLORIDA FLORIDA )
) ss
COUNTY OF BROWARD BROWARD )
On November 12, 1999 before me, a Notary Public, personally appeared
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Sr. VP/General Counsel of ▇▇▇▇▇▇▇▇.▇▇▇, INC., a Florida
corporation, f/k/a First Mortgage Network, Inc., personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Notary Public
(SEAL) My Commission Expires: 12/18/01
[NOTARY PUBLIC STAMP]
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
COMISSION #CC 703550
EXPIRES DEC 18, 2001
BONDED THRU
ATLANTIC BONDING CO., INC.
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
) ss
COUNTY OF ▇▇▇▇▇▇▇▇▇▇ )
On November 15, 1999 before me, a Notary Public, personally appeared
▇▇▇ ▇▇▇▇▇, the Director of RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/S/ ▇▇▇▇▇▇▇▇▇ von dem ▇▇▇▇▇
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Notary Public
My Commission Expires:
------------------------
(SEAL)
[NOTARY PUBLIC STAMP]
▇▇▇▇▇▇▇▇▇ von dem ▇▇▇▇▇
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires October 15, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ )
) ss
COUNTY OF ▇▇▇▇▇▇ )
On November 16, 1999 before me, a Notary Public, personally appeared
▇▇▇▇ ▇▇▇▇, the Director of BANK UNITED, a federal savings bank, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he/she executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Notary Public, ▇▇▇▇▇▇ County, Georgia
My Commission Expires September 30, 2001
(SEAL)
[NOTARY PUBLIC STAMP]
NOTARY PUBLIC, ▇▇▇▇▇▇ COUNTY, GEORGIA
MY COMMISSION EXPIRES SEPTEMBER 30, 2001
78