EXHIBIT 10.7
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MASTER LOAN AND SECURITY AGREEMENT
_____________________________
Dated as of July 20, 1999
______________________________
NEW CENTURY MORTGAGE CORPORATION
and
NC CAPITAL CORPORATION
as Borrowers
and
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC.
as Lender
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TABLE OF CONTENTS
Page
Section 1. Definitions and Accounting Matters...................................... 1
1.01 Certain Defined Terms............................................. 1
1.02 Accounting Terms and Determinations............................... 13
Section 2. Loans, Note and Prepayments............................................. 13
2.01 Loans............................................................. 13
2.02 Notes............................................................. 13
2.03 Procedure for Borrowing........................................... 14
2.04 Limitation on Types of Loans; Illegality.......................... 15
2.05 Repayment of Loans; Interest...................................... 16
2.06 Mandatory Prepayments or Pledge................................... 16
Section 3. Payments; Computations; Etc............................................. 17
3.01 Payments.......................................................... 17
3.02 Computations...................................................... 17
3.03 Requirements of Law............................................... 17
Section 4. Collateral Security..................................................... 18
4.01 Collateral; Security Interest..................................... 18
4.02 Re-registration................................................... 20
4.03 Further Documentation............................................. 20
4.04 Changes in Locations, Name, etc................................... 21
4.05 Lender's Appointment as Attorney-in-Fact.......................... 21
4.06 Performance by Lender of Borrowers' Obligations................... 22
4.07 Proceeds.......................................................... 22
4.08 Remedies.......................................................... 23
4.09 Registration Rights; Private Sales................................ 24
4.10 Limitation on Duties Regarding Preservation of Collateral......... 24
4.11 Powers Coupled with an Interest................................... 25
4.12 Release of Security Interest...................................... 25
Section 5. Conditions Precedent.................................................... 25
5.01 Initial Loan...................................................... 25
5.02 Initial and Subsequent Loans...................................... 26
Section 6. Representations and Warranties.......................................... 29
6.01 Existence......................................................... 29
6.02 Financial Condition............................................... 30
6.03 Litigation........................................................ 30
6.04 No Breach......................................................... 30
6.05 Action............................................................ 31
6.06 Approvals......................................................... 31
6.07 Margin Regulations................................................ 31
6.08 Taxes............................................................. 31
6.09 Investment Company Act............................................ 31
6.10 Collateral; Collateral Security................................... 31
6.11 Chief Executive Office............................................ 32
6.12 Location of Books and Records..................................... 32
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6.13 [Reserved]........................................................ 32
6.14 True and Complete Disclosure...................................... 33
6.15 Tangible Net Worth................................................ 33
6.16 ERISA............................................................. 33
6.17 Governing Agreements.............................................. 33
6.18 Securities Information............................................ 33
Section 7. Covenants of the Borrowers.............................................. 34
7.01 Financial Statements.............................................. 34
7.02 Litigation........................................................ 35
7.03 Existence, etc.................................................... 36
7.04 Prohibition of Fundamental Changes................................ 36
7.05 Borrowing Base Deficiency......................................... 36
7.06 Notices........................................................... 36
7.07 Underwriting Guidelines........................................... 37
7.08 Transactions with Affiliates...................................... 37
7.09 Limitation on Liens............................................... 37
7.10 Limitation on Guarantees.......................................... 38
7.11 Limitation on Distributions....................................... 38
7.12 Maintenance of Tangible Net Worth................................. 38
7.13 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.. 38
7.14 Maintenance of Profitability...................................... 38
7.15 Servicer; Servicing Tape.......................................... 38
7.16 Required Filings.................................................. 38
7.17 No Adverse Selection.............................................. 39
7.18 Remittance of Prepayments......................................... 39
7.19 Governing Agreements.............................................. 39
7.20 Rights and Payments under Pledged Securities...................... 39
7.21 Voting Rights..................................................... 39
7.22 Other Information................................................. 39
7.23 Provision of Escrow Instruction Letter............................ 39
7.24 U.S. Bank Compliance Certificates................................. 39
7.25 Collection Account................................................ 40
Section 8. Events of Default....................................................... 40
Section 9. Remedies Upon Default................................................... 42
Section 10. No Duty of Lender....................................................... 42
Section 11. Securitization Transactions............................................. 43
11.01 Exclusive Option.................................................. 43
11.02 Fees.............................................................. 44
11.03 Information....................................................... 44
11.04 Option Breakage Fee............................................... 45
Section 12. Miscellaneous........................................................... 45
12.01 Waiver............................................................ 45
12.02 Notices........................................................... 45
12.03 Indemnification and Expenses...................................... 46
12.04 Amendments........................................................ 47
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12.05 Successors and Assigns............................................ 47
12.06 Survival.......................................................... 47
12.07 Captions.......................................................... 47
12.08 Counterparts...................................................... 47
12.09 Loan Agreement Constitutes Security Agreement; Governing Law...... 47
12.10 SUBMISSION TO JURISDICTION; WAIVERS............................... 47
12.11 Waiver of Jury Trial.............................................. 48
12.12 Acknowledgments................................................... 48
12.13 Hypothecation or Pledge of Collateral............................. 48
12.14 Servicing......................................................... 49
12.15 Periodic Due Diligence Review..................................... 50
12.16 Set-Off........................................................... 51
12.17 Intent............................................................ 51
12.18 Confidential Information.......................................... 51
SCHEDULES
SCHEDULE 1 Representations and Warranties for Eligible Mortgage Loans
SCHEDULE 2 Representations and Warranties for Eligible Securities
SCHEDULE 3 Filing Jurisdictions and Offices
SCHEDULE 4 Option Breakage Fee Collateral Value and Applicable Margin
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to Borrowers
EXHIBIT D Form of Notice of Request for Borrowing and Pledge
EXHIBIT E-1 Form of Borrowers' Release Letter
EXHIBIT E-2 Form of Warehouse Lender's Release Letter
EXHIBIT F Form of Blocked Account Agreement
EXHIBIT G Form of Servicer Notice
EXHIBIT H Form of Instruction Letter
EXHIBIT I Form of Mortgage Note
EXHIBIT J Underwriting Guidelines
EXHIBIT K Form of Contribution Agreement
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of July 20, 1999 (the
"Loan Agreement"), between NEW CENTURY MORTGAGE CORPORATION, a California
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corporation ("New Century"), NC CAPITAL CORPORATION, a California corporation
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("NCCC" and, together with New Century, the "Borrowers"), and ▇▇▇▇▇ ▇▇▇▇▇▇ REAL
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ESTATE SECURITIES INC., a Delaware corporation (the "Lender").
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RECITALS
The Borrowers have requested that the Lender from time to time make,
at the Lender's sole discretion, revolving credit loans to them to finance the
Eligible Securities and certain residential mortgage loans owned by any
Borrower. The Lender is prepared to consider making such loans upon the terms
and conditions hereof. Accordingly, the parties hereto agree as follows.
Section 1. Definitions and Accounting Matters.
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1.01 Certain Defined Terms. As used herein, the following terms
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shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Adjusted Net Worth" shall mean, with respect to the Borrowers at a
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particular date, the Consolidated Net Worth of the Borrowers, minus no more than
100% of the following amounts: (a) advances or loans to shareholders, officers
or Affiliates of the Borrowers; (b) investments in Affiliates of the Borrowers
which are not consolidated with the Borrowers; (c) without duplication, assets
pledged to secure any liabilities not included in the Indebtedness of the
Borrowers; (d) goodwill, including any amounts (however designated on the
balance sheet) representing the cost of acquisitions of Subsidiaries in excess
of underlying tangible assets; (e) patents, trademarks, copyrights; (f)
leasehold improvements not recoverable at the expiration of a lease; (g)
deferred charges (including, but not limited to, unamortized debt discount and
expense, organization expenses and experimental and development expenses, but
excluding prepaid expenses); (h) other investments which do not have a readily
available market value; (i) real estate owned (REO) or loans repurchased by the
Borrowers due to breaches of representations or warranties under other lending
or purchase agreements; (j) capitalized mortgage servicing rights; (k) such
other assets which would be deemed by HUD not to be acceptable in calculating
adjusted net worth in accordance with its requirements in effect as of such
date, as such requirements appear in the "Audit Guide for Audit of Approved Non-
Supervised Mortgagees"; and (l) other assets deemed unacceptable by the Lender
in its sole reasonable discretion; plus value given for the Borrowers' servicing
portfolios at a market multiple deemed reasonable by the Lender.
"Affiliate" shall mean with respect to any Person, any "affiliate" of
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such Person as such term is defined in the Bankruptcy Code in effect from time
to time.
"Applicable Collateral Percentage" shall mean, with respect to any
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Eligible Mortgage Loan or Eligible Security, a percentage to be determined by
the Lender in its sole discretion; provided that (i) the Applicable Collateral
Percentage of any Eligible Securities
pledged hereunder shall be (a) reduced to not more than 40% for any Eligible
Security pledged for more than 6 months and (b) reduced at least a further 1.5%
each month thereafter that such Eligible Security continues to be pledged
hereunder (ii) the Applicable Collateral Percentage shall be 85% with respect to
each eligible Mortgage Loan in respect of which there is a delinquency in the
payment of principal and/or interest which continues for a period in excess of
59 days (without regard to any applicable grace periods), to each and (iii) the
Applicable Collateral Percentage shall be deemed to be zero with respect to (1)
each Eligible Mortgage Loan which is a Wet-Ink Mortgage Loan for which the
Custodian has failed to receive the related Mortgage Loan Documents by the
seventh (7/th/) Business Day following the applicable Funding Date, (2) each
Eligible Mortgage Loan which is both a Wet-Ink Mortgage Loan and a Borrower
Refinanced Loan, for which the Custodian has failed to receive facsimile copies
of the related Mortgage, Mortgage Note, and Assignment of Mortgage by the first
(1/st/) Business Day following the applicable Funding Date or (3) which is an
Eligible Mortgage Loan which remains pledged to the Lender hereunder for more
than 180 days after the first Funding Date therefor; provided further, that
notwithstanding anything herein to the contrary, such amounts shall be
determined in the Lender's sole discretion and shall not be binding on the
Lender in determining the Applicable Collateral Percentage.
"Applicable Margin" shall mean with respect to any Eligible Mortgage
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Loans and Eligible Securities, a percentage to be determined by the Lender in
its sole discretion.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
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assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment and pledge of
the Mortgage.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
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1978, as amended from time to time.
"Blocked Account Agreement" shall mean an agreement between the
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Servicer, the Borrowers and the Lender substantially in the form of Exhibit F
hereto, as the same may be amended, supplemented or otherwise modified from time
to time, in which the Servicer acknowledges the Lender's lien on the Collection
Account, and agrees that, in the event that it receives notice that an Event of
Default hereunder has occurred and until such notice is rescinded by the Lender,
the Servicer shall only withdraw funds from the Collection Account on
instruction from the Lender, and which constitutes notice pursuant to Section
9302 of the California Commercial Code of the Lender's security interest in the
Collection Account, which notice is intended to satisfy the requirements of such
section.
"Borrower Refinanced Loan" shall mean an Eligible Mortgage Loan made
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by a Borrower to a Mortgagor, the proceeds of which are used to pay indebtedness
owed by such Mortgagor to, and release the lien of an existing Mortgage in favor
of, a Borrower.
"Borrowers" shall have the meaning provided in the heading hereof.
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"Borrowing Base" shall mean the aggregate Collateral Value of all
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Eligible Mortgage Loans and any Eligible Securities.
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"Borrowing Base Deficiency" shall have the meaning provided in Section
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2.06 hereof.
"Breakage Fee" shall mean an amount equal to the sum of (a) the
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interest accrued on an "actual/360" basis, on the principal balance of any Loan
(or portion thereof) prepaid, for the period commencing on the date such Loan is
prepaid through the earlier to occur of the next Monthly Payment Date or the
related Maturity Date immediately following the date of such prepayment, at a
rate equal to the Eurodollar Rate plus the Applicable Margin, plus (b) with
respect to any voluntary prepayment, interest accrued on an "actual/360" basis,
on the principal balance of any Loan (or portion thereof) prepaid, for the
period commencing on the date such Loan is prepaid through the earlier to occur
of the next Monthly Payment Date or the related Maturity Date immediately
following the date of such prepayment, at a rate equal to the excess, if any of:
(1) the rate of the Eurodollar Rate plus the Applicable Margin , determined as
of the first day of the Interest Period during which such prepayment occurred
and (2) the rate of the Eurodollar Rate plus the Applicable Margin as of the
date such Loan is prepaid, and (c) in any case, all reasonable losses, expenses
and liabilities that arise from prepayment of such Loan, including without
limitation, any loss and expense on liabilities incurred by reason of
liquidating or reemployment of deposits or other funds required by us to fund
your Loan.
"Business Day" shall mean any day other than (i) a Saturday or Sunday
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or (ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of
New York or the Custodian is authorized or obligated by law or executive order
to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
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obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Collateral" shall have the meaning provided in Section 4.01(b)
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hereof.
"Collateral Value" shall mean, (1) with respect to each Eligible
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Security, the Applicable Collateral Percentage multiplied by the Market Value of
the Eligible Security, and (2) with respect to each Eligible Mortgage Loan, the
lesser of (a) the Applicable Collateral Percentage of the Market Value of such
Eligible Mortgage Loan, and (b) a percentage (to be determined by the Lender in
its sole discretion) of the principal balance of such Eligible Mortgage Loan,
provided, that, the following additional limitations on Collateral Value apply:
(i) the aggregate Collateral Value of Eligible Mortgage Loans
that are Delinquent Mortgage Loans may not exceed $15,000,000;
(ii) the aggregate Collateral Value of Eligible Securities may
not exceed $30,000,000;
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(iii) the aggregate Collateral Value of Eligible Mortgage Loans
that are Wet-Ink Mortgage Loans may not exceed $30,000,000 ;
(iv) the Collateral Value shall be deemed to be zero with
respect to each Eligible Mortgage Loan or with respect to each Eligible
Security, as applicable (1) in respect of which there is a breach of a
representation and warranty set forth on Schedule 1 or Schedule 2 (assuming
each representation and warranty is made as of the date Collateral Value is
determined), as applicable, (2) in respect of which there is a delinquency
in the payment of principal and/or interest which continues for a period in
excess of 89 days (without regard to any applicable grace periods), (3)
which has been released from the possession of the Custodian under the
Custodial Agreement to the Borrower for a period in excess of 14 days, or
(4) which exceed the limitations on Collateral Value set forth in (i)
through (iii) above; and
(v) notwithstanding the limitations set forth in (i), (ii),
(iii) and (iv) above, the Lender and Borrowers may by mutual agreement
exceed the limitations set forth in (i), (ii) and (iii).
"Collection Account" shall mean one or more accounts established by
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the Servicer subject to a security interest in favor of the Lender and to the
Blocked Account Agreement, into which (i) all Collections shall be deposited by
the Servicer and (ii) the applicable trustee shall be instructed to remit all
Collections with respect to the Eligible Securities.
"Collections" shall mean, collectively, (i) all collections and
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proceeds on or in respect of the Eligible Mortgage Loans pledged to the Lender
hereunder, excluding collections required to be paid to the Servicer or a
mortgagor on the Eligible Mortgage Loans and (ii) cash dividends or
distributions or any monies distributed on account of any Eligible Securities
pledged to the Lender hereunder.
"Consolidated Net Worth" shall mean all amounts which would be
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included under shareholders' equity on a consolidated balance sheet of the
Borrowers in accordance with GAAP as at such date.
"Contribution Agreement" shall mean an agreement between the Borrowers
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and the Lender substantially in the form of Exhibit K hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
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the date hereof, among the Borrowers, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean U.S. Bank National Association, as custodian
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under the Custodial Agreement, and its successors and permitted assigns
thereunder.
"Default" shall mean an Event of Default or an event that with notice
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or lapse of time or both would become an Event of Default.
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"Delinquent Mortgage Loan" shall mean a Mortgage Loan which is more
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than 29 days, but less than or equal to 89 days delinquent (without regard to
any applicable grace period).
"Dollars" and "$" shall mean lawful money of the United States of
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America.
"Due Diligence Review" shall mean the performance by the Lender of any
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or all of the reviews permitted under Section 12.15 hereof with respect to any
or all of the Eligible Mortgage Loans or Eligible Securities, as desired by the
Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
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precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan, including a Wet-
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Ink Mortgage Loan, which is secured by a first or a second mortgage lien on a
one-to-four family residential property, an individual condominium unit in a
low-rise or high-rise condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development which has been
originated and serviced in accordance with the Underwriting Guidelines as to
which the representations and warranties in Section 6.10 and Schedule 1 hereof
are correct.
"Eligible Security" shall mean any residual mortgage backed
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certificates delivered by the Borrowers to the Lender in form acceptable to the
Lender, issued in connection with a Securitization Transaction for which the
Lender or its Affiliate acted as lead or managing underwriter or placement agent
with respect to the issuance thereof, in an amount not to exceed the aggregate
amount of bonds allocated to the Lender or its Affiliate with respect to such
Securitization Transaction.
"Eligible Security File" shall mean, with respect to any Eligible
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Security pledged to the Lender hereunder: (i) the original Eligible Security,
(ii) the related Governing Agreements, (iii) an Instruction Letter in connection
with the Eligible Security and (iv) any other documents which the Lender may in
good faith request.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
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is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which any of the Borrowers is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which any of the Borrowers is a member.
"Escrow Instruction Letter" shall mean the Escrow Instruction Letter
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from any Borrower to the Settlement Agent, in the form of Annex 16 to the
Custodial Agreement as the same may be modified, supplemented and in effect from
to time.
"Eurodollar Rate" shall mean, with respect to each Interest Period a
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Loan is outstanding, the rate per annum equal to the rate appearing at page 5 of
the Telerate Screen as
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one-month LIBOR on the first day of such Interest Period, and if such rate shall
not be so quoted, the rate per annum at which the Lender is offered Dollar
deposits at or about 9:00 A.M., New York City time, on such date by prime banks
in the interbank eurodollar market where the eurodollar and foreign currency
exchange operations in respect of its Loans are then being conducted for
delivery on such day for a period of 30 days and in an amount comparable to the
amount of the Loans to be outstanding on such day. The Eurodollar Rate shall be
reset by the Lender as described above and the Lender's determination of
Eurodollar Rate shall be conclusive upon the parties absent manifest error on
the part of the Lender.
"Event of Default" shall have the meaning provided in Section 8
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hereof.
"Existing Financing Documents" shall mean the U.S. Bank Financing
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Documents, the Greenwich Capital Financing Documents and the Salomon Financing
Documents.
"Federal Funds Rate" shall mean, for any day, the weighted average of
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the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.
"Funding Date" shall mean the date on which a Loan is made hereunder.
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"GAAP" shall mean generally accepted accounting principles as in
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effect from time to time in the United States.
"Governing Agreements" shall mean with respect to each Eligible
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Security, any agreements which govern the issuance and the payment of such
Eligible Security, including, without limitation, any pooling and servicing
agreement, indenture or servicing agreement.
"Governmental Authority" shall mean any nation or government, any
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state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the
respective Borrower, any of its Subsidiaries or any of its properties.
"Greenwich Capital Financing Documents" shall mean (i) Master Loan and
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Security Agreement, dated as of June 23, 1999, by and between NCCC and Greenwich
Capital Financial Products, Inc., (ii) Residual Financing Facility Agreement,
dated as of June 23, 1999, by and between NCCC and Greenwich Capital Financial
Products, Inc., (iii) the Custodial Agreement, dated as of June 23, 1999 by and
among NCCC, U.S. Bank National Association and Greenwich Capital Financial
Products, Inc., (iv) the Affiliate Guaranty, dated as of June 23, 1999, made by
New Century and New Century Financial Corporation in favor of Greenwich Capital
Financial Products, Inc. and (v) all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial institutions
approved by the Lender, provided, that in no event shall broker-dealers or their
Affiliates be acceptable financial institutions.
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"Guarantee" shall mean, as to any Person, any obligation of such
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Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
"HUD" shall mean the Department of Housing and Urban Development, or
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any successor thereto.
"Indebtedness" shall mean, for any Person: (a) obligations created,
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issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements, sale/buy back agreements
or like arrangements; (g) Indebtedness of others Guaranteed by such Person; (h)
all obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; and (i) Indebtedness of general
partnerships of which such Person is a general partner.
"Instruction Letter" shall mean an instruction letter in the form of
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Exhibit H hereto.
"Interest Period" shall mean, with respect to any Loan, (i) initially,
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the period commencing on the Funding Date with respect to such Loan and ending
on the earlier of the related Maturity Date or the second Business Day of the
next succeeding month, and (ii) thereafter, each period commencing on the second
Business Day of a month and ending on the earlier of the related Maturity Date
or the second Business Day of the next succeeding month.
"Interest Rate Protection Agreement" shall mean, with respect to any
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or all of the Eligible Mortgage Loans, any short sale of US Treasury Security,
or futures contract, or
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mortgage related security, or Eurodollar futures contract, or options related
contract, or interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by the respective Borrower, and acceptable to the
Lender.
"Lender" shall have the meaning provided in the heading hereto.
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"Lien" shall mean any mortgage, lien, pledge, charge, security
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interest or similar encumbrance.
"Loan" shall have the meaning provided in Section 2.01(a) hereof.
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"Loan Agreement" shall mean this Master Loan and Security Agreement,
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as the same may be amended, supplemented or otherwise modified from time to
time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
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Note, the Custodial Agreement, and the Blocked Account Agreement.
"Market Value" shall mean, as of any date in respect of an Eligible
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Mortgage Loan and any Eligible Security, the price at which such Eligible
Mortgage Loan or Eligible Security could readily be sold as determined in the
Lender's sole discretion using its reasonable business judgment, taking into
account the level of interest rates, the financial condition of the Borrowers,
the characteristics of such Eligible Mortgage Loan or such Eligible Security, as
applicable, and general market conditions, which price may be determined to be
zero. The Lender's determination of Market Value shall be conclusive upon the
parties absent manifest error on the part of the Lender.
"Material Adverse Effect" shall mean a material adverse effect on (a)
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the Property, business, operations, financial condition or prospects of either
of the Borrowers, (b) the ability of either of the Borrowers to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights and
remedies of the Lender under any of the Loan Documents, (e) the timely payment
of the principal of or interest on the Loans or other amounts payable in
connection therewith or (f) the Collateral.
"Maturity Date" shall mean such date as is determined by the Lender
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in its sole discretion, or such earlier date on which this Loan Agreement shall
terminate in accordance with the provisions hereof or by operation of law.
"Maximum Credit" shall mean initially $300 million and thereafter an
--------------
amount notified by the Lender to the Borrowers from time to time (and reflected
in an endorsement to the Note) as the Maximum Credit, taking into account the
Adjusted Net Worth of the Borrowers but determined by the Lender in its sole
discretion.
"Monthly Payment Date" shall mean the second (2nd) Business Day.
--------------------
-8-
"Mortgage" shall mean the mortgage, deed of trust or other instrument
--------
securing a Mortgage Note, which creates a first or second lien on the fee in
real property securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
-------------
Custodial Agreement.
"Mortgage Loan" shall mean a mortgage loan acquired from a Qualified
-------------
Originator with either an "A", "A-" or "B/C" credit history which is
underwritten in accordance with the Underwriting Guidelines, which the Custodian
has been instructed to hold for the Lender pursuant to the Custodial Agreement,
and which Mortgage Loan includes, without limitation, (i) a Mortgage Note and
related Mortgage and (ii) all right, title and interest of each of the Borrowers
in and to the Mortgaged Property covered by such Mortgage.
"Mortgage Loan Documents" shall mean, with respect to an Eligible
-----------------------
Mortgage Loan, the documents comprising the Mortgage File for such Eligible
Mortgage Loan.
"Mortgage Loan Schedule" shall have the meaning assigned thereto in
----------------------
the Custodial Agreement.
"Mortgage Loan Schedule and Exception Report" shall have the meaning
-------------------------------------------
assigned thereto in the Custodial Agreement.
"Mortgage Loan Tape" shall mean a computer-readable file containing
------------------
information with respect to each Eligible Mortgage Loan, to be delivered by the
Borrowers to the Lender pursuant to Section 2.03(a) hereof which tape fields are
identified on Annex I to the Custodial Agreement.
"Mortgage Note" shall mean the original executed promissory note or
-------------
other evidence of the indebtedness of a mortgagor/borrower with respect to an
Eligible Mortgage Loan.
"Mortgaged Property" shall mean the real property (including all
------------------
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
---------
"Multiemployer Plan" shall mean a multiemployer plan defined as such
------------------
in Section 3(37) of ERISA to which contributions have been or are required to be
made by any of the Borrowers or any ERISA Affiliate and that is covered by Title
IV of ERISA.
"Net Income" shall mean, for any period, the aggregate net income of
----------
the Borrowers for such period as determined in accordance with GAAP.
"1934 Act" shall mean the Securities and Exchange Act of 1934, as
--------
amended.
-9-
"Note" shall have the meaning provided for by Section 2.02(a) hereof.
----
"Option" shall have the meaning provided for by Section 11.01(a)
------
hereof.
"Option Breakage Fee" shall mean an amount equal to (i) 0.1875%
-------------------
multiplied by (ii) the difference between (a) the aggregate principal balance of
all securities issued in a Securitization Transaction for which the Lender or an
Affiliate of the Lender is the lead managing underwriter or placement agent
during the 12 month period specified in Section 11.04 hereof and (b) $500
million.
"Optional Market Value Event" shall have the meaning provided for by
---------------------------
Section 11.04(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
----
maintained by any of the Borrowers or any ERISA Affiliate and covered by Title
IV of ERISA, other than a Multiemployer Plan.
"Pledged Mortgage Loans" shall have the meaning provided in Section
----------------------
4.01(b) hereof.
"Pledged Securities" shall have the meaning provided in Section 4.01
------------------
(b) hereof.
"Post-Default Rate" shall mean, in respect of any principal of any
-----------------
Loan or any other amount under this Loan Agreement, the Note or any other Loan
Document that is not paid when due to the Lender (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2.00% per annum plus the
Prime Rate.
"Prime Rate" shall mean the prime rate announced to be in effect from
----------
time to time, as published as the average rate in The Wall Street Journal.
-----------------------
"Property" shall mean any right or interest in or to property of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Qualified Originator" shall mean an originator of Eligible Mortgage
--------------------
Loans reasonably acceptable to the Lender; provided, however, in no event shall
PWF Corporation be deemed to be a Qualified Originator unless and until the
provisions of Section 5.03 hereof have been satisfied.
"Release Collateral" shall have the meaning provided in Section
------------------
2.03(c) hereof.
-10-
"Regulations T, U and X" shall mean Regulations T, U and X of the
----------------------
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"Relevant System" shall mean (a) The Depository Trust Company in New
---------------
York, New York, or (b) such other clearing organization or book-entry system as
is designated in writing by the Lender.
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the president, the
-------------------
vice president, the controller, the chief executive officer or, with respect to
financial matters, the chief financial officer of such Person.
"Salomon Financing Documents" shall mean (i) the Letter Agreement
---------------------------
dated as of December 11, 1998, between NCCC, New Century, Salomon Brothers
Realty Corp. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., (ii) the Purchase and Sale Agreement
dated as of December 11, 1998, between NCCC, New Century, and Salomon Brothers
Realty Corp., and (iii) all other documents or agreements executed in connection
therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial institutions
approved by the Lender, provided, that in no event shall broker-dealers or their
Affiliates be acceptable financial institutions.
"Secured Obligations" shall have the meaning provided in Section
-------------------
4.01(c) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Securitization Transaction" shall mean the creation and issuance of
--------------------------
mortgage backed securities.
"Servicer" shall have the meaning provided in Section 12.14(c) hereof.
--------
"Servicing Agreement" shall have the meaning provided in Section
-------------------
12.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
-----------------
12.14(b) hereof.
"Servicing Rights" shall mean any and all of the following: (a) any
----------------
and all rights to service the Eligible Mortgage Loans; (b) any payments to or
monies received by any Borrower for servicing the Eligible Mortgage Loans; (c)
any late fees, penalties or similar payments with respect to the Eligible
Mortgage Loans; (d) all agreements or documents creating, defining or evidencing
any such servicing rights to the extent they relate to such servicing rights and
all rights of any Borrower thereunder; (e) escrow payments or other similar
payments with respect to the Eligible Mortgage Loans and any amounts actually
collected by any Borrower with respect
-11-
thereto; and (f) all accounts and other rights to payment related to any of the
property described herein.
"Settlement Agent" shall mean, with respect to any Loan, the Custodian
----------------
under the Custodial Agreement or any other entity approved by the Lender in its
sole discretion.
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Tangible Net Worth" shall mean with respect to any Person, as of any
------------------
date of determination, the Adjusted Net Worth of such Person, less the adjusted
net book value of all assets of such Person (to the extent reflected as an asset
in the balance sheet of such Person at such date) which will be treated as
intangibles under GAAP, including without limitation, such items as deferred
financing expenses, net leasehold improvements, good will, trademarks, trade
names, service marks, copyrights, patents, licenses and unamortized debt
discount and expense; provided, that residual securities shall not be treated as
intangibles for purposes of this definition.
"Test Period" shall have the meaning provided in Section 7.14 hereof.
-----------
"Total Indebtedness" shall mean, for any period, the aggregate
------------------
Indebtedness of such Borrower during such period less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP.
"Trustee" shall mean the Person under the applicable Governing
-------
Agreement responsible for administering the related Eligible Security.
"Underwriting Guidelines" shall mean underwriting guidelines of the
-----------------------
Borrowers attached hereto as Exhibit J, as may be amended from time to time only
with the consent of the Lender, at the Lender's sole discretion.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect on the date hereof in the State of New York; provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"U.S. Bank Financing Documents" shall mean (i) the Fourth Amended and
-----------------------------
Restated Credit Agreement, dated as of May 26, 1999, by and between New Century
and U.S. Bank National Association, (ii) the Pledge and Security Agreement,
dated as of May 29, 1998,
-12-
by and between New Century and U.S. Bank National Association, (iii) the
Servicing Security Agreement, dated as of May 29, 1998, between New Century and
U.S. Bank National Association and (iv) all other documents or agreements
executed in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with financial
institutions approved by the Lender, provided, that in no event shall broker-
dealers or their Affiliates be acceptable financial institutions.
"Wet-Ink Mortgage Loan" shall mean an Eligible Mortgage Loan which is
---------------------
pledged to the Lender simultaneously with the origination thereof by the
Qualified Originator, which origination is in accordance with the Underwriting
Guidelines and is funded in part or in whole with proceeds of a Loan advanced
directly to a Settlement Agent and held in escrow pursuant to the Custodial
Agreement.
"Whole Loan Sale" shall mean a sale of Mortgage Loans not involving a
---------------
Securitization Transaction.
1.02 Accounting Terms and Determinations. Except as otherwise
-----------------------------------
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Loans, Note and Prepayments.
---------------------------
2.01 Loans.
-----
(a) Subject to fulfillment of the conditions precedent set forth in
Sections 5.01 and 5.02 hereof, and provided that no Default shall have occurred
and be continuing hereunder, the Lender agrees to consider from time to time the
Borrowers' requests that the Lender make, on the terms and conditions of this
Loan Agreement, loans to the Borrowers in Dollars secured by Eligible Mortgage
Loans and/or Eligible Securities, from and including the Effective Date to and
including the termination of this Loan Agreement in an aggregate principal
amount at any one time outstanding not exceeding the lesser of (i) the Maximum
Credit at such time, and (ii) the Borrowing Base at such time. This Loan
Agreement is not a commitment to lend but rather sets forth the procedures to be
used in connection with periodic requests for Loans. Each of the Borrowers
hereby acknowledges that the Lender is under no obligation to agree to make, or
to make, any Loan pursuant to this Loan Agreement.
(b) Subject to the terms and conditions of this Loan Agreement, during
such period the Borrowers may borrow, repay and reborrow hereunder.
(c) In no event shall a Loan be made when any Default or Event of
Default has occurred and is continuing.
2.02 Notes.
-----
(a) The Loans made by the Lender shall be evidenced by a single
promissory note executed by each of the Borrowers substantially in the form of
Exhibit A hereto (the "Note"), dated the date hereof, payable to the Lender in a
--------- ----
principal amount equal to the aggregate amount
-13-
of the Loans made pursuant to this Loan Agreement as originally in effect and
otherwise duly completed. The Lender shall have the right to have its Note
subdivided, by exchange for promissory notes of lesser denominations or
otherwise.
(b) The date, amount and interest rate of each Loan made by the Lender
to the Borrowers, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of the
Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof; provided that the failure of the Lender to make any such
--------
recordation or endorsement shall not affect the obligations of the Borrowers to
make a payment when due of any amount owing hereunder or under the Note in
respect of the Loans.
2.03 Procedure for Borrowing.
-----------------------
(a) The Borrowers may request a borrowing hereunder, on any Business
Day during the period from and including the Effective Date to and including the
termination of this Loan Agreement, by delivering to the Lender, with a copy to
the Custodian, a written request for borrowing, substantially in the form of
Exhibit D attached hereto, which request must be received by the Lender prior to
---------
2:00 p.m., New York City time, two (2) Business Days prior to the requested
Funding Date for any Mortgage Loans which are not Wet-Ink Mortgage Loans, (ii)
6:00 p.m., New York City time, one (1) Business Day prior to the Funding Date
for any Eligible Mortgage Loans which are Wet-Ink Mortgage Loans and (iii) 10:00
a.m. New York City time, three (3) Business Days prior to the Funding Date for
any Eligible Security. Such request for borrowing shall (i) attach a schedule
identifying the Eligible Mortgage Loans which are not Wet-Ink Mortgage Loans or
Eligible Securities that the Borrowers propose to pledge to the Lender and to be
included in the Borrowing Base in connection with such borrowing, (ii) specify
the requested Funding Date, (iii) include a Mortgage Loan Tape containing
information with respect to the Eligible Mortgage Loans and Eligible Securities
that the Borrowers propose to pledge to the Lender and to be included in the
Borrowing Base in connection with such borrowing, and (iv) certify as to the
truth and accuracy of the representations and warranties made hereunder as
required by Section 5.02(b) hereof .
Upon the Borrowers' request for a borrowing pursuant to Section 2.03(a), the
Lender may at its sole option, assuming all conditions precedent set forth in
Section 5.01 and 5.02 have been met and provided no Default shall have occurred
and be continuing, make a Loan to the Borrowers on the requested Funding Date in
the amount so requested.
(b) Each of the Borrowers shall release to the Custodian, in the case
of any Eligible Mortgage Loan which is not a Wet-Ink Mortgage Loan, and to the
Lender, in the case of any Eligible Security, no later than 12:00 p.m., New York
City time, two (2) Business Days prior to any Funding Date, the Mortgage Files
and the Eligible Security Files, as applicable, pertaining to each such Eligible
Mortgage Loan or Eligible Security to be pledged to the Lender and included in
the Borrowing Base on such requested Funding Date, in accordance with the terms
and conditions hereof and of the Custodial Agreement. With respect to each Wet-
Ink Mortgage Loan pledged to the Lender and included in the Borrowing Base on a
requested Funding Date:
-14-
(i) By no later than 12.00 p.m., New York City time, the Borrowers
shall deliver all Mortgage Loan Documents related to all Wet-Ink Mortgage
Loans included in the Borrowing Base on such Funding Date and the original
Escrow Instruction Letter to the Custodian, for receipt by the Custodian no
later than seven (7) Business Days following the Funding Date, and, in the
case of any Borrower Refinanced Loan, the Borrower shall deliver facsimile
copies of the related Mortgage, Mortgage Note and Assignment of Mortgage by
12.00 p.m., New York City time no later than one (1) Business Day following
the Funding Date); and
(ii) the Borrowers shall cause the Settlement Agent to send the
Custodian a facsimile of the associated Escrow Instruction Letter on each
Funding Date.
(c) Pursuant to the Custodial Agreement, the Custodian shall deliver
to the Lender and the Borrowers, no later than 1:30 p.m., New York City time, on
a Funding Date (and with respect to each Wet-Ink Mortgage Loan, on the date of
receipt and on the Business Day of receipt of the related original Mortgage Loan
Documents), a Trust Receipt (as defined in the Custodial Agreement) in respect
of all Eligible Mortgage Loans pledged to the Lender on such Funding Date, and a
Mortgage Loan Schedule and Exception Report. With respect to an Eligible
Security, the Borrowers shall deliver to the Lender no later than 1:30 p.m., New
York City time, on the requested Funding Date each Eligible Security, registered
in the name of the Lender, to be pledged to the Lender and included in the
Borrowing Base on such requested Funding Date. Subject to Sections 2.01 and 5
hereof, such borrowing will then be made available to the Borrowers by the
Lender transferring, via wire transfer, to the following account of the
Borrowers at U.S. Bank National Association: "New Century Mortgage Collateral
Account", ABA ▇▇▇▇▇▇▇▇▇, Account # 173100971378, not later than 5:00 p.m. New
York City time on such Funding Date, in the aggregate amount of such borrowing
in funds immediately available to the Borrowers with respect to each Pledged
Mortgage Loan which is not a Wet-Ink Loan and each Pledged Security; provided
--------
that if such Pledged Mortgage Loan or Eligible Security is subject to any prior
interest, encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest (any such Eligible Mortgage Loan or Eligible Security
"Release Collateral"), the Lender shall make available the portion of such
------------------
borrowing relating to such Release Collateral in accordance with the written
instructions of the holder of such interest, encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest. With respect to each
Pledged Mortgage Loan which is a Wet-Ink Mortgage Loan, subject to Sections 2.01
and 5 hereof, such borrowing will then be made available to the Borrowers by the
Lender transferring, via wire transfer, to the account of the applicable
Settlement Agent in accordance with the instructions set forth in the Escrow
Instruction Letter, not later than 5:00 p.m. New York City time on such Funding
Date, in the aggregate amount of such borrowing in funds immediately available
to the Settlement Agent.
2.04 Limitation on Types of Loans; Illegality. Anything herein to the
----------------------------------------
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Rate and the Applicable Margin:
(a) the Lender determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar
-15-
Rate" in Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest for
Loans as provided herein; or
(b) the Lender determines, which determination shall be conclusive,
that the relevant rate of interest referred to in the definition of "Eurodollar
Rate" in Section 1.01 hereof upon the basis of which the rate of interest for
Loans is to be determined is not likely to cover the cost to the Lender of
making or maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its obligation to make
or maintain Loans hereunder using a Eurodollar Rate;
then the Lender shall give the Borrowers prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
consider making additional Loans, and the Borrowers shall, either prepay all
such Loans as may be outstanding or pay interest on such Loans at a rate per
annum equal to the Federal Funds Rate plus 4.00%; provided, however, that such
prepayment or payment of increased interest rate shall take effect with respect
to clause (b) above two Business Days following such notice.
2.05 Repayment of Loans; Interest.
----------------------------
(a) Each Borrower hereby promises to repay in full on the applicable
Maturity Date the then aggregate outstanding principal amount of the Loans.
(b) Each Borrower hereby promises to pay to the Lender interest on the
unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at a
rate per annum equal to the Eurodollar Rate plus the Applicable Margin.
Notwithstanding the foregoing, each Borrower hereby promises to pay to the
Lender interest at the applicable Post-Default Rate on any principal of any Loan
and on any other amount payable by any of the Borrowers hereunder or under the
Note that shall not be paid in full when due (whether at stated maturity, by
acceleration or by mandatory prepayment or otherwise) for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Loan shall be payable monthly in arrears, if
applicable, on the second Business Day of each month and for the last month of
the Loan Agreement on the second Business Day of such last month and on the
related Maturity Date, except that interest payable at the Post-Default Rate
shall accrue daily and shall be payable upon such accrual. Upon reasonable
request by the Borrowers, the Lender shall give the Borrowers notice of the
determination of the interest rate provided herein or any change therein .
(c) It is understood and agreed that, unless and until a Default shall
have occurred and be continuing, the Borrowers shall be entitled to the proceeds
of the Eligible Mortgage Loans pledged to the Lender hereunder.
2.06 Mandatory Prepayments or Pledge.
-------------------------------
If at any time the aggregate outstanding principal amount of Loans
exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined by the
-------------------------
Lender and notified to either of the Borrowers on any Business Day, the
Borrowers shall no later than one Business Day after receipt of such notice,
either prepay the Loans in part or in whole or pledge additional
-16-
Eligible Mortgage Loans (which Collateral shall be in all respects acceptable to
the Lender) to the Lender, such that after giving effect to such prepayment or
pledge the aggregate outstanding principal amount of the Loans does not exceed
the Borrowing Base.
The Borrowers may not prepay Loans hereunder other than as
specifically provided herein. In connection with any prepayment of a Loan, the
Borrowers shall be required to pay a Breakage Fee to the Lender in addition to
any other amounts due hereunder.
Section 3. Payments; Computations; Etc.
---------------------------
3.01 Payments.
--------
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrowers under this
Loan Agreement and the Note, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the
following account maintained by the Lender: Account No. ▇▇▇-▇-▇▇▇▇▇▇, for the
account of PaineWebber Conduit Funding, The Chase Manhattan Bank, ABA No.
▇▇▇▇▇▇▇▇▇) not later than 1:00 p.m., New York City time, on the date on which
such payment shall become due (and each such payment made after such time on
such due date shall be deemed to have been made on the next succeeding Business
Day). Each of the Borrowers hereby acknowledges that it has no rights of
withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Loan Agreement or the Note would otherwise
fall on a day that is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.
3.02 Computations. Interest on the Loans shall be computed on the
------------
basis of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
3.03 Requirements of Law.
-------------------
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement, the Note or any Loan made by it (excluding net
income taxes) or change the basis of taxation of payments to the Lender in
respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory Loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, Loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Lender which is not otherwise included in the determination of the Eurodollar
Rate hereunder;
-17-
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, the Borrowers shall promptly pay the Lender
such additional amount or amounts as will compensate the Lender for such
increased cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation (taking
into consideration the Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by the Lender to be material, then from
time to time, the Borrowers shall promptly pay to the Lender such additional
amount or amounts as will compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrowers of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by the Lender to the
Borrowers shall be conclusive in the absence of manifest error.
Section 4. Collateral Security.
-------------------
4.01 Collateral; Security Interest.
-----------------------------
(a) Pursuant to the Custodial Agreement, the Custodian shall hold the
Mortgage Loan Documents as exclusive bailee and agent for the Lender pursuant to
terms of the Custodial Agreement and shall deliver to the Lender Trust Receipts
(as defined in the Custodial Agreement) each to the effect that it has reviewed
such Mortgage Loan Documents in the manner and to the extent required by the
Custodial Agreement and identifying any deficiencies in such Mortgage Loan
Documents as so reviewed.
(b) All of each of the Borrowers' right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as the "Collateral":
----------
(i) all Eligible Mortgage Loans identified on a Notice of
Request for Borrowing and Pledge delivered by the Borrowers to the Lender
("Pledged Mortgage Loans") and all Servicing Rights thereto;
----------------------
(ii) all Mortgage Loan Documents, including without limitation
all promissory notes, and all Servicing Records (as defined in , and
subject to the provisions of, Section 12.14(b) below), servicing agreements
and any other collateral pledged or
-18-
otherwise relating to such Pledged Mortgage Loans, together with all files,
documents, instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and other
books and records relating thereto;
(iii) the Eligible Securities identified on a Notice of Request
for Borrowing and Pledge delivered by the Borrowers to the Lender ("Pledged
-------
Securities").
----------
(iv) all securities, moneys, or property representing interest
or dividends on any of such Pledged Securities, or representing a
distribution in respect of such Pledged Securities or resulting form a
split-up, revision, reclassification or like change of such Pledged
Securities or otherwise received in exchange therefore, and any
subscriptions, warrants, rights or options issued to the holders of, or
otherwise in respect of, such Pledged Securities.
(v) all Governing Agreements;
(vi) the documents and certificates comprising the Eligible
Security Files including without limitation the original Eligible
Securities and any other collateral pledged or otherwise relating to such
Eligible Securities, together with all files, documents, instruments,
surveys, certificates, correspondence, appraisals, computer storage media,
accounting records and other books and records relating thereto;
(vii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance certificate or
other document evidencing such mortgage guaranties or insurance relating to any
Pledged Mortgage Loan and all claims and payments thereunder;
(viii) all other insurance policies and insurance proceeds
relating to all of the foregoing or any related Mortgaged Property;
(ix) all Interest Rate Protection Agreements;
(x) the Collection Account and all monies from time to time on
deposit in the Collection Account;
(xi) any purchase agreements covering or relating to any or all
of the foregoing;
(xii) all collateral, however defined, under any other agreement
between any of the Borrowers or any of its Affiliates on the one hand and the
Lender or any of its Affiliates on the other hand;
(xiii) all "general intangibles", "accounts" and "chattel paper"
as defined in the Uniform Commercial Code relating to or constituting any and
all of the foregoing; and
(xiv) any and all replacements, substitutions, distributions on
or proceeds of any and all of the foregoing.
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(c) Each of the Borrowers hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under the
Collateral to the Lender to secure the repayment of principal of and interest on
all Loans and all other amounts owing to the Lender hereunder, under the Note
and under the other Loan Documents (collectively, the "Secured Obligations").
-------------------
Each of the Borrowers agree to ▇▇▇▇ its respective computer records and tapes to
evidence the interests granted to the Lender hereunder.
(d) On or prior to the applicable Funding Date, the Borrowers shall
deliver the related Eligible Securities re-registered in the name of the Lender
or other designee of the Lender and the Lender or its other designee shall have
all rights of conversions, exchange, subscription and any other rights,
privileges and options pertaining to such Pledged Securities as the owner
thereof, and in connection therewith, the right to deposit and deliver any and
all of the Pledged Securities with any committee, depositary transfer, agent,
register or other designated agency upon such terms and conditions as the Lender
may determine.
(e) The Lender, as "entitlement holder" (as defined in Section 8-
102(a)(7) of the UCC) with respect to the Pledged Securities, shall be entitled
to receive all cash dividends and distributions paid in resect thereof. Any such
dividends or distributions received by the Borrowers shall be promptly remitted
to the Collection Account.
4.02 Re-registration.
---------------
(a) In connection with the delivery to the Lender, of each
certificate representing one or more shares of Pledged Securities pursuant to
Section 4.01 above, the Borrowers shall deliver such Pledged Securities re-
registered in the Lender's name (or in such name as the Lender may designate).
(b) The Borrowers shall cause any amounts paid under any Pledged
Security to be remitted to the Lender in accordance with the instructions set
forth on Exhibit H hereto.
---------
(c) Concurrently with the delivery to the Lender of each certificate
representing one or more shares of Pledged Securities pursuant to Section 4.01
above, (A) the Borrowers shall have (1) notified the applicable Trustee, in the
form of the Instruction Letter attached hereto as Exhibit H, in connection with
---------
the related transaction pursuant to which such Pledged Securities were issued,
of the pledge of the related Pledged Securities hereunder, and (2) instructed
the Trustee to pay all amounts payable to the holders of the Pledged Securities
to an account specified by the Lender, and (B) the Trustee shall have
acknowledged in writing the instructions set forth in clause (A) above, and a
copy of the fully executed Instruction Letter shall be delivered to the Lender.
4.03 Further Documentation. At any time and from time to time, upon
---------------------
the written request of the Lender, and at the sole expense of the Borrowers, the
Borrowers will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with
-20-
respect to the Liens created hereby. Each of the Borrowers also hereby
authorizes the Lender to file any such financing or continuation statement
without the signature of such Borrower to the extent permitted by applicable
law. A carbon, photographic or other reproduction of this Loan Agreement shall
be sufficient as a financing statement for filing in any jurisdiction.
4.04 Changes in Locations, Name, etc. Each of the Borrowers shall not
--------------------------------
(i) change the location of its respective chief executive office/chief place of
business from that specified in Section 6 hereof or (ii) change its respective
name, identity or corporate structure (or the equivalent) or change the location
where it maintains its records with respect to the Collateral unless it shall
have given the Lender at least 15 days prior written notice thereof and shall
have delivered to the Lender all Uniform Commercial Code financing statements
and amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue its perfected status in the
Collateral with the same or better priority.
4.05 Lender's Appointment as Attorney-in-Fact.
----------------------------------------
(a) Each of the Borrowers hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of such Borrower and in the name of such Borrower or in
its own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, each of the Borrowers hereby
gives the Lender the power and right, on behalf of such Borrower, without assent
by, but with notice to, such Borrower, if an Event of Default shall have
occurred and be continuing, to do the following:
(i) in the name of such Borrower or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys
due under any mortgage insurance or with respect to any other Collateral
and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Lender for
the purpose of collecting any and all such moneys due under any such
mortgage insurance or with respect to any other Collateral whenever
payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under
any Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action
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or proceeding brought against such Borrower with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give such
discharges or releases as the Lender may deem appropriate; and (G)
generally, to sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Lender were the absolute owner thereof for all purposes, and to
do, at the Lender's option and such Borrower's expense, at any time, and
from time to time, all acts and things which the Lender deems necessary to
protect, preserve or realize upon the Collateral and the Lender's Liens
thereon and to effect the intent of this Loan Agreement, all as fully and
effectively as such Borrower might do.
Each of the Borrowers hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
(b) Each of the Borrowers also authorizes the Lender, at any time and
from time to time, to execute, in connection with any sale provided for in
Section 4.08 or Section 4.09 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrowers for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.06 Performance by Lender of Borrowers' Obligations. If any of the
-----------------------------------------------
Borrowers fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrowers to the Lender on demand and shall constitute Secured
Obligations.
4.07 Proceeds. If an Event of Default shall occur and be continuing,
--------
(a) all proceeds of Collateral received by any of the Borrowers consisting of
cash, checks and other near-cash items shall be held by such Borrower in trust
for the Lender, segregated from other funds of such Borrower, and shall
forthwith upon receipt by such Borrower be turned over to the Lender in the
exact form received by such Borrower (duly endorsed by such Borrower to the
Lender, if required) and (b) any and all such proceeds received by the Lender
(whether from such Borrower or otherwise) may, in the sole discretion of the
Lender, be held by the Lender as collateral security for, and/or then or at any
time thereafter may be applied by the Lender against, the Secured Obligations
(whether matured or unmatured), such application to be in such order as the
Lender shall elect. Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Loan Agreement shall have been
terminated shall be paid over to the Borrowers or to whomsoever may be lawfully
entitled to receive the same. For
-22-
purposes hereof, proceeds shall include, but not be limited to, all principal
and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.08 Remedies. If an Event of Default shall occur and be continuing,
--------
the Lender may, at its option, enter into one or more Interest Rate Protection
Agreements covering all or a portion of the Eligible Mortgage Loans pledged to
the Lender hereunder, and the Borrowers shall be responsible for all damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against the Lender relating to or arising out of such Interest Rate
Protection Agreements; including without limitation any losses resulting from
such Interest Rate Protection Agreements. If an Event of Default shall occur and
be continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any of
the Borrowers or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as the Lender deems
appropriate, for cash or on credit or for future delivery without assumption of
any credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in any of the Borrowers, which right or equity is hereby
waived or released. Each of the Borrowers hereby further agrees, at the Lender's
request, to assemble the Collateral and make it available to the Lender at
places which the Lender shall reasonably select, whether at such Borrower's
premises or elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including
without limitation reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Secured Obligations, in such order as the Lender may
elect, and only after such application and after the payment by the Lender of
any other amount required or permitted by any provision of law, including
without limitation Section 9-504(1)(c) of the Uniform Commercial Code, need the
Lender account for the surplus, if any, to the Borrowers. To the extent
permitted by applicable law, each of the Borrowers hereby waives all claims,
damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. Each of the
Borrowers shall remain liable for any deficiency (plus accrued interest thereon
as contemplated pursuant to Section 2.05(b) hereof) if the proceeds of any sale
or other disposition of the
-23-
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Lender to collect such
deficiency.
4.09 Registration Rights; Private Sales.
-----------------------------------
(a) If the Lender shall determine to exercise its right to sell any
or all of the Pledged Securities pursuant to Section 4.08 or Section 4.09
hereof, and if in the opinion of the Lender it is necessary or advisable to have
the Pledged Securities, or a portion thereof to be sold, registered under the
provisions of the Securities Act, the Borrowers will (i) cause to be executed
and delivered all such instruments and documents, and do or cause to be done all
such other acts as may be in the opinion of the Lender, necessary or advisable
to register the Pledged Securities, or that portion of it to be sold, under the
provisions of the Securities Act, and (ii) use its bests efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Securities, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the to the related prospectus which, in the opinion
of the Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Borrowers agrees to
comply with the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions which the Lender shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) The Borrowers recognize that the Lender may be unable to effect a
public sale of any or all of the Pledged Securities, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Borrowers acknowledge and agree that any such private sale may result in prices
and other terms less favorable to the Lender than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Lender shall be under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the Borrowers or any
issuer of such Pledged Securities to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if the
Borrowers or such issuer, as the case may be, would agree to do so.
4.10 Limitation on Duties Regarding Preservation of Collateral. The
---------------------------------------------------------
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender nor
any of its directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrowers or otherwise.
-24-
4.11 Powers Coupled with an Interest. All authorizations and agencies
-------------------------------
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
4.12 Release of Security Interest. Upon termination of this Loan
----------------------------
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral including the filing of any
UCC statements reasonably required to release such interest; provided that if
any payment, or any part thereof, of any of the Secured Obligations is rescinded
or must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or similar reorganization of any of the
Borrowers, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or a trustee or similar officer for, any of the Borrowers or
any substantial part of its respective Property, or otherwise, this Loan
Agreement, all rights hereunder and the Liens created hereby shall continue to
be effective, or be reinstated, as though such payments had not been made.
Section 5. Conditions Precedent.
--------------------
5.01 Initial Loan. If the Lender agrees to make a Loan to the
------------
Borrowers pursuant to the terms of this Loan Agreement, the obligation of the
Lender to make its initial Loan hereunder is additionally subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan,
of the condition precedent that the Lender shall have received all of the
following documents, each of which shall be satisfactory to the Lender and its
counsel in form and substance:
(a) Loan Documents. The Loan Documents, duly completed and executed.
--------------
(i) Note. The Note, duly completed and executed;
----
(ii) Custodial Agreement. The Custodial Agreement, duly
-------------------
executed and delivered by the Borrowers and the Custodian. In addition,
each of the Borrowers shall have taken such other action as the Lender
shall have requested in order to perfect the security interests created
pursuant to the Loan Agreement;
(iii) Blocked Account Agreement. A Blocked Account
-------------------------
Agreement, duly executed by the parties thereto;
(iv) Contribution Agreement. A Contribution Agreement, duly
----------------------
executed by the parties thereto;
(b) Organizational Documents. A good standing certificate and
------------------------
certified copies of the charter and by-laws (or equivalent documents) of each of
the Borrowers and of all corporate or other authority for each of the Borrowers
with respect to the execution, delivery and performance of the Loan Documents
and each other document to be delivered by each of the Borrowers from time to
time in connection herewith (and the Lender may conclusively rely on such
certificate until it receives notice in writing from such Borrower to the
contrary);
-25-
(c) Legal Opinion. A legal opinion of outside counsel to the
-------------
Borrowers, which, together with a legal opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, counsel
to the Borrowers, is substantially in the form attached hereto as Exhibit C;
(d) Mortgage Loan Schedule and Exception Report. A Mortgage Loan
-------------------------------------------
Schedule and Exception Report, dated the Effective Date, from the Custodian,
duly completed;
(e) Servicing Agreement(s). Any Servicing Agreement, certified as a
----------------------
true, correct and complete copy of the original, with a letter attached thereto
acknowledged by the applicable Servicer directing the Servicer to remit all
payments on account of the Eligible Mortgage Loans directly to the Lender upon
receipt of notice from the Lender of the occurrence of an Event of Default;
(f) U.S. Bank Financing Documents. Copies of the U.S. Bank Financing
-----------------------------
Documents, certified to be true and complete copies thereof by a Responsible
Officer of New Century Mortgage Corporation;
(g) Salomon Financing Documents. Copies of the Salomon Financing
---------------------------
Documents, certified to be true and complete copies thereof by a Responsible
Officer of New Century Mortgage Corporation;
(h) Greenwich Capital Financing Documents. Copies of the Greenwich
-------------------------------------
Capital Financing Documents, certified to be true and complete copies thereof by
a Responsible Officer of NCCC;
(i) Consents and Waivers. Any and all irrevocable consents and
--------------------
waivers required under the Existing Financing Documents.
(j) Other Documents. Such other documents as the Lender may
---------------
reasonably request.
5.02 Initial and Subsequent Loans. If the Lender agrees to make a
----------------------------
Loan to the Borrowers, the making of each Loan to the Borrowers (including the
initial Loan) on any Business Day is subject to the satisfaction of the
following further conditions precedent, both immediately prior to the making of
such Loan and also after giving effect thereto and to the intended use thereof:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) both immediately prior to the making of such Loan and also after
giving effect thereto and to the intended use thereof, the representations and
warranties made by each of the Borrowers in Section 6 hereof, and elsewhere in
each of the Loan Documents, shall be true, correct and complete on and as of the
date of the making of such Loan in all material respects (in the case of the
representations and warranties in Section 6.10 and Schedule 1 or Schedule 2, as
applicable, solely with respect to Eligible Mortgage Loans or Eligible
Securities included in the Borrowing Base) with the same force and effect as if
made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date). The Lender shall have received a Notice of Request for Borrowing and
Pledge
-26-
signed by a Responsible Officer of each of the Borrowers, substantially in the
form of Exhibit D attached hereto, which shall certify as to the truth, accuracy
and completeness of the above, which Notice of Request for Borrowing and Pledge
shall specifically include a statement that each of the Borrowers is in
compliance with all governmental licenses and authorizations and is qualified to
do business and in good standing in all required jurisdictions Loan, and the
parties hereto shall complied with Section 2.03 hereof with respect to such
Loan.
(c) the aggregate outstanding principal amount of the Loans shall not
exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 12.15 hereof, the Lender shall have
completed its due diligence review of the Mortgage Loan Documents for each Loan
and such other documents, records, agreements, instruments, mortgaged properties
or information relating to such Loans as the Lender in its sole discretion deems
appropriate to review and such review shall be satisfactory to the Lender in its
sole discretion;
(e) the Lender shall have received from the Custodian a Mortgage Loan
Schedule and Exception Report with Exceptions as are acceptable to the Lender in
its sole discretion in respect of Eligible Mortgage Loans to be pledged
hereunder on such Business Day;
(f) (i) With respect to Eligible Securities that shall be delivered
or held in definitive, certificated form, the Borrowers shall deliver to
the Lender or its designee the original of the relevant certificate
registered in the name of the Lender or its designee, transfer tax stamps,
and any other documents or instruments necessary in the opinion of the
Lender to create in favor of the Lender a valid, perfected, first priority
security interest in such security or other item of investment property to
the Lender. Unless otherwise instructed by Lender, any delivery of a
security or other item of investment property in definitive, certificated
form shall be made to the Lender's designee at the "Address for Notices"
specified below its name on the signature pages hereof or thereof.
(ii) With respect to Eligible Securities that shall be delivered
or held in uncertificated form and the ownership of which is registered on
books maintained by the issuer thereof or its transfer agent, the Borrowers
shall cause the registration of such security or other item of investment
property in the name of Lender or its designee and at the request of the
Lender, shall take such other and further steps, and shall execute and
deliver such documents or instruments necessary in the opinion of the
Lender, to create in favor of the Lender a valid, perfected, first priority
security interest in the relevant interest granted therein to Lender
hereunder.
(iii) With respect to Eligible Securities that shall be delivered
through a Relevant System in book-entry form and credited to or otherwise
credited to or held in an Eligible Securities account, the Borrowers shall
take such actions necessary to provide instruction to the relevant
financial institution or other entity, which instruction shall be
sufficient if complied with to create in favor of the Lender a valid,
perfected, first priority security interest in the relevant interest
granted therein to Lender hereunder. In connection with any account to
which the Eligible Securities are credited or otherwise
-27-
held, each of the Borrowers shall execute and deliver such other and
further documents or instruments necessary, in the reasonable opinion of
the Lender, to create in favor of the Lender a valid, perfected, first
priority security interest in the relevant interest granted therein to
Lender hereunder. Any account to which the Eligible Securities are credited
or otherwise shall be designated "▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc."
or such variation thereon as the Lender may direct.
(iv) Any delivery of an Eligible Security in accordance with
clauses (i) through (iii) above, or any other method acceptable to the
Lender, shall be sufficient to cause the Lender to have a perfected, first
priority security interest in, and to be the "entitlement holder" (as
defined in Section 8-102(a)(7) of the Uniform Commercial Code of the State
of the New York (the "UCC")) with respect to the Eligible Securities.
---
(g) the Lender shall have received from the Borrowers a Warehouse
Lender's Release Letter substantially in the form of Exhibit E-2 hereto (or such
-----------
other form acceptable to the Lender) or a Borrowers Release Letter substantially
in the form of Exhibit E-1 hereto (or such other form acceptable to the Lender)
-----------
covering each Eligible Mortgage Loan to be pledged to the Lender;
(h) the Lender shall have received from the Borrowers copies of each
Servicing Agreement relating to the Eligible Mortgage Loans and the Lender shall
have reviewed and approved each such Servicing Agreement in its sole discretion;
(i) for each Wet-Ink Mortgage Loan which is not a Borrower Refinanced
Loan, the Lender shall have received an insured closing letter from all
Settlement Agents that are not title insurance companies;
(j) none of the following shall have occurred and/or be continuing:
(i) an event or events shall have occurred resulting in the
effective absence of a "repo market" or comparable "lending market" for
financing debt obligations secured by mortgage loans or securities or an
event or events shall have occurred resulting in the Lender not being able
to finance any Eligible Mortgage Loans and/or Eligible Securities through
the "repo market" or "lending market" with traditional counterparties at
rates which would have been reasonable prior to the occurrence of such
event or events;
(ii) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans or an event or events shall have occurred resulting in the
Lender not being able to sell securities backed by mortgage loans at prices
which would have been reasonable prior to such event or events; or
(iii) there shall have occurred a material adverse change in
the "repo market" or comparable "lending market" or in the financial
----------- --------------
condition of the Lender which effects (or can reasonably be expected to
effect) materially and adversely the ability of the Lender to fund its
obligations under this Loan Agreement.
-28-
(k) with respect to each Pledged Security:
(i) the Lender shall have received each Security to be pledged
hereunder on such Business Day registered in the name of the Lender;
(ii) the Lender shall have received a copy of the executed
Governing Agreements governing the Pledged Securities and/or any
supplements thereto, and the offering documents related to the Pledged
Securities; and
(iii) Without limitation on the foregoing, no Pledged
Securities, whether certificated or uncertificated, shall remain in the name, or
possession, of the Borrower or any of its agents or shall be credited to or held
in any securities account in the name of the Borrower or any of its agents.
Each request for a borrowing by the Borrowers hereunder shall
constitute a certification by each of the Borrowers that all the conditions set
forth in this Section 5 have been satisfied (both as of the date of such request
and as of the date of such borrowing).
5.03 Additional Conditions Regarding PWF Corporation. Within thirty
-----------------------------------------------
(30) days of the date hereof, the Borrowers shall provide the Lender with each
of the following:
(i) a copy of an executed flow mortgage loan purchase and sale
agreement, dated as of the date hereof (the "PWF Agreement"), between PWF
-------------
Corporation and New Century Mortgage Corporation, in form and substance
reasonably acceptable to the Lender and containing customary representations and
warranties and related provisions regarding the sale of such Mortgage Loans;
(ii) an opinion of counsel in form and substance and from an
attorney, in both cases, acceptable to the Lender in its sole discretion, that
any Mortgage Loans which were originated by PWF Corporation and acquired by a
Borrower pursuant to the PWF Agreement would be acquired by the related Borrower
in a true and legal sale; and
(iii) an originally executed pledge agreement by PWF Corporation in
favor of the Lender, in form and substance acceptable to the Lender in its sole
discretion, relating to any Mortgage Loans originated by PWF Corporation which
the Borrowers would seek to pledge in accordance with the terms hereof.
Section 6. Representations and Warranties. Each of the Borrowers
------------------------------
represents and warrants to the Lender that throughout the term of this Loan
Agreement:
6.01 Existence. Each of the Borrowers (a) is a corporation duly
---------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect; and (c) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify
-29-
would not be reasonably likely (either individually or in the aggregate) to have
a Material Adverse Effect.
6.02 Financial Condition. Each of the Borrowers has heretofore
-------------------
furnished to the Lender a copy of (a) its consolidated balance sheet and the
consolidated balance sheets of its consolidated Subsidiaries for the fiscal year
of such Borrower ended December 31, 1998 and the related consolidated statements
of income and retained earnings and of cash flows for such Borrower and its
consolidated Subsidiaries for such fiscal period, setting forth in comparative
form the figures for the previous year, and with respect to New Century, with
the opinion thereon of KPMG Peat Marwick LLP or another nationally recognized
accounting firm, and, (b) its consolidated balance sheet and the consolidated
balance sheets of its consolidated Subsidiaries for the quarterly fiscal period
of such Borrower ended March 31, 1999 and the related consolidated statements of
income and retained earnings and of cash flows for such Borrower and its
consolidated Subsidiaries for such quarterly fiscal period, setting forth in
each case in comparative form the figures for the previous quarter. All such
financial statements are complete and correct and fairly present, in all
material respects, the consolidated financial condition of such Borrower and its
Subsidiaries and the consolidated results of their operations as at such dates
and for such fiscal periods, all in accordance with GAAP applied on a consistent
basis. Since March 31, 1999 there has been no material adverse change in the
consolidated business, operations or financial condition of such Borrower and
its consolidated Subsidiaries taken as a whole from that set forth in said
financial statements.
6.03 Litigation. There are no actions, suits, arbitrations,
----------
investigations (including, without limitation, any of the foregoing which are
pending or to the Borrowers' knowledge, threatened) or other legal or arbitrable
proceedings affecting any of the Borrowers or any of their respective
Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Loan Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $4,000,000.00, (iii) which,
individually or in the aggregate, if adversely determined, could reasonably be
likely to have a Material Adverse Effect, or (iv) requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act or any rules
thereunder. Each of the Borrowers is not (i) in violation of any applicable law
which violation materially adversely affects or may reasonably be expected to
materially adversely affect the business, operations, properties, assets or
condition (financial or otherwise) of such Borrower, or (ii) subject to or in
default with respect to any final judgment, writ, injunction, decree, rule or
regulation of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which would have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise) of such Borrower.
6.04 No Breach. Neither (a) the execution and delivery of the Loan
---------
Documents nor (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will (i) conflict with or
result in a breach of the charter or by-laws of any of the Borrowers, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority against or binding on the Borrowers, or any Servicing
Agreement, or any Governing Agreement or other material agreement or instrument
to which any of the Borrowers or any of their respective Subsidiaries is a party
or by which any of them or
-30-
any of their Property is bound or to which any of them is subject, (ii)
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant
to this Loan Agreement) upon any Property of any of the Borrowers or any of
their respective Subsidiaries pursuant to the terms of any such agreement or
instrument or (iii) constitute an event of default or an event which, with the
passage of time or expiration of any grace period, would constitute an event of
default under the Existing Financing Documents.
6.05 Action. Each of the Borrowers has all necessary corporate or
------
other power, authority and legal right to execute, deliver and perform its
obligations under each of the Loan Documents; the execution, delivery and
performance by such Borrower of each of the Loan Documents have been duly
authorized by all necessary corporate or other action on its part; and each Loan
Document has been duly and validly executed and delivered by such Borrower and
constitutes a legal, valid and binding obligation of such Borrower, enforceable
against such Borrower in accordance with its terms; except as enforceability may
be limited by (A) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws affecting the enforcement of the rights of
creditors generally, and (B) general principles of equity, whether enforcement
is sought in a proceeding in equity or at law.
6.06 Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by each of the
Borrowers of the Loan Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Loan hereunder,
------------------
nor the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulations T, U or X.
6.08 Taxes. Each of the Borrowers and their respective Subsidiaries
-----
have filed all Federal income tax returns and all other material tax returns
that are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by any of them, except for
any such taxes as are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of each of
the Borrowers and their respective Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of such Borrower, adequate.
6.09 Investment Company Act. None of the Borrowers nor any of their
----------------------
respective Subsidiaries are an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.10 Collateral; Collateral Security.
-------------------------------
(a) None of the Borrowers has assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any other Person, and
immediately prior to the pledge of
-31-
such Collateral to the Lender, such Borrower was the sole owner of such
Collateral and had good and marketable title thereto, and has full right and
authority to pledge or assign such Collateral free and clear of all Liens, in
each case except for Liens to be released simultaneously with the Liens granted
in favor of the Lender hereunder. No Mortgage Loan or Eligible Security pledged
to the Lender hereunder was acquired (by purchase or otherwise) by any of the
Borrowers from an Affiliate of such Borrower, except for Eligible Mortgage Loans
or Eligible Securities purchased from another Borrower. All Mortgage Notes
evidencing each Mortgage Loan are substantially in the form of Exhibit I hereto.
(b) The provisions of this Loan Agreement are effective to create in
favor of the Lender a valid security interest in all right, title and interest
of each of the Borrowers in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note endorsed in
blank by a duly authorized officer of such Borrower and receipt by the Lender of
each Eligible Security assigned by such Borrower to the Lender, the Lender shall
have a fully perfected first priority security interest therein, in the Mortgage
Loan or Eligible Security and in the case of a Mortgage Loan, in each of the
Borrowers' interests, if any, in the related Mortgaged Property.
(d) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and the Borrowers as "Debtors", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of each of the Borrowers in, to
and under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
(e) All of the Pledged Securities have been validly issued, and are
fully paid and non-assessable and not subject to preemptive rights, and the
Pledged Securities have been offered, issued and sold in compliance with all
applicable laws and (A) there are no outstanding rights, options, warrants or
agreements for the purchase from, or sale or issuance, in connection with the
Pledged Securities; (B) there are no agreements on the part of any of the
Borrowers to issue, sell or distribute the Pledged Securities; and (C) none of
the Borrowers has any obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any securities or any interest therein or to pay any
dividend or make any distribution in respect of the Pledged Securities.
6.11 Chief Executive Office. On the Effective Date, and during the
----------------------
four months immediately preceding the Effective Date, each of the Borrowers'
chief executive office and principal place of business is located at ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6.12 Location of Books and Records. The location where each of the
-----------------------------
Borrowers keeps its respective books and records, including all computer tapes
and records relating to the Collateral is (i) its respective chief executive
office and (ii) ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6.13 [Reserved].
----------
-32-
6.14 True and Complete Disclosure. The information, reports,
----------------------------
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrowers to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Borrowers to the Lender in connection with this Loan Agreement and the other
Loan Documents and the transactions contemplated hereby and thereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to a Responsible
Officer of any of the Borrowers, after due inquiry, that could reasonably be
expected to have a Material Adverse Effect that has not been disclosed herein,
in the other Loan Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to the Lender for use in
connection with the transactions contemplated hereby or thereby.
6.15 Tangible Net Worth. On the Effective Date, the aggregate
------------------
Tangible Net Worth of the Borrowers is not less than $40,000,000.
6.16 ERISA. Each Plan to which any of the Borrowers or its respective
-----
Subsidiaries make direct contributions, and, to the knowledge of each of the
Borrowers, each other Plan and each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material respects in
compliance with, the applicable provisions of ERISA, the Code and any other
Federal or State law. No event or condition has occurred and is continuing as to
which any of the Borrowers would be under an obligation to furnish a report to
the Lender under Section 7.01(d) hereof.
6.17 Governing Agreements. All representations and warranties in any
--------------------
applicable Governing Agreement are true and correct in all material respects as
of the date hereof as if made on such date and are incorporated herein by
references mutatis mutandis; or any such breach thereof does not have a Material
Adverse Effect. No event of default has occurred and is continuing under any
Governing Agreement.
6.18 Securities Information. The information set forth relating to
----------------------
the Pledged Securities in the related Notice of Request for Borrowing and Pledge
and all other information or data furnished by, or on behalf of, the Borrowers
to the Lender with respect to the Pledged Securities is complete, true and
correct in all material respects, and the Borrowers hereby acknowledge that
Lender has not verified the accuracy of such information or data.
-33-
Section 7. Covenants of the Borrowers. Each of the Borrowers hereby
--------------------------
covenants and agrees with the Lender that, so long as any Loan is outstanding
and until payment in full of all Secured Obligations:
7.01 Financial Statements. Each of the Borrowers shall deliver to the
--------------------
Lender:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal year of
such Borrower, the unaudited consolidated balance sheets of such Borrower and
its consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for such Borrower and its consolidated Subsidiaries for such period and
the portion of the fiscal year through the end of such period, setting forth in
each case in comparative form the figures for the previous year or quarter,
accompanied by a certificate of a Responsible Officer of such Borrower, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of such
Borrower and its consolidated Subsidiaries in accordance with GAAP, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of such Borrower, the consolidated balance sheets of
such Borrower and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and retained earnings and
of cash flows for such Borrower and its consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, and, with respect to New Century, accompanied by an opinion thereon of
independent certified public accountants of recognized national standing, which
opinion shall not be qualified as to scope of audit or going concern and shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of such Borrower and
its consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP;
(c) from time to time such other information regarding the financial
condition, operations, or business of such Borrower as the Lender may reasonably
request;
(d) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer of such Borrower knows, or with respect to
any Plan or Multiemployer Plan to which such Borrower or any of its Subsidiaries
makes direct contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of such
Borrower setting forth details respecting such event or condition and the
action, if any, that such Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by such Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in Section 4043(c) of
ERISA and the regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified within thirty (30) days of the occurrence of
such event (provided that a failure to meet the
-34-
minimum funding standard of Section 412 of the Code or Section 302 of
ERISA, including without limitation the failure to make on or before its
due date a required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice
of intent to terminate any Plan or any action taken by such Borrower or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by such Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by
such Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated under Section
4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against such Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if such
Borrower or an ERISA Affiliate fails to provide timely security to such
Plan in accordance with the provisions of said Sections.
7.02 Litigation. Each of the Borrowers will promptly, and in any event
----------
within 10 days after service of process on any of the following, give to the
Lender notice of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting such Borrower or
any of its Subsidiaries or affecting any of the Property of any of them before
any Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Loan Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $4,000,000.00, (iii) which,
individually or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect, or (iv) requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act and any rules
thereunder.
-35-
7.03 Existence, etc. Each of the Borrowers will:
---------------
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in this
Section 7.03(a) shall prohibit any transaction expressly permitted under Section
7.04 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office from the address referred to
in Section 6.11 unless it shall have fulfilled each of the conditions specified
in Section 4.04;
(e) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its Property
prior to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; and
(f) permit representatives of the Lender, during normal business
hours, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender.
7.04 Prohibition of Fundamental Changes. Neither of the Borrowers
----------------------------------
shall enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that such
Borrower may merge or consolidate with (a) any wholly owned subsidiary of such
Borrower, or (b) any other Person if such Borrower is the surviving corporation;
and provided further, that if after giving effect thereto, no Default would
exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there exists a
-------------------------
Borrowing Base Deficiency the Borrowers shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. Each of the Borrowers shall give notice to the Lender:
-------
(a) promptly upon receipt of notice or knowledge of the occurrence of
any Default or Event of Default;
(b) with respect to any Eligible Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt by such Borrower of any principal prepayment
(in full or partial) of such pledged Eligible Mortgage Loan;
-36-
(c) with respect to any Eligible Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt of notice or knowledge that the underlying
Mortgaged Property has been damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged so
as to affect adversely the Collateral Value of such pledged Eligible Mortgage
Loan;
(d) promptly upon receipt of notice or knowledge of (i) any default
related to any Collateral, (ii) any Lien or security interest (other than
security interests created hereby or by the other Loan Documents) on, or claim
asserted against, any of the Collateral or (iii) any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect;
(e) with respect to any Pledged Security, promptly upon receipt of
notice or knowledge the occurrence of event of default under any Governing
Agreement;
(f) upon the Borrower borrowing under the U.S. Bank Financing
Documents, and, for each month during which any such amounts shall have been
borrowed, no later than five Business Days after the end of each such month, a
daily tabulation of the amounts so borrowed during such month;
(g) upon any material amendment to the Existing Financing Documents,
any decrease in the gross amount available to be borrowed thereunder, or any
change in custodian or custodial arrangements relating thereto; and
(h) upon any event of default or event which, with the passage of
time or expiration of any grace periods, would constitute an event of default
under the Existing Financing Documents.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of such Borrower setting forth details of the
occurrence referred to therein and stating what action such Borrower has taken
or proposes to take with respect thereto.
7.07 Underwriting Guidelines. None of the Borrowers shall make any
-----------------------
material amendment or modification to the Underwriting Guidelines without the
prior written consent of the Lender, which shall not be unreasonably withheld,
and, such Borrower shall promptly deliver to the Lender a complete copy of such
amended or modified Underwriting Guidelines.
7.08 Transactions with Affiliates. None of the Borrowers will enter
----------------------------
into any transaction, including without limitation any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of such Borrower's business and (c) upon fair and reasonable
terms no less favorable to such Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, or make a
payment that is not otherwise permitted by this Section 7.08 to any Affiliate.
In no event shall any of the Borrowers pledge to the Lender hereunder any
Eligible Mortgage Loan acquired by such Borrower from an Affiliate of such
Borrower unless such Affiliate is also a Borrower.
7.09 Limitation on Liens. Each of the Borrowers will defend the
-------------------
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or
-37-
claim on or to the Collateral, other than the security interests created under
this Loan Agreement, and each of the Borrowers will defend the right, title and
interest of the Lenders in and to any of the Collateral against the claims and
demands of all persons whomsoever.
7.10 Limitation on Guarantees. The Borrowers in the aggregate shall
------------------------
not create, incur, assume or suffer to exist any Guarantees in excess of
$300,000,000, other than guarantees pursuant to the Existing Financing Documents
and under this Agreement which in the aggregate shall not exceed $1,600,000,000.
7.11 Limitation on Distributions. Upon the occurrence and during the
---------------------------
continuation of any Event of Default under Section 8(a), (b), (f), (g), (h), (k)
and (l) hereof, none of the Borrowers shall make any payment on account of, or
set apart assets for a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of, any equity or
partnership interest of such Borrower, whether now or hereafter outstanding, or
make any other distribution in respect of the foregoing or to any shareholder or
equity owner of such Borrower, either directly or indirectly, whether in cash or
property or in obligations of such Borrower or any of such Borrower's
consolidated Subsidiaries.
7.12 Maintenance of Tangible Net Worth. The Borrowers shall not
---------------------------------
permit their aggregate Tangible Net Worth to be less than the sum of (i)
$40,000,000 plus (ii) an amount equal to 75% of the aggregate or positive Net
Income (without deduction for quarterly losses) as measured on a monthly basis
(as at the end of each month).
7.13 Maintenance of Ratio of Total Indebtedness to Tangible Net
----------------------------------------------------------
Worth. New Century shall not permit the ratio of aggregate Total Indebtedness to
-----
aggregate Tangible Net Worth of New Century to be greater than (i) 15:1 on an
average daily basis as measured as of the last day of each month and (ii) 8:1 as
measured as of the last day of each fiscal quarter of New Century.
7.14 Maintenance of Profitability. The Borrowers shall not permit,
----------------------------
for any period of three consecutive fiscal quarters (each such period, a "Test
----
Period"), Net Income for such Test Period, before income taxes for such Test
------
Period and distributions made during such Test Period, to be less than $1.00.
7.15 Servicer; Servicing Tape. The Borrowers shall provide or cause
------------------------
to be provided to the Lender on the twentieth Business Day of each month a
computer readable magnetic tape containing servicing information, including
without limitation those fields specified by the Lender from time to time, on a
loan-by-loan basis and in the aggregate, with respect to the Eligible Mortgage
Loans serviced under the Servicing Agreement by any of the Borrowers or any
Servicer. None of the Borrowers shall cause the Eligible Mortgage Loans to be
serviced by any servicer other than a servicer expressly approved in writing by
the Lender. In addition, each of the Borrowers shall promptly, but in no event
later than two (2) Business Days after receipt, forward a copy of any
information or reports received by such Borrower as the holder or owner of a
Pledged Security.
7.16 Required Filings. Each of the Borrowers shall, promptly provide
----------------
the Lender with copies of all documents which such Borrower or any Affiliate of
such Borrower is
-38-
required to file with the Securities and Exchange Commission in accordance with
the 1934 Act or any rules thereunder.
7.17 No Adverse Selection. None of the Borrowers has selected the
--------------------
Collateral in a manner so as to adversely affect the Lender's interests.
7.18 Remittance of Prepayments. Each of the Borrowers shall remit,
-------------------------
with sufficient detail to enable the Lender to appropriately identify the
Eligible Mortgage Loan to which any amount remitted applies, to the Lender on
each Thursday (or the next Business Day if such Thursday is not a Business Day)
all principal prepayments that such Borrower has received during the previous
week.
7.19 Governing Agreements. None of the Borrowers shall amend any
--------------------
Governing Agreement without first obtaining the written consent of the Lender.
7.20 Rights and Payments under Pledged Securities. If any of the
--------------------------------------------
Borrowers shall, as a result of its ownership of Pledged Securities, become
entitled to receive or shall receive any rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for the Pledged Securities,
or otherwise in respect thereof, such Borrower shall accept the same as the
Lender's agent, hold the same in trust for the lender and deliver the same
forthwith to the Lender in the exact form received, duly indorsed by such
Borrower to the Lender, if required, together with an undated bond power
covering such certificate duly executed in blank and with, if the Lender so
requests, signature guaranteed, to be held by the Lender hereunder as additional
collateral security for the Secured Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by any of the Borrowers, such Borrower shall, until such money or
property is paid or delivered to the Lender as required hereunder, hold such
money or property in trust for the Lender, segregated from other funds of such
Borrower, as additional collateral security for the Secured Obligations.
7.21 Voting Rights. Without the prior written consent of the Lender,
-------------
none of the Borrowers will vote to enable, or take any other action to permit,
any rights afforded it as a holder of the Pledged Securities under any Governing
Agreement.
7.22 Other Information. Each of the Borrowers shall furnish to the
-----------------
Lender, promptly, as soon as available, copies of any and all financial
statements and all registration statements filed with the Securities and
Exchange Commission, or any Governmental Authority which supervises the issuance
of securities by such Borrower.
7.23 Provision of Escrow Instruction Letter. Each of the Borrowers
--------------------------------------
shall provide the Lender with a form of Escrow Instruction Letter as set forth
in Section 6(b) of the Custodial Agreement, which it shall use for Wet-Ink
Mortgage Loan fundings, which instructions shall be in form and substance
acceptable to the Lender.
7.24 U.S. Bank Compliance Certificates. The Borrowers shall deliver
---------------------------------
to the Lender copies of each Compliance/Borrowing Base Certificate (as defined
in the U.S. Bank Financing Documents) promptly, and in no event later than one
(1) Business Day after delivery of such Compliance/Borrowing Base Certificate to
U.S. Bank National Association pursuant to the U.S. Bank Financing Documents.
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7.25 Collection Account. The Borrower shall deposit, or shall cause
------------------
to be deposited, each Monthly Payment into the Collection Account within one
Business Day of receipt thereof.
Section 8. Events of Default. Each of the following events shall
----------------
constitute an event of default (an "Event of Default") hereunder:
----------------
(a) any of the Borrowers shall default in the payment of any
principal of or interest on any Loan when due (whether at stated maturity, upon
acceleration or at mandatory or optional prepayment); or
(b) any of the Borrowers shall default in the payment of any other
amount payable by it hereunder or under any other Loan Document after
notification by the Lender of such default, and such default shall have
continued unremedied for five Business Days; or
(c) any representation, warranty or certification made or deemed made
herein or in any other Loan Document by any of the Borrowers or any certificate
furnished to the Lender pursuant to the provisions hereof or thereof shall prove
to have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule 1
or Schedule 2, which shall be considered solely for the purpose of determining
the Collateral Value of the Eligible Mortgage Loans; unless such Borrower shall
have made any such representations and warranties with knowledge that they were
materially false or misleading at the time made); or (ii) any such
representations and warranties have been determined by the Lender in its sole
discretion and in good faith to be materially false or misleading on a regular
basis); or
(d) any of the Borrowers shall fail to comply with the requirements
of Section 7.03(a), Section 7.04, Section 7.05, Section 7.06, or Sections 7.07
through 7.22 hereof (to the extent such Borrower is subject to any such Sections
7.07 through 7.22); or any of the Borrowers shall otherwise fail to comply with
the requirements of Section 7.03 hereof and such default shall continue
unremedied for a period of five Business Days; or any of the Borrowers shall
fail to observe or perform any other covenant or agreement contained in this
Loan Agreement or any other Loan Document and such failure to observe or perform
shall continue unremedied for a period of seven Business Days; or
(e) a final judgment or judgments for the payment of money in excess
of $4,000,000 in the aggregate shall be rendered against any of the Borrowers or
any of its respective Affiliates by one or more courts, administrative tribunals
or other bodies having jurisdiction and the same shall not be satisfied,
discharged (or provision shall not be made for such discharge) or bonded, or a
stay of execution thereof shall not be procured, within 60 days from the date of
entry thereof, and such Borrower or any such Affiliate shall not, within said
period of 60 days, or such longer period during which execution of the same
shall have been stayed or bonded, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(f) any of the Borrowers shall admit in writing its inability to pay
its debts as such debts become due; or
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(g) any of the Borrowers or any of its respective Affiliates shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator or the like of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code or
(vi) take any corporate or other action for the purpose of effecting any of the
foregoing; or
(h) a proceeding or case shall be commenced, without the application or
consent of any of the Borrowers or any of their respective Affiliates, in any
court of competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of such Borrower or any
Affiliate of such Borrower or of all or any substantial part of its property and
such receiver, custodian, trustee, examiner, liquidator or the like is not
discharged for a period of 60 or more days, or (iii) similar relief in respect
of such Borrower or any Affiliate of such Borrower under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against any of
the Borrowers or any Affiliate of such Borrower shall be entered in an
involuntary case under the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for whatever reason
be terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by any of the Borrowers; or
(j) any of the Borrowers shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Collateral in
favor of the Lender or shall be Liens in favor of any Person other than the
Lender; or
(k) any materially adverse change in the Property, business, financial
condition or prospects of any of the Borrowers or any of their Affiliates shall
occur, in each case as determined by the Lender in its sole discretion, or any
other condition shall exist which, in the Lender's sole discretion, constitutes
a material impairment of such Borrower's ability to perform its obligations
under this Loan Agreement, the Note or any other Loan Document; or
(l) any of the Borrowers or any of such Borrower's Affiliates shall be in
default beyond any applicable grace period under any note, indenture, loan
agreement, guaranty, swap agreement or any other contract to which it is a
party, which default constitutes an amount equal to or in excess of $4,000,000
and (i) involves the failure to pay a matured obligation, or (ii) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
of such note, indenture, loan agreement, guaranty, swap agreement or other
contract; or
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(m) the discovery by the Lender of a condition or event which existed at
or prior to the execution hereof and which the Lender, in its sole discretion,
determines materially and adversely affects: (i) the condition (financial or
otherwise) of any of the Borrowers, its respective Subsidiaries or Affiliates;
or (ii) the ability of any of the Borrowers or the Lender to fulfill its
respective obligations under this Loan Agreement; or
(n) as of any date of determination, (i) the rate of delinquency of the
mortgage loans underlying the Pledged Securities shall equal or exceed the rates
of delinquency of such mortgage loans required for the applicable trustee to
replace the servicer under the related Governing Agreement, or (ii) if no such
requirement exists in the applicable Governing Agreement, 25% or more of the
mortgage loans underlying the Pledged Securities are contractually more than 89
days delinquent as of such date of determination; or
(o) upon any event of default or event which, with the passage of time or
expiration of any grace periods, would constitute an event of default under
the Existing Financing Documents; or
(p) any of the events specified in Section 5.02(j) hereof have occurred.
Section 9. Remedies Upon Default.
---------------------
(a) An Event of Default shall be deemed to be continuing unless expressly
waived by the Lender in writing. Upon the occurrence of one or more Events of
Default hereunder, the Lender's obligation to consider making additional Loans
to the Borrowers shall automatically terminate without further action by any
Person. Upon the occurrence of one or more Events of Default other than those
referred to in Section 8(g) or (h), the Lender may immediately declare the
principal amount of the Loans then outstanding under the Note to be immediately
due and payable, together with all interest thereon and fees and expenses
accruing under this Loan Agreement. Upon the occurrence of an Event of Default
referred to in Sections 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by each of the Borrowers.
(b) Upon the occurrence of one or more Events of Default, and if any of
the Borrowers or any Affiliate of any of the Borrowers is the Servicer, and
subject to the provisions of Section 12.14(b)(ii), the Lender shall have the
right to obtain physical possession of the Servicing Records and all other files
of such Borrower relating to the Collateral and all documents relating to the
Collateral which are then or may thereafter come in to the possession of any of
the Borrowers or any third party acting for such Borrower and the Borrowers
shall deliver to the Lender such assignments as the Lender shall request. The
Lender shall be entitled to specific performance of all agreements of each of
the Borrowers contained in this Loan Agreement.
Section 10. No Duty of Lender. The powers conferred on the Lender
-----------------
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon it
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to exercise any such powers. The Lender shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrowers for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.
Section 11. Securitization Transactions.
---------------------------
11.01 Exclusive Option.
----------------
(a) In connection with any Securitization Transaction involving Mortgage
Loans that are Eligible Mortgage Loans, at any time commencing after NCCC's
1999-2 securitization, NCCC hereby grants to Lender the exclusive option and the
exclusive right (the "Option"), but not the obligation, pursuant to underwriting
------
agreements and/or placement agency agreements in form and substance reasonably
satisfactory to NCCC and the Lender or its designee, for the Lender or its
designee to act as lead or co-lead underwriter and/or placement agent with
respect to each such Securitization Transaction as follows:
(b) Within the first 12 month period commencing on the Effective Date
hereof, the Lender will have the exclusive option to act (i) as lead managing
underwriter on NCCC's fourth or fifth Securitization Transaction of 1999 for
which NCCC will use its best efforts to cause the principal balance of the
securities offered pursuant to each such Securitization Transaction to be no
less than $250,000,000 and (ii) as lead managing underwriter on one (1)
additional NCCC Securitization Transaction for which NCCC will use its best
efforts to cause the principal balance of the securities offered pursuant to
such Securitization Transaction to be no less than $250,000,000.
(c) During each subsequent 12 month period, the Lender will have the
exclusive option to act (i) as lead managing underwriter on at least two (2)
NCCC Securitization Transactions for which NCCC shall use its best efforts to
cause the principal balance of the securities offered pursuant to such
Securitization Transaction to be no less than $500,000,000 and (ii) as co-lead
managing underwriter on at least two (2) additional Securitization Transactions.
The Option shall be deemed to have expired if (i) the Lender refuses to
make a Loan against eligible Collateral which otherwise would be permitted under
the terms of this Agreement (including, without limitation, the Maximum Credit
specified herein) and (ii) the Borrowers repay all amounts outstanding under the
Promissory Note within 30 calendar days of Lender's Loan refusal.
In addition, the Option shall be deemed to terminate (A) on the first
anniversary of the initial Funding Date (such date, the "First Borrower Option
---------------------
Termination Date") if (i) no Default or Event of Default has occurred and is
----------------
continuing under any Loan Document, (ii) no Loan remains outstanding as of such
date, the Borrowers have paid any amounts due under the terms hereof or any
other Loan Document, and no new Request for Borrowing has been submitted to the
Lender, and (iii) the Borrowers provide the Lender with written notice of their
intention to terminate the Option on such First Borrower Option Termination Date
or (B) on any date after the First Borrower Option Termination Date (any such
date, a "Subsequent Borrower
-------------------
-43-
Option Termination Date") if (i) no Default or Event of Default has occurred and
-----------------------
is continuing under any Loan Document, (ii) no Loan remains outstanding as of
such date, the Borrowers have paid any amounts due under the terms hereof or any
other Loan Document, and no new Request for Borrowing has been submitted to the
Lender, (iii) no Loan has been made to any Borrower during the twelve month
period immediately preceding such Borrower Option Termination Date, and (iv) the
Borrowers provide the Lender with written notice of their intention to terminate
the Option on such Borrower Option Termination Date; provided, however, that in
the event the Borrower submits any Request for Borrowing or a Loan is otherwise
made to any Borrower pursuant to the terms hereof after the First Borrower
Option Termination Date or a Subsequent Borrower Option Termination Date, any
such Option termination shall be null and void, and the Borrower shall be
obligated in accordance with the terms of this Section 11 as if no termination
had occurred (including, without limitations, making any payments which would
have been required pursuant to Section 11.04 if no termination had occurred).
11.02 Fees.
----
(a) As compensation for its placement and underwriting services as
provided in Section 11.01 hereof, NCCC shall pay, or cause to be paid to the
Lender, a fee of 0.25% of the principal balance of each Security underwritten or
placed by the Lender or its designee pursuant to the related Securitization
Transaction.
(b) In addition to the foregoing fees, NCCC shall, upon demand, pay to the
Lender or its designee or reimburse the Lender or its designee for all out-of
pocket costs and expenses of the Lender and any such designee, and their
Affiliates, in connection with each Securitization Transaction (whether or not
such Securitization Transaction is completed, except if such Securitization
Transaction is not completed as a result of the sole fault of the Lender or its
Affiliates) in which the Lender or its designee acts as underwriter and/or
placement agent, including without limitation, the fees and disbursements of
counsel for the Lender, such designee and their Affiliates. NCCC shall bear its
own costs and expenses in connection with any such Securitization Transaction.
In connection with any Securitization Transaction using Lender's shelf
registration statement (whether or not such Securitization Transaction is
completed, except if such Securitization Transaction is not completed as a
result of the sole fault of the Lender or its Affiliates), NCCC shall pay all
out-of-pocket costs and expenses arising from such Securitization Transaction,
including, but not limited to, the fees and disbursements of legal counsel
(including counsel for the Lender, and its designee (if any) and their
Affiliates and investor's counsel in any private placement, if retained), rating
agency fees, credit enhancement fees, SEC registration fees, auditor's fees, due
diligence fees and expenses, servicer fees and expenses and trustee fees and
expenses.
11.03 Information. NCCC hereby represents, warrants and agrees that all
-----------
information to be provided by it or any of its Affiliates in connection with any
Securitization Transaction shall be true, correct and complete. NCCC shall enter
into such agreements and provide such certificates, opinions and other documents
as the Lender or its designee may deem necessary or appropriate in connection
with any such Securitization Transaction, including without limitation, an
indemnification agreement satisfactory to the Lender and its designee pursuant
to which the Lender, such designee, Lender's Affiliates, and their respective
officers, directors, agents and employees shall be indemnified for all
liabilities, losses, damages,
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judgments, costs and expenses resulting from a breach of the representation,
warranty and agreement set forth in the immediately preceding sentence and other
liabilities incurred by the Lender or such other parties as a result of such
Securitization Transaction.
11.04 Option Breakage Fee.
-------------------
(a) On each annual anniversary of the Effective Date hereunder, the
Borrowers shall pay to the Lender the Option Breakage Fee, if any, with respect
to the prior 12-month period, provided however that the Option Breakage Fee
shall not be payable if (A) (i) the Lender has refused to make a Loan against
the Collateral pledged by the Borrowers which would otherwise be eligible for
such a Loan pursuant to the terms of this Agreement (including, without
limitation, compliance with the Maximum Credit specified herein) with the
respective Collateral Value and the Applicable Margin set forth on Schedule 4
hereto or (ii) there occurs an Optional Market Value Event and (B) the Borrowers
have repaid all Loans outstanding hereunder within 30 calendar days of the
Lender's refusal to make such Loan.
(b) Solely for purposes of this Section 11.04, in the event the Borrowers
object to the Lender's determination of Market Value for Eligible Market Loans
in connection with the Borrowers' delivery of a Notice of Request for Borrowing
and Pledge, the Borrowers shall deliver to the Lender, no later than 2 Business
Days prior to the related Funding Date, 3 written committed bids (each a "Bid
---
Price") for the purchase of such Eligible Mortgage Loans each from a major
-----
financial institution or an Affiliate thereof (other than Borrowers or their
Affiliates) who regularly engage in purchases and sales of pools of mortgage
loans similar to the related Eligible Mortgage Loans in principal amounts
substantially similar to the aggregate principal balance of such Eligible
Mortgage Loans. Each Bid Price shall be expressed as a percentage of the
aggregate principal balance of the related Eligible Mortgage Loans. In the event
the Market Value determined by the Lender (expressed as a percentage of the
aggregate principal balance of such Eligible Mortgage Loans) is more than 50
basis points (0.50%) lower than the lowest of such Bid Prices (such lowest Bid
Price, the "Qualified Bid Price"), the Lender shall, at its sole and absolute
-------------------
discretion, have the option to (i) make a Loan to the Borrowers utilizing the
Qualified Bid Price to determine Market Value or (ii) decline to make a Loan on
the terms described in clause (i) hereof (such event described in this clause
(ii), an "Optional Market Value Event").
---------------------------
Section 12. Miscellaneous.
-------------
12.01 Waiver. No failure on the part of the Lender to exercise and no
------
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
Loan Document preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
12.02 Notices. Except as otherwise expressly permitted by this Loan
-------
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without
-45-
limitation by telex or telecopy) delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
thereof); or, as to any party, at such other address as shall be designated by
such party in a written notice to each other party. Except as otherwise provided
in this Loan Agreement and except for notices given under Section 2 (which shall
be effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by telex or telecopy or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
12.03 Indemnification and Expenses.
----------------------------
(a) The Borrowers, jointly and severally, agree to hold the Lender, and
its Affiliates and their officers, directors, employees, agents and advisors
(each, an "Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by or asserted against such Indemnified
Party (collectively, the "Costs") relating to or arising out of this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than any Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrowers agree to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Eligible
Mortgage Loans and Eligible Securities relating to or arising out of any
violation or alleged violation of any securities law, environmental law, rule or
regulation or any consumer credit laws, including without limitation the Truth
in Lending Act and/or the Real Estate Settlement Procedures Act, that, in each
case, results from anything other than such Indemnified Party's gross negligence
or willful misconduct. In any suit, proceeding or action brought by an
Indemnified Party in connection with any Eligible Mortgage Loan or Eligible
Security for any sum owing thereunder, or to enforce any provisions of any
Eligible Mortgage Loan, the Borrowers will save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by any of the Borrowers of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from such Borrower. The
Borrowers also agree to reimburse an Indemnified Party as and when billed by
such Indemnified Party for all such Indemnified Party's costs and expenses
incurred in connection with the enforcement or the preservation of such
Indemnified Party's rights under this Loan Agreement, the Note, any other Loan
Document or any transaction contemplated hereby or thereby, including without
limitation the reasonable fees and disbursements of its counsel. Each of the
Borrowers hereby acknowledges that, notwithstanding the fact that the Note is
secured by the Collateral, the obligations of the Borrowers under the Note is a
recourse obligation of each of the Borrowers.
(b) The Borrowers agree to (i) pay as and when billed by the Lender all of
the out-of-pocket costs and expenses (including the reasonable fees and expenses
of counsel) incurred by the Lender in connection with the drafting, development,
preparation, negotiation and execution of, this Loan Agreement, the Note, any
other Loan Document or any other
-46-
documents prepared in connection with the initial execution herewith in an
aggregate amount not to exceed $50,000 and (ii) pay as and when billed by the
Lender all of the out-of-pocket costs and expenses (including the reasonable
fees and expenses of counsel) incurred by the Lender in connection with the
drafting, development, preparation, negotiation and execution of any amendment,
supplement or modification thereto. The Borrowers agree to pay as and when
billed by the Lender all of the out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the transactions
contemplated hereby and thereby including without limitation (i) all the
reasonable fees, disbursements and expenses of counsel to the Lender, and (ii)
all the inspection, testing and review costs and expenses incurred by the Lender
with respect to Collateral under this Loan Agreement, including, but not limited
to, those costs and expenses incurred by the Lender pursuant to Sections
12.03(a), 12.14 and 12.15 hereof.
12.04 Amendments. Except as otherwise expressly provided in this Loan
----------
Agreement, any provision of this Loan Agreement may be modified or supplemented
only by an instrument in writing signed by each of the Borrowers and the Lender
and any provision of this Loan Agreement may be waived by the Lender.
12.05 Successors and Assigns. This Loan Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.06 Survival. The obligations of each of the Borrowers under Section
--------
3.03, Section 11.01, Section 11.02, Section 11.03, Section 11.04 and Section
12.03 hereof shall survive the repayment of the Loans and the termination of
this Loan Agreement. In addition, each representation and warranty made or
deemed to be made by a request for a borrowing, herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making any Loan, any Default that may
arise because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that the Lender may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time such Loan was made.
12.07 Captions. The table of contents and captions and section headings
--------
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Loan Agreement.
12.08 Counterparts. This Loan Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Loan Agreement by
signing any such counterpart.
12.09 Loan Agreement Constitutes Security Agreement; Governing Law. This
------------------------------------------------------------
Loan Agreement shall be governed by New York law without reference to choice of
law doctrine, and shall constitute a security agreement within the meaning of
the Uniform Commercial Code.
12.10 Submission to Jurisdiction; Waivers. Each of the Borrowers hereby
------------------------------------
irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS LOAN AGREEMENT, THE NOTE
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AND THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT
IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL
HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN
ANY OTHER JURISDICTION.
12.11 Waiver of Jury Trial. EACH OF THE BORROWERS AND THE LENDER HEREBY
--------------------
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
12.12 Acknowledgments. Each of the Borrowers hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrowers, and the
relationship between the Borrowers and the Lender is solely that of debtor and
creditor; and
(c) no joint venture exists between the Lender and the Borrowers.
12.13 Hypothecation or Pledge of Collateral. The Lender shall have free
-------------------------------------
and unrestricted use of all Collateral and nothing in this Loan Agreement shall
preclude the Lender from engaging in repurchase transactions with the Collateral
or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan
-48-
Agreement shall obligate the Lender to segregate any Collateral delivered to the
Lender by the Borrowers.
12.14 Servicing.
---------
(a) Each of the Borrowers covenants to maintain or cause the servicing of
the Eligible Mortgage Loans to be maintained in conformity with accepted and
prudent servicing practices in the industry for the same type of mortgage loans
as the Eligible Mortgage Loans and in a manner at least equal in quality to the
servicing such Borrower provides for mortgage loans which it owns. In the event
that the preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of Default, (ii) the date on which all the Secured
Obligations have been paid in full or (iii) the transfer of servicing approved
by the Borrowers.
(b) If the Eligible Mortgage Loans are serviced by any of the Borrowers,
(i) the Borrowers agree that the Lender is the collateral assignee of all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Eligible Mortgage Loans (the
"Servicing Records"), and (ii) the Borrowers hereby grant the Lender a security
-----------------
interest in all servicing fees and Servicing Rights relating to the Eligible
Mortgage Loans and, except as provided below in this Section 12.14(b) all
Servicing Records, to secure the obligation of such Borrower or its designee to
service in conformity with this Section and any other obligation of such
Borrower to the Lender. Each of the Borrowers covenants to safeguard such
Servicing Records and to deliver them promptly to the Lender or its designee
(including the Custodian) at the Lender's request. The Borrowers and the Lender
hereby agree that, on the date of this Loan Agreement, the Lender does not have
a 1st lien or a lien on the Servicing Records attributable to the Eligible
Mortgage Loans and that such Servicing Records may be subject to a lien under
the U.S. Bank Financing Documents. The Borrowers shall, not later than 90 days
following the date of this Loan Agreement, take all necessary action to ensure
that the Lender has a first perfected security interest in the Servicing Records
relating to the Eligible Mortgage Loans and the Servicing Records will not be
subject to any other lien, either created under the U.S. Bank Financing
Documents or otherwise. At the time such lien is created, the second preceding
sentence shall be of no effect. The failure of the Borrowers to grant a first
perfected security interest in such Servicing Records and provide evidence
thereof to the Lender within such 90-day period shall constitute an Event of
Default under this Loan Agreement. Notwithstanding the foregoing, each Borrower
agrees and acknowledges that the three preceding sentences do not in any way
apply to the Borrower's pledge of any Servicing Rights hereunder or the lien
granted and created hereunder with respect to such Servicing Rights.
(c) If the Eligible Mortgage Loans are serviced by a third party servicer
(such third party servicer, the "Servicer"), the Borrowers (i) shall provide a
--------
copy of the servicing agreement to the Lender, which shall be in form and
substance acceptable to the Lender (the "Servicing Agreement"); (ii) shall
-------------------
provide a Servicer Notice to the Servicer substantially in the form of Exhibit G
hereto; and (iii) hereby irrevocably assigns to the Lender and the Lender's
successors and assigns all right, title, interest of such Borrower in, to and
under, and the benefits of, any Servicing Agreement with respect to the Eligible
Mortgage Loans. Any successor to the
-49-
Servicer shall be approved in writing by the Lender prior to such successor's
assumption of servicing obligations with respect to the Eligible Mortgage Loans.
(d) If the servicer of the Eligible Mortgage Loans is any of the Borrowers
or the Servicer is an Affiliate of any of the Borrowers, such Borrower shall
provide to the Lender a letter from such Borrower or the Servicer, as the case
may be, to the effect that upon the occurrence of an Event of Default, the
Lender may terminate any Servicing Agreement and transfer servicing to its
designee, at no cost or expense to the Lender, it being agreed that such
Borrower will pay any and all fees required to terminate the Servicing Agreement
and to effectuate the transfer of servicing to the designee of the Lender.
(e) After the Funding Date, until the pledge of any Eligible Mortgage Loan
is relinquished by the Custodian, none of the Borrowers will have any right to
modify or alter the terms of such Eligible Mortgage Loan and none of the
Borrowers will have any obligation or right to repossess such Eligible Mortgage
Loan, except as provided in the Custodial Agreement.
(f) In the event any of the Borrowers or its respective Affiliate is
servicing the Eligible Mortgage Loans, such Borrower shall permit the Lender to
inspect such Borrower's or its Affiliate's servicing facilities, as the case may
be, for the purpose of satisfying the Lender that such Borrower or its
Affiliate, as the case may be, has the ability to service the Eligible Mortgage
Loans as provided in this Loan Agreement.
12.15 Periodic Due Diligence Review. Each of the Borrowers acknowledge
-----------------------------
that the Lender has the right to perform continuing due diligence reviews with
respect to the Eligible Mortgage Loans and any Eligible Securities, for purposes
of verifying compliance with the representations, warranties and specifications
made hereunder, or otherwise, and each of the Borrowers agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to such
Borrower, the Lender or its authorized representatives will be permitted during
normal business hours to examine, inspect, and make, at the Lender's expense,
copies and extracts of, the Mortgage Files and any and all documents, records,
agreements, instruments or information relating to any Eligible Mortgage Loans
and any Eligible Securities in the possession or under the control of such
Borrower and/or the Custodian. Each of the Borrowers shall also make available
to the Lender a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files, the Eligible Security Files,
the Eligible Securities and the Eligible Mortgage Loans. Without limiting the
generality of the foregoing, the Borrowers hereby acknowledges that the Lender
may make Loans to the Borrowers based solely upon the information provided by
the Borrowers to the Lender in the Eligible Mortgage Loan Tape and the
representations, warranties and covenants contained herein, and that the Lender,
at its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Eligible Mortgage Loans and any Eligible
Securities securing such Loan, including without limitation ordering new credit
reports and new appraisals on the related Mortgaged Properties and otherwise re-
generating the information used to originate such Eligible Mortgage Loan or
underwrite such Eligible Security. The Lender may underwrite such Eligible
Mortgage Loans or Eligible Securities itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Each of the Borrowers
agrees to cooperate with the Lender and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all
-50-
documents, records, agreements, underwriting reports, instruments or information
relating to such Eligible Mortgage Loans or Eligible Securities in the
possession, or under the control, of such Borrower.
12.16 Set-Off. In addition to any rights and remedies of the Lender
-------
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrowers, any such notice being expressly waived by
the Borrowers to the extent permitted by applicable law, upon any amount
becoming due and payable by the Borrowers hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrowers. The
Lender agrees promptly to notify the Borrowers after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
12.17 Intent. The parties recognize that each Loan is a "securities
------
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
12.18 Confidential Information.
------------------------
(a) Lender hereby acknowledges and agrees that all written or computer-
readable information provided by the Borrowers to the Lender regarding the
Borrowers or the Collateral (the "Borrowers Confidential Information"), shall be
----------------------------------
kept confidential and each of their respective contents will not be divulged to
any party without the Borrower's consent except to the extent that (i) the
Lender deems appropriate to do so in working with legal counsel, auditors,
taxing authorities or other governmental agencies or regulatory bodies or in
order to comply with any applicable federal or state laws, (ii) any portion of
the Borrowers Confidential Information is in the public domain other than due to
a breach of this covenant, (iii) the Lender deems appropriate in connection with
exercising any or all of the Lender's rights or remedies or complying with any
obligations under any of the Loan Documents.
(b) Each of the Borrowers hereby acknowledges and agrees that all written
or computer-readable information provided by the Lender to the Borrowers
regarding the Lender (the "Lender Confidential Information"), shall be kept
-------------------------------
confidential and each of their respective contents will not be divulged to any
party without Lender's consent except to the extent that (i) such Borrower deems
appropriate to do so in working with legal counsel, auditors, taxing authorities
or other governmental agencies or regulatory bodies or in order to comply with
any applicable federal or state laws, (ii) any portion of the Lender
Confidential Information is in the public domain other than due to a breach of
this covenant, (iii) such Borrower deems appropriate in connection with
exercising any or all of such Borrower's rights or remedies or complying with
any obligations under any of the Loan Documents.
(c) The provisions set forth in this Section 12.18 shall survive the
termination of this Loan Agreement for a period of two years following such
termination.
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[SIGNATURE PAGE FOLLOWS]
-52-
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
BORROWERS
NEW CENTURY MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name:
Title: Executive Vice President
Address for Notices:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
NC CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name:
Title: Senior Vice President
Address for Notices:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
LENDER
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC.
By: _____________________________________
Name:
Title:
Address For Notices:
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
STATE OF _______________)
) ss.:
COUNTY OF ______________)
On the _____ day of ____________, 199_ before me, a Notary Public in
and for said State, personally appeared ____________, known to me to be
______________ of New Century Mortgage Corporation, the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
____________________________________
Notary Public
My Commission expires ______________
STATE OF ____________)
) ss.:
COUNTY OF ___________)
On the _____ day of ____________, 199_ before me, a Notary Public in
and for said State, personally appeared ____________, known to me to be
______________ of NC Capital Corporation, the corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
____________________________________
Notary Public
My Commission expires ______________
STATE OF NEW YORK ______________)
) ss.:
COUNTY OF NEW YORK _____________)
On the _____ day of _______________, 199_ before me, a Notary Public
in and for said State, personally appeared ____________, known to me to be
_____________ of ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc. the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
__________________________________
Notary Public
My Commission expires ____________
SCHEDULE 1
----------
REPRESENTATIONS AND WARRANTIES FOR MORTGAGE LOANS
As to each Mortgage Loan included in the Borrowing Base on a Funding
Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage and
Mortgaged Property), each Borrower shall be deemed to make the following
representations and warranties to the Lender with respect to each Eligible
Mortgage Loan such Borrower intends to pledge to the Lender pursuant to the Loan
Agreement as of such date and as of each date Collateral Value is determined
(certain defined terms used herein and not otherwise defined in the Loan
Agreement appearing in Part II to Schedule 2):
(a) Mortgage Loans as Described. The information set forth in the
---------------------------
Mortgage Loan Schedule with respect to the Mortgage Loan is complete, true and
correct in all material respects.
(b) Payments Current. All payments required to be made up to the
----------------
Funding Date for the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage Loan is
delinquent nor has more than any one payment under the Mortgage Loan been
delinquent thirty days or more in the twelve months preceding the date of
determination. In no event has a payment been more than 89 days delinquent for
such Mortgage Loan. The first Monthly Payment shall be made, or shall have been
made, with respect to the Mortgage Loan on its Due Date or within the grace
period, all in accordance with the terms of the related Mortgage Note.
(c) No Outstanding Charges. There are no defaults in complying with
----------------------
the terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which such Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is earlier, to the day which precedes by one month the
Due Date of the first installment of principal and interest thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note and
-------------------------
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required, and
its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect
of the Mortgage Loan has been released, in whole or in part, except in
connection with an assumption agreement approved by the title insurer, to the
extent required by such policy, and which assumption agreement is part
Schedule 1-1
of the Mortgage File delivered to the Custodian and the terms of which are
reflected in the Mortgage Loan Schedule.
(e) No Defenses. The Mortgage Loan is not subject to any right of
-----------
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor
in any state or Federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. The Borrowers has no knowledge of, nor has it
received any notice that, any Mortgagor in respect of the Mortgage Loan is a
debtor in any state or federal bankruptcy or insolvency proceeding.
(f) Hazard Insurance. The Mortgaged Property is insured by a fire
----------------
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against earthquake and
other risks insured against by Persons operating like properties in the locality
of the Mortgaged Property, in an amount not less than the greatest of (i) 100%
of the replacement cost of all improvements to the Mortgaged Property, or (ii)
either (A) the outstanding principal balance of the Mortgage Loan with respect
to each First Lien Mortgage Loan, or (B) with respect to each Second Lien
Mortgage Loan, the sum of the outstanding principal balance of the First Lien
Mortgage Loan and the balance of the Second Lien Mortgage Loan, or (iii) the
amount necessary to avoid the operation of any co-insurance provisions with
respect to the Mortgaged Property, and consistent with the amount that would
have been required as of the date of origination in accordance with the
Underwriting Guidelines. If any portion of the Mortgaged Property is in an area
identified by any federal Governmental Authority as having special flood
hazards, and flood insurance is available, a flood insurance policy meeting the
current guidelines of the Federal Insurance Administration is in effect with a
generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (1) the outstanding principal balance of the Mortgage
Loan, (2) the full insurable value of the Mortgaged Property, and (3) the
maximum amount of insurance available under the Flood Disaster Protection Act of
1973, as amended. All such insurance policies (collectively, the "hazard
------
insurance policy") contain a standard mortgagee clause naming the Borrower, its
----------------
successors and assigns (including without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled
without 30 days' prior written notice to the mortgagee. No such notice has been
received by the Borrower. All premiums on such insurance policy have been paid.
The related Mortgage obligates the Mortgagor to maintain all such insurance and,
at such Mortgagor's failure to do so, authorizes the mortgagee to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from such Mortgagor. Where required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a "master" or "blanket" hazard insurance
policy covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer and is in full force and effect.
The Borrower has not engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or
Schedule 1-2
the validity and binding effect of either including, without limitation, no
unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney,
firm or other Person, and no such unlawful items have been received, retained or
realized by the Borrower.
(g) Compliance with Applicable Laws. Any and all requirements of any
-------------------------------
federal, state or local law including, without limitation, usury, truth-in-
lending, real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws applicable to the Mortgage Loan have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and the Borrower shall
maintain or shall cause its agent to maintain in its possession, available for
the inspection of the Lender, and shall deliver to the Lender, upon demand,
evidence of compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been
---------------------------
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Borrower has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(i) Location and Type of Mortgaged Property. The Mortgaged Property
---------------------------------------
is located in an Acceptable State as identified in the Mortgage Loan Schedule
and consists of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an individual condominium unit in
a low-rise or high-rise condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development, provided, however,
that any condominium unit or planned unit development shall conform with the
applicable FNMA and FHLMC requirements regarding such dwellings and that no
residence or dwelling is a mobile home. No portion of the Mortgaged Property is
used for commercial purposes.
(j) Valid Lien. The Mortgage is a valid, subsisting, enforceable and
----------
perfected (A) first lien and first priority interest with respect to each
Mortgage Loan which is indicated by the Borrower to be a First Lien Mortgage
Loan (as reflected on the Mortgage Loan Tape), or (B) second lien and second
priority security interest with respect to each Mortgage Loan which is indicated
by the Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Tape), in either case, on the property included in the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located
in or annexed to such buildings, and all additions, alterations and replacements
made at any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
(1) the lien of current real property taxes and assessments not yet
due and payable;
Schedule 1-3
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable to
prudent mortgage lending institutions generally and specifically referred to in
the lender's title insurance policy delivered to the originator of the Mortgage
Loan and (a) referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such appraisal;
(3) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended to be
provided by the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property;
(4) with respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage Loan
Tape) a prior mortgage lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority security interest
with respect to each Mortgage Loan which is indicated by the Borrower to be a
First Lien Mortgage Loan (as reflected on the Mortgage Loan Tape), or (B) second
lien and second priority security interest with respect to each Mortgage Loan
which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Tape), in either case, on the property described
therein and the Borrower has full right to pledge and assign the same to the
Lender.
(k) Validity of Mortgage Documents. The Mortgage Note and the
------------------------------
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken placed on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan.
The Borrower has reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
-----------------------------
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
further requirement for future advances thereunder, and any and all requirements
as to completion of any on-site or off-site improvement and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of
the Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.
Schedule 1-4
(m) Ownership. The Borrower is the sole owner and holder of the
---------
Mortgage Loan to be pledged hereunder. The Mortgage Loan is not assigned or
pledged, and the Borrower has good, indefeasible and marketable title thereto,
and has full right to transfer, pledge and assign the Mortgage Loan to the
Lender free and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and has full right and authority
subject to no interest or participation of, or agreement with, any other party,
to assign, transfer and pledge each Mortgage Loan pursuant to this Loan
Agreement and following the pledge of each Mortgage Loan, the Lender will hold
such Mortgage Loan free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest except any such
security interest created pursuant to the terms of this Loan Agreement.
(n) Doing Business. All parties which have had any interest in the
--------------
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (D) not doing business in such state.
(o) LTV. No Mortgage Loan has an LTV greater than 95%. No Second
---
Lien Mortgage Loan has a CLTV greater than 100%.
(p) Title Insurance. The Mortgage Loan is covered by either (i) an
---------------
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC and each such title insurance policy is
issued by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Borrower, its successors and assigns, as to the first (or second, if the
Mortgage Loan is a Second Lien Mortgage Loan) priority lien of the Mortgage in
the original principal amount of the Mortgage Loan (or to the extent a Mortgage
Note provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the exceptions
contained in clauses (1), (2) and (3) and, with respect to each Mortgage Loan
which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the Mortgage Loan Tape) clause (4) of paragraph (j) of this Part I
of Schedule 1, and in the case of adjustable rate Mortgage Loans, against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment to the Mortgage Interest
Rate and Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress and against encroachments by or upon
the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Borrower, its successors and assigns, are the sole insureds of such lender's
title insurance policy, and such lender's title insurance policy is valid and
remains in full force and effect and will be in force and effect upon the
consummation of the transactions
Schedule 1-5
contemplated by this Loan Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder or servicer of the related
Mortgage, including the Borrower has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy, including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have
been received, retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or event of
-----------
acceleration existing under the Mortgage or the Mortgage Note and no event has
occurred which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration, and neither the Borrower nor its predecessors have waived any
default, breach, violation or event of acceleration. With respect to each
Mortgage Loan which is indicated by the Borrower to be a Second Lien Mortgage
Loan (as reflected on the Mortgage Loan Tape) (i) the first lien is in full
force and effect, (ii) there is no default, breach, violation or event of
acceleration existing under such first lien or the related mortgage note, (iii)
no event which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration thereunder, and either (A) the first lien contains a provision
which allows or (B) applicable law requires, the mortgagee under the Second Lien
Mortgage Loan to receive notice of, and affords such mortgagee an opportunity to
cure any default by payment in full or otherwise under the first lien. For
purposes of this clause (q), a delinquent payment of less than 30 days pursuant
to a Mortgage Note or a Mortgage Loan in and of itself shall not be considered a
default, breach, violation or event of acceleration.
(r) No Mechanics' Liens. There are no mechanics' or similar liens or
-------------------
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.
(s) Location of Improvements; No Encroachments. All improvements
------------------------------------------
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.
(t) Origination; Payment Terms. The Mortgage Loan was originated by
--------------------------
or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than 60 days after funds were disbursed in connection
with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with respect to
adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to equal
the Index plus the Gross Margin, subject to the Mortgage Interest Rate Cap. The
Mortgage Note is payable on the first day of each month in equal monthly
installments of principal and interest, which installments of
Schedule 1-6
interest, with respect to adjustable rate Mortgage Loans, are subject to change
due to the adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original
term of not more than 30 years from commencement of amortization. The due date
of the first payment under the Mortgage Note is no more than 60 days from the
date of the Mortgage Note.
(u) Customary Provisions. The Mortgage Note has a stated maturity.
--------------------
The Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage.
(v) Conformance with Underwriting Guidelines and Agency Standards.
-------------------------------------------------------------
The Mortgage Loan was underwritten in accordance with the Underwriting
Guidelines. The Mortgage Note and Mortgage are on forms similar to those
used by FHLMC or FNMA and the Borrower has made no representations to a
Mortgagor that are inconsistent with the mortgage instruments used.
(w) Occupancy of the Mortgaged Property. As of the Funding Date the
-----------------------------------
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities. The Borrower has not received notification from any
Governmental Authority that the Mortgaged Property is in material non-compliance
with such laws or regulations, is being used, operated or occupied unlawfully or
has failed to have or obtain such inspection, licenses or certificates, as the
case may be. The Borrower has not received notice of any violation or failure to
conform with any such law, ordinance, regulation, standard, license or
certificate. No Mortgagor is a Mortgagor with respect to more than five Eligible
Mortgage Loans whose aggregate Collateral Value is included in the calculation
of the Borrowing Base.
(x) No Additional Collateral. The Mortgage Note is not and has not
------------------------
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above.
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
--------------
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
the Lender to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.
Schedule 1-7
(z) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered
under the Custodial Agreement for each Mortgage Loan have been delivered to the
Custodian. The Borrower or its agent is in possession of a complete, true and
accurate Mortgage File in compliance with the Custodial Agreement, except for
such documents the originals of which have been delivered to the Custodian.
(aa) Transfer of Eligible Mortgage Loans. The Assignment of Mortgage
-----------------------------------
is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(bb) Due-On-Sale. The Mortgage contains an enforceable provision for
-----------
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(cc) No Buydown Provisions; No Graduated Payments or Contingent
----------------------------------------------------------
Interests. The Mortgage Loan does not contain provisions pursuant to which
---------
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Borrower, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(dd) Consolidation of Future Advances. Any future advances made to
--------------------------------
the Mortgagor prior to the Funding Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
With respect to each Mortgage Loan, the lien of the Mortgage securing the
consolidated principal amount is expressly insured as having (A) first lien
priority with respect to each Mortgage Loan which is indicated by the Borrower
to be a First Lien Mortgage Loan (as reflected on the Mortgage Loan Tape), or
(B) second lien priority with respect to each Mortgage Loan which is indicated
by the Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage
Loan Tape), in either case, by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to FNMA and FHLMC. The consolidated principal amount does not exceed
the original principal amount of the Mortgage Loan.
(ee) Mortgaged Property Undamaged. The Mortgaged Property is
----------------------------
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair. There have not been
any condemnation proceedings with respect to the Mortgaged Property and the
Borrower has no knowledge of any such proceedings.
(ff) Collection Practices; Escrow Deposits; Interest Rate Adjustments.
----------------------------------------------------------------
The origination and collection practices used by the originator, each servicer
of the Mortgage Loan and the Borrower with respect to the Mortgage Loan have
been in all respects in compliance with
Schedule 1-8
Accepted Servicing Practices, applicable laws and regulations, and have been in
all respects legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of, or under the control of,
the Borrower and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law. An
escrow of funds is not prohibited by applicable law and has been established in
an amount sufficient to pay for every item that remains unpaid and has been
assessed but is not yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due the Borrower have been capitalized under the
Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments have been
made in strict compliance with state and federal law and the terms of the
related Mortgage Note. Any interest required to be paid pursuant to state,
federal and local law has been properly paid and credited.
(gg) Other Insurance Policies. No action, inaction or event has
------------------------
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy or bankruptcy bond, irrespective of
the cause of such failure of coverage. In connection with the placement of any
such insurance, no commission, fee, or other compensation has been or will be
received by the Borrower or by any officer, director, or employee of the
Borrower or any designee of the Borrower or any corporation in which the
Borrower or any officer, director, or employee had a financial interest at the
time of placement of such insurance.
(hh) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
---------------------------------------
notified the Borrower of, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(ii) Appraisal. The Mortgage File contains an appraisal of the
---------
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser who had no interest, direct or indirect in
the Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the requirements of FNMA or
FHLMC and Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 as amended and the regulations promulgated thereunder,
all as in effect on the date the Mortgage Loan was originated.
(jj) Construction or Rehabilitation of Mortgaged Property. No
----------------------------------------------------
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(kk) No Defense to Insurance Coverage. No action has been taken or
--------------------------------
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of the Borrower, the
related Mortgagor or any party involved in
Schedule 1-9
the application for such coverage, including the appraisal, plans and
specifications and other exhibits or documents submitted therewith to the
insurer under such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay by reason of such
insurer's breach of such insurance policy or such insurer's financial inability
to pay.
(ll) Capitalization of Interest. The Mortgage Note does not by its
--------------------------
terms provide for the capitalization or forbearance of interest. None of the
Mortgage Loans provides for Negative Amortization.
(mm) No Equity Participation. No document relating to the Mortgage
-----------------------
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed, nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(nn) No Exception. The Custodian has not noted any material
------------
exceptions on an Exception Report (as defined in the Custodial Agreement) with
respect to the Mortgage Loan which would materially adversely affect the
Mortgage Loan or the Lender's security interest, granted by the Borrower in the
Mortgage Loan.
(oo) Qualified Originator. The Mortgage Loan has been originated by,
--------------------
and, if applicable, purchased by the Borrower from, a Qualified Originator.
(pp) Mortgage Submitted for Recordation. The Mortgage either has been
----------------------------------
or will promptly be submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is located.
(qq) Disclosure Materials. The Mortgagor has executed a statement to
--------------------
the effect that the Mortgagor has received all disclosure materials required by
and the Qualified Originator has complied with all applicable law with respect
to the making of the Mortgage Loans. The Borrower shall maintain such statement
in the Mortgage File.
(rr) Section 32 Loans. The related Mortgagor has been provided with
----------------
all disclosure materials required by Section 226.32 of the Federal Reserve Board
Regulation Z with respect to any Mortgage Loans subject to such Section of the
Federal Reserve Board Regulation Z.
(ss) Texas Home Equity Loans. With respect to any Mortgage Loan which
-----------------------
is a Texas Home Equity Loan, any and all requirements of Section 50, Article XVI
of the Texas Constitution applicable to Texas Home Equity Loans which were in
effect at the time of the origination of the Mortgage Loan have been complied
with.
(tt) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan that
----------------------
is a Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing
by the Borrower to hold the related Mortgage Loan Documents as agent and bailee
for the Lender or the Lender's agent and to promptly forward such Mortgage Loan
Documents in accordance with the provisions of the Custodial Agreement and the
Escrow Instruction Letter.
Schedule 1-10
Notwithstanding the representations and warranties set forth in paragraphs (u)
(x) or (mm) hereof, a Mortgage Loan (a) which is an interest only Mortgage Loan,
or (b) is a Negative Amortization Mortgage Loan may be considered an Eligible
Mortgage Loan if (i) the Borrower has received the prior written consent of the
Lender with respect to the inclusion of such Mortgage Loan, and (ii) the related
Mortgage Loan Schedule identifies such Mortgage Loan as being an interest only
Mortgage Loan or a Negative Amortization Mortgage Loan.
Schedule 1-11
SCHEDULE 2
----------
PART I. REPRESENTATIONS AND WARRANTIES FOR ELIGIBLE SECURITIES
As to each Eligible Security included in the Borrowing Base on a
Funding Date, the Borrower who intends to pledge such Eligible Security to the
Lender pursuant to the Loan Agreement shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Value is determined (certain defined terms used herein and not
otherwise defined in the Loan Agreement appearing in Part II to this Schedule
2).
(a) Validity of Governing Agreement. Each of the Governing
-------------------------------
Agreements and any other agreement executed and delivered in connection with an
Eligible Security is genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. The
parties to each Governing Agreement had legal capacity to enter into such
Governing Agreement and any such agreement, and such Governing Agreement and any
such other related agreement thereto have been duly and properly executed by the
parties thereto. Each Governing Agreement constitutes a legal, valid, binding
and enforceable obligation of the parties thereto. Each Governing Agreement is
in full force and effect, and the enforceability of the Governing Agreement has
not been contested by the parties thereto.
(b) Original Terms Unmodified. The terms of each Governing Agreement
-------------------------
and the related Eligible Security have not been impaired, altered or modified in
any respect.
(c) No Waiver. The Borrower has not waived the performance by the
---------
parties thereto of any action, if the failure to perform such action would cause
the Governing Agreements to be in default, nor has the Borrower waived any
default resulting from any action or inaction by the parties thereto.
(d) No Defaults. There is no default, breach, violation or event of
-----------
acceleration existing under any Governing Agreement and no event has occurred
which, with the passage of time or giving of notice or both and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration thereunder, and neither the Borrower nor its predecessors
in interest have waived any such default, breach, violation or event of
acceleration.
(e) Delivery of Governing Agreement. The Governing Agreements for
-------------------------------
the related Eligible Security have been or shall be delivered to the Lender at
least 5 Business Days prior to each Funding Date.
(f) Eligible Securities Assignable. Each Eligible Security is
------------------------------
assignable to the Lender and to the Lender's successors and assigns. The
Governing Agreements permit NCCC to sell, assign, pledge, transfer or
rehypothecate the Eligible Security.
(g) Ownership. Each Eligible Security is owned by NCCC free from all
---------
Liens.
Schedule 2-1
PART II. DEFINED TERMS
In addition to terms defined elsewhere in the Loan Agreement, the
following terms shall have the following meanings when used in Schedule 1 and
Schedule 2:
"Acceptable State" shall mean any state notified by the Borrowers to
----------------
the Lender from time to time and approved in writing by the Lender, which
approval has not been revoked by the Lender in their sole discretion, any such
notice of revocation to be given no later than 10 Business Days prior to its
intended effective date.
"Accepted Servicing Practices" shall mean, with respect to any
----------------------------
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"ALTA" means the American Land Title Association.
----
"Appraised Value" shall mean the value set forth in an appraisal made
---------------
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Best's" means Best's Key Rating Guide, as the same shall be amended
------
from time to time.
"Combined LTV" or "CLTV" shall mean with respect to any Mortgage Loan
------------ ----
that is a Second Lien Mortgage Loan, the ratio of (a) the outstanding principal
balance on the date of origination of (i) the Mortgage Loan constituting the
first lien plus (ii) the Mortgage Loan constituting the second lien to (b) the
lesser of (i) the Appraised Value of the Mortgaged Property and (ii) if the
Mortgaged Property was purchased within 6 months of the origination of the
Mortgage Loan, the purchase price of the Mortgaged Property.
"Cut-off Date" means the first day of the month in which the related
------------
Funding Date occurs.
"Due Date" means the day of the month on which the Monthly Payment is
--------
due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" means with respect to any Mortgage Loan, the amounts
---------------
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
-----
successor thereto.
Schedule 2-2
"First Lien Mortgage Loan" shall mean a Mortgage Loan secured by the
------------------------
lien on the related Mortgaged Property, subject to no prior liens on such
Mortgaged Property.
"FNMA" means the Federal National Mortgage Association, or any
----
successor thereto.
"Gross Margin" means with respect to each adjustable rate Mortgage
------------
Loan, the fixed percentage amount set forth in the related Mortgage Note.
"Index" means with respect to each adjustable rate Mortgage Loan, the
-----
index set forth in the related Mortgage Note for the purpose of calculating the
interest rate thereon.
"Insurance Proceeds" means with respect to each Mortgage Loan,
------------------
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means with respect to each adjustable
-----------------------------
rate Mortgage Loan, the date, specified in the related Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
------------------- ---
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 6 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Monthly Payment" means the scheduled monthly payment of principal and
---------------
interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.
"Mortgage Interest Rate" means the annual rate of interest borne on a
----------------------
Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable rate
--------------------------
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
"Mortgagee" means the related Borrower or any subsequent holder of a
---------
Mortgage Loan.
"Negative Amortization" means a gradual increase in the mortgage debt
---------------------
that occurs when the monthly fixed installment is not sufficient for full
application to both principal and interest. The interest shortage is added to
the unpaid principal balance to create "negative" amortization.
"Origination Date" shall mean, with respect to each Mortgage Loan, the
----------------
date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Borrowers with respect to such Mortgage Loan,
in which case the Origination Date shall be
Schedule 2-3
deemed to be the date that is 40 days prior to the date of the first payment
under the Mortgage Note relating to such Mortgage Loan.
"Qualified Insurer" means an insurance company duly qualified as such
-----------------
under the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by Best's with respect to hazard and flood insurance.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
-------------------------
secured by a lien on the Mortgaged Property, subject to one prior lien on such
Mortgaged Property.
"Servicing File" means with respect to each Mortgage Loan, the file
--------------
retained by the related Servicer consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of the Mortgage
Loan Documents set forth in Section 2 of the Custodial Agreement.
"Texas Home Equity Loan" means an extension of credit described by
----------------------
Section 50(a)(6), Article XVI of the Texas Constitution.
Schedule 2-4
SCHEDULE 3
----------
FILING JURISDICTIONS AND OFFICES
Secretary of State of Minnesota
Secretary of State of California
Schedule 3-1
SCHEDULE 4
----------
Option Breakage Fee Collateral Value and Applicable Margin
"Collateral Value" shall mean (1) with respect to all Eligible
----------------
Mortgage Loans (other than Wet-Ink Mortgage Loans) with respect to the initial
Funding Date with respect thereto, the lesser of (i) 100% of the Market Value of
such Eligible Mortgage Loan and (ii) 100% of the unpaid principal balance of
such Eligible Mortgage Loan, and thereafter, the lesser of (i) 98% of the Market
Value of such Eligible Mortgage Loans; provided that the Collateral Value with
respect to any Eligible Mortgage Loan in respect of which there is a delinquency
in the payment of principal and/or interest which continues for a period in
excess of 59 days (without regard to any applicable grace periods) shall equal
the 85% of the Market Value of such Mortgage Loan or (ii) 100% of the unpaid
principal balance of such Eligible Mortgage Loans, (2) with respect to Wet-Ink
Mortgage Loans, the lesser of (i) 96% of Market Value and (ii) 98% of current
unpaid principal balance of such Wet-Ink Mortgage Loans and (3) with respect to
Eligible Securities, 50% of Market Value of such Eligible Securities provided
that such percentage shall be (i) reduced to 40% of Market Value on any Eligible
Security pledged for more than 6 months and (ii) reduced a further 1.5% of
Market Value each month thereafter that such Eligible Security continues to be
pledged, provided, that, the following additional limitations on Collateral
Value apply:
(i) the aggregate Collateral Value of Eligible Mortgage Loans that
are Delinquent Mortgage Loans may not exceed $15,000,000;
(ii) the aggregate Collateral Value of Eligible Securities may not
exceed $30,000,000;
(iii) the aggregate Collateral Value of Eligible Mortgage Loans that
are Wet-Ink Mortgage Loans may not exceed $30,000,000;
(iv) the Collateral Value shall be deemed to be zero with respect to
each Eligible Mortgage Loan or with respect to each Eligible Security, as
applicable (1) in respect of which there is a breach of a representation
and warranty set forth on Schedule 1 or Schedule 2 (assuming each
representation and warranty is made as of the date Collateral Value is
determined), as applicable, (2) in respect of which there is a delinquency
in the payment of principal and/or interest which continues for a period in
excess of 89 days (without regard to any applicable grace periods), (3)
which has been released from the possession of the Custodian under the
Custodial Agreement to the Borrower for a period in excess of 14 days, or
(4) which exceed the limitations on Collateral Value set forth in (i)
through (iii) above;
(v) the Collateral Value shall be deemed to be zero with respect to
each Eligible Mortgage Loan which (1) is a Wet-Ink Mortgage Loan for which
the Custodian has failed to receive the related Mortgage Loan Documents by
the seventh (7th) Business Day following the applicable Funding Date and
(2) is both a Wet-Ink Mortgage Loan and a Borrower Refinanced Loan for
which the Custodian has failed to receive
Schedule 3-1
facsimile copies of the Mortgage, Mortgage Note, and Assignment of Mortgage
by the first (1st) Business Day following the applicable Funding Date; and
(vi) the Collateral Value shall be deemed to be zero with respect to
each Eligible Mortgage Loan which remains pledged to the Lender hereunder
for more than 180 days after the first Funding Date therefor.
"Applicable Margin" shall mean with respect to (i) Eligible Mortgage
-----------------
Loans (other than Wet-Ink Mortgage Loans), 1.25%, (2) Wet-Ink Mortgage Loans,
1.50% and (3) Eligible Securities 3.00%.
Schedule 2-2
EXHIBIT A
---------
FORM OF PROMISSORY NOTE
$300,000,000 July 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, NEW CENTURY MORTGAGE CORPORATION, AND NC CAPITAL
CORPORATION, (the "Borrowers"), hereby promise to pay, jointly and severally, to
---------
the order of ▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC. (the "Lender"), at the
------
principal office of the Lender at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, in lawful money of the United States, and in immediately available
funds, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) (or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Loans made by the Lender to the Borrowers under the Loan Agreement), on the
dates and in the principal amounts provided in the Loan Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Loan Agreement.
The date, amount and interest rate of each Loan made by the Lender to
the Borrowers, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
--------
or endorsement shall not affect the obligations of the Borrowers to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of _______________, 1999 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Loan Agreement")
--------------
between each of the Borrowers and the Lender, and evidences Loans made by the
Lender thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Loan Agreement.
The Borrowers agree to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, each of the Borrowers
hereby acknowledges, admits and agrees that the Borrowers' obligations under
this Note are recourse obligations of each of the Borrowers to which each of the
Borrowers pledges its full faith and credit.
Each of the Borrowers, and any indorsers or guarantors hereof, (a)
severally waives diligence, presentment, protest and demand and also notice of
protest, demand, dishonor and nonpayments of this Note, (b) expressly agrees
that this Note, or any payment hereunder, may be extended from time to time, and
consent to the acceptance of further Collateral, the
A-1
release of any Collateral for this Note, the release of any party primarily or
secondarily liable hereon, and (c) expressly agrees that it will not be
necessary for the Lender, in order to enforce payment of this Note, to first
institute or exhaust the Lender's remedies against the Borrowers or any other
party liable hereon or against any Collateral for this Note. No extension of
time for the payment of this Note, or any installment hereof, made by agreement
by the Lender with any person now or hereafter liable for the payment of this
Note, shall affect the liability under this Note of the Borrowers, even if the
Borrowers are not a party to such agreement; provided, however, that the Lender
-------- -------
and each of the Borrowers, by written agreement between them, may affect the
liability of the Borrowers.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
This Note shall be governed by and construed under the laws of the
State of New York (without reference to choice of law doctrine) whose laws each
of the Borrowers expressly elects to apply to this Note. Each of the Borrowers
agrees that any action or proceeding brought to enforce or arising out of this
Note may be commenced in the Supreme Court of the State of New York, Borough of
Manhattan, or in the District Court of the United States for the Southern
District of New York.
NEW CENTURY MORTGAGE CORPORATION
By ________________________________________
Name:
Title:
NC CAPITAL CORPORATION
By ________________________________________
Name:
Title:
A-2
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrowers, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
-------------------------------------------------------------------------------------------------------------
DATE MADE PRINCIPAL AMOUNT INTEREST AMOUNT PAID OR UNPAID PRINCIPAL AMOUNT NOTATION
OF LOAN RATE PREPAID MADE BY
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
A-3
EXHIBIT B
---------
FORM OF CUSTODIAL AGREEMENT
B-1
EXHIBIT C
---------
FORM OF OPINION OF COUNSEL TO BORROWERS
(date)
▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to [New Century
Mortgage Corporation and NC Capital Corporation], [each] a California
corporation (the "Borrowers"), with respect to certain matters in connection
---------
with that certain Master Loan and Security Agreement, dated _______________ (the
"Loan and Security Agreement"), by and between the Borrowers and ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Real Estate Securities Inc. (the "Lender"), being executed contemporaneously
------
with a Promissory Note dated ___________, 199___ from the Borrowers to the
Lender (the "Note"), a Custodial Agreement, dated as of _______________ (the
----
"Custodial Agreement"), by and among the Borrowers, U.S. Bank National
-------------------
Association (the "Custodian"), and the Lender. Capitalized terms not otherwise
---------
defined herein have the meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. Custodial Agreement;
4. unfiled copies of the financing statements listed on Schedule 1
(collectively, the "Financing Statements") naming the Borrowers as Debtors and
--------------------
the Lender as Secured Party and describing the Collateral (as defined in the
Loan and Security Agreement) as to which security interests may be perfected by
filing under the Uniform Commercial Code of the States listed on Schedule 1 (the
----------
"Filing Collateral"), which I understand will be filed in the filing offices
-----------------
listed on Schedule 1 (the "Filing Offices");
---------- --------------
5. the reports listed on Schedule 2 as to UCC financing statements
----------
(collectively, the "UCC Search Report"); and
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Borrowers contained in the
Loan and Security
C-1
Agreement. [We] [I] have assumed the authenticity of all documents submitted to
me as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. [Each of] the Borrower[s] is a California corporation duly
organized, validly existing and in good standing under the laws of California
and is qualified to transact business in, and is in good standing under, the
laws of the state of California.
2. [Each of] the Borrower[s] has the corporate power to engage in the
transactions contemplated by the Loan and Security Agreement, the Note, and the
Custodial Agreement and all requisite corporate power, authority and legal right
to execute and deliver the Loan and Security Agreement, the Note, and the
Custodial Agreement and observe the terms and conditions of such instruments.
[Each of] the Borrower[s] has all requisite corporate power to borrow under the
Loan and Security Agreement and to grant a security interest in the Collateral
pursuant to the Loan and Security Agreement.
3. The execution, delivery and performance by [each of] the
Borrower[s] of the Loan and Security Agreement, the Note, and the Custodial
Agreement, and the borrowings by the Borrower[s] and the pledge of the
Collateral under the Loan and Security Agreement have been duly authorized by
all necessary corporate action on the part of such Borrower. Each of the Loan
and Security Agreement, the Note and the Custodial Agreement have been executed
and delivered by each of the Borrower[s] and are legal, valid and binding
agreements, enforceable in accordance with their respective terms against such
Borrower, subject to bankruptcy laws and other similar laws of general
application affecting rights of creditors and subject to the application of the
rules of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization of the
benefits provided thereunder or with the Lender's security interest in the
Collateral.
4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of [any of] the Borrower[s] for the execution, delivery or
performance by such Borrower of the Loan and Security Agreement, the Note and
the Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral pursuant to the Loan and Security Agreement.
5. The execution, delivery and performance by [each of] the
Borrower[s] of, and the consummation of the transactions contemplated by, the
Loan and Security Agreement, the Note and the Custodial Agreement do not and
will not (a) violate any provision of such Borrower's charter or by-laws, (b)
violate any applicable law, rule or regulation, (c) violate any order, writ,
injunction or decree of any court or governmental authority or agency or any
arbitral award applicable to such Borrower of which I have knowledge (after due
inquiry) or (d) result in a breach of, constitute a default under, require any
consent under, or result in the acceleration or required prepayment of any
indebtedness pursuant to the terms of, any agreement or instrument of which I
have knowledge (after due inquiry) to which such Borrower is a party or by which
it is bound or to which it is subject, or (except for the Liens created pursuant
to the Loan and
C-2
Security Agreement) result in the creation or imposition of any Lien upon any
Property of such Borrower pursuant to the terms of any such agreement or
instrument.
6. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against [any of] the Borrower[s]
which, in [our] [my] judgment, either in any one instance or in the aggregate,
would be reasonably likely to result in any material adverse change in the
properties, business or financial condition, or prospects of such Borrower or in
any material impairment of the right or ability of such Borrower to carry on its
business substantially as now conducted or in any material liability on the part
of such Borrower or which would draw into question the validity of the Loan and
Security Agreement, the Note, the Custodial Agreement, the Eligible Mortgage
Loans, the Eligible Securities or any Governing Agreement or of any action taken
or to be taken in connection with the transactions contemplated thereby, or
which would be reasonably likely to impair materially the ability of such
Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Custodial Agreement, the Eligible Mortgage Loans, the Eligible
Securities or any Governing Agreement.
7. The Loan and Security Agreement is effective to create, in favor
of the Lender, a valid security interest under the Uniform Commercial Code in
all of the right, title and interest of each of the Borrower[s] in, to and under
the Collateral as collateral security for the payment of the Secured Obligations
(as defined in the Loan and Security Agreement), except that (a) such security
interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, (b) the security interests in Collateral in which [each of] the
Borrower[s] acquires rights after the commencement of a case under the
Bankruptcy Code in respect of such Borrower may be limited by Section 552 of the
Bankruptcy Code.
8. With respect to that portion of the Collateral consisting of
Eligible Securities, the security interest of the Lender will be a perfected,
first-priority security interest, and a "security entitlement" (as defined in
Section 8-102(a)(17) of the UCC) with respect to the Eligible Securities will be
created in favor of the Lender, upon (i) the registration of the Eligible
Securities by the issuer thereof in the name of the Lender, (ii) delivery of the
certificates representing the Eligible Securities to the Lender, registered in
the name of the Lender or duly endorsed to the Lender or in blank, or (iii) the
making by [_______], in its capacity as a "securities intermediary" (as defined
in Section 8-102(a) of the UCC) of appropriate and accurate entries in its
records to indicate the credit of a "security entitlement" (as defined in
Section 8-501(a) of the UCC) to the Eligible Securities to the "securities
account" of the Lender. Such "security entitlement" will be subject to no prior
interest.
9. (a) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower[s] as "Debtor[s]", and describing
the filing Collateral, in the jurisdictions and recording offices listed on
Schedule 1 attached hereto, the security interests referred to in paragraph 7
above will constitute fully perfected security interests under the Uniform
Commercial Code in all right, title and interest of [each of] the Borrower[s]
in, to and under the filing Collateral.
C-3
(b) The UCC Search Report sets forth the proper filing offices and
the proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Filing
----------
Collateral as of the dates and times specified on Schedule 2. The UCC Search
----------
Report identifies no Person who has filed in any Filing Office a financing
statement describing the Filing Collateral prior to the effective dates of the
UCC Search Report.
10. The Assignments of Mortgage are in recordable form, except for
the insertion of the name of the assignee, and upon the name of the assignee
being inserted, are acceptable for recording under the laws of the state where
each related Mortgaged Property is located.
Very truly yours,
C-4
EXHIBIT D
---------
FORM OF NOTICE OF REQUEST FOR BORROWING AND PLEDGE
Master Loan and Security Agreement, dated as of ______________________
(the "Loan and Security Agreement"), by and between the Borrowers and ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ Real Estate Securities Inc. (the "Lender"),
------
Lender: ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.
Borrowers: New Century Mortgage Corporation, and NC
Capital Corporation
Requested Funding Date:
Number of Eligible
Mortgage Loans to be
Pledged:
Original UPB: $
Current UPB: $
Number of Eligible Securities
to be Pledged: _________________________________
UPB: $
Number of Other Mortgage
Assets to be Pledged: _________________________________
UPB: $
Requested Wire Amount: $
Requested Maturity Date:
Applicable Margin for
Eligible Mortgage Loans
(other than Wet-Ink Mortgage
Loans): __________ basis points (_____%)
Applicable Margin for Wet-Ink
Mortgage Loans: __________ basis points (_____%)
Applicable Margin for
Eligible Securities: __________ basis points (_____%)
Wire Instructions:
[I] hereby certify as an [Officer of New Century Mortgage Corporation] [NC
Capital Corporation] that the following conditions are true and accurate:
D-1
1. No Default or Event of Default has occurred and is continuing on the
date hereof nor will occur after giving effect to such Loan as a
result of such Loan.
2. Each of the representations and warranties made by the Borrowers in or
pursuant to the Loan Documents is true and correct in all material
respects on and as of such date (in the case of the representations
and warranties in respect of Eligible Mortgage Loans or Eligible
Securities, solely with respect to Eligible Mortgage Loans or Eligible
Securities being included the Borrowing Base on the Funding Date) as
if made on and as of the date hereof (or, if any such representation
or warranty is expressly stated to have been made as of a specific
date, as of such specific date).
3. The Borrower[s] [is] [are] in compliance with all governmental
licenses and authorizations and is qualified to do business and is in
good standing in all required jurisdictions.
All Capitalized terms used herein shall have the meanings set forth in that
certain Master Loan and Security Agreement, dated as of ________________,
between the Borrowers and the Lender.
Requested and certified to by:
[New Century Mortgage Corporation] [NC Capital Corporation]
By:________________________________
Name:
Title:
ACCEPTED AND AGREED:
--------------------
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE
SECURITIES INC.
By _______________________
Name:
Title:
Date: ____________________
D-2
SCHEDULE OF
ASSETS TO BE PLEDGED
D-3
EXHIBIT E-1
-----------
FORM OF BORROWERS' RELEASE LETTER
[Date]
▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Master Loan and Security Agreement, dated as of _____________
(the "Loan and Security Agreement"), by and between New Century
---------------------------
Mortgage Corporation, NC Capital Corporation (the "Borrowers")
---------
and ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc. (the "Lender")
------
Ladies and Gentlemen:
With respect to the mortgage loans described in the attached Schedule
--------
A (the "Eligible Mortgage Loans") (a) we hereby certify to you that the Eligible
- -----------------------
Mortgage Loans are not subject to a lien of any third party and (b) we hereby
release all right, interest or claim of any kind with respect to such Eligible
Mortgage Loans, such release to be effective automatically without further
action by any party upon payment from ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.,
of the amount of the Loan contemplated under the Loan and Security Agreement
(calculated in accordance with the terms thereof) in accordance with the wiring
instructions set forth in the Loan and Security Agreement.
Very truly yours,
NEW CENTURY MORTGAGE CORPORATION
By:_____________________________________
Name:
Title:
NC CAPITAL CORPORATION
By:_____________________________________
Name:
Title:
E-1-1
EXHIBIT E-2
-----------
FORM OF WAREHOUSE LENDER'S RELEASE LETTER
(Date)
▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Certain Eligible Mortgage Loans Identified on Schedule A hereto
----------
and owned by [New Century Mortgage Corporation] [NC Capital
Corporation]
The undersigned hereby releases all right, interest, lien or claim of
any kind with respect to the mortgage loan(s) described in the attached Schedule
--------
A, such release to be effective automatically without any further action by any
-
party upon payment in one or more installments, in immediately available funds
of $__________________, in accordance with the following wire instructions:
____________________
____________________
Very truly yours,
[WAREHOUSE LENDER]
By:___________________________
Name:_________________________
Title:________________________
E-2-1
EXHIBIT F
---------
FORM OF BLOCKED ACCOUNT AGREEMENT
July 20, 1999
New Century Mortgage Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
U.S. National Bank Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇ ▇▇▇▇▇▇▇
Re: Collection Account Established by New Century Mortgage
Corporation (in such capacity, the "Servicer") at U.S. Bank
--------
National Association (the "Bank") Pursuant to that Certain
----
Servicing Agreement (as amended, supplemented or otherwise
modified from time to time, the "Servicing Agreement"), dated
-------------------
December 1, 1998, between Servicer and NC Capital Corporation
(together with the Servicer, the "Borrowers")
---------
Ladies and Gentlemen:
We hereby notify the Bank that we have collaterally assigned ownership
and exclusive control of and all right, title and interest in and to our demand
deposit account number 1047-5623-4282 ABA# ▇▇▇▇▇▇▇▇▇ maintained with you (the
"Collection Account"), and all funds from time to time credited to such account,
------------------
to ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, att: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Lender"), and agree with
------
you as follows:
The Servicer will, from time to time, deposit funds received in
accordance with the Servicing Agreement into the Collection Account. ▇▇▇▇▇
▇▇▇▇▇▇ Real Estate Securities Inc. (the "Lender") has established a secured
------
loan arrangement with us. By our execution of this letter, we acknowledge that
we have granted a security interest in all of our right, title and
F-1
interest in and to the Collection Account and any funds from time to time on
deposit therein, that such funds are received by the Servicer in trust for the
benefit of Lender and, except as provided below, are for application against the
our liabilities to Lender.
The Collection Account shall be under the exclusive dominion and
control of the Lender. Neither we nor any other Person claiming on behalf of or
through us shall have any right or authority, whether express or implied, to
close or make use of, or withdraw any funds from, the Collection Account, except
as expressly provided herein.
The Lender shall be irrevocably entitled (until the Lender shall
notify you to the contrary) to exercise any and all rights (without notice to us
or further consent by us) in respect of or in connection with the Collection
Account including, without limitation, the right to prevent us from withdrawing
funds from the Collection Account, to specify when transfers of funds are to be
made out of or in connection with the Collection Account and to make withdrawals
of funds therefrom. If the Lender shall at any time instruct you to make
transfers of funds from the Collection Account directly to the Lender, such
transfers shall be made to such account as the Lender shall specify.
At the request of the Lender, you shall provide to the Lender a report
of all amounts credited to the Collection Account not later than the close of
business on any business day.
All fees, expenses and other charges arising out of or in connection
with the Collection Account shall remain our obligation; provided that the
--------
Lender shall be notified by you of any default in our payment of such obligation
and the Lender shall be entitled to cure any such default within a reasonable
period of time after its receipt of such notice.
In the event that any provision of any instrument, certificate or
other document delivered in connection with the Collection Account shall be
inconsistent with any provision of this letter agreement, the provisions of this
letter agreement shall govern.
You hereby waive any right that you may now or hereafter have to
security interests, bank's or other possessory liens, rights to offset or other
claims against the funds in the Collection Account. You agree to hold the funds
in the Collection Account as the bailee and custodian for the benefit of the
Lender, to indicate on your records the assignment of the funds in the
Collection Account in favor of the Lender and to provide the Lender, at the
request of the Lender, with information concerning the amounts on deposit in the
Collection Account. You agree not to pay to us all or any part of the funds in
the Collection Account or any income, distributions, profits or proceeds of the
funds in the Collection Account without the prior written consent of the Lender.
Notwithstanding anything contained herein to the contrary, we agree
and the Lender agrees that you shall be entitled to be reimbursed from funds in
the Collection Account for your fees related to your services in connection with
the Collection Account and for amounts in respect of returned and otherwise
uncollected items previously credited to the Collection Account.
F-2
By the Bank's execution of this letter, it agrees and acknowledges
that this letter constitutes notice pursuant to Section 9302 of the California
Commercial Code of the Lender's security interest in the Collection Account and
such notice is intended to satisfy the requirements of such section. The Bank
further acknowledges that (a) it has not received notice from any other party
(each a "Third Party") of a Third Party's interest in the Collection Account and
-----------
(b) it shall deliver prompt written notice to the Lender of its receipt of any
notice from any Third Party of such Third Party's interest in the Collection
Account.
By the Servicer's execution of this letter, it agrees: (a) that all
funds from time to time hereafter in the Collection Account are the property of
the Borrowers held in trust for the benefit of the Lender and that unless and
until the Servicer receives notice from the Lender that an event of default has
occurred and is continuing under the Lender's secured lending arrangement with
the Borrowers (a "Notice of Event of Default"), the Servicer shall transfer
--------------------------
funds from the Collection Account in accordance with the instructions of the
Borrowers; (b) that Servicer will not exercise any right of set-off, banker's
lien or any similar right in connection with such funds provided, that in the
--------
event any check is returned to the Servicer because of insufficient funds (or is
otherwise unpaid) the Servicer shall be entitled to set off the amount of any
such returned check; (c) that until the Servicer receives written notification
from the Lender to the contrary, the Servicer will not withdraw (other than as
expressly set forth in the Servicing Agreement or herein) or permit any person
or entity to withdraw or transfer funds from the Collection Account; and (d)
that if the Servicer receives a Notice of Event of Default from the Lender, the
Servicer shall not withdraw or permit NC Capital Corporation to withdraw or
transfer funds from the Collection Account and shall cause or permit withdrawals
from the Collection Account only in the manner as the Lender may instruct.
By its acknowledgment and acceptance of this letter agreement, the
Lender hereby instructs the Bank, until such instruction is rescinded by the
Lender or superseded by a different instruction from the Lender, that we shall
have the right to withdraw collected amounts then standing to the credit of the
Collection Account from time to time.
All bank statements in respect to the Collection Account shall be sent
to the Borrowers with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
[SIGNATURE PAGE FOLLOWS]
F-3
Please acknowledge your agreement to the terms of the foregoing by
signing in the space provided below on three copies hereof sent herewith, and
returning a one such signed copy to the undersigned and two such signed copies
to the Lender.
Very truly yours,
NEW CENTURY MORTGAGE CORPORATION
as Borrower
By______________________________________
Name:
Title:
NC CAPITAL CORPORATION
as Borrower
By______________________________________
Name:
Title:
[Signatures Continue on Next Page]
F-4
Agreed and Acknowledged:
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC.
By_________________________
Name:
Title:
[SERVICER]
as Servicer
By_________________________
Name:
Title:
[BANK]
as Bank
By_________________________
Name:
Title:
F-5
EXHIBIT G
---------
FORM OF SERVICER NOTICE
__________ __, 199__
[SERVICER], as Servicer
[ADDRESS]
Attention: ___________
Re: Master Loan and Security Agreement, dated as of ________________
(the "Loan and Security Agreement"), by and between New Century
---------------------------
Mortgage Corporation, NC Capital Corporation (the "Borrowers")
---------
and ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc. (the "Lender")
------
Ladies and Gentlemen:
[SERVICER] (the "Servicer") is servicing certain mortgage loans for
--------
the Borrowers pursuant to certain Servicing Agreements between the Servicer and
the Borrowers. Pursuant to the Loan Agreement between the Lender and the
Borrowers, the Servicer is hereby notified that the Borrowers have pledged to
the Lender certain mortgage loans which are serviced by Servicer which are
subject to a security interest in favor of the Lender.
Upon receipt of a Notice of Event of Default from the Lender in which
the Lender shall identify the mortgage loans which are then pledged to Lender
under the Loan Agreement (the "Eligible Mortgage Loans"), the Servicer shall
-----------------------
segregate all amounts collected on account of such Eligible Mortgage Loans, hold
them in trust for the sole and exclusive benefit of the Lender, and remit such
collections in accordance with the Lender's written instructions. Following
such Notice of Event of Default, Servicer shall follow the instructions of
Lender with respect to the Eligible Mortgage Loans, and shall deliver to Lender
any information with respect to the Eligible Mortgage Loans reasonably requested
by Lender.
Notwithstanding any contrary information which may be delivered to the
Servicer by the Borrowers, the Servicer may conclusively rely on any information
or Notice of Event of Default delivered by the Lender, and the Borrowers,
jointly and severally, shall indemnify and hold the Servicer harmless for any
and all claims asserted against it for any actions taken in good faith by the
Servicer in connection with the delivery of such information or Notice of Event
of Default.
Please acknowledge receipt of this instruction letter by signing in
the signature block below and forwarding an executed copy to the Lender promptly
upon receipt. Any notices to the Lender should be delivered to the following
address: ________________________; Attention: ________________________, with a
copy to ______________________; Telephone: _______________; Facsimile:
_______________.
G-1
Very truly yours,
NEW CENTURY MORTGAGE CORPORATION
By:_____________________________________
Name:
Title:
NC CAPITAL CORPORATION
By _____________________________________
Name:
Title:
ACKNOWLEDGED:
_____________________________, as Servicer
By:_____________
Name:
Title:
Telephone:
Facsimile:
G-2
EXHIBIT H
---------
FORM OF INSTRUCTION LETTER
__________ __, 1999
____________________, as Trustee
____________________
____________________
Attention: _______________
Re: Master Loan and Security Agreement, dated as of _______________
(the "Loan and Security Agreement"), by and between New Century
---------------------------
Mortgage Corporation, NC Capital Corporation, (the "Borrowers")
---------
and ▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc. (the "Lender")
------
Ladies and Gentlemen:
Pursuant to the Master Loan and Security Agreement, dated as of
__________ (the "Loan and Security Agreement"), between the Lender and the
---------------------------
Borrowers, you are hereby notified that: (i) the Borrowers have pledged to the
Lender the asset described on Schedule 1 hereto (the "Security"), (ii) the
---------- --------
Security is subject to a security interest in favor of the Lender, (iii) unless
notified by the Lender in writing, any payments or distributions made with
respect to the [Borrowers'] interest in each Security should be remitted by the
Trustee (or other paying agent) directly to the Lender in accordance with the
following wire instructions:
Account No.:_______________
ABA No.:___________________
Reference:_________________
Please acknowledge receipt of this instruction letter and confirm that
the Security is registered in the name of [__________] and you are aware of
▇▇▇▇▇ ▇▇▇▇▇▇ Real Estate Securities Inc.'s interest in the Security as Lender
under the Loan Agreement and your agreement to the terms hereof by signing in
the signature block below and forwarding an executed copy to the Lender promptly
upon receipt. Any notices to the Lender should be delivered to the following
address: ________________________________________; Attention:
_________________________, with a copy to ______________________; Telephone:
(___) ___________; Facsimile: (___) ___________________.
H-1
Very truly yours,
NEW CENTURY MORTGAGE CORPORATION
By:_____________________________________
Name:
Title:
NC CAPITAL CORPORATION
By _____________________________________
Name:
Title:
ACKNOWLEDGED:
________________________________, not in its individual capacity, but as Trustee
for ________________
By:______________________
Name:
Title:
Telephone:
Facsimile:
H-2
EXHIBIT I
---------
FORM OF MORTGAGE NOTE
I-1
EXHIBIT J
---------
UNDERWRITING GUIDELINES
J-1
EXHIBIT K
---------
FORM OF CONTRIBUTION AGREEMENT
------------------------------
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
---------
the 20th day of July, 1999, by and among NEW CENTURY MORTGAGE CORPORATION, a
California corporation ("New Century"), NC CAPITAL CORPORATION a California
-----------
corporation ("NCCC"), each of which has a mailing address at 18400 ▇▇▇ ▇▇▇▇▇▇,
----
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (NCCC together with New Century, the
"Borrowers"), and ▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE SECURITIES INC. ("Lender"), a
--------- ------
Delaware corporation, having an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, the Borrowers have entered into a
Master Loan and Security Agreement (the "Loan Agreement") with ▇▇▇▇▇ ▇▇▇▇▇▇ Real
--------------
Estate Securities Inc. (the "Lender"), pursuant to which the Lender shall
------
consider on an uncommitted basis making Loans to the Borrowers, collectively, in
an aggregate principal sum of up to $300 million (the "Loans") , which Loans are
-----
evidenced by a promissory note made by the Borrowers to the Lender (the "Note")
----
in the amount of the Loans and secured by certain collateral (the "Collateral")
----------
pledged by the Borrowers in favor of the Lender;
WHEREAS, each Borrower is jointly and severally liable under the Note
for payment of the full amount of the Note;
WHEREAS, each of the Borrowers will receive substantial benefits by
reason of the Loan; and
WHEREAS, the Borrowers are desirous of providing for certain rights of
contribution and subrogation as more particularly hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrowers agree as follows:
(a) In the event of (a) any payment by any one or more of the
Borrowers of any amount in excess of the principal amount borrowed by such
Borrower under the Loan Agreement (each such amount, as the same may be
amortized pursuant to the Note, an "Allocable Principal Balance") together with
---------------------------
interest thereon and any other amounts payable with respect thereto, (b) the
foreclosure of, or the delivery of deeds in lieu of foreclosure relating to, any
of the Collateral owned by one or more of the Borrowers, each Borrower (the
"Overpaying Borrower") whose Collateral or assets have been utilized to satisfy
-------------------
obligations under the Loan or otherwise for the benefit of one or more other
Borrowers shall be entitled, after payment in full of the Note and the
satisfaction of all the Borrowers other obligations to Lender, to contribution
from each of the benefited Borrowers, for the amounts so paid, advanced or
benefited, up to such benefited Borrower's then current Allocable Principal
Balance. Any such contribution payments shall be made within ten (10) days after
demand therefor.
J-1
(b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) This Agreement shall be construed and enforced in accordance with
the laws of the State of New York.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.
(e) Any notices required to be given under this Agreement shall be
given in the manner provided in the Loan Agreement. All capitalized terms,
unless otherwise defined herein, have the same meanings as defined in the Loan
Agreement.
(f) This Agreement may not be modified, amended or terminated except
by a written agreement executed by all of the parties hereto.
H-2
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
▇▇▇▇▇ ▇▇▇▇▇▇ REAL ESTATE
SECURITIES INC.
By:____________________________________
Name:
Title:
NEW CENTURY MORTGAGE CORPORATION
By:____________________________________
Name:
Title:
NC CAPITAL CORPORATION
By:____________________________________
Name:
Title:
H-3