EXHIBIT 10.4
THIRD AMENDMENT TO
FIRST AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY
AGREEMENT (this "Amendment") dated as of August 22, 2003, between Oak Street
Mortgage LLC, a Delaware limited liability company ("Oak Street LLC"), OAK
STREET MORTGAGE, INC., a Delaware corporation ("Oak Street Inc."), and OAK
STREET MORTGAGE OF TENNESSEE LLC, a Tennessee limited liability company ("Oak
Street TN") ("Oak Street LLC, Oak Street Inc. and Oak Street TN are collectively
referred to as "Borrower") and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation ("Lender").
A. Borrower and Lender have entered into a revolving mortgage warehousing
facility with a present Warehousing Commitment Amount of $150,000,000,
which is evidenced by a First Amended and Restated Warehousing
Promissory Note dated August 31, 2002, a Sublimit Promissory Note dated
August 31, 2002 (the "Notes"), and by a First Amended and Restated
Warehousing Credit and Security Agreement dated as of August 31, 2002
(as the same may have been and may be amended or supplemented, the
"Agreement").
B. Borrower has requested that Lender increase the Warehousing Commitment
Amount and amend certain other terms of the Agreement, and Lender has
agreed to such increase and those other amendments, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, the parties to this Amendment agree as follows:
1. Subject to Borrower's satisfaction of the conditions set forth in
Section 8, the effective date of the Amendment is August 7, 2003,
except that the effective date of the Warehousing Commitment Fee is
September 1, 2003 ("Effective Date").
2. Unless otherwise defined in this Amendment, all capitalized terms have
the meanings given to those terms in the Agreement. Defined terms may
be used in the singular or the plural, as the context requires. The
words "include," "includes" and "including" are deemed to be followed
by the phrase "without limitation." Unless the context in which it is
used otherwise clearly requires, the word "or" has the inclusive
meaning represented by the phrase "and/or." References to Sections and
Exhibits are to Sections and Exhibits of this Amendment unless
otherwise expressly provided.
3. The Title Page and the Table of Contents in the Agreement are amended
and restated in their entirety as set forth in the new Title Page and
Table of Contents attached to this Amendment.
4. Article 1 of the Agreement is amended and restated in its entirety as
set forth in Article 1 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 1 (including each and
every Section in Article 1) are deemed to refer to the new Article 1.
5. Article 3 of the Agreement is amended and restated in its entirety as
set forth in Article 3 attached to this Amendment. All references in
the Agreement and other
* Represents confidential information that has been omitted and filed separately
with the Commission.
Loan Documents to Article 3 (including each and every Section in
Article 3) are deemed to refer to the new Article 3.
6. Article 6 of the Agreement is amended and restated in its entirety as
set forth in Article 6 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 6 (including each and
every Section in Article 6) are deemed to refer to the new Article 6.
7. Article 7 of the Agreement is amended and restated in its entirety as
set forth in Article 7 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 7 (including each and
every Section in Article 7) are deemed to refer to the new Article 7.
8. Article 8 of the Agreement is amended and restated in its entirety as
set forth in Article 8 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 8 (including each and
every Section in Article 8) are deemed to refer to the new Article 8.
9. Article 9 of the Agreement is amended and restated in its entirety as
set forth in Article 9 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 9 (including each and
every Section in Article 9) are deemed to refer to the new Article 9.
10. Article 10 of the Agreement is amended and restated in its entirety as
set forth in Article 10 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 10 (including each
and every Section in Article 10) are deemed to refer to the new Article
10.
11. Article 11 of the Agreement is amended and restated in its entirety as
set forth in Article 1 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 11 (including each
and every Section in Article 11) are deemed to refer to the new Article
11.
12. Article 12 of the Agreement is amended and restated in its entirety as
set forth in Article 12 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 12 (including each
and every Section in Article 12) are deemed to refer to the new Article
12.
13. Exhibit E to the Agreement is amended and restated in its entirety as
set forth in Exhibit E to this Amendment. All references in the
Agreement and the other Loan Documents to Exhibit E are deemed to refer
to the new Exhibit E.
14. Exhibit H to the Agreement is amended and restated in its entirety as
set forth in Exhibit H to this Amendment. All references in the
Agreement and the other Loan Documents to Exhibit H are deemed to refer
to the new Exhibit H.
15. The Agreement is hereby amended to add Exhibit J in the form attached
hereto.
16. Borrower must deliver to Lender (a) two executed copies of this
Amendment and (b) a $700 document production fee.
17. Borrower represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan
Documents continue to be the legal, valid and binding agreements and
obligations of Borrower, enforceable in accordance with their terms, as
modified by this Amendment, (c) Lender is not in
default under any of the Loan Documents and Borrower has no offset or
defense to its performance or obligations under any of the Loan
Documents, (d) except for changes permitted by the terms of the
Agreement, Borrower's representations and warranties contained in the
Loan Documents are true, accurate and complete in all respects as of
the Effective Date and (e) there has been no material adverse change in
Borrower's financial condition from the date of the Agreement to the
Effective Date.
18. Except as expressly modified, the Agreement is unchanged and remains in
full force and effect, and Borrower ratifies and reaffirms all of its
obligations under the Agreement and the other Loan Documents.
19. This Amendment may be executed in any number of counterparts, each of
which will be deemed an original, but all of which shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be duly
executed on their behalf by their duly authorized officers as of the day and
year above written.
OAK STREET MORTGAGE LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. Royal
-----------------------------------------
Its: Chief Financial Officer
OAK STREET MORTGAGE, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. Royal
-----------------------------------------
Its: Chief Financial Officer
OAK STREET MORTGAGE OF TENNESSEE LLC,
a Tennessee limited liability company
By: /s/ ▇▇▇▇▇ ▇. Royal
-----------------------------------------
Its: Chief Financial Officer
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. Wesl
-----------------------------------------
Its: Managing Director
GMAC Residential Funding
--------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED WAREHOUSING
CREDIT AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
BETWEEN
OAK STREET MORTGAGE LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AND
OAK STREET MORTGAGE OF TENNESSEE LLC,
A TENNESSEE LIMITED LIABILITY COMPANY
AND
OAK STREET MORTGAGE, INC.,
A DELAWARE CORPORATION
AND
RESIDENTIAL FUNDING CORPORATION,
A DELAWARE CORPORATION
DATED AS OF AUGUST 31, 2002
TABLE OF CONTENTS
1. THE CREDIT..................................................................................... 1-1
1.1. The Warehousing Commitment..................................................................... 1-1
1.2. Expiration of Warehousing Commitment........................................................... 1-2
1.3. Warehousing Note/Sublimit Note................................................................. 1-2
2. PROCEDURES FOR OBTAINING ADVANCES.............................................................. 2-1
2.1. Warehousing Advances........................................................................... 2-1
3. INTEREST, PRINCIPAL AND FEES................................................................... 3-1
3.1. Interest ..................................................................................... 3-1
3.2. Interest Limitation............................................................................ 3-2
3.3. Principal Payments............................................................................. 3-2
3.4. Buydowns ..................................................................................... 3-4
3.5. Warehousing Commitment Fees.................................................................... 3-4
3.6. Non-Usage Fees................................................................................. 3-5
3.7. Loan Package Fees, Wire Fees, Warehousing Fees................................................. 3-5
3.8. Miscellaneous Fees and Charges................................................................. 3-5
3.9. Overdraft Advances............................................................................. 3-6
3.10. Method of Making Payments...................................................................... 3-6
4. COLLATERAL..................................................................................... 4-1
4.1. Grant of Security Interest..................................................................... 4-1
4.2. Maintenance of Collateral Records.............................................................. 4-2
4.3. Release of Security Interest in Pledged Loans and Pledged Securities........................... 4-3
4.4. Collection and Servicing Rights................................................................ 4-4
4.5. Return of Collateral at End of Warehousing Commitment.......................................... 4-4
4.6. Delivery of Collateral Documents............................................................... 4-4
5. CONDITIONS PRECEDENT........................................................................... 5-1
5.1. Initial Advance................................................................................ 5-1
5.2. Each Advance................................................................................... 5-3
5.3. Force Majeure.................................................................................. 5-3
6. GENERAL REPRESENTATIONS AND WARRANTIES......................................................... 6-1
6.1. Place of Business.............................................................................. 6-1
6.2. Organization; Good Standing; Subsidiaries...................................................... 6-1
6.3. Authorization and Enforceability............................................................... 6-2
6.4. Approvals ..................................................................................... 6-2
6.5. Financial Condition............................................................................ 6-2
6.6. Litigation..................................................................................... 6-3
6.7. Compliance with Laws........................................................................... 6-3
6.8. Regulation U................................................................................... 6-3
6.9. Investment Company Act......................................................................... 6-3
6.10. Payment of Taxes............................................................................... 6-3
6.11. Agreements..................................................................................... 6-4
6.12. Title to Properties............................................................................ 6-4
6.13. ERISA.......................................................................................... 6-4
6.14. No Retiree Benefits............................................................................ 6-4
6.15. Assumed Names.................................................................................. 6-4
6.16. Servicing ..................................................................................... 6-5
7. AFFIRMATIVE COVENANTS.......................................................................... 7-1
7.1. Payment of Obligations......................................................................... 7-1
7.2. Financial Statements........................................................................... 7-1
7.3. Other Borrower Reports......................................................................... 7-1
7.4. Maintenance of Existence; Conduct of Business.................................................. 7-2
7.5. Compliance with Applicable Laws................................................................ 7-2
7.6. Inspection of Properties and Books; Operational Reviews........................................ 7-2
7.7. Notice......................................................................................... 7-3
7.8. Payment of Debt, Taxes and Other Obligations................................................... 7-3
7.9. Insurance ..................................................................................... 7-3
7.10. Closing Instructions........................................................................... 7-3
7.11. Subordination of Certain Indebtedness.......................................................... 7-4
7.12. Other Loan Obligations......................................................................... 7-4
7.13. ERISA.......................................................................................... 7-4
7.14. Use of Proceeds of Warehousing Advances........................................................ 7-4
8. NEGATIVE COVENANTS............................................................................. 8-1
8.1. Contingent Liabilities......................................................................... 8-1
8.2. Pledge of Servicing Contracts.................................................................. 8-1
8.3. Restrictions on Fundamental Changes............................................................ 8-1
8.4. Subsidiaries................................................................................... 8-1
8.5. Deferral of Subordinated Debt.................................................................. 8-1
8.6. Loss of Eligibility............................................................................ 8-2
8.7. Accounting Changes............................................................................. 8-2
8.8. Leverage Ratio................................................................................. 8-2
8.9. Minimum Tangible Net Worth..................................................................... 8-2
8.10. Current Ratio.................................................................................. 8-2
8.11. Liquid Assets.................................................................................. 8-2
8.12. Transactions with Affiliates................................................................... 8-2
8.13. Recourse Servicing Contracts................................................................... 8-2
8.14. Gestation Agreements........................................................................... 8-2
9. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL........................ 9-1
9.1. Special Representations and Warranties Concerning Eligibility as
Seller/Servicer of Mortgage Loans ......................................................... 9-1
9.2. Special Representations and Warranties Concerning Warehousing Collateral....................... 9-1
9.3. Special Representations Concerning REO Properties.............................................. 9-3
9.4. Special Affirmative Covenants Concerning Warehousing Collateral................................ 9-3
9.5. Special Affirmative Covenants Concerning REO Properties........................................ 9-4
9.6. Special Negative Covenants Concerning Warehousing Collateral................................... 9-4
10. DEFAULTS; REMEDIES............................................................................. 10-1
10.1. Events of Default.............................................................................. 10-1
10.2. Remedies ..................................................................................... 10-2
10.3. Application of Proceeds........................................................................ 10-5
10.4. Lender Appointed Attorney-in-Fact.............................................................. 10-5
10.5. Right of Set-Off............................................................................... 10-5
11. MISCELLANEOUS.................................................................................. 11-1
11.1. Notices ..................................................................................... 11-1
11.2. Reimbursement Of Expenses; Indemnity........................................................... 11-1
11.3. Financial Information.......................................................................... 11-2
11.4. Terms Binding Upon Successors; Survival of Representations..................................... 11-2
11.5. Assignment..................................................................................... 11-2
11.6. Amendments..................................................................................... 11-2
11.7. Governing Law.................................................................................. 11-2
11.8. Participations................................................................................. 11-3
11.9. Relationship of the Parties................................................................... 11-3
11.10. Severability.................................................................................. 11-3
11.11. Consent to Credit References.................................................................. 11-3
11.12. Counterparts.................................................................................. 11-3
11.13. Entire Agreement.............................................................................. 11-4
11.14. Consent to Jurisdiction....................................................................... 11-4
11.15. Waiver of Jury Trial.......................................................................... 11-4
11.16. Waiver of Punitive, Consequential, Special or Indirect Damages................................ 11-4
12. DEFINITIONS................................................................................... 12-1
12.1. Defined Terms................................................................................. 12-1
12.2. Other Definitional Provisions; Terms of Construction.......................................... 12-11
EXHIBITS
Exhibit A-REO Request for Advance - REO Properties
Exhibit A-SF Request for Advance
Exhibit B-REP/NP/REO Procedures and Documentation for Warehousing
Repurchased Mortgage Loans, Nonperforming Mortgage
Loans and REO Properties
Exhibit B-SF Procedures and Documentation for Warehousing Mortgage
Loans
Exhibit C Schedule of Servicing Portfolio
Exhibit D Subsidiaries
Exhibit E Compliance Certificate
Exhibit F Lines of Credit
Exhibit G Assumed Names
Exhibit H Eligible Loans and Other Assets
Exhibit I Terms of Guaranteed Obligations
Exhibit J Collateral Operations Fee Schedule
FIRST AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as
of August 31, 2002, among OAK STREET MORTGAGE LLC, a Delaware limited liability
company f/ka Cresleigh Financial Services LLC ("Oak Street LLC"), OAK STREET
MORTGAGE OF TENNESSEE LLC, a Tennessee limited liability company f/k/a CRESLEIGH
BANCORP OF TENNESSEE LLC ("Oak Street of TN"), OAK STREET MORTGAGE, INC., a
Delaware corporation f/k/a CRESLEIGH FINANCIAL SERVICES, INC. ("Oak Street
Inc.") (Oak Street LLC, Oak Street of TN and Oak Street Inc. are collectively
referred to as the "Borrower"), and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation ("Lender").
A. Borrower has requested certain financing from Lender.
B. Borrower has asked Lender to amend and restate the Existing Agreement
(as defined below) and to set forth the terms and conditions upon which
Lender will provide certain financing to Borrower.
C. Lender has agreed to amend and restate the Existing Agreement to
provide that financing to Borrower subject to the terms and conditions
of this Agreement.
D. Subject to Borrower's satisfaction of the conditions set forth in
Article 5, the "Closing Date" for the transactions contemplated by this
Agreement is August 31, 2002.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. THE CREDIT
1.1. THE WAREHOUSING COMMITMENT
On the terms and subject to the conditions and limitations of this Agreement,
including Exhibit H, Lender agrees to make Warehousing Advances to Borrower from
the Closing Date to the Business Day immediately preceding the Warehousing
Maturity Date, during which period Borrower may borrow, repay and reborrow in
accordance with the provisions of this Agreement. The total aggregate principal
amount of all Warehousing Advances outstanding at any one time may not exceed
the Warehousing Commitment Amount. While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.
Effective as of the Closing Date, all outstanding loans made under the Existing
Agreement are deemed to be Warehousing Advances made under this Agreement. All
Warehousing Advances under this Agreement constitute a single indebtedness, and
all of the Collateral is security for the Warehousing Note and the Sublimit Note
and for the performance of all of the Obligations. Warehousing Advances will be
made to Oak Street LLC, Oak Street of TN or to Oak Street Inc., as requested by
Oak Street LLC, Oak Street of TN or Oak Street Inc., respectively, will be
deemed made to or for the benefit of Oak Street LLC and Oak Street of TN and Oak
Street Inc., jointly and severally, and each of Oak Street LLC, Oak Street of TN
and Oak Street Inc. are obligated to repay any Warehousing Advances made to Oak
Street LLC, Oak Street of TN or to Oak Street Inc. under the Warehousing
Commitment. With respect to its obligation to repay Warehousing Advances made to
any other Borrower, each Borrower agrees to the terms set forth in Exhibit I.
Page 1
1.2. EXPIRATION OF WAREHOUSING COMMITMENT
The Warehousing Commitment expires on the earlier of ("Warehousing Maturity
Date"): (a) March 27, 2005, as such date may be extended in writing by Lender,
in its sole discretion, on which date the Warehousing Commitment will expire of
its own term and the Warehousing Advances will become due and payable without
the necessity of Notice or action by Lender; and (b) the date the Warehousing
Commitment is terminated and the Warehousing Advances become due and payable
under Section 10.2.
1.3. WAREHOUSING NOTE/SUBLIMIT NOTE
Warehousing Advances, other than Warehousing Advances made against REO
Properties, are evidenced by Borrower's promissory note, payable to Lender on
the form prescribed by Lender ("Warehousing Note"). Warehousing Advances made
against REO Properties are evidenced by Borrower's promissory note, payable to
Lender on the form prescribed by Lender ("Sublimit Note"). The term "Warehousing
Note" and "Sublimit Note" as used in this Agreement includes all amendments,
restatements, renewals or replacements of the original Warehousing Note, the
Sublimit Note and all substitutions for it. All terms and provisions of the
Warehousing Note and the Sublimit Note are incorporated into this Agreement.
END OF ARTICLE 1
Page 2
INTEREST, PRINCIPAL AND FEES
3.1. INTEREST
3.1 (a) Except as provided in Sections 3.1(d) and 3.1(e), Borrower must pay
interest on the unpaid amount of each Warehousing Advance from the date
the Warehousing Advance is made until it is paid in full at the
Interest Rate specified in Exhibit H.
3.1 (b) As long as no Default or Event of Default exists, Borrower is
entitled to receive a benefit in the form of an "Earnings Credit" on
the portion of the Eligible Balances maintained in time deposit
accounts with a Designated Bank, and Borrower is entitled to receive a
benefit in the form of an "Earnings Allowance" on the portion of the
Eligible Balances maintained in demand deposit accounts with a
Designated Bank. Any Earnings Allowance will be used first and any
Earnings Credit will be used second as a credit against Miscellaneous
Fees and Charges (including Designated Bank Charges), and against other
fees payable to Lender under this Agreement, including Warehousing
Fees, Wire Fees, Warehousing Commitment Fees,Non-Usage Fees, and Loan
Package Fees, and may be used, at Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the month in which the
benefit was received will be accumulated and must be used within 6
months of the month in which the benefit was received. As long as no
Default or Event of Default exists, any Earnings Credit not used during
the month in which the benefit was received will be used to provide a
cash benefit to Borrower. Any Earnings Credit retained by Lender as a
result of a Default or Event of Default will be applied to the payment
of Borrower's Obligations in the order Lender determines in its sole
discretion. The Earnings Credit and the Earnings Allowance for any
month will be determined by Lender in its sole discretion and Lender's
determination of those amounts is conclusive and binding absent
manifest error. In no event will the benefit received by Borrower
exceed the Depository Benefit.
Either party to this Agreement may terminate the benefits provided for
in this Section effective immediately upon Notice to the other party,
if the terminating party determines (which determination is conclusive
and binding on the other party, absent manifest error) at any time that
any applicable law, rule, regulation, order or decree or any
interpretation or administration of such law, rule, regulation, order
or decree by any governmental authority charged with its interpretation
or administration, or compliance by such party with any request or
directive (whether or not having the force of law) of any such
authority, makes it unlawful or impossible for the party sending the
Notice to continue to offer or receive the benefits provided for in
this Section. No Notice is required for a termination of benefits as a
result of a Default or Event of Default.
3.1 (c) Lender computes interest on the basis of the actual number of days
elapsed in a year of 360 days. Borrower must pay interest monthly in
arrears, not later than 9 days after the date of Lender's invoice or,
if applicable, 2 days after the date of Lender's account analysis
statement, commencing with the first month following the Closing Date
and on the Warehousing Maturity Date.
3.1 (d) If, for any reason Borrower repays a Warehousing Advance on the
same day that it was made by Lender, Borrower agrees to pay to Lender
an administrative fee equal to 1 day of interest on that Advance at the
Interest Rate that would otherwise be applicable under Exhibit H.
Borrower must pay all administrative fees within 9 days after the date
of Lender's invoice or, if applicable, within 2 days of the date of
Lender's account analysis statement.
Page 1
3.1 (e) After an Event of Default occurs and upon Notice to Borrower by Lender,
the unpaid amount of each Warehousing Advance will bear interest at the
Default Rate until paid in full.
3.1 (f) Lender will adjust the rates of interest provided for in this Agreement
as of the effective date of each change in the applicable index.
Lender's determination of such rates of interest as of any date of
determination are conclusive and binding, absent manifest error.
3.2. INTEREST LIMITATION
Lender does not intend, by reason of this Agreement, the Warehousing Note, the
Sublimit Note or any other Loan Document, to receive interest in excess of the
amount permitted by applicable law. If Lender receives any interest in excess of
the amount permitted by applicable law, whether by reason of acceleration of the
maturity of this Agreement, the Warehousing Note, the Sublimit Note or
otherwise, Lender will apply the excess to the unpaid principal balance of the
Warehousing Advances and not to the payment of interest. If all Warehousing
Advances have been paid in full and the Warehousing Commitment has expired or
has been terminated, Lender will remit any excess to Borrower. This Section
controls every other provision of all agreements between Borrower and Lender and
is binding upon and available to any subsequent holder of the Warehousing Note
or the Sublimit Note.
3.3. PRINCIPAL PAYMENTS
3.3 (a) Borrower must pay Lender the outstanding principal amount of all
Warehousing Advances on the Warehousing Maturity Date.
3.3 (b) Except as provided in Section 3.1(d), Borrower may prepay any
portion of the Warehousing Advances without premium or penalty at any
time.
3.3 (c) Borrower must pay to Lender, without the necessity of prior demand
or Notice from Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower's Operating Account for, the amount of
any outstanding Warehousing Advance against a specific Pledged Asset
upon the earliest occurrence of any of the following events:
(1) One (1) Business Day elapses from the date a Warehousing
Advance was made if the Pledged Loan to be funded by that Warehousing
Advance is not closed and funded.
(2) Ten (10) Business Days elapse without the return of a
Collateral Document delivered by Lender to Borrower under a Trust
Receipt for correction or completion.
(3) On the date on which a Pledged Loan is determined to have been
originated based on untrue, incomplete or inaccurate information or
otherwise to be subject to fraud, whether or not Borrower had knowledge
of the misrepresentation, incomplete or incorrect information or fraud,
on the date on which Borrower knows, has reason to know, or receives
Notice from Lender, that (A) one or more of the representations and
warranties set forth in Article 9 were inaccurate or incomplete in any
material respect on any date when made or deemed made, or (B) Borrower
has failed to perform or comply with any covenant, term or condition
set forth in Article 9.
(4) On the date the Pledged Loan or a Lien prior to the Mortgage
securing repayment of the Pledged Loan is defaulted and remains in
default for a period of 60 days or more.
Page 2
(5) Upon the sale, other disposition or prepayment of any Pledged
Asset or, with respect to a Pledged Loan included in an Eligible
Mortgage Pool, upon the sale or other disposition of the related Agency
Security.
(6) One (1) Business Day immediately preceding the date scheduled
for the foreclosure or trustee sale of the premises securing a Pledged
Loan.
3.3 (d) Upon telephonic or written Notice to Borrower by Lender, Borrower
must pay to Lender, and Borrower authorizes Lender to cause the Funding
Bank to charge Borrower's Operating Account for, the amount of any
outstanding Warehousing Advance against a specific Pledged Asset upon
the earliest occurrence of any of the following events:
(1) For any Pledged Loan, the Warehouse Period elapses.
(2) Forty-five (45) days elapse from the date a Pledged Loan was
delivered to an Investor or Approved Custodian for examination and
purchase or for inclusion in a Mortgage Pool, without the purchase
being made or an Eligible Mortgage Pool being initially certified, or
upon rejection of a Pledged Loan as unsatisfactory by an Investor or
Approved Custodian.
(3) Seven (7) Business Days elapse from the date a Wet Settlement
Advance was made against a Pledged Loan, other than a Repurchased
Mortgage Loan or a Nonperforming Mortgage Loan, without receipt by
Lender of all Collateral Documents relating to the Pledged Loan.
(4) With respect to any Pledged Loan, any of the Collateral
Documents, upon examination by Lender, are found not to be in
compliance with the requirements of this Agreement or the related
Purchase Commitment.
(5) Three (3) Business Days after the mandatory delivery date of
the related Purchase Commitment if the specific Pledged Loan or the
Pledged Security backed by that Pledged Loan has not been delivered
under the Purchase Commitment prior to such mandatory delivery date, or
on the date the related Purchase Commitment expires or is terminated,
unless, in each case, the Pledged Loan or Pledged Security is eligible
for delivery to another Investor under a comparable Purchase
Commitment.
3.3 (e) In addition to the payments required pursuant to Sections 3.3(a),
3.3(c) and 3.3(d), if the principal amount of any Pledged Loan is
prepaid in whole or in part while a Warehousing Advance is outstanding
against the Pledged Loan, Borrower must pay to Lender, without the
necessity of prior demand or Notice from Lender, and Borrower
authorizes Lender to cause the Funding Bank to charge Borrower's
Operating Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.
3.3 (f) The proceeds of the sale or other disposition of Pledged Assets
must be paid directly by the Investor to the Cash Collateral Account.
Borrower must give Notice to Lender in writing or by telephone or by
RFConnects Delivery to Lender (and if by telephone, followed promptly
by written Notice) of the Pledged Assets for which proceeds have been
received. Upon receipt of Borrower's Notice, Lender will apply any
proceeds deposited into the Cash Collateral Account to the payment of
the Warehousing Advances related to the Pledged Assets identified by
Borrower in its Notice, and those Pledged Assets will be considered to
have been redeemed from pledge. Lender is entitled to rely upon
Borrower's affirmation that deposits in the Cash Collateral Account
represent payments from Investors for the purchase of the Pledged
Assets specified by Borrower in its Notice. If the payment from an
Investor for the purchase of Pledged Assets is less than the
outstanding Warehousing Advances against the Pledged Assets
Page 3
identified by Borrower in its Notice, Borrower must pay to Lender, and
Borrower authorizes Lender to cause the Funding Bank to charge
Borrower's Operating Account in an amount equal to that deficiency. As
long as no Default or Event of Default exists, Lender will return to
Borrower any excess payment from an Investor for Pledged Assets.
3.3 (g) Lender reserves the right to revalue any Pledged Loan. Borrower
must pay to Lender, without the necessity of prior demand or Notice
from Lender, and Borrower authorizes Lender to cause the Funding Bank
to charge Borrower's Operating Account for, any amount required after
any such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against the revalued Pledged Loan to an amount
equal to the Advance Rate for the applicable type of Eligible Loan or
REO Property multiplied by the Fair Market Value of the Mortgage Loan.
3.4. BUYDOWNS
Borrower may prepay a portion of the Warehousing Advances outstanding against
Subprime Mortgage Loans (a "Buydown") upon Notice to Lender not later than (a)
1:00 p.m. on the Business Day immediately preceding the Business Day on which
Borrower desires to make a Buydown in the amount of $10,000,000 or more or (b)
1:00 p.m. on the Business Day on which Borrower desires to make a Buydown in an
amount less than $10,000,000. Each Buydown must be in an amount not less than
$5,000, and Buydowns may not exceed, in the aggregate, the amount outstanding
against Subprime Mortgage Loans. A Buydown is a reduction in the aggregate
amount of the Warehousing Advances outstanding against Subprime Mortgage Loans,
but does not represent the prepayment of any particular Warehousing Advance, and
does not entitle Borrower to the release of any Collateral. Lender may apply
Buydowns to reduce interest payable by Borrower on outstanding Warehousing
Advances in any order that Lender determines in its sole discretion. Unless a
Default or Event of Default exists, Borrower may reborrow all or any portion of
a Buydown upon Notice to Lender not later than (m) 1:00 p.m. on the Business Day
immediately preceding the Business Day on which Borrower desires to reborrow
$10,000,000 or more or (n) 1:00 p.m. on the Business Day that Borrower desires
to reborrow an amount less than $10,000,000. If Lender receives Buydowns or a
combination of Buydowns and payments of Warehousing Advances that exceed the
aggregate principal balance of the Warehousing Advances outstanding against
Subprime Mortgage Loans (an "Excess Buydown"), as long as no Default or Event of
Default exists, Borrower may reborrow all or any portion of an Excess Buydown
upon Notice to Lender not later than (y) 1:00 p.m. on the Business Day
immediately preceding the Business Day on which Borrower desires to reborrow
$10,000,000 or more or (z) 1:00 p.m. on the Business Day that Borrower desires
to reborrow an amount less than $10,000,000. Alternatively, Lender may, in its
sole discretion, re-advance to Borrower all or any portion of an Excess Buydown
by causing the Funding Bank to credit the Operating Account in that amount.
Lender has no obligation to pay or otherwise provide to Borrower any interest,
dividends or other benefits on an Excess Buydown.
3.5. WAREHOUSING COMMITMENT FEES
Borrower must pay Lender a fee ("Warehousing Commitment Fee") in the amount set
forth in Exhibit J. The Warehousing Commitment Fee is payable quarterly in
advance. On the Closing Date, Borrower must pay the prorated portion of the
Warehousing Commitment Fee due from the Closing Date to the last day of the
current Calendar Quarter. After the Closing Date, Borrower must pay the
Warehousing Commitment Fee within 9 days after the date of Lender's invoice or,
if applicable, within 2 days after the date of Lender's account analysis
statement. If the date set forth in clause (a) of the definition of Warehousing
Maturity Date occurs on a day other than the last day of a Calendar Quarter,
Borrower must pay the prorated portion of the Warehousing Commitment Fee due
from the beginning of the then current Calendar Quarter to and including that
date. Borrower is not entitled to a reduction in the amount of the Warehousing
Commitment Fee if (a) the Warehousing Commitment Amount is reduced or (b) the
Warehousing Commitment
Page 4
is terminated at the request of Borrower or as a result of an Event of Default.
If the Warehousing Commitment terminates at the request of Borrower or as a
result of an Event of Default, Borrower must pay, on the date of termination, a
Warehousing Commitment Fee on the Warehousing Commitment Amount in effect
immediately prior to termination, for the period from the date of termination to
and including the date set forth in clause (a) of the definition of Warehousing
Maturity Date on the date of such termination. Lender's determination of the
Warehousing Commitment Fee for any period is conclusive and binding, absent
manifest error.
3.6. NON-USAGE FEES
At the end of each month during the term of this Agreement, Lender will
determine the average usage of the Warehousing Commitment by calculating the
arithmetic daily average of the Warehousing Advances outstanding during such
month ("Used Portion"). Lender will then subtract the Used Portion from the
arithmetic daily average of the Warehousing Commitment Amount outstanding during
such month, and the result, if positive, will be known as the "Unused Portion."
Borrower agrees to pay to Lender a fee ("Non-Usage Fee") in the amount set forth
in Exhibit J. The Non-Usage Fee is payable monthly, in arrears. Borrower must
pay the Non-Usage Fee within 9 days after of the date of Lender's invoice or
account analysis statement. If the date set forth in clause (a) of the
definition of Warehousing Maturity Date occurs on a day other than the last day
of a month, Borrower must pay the prorated portion of the Non-Usage Fee due from
the beginning of the month to and including that date. Borrower is not entitled
to a reduction in the amount of the Non-Usage Fee if (a) the Warehousing
Commitment Amount is reduced or (b) the Warehousing Commitment is terminated at
the request of Borrower or as a result of an Event of Default. If the
Warehousing Commitment terminates at the request of Borrower or as a result of
an Event of Default, Borrower must pay, on the date of termination, a Non-Usage
Fee in the amount of 0.125% per annum of the Warehousing Commitment Amount in
effect immediately prior to the date of termination, for the period from the
date of termination to and including the date set forth in clause (a) of the
definition of Warehousing Maturity Date. Lender's determination of the Non-Usage
Fee for any period is conclusive and binding, absent manifest error.
3.7. LOAN PACKAGE FEES, WIRE FEES, WAREHOUSING FEES
At the time of each Warehousing Advance against an Eligible Loan or REO
Property, Borrower will incur a loan package fee ("Loan Package Fee") and a wire
fee ("Wire Fee"). Loan Package Fees and Wire Fees may, at Lender's discretion,
be billed separately or combined into a single warehousing fee ("Warehousing
Fee"). Borrower must pay all Loan Package Fees, Wire Fees or Warehousing Fees in
the amount set forth in Exhibit J within 9 days after the date of Lender's
invoice or, if applicable, within 2 days after the date of Lender's account
analysis statement.
3.8. MISCELLANEOUS FEES AND CHARGES
Borrower must reimburse Lender for all Miscellaneous Fees and Charges. Borrower
must pay all Miscellaneous Fees and Charges within 9 days after the date of
Lender's invoice or, if applicable, within 2 days after the date of Lender's
account analysis statement.
3.9. OVERDRAFT ADVANCES
If, under the authorization given by Borrower in the Funding Bank Agreement or
pursuant to this Agreement, Lender debits Borrower's Operating Account or
directs the Funding Bank to honor an item presented against the Operating
Account or against the Check Disbursement Account, and that debit or direction
results in an overdraft, Lender may make an additional Warehousing Advance to
fund that overdraft ("Overdraft Advance"). Borrower must pay (a) the outstanding
amount of any Overdraft Advance, plus interest on that Overdraft Advance, within
1 Business Day after the date of the Overdraft Advance, and (b) interest on the
amount of the Overdraft Advance,
Page 5
at a rate per annum equal to the Bank One Prime Rate plus 2%, within 9 days
after the date of Lender's invoice or, if applicable, within 2 days after the
date of Lender's account analysis statement.
3.10. METHOD OF MAKING PAYMENTS
3.10 (a) Unless otherwise specified in this Agreement, Borrower must make
all payments under this Agreement to Lender by the close of business on
the date when due unless the date is not a Business Day. If the due
date is not a Business Day, payment is due on, and interest will accrue
to, the next Business Day. Borrower must make all payments in United
States dollars in immediately available funds transferred by wire to
accounts designated by Lender.
3.10 (b) While a Default or Event of Default exists, Borrower authorizes
Lender to cause the Funding Bank to charge Borrower's Operating Account
for any Obligations due and payable to Lender, without the necessity of
prior demand or Notice from Lender.
END OF ARTICLE 3
Page 6
GENERAL REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and the making
of each Warehousing Advance, that:
6.1. PLACE OF BUSINESS
Each Borrower's chief executive office and principal place of business is ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇.
6.2. ORGANIZATION; GOOD STANDING; SUBSIDIARIES
6.2 (a) Oak Street LLC is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has the full legal power and authority to own its
property and to carry on its business as currently conducted. Oak
Street LLC is duly qualified as a foreign limited liability company to
do business and is in good standing in each jurisdiction in which the
transaction of its business makes qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no
material adverse effect on Oak Street LLC's business, operations,
assets or financial condition as a whole. For the purposes of this
Agreement, good standing includes qualification for all licenses and
payment of all taxes required in the jurisdiction of its formation and
in each jurisdiction in which Oak Street LLC transacts business. Oak
Street LLC has no Subsidiaries except as set forth on Exhibit D, which
sets forth with respect to each Subsidiary, its name, address,
jurisdiction of organization, each state in which it is qualified to do
business, and the percentage ownership of its Equity Interests by Oak
Street LLC. Each of Oak Street LLC's Subsidiaries is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted.
6.2 (b) Oak Street of TN is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Tennessee, and has the full legal power and authority to own its
property and to carry on its business as currently conducted. Oak
Street of TN is duly qualified as a foreign limited liability company
to do business and is in good standing in each jurisdiction in which
the transaction of its business makes qualification necessary, except
in jurisdictions, if any, where a failure to be in good standing has no
material adverse effect on Oak Street of TN's business, operations,
assets or financial condition as a whole. For the purposes of this
Agreement, good standing includes qualification for all licenses and
payment of all taxes required in the jurisdiction of its formation and
in each jurisdiction in which Oak Street of TN transacts business. Oak
Street of TN has no Subsidiaries except as set forth on Exhibit D,
which sets forth with respect to each Subsidiary, its name, address,
jurisdiction of organization, each state in which it is qualified to do
business, and the percentage ownership of its Equity Interests by Oak
Street of TN. Each of Oak Street of TN's Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted.
6.2 (c) Oak Street Inc. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
the full legal power and authority to own its property and to carry on
its business as currently conducted. Oak Street Inc. is duly qualified
as a foreign corporation to do business and is in good standing in each
Page 1
jurisdiction in which the transaction of its business makes
qualification necessary, except in jurisdictions, if any, where a
failure to be in good standing has no material adverse effect on Oak
Street Inc.'s business, operations, assets or financial condition as a
whole. For the purposes of this Agreement, good standing includes
qualification for all licenses and payment of all taxes required in the
jurisdiction of its formation and in each jurisdiction in which Oak
Street Inc. transacts business. Oak Street Inc. has no Subsidiaries
except as set forth on Exhibit D, which sets forth with respect to each
Subsidiary, its name, address, jurisdiction of organization, each state
in which it is qualified to do business, and the percentage ownership
of its Equity Interests by Oak Street Inc. Each of Oak Street Inc.'s
Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, and has the
full legal power and authority to own its property and to carry on its
business as currently conducted.
6.3. AUTHORIZATION AND ENFORCEABILITY
Each Borrower has the power and authority to execute, deliver and perform this
Agreement, the Warehousing Note, the Sublimit Note and other Loan Documents to
which Borrower is party and to make the borrowings under this Agreement. The
execution, delivery and performance by each Borrower of this Agreement, the
Warehousing Note, the Sublimit Note and the other Loan Documents to which
Borrower is party and the making of the borrowings under this Agreement, the
Warehousing Note and the Sublimit Note have been duly and validly authorized by
all necessary company action on the part of Borrower (none of which actions has
been modified or rescinded, and all of which actions are in full force and
effect) and do not and will not (a) conflict with or violate any provision of
law, of any judgments binding upon Borrower, or of the articles of organization
or operating agreement of Borrower, or (b) conflict with or result in a breach
of, constitute a default or require any consent under, or result in or require
the acceleration of any indebtedness of Borrower under any agreement, instrument
or indenture to which Borrower is a party or by which Borrower or its property
may be bound or affected, or result in the creation of any Lien upon any
property or assets of Borrower (other than the Lien on the Collateral granted
under this Agreement). This Agreement, the Warehousing Note, the Sublimit Note
and the other Loan Documents constitute the legal, valid and binding obligations
of each Borrower, enforceable in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other such laws affecting the
enforcement of creditors' rights.
6.4. APPROVALS
The execution and delivery of this Agreement, the Warehousing Note, the Sublimit
Note and the other Loan Documents and the performance of Borrower's obligations
under this Agreement, the Warehousing Note, the Sublimit Note and the other Loan
Documents and the validity and enforceability of this Agreement, the Warehousing
Note, the Sublimit Note and the other Loan Documents do not require any license,
consent, approval or other action of any state or federal agency or governmental
or regulatory authority other than those that have been obtained and remain in
full force and effect.
6.5. FINANCIAL CONDITION
The balance sheet of Oak Street LLC (and, Oak Street LLC's Subsidiaries, on a
consolidated basis) and of Borrower (on a consolidating basis) as of each
Statement Date, and the related statements of income, cash flows and changes in
Equity Interests for the period ended on each Statement Date, and the interim
statements of income of Oak Street LLC for the month ended on each Statement
Date, furnished to Lender, fairly present the financial condition of Oak Street
LLC (and, Oak Street LLC's Subsidiaries) and Borrower, as applicable, as at that
Statement Date and the results of its operations for the fiscal period ended on
that Statement Date. None of the Borrowers had, on each Statement Date, no known
material liabilities, direct or indirect, fixed or
Page 2
contingent, matured or unmatured, or liabilities for taxes, long-term leases or
unusual forward or long-term commitments not disclosed by, or reserved against
in, those financial statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of any Borrower except as previously disclosed to Lender in writing. Those
financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved. Since the Audited Statement
Date, there has been no material adverse change in the business, operations,
assets or financial condition of any Borrower, nor is any Borrower aware of any
state of facts that (with or without notice or lapse of time or both) would or
could result in any such material adverse change.
6.6. LITIGATION
There are no actions, claims, suits or proceedings pending or, to Borrower's
knowledge, threatened or reasonably anticipated against or affecting Borrower or
any Subsidiary of Borrower in any court or before any arbitrator or before any
government commission, board, bureau or other administrative agency that, if
adversely determined, may reasonably be expected to result in a material adverse
change in Borrower's business, operations, assets or financial condition as a
whole, or that would affect the validity or enforceability of this Agreement,
the Warehousing Note, the Sublimit Note or any other Loan Document.
6.7. COMPLIANCE WITH LAWS
Neither Borrower nor any Subsidiary of Borrower is in violation of any provision
of any law, or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority that could result
in a material adverse change in Borrower's business, operations, assets or
financial condition as a whole or that would affect the validity or
enforceability of this Agreement, the Warehousing Note, the Sublimit Note or any
other Loan Document.
6.8. REGULATION U
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock, and no part of the proceeds of any Warehousing Advance made under
this Agreement will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
6.9. INVESTMENT COMPANY ACT
Borrower is not an "investment company" or controlled by an "investment company"
within the meaning of the Investment Company Act.
6.10. PAYMENT OF TAXES
Borrower and each of its Subsidiaries has filed or caused to be filed all
federal, state and local income, excise, property and other tax returns that are
required to be filed with respect to the operations of Borrower and its
Subsidiaries, all such returns are true and correct and Borrower and each of its
Subsidiaries has paid or caused to be paid all taxes shown on those returns or
on any assessment, to the extent that those taxes have become due, including all
FICA payments and withholding taxes, if appropriate. The amounts reserved as a
liability for income and other taxes payable in the financial statements
described in Section 6.5 are sufficient for payment of all unpaid federal, state
and local income, excise, property and other taxes, whether or not disputed, of
Borrower and its Subsidiaries accrued for or applicable to the period and on the
dates of those financial statements and all years and periods prior to those
financial statements and for which
Page 3
Borrower and its Subsidiaries may be liable in their own right or as transferee
of the assets of, or as successor to, any other Person. No tax Liens have been
filed and no material claims are being asserted against Borrower, any Subsidiary
of Borrower or any property of Borrower or any Subsidiary of Borrower with
respect to any taxes, fees or charges.
6.11. AGREEMENTS
Neither Borrower nor any Subsidiary of Borrower is a party to any agreement,
instrument or indenture or subject to any restriction materially and adversely
affecting its business, operations, assets or financial condition, except as
disclosed in the financial statements described in Section 6.5. Neither Borrower
nor any Subsidiary of Borrower is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement, instrument, or indenture which default could result in a material
adverse change in Borrower's business, operations, properties or financial
condition as a whole. No holder of any indebtedness of Borrower or of any of its
Subsidiaries has given notice of any asserted default under that indebtedness,
and no liquidation or dissolution of Borrower or of any of its Subsidiaries and
no receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to Borrower or of any of its Subsidiaries or any of its or
their properties is pending, or to the knowledge of Borrower, threatened.
6.12. TITLE TO PROPERTIES
Borrower and each Subsidiary of Borrower has good, valid, insurable and (in the
case of real property) marketable title to all of its properties and assets
(whether real or personal, tangible or intangible) reflected on the financial
statements described in Section 6.5, except for those properties and assets that
Borrower has disposed of since the date of those financial statements either in
the ordinary course of business or because they were no longer used or useful in
the conduct of Borrower's or the Subsidiary's business. All of Borrower's
properties and assets are free and clear of all Liens except as disclosed in
Borrower's financial statements.
6.13. ERISA
Each Plan is in compliance with all applicable requirements of ERISA and the
Internal Revenue Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and the Internal Revenue Code setting forth
those requirements, except where any failure to comply would not result in a
material loss to Borrower or any ERISA Affiliate. All of the minimum funding
standards or other contribution obligations applicable to each Plan have been
satisfied. No Plan is a defined-benefit pension plan subject to Title IV of
ERISA, and there is no Multiemployer Plan.
6.14. NO RETIREE BENEFITS
Except as required under Section 4980B of the Internal Revenue Code, Section 601
of ERISA or applicable state law, neither Borrower nor, if applicable, any
Subsidiary is obligated to provide post-retirement medical or insurance benefits
with respect to employees or former employees.
6.15. ASSUMED NAMES
Borrower does not originate Mortgage Loans or otherwise conduct business under
any names other than its legal name and the assumed names set forth on Exhibit
G. Borrower has made all filings and taken all other action as may be required
under the laws of any jurisdiction in which it originates Mortgage Loans or
otherwise conducts business under any assumed name. Borrower's use of the
assumed names set forth on Exhibit G does not conflict with any other Person's
legal rights to any such name, nor otherwise give rise to any liability by
Borrower to any
Page 4
other Person. Borrower may amend Exhibit G to add or delete any assumed names
used by Borrower to conduct business. An amendment to Exhibit G to add an
assumed name is not effective until Borrower has delivered to Lender an assumed
name certificate in the jurisdictions in which the assumed name is to be used,
which must be satisfactory in form and content to Lender, in its sole
discretion. In connection with any amendment to delete a name from Exhibit G,
Borrower represents and warrants that it has ceased using that assumed name in
all jurisdictions.
6.16. SERVICING
Exhibit C is a true and complete list of Borrower's Servicing Portfolio. All of
Borrower's Servicing Contracts are in full force and effect, and are
unencumbered by Liens other than Liens disclosed in Exhibit C. No default or
event that, with notice or lapse of time or both, would become a default, exists
under any of Borrower's Servicing Contracts.
END OF ARTICLE 6
Page 5
AFFIRMATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must:
7.1. PAYMENT OF OBLIGATIONS
Punctually pay or cause to be paid all Obligations, including the Obligations
payable under this Agreement and under the Warehousing Note and the Sublimit
Note, in accordance with their terms.
7.2. FINANCIAL STATEMENTS
Deliver to Lender:
7.2 (a) As soon as available and in any event within 30 days after the end
of each month, including the last month of Oak Street LLC's fiscal
year, an interim statement of income of Oak Street LLC (and, Oak Street
LLC's Subsidiaries, on a consolidated basis) for the immediately
preceding month and for the period from the beginning of the fiscal
year to the end of that month, and the related balance sheet as at the
end of the immediately preceding month, all in reasonable detail,
subject, however, to year-end audit adjustments.
7.2 (b) As soon as available and in any event within 90 days after the end
of each fiscal year of Oak Street LLC, fiscal year-end statements of
income, changes in Equity Interests and cash flow of Oak Street LLC
(and, Oak Street LLC's Subsidiaries, on a consolidated basis) and of
Borrower (on a consolidating basis) for that year, and the related
balance sheet as of the end of that year (setting forth in comparative
form the corresponding figures for the preceding fiscal year), all in
reasonable detail and accompanied by (1) an opinion as to those
financial statements in form and prepared by independent certified
public accountants of recognized standing acceptable to Lender and (2)
any management letters, management reports or other supplementary
comments or reports delivered by those accountants to Oak Street LLC or
Borrower, as applicable, or its respective management committee or
board of directors.
7.2 (c) Together with each delivery of financial statements required by
this Section, a Compliance Certificate substantially in the form of
Exhibit E.
7.2 (d) Copies of all regular or periodic financial and other reports that
Borrower files with the Securities and Exchange Commission or any
successor governmental agency or other entity.
7.3. OTHER BORROWER REPORTS
Deliver to Lender:
7.3 (a) As soon as available and in any event within 30 days after the end
of each month, a consolidated loan production report as of the end of
that month, presenting the total dollar volume and the number of
Mortgage Loans originated and closed or purchased during that month and
for the fiscal year-to-date, specified by property type and loan type.
Page 1
7.3 (b) As soon as available and in any event within 30 days after the end
of each month, a report ("Forward Commitment Report") as of the end of
that month, detailing the original amount of the commitment, the date
executed, the amount outstanding on the commitment and the amount of
the commitment used.
7.3 (c) As soon as available and in any event within 30 days after the end
of each month, a report as of the end of that month, detailing FASB 91
adjustment information. After Borrower implements FASB 91 this report
will no longer be required.
7.3 (d) As soon as available and in any event within 30 days after the end
of each month, a report detailing all requests the Borrower repurchase
Pledged Assets from an Investor or out of an Eligible Mortgage Pool,
the status of each such request, and any indemnification or similar
agreement entered into by Borrower in connection with any such request.
7.3 (e) As soon as available and in any event within 30 days after the end
of each month, a report as of the end of that month, detailing all
investments in Affiliates, advances to and receivables from Affiliates
and amounts owed to Affiliates by Borrower.
7.3 (f) Other reports in respect of Pledged Assets, including copies of
purchase confirmations issued by Investors purchasing Pledged Loans
from Borrower, in such detail and at such times as Lender in its
discretion may reasonably request.
7.3 (g) With reasonable promptness, all further information regarding the
business, operations, properties or financial condition of Borrower as
Lender may reasonably request, including copies of any audits completed
by HUD, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
7.4. MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS
Preserve and maintain its existence as a limited liability company in good
standing and all of its rights, privileges, licenses and franchises necessary or
desirable in the normal conduct of its business, including its eligibility as
lender, seller/servicer and issuer described under Section 9.1; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required for maintaining Borrower's eligibility as lender,
seller/servicer and issuer described under Section 9.1; and make no material
change in the nature or character of its business or engage in any business in
which it was not engaged on the date of this Agreement.
7.5. COMPLIANCE WITH APPLICABLE LAWS
Comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, a breach of which could result in a
material adverse change in Borrower's business, operations, assets, or financial
condition as a whole or on the enforceability of this Agreement, the Warehousing
Note, the Sublimit Note, any other Loan Document or any Collateral, except where
contested in good faith and by appropriate proceedings.
7.6. INSPECTION OF PROPERTIES AND BOOKS; OPERATIONAL REVIEWS
Permit Lender or any Participant (and their authorized representatives) to
discuss the business, operations, assets and financial condition of Borrower and
its Subsidiaries with Borrower's managers and other management officials, agents
and employees, and to examine and make copies or extracts of Borrower's and its
Subsidiaries' books of account, all at such reasonable times as Lender or any
Participant may request. Provide its accountants with a copy of this Agreement
promptly after its execution and authorize and instruct them to answer candidly
all
Page 2
questions that the officers of Lender or any Participant or any authorized
representatives of Lender or any Participant may address to them in reference to
the financial condition or affairs of Borrower and its Subsidiaries. Borrower
may have its representatives in attendance at any meetings held between the
officers or other representatives of Lender or any Participant and Borrower's
accountants under this authorization. Permit Lender or any Participant (and
their authorized representatives) access to Borrower's premises and records for
the purpose of conducting a review of Borrower's general mortgage business
methods, policies and procedures, auditing its loan files and reviewing the
financial and operational aspects of Borrower's business.
7.7. NOTICE
Give prompt Notice to Lender of (a) any action, suit or proceeding instituted by
or against Borrower or any of its Subsidiaries in any federal or state court or
before any commission or other regulatory body (federal, state or local,
domestic or foreign), which action, suit or proceeding has at issue in excess of
$250,000, or any such proceedings threatened against Borrower or any of its
Subsidiaries in a writing containing the details of that action, suit or
proceeding; (b) the filing, recording or assessment of any federal, state or
local tax Lien against Borrower, or any of its assets or any of its
Subsidiaries; (c) an Event of Default; (d) a Default that continues for more
than 4 days; (e) the suspension, revocation or termination of Borrower's
eligibility, in any respect, as lender, seller/servicer or issuer as described
under Section 9.1; (f) the transfer, loss, nonrenewal or termination of any
Servicing Contracts to which Borrower is a party, or which is held for the
benefit of Borrower, and the reason for that transfer, loss, nonrenewal or
termination; (g) any Prohibited Transaction with respect to any Plan, specifying
the nature of the Prohibited Transaction and what action Borrower proposes to
take with respect to it; and (h) any other action, event or condition of any
nature that could lead to or result in a material adverse change in the
business, operations, assets or financial condition of Borrower or any of its
Subsidiaries.
7.8. PAYMENT OF DEBT, TAXES AND OTHER OBLIGATIONS
Pay, perform and discharge, or cause to be paid, performed and discharged, all
of the obligations and indebtedness of Borrower and its Subsidiaries, all taxes,
assessments and governmental charges or levies imposed upon Borrower or its
Subsidiaries or upon their respective income, receipts or properties before
those taxes, assessments and governmental charges or levies become past due, and
all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could become a Lien or charge upon any of their respective properties or
assets. Borrower and its Subsidiaries are not required to pay, however, any
taxes, assessments and governmental charges or levies or claims for labor,
materials or supplies for which Borrower or its Subsidiaries have obtained an
adequate bond or insurance or that are being contested in good faith and by
proper proceedings that are being reasonably and diligently pursued and for
which proper reserves have been created.
7.9. INSURANCE
Maintain blanket bond coverage and errors and omissions insurance or mortgage
impairment insurance, with such companies and in such amounts as satisfy
prevailing requirements applicable to a lender, seller/servicer and issuer
described under Section 9.1, and liability insurance and fire and other hazard
insurance on its properties, in each case with responsible insurance companies
acceptable to Lender, in such amounts and against such risks as is customarily
carried by similar businesses operating in the same location. Within 30 days
after Notice from Lender, obtain such additional insurance as Lender may
reasonably require, all at the sole expense of Borrower. Copies of such policies
must be furnished to Lender without charge upon request of Lender.
Page 3
7.10. CLOSING INSTRUCTIONS
Indemnify and hold Lender harmless from and against any loss, including
reasonable attorneys' fees and costs, attributable to the failure of any title
insurance company, agent or attorney to comply with Borrower's disbursement or
instruction letter relating to any Mortgage Loan. Lender has the right to
pre-approve Borrower's choice of title insurance company, agent or attorney and
Borrower's disbursement or instruction letter to them in any case in which
Borrower intends to obtain a Warehousing Advance against the Mortgage Loan to be
created at settlement or to pledge that Mortgage Loan as Collateral under this
Agreement. In any event, Borrower's disbursement or instruction letter must
include the following language:
Residential Funding Corporation has a security interest in any amounts
advanced by it to fund this mortgage loan and in the mortgage loan
funded with those amounts. You must promptly return any amounts
advanced by Residential Funding Corporation and not used to fund this
mortgage loan. You also must immediately return all amounts advanced by
Residential Funding Corporation if this mortgage loan does not close
and fund within 1 Business Day of your receipt of those funds.
7.11. SUBORDINATION OF CERTAIN INDEBTEDNESS
Cause any indebtedness of Borrower to any member, manager or Affiliate or any
shareholder, director or officer of any manager, member or Affiliate of
Borrower, which indebtedness has a term of more than 1 year or is in excess of
$25,000, to be subordinated to the Obligations by the execution and delivery to
Lender of a Subordination of Debt Agreement, on the form prescribed by Lender,
certified by the corporate secretary of Borrower to be true and complete and in
full force and effect.
7.12. OTHER LOAN OBLIGATIONS
Perform all material obligations under the terms of each loan agreement, note,
mortgage, security agreement or debt instrument by which Borrower is bound or to
which any of its property is subject, and promptly notify Lender in writing of a
declared default under or the termination, cancellation, reduction or nonrenewal
of any of its other lines of credit or agreements with any other lender. Exhibit
F is a true and complete list of all such lines of credit or agreements as of
the date of this Agreement. Borrower must give Lender at least 30 days Notice
before entering into any additional lines of credit or agreements. Notices to
Lender are for informational purposes only and Lender will not have the right to
approve any current or future lines of credit or agreements.
7.13. ERISA
Maintain (and, if applicable, cause each ERISA Affiliate to maintain) each Plan
in compliance with all material applicable requirements of ERISA and of the
Internal Revenue Code and with all applicable rulings and regulations issued
under the provisions of ERISA and of the Internal Revenue Code, and not (and, if
applicable, not permit any ERISA Affiliate to), (a) engage in any transaction in
connection with which Borrower or any ERISA Affiliate would be subject to either
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code, in either case in an amount exceeding
$25,000 or (b) fail to make full payment when due of all amounts that, under the
provisions of any Plan, Borrower or any ERISA Affiliate is required to pay as
contributions to that Plan, or permit to exist any accumulated funding
deficiency (as such term is defined in Section 302 of ERISA and Section 412 of
the Internal Revenue Code), whether or not waived, with respect to any Plan in
an aggregate amount exceeding $25,000.
Page 4
7.14. USE OF PROCEEDS OF WAREHOUSING ADVANCES
Use the proceeds of each Warehousing Advance solely for the purpose of funding
Eligible Loans or REO Properties and against the pledge of those Eligible Loans
and REO Properties as Collateral.
END OF ARTICLE 7
Page 5
NEGATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:
8.1. CONTINGENT LIABILITIES
Assume, guarantee, endorse or otherwise become contingently liable for the
obligation of any Person except by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, except for obligations
arising in connection with the sale of Mortgage Loans with recourse in the
ordinary course of Borrower's business, and except for a limited guaranty of
$2,500,000 given by Oak Street LLC to Bank One in connection with Bank One
providing a $15,000,000 line of credit to Oak Street Funding LLC.
8.2. PLEDGE OF SERVICING CONTRACTS
Pledge or grant a security interest in any existing or future Servicing
Contracts of Borrower other than to Lender or omit to take any action required
to keep all of Borrower's Servicing Contracts in full force and effect.
8.3. RESTRICTIONS ON FUNDAMENTAL CHANGES
8.3 (a) Consolidate, merge or enter into any analogous reorganization or
transaction with any Person.
8.3 (b) Amend or otherwise modify Borrower's articles of organization or
operating agreement in any way which will have an adverse impact on
Lender.
8.3 (c) Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
8.3 (d) Cease actively to engage in the business of originating or
acquiring Mortgage Loans or make any other material change in the
nature or scope of the business in which Borrower engages as of the
date of this Agreement.
8.3 (e) Sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one transaction or a series of transactions) all or any
substantial part of Borrower's business or assets, whether now owned or
acquired after the Closing Date, other than, in the ordinary course of
business and to the extent not otherwise prohibited by this Agreement,
sales of (1) Mortgage Loans, (2) Mortgage-backed Securities and (3)
Servicing Contracts.
8.3 (f) Acquire by purchase or in any other transaction all or
substantially all of the business or property of, or stock or other
ownership interests of, any Person; provided, however, Borrower may
purchase all or substantially all of the business or property of a
Person whose primary business is directly related to mortgage banking
if (1) the purchase price is no greater than $500,000, (2) the business
or property is consolidated into the Borrower, and (3) Borrower gives
at least five 5 Business Days advance written Notice of such purchase.
8.3 (g) Permit any Subsidiary of Borrower to do or take any of the
foregoing actions.
Page 1
8.4. SUBSIDIARIES
Form or acquire, or permit any Subsidiary of Borrower to form or acquire, any
Person that would thereby become a Subsidiary.
8.5. DEFERRAL OF SUBORDINATED DEBT
Pay any Subordinated Debt of Borrower in advance of its stated maturity or,
after a Default or Event of Default under this Agreement has occurred, make any
payment of any kind on any Subordinated Debt of Borrower until all of the
Obligations have been paid and performed in full and any applicable preference
period has expired.
8.6. LOSS OF ELIGIBILITY
Take any action that would cause Borrower to lose all or any part of its status
as an eligible lender, seller/servicer or issuer as described under Section 9.1.
8.7. ACCOUNTING CHANGES
Make, or permit any Subsidiary of Borrower to make, any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change its fiscal year or the fiscal year of any Subsidiary of Borrower, except
to comply with FASB 91.
8.8. LEVERAGE RATIO
Permit Oak Street LLC's Leverage Ratio at any time to exceed 20 to 1.
8.9. MINIMUM TANGIBLE NET WORTH
Permit Oak Street LLC's Tangible Net Worth at any time to be less than (a)
$10,000,000 plus (b) 50% of Oak Street LLC's net income after taxes and
distributions to members for tax purposes, if positive, for each six-month
period ending on June 30 or December 31 of any year. Adjustments will occur on
the first Business Day after the end of each six-month period.
8.10. CURRENT RATIO
Permit Oak Street LLC's Current Ratio at any time to be less than 1.03 to 1.
8.11. LIQUID ASSETS
Permit Oak Street LLC's Liquid Assets at any time to be less than $5,000,000.
8.12. TRANSACTIONS WITH AFFILIATES
Directly or indirectly (a) make any loan, advance, extension of credit or
capital contribution to any of Borrowers' Affiliates, except Oak Street LLC may
(i) loan H&K Collections, LLC $1,000,000 to fund the initial start up of the
joint venture, (ii) contribute $2,500,000 to Oak Street Funding LLC to initially
capitalize this entity, and (iii) contribute $700,000 to initially capitalize
H&K Collections, LLC, (b) sell, transfer, pledge or assign any of its assets to
or on behalf of those Affiliates, (c) merge or consolidate with or purchase or
acquire assets from those Affiliates, or (d) pay management fees to or on behalf
of those Affiliates.
Page 2
8.13. RECOURSE SERVICING CONTRACTS
Acquire or enter into Servicing Contracts under which Borrower must repurchase
or indemnify the holder of the Mortgage Loans as a result of defaults on the
Mortgage Loans at any time during the term of those Mortgage Loans.
8.14. GESTATION AGREEMENTS
Directly or indirectly sell or finance a Mortgage Loan under any Gestation
Agreement if the Mortgage Loan is or was previously pledged to Lender as
Collateral under this Agreement if the aggregate amount of Warehousing Advances
outstanding is less than 60% of the Warehousing Commitment Amount.
END OF ARTICLE 8
Page 3
SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL
9.1. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING ELIGIBILITY AS
SELLER/SERVICER OF MORTGAGE LOANS
Oak Street LLC represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and the making
of each Warehousing Advance, that Oak Street LLC is approved and qualified and
in good standing as a lender, seller/servicer or issuer, as set forth below, and
meets all requirements applicable to its status as:
9.1 (a) A HUD-approved mortgagee, eligible to originate, purchase, hold,
sell and service FHA fully insured Mortgage Loans.
9.1 (b) A Lender-approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell and service Mortgage Loans to be sold
to Lender.
9.2. SPECIAL REPRESENTATIONS AND WARRANTIES CONCERNING WAREHOUSING
COLLATERAL
Borrower represents and warrants to Lender, as of the date of this Agreement and
as of the date of each Warehousing Advance Request and the making of each
Warehousing Advance, that:
9.2 (a) Borrower has not selected the Collateral in a manner so as to
affect adversely Lender's interests.
9.2 (b) Borrower is the legal and equitable owner and holder, free and
clear of all Liens (other than Liens granted under this Agreement), of
the Pledged Loans and the Pledged Securities. All Pledged Loans,
Pledged Securities and related Purchase Commitments have been duly
authorized and validly issued to Borrower, and all of the foregoing
items of Collateral comply with all of the requirements of this
Agreement, and have been and will continue to be validly pledged or
assigned to Lender, subject to no other Liens.
9.2 (c) Borrower has, and will continue to have, the full right, power and
authority to pledge the Collateral pledged and to be pledged by it
under this Agreement.
9.2 (d) Each Mortgage Loan and each related document included in the
Pledged Loans (1) has been duly executed and delivered by the parties
to that Mortgage Loan and that related document, (2) has been made in
compliance with all applicable laws, rules and regulations (including
all laws, rules and regulations relating to usury), (3) is and will
continue to be a legal, valid and binding obligation, enforceable in
accordance with its terms, without setoff, counterclaim or defense in
favor of the mortgagor under the Mortgage Loan or any other obligor on
the Mortgage Note and (4) has not been modified, amended or any
requirements of which waived, except in a writing that is part of the
Collateral Documents.
9.2 (e) Each Pledged Loan is secured by a Mortgage on real property located
in one of the states of the United States or the District of Columbia.
9.2 (f) Unless Third Party Originated Loans are permitted, each Pledged
Loan has been closed or will be closed and funded with the Warehousing
Advance made against it.
Page 1
9.2 (g) Except for open-ended Second Mortgage Loans, each Mortgage Loan has
been fully advanced in the face amount of its Mortgage Note.
9.2 (h) Each First Mortgage is a first Lien on the premises described in
that Mortgage.
9.2 (i) Each Second Mortgage Loan is secured by a second Lien on the
premises described in that Mortgage.
9.2 (j) To the extent required by the related Purchase Commitment or by
Investors generally for similar Mortgage Loans, each Second Mortgage
Loan has or will have a title insurance policy, in ALTA form or
equivalent, from a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the usual requirements
of Investors purchasing those Mortgage Loans.
9.2 (k) Each First Mortgage Loan has or will have a title insurance policy,
in ALTA form or equivalent, from a recognized title insurance company,
insuring the priority of the Lien of the Mortgage and meeting the usual
requirements of Investors purchasing those Mortgage Loans.
9.2 (l) Each Mortgage Loan has been evaluated or appraised in accordance
with Title XI of FIRREA.
9.2 (m) The Mortgage Note for each Pledged Loan is (1) payable or endorsed
to the order of Borrower, (2) an "instrument" within the meaning of
Article 9 of the Uniform Commercial Code of all applicable
jurisdictions and (3) is denominated and payable in United States
dollars.
9.2 (n) No default has existed for 60 days or more under any Mortgage Loan
included in the Pledged Loans.
9.2 (o) No party to a Mortgage Loan or any related document is in violation
of any applicable law, rule or regulation that would impair the
collectibility of the Mortgage Loan or the performance by the mortgagor
or any other obligor of its obligations under the Mortgage Note or any
related document.
9.2 (p) All fire and casualty policies covering the premises encumbered by
each Mortgage included in the Pledged Loans (1) name and will continue
to name Borrower and its successors and assigns as the insured under a
standard mortgagee clause, (2) are and will continue to be in full
force and effect and (3) afford and will continue to afford insurance
against fire and such other risks as are usually insured against in the
broad form of extended coverage insurance generally available.
9.2 (q) Pledged Loans secured by premises located in a special flood hazard
area designated as such by the Director of the Federal Emergency
Management Agency are and will continue to be covered by special flood
insurance under the National Flood Insurance Program.
9.2 (r) Each Pledged Loan against which a Warehousing Advance is made on
the basis of a Purchase Commitment meets all of the requirements of
that Purchase Commitment, and each Pledged Security against which a
Warehousing Advance is outstanding meets all of the requirements of the
related Purchase Commitment.
9.2 (s) Pledged Loans that are intended to be exchanged for Agency
Securities comply or, prior to the issuance of the Agency Securities
will comply, with the requirements of any
Page 2
governmental instrumentality, department or agency issuing or
guaranteeing the Agency Securities.
9.2 (t) Pledged Loans that are intended to be used in the formation of
Mortgage-backed Securities (other than Agency Securities) comply with
the requirements of the issuer of the Mortgage-backed Securities (or
its sponsor) and of the Rating Agencies.
9.2 (u) The original assignments of Mortgage delivered to Lender for each
Pledged Loan are in recordable form and comply with all applicable laws
and regulations governing the filing and recording of such documents.
9.2 (v) No Pledged Loan delivered to Lender is a Discontinued Loan.
9.2 (w) Each Pledged Loan secured by real property to which a Manufactured
Home is affixed will create a valid Lien on that Manufactured Home that
will have priority over any other Lien on the Manufactured Home,
whether or not arising under applicable real property law.
9.3. SPECIAL REPRESENTATIONS CONCERNING REO PROPERTIES
Borrower represents and warrants to Lender, as of the date of this Agreement and
as of the date of each Warehousing Advance Request for a Warehousing Advance
made against an REO Property and the making of each Warehousing Advance, that:
9.3 (a) Borrower is the legal and equitable owner and holder, free and
clear of all Liens (other than Liens granted hereunder and under the
REO Mortgages) of the REO Property against which a Warehousing Advance
is being or has been requested. All REO Mortgages have been fully
authorized and validly executed and delivered by Borrower, and the REO
Property against which a Warehousing Advance has been made have been
and will continue to be subject to a Lien in favor of Lender, subject
to no other Liens.
9.3 (b) Each REO Mortgage is in full force and effect, is legal, valid and
enforceable in accordance with its terms, and no default or event
which, with notice or lapse of time or both, would become a default,
exists under any such REO Mortgage.
9.4. SPECIAL AFFIRMATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must:
9.4 (a) Warrant and defend the right, title and interest of Lender in and
to the Collateral against the claims and demands of all Persons.
9.4 (b) Service or cause to be serviced all Pledged Loans in accordance
with the standard requirements of the issuers of Purchase Commitments
covering them and all applicable HUD, ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
requirements, including taking all actions necessary to enforce the
obligations of the obligors under such Mortgage Loans. Service or cause
to be serviced all Mortgage Loans backing Pledged Securities in
accordance with applicable governmental requirements and requirements
of issuers of Purchase Commitments covering them. Hold all escrow funds
collected in respect of Pledged Loans and Mortgage Loans backing
Pledged Securities in trust, without commingling the same with
non-custodial funds, and apply them for the purposes for which those
funds were collected.
Page 3
9.4 (c) Execute and deliver to Lender with respect to the Collateral those
further instruments of sale, pledge, assignment or transfer, and those
powers of attorney, as required by Lender, and do and perform all
matters and things necessary or desirable to be done or observed, for
the purpose of effectively creating, maintaining and preserving the
security and benefits intended to be afforded Lender under this
Agreement.
9.4 (d) Notify Lender within 2 Business Days of any default under, or of
the termination of, any Purchase Commitment relating to any Pledged
Loan, Eligible Mortgage Pool, or Pledged Security.
9.4 (e) Promptly comply in all respects with the terms and conditions of
all Purchase Commitments, and all extensions, renewals and
modifications or substitutions of or to all Purchase Commitments.
Deliver or cause to be delivered to the Investor the Pledged Loans and
Pledged Securities to be sold under each Purchase Commitment not later
than the mandatory delivery date of the Pledged Loans or Pledged
Securities under the Purchase Commitment.
9.4 (f) Prior to the origination by Borrower of any Mortgage Loans for sale
to ▇▇▇▇▇▇ ▇▇▇, enter into an agreement among Borrower, Lender and
▇▇▇▇▇▇ Mae, pursuant to which ▇▇▇▇▇▇ ▇▇▇ agrees to send all cash
proceeds of Mortgage Loans sold by Borrower to ▇▇▇▇▇▇ Mae to the Cash
Collateral Account.
9.4 (g) Prior to the origination by Borrower of any Mortgage Loan to be
registered on the MERS system, obtain the approval of Lender and enter
into an Electronic Tracking Agreement.
9.5. SPECIAL AFFIRMATIVE COVENANTS CONCERNING REO PROPERTIES
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other Loan
Document, Borrower must:
9.5 (a) Record in the appropriate recording office to perfect a Lien on
each REO Property against which a Warehousing Advance is outstanding on
an REO Mortgage with respect to such REO Property, including the
payment of all recording fees or taxes.
9.5 (b) Immediately upon execution thereof, deliver to Lender a copy of any
contract entered into by Borrower for the sale, transfer or other
disposition of an REO Property against which a Warehousing Advance has
been made.
9.5 (c) Instruct the purchaser of any REO Property and the closing agent
for any REO Property sale against which a Warehousing Advance has been
made to wire transfer the purchase proceeds for the REO Property to the
Cash Collateral Account.
9.6. SPECIAL NEGATIVE COVENANTS CONCERNING WAREHOUSING COLLATERAL
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:
9.6 (a) Amend or modify, or waive any of the terms and conditions of, or
settle or compromise any claim in respect of, any Pledged Loans or
Pledged Securities.
9.6 (b) Sell, transfer or assign, or grant any option with respect to, or
pledge (except under this Agreement and, with respect to each Pledged
Loan or Pledged Security, the related Purchase Commitment) any of the
Collateral or any interest in any of the Collateral.
Page 4
9.6 (c) Make any compromise, adjustment or settlement in respect of any of
the Collateral or accept other than cash in payment or liquidation of
the Collateral.
END OF ARTICLE 9
Page 5
DEFAULTS; REMEDIES
10.1. EVENTS OF DEFAULT
The occurrence of any of the following is an event of default ("Event of
Default"):
10.1 (a) Borrower fails to pay the principal of any Warehousing Advance when
due, whether at stated maturity, by acceleration, or otherwise; or
fails to pay any installment of interest on any Warehousing Advance
within 9 days after the date of Lender's invoice or, if applicable,
within 2 days after the date of Lender's account analysis statement; or
fails to pay, within any applicable grace period, any other amount due
under this Agreement or any other Obligation of Borrower to Lender.
10.1 (b) Borrower or any of its Subsidiaries fails to pay, or defaults in
the payment of any principal or interest on, any other indebtedness or
any contingent obligation within any applicable grace period; breaches
or defaults with respect to any other material term of any other
indebtedness or of any loan agreement, mortgage, indenture or other
agreement relating to that indebtedness, if the effect of that breach
or default is to cause, or to permit the holder or holders of that
indebtedness (or a trustee on behalf of such holder or holders) to
cause, indebtedness of Borrower or its Subsidiaries in the aggregate
amount of $50,000 or more to become or be declared due before its
stated maturity (upon the giving or receiving of notice, lapse of time,
both, or otherwise).
10.1 (c) Borrower fails to perform or comply with any term or condition
applicable to it contained in Sections 7.4 or 7.14 or in any Section of
Article 8.
10.1 (d) Any representation or warranty made or deemed made by Borrower
under this Agreement, in any other Loan Document or in any written
statement or certificate at any time given by Borrower is inaccurate or
incomplete in any material respect on the date as of which it is made
or deemed made.
10.1 (e) Borrower defaults in the performance of or compliance with any term
contained in this Agreement or any other Loan Document other than those
referred to in Sections 10.1 (a), 10.1 (c) or 10.1 (d) and such default
has not been remedied or waived within 30 days after the earliest of
(1) receipt by Borrower of Notice from Lender of that default, (2)
receipt by Lender of Notice from Borrower of that default or (3) the
date Borrower should have notified Lender of that default under Section
7.7(c) or 7.7(d).
10.1 (f) An "event of default" (however defined) occurs under any agreement
between Borrower and Lender other than this Agreement and the other
Loan Documents.
10.1 (g) A case (whether voluntary or involuntary) is filed by or against
Borrower or any Subsidiary of Borrower under any applicable bankruptcy,
insolvency or other similar federal or state law; or a court of
competent jurisdiction appoints a receiver (interim or permanent),
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Borrower or any Subsidiary of Borrower, or over all
or a substantial part of their respective properties or assets; or
Borrower or any Subsidiary of Borrower (1) consents to the appointment
of or possession by a receiver (interim or permanent), liquidator,
sequestrator, trustee, custodian or other officer having similar powers
over Borrower or any Subsidiary of Borrower , or over all or a
substantial part of their respective properties or assets, (2) makes an
assignment for the benefit of creditors, or (3) fails, or admits in
writing its inability, to pay its debts as those debts become due.
Page 1
10.1 (h) Borrower fails to perform any contractual obligation to repurchase
Mortgage Loans, if such obligations in the aggregate exceed $500,000.
10.1 (i) Any money judgment, writ or warrant of attachment or similar
process involving in an amount in excess of $250,000 is entered or
filed against Borrower or any of its Subsidiaries or any of their
respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of 30 days or 5 days before the date of any
proposed sale under that money judgment, writ or warrant of attachment
or similar process.
10.1 (j) Any order, judgment or decree decreeing the dissolution of Borrower
is entered and remains undischarged or unstayed for a period of 20
days.
10.1 (k) Borrower purports to disavow the Obligations or contests the
validity or enforceability of any Loan Document.
10.1 (l) Lender's security interest on any portion of the Collateral becomes
unenforceable or otherwise impaired.
10.1 (m) A material adverse change occurs in Borrower's financial condition,
business, properties, operations or prospects, or in Borrower's ability
to repay the Obligations.
10.1 (n) Any Lien for any taxes, assessments or other governmental charges
(1) is filed against Borrower or any of its property, or is otherwise
enforced against Borrower or any of its property, or (2) obtains
priority that is equal to greater than the priority of Lender's
security interest in any of the Collateral.
10.1 (o) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ceases to be the Chief Executive Officer of Oak
Street LLC unless a substitute reasonably acceptable to Lender has been
elected within 90 days thereafter; or
10.1 (p) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ceases to be the Managing Member of Oak Street LLC
unless a substitute reasonably acceptable to Lender has been elected
within 90 days thereafter; or
10.1 (q) ▇▇▇▇▇ Royal ceases to be the Chief Financial Officer of Oak Street
LLC unless a substitute reasonably acceptable to Lender has been
elected within 90 days thereafter; or
10.1 (r) ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a ▇▇▇▇▇▇ family trust,
▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Sotseks Corp. or any heirs of the foregoing who
are individuals, collectively, cease to own, directly or indirectly, a
majority of the Equity Interests of Borrower.
10.2. REMEDIES
10.2 (a) If an Event of Default described in Section 10.1 (g) occurs with
respect to Borrower, the Warehousing Commitment will automatically
terminate and the unpaid principal amount of and accrued interest on
the Warehousing Note, the Sublimit Note and all other Obligations will
automatically become due and payable, without presentment, demand or
other Notice or requirements of any kind, all of which Borrower
expressly waives.
10.2 (b) If any other Event of Default occurs, Lender may, by Notice to
Borrower, terminate the Warehousing Commitment and declare the
Obligations to be immediately due and payable.
10.2 (c) If any Event of Default occurs, Lender may also take any of the
following actions:
Page 2
(1) Foreclose upon or otherwise enforce its security interest in
any Lien on the Collateral to secure all payments and performance of
the Obligations in any manner permitted by law or provided for in the
Loan Documents.
(2) Notify all obligors under any of the Collateral that the
Collateral has been assigned to Lender (or to another Person designated
by Lender) and that all payments on that Collateral are to be made
directly to Lender (or such other Person); settle, compromise or
release, in whole or in part, any amounts any obligor or Investor owes
on any of the Collateral on terms acceptable to Lender; enforce payment
and prosecute any action or proceeding involving any of the Collateral;
and where any Collateral is in default, foreclose on and enforce any
Liens securing that Collateral in any manner permitted by law and sell
any property acquired as a result of those enforcement actions.
(3) Prepare and submit for filing Uniform Commercial Code
amendment statements evidencing the assignment to Lender or its
designee of any Uniform Commercial Code financing statement filed in
connection with any item of Collateral.
(4) Act, or contract with a third party to act, at Borrower's
expense, as servicer or subservicer of Collateral requiring servicing,
and perform all obligations required under any Collateral, including
Servicing Contracts and Purchase Commitments.
(5) Require Borrower to assemble and make available to Lender the
Collateral and all related books and records at a place designated by
Lender.
(6) Enter onto property where any Collateral or related books and
records are located and take possession of those items with or without
judicial process; and obtain access to Borrower's data processing
equipment, computer hardware and software relating to the Collateral
and use all of the foregoing and the information contained in the
foregoing in any manner Lender deems necessary for the purpose of
effectuating its rights under this Agreement and any other Loan
Document.
(7) Before the disposition of the Collateral, prepare it for
disposition in any manner and to the extent Lender deems appropriate.
(8) Exercise all rights and remedies of a secured creditor under
the Uniform Commercial Code of Minnesota or other applicable law,
including selling or otherwise disposing of all or any portion of the
Collateral at one or more public or private sales, whether or not the
Collateral is present at the place of sale, for cash or credit or
future delivery, on terms and conditions and in the manner as Lender
may determine, including sale under any applicable Purchase Commitment.
Borrower waives any right it may have to prior notice of the sale of
all or any portion of the Collateral to the extent allowed by
applicable law. If notice is required under applicable law, Lender will
give Borrower not less than 10 days' notice of any public sale or of
the date after which any private sale may be held. Borrower agrees that
10 days' notice is reasonable notice. Lender may, without notice or
publication, adjourn any public or private sale one or more times by
announcement at the time and place fixed for the sale, and the sale may
be held at any time or place announced at the adjournment. In the case
of a sale of all or any portion of the Collateral on credit or for
future delivery, the Collateral sold on those terms may be retained by
Lender until the purchaser pays the selling price or takes possession
of the Collateral. Lender has no liability to Borrower if a purchaser
fails to pay for or take possession of Collateral sold on those terms,
and in the case of any such failure, Lender may sell the Collateral
again upon notice complying with this Section.
(9) Instead of or in conjunction with exercising the power of sale
authorized by Section (8), Lender may proceed by suit at law or in
equity to collect all amounts due on
Page 3
the Collateral, or to foreclose Lender's Lien on and sell all or any
portion of the Collateral pursuant to a judgment or decree of a court
of competent jurisdiction.
(10) Proceed against Borrower on the Warehousing Note and the
Sublimit Note.
(11) Retain all excess proceeds from the sale or other disposition
of the Collateral, and apply them to the payment of the Obligations
under Section 10.3.
10.2 (d) Lender will incur no liability as a result of the commercially
reasonable sale or other disposition of all or any portion of the
Collateral at any public or private sale or other disposition. Borrower
waives (to the extent permitted by law) any claims it may have against
Lender arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price
that Lender might have obtained at a public sale, or was less than the
aggregate amount of the outstanding Warehousing Advances, accrued and
unpaid interest on those Warehousing Advances, and unpaid fees, even if
Lender accepts the first offer received and does not offer the
Collateral to more than one offeree. Borrower agrees that any sale of
Collateral under the terms of a Purchase Commitment, or any other
disposition of Collateral arranged by Borrower, whether before or after
the occurrence of an Event of Default, will be deemed to have been made
in a commercially reasonable manner.
10.2 (e) Borrower acknowledges that Mortgage Loans are collateral of a type
that is the subject of widely distributed standard price quotations and
that Mortgage-backed Securities are collateral of a type that is
customarily sold on a recognized market. Borrower waives any right it
may have to prior notice of the sale of Pledged Securities, and agrees
that Lender may purchase Pledged Loans and Pledged Securities at a
private sale of such Collateral.
10.2 (f) Borrower specifically waives and releases (to the extent permitted
by law) any equity or right of redemption, stay or appraisal that
Borrower has or may have under any rule of law or statute now existing
or adopted after the date of this Agreement, and any right to require
Lender to (1) proceed against any Person, (2) proceed against or
exhaust any of the Collateral or pursue its rights and remedies against
the Collateral in any particular order, or (3) pursue any other remedy
within its power. Lender is not required to take any action to preserve
any rights of Borrower against holders of mortgages having priority to
the Lien of any Mortgage or Security Agreement included in the
Collateral or to preserve Borrower's rights against other prior
parties.
10.2 (g) Lender may, but is not obligated to, advance any sums or do any act
or thing necessary to uphold or enforce the Lien and priority of, or
the security intended to be afforded by, any Mortgage or Security
Agreement included in the Collateral, including payment of delinquent
taxes or assessments and insurance premiums. All advances, charges,
costs and expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by Lender in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement of
this Agreement, together with interest on those amounts at the Default
Rate, from the time paid by Lender until repaid by Borrower, are deemed
to be principal outstanding under this Agreement, the Warehousing Note
and the Sublimit Note.
10.2 (h) No failure or delay on the part of Lender to exercise any right,
power or remedy provided in this Agreement or under any other Loan
Document, at law or in equity, will operate as a waiver of that right,
power or remedy. No single or partial exercise by Lender of any right,
power or remedy provided under this Agreement or any other Loan
Document, at law or in equity, precludes any other or further exercise
of that right, power, or remedy by Lender, or Lender's exercise of any
other right, power or remedy. Without limiting the
Page 4
foregoing, Borrower waives all defenses based on the statute of
limitations to the extent permitted by law. The remedies provided in
this Agreement and the other Loan Documents are cumulative and are not
exclusive of any remedies provided at law or in equity.
10.2 (i) Borrower grants Lender a license or other right to use, without
charge, Borrower's computer programs, other programs, labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for
sale and selling any of the Collateral and Borrower's rights under all
licenses and all other agreements related to the foregoing inure to
Lender's benefit until the Obligations are paid in full.
10.3. APPLICATION OF PROCEEDS
Lender may apply the proceeds of any sale, disposition or other enforcement of
Lender's Lien on all or any portion of the Collateral to the payment of the
Obligations in the order Lender determines in its sole discretion. From and
after the indefeasible payment to Lender of all of the Obligations, any
remaining proceeds of the Collateral will be paid to Borrower, or to its
successors or assigns, or as a court of competent jurisdiction may direct. If
the proceeds of any sale, disposition or other enforcement of the Collateral are
insufficient to cover the costs and expenses of that sale, disposition or other
enforcement and payment in full of all Obligations, Borrower is liable for the
deficiency.
10.4. LENDER APPOINTED ATTORNEY-IN-FACT
Borrower appoints Lender its attorney-in-fact, with full power of substitution,
for the purpose of carrying out the provisions of this Agreement, the
Warehousing Note, the Sublimit Note and the other Loan Documents and taking any
action and executing any instruments that Lender deems necessary or advisable to
accomplish that purpose. Borrower's appointment of Lender as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, Lender may give notice of its Lien on the Collateral to any Person,
either in Borrower's name or in its own name, endorse all Pledged Loans or
Pledged Securities payable to the order of Borrower, change or cause to be
changed the book-entry registration or name of subscriber or Investor on any
Pledged Security, prepare and submit for filing Uniform Commercial Code
amendment statements with respect to any Uniform Commercial Code financing
statements filed in connection with any item of Collateral or receive, endorse
and collect all checks made payable to the order of Borrower representing
payment on account of the principal of or interest on, or the proceeds of sale
of, any of the Pledged Loans or Pledged Securities and give full discharge for
those transactions.
10.5. RIGHT OF SET-OFF
If Borrower defaults in the payment of any Obligation or in the performance of
any of its duties under the Loan Documents, Lender may, without Notice to or
demand on Borrower (which Notice or demand Borrower expressly waives), set-off,
appropriate or apply any property of Borrower held at any time by Lender, or any
indebtedness at any time owed by Lender to or for the account of Borrower,
against the Obligations, whether or not those Obligations have matured.
END OF ARTICLE 10
Page 5
MISCELLANEOUS
11.1. NOTICES
Except where telephonic or facsimile notice is expressly authorized by this
Agreement, all communications required or permitted to be given or made under
this Agreement ("Notices") must be in writing and must be sent by manual
delivery, overnight courier or United States mail (postage prepaid), addressed
as follows (or at such other address as may be designated by it in a Notice to
the other):
If to Borrower: Oak Street Mortgage LLC
Oak Street Mortgage of Tennessee LLC
Oak Street Mortgage, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Royal, CFO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: Residential Funding Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Director
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All periods of Notice will be measured from the date of delivery if delivered
manually or by facsimile, from the first Business Day after the date of sending
if sent by overnight courier or from 4 days after the date of mailing if sent by
United States mail, except that Notices to Lender under Article 2 and Section
3.3 (f) shall be deemed to have been given only when actually received by
Lender. Borrower authorizes Lender to accept Borrower's bailee pledge
agreements, Warehousing Advance Requests, shipping requests, wire transfer
instructions and security delivery instructions transmitted to Lender by
facsimile or RFConnects Delivery, and those documents, when transmitted to
Lender by facsimile or by RFConnects Delivery, have the same force and effect as
the originals.
11.2. REIMBURSEMENT OF EXPENSES; INDEMNITY
Borrower must: (a) pay Lender a document production fee in connection with the
preparation and negotiation of this Agreement; (b) pay such additional
documentation production fees as Lender may require and all out-of-pocket costs
and expenses of Lender, including reasonable fees, service charges and
disbursements of counsel to Lender (including allocated costs of internal
counsel), in connection with the amendment, enforcement and administration of
this Agreement, the Warehousing Note, the Sublimit Note and other Loan Documents
and the making, repayment and payment of interest on the Warehousing Advances;
(c) indemnify, pay, and hold harmless Lender and any other holder of the
Warehousing Note and the Sublimit Note from and against, all present and future
stamp, documentary and other similar taxes with respect to the foregoing matters
and save Lender and any other holder of the Warehousing Note and the Sublimit
Note harmless from and against all liabilities with respect to or resulting from
any delay or omission to pay such taxes; and (d) indemnify, pay and hold
harmless Lender and all of its Affiliates, officers, directors, employees or
agents and any subsequent holder of the Warehousing Note and the Sublimit Note
(collectively called the "Indemnitees") from and against all liabilities,
obligations, losses, damages, penalties, judgments, suits, costs, expenses and
disbursements of every kind or nature (including the reasonable fees and
disbursements of counsel to the Indemnitees (including allocated costs of
internal counsel) in connection with any investigative, administrative
Page 1
or judicial proceeding, whether or not the Indemnitees have been designated as
parties to such proceeding) that may be imposed upon, incurred by or asserted
against such Indemnitees in any manner relating to or arising out of this
Agreement, the Warehousing Note, the Sublimit Note or any other Loan Document or
any of the transactions contemplated by this Agreement, the Warehousing Note,
the Sublimit Note and the other Loan Documents ("Indemnified Liabilities"),
except that Borrower has no obligation under this Agreement with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of any such Indemnitees. To the extent that the undertaking to indemnify, pay
and hold harmless as set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, Borrower must contribute
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them. The agreement of Borrower contained in this Article
survives the expiration or termination of this Agreement and the payment in full
of the Warehousing Note and the Sublimit Note. Attorneys' fees and disbursements
incurred in enforcing, or on appeal from, a judgment under this Agreement are
recoverable separately from and in addition to any other amount included in such
judgment, and this clause is intended to be severable from the other provisions
of this Agreement and to survive and not be merged into such judgment.
11.3. FINANCIAL INFORMATION
All financial statements and reports furnished to Lender under this Agreement
must be prepared in accordance with GAAP (except for the implementation of FASB
91) applied on a basis consistent with that applied in preparing the financial
statements as at the end of and for Borrower's most recent fiscal year (except
to the extent otherwise required to conform to good accounting practice). Lender
acknowledges and consents to the fact that Borrower has not and does not intend
to implement FASB 91 for its own account; notwithstanding, Borrower must report
to Lender, as a line item within the financial statements and compliance
certificate due each month under Section 7.2, an adjustment to reflect the
impact that FASB 91 would have on such financial statements.
11.4. TERMS BINDING UPON SUCCESSORS; SURVIVAL OF REPRESENTATIONS
The terms and provisions of this Agreement are binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns. All of
Borrower's representations, warranties, covenants and agreements survive the
making of any Warehousing Advance, and except where a longer period is set forth
in this Agreement, remain effective for as long as the Warehousing Commitment is
outstanding or there remain any Obligations to be paid or performed.
11.5. ASSIGNMENT
Borrower cannot assign this Agreement. Lender may at any time, without Notice to
or the consent of Borrower, transfer or assign, in whole or in part, its
interest in this Agreement, the Warehousing Note and the Sublimit Note along
with Lender's security interest in any of the Collateral, and any assignee of
Lender may enforce this Agreement, the Warehousing Note, the Sublimit Note and
its security interest in the Collateral assigned.
11.6. AMENDMENTS
Except as otherwise provided in this Agreement, this Agreement may not be
amended, modified or supplemented unless the amendment, modification or
supplement is set forth in a writing signed by both Borrower and Lender.
Page 2
11.7. GOVERNING LAW
This Agreement and the other Loan Documents are governed by the laws of the
State of Minnesota, without reference to its principles of conflicts of laws.
11.8. PARTICIPATIONS
Lender may at any time sell, assign or grant participations in, or otherwise
transfer to any other Person ("Participant"), all or part of the Obligations.
Without limiting Lender's exclusive right to collect and enforce the
Obligations, Borrower agrees that each participation will give rise to a
debtor-creditor relationship between Borrower and the Participant, and Borrower
authorizes each Participant, upon the occurrence of an Event of Default, to
proceed directly by right of setoff, banker's lien, or otherwise, against any
assets of Borrower that may be held by that Participant. Borrower authorizes
Lender to disclose to prospective and actual Participants all information in
Lender's possession concerning Borrower, this Agreement and the Collateral.
11.9. RELATIONSHIP OF THE PARTIES
This Agreement provides for the making and repayment of Warehousing Advances by
Lender (in its capacity as a lender) and Borrower (in its capacity as a
borrower), for the payment of interest on those Warehousing Advances and for the
payment of certain fees by Borrower to Lender. The relationship between Lender
and Borrower is limited to that of creditor and secured party on the part of
Lender and of debtor on the part of Borrower. The provisions of this Agreement
and the other Loan Documents for compliance with financial covenants and the
delivery of financial statements and other operating reports are intended solely
for the benefit of Lender to protect its interest as a creditor and secured
party. Nothing in this Agreement creates or may be construed as permitting or
obligating Lender to act as a financial or business advisor or consultant to
Borrower, as permitting or obligating Lender to control Borrower or to conduct
Borrower's operations, as creating any fiduciary obligation on the part of
Lender to Borrower, or as creating any joint venture, agency, partnership or
other relationship between Lender and Borrower other than as explicitly and
specifically stated in the Loan Documents. Borrower acknowledges that it has had
the opportunity to obtain the advice of experienced counsel of its own choice in
connection with the negotiation and execution of the Loan Documents and to
obtain the advice of that counsel with respect to all matters contained in the
Loan Documents, including the waivers of jury trial and of punitive,
consequential, special or indirect damages contained in Sections 11.15 and
11.16, respectively. Borrower further acknowledges that it is experienced with
respect to financial and credit matters and has made its own independent
decisions to apply to Lender for credit and to execute and deliver this
Agreement.
11.10. SEVERABILITY
If any provision of this Agreement is declared to be illegal or unenforceable in
any respect, that provision is null and void and of no force and effect to the
extent of the illegality or unenforceability, and does not affect the validity
or enforceability of any other provision of the Agreement.
11.11. CONSENT TO CREDIT REFERENCES
Borrower consents to the disclosure of information regarding Borrower and its
Subsidiaries and their relationships with Lender to Persons making credit
inquiries to Lender. This consent is revocable by Borrower at any time upon
Notice to Lender as provided in Section 11.1.
Page 3
11.12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which will
be deemed an original, but all of which together constitute but one and the same
instrument.
11.13. ENTIRE AGREEMENT
This Agreement, the Warehousing Note, the Sublimit Note and the other Loan
Documents represent the final agreement among the parties with respect to their
subject matter, and may not be contradicted by evidence of prior or
contemporaneous oral agreements among the parties. There are no oral agreements
among the parties with respect to the subject matter of this Agreement, the
Warehousing Note, the Sublimit Note and the other Loan Documents.
11.14. CONSENT TO JURISDICTION
AT THE OPTION OF LENDER, THIS AGREEMENT, THE WAREHOUSING NOTE, THE SUBLIMIT NOTE
AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT
WITHIN THE STATE OF MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION AND VENUE
OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION OR VENUE OF THOSE
COURTS, INCLUDING THE OBJECTION THAT VENUE IN THOSE COURTS IS NOT CONVENIENT.
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE
OF PROCESS UPON BORROWER BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER.
BORROWER'S CONSENT AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER'S
RIGHT TO ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, LENDER AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR
FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE BORROWER'S ACTION DISMISSED WITHOUT
PREJUDICE.
11.15. WAIVER OF JURY TRIAL
BORROWER AND LENDER EACH PROMISES AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO
THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR ARISES AFTER THE DATE OF THIS
AGREEMENT. THIS WAIVER OF THE RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD
OTHERWISE APPLY. LENDER AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT
THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
TRIAL BY JURY. FURTHER, BORROWER AND LENDER EACH CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY'S COUNSEL,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS
THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY
JURY.
Page 4
11.16. WAIVER OF PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL
OR INDIRECT DAMAGES FROM LENDER OR ANY OF LENDER'S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY BORROWER AGAINST LENDER
OR ANY OF LENDER'S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY BORROWER, AND
IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE APPLY.
LENDER IS AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES.
END OF ARTICLE 11
Page 5
DEFINITIONS
12.1. DEFINED TERMS
Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms in
Exhibits to this Agreement:
"Advance Rate" means, with respect to any Eligible Loan and REO Property, the
Advance Rate set forth in Exhibit H for that type of Eligible Loan or REO
Property.
"Affiliate" means, when used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person that beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting Equity Interests of
the Person referred to, (c) each Person, 5% or more of the voting Equity
Interests of which is beneficially owned or held, directly or indirectly, by the
Person referred to, and (d) each of such Person's officers, directors, joint
venturers and partners. For these purposes, the term "control" (including the
terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of the Person in question.
"Aged Mortgage Loans" means Mortgage Loans against which a Warehousing Advance
has been outstanding for longer than the Standard Warehouse Period, provided
that Aged Mortgage Loans are permitted for such type of Mortgage Loan.
"Aged Warehouse Period" means the maximum number of days a Warehouse Advance
against Aged Mortgage Loans of a particular type may remaining outstanding.
"Agency Security" means a Mortgage-backed Security issued or guaranteed by
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae.
"Agreement" means this First Amended and Restated Warehousing Credit and
Security Agreement, either as originally executed or as it may be amended,
restated, renewed or replaced.
"Appraised Property Value" means with respect to an interest in real property,
the then current fair market value of the real property and any improvements on
it as of recent date determined in accordance with Title XI of FIRREA by a
qualified appraiser who is a member of the American Institute of Real Estate
Appraisers or other group of professional appraisers.
"Approved Custodian" means a pool custodian or other Person that Lender deems
acceptable, in its sole discretion, to hold Mortgage Loans for inclusion in a
Mortgage Pool or to hold Mortgage Loans as agent for an Investor that has issued
a Purchase Commitment for those Mortgage Loans.
"Audited Statement Date" means the date of Borrower's most recent audited
financial statements (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under the Existing Agreement or this
Agreement.
"Bank One" means Bank One, National Association, or any successor bank.
"Bank One Prime Rate" means, as of any date of determination, the highest prime
rate quoted by Bank One and most recently published by Bloomberg L.P. If the
prime rate for Bank One is not quoted or published for any period, then during
that period the term "Bank One Prime Rate"
Page 1
means the highest prime rate published in the most recent edition of The Wall
Street Journal in its regular column entitled "Money Rates."
"Borrower" has the meaning set forth in the first paragraph of this Agreement.
"BPO Value" means, with respect to the improved real property securing any
Mortgage Loan, the lowest fair market value for such real property or ownership
interest and occupancy rights as set forth in an opinion of a real estate broker
acceptable to Lender, in its sole discretion, as to the value of such improved
real property if sold within a 60-day marketing period. Each such broker price
opinion must be obtained from a real estate broker with substantial experience
in the purchase and sale of similar properties in the geographic area in which
the real property or ownership interest and occupancy rights to be valued is
located and should be as of a date not more than 30 days prior to the date of
the related Advance.
"Business Day" means any day other than Saturday, Sunday or any other day on
which national banking associations are closed for business.
"Buydown" has the meaning set forth in Section 3.4.
"Calendar Quarter" means the 3 month period beginning on each January 1, April
1, July 1 or October 1.
"Cash Collateral Account" means a demand deposit account maintained at the
Funding Bank in Lender's name and designated for receipt of the proceeds of the
sale or other disposition of Collateral.
"Check Disbursement Account" means a demand deposit account maintained at the
Funding Bank in Borrower's name and under the control of Lender for clearing
checks written by Borrower to fund Mortgage Loans funded by Warehousing
Advances.
"Closing Date" has the meaning set forth in the Recitals to this Agreement.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Documents" means, with respect to each Mortgage Loan, (a) the
Mortgage Note, the Mortgage and all other documents including, if applicable,
any Security Agreement, executed in connection with or relating to the Mortgage
Loan; (b) as applicable, the original lender's ALTA Policy of Title Insurance or
its equivalent, documents evidencing the FHA Commitment to Insure, the VA
Guaranty or private mortgage insurance, the appraisal, the Regulation Z
statement, the environmental assessment, the engineering report, certificates of
casualty or hazard insurance, credit information on the maker of the Mortgage
Note, the HUD-1 or corresponding purchase advice; (c) any other document listed
in Exhibit B; and (d) any other document that is customarily desired for
inspection or transfer incidental to the purchase of any Mortgage Note by an
Investor or that is customarily executed by the seller of a Mortgage Note to an
Investor.
"Committed Purchase Price" means for an Eligible Loan (a) the dollar price as
set forth in the Purchase Commitment or, if the price is not expressed in
dollars, the product of the Mortgage Note Amount multiplied by the price
(expressed as a percentage) as set forth in the Purchase Commitment for the
Eligible Loan, or (b) if the Eligible Loan is to be used to back an Agency
Security, the dollar price as set forth in a Purchase Commitment or, if the
price is not expressed in dollars the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in the Purchase
Commitment for the Agency Security.
"Compliance Certificate" means a certificate executed on behalf of Borrower by
its manager having principal financial accounting responsibilities,
substantially in the form of Exhibit E.
Page 2
"Credit Score" means a mortgagor's overall consumer credit rating, represented
by a single numeric credit score using the Fair, ▇▇▇▇▇ consumer credit scoring
system, provided by a credit repository acceptable to Lender and the Investor
that issued the Purchase Commitment covering the related Mortgage Loan (if a
Purchase Commitment is required by Exhibit H).
"Current Assets" means a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) assets that in the regular course of
business will be readily and quickly realized, or converted into cash, all in
accordance with GAAP, within 1 year, together with those additional assets that
may readily be converted into cash without impairing the business of Borrower.
Current Assets include (a) cash, (b) temporary investments, (c) Mortgage Loans
and Mortgage-backed Securities held for sale (net of any loan loss reserves),
(d) accounts and accrued interest receivable (net of allowance for doubtful
accounts) and (e) servicing advances made on behalf of mortgagors, but exclude
(x) loans and advances to or receivables due from managers, members, employees
or Affiliates, (y) all deferred assets, other than prepaid items for insurance,
taxes and rents and (z) any properties or assets located outside the continental
United States and Canada.
"Current Liabilities" means a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) liabilities, or any portion of a Person's
liabilities, the maturity of which will not extend beyond 1 year from the date
of determination.
"Current Ratio" means the ratio of a Person's Current Assets to Current
Liabilities.
"Daily Outstanding Balances" has the meaning set forth in Section 3.11.
"Debt" means (a) all indebtedness or other obligations of a Person that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of the Person on the date of
determination, plus (b) all indebtedness or other obligations of the Person for
borrowed money or for the deferred purchase price of property or services. For
purposes of calculating a Person's Debt, Subordinated Debt not due within 1 year
of that date and deferred taxes arising from capitalized excess servicing fees
and capitalized servicing rights may be excluded from a Person's indebtedness.
"Default" means the occurrence of any event or existence of any condition that,
but for the giving of Notice or the lapse of time, would constitute an Event of
Default.
"Default Rate" means, for any Warehousing Advance, the Interest Rate applicable
to that Warehousing Advance plus 4% per annum. If no Interest Rate is applicable
to a Warehousing Advance, "Default Rate" means, for that Warehousing Advance,
the highest Interest Rate then applicable to any outstanding Warehousing Advance
plus 4% per annum.
"Depository Benefit" means the compensation received by Lender, directly or
indirectly, as a result of Borrower's maintenance of Eligible Balances with a
Designated Bank.
"Designated Bank" means any bank designated by Lender as a Designated Bank, but
only for as long as Lender has an agreement under which Lender receives
Depository Benefits from that bank.
"Designated Bank Charges" means any fees, interest or other charges that would
otherwise be payable to a Designated Bank in connection with Eligible Balances
maintained at the Designated Bank, including deposit insurance premiums, service
charges and any other charges that may be imposed by governmental authorities
from time to time.
"Discontinued Loan" has the meaning set forth in the GMAC-RFC Client Guide.
Page 3
"Earnings Allowance " has the meaning set forth in Section 3.1(b).
"Earnings Credit " has the meaning set forth in Section 3.1(b).
"Electronic Advance Request" means an electronic transmission through RFConnects
Delivery containing the same information as Exhibit A to this Agreement.
"Electronic Tracking Agreement" means an Electronic Tracking Agreement, on the
form prescribed by Lender, among Borrower, Lender, MERS and MERCORP, Inc.,
pursuant to which Lender will have the authority to, among other things,
withdraw a Mortgage from the MERS system, if either the Mortgage Loan has been
registered on the MERS system naming Borrower as servicer or subservicer, or the
Mortgage Loan has not yet been registered on the MERS system.
"Eligible Balances" means all funds of or maintained by Borrower (and, if
applicable, Borrower's Subsidiaries) in demand deposit or time deposit accounts
at a Designated Bank, minus balances to support float, reserve requirements and
any other reductions that may be imposed by governmental authorities from time
to time.
"Eligible Loan" means a Single Family Mortgage Loan that satisfies the
conditions and requirements set forth in Exhibit H.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an Approved
Custodian has issued its initial certification, (b) there exists a Purchase
Commitment covering the Agency Security to be issued on the basis of that
certification and (c) the Agency Security will be delivered to Lender.
"Equity Interests" means all shares, interests, participations or other
equivalents, however, designated, of or in a Person (other than a natural
person), whether or not voting, including common stock, membership interests,
warrants, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that
is a member of a group of which Borrower is a member and that is treated as a
single employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any of the conditions or events set forth in Section
10.1.
"Excess Buydown" has the meaning set forth in Section 3.4.
"Excess Usage Day" has the meaning set forth in Section 3.11.
"Excess Usage Fee" has the meaning set forth in Section 3.11.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Exhibit B" means Exhibit B-SF or Exhibit B-REP/NP/REO, as applicable to the
type of Eligible Loan or REO Property against which a Warehousing Advance is to
be made.
Page 4
"Existing Agreement" means the Warehousing Credit and Security Agreement dated
as of June 30, 2000, as amended, between Oak Street Mortgage LLC f/k/a Cresleigh
Financial Services LLC and Lender.
"Fair Market Value" means, at any time for an Eligible Loan or a related Agency
Security (if the Eligible Loan is to be used to back an Agency Security) as of
any date of determination, (a) the Committed Purchase Price if the Eligible Loan
is covered by a Purchase Commitment from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac or the
Eligible Loan is to be exchanged for an Agency Security and that Agency Security
is covered by a Purchase Commitment from an Investor, or (b) otherwise, the
market price for such Eligible Loan or Agency Security, determined by Lender
based on market data for similar Mortgage Loans or Agency Securities and such
other criteria as Lender deems appropriate in its sole discretion.
"▇▇▇▇▇▇ Mae" means ▇▇▇▇▇▇ ▇▇▇, a corporation created under the laws of the
United States, and any successor corporation or other entity.
"FHA" means the Federal Housing Administration and any successor agency or other
entity.
"FICA" means the Federal Insurance Contributions Act and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 and all rules and regulations promulgated under that statute, as
amended, and any successor statute, rules, and regulations.
"First Mortgage" means a Mortgage that constitutes a first Lien on the real
property covered by the Mortgage.
"First Mortgage Loan" means a Mortgage Loan secured by a First Mortgage.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, a corporation created under the laws of the
United States, and any successor corporation or other entity.
"Funding Bank" means Bank One or any other bank designated by Lender as a
Funding Bank.
"Funding Bank Agreement" means a letter agreement on the form prescribed by
Lender between the Funding Bank and Borrower authorizing Lender's access to the
Operating Account and the Check Disbursement Account.
"GAAP" means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or
pronouncements of any other entity approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Gestation Agreement" means an agreement under which Borrower agrees to sell or
finance (a) a Mortgage Loan prior to the date of purchase by an Investor or (b)
a Mortgage Pool prior to the date a Mortgage-backed Security backed by the
Mortgage Pool is issued.
"▇▇▇▇▇▇ Mae" means the Government National Mortgage Association, an agency of
the United States government, and any successor agency or other entity.
"GMAC-RFC Client Guide" means the applicable loan purchase guide issued by
Lender, as the same may be amended or replaced.
Page 5
"Government Mortgage Loan" means a closed-end First Mortgage Loan that is either
HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a Title I Mortgage
Loan) or VA guaranteed.
"Hedging Arrangements" means, with respect to any Person, any agreements or
other arrangements (including interest rate swap agreements, interest rate cap
agreements and forward sale agreements) entered into to protect that Person
against changes in interest rates or the market value of assets.
"High LTV Mortgage Loan" has the meaning set forth in Exhibit H.
"HUD" means the Department of Housing and Urban Development, and any successor
agency or other entity.
"Indemnified Liabilities" has the meaning set forth in Section 11.2.
"Indemnitees" has the meaning set forth in Section 11.2.
"Interest Rate" means, for any Warehousing Advance, the floating rate of
interest specified for that Warehousing Advance in Exhibit H.
"Interim Statement Date" means the date of the most recent unaudited financial
statements of Borrower (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under the Existing Agreement or this
Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, Title 26 of the
United States Code, and all rules, regulations and interpretations issued under
those statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.
"Investment Company Act" means the Investment Company Act of 1940 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Investor" means ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or a financially responsible private
institution that Lender deems acceptable, in its sole discretion, to issue
Purchase Commitments with respect to a particular category of Eligible Loans.
"Lender" has the meaning set forth in the first paragraph of this Agreement.
"Leverage Ratio" means the ratio of a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) Debt to Tangible Net Worth. For purposes
of calculating a Person's Leverage Ratio, Debt arising under Hedging
Arrangements, to the extent of assets arising under those Hedging Arrangements,
may be excluded from a Person's Debt.
"LIBOR" means, for each week, the rate of interest per annum that is equal to
the arithmetic mean of the U.S. Dollar London Interbank Offered Rates for 1
month periods of certain U.S. banks as of 11:00 a.m. (London time) on the first
Business Day of each week on which the London Interbank market is open, as
published by Bloomberg L.P. If those interest rates are not offered or published
for any period, then during that period LIBOR means the London Interbank Offered
Rate for 1 month periods as published in The Wall Street Journal in its regular
column entitled "Money Rates" on the first Business Day of each week on which
the London Interbank market is open.
Page 6
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature of such an agreement and any
agreement to give any security interest).
"Liquid Assets" means the following assets owned by a Person (and, if
applicable, that Person's Subsidiaries, on a consolidated basis) as of any date
of determination: (a) unrestricted and unencumbered cash, (b) funds on deposit
in accounts with any bank located in the United States (net of the aggregate
amount payable under all outstanding and unpaid checks, drafts and similar items
drawn by a Person against those accounts), (c) investment grade commercial
paper, (d) money market funds and (e) marketable securities, plus, in the case
of Borrower and in the absence of a Default or Event of Default, (f) the amount
of any Buydowns and Excess Buydowns.
"Loan Documents" means this Agreement, the Warehousing Note, the Sublimit Note,
any agreement of Borrower relating to Subordinated Debt, any Security Agreement,
if applicable, and each other document, instrument or agreement executed by
Borrower in connection with any of those documents, instruments and agreements,
as originally executed or as any of the same may be amended, restated, renewed
or replaced.
"Loan Package Fee " has the meaning set forth in Section 3.5.
"Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a) the maximum
amount that may be borrowed under the Mortgage Loan (whether or not borrowed) at
the time of origination, plus the Mortgage Note Amounts of all other Mortgage
Loans secured by the related Property, to (b) the Appraised Property Value of
the related Property.
"Manufactured Home" means a structure that is built on a permanent chassis
(steel frame) with the wheel assembly necessary for transportation in one or
more sections to a permanent site or semi-permanent site.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System, as amended.
"MERS" means Mortgage Electronic Registrations Systems, Inc. and any successor
entity.
"Miscellaneous Fees and Charges" means the miscellaneous fees set forth on
Lender's collateral operations fees schedule (either as originally delivered to
Borrower or as it may be amended, restated, renewed or replaced after the date
of this Agreement) and all miscellaneous disbursements, charges and expenses
incurred by or on behalf of Lender for the handling and administration of
Warehousing Advances and Collateral, including costs for Uniform Commercial
Code, tax lien and judgment searches conducted by Lender, filing fees, charges
for wire transfers and check processing charges, charges for security delivery
fees, charges for overnight delivery of Collateral to Investors, recording fees
for REO Mortgages, Funding Bank service fees and overdraft charges and
Designated Bank Charges.
"Mortgage" means a mortgage or deed of trust on real property that is improved
and substantially completed (including real property to which a Manufactured
Home has been affixed in a manner such that the Lien of a mortgage or deed of
trust would attach to the Manufactured Home under applicable real property law).
"Mortgage-backed Securities" means securities that are secured or otherwise
backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured by a
Mortgage and, if applicable, a Security Agreement.
Page 7
"Mortgage Note" means a promissory note secured by one or more Mortgages and, if
applicable, one or more Security Agreements.
"Mortgage Note Amount" means, as of any date of determination, the then
outstanding and unpaid principal amount of a Mortgage Note (whether or not an
additional amount is available to be drawn under that Mortgage Note).
"Mortgage Pool" means a pool of one or more Pledged Loans on the basis of which
a Mortgage-backed Security is to be issued.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of Borrower
has any obligation with respect to its employees.
"Non-Usage Fee" has the meaning set forth in Section 3.6.
"Notices" has the meaning set forth in Section 11.1.
"Obligations" means all indebtedness, obligations and liabilities of Borrower to
Lender and Lender's Subsidiaries (whether now existing or arising after the date
of this Agreement, voluntary or involuntary, joint or several, direct or
indirect, absolute or contingent, liquidated or unliquidated, or decreased or
extinguished and later increased and however created or incurred), including
Borrower's obligations and liabilities to Lender under the Loan Documents and
disbursements made by Lender for Borrower's account.
"Operating Account" means a demand deposit account maintained at the Funding
Bank in Borrower's name and designated for funding that portion of each Eligible
Loan or REO Property not funded by a Warehousing Advance made against that
Eligible Loan or REO Property and for returning any excess payment from an
Investor for a Pledged Loan or Pledged Security.
"Overdraft Advance" has the meaning set forth in Section 3.9.
"Participant" has the meaning set forth in Section 11.8.
"Person" means and includes natural persons, corporations, limited liability
companies, limited liability partnerships, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions of those governments.
"Plan" means each employee benefit plan (whether in existence on the date of
this Agreement or established after that date), as that term is defined in
Section 3 of ERISA, maintained for the benefit of directors, officers or
employees of Borrower or any ERISA Affiliate.
"Pledged Assets" means, collectively, Pledged Loans, Pledged Securities, and REO
Properties.
"Pledged Hedging Accounts" has the meaning set forth in Section 4.1(i).
"Pledged Hedging Arrangements" has the meaning set forth in Section 4.1(i).
"Pledged Loans" has the meaning set forth in Section 4.1(b).
"Pledged Securities" has the meaning set forth in Section 4.1(c).
"Prime Mortgage Loan" has the meaning set forth in Exhibit H.
Page 8
"Prohibited Transaction" has the meanings set forth for such term in Section
4975 of the Internal Revenue Code and Section 406 of ERISA.
"Purchase Commitment" means a written commitment, in form and substance
satisfactory to Lender, issued in favor of Borrower by an Investor under which
that Investor commits to purchase Mortgage Loans or Mortgage-backed Securities.
"Receivables" has the meaning set forth in Section 4.1(e).
"Release Amount" has the meaning set forth in Section 4.3(f).
"REO Mortgage" means a First Mortgage in form and substance approved by Lender
covering an REO Property which has been executed and delivered by Borrower for
the benefit of Lender.
"REO Property" has the meaning set forth in Exhibit H.
"Repurchased Mortgage Loan" has the meaning set forth in Exhibit H.
"RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase Commitment
issued by Lender.
"RFConnects Delivery" means Lender's proprietary service to support the
electronic exchange of information between Lender and Borrower, including
Advance Requests, shipping requests, payoff requests, activity reports and
exception reports.
"RFConnects Pledge Agreement" means an agreement (on the then current form
prescribed by Lender) granting Lender a security interest in Mortgage Loans for
which Borrower has requested Warehousing Advances using RFConnects Delivery.
"Second Mortgage" means a Mortgage that constitutes a second Lien on the
property covered by the Mortgage.
"Second Mortgage Loan" means a Mortgage Loan secured by a Second Mortgage.
"Security Agreement" means a security agreement or other agreement that creates
a Lien on personal property, including furniture, fixtures and equipment, to
secure repayment of a Mortgage Loan.
"Servicing Contract" means, with respect to any Person, the arrangement, whether
or not in writing, under which that Person has the right to service Mortgage
Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal balance of
Mortgage Loans serviced by that Person under Servicing Contracts, minus the
principal balance of all Mortgage Loans that are serviced by that Person for
others under subservicing arrangements.
"Single Family Mortgage Loan" means a Mortgage Loan secured by a Mortgage on
improved real property on which is located a 1-to-4 family residence.
"Standard Warehouse Period" means, for any Mortgage Loan or REO Property, the
maximum number of days a Warehousing Advance against that type of Mortgage Loan
or REO Property, other than against an Aged Mortgage Loan, may remain
outstanding, as set forth in Exhibit H.
"Statement Date" means the Audited Statement Date or the Interim Statement Date,
as applicable.
Page 9
"Sublimit" means the aggregate amount of Warehousing Advances (expressed as a
dollar amount or as a percentage of the Warehousing Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of Eligible
Loan or REO Property.
"Sublimit Note" has the meaning set forth in Section 1.3.
"Subordinated Debt" means (a) all indebtedness of Borrower for borrowed money
that is effectively subordinated in right of payment to all present and future
Obligations either (1) under a Subordination of Debt Agreement on the form
prescribed by Lender or (2) otherwise on terms acceptable to Lender, and (b)
solely for purposes of Section 8.5, all indebtedness of Borrower that is
required to be subordinated by Sections 5.1 (b) and 7.11.
"Subprime Mortgage Loan" has the meaning set forth in Exhibit H.
"Subsidiary" means any corporation, partnership, association or other business
entity in which more than 50% of the shares of stock or other ownership
interests having voting power for the election of directors, managers, trustees
or other Persons performing similar functions is at the time owned or controlled
by any Person either directly or indirectly through one or more Subsidiaries of
that Person.
"Tangible Net Worth" means the excess of a Person's (and, if applicable, the
Person's Subsidiaries, on a consolidated basis) total assets over total
liabilities as of the date of determination, each determined in accordance with
GAAP (except for implementation of FASB 91, to the extent Borrower has not yet
implemented FASB 91), applied in a manner consistent with the most recent
audited financial statements delivered to Lender under the Existing Agreement,
plus that portion of Subordinated Debt not due within 1 year of that date. For
purposes of calculating a Person's Tangible Net Worth, advances or loans to
managers, members, employees or Affiliates, investments in Affiliates, assets
pledged to secure any liabilities not included in the Debt of the Person,
intangible assets, those other assets that would be deemed by HUD to be
non-acceptable in calculating adjusted net worth in accordance with its
requirements in effect as of that date, as those requirements appear
"Consolidated Audit Guide for Audits of HUD Programs," and other assets Lender
deems unacceptable, in its sole discretion, must be excluded from a Person's
total assets.
"Third Party Originated Loan" means a Mortgage Loan originated and funded by a
third party (other than with funds provided by Borrower at closing to purchase
the Mortgage Loan) and subsequently purchased by Borrower.
"Trust Receipt" means a trust receipt in a form approved by and under which
Lender may deliver any document relating to the Collateral to Borrower for
correction or completion.
"Usage Target" has the meaning set forth in Section 3.11.
"Unused Portion" has the meaning set forth in Section 3.6.
"Used Portion" has the meaning set forth in Section 3.6.
"Warehousing Advance" means a disbursement by Lender to fund the origination or
acquisition of a Mortgage Loan.
"Warehousing Advance Request" has the meaning set forth in Section 2.1.
"Warehousing Collateral Value" means, as of any date of determination, (a) with
respect to any Eligible Loan or REO Property, the lesser of (1) the amount of
any Warehousing Advance made, or that could be made, against such Eligible Loan
or REO Property under Exhibit H or (2) an
Page 10
amount equal to the Advance Rate for the applicable type of Eligible Loan or REO
Property multiplied by the Fair Market Value of such Eligible Loan or REO
Property; (b) if Eligible Loans or REO Properties have been exchanged for Agency
Securities, the lesser of (1) the amount of any Warehousing Advances outstanding
against the Eligible Loans or REO Properties backing the Agency Securities or
(2) an amount equal to the Advance Rates for the applicable types of Eligible
Loans backing the Agency Securities multiplied by the Fair Market Value of the
Agency Securities; and (c) with respect to cash, the amount of the cash.
"Warehousing Commitment" means the obligation of Lender to make Warehousing
Advances to Borrower under Section 1.1.
"Warehousing Commitment Amount" means $200,000,000.
"Warehousing Commitment Fee" has the meaning set forth in Section 3.5.
"Warehousing Fee" has the meaning set forth in Section 3.7.
"Warehousing Maturity Date" has the meaning set forth in Section 1.2.
"Warehousing Note" has the meaning set forth in Section 1.3.
"Wet Settlement Advance" means with respect to any Warehousing Advance, the time
from the date the Warehousing Advance is made until the date of Lender's receipt
of the Collateral Documents required by Article 2 and the Exhibits and documents
referenced in that Article.
"Wire Disbursement Account" means a demand deposit account maintained at the
Funding Bank in Lender's name for clearing wire transfers requested by Borrower
to fund Warehousing Advances.
"Wire Fee" has the meaning set forth in Section 3.7.
12.2. OTHER DEFINITIONAL PROVISIONS; TERMS OF CONSTRUCTION
12.2 (a) Accounting terms not otherwise defined in this Agreement have the
meanings given to those terms under GAAP.
12.2 (b) Defined terms may be used in the singular or the plural, as the
context requires.
12.2 (c) All references to time of day mean the then applicable time in
Chicago, Illinois, unless otherwise expressly provided.
12.2 (d) References to Sections, Exhibits, Schedules and like references are
to Sections, Exhibits, Schedules and the like of this Agreement unless
otherwise expressly provided.
12.2 (e) The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation."
12.2 (f) Unless the context in which it is used otherwise clearly requires,
the word "or" has the inclusive meaning represented by the phrase
"and/or."
12.2 (g) All incorporations by reference of provisions from other agreements
are incorporated as if such provisions were fully set forth into this
Agreement, and include all necessary definitions and related provisions
from those other agreements. All provisions from other agreements
incorporated into this Agreement by reference survive any termination
of
Page 11
those other agreements until the Obligations of Borrower under this
Agreement, the Warehousing Note and the Sublimit Note are irrevocably
paid in full and the Warehousing Commitment is terminated.
12.2 (h) All references to the Uniform Commercial Code shall be deemed to be
references to the Uniform Commercial Code in effect on the date of this
Agreement in the applicable jurisdiction.
12.2 (i) Unless the context in which it is used otherwise clearly requires,
all references to days, weeks and months mean calendar days, weeks and
months.
END OF ARTICLE 12
Page 12
EXHIBIT E
COMPLIANCE CERTIFICATE
This Compliance Certificate is submitted to the Lender pursuant to Section
7.2(c) of the First Amended and Restated Warehousing CREDIT and Security
Agreement among Oak Street Mortgage LLC ("Oak Street LLC"), OAK STREET MORTGAGE
OF TENNESSEE LLC ("Oak Street of TN") and OAK STREET MORTGAGE, INC. ("Oak Street
Inc.") (Oak Street LLC, Oak Street of TN and Oak Street Inc. are collectively
referred to as the "Borrowers") and RESIDENTIAL FUNDING CORPORATION ("Lender"),
dated as of August 31, 2002 (as amended, restated, renewed or replaced,
"Agreement"). Capitalized terms and Section numbers used in this Compliance
Certificate without further definition refer to those terms and Sections set
forth in the Agreement.
The undersigned hereby certifies to Lender that as of the close of business on ,
("Statement Date") and with respect to Oak Street LLC (and Oak Street LLC's
Subsidiaries on a consolidated basis):
20. As demonstrated by the attached calculations supporting this Compliance
Certificate, Borrowers satisfied the covenants set forth in Sections
8.8, 8.9, 8.10, 8.11 and 8.12 or, if Borrowers did not satisfy any of
those covenants, a detailed explanation is attached setting forth the
nature and the period of existence of any Default or Event of Default
and the action Borrowers have taken, are taking or propose to take with
respect to that Default or Event of Default.
21. Borrowers have not transferred (by sale or otherwise), pledged or
granted a security interest in any Servicing Contracts, except as
permitted under the terms of the Agreement.
22. Borrowers have not made any payments in advance of the scheduled
maturity date on any Subordinated Debt, and Borrowers have not incurred
any additional Debt that must be subordinated under the terms of
Section 7.11.
23. Borrowers were in full compliance with all applicable Investor net
worth requirements, and in good standing with each Investor.
24. I have reviewed the terms of the Agreement and have made, or caused to
be made under my supervision, a review in reasonable detail of the
transactions and conditions of Borrowers (and Borrowers' Subsidiaries).
That review has not disclosed, and I have no other knowledge of the
existence of, any Default or Event of Default, or if any Default or
Event of Default existed or exists, a detailed explanation is attached
setting forth the nature and the period of existence of the Default or
Event of Default and the action Borrowers have taken, are taking or
propose to take with respect to that Default or Event of Default.
25. Pursuant to Section 7.2 of the Agreement, enclosed are the financial
statements of Oak Street LLC as of the Statement Date. The financial
statements for the period ending on the Statement Date fairly present
the financial condition and results of operations of Oak Street LLC
(and Oak Street LLC's Subsidiaries on consolidated basis) as of the
Statement Date.
Dated:_______________________________ OAK STREET MORTGAGE LLC,
a Delaware limited liability company
By:_________________________________
Its:________________________________
Page 13
CALCULATIONS SUPPORTING COMPLIANCE CERTIFICATE
Borrower Name: Oak Street Mortgage LLC (and, if applicable, its Subsidiaries)
Statement Date: ____________________
All financial calculations set forth in this Compliance Certificate are as of
the Statement Date.
1. TANGIBLE NET WORTH
A. Net Worth of is:
Excess of total assets over total liabilities: $_________________________
Plus: Subordinated Debt (or any portion of that
Subordinated Debt) due (must be more
than 6 months after the Warehousing
Maturity Date): $_________________________
Minus: Advances or loans to or receivables due from,
members, managers or Affiliates or any
shareholder, director or officer of any manager,
member or Affiliate that Lender deems
intangible: $_________________________
Minus: Investments in Affiliates deemed intangible
by Lender: $_________________________
Minus: Assets pledged to secure liabilities not
included in Debt: $_________________________
Minus: Intangible assets: $_________________________
Minus: Other assets that HUD deems non-acceptable: $_________________________
Minus: Other assets that Lender deems unacceptable: $_________________________
TANGIBLE NET WORTH $_________________________
B. Minimum Tangible Net Worth of Oak Street LLC is:
(i) Base Minimum: $_________________________
(ii) 50% of positive net income for completed 6-month
period after taxes and distributions to members for
tax purposes for each 6-month period: $_________________________
New Minimum ((i) plus (ii)): $_________________________
C. Requirements of Section 8.9 of the Agreement:
Page ▇▇
▇▇▇ ▇▇▇▇▇▇ LLC'S TANGIBLE NET WORTH MUST BE AT LEAST
$10,000,000 PLUS 50% OF OAK STREET LLC'S NET INCOME AFTER
TAXES AND DISTRIBUTIONS TO MEMBERS FOR TAX PURPOSES, IF
POSITIVE, FOR EACH SIX-MONTH PERIOD ENDING ON JUNE 30 OR
DECEMBER 31 OF ANY YEAR. ADJUSTMENTS WILL OCCUR ON THE FIRST
BUSINESS DAY AFTER THE END OF EACH SIX-MONTH PERIOD.
D. COVENANT SATISFIED: _____ COVENANT NOT SATISFIED: _____
2. DEBT OF BORROWER
A. Borrower's total liabilities calculated in accordance with
GAAP, plus all indebtedness or other obligations for borrowed
money or for the deferred purchase price
of property or services: $_________________________
Minus: Subordinated Debt (or any portion of that
Subordinated Debt) due (must be more than
6 months after the Warehousing
Maturity Date): $_________________________
B. DEBT (Total): $_________________________
Minus: Debt arising under Hedging Arrangements
(to the extent of assets arising under those
Hedging Arrangements): $_________________________
C. DEBT (adjusted for Hedging Arrangements): $_________________________
3. LEVERAGE RATIO
A. The ratio of Debt (adjusted for Hedging Arrangements)
to Tangible Net Worth is (2.C. to 1.A.): __________ to 1
B. Requirements of Section 8.8 of the Agreement:
BORROWER'S leverage ratio MUST not exceed 20 to 1.
C. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
4. LIQUID ASSETS OF BORROWER
A. The following unrestricted and unencumbered assets:
Cash: $_________________________
Funds on deposit in any United States bank
(net of all outstanding checks, drafts and
similar items): $_________________________
Investment grade commercial paper: $_________________________
Money market funds: $_________________________
Page 15
Marketable securities: $_________________________
Buydown: $_________________________
Excess Buydown: $_________________________
B. LIQUID ASSETS $_________________________
Requirements of Section 8.11 of the Agreement:
borrower's LIQUID ASSETS must not be less than $5,000,000.
C. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
5. TRANSACTIONS WITH AFFILIATES
A. Loans, advances, and extensions of credit by
Borrower to its Affiliates during the current fiscal year: $_________________________
B. Capital contributions made by Borrower to
its Affiliates during the current fiscal year: $_________________________
C. Transfers, sales, pledges, assignments or other dispositions
of assets made by Borrower or
on behalf of its Affiliates: $_________________________
D. Management fees paid by Borrower to Affiliates
during the current fiscal year: $_________________________
E. Requirements of Section 8.12 of the Agreement:
(1) CONTRIBUTIONS BY OAK STREET LLC TO H&K COLLECTIONS
LLC MUST NOT EXCEED A LOAN IN THE AMOUNT OF
$1,000,000 AND A CAPITAL CONTRIBUTION IN THE AMOUNT
OF $700,000.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ___
(2) CONTRIBUTIONS BY OAK STREET LLC TO OAK STREET FUNDING
LLC MUST NOT EXCEED A CAPITAL CONTRIBUTION IN THE
AMOUNT OF $2,500,000.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ___
(3) BORROWER MAY NOT TRANSFER, SELL, PLEDGE, ASSIGN OR
MAKE ANY OTHER DISPOSITION OF ASSETS TO OR ON BEHALF
OF ITS AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ___
(4) BORROWER MAY NOT MERGE OR CONSOLIDATE WITH, OR
PURCHASE OR ACQUIRE ANY ASSETS FROM, ITS AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ___
(5) BORROWER MAY NOT PAY ANY MANAGEMENT FEES TO ITS
AFFILIATES.
Page 16
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ___
6. CURRENT RATIO
A. Current Assets:
Cash: $_________________________
Temporary investments: $_________________________
Mortgage Loans and Mortgage-backed Securities
held for sale (net of any loan loss reserves): $_________________________
Accounts and accrued interest receivable
(net of any allowance for doubtful accounts): $_________________________
Servicing advances made on behalf of mortgagors: $_________________________
Minus: Loans/advances to or receivables from
employees, officers or owners and
Affiliates: $_________________________
Minus: Deferred assets, other than prepaid
items for insurance, taxes and rent: $_________________________
TOTAL CURRENT ASSETS: $_________________________
B. Current Liabilities (liabilities or any portion maturing
within 1 year): $_________________________
Warehouse notes payable: $_________________________
Other notes payable: $_________________________
Repurchase agreements: $_________________________
Accounts payable and accrued expenses: $_________________________
TOTAL CURRENT LIABILITIES: $_________________________
C. Current Ratio: _____________________ to 1
D. Requirements of Section 8.10 of the Agreement:
BORROWER'S current ratio MUST not exceed 1.03 to 1.
E. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ______
Page 17
7. LOAN PRODUCTION VOLUME
Aggregate Mortgage Note
Loan Type Number of Mortgage Loans Amount
-----------------------------------------------------------------------------------------
Prime Mortgage Loans
-----------------------------------------------------------------------------------------
Subprime Mortgage Loans
-----------------------------------------------------------------------------------------
High LTV Mortgage Loans
-----------------------------------------------------------------------------------------
Repurchased Mortgage Loans
-----------------------------------------------------------------------------------------
Nonperforming Mortgage Loans
-----------------------------------------------------------------------------------------
REO Properties
-----------------------------------------------------------------------------------------
8. INVESTMENTS IN AFFILIATES
K, S, & K, LLC $ _________________
Creations Title LLC $ _________________
Great Western Loan & Investments LP $ _________________
Oak Street Funding LLC $ _________________
H&K Collections LLC $ _________________
9. ADVANCES TO & RECEIVABLES FROM AFFILIATES
K, S, & K, LLC $ _________________
Creations Title LLC $ _________________
Great Western Loan & Investments LP $ _________________
Oak Street Funding LLC $ _________________
H&K Collections LLC $ _________________
10. AMOUNTS OWED TO AFFILIATES
K, S, & K, LLC $ _________________
Creations Title LLC $ _________________
Great Western Loan & Investments LP $ _________________
Oak Street Funding LLC $ _________________
H&K Collections LLC $ _________________
Page 18
EXHIBIT H
ELIGIBLE LOANS AND OTHER ASSETS
Oak Street Mortgage LLC
Oak Street Mortgage, Inc.
Oak Street Mortgage of Tennessee LLC
LIMITATIONS ON WAREHOUSING ADVANCES AGAINST MORTGAGE LOANS
Lender's obligation to make Warehousing Advances under the Agreement is subject
to the following limitations:
1. No Warehousing Advance will be made against any Mortgage Loan
that has been previously sold or pledged to obtain financing
(whether or not such financing constitutes Debt) under another
warehousing financing arrangement or a gestation agreement.
2. No Warehousing Advance will be made against any Mortgage Loan
that Lender believes may be based on untrue, incomplete or
inaccurate or fraudulent information or may otherwise be
subject to fraud.
3. No Warehousing Advance will be made against a Mortgage Loan if
any of the limitations set forth in this Exhibit H would be
exceeded after giving effect to the Warehousing Advance.
4. No Warehousing Advance will be made against a Mortgage Loan
with an original principal balance in excess of $2,000,000.
SUBLIMITS
These general limitations apply to all Warehousing Advances against Eligible
Loans:
1. Wet Settlement Advances: 40% of the Warehousing Commitment
Amount.
2. Third Party Originated Loans: Not Permitted
ELIGIBLE LOANS AND TERMS OF WAREHOUSING ADVANCES
Subject to compliance with the terms and limitations set forth below and the
terms, representations and warranties and the covenants in the Agreement, each
of the following Mortgage Loans is an Eligible Loan for purposes of the
Agreement:
11. PRIME MORTGAGE LOAN
(a) Definition: A First Mortgage Loan or a Second Mortgage Loan with the
following characteristics:
(i) For a First Mortgage Loan:
Page 19
A. Underwritten substantially in accordance with ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac underwriting standards (except as to
maximum amount); and
B. Loan-to-Value Ratio not to exceed 80% or, if the
Loan-to-Value Ratio exceeds 80%, the Prime Mortgage Loan is
insured by or subject to a commitment for mortgage insurance
in an amount and on terms and conditions that satisfy the
underwriting standards of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac; or
C. A Government Mortgage Loan.
(ii) For a Second Mortgage Loan:
A. The credit of the obligor has been underwritten
substantially in accordance with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
underwriting standards; and
B. Loan-to-Value Ratio not more than 100%.
(b) Interest Rate:
(i) Other Mortgage Loans: 1.00% over LIBOR
(ii) Aged Mortgage Loans: 1.50% over LIBOR
(c) Prime Sublimit: $24,000,000
(i) First Mortgage Loan: $24,000,000
(ii) Second Mortgage Loan: $12,000,000
(iii) Aged Mortgage Loans: $600,000
(d) Committed/Uncommitted:
(i) First Mortgage Loans: Purchase Commitment required
(ii) Second Mortgage Loans: Purchase Commitment NOT required
(e) Wet Settlement Advances: Permitted
(f) Aged Mortgage Loans: Permitted for First Mortgage
Loans only
(g) Committed Advance Rate:
(i) First Mortgage Loan: * % of the lesser of (i) the
Mortgage Note Amount or (ii) the
Committed Purchase Price
(ii) RFC Mortgage Loan: * % of the lesser of (i) of
the Mortgage Note Amount or (ii)
the Committed Purchase Price
(h) Uncommitted Advance Rate: * % of the Mortgage Note
Amount
(i) Standard Warehouse Period: 90 days
(j) Aged Warehouse Period: 120 days
Page 20
(k) Required Prepayments: All Mortgage Loans in warehouse
45 days will be reduced by 2% of
the Mortgage Note Amount.
On the day a Pledged Loan
becomes an Aged Mortgage Loan,
the Warehousing Advance against
such Pledged Loan must be (a)
repaid in full, to the extent
the Aged Mortgage Loan Sublimit
would be exceeded, or (b)
otherwise, reduced by 5% of the
Mortgage Note Amount.
12. SUBPRIME MORTGAGE LOAN
(a) Definition: A First Mortgage Loan or Second Mortgage Loan that has a
risk rating of "A-," "B" or "C" (determined using underwriting standards that
comply with industry standards in the sole judgment of Lender), and that is
acceptable for purchase by at least two Investors.
(b) Interest Rate:
(ii) Other Mortgage Loans: 1.00% over LIBOR
(ii) Aged Mortgage Loans: 1.50% over LIBOR
(c) Subprime Sublimit: $200,000,000
(i) First Mortgage Loan: $200,000,000
(ii) Second Mortgage Loan: $40,000,000
(iii) Aged Mortgage Loans: $10,000,000
(d) Committed/Uncommitted: Purchase Commitment NOT required
(e) Wet Settlement Advances: Permitted
(f) Aged Mortgage Loans: Permitted for First Mortgage
Loans only
(g) Committed Advance Rate:
(i) RFC Mortgage Loan: * % of the lesser of (i) of
the Mortgage Note Amount or (ii)
the Committed Purchase Price
(h) Uncommitted Advance Rate:
(i) First Mortgage Loan: * % of the Mortgage Note
Amount
(ii) Second Mortgage Loan: * % of the Mortgage Note
Amount
(i) Standard Warehouse Period: 90 days
(j) Aged Warehouse Period: 180 days
Page 21
(k) Required Prepayments: All Mortgage Loans in warehouse
45 days will be reduced by 2% of
the Mortgage Note Amount.
On the day a Pledged Loan
becomes an Aged Mortgage Loan,
the Warehousing Advance against
such Pledged Loan must be (a)
repaid in full, to the extent
the Aged Mortgage Loan Sublimit
would be exceeded, or (b)
otherwise, reduced by 5% of the
Mortgage Note Amount.
Thereafter, the Warehousing
Advance must be reduced by 5% of
the Mortgage Note Amount.
13. HIGH LTV MORTGAGE LOAN
(a) Definition: A Second Mortgage Loan that meets the 125 Loan Program
eligibility criteria set forth in the GMAC-RFC Client Guide and for which an
AssetWise Certificate has been issued, and a First Mortgage Loan that meets the
Home Solution Program eligibility criteria set forth in the GMAC-RFC Client
Guide and for which an AssetWise Certificate has been issued.
(b) Interest Rate: 2.00% over LIBOR
(c) High LTV Sublimit: $1,000,000
(d) Committed/Uncommitted: Purchase Commitment from Lender
required
(e) Wet Settlement Advances: Permitted
(f) Aged Mortgage Loans: Not Permitted
(g) Committed Advance Rate:
(i) First Mortgage Loan: * % of the lesser of (i) of
the Mortgage Note Amount or (ii)
the Committed Purchase Price
(ii) Second Mortgage Loan: * % of the lesser of (i) of
the Mortgage Note Amount or (ii)
the Committed Purchase Price
(h) Standard Warehouse Period: 45 days
14. REPURCHASED MORTGAGE LOAN/NONPERFORMING MORTGAGE LOAN/REO PROPERTY
(a) Definitions:
Repurchased Mortgage Loan: A Mortgage Loan that has been repurchased
from an Investor or a Mortgage Pool pursuant to a Servicing Contract.
Nonperforming Mortgage Loan: A First Mortgage Loan or a Second Mortgage
Loan that is not a High LTV Mortgage Loan and (i) is in the process of
foreclosure, (ii) is 60 days or more delinquent or (iii) with respect
to which the Warehousing Period has expired.
Page 22
Schedule 1-9
REO Property: An improved real property containing a 1- to 4-family
residence, which property is owned by Borrower as the result of a
foreclosure proceeding or the acceptance of a deed in lieu of
foreclosure, or has been purchased from an Investor to satisfy a
repurchase obligation of Borrower to the Investor.
(b) Interest Rate: 3.25% over LIBOR
(c) Sublimit: $2,400,000
(d) Committed/Uncommitted: Purchase Commitment NOT required
(e) Wet Settlement Advances: Not Permitted
(f) Aged Mortgage Loans: Not Permitted
(g) Advance Rate for Repurchased and
Nonperforming Mortgage Loans: * % of the lesser of (i)
Lender's initial Warehousing
Advance, (ii) the unpaid
principal balance, (iii) the
repurchase price, or (iv) the
Appraised Property Value or BPO
Value
(h) Advance Rate for REO Property: The lesser of (i) * % Lender's
initial Warehousing Advance or
(ii) * % of the Appraised
Property Value or BPO Value
(i) Standard Warehouse Period: 365 days
(j) Required Prepayments for Repurchased
and Nonperforming Mortgage Loans: 5% of the Mortgage Note Amount,
paid each month occurring more
than 90 days after the date of
the Warehousing Advance
(k) Required Prepayments for REO Property: 5% of the initial Warehousing
Advance against an REO Property
paid each month occurring more
than 90 days after the date of
the Warehousing Advance
Page 23
EXHIBIT J
COLLATERAL OPERATIONS FEE SCHEDULE
(SINGLE FAMILY)
LOAN FEES
Warehousing Commitment Fees (i) 0.125% per annum of
$125,000,000 through August 31,
2003, computed on the basis of
the actual number of days in
each Calendar Quarter and a year
of 360 days and (ii) thereafter,
0.125% per annum of the
Warehousing Commitment Amount,
computed on the basis of the
actual number of days in each
Calendar Quarter and a year of
360 days.
Non-Usage Fees 0.125% per annum of the Unused
Portion during such month,
except that no Non-Usage Fee
will be payable for any month in
which the Used Portion equals or
exceeds 50% of the Warehousing
Commitment Amount computed on
the basis of the actual number
of days in each month and a year
of 360 days.
Loan Package Fee $20.00*
Wire Fee $7.50
* Should Borrower opt to use MERS, the Loan Package Fee will be $15.00.
COLLATERAL OPERATIONS FEES
Reservation Number Fee $5 per Reservation Number
(Good funds states only)
Restocking Fee for Mortgage Loans
Returned to Lender by Investors $10 per Mortgage Loan
Returned Wire Fee $10 per wire
Page 24
COLLATERAL OPERATIONS FEES
Early Payoff Fee (payoff of Warehousing
Advance prior to check clearance) $25 per Mortgage Loan
---------------------------------------------------------------------------------------
Late Fee for Interest or Fees not paid within
time period specified in Agreement $50 per occurrence
---------------------------------------------------------------------------------------
Overdraft Fee $60 per occurrence
---------------------------------------------------------------------------------------
Security Pick-up, Delivery and DK Fees $45 per transaction
---------------------------------------------------------------------------------------
PRIOR DAY BANK REPORTING FEE:
---------------------------------------------------------------------------------------
- Warehousing Commitments of up to $50 million $300 per month
---------------------------------------------------------------------------------------
- Warehousing Commitments of more than $50 million $400 per month
but less than $100 million
---------------------------------------------------------------------------------------
- Warehousing Commitments of more than $100 million $500 per month
---------------------------------------------------------------------------------------
Intra-Day Bank Reporting Fee $300 per month
---------------------------------------------------------------------------------------
Page 25