EXHIBIT 10.1
SECOND AMENDED AND RESTATED LOAN AGREEMENT
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THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT is entered into as of July
30, 1999, between MATRIX FINANCIAL SERVICES CORPORATION, an Arizona corporation
("Borrower"), the Lenders described below, and BANK ONE, TEXAS, N.A., as
Administrative Agent for Lenders.
(See Section 1.1 for defined terms.)
A. Borrower, certain lenders, and Administrative Agent are parties to the
Loan Agreement (as renewed, extended, or amended, the "Original Loan Agreement")
dated as of July 12, 1995, providing for, among other things, (i) a revolving
line of credit to finance Borrower's Mortgage Loan origination and acquisition
until those Mortgage Loans are sold in the secondary market, (ii) a sublimit of
that revolving line of credit to pay certain Servicing Payments, and (iii) a
line of credit with a term conversion feature to repay certain of Borrower's
then-existing-term Debt and to finance Borrower's Servicing Portfolio
origination and acquisition.
B. Borrower, certain lenders, and Administrative Agent entered into the
Amended and Restated Loan Agreement (as renewed, extended, or amended, the
"Existing Loan Agreement") dated as of January 31, 1997, to entirely amend,
modify, and restate the Original Loan Agreement in order to, among other things,
(i) renew, increase, and extend the indebtedness under the Original Loan
Agreement, (ii) increase the aggregate Warehouse and Term-Line Commitments,
(iii) eliminate the receivables sublimit under the Warehouse Commitment and add
the Working-Capital Commitment, (iv) amend certain sublimits, (v) add the
Second-Lien and Repurchase Sublimits under the Warehouse Commitment, (vi) modify
certain financial covenants, and (vii) add the Overline Facility.
C. Borrower has requested that the lenders under the Existing Loan
Agreement (collectively, the "Existing Lenders") entirely amend, modify, and
restate the Existing Loan Agreement in the form of this agreement in order to,
among other things, (i) renew, and extend the indebtedness under the Existing
Loan Agreement, (ii) provide for Borrowings supported by Eligible-Alt-A Loans
and Eligible-Subprime Loans, (iii) remove all Nonconforming Loans (as defined in
Existing Loan Agreement) from the Borrowing Base, (iv) remove the Overline
Facility, and (v) make certain related changes.
D. Upon and subject to the terms and conditions of this agreement, Lenders
are willing to entirely amend and restate the Existing Loan Agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower, Lenders,
and Administrative Agent agree that the Existing Loan Agreement shall be amended
and restated in its entirety, as follows:
SECTION 1. DEFINITIONS AND REFERENCES. Unless stated otherwise, the
following provisions apply to each Loan Document, and annexes, exhibits, and
schedules to, and certificates, reports, and other writings delivered under, the
Loan Documents.
1.1 Definitions.
"Acknowledgment Agreement" means, at any time and as applicable, the form
of Acknowledgment Agreement then required by (a) FHLMC to be executed as a
condition to the creation of a security interest in
Servicing Rights for Mortgage Pools serviced for FHLMC, completed and executed
by Borrower, Administrative Agent, (if necessary) each Lender, and FHLMC, and
otherwise in form acceptable to Administrative Agent, together with every
supplement to and replacement for that agreement in accordance with the FHLMC
Guide, (b) FNMA to be executed as a condition to the creation of a security
interest in Servicing Rights for Mortgage Pools serviced for FNMA, completed and
executed by Borrower, Administrative Agent, (if necessary) each Lender, and
FNMA, and otherwise in form acceptable to Administrative Agent, together with
every supplement to and replacement for that agreement in accordance with the
FNMA Guide, and (c) GNMA to be executed as a condition to the creation of a
security interest in Servicing Rights for Mortgage Pools guaranteed by GNMA,
completed and executed by Borrower, Administrative Agent, (if necessary) each
Lender, and GNMA, and otherwise in form acceptable to Administrative Agent,
together with every supplement to and replacement for that agreement in
accordance with the GNMA Guide.
"Adjusted-Net Worth" means, at any time, the sum (without duplication) of
(a) the Companies' consolidated stockholders' equity plus (b) any Permitted Debt
outstanding under the Revolving Subordinated Loan Agreement between Borrower and
Guarantor referred to in Section 8.1(c).
"Adjusted-Tangible-Net Worth" means, at any time, the sum (without
duplication) of (a) the Companies' consolidated stockholders' equity, plus (b)
the lesser of either (i) 1.25% of the Servicing Portfolio or (ii) the Appraised
Value of the Servicing Portfolio, minus (c) purchased servicing, originated
mortgage servicing rights (sometimes known in the industry as "OMSRs"), deferred
excess servicing, rights with respect to the foregoing, and unamortized debt
discount and expense, minus (d) treasury stock, minus (e) any surplus resulting
from the write-up of assets, minus (f) goodwill, including, without limitation,
any amounts representing the excess of the purchase price paid for acquired
assets, stock, or interests over the book value assigned to them, minus (g)
patents, trademarks, service marks, trade names, and copyrights, minus (h)
Borrower's direct and indirect guaranties of Debt of any other Person, (other
than Matrix Bancorp., Inc., minus (i) Borrower's obligation with respect to
letters of credit, acceptances, and similar obligations, minus (j) other
intangible assets, plus (k) any Permitted Debt expressly subordinated to the
Obligation.
"Affiliate" of a Person means any other individual or entity who directly
or indirectly controls, is controlled by, or is under common control with that
Person. For purposes of this definition (a) "control," "controlled by," and
"under common control with" mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or other interests, by contract, or otherwise),
and (b) the Companies are "Affiliates" of each other.
"Administrative Agent" means, at any time, Bank One, Texas, N.A. (or its
successor appointed under Section 11.6), acting as administrative, collateral,
and managing agent for Lenders under the Loan Documents.
"Administrative Agent's Request" is defined in Section 2.3(f).
"Alt-A Borrowing" means a Warehouse Borrowing which is (a) a Ratable
Borrowing or Swing Borrowing, (b) subject to the Alt-A Sublimit, and (c)
supported by the Borrowing Base for Eligible-Alt-A Loans.
"Alt-A Sublimit" means, at any time, $30,000,000.
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"Applicable-Covered Rate" means, for each Borrowing-Purpose Category in the
table below, the annual interest rate stated beside that category:
Borrowing-Purpose Category Applicable-Covered Rate
Gestation Borrowings 0.850%
Conforming Warehouse Borrowings 1.250%
Alt-A Borrowings 1.375%
Repurchase Borrowings 1.375%
Indirect-Warehouse Borrowings 1.500%
Second-Lien Borrowings 1.500%
Subprime Borrowings 1.500%
Working-Capital Borrowings 1.500%
Term-Line Borrowings 2.000%
"Applicable Margin" means, for each Borrowing-Purpose Category and relevant
Borrowing-Price Category in the table below, the positive or negative interest
margin beside those categories:
Borrowing-Purpose Category Borrowing-Price Category Applicable Margin
Gestation Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 0.850%
Conforming Warehouse Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.250%
Swing Borrowings Base Rate 0.000%
Fed-Funds Rate 1.250%
Alt-A Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.375%
Repurchase Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.375%
Indirect-Warehouse Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.500%
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Borrowing-Purpose Category Borrowing-Price Category Applicable Margin
Second-Lien Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.500%
Subprime Borrowings Base Rate 0.000%
Fed-Funds Rate or LIBOR 1.500%
Working-Capital Borrowings Base Rate 0.500%
Term-Line Borrowings Base Rate 1.000%
Fed-Funds Rate or LIBOR 2.000%
"Appraisal" means, for any Mortgage Loan, a written statement of the market
value of the real property securing it.
"Appraisal Law" means any Law that is applicable to appraisals of
mortgaged-residential property in connection with transactions involving that
property, including, without limitation, Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, the Federal Deposit Insurance
Corporation Improvement Act of 1991, 12 C.F.R. Chapter I, Part 34, Subpart C, 12
C.F.R. Chapter II, Subchapter A, Part 225, Subpart G, and 12 C.F.R. Chapter III,
Subchapter B, Part 323.
"Appraised Value" means, at any time, the appraised value of the Servicing
Portfolio determined in the appraisal most recently delivered to Administrative
Agent by an appraiser and in a manner and form satisfactory to Administrative
Agent.
"Approved Investor" means (a) FHLMC, FNMA, and GNMA and (b) any other
Person from time to time named on lists (separate lists will be maintained for
Alt-A Borrowings, Subprime Borrowings, Second-Lien Borrowings, and for all other
Warehouse Borrowings) agreed to by Administrative Agent and Borrower, which
lists Administrative Agent shall furnish to any Lender upon request, as those
lists may be amended from time to time (i) by Borrower and Administrative Agent
to remove or add other names as Administrative Agent and Borrower may agree,
(ii) by either Administrative Agent or Determining Lenders to remove any such
other Person after Administrative Agent has or Determining Lenders have given to
Borrower notice of, and an opportunity to discuss, the proposed removal of that
Person, or (iii) automatically, without signing by any party, to remove any such
Person who then (A) is not Solvent, (B) fails to pay its debts generally as they
become due, (C) voluntarily seeks, consents to, or acquiesces in the benefit of
any Debtor Law, or (D) becomes a party to or is made the subject of any
proceeding provided for by any Debtor Law, other than as a creditor or claimant,
that could suspend or otherwise adversely affect the Rights of any Company,
Administrative Agent, or any Lender in connection with the transactions
contemplated in the Loan Documents. With respect to Jumbo Loans, the term
"Approved Investor" will be deemed to refer to an Approved-Jumbo Investor.
"Approved-Jumbo Investor" means (a) FHLMC, FNMA, and GNMA and (b) any other
Person from time to time named on a list agreed to by Administrative Agent and
Borrower, which Administrative Agent shall furnish to any Lender upon request,
as that list may be amended from time to time (i) by Borrower and Administrative
Agent to remove or add other names as Administrative Agent and Borrower may
agree, (ii) by
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either Administrative Agent or Determining Lenders to remove any such other
Person after Administrative Agent has or Determining Lenders have given to
Borrower notice of, and an opportunity to discuss, the proposed removal of that
Person, or (iii) automatically, without signing by any party, to remove any such
Person who then (A) is not Solvent, (B) fails to pay its debts generally as they
become due, (C) voluntarily seeks, consents to, or acquiesces in the benefit of
any Debtor Law, or (D) becomes a party to or is made the subject of any
proceeding provided for by any Debtor Law, other than as a creditor or claimant,
that could suspend or otherwise adversely affect the Rights of either Borrower,
Administrative Agent, or any Lender in connection with the transactions
contemplated in the Loan Documents.
"Approved Originator" means any Originator who (a) has entered into a
Three-Party Agreement with Borrower and Administrative Agent and (b) is from
time to time named on a list agreed to by Administrative Agent and Borrower
(which list Administrative Agent shall furnish to any Lender upon request) as
that list may be amended from time to time (i) by Borrower and Administrative
Agent to remove or add other names as Administrative Agent and Borrower may
agree, (ii) by either Administrative Agent or Determining Lenders to remove any
such other Person after Administrative Agent has or Determining Lenders have
given to Borrower notice of (and an opportunity to discuss) the proposed removal
of that Person, or (iii) automatically (without signing by any party) to remove
any such Person who then (A) is not Solvent, (B) fails to pay its debts
generally as they become due, (C) voluntarily seeks, consents to, or acquiesces
in the benefit of any Debtor Law, (D) becomes a party to or is made the subject
of any proceeding provided for by any Debtor Law (other than as a creditor or
claimant) that could suspend or otherwise adversely affect the Rights of any
Company, Administrative Agent, or any Lender in connection with the transactions
contemplated in the Originator Documents or Loan Documents, (E) is in default
under its Indirect-Warehouse Loan Agreement, or (F) fails to be agency qualified
in any respect.
"Approved PMI" means any private-mortgage insurance company from time to
time named on a list agreed to by Administrative Agent and Borrower, which
Administrative Agent shall furnish to any Lender upon request, as that list may
be amended from time to time (a) by Borrower and Administrative Agent to remove
or add other names as Administrative Agent and Borrower may agree, (b) by
either Administrative Agent or Determining Lenders to remove any Person on the
list after Administrative Agent has or Determining Lenders have given to
Borrower notice of, and an opportunity to discuss, the proposed removal of that
Person, or (c) automatically, without signing by any party, to remove any such
Person who then (i) is not Solvent, (ii) fails to pay its debts generally as
they become due, (iii) voluntarily seeks, consents to, or acquiesces in the
benefit of any Debtor Law, or (iv) becomes a party to or is made the subject of
any proceeding provided for by any Debtor Law, other than as a creditor or
claimant, that could suspend or otherwise adversely affect the Rights of
Borrower, Administrative Agent, or any Lender in connection with the
transactions contemplated in the Loan Documents.
"Assignment" means an Assignment and Assumption Agreement executed by a
selling Lender and a Purchaser under Section 12.12 and Section 12.14 and
delivered to Administrative Agent in substantially the form of Exhibit F-2.
"Average-Adjusted-Base Rate" means, for any period, an annual interest rate
equal to the quotient of (a) the sum of the Base Rate plus the Applicable Margin
for each calendar day during that period divided by (b) the number of days
during that period.
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"Average-Adjusted-Fed-Funds Rate" means, for any period, an annual interest
rate equal to the quotient of (a) the sum of the Fed-Funds Rate plus the
Applicable Margin for each calendar day during that period divided by (b) the
number of days during that period.
"Average-Adjusted-LIBOR Rate" means, for any period, an annual interest
rate equal to the quotient of (a) the sum of LIBOR plus the Applicable Margin
for each calendar day during that period divided by (b) the number of days
during that period.
"Average-Depositary Balances" means, for any period and for any Depositary,
(a) the quotient of (i) the sum of that Depositary's Eligible Balances as of the
close of business for each calendar day (which for any day that is not a
Business Day are deemed for this definition to be those balances for the
preceding Business Day) during that period divided by (ii) the number of
calendar days during that period minus (b) amounts necessary to satisfy any
deposit insurance, reserve, special deposit, Tax (other than that Depositary's
general corporate income or franchise Taxes), duty, or other imposition (in each
case at the applicable rates) requirements applicable to that Depositary for
those accounts, minus (c) amounts required to compensate that Depositary for
direct processing and transaction costs and other services rendered in
connection with those accounts in accordance with that Depositary's system of
charges for similar accounts, minus (d) unless otherwise paid directly to that
Depositary, any amounts in those accounts utilized as of that day in the
calculation of interest on any other Debt payable by any Company to that
Depositary or any other Person.
"Average-Principal Debt" means, for any period and any Lender, the quotient
of (a) the sum of the Principal Debt owed to that Lender as of the close of
business for each calendar day (which for any day that is not a Business Day is
deemed for this definition to be the Principal Debt as of the close of business
for the preceding Business Day) divided by (b) the number of days during that
period.
"Bailee Letter" means, as applicable under the circumstances, one of the
letters executed and delivered by Administrative Agent in substantially the form
of Exhibit C-4.
"Bank One" means Bank One, Texas, N.A., in its individual capacity.
"Base Rate" means an annual interest rate equal from day to day to the
floating annual interest rate established by Administrative Agent from time to
time as its base-rate of interest, which may not be the lowest interest rate
charged by Administrative Agent on loans similar to Borrowings.
"Base-Rate Borrowing" means any Borrowing bearing interest at the Average-
Adjusted-Base Rate.
"Borrower" is defined in the preamble to this agreement.
"Borrowing" means any amount disbursed (a) by any Lender to Borrower under
the Loan Documents as an original disbursement of funds, a renewal, extension,
or continuation of an amount outstanding, or a payment under an LC, or (b) by
Administrative Agent or any Lender in accordance with, and to satisfy a
Company's obligations under, any Loan Document.
"Borrowing Base" means, at any time, the sum of the various borrowing bases
set forth on Schedule 4.2.
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"Borrowing-Base Report" means a report executed by Administrative Agent and
delivered to Borrower and Lenders in substantially the form of Exhibit D-3.
"Borrowing Date" means, for any Borrowing, the date it is disbursed.
"Borrowing Excess" means, at any time, the amount by which any of the
limitations of Section 2.1 are exceeded.
"Borrowing-Price Category" means any category of Borrowing determined with
respect to the applicable interest option, e.g., a Base-Rate Borrowing, Fed-
Funds Borrowing, or LIBOR Borrowing.
"Borrowing-Purpose Category" means any category of Borrowing determined
with respect to its purpose, e.g., a (a) Warehouse Borrowing, which may be an
Alt-A Borrowing, Dry Borrowing, Wet Borrowing, Gestation Borrowing, Swing
Borrowing, Second-Lien Borrowing, Subprime Borrowing, or Repurchase Borrowing,
(b) Working-Capital Borrowing, which may be a P&I Borrowing, T&I Borrowing, or
Foreclosure Borrowing, or (c) Term-Line Borrowing.
"Borrowing Request" means a request executed by a Responsible Officer of
Borrower requesting a Borrowing and delivered to Administrative Agent in
substantially the form of Exhibit D-1.
"Business Day" means (a) for purposes of any LIBOR Borrowing, a day when
commercial banks are open for international business in London, England, and (b)
for all other purposes, any day other than Saturday, Sunday, and any other day
that commercial banks are authorized by applicable Laws to be closed in Texas.
"Calendar Month" means that portion of a calendar month that occurs at any
time from the date of this agreement to the date that the Obligation is paid in
full and all commitments to lend under this agreement have terminated or been
canceled.
"Calendar Quarter" means that portion of any calendar quarter that occurs
at any time from the date of this agreement to the date that the Obligation is
paid in full and all commitments to lend under this agreement have terminated or
been canceled.
"CMLTD" means current maturities of long-term debt (inclusive of the term
debt extended under this agreement), plus current maturities of capital leases.
"Cash Flow" means, for any period on a consolidated basis for Borrower and
in accordance with GAAP, consistently applied, the sum of (a) net income
(calculated as profit or loss after deducting tax expense and after recognizing
extraordinary losses and extraordinary gains but not non-cash income tax
recoveries) plus (b) to the extent actually deducted in calculating net income,
depreciation, and amortization minus (c) to the extent actually included in
calculating net income, any non-cash revenue minus (d) any Distributions paid to
Guarantor.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
"Closing Date" means July 30, 1999.
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"Collateral" means all Collateral as defined in the Security Agreement or
as otherwise delivered by any Person as security for the Obligation.
"Collateral-Conversion Notice" means a notice executed by Borrower and
delivered to Administrative Agent in substantially the form of Exhibit D-7.
"Collateral-Delivery Notice" means a notice executed by Borrower and
delivered to Administrative Agent in substantially the form of Exhibit D-2.
"Collateral Documents" means the documents and other items described on
Schedule 4.3 and required to be delivered to Administrative Agent under Section
4.3.
"Combined Commitment" means, at any time and for any Lender, the sum of
that Lender's (a) Warehouse Commitment, (b) Working-Capital Commitment, and (c)
Term-Line Commitment.
"Commitment Percentage" means, at any time for any Lender, (a) in relation
to the Warehouse Commitment, the proportion (stated as a percentage) that its
Warehouse Commitment bears to the total Warehouse Commitments of all Lenders,
(b) in relation to the Working-Capital Commitment, the proportion (stated as a
percentage) that its Working-Capital Commitment bears to the total Working-
Capital Commitments of all Lenders, (c) in relation to the Term-Line Commitment,
the proportion (stated as a percentage) that its Term-Line Commitment bears to
the total Term-Line Commitments of all Lenders, and (d) in relation to the
determination of Determining Lenders, the proportion (stated as a percentage)
that its Combined Commitment bears to the total Combined Commitments of all
Lenders.
"Companies" means (a) at any time, Borrower and each of its Subsidiaries,
and (b) where appropriate in respect of any period unless otherwise provided,
includes all of their operations during that period whether discontinued or not.
"Compliance Certificate" means a certificate executed by a Responsible
Officer of Borrower and delivered to Administrative Agent in substantially the
form of Exhibit D-6.
"Conventional Loan" means a Mortgage Loan that (a) is not a FHA Loan or VA
Loan but (b) complies with all applicable requirements for purchase under the
FNMA or FHLMC standard form of conventional-mortgage-purchase contract.
"Correction Period" means 14 calendar days for any Collateral Documents
shipped under Section 4.6 for correction.
"Current Financials" means either (a) the Companies' Financials for the
year ended December 31, 1998, and for the six months ended June 30, 1999, or (b)
at any time after the Companies' annual Financials are first delivered under
Section 7.1, the Companies' annual Financials then most recently delivered to
Administrative Agent and subsequent monthly Financials then most recently
delivered to Administrative Agent.
"Debt", for any Person and without duplication, means (a) all obligations
required by GAAP to be classified upon that Person's balance sheet as
liabilities, (b) liabilities secured (or for which the holder of the liabilities
has an existing Right, contingent or otherwise, to be so secured) by any Lien
existing on property
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owned or acquired by that Person, (c) obligations that under GAAP should be
capitalized for financial reporting purposes, and (d) all guaranties,
endorsements, and other contingent obligations with respect to Debt of others or
in respect of any Employee Plan.
"Debtor Laws" means the Bankruptcy Code of the United States of America and
all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar Laws affecting creditors' Rights.
"Default" is defined in Section 10.1.
"Default Rate" means, for any day, an annual interest rate equal to the
lesser of either (a) the Fed-Funds Rate plus 5% or (b) the Maximum Rate.
"Depositary" means any Lender with whom Borrower maintains non-interest
bearing demand deposit accounts in its name.
"Determining Lenders" means, at any time, any combination of Lenders whose
(a) Termination Percentages total at least 66_% at any time on or after the
Warehouse-Actual-Termination Date, or (b) Commitment Percentages total at least
66_% at all other times.
"Distribution" means, at any time and with respect to any shares of any
capital stock or other equity securities issued by a Person, (a) the retirement,
redemption, purchase, or other acquisition for value of those securities, (b)
the declaration or payment of any dividend with respect to those securities, (c)
any loan or advance by that Person to, or other investment by that Person in,
the holder of any of those securities, and (d) any other payment by that Person
with respect to those securities.
"Dry Borrowing" means a Warehouse Borrowing for which all of the Collateral
Documents have been delivered to Administrative Agent in accordance with Section
4.3.
"Eligible-Alt-A Loan" is defined in Schedule 4.1.
"Eligible Balances" means, for any calendar day and any Depositary, the sum
(which for any day that is not a Business Day is deemed for this definition to
be that sum as determined as of the close of business on the preceding Business
Day) of collected balances as of the close of business on that day in all
identified non-interest bearing demand deposit accounts or money market zero
reserve accounts of or maintained by Borrower with that Depositary.
"Eligible-Foreclosure Receivable" is defined in Schedule 4.1.
"Eligible-Gestation Collateral" is defined in Schedule 4.1.
"Eligible-Indirect-Warehouse Loan" is defined in Schedule 4.1.
"Eligible-Mortgage Collateral" means, at any time, all Eligible-Mortgage
Loans and all Eligible-Mortgage Securities.
"Eligible-Mortgage Loan" is defined in Schedule 4.1.
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"Eligible-Mortgage Security" is defined in Schedule 4.1.
"Eligible-P&I Receivable" is defined in Schedule 4.1.
"Eligible-Repurchased Loan" is defined in Schedule 4.1.
"Eligible-Second-Lien Loan" is defined in Schedule 4.1.
"Eligible-Servicing Portfolio" is defined in Schedule 4.1.
"Eligible-Subprime Loan" is defined in Schedule 4.1.
"Eligible-T&I Receivable" is defined in Schedule 4.1.
"Employee Plan" means any employee-pension-benefit plan (a) covered by
Title IV of ERISA and established or maintained by Borrower or any ERISA
Affiliate (other than a Multiemployer Plan) or (b) established or maintained by
Borrower or any ERISA Affiliate, or to which Borrower or any ERISA Affiliate
contributes, under the Laws of any foreign country.
"Environmental Law" means any applicable Law that relates to protection of
the environment or to the regulation of any Hazardous Substances, including,
without limitation, CERCLA, the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the
Safe Drinking Water Act (42 U.S.C. Section 201 and Section 300f et seq.), the
Rivers and Harbors Act (33 U.S.C. Section 401 et seq.), the Oil Pollution Act
(33 U.S.C. Section 2701 et seq.), analogous state and local Laws, and any
analogous future enacted or adopted Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any Person that, for purposes of Title IV of ERISA,
is a member of Borrower's controlled group or is under common control with
Borrower within the meaning of Section 414 of the IRC.
"Existing Lenders" is defined in the recitals of this agreement.
"Existing Loan Agreement" is defined in the recitals of this agreement.
"Fed-Funds Borrowing" means any Borrowing bearing interest at the Average-
Adjusted-Fed-Funds Rate.
"Fed-Funds Rate" means, for any day, the annual interest rate, rounded
upwards, if necessary, to the nearest 0.01%, determined by Administrative Agent
to be either (a) the weighted average of the rates on overnight-federal-funds
transactions with member banks of the Federal Reserve System arranged by
federal-funds brokers for that day (or, if not a Business Day on the preceding
Business Day) as published by the
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ (as published by ▇▇▇▇▇▇-▇▇▇▇▇▇, page 73,
utilizing the "Fed-Effective Rate"), or (b) if not so published for any day, the
average of the quotations for that day on those transactions received by
Administrative Agent from three federal-funds brokers of recognized standing it
may select.
"FHA" means the Federal Housing Administration within the United States
Department of Housing and Urban Development.
"FHA Loan" means a Mortgage Loan which is either (a) fully or partially
insured by FHA under the National Housing Act or Title V of the Housing Act of
1949, (b) subject to a current, binding, and enforceable commitment issued by
FHA for that insurance, or (c) eligible for direct endorsement under the FHA
Direct Endorsement Program.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Financials" of a Person means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared (a)
according to GAAP (subject to year end audit adjustments with respect to interim
Financials) and (b) except as stated in Section 1.4, in comparative form to
prior year-end figures or corresponding periods of the preceding fiscal year or
other relevant period, as applicable.
"FNMA" means the Federal National Mortgage Association.
"Foreclosure Borrowing" means a Working-Capital Borrowing that is (a) a
Ratable Borrowing, (b) supported by the Borrowing Base for Receivables, and (c)
to be used by Borrower to reimburse itself for a Foreclosure Payment it has
made.
"Foreclosure Payment" means the unreimbursed purchase price paid by
Borrower to repurchase a defaulted Mortgage Loan out of a Mortgage Pool in
accordance with Borrower's obligations under the applicable Servicing Contract.
"Funding Loss" means any reasonable, out-of-pocket loss or expense that any
Lender incurs because Borrower (a) fails or refuses, for any reason other than a
default by the Lender claiming that loss or expense, to take any LIBOR Borrowing
that it has requested under this agreement, or (b) prepays or pays any LIBOR
Borrowing at any time other than the last day of the applicable Interest Period.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
"Gestation Borrowing" means a Warehouse Borrowing (that is a Ratable
Borrowing) that is (a) subject to the Gestation Sublimit and (b) supported by
the Borrowing Base for Gestation Collateral.
"Gestation Sublimit" means, at any time, 50% of the total Warehouse
Commitments.
"GNMA" means the Government National Mortgage Association.
"Guarantor" means Matrix Bancorp, Inc., a Colorado corporation.
11
"Guaranty" means a Second Amended and Restated Guaranty in substantially
the form of Exhibit B.
"Guide" means the following, as applicable under the circumstances, for (a)
FHLMC, the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' & Servicers' Guide, (b) FNMA, the ▇▇▇▇▇▇ ▇▇▇
Servicing Guide, and (c) GNMA, as applicable, either (i) the GNMA I Mortgage
Securities Guide, Handbook GNMA 5500.1REV-6, or (ii) the GNMA II Mortgage
Securities Guide, Handbook GNMA 5500.2.
"Hazardous Substance" means any substance that is designated, defined,
classified, or regulated as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, or toxic or hazardous substance under any Environmental
Law, including, without limitation, any hazardous substance within the meaning
of Section 101(14) of CERCLA.
"Hedge Contract" means, for any Person, any present or future, whether
master or single, agreement, document or instrument providing for, or
constituting an agreement to enter into (a) commodity ▇▇▇▇▇▇ in the normal
course of business in accordance with prior practices of that Person before the
date of this agreement for purposes of hedging material purchases, (b) foreign-
currency purchases and swaps, (c) interest-rate swaps, and (d) interest-rate-
hedging products.
"Indirect-Warehouse Borrowings" means a Warehouse Borrowing which is (a) a
Ratable Borrowing or Swing Borrowing, (b) subject to the Indirect-Warehouse
Sublimit, and (c) supported by the Borrowing Base for Eligible-Indirect-
Warehouse Loans.
"Indirect-Warehouse Collateral" means all Indirect-Warehouse Documents
offered as Collateral under the Loan Documents.
"Indirect-Warehouse Documents" means, for any Approved Originator, its
Indirect-Warehouse Loan Agreement and the documents and items described on
Schedule 4.3 and required to be delivered to Administrative Agent under Section
4.3.
"Indirect-Warehouse Loan Agreement" means a loan agreement between Borrower
and an Approved Originator under which, among other things (a) Borrower provides
financing to that Approved Originator for its Mortgage Loan origination and
acquisition until those Mortgage Loans are sold in the secondary market, and (b)
that Approved Originator grants to Borrower first-priority Liens upon, among
other things, the Mortgage Collateral delivered to or for Borrower by or for
that Approved Originator.
"Indirect-Warehouse Sublimit" means $10,000,000.
"Interest Period" is determined in accordance with Section 3.8.
"IRC" means the Internal Revenue Code of 1986.
"Jumbo Loan" means a Mortgage Loan (other than a FHA Loan or VA Loan) that
complies with all applicable requirements for purchase under the FNMA or FHLMC
standard form of conventional mortgage purchase contract then in effect except
that the amount of it exceeds the maximum loan amount under those requirements.
12
"Jumbo Sublimit", at any time, means, unless otherwise approved by
Administrative Agent in writing, (a) for all Jumbo Loans (except Eligible-Alt-A
Loans, Eligible-Subprime Loans, Eligible-Repurchased Loans, or Eligible-Second-
Lien Loans), 35% of the total Warehouse Commitments, and (b) for any Jumbo Loan
(except Eligible-Alt-A Loans, Eligible-Subprime Loans, Eligible-Repurchase
Loans, or Eligible-Second-Lien Loans) in excess of $750,000, only the first
$750,000.
"Laws" means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
"LC" means a standby letter of credit issued by Administrative Agent or any
of its Affiliates under this agreement and under an LC Agreement.
"LC Agreement" means a letter of credit application and agreement (in form
and substance satisfactory to Administrative Agent) submitted and executed by
Borrower to Administrative Agent or any of its Affiliates for an LC for the
account of any Company.
"LC Exposure" means, without duplication, the sum of (a) the total face
amount of all undrawn and uncancelled LCs plus (b) the total unpaid
reimbursement obligations of Borrower under drawings or drafts under any LC.
"LC Request" means a request by Borrower to Administrative Agent by
electronic device or in writing (in form acceptable to Administrative Agent) for
an LC.
"Lender Lien" means any present or future first-priority (except as
otherwise specifically provided in the Loan Documents) Lien securing the
Obligation and assigned, conveyed, and granted to or created in favor of
Administrative Agent for the benefit of Lenders under the Loan Documents.
"Lenders" means the financial institutions, including, without limitation,
Administrative Agent in respect of its share of Borrowings, named on Schedule 2
or on the most-recently-amended Schedule 2, if any, delivered by Administrative
Agent under this agreement, and, subject to this agreement, their respective
successors and permitted assigns (but not any Participant who is not otherwise a
party to this agreement).
"LIBOR" means, for a LIBOR Borrowing, the annual interest rate, rounded
upwards, if necessary, to the nearest 0.01%, equal to the annual interest rate,
rounded upwards, if necessary to the nearest 0.01%, that is (a) the rate
determined by Administrative Agent, at approximately 10:00 a.m. on the second
Business Day before the applicable Interest Period, as the rate reported by
Telerate Mortgage Services or ▇▇▇▇▇▇-▇▇▇▇▇▇ for deposits in United States
dollars in the London interbank market that are comparable in amount and
maturity of that Borrowing, or (b) if Administrative Agent cannot determine that
rate, then the rate that deposits in United States dollars are offered to
Administrative Agent in the amount of that LIBOR Borrowing in the London
interbank market, at approximately 11:00 a.m., London, England, time on the
third Business Day before the applicable Interest Period, for deposits
comparable in amount and maturity of that Borrowing.
"LIBOR Borrowing" means any Borrowing (other than a Swing Borrowing) that
bears interest at the Average-Adjusted-LIBOR Rate.
13
"Lien" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners.
"Litigation" means any action by or before any Tribunal.
"Loan Documents" means (a) this agreement, certificates and reports
delivered under this agreement, and exhibits and schedules to this agreement,
(b) all agreements, documents, and instruments in favor of Administrative Agent
or Lenders (or Administrative Agent on behalf of Lenders) ever delivered under
this agreement or otherwise delivered in connection with any of the Obligation,
(c) all LCs and LC Agreements, and (d) all renewals, extensions, and
restatements of, and amendments and supplements to, any of the foregoing.
"Management Report" means a report delivered by a Responsible Officer of
Borrower to Administrative Agent in substantially the form of Exhibit D-5.
"Market Value" means, at any time (a) for Mortgage Loans, except as
provided in clause (b) below, a market value based upon the then-most recent
posted net yield for 30-day mandatory future delivery furnished by FNMA and
published and distributed by Telerate Mortgage Services or ▇▇▇▇▇▇-▇▇▇▇▇▇ or (if
that posted net yield is not available from these services) obtained by
Administrative Agent from FNMA, (b) for Jumbo Loans or any other Mortgage Loan
when the posted rate is not available from FNMA, the value determined in good
faith by Administrative Agent, and (c) for Mortgage Securities, the applicable
Take-Out Prices, as detailed in the then most-recent Take-Out Report delivered
by Borrower under this agreement of all Take-Out Commitments relating to
Mortgage Securities.
"Material-Adverse Event" means any circumstance or event that, individually
or collectively, is reasonably expected to result (at any time before the
commitments under this agreement are fully canceled or terminated and the
Obligation is fully paid and performed) in any (a) impairment of Borrower's or
Guarantor's ability to perform any of its payment or other material obligations
under any Loan Document or (ii) the ability of Administrative Agent or any
Lender to enforce any of those obligations or any of their respective Rights
under the Loan Documents, (b) material and adverse effect on Borrower's
individual financial condition or the Companies' consolidated financial
condition as represented to Lenders in the Current Financials most recently
delivered before the date of this agreement, (c) material and adverse effect on
any Collateral, or (d) Default or Potential Default.
"Material Agreement" means, for any Person, any agreement to which that
Person is a party, by which that Person is bound, or to which any assets of that
Person may be subject, and that is not cancelable by that Person upon less than
30-days notice without liability for further payment other than nominal penalty,
and the default under which or cancellation or forfeiture of which would be a
Material-Adverse Event.
"Maximum Amount" and "Maximum Rate" respectively mean, for any day and for
any Lender, the maximum non-usurious amount and the maximum non-usurious rate of
interest that, under applicable Law, the Lender is permitted to contract for,
charge, take, reserve, or receive on its portion of the Obligation.
"Mortgage Collateral" means all Mortgage Loans, Mortgage Securities, and
related Collateral Documents offered as Collateral under the Loan Documents.
14
"Mortgage-Collateral Group" is defined on Schedule 4.2.
"Mortgage Loan" means a loan that is not a construction or non-residential
commercial loan, is evidenced by a valid promissory note, and is secured by a
mortgage, deed of trust, or trust deed that grants a perfected first-priority
Lien (except as otherwise specifically provided in the Loan Documents) on
residential-real property.
"Mortgage Pool" means a (a) "group" or "grouping" of Mortgage Loans
assembled in accordance with, and as that term is used in, the FHLMC Guide, (b)
"pool" of Mortgage Loans assembled in accordance with, and as that term is used
in, the FNMA Guide or the GNMA I Guide, (c) "pool" of Mortgage Loans or a "loan
package" consisting of Mortgage Loans assembled in accordance with, and as those
terms are used in, the GNMA II Guide, or (d) any other pool of Mortgage Loans
assembled by an Approved Investor securing, and providing for pass-through
payments of principal and interest on, its Mortgage Securities.
"Mortgage Security" means a security, in respect of an underlying pool of
related Mortgage Loans, that provides for payment by the issuer to the holder of
specified principal installments and a fixed-interest rate on the unpaid
balance, with all prepayments being passed through to the holder, and is issued
in certificate or book-entry form.
"Multiemployer Plan" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the IRC (or any similar type
of plan established or regulated under the Laws of any foreign country) to which
Borrower or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
"Net Income" means, for any period and any Person, the amount that should,
in accordance with GAAP, be reflected on that Person's income statement as net
income (reflecting that Person's profit or loss after deducting its Tax expense)
for that period after deduction of any minority interests.
"Net Worth" means, for any period and any Person, that Person's
stockholder's equity as determined under GAAP.
"Notes" means the Warehouse Notes, Swing Note, Working-Capital Notes, and
Term-Line Notes.
"Obligation" means all (a) present and future indebtedness, obligations,
and liabilities of Borrower to Administrative Agent or any Lender and related to
any Loan Document, whether principal, interest, fees, costs, attorneys' fees, or
otherwise, (b) all present and future indebtedness, obligations, and liabilities
of Borrower to Administrative Agent or any Lender in respect of any Hedge
Contract, (c) amounts that would become due but for operation of 11 U.S.C.
Sections 502 and 503 or any other provision of Title 11 of the United States
Code, and all renewals, extensions, and modifications of any of the foregoing,
and (d) pre- and post-maturity interest on any of the foregoing, including,
without limitation, all post-petition interest if any Company voluntarily or
involuntarily files for protection under any Debtor Law.
"Originator" means any Person who originates and acquires Mortgage Loans
and markets and sells then in the secondary market.
"Participant" is defined in Section 12.13.
15
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Debt" is defined in Section 8.1.
"Permitted Liens" is defined in Section 8.2.
"Permitted Loans/Investments" is defined in Section 8.3.
"Person" means any individual, entity, or Tribunal.
"P&I Borrowing" means a Working-Capital Borrowing that is (a) a Ratable
Borrowing, (b) supported by the Borrowing Base for Receivables, and (c) to be
used by Borrower to make a P&I Payment.
"P&I Payment" means an unreimbursed advance or payment by Borrower to
effect the timely payment of scheduled principal and interest on Mortgage
Securities that are backed by a Mortgage Pool serviced by Borrower in accordance
with Borrower's obligations under the applicable Servicing Contract to cover a
short-fall between the principal and interest collected from mortgagors in
respect of that Mortgage Pool and the principal and interest due on those
Mortgage Securities.
"Potential Default" means any event's occurrence or any circumstance's
existence that would, upon any required notice, time lapse, or both, become a
Default.
"Principal Debt" means, at any time, the outstanding principal balance of
all Borrowings.
"Purchaser" is defined in Section 12.14.
"Ratable Borrowing" means a Borrowing that is advanced by Lenders to
Borrower in accordance with their Commitment Percentages.
"Regulation Q" means Regulation Q promulgated by the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 17.
"Regulation U" means Regulation U promulgated by the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 221.
"Regulation X" means Regulation X promulgated by the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 224.
"Release Request" means a Release Request executed and delivered by
Borrower to Administrative Agent in substantially in the form of Exhibit C-6.
"Representatives" means representatives, officers, directors, employees,
attorneys, and agents.
"Repurchase Borrowing" means a Warehouse Borrowing that is (a) a Ratable
Borrowing or Swing Borrowing, (b) subject to the Repurchase Sublimit and (c)
supported by the Borrowing Base for Eligible-Repurchased Loans.
"Repurchase Sublimit" means $20,000,000.
16
"Responsible Officer" means (a) the chairman, president, chief executive
officer, any vice president, or chief financial officer of Borrower to the
extent that such officer's name, title, and signature have been certified to
Administrative Agent by the secretary or an assistant secretary of Borrower or
(b) any other officer designated as a "Responsible Officer" in writing to
Administrative Agent by any officer in clause (a) preceding.
"Revolving Subordinated Loan Agreement" means the Revolving Loan Agreement
dated August 1, 1995, between Borrower and Guarantor.
"Rights" means rights, remedies, powers, privileges, and benefits.
"Second-Lien Borrowing" means a Warehouse Borrowing which is (a) a Ratable
Borrowing or Swing Borrowing, (b) subject to the Second-Lien Sublimit, and (c)
supported by the Borrowing Base for Eligible-Second-Lien Loans.
"Second-Lien Sublimit" means $5,000,000.
"Security Agreement" means the Security Agreement executed by Borrower and
Administrative Agent in substantially the form of Exhibit C-1.
A "servicer" means variously a "seller," "servicer," "issuer," or "lender,"
as defined or used in the applicable Guide in respect of a Person having
Servicing Rights.
"Servicing Account" means a non-interest bearing deposit account
established by Borrower with Administrative Agent, styled and numbered "Matrix
Servicing Account," Account No. 1886479342, for deposit of P&I Borrowings, T&I
Borrowings, Foreclosure Borrowings, and payments on the Obligation related to
P&I Borrowings, T&I Borrowings, and Foreclosure Borrowings.
"Servicing Contract" means, at any time, a Guide or any other present or
future written agreement between an investor and Borrower acting as a servicer,
or master servicer in the case of a sub-servicing arrangement, providing for
Borrower to service mortgage loans or mortgage pools, as that Guide or agreement
may be supplemented by applicable manuals, guides, and Laws.
"Servicing Payments" means P&I Payments, T&I Payments, and Foreclosure
Payments.
"Servicing Portfolio" means, at any time, the total unpaid principal amount
of Mortgage Loans serviced by Borrower for a fee, the servicing rights to which
are owned by Borrower, other than any Mortgage Loans serviced by Borrower under
a subservicing agreement or a master servicing agreement.
"Servicing Receivables" means, at any time, all Eligible-Foreclosure
Receivables, Eligible-P&I Receivables, and Eligible-T&I Receivables.
"Servicing Rights" means, for Borrower and at any time, all present and
future Rights as servicer or master servicer under Servicing Contracts,
including, but not limited to, all Rights to receive Servicing Receivables and
all other compensation, payments, reimbursements, termination and other fees,
and proceeds of any disposition of those Rights.
17
"Settlement Account" means a non-interest bearing deposit account
established by Borrower with Administrative Agent, styled and numbered "Matrix
Settlement Account," Account No. 1886479318, for deposit of payments from
investors, the settlement of collections from Mortgage Securities in connection
with Mortgage Collateral, and deposit of payments on the Obligation.
"Shipping Period" means 45 calendar days (60 calendar days for bond
programs and FNMA and FHLMC arm conversions) for the Collateral Documents for
any Mortgage Loan shipped to or for an investor under Section 4.5.
"Shipping Request" means a Shipping Request executed and delivered by
Borrower to Administrative Agent in substantially the form of Exhibit C-3.
"Solvent" means, for any Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
"Subprime Borrowing" means a Warehouse Borrowing which is (a) a Ratable
Borrowing or Swing Borrowing, (b) subject to the Subprime Sublimit, and (c)
supported by the Borrowing Base for Eligible-Subprime Loans.
"Subprime Sublimit" means, at any time, $10,000,000.
"Subsidiary" of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
"Swing Borrowing" means a Warehouse Borrowing that is (a) either a Dry
Borrowing or Wet Borrowing but not a Gestation Borrowing or a LIBOR Borrowing,
(b) advanced by Administrative Agent to Borrower under the Swing Sublimit, and
(c) supported by the Borrowing Base for Mortgage Collateral.
"Swing Note" means a promissory note executed and delivered by Borrower,
payable to Administrative Agent's order, in the stated principal amount of the
Swing Sublimit, and substantially in the form of Exhibit A-2, as renewed,
extended, amended, or replaced.
"Swing Sublimit" means $15,000,000.
"Take-Out Commitment" means a binding commitment from an Approved Investor
to purchase Mortgage Collateral, acceptable in form and substance to
Administrative Agent, in favor of Borrower, with respect to which there is no
condition which cannot be reasonably anticipated to be satisfied or complied
with before its expiration.
"Take-Out Price" means, at any time, the amount described and calculated as
provided on Schedule 4.2.
"Take-Out Report" means a report delivered by Borrower to Administrative
Agent substantially in the form of Exhibit D-4.
18
"Taxes" means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises, or assets.
"Term-Line Borrowing" means a Ratable Borrowing that is (a) advanced to
Borrower under the Term-Line Commitment and (b) supported by the Borrowing Base
for Term-Line.
"Term-Line Commitment" means, at any time and for any Lender, the amount
stated beside its name and so designated on Schedule 2, as that schedule may be
amended and as that amount may be canceled or terminated under this agreement.
"Term-Line Note" means a promissory note executed and delivered by
Borrower, payable to a Lender's order, in the stated principal amount of its
Term-Line Commitment, and substantially in the form of Exhibit A-4, as renewed,
extended, or replaced.
"Termination Percentage" means, at any time for any Lender, (a) in relation
to Warehouse Borrowings, the proportion (stated as a percentage) that the
Principal Debt owed to it in respect of Warehouse Borrowings bears to the total
Principal Debt owed to all Lenders in respect of Warehouse Borrowings, (b) in
relation to Working-Capital Borrowings, the proportion (stated as a percentage)
that the Principal Debt owed to it in respect of Working-Capital Borrowings
bears to the total Principal Debt owed to all Lenders in respect of Working-
Capital Borrowings, (c) in relation to Term-Line Borrowings, the proportion
(stated as a percentage) that the Principal Debt owed to it in respect of Term-
Line Borrowings bears to the total Principal Debt owed to all Lenders in respect
of Term-Line Borrowings, and (d) in relation to the determination of Determining
Lenders, the proportion (stated as a percentage) that the total Principal Debt
owed to it bears to the total Principal Debt owed to all Lenders.
"Three-Party Agreement" means a Three-Party Agreement entered into between
Administrative Agent, Borrower, and an Approved Originator substantially in the
form of Exhibit G.
"T&I Borrowing" means a Working-Capital Borrowing that is (a) a Ratable
Borrowing, (b) supported by the Borrowing Base for Receivables, and (c) to be
used by Borrower to make a T&I Payment.
"T&I Payment" means an unreimbursed advance or payment by Borrower to cover
tax- and insurance-escrow payments not paid when required by a mortgagor under a
Mortgage Loan in accordance with Borrower's obligations under the applicable
Servicing Contract.
"Total-Adjusted Debt" means, for the Companies, on a consolidated basis,
and at any time, the sum of (a) total Debt, minus (b) obligations under
repurchase agreements used to finance mortgage securities, minus (c) obligations
under escrow-arbitrage-type facilities.
"Tranche A" means that portion of Term-Line Borrowings that (a) is advanced
for the purpose of leveraging certain portions of Borrower's existing Servicing
Portfolio, (b) may not be reborrowed under this agreement on or after the
Tranche A-Actual-Termination Date, and (c) may not exceed an amount equal at any
time to the lesser of either (i) the total Term-Line Commitments minus Tranche B
or (ii) $15,000,000.
"Tranche A-Actual-Termination Date" means the earlier of either (a) the
Tranche A-Stated-Termination Date or (b) the date on which all of the Term-Line
Commitments have otherwise terminated or been canceled.
19
"Tranche A-Stated-Termination Date" means August 1, 1999.
"Tranche B" means that portion of Term-Line Borrowings that (a) is advanced
for the purpose of financing certain Servicing Portfolio acquisitions, (b) may
not be reborrowed under this agreement on or after the Tranche B-Actual-
Termination Date, and (c) may not exceed an amount equal at any time to the
lesser of either (i) the total Term-Line Commitments minus Tranche A or (ii)
$30,000,000.
"Tranche B-Actual-Termination Date" means the earlier of either (a) the
Tranche B-Stated-Termination Date or (b) the date on which all of the Term-Line
Commitments have otherwise terminated or been canceled.
"Tranche B-Stated-Termination Date" means June 30, 2000.
"Tribunal" means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel, or (c)
central bank.
"Trust Receipt" means a Trust Receipt and Agreement executed and delivered
by Borrower to Administrative Agent in substantially the form of Exhibit C-5.
"UCC" means the Uniform Commercial Code as enacted in Texas or other
applicable jurisdictions.
"VA" means the Department of Veteran's Affairs.
"VA Loan" means a Mortgage Loan (a) the full or partial payment of which is
guaranteed by the VA under the Servicemen's Readjustment Act of 1944 or Chapter
37 of Title 38 of the United States Code, (b) for which the VA has issued a
current binding and enforceable commitment for such a guaranty, or (c) that is
subject to automatic guarantee by the VA. In each case, the applicable guaranty,
commitment to guarantee, or automatic guaranty is for the maximum amount
permitted by Law.
"Warehouse Account" means a non-interest bearing deposit account
established by Borrower with Administrative Agent, styled and numbered "Matrix
Funding Account," Account No. 1886479326, for deposit of Warehouse Borrowings.
"Warehouse-Actual-Termination Date" means the earlier of either (a) the
Warehouse-Stated-Termination Date or (b) the date on which all of the Warehouse
Commitments have otherwise terminated or been canceled.
"Warehouse Borrowing" means a Ratable Borrowing or Swing Borrowing that is
(a) advanced to Borrower under the Warehouse Commitment, (b) either a Dry
Borrowing, Wet Borrowing, Gestation Borrowing (which may not be a Swing
Borrowing), Alt-A Borrowing, Subprime Borrowing, Second-Lien Borrowing,
Indirect-Warehouse Borrowing, or Repurchase Borrowing, and (c) supported by the
Borrowing Base for Mortgage Collateral.
"Warehouse Commitment" means, at any time and for any Lender, the amount
stated beside its name and so designated on Schedule 2, as that schedule may be
amended and as that amount may be canceled or terminated under this agreement.
20
"Warehouse Note" means a promissory note executed and delivered by
Borrower, payable to a Lender's order, in the stated principal amount of its
Warehouse Commitment, and substantially in the form of Exhibit A-1, as renewed,
extended, amended, or replaced.
"Warehouse-Stated-Termination Date" means June 30, 2000.
"Wet Borrowing" means a Borrowing for which all of the Collateral Documents
have not been delivered to Administrative Agent in accordance with Section 4.3.
"Wet Period" means seven Business Days for the Collateral Documents for any
Mortgage Loan that supports a Wet Borrowing.
"Wet Sublimit" means, at any time, a percentage of the total Warehouse
Commitments, which percentage is (a) 35% for the first five and last five
Business Days of each Calendar Month, and (b) 25% at all other times.
"Wire Instructions" mean, for any Person, the information for wire
transfers of funds to that Person, which (until changed by written notice to all
other parties to this agreement) are stated for (a) Borrower and Administrative
Agent, beside their names on the signature pages below, and (b) each Lender,
beside its name on Schedule 2.
"Working-Capital Borrowing" means a Borrowing that is (a) a Ratable
Borrowing, (b) either a P&I Borrowing, T&I Borrowing, or Foreclosure Borrowing,
(c) subject to the Working-Capital Commitment, and (d) supported by the
Borrowing Base for Receivables.
"Working-Capital Commitment" means, at any time and for any Lender, the
amount stated beside its name and so designated on Schedule 2, as that schedule
may be amended and as that amount may be canceled or terminated under this
agreement.
"Working-Capital Note" means a promissory note executed and delivered by
Borrower, payable to a Lender's order, in the stated principal amount of its
Working-Capital Commitment, and substantially in the form of Exhibit A-3, as
renewed, extended, or replaced.
1.2 Time References. Unless otherwise specified, in the Loan Documents (a)
time references (e.g., 10:00 a.m.) are to time in Dallas, Texas, and (b) in
calculating a period from one date to another, the word "from" means "from and
including" and the word "to" or "until" means "to but excluding."
1.3 Other References. Unless otherwise specified, in the Loan Documents
(a) where appropriate, the singular includes the plural and vice versa, and
words of any gender include each other gender, (b) heading and caption
references may not be construed in interpreting provisions, (c) monetary
references are to currency of the United States of America, (d) section,
paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Document in which they are used, (e) references to "telefax,"
"telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy
transmissions, (f) references to "including" mean including without limiting the
generality of any description preceding that word, (g) the rule of construction
that references to general items that follow references to specific items as
being limited to the same type or character of those specific items is not
applicable in the Loan Documents, (h) references to any
21
Person include that Person's heirs, personal representatives, successors,
trustees, receivers, and permitted assigns, (i) references to any Law include
every amendment or supplement to it, rule and regulation adopted under it, and
successor or replacement for it, and (j) references to any Loan Document or
other document include every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it.
1.4 Accounting Principles. Unless otherwise specified, in the Loan
Documents (a) GAAP in effect on the date of this agreement determines all
accounting and financial terms and compliance with all financial covenants, (b)
otherwise, all accounting principles applied in a current period must be
comparable in all material respects to those applied during the preceding
comparable period, and (c) while Borrower has any consolidated Subsidiaries (i)
all accounting and financial terms and compliance with reporting covenants must
be on a consolidating and consolidated basis, as applicable, and (ii) compliance
with financial covenants must be on a consolidated basis.
SECTION 2. BORROWING PROVISIONS. Subject to the provisions in the Loan
Documents, each Lender severally and not jointly agrees to extend credit to
Borrower under the Warehouse Commitments. the Working-Capital Commitments, and
the Term-Line Commitments in accordance with the following provisions.
2.1 Commitments.
(a) Warehouse Commitments. Subject to the limitations below and other
provisions of the Loan Documents, on a revolving basis, and on Business
Days before the Warehouse-Actual-Termination Date, each Lender severally
agrees to provide its Commitment Percentage (except for Administrative
Agent in respect of Swing Borrowings) of Warehouse Borrowings so long as,
in each case, no Warehouse Borrowing may be disbursed that would cause any
of the following applicable limitations to be exceeded, which limitations
must be read together and are not mutually exclusive:
(i) The sum (without duplication) of the total Principal Debt
plus the total LC Exposure may never exceed the lesser of either (A)
the total Combined Commitments or (B) the total Borrowing Base.
(ii) The total Principal Debt of all Warehouse Borrowings may
never exceed the lesser of either (A) the total Warehouse Commitments
or (B) the sum of the Borrowing Base for Mortgage Collateral plus the
Borrowing Base for Gestation Collateral.
(iii) The total Principal Debt of all Swing Borrowings may never
exceed the Swing Sublimit.
(iv) The total Principal Debt of all Wet Borrowings may never
exceed the Wet Sublimit.
(v) The total Principal Debt of all Gestation Borrowings may
never exceed the lesser of either (A) the Gestation Sublimit or (B)
the Borrowing Base for Gestation Collateral.
(vi) The total Principal Debt of all Alt-A Borrowings may never
exceed the lesser of either (A) the Alt-A Sublimit or (B) the
Borrowing Base for Eligible-Alt-A Loans.
22
(vii) The total Principal Debt of all Subprime Borrowings may
never exceed the lesser of either (A) the Subprime Sublimit or (B) the
Borrowing Base for Eligible-Subprime Loans.
(viii) The total Principal Debt of all Second-Lien Borrowings
may never exceed the lesser of either (A) the Second-Lien Sublimit or
(B) the Borrowing Base for Eligible-Second-Lien Loans.
(ix) The total Principal Debt of all Indirect-Warehouse
Borrowings may never exceed the lesser of either (A) the Indirect-
Warehouse Sublimit or (B) the Borrowing Base for Eligible-Indirect-
Warehouse Loans.
(x) The total Principal Debt of all Repurchase Borrowings may
never exceed the lesser of either (A) the Repurchase Sublimit or (B)
the Borrowing Base for Eligible-Repurchased Loans.
(xi) Except for Administrative Agent in respect of Swing
Borrowings, no Lender's direct or indirect portion of the Principal
Debt under this clause (a) may ever exceed either its Warehouse
Commitment or its Commitment Percentage for Warehouse Borrowings.
(xii) No Warehouse Borrowing may be made on a day that is not a
Business Day, or on or after the Warehouse-Actual-Termination Date.
(xiii) Each disbursement of a Warehouse Borrowing must be at
least $25,000.
(b) Working-Capital Commitments. Subject to the limitations below
and other provisions of the Loan Documents, on a revolving basis, and on
Business Days before the Warehouse-Actual-Termination Date, each Lender
severally agrees to provide its Commitment Percentage of Working-Capital
Borrowings so long as, in each case, no Working-Capital Borrowing may be
disbursed that would cause any of the following applicable limitations to
be exceeded, which limitations must be read together and are not mutually
exclusive:
(i) The sum (without duplication) of the total Principal Debt
plus the total LC Exposure may never exceed the lesser of either (A)
the total Combined Commitments, or (B) the total Borrowing Base.
(ii) The sum (without duplication) of the total Principal Debt
of all Working-Capital Borrowings plus the total LC Exposure may never
exceed the lesser of either (A) the total Working-Capital Commitments
or (B) the Borrowing Base for Receivables.
(iii) No Working-Capital Borrowing may be made on a day that is
not a Business Day, or on or after the Warehouse-Actual-Termination
Date.
(iv) Each disbursement of a Working-Capital Borrowing must be
at least $25,000.
(c) Term-Line Commitments. Subject to the limitations below and other
provisions of the Loan Documents, on a revolving basis, and on Business
Days before the Tranche A-Actual-
23
Termination Date or the Tranche B-Actual-Termination Date (as applicable),
each Lender severally agrees to provide its Commitment Percentage of Term-
Line Borrowings so long as, in each case, no Term-line Borrowing may be
disbursed that would cause any of the following applicable limitations to
be exceeded, which limitations must be read together and are not mutually
exclusive:
(i) The sum (without duplication) of the total Principal Debt
plus the total LC Exposure may never exceed the lesser of either (A)
the total Combined Commitment, or (B) the total Borrowing Base.
(ii) The total Principal Debt of all Term-Line Borrowings may
never exceed the lesser of either (A) the total Term-Line Commitments
or (B) the Borrowing Base for Term-Line.
(iii) Term-Line Borrowings in respect of Tranche A and Tranche B
may never exceed the limitations for those Term-Line Borrowings in the
definitions of those terms in this agreement.
(iv) No Term-Line Borrowing may be made on a day that is not a
Business Day, or on or after the Tranche A-Actual-Termination Date or
Tranche B-Actual-Termination Date (as applicable).
(v) Each disbursement of a Term-Line Borrowing must be at
least $100,000.
Borrower may request that Term-Line Borrowings be made after the Tranche A-
Actual-Termination Date or Tranche B-Actual-Termination Date (as
applicable). Subject to all of the limitations of this Section 2.1(c) and
all other provisions of the Loan Documents, Lenders may in their sole and
absolute discretion provide such additional Term-Line Borrowings. If any
such additional Term-Line Borrowings are ever made, the payment schedule
for Tranche A and Tranche B (as applicable) shall be adjusted so that the
Principal Debt of such Term-Line Borrowings is repaid according to the
same repayment schedule (other than the adjustment to the amount of the
monthly payment) as set forth in Section 3.3. Borrower acknowledges that
(i) neither Administrative Agent nor any Lender has made any
representations to Borrower regarding its intent to agree to any such
additional Term-Line Borrowings, (ii) no Lender shall have any obligation
to extend such additional Term-Line Borrowings, and (iii) any extension of
such additional Term-Line Borrowings shall not commit Lenders to any
further such extensions.
2.2 Borrowing Request. Borrower may only request a Borrowing by timely
delivering to Administrative Agent a Collateral-Delivery Notice and required
Collateral Documents under Section 4.3 and by delivering to Administrative Agent
a Borrowing Request for the Borrowing before 11:00 a.m. on the Borrowing Date
for it for a Fed-Funds Borrowing or Base-Rate Borrowing or the third Business
Day before the Borrowing Date for a LIBOR Borrowing. A Borrowing Request is
irrevocable and binding on Borrower when delivered. Administrative Agent shall
use its best efforts to promptly, but at least by 1:00 p.m. on the day it timely
receives a Borrowing Request for a Ratable Borrowing, send a copy of it to each
Lender by fax and confirm it by telephone.
2.3 Fundings.
24
(a) Remittance by Lenders. Each Lender shall remit its Commitment
Percentage of any Ratable Borrowing requested in a Borrowing Request to
Administrative Agent's principal office in Dallas, Texas, by wire transfer
according to Administrative Agent's Wire Instructions, in funds that are
available for immediate use by Administrative Agent by 2:00 p.m. on the
Borrowing Date.
(b) Funding by Administrative Agent. Subject to receipt of those
funds, Administrative Agent shall (i) for a Borrowing under an
Administrative Agent's Request, treat those funds as a payment by Borrower
on the Principal Debt of Swing Borrowings, and (ii) for any other Borrowing
on the Borrowing Date, unless to its actual knowledge any of the applicable
conditions precedent have not been satisfied by Borrower or waived by the
requisite Lenders, either (A) deposit those funds into the Warehouse
Account for a Dry Borrowing, (B) wire transfer those funds in accordance
with the Borrowing Request for a Wet Borrowing, (C) deposit those funds
into the Servicing Account for a Working-Capital Borrowing, or (D) wire
transfer those funds in accordance with the Borrowing Request for a Term-
Line Borrowing.
(c) Non-remittance Under Borrowing Request. Absent contrary written
notice from a Lender received by Administrative Agent by 2:00 p.m. on the
Borrowing Date, Administrative Agent may assume that each Lender has made
its Commitment Percentage of a Ratable Borrowing under a Borrowing Request
available to Administrative Agent on the Borrowing Date and may, but is not
obligated to, make available to Borrower a corresponding amount. If a
Lender fails to make its Commitment Percentage of that Borrowing available
to Administrative Agent on the Borrowing Date, whether because of that
Lender's default, because that Lender is not open for business on that
Business Day, or otherwise, then Administrative Agent may recover that
amount on demand (i) from that Lender, together with interest at the Fed-
Funds Rate, during the period from the Borrowing Date to the date
Administrative Agent recovers that amount from that Lender, which payment
is then deemed to be that Lender's Commitment Percentage of that Borrowing,
or (ii) if that Lender fails to pay that amount upon demand, then from
Borrower together with interest at an annual interest rate equal to the
rate applicable to the requested Borrowing during the period from the
Borrowing Date to the date Administrative Agent recovers that amount from
Borrower. Notwithstanding these provisions, each Lender remains obligated
to lend its Commitment Percentage of that Borrowing, assumes the credit
risk for that amount when the Borrowing is made available to or for
Borrower, and, after Administrative Agent has recovered the amount of
interest provided for in clause (i) above, is entitled to interest on that
amount from the Borrowing Date.
(d) Non-remittance Under Administrative Agent's Request. If a Lender
fails to make its Commitment Percentage of a Ratable Borrowing under an
Administrative Agent's Request available to Administrative Agent on its
Borrowing Date, then, without acquiescing in that Lender's default or
waiving any Rights Administrative Agent has against that Lender, by 10:00
a.m. on the next Business Day, then Administrative Agent shall notify
Borrower of the amount of Principal Debt of Swing Borrowings that remains.
(e) Other Lenders. Although no Lender is responsible for the failure
of any other Lender to make its Commitment Percentage of any Ratable
Borrowing, that failure does not excuse any other Lender from making its
Commitment Percentage of that Borrowing.
(f) Administrative Agent's Request. On any Business Day on which
there is any Principal Debt for Swing Borrowings, Administrative Agent may,
but at least once per calendar week
25
when those circumstances exist, Administrative Agent shall (without any
liability for failing to), unilaterally request a Ratable Borrowing under
this Section 2.3, to be made in the amount of that Principal Debt on the
next Business Day, as a Fed-Funds Borrowing. That Ratable Borrowing is for
the account of Borrower, but does not require Borrower's joinder or other
action. Administrative Agent shall fax that request (an "Administrative
Agent's Request") to each Lender and Borrower and confirm it by telephone
by 2:00 p.m. on the Borrowing Date for the requested Ratable Borrowing.
When so made, an Administrative Agent's Request irrevocably binds Borrower.
2.4 Wet-Borrowing Procedures. The conditions and procedures of Section
2.2 and Section 2.3 apply to Wet Borrowings except as follows:
(a) Collateral Documents. A Wet Borrowing may be funded before
delivery to Administrative Agent of all of the required Collateral
Documents for the Eligible-Mortgage Loans supporting that Wet Borrowing.
The Collateral-Delivery Notice delivered to Administrative Agent for a Wet
Borrowing may be sent to Administrative Agent by fax but must identify and
describe each Mortgage Loan that supports that Wet Borrowing and the amount
of the Borrowing Base for Mortgage Collateral applicable to it. By
delivering the Collateral-Delivery Notice, Borrower confirms its grant
under this agreement of Lender Liens, from the Borrowing Date for each Wet
Borrowing, on each Collateral Document offered as Collateral in that
Collateral-Delivery Notice that is perfected subject to the delivery of the
related promissory notes for those Mortgage Loans to Administrative Agent
or its bailee.
(b) Funding by Administrative Agent. Administrative Agent shall make
the funds available to Borrower by 4:00 p.m. on the Borrowing Date by
depositing these funds into the Warehouse Account or by wire transfer in
accordance with the Borrowing Request.
2.5 Swing-Borrowing Procedures. The conditions and procedures of Section
2.2, Section 2.3, and Section 2.4 apply to Swing Borrowings except as follows:
(a) Borrowing Request. The Borrowing Request for a Swing Borrowing
must be delivered to Administrative Agent by 3:00 p.m. on the Borrowing
Date and may not request a LIBOR Borrowing.
(b) Election by Administrative Agent. Administrative Agent shall
then elect in its sole discretion whether to loan that Swing Borrowing. If
Administrative Agent elects to loan that Swing Borrowing, then it shall
follow the funding procedures that are applicable under Sections 2.2, 2.3,
and 2.4.
(c) Participations. Immediately upon Administrative Agent's funding
a Swing Borrowing, Administrative Agent is deemed to have sold and
transferred to each other Lender, and each other Lender is deemed
irrevocably and unconditionally to have purchased and received from
Administrative Agent, without recourse or warranty, an undivided interest
and participation in that Swing Borrowing to the extent of that Lender's
Commitment Percentage of the amount of it, which participation must be paid
for on demand by Administrative Agent.
2.6 Letters of Credit.
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(a) Conditions. Subject to the terms and conditions of this
agreement and applicable Laws, Administrative Agent (itself or through one
of its Affiliates, and references in this Section 2.6 to Administrative
Agent include those Affiliates) agrees to issue LCs upon Borrower's making
or delivering an LC Request and delivering an LC Agreement, both of which
must be received by Administrative Agent no later than on the Business Day
before the requested LC is to be issued, so long as (i) no LC may expire
after three Business Days before the Warehouse-Actual-Termination Date, and
(ii) the LC Exposure does not exceed $2,000,000.
(b) Participation. Immediately upon Administrative Agent's issuance
of any LC, Administrative Agent shall be deemed to have sold and
transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from
Administrative Agent, without recourse or warranty, an undivided interest
and participation to the extent of such Lender's Commitment Percentage
under the Working-Capital Commitment in the LC and all applicable Rights of
Administrative Agent in the LC, other than Rights to receive certain fees
provided in Section 3.14(f) to be for Administrative Agent's sole account.
(c) Reimbursement Obligations. To induce Administrative Agent to
issue and maintain LCs, and to induce Lenders to participate in issued LCs,
Borrower agrees to pay or reimburse Administrative Agent (i) on the date
when any draft or draw request is presented under any LC, the amount paid
or to be paid by Administrative Agent and (ii) promptly, upon demand, the
amount of any additional fees Administrative Agent customarily charges for
the application and issuance of an LC, for amending LC Agreements, for
honoring drafts and draw requests, and for taking similar action in
connection with letters of credit. If Borrower has not reimbursed
Administrative Agent for any drafts or draws paid or to be paid on the date
of Administrative Agent's demand for reimbursement, Administrative Agent is
irrevocably authorized to fund Borrower's reimbursement obligations as a
Base-Rate Borrowing under the Working-Capital Commitment if proceeds are
available under the Working-Capital Commitment and if the conditions in
this agreement for such a Borrowing (other than any notice requirements or
minimum funding amounts) have, to Administrative Agent's knowledge, been
satisfied. The proceeds of that Borrowing shall be advanced directly to
Administrative Agent to pay Borrower's unpaid reimbursement obligations. If
funds cannot be advanced under the Working-Capital Commitment, then
Borrower's reimbursement obligation shall constitute a demand obligation.
Borrower's obligations under this section are absolute and unconditional
under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment that Borrower may have at any time
against Administrative Agent or any other Person. From Administrative
Agent's demand for reimbursement to the date paid (including any payment
from proceeds of a Base-Rate Borrowing), unpaid reimbursement amounts
accrue interest that is payable on demand at the Default Rate thereafter.
(d) General. Administrative Agent shall promptly notify Borrower of
the date and amount of any draft or draw request presented for honor under
any LC (but failure to give notice will not affect Borrower's obligations
under this agreement). Administrative Agent shall pay the requested amount
upon presentment of a draft or draw request unless presentment on its face
does not comply with the terms of the applicable LC. When making payment,
Administrative Agent may disregard (i) any default or potential default
that exists under any other agreement and (ii) obligations under any other
agreement that have or have not been performed by the beneficiary or any
other Person (and Administrative Agent is not liable for any of those
obligations). Borrower's reimbursement obligations to Administrative Agent
and Lenders, and each Lender's obligations to Administrative Agent, under
this section are absolute and unconditional irrespective of, and
Administrative Agent is
27
not responsible for, (i) the validity, enforceability, sufficiency,
accuracy, or genuineness of documents or endorsements (even if they are in
any respect invalid, unenforceable, insufficient, inaccurate, fraudulent,
or forged), (ii) any dispute by any Company with or any Company's claims,
setoffs, defenses, counterclaims, or other Rights against Administrative
Agent, any Lender, or any other Person, or (iii) the occurrence of any
Potential Default or Default. However, nothing in this agreement
constitutes a waiver of Borrower's Rights to assert any claim or defense
based upon the gross negligence or willful misconduct of Administrative
Agent or any Lender. Administrative Agent shall promptly distribute
reimbursement payments received from Borrower to all Lenders according to
their Commitment Percentages of the total Working-Capital Commitment.
(e) Obligations of Lenders. If Borrower fails to reimburse
Administrative Agent as provided in Section 2.6(c) and Section 2.6(d)
within 24 hours after Administrative Agent's demand for reimbursement, and
funds cannot be advanced under the Working-Capital Commitment to satisfy
the reimbursement obligations, Administrative Agent shall promptly notify
each Lender of Borrower's failure, of the date and amount paid, and of each
Lender's Commitment Percentage of the unreimbursed amount. Each Lender
shall promptly and unconditionally make available to Administrative Agent
in immediately available funds its Commitment Percentage of the unpaid
reimbursement obligation, subject to the limitations of Section 2.1. Funds
are due and payable to Administrative Agent before the close of business on
the Business Day when Administrative Agent gives notice to each Lender of
Borrower's reimbursement failure (if notice is given before 1:00 p.m.) or
on the next succeeding Business Day (if notice is given after 1:00 p.m.).
All amounts payable by any Lender accrue interest after the due date at the
Federal-Funds Rate from the day the applicable draft or draw is paid by
Administrative Agent to (but not including) the date the amount is paid by
the Lender to Administrative Agent.
(f) Duties of Administrative Agent. Administrative Agent agrees with
each Lender that it will exercise and give the same care and attention to
each LC as it gives to its other letters of credit. Each Lender and
Borrower agree that, in paying any draft or draw under any LC,
Administrative Agent has no responsibility to obtain any document (other
than any documents expressly required by the respective LC) or to ascertain
or inquire as to any document's validity, enforceability, sufficiency,
accuracy, or genuineness or the authority of any Person delivering it.
Neither Administrative Agent nor its Representatives will be liable to any
Lender or any Company for any LC's use or for any beneficiary's acts or
omissions. Any action, inaction, error, delay, or omission taken or
suffered by Administrative Agent or any of its Representatives in
connection with any LC, applicable draws, drafts, or documents, or the
transmission, dispatch, or delivery of any related message or advice, if in
good faith and in conformity with applicable Laws and in accordance with
the standards of care specified in the Uniform Customs and Practices for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (as amended or modified), is binding upon the Companies
and Lenders and does not place Administrative Agent or any of its
Representatives under any resulting liability to any Company or any Lender.
Administrative Agent is not liable to any Company or any Lender for any
action taken or omitted, in the absence of gross negligence or willful
misconduct, by Administrative Agent or its Representative in connection
with any LC.
(g) Cash Collateral. On the Warehouse-Actual-Termination Date and if
requested by Determining Lenders while a Default exists, Borrower shall
provide Administrative Agent, for the benefit of Lenders, cash collateral
in an amount equal to the then-existing LC Exposure.
28
(h) Indemnification. Borrower shall protect, indemnify, pay, and
save Administrative Agent, each Lender, and their respective
Representatives harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges, and expenses (including
reasonable attorneys' fees) which any of them may incur or be subject to as
a consequence of the issuance of any LC, any dispute about it, or the
failure of Administrative Agent to honor a draft or draw request under any
LC as a result of any act or omission (whether right or wrong) of any
present or future Tribunal. However, no Person is entitled to indemnity
under the foregoing for its own gross negligence or willful misconduct.
(i) LC Agreements. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this agreement in any manner. The fees and other amounts
payable with respect to each LC are as provided in this agreement, drafts
and draws under each LC are part of the Obligation, only the events
specified in this agreement as a Default shall constitute a default under
any LC, and the terms of this agreement control any conflict between the
terms of this agreement and any LC Agreement.
2.7 Borrowing Requests and LC Requests. Each Borrowing Request and LC
Request constitutes a representation and warranty by Borrower that as of the
Borrowing Date or the date of issuance of the requested LC, as the case may be,
that all of the conditions precedent in Section 5 have been satisfied.
2.8 Terminations. All Warehouse Commitments and all Working-Capital
Commitments automatically terminate in full on the Warehouse-Actual-Termination
Date, and all Term-Line Commitments automatically terminate in full on the
Tranche A-Actual-Termination Date or Tranche B-Actual-Termination Date (as
applicable). After giving written and irrevocable notice to Administrative Agent
and each Lender at least five Business Days before the effective date of any
termination, Borrower may fully or partially terminate the Warehouse
Commitments, the Working-Capital Commitments, or the Term-Line Commitments, or
any combination of them before those respective dates, and any partial
termination must be ratable in accordance with each Lender's Commitment
Percentage. Once terminated, no part of the Warehouse Commitment, the Working-
Capital Commitment, or Term-Line Commitment (as applicable) may be reinstated
except by an amendment to this agreement.
SECTION 3. PAYMENT TERMS.
3.1 Notes. The Principal Debt (and related interest) of Warehouse
Borrowings that are Ratable Borrowings, Warehouse Borrowings that are Swing
Borrowings, Working-Capital Borrowings, and Term-Line Borrowings is respectively
evidenced by the Warehouse Notes, Swing Note, Working-Capital Notes, and Term-
Line Notes.
3.2 Payment Procedures.
(a) Payments. Borrower shall make each payment and prepayment on the
Obligation to Administrative Agent, on behalf of Lenders, in accordance
with Administrative Agent's Wire Instructions in funds that are available
for immediate use by Administrative Agent. Payments that are received by
3:00 p.m. on a Business Day are deemed received on that Business Day.
Payments that
29
are received after 3:00 p.m. on a Business Day are deemed received on the
next Business Day. Subject to Section 3.7(f), applicable interest continues
to accrue through the calendar day immediately before the Business Day on
which the payment is deemed received. No Lender directly invoices Borrower
for, and only Administrative Agent invoices Borrower for, interest under
the Loan Documents.
(b) Distributions. When received under clause (a) above,
Administrative Agent shall distribute each payment to each Lender, in
accordance with Section 3.5 and each Lender's Wire Instructions, reasonably
promptly after receipt but by no later than 4:00 p.m. on the Business Day
the payment is deemed to be received by Administrative Agent under clause
(a) above. If Administrative Agent fails to distribute any payment to any
Lender as required by this clause, then Administrative Agent shall pay to
that Lender on demand interest on that payment, from the date due under
this clause until paid, at an annual interest rate equal from day to day to
the Fed-Funds Rate.
3.3 Scheduled Payments. Unless otherwise provided in this agreement,
Borrower shall pay the Obligation in accordance with the following table:
Obligation Payable
Interest on each LIBOR Borrowing except at As it accrues on (a) the last day of that Borrowing's
the Default Rate Interest Period and, if that Interest Period is longer
than three months, 90 days after its first day and each
90 days after that and (b) on the Warehouse-Actual-
Termination Date (for Warehouse and Working-Capital
Borrowings) or the final maturity date of the
applicable tranche for Term-Line Borrowings, as the
case may be
Interest on each other Borrowing except at On (a) the 15th day of each Calendar Month as it accrued
the Default Rate it accrued on the last day of the preceding Calendar
Month and (b) on the Warehouse-Actual-Termination Date
or the final maturity date of the applicable tranche
for Term-Line Borrowings, as the case may be
Interest at the Default Rate regardless of On demand as it accrues
Borrowing-Price Category
Principal Debt of Swing Borrowings On demand
Other Principal Debt of, and other Obligation On the Warehouse-Actual-Termination Date
related to, Warehouse Borrowings and
Working-Capital Borrowings
Principal Debt of Tranche A outstanding on In consecutive, equal, monthly installments commencing
the Tranche A-Actual-Termination Date on the Tranche A-Actual-Termination Date and continuing
on the same day of each ensuing Calendar Month, with
the last installment being made on June 30, 2004,
accompanied by the balance of all related Obligation
then remaining unpaid
Principal Debt of Tranche B outstanding on In consecutive, equal, monthly installments commencing
the Tranche B-Actual-Termination Date on June 30, 2000, and continuing on the same day of
each ensuing Calendar Month, with the last installment
being made on June 30, 2005, accompanied by the balance
of all Obligation then remaining unpaid
30
3.4 Prepayments.
(a) P&I Borrowings. For at least seven-consecutive days during each
30-consecutive-day period, Borrower shall pay all, and not owe any,
Principal Debt for P&I Borrowings.
(b) T&I Borrowing. Borrower shall pay the Principal Debt of each T&I
Borrowing on or before the earlier of either 270 days after its Borrowing
Date or the Warehouse-Actual-Termination Date.
(c) Foreclosure Borrowing. Borrower shall pay the Principal Debt of
each Foreclosure Borrowing on or before the earlier of either 180 days
after its Borrowing Date or the Warehouse-Actual-Termination Date.
(d) Commitment Termination. Borrower shall, on the date that full or
partial termination of a Lender's Warehouse Commitment, Working-Capital
Commitment, or Term-Line Commitment, as the case may be, becomes effective
under Section 2.8, pay to that Lender the full Obligation owed to it in
respect of that commitment in the case of a full termination or the
Principal Debt owed to it for the relevant Borrowings that exceed its
reduced commitment, as the case may be.
(e) Borrowing Excess. If at any time a Borrowing Excess exists,
then, on demand, Borrower shall take the following applicable action that
eliminates that Borrowing Excess:
(i) For a Borrowing Excess that is not capable of elimination
by delivery of additional Collateral or an increase in the total or
any applicable Borrowing Base, e.g., if the total Principal Debt were
to exceed the total Combined Commitments, or when a Default exists,
prepay to Administrative Agent for distribution to the appropriate one
or more Lenders Principal Debt of the appropriate one or more
Borrowing-Purpose Categories (together with any related Funding Loss).
(ii) For any other Borrowing Excess and only when no Default
exists, either (A) deliver to Administrative Agent, in accordance with
this agreement, additional Collateral that causes the total or the
applicable Borrowing Base, as the case may be, to increase, (B) prepay
to Administrative Agent for distribution to the appropriate one or
more Lenders Principal Debt of the appropriate one or more Borrowing-
Purpose Categories (together with any related Funding Loss), or (C)
any combination of the actions under clauses (A) or (B) above.
(f) Voluntary Prepayments. Borrower may voluntarily prepay all or
any of the Obligation at any time without premium or penalty, but with any
applicable Funding Loss.
3.5 Order of Application. All payments and proceeds, whether voluntary,
involuntary, through the exercise of any Right of set-off or other Right,
realization against any Collateral, or otherwise, shall be applied in the
following order:
(a) No Default. While no Default exists, in the order and manner as
Borrower directs, except that principal payments must always be applied in
the following order and manner:
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(i) Principal Debt of Swing Borrowings, in each case payable
solely to Administrative Agent, which Administrative Agent shall
distribute in accordance with the participation interests in that
Principal Debt that any one or more Lenders may have purchased and
paid for under Section 2.5(c).
(ii) Principal Debt of all non-Swing Borrowings in the order
below, payable ratably to each Lender in accordance with its
Commitment Percentage, except as the order may be rearranged by
Administrative Agent to the extent possible to avoid the application
of any Funding Loss for LIBOR Borrowings. Principal Debt shall be
applied (A) to the Borrowing-Purpose Category to the extent the
collections or proceeds are from or arose in respect of the Collateral
in its Borrowing Base and (B) then in the following order:
. Term-Line Borrowings
. Foreclosure Borrowings
. P&I Borrowings
. T&I Borrowings
. Alt-A Borrowings (Wet Borrowings first)
. Subprime Borrowings (Wet Borrowings first)
. Repurchase Borrowings (Wet Borrowings first)
. Second-Lien Borrowings (Wet Borrowings first)
. Indirect-Warehouse Borrowings (Wet Borrowings first)
. Other Wet Borrowings
. Other Dry Borrowings (other than Gestation Borrowings)
. Gestation Borrowings
(b) Default or No Direction. While a Default exists or if Borrower
fails to give any direction, in the following order and manner:
(i) All costs and expenses incurred by Administrative Agent in
connection with its duties under the Loan Documents, including,
without limitation, fees and expenses paid by Administrative Agent to
any servicing companies retained by Administrative Agent to assist it
in servicing any Collateral required to be serviced, to any attorneys,
or to any agents, that have not been reimbursed by Lenders, together
with interest at the Default Rate, payable solely to Administrative
Agent.
(ii) All costs and expenses incurred by any Lender in
connection with the Loan Documents that are reimbursable to it under
the Loan Documents and all amounts paid by that Lender to
Administrative Agent as a reimbursement to it of costs and expenses
incurred by Administrative Agent in connection with its duties under
the Loan Documents, together with interest at the Default Rate,
payable ratably to Lenders in the proportion that each Lender's share
of those costs and expenses bears to the total of those costs and
expenses for all Lenders.
(iii) Accrued and unpaid interest on the Obligation, payable
ratably to Lenders in the proportion that the amount of interest owed
to each Lender bears to the total of all interest owed to all Lenders.
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(iv) Except with respect to payments and proceeds identifiable
as relating solely to Working-Capital Borrowings or Term-Line
Borrowings, Principal Debt of Swing Borrowings, in each case payable
solely to Administrative Agent, which Administrative Agent shall
distribute in accordance with the participation interests in that
Principal Debt that any one or more Lenders may have purchased and
paid for under Section 2.5(c).
(v) Any LC reimbursement obligations that are due and payable
and that remain unfunded by any Borrowing under the Working-Capital
Commitment.
(vi) Principal Debt in the order below, payable ratably to each
Lender in accordance with its Termination Percentage, except as the
order may be rearranged by Administrative Agent to the extent possible
to avoid the application of any Funding Loss for LIBOR Borrowings.
Principal Debt shall be applied (A) to the Borrowing-Purpose Category
to the extent the collections or proceeds are from or arose in respect
of the Collateral in its Borrowing Base and (B) then in the following
order:
. Term-Line Borrowings
. Foreclosure Borrowings
. P&I Borrowings
. T&I Borrowings
. Alt-A Borrowings (Wet Borrowings first)
. Subprime Borrowings (Wet Borrowings first)
. Repurchase Borrowings (Wet Borrowings first)
. Second-Lien Borrowings (Wet Borrowings first)
. Indirect-Warehouse Borrowings (Wet Borrowings first)
. Other Wet Borrowings
. Other Dry Borrowings (other than Gestation Borrowings)
. Gestation Borrowings
(vii) All other portions of the Obligation, payable ratably to
Lenders in the proportion that each Lender's share of those amounts
bears to the total of those amounts for all Lenders.
(viii) As a deposit with Administrative Agent, for the benefit of
Lenders, as security for and payment of any subsequent LC
reimbursement obligations.
(ix) Either to Borrower or to its successors or assigns on
behalf of Borrower, to be divided between them as they may agree or as
a court of competent jurisdiction may direct.
3.6 Sharing. If any Lender obtains any amount from collateral in its
possession as security for or related to the Borrower's obligations under the
Loan Documents, whether voluntary, involuntary, or otherwise, including, without
limitation, as a result of exercising its Rights under Section 10.3, that
exceeds the portion of that amount it is otherwise entitled under the Loan
Documents to receive, then that Lender shall purchase from the other Lenders
participations that result in the purchasing Lender's sharing the excess amount
ratably with each Lender in accordance with the portion it is entitled to
receive under the Loan Documents. If all or any of that excess amount is
subsequently recovered from that purchasing Lender, then the purchase of
participations in it is automatically rescinded and the purchase price restored
to that purchasing Lender to the extent of the recovery. Any Lender purchasing a
participation from another Lender under this section may,
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to the extent lawful, exercise all of its Rights of payment (including the Right
of offset) with respect to that participation as fully as if that Lender were
the direct creditor of Borrower in the amount of that participation.
3.7 Interest Rates.
(a) Non-Default Rate. Subject to clause (b) below, all Principal Debt
bears an annual interest rate equal to the lesser of either the Maximum
Rate or the rate applicable in the following table:
Principal Debt Rate
Principal Debt of each LIBOR Borrowing Average-Adjusted-LIBOR Rate.
Average-Principal Debt of all other Applicable-Covered Rate
Borrowings owed to a Depositary during
any Calendar Month that does not exceed
its Average-Depositary Balances for that
Calendar Month
Average-Principal Debt of all Borrowings Average-Adjusted-Base Rate or
owed to any Lender and not bearing Average-Adjusted-Fed-Funds Rate
interest under the above sections of for that Calendar Month, whichever
this table for any Calendar Month is applicable
(b) Default Rate. For all past-due Principal Debt and past-due
interest on the Principal Debt from the date due (stated or by
acceleration) until paid, whether or not payment is before or after entry
of a judgment, the rate applicable in the following table:
Principal Debt and Past-Due Interest Rate
Average-Principal Debt owed to a Depositary during a 5.0%
Calendar Month and all past-due accrued interest on
that Principal Debt that does not exceed its
Average-Depositary Balances for that Calendar Month
Average-Principal Debt owed to any Lender and not Default Rate
bearing interest under the above section of this
table, and all past-due interest on that Principal
Debt, for any Calendar Month
(c) Rate Changes. Each change in LIBOR, the Fed-Funds Rate, the Base
Rate, and the Maximum Rate is effective upon the effective date of change
without notice to Borrower or any other Person.
(d) Calculations. Interest is calculated on the basis of actual days
(including the first but excluding the last) over a 360-day year, unless
the calculation would result in an interest rate greater than the Maximum
Rate, in which event interest is calculated on the basis of the actual days
in that year. All interest rate determinations and calculations by
Administrative Agent are conclusive and binding absent manifest error.
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(e) Recapture. If the designated interest rate applicable to any
Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate. However, any subsequent reductions in the
designated rate shall not become effective until the total amount of
accrued interest equals the amount of interest that would have accrued if
that designated rate had always been in effect. If at maturity (stated or
by acceleration), or at final payment of the Notes, the total interest paid
or accrued is less than the interest that would have accrued if the
designated rates had always been in effect, then, at that time and to the
extent permitted by Law, Borrower shall pay an amount equal to the
difference of (i) the lesser of either the amount of interest that would
have accrued if the designated rates had always been in effect or the
amount of interest that would have accrued if the Maximum Rate had always
been in effect, minus (ii) the amount of interest actually paid or accrued
on the Notes.
(f) Maximum Rate. Regardless of any Loan Document provision, no
Lender is entitled to contract for, charge, take, reserve, receive, or
apply, as interest on all or any of the Obligation any amount in excess of
the Maximum Rate. If a Lender ever does so, then any excess is treated as
a partial prepayment of principal, and any remaining excess shall be
refunded to Borrower, as the case may be. In determining if the interest
paid or payable exceeds the Maximum Rate, Borrower and Lenders shall, to
the extent lawful (i) treat all Borrowings as but a single extension of
credit, (ii) characterize any nonprincipal payment as an expense, fee, or
premium rather than as interest, (iii) exclude voluntary prepayments and
their effects, and (iv) amortize, prorate, allocate, and spread the total
amount of interest throughout the full-contemplated term of the Obligation.
However, if the Obligation is paid in full before the end of that full-
contemplated term and the interest received for the Obligation's actual
period of existence exceeds the Maximum Amount, then Lenders shall refund
any excess without being subject to any penalties provided by any Laws. If
Texas Laws are applicable for purposes of determining the "Maximum Rate" or
the "Maximum Amount," then those terms mean the "indicated rate ceiling"
from time to time in effect under Article 1.04, Title 79, Texas Revised
Civil Statutes, as amended. Chapter 15, Subtitle 79, Texas Revised Civil
Statutes, 1925 (which regulates certain revolving credit loan accounts and
revolving triparty accounts), does not apply to the Obligation.
3.8 Interest Periods. When Borrower requests any LIBOR Borrowing, it
may elect the applicable interest period (each an "Interest Period"), which may
be either one, two or three months at its option or such other period as it and
Administrative Agent may agree (after first obtaining Determining Lender
approval if for more than six months), subject to the following conditions: (a)
The initial Interest Period commences on the applicable Borrowing Date and each
subsequent applicable Interest Period commences on the day when the next
preceding applicable Interest Period expires; (b) if any Interest Period begins
on a day for which no numerically corresponding Business Day in the Calendar
Month at the end of the Interest Period exists, then the Interest Period ends on
the last Business Day of that Calendar Month; (c) if an Interest Period would
otherwise not end on a Business Day, it shall end on the immediately preceding
Business Day; (d) no Interest Period for any portion of the Obligation may
extend beyond the scheduled repayment date for that portion of the Obligation;
and (e) no more than three Interest Periods may be in effect at any time.
3.9 Basis Unavailable or Inadequate for LIBOR Rate. If, on or before
any date when a LIBOR Rate is to be determined for a Borrowing, Administrative
Agent or any Lender (upon notice to Administrative Agent) determines that the
basis for determining the applicable rate is not available or that the resulting
rate does not accurately reflect the cost to Lenders of making or converting
Borrowings at that rate for the applicable Interest Period, then Administrative
Agent shall promptly notify Borrower of that
35
determination (which is conclusive and binding on Borrower, absent manifest
error) and that Borrowing shall be a Fed-Funds Borrowing. Until Administrative
Agent notifies Borrower that it or the notifying Lender (upon notice to
Administrative Agent) has determined that those circumstances no longer exist,
which it shall promptly do, Lenders' commitments under this agreement to make
LIBOR Borrowings are suspended.
3.10 Additional Costs. This section survives the full satisfaction of the
Obligation and termination of the Loan Documents, and release of Lender Liens.
(a) For any LIBOR Borrowing, if (i) (A) any change after the date of
this agreement in any present Law, and for purposes of this Section 3.10,
Law includes interpretations and guidelines of any Tribunal whether or not
having the force of Law, or any future Law imposes, modifies, or deems
applicable (or if compliance by any Lender with any requirement of any
Tribunal results in) any requirement that any reserves (including, without
limitation, any marginal, emergency, supplemental, or special reserves) be
maintained, (B) those reserves reduce any sums receivable by that Lender
under this agreement or increase the costs incurred by that Lender in
advancing or maintaining any portion of any LIBOR Borrowing, and (C) that
Lender determines that the reduction or increase is material (and it may,
in determining the material nature of the reduction or increase, utilize
reasonable assumptions and allocations of costs and expenses and use any
reasonable averaging or attribution method), then (ii) that Lender (through
Administrative Agent) shall deliver to Borrower a certificate stating in
reasonable detail the calculation of the amount necessary to compensate it
for its reduction or increase (which certificate is conclusive and binding
absent manifest error), and Borrower, shall pay that amount to that Lender
within ten days after demand.
(b) For any Borrowing, if (i) (A) any change after the date of this
agreement in any present Law or any future Law regarding capital adequacy
or compliance by any Lender with any request, directive, or requirement now
or in the future imposed by any Tribunal regarding capital adequacy or any
change in the risk category of this transaction reduces the rate of return
on its capital as a consequence of its obligations under this agreement to
a level below that which it otherwise could have achieved (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by it to be material (and it may, in determining the amount, utilize
reasonable assumptions and allocations of costs and expenses and use any
reasonable averaging or attribution method), then (ii) that Lender (through
Administrative Agent) shall notify Borrower and deliver to Borrower a
certificate stating in reasonable detail the calculation of the amount
necessary to compensate it (which certificate is presumed correct), and
Borrower, shall pay that amount to Lender within ten days after demand.
(c) Any Taxes payable by Administrative Agent or any Lender or ruled
(by a Tribunal) payable by Administrative Agent or any Lender in respect of
any Loan Document shall, if permitted by Law and if deemed material by
Administrative Agent or that Lender (who may, in determining the material
nature of the amount payable, utilize reasonable assumptions and
allocations of costs and expenses and use any reasonable averaging or
attribution method), be paid by Borrower, together with interest and
penalties, if any (except for Taxes payable on the overall net income of
Administrative Agent or that Lender and except for interest and penalties
incurred as a result of the gross negligence or willful misconduct of
Administrative Agent or any Lender). Administrative Agent or that Lender
(through Administrative Agent) shall notify Borrower and deliver to
Borrower a certificate stating in reasonable detail the calculation of the
amount of payable Taxes, which certificate is conclusive and binding
(absent manifest error), and Borrower shall pay that amount to
Administrative Agent for the
36
account of Administrative Agent or that Lender, as the case may be, within
ten days after demand. If Administrative Agent or that Lender subsequently
receives a refund of the Taxes paid to it by Borrower, then the recipient
shall promptly pay the refund to Borrower.
3.11 Change in Laws. If any change, after the date of this agreement,
in any present Law or any future Law makes it unlawful for any Lender to make or
maintain LIBOR Borrowings, then that Lender shall promptly notify Administrative
Agent, who shall promptly notify Borrower and (a) as to undisbursed funds, any
requested Borrowing shall be made as a Fed-Funds Borrowing, (b) as to any
outstanding Borrowing (i) if maintaining the Borrowing until the last day of the
applicable Interest Period is unlawful, the Borrowing shall be converted to a
Fed-Funds Borrowing as of the date of notice, but Borrower is not obligated to
pay any related Funding Loss, or (ii) if not prohibited by Law, the Borrowing
shall be converted to an Fed-Funds Borrowing as of the last day of the
applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty, and
without payment of any related Funding Loss.
3.12 Funding Loss. Subject to Section 3.11, Borrower Agrees To Indemnify
Each Lender Against, And Pay To It Upon Demand, Any Funding Loss Of That Lender.
When any Lender demands that Borrower pay any Funding Loss, that Lender shall
deliver to Administrative Agent who shall promptly deliver to Borrower a
certificate stating in reasonable detail the basis for imposing Funding Loss and
the calculation of the amount, which calculation shall be presumed correct. This
Section 3.12 survives the satisfaction and payment of the Obligation and
termination of the Loan Documents.
3.13 Foreign Lenders, Participants, and Purchasers. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Purchaser (by executing an Assignment) that is not organized under the Laws of
the United States of America or one of its states (a) represents to
Administrative Agent and Borrower that (i) no Taxes are required to be withheld
by Administrative Agent or Borrower with respect to any payments to be made to
it in respect of the Obligation and (ii) it has furnished to Administrative
Agent and Borrower two duly completed copies of either U.S. Internal Revenue
Service Form 4224, Form 1001, Form W-8, or any other form acceptable to
Administrative Agent that entitles it to exemption from U.S. federal withholding
Tax on all interest payments under the Loan Documents, and (b) covenants to (i)
provide Administrative Agent and Borrower a new Form 4224, Form 1001, Form W-8,
or other form acceptable to Administrative Agent upon the expiration or
obsolescence of any previously delivered form according to Law, duly executed
and completed by it, and (ii) comply from time to time with all Laws with regard
to the withholding Tax exemption. If any of the foregoing is not true or the
applicable forms are not provided, then Borrower and Administrative Agent
(without duplication) may deduct and withhold from interest payments under the
Loan Documents United States federal income Tax at the full rate applicable
under the IRC.
3.14 Fees. The following are not compensation for the use, detention,
or forbearance of money, are in addition to and not in lieu of interest and
expenses otherwise described in the Loan Documents, are non-refundable, bear
interest if not paid when due at the Default Rate, and are calculated on the
basis of actual days (including the first but excluding the last) elapsed over a
year of 360 days (or actual days during that year, if the calculation would
otherwise result in exceeding the Maximum Amount and the payment were deemed to
be interest notwithstanding the above provisions to the contrary):
(a) Administrative Agent's Fees. Borrower shall pay to
Administrative Agent, for its sole account, administrative, syndication,
and custodial fees in amounts and upon such payment terms as may be
separately agreed upon by Borrower and Administrative Agent in writing.
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(b) Warehouse Unused Facility Fee. Borrower shall pay to
Administrative Agent an unused facility fee for Lenders payable in arrears
on the 15th day of each Calendar Month for the preceding Calendar Month and
on the Warehouse-Actual-Termination Date. Each payment of the unused
facility fee is a percentage per annum calculated for the period in which
it accrued as the product of 0.125% multiplied by the amount by which (i)
the average-daily total Warehouse Commitment exceeds (ii) the average daily
Principal Debt relating to Warehouse Borrowings.
(c) Working-Capital Commitment Fee. Borrower shall pay to
Administrative Agent a commitment fee for Lenders payable in arrears on the
15th day of the Calendar Quarter for the preceding Calendar Quarter and on
the Warehouse-Actual-Termination Date. Each payment of the commitment fee
is a percentage per annum calculated for the period in which it accrued as
the product of 0.150% multiplied by the total Working-Capital Commitment.
(d) Term-Line Commitment Fee. Borrower shall pay to Administrative
Agent a commitment fee for Lenders payable in arrears on the 15th day of
the Calendar Quarter for the preceding Calendar Quarter and on the Tranche
B-Stated-Termination Date. Each payment of the commitment fee is a
percentage per annum calculated for the period in which it accrued as the
product of 0.250% multiplied by the amount by the total Term-Line
Commitment.
SECTION 4. COLLATERAL PROCEDURES.
4.1 Eligible Collateral. The eligibility requirements for Collateral to
be included in the Borrowing Base are listed on Schedule 4.1. If at any time
any item of Collateral ceases to meet those requirements, then that item is
automatically excluded from all calculations of the applicable Borrowing Base.
4.2 Borrowing Base. The elements for calculating the Borrowing Base are
listed on Schedule 4.2. By 2:00 p.m. on the date of any Borrowing, any payment
of Principal Debt, or removal of any Collateral, Administrative Agent shall
deliver to Borrower and Lenders a Borrowing-Base Report prepared on the basis of
the information provided by Borrower in the most recent Take-Out Report and
other information then available to Administrative Agent as provided in this
agreement.
4.3 Collateral Delivery. Borrower must comply with all the required
procedures in Schedule 4.3 for Mortgage Collateral offered in connection with
this agreement by no later than 11:00 a.m. on (i) the Borrowing Date for
Collateral supporting any Borrowing other than a Wet Borrowing and (ii) the
seventh Business Day after the Borrowing Date of any Wet Borrowing for
Collateral supporting that Borrowing. By 11:00 a.m. on the Business Day that
Borrower is converting any Dry Borrowing to a Gestation Borrowing, Borrower
shall execute and deliver to Administrative Agent a Collateral-Conversion
Notice.
4.4 Bailee and Administrative Agent. Administrative Agent and Lenders
appoint Borrower, and Borrower shall act, as their (a) special agent for the
sole and limited purpose of obtaining and maintaining Appraisals for Mortgage
Loans as required by the Loan Documents and (b) bailee to (i) hold in trust for
Administrative Agent (A) the original recorded copy of the mortgage, deed of
trust, or trust deed securing each Mortgage Loan, (B) a mortgagee policy of
title insurance (or binding unexpired and unconditional commitment to issue such
insurance if the policy has not yet been delivered to Borrower) insuring
Borrower's perfected, first priority Lien (or second-priority Lien with respect
to Second-Lien Borrowings) created by that mortgage, deed of trust, or trust
deed, (C) the original insurance policies referred to in Part A.6(c) on Schedule
4.1, and
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(D) all other original documents, including any undelivered Take-Out
Commitments, promissory notes, and Mortgage Securities, (ii) specifically
identify those items in the appropriate Collateral-Delivery Notice, and (iii)
deliver to Administrative Agent any of the foregoing items as soon as reasonably
practicable upon Administrative Agent's request.
4.5 Shipment for Sale.
(a) Shipment of Collateral. If no Default, Potential Default, or
Borrowing Excess exists and if shipment would not result in any Approved
Investor (other than FNMA, FHLMC, and GNMA, or any other investor that
Administrative Agent has approved in writing) or its servicers and
custodians holding Collateral Documents for Mortgage Loans with more than a
total $5,000,000 face amount, then Borrower may, by a Shipping Request
delivered to Administrative Agent by 11:00 a.m. on the Business Day of
shipment, request Administrative Agent to ship Collateral Documents to an
Approved Investor or its servicer or custodian for purchase of the related
Mortgage Loans. If Administrative Agent has no actual knowledge that any
of the above conditions have not been satisfied, then Administrative Agent
shall ship the Collateral Documents it holds for those Mortgage Loans to
that Approved Investor or its servicer or custodian under the appropriate
Bailee Letter.
(b) Ineligible Collateral. Collateral shipped under clause (a)
above, unless returned to Administrative Agent, ceases to be Eligible-
Mortgage Collateral (i) to the extent that Collateral Documents for
Mortgage Loans with more than a total face amount of $5,000,000 are held by
or for any Approved Investor (other than FNMA, FHLMC, and GNMA, or any
other investor that Administrative Agent has approved in writing) and (ii)
upon the earlier of either the release of the Lender Liens in that
Collateral under clause (c) below or the expiration of the Shipping Period
for that Collateral.
(c) Release of Liens. The Lender Liens on any Collateral shipped
under clause (a) above continue on that Collateral until either (i)
Administrative Agent receives payment in the Settlement Account in an
amount at least equal to the price paid by the purchaser for each Eligible-
Mortgage Loan so sold or (ii) in the case of Mortgage Loans being sold or
exchanged for Mortgage Securities, Eligible-Mortgage Securities are
delivered to or for Administrative Agent in accordance with Schedule 4.3
and other applicable provisions of the Loan Documents and become Collateral
under this agreement for all purposes.
(d) Certain Credits. Neither Administrative Agent nor any Lender is
obligated at any time to credit Borrower for any amounts due from any
purchase of any Mortgage Collateral contemplated under this agreement until
Administrative Agent has actually received immediately available funds for
that Mortgage Collateral in the amount required under this agreement.
Neither Administrative Agent nor any Lender is obligated at any time to
collect any amounts or otherwise enforce any obligations due from any
purchaser in respect of any such purchase.
4.6 Shipment for Correction. If no Default, Potential Default, or
Borrowing Excess exists or occurs as a result of the shipment and if shipment
would not result in any Collateral Documents for Mortgage Loans with more than a
total face amount of $1,000,000 being outstanding for correction, then Borrower
may, by a Trust Receipt delivered to Administrative Agent, request that
Administrative Agent ship to Borrower the entire mortgage loan file of
Collateral Documents for any Mortgage Loan so that certain of those Collateral
Documents may be corrected or replaced for clerical or other non-substantive
mistakes. If Administrative
39
Agent has no actual knowledge that any of the above conditions have not been
satisfied, then and subject to the limitations below, then Administrative Agent
shall ship to Borrower the entire mortgage loan file of Collateral Documents to
be corrected or replaced. Borrower shall re-deliver to Administrative Agent the
corrected Collateral Documents (meeting the requirements of Schedule 4.3) before
the expiration of the Correction Period for that Collateral. Collateral shipped
under this section, unless returned to Administrative Agent, ceases to be
Eligible-Mortgage Collateral (a) to the extent that Collateral Documents for
Mortgage Loans with more than a total face amount of $1,000,000 are outstanding
for correction at any time and (b) upon the expiration of the Correction Period
for that Collateral. The Lender Liens on any Collateral shipped under this
section continue in full force and effect.
4.7 Release of Collateral.
(a) Excess Collateral. If no Default or Potential Default exists and
no Borrowing Excess exists or would occur (after taking into account any
corresponding payment on the Obligation) as a result of the release,
Borrower may, by a Release Request delivered to Administrative Agent by
11:00 a.m. on the Business Day of the release, request that Administrative
Agent release the Lender Liens on any Collateral.
(b) Satisfaction of Obligation. If the Obligation is fully paid and
performed and all commitments by each Lender to extend credit under the
Loan Documents are terminated or canceled, Borrower may, by written request
to Administrative Agent, request that Administrative Agent release the
Lender Liens on all of the Collateral, return to Borrower or its designee
all Collateral Documents then held by Administrative Agent, and execute a
release of any financing statements or other documents filed or recorded to
perfect the Lender Liens.
(c) Releases. If Administrative Agent has no actual knowledge that
any of the above conditions for a release have not been satisfied, then
Administrative Agent shall effect those releases.
SECTION 5. CONDITIONS PRECEDENT. No Lender is obligated to fund its part of
any Borrowing and Administrative Agent is not obligated to issue any LC unless
Administrative Agent has received all of the documents and items described on
Schedule 5. In addition, no Lender is obligated to fund its part of any
Borrowing and Administrative Agent is not obligated to issue any LC unless on
the applicable Borrowing Date (and after giving effect to the requested
Borrowing or LC): (a) Administrative Agent has timely received a Borrowing
Request or LC Request (together with the applicable LC Agreement); (b)
Administrative Agent receives any applicable LC fees; (c) all of the
representations and warranties of Borrower in the Loan Documents are true and
correct in all material respects (unless they speak to a specific date or are
based on facts which have changed by transactions contemplated or permitted by
this agreement); (d) no Default or Potential Default exists; (e) the funding of
the Borrowing or the issuance of the LC is permitted by Law and does not cause a
Borrowing Excess; and (f) if reasonably requested by Administrative Agent, it
has received evidence substantiating any of the matters in the Loan Documents
that are necessary to enable Borrower to qualify for the Borrowing or the
issuance of the LC, as the case may be. Each condition precedent in this
agreement (including, without limitation, those on Schedule 5) is material to
the transactions contemplated by this agreement, and time is of the essence with
respect to each. Subject to first obtaining the approval of all Lenders,
Administrative Agent or any Lender may fund any Borrowing or issue any LC
without all conditions being satisfied. However, to the extent lawful, that
funding is not a waiver of the requirement that each condition precedent be
satisfied as a prerequisite for any subsequent funding or issuance, unless all
Lenders specifically waive an item in writing.
40
SECTION 6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Administrative Agent and Lenders as follows:
6.1 Purpose of Credit. Borrower will use all proceeds of Borrowings for
one or more of the following: (a) Warehouse Borrowings will be used to finance
Borrower's Mortgage Loan origination and acquisition until those Mortgage Loans
are sold in the secondary market, (b) Working-Capital Borrowings will be used
either (i) to pay certain Servicing Payments until those payments are reimbursed
by either obligors under Mortgage Loans being serviced by Borrower or by the
appropriate governmental agencies or (ii) to issue letters of credit to support
sales of Servicing Rights, and (c) Term-Line Borrowings will be used to finance
the acquisition of various servicing portfolios and to provide funding for
Borrower's internally-generated Servicing Rights. In addition, the initial
Borrowing on the Closing Date will be used to repay the outstanding indebtedness
under the Existing Loan Agreement owed to any Existing Lender that is not a
Lender under this agreement. 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 any "margin stock" within the meaning of Regulation U.
No part of the proceeds of any LC draft or drawing or any Borrowing is to be
used, directly or indirectly, for a purpose that violates any Law, including,
without limitation, the provisions of Regulation U.
6.2 About the Companies.
(a) Subsidiaries and Trade Names. Except as described on Schedule
6.2 (i) Borrower has no Subsidiaries and (ii) no Company has used or
transacted business under any other corporate or trade name in the six-
month period preceding the date of this agreement.
(b) Existence, Qualification, and Compliance. Each Company is duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated as stated on Schedule 6.2. Except
where failure is not a Material-Adverse Event, each Company (i) is duly
qualified to transact business and is in good standing as a foreign
corporation or other entity in each jurisdiction where the nature and
extent of its business and properties require due qualification and good
standing (as described on Schedule 6.2), (ii) possesses all requisite
authority, permits, and power to conduct its business as is now being, or
is contemplated by this agreement to be, conducted, and (iii) is in
compliance with all applicable Laws.
(c) Offices. Each Company's chief executive office and other
principal offices are described on Schedule 6.2. The present and
foreseeable location of each Company's books and records concerning
accounts and accounts receivable is at its chief executive office, and all
of its books, and records are in its possession.
6.3 Authorization and Contravention . The execution and delivery by each
Company of each Loan Document to which it is a party and the performance by it
of its related obligations (a) are within its corporate power, (b) have been
duly authorized by all necessary corporate action, (c) except for any action or
filing that has been taken or made on or before the date of this agreement,
require no action by or filing with any Tribunal, (d) do not violate any
provision of its charter or bylaws, (e) except where not a Material-Adverse
Event, do not violate any provision of Law applicable to it or any material
agreements to which it is a party, and (f) except for Lender Liens, do not
result in the creation or imposition of any Lien on any asset of any Company.
41
6.4 Binding Effect. Upon execution and delivery by all parties to it,
each Loan Document will constitute a legal and binding obligation of each
Company party to it, enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable Debtor Laws and general
principles of equity.
6.5 Fiscal Year. The Companies' fiscal year ends each December 31.
6.6 Current Financials. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the financial
condition, results of operations, and cash flows of the Companies as of, and for
the portion of the fiscal year ending on their date or dates (subject only to
normal year-end adjustments). All material liabilities of the Companies as of
the date or dates of the Current Financials are reflected in them or notes to
them. Except for transactions directly related to, or specifically contemplated
by, the Loan Documents, no subsequent material adverse changes have occurred in
the financial condition of the Companies from that shown in the Current
Financials, nor has any Company incurred any subsequent material liability.
6.7 Debt. No Company has any Debt except Permitted Debt.
6.8 Solvency. On the date of each Borrowing or the issuance of any LC,
each Company is, and after giving effect to the requested Borrowing or LC will
be, Solvent.
6.9 Litigation. Except as disclosed on Schedule 6.9 (a) no Company is
subject to, or aware of the threat of, any Litigation that is reasonably likely
to be determined adversely to it or, if so adversely determined, would be a
Material-Adverse Event, and (b) no outstanding or unpaid judgments against any
Company exists.
6.10 Transactions with Affiliates. No Company is a party to a material
transaction with any of its Affiliates except (a) transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate, and (b) transactions
described on Schedule 6.10.
6.11 Taxes. All Tax returns of each Company required to be filed have been
filed (or extensions have been granted) before delinquency, except for returns
for which the failure to file is not a Material-Adverse Event, and all Taxes
imposed upon each Company that are due and payable have been paid before
delinquency.
6.12 Employee Plans. Except where occurrence or existence is not a
Material-Adverse Event, (a) no Employee Plan has incurred an "accumulated
funding deficiency" (as defined in Section 302 of ERISA or Section 412 of the
IRC), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan, (c) no Company has withdrawn in whole or in
part from participation in a Multiemployer Plan, (d) no Company has engaged in
any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975
of the IRC), and (e) no "reportable event" (as defined in Section 4043 of ERISA)
has occurred in respect of any Employee Plan, excluding events for which the
notice requirement is waived under applicable PBGC regulations.
6.13 Property and Liens. Each Company has good and marketable title to
all its property reflected on the Current Financials except for property that is
obsolete or that has been disposed of in the ordinary course of business or,
after the date of this agreement, as otherwise permitted by this agreement. All
Collateral is free and clear of any Liens and adverse claims of any nature
except Permitted Liens.
42
6.14 Intellectual Property. Borrower owns all material licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct its businesses as
presently conducted by it and proposed to be conducted by it immediately after
the date of this agreement. Borrower is conducting its business without
infringement or claim of infringement of any license, patent, copyright, service
▇▇▇▇, trademark, trade name, trade secret, or other intellectual property right
of others, other than any infringements or claims that, if successfully asserted
against or determined adversely to Borrower, are not a Material-Adverse Event.
To Borrower's knowledge, no infringement or claim of infringement by others of
any material license, patent, copyright, service ▇▇▇▇, trademark, trade name,
trade secret, or other intellectual property of Borrower exists.
6.15 Environmental Matter. Except where not a Material-Adverse Event,
no Company (a) knows of any environmental condition or circumstance adversely
affecting any Company's properties or operations or any material portion of the
properties subject to Mortgage Loans, (b) has received any report of any
Company's violation of any Environmental Law, or (c) knows that any Company is
under any obligation to remedy any violation of any Environmental Law. Each
Company has taken prudent steps to determine that its properties and operations
and that substantially all of the properties subject to Mortgage Loans do not
violate any Environmental Law except violations that are not a Material-Adverse
Event.
6.16 Government Regulations.
(a) Inapplicable Regulations. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, or the Public Utility
Holding Company Act of 1935, as amended.
(b) Borrower's Eligibility. Borrower is approved and qualified and in
good standing as an issuer, mortgagee, or seller/servicer, as described
below, and meets all requirements applicable to its status as such: (i)
GNMA approved issuer of Mortgage-Backed Securities guaranteed by GNMA; (ii)
FNMA approved seller/servicer of Mortgage Loans, eligible to originate,
purchase, hold, sell, and service Mortgage Loans to be sold to FNMA; (iii)
FHLMC approved seller/servicer of Mortgage Loans, eligible to originate
purchase, hold, sell and service Mortgage Loans to be sold to FHLMC; (iv)
FHA approved mortgagee, eligible to originate, purchase, hold, sell and
service FHA Loans; and (v) VA approved mortgagee, eligible to originate,
purchase, hold, sell and service VA Loans.
6.17 Insurance. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by self-
insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
6.18 Appraisals. With respect to the property the subject of any Mortgage
Loan, Borrower has obtained Appraisals in material compliance with all Appraisal
Laws.
6.19 Full Disclosure. Each material fact or condition relating to the Loan
Documents or the financial condition, business, or property of the Companies
that is a Material-Adverse Event has been disclosed in writing to Administrative
Agent and Lenders. All information previously furnished by any Company to
43
Administrative Agent or any Lender in connection with the Loan Documents was,
and all information furnished in the future by any Company to Administrative
Agent or any Lender will be, true and accurate in all material respects or based
on reasonable estimates on the date the information is stated or certified.
SECTION 7. AFFIRMATIVE COVENANTS. Until all commitments by Lenders to extend
credit under this agreement have been canceled or terminated and the Obligation
is fully paid and performed, Borrower jointly and severally covenants and agrees
with Administrative Agent and Lenders as follows:
7.1 Reporting Requirements. Borrower shall cause to be furnished to
Administrative Agent the following (all in form and detail reasonably
satisfactory to Administrative Agent), and, reasonably promptly upon receiving
them, Administrative Agent shall provide copies of them to each Lender:
(a) Annual Financials. Promptly when available but at least within 90
days after each fiscal-year end of Borrower, audited Financials of the
Companies as of that year end, each reflecting the corresponding figures
for the preceding fiscal year in comparative form, accompanied by (i) an
unqualified opinion of a firm of independent certified public accountants
acceptable to Administrative Agent stating that those Financials were
prepared in accordance with GAAP applied on a basis consistent with prior
periods except for such changes in GAAP concurred in by Borrower's
independent public accountants, and that the consolidated portion of those
Financials present fairly the consolidated and consolidating financial
condition and results of operations of the Companies as of (and for the
fiscal year ending on) that last day, and (ii) a Compliance Certificate.
(b) Guarantor Financial Statements. Promptly when available but at
least within 90 days after each fiscal year end of Guarantor, audited
financial statements and statements of cash flow for any Guarantor prepared
as of the end of the previous calendar year in form and detail reasonably
acceptable to Administrative Agent.
(c) Monthly Financials. Promptly when available but at least within
45 days after each Calendar Month, Financials of the Companies as of the
end of that month, accompanied by (i) a Management Report and (ii) a
Compliance Certificate.
(d) Take-Out Report. By 5:00 p.m. on each Monday (or, if any Monday
is not a Business Day, then by that time on the next Business Day) but only
to the extent that Borrower has elected not to deliver specifically-
designated Take-Out Commitments to Administrative Agent under Schedules 4.2
and 4.3, a Take-Out Report that is prepared as of the close of business on
the preceding Business Day and reports the Take-Out Prices of the Mortgage-
Collateral Groups comprising the Mortgage Collateral for which specifically
designated Take-Out Commitments have not been delivered.
(e) Investor Information. Promptly after the request by
Administrative Agent or Determining Lenders, financial information about
any investor (other than FNMA, FHLMC, and GNMA) for purposes of determining
whether that investor should become or remain an Approved Investor.
(f) Appraised Value. Promptly when available but at least within 60
days after the end of each Calendar Quarter, an appraisal of the Appraised
Value, which appraisal must be prepared by an independent third-party
appraiser (acceptable to Determining Lenders in their sole discretion) for
44
the Calendar Quarters ending each June 30 and December 31 and may be
internally prepared by Borrower for the Calendar Quarters ending each March
31 and September 30.
(g) Notices. Notice, promptly after any Company knows or has reason
to know, of (i) the existence and status of any Litigation that, if
determined adversely to any Company, would be a Material-Adverse Event,
(ii) any change in any material fact or circumstance represented or
warranted by any Company in any Loan Document that constitutes a Material-
Adverse Event, (iii) the receipt by any Company of notice of any violation
or alleged violation of ERISA or any Environmental Law or other Law if that
violation is a Material-Adverse Event, or (iv) a Default or Potential
Default specifying the nature thereof and what action Borrower have taken,
are taking, or propose to take with respect to it.
(h) Other Information. Promptly upon reasonable request by
Administrative Agent or Determining Lenders (through Administrative Agent),
information (not otherwise required to be furnished under the Loan
Documents) respecting the business affairs, assets, and liabilities of any
Company and opinions, certifications, and documents in addition to those
mentioned in this agreement.
7.2 Use of Proceeds. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this agreement.
7.3 Books and Records. Each Company shall maintain books, records, and
accounts necessary to prepare Financials in accordance with GAAP.
7.4 Inspections. Upon reasonable request, each Company shall allow
Administrative Agent, any Lender, or their respective Representatives to inspect
any of its properties, to review reports, files, and other records and to make
and take away copies, to conduct tests or investigations, and to discuss any of
its affairs, conditions, and finances with its directors, officers, employees,
or representatives from time to time during reasonable business hours.
7.5 Taxes. Each Company shall promptly pay when due any and all Taxes
other than Taxes of which the failure to pay is not a Material-Adverse Event or
which are being contested in good faith by lawful proceedings diligently
conducted, against which reserve or other provision required by GAAP has been
made, and in respect of which levy and execution of any Lien have been and
continue to be stayed.
7.6 Expenses. Borrower shall pay (a) all reasonable legal fees and
expenses incurred by Administrative Agent in connection with the preparation,
negotiation, and execution of the Loan Documents, (b) all reasonable legal fees
and expenses incurred by Administrative Agent in connection with each separate
future amendment, consent, waiver, or approval executed in connection with any
Loan Document, (c) all fees, charges, or Taxes for the recording or filing of
any Loan Document to create or perfect Lender Liens, (d) all other reasonable
out-of-pocket expenses of Administrative Agent or any Lender in connection with
the preparation, negotiation, execution, or administration of the Loan
Documents, including, without limitation, courier expenses incurred in
connection with the Mortgage Collateral, (e) all amounts expended, advanced, or
incurred by Administrative Agent or any Lender to satisfy any obligation of any
Company under any Loan Document, to collect the Obligation, or to enforce the
Rights of Administrative Agent or any Lender under any Loan Document, including,
without limitation, all court costs, attorneys' fees (whether for trial, appeal,
other proceedings, or otherwise), fees of auditors and accountants, and
investigation expenses reasonably incurred
45
by Administrative Agent or any Lender in connection with any such matters, (f)
interest at an annual interest rate equal to the Default Rate on each item
specified in clauses (a) through (e) above from 30 days after the date of
written demand or request for reimbursement to the date of reimbursement, and
(g) any and all stamp and other Taxes payable or determined to be payable in
connection with the execution, delivery, or recordation of any Loan Document, in
connection with which Borrower shall indemnify and save Administrative Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay those taxes to the extent
those Liabilities arise solely because Borrower failed to pay the taxes upon
demand by administrative agent or any lender, which indemnity survives the
payment and performance of the obligation and termination of the Loan Documents.
7.7 Maintenance of Existence, Assets, and Business. Each Company shall
(a) except as permitted by Section 8.5, maintain its corporate existence and
good standing in its state of incorporation and its authority to transact
business in all other states where failure to maintain its authority to transact
business is a Material-Adverse Event, and (b) maintain all licenses, permits,
and franchises necessary for its business where failure to do so is a Material-
Adverse Event, including, without limitation, Borrower's eligibility as lender,
seller/servicer, and issuer as described in Section 6.16(b).
7.8 Insurance. Borrower shall (a) maintain with financially sound and
reputable insurers, insurance with respect to its assets and business against
such liabilities, casualties, risks, and contingencies and in such types and
amounts, including, without limitation, a fidelity bond or bonds in form and
with coverage, with a company, and with respect to such individuals or groups of
individuals, as satisfy prevailing FNMA, FHLMC, and GNMA requirements applicable
to a qualified mortgage institution and otherwise as is customary in the case of
Persons engaged in the same or similar businesses and similarly situated, and
(b) upon Administrative Agent's request, furnish to Administrative Agent from
time to time (i) a summary of its insurance coverage, in form and substance
satisfactory to Administrative Agent, and (ii) originals or copies of the
applicable policies.
7.9 Take-Out Commitments. Borrower shall perform and observe in all
material respects each of the provisions of each Take-Out Commitment on its part
to be performed or observed and cause all things to be done that are necessary
to have each item of Mortgage Collateral and the Collateral Documents covered by
a Take-Out Commitment to comply with its requirements.
7.10 Appraisals. Borrower shall promptly (a) permit Administrative
Agent's and any Lender's authorized Representatives to discuss with Borrower's
officers or with the appraisers furnishing Appraisals the procedures for
preparation, review, and retention of, and to review and obtain copies of, all
Appraisals pertaining to any Mortgage Collateral, and (b) upon Administrative
Agent's or any Lender's request, cooperate with it to ascertain that the
Appraisals comply with all Appraisal Laws.
7.11 Indemnification. In consideration of the commitments by
Administrative Agent and Lenders under the Loan Documents, Borrower shall
Indemnify and defend each Administrative Agent, Lender, and their respective
affiliates and representatives (collectively, the "Indemnified Parties"), and
defend them and hold each of them harmless, against any and all losses,
liabilities, claims, damages, deficiencies, interest, judgments, costs, or
expenses, including, without limitation, reasonable Attorneys' Fees, incurred by
any of them arising from or because of (A) any
46
investigation, litigation, or other proceeding brought or threatened in
connection with any Loan Document or the transactions contemplated by the Loan
Documents, including, without limitation, any use by either company of the
proceeds of borrowings, (B) any impoundment, attachment, or retention of any
mortgage collateral or any failure of any investor to pay the entire purchase
price of any mortgage collateral under any take-out commitment, (C) any alleged
violation of any federal or State Law relating to usury in connection with any
mortgage collateral, and (D) any representation made by any company under any
Loan Document. Although each Indemnified Party is entitled to indemnification
for any Indemnified Party's ordinary negligence, no Indemnified Party is
entitled to indemnification for its own gross negligence, willful misconduct, or
fraud. This indemnity survives the payment and performance of the obligation and
termination of the Loan Documents.
SECTION 8. NEGATIVE COVENANTS. Until all commitments by Lenders to extend
credit under this agreement have been canceled or terminated and the Obligation
is fully paid and performed, Borrower covenants and agrees with Administrative
Agent and Lenders as follows:
8.1 Debt. No Company may directly or indirectly create, incur, permit to
----
exist, or commit to create or incur (a) any Debt for what is commonly referred
to in the industry as "wet borrowings" (i.e., borrowings under mortgage
warehouse, mortgage repurchase, or similar financing arrangements that may be
made without at least the original mortgage note in respect of such borrowings
having been delivered to the lender or its custodian) except for Wet Borrowings
under this agreement and wet borrowings in connection with any Permitted Debt
for which the description below specifically allows for such wet borrowings, (b)
any mortgage loan repurchase agreements except in connection with any Permitted
Debt for which the description below specifically allows for mortgage loan
repurchase agreements or as otherwise permitted by Administrative Agent in
writing, or (c) any other Debt except the following (collectively, the
"Permitted Debt"):
(i) Obligations to pay Taxes.
(ii) Liabilities for accounts payable, non-capitalized equipment
or operating leases, and similar liabilities if in each case incurred
in the ordinary course of business.
(iii) Accrued expenses, deferred credits, and loss contingencies
that are properly classified as liabilities under GAAP.
(iv) The Obligation.
(v) Up to $825,000 in Debt (including related letters of credit
and reimbursement agreements) under a municipal bond financing
facility with U.S. Bank National Association (formerly known as
Colorado National Bank).
(vi) Up to $1,235,000 in Debt under a land acquisition loan from
First Security Bank, which can be replaced by up to $5,000,000 in Debt
under a land acquisition/development loan from Bank One, Colorado.
47
(vii) Up to $15,000,000 in warehouse Debt with Argo Federal
Savings Bank that involves financings of a Company's origination or
acquisition of mortgage loans until they are sold in the secondary
market so long as, by no later than January 30, ▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
N.A., is the collateral custodian on behalf of Argo Federal Savings
Bank in connection with that facility or else the facility is no
longer Permitted Debt.
(viii) Up to $400,000 in Debt (but not warehouse-type Debt) under
a facility with ▇▇▇▇▇-▇▇▇▇▇▇▇ (American Strategic Income Portfolio,
Inc.) as that amount may be reduced but not increased at any time on
or after the Closing Date.
(ix) Debt under a Revolving Subordinated Loan Agreement between
Borrower and Guarantor, providing (in terms acceptable to
Administrative Agent) that any liabilities arising under the Revolving
Subordinated Loan Agreement are expressly subordinated to the
Obligation.
(x) Guaranty by the Companies of up to $20,000,000 principal
and all other indebtedness of Matrix Bancorp, Inc. under a combination
revolving and term credit facility provided by U.S. Bank National
Association, and other lenders, as that facility may be renewed,
extended, amended, or restated from time to time.
(xi) Debt (other than the above) incurred after the date of
this agreement, never to exceed $250,000 unless approved by
Administrative Agent in writing.
8.2 Liens. No Company may (a) create, incur, permit to exist, enter into,
or commit to enter into any arrangement or agreement (except the Loan Documents)
that directly or indirectly prohibits any Company from creating or incurring any
Lien on any of its assets, or (b) create, incur, permit to exist, or commit to
create or incur any Lien on any of its assets except the following
(collectively, the "Permitted Liens"):
(i) Any interest or title of a lessor in assets being leased
under any non-capitalized equipment or operating lease.
(ii) Pledges or deposits that (a) do not encumber any
Collateral and (b) are made to secure payment of workers'
compensation, unemployment insurance, or other forms of governmental
insurance or benefits or to participate in any fund in connection with
workers' compensation, unemployment insurance, pensions, or other
social security programs.
(iii) Good-faith pledges or deposits that (a) do not cover any
Collateral and (b) are either (i) not in excess of 10% (excluding
deposits put down for servicing portfolio purchases in the ordinary
course of business) of the amounts due under, and made to secure,
either Company's performance of bids, tenders, contracts (other than
for the repayment of borrowed money), or leases, or (ii) made to
secure statutory obligations, surety or appeal bonds, or indemnity,
performance, or other similar bonds benefitting any Company in the
ordinary course of its business.
(iv) Zoning and similar restrictions on the use of real
property that do not materially impair the use of the real property
and that are not violated by existing or proposed structures or land
use.
48
(v) The following if no Lien has been filed in any
jurisdiction or agreed to: (a) Liens for Taxes not yet due and payable
and (b) if, to the extent they cover any Collateral, they are
subordinate to the Lender Liens in form and substance reasonably
acceptable to Administrative Agent (c) mechanic's Liens and
materialman's Liens for services or materials for which payment is not
yet due and payable and (d) landlord's Liens for rent not yet due and
payable.
(vi) The following if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings
diligently conducted, reserve or other appropriate provision (if any)
required by GAAP has been made, levy and execution continue to be
stayed, any of which covering any Collateral must be subordinate to
the Lender Liens in form and substance reasonably acceptable to
Administrative Agent, and any of which do not in the aggregate
materially detract from the value of the property of the Company in
question, or materially impair the use of that property in the
operation of its business: (a) claims and Liens for Taxes due and
payable; (b) claims and Liens upon, and defects of title to, real or
personal property (other than any Collateral), including any
attachment of personal or real property or other legal process before
adjudication of a dispute on the merits; (c) claims and Liens of
mechanics, materialmen, warehousemen, carriers, landlords, or other
like Liens; and (d) adverse judgments or orders on appeal for the
payment of money.
(vii) Lender Liens.
(viii) Liens (a) evidenced by any financing statements reflected
in any UCC Search Reports described on Schedule 5 to the extent that
they are not required to be terminated, partially released, amended,
or subordinated as reflected in the conditions in Schedule 5 or (b)
securing Permitted Debt.
8.3 Loans, Advances, and Investments. No Company may make or commit to
make any loan, advance, extension of credit, or capital contribution to, make or
commit to make any investment in, or purchase or commit to purchase any stock or
other securities or evidences of Debt of, or interests in, any other Person
except the following (collectively, "Permitted Loans/Investments"):
(a) Extensions of trade credit and other payables in the ordinary
course of business.
(b) Loans and advances to officers or employees of any Company that
are (a) in the ordinary course of business for travel, entertainment, or
relocation or (b) not in the ordinary course and are never more than a
total outstanding of (i) $50,000 for any one officer, director, or employee
or (ii) $50,000 for all of the Companies.
(c) Mortgage Loans and Mortgaged Securities originated or acquired by
Borrower in the ordinary course of its business.
(d) Acquisition of securities or evidences of Debt of others when
acquired by Borrower in settlement of accounts receivable or other Debts
arising in the ordinary course of business so long as the total of all of
those securities or evidences of Debt is not material to Borrower's
financial condition.
49
(e) Investments in obligations, with maturities of one year or less,
issued or unconditionally guaranteed by, or issued by any of its agencies
and backed by the full faith and credit of, the United States of America.
(f) Demand deposit accounts maintained in the ordinary course of
business.
(g) Certificates of deposit issued by (a) any Lender or (b) any other
commercial bank organized under the Laws of the United States of America or
one of its states that has combined capital, surplus, and undivided profits
of at least $250,000,000 and a rating of C or better by ▇▇▇▇▇▇▇▇ Bank
Watch, Inc.
(h) Eurodollar investments with (a) any Lender or (b) any other
financial institution that has (i) combined capital, surplus, and undivided
profits of at least $100,000,000 and (ii) a commercial-paper rating of at
least P-1 or A-1 or (if it does not have a commercial-paper rating) a bond
rating of at least A-1 or A- by ▇▇▇▇▇'▇ Investors Service, Inc., or
Standard & Poor's Corporation, respectively.
(i) Investments in commercial paper (a) having a maturity of one year
or less and (b) given the highest rating by a nationally-recognized-credit-
rating agency.
(j) Investments in municipal bonds acquired on or before the Closing
Date.
(k) An investment in real property in Ft. ▇▇▇▇▇▇, Colorado, valued up
to $5,000,000.
(l) Investments in Pulte Corporation model homes, valued at no more
than $500,000.
(m) Loans to Approved Originators under Indirect-Warehouse Loans
Agreements with a maximum commitment of $5,000,000 to each individual
Approved Originator.
(n) Other loans, advances, or investments, so long as the aggregate
amount outstanding (defined as the amount of any such loans or advances
plus the cost of any such investments) is never more than $100,000 at any
one time.
At no time may the aggregate market value of all Permitted Loans/Investments
(other than Mortgage Loans and Mortgage Securities described in Section 8.3(c)
and loans described in Section 8.3(m) above) exceed an aggregate value of more
than $6,000,000.
8.4 Distributions. Borrower may not directly or indirectly pay or declare
any Distribution in respect of any fiscal year (whether paid or declared before,
during, or after such fiscal year) except (a) dividends payable solely in the
form of capital stock, (b) cash distributions to Borrower's shareholders in an
amount not to exceed 50% of Borrower's net cash income for that fiscal year
(after adjustments for non-cash income and cash taxes) so long as no Default or
Potential Default exists or would be created by the Distribution or (c)
Distributions otherwise approved in writing by Determining Lenders.
8.5 Merger or Consolidation. No Company may directly or indirectly merge
or consolidate with or into any other Person except that any Company may merge
into or be consolidated with any other Company so long as Borrower is the
surviving corporation if it is involved.
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8.6 Liquidations and Dispositions of Assets. No Company may directly or
indirectly dissolve or liquidate or sell, transfer, lease, or otherwise dispose
of any material portion of its assets or business except for sales or other
dispositions by Borrower, in the ordinary course of business, of (a) subject to
Section 9, part of its Servicing Portfolio, or (b) subject to Section 4,
Mortgage Loans, Mortgage Securities, or Servicing Receivables that are
Collateral, or (c) Mortgage Loans, Mortgage Securities, or Servicing Receivables
that are not Collateral.
8.7 Use of Proceeds. Borrower may not directly or indirectly use the
proceeds of Borrowings (a) for any purpose other than as represented in this
agreement, (b) for the funding or acquisition of construction or commercial
loans, (c) for wages of employees, unless a timely payment to or deposit with
the United States of America of all amounts of Tax required to be deducted and
withheld with respect to such wages is also made, or (d) in violation of
Regulation U or Section 7 of the Securities Exchange Act of 1934.
8.8 Transactions with Affiliates. No Company may directly or indirectly
enter into any transaction with any of its Affiliates other than transactions in
the ordinary course of business or upon fair and reasonable terms not materially
less favorable than it could obtain or could become entitled to in an arm's-
length transaction with a Person that was not its Affiliate.
8.9 Employee Plans. Except where a Material-Adverse Event would not
result, no Company may directly or indirectly permit any of the events or
circumstances described in Section 6.12 to exist or occur.
8.10 Compliance with Laws and Documents. No Company may directly or
indirectly (a) violate the provisions of any Laws applicable to it or of any
Material Agreement to which it is a party if that violation alone or with all
other violations is a Material-Adverse Event or (b) violate the provisions of
its charter or bylaws or repeal, replace or amend any provision of its charter
or bylaws if any such action is a Material-Adverse Event.
8.11 Government Regulations. No Company may directly or indirectly
conduct its business in a way that it becomes regulated under the Investment
Company Act of 1940.
8.12 Fiscal Year Accounting. No Company may directly or indirectly change
its fiscal year nor use any accounting method other than GAAP.
8.13 New Businesses. No Company may directly or indirectly engage in any
business except the businesses in which it or any of its Affiliates is presently
engaged and any other reasonably-related business.
8.14 Assignment. No Company may directly or indirectly assign or transfer
any of its Rights, duties, or obligations under any of the Loan Documents.
8.15 Other Facilities. No Company may directly or indirectly receive
advances under any other warehouse- or servicing-type facility except as
provided in this agreement or as approved in writing by Administrative Agent.
8.16 Underwriting Guidelines. No Company may make any material change to
its underwriting guidelines.
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SECTION 9. FINANCIAL COVENANTS. Until all commitments by Lenders to extend
-------------------
credit under this agreement have been canceled or terminated and the Obligation
is fully paid and performed, Borrower covenants and agrees with Administrative
Agent and Lenders as follows:
9.1 Net Worth.
(a) The Companies' Net Worth may never be less than the greater of:
(i) $13,000,000, or (ii) 90% of actual Net Worth as of the preceding fiscal
year end, plus 90% of positive Net Income for each Calender Month following
such date, plus 90% of all contributions to any Company's stockholders'
equity made on or after such date.
(b) The Companies' Adjusted-Net Worth may never be less than the
greater of: (i) $25,000,000, or (ii) 90% of actual Adjusted-Net Worth as of
the preceding fiscal year end, plus 90% of positive Net Income for each
Calender Month following such date, plus 90% of all contributions to any
Company's stockholders' equity made on or after such date (other than
Subordinated Debt under the Revolving Subordinated Loan Agreement).
(c) The Companies' Adjusted-Tangible-Net Worth may never be less
than the greater of: (i) $25,000,000, or (ii) 90% of actual Adjusted-
Tangible-Net Worth as of the preceding fiscal year end, plus 90% of
positive Net Income for each Calender Month following such date, plus 90%
of all contributions to any Company's stockholders' equity made on or after
such date.
9.2 Leverage. The ratio of the Companies' Total-Adjusted Debt to
Adjusted-Tangible-Net Worth may never exceed 8.0 to 1.0.
9.3 Servicing Leverage. The ratio of outstanding Term-Line Borrowings to
the Companies' Adjusted-Net Worth may never exceed 2.5 to 1.0.
9.4 Subordinated Debt Leverage. The ratio of any Permitted Debt
outstanding under the Revolving Subordinated Loan Agreement to the Companies'
Net Worth may never exceed 2.0 to 1.0.
9.5 Cash Flow. The ratio of the Companies' historical Cash Flow to
historical CMLTD may never be less than 1.3 to 1.0 at the end of any 12-month
period, calculated as of the last day of each Calendar Month.
9.6 Servicing Portfolio. The Servicing Portfolio may never be less than
$4,000,000,000. Agency servicing must represent a minimum of 65% of the total
Servicing Portfolio.
9.7 Servicing Delinquencies. The ratio of mortgage loans in the
Servicing Portfolio that are 30 days or more delinquent, or in foreclosure or
bankruptcy, to the Servicing Portfolio, may not exceed 8.0%. The ratio of
mortgage loans in the Servicing Portfolio that are 90 days or more delinquent,
or in foreclosure or bankruptcy, to the Servicing Portfolio, may not exceed
3.0%.
9.8 Debt to Servicing Portfolio.
(a) The Principal Debt of Term-Line Borrowings may never exceed the
lesser of either (i) 1.25% of the unpaid principal balance of the Servicing
Portfolio, or (ii) 70% of the Appraised Value of the Servicing Portfolio.
52
(b) The Principal Debt of Working-Capital Borrowings and Term-Line
Borrowings may never exceed the lesser of either (i) 1.25% of the unpaid
principal balance of the Servicing Portfolio, or (ii) 95% of the Appraised
Value of the Servicing Portfolio.
SECTION 10. DEFAULTS AND REMEDIES.
10.1 Default. The term "Default" means the existence or occurrence of
any one or more of the following:
(a) Obligation. Borrower fails to pay (i) any interest on the
Obligation when due under the Loan Documents and that failure continues for
five days or (ii) any other part of the Obligation when due under the Loan
Documents.
(b) Covenants. Any Company fails to punctually and properly
perform, observe, and comply with any (i) any covenant, agreement, or
condition under Sections 8 or 9 or (ii) any covenant, agreement, or
condition contained in any of the Loan Documents, other than covenants to
pay the Obligation and the covenants listed in clause (i) above and that
failure continues for a period of 15 calendar days after any Company has,
or, with the exercise of reasonable investigation, should have, notice of
it.
(c) Misrepresentation. Any material statement, warranty, or
representation by or on behalf of any Company or Guarantor in any Loan
Document or other writing authored by any Company or Guarantor and
furnished in connection with the Loan Documents, proves to have been
incorrect or misleading in any material respect as of the date made or
deemed made.
(d) Debtor Law. Any Company or Guarantor (i) is not Solvent, (ii)
fails to pay its Debts generally as they become due, (iii) voluntarily
seeks, consents to, or acquiesces in the benefit of any Debtor Law, or (iv)
becomes a party to or is made the subject of any proceeding provided for by
any Debtor Law, other than as a creditor or claimant, that could suspend or
otherwise adversely affect the Rights of Administrative Agent or any Lender
granted in the Loan Documents unless, if the proceeding is involuntary, the
applicable petition is dismissed within 60 days after its filing.
(e) Other Debt. Any Company or Guarantor fails to make any payment
due on any Debt or security (with respect to which any Company or Guarantor
has redemption, sinking fund, or other purchase obligations) or any event
occurs or any condition exists in respect of any Debt or security of any
Company or Guarantor, the effect of which is (i) to cause or to permit any
holder of that Debt or security or a trustee to cause (whether or not it
elects to cause) any of that Debt or security to become due before its
stated maturity or its regularly scheduled payment dates, or (ii) to permit
a trustee or the holder of any security (other than common stock of any
Company or Guarantor) to elect (whether or not it does elect) a majority of
the directors on the board of directors of that Company or Guarantor.
(f) Judgments. Any Company or Guarantor fails to pay any money
judgment against it at least ten days prior to the date on which any of the
assets of that Company or Guarantor may be lawfully sold to satisfy that
judgment.
53
(g) Attachments. The failure to have discharged within a period
of 30 days after the commencement of any attachment, sequestration, or
similar proceeding against any of the assets of any Company or Guarantor.
(h) Unenforceability. Any material provision of any Loan Document
for any reason ceases to be in full force and effect or is fully or
partially declared null and void or unenforceable or the validity or
enforceability of any Loan Document is challenged or denied by any Company.
(i) Change of Control. Any (i) material change in the ownership or
management of Borrower or any Guarantor from that ownership and management
as it exists on the date of this agreement or (ii) failure to provide
advance notice of any change in ownership or management.
(j) Agency Qualifications. (i) Borrower fails to meet any GNMA
seller or servicing standard or requirement that is a Material-Adverse
Event, (ii) GNMA revokes or terminates Borrower's Right to service for
GNMA, (iii) GNMA issues a letter of extinguishment under any GNMA guaranty
agreement, (iv) Borrower ceases to be an eligible issuer or servicer for
either FNMA or FHLMC, (v) FNMA or FHLMC impose any sanctions upon Borrower
resulting in a Material-Adverse Event, (vi) FNMA or FHLMC terminate or
revoke Borrower's Right to service for FNMA or FHLMC, or (vii) FNMA or
FHLMC initiate any transfer of servicing from Borrower.
(k) LCs. Administrative Agent is served with, or becomes subject
to, a court order, injunction, or other process or decree restraining or
seeking to restrain it from paying any amount under any LC and either (a) a
drawing has occurred under the LC, and Borrower has refused to reimburse
Administrative Agent for payment, or (b) the expiration date of the LC has
occurred, but the Right of the beneficiary to draw under the LC has been
extended past the expiration date in connection with the pendency of the
related court action or proceeding, and Borrower has failed to deposit with
Administrative Agent cash collateral in an amount equal to Administrative
Agent's maximum exposure under the LC.
10.2 Remedies.
(a) Debtor Law. Upon the occurrence of a Default under Section
10.1(d), the commitments of Lenders to extend credit under this agreement
automatically terminate and the full Obligation is automatically due and
payable, without presentment, demand, notice of default, notice of the
intent to accelerate, notice of acceleration, or other requirements of any
kind, all of which are expressly waived by Borrower.
(b) Other Defaults. While a Default exists, other than those
described in clause (a) above, Administrative Agent may and, upon the
direction of Determining Lenders, shall declare the Obligation to be
immediately due and payable, whereupon it shall be due and payable,
whereupon the commitments of Lenders to extend credit under this agreement
are then automatically terminated.
(c) Other Remedies. Following the termination of the commitments
of Lenders to extend credit under this agreement and the acceleration of
the Obligation, Administrative Agent may (and, at the direction of
Determining Lenders, shall) do any one or more of the following: (i) Reduce
any claim to judgment; (ii) foreclose upon or otherwise enforce any Lender
Liens; (iii) demand payment of an amount equal to the LC Exposure then
existing and retain as collateral for the LC
54
Exposure any amounts received from any Company or from any property of any
Company, through offset, or otherwise; and (iv) exercise any other Rights
in the Loan Documents, at Law, in equity, or otherwise that Determining
Lenders may direct. Should any Default continue that, in Administrative
Agent's opinion, materially and adversely affects the Collateral or the
interests of the Lenders under this agreement, Administrative Agent may, in
a notice to the Lenders of that Default set forth one or more actions that
Administrative Agent, in its opinion, believes should be taken. Unless
otherwise directed by Determining Lenders (excluding the Lender serving as
Administrative Agent) within ten days following the date of the notice
setting forth the proposed action or actions, Administrative Agent may, but
shall not be obligated to, take the action or actions set forth in that
notice.
10.3 Right of Offset. Borrower hereby grants to Administrative Agent and
to each Lender a right of offset, to secure the repayment of the Obligation,
upon any and all monies, securities, or other property of Borrower, and the
proceeds therefrom now or hereafter held or received by or in transit to
Administrative Agent or such Lender from or for the account of Borrower, whether
for safekeeping, custody, pledge, transmission, collection, or otherwise, and
also upon any and all deposits (general or special, time or demand, provisional
or final) and credits of Borrower, and any and all claims of Borrower against
Administrative Agent or such Lender, at any time existing. Upon the occurrence
of any Default, Administrative Agent and each Lender are authorized at any time
and from time to time, without notice to either Company, to offset, appropriate,
and apply any and all of those items against the Obligation, subject to Section
3.6. Notwithstanding anything in this section or elsewhere in this agreement to
the contrary, neither Administrative Agent nor any other Lender shall have any
right to offset, appropriate, or apply any accounts of Borrower which consist of
escrowed funds (except and to the extent of any beneficial interest which
Borrower have in such escrowed funds) which have been so identified by any
Company in writing at the time of deposit thereof.
10.4 Waivers. Borrower waives any right to require Administrative Agent
to (a) proceed against any Person, (b) proceed against or exhaust any of the
Collateral or pursue its Rights and remedies as against the Collateral in any
particular order, or (c) pursue any other remedy in its power. Administrative
Agent shall not be required to take any steps necessary to preserve any Rights
of any Company against any Person from which any Company purchased any Mortgage
Loans or to preserve Rights against prior parties. Borrower and each surety,
endorser, guarantor, pledgor, and other party ever liable or whose property is
ever liable for payment of any of the Obligation jointly and severally waive
presentment and demand for payment, protest, notice of intention to accelerate,
notice of acceleration, and notice of protest and nonpayment, and agree that
their or their property's liability with respect to the Obligation, or any part
thereof, shall not be affected by any renewal or extension in the time of
payment of the Obligation, by any indulgence, or by any release or change in any
security for the payment of the Obligation, and hereby consent to any and all
renewals, extensions, indulgences, releases, or changes, regardless of the
number thereof.
10.5 Performance by Administrative Agent. Should any covenant, duty, or
agreement of any Company fail to be performed in accordance with the terms of
this agreement or of any document delivered under this agreement, Administrative
Agent may, at its option, after notice to Borrower, as the case may be, perform,
or attempt to perform, such covenant, duty, or agreement on behalf of that
Company and shall notify each Lender that it has done so. In such event,
Borrower shall jointly and severally, at the request of Administrative Agent,
promptly pay any amount expended by Administrative Agent in such performance or
attempted performance to Administrative Agent at its principal place of
business, together with interest thereon at the Maximum Rate from the date of
such expenditure by Administrative Agent until paid. Notwithstanding the
foregoing, it is expressly understood that Administrative Agent does not assume
and shall never have, except by express written consent of Administrative Agent,
any liability or responsibility for the performance
55
of any duties of any Company under this agreement or under any other document
delivered under this agreement.
10.6 No Responsibility. Except in the case of fraud, gross negligence, or
willful misconduct, neither Administrative Agent nor any of its officers,
directors, employees, or attorneys shall assume, or ever have any liability or
responsibility for, any diminution in the value of the Collateral or any part of
the Collateral.
10.7 No Waiver. The acceptance by Administrative Agent or any Lender at
any time and from time to time of partial payment or performance by any Company
of any of their respective obligations under this agreement or under any Loan
Document shall not be deemed to be a waiver of any Default then existing. No
waiver by Administrative Agent or any Lender shall be deemed to be a waiver of
any other then existing or subsequent Default. No delay or omission by
Administrative Agent or any Lender in exercising any right under this agreement
or under any other document required to be executed under or in connection with
this agreement shall impair such right or be construed as a waiver thereof or
any acquiescence therein, nor shall any single or partial exercise of any such
right preclude other or further exercise thereof, or the exercise of any other
right under this agreement or otherwise.
10.8 Cumulative Rights. All Rights available to Administrative Agent and
the Lenders under this agreement or under any other document delivered under
this agreement shall be cumulative of and in addition to all other Rights
granted to Administrative Agent and the Lenders at Law or in equity, whether or
not the Notes be due and payable and whether or not Administrative Agent shall
have instituted any suit for collection, foreclosure, or other action in
connection with this agreement or any other document delivered under this
agreement.
10.9 Rights of Individual Lenders. No Lender shall have any right by
virtue of, or by availing itself of, any provision of this agreement to
institute any actions or proceedings at Law, in equity, or otherwise (excluding
any actions in bankruptcy), upon or under or with respect to this agreement, or
for the appointment of a receiver, or for any other remedy under this agreement,
unless (a) the Determining Lenders previously shall have given to Administrative
Agent written notice of a Default and the continuance thereof, including a
written request upon Administrative Agent to institute such action or
proceedings in its own name and offering to indemnify Administrative Agent
against the costs, expenses and liabilities to be incurred therein or thereby,
(b) Administrative Agent, for ten Business Days after its receipt of such
notice, shall have failed to institute any such action or proceeding, and (c) no
direction inconsistent with such written request shall have been given to
Administrative Agent by Determining Lenders. It is understood and intended, and
expressly covenanted by the taker and holder of every Note with every other
taker and holder and Administrative Agent, that no one or more holders of Notes
shall have any right in any manner whatever by virtue, or by availing itself, of
any provision of this agreement to affect, disturb or prejudice the Rights of
any other Lenders, or to obtain or seek to obtain priority over or preference to
any other such Lender, or to enforce any right under this agreement, except in
the manner herein provided and for the equal, ratable and common benefit of all
Lenders. For the protection and enforcement of the provisions of this Section
10.9, each and every Lender and Administrative Agent shall be entitled to such
relief as can be given either at law or in equity.
10.10 Notice to Administrative Agent. Should any Default or Potential
Default occur and be continuing, any Lender having actual knowledge thereof
shall notify Administrative Agent and Borrower of the existence thereof, but the
failure of any Lender to provide that notice shall not prejudice that Lender's
Rights under this agreement.
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10.11 Costs. All court costs, reasonable attorneys' fees, other costs
of collection, and other sums spent by Administrative Agent or any Lender in the
exercise of any Right provided in any Loan Document is payable to Administrative
Agent or that Lender, as the case may be, on demand, is part of the Obligation,
and bears interest at the Default Rate from the date paid by Administrative
Agent or any Lender to the date repaid by Borrower.
SECTION 11 AGENT.
11.1 Authorization and Action. Each Lender hereby appoints Administrative
Agent as Administrative Agent under the Loan Documents and authorizes
Administrative Agent to take such action on its behalf and to exercise such
powers and perform such duties as are expressly delegated to Administrative
Agent by the terms of the Loan Documents, together with such powers as are
reasonably incidental thereto. As to any matter not expressly provided for by
this agreement (including, without limitation, enforcement or collection of the
Notes), Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of Lenders, and those instructions shall be binding upon all
Lenders and all holders of the Notes. However, that Administrative Agent shall
not be required to take any action that exposes Administrative Agent to personal
liability or that is contrary to this agreement or applicable Laws.
Administrative Agent agrees to give to each Lender prompt notice of each notice
given to it by Borrower pursuant to the terms of the Loan Documents.
11.2 Administrative Agent's Reliance, Etc. Notwithstanding anything to
the contrary in any Loan Document, neither Administrative Agent nor any of its
Representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with the Loan Documents, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Administrative Agent: (a) May treat the payee of
any Note as the holder thereof; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it or Borrower and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties, or
representations made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this agreement on the part of
Borrower or to inspect the property (including the books and records) of
Borrower, except receipt of delivery of the items required under Sections 3.2,
4.1, 4.3, and 7.1; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this agreement or any other instrument or document furnished pursuant hereto;
and (f) shall incur no liability under or in respect of this agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy) believed by it to be genuine and signed or sent by the proper
party or parties.
11.3 Administrative Agent and Affiliates. With respect to Borrowings
made by it, and the one or more Notes issued to it, Administrative Agent shall
have the same rights and powers under this agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
the Administrative Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Administrative Agent in its individual
capacity. Administrative Agent and the Affiliates of Administrative Agent may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, Borrower, any of its Affiliates
and any Person who may do
57
business with or own securities of Borrower or any of its Affiliates, all as if
Administrative Agent was not Administrative Agent and without any duty to
account therefor to Lenders.
11.4 Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon Administrative Agent or any other Lender, and based on
the financial statements referred to in Sections 6.6 and 7.1 of this agreement
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter this agreement. Each Lender also
acknowledges that it will, independently and without reliance upon
Administrative Agent or any Lender, and based on such documents and information
as it shall deem appropriate at the time, make its own credit decisions in
taking or not taking action under this agreement.
11.5 Indemnification. Lenders shall indemnify Administrative Agent (to
the extent not reimbursed by Borrower), ratably according to their respective
Commitment Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Administrative Agent in any way relating to or arising out of
this agreement or any action taken or omitted by Administrative Agent under this
agreement (including any of same which may result from the negligence, but not
gross negligence, of Administrative Agent). However, no Lender shall be liable
for any portion of those liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings, or otherwise) of,
or legal advice in respect of rights or responsibilities under, this agreement,
to the extent that Administrative Agent is not reimbursed for such expenses by
Borrower.
11.6 Successor Administrative Agent. Administrative Agent may resign at
any time by giving written notice thereof to Lenders and Borrower and may be
removed at any time with or without cause by 100% of Lenders. Upon any such
resignation or removal, 100% of Lenders shall have the right to appoint a
successor Administrative Agent in the capacity of Administrative Agent. If no
successor Administrative Agent shall have been so appointed by 100% of Lenders,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Lenders' removal
of the retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of Lenders, appoint a successor Administrative Agent, which shall
be any other Lender at the time of resignation or removal of Administrative
Agent, or, otherwise, a commercial bank or savings bank organized under the laws
of the United States of America or of any state thereof which has a combined
capital and surplus of at least $200,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from any further duties, and obligations under this agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this agreement. The appointment of a successor Administrative Agent
shall not release the retiring Administrative
58
Agent from any liability it may have for any actions taken or omitted to be
taken by it while it was Administrative Agent under this agreement.
11.7 Inspection. Administrative Agent shall permit any officer,
employee, agent of Borrower or any Lender which may so request to visit and
inspect the premises on which the custodial duties of Administrative Agent
hereunder are performed, examine the books and records of Administrative Agent
which pertain to such custodial duties, take copies and extracts therefrom, and
discuss the performance of such custodial duties with the officers, accountants
and auditors of Administrative Agent that are responsible therefor, all at such
reasonable times and as often as Borrower or any Lender may desire.
SECTION 12. MISCELLANEOUS.
12.1 Nonbusiness Days. Any action that is due under any Loan Document
on a non-Business Day may be delayed until the next Business Day. However,
interest accrues on any payment until it is made.
12.2 Communications. Unless otherwise stated, a communication under any
Loan Document to a party to this agreement must be written to be effective and
is deemed given:
(a) For Borrowing Requests, Collateral Delivery-Notices, Shipping
Requests, and Release Requests, only when actually received by
Administrative Agent.
(b) Otherwise, if by fax, when transmitted to the appropriate fax
number, but, without affecting the date deemed given, the fax must be
promptly confirmed by telephone.
(c) Otherwise, if by mail, on the third Business Day after enclosed
in a properly addressed, stamped, and sealed envelope deposited in the
appropriate official postal service.
(d) Otherwise, when actually delivered.
Until changed by written notice to each other party to this agreement, the
address and fax number are stated for (a) Borrower and Administrative Agent,
beside their names on the signature pages below, and (b) each Lender, beside its
name on Schedule 2.
12.3 Form and Number of Documents. The form, substance, and number of
counterparts of each writing to be furnished under the Loan Documents must be
satisfactory to Administrative Agent and its counsel.
12.4 Exceptions to Covenants. An exception to any Loan Document covenant
does not permit violation of any other Loan Document covenant.
12.5 Survival. All Loan Document provisions survive all closings and are
not affected by any investigation made by any party.
12.6 Governing Law. Unless otherwise stated, each Loan Document must be
construed, and its performance enforced, under the Laws of the State of Texas
and the United States of America.
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12.7 Invalid Provisions. If any provision of a Loan Document is
judicially determined to be unenforceable, all other provisions of it remain
enforceable. If the provision determined to be unenforceable is a material part
of that Loan Document, then, to the extent lawful, it shall be replaced by a
judicially-construed provision that is enforceable but otherwise as similar in
substance and content to the original provision as the context of it reasonably
allows.
12.8 Conflicts Between Loan Documents. The provisions of this agreement
control if in conflict (i.e., the provisions contradict each other as opposed to
a Loan Document containing additional provisions not in conflict) with the
provisions of any other Loan Document.
12.9 Discharge and Certain Reinstatement. Borrower's obligations under
the Loan Documents remain in full force and effect until no Lender has any
commitment to extend credit under the Loan Documents and the Obligation is fully
paid (except for provisions under the Loan Documents which by their terms
expressly survive payment of the Obligation and termination of the Loan
Documents). If any payment under any Loan Document is ever rescinded or must be
restored or returned for any reason, then all Rights and obligations under the
Loan Documents in respect of that payment are automatically reinstated as though
the payment had not been made when due.
12.10 Amendments, Consents, Conflicts, and Waivers. An amendment of, or
an approval, consent, or waiver by Administrative Agent or by one or more
Lenders under, any Loan Document must be in writing and must be:
(a) Borrower and Administrative Agent. Executed by Borrower and
Administrative Agent if it purports to reduce or increase any fees payable
to Administrative Agent by Borrower.
(b) Borrower, Administrative Agent, and All Lenders. Executed by
Borrower and Administrative Agent and executed or approved in writing by
all Lenders if action of all Lenders is specifically provided in any Loan
Document or if it purports to (i) except as otherwise stated in this
Section 12.10, extend the due date or decrease the scheduled amount of any
payment under, or reduce the rate or amount of interest, fees, or other
amounts payable to Administrative Agent or any Lender under, any Loan
Document, (ii) change the definition of Borrowing Base (or any component of
it), Commitment Percentage, Determining Lenders, Market Value, Termination
Percentage, Tranche A-Stated-Termination Date, Tranche B-Stated-
Termination Date or Warehouse-Stated-Termination Date, or (iii) partially
or fully release any Guaranty or any Collateral except releases of
Collateral contemplated in this agreement.
(c) Borrower, Administrative Agent, and Determining Lenders.
Otherwise (i) for this agreement, executed by Borrower, Administrative
Agent, and Determining Lenders, or (ii) for other Loan Documents, approved
in writing by Determining Lenders and executed by Borrower, Administrative
Agent, and any other party to that Loan Document.
No course of dealing or any failure or delay by Administrative Agent, any
Lender, or any of their respective Representatives with respect to exercising
any Right of Administrative Agent or any Lender under the Loan Documents
operates as a waiver of that Right. An approval, consent, or waiver is only
effective for the specific instance and purpose for which it is given. The Loan
Documents may only be supplemented by agreements, documents, and instruments
delivered according to their respective express terms.
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12.11 Multiple Counterparts. Any Loan Document may be executed in any
number of counterparts with the same effect as if all signatories had signed the
same document, and all of those counterparts must be construed together to
constitute the same document. This agreement is effective when counterparts of
it have been executed and delivered to Administrative Agent by each Lender,
Administrative Agent, and Borrower, or, in the case only of those Lenders, when
Administrative Agent has received faxed or other evidence satisfactory to it
that each Lender has executed and is delivering to Administrative Agent a
counterpart of it.
12.12 Parties. This agreement binds and inures to Borrower, each Lender,
Administrative Agent, and their respective successors and permitted assigns.
Only those Persons may rely upon or raise any defense about this agreement.
(a) Assignment by Companies. No Company may assign any Rights or
obligations under any Loan Document without first obtaining the written
consent of Administrative Agent and all Lenders.
(b) Assignment by Lender. Any Lender may assign, pledge, and
otherwise transfer all or any of its Rights and obligations under the Loan
Documents either (i) to a Federal Reserve Bank without the consent of any
party to this agreement so long as that Lender is not released from its
obligations under the Loan Documents, or (ii) otherwise in the ordinary
course of its lending business and in accordance with all Laws, and with
Section 12.13 or 12.14 so long as (A) except for assignments, pledges, and
other transfers by a Lender to its Affiliates, the written consent of
Borrower and Administrative Agent, which may not be unreasonably withheld,
must be first obtained, (B) the assignment or transfer (other than a
pledge) does not involve a purchase price that directly or indirectly
reflects a discount from face value unless that Lender first offered that
assignment or transfer to the other Lenders on ratable basis according to
their Commitment Percentages, (C) neither Borrower nor Administrative Agent
are required to incur any cost or expense incident to any assignment,
pledge, or other transfer by any Lender, all of which are for the account
of the assigning, pledging, or transferring Lender and its assignee,
pledgee, or transferee as they may agree, and (D) if the Participant or
Purchaser is organized under the Laws of any jurisdiction other than the
United States of America or any of its states, it complies with Section
3.13.
(c) Otherwise Void. Any purported assignment, pledge, or other
transfer in violation of this section is void from beginning and not
effective.
12.13 Participations. Subject to Section 12.12(b) and this section and
only if no Default exists, a Lender may at any time sell to one or more Persons
(each a "Participant") participating interests in its Commitment and its share
of the Obligation.
(a) Additional Conditions. For each participation (i) the selling
Lender must remain, and the Participant may not become, a "Lender" under
this agreement, (ii) the selling Lender's obligations under the Loan
Documents must remain unchanged, (iii) the selling Lender must remain
solely responsible for the performance of those obligations, (iv) the
selling Lender must remain the holder of its one or more Notes and its
share of the Obligation for all purposes under the Loan Documents, and (v)
Borrower and Administrative Agent may continue to deal solely and directly
with the selling Lender in connection with those Rights and obligations.
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(b) Participant Rights. The selling Lender may obtain for each of
its Participants the benefits of the Loan Documents related to
participations in its share of the Obligation, but Borrower is never
obligated to pay any greater amount that would be due to the selling Lender
under the Loan Documents calculated as though no participation had been
made. Otherwise, Participants have no Rights under the Loan Documents
except certain permitted voting Rights described below.
(c) Participation Agreements. An agreement for a participating
interest (i) may only provide to a Participant voting Rights in respect of
any amendment of or approval, consent, or waiver under any Loan Document
related to the matters in Section 12.10(b) if it also provides for a voting
mechanism that a majority of that selling Lender's Commitment Percentage or
Termination Percentage, as the case may be (whether directly held by that
selling Lender or participated) controls the vote for that selling Lender,
and (ii) may not permit a Participant to assign, pledge, or otherwise
transfer its participating interest in the Obligation to any Person except
any Lender or its Affiliates.
12.14 Transfers. Subject to Section 12.12(b) and this section and only if
no Default exists, a Lender may at any time sell to one or more financial
institutions (each a "Purchaser") all or part of its Rights and obligations
under the Loan Documents.
(a) Additional Conditions. The sale (i) must be accomplished by the
selling Lender and Purchaser executing and delivering to Administrative
Agent and Borrower an Assignment and (ii) may not occur until the selling
Lender pays to Administrative Agent an administrative-transfer fee of
$2,500.
(b) Procedures. Upon satisfaction of the foregoing conditions and
as of the Effective Date in the assignment and assumption agreement, which
may not be before delivery of that document to Administrative Agent and
Borrower, then (i) a Purchaser is for all purposes a Lender party to, with
all the Rights and obligations of a Lender under, this agreement, with a
Commitment as stated in the assumption agreement, (ii) the selling Lender
is released from its obligations under the Loan Documents to a
corresponding extent, (iii) Schedule 2 is automatically deemed to reflect
the name, address, and Commitment of the Purchaser and the reduced
Commitment of the selling Lender, and Administrative Agent shall deliver to
Borrower and Lenders an amended Schedule 2 reflecting those changes, (iv)
Borrower shall execute and deliver to each of the selling Lender and the
Purchaser a Note, each based upon their respective Commitments following
the transfer, (v) upon delivery of the one or more Notes under clause (iv)
above, the selling Lender shall return to the appropriate Company all Notes
previously delivered to it under this agreement, and (vi) the Purchaser is
subject to all the provisions in the Loan Documents, the same as if it were
a Lender that executed this agreement on its original date.
12.15 Jurisdiction; Venue; Service of Process; and Jury Trial. Each
Party, in each case for itself, its successors and assigns (and in the case of
Borrower, for each of its subsidiaries), (A) irrevocably submits to the
Nonexclusive Jurisdiction of The State and Federal Courts located in Texas, and
agrees and consents that service of process may be made upon it in any legal
proceeding arising out of or in connection with The Loan Documents and the
obligation by service of process as provided By Texas Law, (B) irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any litigation arising out of or in
connection with the Loan Documents and the obligation brought in any such
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court, (c) irrevocably waives any claims that any litigation brought in any such
court has been brought in an inconvenient forum, (d) agrees to designate and
maintain an Administrative Agent for service of process in Dallas, Texas, in
connection with any such litigation and to deliver to Administrative Agent
evidence thereof, if requested, (e) irrevocably consents to the service of
process out of any of the aforementioned courts in any such litigation by the
mailing of copies thereof by certified mail, return receipt requested, postage
prepaid, at its address set forth herein, (f) irrevocably agrees that any legal
proceeding against any party arising out of or in connection with the loan
documents or the obligation shall be brought in one of the aforementioned
courts, and (g) irrevocably waives, to the fullest extent permitted by law, its
respective rights to a jury trial of any claim or cause of action based upon or
arising out of any loan document or the transactions contemplated thereby. the
scope of each of the foregoing waivers is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Borrower (for itself and on behalf of each of its Subsidiaries) and each other
party to this agreement acknowledge that this waiver is a material inducement to
the agreement of each party hereto to enter into a business relationship, that
each has already relied on this waiver in entering into this agreement, and each
will continue to rely on each of such waivers in related future dealings.
Borrower (for itself and on behalf of each of its Subsidiaries) and each other
party to this agreement warrant and represent that they have reviewed these
waivers with their legal counsel, and that they knowingly and voluntarily agree
to each such waiver following consultation with legal counsel. The waivers in
this Section 12.15 are irrevocable, meaning that they may not be modified either
orally or in writing, and these waivers shall apply to any subsequent
amendments, supplements, and replacements to or of this or any other Loan
Document. In the event of Litigation, this agreement may be filed as a written
consent to a trial by the court.
12.16 Limitation of Liability. Neither Administrative Agent nor any
Lender shall be liable to any Company for any amounts representing indirect,
special, or consequential damages suffered by any Company, except where such
amounts are based substantially on willful misconduct by Administrative Agent or
any Lender, but then only to the extent any damages resulting from such wilful
misconduct are covered by Administrative Agent's and the other Lenders' fidelity
bond or other insurance.
12.17 Entire Agreement. The Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
12.18 Restatement of Existing Loan Agreement, Repayment of Non-
Participating Existing Lenders, and Settlement of Funds. The parties hereto
agree that, on the Closing Date, after all conditions precedent set forth in
Section 5 have been satisfied or waived: (a) the Obligation (as defined in this
agreement) represents, among other things, the amendment, extension,
consolidation, and modification of the "Obligation" (as defined in the Existing
Loan Agreement); (b) this agreement is intended to, and does hereby, restate,
renew, extend, amend, modify, supersede, and replace the Existing Loan
Agreement; (c) the Second Amended and Restated Guaranty executed pursuant to
this agreement as of the Closing Date is intended to, and does hereby, restate,
renew, extend, amend, modify, supersede, and replace the Amended and Restated
Guaranty executed and delivered pursuant to the Existing Loan Agreement; (d) the
Notes executed pursuant
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to this agreement amend, renew, extend, modify, replace, substitute for and
supersede in their entirety (but do not extinguish, the Debt arising under) the
promissory notes issued pursuant to the Existing Loan Agreement (other than Debt
owed to Existing Lenders who are not continuing as a Lender under this
agreement, which Debt is being repaid); and (e) the entering into and
performance of their respective obligations under this agreement and the
transactions evidenced hereby do not constitute a novation. Additionally, the
following allocations and payments by the parties indicated will be made in
order to reflect the amended and restated commitments and the Lenders'
Commitment Percentages thereof:
(a) On the Closing Date, after all conditions precedent set forth in
Section 5 have been satisfied or waived, all outstanding indebtedness under
the Existing Loan Agreement owed to any Existing Lender that has not
continued to be a Lender under this Agreement shall be repaid in full by
Borrower and such Existing Lender's commitments under the Existing Loan
Agreement shall be terminated.
(b) Each Lender which was an Existing Lender will fund, if positive,
an amount equal to the difference between (i) its Commitment Percentage of
the Principal Debt outstanding under this agreement, including, without
limitation, its Commitment Percentage of any Borrowings made, and (ii) its
ratable portion of the aggregate unpaid principal balance of all borrowings
under the Existing Loan Agreement.
remainder of page intentionally blank
signature page follows
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EXECUTED as of the date first stated in this Second Amended and Restated
Loan Agreement.
Matrix Financial Services Corporation MATRIX FINANCIAL SERVICES
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION, as Borrower
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Tel ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Fax ▇▇▇-▇▇▇-▇▇▇▇
BANK ONE, TEXAS, N.A., as Administrative U.S. BANK NATIONAL
Agent and a Lender ASSOCIATION, as a Lender
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
RESIDENTIAL FUNDING
CORPORATION, as a Lender
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
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