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EXHIBIT 10.15
$15,000,000
WAREHOUSE CREDIT AGREEMENT
among
E-LOAN, INC., as Borrower,
▇▇▇▇▇▇ RIVER FUNDING INC., as Lender
and
GE CAPITAL MORTGAGE SERVICES, INC., as Agent
Dated as of June 24, 1998
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TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1
1.01 Defined Terms 1
1.02 Principles of Construction 14
SECTION 2. AMOUNT AND TERMS OF CREDIT 15
2.01 Commitment 15
2.02 Minimum Borrowing Amount 15
2.03 Pledge of Collateral 15
2.04 Request for Advance 16
2.05 Disbursement of Funds 16
2.06 Note 16
2.07 Interest 17
SECTION 3. FEES 17
3.01 Fees 17
SECTION 4. PREPAYMENTS; PAYMENTS 18
4.01 Voluntary Prepayments 18
4.02 Mandatory Prepayments 18
4.03 Release of Collateral; Substitution 20
4.04 Sale of Collateral to Investors 21
4.05 Method and Place of Payment 22
4.06 Net Payments 22
SECTION 5. CONDITIONS PRECEDENT 22
5.01 Execution of Agreement; Note 22
5.02 No Default; Representations and Warranties 22
5.03 Request for Advance 22
5.04 Opinion of Counsel 23
5.05 Diligence 23
5.06 Corporate Documents; Proceedings 23
5.07 Financial Statements 23
5.08 Mandatory Prepayment 23
5.09 Warehouse Security Agreement 24
5.10 No Adverse Change 24
5.11 Insurance 24
5.12 [Intentionally omitted] 24
5.13 Delivery of the Collateral 24
5.14 Fees 25
5.15 No Litigation 25
5.16 Liquidity Agreement 25
5.17 Acknowledgment 25
5.18 Legal or Regulatory Proceedings 25
5.19 Guaranty Agreement 25
5.20 Support Agreement 25
5.21 Intercreditor Agreement 25
5.22 Treatment of Existing Liens 26
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS 26
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6.01 Corporate Status 26
6.02 Corporate Power and Authority 26
6.03 No Violation 26
6.04 Governmental Approvals 27
6.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; etc. 27
6.06 Litigation 27
6.07 True and Complete Disclosure 27
6.08 Use of Proceeds; Margin Regulations 28
6.09 Tax Returns and Payments 28
6.10 Compliance with ERISA 28
6.11 Capitalization 28
6.12 Subsidiaries 29
6.13 Compliance with Statutes, etc 29
6.14 Investment Company Act 29
6.15 No Burdensome Agreement 29
6.16 Security Interests 29
6.17 Registration 29
6.18 Representations Relating to the Mortgage Loans 30
6.19 Representations Relating to the Mortgage-backed Securities 31
6.20 Insurance 31
6.21 Title to Property 32
6.22 No Recourse Sales 32
6.23 Fictitious Names 32
SECTION 7. AFFIRMATIVE COVENANTS 32
7.01 Information Covenants 32
7.02 Books, Records and Inspections 35
7.03 Maintenance of Property, Insurance 35
7.04 Corporate Franchises 36
7.05 Compliance with Statutes, etc. 36
7.06 ERISA 36
7.07 Performance of Obligations 37
7.08 Mortgage Loans 37
7.09 Payment of Taxes 37
7.10 Corporate Separateness 38
7.11 Collateral 38
7.12 Portfolio Hedging Arrangements 38
7.13 Borrowing Base Valuation Reports 38
SECTION 8. NEGATIVE COVENANTS 39
8.01 Liens 39
8.02 Consolidation, Merger, Sale of Assets, etc. 39
8.03 Dividends 39
8.04 [Intentionally omitted] 40
8.05 Advances, Investments and Loans 40
8.06 Transactions with Affiliates 40
8.07 Capital Expenditures 41
8.08 Maximum Adjusted Leverage Ratio 41
8.09 Minimum Adjusted Tangible Net Worth 41
8.10 [Intentionally omitted] 41
8.11 Modifications of Certificate of Incorporation, By-Laws,
Certain Other Agreements and Collateral 41
8.12 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions 41
8.13 Limitation on Issuances of Capital Stock by Subsidiaries 41
8.14 Business 42
8.15 Portfolio Aging 42
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8.16 Minimum Current Ratio 42
SECTION 9. EVENTS OF DEFAULT 42
9.01 Payments 42
9.02 Representations, etc. 42
9.03 Covenants 42
9.04 Default Under Other Agreements 42
9.05 Default Under Agreements With Agent 43
9.06 Bankruptcy, etc. 43
9.07 ERISA 43
9.08 Warehouse Security Agreement 43
9.09 [Intentionally omitted] 43
9.10 Management 43
9.11 Judgments 44
9.12 Material Adverse Change 44
9.13 Default Not a Condition of a 120-Day Demand 44
SECTION 10. THE AGENT 44
10.01 Authorization and Action 44
10.02 Agent's Duties 45
10.03 GE Capital Mortgage Services, Inc. and Affiliates 45
10.04 Successor Agent 45
SECTION 11. MISCELLANEOUS 46
11.01 Payment of Expenses; Indemnity 46
11.02 Notices 51
11.03 Benefit of Agreement 51
11.04 Remedies Cumulative 51
11.05 Calculations; Computations 51
11.06 Governing Law; Submission to Jurisdiction; Venue 51
11.07 No Proceedings 52
11.08 Counterparts 52
11.09 Effectiveness 52
11.10 Headings Descriptive 52
11.11 Amendment or Waiver 52
11.12 Survival 52
11.13 Waiver of Jury Trial 53
SCHEDULES
SCHEDULE 6.11 CAPITALIZATION
SCHEDULE 6.12 LIST OF SUBSIDIARIES
SCHEDULE 7.01(p) CREDIT PACKAGE DOCUMENTS (LIST OF DOCUMENTS TO BE
DELIVERED WITH RESPECT TO A PLEDGED MORTGAGE)
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EXHIBITS
EXHIBIT A-1 - FORM OF PLEDGE OF COLLATERAL
EXHIBIT A-2 - FORM OF REQUEST FOR ADVANCE BY CHECK
EXHIBIT A-3 - FORM OF REQUEST FOR ADVANCE BY WIRE
EXHIBIT B-1 - FORM OF WET ADVANCE DISBURSEMENT INSTRUCTION
EXHIBIT B-2 - FORM OF BORROWER'S WET ADVANCE DISBURSEMENT INSTRUCTION
EXHIBIT C - INTENTIONALLY OMITTED
EXHIBIT D - FORM OF NOTE
EXHIBIT E - FORM OF OPINION OF SPECIAL COUNSEL FOR THE BORROWER
EXHIBIT F-1 - FORM OF OFFICERS' CERTIFICATE FOR BORROWER
EXHIBIT F-2 - FORM OF OWNERS' AND OFFICERS' CERTIFICATION
EXHIBIT G - CREDIT SCORES
EXHIBIT H - FORM OF ACKNOWLEDGEMENT OF COLLATERAL AGENT'S RIGHTS
EXHIBIT I - FORM OF WAREHOUSE SECURITY AGREEMENT
EXHIBIT J - FORM OF GUARANTY AGREEMENT
EXHIBIT K - FORM OF SUPPORT AGREEMENT
EXHIBIT L - FORM OF INTERCREDITOR AGREEMENT
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WAREHOUSE CREDIT AGREEMENT (as modified, supplemented or amended from
time to time, this "Agreement"), dated as of June 24, 1998, among E-LOAN, INC.,
a California corporation (the "Borrower"), ▇▇▇▇▇▇ RIVER FUNDING INC., a Delaware
corporation (the "Lender"), and GE CAPITAL MORTGAGE SERVICES, INC., a New Jersey
corporation (the "Agent").
WITNESSETH:
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WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lender is willing to make available to the Borrower the credit facilities
provided for herein;
NOW, THEREFORE, IT IS AGREED:
Section 1. Definitions and Principles of Construction.
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1.01 Defined Terms. As used in this 'Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjusted Leverage Ratio" shall mean, as to any Person, the ratio of
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the Consolidated Liabilities of such Person to the Adjusted Tangible Net Worth
of such Person.
"Adjusted Tangible Net Worth" shall mean, as to any Person, (x) the
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sum of, without duplication, the Consolidated Net Worth of such Person and its
Subsidiaries, plus an amount equal to 0% of the aggregate principal amount of
the Servicing Portfolio of such Person, plus the principal amount of any
Indebtedness that is subordinated to the payment of the Obligations on such
terms as are acceptable to the Agent and that does not permit or require any
principal payment in respect thereof prior to the Expiry Date in effect from
time to time, less (y) the sum of (i) the amount of all intangible items,
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand names, write-ups of
assets and purchased, capitalized or excess servicing, (ii) all receivables from
any officer, director or Affiliate of the Borrower, (iii) all unpaid stock
subscriptions, (iv) the Contingent Obligations of such Person as determined by
the Agent and (v) any other assets determined by the Agent in its reasonable
discretion.
"Advance" shall have the meaning provided in Section 2.01.
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"Advance Account" shall mean the depositary account of the Borrower
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designated by the Borrower by written notice to the Agent and the Lender.
"Affiliate" shall mean, as to any Person, any other Person (other
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than an individual) directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such
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Person; provided, however, that for purposes of Section 8.06, an Affiliate of
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the Borrower shall include any Person that directly or indirectly owns more than
5% of the Borrower and any officer or director of the Borrower or any such
Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Bankruptcy Code" shall mean Title 11 of the United States Code
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entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto.
"Borrower's Wet Advance Disbursement Instruction" shall have the
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meaning provided in Section 2.05.
"Borrowing Base" shall mean, as of any date, an amount that is the sum
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of the following, with respect to all Eligible Mortgage Loans, Eligible
Nonconforming Mortgage Loans and Liquid Assets pledged to the Security Agent as
of such date: (1) the sum for all Conforming Loans that are Committed Mortgage
Loans and are the subject of an Interest Rate Commitment of the product of (x)
the Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y)
100% of the Market Value of such Mortgage Loan, (2) the sum for all other
Conforming Loans that are Committed Mortgage Loans of the product of (x) the
Mortgage Loan Aging Percentage with respect to such Mortgage Loan and (y) 99% of
the Market Value of such Mortgage Loan, (3) the sum for all Jumbo Loans (each of
which shall be a Committed Mortgage Loan) which are the subject of an Interest
Rate Commitment of the product of (x) the Mortgage Loan Aging Percentage with
respect to such Mortgage Loan and (y) 100% of the Market Value of such Mortgage
Loan, (4) the sum for all other Jumbo Loans (each of which shall be a Committed
Mortgage Loan) of the product of (x) the Mortgage Loan Aging Percentage with
respect to such Mortgage Loan and (y) 99% of the Market Value of such Mortgage
Loan, (5) the sum for all Mortgage Loans that are FHA Loans, VA Loans or State
Loans of the product of (x) the Mortgage Loan Aging Percentage with respect to
such Mortgage Loan and (y) 99% of the Market Value of such Mortgage Loan, (6) 0%
of the Market Value of each Mortgage-backed Security, (7) an amount equal to the
aggregate principal amount of the Liquid Assets, (8) the sum for all Credit A-
Loans of the product of (x) the Nonconforming Mortgage Loan Aging Percentage
with respect to such Mortgage Loan and (y) 99% of the Market Value of such
Mortgage Loan, (9) the sum for all Credit B Loans of the product of (x) the
Nonconforming Mortgage Loan Aging Percentage with respect to such Mortgage Loan
and (y) 99% of the Market Value of such Mortgage Loan, (10) the sum for all
Credit C Loans of the product of (x) the Nonconforming Mortgage Loan Aging
Percentage with respect to such Mortgage Loan and (y) 98% of the Market Value of
such Mortgage Loan and (11) the sum for all Credit D Loans of the product of (x)
the Nonconforming Mortgage Loan Aging Percentage with respect to such Mortgage
Loan and (y) 0% of the Market Value of such Mortgage Loan.
"Borrowing Base Valuation Report" shall have the meaning provided in
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Section 7.13.
"Business Day" shall mean any day except Saturday, Sunday and any
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day which shall be in New York, New York, a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
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"Cash Equivalents" means (i) securities with maturities of sixty days
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or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (ii) certificates of
deposit, eurodollar time deposits, overnight bank deposits, bankers' acceptances
and repurchase agreements of any commercial bank whose short-term obligations
are rated "A-1" by S&P and, if rated by ▇▇▇▇▇'▇, "P-1" by ▇▇▇▇▇'▇ and, if rated
by Fitch, "F-1" by Fitch, having maturities of sixty days or less from the date
of acquisition, (iii) commercial paper having maturities of sixty days or less
from the date of acquisition, rated at least "A-1" by S&P or "P-1" by ▇▇▇▇▇'▇
and, if rated by Fitch, "F-1" by Fitch, (iv) money market funds rated at least
"AAAm" or "AAA-G" by S&P or "P-1" by ▇▇▇▇▇'▇ and, if rated by Fitch, "AAA" by
Fitch, and (v) repurchase agreements with counterparties whose short-term
obligations are rated at least "A-1" by S&P or "P-1" by ▇▇▇▇▇'▇ and, if rated by
Fitch, "F-1" with a term of sixty days or less.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Collateral" shall mean all "Collateral" as defined in the Warehouse
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Security Agreement.
"Collateral Agent" shall mean General Electric Capital Corporation in
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its capacity as collateral agent pursuant to the ▇▇▇▇▇▇ River Security
Agreement.
"Collateral Documents" shall mean, as to a Mortgage Loan which has
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been or is to be pledged to the Security Agent as Collateral, the following
documents and instruments:
(i) The original Mortgage Note executed with respect to such
Mortgage Loan by a third party in favor of the Borrower (or
properly endorsed to the Borrower if purchased or acquired by
the Borrower) and endorsed in blank by the Borrower;
(ii) The original recorded Mortgage securing such Mortgage Note or
a copy of the original Mortgage securing such Mortgage Note,
certified by the Borrower or a title company or escrow company
reasonably satisfactory to the Security Agent to be a true
copy of the original instrument submitted for recording;
(iii) If the Mortgage Note was purchased by the Borrower, an
original properly recorded assignment of the related Mortgage
to the Borrower or a copy of such assignment certified by the
Borrower or a title or escrow company reasonably satisfactory
to the Security Agent to be a true copy of the original
instrument submitted for recording and a certified copy of
each intervening assignment of such Mortgage, if any;
(iv) An assignment of the Mortgage by the Borrower to the Security
Agent fully completed and in recordable form. If appropriate
filing and recording information regarding the Mortgage has
not been inserted into the assignment, the Borrower hereby
authorizes the Security Agent to insert such information, when
available. Such assignment shall not be filed for recordation
unless the Security Agent shall in good ▇▇▇▇▇ ▇▇▇▇ such action
necessary to further secure any Advances, in which
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case the Security Agent may file of record any or all such
assignments. The Borrower shall immediately reimburse the
Security Agent for any and all costs and expenses incurred by
the Security Agent in connection with such recordation;
(v) A closing protection letter executed by an authorized
representative of a title insurance company or escrow company
reasonably satisfactory to the Agent stating that the closing
agent with respect to such Mortgage Loan is an authorized
agent of such title insurance company or escrow company; and
(vi) Such other documents as the Security Agent may reasonably
require from time to time, including, without limitation, a
copy of any Purchase Commitment or Master Commitment relating
to the Mortgage Loan.
"Collateral Value" shall mean, at any time, with respect to a Mortgage
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Loan or a Mortgage-backed Security, the amount resulting from that part of the
calculation of the Borrowing Base at such time that relates to such Mortgage
Loan or Mortgage-backed Security.
"Combined Loan-to-Value Ratio" shall mean, as to any Mortgage Loan,
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the ratio expressed as a percentage that the sum of the original principal
balance of such Mortgage Loan and the then current principal balance of any
related first priority mortgage bears to the appraised value of the related
mortgaged property at the time such Mortgage Loan was originated.
"Commercial Paper" shall mean the short-term promissory notes of the
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Lender.
"Commercial Paper Rate" shall mean with respect to any calendar month,
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a rate per annum determined by annualizing the aggregate interest expense of
Lender (determined on an accrual basis) for such calendar month in respect of
(i) Commercial Paper outstanding during such calendar month and (ii) any
borrowings made by Lender under the Liquidity Agreement.
"Commitment" shall mean the obligation of the Lender to make Advances
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in an aggregate principal amount outstanding at any time not to exceed
$15,000,000.
"Committed Mortgage Loans" shall mean all Mortgage Loans pledged to
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the Security Agent pursuant to the terms of this Agreement and of the Warehouse
Security Agreement (i) which satisfy all of the requirements of any Purchase
Commitment or are covered by a Hedging Contract, (ii) which could be delivered
under any such Purchase Commitment, and (iii) which, in respect of all Mortgage
Loans of a particular type and yield, do not in the aggregate have a principal
amount in excess of the sum of (A) the aggregate then remaining amount of all
Purchase Commitments the requirements of which are satisfied by Mortgage Loans
of such type and yield owned by the Borrower plus (B) the aggregate amount of
all Hedging Contracts that cover Mortgage Loans of such type and yield owned by
the Borrower.
"Conforming Loan" shall mean a Mortgage Loan (other than a VA Loan,
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an FHA Loan or a State Loan) that is underwritten in conformity with FHLMC or
FNMA underwriting standards and is otherwise eligible for purchase by FNMA or
FHLMC.
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"Consolidated Liabilities" shall mean, as to any Person, the
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liabilities of such Person and its Subsidiaries determined on a consolidated
basis and in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis, and shall include in any event the
Contingent Obligations of such Person and its Subsidiaries.
"Consolidated Net Worth" shall mean, as to any Person, the Net Worth
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of such Person and its Subsidiaries determined on a consolidated basis and in
accordance with generally accepted accounting principles in the United States,
applied on a consistent basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
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Subsidiaries of such Person which are or are required to be consolidated with
such Person for financial reporting purposes in accordance with generally
accepted accounting principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any obligation
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of such Person arising from an existing condition or situation that involves
uncertainty as to outcome and that will be resolved by the occurrence or
nonoccurrence of some future event, including but not limited to any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly; provided,
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however, that the term Contingent Obligation shall not include endorsements of
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instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by the Agent.
"▇▇▇▇▇▇ River Security Agreement" shall mean the Assignment and
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Security Agreement dated as of March 1, 1993 among the Lender, the Collateral
Agent and the cash collateral bank named therein (as such agreement may be
amended, supplemented or modified from time to time).
"Credit A-Loan" shall mean a Mortgage Loan (other than a Mortgage
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Loan that satisfies all the requirements of an Eligible Mortgage Loan) the
obligor of which has a Credit Score as described on Exhibit G hereto.
"Credit B Loan" shall mean a Mortgage Loan (other than a Mortgage
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Loan that satisfies all the requirements of an Eligible Mortgage Loan) the
obligor of which has a Credit Score as described on Exhibit G hereto.
"Credit C Loan" shall mean a Mortgage Loan (other than a Mortgage
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Loan that satisfies all the requirements of an Eligible Mortgage Loan) the
obligor of which has a Credit Score as described on Exhibit G hereto.
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"Credit D Loan" shall mean a Mortgage Loan (other than a Mortgage
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Loan that satisfies all the requirements of an Eligible Mortgage Loan) the
obligor of which has a Credit Score as described on Exhibit G hereto.
"Credit Documents" shall mean this Agreement, the Note and the
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Warehouse Security Agreement.
"Credit Package Documents" shall have the meaning provided in Section
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7.01(p).
"Credit Score" shall mean the numeric consumer credit score developed
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by Fair ▇▇▇▇▇ & Co., Inc. and referred to as a "FICO Score".
"Current Ratio" shall mean, as to any Person, the ratio of current
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assets to current liabilities, as determined in accordance with generally
accepted accounting principles in the United States, applied on a consistent
basis.
"Custodian" shall mean, with respect to any Investor, any financial
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institution selected by such Investor to act as a custodian for Mortgage Loans
acquired or to be acquired by such Investor; provided that such financial
institution has been approved by the Security Agent and meets all applicable
requirements of such Investor to act as such custodian.
"Default" shall mean any event, act or condition which with notice
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or lapse of time, or both, would constitute an Event of Default.
"Depositary" shall mean Bankers Trust Company, a New York banking
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corporation, in its capacity as issuing and paying agent for the Commercial
Paper under the Depositary Agreement.
"Depositary Agreement" shall mean the Depositary Agreement entered
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into by the Lender, the Depositary, and the agent under the Liquidity Agreement,
as such agreement may be supplemented or modified from time to time.
"Effective Date" shall have the meaning provided in Section 11.09.
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"Eligible Mortgage Loan" shall mean at the time of the determination
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thereof (a) a Mortgage Loan, which at such time (i) is pledged as Collateral
pursuant to the terms of this Agreement and of the Warehouse Security Agreement
and is not pledged as security for any Indebtedness owing to, or otherwise
subject to a Lien for the benefit of, any person other than the Lender, (ii) is
a First Mortgage Loan, (iii) is, without duplication, a Conforming Loan, a Jumbo
Loan, an FHA Loan, a VA Loan or a State Loan, (iv) is subject to a Purchase
Commitment or covered by a Hedging Contract or is a Mortgage Loan that bears
interest at an adjustable rate and is covered by a Master Commitment, (v) in the
case of a Mortgage Loan that is not subject to a Wet Advance, has an Origination
Date that is less than 180 calendar days prior to such time, (vi) in the case of
a Mortgage Loan that is subject to a Wet Advance, has an Origination Date that
is not more than five Business Days prior to such time and (vii) has a Combined
Loan-to-Value Ratio of 100% or less, excluding in all such cases, however, any
Mortgage Loan about which any of the
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representations, warranties and agreements contained in Section 6.18 is not true
and correct; provided that, in the case of a Mortgage Loan (other than a State
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Loan), the interest rate on such Mortgage Loan was, as of the date on which
such interest rate was set or established, at least equal to the then current
market rate of interest for mortgage loans of the same type as determined by the
Agent; or (b) a Mortgage-backed Security which at such time (i) is subject to a
Purchase Commitment, (ii) is pledged as Collateral pursuant to the terms of this
Agreement and of the Warehouse Security Agreement and (iii) was issued by FNMA,
FHLMC or GNMA not more than 60 calendar days prior to such time.
"Eligible Nonconforming Mortgage Loan" shall mean at the time of the
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determination thereof, a Mortgage Loan, which at such time (i) is pledged as
Collateral pursuant to the terms of this Agreement and of the Warehouse Security
Agreement and is not pledged as security for any Indebtedness owing to, or
otherwise subject to a Lien for the benefit of, any person other than the
Lender, (ii) is, without duplication, a First Mortgage Loan or a Second Mortgage
Loan, (iii) is subject to a Purchase Commitment, (iv) has and has had no
delinquency with respect to any payment due thereunder, (v) has no deficiencies
in respect of the documentation therefor, (vi) is, without duplication, a Credit
A- Loan, a Credit B Loan, a Credit C Loan or a Credit D Loan, (vii) in the case
of a Mortgage Loan that is not subject to a Wet Advance, has an Origination Date
that is less than 20 calendar days prior to such time, (viii) in the case of a
Mortgage Loan that is subject to a Wet Advance, has an Origination Date that is
not more than five Business Days prior to such time and (ix) has a Combined
Loan-to-Value Ratio of 100% or less, excluding in all such cases, however any
Mortgage Loan about which any of the representations, warranties and agreements
contained in Section 6.18 is not true and correct; provided that the interest
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rate on such Mortgage Loan was, as of the date on which such interest rate was
set or established, at least equal to the then current market rate of interest
for mortgage loans of the same type as determined by the Agent.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9)
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of ERISA) which together with the Borrower or any of its Subsidiaries would be a
member of the same "controlled group" within the meaning of Section 414(b), (m),
(c) and (o) of the Code.
"Event of Default" shall have the meaning provided in Section 9.
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"Existing Indebtedness" shall have the meaning provided in Section
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8.04(ii).
"Expiry Date" shall mean the earlier of (i) June 30, 1999 as such
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date may be extended upon mutual agreement among the Borrower, the Lender and
the Agent from time to time, (ii) the date which is fifteen days prior to the
Liquidity Termination Date in effect from time to time and (iii) the date that
is 120 days after the date on which the Lender shall have given the Borrower the
notice referred to in Section 9.13 hereof.
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"Facility Documents" shall mean the Credit Documents, the Collateral
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Documents, the Liquidity Agreement, the Depositary Agreement, the Reimbursement
Agreement, the ▇▇▇▇▇▇ River Security Agreement, any letters of credit issued
pursuant to the terms of the Reimbursement Agreement, the Commercial Paper and
any agreements entered into by the Lender with placement agent(s) or dealer(s)
for the placement or sale of Commercial Paper.
"Fees" shall mean all fees and expenses required to be paid by the
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Borrower pursuant to Section 3.01.
"FHA" shall mean the Federal Housing Administration or any successor
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thereto.
"FHA Loan" shall mean a Mortgage Loan which (i) is eligible for
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insurance by FHA and (ii) is so insured or is subject to a current binding and
enforceable commitment for such insurance pursuant to the provisions of the
National Housing Act, as now in effect and as may be hereafter amended from time
to time, and is otherwise eligible for inclusion in a GNMA Mortgage-backed
Security pool.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or
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any successor thereto.
"First Mortgage Loan" shall mean a Mortgage Loan that is underwritten
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in conformity with underwriting standards approved by the applicable Investor
and is secured by a first priority Mortgage.
"Fitch" shall mean Fitch Investors Service, L.P.
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"FNMA" shall mean the Federal National Mortgage Association or any
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successor thereto.
"GNMA" shall mean the Governmental National Mortgage Association or
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any successor thereto.
"Guaranty Agreement" shall have the meaning provided in Section 5.19.
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"Hedging Contract" shall mean a written contractual arrangement
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designed to provide protection against fluctuations in interest rates with
respect to Mortgage Loans and commitments made to prospective Mortgage Loan
obligors to extend Mortgage Loans at specified rates of interest, in each case
in accordance with guidelines acceptable to the Agent.
"HUD" shall mean the Department of Housing and Urban Development or
---
any successor thereto.
"Indebtedness" shall mean, as to any Person, without duplication,
------------
(i) all indebtedness (including principal; interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all drafts drawn thereunder, (iii) all liabilities secured by
any Lien
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on any property owned by such Person, whether or not such liabilities have been
assumed by such Person, (iv) the aggregate amount required in accordance with
generally accepted accounting principles to be capitalized under leases under
which such Person is the lessee and (v) all Contingent Obligations of such
Person.
"Initial Borrowing Date" shall mean the date on which the initial
----------------------
incurrence of Advances occurs.
"Insolvency Event" shall mean, with respect to any Person, the
----------------
occurrence of any of the following events: (i) such Person shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a receiver,
trustee, custodian, conservator or liquidator for itself or a substantial
portion of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or such Person, or a substantial part of its property,
assets or business, shall be subject to, consent to or acquiesce in the
appointment of a receiver, trustee, custodian, conservator or liquidator for
itself or a substantial portion of its property, assets or business; (ii)
corporate action shall be taken by such Person for the purpose of effectuating
any of the foregoing; (iii) an order for relief shall be entered in a case under
the Bankruptcy Code in which such Person is a debtor; or (iv) involuntary
proceedings or an involuntary petition shall be commenced or filed against such
Person under any bankruptcy, insolvency or similar law or seeking the
dissolution, liquidation or reorganization of such Person or the appointment of
a receiver, trustee, custodian, conservator or liquidator for such Person or of
a substantial part of the property, assets or business of such Person, or any
writ, order, judgment, warrant of attachment, execution or similar process shall
be issued or levied against a substantial part of the property, assets or
business of such Person, and such proceeding or petition shall not be dismissed,
or such execution or similar process shall not be released, vacated or fully
bonded, within sixty (60) days after commencement, filing or levy, as the case
may be.
"Interest Rate Commitment" shall mean a commitment whereby the
------------------------
Borrower agrees to deliver a Mortgage Loan to GE Capital Mortgage Services,
Inc., as investor, according to the terms of a Purchase Commitment and GE
Capital Mortgage Services, Inc. agrees to a specified interest rate and purchase
price for a designated length of time.
"Investor" shall mean FHLMC, FNMA, GNMA or any financial institution,
--------
broker, dealer, institutional investor or state agency or instrumentality
approved by the Agent.
"Jumbo Loan" shall mean a Mortgage Loan (other than an FHA Loan, a
----------
VA Loan, or a State Loan) that is underwritten in accordance with standards
approved by the Agent that are generally comparable to the standards established
by FNMA or FHLMC in all respects other than the original principal amount of the
Mortgage Loan and that were established by an Investor (other than FHLMC, FNMA
or GNMA).
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"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
----
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Liquid Assets" shall mean (i) certificates of deposit of any
-------------
commercial bank whose short-term obligations are rated "A-1+" by S&P and, if
rated by Moody's, "P-1" by Moody's and, if rated by Fitch, "F-1+" by Fitch
having maturities of 60 days or less from the date of acquisition and (ii)
securities issued or fully guaranteed or insured by the United States
Government or any agency thereof having maturities of 60 days or less from the
date of acquisition.
"Liquidity Agreement" shall mean the Liquidity Agreement dated as of
-------------------
March 1, 1993 among the Lender, the liquidity lenders party thereto and General
Electric Capital Corporation, as liquidity agent, as the same may be amended or
modified from time to time.
"Liquidity Lenders" shall mean the banks and financial institutions
-----------------
that are parties to the Liquidity Agreement from time to time.
"Liquidity Termination Date" shall mean the earlier of (i) March 31,
--------------------------
1999, as such date may be extended in accordance with the terms of the Liquidity
Agreement and (ii) the date on which the commitment of the Liquidity Lenders
under the Liquidity Agreement is terminated following the occurrence of an event
of default thereunder.
"LOC Providers" shall mean those banks and financial institutions
-------------
that are parties to the Reimbursement Agreement.
"Margin Stock" shall have the meaning provided in Regulation U of the
------------
Board of Governors of the Federal Reserve System.
"Market Value" shall mean as of any date at which the amount thereof
------------
is to be determined, (i) as to any Mortgage-backed Security, the purchase price
therefor (exclusive of any accrued interest included in such purchase price)
under the Purchase Commitment with respect thereto; and (ii) as to any Mortgage
Loan an amount equal to the lower of (A) an amount equal to (1) with respect to
a Mortgage Loan that was funded directly by the Borrower to the obligor
thereunder, the outstanding principal amount of such Mortgage Loan or (2) with
respect to a Mortgage Loan that was purchased by the Borrower, the lesser of (x)
the purchase price paid by the Borrower therefor (exclusive of any accrued
interest or servicing release premium included in such purchase price) and (y)
the outstanding principal amount of such Mortgage Loan, as applicable, (B) the
amount determined by the Agent, in its reasonable discretion, as the price
(exclusive of any accrued interest that would be included in such price) at
which such Mortgage Loan could on the date of such determination be sold in the
secondary market to a bona fide investor in an arm's-length transaction and (C)
the price at which an Investor has committed to purchase such Mortgage Loan.
--- -----
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"Master Commitment" shall mean a written master commitment or any
-----------------
other written commitment, on general terms and conditions approved by the Agent,
from an Investor to purchase from the Borrower from time to time up to a
specified dollar amount of Mortgage Loans without specification of the yield or
purchase price of each such Mortgage Loan.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Mortgage" shall mean a first or second mortgage, first or second
--------
deed of trust, first or second deed to secure debt or other first or second
security device which is customary and serves the same function as a mortgage
under the law and practice in the jurisdiction in which the premises subject to
the mortgage are located. For all Mortgage Loans secured by premises located in
states in which it is customary to use deeds of trust or security deeds as the
security device, a deed of trust or security deed, as the case may be, shall be
used as the security device. Mortgages shall, unless the Agent shall otherwise
approve, be on forms acceptable to FNMA, GNMA or FHLMC.
"Mortgage-backed Securities" shall mean securities that are (A)(i)
--------------------------
issued in accordance with guidelines established by GNMA, FNMA or FHLMC, (ii)
guaranteed as to payment by GNMA, FNMA or FHLMC in accordance with the
guidelines established by such entities and (iii) secured by a pool of Mortgage
Loans originally included as Eligible Mortgage Loans hereunder, or which would
have otherwise satisfied the requirements for Eligible Mortgage Loans if such
Mortgage Loans had been pledged to the Security Agent pursuant to the terms of
this Agreement and of the Warehouse Security Agreement, (B) subject to a
Purchase Commitment and (C) issued in book-entry form.
"Mortgage Bankers' Reporting Forms" shall have the meaning provided
---------------------------------
in Section 7.01(o).
"Mortgage Loan" shall mean a loan evidenced by a Mortgage Note and
-------------
secured by a Mortgage encumbering a completed one to four family residential
property (including, without limitation, condominium units and excluding
cooperative ownership interests).
"Mortgage Loan Aging Percentage" shall mean, as of any date, with
------------------------------
respect to any Eligible Mortgage Loan, (i) 100% if such Mortgage Loan has an
Origination Date that is less than 90 days prior to such date, (ii) 75% if such
Mortgage Loan has an Origination Date that is less than 120 days and more than
89 days prior to such date, (iii) 50% if such Mortgage Loan has an Origination
Date that is less than 150 days and more than 119 days prior to such date, (iv)
25% if such Mortgage Loan has an Origination Date that is less than 180 days and
more than 149 days prior to such date and (v) 0% if such Mortgage Loan has an
Origination Date that is 180 or more days prior to such date.
"Mortgage Note" shall mean a promissory note executed by a competent
-------------
party which is secured by a Mortgage.
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"Net Worth" shall mean, as to any Person, the sum of (i) its capital
---------
stock, capital in excess of par or stated value of shares of its capital stock,
retained earnings and any other account which, in accordance with generally
accepted accounting principles in the United States, constitutes stockholder
equity less (ii) any treasury stock, any unpaid stock subscriptions and any
subordinated or other loans from stockholders, in each case to the extent
included in clause (i).
"Nonconforming Commitment" shall have the meaning provided in Section
------------------------
2.01.
"Nonconforming Mortgage Loan Aging Percentage" shall mean, as of any
--------------------------------------------
date, with respect to any Eligible Nonconforming Mortgage Loan, (i) 100% if such
Mortgage Loan has an Origination Date that is less than 60 days prior to such
date, (ii) 50% if such Mortgage Loan has an Origination Date that is less than
90 days and more than 59 days prior to such date and (iii) 0% if such Mortgage
Loan has an Origination Date that is 90 days or more prior to such date.
"Note" shall have the meaning provided in Section 2.06.
----
"Obligations" shall mean all amounts owing to the Lender or the Agent
-----------
pursuant to the terms of this Agreement and any other Credit Document.
"Office" shall mean the office of the Agent located at Three Executive
------
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ or such other address as the Agent may
specify from time to time in a written notice to the Borrower and the Lender.
"Origination Date" shall mean, with respect to any Mortgage Loan, the
----------------
date such Mortgage Loan was funded to the obligor thereon.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Section 4002 of ERISA or any successor thereto.
"Person" shall mean any individual, partnership, joint venture, firm,
------
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as
----
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), or at any time during the
five calendar years preceding the date of this Agreement was maintained or
contributed to by (or to which there is an obligation to contribute of), the
Borrower or by a Subsidiary of the Borrower or an ERISA Affiliate.
"Purchase Commitment" shall mean a current binding and enforceable
-------------------
written commitment (or contract for purchase) from an Investor to purchase from
the Borrower Mortgage Loans or Mortgage-backed Securities of a particular type
and yield owned by the Borrower at a committed price, which commitment shall at
all times be subject to approval by the Agent as to terms and conditions.
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"Rating Agency" shall mean each credit rating agency that the Lender
-------------
shall have requested to provide a credit rating with respect to the Commercial
Paper and which is then providing such a credit rating.
"Reimbursement Agreement" shall mean the Letter of Credit and
-----------------------
Reimbursement Agreement dated as of March 1, 1993 among the Lender, the banks
and financial institutions party thereto and General Electric Capital
Corporation, as letter of credit agent, as such agreement may be amended,
supplemented or modified from time to time.
"Reportable Event" shall mean an event described in Section 4043(b)
----------------
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Request for Advance" shall have the meaning provided in Section 2.04.
-------------------
"S&P" shall mean Standard & Poor's Corporation.
---
"Second Mortgage Loan" shall mean a Mortgage Loan that is underwritten
--------------------
in conformity with underwriting standards approved by the applicable Investor
and is secured by a second priority Mortgage.
"Security Agent" shall mean GE Capital Mortgage Services, Inc. in its
--------------
capacity as security agent for the Lender pursuant to the Warehouse Security
Agreement.
"Servicing Portfolio" shall mean, as to any Person, all Mortgage Loans
-------------------
the servicing or subservicing rights for which are owned by such Person and with
respect to which such Person functions as the servicing institution.
"State Loan" shall mean a Mortgage Loan that is (i) underwritten in
----------
conformity with underwriting standards that are established by a state agency or
instrumentality and approved by the Agent and (ii) subject to a Purchase
Committment from such state agency or instrumentality.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
----------
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has (A) more than a 50% equity interest at the time or (B) an
interest satisfying the provisions of clause (i) hereof in any general partner
of any limited partnership or joint venture.
"Support Agreement" shall have the meaning provided in Section 5.20.
-----------------
"Taxes" shall have the meaning provided in Section 11.01(e).
-----
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"UCC" shall mean the Uniform Commercial Code as from time to time in
---
effect in New Jersey or any other relevant jurisdiction, as applicable.
"Unfunded Current Liability" of any Plan means the amount, if any, by
--------------------------
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan, exceeds
the fair market value of the assets allocable thereto, determined in accordance
with Section 412 of the Code.
"VA" shall mean the Veterans Administration or any successor thereto.
--
"VA Loan" shall mean a Mortgage Loan which is eligible for guarantee
-------
by VA and is either so guaranteed or is subject to a current binding and
enforceable commitment for such guarantee pursuant to the provisions of the
Servicemen's Readjustment Act, as now in effect and as may be hereafter amended
from time to time, and is otherwise eligible for inclusion in a GNMA
Mortgage-backed Security pool.
"Warehouse Payment Account" shall mean the segregated direct deposit
-------------------------
account number ▇▇-▇▇▇-▇▇▇ maintained by the Collateral Agent with respect to
this Agreement at Bankers Trust Company in accordance with the terms of the
▇▇▇▇▇▇ River Security Agreement.
"Warehouse Security Agreement" shall have the meaning provided in
----------------------------
Section 5.09.
"Wet Advance" shall mean an Advance made by the Lender against the
-----------
pledge of Eligible Mortgage Loans or Eligible Nonconforming Mortgage Loans with
respect to which the Borrower has delivered to the Agent a Request for Advance
in accordance with Section 2.04 in lieu of the delivery of the Mortgage Note
related thereto: provided, however, that from and after the date on which the
-------- -------
Mortgage Note with respect to any such Mortgage Loan is received by the Security
Agent, such Advance shall cease to be a Wet Advance.
"Wet Advance Disbursement Instruction" shall have the meaning provided
------------------------------------
in Section 2.05.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
-----------------------
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
1.02 Principles of Construction. (a) All references to sections,
--------------------------
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
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(b) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in
conformity with those used in the preparation of the financial statements
referred to in Section 6.05(a).
Section 2. Amount and Terms of Credit.
--------------------------
2.01 Commitment. Subject to and upon the terms and conditions set
----------
forth herein, the Lender agrees, at any time and from time to time prior to the
Expiry Date (or such earlier date as the Commitment shall have been terminated
pursuant to the terms hereof), to make an advance or advances (each an "Advance"
and, collectively, the "Advances") to the Borrower, which Advance: (i) shall be
made at any time and from time to time in accordance with the terms hereof on
and after the Effective Date and prior to the Expiry Date; (ii) shall bear
interest as provided in Section 2.07; (iii) may be prepaid and reborrowed in
accordance with the provisions hereof; and (iv) shall be made against the pledge
by the Borrower of Eligible Mortgage Loans, Eligible Nonconforming Mortgage
Loans or Liquid Assets as Collateral for such Advance as provided herein and in
the Warehouse Security Agreement; provided, however, that (1) the aggregate
-------- -------
principal amount of Advances outstanding at any time shall not exceed the lesser
of (x) the Commitment and (y) the Borrowing Base, at such time, (2) the
aggregate principal amount of Advances outstanding at any time secured by
Mortgage-backed Securities shall not exceed 0% of the Commitment, (3) the
aggregate principal amount of Wet Advances outstanding at any time shall not
exceed 30% of the Commitment, (4) the aggregate principal amount of Advances
outstanding at any time secured by Jumbo Loans shall not exceed 75% of the
Commitment, (5) the aggregate principal amount of Advances outstanding at any
time secured by Eligible Nonconforming Mortgage Loans shall not exceed
$1,500,000 (the "Nonconforming Commitment"), (6) the aggregate principal amount
of Advances outstanding at any time secured by Credit A- Loans shall not exceed
100% of the Nonconforming Commitment, (7) the aggregate principal amount of
Advances outstanding at any time secured by Credit B Loans shall not exceed 100%
of the Nonconforming Commitment, (8) the aggregate principal amount of Advances
outstanding at any time secured by Credit C Loans shall not exceed 50% of the
Nonconforming Commitment and (9) the aggregate principal amount of Advances
outstanding at any time secured by Credit D Loans shall not exceed 0% of the
Nonconforming Commitment.
2.02 Minimum Borrowing Amount. The principal amount of each
------------------------
Advance shall not be less than $500.
2.03 Pledge of Collateral. Whenever the Borrower desires to
--------------------
pledge a Mortgage Loan or Mortgage-Backed Security to the Security Agent, it
shall deliver to the Agent at its office a pledge of Collateral substantially in
the form of Exhibit A-1 (the "Pledge of Collateral"). Each Pledge of Collateral:
(i) shall be appropriately completed by an authorized employee of the Borrower
to describe the Collateral to be pledged; and (ii) shall have attached thereto
each of the Collateral Documents required in the Pledge of Collateral,
including, without limitation, in the case of a Mortgage Loan with respect to
which a Wet Advance is being requested in accordance with Section 2.04, an
assignment by the Borrower to the Security Agent of the related Mortgage fully
completed and in recordable form.
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2.04 Request for Advance. Whenever the Borrower desires to incur
-------------------
an Advance hereunder, it shall deliver to the Agent at its Office a request
for Advance substantially in the form of Exhibit A-2 or Exhibit A-3, as
applicable (the "Request for Advance") not later than the close of business on
the Business Day prior to the proposed date of such Advance; provided, however,
--------- -------
that before submitting a request for an Advance to be secured by a Mortgage
Loan with an outstanding principal amount in excess of $650,000, the Borrower
shall have obtained the prior approval of the Agent. Each Request for Advance:
(i) shall be appropriately completed by an authorized employee of the Borrower
to specify the aggregate principal amount of the Advance or Wet Advance to be
made and the proposed date of such Advance (which shall be a Business Day); and
(ii) shall, in the case of a Wet Advance, include instructions with respect to
the disbursement of such Wet Advance.
2.05 Disbursement of Funds. (a) No later than 3:00 P.M. (New York
---------------------
City time) on the date specified in the Request for Advance with respect to any
Advance other than a Wet Advance, the Lender shall make available to the
Borrower the amount of such Advance requested to be made on such date by wire
transfer of funds to the Borrower's Advance Account.
(b) No later than 3:00 P.M. (New York City time) on the date specified
in the Request for Advance with respect to any Wet Advance, the Agent shall
disburse the amount of such Wet Advance directly to the appropriate title
company, escrow agent or closing agent, by cashier's check or wire transfer in
accordance with the instructions set forth in the related Request for Advance,
the Agent's customary practice and the requirements of applicable law.
(c) In the event that a Wet Advance is disbursed by a cashier's check
sent by the Agent or the Agent's bank to the appropriate title company, escrow
agent or closing agent, the Agent shall disburse the amount of such Wet Advance
under cover of an instruction letter substantially in the form of Exhibit B-1 (a
"Wet Advance Disbursement Instruction"). In the event that a Wet Advance is to
be disbursed by wire transfer or by a cashier's check printed at the Borrower's
office and sent by the Borrower to the appropriate title company, escrow agent
or closing agent, the Borrower shall deliver to the appropriate title company,
escrow agent or closing agent an instruction letter substantially in the form of
Exhibit B-2 (a "Borrower's Wet Advance Disbursement Instruction"). Upon the
request of the Agent, the Borrower shall deliver to the Agent a copy of any
Borrower's Wet Advance Disbursement Instruction delivered by the Borrower.
2.06 Note. The Borrower's obligation to pay the principal of, and
----
interest on, all Advances made to it by the Lender shall be evidenced by a
promissory note substantially in the form of Exhibit D (the "Note"). The Note
shall (i) be executed by the Borrower, (ii) be payable to the order of the
Lender and be dated on or prior to the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Commitment and be payable in the aggregate
principal amount of the Advances evidenced thereby, (iv) mature, with respect to
each Advance evidenced thereby, on the Expiry Date, (v) bear interest as
provided in Section 2.07, (vi) be subject to mandatory prepayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents. The Lender will note on its internal records the amount
of each Advance made by it and each payment in respect thereof and will prior to
any transfer of the Note endorse on the
16
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reverse side thereof the outstanding principal amount of Advances evidenced
thereby. Failure to make any such notation shall not affect the Borrower's
obligations in respect of such Advances.
2.07 Interest. (a) The Borrower agrees to pay interest in respect
--------
of the outstanding principal amount of the Advances from the date the proceeds
thereof are made available to the Borrower until the maturity thereof (whether
by acceleration or otherwise) (i) with respect to Advances secured by Eligible
Mortgage Loans, at a rate per annum equal to 2.00% in excess of the Commercial
Paper Rate in effect from time to time and (ii) with respect to Advances secured
by Eligible Nonconforming Mortgage Loans, at a rate per annum equal to 2.25% in
excess of the Commercial Paper Rate in effect from time to time; provided,
--------
however, that with respect to any Advance which is disbursed by cashier's check,
-------
which Advance has been outstanding for less than sixteen days (16), the
applicable rate of interest, calculated in accordance with the provisions of
this Section 2.07(a), shall be reduced by .50%.
(b) Overdue principal and, to the extent permitted by law, overdue
interest, and any other overdue amount payable by the Borrower hereunder, shall
bear interest at a rate per annum equal to 4% per annum in excess of the rate
specified in clause (a) above in effect from time to time; provided, however,
-------- -------
that no Advance shall bear interest at a rate in excess of the maximum rate
permitted by applicable law.
(c) Accrued (and theretofore unpaid) interest shall be payable in
respect of the Advances (i) monthly in arrears on the fifth Business Day of each
calendar month with respect to interest accrued during the preceding calendar
month, (ii) on any prepayment which reduces the outstanding Advances to zero,
(iii) at maturity (whether by acceleration, demand or otherwise) and (iv) after
such maturity, on demand. The Agent shall provide the Borrower with a notice
setting forth the interest accrued with respect to each calendar month not later
than the third Business Day following the end of such calendar month.
Section 3. Fees.
----
3.01 Fees. (a) The Borrower shall pay the Agent an administration
----
fee (the "Administration Fee") with respect to each calendar month during the
term of this Agreement in an amount equal to the sum of $20.00 for each Mortgage
Loan pledged as Collateral for the first time during such calendar month. In
addition, the Borrower shall pay all administrative costs of the Lender or the
Agent in connection with the making of an Advance and the handling of
Collateral, including, but not limited to, the costs of overnight and express
delivery, cashier's checks and wire transfers. The Administration Fee and
administrative costs with respect to each calendar month. will be due and
payable on the fifth Business Day following the end of such calendar month.
(b) The Agent shall provide the Borrower with a notice setting forth
the Administration Fee accrued and the administrative costs with respect to each
calendar month not later than the third Business Day following the end of such
calendar month.
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Section 4. Prepayments; Payments.
---------------------
4.01 Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay the Advances, without premium or penalty, in whole or in part from time
to time on the following terms and conditions: (i) the Borrower shall give the
Agent at its Office notice of its intent to prepay not later than 2:00 p.m. (New
York City time) at least one Business Day prior to the date of such prepayment;
provided, however, that with respect to any prepayment of an amount in excess
--------- -------
of 30% of the Advances then outstanding, the Borrower shall give the Agent
notice of its intent to prepay at least 5 Business Days prior to the date of
such prepayment, and (ii) the amount of such prepayment shall be at least
$10,000.
4.02 Mandatory Prepayments. Except as set forth in Section
---------------------
4.03(b), a prepayment of Advances shall be required, without notice or demand
of any kind to the Borrower, as follows:
(a) if on any date the aggregate principal amount of Advances
outstanding (after giving effect to all other repayments thereof on
such date) exceeds the lesser of (x) the Commitment or (y) the
Borrowing Base, as then in effect, the Borrower shall immediately
prepay the principal of Advances in an aggregate amount equal to such
excess;
(b) if on any date the aggregate principal amount outstanding
of Advances secured by Mortgage-backed Securities exceeds 0% of the
Commitment, the Borrower shall immediately prepay the principal of
Advances secured by Mortgage-backed Securities in an aggregate amount
equal to such excess;
(c) if on any date the aggregate principal amount outstanding
of Wet Advances exceeds 30% of the Commitment, the Borrower shall
immediately prepay the principal of Wet Advances in an aggregate amount
equal to such excess;
(d) if on any date the aggregate principal amount outstanding
of Advances secured by Jumbo Loans exceeds 75% of the Commitment, the
Borrower shall immediately prepay the principal of Advances secured by
Jumbo Loans in an aggregate amount equal to such excess;
(e) if (i) 60 calendar days shall have elapsed from the date
of first issuance of a Mortgage-backed Security in respect of which an
Advance has been made hereunder, and (ii) such Mortgage-backed Security
has not been sold by the Borrower and paid for by an Investor and (iii)
the Advances secured by such Mortgage-backed Security have not been
prepaid pursuant to any other clause of this Section 4.02, the Borrower
shall immediately prepay the principal of Advances in an aggregate
amount equal to the Collateral Value of such Mortgage-backed Security;
(f) if the Agent shall have notified the Borrower or the
Borrower otherwise becomes aware that any Mortgage Loan or
Mortgage-backed Security originally included as an Eligible Mortgage
Loan or an Eligible Nonconforming Mortgage Loan no longer constitutes
an Eligible Mortgage Loan or an Eligible Nonconforming Mortgage Loan
pursuant to the terms and standards set forth herein and in the
Warehouse Security
18
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Agreement, the Borrower shall immediately prepay the principal of Advances in an
aggregate amount equal to the Collateral Value of such Mortgage Loan or
Mortgage-backed Security;
(g) if a Mortgage Loan or a Mortgage-backed Security in respect of
which an Advance has been made hereunder is sold, the Borrower shall on the date
of settlement for such sale prepay the principal of Advances in an aggregate
amount equal to the Collateral Value of such Mortgage Loan or Mortgage-backed
Security;
(h) if 21 calendar days shall have elapsed from the date a Mortgage
Loan is sent from the Security Agent to an Investor or the Custodian for an
Investor as provided in Section 4.04 and in the Warehouse Security Agreement and
such Mortgage Loan has neither been redelivered to the Security Agent nor
purchased pursuant to the letter of transmittal delivered therewith, the form of
which shall be that customarily used by the Security Agent or, if appropriate,
the form required by FNMA or FHLMC, the Borrower shall immediately prepay the
principal of Advances in an aggregate amount equal to the Collateral Value of
such Mortgage Loan;
(i) if 14 calendar days shall have elapsed from the date on which the
Borrower is requested by the Security Agent to obtain a substantially corrected
or completed copy of any material document in connection with any Mortgage Loan
or Mortgage-backed Security and the same shall not have been delivered to the
Security Agent with the appropriate completion or correction, the Borrower shall
immediately prepay the principal of Advances in an aggregate amount equal to the
Collateral Value of such Mortgage Loan or Mortgage-backed Security;
(j) if (1) there shall be a default in the payment of principal or
interest by the obligor under (x) an Eligible Mortgage Loan in respect of which
an Advance has been made hereunder and such default shall be continuing for 60
days or more or (y) a Mortgage-backed Security in respect of which an Advance
has been made hereunder and such default shall be continuing for 3 Business Days
or more or (z) an Eligible Nonconforming Mortgage Loan in respect of which an
Advance has been made hereunder and such default shall be continuing for 60 days
or more, (2) an Insolvency Event shall occur in respect of an obligor on any
Mortgage Loan in respect of which an Advance has been made hereunder or (3)
foreclosure or similar proceedings shall be commenced in respect of the premises
which secure any Mortgage Loan in respect of which an Advance has been made
hereunder, the Borrower shall immediately prepay the principal of Advances in an
aggregate amount equal to the Collateral Value of such Mortgage Loan or
Mortgage-backed Security;
(k) if the Mortgage Loan to be funded with the proceeds of any Wet
Advance is not funded on the date of such Wet Advance, the Borrower shall
immediately prepay the full principal amount of such Wet Advance;
(l) if the Mortgage Note in respect of any Mortgage Loan securing a Wet
Advance is not delivered to the Lender within five Business Days following the
date on
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which such Wet Advance was made, the Borrower shall immediately prepay
the full principal amount of such Wet Advance;
(m) if on any date the aggregate principal amount of Advances
outstanding at any time secured by Eligible Nonconforming Mortgage
Loans exceeds the Nonconforming Commitment then in effect, the Borrower
shall immediately prepay the principal of Advances in an aggregate
amount equal to such excess;
(n) if on any date the aggregate principal amount of Advances
secured by Credit A- Loans exceeds 100% of the Nonconforming
Commitment, the Borrower shall immediately prepay the principal of
Advances secured by Credit A- Loans in an aggregate amount equal to
such excess;
(o) if on any date the aggregate principal amount of Advances
secured by Credit B Loans exceeds 100% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit B Loans in an aggregate amount equal to such excess;
(p) if on any date the aggregate principal amount of Advances
secured by Credit C Loans exceeds 50% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit C Loans in an aggregate amount equal to such excess; and
(q) if on any date the aggregate principal amount of Advances
secured by Credit D Loans exceeds 0% of the Nonconforming Commitment,
the Borrower shall immediately prepay the principal of Advances secured
by Credit D Loans in an aggregate amount equal to such excess.
4.03 Release of Collateral; Substitution. (a) So long as no
-----------------------------------
Default or Event of Default has occurred and is continuing or would result
therefrom, upon the Borrower's request therefor accompanied by a prepayment by
the Borrower of Advances in an amount sufficient to cause the amount of Advances
outstanding to be less than or equal to the Borrowing Base (calculated without
reference to any Collateral which the Borrower requests be released from the
Lien granted pursuant to the Warehouse Security Agreement) and a deposit by the
Borrower of such amount as the Agent shall reasonably designate as a reserve for
application to any fees, accrued interest or breakage costs payable with respect
to the calendar month in which such prepayment occurs, the Security Agent shall,
within one Business Day after the later of the receipt of such request or such
prepayment and deposit, release from the Lien granted pursuant to the Warehouse
Security Agreement and deliver to the Borrower in accordance with the terms of
the Warehouse Security Agreement (i) the Collateral corresponding to such
Mortgage Loan(s) or Mortgage-backed Security(ies) and (ii) the Collateral
Documents pertaining thereto.
(b) So long as no Default or Event of Default has occurred and is
continuing in lieu of any required pre-payment of principal pursuant to Section
4.02, the Borrower may, subject to the terms and conditions hereof and the prior
consent of the Agent, substitute and pledge additional Eligible Mortgage Loans
and/or Eligible Nonconforming Mortgage Loans (together with all
20
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required Collateral Documents with respect thereto) having an aggregate
Collateral Value in an amount such that immediately after giving effect to such
substitution or addition, such prepayment is no longer required.
4.04 Sale of Collateral to Investors. (a) The Security Agent
-------------------------------
shall arrange, in accordance with the provisions of the Warehouse Security
Agreement, for the delivery of Mortgage Loans pledged to the Security Agent to
an Investor (or such Investor's Custodian) pursuant to a Purchase Commitment for
examination and purchase thereof by such Investor; provided, however, that prior
-------- -------
thereto the Security Agent shall have received from the Borrower one Business
Day's prior written notice describing the Mortgage Loan(s) to be delivered and
the shipping or wiring instructions therefor, such notice executed by an
authorized employee of the Borrower and identifying the Investor and the price
which such Investor has agreed to pay for such Collateral and/or the
Mortgage-backed Security that is to be issued against the delivery and release
of such Collateral.
(b) The Security Agent shall release Collateral consisting of
Mortgage-backed Securities to the Investor under the related Purchase Commitment
on the settlement date specified in such Purchase Commitment by book-entry
transfer of such Mortgage-backed Securities to the account of such Investor
against the wire transfer to the account of the Security Agent of the full
purchase price specified in such Purchase Commitment; provided
--------
that (i) the Security Agent shall have received from the Investor or the
Borrower appropriate instructions with respect to such delivery, transfer and
payment and (ii) the Borrower shall have made all deposits (if any) required in
connection therewith pursuant to Section 4.04(c) below.
(c) The Borrower shall make a deposit in immediately available funds
into the Warehouse Payment Account by 4:00 p.m. on the Business Day on which the
release of the Security Agent's security interest in such Mortgage Loan or
Mortgage-backed Securities is scheduled to occur pursuant to the purchase by an
Investor under a Purchase Commitment, in an amount equal to the amount by which
the aggregate amount of Advances outstanding exceeds the Borrowing Base
(calculated without reference to any such Mortgage Loan or Mortgage-backed
Security).
(d) Each delivery of Collateral pursuant to this Section 4.04 shall be
accompanied by a bailee letter in accordance with the requirements of the
Warehouse Security Agreement. All payments in respect of such Collateral so
purchased shall not be deemed received by the Security Agent until such funds
constitute "immediately available" funds in the Warehouse Payment Account or
such Mortgage-backed Securities have been credited to the account of the
Security Agent. For purposes hereof, confirmation of receipt of wired funds
shall constitute "immediately available" funds.
(e) In the event that the Borrower has entered into an agreement which
provides for the sale by the Borrower to an Investor of the rights to service
any Mortgage Loan (which sale is separate from the sale of such Mortgage Loan)
pledged to the Security Agent pursuant to the terms of this Agreement and the
Warehouse Security Agreement, the Borrower shall provide such Investor with
written notice (in a form satisfactory to the Agent) that the payment for such
servicing rights shall be made directly to the Agent for the account of the
Lender.
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(f) The Borrower shall deliver to the Agent, on or prior to 10:30 a.m.
on the Business Day following receipt by the Security Agent of payment from an
Investor for Mortgage Loans (or the right to service Mortgage Loans) or
Mortgage-backed Securities purchased, notice designating the Mortgage Loans or
Mortgage-backed Securities to which such payment applies. An amount equal to the
funds transferred to the Security Agent in respect of Mortgage Loans (or the
right to service Mortgage Loans) or Mortgage-backed Securities purchased by an
Investor (whether such funds were transferred by the Borrower pursuant to
Section 4.04(c) or by the Investor pursuant to Sections 4.04(b), 4.04(d) or
4.04(e)) shall be applied by the Security Agent as a prepayment of Advances.
4.05 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement and the Note shall be made to
the Agent for the account of the Lender not later than 2:00 p.m. (New York City
time) on the date when due and shall be made in immediately available funds for
deposit to the Warehouse Payment Account. Any payment received after 2:00 p.m.
(New York City time) on any Business Day shall be treated as being received on
the next succeeding Business Day. Whenever any payment to be made hereunder or
under the Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest, fees and penalties shall be
payable at the rate otherwise applicable. The Borrower hereby authorizes the
Lender, with prior notice to the Borrower by the Lender, to deduct from each
Advance to be made hereunder, all amounts due and owing to the Lender or Agent
including interest, penalties, fees or mandatory prepayments.
4.06 Net Payments. All payments made by or on behalf of the
------------
Borrower hereunder will be made without setoff, counter-claim or other defense.
Section 5. Conditions Precedent.
--------------------
The obligation of the Lender to make each Advance to the Borrower
hereunder is subject, at the time of the making of each such Advance (except as
hereinafter indicated), to the satisfaction of the following conditions:
5.01 Execution of Agreement; Note. On or prior to the Initial
----------------------------
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Lender the Note executed by the Borrower in the
amount, maturity and as otherwise provided herein.
5.02 No Default; Representations and Warranties. At the time of
------------------------------------------
the making of each Advance and also after giving effect thereto (i) there shall
exist no Default or Event of Default, and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Advance.
5.03 Request for Advance. Prior to the making of each Advance,
-------------------
the Agent shall have received a Request for Advance with respect thereto meeting
the requirements of Section 2.04.
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5.04 Opinion of Counsel. On the Initial Borrowing Date, the Lender
------------------
shall have received from outside counsel for the Borrower (who shall be
reasonably satisfactory to the Lender) an opinion addressed to the Lender and
dated the Initial Borrowing Date covering the matters set forth in Exhibit E and
such other matters incident to the transactions contemplated herein as the
Lender may reasonably request.
5.05 Diligence. On or prior to the Effective Date, the Agent shall
---------
have satisfactorily completed its due diligence review of the Borrower's
operations, business, financial condition and underwriting and origination of
Mortgage Loans.
5.06 Corporate Documents: Proceedings. (a) On the Initial
--------------------------------
Borrowing Date, the Lender shall have received a certificate, dated the Initial
Borrowing Date, signed by the President or any Vice President of the Borrower,
and attested to by the Secretary or any Assistant Secretary of the Borrower,
substantially in the form of Exhibit F-1 and with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws of the
Borrower, the resolutions of the Borrower referred to in such certificate and a
good-standing certificate from the Secretary of State of the jurisdiction of
incorporation of the Borrower.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in this Agreement
and the other Credit Documents shall be reasonably satisfactory in form and
substance to the Lender, and the Lender shall have received all information and
copies of all documents and papers, including records of corporate proceedings
and governmental approvals, if any, which the Lender reasonably may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.07 Financial Statements. On or prior to the Initial Borrowing
--------------------
Date, the Lender shall have received (i) the consolidated and consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries for the fiscal
year most recently ended and the related statements of income and retained
earnings and statements of cash flows of the Borrower and its Consolidated
Subsidiaries for such fiscal year, in each case certified by an independent
certified public accountant reasonably acceptable to the Lender and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied, together with any "management letters" detailing any
"material weaknesses in internal controls" (as defined by the Financial
Accounting Standards Board) noted by such accountants for such period and (ii)
copies of any uniform single audit reports in respect of the Borrower required
or requested by FNMA or FHLMC, any audits or financial reports in respect of the
Borrower completed or requested by HUD, GNMA, FNMA, FHLMC or any other
governmental agency or Investor and any Mortgage Bankers' Reporting Forms
prepared by the Borrower, in each case during the year preceding the date
hereof.
5.08 Mandatory Prepayment. After giving effect to the proposed
--------------------
Advance, no prepayment would be required pursuant to Section 4.02.
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5.09 Warehouse Security Agreement. The Borrower shall have duly
----------------------------
authorized, executed and delivered a Warehouse Security Agreement substantially
in the form of Exhibit I (as modified, supplemented or amended from time to
time, the "Warehouse Security Agreement") covering all of the Borrower's present
and future Collateral, together with:
(a) acknowledgment copies of proper financing statements (Form UCC-1)
duly filed under the UCC of each jurisdiction as may be necessary or,
in the opinion of the Security Agent, desirable to perfect the security
interests purported to be created by the Warehouse Security Agreement;
(b) certified copies of "Requests for Information or Copies" (Form
UCC-11), or equivalent reports, listing the financing statements
referred to in clause (a) above and all other effective financing
statements that name the Borrower as debtor and that are filed in the
jurisdictions referred to in said clause (a), together with copies of
such other financing statements (none of which shall cover the
Collateral, except to the extent evidencing Liens permitted pursuant to
Section 8.01); and
(c) evidence of the completion of all other recordings and filings of,
or with respect to, the Warehouse Security Agreement and the taking of
all other actions as may be necessary or, in the opinion of the
Security Agent, desirable to perfect the security interests purported
to be created by the Warehouse Security Agreement.
5.10 No Adverse Change. Since April 30, 1998, there shall have
-----------------
been no material adverse change in the operations, business, property, assets or
financial condition or prospects of the Borrower.
5.11 Insurance. On or prior to the Initial Borrowing Date, the
---------
Lender shall have received from the Borrower, a copy of a fidelity bond and
policy of insurance containing errors and omissions coverage and such other
insurance as the Lender shall require, each of which policies, where applicable,
shall be in such form, with such companies and in such amounts as are in
accordance with the Agent's requirements and shall name the Lender and the Agent
as loss payees and certificate holders.
5.12 [Intentionally omitted]
5.13 Delivery of the Collateral. Prior to the making of an
--------------------------
Advance, the Security Agent shall have received (a) if such Advance is to be
made inrespect of Mortgage Loans and is not to be a Wet Advance, the Collateral
Documents relating to the Mortgage Loans pledged to secure such Advance; (b) if
such Advance is to be a Wet Advance, a duly executed assignment by the Borrower
to the Security Agent of the related Mortgage fully completed and in recordable
form, a copy of the Purchase Commitment or the Master Commitment, if applicable,
and satisfactory confirmation that the Collateral Documents relating thereto are
to be delivered to an escrow agent, closing agent or title company acceptable to
the Lender with instructions that such Collateral Documents are to be delivered
directly to the Security Agent; or (c) if such Advance is to be made in respect
of Mortgage-backed Securities, copies of the applicable mortgage schedules and
FNMA,
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FHLMC or GNMA delivery schedules, the confirmed trade ticket and satisfactory
confirmation of the Security Agent's interest in such Mortgage-backed
Securities.
5.14 Fees. Prior to the making of an Advance, the Borrower shall
----
have paid all Fees then due and payable to the Lender and the Agent.
5.15 No Litigation. There shall be no judgment, order, injunction
-------------
or other restraint which shall prohibit or impose, and no litigation pending or
threatened against or affecting the Borrower or any of its Subsidiaries which,
in the opinion of the Lender or the Agent, would prohibit or result in the
imposition of materially adverse conditions upon, the financing contemplated
hereby, or otherwise have a material adverse effect on the business, operations,
property, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries.
5.16 Liquidity Agreement. The Liquidity Agreement shall be in full
-------------------
force and effect and the Lender shall have obtained sufficient funds to permit
it to make such Advance through the issuance of Commercial Paper as provided in
the Liquidity Agreement or through the borrowing of such funds from the
Liquidity Lenders.
5.17 Acknowledgment. On or prior to the Initial Borrowing Date,
--------------
the Borrower shall have executed and delivered to the Agent an Acknowledgment of
Collateral Agent's Rights substantially in the form of Exhibit H pursuant to
which the Borrower shall have acknowledged that all of the right, title and
interest of the Lender in and to this Agreement, the Note and the Collateral has
been pledged and assigned to, and will be enforceable by, General Electric
Capital Corporation, as Collateral Agent for the secured parties under the
▇▇▇▇▇▇ River Security Agreement.
5.18 Legal or Regulatory Proceedings. On or prior to the Initial
-------------------------------
Borrowing Date, the Borrower shall have delivered to the Agent certificates of
the principal shareholders and senior officers of the Borrower, in substantially
the form of Exhibit F-2, with respect to certain legal and regulatory
proceedings relating to such persons.
5.19 Guaranty Agreement. On or prior to the Initial Borrowing
------------------
Date, the Lender shall have received from ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (each a "Guarantor" and collectively the "Guarantors") a duly
executed Guaranty and Surety Agreement substantially in the form of Exhibit J
hereto (as modified, supplemented or amended from time to time, the "Guaranty
Agreement").
5.20 Support Agreement. On or prior to the Initial Borrowing Date,
-----------------
the Lender shall have received from ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
a duly executed Support Agreement substantially in the form of Exhibit K hereto
(as modified, supplemented or amended from time to time, the "Support
Agreement").
5.21 Intercreditor Agreement. Within sixty (60) days after the
-----------------------
Borrower shall have entered into any agreement with a lender pursuant to which
such lender agrees to make available to the Borrower a revolving warehouse line
of credit, the Borrower shall deliver to the Agent an
25
31
Intercreditor Agreement substantially in the form of Exhibit L hereto, duly
executed by such lender and by the Borrower (as modified, supplemented or
amended from time to time, the "Intercreditor Agreement").
5.22 Treatment of Existing Liens. Within ten (10) days after the
---------------------------
Initial Borrowing Date, the Borrower shall have delivered to the Agent for
filing a proper amendment to financing statement (Form UCC-2) duly executed by
Silicon Valley Bank, evidencing the amendment of the original financing
statement filed by such lender to make clear that the collateral covered by such
financing statement does not include any of the Collateral.
The acceptance of the benefits of each Advance shall constitute a
representation and warranty by the Borrower to the Lender that all the
conditions specified in Sections 5.02, 5.08, 5.10 and 5.15 exist as of that
time. All of the Note, certificates and other documents and papers referred to
in this Section 5, unless otherwise specified, shall be delivered to the Agent
at the Office for the account of the Lender and shall be reasonably satisfactory
in form and substance to the Agent.
Section 6. Representations. Warranties and Agreements.
------------------------------------------
In order to induce the Lender to enter into this Agreement and to make
the Advances, the Borrower makes the following representations, warranties and
agreements as of the Effective Date, all of which shall survive the execution
and delivery of this Agreement and the Note and the making of the Advances (with
the execution and delivery of this Agreement and the making of each Advance
thereafter being deemed to constitute a representation and warranty that the
matters as specified in this Section 6 are true and correct in all respects on
and as of the date hereof and as of the date of such Advance, unless stated to
relate to a specific earlier date):
6.01 Corporate Status. Each of the Borrower and its Subsidiaries
----------------
(i) is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its incorporation, (ii) has the power and
authority to own its property and assets and to transact the business in which
it is engaged and (iii) is duly qualified as a foreign corporation and in good
standing in each jurisdiction where the ownership, leasing or operation of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the business and operations of the Borrower.
6.02 Corporate Power and Authority. The Borrower has the corporate
-----------------------------
power to execute, deliver and perform the terms and provisions of each of the
Credit Documents and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each of such Credit Documents. The
Borrower has duly executed and delivered each of the Credit Documents, and each
of such Credit Documents constitutes its legal, valid and binding obligation
enforceable in accordance with its terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and the effect of equitable principles whether applied in an action at law or a
suit in equity.
6.03 No Violation. Neither the execution, delivery or performance
------------
by the Borrower of the Credit Documents, nor compliance by it with the terms and
provisions thereof, (i) will
26
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contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of any of the
material terms, covenants, conditions or provisions of, or constitute a material
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien other than a Lien permitted pursuant to Section 8.01
upon any of the property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a party or by
which it or any of its property or assets is bound or to which it may be subject
or (iii) will violate any provision of the certificate of incorporation or
by-laws of the Borrower.
6.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any such Credit Document.
6.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; etc. (a)
----------------
The consolidated and consolidating balance sheet of the Borrower and its
Consolidated Subsidiaries and the related consolidated and consolidating
statements of income and retained earnings and statements of cash flows of the
Borrower and its Consolidated Subsidiaries furnished to the Lender in accordance
with Section 5.07 hereof present fairly the consolidated and consolidating
financial condition of the Borrower and its Consolidated Subsidiaries at the
dates of such balance sheets and the consolidated and consolidating results of
the operations of the Borrower and its Consolidated Subsidiaries for the fiscal
periods covered by such statements of income and retained earnings and
statements of cash flows. All such financial statements have been prepared in
accordance with generally accepted accounting principles and practices in the
United States consistently applied. Since April 30, 1998 there has not been any
material adverse change in the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower.
(b) Except as fully reflected on the financial statements referred to
in Section 6.05(a), there will be as of the Effective Date no liabilities or
obligations with respect to the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would be
material to the Borrower or to the Borrower and its Subsidiaries taken as a
whole.
6.06 Litigation. There are no actions, suits or proceedings
----------
pending or threatened (i) with respect to any Credit Document or (ii) that could
materially and adversely affect the business, operations, property, assets,
condition (financial or otherwise) or prospects of the Borrower.
6.07 True and Complete Disclosure. All factual information (taken
----------------------------
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower to the Lender or the Agent (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement, the Warehouse Security Agreement or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a
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whole) hereafter furnished by or on behalf of the Borrower to the Lender or the
Agent will be, true and accurate in all material respects on the date furnished
to the Lender or the Agent and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
6.08 Use of Proceeds; Margin Regulations. All proceeds of each
-----------------------------------
Advance will be used by the Borrower for the financing of the Borrower's
mortgage lending business; provided that no part of the proceeds of any Advance
--------
will be used by the Borrower to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Advance nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. The Borrower and each of its
------------------------
Subsidiaries has filed all tax returns required to be filed by it and has paid
all income taxes payable by it which have become due pursuant to such tax
returns and all other taxes and assessments payable by it which have become due,
other than those not yet delinquent and except for those contested in good faith
and for which adequate reserves have been established. The Borrower and each of
its Subsidiaries has paid, or has provided adequate reserves (in the good faith
judgment of the management of the Borrower or such Subsidiary, as the case may
be) for the payment of, all federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the date hereof.
6.10 Compliance with ERISA. Each Plan is in substantial compliance
---------------------
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization, no Plan has an Unfunded Current
Liability, and no Plan has an accumulated or waived funding deficiency or
permitted decreases in its funding standard account within the meaning of
Section 412 of the Code; neither the Borrower nor any ERISA Affiliate of the
Borrower has incurred any material liability to or on account of a Plan pursuant
to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code or expects to incur any liability
under any of the foregoing sections on account of the termination of,
participation in or contributions to any such Plan; no proceedings have been
instituted to terminate any Plan; no condition exists which presents a material
risk to the Borrower or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
Lien imposed under the Code or ERISA on the assets of the Borrower exists or is
likely to arise on account of any Plan; and the Borrower may terminate
contributions to any other employee benefit plans maintained by it without
incurring any material liability to any Person interested therein.
6.11 Capitalization. Set forth on Schedule 6.11 is an accurate
--------------
and complete list of all Persons who own 5% or more of the voting stock of the
Borrower, together with the percentage ownership of each. All outstanding shares
of the Borrower's capital stock have been duly and validly issued, are fully
paid and non-assessable. The Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for
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the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock except as set forth on Schedule
6.11 hereto.
6.12 Subsidiaries. Set forth on Schedule 6.12 is an accurate and
------------
all Subsidiaries of the Borrower and the percentage ownership by the Borrower in
each such Subsidiary on the Effective Date, together with a brief description of
the business of each such Subsidiary.
6.13 Compliance with Statutes, etc. The Borrower and each of its
-----------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliances as would not (i) in the aggregate,
have a material adverse effect on the business, operations, property, assets,
condition (financial or otherwise) or prospects of the Borrower and (ii) affect
in any respect the validity or enforceability of any Credit Document or the
Security Agent's rights in the Collateral.
6.14 Investment Company Act. Neither the Borrower nor any
----------------------
Subsidiary of the Borrower is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
6.15 No Burdensome Agreement. Neither of the Borrower nor any
-----------------------
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or corporate restriction
which by its terms would have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the Borrower or
such Subsidiary or on the ability of the Borrower to carry out its obligations
under the Note or the other Credit Documents to which it is a party.
6.16 Security Interests. The Warehouse Security Agreement creates,
------------------
as security for the Obligations, valid and enforceable security interests in and
Liens on all of the Collateral in favor of the Security Agent on behalf of the
Lender which are perfected and superior and prior to the rights of all third
Persons and subject to no other Liens (other than Liens permitted pursuant to
Section 8.01). The Borrower has, or will have at the time of pledge thereof,
good and marketable title to all of the Collateral, free and clear of all Liens
except those described in the preceding sentence.
6.17 Registration. The Borrower currently is, and will be at all
------------
times at which any Advance is outstanding hereunder, licensed, registered,
approved, qualified or otherwise authorized in good standing to the extent
required under applicable law, as a mortgage banker, mortgage broker, real
estate broker, servicer of mortgage loans or otherwise in each jurisdiction in
which the conduct of its business requires such licensing, registration,
approval, qualification or other authorization, including, without limitation,
as applicable, as a (i) GNMA approved seller and/or servicer of Mortgage Loans
and issuer of Mortgage-backed Securities guaranteed by GNMA, (ii) FNMA approved
seller and/or servicer of Mortgage Loans, eligible to originate, purchase, hold,
sell and service Mortgage Loans to be sold to FNMA, (iii) FHLMC approved seller
and/or servicer of Mortgage Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to FHLMC, (iv) lender in good standing
under the VA loan guaranty program eligible to originate,
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purchase, hold, sell and service VA Loans, (v) HUD approved lender, eligible to
originate, purchase, hold, sell and service FHA Loans and (vi) licensed mortgage
banker in each state in which it originates Mortgage Loans. To the best of the
Borrower's knowledge, all appraisers providing services in connection with the
origination of Mortgage Loans by the Borrower have all licenses, registrations,
approvals and qualifications required by all applicable laws or regulations.
6.18 Representations Relating to the Mortgage Loans. (a) At all
----------------------------------------------
times during which a Mortgage Loan is pledged as Collateral for Advances
hereunder, such Mortgage Loan will (i) be an FHA Loan, a VA Loan, a Conforming
Loan, a Jumbo Loan, a State Loan, a Credit A- Loan, a Credit B Loan, a Credit C
Loan or a Credit D Loan; (ii) be an Eligible Mortgage Loan or an Eligible
Nonconforming Mortgage Loan and be free of any default and the Borrower will
have had no notice of any event which has occurred which may, with the passage
of time or the giving of notice, or both, become a default; (iii) comply with
the terms of this Agreement and with the relevant Purchase Commitment and/or
Master Commitment, if any; (iv) be a legal, valid and binding obligation of the
mortgagor and the mortgagee thereunder enforceable in accordance with its terms
and subject to no offset, defense or counterclaim, obligating such mortgagor to
make the payments specified therein, and each FHA Loan and each VA Loan will be
fully eligible for, and the Borrower will have complied with all applicable
requirements of law, rule or regulation in respect of, FHA insurance or VA
guaranty, respectively; (v) if such Mortgage Loan is an Eligible Nonconforming
Mortgage Loan, be subject to a Purchase Commitment, or if such Mortgage Loan is
an Eligible Mortgage Loan, be subject to a Purchase Commitment or Hedging
Contract or, if it is a Mortgage Loan that bears interest at an adjustable rate,
a Master Commitment which Purchase Commitment or Master Commitment is a legal,
valid and binding obligation of the Investor party thereto, is enforceable
against such Investor in accordance with its terms (subject to the effect of
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and the effect of equitable principles whether applied in an action at
law or a suit in equity), and, except as is otherwise notified in writing by the
Borrower to the Lender and Agent, permits the assignment thereof to the Security
Agent; (vi) be owned by the Borrower and be subject to no Lien or claim
whatsoever, either legal or equitable, other than that granted to the Security
Agent for the benefit of the Lender; (vii) be fully disbursed, the final
disbursement to the mortgagor in connection therewith having been made no more
than 30 days prior to the date of pledge if such disbursement was made by the
Borrower (unless such Mortgage Loan is delivered as Collateral securing the
initial Advance made to the Borrower hereunder); (viii) not be modified (except
as to correction of clerical or scrivener errors), amended, superseded or
otherwise subject to any other agreement or contract of any kind with the
relevant mortgagor under such Mortgage Loan except to the extent such amendment,
modification or other agreement or contract has been disclosed in writing to the
Security Agent by the Borrower at the time of the pledge and does not affect the
salability of such Mortgage Loan pursuant to any applicable Master Commitment or
Purchase Commitment; (ix) be a valid first or second lien on the mortgaged
premises subject thereto; (x) if required by the Investor, have a title
insurance policy or binder, in ALTA form satisfactory to the Agent insuring the
priority of the Borrower's first or second lien therein subject only to (1) the
lien of the related first mortgage, if any, (2) the lien of current real
property taxes and assessments, (3) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date of
recording of the related mortgage or deed of trust, such exceptions appearing of
record being acceptable to mortgage lending institutions generally in the area
wherein the property subject
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thereto is located and (4) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the related mortgage or deed of trust and (xi) not
have been selected for pledge hereunder utilizing procedures, other than those
necessary to comply with the representations and warranties set forth herein,
which are adverse to the interests of the Lender.
(b) At the time of the pledge of each Mortgage Loan, the Borrower will
have received with respect to each such Mortgage Loan (i) a hazard insurance
policy with a standard mortgagee clause in a form satisfactory to the Agent and
with extended coverage in an amount which is at least equal to the maximum
insurable value of the improvements securing such Mortgage Loan from time to
time or the principal balance owing on such Mortgage Loan, whichever is less and
(ii) a policy, or other satisfactory evidence, of flood insurance or
satisfactory documentation to demonstrate that the mortgaged premises are not
located in a special flood hazard area. Such documentation will be retained in
the Borrower's files relating to such Mortgage Loan.
(c) With respect to each Mortgage Loan pledged to the Security Agent,
the Borrower has fully complied with, and will fully comply with, or the
original mortgagee thereof has fully complied with and will fully comply with,
(A) all applicable state and federal laws and regulations, including but not
limited to (i) the Real Estate Settlement Procedures Act of 1974, (ii) the Equal
Credit Opportunity Act, (iii) the Federal Truth in Lending Act and Regulation Z
of the Board of Governors of the Federal Reserve System, (iv) any laws requiring
persons providing appraisals of property values to be properly licensed, and (v)
all other usury, disclosure, consumer credit protection or truth-in-lending laws
which may apply, and in each such case with all regulations promulgated in
connection therewith as the same may be from time to time amended and will
maintain sufficient documentary evidence in its file to substantiate such
compliance (including, without limitation, delivery of all necessary disclosure
statements) and (B) all of the terms and provisions of such Mortgage Loan and of
any contractual escrow arrangements applicable thereto.
6.19 Representations Relating to the Mortgage-backed Securities.
----------------------------------------------------------
At the time a Mortgage-backed Security is pledged as Collateral, such
Mortgage-backed Security will be (i) an Eligible Mortgage Loan free of any
default, (ii) subject to a Purchase Commitment which is a legal, valid and
binding obligation of the Investor party thereto, is enforceable against such
Investor in accordance with its terms, permits the assignment thereof to the
Security Agent and the Collateral Agent and may be enforced against such
Investor by the Security Agent or the Collateral Agent, (iii) comply with all of
the terms of such Purchase Commitment, (iv) a legal, valid and binding
obligation of the issuer thereof enforceable in accordance with its terms, and
(v) subject to no Lien or claim whatsoever, either legal or equitable, other
than that granted to the Security Agent for the benefit of the Lender and the
interest of the Investor under the related Purchase Commitment.
6.20 Insurance. The Borrower has blanket fidelity bond coverage
---------
and errors and omissions insurance coverage in such form, with such companies
and in such amounts as are in accordance with standards and requirements
satisfactory to the applicable Investor.
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6.21 Title to Property. The Borrower has good and marketable title
-----------------
to all of its property, the value of which is included in the financial
statements delivered pursuant hereto, subject to no Liens, encumbrances or
claims other than those disclosed on such financial statements.
6.22 No Recourse Sales. No commitment or other contractual
-----------------
arrangement pursuant to which the Borrower has sold or currently has a right to
sell Mortgage Loans to a third party provides for any recourse to the Borrower
except in the event of a breach of representations or warranties made in
connection with such sale.
6.23 Fictitious Names. Neither the Borrower nor any Subsidiary
----------------
of the Borrower operates or does business under any assumed, trade or fictitious
name.
Section 7. Affirmative Covenants.
---------------------
The Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the Agent
---------------------
(unless otherwise indicated):
(a) Monthly Financial Statements. Within 30 days after the close
----------------------------
of each monthly accounting period of the Borrower, the consolidated
statements of financial condition of the Borrower and its Consolidated
Subsidiaries as at the end of such period, and the related consolidated
statements of income and retained earnings and statements of cash flows
for such period and for the elapsed portion of the fiscal year ended
with the last day of such period, setting forth comparative figures for
the related periods in the prior fiscal year, all of which shall be in
form and substance satisfactory to the Agent and certified as to
fairness of presentation by the Chief Financial Officer of the
Borrower, subject to normal year-end audit adjustments and accompanied
by a certificate from such financial officer to the effect that no
Default or Event of Default has occurred and is continuing, and a
statement as to the beneficial ownership of all of the issued and
outstanding capital stock of the Borrower as at the end of such period,
certified as accurate by such financial officer.
(b) Annual Financial Statements. Within 90 days after the close
---------------------------
of each fiscal year of the Borrower, the consolidated and consolidating
statements of financial conditions of the Borrower and its Consolidated
Subsidiaries as at the end of such fiscal year, and the related
consolidated and consolidating statements of income and retained
earnings and statements of cash flows for such fiscal year, in form and
substance satisfactory to the Agent and setting forth comparative
figures for the preceding fiscal year and certified, in the case of the
consolidated financial statements, by independent certified public
accountants reasonably acceptable to the Agent, together with a report
of such accounting firm stating that its regular audit of the financial
statements of the Borrower was conducted in accordance with generally
accepted auditing standards.
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(c) Management Letters. Promptly, and in no event later than
------------------
five days, after receipt by the Borrower thereof, a copy of any
"management letter" received by the Borrower from its certified public
accountants detailing any "material weaknesses in internal control"
noted by such accountants (as defined by the Financial Accounting
Standards Board).
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(a) and (b), a
certificate of the Chief Financial Officer of the Borrower to the
effect that, to the best of his knowledge, no Default or Event of
Default has occurred and is continuing or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and
extent thereof and any actions taken or proposed to be taken to cure
any such Default or Event of Default, which certificate shall set forth
the calculations required to establish whether the Borrower was in
compliance with the provisions of Sections 8.08 and 8.09, at the end of
such month or fiscal year, as the case may be.
(e) Notices. Promptly (and in no event later than five days
-------
following the occurrence thereof), notice of (i) the occurrence of any
event which constitutes a Default or Event of Default, detailing the
nature of such Default or Event of Default and any actions taken or
proposed to be taken to cure such Default or Event of Default, (ii) the
commencement of any action, suit or proceeding against the Borrower or
any of its Subsidiaries before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality which
(A) could result in liability or loss of $250,000 or more, in excess of
any applicable insurance coverage to the Borrower or such Subsidiary,
as the case may be, or (B) would otherwise materially adversely affect
the management or the condition or operations (financial or otherwise)
of the Borrower or any of its Subsidiaries, (iii) any change in any of
the President, Chief Executive Officer, Chief Financial Officer or
Director of Mortgage Banking Operations of the Borrower, or (iv) any
loss or any threatened loss known to the Borrower of any authorization,
qualification, license or permit issued by any governmental or
regulatory authority to the Borrower or any of its Subsidiaries the
loss of which could have a material adverse effect upon the financial
condition or business of the Borrower or any of its Subsidiaries.
(f) Reports Relating to Collateral. In respect of the Collateral,
------------------------------
bi-weekly or more frequently as Agent may, from time to time, request a
position valuation report from the Borrower in a form acceptable to the
Agent (the "Position Valuation Report").
(g) Monthly Servicing Reports. Within 30 days after the close of
-------------------------
each calendar month in which the Borrower owns a Servicing Portfolio, a
consolidated report of the Borrower providing a summary, for all
Mortgage Loans the servicing rights to which are owned by the Borrower,
regardless of whether such Mortgage Loans are pledged to the Lender, of
(i) the entities that own such Mortgage Loans, (ii) the original terms
of such Mortgage Loans and whether such Mortgage Loans bear interest at
a fixed rate or an adjustable rate, (iii) the weighted average interest
rate and the weighted average net servicing fee with respect to such
Mortgage Loans, (iv) whether any such Mortgage Loans were sold by the
Borrower with recourse and the nature of such recourse, (v) which of
such Mortgage Loans (A) are current and in good standing, (B) are more
than 30, 60 or 90 days past due,
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respectively, (C) are the subject of pending litigation, bankruptcy or
foreclosure proceedings, and (D) have been converted (through
foreclosure or other proceedings in lieu thereof) by the Borrower into
real estate owned by the Borrower, and (vi) any reserves established by
the Borrower for losses in respect of delinquent Mortgage Loans or real
estate owned by the Borrower.
(h) Other Reports and Filings. Promptly, and in any event within
-------------------------
10 days following the filing thereof, copies of all financial
information, proxy materials and other information and reports, if any,
which the Borrower shall file with the Securities and Exchange
Commission or any governmental agencies substituted therefor.
(i) Servicing Transactions. (i) Promptly, and in any event within
----------------------
10 days following the execution thereof, copies of any agreements
executed by the Borrower which provide for the sale by the Borrower to
an Investor of the rights to service any Mortgage Loan, which sale is
separate from the sale of the related Mortgage Loan, pledged to the
Security Agent pursuant to the terms of this Agreement and the
Warehouse Security Agreement and (ii) written notice not less than 10
days prior to any purchase or sale of mortgage servicing rights or any
other transaction which would result in greater than a 10 percent
increase or decrease in the aggregate unpaid principal balance of all
Mortgage Loans included in the Servicing Portfolio of the Borrower.
(j) Leases. Written notice not less than 10 days prior to any
------
agreement to rent or lease any real or personal property which would
result in aggregate payments thereunder by the Borrower (including,
without limitation, any property taxes paid as additional rent or lease
payments) in excess of $250,000.
(k) Capital Expenditures. Written notice not less than 10 days
-------------------
prior to any agreement by the Borrower pursuant to which the Borrower
intends to make any expenditure for fixed or capital assets (including,
without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted accounting
principles and including capitalized lease obligations) which will
exceed $250,000.
(l) [Intentionally omitted]
(m) Commitment Default. Notice within 2 Business Days of any
------------------
default under, or of the termination, invalidation or cancellation of,
any Purchase Commitment or Master Commitment relating to any Mortgage
Loan or Mortgage-backed Security constituting Collateral.
(n) Collateral Servicing Report. Within five (5) Business Days
---------------------------
after the end of each calendar month, a report detailing the identities
of the entities other than the Borrower, if any, servicing any Mortgage
Loans pledged as Collateral hereunder or which secure a Mortgage-backed
Security pledged as Collateral hereunder.
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(o) Other Information. Promptly, and in any event within five
-----------------
(5) Business Days after the Borrower's receipt or filing thereof, (i)
copies of any notices or information given to or received from the
holders of any Indebtedness of the Borrower relating to any actual or
alleged default, demand for payment or acceleration of payment, or from
the PBGC or the United States Department of Labor in connection with
any matter arising with respect to ERISA, (ii) copies of all audits
completed by HUD, GNMA, FNMA, FHLMC or any other governmental agency or
Investor with respect to the Borrower, (iii) all Mortgage Bankers'
Financial Reporting Form Statement of Condition (designated as FHLMC
Form 1055 and FNMA Form 1002, respectively, and any successor thereto
or replacement thereof) (the "Mortgage Bankers' Reporting Forms") filed
by the Borrower with FHLMC or FNMA, (iv) copies of any uniform single
audit reports required or requested by FNMA or FHLMC, and (v) such
other information or documents (financial or otherwise) as the Agent or
the Lender may reasonably request.
(p) Credit Package Documents. Promptly upon the written request
------------------------
by the Agent, to the extent available, each of the documents listed in
Schedule 7.01(p) (collectively, the "Credit Package Documents"), as
applicable.
(q) Guarantors' Financial Information. (i) Within 90 days after
---------------------------------
the close of each calendar year, an updated personal financial
statement of each Guarantor and (ii) copies of each Guarantor's federal
income tax returns within 30 days after the filing date of each such
return.
7.02 Books, Records and Inspections. The Borrower will, and will
------------------------------
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in conformity with generally accepted
accounting principles in the United States and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or the Lender to
visit and inspect any of the properties of the Borrower or such Subsidiary, and
to examine the books of record and account of the Borrower or such Subsidiary
and discuss the affairs, finances and accounts of the Borrower or such
Subsidiary with, and be advised as to the same by, its and their officers,
employees and independent accountants, all at such reasonable times and
intervals and to such extent as the Agent or the Lender may request. Any such
inspection and/or examination may include an audit by the Agent of the servicing
of the Collateral and the Borrower's Servicing Portfolio and such procedures as
the Agent deems appropriate to confirm the reporting of Mortgage Loan balances.
7.03 Maintenance of Property, Insurance. The Borrower will, and
----------------------------------
will cause each of its Subsidiaries to, (i) keep all property necessary for the
operation of its business in good working order and condition, (ii) except as
otherwise provided in clause (iii) below, maintain with financially sound and
reputable insurance companies insurance in at least such amounts and against at
least such risks as are customarily insured against by companies in the same or
similar business, (iii) maintain fidelity bond coverage and errors and omissions
insurance coverage in accordance with standards and requirements reasonably
satisfactory to the applicable Investor and the Agent and (iv) furnish to the
Agent or the Lender, upon written request, full information as to
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the insurance carried. The provisions of this Section 7.03 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of the security
documents that require the maintenance of insurance.
7.04 Corporate Franchises. The Borrower will, and will cause each
--------------------
of its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, qualifications, licenses, permits and patents; provided, however,
--------- -------
that nothing in this Section 7.04 shall prevent the withdrawal by the Borrower
or any of its Subsidiaries of its qualification as a foreign corporation in any
jurisdiction where such withdrawal could not have a material adverse effect on
the business, operations, property, assets, condition (financial or otherwise)
or prospects of the Borrower or such Subsidiary.
7.05 Compliance with Statutes, etc. The Borrower will, and will
------------------------------
cause each of its Subsidiaries and will use commercially reasonable efforts to
cause each appraiser, correspondent, broker or other service provider that
participates with the Borrower in the origination or servicing of Mortgage Loans
to, comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to (1) licensing or registration (as described in Section 6.17 hereof)
and (2) environmental standards and controls), except such noncompliances as
could not (i) adversely affect in any manner the legality, validity or
enforceability of any Mortgage Loan, Mortgage-backed Security, Purchase
Commitment or Hedging Contract or (ii) in the aggregate, have a material adverse
effect on the business, operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
7.06 ERISA. As soon as possible and, in any event, within 10 days
-----
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know any of the following, the Borrower will deliver to the Agent a
certificate of the Chief Financial Officer of the Borrower setting forth details
as to such occurrence and such action, if any, which the Borrower, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by the
Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant or
the Plan administrator with respect thereto; that a Reportable Event has
occurred; that an accumulated funding deficiency has been incurred or an
application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a Lien under
ERISA; that proceedings may be or have been instituted to terminate a Plan; that
a proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; or that the Borrower, any of its Subsidiaries
or ERISA Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or with respect
to a Plan under Section 4971 or 4975 of the Code or Section 409, 502(i) or
502(1) of ERISA. The Borrower will deliver to the Agent a complete copy of the
annual report (Form 5500) of each Plan required to be
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filed with the Internal Revenue Service. In addition to any certificates or
notices delivered to the Agent pursuant to the first sentence hereof, copies of
annual reports and any other notices received by the Borrower or any of its
Subsidiaries required to be delivered to the Agent hereunder shall be delivered
to the Agent no later than 10 days after the later of the date such report or
notice has been filed with the Internal Revenue Service or the PBGC, given to
Plan participants or received by the Borrower or such Subsidiary.
7.07 Performance of Obligations. The Borrower will, and will
--------------------------
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not in the
aggregate, have a material adverse effect on the business, operations, property,
assets, condition (financial or otherwise) or prospects of the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
7.08 Mortgage Loans. (a) The Borrower will not modify or waive
--------------
any term of any pledged Mortgage Loan or release any security or obligor, if as
a result thereof such Mortgage Loan would become, nor cause, through any
activity or inactivity, a Mortgage Loan to become, ineligible for FHA insurance
or VA guaranty, if applicable, or for purchase in accordance with the relevant
Master Commitment or Purchase Commitment. The Borrower will notify the Agent of
(i) any payment default in respect of any pledged Collateral which has continued
for 30 days, 60 days or 90 days, respectively, (ii) the occurrence of an
Insolvency Event of which the Borrower has knowledge in respect of an obligor on
any Mortgage Loan pledged as Collateral, (iii) the commencement of foreclosure
or similar proceedings in respect of the premises which secure any Mortgage Loan
pledged as Collateral and (iv) any other material default in any other term of
any pledged Collateral, such notice to be delivered not later than three (3)
Business Days following the occurrence thereof in the case of an event specified
in clauses (i) or (iii) and promptly upon the Borrower's receiving notice or
otherwise becoming aware thereof in the case of an event specified in clauses
(ii) or (iv).
(b) All FHA Loans, and VA Loans will comply in all respects with all
applicable requirements for purchase under the applicable GNMA or FNMA standard
form of selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect. All Conforming Mortgage Loans will comply in
all respects with all applicable requirements for purchase under the applicable
FNMA or FHLMC selling contract for Mortgage Loans of such type and any
supplement thereto then in effect. All Jumbo Loans will comply in all respects
with all applicable requirements for purchase under any Purchase Commitment
relating thereto. All State Loans will comply in all respects with all
applicable requirements for purchase by the state agency or instrumentality that
issued a Purchase Commitment in respect thereof. All Eligible Nonconforming
Mortgage Loans will comply in all respects with all applicable requirements for
purchase under any Purchase Commitment relating thereto. All Mortgage Loans will
be serviced and administered in accordance with all requirements of any Investor
that has issued a Purchase Commitment or a Master Commitment applicable thereto.
7.09 Payment of Taxes. The Borrower will pay and discharge all
----------------
taxes, assessments and governmental charges or liens imposed upon the Borrower
or upon the Borrower's income or
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43
profits, or upon any properties belonging to the Borrower, prior to the date on
which any penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien upon any such property.
7.10 Corporate Separateness. The Borrower will, and will cause
----------------------
each of its Subsidiaries to, take such actions as are necessary to keep its
operations and the operations of each of its Subsidiaries separate and apart
from each of the other's, including, without limitation, insuring that all
customary formalities regarding the corporate existence of the Borrower and each
such Subsidiary, including holding regular meetings and maintenance of its
current minute books, are followed.
7.11 Collateral. The Borrower will (a) warrant and defend the
----------
right, title and interest of the Lender and the Security Agent in and to the
Collateral against the claims and demands of all persons whomsoever; (b)
service, or cause to be serviced, all Mortgage Loans in accordance with the
requirements of the issuers of Master Commitments and 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) and service, or cause to be serviced, all
Mortgage Loans backing Mortgage-backed Securities in accordance with applicable
governmental requirements and the requirements of issuers of Purchase
Commitments covering the same; (c) hold all escrow funds collected in respect of
Mortgage Loans and mortgage loans backing Mortgage-backed Securities in trust,
without commingling the same with non-custodial funds, and apply the same for
the purposes for which such funds were collected; (d) comply in all respects
with the terms and conditions of all Master Commitments and Purchase
Commitments, and all extensions, renewals and modifications or substitutions
thereof or thereto, and deliver or cause to be delivered to the applicable
Investor the Mortgage Loans and Mortgage-backed Securities to be sold under each
Purchase Commitment not later than three (3) Business Days prior to the
expiration thereof; and (e) maintain, and, upon request, shall make available to
the Lender, the Agent or the Security Agent the originals, or copies in any case
where the original has been delivered to the Security Agent or to an Investor,
of its Mortgage Notes, Mortgages, Purchase Commitments, Master Commitments,
Hedging Contracts 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.
7.12 Portfolio Hedging Arrangements. The Borrower will enter into
------------------------------
and maintain from time to time Hedging Contracts with respect to Mortgage Loans
held by it and commitments made by it to prospective Mortgage Loan obligors to
extend Mortgage Loans at specified rates of interest.
7.13 Borrowing Base Valuation Reports. The Agent will prepare and
--------------------------------
deliver to the Borrower weekly, or more frequently as the Agent may from time to
time determine, a report with respect to all Eligible Mortgage Loans, Eligible
Nonconforming Mortgage Loans and Liquid Assets pledged to the Security Agent as
of such date (a "Borrowing Base Valuation Report"). Unless the Borrower shall,
within 48 hours after receiving any such Borrowing Base Valuation Report, notify
the Agent that the Borrower disagrees with the information contained therein,
the Borrower shall be deemed to have certified to the Agent that, as of the date
of the Borrowing Base
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Valuation Report: (a) the calculations contained therein are accurate and have
been prepared in accordance with the terms and conditions of the Warehouse
Credit Agreement; and (b) no prepayment is required under the terms of Section
4.02 of the Warehouse Credit Agreement.
Section 8. Negative Covenants.
------------------
The Borrower covenants and agrees that as of the Effective Date, and
thereafter for so long as this Agreement is in effect and until the Commitment
has terminated, the Note is no longer outstanding and the Advances, together
with interest, Fees and all other Obligations, are paid in full, without the
prior written consent of the Lender:
8.01 Liens. The Borrower will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to (i) any Collateral, or (ii) any right of the Borrower or any of its
Subsidiaries to service Mortgage Loans; provided that the provisions of this
--------
Section 8.01 shall not prevent the creation, incurrence, assumption or existence
of:
(a) Liens for taxes not yet due, or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves
have been established;
(b) Liens created pursuant to the Warehouse Security Agreement; and
(c) Liens in favor of FNMA, GNMA or FHLMC on the right of the Borrower
to service Mortgage Loans sold to such agencies.
8.03 Dividends. (a) Upon the occurrence and during the continuance
---------
of any Default or Event of Default (determined after giving effect to any
proposed action of the Borrower), the Borrower will not, and will not permit any
of its Subsidiaries to, declare or pay any dividends, or return any capital, to
its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
shares of any class of its capital stock now or hereafter outstanding (or any
options or warrants issued by the Borrower or by such Subsidiary with respect to
its capital stock), or set aside any funds for any of the foregoing purposes, or
permit
39
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any of its Subsidiaries to purchase or otherwise acquire for a consideration any
shares of any class of the capital stock of the Borrower or such Subsidiary now
or hereafter outstanding (or any options or warrants issued by the Borrower or
such Subsidiary with respect to its capital stock), except that any Subsidiary
may pay dividends to the Borrower or to any Wholly-Owned Subsidiary of the
Borrower.
(b) The Borrower will not at any time declare or pay any dividends, or
return any capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now or
hereafter outstanding (or any options or warrants issued by the Borrower with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or permit any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock of the Borrower now
or hereafter outstanding (or any options or warrants issued by the Borrower with
respect to its capital stock), or pay any special distributions or bonuses not
in the ordinary course of business to any officer or employee that owns capital
stock of the Borrower, if after giving effect thereto the Adjusted Tangible Net
Worth of the Borrower would be less than the amount required by Section 8.09
hereof.
8.04 [Intentionally omitted]
8.05 Advances, Investments and Loans. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, except for:
(a) Mortgage Loans or other loans extended in the ordinary
course of the Borrower's or any Subsidiary's mortgage banking
business; or
(b) cash, Cash Equivalents and Mortgage-backed Securities.
8.06 Transactions with Affiliates. The Borrower will not, and
----------------------------
will not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate; provided, however, that the Borrower
-------- --------
will not, and will not permit any of its Subsidiaries to:
(a) use, furnish, or rely upon an insurance policy (including but not
limited to title insurance and hazard insurance) underwritten by or
issued by any Affiliate of the Borrower;
(b) use, furnish, or rely upon an appraisal issued by any Affiliate or
by any Person controlled by any Affiliate of the Borrower except with
respect to FHA Loans, VA Loans or State Loans; or
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46
(c) pledge any Mortgage Loan to the Lender under which the Borrower or
any Affiliate thereof is a mortgagor or guarantor for such Mortgage
Loan.
8.07 Capital Expenditures. The Borrower will not, and will not
--------------------
permit any of its Subsidiaries to, make any expenditure for fixed or capital
assets (including, without limitation, expenditures for maintenance and repairs
which should be capitalized in accordance with generally accepted accounting
principles and including capitalized lease obligations) other than such
expenditures made in the ordinary course of such Person's business in an amount
not in excess of $250,000.
8.08 Maximum Adjusted Leverage Ratio. The Borrower will not permit
-------------------------------
its Adjusted Leverage Ratio at any time during any fiscal year to be greater
than 15 to 1.
8.09 Minimum Adjusted Tangible Net Worth. The Borrower will not
-----------------------------------
permit its Adjusted Tangible Net Worth at any time during any fiscal year to be
less than $1,500,000.
8.10 [Intentionally omitted]
8.11 Modifications of Certificate of Incorporation, By-Laws,
--------------------------------------------------------
Certain Other Agreements and Collateral. The Borrower will not, without prior
---------------------------------------
written notice to the Lender, amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or modification of
any certificate of designation) or by-laws, or any agreement entered into by it,
with respect to its capital stock, or enter into any new agreement with respect
to its capital stock. The Borrower will not, without the prior written consent
of the Lender, amend, modify or waive any of the terms of, or settle or
compromise any claim with respect to, any Collateral or any Collateral Document.
8.12 Limitation on Restrictions on Subsidiary Dividends and Other
------------------------------------------------------------
The Distributions.
-----------------
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary
of the Borrower, (b) make loans or advances to the Borrower or (c) transfer any
of its properties or assets to the Borrower, except for such encumbrances or
restrictions existing under or by reasons of (i) applicable law, (ii) this
Agreement and (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or any Subsidiary of
the Borrower.
8.13 Limitation on Issuances of Capital Stock by Subsidiaries.
--------------------------------------------------------
The Borrower will not permit any of its Subsidiaries to issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock, except for (i)
transfers and replacements of then outstanding shares of capital stock and (ii)
any issuance of shares after which the Borrower continues to own or control,
directly or indirectly, in the aggregate fifty-one percent (51%) or more of the
voting capital stock of such Subsidiary.
41
47
8.14 Business. The Borrower will not, and will not permit any of
--------
its Subsidiaries to, without the prior written consent of the Lender (which
consent shall not be unreasonably withheld), engage (directly or indirectly) in
any business other than the business in which the Borrower or such Subsidiary,
respectively, is engaged on the Effective Date.
8.15 Portfolio Aging. The Borrower will not at any time permit the
---------------
aggregate principal amount of the Eligible Mortgage Loans then pledged as
Collateral that have an Origination Date that is more than 60 days prior to such
time, to exceed 0% of the aggregate principal amount of all Eligible Mortgage
Loans that are pledged as Collateral at such time and will not at any time
permit the aggregate principal amount of the Eligible Nonconforming Mortgage
Loans then pledged as Collateral that have an Origination Date that is more than
60 days prior to such time to exceed 0% of the aggregate principal amount of all
Eligible Nonconforming Mortgage Loans that are pledged as Collateral at such
time.
8.16 Minimum Current Ratio. The Borrower will not permit its
---------------------
Current Ratio to be less than 1.0 to 1.0 at any time during any fiscal year.
Section 9. Events of Default.
-----------------
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of any Advance or (ii) default, and such default shall
continue unremedied for 3 or more days, in the payment when due of any interest
on any Advance or any Fees or any other amount owing hereunder or under any
Credit Document; or
9.02 Representations, etc. Any representation, warranty or
--------------------
statement made or deemed made by the Borrower herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto or to the
Agent as part of the Agent's due diligence review of the Borrower shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
9.03 Covenants. The Borrower shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Sections 7.01(e), 7.04, 7.05, 7.06, 7.07, 7.08 or 8 or (ii) default in the due
performance or observance by it of any term, covenant or agreement contained in
this Agreement (other than those referred to in Sections 9.01 and 9.02 and
clause (i) of this Section 9.03) and such default shall continue unremedied for
a period of 15 days; or
9.04 Default Under Other Agreements. (a) The Borrower or any of
------------------------------
its Subsidiaries shall (i) default in any payment of any Indebtedness pursuant
to which the Borrower is obligated in any manner in an amount in excess of
$250,000 (other than the Obligations) beyond the period of grace (not to exceed
30 days), if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness (other than the
Obligations) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
42
48
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to whether any notice is
required), any such Indebtedness to become due prior to its stated maturity; or
(b) any Indebtedness (other than the Obligations) of the Borrower or any
Indebtedness of its Subsidiaries pursuant to which the Borrower is obligated in
any manner shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment or as a mandatory
prepayment (unless such required prepayment or mandatory prepayment results from
a default thereunder or an event of the type that constitutes an Event of
Default), prior to the stated maturity thereof; or
9.05 Default Under Agreements With Agent. The Borrower, or any of
-----------------------------------
its Subsidiaries, shall default under any contract, agreement or arrangement
between the Borrower, or such Subsidiary, and the Agent or any Affiliate of the
Agent, or the Borrower or such Subsidiary shall terminate, for any reason
whatsover (other than the failure of any such Mortgage Loan to be funded to the
obligor thereunder), any commitment of the Agent or any Affiliate of the Agent
to purchase Mortgage Loans originated or owned by the Borrower or such
Subsidiary; or
9.06 Bankruptcy, etc. An Insolvency Event shall occur with respect
---------------
to the Borrower or any of its Subsidiaries or any Guarantor or any Person who
has executed the Support Agreement; or
9.07 ERISA. Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan is, shall have been or is likely to be terminated or the
subject of termination proceeding under ERISA, any Plan shall have an Unfunded
Current Liability, or the Borrower or any of its Subsidiaries or ERISA
Affiliates has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 501(i), 501(1), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code, and there shall result from
any such event or events the imposition of a Lien upon the assets of the
Borrower or any of its Subsidiaries, the granting of a security interest, or a
liability or a material risk of incurring a liability to the PBGC or a Plan or a
trustee appointed under ERISA or a penalty under Section 4971 of the Code, which
lien, security interest, liability or penalty, singly or in the aggregate
exceeds $100,000; or
9.08 Warehouse Security Agreement. The Warehouse Security
----------------------------
Agreement or any provision thereof shall cease to be in full force and effect,
or shall cease to give the Security Agent the Liens, rights, powers and
privileges purported to be created thereby, or the Borrower shall default in the
due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to the Warehouse Security Agreement; or
9.09 [Intentionally omitted]
9.10 Management. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease to be actively
----------
involved in the management of the Borrower and its Subsidiaries with
substantially the same duties as currently performed and, within 90 days
thereafter, the Borrower shall have failed to replace such individual
43
49
with a substitute reasonably satisfactory to the Lender and the Agent, based on
such individual's experience and background in mortgage banking; or
9.11 Judgments. One or more judgments or decrees shall be entered
---------
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or fully covered by
insurance) of $100,000 or more, and all such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30 days after
the entry thereof; or
9.12 Material Adverse Change. A material adverse change shall
-----------------------
occur in the financial condition, operations or prospects of the Borrower or any
of its Subsidiaries or any Guarantor or any Person who has executed the Support
Agreement; or any material adverse action shall be taken by any state or federal
regulatory body or any court against the Borrower or any of its Subsidiaries
which may result in the loss of any agreement, permit or license of the Borrower
or any of its Subsidiaries, or otherwise limit the business or operations of the
Borrower or any of its Subsidiaries which loss or limitation would have a
material adverse effect on the financial condition, operations or prospects of
the Borrower;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Lender shall, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, the Lender or
the holder of the Note to enforce its claims against the Borrower (provided,
--------
that, if an Event of Default specified in Section 9.06 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Agent to the Borrower as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Commitment terminated, whereupon the Commitment of the Lender shall forthwith
terminate immediately and any Fees shall forthwith become due and payable
without any other notice of any kind; and (ii) declare the principal of and any
accrued interest in respect of all Advances and all Obligations to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower.
9.13 Default Not a Condition of a 120-Day Demand. Notwithstanding
-------------------------------------------
any of the other terms of this Agreement, including, without limitation, the
preceding provisions of this Section 9, the Lender shall have the right to
demand payment of the outstanding Advances at any time, upon 120 days' prior
written notice to the Borrower, whether or not any Default or Event of Default
exists or the Expiry Date has occurred.
Section 10. The Agent.
---------
10.01 Authorization and Action. The Lender hereby appoints and
------------------------
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. The
Lender hereby delegates to the Agent all of its powers hereunder.
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9.14 Consolidation, Merger, Sale of Assets, etc. The Borrower
-------------------------------------------
shall, or shall permit any of its Subsidiaries which are engaged in the mortgage
banking business to, wind up, liquidate or dissolve its affairs or enter into
any transaction of merger or consolidation (except mergers or consolidations of
a Subsidiary into the Borrower, with the Borrower as the surviving corporation),
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its property or assets which
are material (including, but not limited to, any rights to service Mortgage
Loans in the Borrower's Servicing Portfolio), individually or in the aggregate,
other than obsolete or worn out property, whether now owned or hereafter
acquired, other than in the ordinary course of business as presently conducted
and at fair market value, without the prior approval of the Lender or the Agent
(which approval shall not be reasonably withheld), except that the Borrower and
its Subsidiaries may, in the ordinary course of business, acquire Mortgage Loans
for resale and sell Mortgage Loans and Mortgage-backed Securities.
51
10.02 Agent's Duties. The Agent shall follow its customary
--------------
standards, policies and procedures in performing its duties as Agent hereunder
and in performing such duties shall use that degree of care and attention that
the Agent exercises with respect to the administration of comparable financing
facilities that the Agent extends for its own account. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Agent under or in connection with
this Agreement (including, without limitation, the Agent's servicing,
administering or collecting Collateral as Security Agent pursuant to the
Warehouse Security Agreement), except for its or their own willful misconduct,
gross negligence or bad faith. Without limiting the generality of the foregoing,
the Agent: (i) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (ii) makes no warranty or representation to the
Lender and shall not be responsible to the Lender for any statements, warranties
or representations (whether written or oral) made by the Borrower in or in
connection with this Agreement; (iii) shall not be responsible to the Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, the Note, any other Credit Document, any Collateral
Document or any other instrument or document furnished pursuant hereto; and (iv)
shall incur no liability under or in respect of this Agreement by acting upon
any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
10.03 GE Capital Mortgage Services, Inc. and Affiliates. GE Capital
-------------------------------------------------
Mortgage Services, Inc. and its Affiliates may generally engage in any kind of
business with the Borrower, any of its Affiliates and any person who may do
business with or own securities of the Borrower or any of its Affiliates, all as
if GE Capital Mortgage Services, Inc. were not the Agent and without any duty to
account therefor to the Lender.
10.04 Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lender and the Borrower; provided, that each
Rating Agency shall have confirmed in writing that such resignation shall not
result in a withdrawal or reduction of the then current rating by such Rating
Agency of the Commercial Paper. Upon any such resignation, the Lender shall have
the right to appoint a successor Agent, subject to (i) the prior written
approval of such successor Agent by each LOC Provider and each Liquidity Lender
and (ii) receipt of written confirmation from each Rating Agency that such
appointment shall not result in a withdrawal or downgrading of the then current
credit rating of the Commercial Paper. If no successor Agent shall have been so
appointed by the Lender or shall have accepted such appointed within 15 days
after the retiring Agent's giving of notice of resignation, the Agent, on behalf
of the Lender, may appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and from such time the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
10 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
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Section 11. Miscellaneous.
-------------
11.01 Payment of Expenses; Indemnity. (a) Whether or not the
------------------------------
transactions contemplated hereby are consummated, in addition to the rights of
indemnification granted to the Indemnified Parties under Section 11.01(b)
hereof, the Borrower agrees to pay on demand all costs and expenses in
connection with the preparation, execution, delivery, modification, amendment,
administration and monitoring of the Credit Documents and the other documents to
be delivered thereunder (including the costs in respect of the perfection and
maintenance of the security interests and conducting due diligence with respect
to the Borrower and its business), including, without limitation, the fees and
out-of-pocket expenses of counsel for the Lender and the Agent, and of local
counsel who may be retained by the Lender and the Agent, with respect thereto
and with respect to advising the Lender and the Agent as to their rights and
remedies under the Credit Documents, and including all reasonable costs and
expenses in connection with the servicing and liquidation of the Collateral. The
Borrower further agrees to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, workout, legal
proceedings or otherwise) of the Credit Documents and the other documents to be
delivered thereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section
11.01(a).
(b) (i) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for all fees, expenses or
increased costs payable by the Lender to any Liquidity Lender pursuant to the
Liquidity Agreement due to either (x) the effectiveness of or the introduction
of, or any change in, or in the interpretation of, any law or regulation or (y)
compliance by such Liquidity Lender with any guideline or request from any
central bank or other governmental authority or official (whether or not having
the force of law), which subjects such Liquidity Lender (A) to an increase in
the cost of making, funding or maintaining any loan or any commitment under the
Liquidity Agreement or (B) to make a payment calculated by reference to the
principal of, or interest on, such loan or such commitment made by such
Liquidity Lender.
(ii) The Borrower shall reimburse the Lender upon demand (which
demand shall contain reasonable details thereof), for all fees, expenses or
increased costs payable by the Lender to any Liquidity Lender or any LOC
Provider (the Liquidity Lenders and the LOC Providers collectively referred to
in this Section 11.01(b) as the "Financial Institutions" and, individually, as a
"Financial Institution") pursuant to the Liquidity Agreement or the
Reimbursement Agreement, respectively, due to either (x) the effectiveness of or
the introduction of, or any change in, or in the interpretation of, any law or
regulation or (y) compliance by any Financial Institution with any guideline or
request from any central bank or other governmental authority or official
(whether or not having the force of law and including, in any event, any law,
regulation, interpretation, or guideline with respect to capital adequacy or
request in connection with any of the foregoing and any law, regulation,
interpretation, guideline or request contemplated by the report dated July, 1988
entitled "International Convergence of Capital Measurement and Capital
Standards" issued by the Basle Committee on Banking Regulations and Supervisory
Practices at the Bank for International Settlements) which has or would have the
effect of reducing the rate of return on the capital of such Financial
Institution, or any corporation controlling such Financial Institution, as a
46
53
consequence of its obligations under the Liquidity Agreement, the Reimbursement
Agreement or the Letters of Credit, as the case may be, to a level below that
which such Financial Institution, or such controlling corporation, could have
otherwise achieved but for such adoption, change or compliance (taking into
consideration such Financial Institution's, or the respective controlling
corporation's, policies with respect to capital adequacy) or which has or would
have the effect of increasing the amount of capital required or expected to be
maintained by such Financial Institution, or such controlling corporation, as a
consequence of its obligations under the Liquidity Agreement, the Reimbursement
Agreement or the Letters of Credit, as the case may be.
(iii) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for any increase in any sum
payable by the Lender to any Liquidity Lender under the Liquidity Agreement to
compensate such Liquidity Lender for deductions for Liquidity Taxes (as defined
below) applicable to such sum (including deductions for Liquidity Taxes
applicable to such increase in such sum) such that such Liquidity Lender shall
receive an amount equal to the sum it would have otherwise received had no such
deductions for Liquidity Taxes been made. As used in this Section 11.01(b), the
term "Liquidity Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities, with respect
to any sum payable under the Liquidity Agreement (but excluding taxes that would
not be imposed but for a connection between the Liquidity Lenders or the
Liquidity Agent (as the case may be) and the jurisdiction imposing such tax,
other than a connection arising by virtue of the activities of the Liquidity
Lenders or the Liquidity Agent (as the case may be) pursuant to or in respect of
the Liquidity Agreement or under any other Facility Document, including, without
limitation, the entering into, the loan of money or the extension of credit
pursuant to, the receipt of payments under, or the enforcement of, the Liquidity
Agreement or any other Facility Document).
(iv) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for all costs or expenses
payable by the Lender under the Liquidity Agreement for any present or future
stamp, recording or documentary taxes or similar levies arising from any payment
made under the Liquidity Agreement or from the execution, delivery or
registration of, or otherwise with respect to, the Liquidity Agreement or the
promissory notes delivered by the Lender thereunder or from the execution,
delivery or registration of, or otherwise with respect to, the Liquidity
Agreement or such promissory notes.
(v) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for any increase in any
payment payable by the Lender to any LOC Provider under the Reimbursement
Agreement to compensate such LOC Provider for deductions of LOC Taxes (as
defined below) such that such increase results in a yield to such LOC Provider
(after payment of all LOC Taxes) of interest or any other amounts payable under
the Reimbursement Agreement at the rates or in the amounts specified in the
Reimbursement Agreement. As used in this Section 11.01(b), the term "LOC Taxes"
shall mean any present or future stamp or other taxes, levies, imports, duties,
charges, fees, deductions, withholdings or restrictions or conditions of any
nature whatsoever, now or hereafter imposed, levied, collected, withheld or
assessed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein in respect of any payment made under the Reimbursement
Agreement (but excluding, in
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the case of each LOC Provider, any tax imposed on or measured by the net income
of such LOC Provider pursuant to the laws of any jurisdiction (or any political
subdivision or taxing authority thereof or therein) in which the principal
office of such LOC Provider is located).
(vi) The Borrower shall reimburse the Lender, upon demand (which
demand shall contain reasonable details thereof), for all indemnities payable by
the Lender to any placement agents or dealers for the Commercial Paper.
(vii) In the event the Lender enters into agreements for the making
of advances to one or more borrowers other than the Borrower, the Lender shall
allocate the liability for the costs, expenses and other amounts referred to in
clauses (i) through (vi), inclusive, of this Section 11.01(b) and Section
11.01(c) to the Borrower and each other borrower who has so agreed, provided
--------
that if such costs, expenses or amounts are attributable to the Borrower or the
Credit Documents and not attributable to any other borrower, the Borrower shall
be solely liable for such costs, expenses and amounts.
(c) Without limiting any other rights which the Lender, the Agent, the
Security Agent, the LOC Providers, the Liquidity Lenders, the Collateral Agent,
the Depositary or any Affiliate of any thereof, as well as their respective
directors, officers, employees and agents (each, an "Indemnified Party") may
have hereunder or under applicable law, the Borrower hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses, damages,
expenses and liabilities (including reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "Indemnified Amounts") arising out
of, relating to or resulting from this Agreement, any other Facility Document,
any Mortgage Loan, Mortgage-backed Security or other Collateral or the use of
any proceeds of Advances, excluding, however, Indemnified Amounts to the extent
(i) resulting from gross negligence or willful misconduct (as determined by a
final judgment of a court of competent jurisdiction) on the part of such
Indemnified Party or any Affiliate of such Indemnified Party which directly or
indirectly controls, is controlled by or is under common control with such
Indemnified Party or is a director or officer of such Indemnified Party or of an
Affiliate of such Indemnified Party or (ii) resulting from negligence (as
determined by a final judgment of a court of competent jurisdiction) on the part
of such Indemnified Party or any -Affiliate of such Indemnified Party which
directly or indirectly controls, is controlled by or is under common control
with such Indemnified Party or is a director or officer of such Indemnified
Party or of an Affiliate of such Indemnified Party, which negligence directly
and proximately results in the loss of a Mortgage Note, the receipt of which
Mortgage Note was previously acknowledged in writing by such Indemnified Party
and the loss of which Mortgage Note cannot be mitigated by the cooperative
efforts of the Borrower and the Indemnified Party. Without limiting or being
limited by the foregoing, the Borrower shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from:
(i) the making of an Advance secured by a pledge of a Mortgage
Loan or Mortgage-backed Security which is not at the date of
the creation of such security interest an Eligible Mortgage
Loan or an Eligible Nonconforming Mortgage Loan or
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which thereafter ceases to be an Eligible Mortgage Loan or an
Eligible Nonconforming Mortgage Loan;
(ii) reliance on any representation or warranty or statement
made or deemed made by the Borrower (or any of its officers)
under or in connection with any Credit Document which shall
have been incorrect when made;
(iii) the failure by the Borrower to comply with any
applicable law, rule or regulation with respect to any
Collateral, or the nonconformity of any Collateral with any
such applicable law, rule or regulation;
(iv) the failure to vest in the Security Agent under the
Warehouse Security Agreement a valid first priority security
interest in the Mortgage Loans, the Mortgage-backed Securities
and the other Collateral, except as otherwise permitted by
this Agreement;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Collateral, whether at the
time of any Advance or at any subsequent time;
(vi) any breach or violation, or alleged violation, of federal
or state securities laws in connection with the offering of
the Commercial Paper;
(vii) any investigation, litigation or proceeding related to
this Agreement or, any other Credit Document or the use of
proceeds of Advances or in respect of any Mortgage Loan or
other Collateral;
(viii) the loss, misplacement or destruction of any cashier's
check issued by the Lender in respect of any Advance after
receipt of such check by the closing agent, escrow agent,
title company, attorney or any other authorized party
identified in the Request for Advance relating to such
Advance, it being understood and agreed that, notwithstanding
the indemnity under this Section 11.01(c)(viii) or any such
loss, misplacement or destruction, the funds represented by
any such lost, misplaced or destroyed cashier's check shall
constitute an Advance hereunder; and
(ix) the making of any wire transfer to an incorrect account
or in an incorrect amount in accordance with instructions
received from the Borrower, it being understood and agreed
that, notwithstanding the indemnity under this Section
11.01(c)(ix), the funds represented by any such wire shall
constitute an Advance hereunder.
(d) If after the date hereof due to either (a) the effectiveness
or introduction of, or any change in, or any change in the interpretation of,
any law or regulation by any court or administrative or governmental authority
charged with administration thereof or (b) compliance
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with any guideline or request from any central bank or other governmental
authority or official (whether or not having the force of law and including, in
any event, any law, regulation or interpretation with respect to capital
adequacy or request in connection with any of the foregoing), there shall be an
increase in the cost to the Lender of making, funding or maintaining any Advance
or the Commitment hereunder or the Lender shall be required to make a payment
calculated by reference to the principal of, or interest on, any Advance made by
it or the Commitment (other than any such increased cost, reduction in the
amount receivable, or payment required to be made resulting from the imposition
or an increase in the rate of any Taxes unless such Taxes are payable by the
Borrower under Section 11.01(e) or there shall be an increase in the amount of
capital required or expected to be maintained by the Lender or any corporation
controlling the Lender and the Lender reasonably determines that the amount of
such capital is increased by or based upon the existence of the Lender's
agreement, in its discretion, to make or maintain Advances hereunder and other
similar agreements and facilities), then the Borrower shall, from time to time,
upon demand by the Lender, immediately pay to the Lender additional amounts
sufficient to compensate the Lender for any such increased cost or increase in
capital (to the extent the Lender reasonably determines such increase in capital
to be allocable to the existence of the Lender's agreements hereunder). A
certificate of an officer of the Lender as to such amounts (and the calculation
thereof) submitted to the Borrower shall be conclusive and binding for all
purposes, absent manifest error.
(e) Promptly upon (and in no event later than 10 days following)
notice from the Lender or the Agent to the Borrower, the Borrower agrees to pay,
prior to the date on which penalties attach thereto, all present and future
income, stamp and other taxes, levies, or costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of an Advance and/or the
recording, registration, notarization or other formalization of an Advance or
the execution and delivery or otherwise with respect to the Agreement or the
other Credit Documents and/or any payments of principal, interest or other
amounts made on or in respect of an Advance (all such taxes, levies, costs and
charges being herein collectively called "Taxes"); provided that Taxes shall not
--------
include taxes imposed on or measured by the overall net income or receipts of
the Lender by the United States of America or any political subdivision or
taxing authority thereof or therein. The Borrower agrees to also pay such
additional amounts equal to increases in taxes payable by the Lender described
in the foregoing proviso, which increases arise solely from the receipt by the
Lender of payments made by the Borrower described in the immediately preceding
sentence of this Section 11.01(e). Promptly (and in no event later than 10 days)
after the date on which payment of any such Tax is due pursuant to applicable
law, the Borrower will, at the request of the Lender, furnish to the Lender
evidence, in form and substance satisfactory to the Lender, that the Borrower
has met its obligation under this Section 11.01(e). The Borrower agrees to
indemnify the Lender against, and reimburse the Lender on demand for, any Taxes,
as reasonably determined by the Lender in good faith. The Lender shall provide
the Borrower with appropriate receipts for any payments or reimbursements made
by the Borrower pursuant to this Section 11.01(e).
(f) Notwithstanding anything to the contrary provided herein, the
maximum aggregate amount that the Borrower shall be obligated to pay to the
Lender or to any Indemnified Party pursuant to the provisions of Sections
11.01(b), (d) and (e) shall be $250,000.
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11.02 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, the
Lender or the Agent, at its address specified opposite its signature below, or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall, when
mailed, telegraphed, telecopied or sent by overnight courier, be effective when
deposited in the mails, delivered to the telegraph company or overnight courier,
as the case may be, or sent by telecopier, except that notices and
communications given to the Agent or the Lender pursuant to Section 2 and
Section 4 shall not be effective until received by the Agent or the Lender, as
the case may be.
11.03 Benefit of Agreement. This Agreement shall be binding upon
--------------------
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that the Borrower may not
-------- --------
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Agent and the Lender. The Lender may at any time assign
any of its rights and obligations hereunder or under the Note.
11.04 Remedies Cumulative. No failure or delay on the part of the
-------------------
Agent or the Lender or the holder of the Note in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Agent or the Lender or the holder of the Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies herein or
in any other Credit Document expressly provided are cumulative and not exclusive
of any rights, powers or remedies which the Agent or the Lender or the holder of
the Note would otherwise have. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the Lender or the holder of the Note to any other or further action in any
circumstances without notice or demand.
11.05 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Lender pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lender); provided that, except as otherwise specifically provided herein, all
--------
computations determining compliance with Section 8 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements referred to in Section 6.05(a).
(b) All computations of interest and the Fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days occurring in
the period for which such interest or fees are payable.
11.06 Governing Law; Submission to Jurisdiction; Venue. (a) This
------------------------------------------------
Agreement and the other Credit Documents and the rights and obligation of the
parties hereunder and thereunder shall be construed in accordance with and be
governed by the law of the State of New York, without
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regard to principles of conflicts of laws. Any legal action or proceeding
against the Borrower with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New Jersey located in Camden County
or in the United States Federal courts located in Camden County, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.07 No Proceedings. The Borrower hereby covenants and agrees
--------------
that, prior to the date which is one year and one day after the payment in full
of all outstanding Commercial Paper, it will not institute against, or join any
other Person in instituting against, the Lender, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
11.08 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
11.09 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which the Borrower, the Lender and the Agent
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to the Agent at its Office.
11.10 Headings Descriptive. The headings of the several sections
--------------------
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
11.11 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Lender, the Agent and the Borrower.
11.12 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 11.01 shall survive the execution and delivery of this
Agreement and the Note and the making and repayment of the Advances.
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Waiver of Jury Trial. THE LENDER, THE AGENT AND THE BORROWER BY
--------------------
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE ??H OF THEM MAY HAVE TO A
TRIAL BY JURY OF, UNDER OR IN ??N WITH THIS AGREEMENT, THE NOTE AND ANY
AGREEMENT ??ATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE ??JCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR ??OR ACTIONS OF ANY PARTY
RELATING HERETO OR THERETO. THIS ?? IS A MATERIAL INDUCEMENT FOR THE LENDER AND
THE AGENT TO ??TO THIS AGREEMENT.
WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to ??d deliver this Agreement as of the date first above written.
E-LOAN, INC.
??age Parkway, Suite 102
??CA 94568
??: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
?? No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title: CEO
Capital Mortgage Services, Inc. ▇▇▇▇▇▇ RIVER FUNDING INC.
Executive Campus
?? ▇▇▇▇, ▇▇ ▇▇▇▇▇
??ion: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By /s/ Signature Illegible
??mile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title: Assistant Treasurer
GE CAPITAL MORTGAGE SERVICES, INC.,
??e Executive Campus as Agent
??▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
??tion: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
??imile No.: (▇▇▇) ▇▇▇-▇▇▇▇ By /s/ Signature Illegible
Title: Vice President
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