CREDIT AGREEMENT among M/I FINANCIAL CORP., as the Borrower, The Lenders Party Hereto, and GUARANTY BANK as Administrative Agent May 22, 2008
Exhibit
10.1
among
M/I
FINANCIAL CORP.,
as the
Borrower,
The
Lenders Party Hereto,
and
GUARANTY
BANK
as
Administrative Agent
____________________________
May 22,
2008
TABLE
OF CONTENTS
Page
ARTICLE
I GENERAL
TERMS
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Section
1.1Certain Definitions
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Section
1.2Exhibits and Schedules
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Section
1.3Calculations and Determinations
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ARTICLE
II AMOUNT
AND TERMS OF LOANS
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Section
2.1Commitment and Loans
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Section
2.2Promissory Notes; Interest on the
Notes
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Section
2.3Notice and Manner of Obtaining
Loans[
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Section
2.4Fees.]
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Section
2.5Mandatory Repayments
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Section
2.6Payments to the Administrative
Agent
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Section
2.7Notification by the Administrative
Agent
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Section
2.8Non-Receipt of Funds by the Administrative
Agent.
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Section
2.9Increased Cost and Reduced
Return.
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Section
2.10Settlement Account
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ARTICLE
IIICONDITIONS PRECEDENT
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Section
3.1Initial Loan
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Section
3.2All Loans
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ARTICLE
IVBORROWER REPRESENTATIONS AND WARRANTIES
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Section
4.1Organization and Good Standing
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Section
4.2Authorization and ▇▇▇▇
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Section
4.3No Conflicts or Consents
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Section
4.4Enforceable Obligations
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Section
4.5Priority of Liens
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Section
4.6No Liens
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Section
4.7Financial Condition of the
Borrower
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Section
4.8Full Disclosure
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Section
4.9No Default
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Section
4.10No Litigation
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Section
4.11Taxes
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Section
4.12Principal Office, etc
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Section
4.13Compliance with ERISA
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Section
4.14Subsidiaries
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Section
4.15Indebtedness
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Section
4.16Permits, Patents, Trademarks,
etc.
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Section
4.17Status Under Certain Federal
Statutes
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Section
4.18Securities Act
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Section
4.19No Approvals Required
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Section
4.20Survival of Representations
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Section
4.21Compliance with Laws
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Section
4.22Payment of Obligations
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Section
4.23Individual Mortgage Loans
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Section
4.24Environmental Matters
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Section
4.25Status as Approved
Seller/Servicer
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Section
4.26Regulation U
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ARTICLE
V AFFIRMATIVE
COVENANTS
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Section
5.1Financial Statements and
Reports.
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Section
5.2Taxes and Other Liens
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Section
5.3Maintenance
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Section
5.4Further Assurances
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Section
5.5Reimbursement of Expenses
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Section
5.6Insurance
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Section
5.7Accounts and Records: Servicing
Records
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Section
5.8Right of Inspection
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Section
5.9Notice of Certain Events
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Section
5.10Performance of Certain Obligations and Information Regarding
Investors
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Section
5.11Use of Proceeds: Margin Stock
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Section
5.12Notice of Default
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Section
5.13Compliance with Loan Documents
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Section
5.14Operations and Properties
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Section
5.15Environmental Matters.
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Section
5.16MERS Status.
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Section
5.17Hedging Arrangements
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ARTICLE
VINEGATIVE COVENANTS
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Section
6.1No Merger; Limitation on Issuance of
Securities
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Section
6.2Limitation on Indebtedness
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Section
6.3Fiscal Year, Method of
Accounting
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Section
6.4Business
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Section
6.5Liquidations, Consolidations and Dispositions of Substantial
Assets
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Section
6.6Loans, Advances, and Investments
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Section
6.7Use of Proceeds
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Section
6.8Actions with Respect to Mortgage
Collateral
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Section
6.9Transactions with Affiliates
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Section
6.10Liens
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Section
6.11ERISA Plans
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Section
6.12Change of Principal Office
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Section
6.13Tangible Net Worth
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Section
6.14Total Liabilities to Adjusted Tangible Net
Worth
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Section
6.15Adjusted Tangible Net Worth
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Section
6.16Dividends
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ARTICLE
VIIEVENTS OF DEFAULT
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Section
7.1Nature of Event
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Section
7.2Default Remedies
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Section
7.3Application of Proceeds
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Section
7.4Preservation of Rights
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ARTICLE
VIIIINDEMNIFICATION
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Section
8.1Indemnification
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Section
8.2Limitation of Liability
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ARTICLE
IXTHE ADMINISTRATIVE AGENT
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Section
9.1Appointment
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Section
9.2Delegation of Duties
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Section
9.3Exculpatory Provisions
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Section
9.4Reliance by Agent
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Section
9.5Notice of Defaul]
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Section
9.6Non-Reliance on Administrative Agent and Other
Lenders
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Section
9.7Indemnification
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Section
9.8Agent in Its Individual Capacity
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Section
9.9Successor Administrative Agent
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Section
9.10Administrative Agent's Discretionary
Authority
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ARTICLE
X TAXES
AND YIELD PROTECTION
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Section
10.1Taxes.
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Section
10.2Increased Costs.
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Section
10.3Mitigation Obligations; Replacement of
Lenders.
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Section
10.4Survival
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ARTICLE
XIMISCELLANEOUS [
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Section
11.1Notices
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Section
11.2Amendments, Etc
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Section
11.3CHOICE OF LAW; VENUE
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Section
11.4Invalidity
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Section
11.5Survival of Agreements
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Section
11.6Renewal, Extension or Rearrangemen]
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Section
11.7Waivers
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Section
11.8Cumulative Rights
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Section
11.9Limitation on Interest
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Section
11.10Bank Accounts; Offset
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Section
11.11Assignments
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Section
11.12Exhibits
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Section
11.13Titles of Articles, Sections and
Subsections
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Section
11.14Counterparts; Fax
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Section
11.15Termination; Limited Survival
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Section
11.16Joint and Several Liability
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Section
11.17Disclosures
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Section
11.18Time is of the Essence
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Section
11.19USA Patriot Act Notice
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Section
11.20Electronic Transactions
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Section
11.21No Reliance
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Section
11.22WAIVER OF JURY TRIAL
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Section
11.23CONSEQUENTIAL DAMAGES
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Section
11.24ENTIRE AGREEMENT
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TABLE
OF CONTENTS
(continued)
SCHEDULES
Schedule
1.1 Commitments
and Commitment Percentages
Schedule
1.2 Approved
Investors
Schedule
4.14 Subsidiaries
Schedule
6.2 Related
Person Indebtedness
EXHIBITS
Exhibit
A Form
of Note
Exhibit
B Form
of Borrowing Request
Exhibit
C Certificate
Accompanying Financial Statement
Exhibit
D Borrowing
Base Certificate
Exhibit
E Form
of Security Agreement
THIS
CREDIT AGREEMENT is made and entered into as of May 22, 2008, among M/I
FINANCIAL CORP., an Ohio corporation (the "the
Borrower"), each lender from time to time party hereto (collectively, the
"Lenders"
and individually, a "Lender"),
and GUARANTY BANK, as Administrative Agent.
The
Borrower has requested that the Lenders provide a credit facility, and the
Lenders are willing to do so on the terms and conditions set forth
herein.
In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE
I
GENERAL
TERMS
Section
1.1 Certain
Definitions. As used
in this Agreement, the following terms have the following meanings:
"Act" has
the meaning specified in Section 11.19.
"Adjusted Floating
LIBOR" means, for any day, the rate per annum equal to the sum of the
Floating LIBOR for such day plus the Applicable Floating LIBOR Margin, provided
that the Adjusted Floating LIBOR shall never exceed the Maximum
Rate.
"Applicable
Floating LIBOR Margin" means one and thirty-five one hundredth percent
(1.35%) per annum.
"Adjusted Tangible
Net Worth" means, as of any date, the Tangible Net Worth of the Borrower
minus
the outstanding amount of Intercompany Loans.
"Affiliate"
means, as to any Person, each other Person that directly or indirectly (through
one or more intermediaries or otherwise) controls, is controlled by, or is under
common control with, such Person.
"Aged Loan"
means an Eligible Mortgage Loan which has been included in the Borrowing Base
for more than sixty (60) days but less than or equal to one hundred and twenty
(120) days.
"Aggregate
Commitments" means the Commitments of all Lenders, which amount shall not
exceed (a) from and including May 22, 2008 through and including
December 14, 2008, $30,000,000, (b) from and including
December 15, 2008 through and including January 15, 2009, $40,000,000,
and (c) from and including January 16, 2009 through and including
May 21, 2009, $30,000,000.
"Agreement"
means this Credit Agreement, as the same may from time to time be amended,
supplemented or restated.
"Agreement to
Pledge" means each agreement by the Borrower set forth in a Borrowing
Request for Wet Loans, to deliver Required Mortgage Documents to the
Administrative Agent.
"Applicable
Advance Rate Percentage" means, for each
Mortgage Loan classification listed below, the percentage listed opposite such
Mortgage Loan classification:
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Prime
Loan (Dry Loan)
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98%
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Prime
Loan (Wet Loan)
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98%
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Second
Lien/HELOC Loan (Dry Loan)
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90%
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Second
Lien/HELOC Loan (Wet Loan)
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90%
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Jumbo
Loan (Dry Loan)
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95%
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Jumbo
Loan (Wet Loan)
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95%
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"Applicable
Sublimit" means, for each Mortgage Loan classification listed below, the
percentage of the Aggregate Commitments listed opposite such Mortgage Loan
classification:
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Wet
Loans
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35%
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Prime
Loans
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100%
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Second
Lien/HELOC Loans
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5%
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Jumbo
Loans
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10%
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provided, however, that in the
last five and first five Business Days of every calendar month the Applicable
Sublimit for Wet Loans shall be 50% of the Aggregate Commitments.
"Appraised
Value" means, for any Mortgage Loan, the current appraised value of the
property secured by the Mortgage as determined by an appraisal performed in full
compliance with FNMA/FHLMC appraisal requirements and on an appraisal form
approved by FNMA or FHLMC, and performed by a state licensed or state-certified
real estate appraiser (in accordance with the provisions of Title XI of
FIRREA).
"Assignee"
has the meaning specified in Section 11.10.
"Borrower"
shall have the meaning assigned to such term in the preamble
hereof.
"Borrowing"
means a borrowing of a new Loan.
"Borrowing
Base" means at any date all Eligible Mortgage Loans which have been
delivered to and held by the Administrative Agent or otherwise identified as
Mortgage Collateral.
"Borrowing Base
Certificate" means a certificate describing the Eligible Mortgage Loans
to be included in the Borrowing Base in a form acceptable to the Administrative
Agent.
"Borrowing
Request" means a request, in the form of Exhibit B, for a
Loan pursuant to Article II.
"Business
Day" means a day, other than a Saturday or Sunday, on which commercial
banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to the LIBOR must also be a day on which, in
the judgment of the Administrative Agent, significant transactions in dollars
are carried out in the interbank Eurocurrency market.
"Cash
Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof which mature within ninety (90) days from the date of
acquisition, and (b) time deposits and certificates of deposit, which
mature within ninety (90) days from the date of acquisition, of Lender or any
other domestic commercial bank having capital and surplus in excess of
$200,000,000, which has, or the holding company of which has, a commercial paper
rating of at least A-1 or the equivalent thereof by Standard & Poors (a
division of the ▇▇▇▇▇▇-▇▇▇▇ Companies) or P-1 or the equivalent thereof by
▇▇▇▇▇'▇ Investors Service, Inc.
"Change in
Law" means the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any law,
rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any guideline or
directive (whether or not having the force of law) by any Governmental
Authority.
"Change of
Control" means the Parent ceases to own one hundred percent (100%) of the
voting power of the voting stock of the Borrower.
"CLTV"
means to any Mortgage Loan, the ratio expressed as a percentage determined by
dividing (i) the total amount owing and outstanding on all loans secured by
the residential real property and improvements serving as collateral for the
Mortgage Loan, by (ii) the Appraised Value of the residential real property
and improvements serving as collateral for the Mortgage Loan.
"Code"
means the Internal Revenue Code of 1986, as amended.
"Collateral"
has the meaning given to it in the Security Agreement.
"Collateral Value
of the Borrowing Base" means, on any day, the sum of the Unit Collateral
Values of all Eligible Mortgage Loans included in the Borrowing Base on such day
as determined by Lender based on information then available to the
Administrative Agent.
"Commitment"
means, as to each Lender, the obligation of such Lender to make Loans to the
Borrower pursuant to Section 2.1
hereof, in an aggregate principal amount at any one time outstanding not to
exceed the amount opposite such Lender's name on Schedule 1.1
hereto, as such amount may be adjusted from time to time in accordance with this
Agreement.
"Commitment
Percentage" means, for each Lender as of any date, the percentage of the
Aggregate Commitments represented by such Lender's Commitment, as it may be
amended from time to time, which initially shall be set forth on Schedule 1.1.
"Conforming
Loan" means a Mortgage Loan which (a) receives one of the following
responses from ▇▇▇▇▇▇ Mae Desktop Underwriter: (i) Approve/Eligible,
(ii) Approve/Ineligible, (iii) Refer/Eligible, or
(iv) EA-I,-II,-III/Eligible, or (b) receives one of the following
responses from ▇▇▇▇▇▇▇ Mac Loan Prospector: (i) Accept/Accept, or
(ii) A-Minus. Mortgage Loans receiving a "Refer/Eligible"
response must be accompanied by the Investor's approval to the
exception. Mortgage Loans receiving approval under the "Expanded
Approval" ("EA") criteria or "A-Minus" criteria are permitted only if the
Borrower provides the Administrative Agent with a copy of the ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac contract which allows delivery by the Borrower for this loan
type. Mortgage Loans receiving an "Approve/Ineligible" response are
permitted only if the Borrower represents and warrants to the Administrative
Agent that the Borrower possesses an agency waiver with respect to such Mortgage
Loan, thereby making such Mortgage Loan agency eligible.
"Consolidated"
refers to the consolidation of any Person, in accordance with GAAP, with its
properly consolidated subsidiaries. References herein to a Person's
Consolidated financial statements, financial position, financial condition,
liabilities, etc. refer to the consolidated financial statements, financial
position, financial condition, liabilities, etc. of such Person and its properly
consolidated subsidiaries.
"Debtor
Laws" means all applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization or similar
Laws from time to time in effect affecting the rights of creditors generally and
general principles of equity.
"Default"
means any of the events specified in Section 7.1
hereof, whether or not any requirement for notice or lapse of time or any other
condition has been satisfied.
"Default
Rate" means, at the time in question, with respect to all Obligations,
the sum of (i) three percent (3%) per annum, plus (ii) the
per annum interest rate otherwise payable in respect of the Obligations;
provided that in no event shall the Default Rate ever exceed the Maximum
Rate.
"Dividends,"
in respect of any corporation, means: (a) cash distributions or
any other distributions on, or in respect of, any class of equity security of
such corporation, except for distributions made solely in shares of securities
of the same class; and (b) any and all funds, cash or other payments made
in respect of the redemption, repurchase or acquisition of such
securities.
"Drawdown
Termination Date" means the earlier of May 21, 2009, or the day on
which the Note first becomes due and payable in full.
"Dry Loan"
means an Eligible Mortgage Loan included in the Borrowing Base and for which the
Required Mortgage Documents have been delivered to the Administrative
Agent.
"Eligible Mortgage
Loan" means a Mortgage Loan with respect to which each of the following
statements is accurate and complete (and the Borrower by including such Mortgage
Loan in any computation of the Collateral Value of the Borrowing Base shall be
deemed to so represent and warrant to the Administrative Agent at and as of the
date of such computation):
(a) Such
Mortgage Loan is a binding and valid obligation of the Obligor thereon, in full
force and effect and enforceable in accordance with its terms, except as
enforceability may be limited by Debtor Laws;
(b) The
Mortgage Note evidencing such Mortgage Loan is genuine in all respects as
appearing on its face and as represented in the books and records of the
Borrower, and all information set forth therein is true and
correct;
(c) Such
Mortgage Loan is free of any default (other than as permitted by subparagraph (d)
below) of any party thereto (including the Borrower), counterclaims, offsets and
defenses, including the defense of usury, and from any rescission, cancellation
or avoidance, and all right thereof, whether by operation of law or
otherwise;
(d) No
payment under such Mortgage Loan is more than thirty (30) days past due the
payment due date set forth in the underlying Mortgage Note and
Mortgage;
(e) The
Mortgage Note evidencing such Mortgage Loan contains the entire agreement of the
parties thereto with respect to the subject matter thereof, has not been
modified or amended in any respect not expressed in writing therein and is free
of concessions or understandings with the Obligor thereon of any kind not
expressed in writing therein;
(f) Such
Mortgage Loan is in all respects in accordance with all Requirements of Law
applicable thereto, including, without limitation, the federal Consumer Credit
Protection Act and the regulations promulgated thereunder and all applicable
usury Laws and restrictions, and all notices, disclosures and other statements
or information required by Law or regulation to be given, and any other act
required by Law or regulation to be performed, in connection with such Mortgage
Loan have been given and performed as required;
(g) All
advance payments and other deposits on such Mortgage Loan have been paid in
cash, and no part of said sums has been loaned, directly or indirectly, by the
Borrower to the Obligor, and, other than as disclosed to Lender in writing,
there have been no prepayments;
(h) Such
Mortgage Loan will be free and clear of all Liens, except Permitted
Liens;
(i) The
Property covered by such Mortgage Loan is insured against loss or damage by fire
and all other hazards normally included within standard extended coverage in
accordance with the provisions of such Mortgage Loan with the Borrower named as
a loss payee thereon;
(j) Such
Mortgage Loan is secured by a first Mortgage, or in the case of any Second
Lien/HELOC Loan, a second Mortgage, on Single Family property;
(k) The date
of origination of such Mortgage Loan is not more than thirty (30) days prior to
the date such Mortgage Loan was first included in the Borrowing
Base;
(l) Such
Mortgage Loan has not been included in the Borrowing Base for more than one
hundred and twenty (120) days;
(m) If such
Mortgage Loan is included in the Borrowing Base and has been withdrawn from the
possession of the Administrative Agent on terms and subject to conditions set
forth in the Security Agreement:
(i) If such
Mortgage Loan was withdrawn by the Borrower for purposes of correcting clerical
or other non-substantive documentation problems, the promissory note and other
documents relating to such Mortgage Loan are returned to the Administrative
Agent within ten (10) Business Days from the date of withdrawal; and the Unit
Collateral Value of such Mortgage Loan when added to the Unit Collateral Value
of other Mortgage Loans which have been similarly released to the Borrower and
have not been returned does not exceed ten percent (10%) of the Aggregate
Commitments;
(ii) If such
Mortgage Loan was shipped by the Administrative Agent directly to a permanent
Investor for purchase or to a custodian for the formation of a pool,
(x) such Investor or custodian is in full compliance with the terms of the
bailee letter under which such Mortgage Loan was shipped, and (y) the full
purchase price for such Mortgage Loan has been received by the Administrative
Agent (or such Mortgage Loan has been returned to the Administrative Agent)
within forty-five (45) calendar days from the date of shipment by the
Administrative Agent;
(n) Such
Mortgage Loan is subject to (A) a Take-Out Commitment which is in full
force and effect or (B) a Hedging Arrangement;
(o) Such
Mortgage Loan conforms to and satisfies the requirements for one of the
following Mortgage Loan classifications and has been designated by the Borrower
as one (1) and only one (1) of the following: (i) Prime Loan,
(ii) Jumbo Loan, or (iii) Second Lien/HELOC Loan; provided that, within each
Mortgage Loan classification listed above, the Unit Collateral Value of such
Mortgage Loan when added to the Unit Collateral Value of all other Mortgage
Loans in the same Mortgage Loan classification does not exceed the Applicable
Sublimit for such Mortgage Loan classification;
(p) The
Required Mortgage Documents have been delivered to the Administrative Agent
prior to the inclusion of such Mortgage Loan in any computation of the Borrowing
Base or, if such items have not been delivered to the Administrative Agent on or
prior to the date such Mortgage Loan is first included in any computation of the
Borrowing Base, (a) the Borrower has pledged and agreed to deliver all
Required Mortgage Documents pursuant to a Borrowing Request delivered to the
Administrative Agent prior to such inclusion, and (b) the Unit Collateral
Value of such Mortgage Loan when added to the Unit Collateral Value of all other
Mortgage Loans for which the Administrative Agent has not received the Required
Mortgage Documents does not exceed the Applicable Sublimit for Wet Loans, provided that, all Required
Mortgage Documents with respect to such Mortgage Loan shall be delivered to the
Administrative Agent within seven (7) Business Days after the date of the
Agreement to Pledge with respect thereto;
(q) The
Property covered by such Mortgage Loan is located within the fifty United
States;
(r) Such
Mortgage Loan has been underwritten by the originator thereof in accordance with
such originator's then current underwriting guidelines; and
(s) The
representations and warranties made by the Borrower in Section 4.23
with respect to each Mortgage Note and Mortgage Loan are true and
correct.
"Environmental
Laws" means any and all Laws relating to (a) the protection of the
environment, (b) emissions, discharges or releases of pollutants,
contaminants, chemicals or hazardous or toxic substances or wastes into the
environment including ambient air, surface water, ground water or land, or
(c) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, together with the regulations from time to time promulgated with
respect thereto.
"ERISA
Affiliate" means all members of the group of corporations and trades or
businesses (whether or not incorporated) which, together with the Borrower, are
treated as a single employer under Section 414 of the Code.
"ERISA
Plan" means any pension benefit plan subject to Title IV of ERISA or
Section 412 of the Code maintained or contributed to by the Borrower or any
ERISA Affiliate with respect to which the Borrower has a fixed or contingent
liability.
"E-Sign
Act" means the Electronic Signatures in Global and National Commerce Act,
as amended from time to time.
"Event of
Default" means any of the events specified in Section 7.1
hereof, provided that any requirement in connection with such event for the
giving of notice or the lapse of time, or the happening of any further
condition, event or act has been satisfied.
"Excluded
Taxes" means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the Laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 10.3(b)),
any withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party hereto (or designates a new lending
office) or is attributable to such Foreign Lender's failure or inability (other
than as a result of a Change in Law) to comply with Section 10.1(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 10.1(a).
"Federal Funds
Rate" means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding such
day; provided
that
(a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Guaranty Bank on such day on such
transactions as determined by the Administrative Agent.
"Fee
Letter" means that certain letter agreement, dated May 22, 2008,
between the Borrower and the Administrative Agent.
"FHA" means
the Federal Housing Administration or any successor thereto.
"FHA Loan"
means a Mortgage Loan insured by the FHA.
"FHLMC" or
"▇▇▇▇▇▇▇
Mac" means the Federal Home Loan Mortgage Corporation, or any successor
thereto.
"Financing
Lease" means (i) any lease of Property if the then present value of
the minimum rental commitment thereunder should, in accordance with GAAP, be
capitalized on a balance sheet of the lessee, and (ii) any other lease
obligations which are capitalized on a balance sheet of the lessee.
"FIRREA"
means the Financial Institutions Reform Recovery and Enforcement Act of 1989, as
amended from time to time, together with the regulations from time to time
promulgated with respect thereto.
"Fiscal
Quarter" means each period of three calendar months ending March 31,
June 30, September 30 and December 31 of each year.
"Fiscal
Year" means each period of twelve calendar months ending December 31
of each year.
"Floating
LIBOR" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the rate appearing on Bloomberg
Professional (or, if not available, any other nationally recognized trading
screen reporting the British Bankers' Association LIBOR) at 10:00 a.m.
(Central time) as the British Bankers' Association LIBOR for deposits in U.S.
Dollars with a term equivalent to one month. In the event that such
rate does not appear on Bloomberg Professional, "Floating LIBOR" for purposes of
this definition shall be determined by reference to such other comparable
publicly available service for displaying London inter-bank offered rates as may
be selected by the Administrative Agent.
"FNMA" or
"▇▇▇▇▇▇
▇▇▇" means the Federal National Mortgage Association, or any successor
thereto.
"Foreign
Lender" means any Lender that is organized under the Laws of a
jurisdiction other than that in which the Borrower is resident for tax
purposes. For purposes of this definition, the United States, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Full
Documentation Mortgage Loan" means a Mortgage Loan supported by all of
the customary documentation required to underwrite the Mortgage Loan, including,
without limitation, the following: (i) Verification of Income
("VOI"), (ii) Verification of Assets ("VOA"), and (iii) Verification
of Employment ("VOE").
"Funding
Account" means the non-interest bearing demand checking account
established by the Borrower with the Administrative Agent to be used for
(a) the initial deposit of proceeds of Loans; and (b) the funding or
purchase of a Mortgage Note by the Borrower; provided that the Funding Account
shall be pledged to the Administrative Agent and that the Borrower shall not be
entitled to withdraw funds from the Funding Account.
"GAAP"
means those generally accepted accounting principles and practices which are
recognized as such by the Financial Accounting Standards Board (or any generally
recognized successor) and which, in the case of the Borrower and its
consolidated subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the financial statements described in Section 4.7. If
any change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to the Borrower or the Parent may be prepared in accordance with such change,
but all calculations and determinations to be made hereunder may be made in
accordance with such change only after notice of such change is given to the
Administrative Agent and the Administrative Agent agrees to such change insofar
as it affects the accounting of the Borrower.
"Governmental
Authority" means any nation or government, any agency, department, state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Governmental
Requirement" means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other direction or requirement (including, without
limitation, any of the foregoing which relate to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls) of any arbitrator, court or other Governmental Authority, which
exercises jurisdiction over any Related Person or any of its
Property.
"Guaranty
Obligation" of any Person means any contract, agreement or understanding
of such Person pursuant to which such Person guarantees, or in effect
guarantees, any Indebtedness, lease, dividends or other obligations (the "Primary
Obligations") of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, contingently or
absolutely, in whole or in part, including without limitation
agreements:
(a) to
purchase such Primary Obligation or any property constituting direct or indirect
security therefor,
(b) to
advance or supply funds (A) for the purchase or payment of any such Primary
Obligation, or (B) to maintain working capital or other balance sheet
conditions of the Primary Obligor or otherwise to maintain the net worth or
solvency of the Primary Obligor,
(c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such Primary Obligation of the ability of the Primary Obligor
to make payment of such Primary Obligation; or
(d) otherwise
to assure or hold harmless the owner of any such Primary Obligation against loss
in respect thereof;
provided, that "Guaranty
Obligation" shall not include endorsements that are made in the ordinary
course of business of negotiable instruments or documents for deposit or
collection. The amount of any Guaranty Obligation shall be deemed to
be the maximum amount for which the guarantor may be liable pursuant to the
agreement that governs such Guaranty Obligation, unless such maximum amount is
not stated or determinable, in which case the amount of such obligation shall be
the maximum reasonably anticipated liability thereon, as determined by such
guarantor in good faith.
"Hedging
Arrangement" means any forward sales contract, forward trade contract,
interest rate swap agreement, interest rate cap agreement, or other contract
pursuant to which Borrower has protected itself from the consequences of a loss
in the value of a Mortgage Loan because of changes in interest rates or in the
market value of mortgage loan assets.
"HELOC"
means home equity line of credit.
"Indebtedness"
of any Person at a particular date means the sum (without duplication) at such
date of (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is evidenced by a note,
bond, debenture, or similar instrument, (b) all obligations of such Person
under any Financing Lease, (c) all obligations of such Person in respect of
letters of credit, acceptances, or similar obligations issued or created for the
account of such Person, (d) all Guaranty Obligations of such Person,
(e) all liabilities secured by any Lien on any property owned by such
Person, whether or not such Person has assumed or otherwise become liable for
the payment thereof, and (f) any liability of such Person in respect of
unfunded vested benefits under an ERISA Plan and (g) all liabilities of
such Person in respect of indemnities or repurchase obligations made in
connection with the sale of Mortgage Loans.
"Indemnified
Party" has the meaning set forth in Section 8.1
hereof.
"Indemnified
Taxes" means Taxes other than Excluded Taxes.
"Intercompany
Loan" means a loan or advance from a Related Person to an Affiliate or
shareholder, member or partner of any Related Person.
"Investor"
means any Person approved by the Administrative Agent and listed on Schedule 1.2, as
such Schedule may be updated or supplemented from time to time; provided, however, that the
Administrative Agent shall deliver a list of all Persons approved as Investors
by the Administrative Agent upon each amendment of such Schedule by the
Administrative Agent, and an Investor shall be removed from such list upon the
written direction of the Administrative Agent.
"Investment
Property" means a Single Family dwelling which is not the Principal
Residence or Second/Vacation Property of the Obligor under the related Mortgage
Loan.
"Jumbo
Loan" means a Single Family Mortgage Loan which (a) is secured by a
first-lien Mortgage Loan, (b) has an original principal balance of greater
than the current FNMA/FHLMC loan size limit but less than or equal to $750,000,
(c) has a FICO score greater than or equal to 680, (d) has a LTV less
than or equal to 80% (or 95% if subject to mortgage insurance acceptable to the
Administrative Agent), (e) has a CLTV less than or equal to 90% (or 100% if
subject to mortgage insurance acceptable to the Administrative Agent), and
(f) other than its loan size, would qualify as a Conforming
Loan.
"Law" means
any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree,
permit, concession, franchise, license, agreement or other governmental
restriction of the United States or any state or political subdivision
thereof. Any reference to a Law includes any amendment or
modification to such Law, and all regulations, rulings, and other Laws
promulgated under such Law.
"Lender"
and "Lenders"
have the meaning assigned to such terms in the preamble hereof.
"Liabilities"
means, as to any Person as of any date, the total of all amounts which would be
properly classified as "liabilities" in a balance sheet of such Person at such
date, prepared in accordance with GAAP, consistently applied, including without
limitation, deferred income taxes, deferred compensation of any type and capital
lease obligations, if any.
"Lien"
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (whether statutory or otherwise), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Financing Lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing).
"Loan" has
the meaning given it in Section 2.1.
"Loan
Balance" means for any day, the principal balance of the Loans
outstanding on such day.
"Loan
Document" means any, and "Loan
Documents" shall mean all, of this Agreement, the Notes, the Security
Instruments, the Fee Letter, and any and all other agreements, certificates or
instruments now or hereafter executed and delivered by the Borrower or any other
Person in connection with, or as security for the payment or performance of any
or all of the Obligations, as any of such may be renewed, amended or
supplemented from time to time.
"Loan to
Value" or "LTV"
means, as to any Mortgage Loan, the ratio expressed as a percentage determined
by dividing (a) the total principal amount owing and outstanding on the
first-lien Mortgage Loan, by (b) the Appraised Value of the residential
real property and improvements serving as collateral for the Mortgage
Loan.
"Market
Value" on any day shall be determined by the Administrative Agent, in its
sole discretion, based upon (a) information then available to the
Administrative Agent regarding quotes from dealers for the purchase of mortgage
notes similar to the Mortgage Note that have been delivered to the
Administrative Agent pursuant to this Agreement or (b) sales prices
actually received by the Borrower for mortgage notes sold by the Borrower during
the immediately preceding thirty (30) day period similar to the Mortgage Note
that have been delivered to the Administrative Agent pursuant to this
Agreement.
"Material Adverse
Effect" means any material adverse effect on (a) the validity or
enforceability of this Agreement, the Notes or any other Loan Document,
(b) the business, operations, total Property, prospects or condition
(financial or otherwise) of any Related Person, (c) the collateral under
any Security Instrument, or (d) the ability of any Related Person to
fulfill its obligations under this Agreement, the Notes, or any other Loan
Document to which it is a party.
"Maximum
Rate" means, with respect to each Lender, the maximum nonusurious rate of
interest that such Lender is permitted under applicable Law to contract for,
take, charge, or receive with respect to its Loans.
"MERS"
means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or
any successor thereto.
"MERS
Agreement" means those agreements by and among the Borrower, Lender, MERS
and MERSCORP, Inc., as amended, modified, supplemented, extended, restated or
replaced from time to time.
"MERS®
System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"MIN"
means, with respect to each Mortgage Loan, the Mortgage Identification Number
for such Mortgage Loan registered with MERS on the MERS® System.
"MOM Loan"
means, with respect to any Mortgage Loan, MERS acting as the mortgagee of such
Mortgage Loan, solely as nominee for the originator or the Borrower, as the case
may be, of such Mortgage Loan and its successors and assignees.
"Mortgage"
means a mortgage or deed of trust, on standard forms in form and substance
satisfactory to the Administrative Agent, securing a Mortgage Note and granting
a perfected, first or second priority lien on residential real property
consisting of land and a one-to-four-family dwelling thereon which is completed
and ready for occupancy.
"Mortgage
Collateral" means all Mortgage Notes (a) which are made payable to
the order of the Borrower or have been endorsed (without restriction or
limitation) payable to the order of the Borrower, (b) in which the
Administrative Agent has been granted and continues to hold a perfected first
priority security interest, (c) which are in form and substance acceptable
to the Administrative Agent in its reasonable discretion, (d) which are
secured by Mortgages, and (e) which conform in all respects with all the
requirements for purchase of such Mortgage Note under the Take-Out Commitments
and are valid and enforceable in accordance with their respective
terms.
"Mortgage
Loan" means a mortgage loan which is evidenced by a Mortgage Note and
secured by a Mortgage, together with the rights and obligations of a holder
thereof and payments thereon and proceeds therefrom.
"Mortgage
Note" means the note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under a Mortgage Loan.
"Net
Income" of any Person means, for any period, the net income of such
Person (excluding extraordinary gains but including extraordinary losses) for
such period, calculated in accordance with GAAP.
"Net Worth"
of any Person means, as of any date, an amount equal to all Consolidated assets
of such Person minus such Person's
Consolidated liabilities, each as determined in accordance with
GAAP.
"Note"
means any promissory note delivered by the Borrower to any Lender pursuant to
Section 2.2 in
the form attached hereto as Exhibit A and
all renewals, modifications, amendments, restatements, and extensions
thereof.
"Notice of
Assignment" has the meaning specified in Section 11.11(b)(ii).
"Obligations"
means all present and future Indebtedness, obligations, and liabilities of the
Borrower to the Administrative Agent and the Lenders, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Agreement or
any other Loan Document, and all interest accrued thereon, and reasonable
attorneys' fees and other costs incurred in the drafting, negotiation,
enforcement or collection thereof, regardless of whether such Indebtedness,
obligations, and liabilities are direct, indirect, fixed, contingent, joint,
several or joint and several.
"Obligor"
means the Person or Persons obligated to pay the Indebtedness which is the
subject of a Mortgage Loan.
"Operating
Account" means the non-interest bearing demand checking accounts (whether
one or more) established by the Borrower with the Administrative Agent to be
used for the Borrower's operations. Subject to the rights of the
Administrative Agent and the Lenders under Section 11.10
hereof, the Borrower shall be entitled to withdraw funds from the Operating
Account.
"Other
Taxes" means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
"Parent"
means M/I Homes, Inc., an Ohio corporation, and owner of all of the outstanding
capital stock of the Borrower.
"Parent Debt
Agreement" means that certain Second Amended and Restated Credit
Agreement, dated as of October 6, 2006, among the Parent, JPMorgan Chase
Bank, N.A., as agent, and the lenders party thereto, and all amendments,
modifications and supplements thereto and amendments and restatements thereof,
and including any subsequent credit facilities refinancing any indebtedness
thereunder.
"PBGC"
means the Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to any of its functions.
"Permitted
Liens" means (i) Liens in favor of the Administrative Agent to
secure the Obligations (ii) a first Lien in respect of a Second Lien/HELOC
Loan, and (iii) ad valorem taxes and assessments not yet due and
payable.
"Person"
means any individual, corporation, partnership, joint venture, association,
joint stock company, limited liability company, trust, unincorporated
organization, Governmental Authority, or any other form of entity.
"Prime
Loan" means a Single Family Mortgage Loan which is (a) secured by a
first-lien Mortgage and (b) a Conforming Loan, FHA Loan or VA
Loan.
"Principal
Residence" means a Single Family dwelling that the Obligor occupies as
his or her primary residence.
"Property"
means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.
"Purchasers"
has the meaning specified in Section 11.11(b)(i).
"Regulation U"
means Regulation U issued by the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Regulation X" means Regulation X
issued by the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Related
Persons" means the Borrower and each of the Borrower's
Subsidiaries.
"Reportable
Event" means (1) a reportable event described in
Sections 4043(c)(5) or (6) of ERISA or the regulations promulgated
thereunder, or (2) any other reportable event described in
Section 4043(c) of ERISA or the regulations promulgated thereunder other
than a reportable event not subject to the provision for 30-day notice to the
PBGC pursuant to a waiver by the PBGC under Section 4043(a) of
ERISA.
"Required
Lenders" means, at any time, the holders of 66-2/3% or more of the
Commitments, or if at any time the Commitments are terminated, the holders of
66-2/3% or more of the aggregate outstanding principal amount of all Loans;
provided, however, that if only
two Lenders hold the Commitments or 100% of the aggregate outstanding principal
amount of all Loans when the Commitments are terminated, then Required Lenders
shall mean both Lenders.
"Required Mortgage
Documents" means, as to any Mortgage Loan, the items described on Schedule A to
the Security Agreement.
"Requirement of
Law" as to any Person means the charter and by-laws or other
organizational or governing documents of such Person, and any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including, without limitation, any of the foregoing
which relate to environmental standards or controls, energy regulations and
occupational, safety and health standards or controls) of any arbitrator, court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.
"Second Lien/HELOC
Loan" means a Single Family Mortgage Loan which (a) is secured by a
traditional closed-end second-lien Mortgage or an open-end HELOC Mortgage, and
in each case is a Conforming Loan, FHA Loan or VA Loan, (b) has a CLTV less
than or equal to 95%, and (c) has a principal balance not greater than the
current FNMA/FHLMC loan size limit for such Mortgages.
"Second/Vacation
Property" means a Single Family dwelling that is not used for rental
purposes and that the Obligor occupies for some portion of the
year.
"Security
Agreement" means the Security Agreement between the Borrower and the
Administrative Agent dated of even date herewith in substantially the form
attached as Exhibit E, as
the same may from time to time be further supplemented, amended or
restated.
"Security
Instrument" means (a) the Security Agreement and (b) such other
executed documents, instruments, certificates, agreements and financing
statements as are or may be necessary to grant to the Administrative Agent a
perfected first prior and continuing security interest in and to all Mortgage
Collateral, and any and all other agreements, certificates or instruments now or
hereafter executed and delivered by the Borrower in connection with, or as
security for the payment or performance of, all or any of the Obligations,
including the Borrower's obligations under the Notes and this Agreement, as such
agreements may be amended, modified or supplemented from time to
time.
"Servicing
Agreements" means all agreements between the Related Persons and Persons
other than a Related Person pursuant to which the Borrower undertakes to service
Mortgage Loans.
"Servicing
Records" means all contracts and other documents, books, records and
other information (including without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained with respect to the Servicing Rights.
"Servicing
Rights" means all of right, title and interest of any Related Person in
and under the Servicing Agreements, including, without limitation, the rights of
the Borrower to income and reimbursement thereunder.
"Settlement
Account" means the non-interest bearing demand deposit account
established by the Borrower with the Administrative Agent to be used for
(i) the deposit of proceeds from the sale of Mortgage Collateral, and
(ii) the payment of the Obligations; provided that
(a) the Settlement Account shall be pledged to the Administrative Agent for
the benefit of the Administrative Agent, and (b) the Borrower shall not be
entitled to withdraw funds from the Settlement Account.
"Single
Family" means residential real property consisting of land and a
completed one-to-eight unit single family dwelling thereon (including Principal
Residences, Second/Vacation Property and Investment Property), which is fully
completed and ready for occupancy, and which is not used for commercial
purposes, is not a leasehold interest, and is not a manufactured or mobile
home.
"Subsidiary"
means, with respect to any Person, any corporation, association, partnership,
joint venture, or other business or corporate entity, enterprise or organization
which is directly or indirectly (through one or more intermediaries) controlled
by or owned fifty percent (50%) or more by such Person.
"Take-Out
Commitment" means with respect to any Eligible Mortgage Loan, a written
master commitment of an Investor to purchase a pool of Mortgage Loans or an
individual commitment of an Investor to purchase an individual Mortgage Loan
under which such Eligible Mortgage Loan(s) will be delivered to such Investor on
terms satisfactory to the Administrative Agent, in its reasonable
discretion.
"Tangible Net
Worth" means, as of any date, for any Person, the Net Worth of such
Person minus
all Consolidated assets of such Person which would be classified as intangible
assets under GAAP, including but not limited to goodwill (whether representing
the excess cost over book value of assets acquired or otherwise), patents,
trademarks, trade names, copyrights, franchises, deferred charges, and
capitalized servicing rights.
"Taxes"
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.
"Termination
Event" means (a) the occurrence with respect to any ERISA Plan of a
Reportable Event, (b) the withdrawal of the Borrower or any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer,"
as defined in Section 4001(a)(2) of ERISA, (c) the distribution to
affected parties of a notice of intent to terminate any ERISA Plan or the
treatment of any ERISA Plan amendment as a termination under Section 4041
of ERISA, (d) the institution of proceedings to terminate any ERISA Plan by
the PBGC under Section 4042 of ERISA, or (e) any other event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any ERISA
Plan.
"Total
Liabilities" of any Person means, as of any date, the sum of (a) all
Liabilities of such Person as of such date and (b) the aggregate amount of
Mortgage Loans purchased and remaining under any Mortgage Loan purchase facility
of such Person.
"UCC" means
the Texas Uniform Commercial Code, as the same may hereafter be
amended.
"UETA"
means the Texas Uniform Electronic Transaction Act, as amended from time to
time.
"Unit Collateral
Value" means, on any day, with respect to each Eligible Mortgage Loan
included in the Borrowing Base, the Applicable Advance Rate Percentage of the
least of the following:
(i) the
outstanding principal balance of the Mortgage Note constituting such Mortgage
Loan;
(ii) the
actual out-of-pocket cost to the Borrower of such Mortgage Loan minus the amount
of principal paid under such Mortgage Loan and delivered to Lender for
application to the prepayment of the Loans;
(iii) the
amount at which an Investor has committed to purchase the Mortgage Loan pursuant
to a Take-Out Commitment; or
(iv) the
Market Value of the Mortgage Note constituting such Mortgage Loan.
provided that if any such
Eligible Mortgage Loan included in the Borrowing Base becomes an Aged Loan, the
Unit Collateral Value of such Mortgage Loan as determined by the above
calculation shall be reduced by five percent (5%), and the Borrower shall
immediately, on such Eligible Mortgage Loan's sixty-first (61st) day in the
Borrowing Base, make repayment required by Section 2.5;
and
provided further that if any
such Aged Loan is included in the Borrowing Base for more than ninety (90) days,
the Unit Collateral Value of such Mortgage Loan shall be reduced by an
additional ten percent (10%), and the Borrower shall immediately, on such
Eligible Mortgage Loan's ninety-first (91st) day in the Borrowing Base, make
repayment required by Section 2.5;
and
provided further that no
Eligible Mortgage Loan may be included in the Borrowing Base for more than one
hundred twenty (120) days, such that on the one hundred twenty-first (121st) day
after such Eligible Mortgage Loan is first included in the Borrowing Base, the
Unit Collateral Value of such Mortgage Loan shall be reduced to zero, and the
Borrower shall immediately make repayment required by Section 2.5.
"VA" means
the Veterans Administration and any successor thereto.
"VA Loan"
means a Mortgage Loan guaranteed by the VA.
"Wet Loan"
means an Eligible Mortgage Loan which is included in the Borrowing Base, but for
which the Required Mortgage Documents have not been delivered to
Lender.
Other Definitional
Provisions.
(a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
above-defined meanings when used in the Notes or any other Loan Document,
certificate, report or other document made or delivered pursuant
hereto.
(b) Each term
defined in the singular form in Section 1.1
shall mean the plural thereof when the plural form of such term is used in this
Agreement, the Notes or any other Loan Document, certificate, report or other
document made or delivered pursuant hereto, and each term defined in the plural
form in Section 1.1
shall mean the singular thereof when the singular form of such term is used
herein or therein.
(c) The words
"hereof," "herein," "hereunder" and similar terms when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and section, subsection, schedule and exhibit references herein
are references to sections, subsections, schedules and exhibits to this
Agreement unless otherwise specified. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation."
(d) Unless
the context otherwise requires or unless otherwise provided herein the terms
defined in this Agreement which refer to a particular agreement, instrument or
document also refer to and include all renewals, extensions, modifications,
amendments and restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
(e) As used
herein, in the Notes or in any other Loan Document, certificate, report or other
document made or delivered pursuant hereto, accounting terms relating to any
Person and not specifically defined in this Agreement or therein shall have the
respective meanings given to them under GAAP.
Section
1.2 Exhibits and
Schedules. All Exhibits and Schedules attached to this
Agreement are incorporated by reference herein and made a part hereof for all
purposes.
Section
1.3 Calculations and
Determinations. All calculations under the Loan Documents of
interest and of fees shall be made on the basis of actual days elapsed
(including the first day but excluding the last) and a year of three hundred
sixty (360) days. Each determination by Lender of amounts to be paid
hereunder shall, in the absence of manifest error, be conclusive and
binding. Unless otherwise expressly provided herein or unless Lender
otherwise consents all financial statements and reports furnished to Lender
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP. The
Administrative Agent shall deliver to the Borrower an interest billing statement
for each month on or before the fifth (5th) day of the next succeeding month,
which interest billing statement shall set forth the interest accrued on the
Loans for such month; provided that any failure or
delay in delivering such interest billing or any inaccuracy therein shall not
affect the Obligations.
ARTICLE
II
AMOUNT
AND TERMS OF LOANS
Section
2.1 Commitment and
Loans. Subject to the terms and conditions contained in this
Agreement, each Lender severally agrees to make loans ("Loans") to
the Borrower on a revolving credit basis from time to time on any Business Day
from the date of this Agreement through the Drawdown Termination
Date. The aggregate amount of all Loans requested in any Borrowing
Request must be equal to the lesser of (i) an amount greater than or equal
to $25,000 or (ii) an amount equal to the Aggregate Commitments less the
Loan Balance. Notwithstanding anything to the contrary, after giving
effect to the transactions contemplated by the Borrowing Request pursuant to
which a Loan is requested, and at all other times, the aggregate unpaid
principal amount of all Loans outstanding shall not exceed the lesser of (a) the
Collateral Value of the Borrowing Base, and (b) the Aggregate
Commitments.
Section
2.2 Promissory Notes; Interest
on the Notes. The obligation of the Borrower to repay the
Loans made by the Lenders, together with interest accruing in connection
therewith, shall be evidenced by a Note payable to the order of each
Lender. Interest on the Notes shall be due and payable as provided
herein and therein. The entire Loan Balance and all accrued and
unpaid interest thereon shall be finally due and payable on the Drawdown
Termination Date.
Section
2.3 Notice and Manner of
Obtaining Loans. The Borrower must give written notice (which
may be sent by electronic mail) to the Administrative Agent, or telephonic
notice promptly confirmed in writing, of each request for Loans. Each
such written request or confirmation must be made in the form and substance of
the "Borrowing Request" attached hereto as Exhibit B, duly
completed. Each such Borrowing Request must:
(a) specify
the aggregate amount of any such Borrowing of new Loans and the date on which
such Loans are to be advanced; and
(b) be
received by the Administrative Agent not later than (i) 3:00 p.m.,
Central time, if there is only one Lender or (ii) 12:00 noon, Central
time, if there is more than one Lender, on the day on which any such Loans are
to be made.
With each
delivery of a Borrowing Request to the Administrative Agent, the Borrower
represents and warrants to the Administrative Agent the following:
(i) the
Borrower is entitled to receive the requested Loan under the terms and
conditions of this Agreement;
(ii) all items
which the Borrower is required to furnish to the Administrative Agent pursuant
to this Agreement accompany the Borrowing Request (or, if Wet Loans, shall be
delivered to the Administrative Agent in accordance with the
Agreement);
(iii) all
Mortgage Loans offered thereby conform in all respects with the applicable
requirements set forth in this Agreement;
(iv) no Event
of Default exists under this Agreement or would result from the Borrowing or the
application of the proceeds therefrom;
(v) no change
or event has occurred which with notice and/or the passage of time would
constitute an Event of Default;
(vi) after
giving effect to the Loan requested thereby the Loan Balance shall not exceed
the lesser of (1) the Collateral Value of the Borrowing Base and
(2) the Aggregate Commitments; and
(vii) after
giving effect to the Loans requested thereby, no Applicable Sublimit will be
exceeded.
Additionally,
with each Borrowing Request, the Borrower represents and warrants that, except
as permitted under this Agreement, the Borrower holds with respect to each of
the Mortgage Notes offered the following:
(i) unless
delivered therewith, a certified copy of the Mortgage relating to such Mortgage
Note;
(ii) mortgagee
policies of title insurance conforming to the requirements of the Administrative
Agent or binding commitments for the issuance of same;
(iii) insurance
policies insuring the mortgaged premises as required by the Administrative
Agent; and
(iv) unless
delivered therewith, an original of any executed Take-Out Commitment or document
evidencing any Hedging Arrangement relating to such Mortgage Note.
With the
delivery of each Borrowing Request, the Borrower agrees that it holds the above
referenced items in trust for the Administrative Agent, and will at any time
deliver the same to the Administrative Agent upon request or, upon written
instructions from the Administrative Agent, to any Person designated by the
Administrative Agent, promptly, and in any event within two (2) Business Days
after such request or instructions. The Borrower further agrees that
it will not deliver any of the above items, nor give, transfer, or assign any
interest in same, to any Person other than the Administrative Agent (or the
Person or Persons designated by the Administrative Agent) without the prior
written consent of the Administrative Agent.
Each such
telephonic request shall be deemed a representation, warranty, acknowledgment
and agreement by the Borrower as to the matters which are required to be set out
in such written confirmation. If all conditions precedent to such
Loan have been met, the Administrative Agent will, promptly upon receipt of
funds from the Lenders, on the date remit to the Borrower the amount of such
Loan in immediately available dollars, by crediting the Funding Account with
immediately available funds in the amount of such Loan.
Section
2.4 Fees.
(a) In
consideration of the Lenders' commitment to make the Loans, the Borrower will
pay to the Administrative Agent for the pro rata account of each Lender a
non-refundable unused fee determined on a daily basis by applying a rate of 20.0
basis points (0.20%) per annum to the unused amount of each such Lender's
Commitment on each day during the term of the Loans. This unused fee
shall be due and payable quarterly in arrears on the fifteenth day following
each Fiscal Quarter.
(b) The
Borrower shall pay to the Administrative Agent, a collateral handling fee in the
amount and at the time set forth in the Fee Letter.
Section
2.5 Mandatory
Repayments. If at any time the Loan Balance exceeds the lesser
of (i) the Collateral Value of the Borrowing Base (as a result of an
Applicable Sublimit being exceeded or otherwise) or (ii) the Aggregate
Commitments, then the Borrower (x) shall repay the amount of such excess or
(y) so long as the Loan Balance does not exceed the Aggregate Commitments,
pledge to the Administrative Agent additional Eligible Mortgage Loans which have
an aggregate Unit Collateral Value equal to or greater than such excess, in each
case, within one (1) Business Day after written notice thereof is given by the
Administrative Agent to the Borrower; provided that, after giving
effect to any pledge of additional Eligible Mortgage Loans, the Unit Collateral
Value of such Mortgage Loans when added to the Unit Collateral Value of all
other Mortgage Loans in the same Mortgage Loan classification does not exceed
the Applicable Sublimit for such Mortgage Loan classification.
Section
2.6 Payments to the
Administrative Agent. All payments of interest on the Notes,
all payments of principal, including any principal payment made with proceeds of
Mortgage Collateral, and fees hereunder shall be made directly to the
Administrative Agent without condition or deduction or any counterclaim,
defense, recoupment, setoff, or withholding or deduction for taxes, for the pro
rata benefit of each Lender, in federal or other immediately available funds
before (a) 3:00 p.m. (Central time) if there is only one Lender and
(b) 1:00 p.m. (Central time) if there is more than one Lender, in each
case on the respective dates when due via wire transfer of immediately available
funds to the Settlement Account. The Administrative Agent shall
promptly distribute such payments to the Lenders upon receipt in like funds as
received. The Borrower shall send notice to the Administrative Agent
before (a) 3:00 p.m. (Central time) if there is only one Lender and
(b) 11:00 a.m. (Central time) if there is more than one Lender, in
each case on the day any payment of principal or interest is received by the
Administrative Agent which sets forth the Loans against which such payment is to
be applied. Any payment (or any payment received without a notice
regarding application of such payment) received by the Administrative Agent
after such time will be deemed to have been made on the next following Business
Day. Should any such payment become due and payable on a day other
than a Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, in the case of a payment of principal or past due
interest, interest shall accrue and be payable thereon for the period of such
extension as provided in the Loan Document under which such payment is
due. Each payment under a Loan Document shall be payable at the place
provided therein and, if no specific place of payment is provided, shall be
payable at the place of payment of the Notes. Prior to the occurrence
of an Event of Default and exercise of remedies by the Administrative Agent,
when the Administrative Agent collects or receives money on account of the
Obligations, the Administrative Agent shall apply all such money so distributed,
as follows:
(a) first, to
any reimbursements due the Administrative Agent under Section 5.5;
(b) second,
to any reimbursement due to the Lenders under Section 5.5;
(c) third,
prior to a Default or Event of Default, to the payment of the Loans then due, as
directed by the Borrower
(d) fourth,
to the prepayment of principal on the Notes, together with accrued and unpaid
interest on the principal so prepaid; and
(e) last, for
the payment or prepayment of any other Obligations and the balance, if any,
after all the Obligations have been indefeasibly paid in fully, to the Borrower
or as otherwise required by Law.
All
payments applied to principal or interest on any Note shall be applied first to
any interest then due and payable, then to principal then due and payable, and
last to any prepayment of principal and interest.
Section
2.7 Notification by the
Administrative Agent. Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of each Borrowing
Request and repayment notice received by it hereunder. Upon the
request of the Administrative Agent, not later than 2:00 p.m. (Central
time) on the day on which any Loans are to be made, each Lender shall make
available its pro rata portion of the Loan or Loans in accordance with such
Lender's Commitment in immediately available funds to the Administrative Agent
at its address specified on the Administrative Agent's signature page
hereto.
Section
2.8 Non-Receipt of Funds by the
Administrative Agent.
(a) Unless
the Administrative Agent shall have been notified in writing by any Lender prior
to a Borrowing that such Lender will not make the amount that would constitute
its share of such Borrowing available to the Administrative Agent, the
Administrative Agent may assume that such Lender is making such amount available
to the Administrative Agent, and the Administrative Agent may, in its sole and
absolute discretion, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is not made available
to the Administrative Agent by the required time therefor, and Administrative
Agent elects to make such corresponding amount available to the Borrower, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon, at a rate equal to the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation, plus any administrative, processing or similar
fees charged by the Administrative Agent in connection with the foregoing, for
the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph
shall be conclusive in the absence of manifest error. If such
Lender's share of such Borrowing is not made available to the Administrative
Agent by such Lender within three (3) Business Days after such Borrowing date,
the Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to the relevant Loan, on
demand, from the Borrower. Nothing in this Section shall be deemed to
limit the rights of the Borrower against any such Lender.
(b) Unless
the Administrative Agent shall have been notified in writing by the Borrower
prior to the date of any payment due to be made by the Borrower hereunder that
the Borrower will not make such payment to the Administrative Agent (including
but not limited to situations in which the Borrower informs the Administrative
Agent that the Administrative Agent will be receiving proceeds of Collateral on
a specific date and that the Borrower intends to use such proceeds to make a
payment of principal), the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata
shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three (3) Business Days after such
due date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation, plus administrative, processing or similar fees charged by the
Administrative Agent in connection with the foregoing. Nothing in
this Section shall be deemed to limit the rights of the Administrative Agent or
any Lender against the Borrower.
Section
2.9 Increased Cost and Reduced
Return.
(a) If, after
the date hereof, any Lender shall have determined that the adoption of any
applicable Law, rule, or regulation regarding capital adequacy or any change
therein or in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of Law) of any such Governmental Authority,
central bank, or comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling such
Lender, due to the obligations of such Lender hereunder, to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies with
respect to capital adequacy), then, within fifteen (15) days after demand by
such Lender, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction, but only to the
extent that such Lender has not been compensated therefor by any increase in the
LIBOR.
(b) Each
Lender shall promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section. In the event that any Lender
claims compensation under this Section, such Lender shall furnish to the
Borrower a statement setting forth the additional amount or amounts to be paid
to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Lender shall act in good
faith and may use any reasonable averaging and attribution methods.
Section
2.10 Settlement
Account. The Borrower shall not be entitled to withdraw funds
from the Settlement Account. Except upon the occurrence of any Event
of Default, to the extent that on any Business Day amounts in the Settlement
Account exceed the amount needed in order to maintain the Collateral Value of
the Borrowing Base at an amount equal to or greater than the amount of the Loan
Balance, the Administrative Agent shall cause such excess amount to be
automatically transferred to any Operating Account designated by the Borrower or
as the Borrower may otherwise direct the application of such excess
amount. If on any Business Day the amount in the Settlement Account
is less than the amount needed to maintain the Collateral Value of the Borrowing
Base in an amount equal to or greater than the amount of the Loan Balance, and
the Borrower has not made any payment as provided in Section 2.5, the
Administrative Agent may cause an amount equal to such deficiency to be
transferred from any Operating Account to the Settlement Account.
ARTICLE
III
CONDITIONS
PRECEDENT
The
obligation of the Lenders to make Loans hereunder is subject to fulfillment of
the conditions precedent stated in this Article
III.
Section
3.1 Initial
Loan. The obligation of the Lenders to fund any Loan hereunder
shall be subject to, in addition to the conditions precedent specified in Section 3.2, the
following terms and conditions:
(a) The
Borrower shall have delivered to the Administrative Agent the following (each of
the following documents being duly executed and delivered and in form and
substance satisfactory to each Lender, and, with the exception of the Notes,
each in a sufficient number of originals that each Lender, the Administrative
Agent and its counsel may have an executed original of each
document):
(i) an
executed counterpart of this Agreement and of all instruments, certificates and
opinions referred to in this Article III not
theretofore delivered (except the Borrowing Request which is to be delivered at
the time provided in Subsection 3.2(a)
hereof);
(ii) a Note
for each Lender;
(iii) the
Security Agreement dated of even date herewith;
(iv) a
certificate of the Secretary or Assistant Secretary of the Borrower setting
forth (i) resolutions of its board of directors authorizing the execution,
delivery, and performance of the Loan Documents to which it is a party and
identifying the officers authorized to sign such instruments, (ii) specimen
signatures of the officers so authorized, and (iii) articles of
incorporation of the Borrower certified by the appropriate Secretary of State as
of a recent date, and (iv) code of regulations of the Borrower, certified
as being accurate and complete;
(v) a
certificate of the existence and good standing for the Borrower in its state of
incorporation or organization dated no earlier than fifteen days prior to the
date hereof;
(vi) an
opinion of counsel for the Borrower in form and substance satisfactory to the
Administrative Agent;
(vii) a
Borrowing Request and a Borrowing Base Certificate dated as of the date of the
first Loan, certified by the Chief Executive Officer, President, Secretary,
Chief Financial Officer or Treasurer of the Borrower;
(viii) a copy of
the MERS Agreement, duly executed by the Borrower; and
(ix) such
other documents, instruments, certificates and agreements (including, without
limitation, UCC tax and lien search results) as the Administrative Agent or its
legal counsel may reasonably request at any time at or prior to the date of the
initial Loan hereunder.
(b) No
Person, other than the Administrative Agent, holds any mortgage, pledge, lien,
security interest or other charge or encumbrance in, against or to any of the
Mortgage Loans identified by the Borrower as Mortgage Collateral or included in
any computation of the Collateral Value of the Borrowing Base.
(c) The
Administrative Agent shall have received evidence satisfactory to it that all
filings and other actions necessary or desirable to perfect and protect the
Liens created by the Security Instruments shall have been completed (including,
without limitation, the filing of financing statements on form UCC-1 and filing
of UCC-3 amendments or termination statements).
(d) The
Borrower shall have paid all fees and reimbursements to be paid to the
Administrative Agent pursuant to any Loan Document, the Fee Letter, or otherwise
due the Administrative Agent and including reasonable fees (not to exceed the
amount set forth in the Fee Letter) and expenses of the Administrative Agent's
attorneys.
Section
3.2 All
Loans. The obligation of the Lenders to fund any Loan pursuant
to this Agreement is subject to the following further conditions
precedent:
(a) the
Borrower shall have delivered to the Administrative Agent a Borrowing Request
dated as of the date of such Loan, certified by the Chief Executive Officer,
President, Secretary, Chief Financial Officer or Treasurer of the Borrower, and
the Required Mortgage Documents for all Eligible Mortgage Loans other than Wet
Loans;
(b) all other
Property in which the Borrower has granted a Lien to the Administrative Agent,
for the benefit of the Lenders, shall have been physically delivered to the
possession of the Administrative Agent, to the extent required to be so
delivered under the Loan Documents, and the Administrative Agent has a valid and
perfected first lien on such Property, for the benefit of the
Lenders;
(c) the
representations and warranties of each Related Person contained in this
Agreement or any Security Instrument (other than those representations and
warranties which are by their terms expressly limited to the date of this
Agreement) shall be true and correct in all material respects on and as of the
date of such Loan, as though made on and as of such date, both before and after
giving effect to the Borrowing and the application of the proceeds
thereof;
(d) no
Default or Event of Default shall have occurred and be continuing or would
result from such Borrowing or the application of the proceeds
therefrom;
(e) no change
or event which constitutes a Material Adverse Effect shall have occurred and be
continuing as of the date of such Loan;
(f) the
Funding Account, the Settlement Account and the Operating Account shall be
established and in existence;
(g) the
making of such Loan shall not be prohibited by any Governmental Requirement or
contravene or conflict with any Requirement of Law;
(h) the
delivery to the Administrative Agent of such other documents, instruments,
certificates, agreements and opinions of counsel, including such documents,
agreements, certificates and instruments as may be necessary or desirable to
perfect, preserve or protect the priority of any Lien granted or intended to be
granted hereunder or otherwise and including favorable written opinions of
counsel with respect thereto, as the Administrative Agent may reasonably
request; and
(i) No
Person, other than the Administrative Agent, shall be listed in the field
designated "interim funder" on the MERS® System with respect to any Mortgage
Loans identified by the Borrower as Mortgage Collateral or included in any
computation of the Collateral Value of the Borrowing Base.
Delivery
to the Administrative Agent of a Borrowing Request shall be deemed to constitute
a representation and warranty by the Borrower on the date thereof and on the
date on which the Loan is made of the facts specified in subsections (c)
and (d) of this
Section.
ARTICLE
IV
BORROWER
REPRESENTATIONS AND WARRANTIES
The
Borrower represents and warrants as follows:
Section
4.1 Organization and Good
Standing. Each Related Person (a) is a corporation,
limited liability company or limited partnership duly incorporated or organized
and existing in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) is duly qualified as a foreign entity
and in good standing in all jurisdictions in which its failure to be so
qualified could have a Material Adverse Effect, (c) has the corporate or
organizational power and authority to own its properties and assets and to
transact the business in which it is engaged and is or will be qualified in
those states wherein it proposes to transact business in the future, and
(d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, have a Material
Adverse Effect.
Section
4.2 Authorization and
Power. Each Related Person has the corporate or organizational
power and requisite authority to execute, deliver and perform the Loan Documents
to which it is a party; each Related Person is duly authorized to and has taken
all action necessary to authorize it to, execute, deliver and perform the Loan
Documents to which it is a party and is and will continue to be duly authorized
to perform such Loan Documents.
Section
4.3 No Conflicts or
Consents. Neither the execution and delivery by any Related
Person of the Loan Documents to which it is a party, nor the consummation of any
of the transactions herein or therein contemplated, nor compliance with the
terms and provisions hereof or with the terms and provisions thereof, will
(a) materially contravene or conflict with any Requirement of Law to which
any Related Person is subject, or any indenture, mortgage, deed of trust, or
other agreement or instrument to which any Related Person is a party or by which
any Related Person may be bound, or to which the Property of any Related Person
may be subject, or (b) result in the creation or imposition of any Lien,
other than the Lien of the Security Agreement, on the Property of any Related
Person. All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, from any
Governmental Authority that are necessary in connection with the transactions
contemplated by the Loan Documents have been obtained.
Section
4.4 Enforceable
Obligations. This Agreement, the Notes, and the other Loan
Documents to which any Related Person is a party are the legal, valid and
binding obligations of such Related Person, enforceable in accordance with their
respective terms, except as limited by Debtor Laws.
Section
4.5 Priority of
Liens. Upon delivery to the Administrative Agent of each
Borrowing Request, the Administrative Agent shall have valid, enforceable,
perfected, first priority Liens and security interests in each Mortgage Note
identified therein.
Section
4.6 No
Liens. The Borrower has good and indefeasible title to the
Mortgage Collateral free and clear of all Liens and other adverse claims of any
nature, except for Permitted Liens.
Section
4.7 Financial Condition of the
Borrower. The Borrower has delivered to the Lenders copies of
its annual audited balance sheet as of December 31, 2007, and the related
statements of income, stockholders' equity and cash flows for the period ended
such date; such financial statements fairly present the financial condition of
the Borrower as of such date and the results of operations of the Borrower for
the period ended on such date and have been prepared in accordance with GAAP,
subject to normal year-end adjustments; as of the date thereof, there were no
obligations, liabilities or Indebtedness (including material contingent and
indirect liabilities and obligations or unusual forward or long-term
commitments) of the Borrower which are not reflected in such financial
statements and no change which constitutes a Material Adverse Effect has
occurred in the financial condition or business of the Borrower since
December 31, 2007. The Borrower has also delivered to the
Lenders its unaudited quarterly balance sheet for the period ending
March 31, 2008 and management reports for March 31, 2008; such reports
fairly and accurately present the Borrower's commitment position, pipeline
position, servicing and production as of the end of such months and for the
fiscal year to date for the periods ending on such dates.
Section
4.8 Full
Disclosure. There is no material fact that the Borrower has
not disclosed to Lender which could have a Material Adverse
Effect. None of (i) the financial statements referred to in
Section 4.7
hereof, (ii) any Borrowing Request or officer's certificate, or
(iii) any statement delivered by any Related Person to the Administrative
Agent in connection with this Agreement, contains any untrue statement of
material fact.
Section
4.9 No
Default. No Related Person is in default under any material
loan agreement, mortgage, security agreement or other material agreement or
obligation to which it is a party or by which any of its Property is
bound.
Section
4.10 No
Litigation. There are no material actions, suits or legal,
equitable, arbitration or administrative proceedings pending, or to the
knowledge of the Borrower threatened, against any Related Person the adverse
determination of which could constitute a Material Adverse Effect.
Section
4.11 Taxes. All
tax returns required to be filed by each Related Person in any jurisdiction have
been filed and all taxes, assessments, fees and other governmental charges upon
each Related Person or upon any of its properties, income or franchises have
been paid prior to the time that such taxes could give rise to a Lien thereon,
unless protested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been established on the books of
such Related Person. No Related Person has any knowledge of any
proposed tax assessment against any Related Person.
Section
4.12 Principal Office,
etc. The principal office, chief executive office and
principal place of business of the Borrower is at the address set forth on the
Borrower's signature page hereto or in a written notice given pursuant to Section 6.12.
Section
4.13 Compliance with
ERISA. No Related Person currently maintains, contributes to,
is required to contribute to or has any liability, whether absolute or
contingent, with respect to an ERISA Plan. With respect to all other
employee benefit plans maintained or contributed to by each Related Person, each
Related Person is in material compliance with ERISA.
Section
4.14 Subsidiaries. No
Related Person presently has any Subsidiary or owns any stock in any other
corporation or association except those listed in Schedule 4.14. As
of the date hereof, each Related Person owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in such
exhibit.
Section
4.15 Indebtedness. No
Related Person has any indebtedness outstanding other than the Indebtedness
permitted by Section 6.2.
Section
4.16 Permits, Patents,
Trademarks, etc.
(a) Each
Related Person has all permits and licenses necessary for the operation of its
business.
(b) Each
Related Person owns or possesses (or is licensed or otherwise has the necessary
right to use) all patents, trademarks, service marks, trade names and
copyrights, technology, know-how and processes, and all rights with respect to
the foregoing, which are necessary for the operation of its business, without
any known material conflict with the rights of others. The
consummation of the transactions contemplated hereby will not alter or impair in
any material respect any of such rights of each Related Person.
Section
4.17 Status Under Certain Federal
Statutes. No Related Person is (a) a "public utility," as
such term is defined in the Federal Power Act, as amended, (b) an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1949, as amended or
(c) a "rail carrier," or a "person controlled by or affiliated with a rail
carrier," within the meaning of Title 49, U.S.C., and no Related Person is
a "carrier" to which 49 U.S.C. §l1301(b)(1) is applicable.
Section
4.18 Securities
Act. No Related Person has issued any unregistered securities
in violation of the registration requirements of the Securities Act of 1933, as
amended, or of any other Requirement of Law, and is not violating any rule,
regulation, or requirement under the Securities Act of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended. No Related Person is
required to qualify an indenture under the Trust Indenture Act of 1939, as
amended, in connection with its execution and delivery of the
Notes.
Section
4.19 No Approvals
Required. Other than consents and approvals previously
obtained and actions previously taken, neither the execution and delivery of
this Agreement, the Notes and the other Loan Documents to which any Related
Person is a party, nor the consummation of any of the transactions contemplated
hereby or thereby requires the consent or approval of, the giving of notice to,
or the registration, recording or filing by any Related Person of any document
with, or the taking of any other action in respect of, any Governmental
Authority which has jurisdiction over each Related Person or any of its
Property, except for (a) the filing of the Uniform Commercial Code
financing statements and other similar filings to perfect the interest of the
Lenders in the Collateral, and (b) such other consents, approvals, notices,
registrations, filings or action as may be required in the ordinary course of
business of the Related Persons in connection with the performance of the
obligations of the Related Persons hereunder.
Section
4.20 Survival of
Representations. All representations and warranties by the
Borrower herein shall survive the execution and delivery of this Agreement, the
Notes, the other Loan Documents and the funding of the Loans, and any
investigation at any time made by or on behalf of Lender shall not diminish the
right of Lender to rely thereon.
Section
4.21 Compliance with
Laws. Each Related Person is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, including ERISA and
FIRREA, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith would not likely be expected to have a Material Adverse
Effect.
Section
4.22 Payment of
Obligations. No Related Person is in default in the payment
and discharge of its material obligations and liabilities, including all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower.
Section
4.23 Individual Mortgage
Loans. The Borrower hereby represents with respect to each
Mortgage Note and Mortgage Loan that is part of the Collateral:
(a) The
Borrower has good and marketable title to each Mortgage Note and Mortgage, was
the sole owner thereof and had full right to pledge the Mortgage Loan to Lender
free and clear of any Lien other than Permitted Liens;
(b) To the
knowledge of the Borrower, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note and there
is no event which, with the passage of time or with notice and/or the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration and no such default, breach, violation or event of
acceleration has been waived;
(c) To the
knowledge of the Borrower, the physical condition of the Property subject to the
Mortgage has not deteriorated since the date of origination of the related
secured Mortgage Loan (normal wear and tear excepted) and there is no proceeding
pending for the total or partial condemnation of any Mortgaged
Property;
(d) Each
Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the related Property subject to the Mortgage of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a
deed of trust, by trustee's sale, and (ii) otherwise, by judicial
foreclosure;
(e) Each
Mortgage Loan is a first lien or second lien Single Family loan, and has been
underwritten by the originator thereof in accordance with such originator's then
current underwriting guidelines; provided that (i) the
aggregate amount of Second Lien/HELOC Loans does not exceed the Applicable
Sublimit for Second Lien/HELOC Loans, (ii) the aggregate amount of all Wet
Loans does not exceed the Applicable Sublimit for Wet Loans, and (iii) the
aggregate amount of Jumbo Loans does not exceed the Applicable Sublimit for
Jumbo Loans;
(f) Each
Mortgage Note is either (i) payable in monthly installments of principal
and interest, with interest payable in arrears, and requires a monthly payment
which is sufficient to amortize the original principal balance over the original
term, not to exceed thirty (30) years, and to pay interest at the related
interest rate, or (ii) payable in monthly installments of interest only,
with interest payable in arrears, with principal payments to begin no later than
ten (10) years from closing with payments which are sufficient to fully amortize
the original principal balance over a period not to exceed thirty (30) years;
and no Mortgage Note provides for any extension of the original
term;
(g) No
Mortgage Loan is a loan in respect of either the purchase of a manufactured home
or mobile home or the purchase of the land on which a manufactured home or
mobile home will be placed;
(h) The
origination practices used by the originator of the Mortgage Loans and the
collection practices used by the Borrower with respect to each Mortgage Loan
have been in all material respects legal, proper, prudent and customary in the
loan origination and servicing business;
(i) Each
Mortgage Loan was originated in material compliance with all applicable Laws
and, to the best of the Borrower's knowledge, no fraud or misrepresentation was
committed by any Person in connection therewith; and
(j) For each
Mortgage Loan, the Borrower has obtained closing protection letters from the
underwriter for the respective title insurance policy.
Section
4.24 Environmental
Matters. In the ordinary course of each Related Person's
business, the officers and managers of each Related Person consider the effect
of Environmental Laws on the business of such Related Person, in the course of
which they identify and evaluate potential risks and liabilities accruing to
such Related Person due to Environmental Laws. On the basis of this
consideration, each Related Person has reasonably concluded that neither
violation of nor compliance with Environmental Laws can reasonably be expected
to have a Material Adverse Effect on the business or financial condition of such
Related Person or on the ability of the Borrower to perform the
Obligations. No Related Person has received any notice to the effect
that its operations are not in material compliance with any of the requirements
of applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect on the business or financial condition of the Related
Persons, taken as a whole, or on the ability of the Borrower to perform the
Obligations.
Section
4.25 Status as Approved
Seller/Servicer. The Borrower is an approved Seller/Servicer
for FNMA and FHLMC in good standing and is an approved lender with FHA, VA and
HUD.
Section
4.26 Regulation U. The
Borrower has not, directly or indirectly, used any of the proceeds of the Loans
for the purpose, whether immediate, incidental or ultimate, of buying any
"margin stock" or of maintaining, reducing or retiring any Indebtedness
originally incurred to purchase a stock that is currently any "margin stock," or
for any other purpose which might constitute this transaction a "purpose
credit," in each case within the meaning of Regulation U, or otherwise
taken or permitted to be taken any action which would involve a violation of
Regulation U or of Regulation T (12 C.F.R. 220, as amended)
or Regulation X (12 C.F.R. 224, as amended) or any other
regulation of such board.
ARTICLE
V
AFFIRMATIVE
COVENANTS
Each
Related Person shall at all times comply with (or cause compliances with) the
covenants contained in this Article V, from
the date hereof and for so long as any part of the Obligations or the
Commitments are outstanding unless the Required Lenders have agreed
otherwise.
Section
5.1 Financial Statements and
Reports.
(a) The
Borrower shall furnish to the Administrative Agent the following, all in form
and detail reasonably satisfactory to the Administrative Agent:
(i) Promptly
after becoming available, and in any event within ninety (90) days after the
close of each Fiscal Year, the Borrower's audited Consolidated balance sheet as
of the end of such Fiscal Year, and the related audited Consolidated statements
of income, stockholders' equity and cash flows of the Borrower for such Fiscal
Year, setting forth in each case in comparative form the corresponding figures
for the preceding Fiscal Year. Such financial statements shall be
unqualified and shall be accompanied by the related audit report of independent
certified public accountants acceptable to the Administrative Agent which report
shall be to the effect that such statements have been prepared in accordance
with GAAP applied on a basis consistent with prior periods except for such
changes in such principles with which the independent public accountants shall
have concurred;
(ii) Promptly
after becoming available, and in any event within ninety (90) days after the
close of each Fiscal Year, the Parent's audited Consolidated and consolidating
balance sheet as of the end of such Fiscal Year, and the related audited
Consolidated and consolidating statements of income, stockholders' equity and
cash flows of the Parent for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the preceding Fiscal Year, such
financial statements shall be unqualified and shall be accompanied by the
related audit report of independent certified public accountants acceptable to
the Administrative Agent which report shall be to the effect that such
statements have been prepared in accordance with GAAP applied on a basis
consistent with prior periods except for such changes in such principles with
which the independent public accountants shall have concurred;
(iii) Promptly
after becoming available, and in any event within forty-five (45) days after the
end of each Fiscal Quarter (excluding the fourth Fiscal Quarter in each Fiscal
Year), a Consolidated balance sheet of the Parent as of the end of such Fiscal
Quarter and the related Consolidated statements of income, stockholders' equity
and cash flows of the Parent for such Fiscal Quarter and the period from the
first day of the then current Fiscal Year through the end of such Fiscal
Quarter, certified by the chief financial officer or other executive officer of
the Parent to have been prepared in accordance with GAAP applied on a basis
consistent with prior periods;
(iv) Promptly
after becoming available, and in any event within forty-five (45) days after the
end of each calendar month, including the twelfth calendar month in each Fiscal
Year, a Consolidated and consolidating balance sheet of the Borrower as of the
end of such month and the related Consolidated and consolidating statements of
income, stockholders' equity and cash flows of the Borrower for such month and
the period from the first day of the then current Fiscal Year through the end of
such month, certified by the chief financial officer or other executive officer
of the Borrower to have been prepared in accordance with GAAP applied on a basis
consistent with prior periods;
(v) Promptly
and in any event within forty-five (45) days after the end of each calendar
month in each Fiscal Year of the Borrower, and within fifteen (15) days after
the completion of each year end audit by the Borrower's independent public
accountants, a completed Officer's Certificate in the form of Exhibit C
attached hereto, executed by the president or chief financial officer of the
Borrower;
(vi) Promptly
and in any event within ninety (90) days of the beginning of each Fiscal Year,
an annual operating budget of the Borrower for such Fiscal Year, in form and
substance reasonably satisfactory to the Administrative Agent;
(vii) Promptly
and in any event within forty-five (45) days after the end of each calendar
month, a monthly pipeline report in form and substance reasonably satisfactory
to the Administrative Agent;
(viii) Promptly
and in any event within forty-five (45) days after the end of each Fiscal
Quarter, a mortgage loan production report as of the end of such Fiscal Quarter,
reflecting the Borrower's Mortgage Loan production and acquisition volumes
during such Fiscal Quarter, and such other similar information as reasonably
requested by the Administrative Agent to be in such report;
(ix) Promptly
and in any event within forty-five (45) days after the end of each calendar
month, or more frequently as requested by the Administrative Agent, a hedging
coverage report showing, in detail and form reasonably satisfactory to the
Administrative Agent, the Borrower's hedging coverage of all Eligible Mortgage
Loans subject to a Hedging Arrangement;
(x) Within
forty-five (45) days after the end of each calendar month, a Borrowing Base
Certificate;
(xi) Promptly
upon receipt thereof, a copy of each other report submitted to the Borrower by
independent accountants in connection with any annual, interim or special audit
of the books of the Borrower; and
(xii) Such
other information concerning the business, properties or financial condition of
any Related Person as the Administrative Agent or any Lender may reasonably
request.
Section
5.2 Taxes and Other
Liens. Each Related Person shall pay and discharge promptly
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or upon any of its Property as well as all claims of any kind
(including claims for labor, materials, supplies and rent) which, if unpaid,
might become a Lien upon any or all of its Property; provided, however, each Related
Person shall not be required to pay any such tax, assessment, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted by or on
behalf of such Related Person and if such Related Person shall have set up
reserves therefor adequate under GAAP.
Section
5.3 Maintenance. Each
Related Person shall (a) maintain its corporate or partnership existence,
rights and franchises (provided that (i) with the consent of the Lender
(which consent shall not be unreasonably withheld or delayed), the Borrower may
elect to convert to a limited liability company if Parent is the sole member of
such limited liability company, and (ii) the Borrower may discontinue the
existence of any of its Subsidiaries that the Borrower in good faith determines
are no longer necessary for the business and operations of the Borrower and its
other Subsidiaries); (b) observe and comply in all material respects with
all Governmental Requirements, and (c) maintain its Properties (and any
Properties leased by or consigned to it or held under title retention or
conditional sales contracts) in good and workable condition at all times and
make all repairs, replacements, additions, betterments and improvements to its
Properties as are needed and proper so that the business carried on in
connection therewith may be conducted properly and efficiently at all
times. The Borrower shall maintain good standing as an approved
seller and servicer for FNMA and FHLMC and as an approved lender with FHA, VA
and HUD.
Section
5.4 Further
Assurances. The Borrower shall, within three (3) Business Days
after the request of the Administrative Agent or any Lender, cure any defects in
the execution and delivery of the Notes, this Agreement or any other Loan
Document and each Related Person shall, at its expense, promptly execute and
deliver to Lender upon request all such other and further documents, agreements
and instruments in compliance with or accomplishment of the covenants and
agreements of each Related Person in this Agreement and in the other Loan
Documents or to further evidence and more fully describe the collateral intended
as security for the Notes, or to correct any omissions in this Agreement or the
other Loan Documents, or more fully to state the security for the obligations
set out herein or in any of the other Loan Documents, or to make any recordings,
to file any notices, or obtain any consents.
Section
5.5 Reimbursement of
Expenses. The Borrower shall pay (a) all reasonable legal
fees incurred by the Administrative Agent in connection with the preparation,
negotiation, syndication, execution and delivery of this Agreement, the Note and
the other Loan Documents (subject to the limitation on legal fees set forth in
the Fee Letter) and any amendments, consents or waivers executed in connection
therewith, (b) all fees, charges or taxes for the recording or filing of
the Security Instruments, (c) all reasonable out-of-pocket expenses of the
Administrative Agent in connection with the administration of this Agreement,
the Notes and the other Loan Documents, including courier expenses incurred in
connection with the Mortgage Collateral, (d) all amounts expended, advanced
or incurred by the Administrative Agent to satisfy any obligation of the
Borrower under this Agreement or any of the other Loan Documents or to collect
the Notes, or to protect, preserve, exercise or enforce the rights of the
Lenders under this Agreement or any of the other Loan Documents, (e) all
reasonable out-of-pocket costs and expenses (including fees and expenses of
attorneys and other experts employed or retained by the Administrative Agent or
any Lender) incurred in connection with, arising out of, or in any way related
to (i) consulting during a Default with respect to (A) the protection,
preservation, exercise or enforcement of any of its rights in, under or related
to the Collateral or the Loan Documents or (B) the performance of any of
its obligations under or related to the Loan Documents, or (ii) protecting,
preserving, exercising or enforcing during a Default any of its rights in, under
or related to the Collateral or the Loan Documents, each of (a) through (e)
shall include all underwriting expenses, collateral liquidation costs, court
costs, attorneys' fees (including, without limitation, for trial, appeal or
other proceedings), fees of auditors and accountants, and investigation expenses
reasonably incurred by the Administrative Agent or any Lender in connection with
any such matters, together with interest at the post-maturity rate specified in
the Notes on each item specified in clauses (a) through (e) from thirty
(30) days after the date of written demand or request for reimbursement until
the date of reimbursement. Provided, however, that neither
the Administrative Agent nor any Lender shall be entitled to any reimbursement
under clauses (d) and (e) above if there is a determination in a final,
non-appealable judgment by a court of competent jurisdiction that the
Administrative Agent or such Lender was not entitled to exercise such remedies
under the Loan Documents.
Section
5.6 Insurance. Each
Related Person shall maintain with financially sound and reputable insurers,
insurance with respect to its Properties and business against such liabilities,
casualties, risks and contingencies and in such types and amounts as is
customary in the case of Persons engaged in the same or similar businesses and
similarly situated, including, without limitation, a fidelity bond or bonds with
financially sound and reputable insurers with such coverage and in such amounts
as is customary in the case of Persons engaged in the same or similar businesses
and similarly situated. The improvements on the land covered by each
Mortgage shall be kept continuously insured at all times by responsible
insurance companies against fire and extended coverage hazards under policies,
binders, letters, or certificates of insurance, with a standard mortgagee clause
in favor of the Borrower and its assigns. Each such policy must be in
an amount not less than the highest of the following: (a) the
amount of the Mortgage Loan, (b) 90% of the insurable value of the improvements,
and (c) an amount sufficient to prevent co-insurance, without reduction by
reason of any co-insurance, reduced rate contribution, or similar clause of the
policies or binders. Upon request of the Administrative Agent, the
Borrower shall furnish or cause to be furnished to the Administrative Agent from
time to time a summary of the insurance coverage of the Borrower in form and
substance satisfactory to the Administrative Agent and if requested shall
furnish the Administrative Agent copies of the applicable policies.
Section
5.7 Accounts and Records:
Servicing Records. Each Related Person shall keep books of
record and account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities, in
accordance with GAAP. Each Related Person shall maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate all records pertaining to the performance of
such Related Person's obligations under the Servicing Agreements in the event of
the destruction of the originals of such records) and keep and maintain all
documents, books, records, computer tapes and other information reasonably
necessary or advisable for the performance by each Related Person of its
obligations under the Servicing Agreements.
Section
5.8 Right of
Inspection. Each Related Person shall permit authorized
representatives of the Administrative Agent or any Lender to discuss the
business, operations, assets and financial condition of such Related Person with
their officers and employees, to examine their Servicing Records and books of
records and account and make copies or extracts thereof and to visit and inspect
any of the Properties of each Related Person, all at such reasonable times and
as often as the Administrative Agent or any Lender may request. Each
Related Person will provide its accountants with a copy of this Agreement
promptly after the execution hereof and will instruct its accountants to answer
candidly any and all questions that the officers of the Administrative Agent or
any Lender or any authorized representatives of the Administrative Agent or any
Lender may address to them in reference to the financial condition or affairs of
any Related Person as those conditions or affairs relate to this
Agreement. Each Related Person may have its representatives in
attendance at any meetings between the officers or other representatives of the
Administrative Agent or any Lender and such Related Person's accountants held in
accordance with this authorization.
Section
5.9 Notice of Certain
Events. The Borrower shall promptly notify the Administrative
Agent upon (a) the receipt of any notice from, or the taking of any other
action by, the holder of any promissory note, debenture or other evidence of
Indebtedness of any Related Person with respect to a claimed default, together
with a detailed statement by a responsible officer of the Borrower specifying
the notice given or other action taken by such holder and the nature of the
claimed default and what action the Borrower is taking or proposes to take with
respect thereto; (b) the commencement of, or any determination in, any
legal, judicial or regulatory proceedings between any Related Person and any
Governmental Authority or any other Person which, if adversely determined, could
have a Material Adverse Effect; (c) any change in senior management of the
Borrower, (d) any material adverse change in the business, operations,
prospects or financial condition of any Related Person, including, without
limitation, the insolvency of any Related Person, (e) any event or
condition which, if adversely determined, could have a Material Adverse Effect,
(f) the occurrence of any Termination Event, or (g) any default under
any material Indebtedness that continues beyond any applicable grace or cure
period.
Section
5.10 Performance of Certain
Obligations and Information Regarding Investors. The Borrower
shall perform and observe in all material respects each of the provisions of
each Take-Out Commitment and each of the Servicing Agreements on its part to be
performed or observed and will cause all things to be done which are necessary
to have each item of Mortgage Collateral covered by a Take-Out Commitment comply
with the requirements of such Take-Out Commitment. Upon request by
the Administrative Agent, the Borrower will deliver to the Administrative Agent
financial information concerning any Person the Administrative Agent is
reviewing to determine whether to approve such Person as an Investor; all such
financial information must be delivered to the Administrative Agent prior to any
request by the Borrower for Mortgage Collateral to be delivered to such
Person.
Section
5.11 Use of Proceeds: Margin
Stock. The proceeds of all Loans shall be used by the Borrower
solely for the origination and purchase of Eligible Mortgage
Loans. None of such proceeds shall be used for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U, or
for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation U. Neither the Borrower nor any Person acting on
behalf of the Borrower shall take any action in violation of Regulation U
or Regulation X or shall violate Section 7 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now in effect
or as the same may hereafter be in effect.
Section
5.12 Notice of
Default. The Borrower shall furnish to the Administrative
Agent immediately upon becoming aware of the existence of any Default or Event
of Default, a written notice specifying the nature and period of existence
thereof and the action which the Borrower is taking or proposes to take with
respect thereto.
Section
5.13 Compliance with Loan
Documents. Each Related Person shall promptly comply with any
and all covenants and provisions of this Agreement, the Notes and the other Loan
Documents to be complied with by such Related Person.
Section
5.14 Operations and
Properties. Each Related Person shall comply with all rules,
regulations and guidelines applicable to it. Each Related Person
shall act prudently and in accordance with customary industry standards in
managing and operating its Property.
Section
5.15 Environmental
Matters.
(a) Each
Related Person will comply in all material respects with all Environmental Laws
now or hereafter applicable to such Related Person and shall obtain, at or prior
to the time required by applicable Environmental Laws, all environmental, health
and safety permits, licenses and other authorizations necessary for its
operations and will maintain such authorizations in full force and
effect.
(b) The
Borrower will promptly furnish to the Administrative Agent and each Lender all
written notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by the Borrower, or of which it
has notice, pending or threatened against the Borrower, by any Governmental
Authority with respect to any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations in connection with
its ownership or use of its properties or the operation of its business that
could, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
Section
5.16 MERS
Status.
(a) The
Borrower will (a) at all times, maintain its status as a MERS member in
good standing, (b) at all times remain in full compliance with all terms
and conditions of membership in MERS, including the MERSCORP, Inc. "Rules of
Membership" most recently promulgated by MERSCORP, Inc., the "MERS Procedures
Manual" most recently promulgated by MERS, and any and all other guidelines or
requirements set forth by MERS or MERSCORP, Inc., as each of the foregoing may
be modified from time to time, including, but in no way limited to, compliance
with guidelines and procedures set forth with respect to technological
capabilities, drafting and recordation of Mortgages, registration of Mortgages
on the MERS System, and registration of the interest of the Administrative Agent
in such mortgages and membership requirements, (c) promptly, upon the
request of the Administrative Agent, execute and deliver to the Administrative
Agent an assignment of mortgage, in blank, with respect to any MERS Mortgage
that the Administrative Agent determines shall be removed from the MERS System
and (d) at all times maintain the Electronic Tracking Agreement executed of
even date herewith in full force and effect.
(b) The
Borrower shall not de-register or attempt to de-register any Mortgage from the
MERS System unless the Borrower has complied with the requirements set forth in
the Electronic Tracking Agreement and the requirements hereof and of the
Security Agreement relating to release of Collateral.
Section
5.17 Hedging
Arrangements. The Borrower shall maintain Hedging Arrangements
with respect to all Eligible Mortgage Loans not subject to a Take-Out Commitment
with Persons reasonably satisfactory to the Administrative Agent in order to
mitigate the risk that the market value of any such Eligible Mortgage Loan will
change as a result of a change in interest rates or the market for mortgage loan
assets before the Eligible Mortgage Loan is purchased by an Investor or
repurchased by the Borrower.
ARTICLE
VI
NEGATIVE
COVENANTS
Each
Related Person shall at all times comply with (or cause compliance with) the
covenants contained in this Article VI, from
the date hereof and for so long as any part of the Obligations or the
Commitments are outstanding unless the Required Lenders have agreed otherwise in
writing:
Section
6.1 No Merger; Limitation on
Issuance of Securities. No Related Person shall merge or
consolidate with or into any Person; provided that the Borrower may
merge or consolidate with any wholly owned subsidiary of the Borrower if the
Borrower is the surviving corporation; and provided further that after
giving effect thereto, no Default or Event of Default would exist
hereunder. No Related Person shall acquire by purchase, or otherwise,
all or substantially all of the assets or capital stock of any
Person. The Borrower will not issue any securities other than shares
of its common stock and any options or warrants giving the holders thereof only
the right to acquire such shares. No Related Person other than the
Borrower will issue any additional shares of its capital stock or other
securities or any options, warrants or other rights to acquire such additional
shares or other securities except to the Borrower and only to the extent not
otherwise forbidden under the terms hereof. No Subsidiary of the
Borrower which is a partnership will allow any diminution of the Borrower's
interest (direct or indirect) therein. There shall be no Change of
Control.
Section
6.2 Limitation on
Indebtedness. No Related Person shall incur, create, contract,
assume, have outstanding, guarantee or otherwise be or become, directly or
indirectly, liable in respect of any Indebtedness or Guaranty Obligations
except:
(a) the
Obligations;
(b) trade
debt, equipment leases, office leases, equipment loans and liens for taxes and
assessments not yet due and payable owed in the ordinary course of
business;
(c) Indebtedness
of the Related Persons under agreements and in the amount described on the
disclosure schedule attached hereto as Schedule 6.2;
(d) Intercompany
Loans; and
(e) other
mortgage collateralized facilities, provided an intercreditor agreement in form
and substance satisfactory to the Administrative Agent is in effect with respect
thereto.
Section
6.3 Fiscal Year, Method of
Accounting. No Related Person shall change its Fiscal Year or
make any material change in its method of accounting without prior notice to
Lender. If any such change is required by Law, the reports and
financial statement of the Borrower and its Consolidated subsidiaries required
hereunder may be prepared in accordance with such change but, if such changes
are material, all calculations and determinations to be made hereunder may be
made in accordance with such change only after notice of such change is given to
the Administrative Agent and the Administrative Agent agrees to such change
insofar as it affects the accounting of the Borrower or of the Borrower and its
Consolidated subsidiaries.
Section
6.4 Business. No
Related Person shall, directly or indirectly, engage in any business which
differs materially from that currently engaged in by such Related
Person.
Section
6.5 Liquidations, Consolidations
and Dispositions of Substantial Assets. No Related Person
shall dissolve or liquidate or sell, transfer, lease or otherwise dispose of any
material portion of their property or assets or business; provided, however, nothing in
this Section 6.5
shall be construed to prohibit any Related Person from selling rights to service
mortgage loans and pools of mortgage loans or Mortgage Notes in the ordinary
course of their business.
Section
6.6 Loans, Advances, and
Investments. No Related Person shall make any loan (other than
Mortgage Loans and Intercompany Loans), advance, extension of credit, or capital
contribution to, or investment in (including any investment in any Subsidiary,
joint venture or partnership), or purchase or otherwise acquire any of the
capital stock, securities, or evidences of indebtedness of, any Person
(including, without limitation, any employee or officer of any Related Person)
(collectively, "Investment"),
or otherwise acquire any interest in, or control of, another Person, except for
the following:
(a) Cash
Equivalents;
(b) Any
acquisition of securities or evidences of indebtedness of others when acquired
by a Related Person in settlement of accounts receivable or other debts arising
in the ordinary course of its business, so long as the aggregate amount of any
such securities or evidences of indebtedness is not material to the business or
condition (financial or otherwise) of such Related Person;
(c) Mortgage
Notes acquired by the Borrower in the ordinary course of the Borrower's
business;
(d) Investments
by any Related Person other than those described in the preceding
clauses (a) through (c) in a business venture substantially similar to
those engaged in by such Related Person, provided that the aggregate amount of
all such other Investments for all Related Persons shall at no time exceed
$500,000; and
(e) Investments
in Hedging Arrangements in the ordinary course of the Borrower's
business.
Section
6.7 Use of
Proceeds. The Borrower shall not permit the proceeds of the
Loans to be used for any purpose other than those permitted by Section 5.11
hereof. The Borrower shall not, directly or indirectly, use any of
the proceeds of the Loans for the purpose, whether immediate, incidental or
ultimate, of buying any "margin stock" or of maintaining, reducing or retiring
any Indebtedness originally incurred to purchase a stock that is currently any
"margin stock," or for any other purpose which might constitute this transaction
a "purpose credit," in each case within the meaning of Regulation G of the Board
of Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
Regulation U, or otherwise take or permit to be taken any action which would
involve a violation of such Regulation G or Regulation U or of Regulation T (12
C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224, as amended) or any other
regulation of such board.
Section
6.8 Actions with Respect to
Mortgage Collateral. The Borrower shall not:
(a) Compromise,
extend, release, or adjust payments on any Mortgage Collateral, accept a
conveyance of mortgaged property in full or partial satisfaction of any Mortgage
Collateral, or release any Mortgage securing or underlying any Mortgage
Collateral;
(b) Agree to
the amendment or termination of any Take-Out Commitment in which Lender has a
security interest or to substitution of a Take-Out Commitment for a Take-Out
Commitment in which the Administrative Agent has a security interest hereunder,
if such amendment, termination or substitution may reasonably be expected (as
determined by the Administrative Agent in its sole discretion) to have a
Material Adverse Effect;
(c) Transfer,
sell, assign, or deliver any Mortgage Collateral pledged to the Administrative
Agent to any Person other than the Administrative Agent, except pursuant to a
Take-Out Commitment; or
(d) Grant,
create, incur, permit or suffer to exist any Lien upon any Mortgage Collateral
except for Permitted Liens and such non-consensual Liens as may be deemed to
arise as a matter of law pursuant to any Take-Out Commitment.
Section
6.9 Transactions with
Affiliates. The Borrower shall not enter into any transactions
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of the
Borrower's business and are upon fair and reasonable terms no less favorable to
the Borrower than it would obtain in a comparable arm's length transaction with
a Person not an Affiliate.
Section
6.10 Liens. No
Related Person shall grant, create, incur, assume, permit or suffer to exist any
Lien, upon any of its Property, including without limitation any and all of the
Borrower's Mortgage Notes, and Servicing Rights and the proceeds from any
thereof, other than (a) Liens which secure payment of the Obligations,
(b) first Liens on Property which also secures Second Lien/HELOC Loans, so
long as the Unit Collateral Value of such Mortgage Notes secured thereby does
not exceed the Applicable Sublimit for Second Lien/HELOC Loans, and
(c) Liens on Property other than Collateral which secure payment of the
Indebtedness permitted to be incurred hereunder.
Section
6.11 ERISA
Plans. No Related Person shall adopt or agree to maintain or
contribute to any ERISA Plan. the Borrower shall promptly notify
Lender in writing in the event an ERISA Affiliate adopts an ERISA
Plan.
Section
6.12 Change of Principal
Office. The Borrower shall not move its principal office,
executive office or principal place of business from the address set forth in on
the Borrower's signature page hereto without prior written notice to the
Administrative Agent.
Section
6.13 Tangible Net
Worth. As of the end of each Fiscal Quarter, the Tangible Net
Worth of the Borrower shall not be less than $9,000,000.
Section
6.14 Total Liabilities to
Adjusted Tangible Net Worth. The ratio of Total Liabilities of
the Borrower to Adjusted Tangible Net Worth of the Borrower shall never be more
than 10.0 to 1.0.
Section
6.15 Adjusted Tangible Net
Worth. As of the end of each Fiscal Quarter, the Adjusted
Tangible Net Worth of the Borrower shall not be less than
$7,000,000.
Section
6.16 Dividends. The
Borrower shall not, nor shall it permit any Subsidiary to, declare or pay any
Dividends, unless at the time of each Dividend by the Borrower, (x) no
Default or Event of Default shall have occurred and be continuing or would
result therefrom and (y) after giving effect to such Dividend, the Borrower
is in compliance on a pro forma basis with the covenants set forth in Sections 6.13
through 6.15.
ARTICLE
VII
EVENTS
OF DEFAULT
Section
7.1 Nature of
Event. An Event of Default shall exist if any one or more of
the following occurs:
(a) The
Borrower fails to make any payment of (i) principal of any Note on or
before the date such payment is due, (ii) interest on any Note and such
failure continues for three (3) Business Days after the date such payment is
due, (iii) any fee due hereunder, under any Note, or under any other Loan
Document, and such failure continues for a period of five (5) Business Days
after the date such payment is due, or (iv) any expense or other amount due
hereunder, under any Note, or under any other Loan Document and such failure
continues for a period of five (5) Business Days after the Administrative Agent
gives the Borrower notice thereof;
(b) Default
is made in the due observance or performance by any Related Person of any
covenant set forth in Article VI or
Section 5.9 of
this Agreement;
(c) Default
is made in the due observance or performance by any Related Person of any of the
covenants or agreements contained in this Agreement other than those described
in subsections (a) or (b) immediately above and such Default continues for
a period of fifteen (15) days after the Administrative Agent gives the Borrower
notice thereof;
(d) Any
Related Person defaults in the due observance or performance or any of the
covenants or agreements contained in any other Loan Document to which it is a
party, and (unless such default otherwise constitutes a Default pursuant to
other provisions of this Section 7.1)
such default continues unremedied beyond the expiration of any applicable grace
period which may be expressly allowed under such other Loan
Document;
(e) Any
material statement, warranty or representation by or on behalf of any Related
Person contained in this Agreement, the Notes or any other Loan Document to
which it is a party, or in any Borrowing Request, officer's certificate or other
writing furnished in connection with this Agreement, proves to have been
incorrect or misleading in any material respect as of the date made or deemed
made;
(f) Any
Related Person:
(i) suffers
the entry against it of a judgment, decree or order for relief by a court of
competent jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any jurisdiction now
or hereafter in effect, including the federal Bankruptcy Code, as from time to
time amended, or has any such proceeding commenced against it which remains
undismissed for a period of sixty (60) days; or
(ii) commences
a voluntary case under any applicable bankruptcy, insolvency or similar law now
or hereafter in effect, including the federal Bankruptcy Code, as from time to
time amended, or applies for or consents to the entry of an order for relief in
an involuntary case under any such law; or makes a general assignment for the
benefit of creditors; or fails generally to pay (or admits in writing its
inability to pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(iii) suffers
the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of all or a substantial
part of its assets or of any part of the Mortgage Collateral in a proceeding
brought against or initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within sixty (60) days after the making
thereof, or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(iv) suffers
the entry against it of a final judgment for the payment of money in excess of
$200,000.00 (not covered by insurance satisfactory to Lender in its discretion),
unless the same is discharged within thirty (30) days after the date of entry
thereof or an appeal or appropriate proceeding for review thereof is taken
within such period and a stay of execution pending such appeal is obtained;
or
(v) suffers a
writ or warrant of attachment or any similar process to be issued by any court
against all or any substantial part of its assets or any part of the Mortgage
Collateral.
(g) Any
Related Person fails to make when due or within any applicable grace period any
payment on any Indebtedness (other than the Obligations) with an unpaid
principal balance of over $500,000.00; or any event or condition occurs under
any provision contained in any agreement under which such obligation is
governed, evidenced or secured (or any other material breach or default under
such obligation or agreement occurs) if the effect thereof is to cause or permit
the holder or trustee of such obligation to cause such obligation to become due
or repurchased, prepaid, redeemed or defeased prior to its stated maturity; or
any such obligation becomes due (other than by regularly scheduled payments)
prior to its stated maturity; or any of the foregoing occurs with respect to any
one or more items of Indebtedness of any Related Person with unpaid principal
balances exceeding, in the aggregate, $250,000.00;
(h) Any event
or condition occurs under any provision contained in the Parent Debt Agreement
(or any other material breach or default under the Parent Debt Agreement occurs)
if the effect thereof is to cause or permit the holder or trustee of such
obligation to cause such obligation to become due or repurchased, prepaid,
redeemed or defeased prior to its stated maturity; or any default or event of
default occurs under any provision contained in any line of credit maintained by
the Borrower and such default is not cured within any applicable given
period;
(i) This
Agreement, the Notes or any other Loan Document shall for any reason cease to be
in full force and effect, or be declared null and void or unenforceable in whole
or in part as the result of any action initiated by any Person other than Lender
or the validity or enforceability of any such document shall be challenged or
denied by any Person other than Lender other than by reason of
illegality;
(j) Either
(i) any "accumulated funding deficiency" (as defined in
Section 412(a)) of the Code in excess of $25,000.00 exists with respect to
any ERISA Plan, whether or not waived by the Secretary of the Treasury or his
delegate, or (ii) any Termination Event occurs with respect to any ERISA
Plan and the then current value of such ERISA Plan's benefits guaranteed under
Title IV of ERISA exceeds the then current value of such ERISA Plan's
assets available for the payment of such benefits by more than $10,000.00 (or in
the case of a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such excess exceeds
such amount) or (iii) any Related Person or any ERISA Affiliate withdraws
from a multiemployer plan resulting in liability under Title IV of ERISA of
an amount in excess of $10,000.00 in the case of any Related Person or
$10,000.00 in the case of any other ERISA Affiliate; or
(k) A Change
of Control occurs.
Section
7.2 Default
Remedies. Upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent may, with the consent of the Required
Lenders, or the Administrative Agent shall, upon the request of the Required
Lenders, declare the Commitments to be terminated and/or declare the entire
principal and all interest accrued on the Notes to be, and the Notes, together
with all Obligations, shall thereupon become, forthwith due and payable, without
any presentment, demand, protest, notice of protest and nonpayment, notice of
acceleration or of intent to accelerate or other notice of any kind, all of
which hereby are expressly waived. Notwithstanding the foregoing, if
an Event of Default specified in Subsections 7.1(f)(i),
(ii) or (iii) above occurs
with respect to the Borrower, the Commitments shall automatically and
immediately terminate and the Notes and all other Obligations shall become
automatically and immediately due and payable, both as to principal and
interest, without any action by Lender and without presentment, demand, protest,
notice of protest and nonpayment, notice of acceleration or of intent to
accelerate, or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein, in the Notes to the contrary
notwithstanding.
Section
7.3 Application of
Proceeds. After an Event of Default and acceleration of the
Obligations, the proceeds of any sale or enforcement of all or any part of the
Collateral pursuant to the Security Agreement and the balance of any moneys in
the Settlement Account and the Funding Account shall be applied by the
Administrative Agent:
FIRST, to
the payment of all reasonable costs and expenses of such sale or enforcement,
including reasonable compensation to the Administrative Agent's agents and
counsel, and all reasonable expenses, liabilities and advances made or incurred
by the Administrative Agent acting on instructions of the Required Lenders in
connection therewith, and to any reimbursements due the Administrative Agent
under Section 5.5;
SECOND,
to the payment of all reasonable costs and expenses incurred by the
Administrative Agent under the Security Agreement;
THIRD, to
any reimbursements due the Lenders under Section 5.5;
FOURTH,
to the payment of all accrued and unpaid interest on and fees attributable to,
all Loans under this Agreement, ratably according to the amount so due to each
Lender; and thereafter to the payment of the outstanding principal balance of
all Loans under this Agreement, ratably according to the amount so due to each
Lender;
FIFTH, to
the extent proceeds remain after application under the preceding subparagraphs,
to the payment of all remaining Obligations, until such amounts are paid in
full; and
SIXTH, to
the payment to the Borrower, or to its successors or assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
If the
proceeds of any such sale are insufficient to cover the costs and expenses of
such sale, as aforesaid, and the payment in full of the Obligations, the
Borrower shall remain liable for any deficiency.
Section
7.4 Preservation of
Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 11.2,
and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Lenders until the Obligations have been paid in full.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 Indemnification. The
Borrower agrees to indemnify the Administrative Agent, the Lenders and each of
their respective directors, officers, agents attorneys, employees,
representatives and Affiliates of each Lender (each an "Indemnified
Party"), upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (including reasonable fees of attorneys,
accountants, experts and advisors) of any kind or nature whatsoever (in this
Section 8.1
collectively called "liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against any Indemnified Party
growing out of, resulting from or in any other way associated with any of the
Mortgage Collateral, the Loan Documents, and the transactions and events
(including the enforcement or defense thereof) at any time associated therewith
or contemplated therein (including any violation or noncompliance with any
Environmental Laws by any Related Person).
THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR PART, BY ANY NEGLIGENT ACT
OR OMISSION OF ANY KIND BY SUCH INDEMNIFIED PARTY,
provided
only that such Indemnified Party shall not be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final
non-appealable judgment. All amounts payable by the Borrower shall be
immediately due upon the Administrative Agent's or any Lender's request for the
payment thereof.
Section
8.2 Limitation of
Liability. None of the Administrative Agent or any Lender, or
their respective directors, officers, agents, attorneys, employees,
representatives or Affiliates shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this
Agreement. THE
FOREGOING EXCULPATION SHALL APPLY TO ANY NEGLIGENT ACT OR OMISSION OF ANY KIND
BY ANY SUCH PERSON, OR ANY ACT OR OMISSION WHICH CAUSES SUCH PERSON TO BE
SUBJECT TO STRICT LIABILITY, PROVIDED THAT SUCH PERSON SHALL BE LIABLE FOR ITS
OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
ARTICLE
IX
THE
ADMINISTRATIVE AGENT
Section
9.1 Appointment. Each
Lender hereby irrevocably designates and appoints the Administrative Agent as
the agent of such Lender under this Agreement and the other Loan Documents, and
each such Lender irrevocably authorizes the Administrative Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. The Administrative Agent is
hereby authorized to enter into the Security Agreement thereby appointing the
Administrative Agent as collateral agent to act on behalf of the Lenders and all
obligations of the Lenders under the Security Agreement shall be binding upon
each Lender as if such Lender had executed the Security
Agreement. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
Section
9.2 Delegation of
Duties. The Administrative Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advise of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
Section
9.3 Exculpatory
Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees agents, attorneys-in-fact or affiliates shall be
(i) liable to any Lender or any other Person for any damage, loss or injury
resulting from any action taken or omitted to be taken by the Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates under or in connection with this Agreement or any other Loan
Document, whether sounding in tort, contract or otherwise, INCLUDING IN RESPECT OF LOSSES,
LIABILITIES OR OTHER OBLIGATIONS SUFFERED BY SUCH PERSON'S OWN NEGLIGENCE OR
STRICT LIABILITY but except to the extent that any of the foregoing are
found by a final and nonappealable decision of a court of competent jurisdiction
to have resulted from its or such Person's own gross negligence or willful
misconduct, (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Related Person
or any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Person a party thereto to
perform its obligations hereunder or thereunder, or (iii) responsible in
any manner to any of the Lenders for any fraud of any Related Person or any
officer thereof in this Agreement, in the performance of this Agreement, or in
any way related to the transactions contemplated hereby. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Related
Person.
Section
9.4 Reliance by
Agent. The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified in this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified in this
Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans. Any request, authority or consent of any Person who, at
the time of making such request of giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or endorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
Section
9.5 Notice of
Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default unless
the Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, of all Lenders); provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the
Lenders.
Section
9.6 Non-Reliance on
Administrative Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Administrative Agent
hereafter taken, including any review of the affairs of a Related Person or any
Affiliate of a Related Person, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Related Persons and their affiliates
and made its own decision to make its Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently
and without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Related Persons and their affiliates. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Related Person or
any affiliate of a Related Person that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
Section
9.7 Indemnification. The
Lenders agree to indemnify the Administrative Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought under this
Section (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their respective Commitment Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever that may at any time (whether before or
after the payment of the Loans) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the Administrative Agent's gross
negligence or willful misconduct, PROVIDED, FURTHER, HOWEVER, THAT SUCH INDEMNIFICATION SHALL
COVER THE ADMINISTRATIVE AGENT'S NEGLIGENCE AND STRICT
LIABILITY. The agreements in this Section shall survive the
payment of the Loans and all other amounts payable hereunder.
Section
9.8 Agent in Its Individual
Capacity. In the event the Administrative Agent is a Lender,
the Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Document with respect to its Commitment and its Loans as
any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall, at any time when the Agent is
a Lender, unless the context otherwise indicates, include the Administrative
Agent in its individual capacity. The Administrative Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Related Person as though the Administrative Agent were
not the Administrative Agent. The Administrative Agent, in its
individual capacity, is not obligated to be or remain a Lender.
Section
9.9 Successor Administrative
Agent. The Administrative Agent may resign as Administrative
Agent upon thirty (30) days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative
Agent under this Agreement and the other Loan Documents, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall (unless an Event of Default shall have occurred and
be continuing) be subject to approval by the Borrower (which approval shall not
be unreasonably withheld or delayed), whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and the
term "Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the form Administrative Agent's rights, powers and
duties as Administrative Agent shall be terminated, without any other or further
act or deed on the part of such former Administrative Agent or any of the
parties to this Agreement or any holders of the Loans. If no
successor agent has accepted appointment as Administrative Agent by the date
that is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective, and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for
above. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan
Documents.
Section
9.10 Administrative Agent's
Discretionary Authority. Notwithstanding anything to the
contrary, in connection with the Borrowing Base, the Administrative Agent is
hereby authorized by the Lenders to grant temporary waivers of compliance by the
Borrower with the eligibility requirements regarding qualification of any
Collateral as an Eligible Mortgage Loan or with the Borrowing Base sublimits
when the Administrative Agent deems it appropriate, in its sole discretion, as
to all matters (other than (x) any requirement that a Mortgage Loan be
covered by a Take-Out Commitment, (y) the requirements contained in
subparts (a) through (j) of the definition of "Eligible Mortgage Loan" or
(z) the requirements contained in the definition of "Single Family"), if
the aggregate amount of deviation from strict compliance, based on the Unit
Collateral Value so included in the Borrowing Base and the amount of excess
permitted over the Borrowing Base sublimits does not exceed $5,000,000.00 at ay
time (provided,
however, that
the duration of any such temporary waiver shall not exceed twenty (20) days with
respect to any Wet Loan unless the Mortgage Note related to such Mortgage has
been delivered to the Administrative Agent).
ARTICLE
X
TAXES
AND YIELD PROTECTION
Section
10.1 Taxes.
(a) Payments Free of
Taxes. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free
and clear of and without reduction or withholding for any Indemnified Taxes or
Other Taxes, provided that if the
Borrower shall be required by applicable law to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower
shall timely pay the full amount deducted to the relevant Governmental Authority
in accordance with applicable law.
(b) Payment of Other Taxes by
the Borrower. Without limiting the provisions of subsection (a)
above, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Indemnification by the
Borrower. The Borrower shall indemnify the Administrative
Agent and each Lender, within 10 days after demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Administrative Agent or such Lender, as the case may be,
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate in reasonable detail as to the amount of
such payment or liability delivered to the Borrower by a Lender (with a copy to
the Administrative Agent), or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) Evidence of
Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, and a copy of the return reporting such payment or other evidence
of such payment reasonably satisfactory to the Administrative
Agent.
(e) Status of
Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if requested by the Borrower or
the Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.
Without
limiting the generality of the foregoing, in the event that the Borrower is
resident for tax purposes in the United States, any Foreign Lender shall deliver
to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:
(i) duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a
party,
(ii) duly
completed copies of Internal Revenue Service Form W-8ECI,
(iii) in the
case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a "bank" within the meaning of
section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of
the Borrower within the meaning of section 881(c)(3)(B) of the Code, or
(C) a "controlled foreign corporation" described in
section 881(c)(3)(C) of the Code and (y) duly completed copies of
Internal Revenue Service Form W-8BEN, or
(iv) any other
form prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.
(f) Treatment of Certain
Refunds. If the Administrative Agent or any Lender determines,
in its good faith discretion, that it has received a refund of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section, it
shall pay to the Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower under
this Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all reasonable out-of-pocket expenses of the Administrative
Agent or such Lender, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other Person. The Administrative Agent and each
Lender agree to take such action as the Borrower may reasonably request in order
to apply for and obtain any refund or such amounts as the Borrower reasonably
determines to be appropriate under the circumstances, provided that any such
actions shall be at the sole cost and expense of the Borrower.
Section
10.2 Increased
Costs.
(a) Increased Costs
Generally. If any Change in Law shall:
(i) impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any
Lender;
(ii) subject
any Lender to any tax of any kind whatsoever with respect to this Agreement, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 10.1 and
the imposition of, or any change in the rate of, any Excluded Tax payable by
such Lender); or
(iii) impose on
any Lender any other condition, cost or expense affecting this
Agreement;
and the
result of any of the foregoing shall be to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or any
other amount) then, upon request of such Lender, the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) Capital
Requirements. If any Lender determines that any Change in Law
affecting such Lender regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of this Agreement,
the Commitment of such Lender or the Loans made by such Lender to a level below
that which such Lender or such Lender's holding company could have achieved but
for such Change in Law (taking into consideration such Lender's policies and the
policies of such Lender's holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender such additional
amount or amounts as will compensate such Lender or such Lender's holding
company for any such reduction suffered.
(c) Certificates for
Reimbursement. A certificate of a Lender setting forth in
reasonable detail the amount or amounts necessary to compensate such Lender or
its holding company, as the case may be, as specified in subsection (a)
or (b) of this
Section and delivered to the Borrower shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
(d) Delay in
Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender's right to demand such compensation, provided that the
Borrower shall not be required to compensate a Lender pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender's intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).
Section
10.3 Mitigation Obligations;
Replacement of Lenders.
(a) Designation of a Different
Lending Office. If any Lender requests compensation under
Section 10.2, or
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 10.1,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 10.1 or
10.2, as the
case may be, in the future, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of
Lenders. If any Lender requests compensation under Section 10.2, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 10.1,
the Borrower may at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 11.11),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:
(i) the
Administrative Agent shall have received the assignment fee specified in Section 11.11(b);
(ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);
(iii) in the
case of any such assignment resulting from a claim for compensation under Section 10.2 or
payments required to be made pursuant to Section 10.2,
such assignment will result in a reduction in such compensation or payments
thereafter; and
(iv) such
assignment does not conflict with applicable laws.
A Lender
shall not be required to make any such assignment or delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to
apply.
Section
10.4 Survival. All
of the Borrower's obligations under this Article X shall
survive termination of the Commitments and repayment of all other Obligations
hereunder.
ARTICLE
XI
MISCELLANEOUS
Section
11.1 Notices. Any
notice or request required or permitted to be given under or in connection with
this Agreement, any Note or the other Loan Documents (except as may otherwise be
expressly required therein) shall be in writing and shall be mailed by first
class or express mail, postage prepaid, or sent by telex, telegram, telecopy or
other similar form of rapid transmission, confirmed by mailing (by first class
or express mail, postage prepaid) written confirmation at substantially the same
time as such rapid transmission, or personally delivered to any officer of the
receiving party. All such communications shall be mailed, sent or
delivered to the parties hereto at their respective addresses as listed on each
parties' signature page hereto, or at such other addresses or to such
individual's or department's attention as any party may have furnished the other
party in writing. Any communication so addressed and mailed shall be
deemed to be given when so mailed, except that Borrowing Requests, and
communications related thereto shall not be effective until actually received by
the Administrative Agent or the Borrower, as the case may be; and any notice so
sent by rapid transmission shall be deemed to be given when receipt of such
transmission is acknowledged, and any communication so delivered in person shall
be deemed to be given when receipted for by, or actually received by, an
authorized officer of the Borrower, the Administrative Agent, or any Lender as
the case may be.
Section
11.2 Amendments,
Etc. Neither this Agreement, any other Loan Document, nor any
terms hereof or thereof may be amended, supplemented or modified except in
accordance with the provisions of this Section 11.2. The
Required Lenders and each Related Person party to the relevant Loan Document
may, or with the written consent of the Required Lenders, the Administrative
Agent and each Related Person party to the relevant Loan Document may, from time
to time, (a) enter into written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Related Persons hereunder or thereunder or
(b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, the written
consent of the Borrower, the Administrative Agent and all Lenders shall be
required to:
(i) Extend
the final maturity of any Loan or postpone any regularly scheduled payment of
principal of any Loan or forgive all or any portion of the principal amount
thereof, or reduce the rate or extend the time of payment of interest or fees
thereon;
(ii) Reduce
the percentage specified in the definition of Required Lenders;
(iii) Extend
the Drawdown Termination Date, or reduce the amount of or extend the payment
date for the mandatory payments required under Section 2.5, or
increase the amount of the Aggregate Commitments or the Commitment of any Lender
hereunder;
(iv) Amend
this Section 11.2;
(v) Except as
provided herein or in the Security Agreement, release any
Collateral;
(vi) Amend the
definition of "Unit Collateral Value', "Borrowing Base", "Applicable Margin",
"Applicable Advance Rate Percentage", or any provision in Section 2.2;
(vii) Permit
the Borrower to assign its rights under this Agreement or amend or waive any
restriction on the Borrower's ability to assign its rights or obligations under
any of the Loan Documents;
(viii) Amend the
definition of Applicable Sublimit;
(ix) Amend or
waive any provision herein regarding the indemnification of the Administrative
Agent or any Lender; or
(x) Amend or
waive any provision herein regarding the allocation among the Lenders of any
payments or proceeds received by the Administrative Agent
hereunder.
No
amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Related Persons, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Related Persons,
the Lenders and the Administrative Agent shall be restored to their former
position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
Section
11.3 CHOICE OF LAW;
VENUE. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS. THE BORROWER AND LENDERS HEREBY AGREE THAT THE
OBLIGATIONS CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY,
TEXAS. ALL PARTIES HERETO AGREE THAT (I) ANY ACTION ARISING OUT
OF THIS TRANSACTION SHALL BE FILED IN DALLAS COUNTY, TEXAS, (II) VENUE FOR
ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN THIS AGREEMENT SHALL BE IN
DALLAS COUNTY, (III) PERSONAL JURISDICTION SHALL BE IN DALLAS COUNTY,
TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT SHALL BE
COMMENCED AGAINST ANY PARTY IN DALLAS COUNTY, (V) SUCH ACTION SHALL BE
INSTITUTED IN THE COURTS OF THE STATE OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS
OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
LOCATED IN DALLAS COUNTY, TEXAS, AT THE OPTION OF THE ADMINISTRATIVE AGENT, AND
(VI) THE BORROWER AND THE LENDERS HEREBY WAIVE ANY OBJECTION TO THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVE ANY RIGHT EACH MAY
HAVE TO BE SUED ELSEWHERE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT TO ACCOMPLISH SERVICE OF PROCESS IN ANY MANNER
PERMITTED BY LAW.
Section
11.4 Invalidity. In
the event that any one or more of the provisions contained in any Note, this
Agreement or any other Loan Document shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of such
document.
Section
11.5 Survival of
Agreements. All covenants and agreements herein and in any
other Loan Document not fully performed before the date hereof or the date
thereof, and all representations and warranties herein or therein, shall survive
until payment in full of the Obligations and termination of the
Commitments.
Section
11.6 Renewal, Extension or
Rearrangement. All provisions of this Agreement and of the
other Loan Documents shall apply with equal force and effect to each promissory
note hereafter executed which in whole or in part represents a renewal,
extension for any period, increase or rearrangement of any part of the
Obligations originally represented by the Notes or of any part of such other
Obligations.
Section
11.7 Waivers. No
course of dealing on the part of the Administrative Agent or any Lender, or any
of their officers, employees, consultants or agents, nor any failure or delay by
the Administrative Agent or any Lender with respect to exercising any right,
power or privilege of Lender under any Note, this Agreement or any other Loan
Document shall operate as a waiver thereof, except as otherwise provided in
Section 11.2
hereof.
Section
11.8 Cumulative
Rights. The rights and remedies of the Administrative Agent
and each Lender under the Notes, this Agreement, and any other Loan Document
shall be cumulative, an the exercise or partial exercise of any such right or
remedy shall not preclude the exercise of any other right or
remedy.
Section
11.9 Limitation on
Interest. Each Lender, each Related Person and any other
parties to the Loan Documents intend to contract in strict compliance with
applicable usury Law from time to time in effect. In furtherance
thereof such Persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable Law from time
to time in effect. Neither each Related Person nor any present or
future guarantors, endorsers, or other Persons hereafter becoming liable for
payment of any Obligation shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully charged under applicable Law from time to time in effect,
and the provisions of this section shall control over all other provisions of
the Loan Documents which may be in conflict or apparent conflict
herewith. Each Lender expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of any Obligation is accelerated. If (a) the maturity of any
Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) any Lender or any other holder of any
or all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable Law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related Obligations or,
at such Lender's or such holder's option, promptly returned to each Related
Person or the other payor thereof upon such determination. In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable Law, each
Lender and each Related Persons (and any other payors thereof) shall to the
greatest extent permitted under applicable Law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable Law in order to lawfully charge the maximum amount of interest
permitted under applicable Law. In the event applicable Law provides
for an interest ceiling under Section 303 of the Texas Finance Code, that
ceiling shall be the weekly ceiling.
Section
11.10 Bank Accounts;
Offset. To sure the repayment of the Obligations, each Related
Person hereby grants to each Lender and its successors and assigns (in this
section called an "Assignee")
a security interest, a lien, and a right of offset, each of which shall be in
addition to all other interests, liens, and rights of any Lender or Assignee at
common law, under the Loan Documents, or otherwise, and each of which shall be
upon and against (a) any and all moneys, securities or other property (and
the proceeds therefrom) of any Related Person now or hereafter held or received
by or in transit to any Lender, any Lender or Assignee from or for the account
any Related Person, whether for safekeeping, custody pledge, transmission,
collection or otherwise, (b) any and all deposits (general or special, time
or demand, provisional or final) of any Related Person with any Lender or any
Assignee, and (c) any other credits and claims of any Related Person at any
time existing against any Lender or any Assignee, including claims under
certificates of deposit. During the existence of any Event of
Default, each Lender and each Assignee is hereby authorized to foreclose upon,
offset, appropriate, and apply, at any time and from time to time, without
notice to the Borrower, any and all items hereinabove referred to against the
Obligations then due and payable.
If any
Lender, whether by setoff or otherwise, has payment made to it upon its Loans in
a greater proportion than that received by any other Lender, such Lender agrees,
promptly upon demand, to purchase a portion of the Loans held by the other
Lenders so that after such purchase each Lender will hold its ratable proportion
of Loans. If any Lender whether in connection with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action necessary such
that all Lenders share in the benefits of such collateral ratably in proportion
to their Loans. In case any such payment is distributed by legal
process, or otherwise, appropriate further adjustments shall be
made.
Section
11.11 Assignments.
(a) Successors and
Assigns. The terms and provisions of the Loan Documents shall
be binding upon and inure to the benefit of the Borrower and the Lenders and
their respective successors and assigns, except that (i) the Borrower shall
not have the right to assign its rights or obligations under the Loan Documents
and (ii) an assignment by any Lender must be made in compliance with Section 11.11(b). The
parties to this Agreement acknowledge that clause (ii) of this Section 11.11(a)
relates only to absolute assignments and does not prohibit assignments creating
security interests, including, without limitation, any pledge or assignment by
any Lenders creating security interests, including, without limitation, any
pledge or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such
pledge or assignment creating a security interest shall release the transferor
Lender from its obligations hereunder unless and until the parties hereto have
complied with the provisions of Section 11.11(b). The
Administrative Agent may treat the Person which made any Loan or which holds any
Note as the owner thereof for all purposes hereof unless and until such Person
complies with Section 11.11(b),
provided, however, that the
Administrative Agent may in its discretion (but shall not be required to) follow
instructions form the Person which made any Loan or which holds any Note to
direct payments relating to such Loan or Note to another Person. Any
assignee of the rights to any Loans or any Note agrees by acceptance of such
transfer or assignment to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at
the time of making such request or giving such authority or consent is the owner
of the rights to any Loan (whether or not a Note has been issued in evidence
thereof), shall be conclusive and binding on any subsequent holder, or assignee
of the rights to such Loan.
(b) Assignments.
(i) Permitted
Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers")
all or any part of its rights and obligations under the Loan
Documents. The consent of the Borrower and the Administrative Agent,
which shall not be unreasonably withheld or delayed, shall be required prior to
any assignment becoming effective, provided, however, that if a
Default or Event of Default has occurred and is continuing, the consent of the
Borrower shall not be required, and provided, further, however, that the
consent of neither the Borrower nor the Administrative Agent shall be required
if the Purchaser is (i) a Lender, (ii) an Affiliate of a Lender, or
(iii) a successor by merger to a Lender. Each such assignment
shall (unless it is to a Lender or an Affiliate thereof or each of the Borrower
and the Administrative Agent otherwise consents) be in an amount not less than
the lesser of (i) $5,000,000 or (ii) the remaining amount of the
assigning Lender's Commitment (calculated as of the date of such
assignment).
(ii) Effect; Effective
Date. Upon delivery to the Administrative Agent by the
transferor Lender of a notice of assignment (the "Notice of
Assignment"), together with any consents required by Section 11.11(b)(i)
and payment of a $3,500 fee to the Administrative Agent for processing such
assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment, provided, however, that no fee
shall be due to the Administrative Agent for an assignment by a Lender to an
Affiliate thereof. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by or on behalf of the Lenders
and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by the Borrower, the Lenders or the Administrative
Agent shall be required to release the transferor Lender with respect to the
percentage of the Commitments and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 11.11(b),
the transferor Lender, the Administrative Agent and the Borrower shall, if the
transferor Lender or the Purchaser desires that its Loans be evidenced by Notes,
make appropriate arrangements so that new Notes or, as appropriate replacement
Notes are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their respective Commitments, as adjusted pursuant to such
assignment. In addition, within a reasonable time after the effective
date of any assignment, the Administrative Agent shall, and is hereby authorized
and directed to, revise Schedule 1.1
reflecting the revised Commitments and Commitment Percentages of each of the
Lenders and shall distribute such revised Schedule 1.1 to
each of the Lenders and the Borrower, whereupon such revised Schedule shall
replace the old Schedule and become part of this Agreement.
(c) Distribution of
Information. It is understood and agreed that the
Administrative Agent and each Lender may provide to assignees and prospective
assignees financial information and reports and data concerning the Borrower's
properties and operations which was provided to the Administrative Agent and
such Lender pursuant to this Agreement.
Section
11.12 Exhibits. The
exhibits attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for the purposes stated herein, except that
in the event of any conflict between any of the provisions of such exhibits and
the provisions of this Agreement, the provisions of this Agreement shall
prevail.
Section
11.13 Titles of Articles, Sections
and Subsections. All titles or headings to articles, sections,
subsections or other divisions of this Agreement or the exhibits hereto are only
for the convenience of the parties and shall not be construed to have any effect
or meaning with respect to the other content of such articles, sections,
subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
Section
11.14 Counterparts;
Fax. This Agreement may be executed in counterparts, and it
shall not be necessary that the signatures of both of the parties hereto be
contained on any one counterpart hereof, each counterpart shall be deemed an
original, but all counterparts together shall constitute one and the same
instrument. This Agreement may be duly executed by facsimile or other
electronic transmission.
Section
11.15 Termination; Limited
Survival. In its sole and absolute discretion the Borrower may
at any time that no Obligations are owing elect in a notice delivered to the
Administrative Agent and Lenders to terminate this Agreement. Upon
receipt by the Administrative Agent and the Lenders of such a notice, if no
Obligations are then owing, this Assignment and all other Loan Documents shall
thereupon be terminated and the parties thereto released from all prospective
obligations thereunder. Notwithstanding the foregoing or anything
herein to the contrary, any waivers or admissions made by any Person in any Loan
Documents, any Obligations, and any obligations which any Person may have to
indemnify or compensate the Administrative Agent or any Lender shall survive any
termination of this Agreement or any other Loan Document. At the
request and expense of the Borrower, the Administrative Agent and Lenders shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents.
Section
11.16 Joint and Several
Liability. All obligations which are incurred by two or more
Related Persons shall be their joint and several obligations and
liabilities.
Section
11.17 Disclosures. The
Administrative Agent and any Lender may disclose to, and exchange and discuss
with, any other Person any information concerning the Collateral of the Borrower
or any Subsidiary (whether received by the Administrative Agent, any Lender or
any other Person) for the purpose of (a) complying with Government
Requirements or any legal proceedings, (b) protecting or preserving the
Collateral, (c) protecting, preserving, exercising or enforcing any of
their rights in, under or related to the Collateral or the Loan Documents,
(d) performing any of their obligations under or related to the Loan
Documents, or (e) consulting with respect to any of the foregoing
matters.
Section
11.18 Time is of the
Essence. Time is of the essence with respect to the
performance of the obligations contained in this Agreement.
Section
11.19 USA Patriot Act
Notice. Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub.
L. 107-56 (signed into law October 26, 2003)) (the "Act"), it
is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in
accordance with the Act.
Section
11.20 Electronic
Transactions. The Borrower hereby affirmatively consents and
agrees to permit the Administrative Agent and the Lenders and their successors
and assigns to enter into transactions with the Borrower involving "electronic
records" and "electronic means", as those terms are defined in UETA and the
E-Sign Act.
Section
11.21 No
Reliance. In executing this Agreement, the Borrower warrants
and represents that the Borrower is not relying on any statement or
representation other than those in this Agreement and is relying upon its own
judgment and advice of its attorneys.
Section
11.22 WAIVER OF JURY
TRIAL. EACH OF THE PARTIES HERETO WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS
TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS.
Section
11.23 CONSEQUENTIAL
DAMAGES. NEITHER THE BORROWER, THE ADMINISTRATIVE AGENT NOR
ANY LENDER SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH SUCH PERSON HEREBY
WAIVES, RELEASES AND AGREES NOT TO ▇▇▇ EACH OTHER SUCH PERSON FOR, ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY SUCH OTHER PERSON IN CONNECTION
WITH ANY CLAIM RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREIN.
Section
11.24 ENTIRE
AGREEMENT. THE NOTES, THIS AGREEMENT, AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed as of the date first above written.
BORROWER: M/I FINANCIAL
CORP.,
an Ohio
corporation
Borrower's
Address
▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. Creek
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
By:
▇▇▇▇▇▇▇ ▇.
Creek
Chief Financial
Officer and Treasurer
STATE OF
OHIO §
§
COUNTY OF
FRANKLIN §
Before
me, the undersigned notary public, on this ___ day of May, 2008, personally
appeared ▇▇▇▇▇▇▇ ▇. Creek, the Chief Financial Officer and Treasurer of M/I
Financial Corp., an Ohio corporation, known to me (or proved to me by the
production of a driver's license as identification) to be the person whose name
is subscribed to the foregoing instrument and acknowledged to me that he
executed the same on behalf of said corporation for the purposes and
consideration therein expressed.
|
Notary Public
- State of Ohio
|
||
| My Commission Expires: | ||
| Printed Name of Notary | ||
Schedule 1.1
ADMINISTRATIVE
AGENT: GUARANTY
BANK,
a Federal savings
bank
Address
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Tel:
(▇▇▇) ▇▇▇-▇▇▇▇
By:
Name:
Title:
Schedule 1.1
LENDER: GUARANTY
BANK,
a Federal savings bank,
Address
as a Lender
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Tel:
(▇▇▇) ▇▇▇-▇▇▇▇
By:
Name:
Title:
Schedule 1.1
SCHEDULE
1.1
COMMITMENTS AND COMMITMENT
PERCENTAGES
|
LENDER
|
COMMITMENT
|
COMMITMENT
PERCENTAGES
|
|
|
GUARANTY
BANK
|
From
and including May 22, 2008 through and including December 14,
2008
|
$30,000,000
|
100%
|
|
From
and including December 15, 2008 through and including
January 15, 2009
|
$40,000,000
|
||
|
From
and including January 16, 2009 through and including May 21,
2009
|
$30,000,000
|
Schedule 1.1
SCHEDULE 1.2
APPROVED
INVESTORS
SEE
ATTACHED
Schedule 1.2
MI
FINANCIAL CORP.
SECONDARY
MARKET LENDERS
as
of 04/30/08
▇▇▇▇▇
Fargo Home Mortgage
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Huntington
Mortgage Company
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
Mac (FHLMC)
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Universal
Mortgage Corp.
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
CitiMortgage,
Inc.
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇
Bank
▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Flagstar
Bank
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇
▇▇▇▇▇
Countrywide
Funding Corp.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chase
Manhattan Mortgage Corp.
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ (FNMA)
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Home
Savings
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇.
▇▇▇▇▇, ▇▇
▇▇▇▇▇
GMAC
Bank
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Schedule 1.2
SCHEDULE
4.14
SUBSIDIARIES AND
INVESTMENTS
M/I Title
Agency, Ltd. (100% owned by Borrower). Borrower has invested
$37,700.00 in this Subsidiary as of April 30, 2008
Washington/Metro
Residential Title Agency, LLC (70% owned by Borrower). Borrower has
invested $7,000.00 in this Subsidiary as of April 30, 2008
Schedule 4.14
SCHEDULE
6.2
RELATED PERSON
INDEBTEDNESS
Borrower
and M/I Title Agency, Ltd., in addition to the other direct and indirect
wholly-owned subsidiaries of M/I Homes, Inc., are the guarantors of the
obligations under the (1) the Parent Debt Agreement and (2) the
Indenture, dated March 24, 2005, as amended, with respect to the Senior Notes of
M/I Homes, Inc.
Borrower’s
mortgage loan repurchase obligations
Schedule 6.2
EXHIBIT
A
FORM OF
NOTE
$40,000,000.00 Dallas,
Texas May 22, 2008
FOR VALUE
RECEIVED, the undersigned, M/I
FINANCIAL CORP., an Ohio corporation (the "Borrower"),
promises to pay to the order of GUARANTY BANK (the "Lender"),
the principal sum of FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00) or, if
less, the aggregate unpaid principal amount of the Loans made under this Note by
the Lender to the Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America, at the offices of
Guaranty Bank, as administrative agent (the "Administrative
Agent"), ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such
other place within Dallas County, Texas as from time to time may be designated
by the Administrative Agent.
This Note
(a) is executed and delivered pursuant to that certain Credit Agreement of
even date herewith between the Borrower, the Administrative Agent, and the
Lenders (herein, as from time to time supplemented, amended or restated, called
the "Credit
Agreement"), and is the Note as defined therein, (b) is subject to
the terms and provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events, and (c) is secured by and entitled
to the benefits of certain Loan Documents (as identified and defined in the
Credit Agreement). Payments on this Note shall be made and applied as
provided herein and in the Credit Agreement. Reference is hereby made
to the Credit Agreement for a description of certain rights, limitations of
rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein and to the Loan Documents for a
description of the nature and extent of the security thereby provided and the
rights of the parties thereto. All capitalized terms used herein and
not otherwise defined herein shall have the meanings given thereto in the Credit
Agreement. The holder of this Note shall be entitled to the benefits
provided for in the Credit Agreement.
The
principal amount of this Note, together with all interest accrued hereon, shall
be due and payable in full on the Drawdown Termination Date. Other
principal payments shall be made as required by the Credit
Agreement. All payments of principal of and interest upon this Note
shall be made by the Borrower to the Administrative Agent in federal or other
immediately available funds.
So long
as no Event of Default has occurred and is continuing, all Loans (exclusive of
any past due principal or interest) from time to time outstanding shall bear
interest on each day outstanding at the Adjusted Floating LIBOR in effect on
such day. If an Event of Default has occurred and is continuing, all
Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the applicable
Default Rate in effect on such day. On the fifteenth (15th) day of
each calendar month, beginning on the fifteenth (15th) day of the calendar month
immediately following the calendar month in which this Note is executed, the
Borrower shall pay to the holder hereof all unpaid interest which has accrued on
all Loans through and including the last day of the immediately preceding
calendar month.
At the
option of the Required Lenders, all past due principal of and past due interest
on the Loan Balance shall bear interest on each day outstanding at the
applicable Default Rate in effect on such day, and such interest shall be due
and payable daily as it accrues. Notwithstanding the provisions of
this Note and the Credit Agreement: (i) this Note shall never bear interest
in excess of the Maximum Rate, and (ii) if at any time the rate at which
interest is payable on this Note is limited by the Maximum Rate, this Note shall
bear interest at the Maximum Rate and shall continue to bear interest at the
Maximum Rate until such time as the total amount of interest accrued hereon
equals (but does not exceed) the total amount of interest which would have
accrued hereon had there been no Maximum Rate applicable hereto.
Notwithstanding
all other provisions of this Note or the Credit Agreement, in no event shall the
interest payable hereon, whether before or after maturity, exceed the maximum
amount of interest ("Maximum
Rate") which, under applicable law, may be charged on this Note, and this
Note is expressly made subject to the provisions of the Credit Agreement which
more fully set out the limitations on how interest accrues hereon. In
the event applicable law provides for a ceiling under Section 303 of the
Texas Finance Code, that ceiling shall be the weekly rate ceiling and shall be
used in this Note for calculating the Maximum Rate and for all other
purposes. The term "applicable law" as used in this Note shall mean
the laws of the State of Texas or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
If this
Note is placed in the hands of an attorney for collection after default, or if
all or any part of the indebtedness represented hereby is proved, established or
collected in any court or in any bankruptcy, receivership, debtor relief,
probate or other court proceedings, the Borrower and all endorsers, sureties and
guarantors of this Note jointly and severally agree to pay reasonable attorneys'
fees and collection costs to the holder hereof in addition to the principal and
interest payable hereunder.
The
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
No waiver
by the Lender of any of its rights or remedies hereunder or under any other
document evidencing or securing this Note or otherwise shall be considered a
waiver of any other subsequent right or remedy of the Lender; no delay or
omission in the exercise or enforcement by the Lender of any rights or remedies
shall ever be construed as a waiver of any right or remedy of the Lender; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of the Lender.
The
Borrower reserves the right to prepay the outstanding principal balance of this
Note, in whole or in part at any time and from time to time without premium or
penalty, in accordance with the terms of the Credit Agreement.
Time is
of the essence in the payment and performance of this Note.
THIS NOTE AND THE RIGHTS AND
DUTIES OF THE PARTIES HERETO ARE TO BE PERFORMED IN THE STATE OF TEXAS AND SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE
GOVERNED BY APPLICABLE FEDERAL LAW.
ALL
PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS NOTE,
THE CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. ALL
PARTIES HERETO AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, ALL
PARTIES HERETO FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE
WAIVED BY OPERATION OF THIS PARAGRAPH AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS NOTE OR ANY PROVISION HEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS NOTE.
THE
BORROWER HEREBY AGREES THAT THE OBLIGATIONS CONTAINED HEREIN ARE PERFORMABLE IN
DALLAS COUNTY,
TEXAS. THE BORROWER AGREES THAT (I) ANY ACTION ARISING
OUT OF THIS TRANSACTION MAY BE FILED IN DALLAS COUNTY, TEXAS,
(II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED HEREIN SHALL
BE IN DALLAS COUNTY,
TEXAS, (III) PERSONAL JURISDICTION SHALL BE IN DALLAS COUNTY, TEXAS,
(IV) SUCH ACTION MAY BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS
LOCATED IN DALLAS
COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS LOCATED IN DALLAS COUNTY, TEXAS,
AND (V) THE BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE
SUED ELSEWHERE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER
TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
THIS
NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
Exhibit A -
This Note
is executed as of the day first written above.
M/I
FINANCIAL CORP.,
an Ohio
corporation
By: ______________________________
Name: ▇▇▇▇▇▇▇
▇. Creek
Title: Chief
Financial Officer and Treasurer
STATE OF
OHIO §
§
COUNTY OF
FRANKLIN §
Before
me, the undersigned notary public, on this ____ day of May, 2008, personally
appeared ▇▇▇▇▇▇▇ ▇. Creek, Chief Financial Officer and Treasurer of M/I
Financial Corp., an Ohio corporation, known to me (or proved to me by the
production of a driver's license as identification) to be the person whose name
is subscribed to the foregoing instrument and acknowledged to me that he
executed the same on behalf of said corporation for the purposes and
consideration therein expressed.
|
Notary Public
- State of Ohio
|
||
| My Commission Expires: | ||
| Printed Name of Notary | ||
Exhibit A -
EXHIBIT
B
BORROWING
REQUEST
|
FROM:
|
M/I Financial Corp. (the
"Borrower")
|
|
TO:
|
Guaranty Bank, as
Administrative Agent (the "Administrative
Agent")
|
|
I.
|
The
Borrower hereby requests Loans in the amount and on the date specified
below, pursuant to the Credit Agreement among the Borrower, the
Administrative Agent, and the Lenders dated as of May 22, 2008 (as
amended, modified or restated from time to time, the "Agreement"). Capitalized
terms used herein and defined in the Agreement shall be used herein as so
defined.
|
|
II.
|
Loans
requested:
|
|
(a)
|
The
Borrower hereby requests Loans in the aggregate principal amount of
$__________.
|
|
(b)
|
Requested
advance
date: ,
200__.
|
|
III.
|
The
undersigned officer of the Borrower represents and warrants to the
Administrative Agent:
|
|
(a)
|
The
Borrower is entitled to receive the requested Loan under the terms and
conditions of the Agreement;
|
|
(b)
|
all
items which the Borrower is required to furnish to the Administrative
Agent pursuant to the Agreement accompany this Borrowing Request (or, if
Wet Loans, shall be delivered to the Administrative Agent in accordance
with the Agreement);
|
|
(c)
|
all
Mortgage Loans offered hereby conform in all respects with the applicable
requirements set forth in the
Agreement;
|
|
(d)
|
no
Event of Default has occurred and is continuing under the
Agreement;
|
|
(e)
|
no
change or event which with notice and/or the passage of time would
constitute an Event of Default;
|
|
(f)
|
after
giving effect to the Loans requested hereby the aggregate amount of the
outstanding principal balance of the Loans will not exceed the lesser of
(1) the Collateral Value of the Borrowing Base and (2) the
Commitments; and
|
|
(g)
|
after
giving effect to the Loans requested hereby the Unit Collateral Value of
all Second Lien Loans will not exceed the Applicable Sublimit for Second
Lien Loans and the Unit Collateral of all Wet Loans does not exceed the
Applicable Sublimit for Wet Loans.
|
The
Borrower has attached and submits herewith Submission Lists describing all
Eligible Mortgage Loans included in the Collateral Value of the Borrowing Base,
other than Wet Loans (the "Dry Submission Lists")
and Submission Lists describing all Wet Loans included in the Collateral Value
of the Borrowing Base (the "Wet Submission
Lists"). The Borrower has submitted-or is submitting to the
Administrative Agent concurrently herewith—the Required Mortgage Documents with
respect to each Mortgage Note described or referred to in the Dry Submission
Lists. The Borrower hereby grants to the Administrative Agent a
security interest in all such new Mortgage Collateral described in the Dry
Submission Lists and the Wet Submission Lists and all related Required Mortgage
Documents, and all of the foregoing are hereby made subject to the security
interest of the Administrative Agent created by the Security
Agreement. The Borrower hereby agrees to deliver the Required
Mortgage Documents with respect to each Mortgage Note described or referred to
in the Wet Submission Lists within seven (7) Business Days following the date
hereof.
The
Borrower represents and warrants that, except as permitted under the Agreement,
the Borrower holds with respect to each of the Mortgage Notes hereby offered the
following:
|
(a)
|
unless
delivered herewith, the original filed copy of the Mortgage relating to
such Mortgage.
|
|
(b)
|
mortgagee
policies of title insurance conforming to the requirements of the
Administrative Agent or binding commitments for the issuance of
same;
|
|
(c)
|
insurance
policies insuring the mortgaged premises as required by the Administrative
Agent; and
|
|
(d)
|
unless
delivered herewith, an original of any executed Take-Cut Commitment
relating to such Mortgage Note.
|
The
Borrower agrees that it holds the above referenced items in trust for the
Administrative Agent, and will at any time deliver the same to the
Administrative Agent upon request or, upon written instructions from the
Administrative Agent, to any Person designated by the Administrative
Agent. The Borrower further agrees that it will not deliver any of
the above items, nor give, transfer, or assign any interest in same, to any
Person other than the Administrative Agent (or the Person or Persons designated
by the Administrative Agent) without the prior written consent of the
Administrative Agent.
The
representations and warranties of the Borrower contained in the Agreement and
those contained in each other Loan Document to which the Borrower is a party are
true and correct in all respects on and as of the date hereof.
|
M/I
FINANCIAL CORP.
|
|
|
Date:
_______________,
200___
|
By:
|
|
Name:
Title:
|
Exhibit B -
EXHIBIT
C
CERTIFICATE
ACCOMPANYING
FINANCIAL
STATEMENTS
Reference
is made to that certain Credit Agreement dated as of May 22, 2008 (as from
time to time amended, restated, supplemented or otherwise modified from time to
time, the "Agreement"), by and
among M/I FINANCIAL CORP. (the "Borrower") and
GUARANTY BANK, as administrative agent (the "Administrative
Agent"), which Agreement is in full force and effect on the date
hereof. Terms which are defined in the Agreement are used herein with
the meanings given them in the Agreement.
This
Certificate is furnished pursuant to Section 5.l(a)
of the Agreement. Together herewith the Borrower is furnishing to the
Administrative Agent the Borrower's audited annual financial statements or
monthly financial statements (the "Financial
Statements") dated ___________, 200__ (the "Reporting
Date"). The Borrower hereby represents, warrants, and
acknowledges to the Administrative Agent and each Lender that:
|
|
(a)
|
the
officer of the Borrower signing this instrument is the duly elected,
qualified and acting ____________________ of the
Borrower;
|
|
|
(b)
|
the
Financial Statements are prepared in accordance with
GAAP;
|
|
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(c)
|
attached
hereto is Schedule C-1
showing the Borrower's compliance as of the Reporting Date with the
requirements of Sections 6.13
through 6.15 of the
Agreement *[and the Borrower's non-compliance as of such date with the
requirements of Section(s) ____ of the
Agreement];
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|
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(d)
|
on
the Reporting Date the Borrower was, and on the date hereof the Borrower
is, in full compliance with the disclosure requirements of Article V
of the Agreement, and no Default otherwise existed on the Reporting Date
or otherwise exists on the date of this instrument [except for Default(s)
under Section(s) __________________ of the Agreement, which (is/are)
more fully described on a schedule attached
hereto].
|
The
officer of Borrower signing this instrument hereby certifies that such officer
has reviewed the Loan Documents and the Financial Statements and has otherwise
undertaken such inquiry as is in such officer's opinion necessary to express an
informed opinion with respect to the above representations, warranties and
acknowledgments of Borrower and, to the best of such officer's knowledge, such
representations, warranties, and acknowledgments are true, correct and
complete.
Exhibit C -
IN
WITNESS WHEREOF, this instrument is executed as of ____________,
200___.
M/I
FINANCIAL CORP.,
an Ohio
corporation
By:
Name:
Title:
STATE OF
______________ §
§
COUNTY OF
_________ §
Before
me, the undersigned notary public, on this ___ day of ____________, 20___,
personally appeared __________________, ________________ of M/I Financial Corp.,
an Ohio corporation, known to me (or proved to me by the production of a
driver's license as identification) to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same on
behalf of said corporation for the purposes and consideration therein
expressed.
|
Notary Public
- State of Ohio
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||
| My Commission Expires: | ||
| Printed Name of Notary | ||
Exhibit C -
SCHEDULE
C-1
|
Financial Covenants
|
Required
|
Actual [or in
compliance]
|
|
1.Tangible
Net Worth (6.13)
|
Not
less than $9,000,000
|
____________________
|
|
▇.▇▇▇▇▇
liabilities to
Adjusted
Tangible Net Worth (6.14)
|
Not
more than 10.0 to 1.0
|
____________________
|
|
3.Adjusted
Tangible Net Worth (6.15)
|
Not
less than $7,000,000
|
____________________
|
M/I
FINANCIAL CORP.,
an Ohio
corporation
By:
Name:
Title:
(Date)
Schedule C-1
EXHIBIT
D
BORROWING BASE
CERTIFICATE
May ___,
2008
Reference
is made to that certain Credit Agreement dated as of May 22, 2008 (as from
time to time amended, the "Agreement") by and
between M/I FINANCIAL CORP.
(the "Borrower"), GUARANTY BANK, as
administrative agent (the "Administrative
Agent"), and the lenders party thereto (the "Lenders"). Terms
which are defined in the Agreement are used herein with the meanings given them
in the Agreement.
This
Certificate is being furnished pursuant to Section 3.1(a)(vii)
of the Agreement. The Borrower hereby certifies to the Administrative
Agent and each Lender as follows:
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|
I.
|
The
officer of the Borrower signing this instrument is the duly elected,
qualified and acting ______________________________ of the Borrower and as
such is authorized to submit this Certificate on behalf of the
Borrower;
|
|
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II.
|
As
of the close of business on ____________________, the Collateral Value of
the Borrowing Base was computed as
follows:
|
COLLATERAL
VALUE OF THE BORROWING BASE:
|
A.
|
Unit
Collateral Value of Eligible Mortgage Loans:
|
$
|
|
With
respect to Second Lien Loans, ninety percent (90%) of the least of (i),
(ii), (iii) and (iv) below, with respect to Jumbo Loans, ninety-five
percent (95%) of the least of (i), (ii), (iii) and (iv) below, and with
respect to each other Eligible Mortgage Loan, ninety-eight percent (98%)
of the least of (i), (ii), (iii) and (iv) below:
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$
|
|
|
(i) the
outstanding principal balance of the Mortgage Note constituting such
Mortgage Loan;
|
$
|
|
|
(ii) the
actual out-of-pocket cost to the Borrower of such Mortgage Loan minus the
amount of principal paid under such Mortgage Loan and delivered to the
Administrative Agent for application to the prepayment of the
Loans;
|
$
|
|
|
(iii) the
amount at which an Investor has committed to purchase the Mortgage Loan
pursuant to a Take-Out Commitment not to exceed 100% of the original
principal balance of the Mortgage Note;
|
$
|
|
|
(iv) the
Market Value of the Mortgage Note constituting such Mortgage
Loan.
|
$
|
|
|
Total
of A:
|
$
|
|
|
B.
|
COLLATERAL
VALUE OF THE BORROWING BASE TOTAL OF A
|
$
|
|
C.
|
LOAN
BALANCE
|
$
|
|
D.
|
MAXIMUM
AVAILABILITY UNDER THE BORROWING BASE (B-C)
|
$
|
The
officer of the Borrower signing this Borrowing Base Certificate certifies that,
to the best of his/her
knowledge after due inquiry, the above certifications of the Borrower are true,
correct and complete.
|
Dallas_1\5213642\3
6088-480
5/21/2008
|
M/I
FINANCIAL CORP.
By:
Name:
Title:
Exhibit E – Page
EXHIBIT
E
SECURITY
AGREEMENT
THIS
SECURITY AGREEMENT (this "Security Agreement") is made
and dated as of May 22, 2008, by M/I FINANCIAL CORP., an Ohio
corporation (the "Debtor"), and GUARANTY BANK, acting in its
capacity as administrative agent for the lenders from time to time a party to
the Credit Agreement (as defined below) and in its capacity as a collateral
agent for the Secured Parties (as defined below) (in such capacity, the "Administrative
Agent").
RECITALS
A. Pursuant
to that certain Credit Agreement of even date herewith among the Debtor, the
lenders named therein (the "Lenders"), and the
Administrative Agent (as from time to time amended, supplemented or restated,
the "Credit
Agreement"), the Lenders agreed to extend credit to the Debtor on the
terms and subject to the conditions set forth therein. Capitalized
terms not otherwise defined herein are used with the same meanings as in the
Credit Agreement.
B. As a
condition precedent to the effectiveness of the Credit Agreement, the Lenders
have required the execution and delivery of this Security Agreement in order to,
among other things, create a first priority perfected security interest in the
Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties, to secure payment of the Secured Indebtedness (as defined
below).
NOW,
THEREFORE, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
1. Administrative
Agent.
(a) Appointment. Pursuant
to the terms of the Credit Agreement, each Lender has authorized the
Administrative Agent to enter into this Security Agreement thereby appointing
the Administrative Agent to act as collateral agent, administrative agent,
bailee and custodian for the exclusive benefit of the Lenders and the
Administrative Agent with respect to the Collateral. The Lenders and
the Administrative Agent are hereinafter referred to collectively and severally
as the "Secured
Parties". The Administrative Agent hereby accepts such
appointment and agrees to maintain and hold all Collateral at any time delivered
to it as collateral agent, administrative agent, bailee and custodian for the
exclusive benefit of the Secured Parties. The Administrative Agent
and the Debtor agree that the Administrative Agent is acting and will act with
respect to the Collateral for the exclusive benefit of the Secured Parties and
is not, and shall not at any time in the future be, subject, with respect to the
Collateral, in any manner or to any extent, to the direction or control of the
Debtor except as expressly permitted hereunder and under the other Loan
Documents. The Administrative Agent agrees to act in accordance with
this Security Agreement and in accordance with any written instructions properly
delivered pursuant hereto. Under no circumstances shall the
Administrative Agent deliver possession of Collateral to the Debtor except in
accordance with the express terms of this Security Agreement or the other Loan
Documents.
(b) MERS. The
Administrative Agent (on behalf of the Lenders) and the Debtor hereby confirm
the appointment of the Administrative Agent as the agent for the Secured Parties
with respect to MERS Loans. The Administrative Agent hereby confirms
that one of its Affiliates is a MERS member in good standing and in compliance
with all rules, regulations, procedures, and requirements set forth by MERS,
including, but not limited to, the payment of membership fees.
2. Delivery of
Collateral. The Debtor shall deliver Submission Lists to the
Administrative Agent from time to time identifying Mortgage Loans that the
Debtor intends to include in Collateral by delivering to the Administrative
Agent the mortgage documents described on Schedule A
attached hereto for each such Mortgage Loan (the "Required Mortgage
Documents"). Such delivery shall be made prior to inclusion of
such Mortgage Loans in Collateral, other than for Wet Loans identified in the
applicable Borrowing Request and covered by an Agreement to
Pledge. The Debtor must obtain and hold for the benefit of the
Secured Parties the documents described in Schedule B
attached hereto for each such Mortgage Loan (the "Additional Required Mortgage
Documents"). With each transmission or delivery of a Borrowing
Request, the Debtor shall automatically be deemed to have represented and
warranted the information contained therein or delivered thereunder to be
accurate and complete. The Administrative Agent's responsibility to
review the Required Mortgage Documents is limited to the steps described in
Paragraph 5
below, with said review of the Required Mortgage Documents delivered prior to
11:00 a.m. (Central time) on any Business Day to be completed before
10:00 a.m. (Central time) on the next succeeding Business Day.
3. Grant of Security
Interest. The Debtor hereby pledges, assigns and grants to the
Administrative Agent, for the benefit of the Secured Parties, a first priority
security interest in the property described in Paragraph 4
below (collectively and severally, the "Collateral"), to
secure payment of (i) the Obligations, (ii) all costs reasonably
incurred by the Administrative Agent (a) to obtain, preserve, perfect and
enforce the security interest granted hereby and all other liens and security
interests securing payment of the Obligations, (b) to collect the
Obligations, and (c) to maintain, preserve and collect the Collateral,
including, but not limited to, taxes, assessments, insurance premiums, repairs,
reasonable attorneys' fees and legal expenses (including, without limitation,
allocated costs for in-house legal services), rent, storage charges, advertising
costs, brokerage fees and expenses of sale; and (iii) all renewals,
extensions and modifications of the indebtedness referred to in the foregoing
clauses, or any part thereof. The loans, advances, indebtedness,
obligations, liabilities and costs described in this section are collectively
referred to herein as the "Secured
Indebtedness". All proceeds hereof shall be applied by the
Administrative Agent to the Secured Indebtedness in accordance with the Credit
Agreement.
4. Collateral. The
Collateral shall consist of all right, title and interest of the Debtor, of
every kind and nature, in and to all of the following property, assets and
rights of the Debtor, wherever located, whether now existing or hereafter
arising, and whether now or hereafter owned or acquired by or accruing or owing
to the Debtor, and all proceeds and products thereof (including all proceeds in
the Settlement Account from time to time).
(a) Any and
all Instruments, Certificated Securities, Uncertificated Securities, and
Investment Property of the Debtor and related to the Mortgage Loans or the
Mortgage Notes in the actual or constructive possession of the Administrative
Agent, any Person designated as a bailee ("Bailee") of Mortgage
Notes by the Administrative Agent until payment is made for such Notes or they
are returned to the Administrative Agent, or of the Debtor in trust for the
Administrative Agent, or in transit to or from the Administrative Agent or
Bailee as collateral for the Secured Indebtedness or designated by the Debtor as
collateral for the Secured Indebtedness (whether or not delivered to the
Administrative Agent or Bailee), and any and all agreements and documents
related to any thereof including, without limitation, all Mortgage Notes and
Mortgages delivered, or to be delivered, to the Administrative
Agent or Bailee or to be held by the Debtor in trust for the
Administrative Agent or Bailee, including without limitation:
(i) any and
all rights, titles and interests the Debtor may now or hereafter have in and to
any and all promissory notes, Mortgages, guaranties, bonds, insurance policies,
commitments, and other Instruments, documents, or agreements ever executed and
delivered to the Debtor relating to such Mortgage Notes and
Mortgages;
(ii) any and
all present and future Accounts, Chattel Paper, documents, Instruments, General
Intangibles, Payment Intangibles and other personal property now owned or
hereafter acquired by the Debtor arising from or by virtue of any transactions
related to such Mortgage Notes and Mortgages;
(iii) any and
all proceeds from the sale, financing or other disposition of the items
described in (i) and (ii) above; and
(iv) all
Software, files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records, and other records,
information, and data of the Debtor relating to the Mortgage Loans (including
without limitation all information, data, programs, tapes, discs and cards
necessary to administer and service such Mortgage Loans).
(b) All
Take-Out Commitments relating to the Mortgage Notes, the residential real
property and improvements securing the Mortgage Notes described in subparagraph (a)
above.
(c) All
Hedging Arrangements related to the Collateral ("Pledged Hedging
Arrangements") and the Debtor's accounts in which those Hedging
Arrangements are held ("Pledged Hedging
Accounts"), including all rights to payments arising under the Pledged
Hedging Arrangements and the Pledged Hedging Accounts, except that Secured
Parties' security interest in the Pledged Hedging Arrangements and Pledged
Hedging Accounts applies only to benefits, including rights to payment, related
to the Collateral.
(d) All
right, title and interest of the Debtor under all agreements between the Debtor
and Persons other than the Debtor pursuant to which the Debtor undertakes to
service Mortgage Loans, including without limitation, the rights of the Debtor
to income and reimbursement thereunder, insofar as such agreements relate to the
Mortgage Notes and Mortgages described in subparagraph (a)
above, and all right, title and interest of the Debtor under all agreements
between the Debtor and Persons other than the Debtor pursuant to which such
other Person undertakes to service Mortgage Loans, insofar as such agreements
relate to the Mortgage Notes and Mortgages described in subparagraph (a)
above.
(e) All
purchase agreements, credit agreements or other agreements pursuant to which the
Debtor acquired such Mortgage Loans and all promissory notes, security
agreements and other instruments and documents executed by the Debtor pursuant
thereto or in connection therewith, insofar as such agreements, instruments and
documents relate to the Mortgage Notes and Mortgages described in subparagraph (a)
above.
(f) All other
money or property of the Debtor related to the Mortgage Loans or Mortgage Notes
in the possession of any Secured Party including, without limitation,
(i) the Funding Account, the Settlement Account, the Operating Account, all
Deposit Accounts established with any Secured Party and any other accounts
established by the Debtor with any Secured Party, (ii) all amounts on
deposit in the Funding Account, the Settlement Account, the Operating Account,
such Deposit Accounts or any other accounts established by the Debtor with any
Secured Party and (iii) the obligations of any Secured Party to the Debtor
arising out of such deposits.
(g) All
right, title and interest of the Debtor in and to any other asset of the
Debtor related to the Mortgage Loans or Mortgage Notes which has been
or hereafter at any time is delivered to the Administrative Agent or Bailee
hereunder.
(h) All
proceeds of whatever kind or nature from any of such collateral described in
subparagraphs (a),
(b), (c), (d), (e), (f) and (g)
above.
As used
in this Security Agreement, the terms "Accounts," "Certificated Securities,"
"Chattel Paper," "Deposit Accounts," "General Intangibles", "Instruments",
"Investment Property", "Payment Intangibles", "Software," and "Uncertificated
Securities" and shall have the respective meanings assigned to them in the Texas
Uniform Commercial Code, as amended by Revised Article 9 which became
effective on July 1, 2001, and as the same may hereafter be
amended.
5. Administrative Agent's
Review of Collateral.
(a) Upon any
receipt of Required Mortgage Documents for any Mortgage Loan, the Administrative
Agent shall review the same and verify that:
(i) All
Required Mortgage Documents relating to such Mortgage Loan appear regular on
their face and are in the Administrative Agent's possession, and
(ii) The
statements set forth on Schedule C
hereto are accurate and complete in all respects.
(b) The
Administrative Agent shall maintain a data base of information with respect to
the Mortgage Loans and the Required Mortgaged Documents sufficient to enable the
Administrative Agent to provide the information required to be delivered by it
to the Secured Parties from time to time pursuant to this Security
Agreement. The Administrative Agent's review of the Required Mortgage
Documents delivered by or on behalf of the Debtor hereunder shall be pursuant to
subparagraph (a)
above. Upon completing its review pursuant to subparagraph (a)
above and accompanying documents received each day along with any information
contained on the MERS System, the Administrative Agent shall, not later than
10:00 a.m. (Central time) on the next succeeding Business Day enter such
information in the data base maintained by the Administrative
Agent.
(c) With
respect to the MERS System, the Administrative Agent or one of its Affiliates
shall:
(i) at all
times be a MERS Member,
(ii) at all
times possess the technological capability to fully utilize the MERS
System,
(iii) maintain
on its data base the information, which shall be updated on a daily basis, which
identifies and segregates the MERS Loans in which the Administrative Agent has a
security interest from any other MERS Loan in which the Administrative Agent may
have an interest separate and apart from that of the Administrative Agent
hereunder, and
(iv) comply
with all of its obligations under the Electronic Tracking Agreement, possess at
all times a valid and effective corporate consent from MERS permitting officers
of the Administrative Agent to execute written assignments of mortgage as
officers of MERS, as more particularly set forth in the Electronic Tracking
Agreement, and execute such written assignments of MERS Loans as the
Administrative Agent may require from time to time, and
(d) If the
Administrative Agent notes any exception in the review described in subparagraph (a),
(b) or (c) above, the
Administrative Agent shall note the same as Collateral not included in the
Borrowing Base (subject to the right of the Administrative Agent to waive
certain requirements for eligibility as expressly set forth in the Credit
Agreement). In the event that the Debtor has been requested by the
Administrative Agent to deliver the Additional Required Mortgage Documents with
respect to any Mortgage Loan, the Administrative Agent shall not be required to
review any such documents other than to determine that such documents appear on
their face to be the documents required to be delivered.
6. Handling of Collateral;
Settlement Account; Redemption of Collateral.
(a) So long
as no Default or Event of Default exists, the Administrative Agent may from time
to time release documentation relating to Mortgage Loans to the Debtor against a
trust receipt executed by the Debtor in the form of Exhibit 1
hereto. The Debtor hereby represents and warrants that any request by
the Debtor for release of Collateral under this subparagraph (a)
shall be solely for the purposes of correcting clerical or other non-substantial
documentation problems in preparation of returning such Collateral to the
Administrative Agent for ultimate sale or exchange and that the Debtor has
requested such release in compliance with all terms and conditions of such
release set forth herein and in the Credit Agreement.
(b) So long
as no Default or Event of Default exists, Mortgage Collateral may be sold
pursuant to a Take-Out Commitment, and upon delivery by the Debtor to the
Administrative Agent of a shipping request substantially in the form of that
attached hereto as Exhibit 2,
together with an air ▇▇▇▇ or other form of shipping label properly completed
with the name and address of the respective Investor, the Administrative Agent
will transmit, or cause to be transmitted, Mortgage Loans held by it as directed
by the Debtor under cover of a transmittal letter substantially in the form of
that attached hereto as Exhibit 3 (or
such other form as may be approved by the Administrative Agent).
(c) All
amounts payable on account of the sale or repayment of Collateral will be
instructed to be paid directly or indirectly by the purchaser of the Collateral
or the purchaser of real property securing the Collateral to the Settlement
Account. The Debtor will not be credited for any amounts due from any
purchaser until the Administrative Agent has actually received immediately
available funds. Pursuant to Paragraph 3
above, the Debtor has granted to the Secured Parties a security interest in and
lien upon the Settlement Account and in any and all amounts at any time held
therein. This Paragraph 6(c)
shall further constitute irrevocable notice to the Administrative Agent that the
accounts referred to in Paragraph 4(f)
above are "no access" accounts to the Debtor.
(d) So long
as no Default or Event of Default exists, the Administrative Agent shall take
such steps as it may be reasonably directed from time to time by the Debtor in
writing which are not inconsistent with the provisions of this Security
Agreement and the other Loan Documents and which the Debtor deems necessary to
enable the Debtor to perform and comply with Take-Out Commitments and with other
agreements for the sale or other disposition in whole or in part of Mortgage
Loans. Mortgage Collateral may be sold pursuant to a Take-Out
Commitment so long as no Default or Event of Default exists.
(e) So long
as no Default or Event of Default exists, upon receipt of a Collateral Release
Request in the form attached hereto as Exhibit 4, the
Administrative Agent is hereby authorized, and does hereby agree, to release
free and clear of the security interest granted by this Security Agreement any
Mortgage Loan, together with all other documentation relating thereto, to the
Debtor or as directed by the Debtor; provided that after giving effect to such
release, the Collateral Value of the Borrowing Base is equal or greater than the
Loan Balance. In the event any Collateral Release Request is received
by the Administrative Agent prior to 2:15 p.m. (Dallas time) on any
Business Day, said Collateral shall be released on the following Business
Day. The Administrative Agent agrees to transmit all Collateral
released pursuant to this section as directed by the Debtor at the expense of
the Debtor, and, upon request by the Debtor, to complete the endorsements of the
related instruments and the assignments of the related instruments, to execute
the appropriate form of UCC financing statement release, if necessary, and to
execute such other appropriate instruments of transfer or release as the Debtor
shall reasonably request. The Administrative Agent shall be fully
protected in relying on any delivery instructions from the Debtor in which the
Debtor purports to be entitled to direct delivery of the items identified
therein, and the Debtor shall reimburse the Administrative Agent for all
expenses incurred in connection with the delivery of any item held by it under
this section.
(f) So long
as no Default or Event of Default exists, the Debtor may obtain the release of
the security interest in favor of the Secured Parties in all or any part of the
Mortgage Collateral at any time, and from time to time, by paying to the
Administrative Agent, as a prepayment under the Credit Agreement, the Unit
Collateral Value of the Mortgage Collateral to be so released (such Unit
Collateral Value being determined as of the date of such release). In
the event that the Unit Collateral Value of the Mortgage Collateral designated
by the Administrative Agent, as determined on the date in question, is less than
the Unit Collateral Value of such Mortgage Collateral as determined on the date
that such Mortgage Collateral was first delivered to the Administrative Agent,
and the Administrative Agent reasonably shall deem impaired its ability to
satisfy the Secured Indebtedness by recourse to such Mortgage Collateral, the
Debtor shall, within two (2) Business Days after the reasonable written request
of the Administrative Agent at any time during the term hereof
either:
(i) pay to
the Administrative Agent in immediately available funds an amount equal to the
aggregate Unit Collateral Value of any Mortgage Collateral designated by the
Administrative Agent (such Unit Collateral Value being determined as of the date
of such redemption), or
(ii) deliver
to the Administrative Agent other Mortgage Collateral in substitution for such
designated Mortgage Collateral, the aggregate Unit Collateral Value of which
substituted Mortgage Collateral (determined at the time of substitution) is
equal to or greater than the aggregate Unit Collateral Value of the Mortgage
Collateral being replaced (determined as of the date such Mortgage Collateral
was first delivered to the Administrative Agent hereunder).
(g) A
Mortgage Loan which has been delivered to the Administrative Agent under this
Security Agreement shall be and remain Collateral until released pursuant to
Paragraph 6 or
until this Security Agreement is terminated, notwithstanding (i) any defect
in any document delivered to the Administrative Agent pursuant to the Credit
Agreement or this Security Agreement, (ii) the failure of such Mortgage
Loan to have or retain Unit Collateral Value, (iii) the failure of the
Debtor to make timely delivery of any document required to be delivered to the
Administrative Agent under this Security Agreement or the Credit Agreement, or
(iv) any other fact, circumstance, condition or event
whatsoever. For purposes of the preceding sentence, the funding of
the origination or purchase of a Mortgage Loan from the proceeds of a Loan
and/or the assignment of Unit Collateral Value to such Mortgage Loan by Secured
Party shall be deemed to be conclusive evidence of the delivery of such Mortgage
Loan under the Credit Agreement, notwithstanding any subsequent determination by
the Administrative Agent that the documentation delivered for such Mortgage Loan
was incomplete or defective in any respect or that such Mortgage Loan should not
have been assigned Unit Collateral Value.
7. No
Reliance. The Administrative Agent shall not be responsible to
the Debtor or any Secured Party for any recitals, statements, representations or
warranties contained herein or in any other Loan Document; or for the execution,
effectiveness, genuineness, validity, enforceability, collectability, accuracy,
completeness or sufficiency of this Security Agreement or any other Loan
Document or instruments executed and delivered, or which could have been
executed or delivered, in connection with this Security Agreement or the other
Loan Documents, including, without limitation, the attachment, creation,
effectiveness or perfection of the security interests granted or purported to be
granted hereunder in and to the Collateral. The Administrative Agent
shall be entitled to refrain from exercising any discretionary powers or actions
under this Security Agreement or any other Loan Document until the
Administrative Agent shall have received the prior written consent of one
hundred percent (100%) of the Lenders to such action.
8. Costs and
Expenses. The Debtor shall pay all costs and expenses of the
Administrative Agent relating to the Administrative Agent's performance of this
Security Agreement and the enforcement of the rights and remedies of the
Administrative Agent and the Secured Parties hereunder, including, without
limitation, reasonable fees and expenses of legal counsel to the Administrative
Agent as provided in the Credit Agreement.
9. Availability of
Documents. Each Lender and its agents, accountants, attorneys
and auditors will be permitted from time to time upon reasonable notice to the
Administrative Agent and the Debtor, and at such time as may be mutually
acceptable to such Lender, the Administrative Agent and the Debtor (but in no
event later than one week after such Lender's original requested date) to
examine (to the extent permitted by applicable law) the files, documents,
records and other papers in the possession or under the control of the
Administrative Agent or the Debtor relating to any or all Collateral and to make
copies thereof. Prior to the occurrence of a Default, any such
activity will be at the cost and expense of the Lender conducting such activity;
following the occurrence of a Default, all reasonable out-of-pocket costs and
expenses associated with the exercise by the Secured Parties of their rights
under this Paragraph 9
shall be promptly paid by the Debtor upon demand of any Lender made through the
Administrative Agent.
10. Representations and
Warranties. The Debtor warrants that:
(a) the
Debtor is the sole owner of the Collateral (or, in the case of after-acquired
Collateral, at the time the Debtor acquires rights in the Collateral, will be
the sole owner thereof), subject only to the rights of Investors under the
Take-Out Commitments;
(b) except
for security interests in favor of the Secured Parties and any other security
interests permitted under the Credit Agreement, no Person has (or, in the case
of after-acquired Collateral, at the time the Debtor acquires rights therein,
will have) any right, title, claim or interest in, against or to the Collateral
and, in any event, so long as the Administrative Agent complies with the
procedures relating to possession of Collateral set forth in this Security
Agreement, the Secured Parties shall have a perfected, first priority security
interest therein;
(c) no
consent of any Person is required that has not been obtained for the granting of
the security interests provided for herein, nor will any consent be required for
the Administrative Agent to exercise its rights under this Security Agreement in
accordance with the terms of this Security Agreement;
(d) to the
best of the Debtor's knowledge, all information heretofore, herein or hereafter
supplied to the Administrative Agent by or on behalf of the Debtor with respect
to the Collateral is or will be accurate and complete in all material
respects;
(e) the
Take-Out Commitments covering such Collateral may be collaterally assigned to
the Secured Parties as described herein;
(f) each
Mortgage Loan is, at all dates included in the computation of the Collateral
Value of the Borrowing Base, an Eligible Mortgage Loan;
(g) to the
best of the Debtor's knowledge, no material dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral;
(h) this
Security Agreement constitutes the legal, valid and binding obligation of the
Debtor enforceable against the Debtor and the Collateral in accordance with its
terms (subject to limitations as to enforceability which might result from
bankruptcy, reorganization, insolvency or other similar laws affecting
creditors' rights generally and general principles of equity);
(i) in making
and closing each Mortgage Loan originated by a third party, the Debtor has or
will have fully complied with, and all collateral documents delivered with
respect to such Mortgage Loan comply or will comply with, all applicable
federal, state and local laws, regulations and rules, including, but not limited
to, (1) usury laws, (2) the Real Estate Settlement Procedures Act of
1974, (3) the Equal Credit Opportunity Act, (4) the Federal Truth in
Lending Act (Regulation Z of the Board of Governors of the Federal Reserve
System) and (5) all other consumer protection and truth-in-lending laws
which may apply, and in each case with the regulations promulgated in connection
therewith, as the same may be amended from time to time; and the Debtor shall
maintain sufficient documentary evidence in its files with respect to such
Mortgage Loans to substantiate such compliance;
(j) upon the
delivery of the Mortgage Note evidencing a Mortgage Loan to the Administrative
Agent, the Administrative Agent shall have a valid and perfected first priority
security interest for the benefit of the Secured Parties in such Mortgage Loan;
and
(k) immediately
upon (1) the execution and delivery of the Credit Agreement, the Notes and
the other Loan Documents, (2) the acquisition by the Debtor of rights in
such Collateral and (3) the filing with the Secretary of State of Ohio of a
financing statement showing the Debtor, as debtor, and the Administrative Agent,
as secured party for the benefit of the Secured Parties, and describing the
Collateral, the Administrative Agent shall have a valid and perfected first
priority security interest for the benefit of the Secured Parties in the
Collateral which is other than as described in clause (j) above, to the
extent that a security interest in such other Collateral can be perfected by
filing a financing statement.
11. Covenants of the
Debtor. The Debtor hereby agrees:
(a) to
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings deemed necessary or appropriate by the
Administrative Agent to perfect, maintain and protect the Secured Parties'
security interest hereunder and the priority thereof and to deliver promptly to
the Administrative Agent all originals of any Collateral or proceeds thereof
consisting of chattel paper or instruments;
(b) not to
surrender or lose possession of (other than to the Administrative Agent), sell,
encumber, or otherwise dispose of or transfers, any Collateral or right or
interest therein other than shipment of Mortgage Loans under Take-Out
Commitments and as otherwise permitted under Paragraph 6
above or the Credit Agreement;
(c) not to
grant to any Investor any other security interest in any Collateral, or
otherwise acknowledge the creation of any ownership rights of any Investor with
respect to any Collateral unless and until the Administrative Agent has received
the proceeds of such Collateral as described herein;
(d) at all
times to account fully for and promptly to deliver to the Administrative Agent,
in the form received, all Collateral or proceeds thereof received, endorsed to
the Administrative Agent or in blank as appropriate and accompanied by such
assignments and powers, duly executed, as the Administrative Agent shall
request, and until so delivered all Collateral and proceeds thereof shall be
held in trust for the Administrative Agent, for the benefit of the Secured
Parties, separate from all other property of the Debtor and identified as the
property of the Administrative Agent, for the benefit of the Secured
Parties;
(e) to keep
accurate and complete records of the Collateral and at any reasonable time and
at the Administrative Agent's or any requesting Lender's expense (provided that
during the continuation of any Event of Default, the following shall be at the
Debtor's expense), upon demand by the Administrative Agent or any Lender, to
exhibit to and allow inspection of the Collateral and the records, reports and
information concerning the Collateral by the Administrative Agent or such Lender
(or Persons designated by the Administrative Agent or such Lender);
(f) to keep
the records concerning the Collateral at the location(s) set forth in Paragraph 19
below and not to remove the records from such location(s) without the prior
written consent of the Administrative Agent;
(g) not to
materially modify, compromise, extend, rescind or cancel any deed of trust,
mortgage, note or other document, instrument or agreement connected with any
Mortgage Loan pledged under this Security Agreement or any document relating
thereto or connected therewith or consent to a postponement of strict compliance
on the part of any party thereto with any term or provision thereof in any
material respect;
(h) to keep
the Collateral insured against loss, damage, theft, and other risks customarily
covered by insurance, and such other risks as the Administrative Agent may
reasonably request;
(i) to do all
acts that a prudent investor would deem necessary or desirable to maintain,
preserve and protect the Collateral;
(j) not
knowingly to use or permit any Collateral to be used unlawfully or in violation
of any provision of this Security Agreement, the Credit Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
the Collateral;
(k) to pay
(or require to be paid) prior to their becoming delinquent all taxes,
assessments, insurance premiums, charges, encumbrances and liens now or
hereafter imposed upon or affecting any Collateral except as otherwise permitted
in the Credit Agreement;
(l) to notify
the Administrative Agent before any such change shall occur of any change in the
Debtor's name, identity, structure or jurisdiction through merger, consolidation
or otherwise;
(m) to appear
in and defend, at the Debtor's cost and expense, any action or proceeding which
may affect its title to or the Secured Parties' interest in the Collateral;
and
(n) to comply
in all material respects with all laws, regulations and ordinances relating to
the possession, operation, maintenance and control of the
Collateral.
12. Collection of Collateral
Payments.
(a) Until the
Administrative Agent gives notice to the Debtor pursuant to Paragraph 12(b)
below or exercises the Administrative Agent's or the Secured Parties' rights
under Paragraph 14
hereof, the Debtor shall be entitled to receive all collections on any and all
of the Mortgage Notes, Mortgages and any documents related to the foregoing
(hereinafter collectively called "Collections") and use
the same in the normal course of business. Upon notice from the
Administrative Agent to the Debtor given after the occurrence and during the
continuation of an Event of Default, the Debtor shall furnish to the
Administrative Agent not later than the tenth Business Day after the end of each
month a report on all Collections received during the preceding month and
provide the same accounting therefor as the Debtor customarily furnishes the
Investors therein, including with respect to Collections on each Mortgage Loan:
(1) the name of the Obligor, (2) the Debtor's loan number for the
Mortgage Loan, (3) current principal balance of the Mortgage Loan,
(4) current escrow balance with respect to the Mortgage Loan,
(5) number and amount of past due payments on the Mortgage Loan and
(6) the amount of the Collections received during such month with respect
to the Mortgage Loan, itemized to show (A) principal portion,
(B) interest portion and (C) portion thereof representing amounts paid
in escrow for real estate taxes and insurance.
(b) Upon
notice from the Administrative Agent to the Debtor given after the occurrence
and during the continuation of an Event of Default, the Debtor shall hold all
Collections representing principal payments and prepayments and escrows for real
estate taxes and insurance in trust for the Secured Parties' and shall promptly
remit the same to the Administrative Agent for the benefit of the Secured
Parties. All amounts representing the principal payments and
prepayments on Mortgage Loans which are delivered to the Administrative Agent
pursuant to the preceding sentence shall be deposited in the Settlement Account
and all amounts representing real estate tax and insurance escrows for Mortgage
Loans which are delivered to the Administrative Agent pursuant to the preceding
sentence shall be deposited in an escrow account with any bank satisfactory to
the Debtor and the Administrative Agent, to be held for the payment of the
applicable real estate taxes and insurance premiums.
(c) The
Debtor hereby agrees to indemnify, defend and save harmless the Administrative
Agent and its officers, employees and representatives (collectively, the "Indemnified Persons")
from and against all liabilities and expenses on account of any adverse claim
asserted against the Administrative Agent relating to any moneys received by the
Administrative Agent on account of any Collections WHETHER OR NOT SUCH LIABILITIES AND
EXPENSES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED PERSON (except
for any such liabilities or expenses arising as a direct result of the gross
negligence or willful misconduct of such Indemnified Person) and such obligation
of the Debtor shall continue in effect after and notwithstanding the discharge
of the Secured Indebtedness and/or the release of the security interest granted
in Paragraph 3
above.
13. Authorized Action by the
Administrative Agent. The Debtor hereby irrevocably appoints
the Administrative Agent its attorney in fact, with full power of substitution,
for and on behalf and in the name of the Debtor, which power of attorney shall
become effective upon the occurrence and remain effective during the continuance
of an Event of Default, to (i) endorse and deliver to any Person any check,
instrument or other paper coming into the Administrative Agent's possession and
representing payment made in respect of any Mortgage Note delivered to and held
by the Administrative Agent hereunder as Mortgage Collateral or in respect of
any other Collateral or Take-Out Commitment; (ii) prepare, complete,
execute, deliver and record any assignment to the Administrative Agent or to any
other Person of any Mortgage relating to any Mortgage Note delivered to and held
by the Administrative Agent hereunder as Mortgage Collateral; (iii) endorse
and deliver any Mortgage Note delivered to and held by the Administrative Agent
hereunder as Mortgage Collateral and do every other thing necessary or desirable
to effect transfer of all or any part of the Mortgage Collateral to the
Administrative Agent or to any other Person; (iv) take all necessary and
appropriate action with respect to all Secured Indebtedness and the Mortgage
Collateral to be delivered to the Administrative Agent or held by the Debtor in
trust for the Administrative Agent; (v) commence, prosecute, settle,
discontinue, defend, or otherwise dispose of any claim relating to any Take-Out
Commitment or any part of the Mortgage Collateral; and (vi) sign the
Debtor's name wherever appropriate to effect the enforcement of the
Administrative Agent's rights and remedies set forth in this Agreement relating
to the Secured Indebtedness and/or the Mortgage Collateral. This
Paragraph 13
shall be liberally, not restrictively, construed so as to give the greatest
latitude to the Administrative Agent's power, as the Debtor's attorney-in-fact,
to collect, sell, and deliver any of the Mortgage Collateral and all other
documents relating thereto. The powers and authorities herein
conferred on the Administrative Agent may be exercised by Administrative Agent
through any Person who, at the time of the execution of a particular instrument,
is an authorized officer of the Administrative Agent. The power of
attorney conferred by this Paragraph 13 is
granted for a valuable consideration and is coupled with an interest and
irrevocable so long as the Secured Indebtedness, or any part thereof, shall
remain unpaid or the Commitments are outstanding. All Persons dealing
with the Administrative Agent, or any officer thereof acting pursuant hereto
shall be fully protected in treating the powers and authorities conferred by
this Paragraph 13 as
existing and continuing in full force and effect until advised by the
Administrative Agent that the Secured Indebtedness have been fully and finally
paid and satisfied and the Commitments have been terminated. The
Debtor hereby authorizes the Administrative Agent to file, without the signature
of the Debtor where permitted by law, one or more financing statements,
continuation statements or initial financing statements and amendments thereto
indicating the Collateral. The Debtor further agrees that a carbon,
photographic or other reproduction of this Agreement or any financing statement
describing any Collateral is sufficient as a financing statement and may be
filed in any jurisdiction by the Administrative Agent.
14. Default and
Remedies.
(a) While an
Event of Default exists under any Loan Document, the Administrative Agent may,
on behalf of the Secured Parties, without notice to or demand upon the Debtor:
(a) foreclose or otherwise enforce the Secured Parties' security interest
in the Collateral in any manner permitted by law or provided for hereunder;
(b) sell or otherwise dispose of in a commercially reasonable manner the
Collateral or any part thereof at one or more public or private sales or at any
broker's board or on any securities exchange, whether or not such Collateral is
present at the place of sale, for cash or credit or future delivery and without
assumption of any credit risk, on such terms and in such manner as the
Administrative Agent may determine; (c) require the Debtor to assemble the
Collateral and/or books and records relating thereto and make such available to
the Administrative Agent at a place to be designated by the Administrative
Agent; (d) enter into property where any Collateral or books and records
relating thereto are located and take possession thereof with or without
judicial process; and (e) prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the Administrative
Agent deems appropriate. Whether or not the Administrative Agent
exercises any right given pursuant to this section upon the occurrence of any
Event of Default, the Administrative Agent shall have as to any Collateral all
other rights and remedies provided for herein and all rights and remedies of a
secured party under the Texas Uniform Commercial Code and, in addition thereto
and not in lieu thereof, all other rights or remedies at law or in equity
existing or conferred upon the Administrative Agent or a secured party by other
jurisdictions or other applicable law or given to the Administrative Agent
pursuant to any security agreement, other instrument or agreement heretofore,
now, or hereafter given as security for the Debtor's obligations
hereunder.
(b) The
Administrative Agent is authorized, at any such sale, if it deems it advisable
so to do, to restrict the prospective bidders or purchasers to Persons who will
represent and agree that they are purchasing for their own account, for
investment, and not with a view to the distribution or sale of any of the
Collateral. Upon any sale or other disposition pursuant to this
Security Agreement, the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral or portion thereof
so sold or disposed of and all proceeds thereof shall be promptly distributed in
accordance with the terms of the Credit Agreement. Each purchaser at
any such sale or other disposition shall hold the Collateral free from any claim
or right of whatever kind, including any equity or right of redemption of the
Debtor, and the Debtor specifically waives (to the extent permitted by law) all
rights of redemption, stay or appraisal which it has or may under any rule of
law or statute now existing or hereafter adopted. The Administrative
Agent shall give the Debtor only such notice and shall publish such notice as
may be required by the Texas Uniform Commercial Code or by other applicable law
of the intention to make any such public or private sale or sale at broker's
board or on a securities exchange. The Debtor acknowledges and agrees
that a private sale of any Collateral pursuant to any Take-Out Commitment shall
be deemed to be a sale of such Collateral in a commercially reasonable manner,
provided that such sale is substantially on the terms and conditions of such
Take-Out Commitment. Any such public sale shall be held at such time
or times within the ordinary business hours and at such place or places
permitted by the Texas Uniform Commercial Code. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent may
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral
on credit or for future delivery, (i) the Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, (ii) the Administrative Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold, and (iii) in case of any such failure, such Collateral
may again be sold as provided herein. Nothing contained in this
Security Agreement shall prohibit any Lender from purchasing the Collateral at
such sale.
15. Waiver. Neither
the Administrative Agent nor any Lender shall incur any liability as a result of
the sale of the Collateral in a commercially reasonable manner, or any part
thereof; at any public or
private sale. The Debtor each hereby waives any claims it may have
against the Administrative Agent or any Lender arising by reason of the fact
that the price at which the Collateral may have been sold at such private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate amount of the Secured Indebtedness then
outstanding.
16. Binding Upon
Successors. All rights of the Administrative Agent and the
other Secured Parties under this Security Agreement shall inure to the benefit
of the Administrative Agent and the other Secured Parties and their respective
successors and assigns, and all obligations of the Debtor shall bind its
successors and assigns; provided that the Debtor shall not have the right to
assign its rights or obligations under this Security Agreement without the
consent of the Administrative Agent and all Lenders.
17. Entire Agreement;
Severability. This Security Agreement and the Credit Agreement
contains the entire security agreement and collateral agency agreement with
respect to the Collateral among the Secured Parties, the Administrative Agent,
and the Debtor and supersedes all prior written or oral agreements and
understandings relating thereto. All waivers by the Debtor provided
for in this Security Agreement have been specifically negotiated by the parties
with full cognizance and understanding of their rights. If any of the
provisions of this Security Agreement shall be held invalid or unenforceable,
this Security Agreement shall be construed as if not containing such provisions,
and the rights and obligations of the parties hereto shall be construed and
enforced accordingly.
18. Choice of
Law. This Security Agreement shall be construed in accordance
with and governed by the laws of the State of Texas, except to the extent that
the perfection and the effect of perfection or non-perfection of the security
interest created hereunder, in respect of any of the Collateral, are governed by
the laws of a jurisdiction other than the State of Texas. Where
applicable and except as otherwise defined herein or in the Credit Agreement,
terms used herein have the meanings given them in the Texas Uniform Commercial
Code.
19. Place of Business:
Records. The Debtor represents and warrants that its principal
place of business and chief executive office is at the address set forth beneath
its signature below, and that its books and records concerning the Collateral
are kept at its principal place of business and chief executive
office. The Debtor shall not change its principal place of business
and chief executive office without 30 days' prior written notice to the
Administrative Agent.
20. Notice. Except
where instructions or notices are expressly authorized elsewhere in this
Security Agreement to be given by telephone or by other means of transmission,
all instructions, notices and other communications to be given to any party
hereto shall be given as provided in the Credit Agreement.
21. Modification of
Agreement. No provisions of this Agreement may be amended or
waived (except for waivers expressly provided for hereunder) unless such
amendment or waiver is in writing and is signed by the Debtor and the
Administrative Agent, on behalf of the Lenders.
22. Indemnification of the
Administrative Agent.
(a) DEBTOR HEREBY AGREES TO INDEMNIFY THE
ADMINISTRATIVE AGENT, ITS DIRECTORS, OFFICERS, AFFILIATES AND EMPLOYEES
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent is a party thereto)
which any of them may pay or incur arising out of or relating to this Security
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan thereunder INCLUDING THE
FOREGOING TO THE EXTENT THAT THEY RESULT FROM THE NEGLIGENCE OF THE
ADMINISTRATIVE AGENT but excluding the foregoing to the extent that they
are determined in a final and non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the party seeking indemnification. The obligations of the Debtor
under this Paragraph 22
shall survive the termination of this Security Agreement or the resignation of
the Administrative Agent.
(b) Subject
to the limitations set forth below, THE LENDERS SHALL INDEMNIFY THE
ADMINISTRATIVE AGENT (to the extent not reimbursed by the Debtor) against
any costs, expense (including reasonable counsel fees and disbursements), claim,
demand, action, loss or liability (INCLUDING THE FOREGOING TO THE EXTENT
THAT THEY RESULT FROM THE NEGLIGENCE OF THE ADMINISTRATIVE AGENT but
excluding the foregoing to the extent that they result from the gross negligence
or willful misconduct of the Administrative Agent) that the Administrative Agent
may suffer or incur in any way relating to or arising out of this Security
Agreement or any action taken or not taken by it or them hereunder (the "Indemnified
Amount"). Any Indemnified Amount due to the Administrative
Agent shall be paid by the Lenders pro rata in accordance with their Commitment
Percentages in effect on the date on which indemnification is sought (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their respective percentage of the total Commitments immediately prior to
such date). The foregoing indemnification shall survive any
termination of this Security Agreement or the resignation of the Administrative
Agent. The Administrative Agent hereby represents that the Lenders
have authorized the Administrative Agent to enter into this Security Agreement
and understand that they are bound by the terms hereof as if they were each
signatories hereto.
23. The Administrative
Agent.
(a) Appointment; Nature of
Relationship. Pursuant to the terms of the Credit Agreement
and the terms hereof, Guaranty Bank is appointed by the Lenders as their
contractual representative hereunder and under each other Loan Document to which
the Administrative Agent is a party, and the Lenders irrevocably authorize the
Administrative Agent to act as the contractual representative for each such
Lender with the rights and duties expressly set forth in the Security
Agreement. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Paragraph 23. Notwithstanding
the use of the defined term "Administrative Agent" throughout the Security
Agreement, it is expressly understood and agreed that the Administrative Agent
shall not have any fiduciary responsibilities to any Lender by reason of this
Security Agreement or ay other Loan Document and that the Administrative Agent
is merely acting as the representative of the Lenders with only those duties as
are expressly set forth in this Security Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual
representative, the Administrative Agent (i) does not hereby have or assume
any fiduciary duties to any of the Lenders, (ii) is a "representative" of
the Lenders within the meaning of Section 9.102(73)(E) of Revised
Article 9 of the Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Security Agreement and the other Loan
Documents. The Lenders hereby agree to assert no claim against the
Administrative Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims the Lenders hereby
waive.
(b) Powers. The
Administrative Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to have the Administrative Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Administrative Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except
any action specifically provided by the Loan Documents to be taken by the
Administrative Agent.
(c) GENERAL
EXCULPATION. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS
DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES SHALL BE LIABLE TO THE DEBTOR, THE
LENDERS OR ANY LENDER FOR ANY ACTION TAKEN OR OMITTED IN CONNECTION HEREWITH OR
THEREWITH, WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE, INCLUDING ANY ACTION WHICH
ARISES FROM THE NEGLIGENCE OF THE ADMINISTRATIVE AGENT BUT EXCLUDING ANY
ACTION OR INACTION TO THE EXTENT SUCH ACTION OR INACTION IS DETERMINED IN A
FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
ARISEN FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
PERSON.
(d) No Responsibility for Loans,
Recitals, etc. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
thereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (ii) the existence or possible existence of any Default or Event of
Default; (iv) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith; (v) the value, sufficiency, creation, perfection or
priority of ay Lien in any collateral security; or (vi) the financial
condition of the Debtor or any guarantor of any of the Obligations or of any of
the Debtor's or any such guarantor's respective Subsidiaries. The
Administrative Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by the Debtor to the Administrative Agent
at such time, but is voluntarily furnished by the Debtor to the Administrative
Agent (either in its capacity as the Administrative Agent or in its individual
capacity as a Lender).
(e) Action on Instructions of
the Lenders. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders. The
Administrative Agent and the Lenders hereby acknowledge that the Administrative
Agent shall be under no duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Security Agreement or any other
Loan Document unless it shall be requested in writing to do so by the Required
Lenders. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
in accordance with their Commitment Percentages against any and all liability,
cost and expense that it may incur by reason of taking or continuing to take any
such action.
(f) Employment of Agents;
Assignment to Affiliates. The Administrative Agent may execute
any of its duties as Administrative Agent hereunder and under any other Loan
Documents by or through employees, agents, Affiliates and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable
care. Any such agent or Affiliate (and such Affiliate's directors,
officers, agents or employees) which performs duties in connection with this
Security Agreement shall be entitled to the same benefits of the indemnification
and other protective provisions to which the Administrative Agent is entitled
under this Security Agreement. In particular, to the extent the
Administrative Agent may exercise any rights or remedies with respect to this
Security Agreement or any other Loan Document, the Administrative Agent may
appoint an agent to exercise any such rights or remedies on behalf of the
Administrative Agent. The Administrative Agent may assign its rights
and obligations under this Security Agreement, in whole or in part, to any
Affiliate; however, the Administrative Agent agrees to notify the Lenders and
the Debtor of any such assignment. Affiliate is defined as any entity
that directly or indirectly controls, in controlled by, or is under common
control with the Administrative Agent, or is under contract to be under common
control with the Administrative Agent.
(g) Reliance on Documents;
Counsel. The Administrative Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letters, telegram,
statement, electronic transmission, paper or document believed by it in good
faith to be genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect to legal matters, upon the opinion of f
counsel selected by the Administrative Agent, which counsel may be employees of
the Administrative Agent. The Administrative Agent shall be entitled
to advice of counsel concerning the contractual arrangement between the
Administrative Agent and the Lenders and all matters pertaining to the
Administrative Agent's duties hereunder and under any other Loan
Documents.
(h) Notice of
Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received written notice from a
Lender or the Debtor referring to the Credit Agreement and/or this Security
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default".
(i) Limitation of the
Responsibilities of the Administrative Agent. Except as
otherwise required hereunder, the Administrative Agent shall:
(i) be under
no duty or obligation to inspect, review or examine the files to determine
whether the contents thereof are appropriate for the represented purpose or
whether they have been actually recorded or whether they are other than what
they purport to be on their face;
(ii) not be
responsible for preparing or filing any reports or returns relating to federal,
state or local income taxes with respect to this Security Agreement, other than
for the Administrative Agent's compensation or for reimbursement of
expenses;
(iii) not be
responsible for delays or failures in performance resulting from acts beyond its
control. Such acts shall include, but not be limited to, acts of God,
strikes, lockouts, riots, acts of war or terrorism, epidemics, nationalization,
expropriation, currency restrictions, governmental regulations superimposed
after the fact, fire, communication line failures, computer viruses, power
failures, earthquakes or other disasters;
(iv) have no
notice, and shall not be bound by any of the terms and conditions of any other
document or agreement executed or delivered in connection with, or intended to
control any part of, the transactions anticipated by or referred to in this
Security Agreement unless the Administrative Agent is a signatory party to that
document or agreement. Notwithstanding the foregoing sentence, the
Administrative Agent shall be deemed to have notice of the terms and conditions
(including without limitation definitions not otherwise set forth in full in
this Security Agreement) of other documents and agreements executed or delivered
in connection with, or intended to control any part of, the transactions
anticipated by or referred to in this Security Agreement, to the extent such
terms and provisions are referenced, or are incorporated by reference, into this
Security Agreement and, except for the Credit Agreement, only so long as the
Debtor shall have provided a copy of any such document or agreement to the
Administrative Agent;
(v) be under
no obligation to verify the authenticity of any signature on any of the
documents received or examined by it in connection with this Security Agreement
or the authority or capacity of any person to execute or issue such
document;
(vi) not, nor
shall any of its affiliates, directors, officers, agents, attorneys-in-fact,
counsel, and employees, be liable for any action or omission to act hereunder
except for its own or such person's gross negligence or willful
misconduct. Notwithstanding the foregoing sentence, in no event shall
the Administrative Agent or its affiliates, directors, officers, agents,
attorneys-in-fact, counsel, and employees be held liable for any special,
indirect, punitive or consequential damages resulting from any action taken or
omitted to be taken by it or them hereunder or in connection herewith even if
advised of the possibility of such damages. The provisions of this
subparagraph shall survive the resignation of the Administrative Agent and the
termination of this Security Agreement;
(vii) have no
duty to ascertain whether or not any cash amount or payment has been received by
the Debtor or any third person or deposited in the Settlement Account;
and
(viii) not,
except as specifically set forth in this Security Agreement or the Credit
Agreement, be required to value or produce a report detailing the value of the
Mortgage Loans.
24. Counterparts. This
Agreement may be executed in counterparts, and it shall not be necessary that
the signatures of both of the parties hereto be contained on any one counterpart
hereof; each counterpart shall be deemed an original, but all counterparts
together shall constitute one and the same instrument.
[THE
BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
Exhibit E – Page
EXECUTED
as of the day and year first above written.
M/I
FINANCIAL CORP.
By:
▇▇▇▇▇▇▇ ▇. Creek
Chief Financial Officer and
Treasurer
Address
for Notices:
▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. Creek
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
GUARANTY BANK, as
Administrative Agent
By:
▇▇▇▇
▇▇▇▇▇
Vice
President
Address
for Notices:
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Exhibit E – Page
STATE OF
OHIO §
§
COUNTY OF
FRANKLIN §
Before
me, the undersigned notary public, on this ___ day of May, 2008, personally
appeared ▇▇▇▇▇▇▇ ▇. Creek, Chief Financial Officer and Treasurer of M/I
Financial Corp., an Ohio corporation, known to me (or proved to me by the
production of a driver's license as identification) to be the person whose name
is subscribed to the foregoing instrument and acknowledged to me that he
executed the same on behalf of said corporation for the purposes and
consideration therein expressed.
|
Notary Public
- State of Ohio
|
||
| My Commission Expires: | ||
| Printed Name of Notary | ||
THE
STATE OF
TEXAS )
)
COUNTY
OF
DALLAS
)
This
instrument was acknowledged before me on May ___, 2008, by ▇▇▇▇ ▇▇▇▇▇, Vice
President of GUARANTY
BANK, on behalf of said bank.
|
Notary Public
- State of Texas
|
||
| My Commission Expires: | ||
| ( Printed Name) | ||
Notary
Public, State of Texas
(printed
name)
My
Commission Expires:
Exhibit E – Page
EXHIBITS
AND SCHEDULES
TO
SECURITY
AGREEMENT
|
SCHEDULE
|
DOCUMENT
|
|
|
A
|
Required
Mortgage Documents
|
|
|
B
|
Additional
Required Mortgage Documents
|
|
|
C
|
Required
Review Steps
|
|
|
EXHIBIT
|
DOCUMENT
|
|
|
1
|
Form
of Debtor Trust Receipt
|
|
|
2
|
Form
of Shipping Request
|
|
|
3
|
Form
of Bailee Letter to Investors
|
|
|
4
|
Form
of Collateral Release Request
|
|
EXHIBITS AND SCHEDULES TO SECURITY
AGREEMENT
SCHEDULE
A
REQUIRED
MORTGAGE DOCUMENTS
The
following documents shall be delivered to the Administrative Agent:
A. Original
Mortgage Note executed in favor of the Debtor or the originator who sold such
Mortgage Note to the Debtor (with a complete series of endorsements without
recourse from the original payee thereof through any subsequent holders to the
Debtor if purchased by the Debtor) and endorsed by an authorized signatory of
the Debtor in blank;
B. Unless
the Mortgage is registered on the MERS® System, an assignment in blank of the
Mortgage, executed by the Debtor in recordable form, such assignment may be in
the form of one or more blanket assignments covering Mortgage Loans located in
the same county, if the Administrative Agent so agrees.
C. If the
Mortgage is registered on the MERS® System and noting the presence of a MIN, an
assignment of the Mortgage executed by the Debtor in favor of MERS in recordable
form.
D. Originals
or copies of assignments from each holder of the Mortgage Loan to each
subsequent assignee, if any, to complete the chain of record ownership of such
Mortgage Loan to the Debtor.
E. An
original Mortgage or a copy of the Mortgage certified by the title insurance
company as being a true, correct and complete copy of the original, including
all available Mortgage riders relating to the Mortgage Loan, noting the presence
of the MIN of the Mortgage Loan and language indicating that the Mortgage Loan
is a "MERS as original mortgagee" loan (a "MOM loan") if the Mortgage Loan is a
MOM Loan, with the recording information indicated thereon.
F. If
applicable, a copy of the executed Take-Out Commitment relating to such Mortgage
Note and a certificate of the Debtor confirming that such Mortgage Loan will be
delivered under such Take-Out Commitment.
G. A copy,
certified by the title insurance company as being a true, correct and complete
copy of the original(s), of all applicable and necessary powers-of-attorney and
assumed name certificates.
Schedule A -
SCHEDULE
B
ADDITIONAL
REQUIRED MORTGAGE DOCUMENTS
1. The
original recorded Mortgage securing the Mortgage Note if not delivered to the
Administrative Agent.
2. Evidence
of fire and extended coverage insurance in an amount not less than the highest
of the following: (a) the amount of the Mortgage Loan, (b) 90% of the
insurable value of the improvements, and (c) an amount sufficient to
prevent co-insurance. The Administrative Agent reserves the right to
obtain a loss payable endorsement in its favor if it so desires.
3. Evidence
of Notice to Customer required by the federal Truth-in-Lending Law and Federal
Reserve Regulation Z.
4. In the
case of an FHA Mortgage Note, an FHA insurance certificate or a commitment to
deliver such; in the case of a VA mortgage note; a VA guaranty certificate or a
commitment to deliver such and in the case of a conventional mortgage note, an
appraisal.
5. A
certified copy of the preliminary policy of or commitment for title insurance
insuring the Mortgage as a first lien, or in the case of Second Lien Loans, a
second lien on the property subject thereto written by a title company and in
amount and containing exceptions satisfactory to the Administrative
Agent.
6. Evidence
of certificate of completion, as appropriate under the
circumstances.
7. A copy of
the executed Take-Out Commitment relating to such Mortgage Note or the
residential real property and improvements securing such Mortgage Note if not
delivered to the Administrative Agent.
8. Other
documentation as the Administrative Agent may reasonably deem appropriate, as
well as documentation necessary to fulfill requirements of the applicable
Take-Out Commitments.
9. Such
additional documents as may be necessary in the opinion of the Administrative
Agent to transfer to the Administrative Agent the title to any Collateral
pledged and/or hypothecated pursuant to the Security Agreement.
Schedule B -
SCHEDULE
C
REQUIRED REVIEW
STEPS
1. All
submitted documents are consistent with the related Borrowing Request as to
borrower name, loan face amount, note date and the Debtor's loan
number.
2. The
Mortgage Note and Mortgage each bear an original signature or signatures which
appear to be those of the person or persons named as the maker and
mortgagor/trustor, or, in the case of a certified copy of the Mortgage, such
copy bears which appears to be a reproduction of such signature or
signatures.
3. Except
for (a) the endorsement to the Debtor of the Mortgage Note in the event
such loan was purchased by the Debtor and (b) the endorsement in blank of
the Mortgage Note by the Debtor, neither the Mortgage Note, the Mortgage, nor
the assignment(s) of the Mortgage contain any irregular writings which appear on
their face to affect the validity of any such endorsement or to restrict the
enforceability of the document on which they appear.
4. The
Mortgage Note is endorsed in blank.
5. The
assignment of the Mortgage bears an original signature of an officer of the
Debtor or an original signature of an officer of the Debtor authorized by
Mortgage Electronic Registration Systems, Inc. as nominee of the Debtor (in such
capacity, "MERS") to sign on behalf of MERS based on the corporate resolution of
MERS which appointed such officers of the Debtor for such purpose (a copy of
which resolution having been provided by the Debtor).
Schedule C -
EXHIBIT
1
TRUST
RECEIPT
DATE: ,
200__
GUARANTY
BANK, as Administrative Agent
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇▇▇▇▇
Pursuant
to Paragraph 6 of
the Security Agreement by and among Guaranty Bank, as the Administrative Agent,
and M/I Financial Corp., as the "Debtor" (as amended,
supplemented or restated from time to time, the "Security Agreement"),
the Debtor requests the temporary transfer of the original Mortgage Note(s) as
listed below to allow the Debtor to make corrections to such Mortgage Notes. We
acknowledge that these Mortgage Notes are being used as Mortgage Collateral for
the warehouse line of credit established by the Credit Agreement dated as of
May 22, 2008 by and among the Lenders, the Administrative Agent and the
Debtor (as amended, supplemented or restated from time to time, the "Credit
Agreement").
Loan
Amount Collateral
Value
The
Debtor agrees to hold the Mortgage Notes in trust for the Administrative Agent,
as a custodian, bailee and agent for the benefit of the Secured
Parties. The Debtor agrees to do the following within ten (10)
days of this date:
(a) Return
the Mortgage Notes to the Administrative Agent, or
(b) Pay to
the Administrative Agent, of the pro rata benefit of the Secured Parties, the
aggregate Unit Collateral Value of the Mortgage Notes.
In the
event the Debtor is unable for any reason to comply with the terms of this Trust
Receipt, the Debtor shall immediately return the Mortgage Notes to the
Administrative Agent.
By
accepting the Mortgage Notes, the Debtor shall be bound by the terms of this
Trust Receipt. The Administrative Agent requests that the Debtor
acknowledge the receipt of the Mortgage Notes and this Trust Receipt by signing
below. Capitalized terms not defined herein are used as defined in
the Credit Agreement.
EXHIBIT 1 – Page
REQUESTED
BY:
M/I
FINANCIAL CORP.
By:
Name:
Title:
STATE OF
OHIO §
§
COUNTY OF
_________ §
Before
me, the undersigned notary public, on this ___ day of ___________, 20___,
personally appeared __________________, ________________ of M/I Financial Corp.,
an Ohio corporation, known to me (or proved to me by the production of a
driver's license as identification) to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same on
behalf of said corporation for the purposes and consideration therein
expressed.
|
Notary Public
- State of Ohio
|
||
| My Commission Expires: | ||
| Printed Name of Notary | ||
EXHIBIT 1 – Page
EXHIBIT
2
FORM
OF SHIPPING REQUEST
DATE: ,
200__
GUARANTY
BANK, as Administrative Agent
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇▇▇▇▇
This
letter is to serve as authorization for you to endorse and ship the following
loans:
|
Loan Number
|
Obligor Name
|
Note Amount
|
to the
following address under Take-Out Commitment #__________ (the "Commitment") from an
Investor as follows:
NAME:
ADDRESS:
ATTENTION:
Please
endorse the notes as follows:
Please
ship the loan documents either by ________________________ or by such other
courier service as we have designated to you as "approved". The
courier shall act as an independent contractor bailee acting solely on your
behalf but we acknowledge and agree that you are not responsible for any details
in shipment caused by courier or any other actions or inactions of the courier,
including, without limitation, any loss of any loan documents; however, because
the Commitment expires on ________________, 20___, we ask that you deliver the
loan documents to the courier no later than _______________, 20___.
EXHIBIT 2 – Page
Please
have the courier ▇▇▇▇ us by using our account #______________. If you
should have any questions, or should feel the need for additional documentation,
please do not hesitate to call _____________________.
M/I
FINANCIAL CORP.
By:
Name:
Title:
EXHIBIT 2 – Page
EXHIBIT
3
BAILEE
LETTER FOR INVESTORS
|
GUARANTY
BANK
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:_____________________
Mortgage
Finance Department
FAX: (▇▇▇)
▇▇▇-▇▇▇▇
Telephone: (214)
360-______
|
The
enclosed mortgage notes and other documents (the "Mortgage Documents")
as more particularly described on the attached schedule, have been assigned and
pledged to GUARANTY BANK
("Guaranty"),
as Administrative Agent, as collateral under the Credit Agreement (as renewed,
extended, amended, or restated, the "Credit Agreement")
dated as of May 22, 2008 among M/I FINANCIAL CORP. (the
"Company"), the
Lenders and Guaranty. The Mortgage Documents themselves are being
delivered to you for purchase under an existing commitment (the "Takeout
Commitment").
Either
payment in full for the Mortgage Documents or the Mortgage Documents themselves
must be received by Guaranty within forty-five (45) days after the date of this
letter. Until that time, you are deemed to be holding the Mortgage
Documents in trust as bailee for the Secured Parties, subject to the security
interest granted the Secured Parties in accordance with the applicable
provisions of the Uniform Commercial Code. No property interest in
the Mortgage Documents is transferred to you until Guaranty receives the greater
of (i) the agreed purchase price of the Mortgage Documents or
(ii) $_________________. Upon Guaranty's receipt of such amount,
the Secured Parties' security interest in the Mortgage Documents shall be
released automatically, and the Mortgage Documents shall be free of any lien or
security interest created by, through or under Guaranty, as Administrative
Agent.
If you
receive conflicting instructions regarding the Mortgage Documents from the
Company and Guaranty, as Administrative Agent, you agree to act in accordance
with Guaranty's instructions. GUARANTY RESERVES THE RIGHT, AT ANY
TIME BEFORE IT RECEIVES FULL PAYMENT, TO NOTIFY YOU AND REQUIRE THAT YOU RETURN
THE MORTGAGE DOCUMENTS TO GUARANTY.
Payment
for the Mortgage Documents must be made by wire transfer of immediately
available funds to:
GUARANTY BANK, as
Administrative
Agent Account
Number
ABA
Number: Attn:
Further
Credit: TEL:
FAX:
BY ACCEPTING THE MORTGAGE DOCUMENTS
DELIVERED TO YOU WITH THIS LETTER, YOU CONSENT TO HOLD THE MORTGAGE DOCUMENTS
FOR THE BENEFIT OF THE SECURED PARTIES AND TO BE THE SECURED PARTIES' BAILEE ON
THE TERMS DESCRIBED IN THIS LETTER. GUARANTY REQUESTS THAT YOU
ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE DOCUMENTS AND THIS LETTER BY
SIGNING AND RETURNING TO GUARANTY, AS ADMINISTRATIVE AGENT, THE ENCLOSED COPY OF
THIS LETTER, BUT YOUR FAILURE TO DO SO DOES NOT NULLIFY YOUR CONSENT OR
OTHERWISE AFFECT OR IMPAIR ANY TERM OR CONDITION OF THIS LETTER OR THEIR BINDING
EFFECTS ON YOU. If you fail to make full payment to Guaranty,
as Administrative Agent, for it within forty-five (45) days after the date of
this letter, you are instructed to return all of the Mortgage Documents to
Guaranty. The preceding provision in no way affects or impairs any
claim or cause of action against you in respect of the Take-Out
Commitment.
This
letter binds you and your successors, assigns, trustees, conservators, and
receivers and inures to Guaranty and its respective successors and
assigns.
Very
truly yours,
GUARANTY BANK, as
Administrative Agent
By:
Name:
Title:
Acknowledged
and Agreed as of
,
20___
[NAME OF
BAILEE]
By:
Name:
Title:
EXHIBIT 3 – Page
EXHIBIT
4
COLLATERAL
RELEASE REQUEST
TO: GUARANTY
BANK as Administrative
Agent Date:
|
1.
|
M/I
Financial Corp., hereby requests the release of the Mortgage Collateral
herein specified, pursuant to Paragraph 6(e)
of the Security Agreement (as amended, supplemented or restated from time
to time, the "Agreement")
between the Debtor and Guaranty Bank, as Administrative Agent of for the
Secured Parties ("Administrative
Agent"), and hereby directs the Administrative Agent, in accordance
with the provisions of the Agreement and that certain Credit Agreement
dated as of May 22, 2008, among the Debtor, the Administrative Agent
and the Lenders named therein (as from time to time amended, supplemented
or restated, the "Credit
Agreement") to hold or deliver the Mortgage Collateral described on
the attached schedule as directed herein. Capitalized terms
used herein and defined in the Credit Agreement shall be used herein as so
defined.
|
|
2.
|
Release
Requested:
|
The
Debtor hereby requests that the Administrative Agent, acting on behalf of the
Secured Parties, release any security interest the Secured Parties may have in
each Mortgage Note (the "Identified Notes")
described on Schedule I
attached hereto.
|
3.
|
Delivery
Instructions:
|
The
Debtor hereby directs the Administrative Agent to (check applicable
blank):
|
_____
|
To
hold the Identified Notes pending written delivery instructions from the
Debtor.
|
|
_____
|
To
deliver the Identified Notes to the Person described in the attached
instructions in accordance with the attached
instructions.
|
|
4.
|
The
undersigned officer of the Debtor represents and warrants to the
Administrative Agent and each
Lender:
|
|
(a)
|
the
Debtor is entitled to receive the requested release under the terms and
conditions of the Agreement and the Credit
Agreement;
|
|
(b)
|
no
Default or Event of Default has occurred and is continuing under the
Credit Agreement;
|
|
(c)
|
no
change or event which constitutes a Material Adverse Effect has occurred;
and
|
|
(d)
|
(i) the
Collateral Value of the Borrowing Base (after giving effect to the release
requested pursuant to Paragraph 2
of this Collateral Release Request) is
$__________.
|
(ii) the
Loan Balance is $__________.
|
|
(iii)
|
the
Debtor is entitled to such release. (Requirement of Agreement:
item (i) not less than
item (ii)).
|
|
5.
|
The
representations and warranties of the Debtor contained in the Credit
Agreement and those contained in each other Loan Document to which the
Debtor is a party (other than those representations and warranties which
are by their terms limited to the date of the agreement in which they were
initially made) are true and correct in all material respects on and as of
the date hereof.
|
M/I
FINANCIAL CORP.
By:
Name:
Title:
EXHIBIT 4 – Page
SCHEDULE
I
MORTGAGE
NOTES TO BE RELEASED
|
Loan
Number
|
Date
|
Original
Principal Amount
|
Collateral
Value
|
Maker
|
Payee
|
Interest
Rate
|
Maturity
Date
|
COLLATERAL
DELIVERY INSTRUCTIONS
|
Dallas_1\5208902\3
6088-480
5/20/2008
|
EXHIBIT 4 – Page