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EXHIBIT 10.2
REVOLVING CREDIT AND SECURITY AGREEMENT
dated as of October 12, 1998
among
CITYSCAPE CORP.,
as debtor and debtor-in-possession,
as Borrower
and
CITYSCAPE FINANCIAL CORP.,
as debtor and debtor-in-possession,
as Guarantor
and
THE FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders
and
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Agent
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS............................1
Section 1.01. Definitions.........................................1
Section 1.02. Accounting Terms...................................19
Section 1.03. Computation of Time Periods........................19
Section 1.04. Rules of Construction..............................20
ARTICLE II. LOANS.....................................................20
Section 2.01. Commitment.........................................20
Section 2.02. Notes..............................................20
Section 2.03. Notice of Borrowing; Making of Loans...............20
Section 2.04. Payment of Principal...............................23
Section 2.05. Interest...........................................24
Section 2.06. Reduction of Total Commitment; Prepayment of Loans.24
Section 2.07. Payments...........................................26
Section 2.08. Use of Proceeds....................................28
Section 2.09. Reliance Upon Instructions.........................28
Section 2.10. Eurodollar Rate Not Determinable; Illegality
or Impropriety ....................................28
Section 2.11. Reserve Requirements; Capital Adequacy
Circumstances .....................................29
Section 2.12. Indemnity..........................................30
Section 2.13. Sharing of Setoffs.................................31
Section 2.14. Continuation and Conversion of Loans...............31
Section 2.15. Taxes..............................................32
ARTICLE III. ACKNOWLEDGMENT, RATIFICATION, SECURITY AND ADMINISTRATIVE
PRIORITY...............................................35
Section 3.01. Pre-Petition Obligations...........................35
Section 3.02. Acknowledgment of Security Interests...............35
Section 3.03. Binding Effect of Documents........................35
Section 3.04. Collateral; Grant of Lien and Security Interest....36
Section 3.05. Administrative Priority............................39
Section 3.06. Grants, Rights and Remedies........................39
Section 3.07. No Filings Required................................39
Section 3.08. Survival...........................................39
Section 3.09. Responsibility for Collateral......................40
Section 3.10. Representations and Warranties Concerning
Collateral ........................................40
Section 3.11. Release of Security Interest.......................42
Section 3.12. Covenants and Agreements Concerning Collateral.....43
Section 3.13. Agent's Approval of Investors......................45
Section 3.14. Uniform Commercial Code Financing Statements.......45
Section 3.15. Collection Rights..................................45
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Section 3.16. Attorney-in-Fact...................................45
Section 3.17. The Borrower Remains Liable........................46
ARTICLE IV. BORROWING BASE............................................46
Section 4.01. Condition of Lending...............................46
Section 4.02. Mandatory Prepayment...............................46
Section 4.03. Rights and Obligations Unconditional...............47
Section 4.04. Borrowing Base Certificate.........................47
Section 4.05. General Provisions.................................47
ARTICLE V. CONDITIONS PRECEDENT.......................................47
Section 5.01. Conditions Precedent to Initial Loan...............47
Section 5.02. Conditions Precedent to All Loans..................50
Section 5.03. Loan Requests......................................51
Section 5.04. Disbursing Loans...................................52
Section 5.05. Wet Mortgage Loan Closings.........................52
Section 5.06. Investor Requirements; Other Approvals.............54
Section 5.07. [Intentionally Omitted]............................54
Section 5.08. Temporary Release of Collateral Documents:
Delivery of Collateral Documents...................54
Section 5.09. Deemed Representation..............................55
ARTICLE VI. REPRESENTATIONS AND WARRANTIES............................55
Section 6.01. Formation, Good Standing and Due Qualification.....55
Section 6.02. Power and Authority................................55
Section 6.03. Execution and Binding Effect.......................55
Section 6.04. Absence of Conflicts...............................56
Section 6.05. Litigation.........................................56
Section 6.06. Financial Statements...............................56
Section 6.07. Ownership and Liens................................56
Section 6.08. Taxes..............................................56
Section 6.09. ERISA..............................................56
Section 6.10. Subsidiaries.......................................57
Section 6.11. Operation of Business; Prior or Existing
Restrictions, Etc .................................57
Section 6.12. Labor Disputes and Acts of God.....................57
Section 6.13. Environmental Protection...........................57
Section 6.14. Compliance with Laws...............................58
Section 6.15. Licenses...........................................58
Section 6.16. Chief Executive Office.............................58
Section 6.17. Year 2000..........................................58
Section 6.18. Administrative Priority; Lien Priority.............59
Section 6.20. Bankruptcy Court Order.............................59
ARTICLE VII. AFFIRMATIVE COVENANTS....................................59
Section 7.01. Maintenance of Existence...........................59
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Section 7.02. Conduct of Business................................59
Section 7.03. Maintenance of Properties..........................59
Section 7.04. Maintenance of Records.............................60
Section 7.05. Maintenance of Insurance...........................60
Section 7.06. Compliance with Laws...............................60
Section 7.07. Right of Inspection................................60
Section 7.08. Reporting Requirements.............................60
Section 7.09. Compliance With Environmental Laws.................64
Section 7.10. Purchase Commitments...............................64
Section 7.11. Pledge of Mortgage Loans...........................64
Section 7.12. Taxes..............................................65
Section 7.13. [Intentionally Omitted]............................65
Section 7.14. ERISA..............................................65
Section 7.15. Borrowing Base.....................................65
Section 7.16. Compliance With Custodian Agreement................66
Section 7.17. Availability.......................................66
Section 7.18. Underwriting Guidelines............................66
Section 7.19. Wet Closing Agents.................................66
Section 7.20. Year 2000 Compatibility............................66
ARTICLE VIII. NEGATIVE COVENANTS......................................66
Section 8.01. Interim Bankruptcy Court Order; Final Bankruptcy
Court Order; Administrative Priority; Lien
Priority; Payment of Claims; Greenwich
DIP Facility.......................................66
Section 8.02. Liens..............................................67
Section 8.03. Debt...............................................69
Section 8.04. Mergers, Etc.......................................69
Section 8.05. Leases.............................................69
Section 8.06. Sale and Leaseback.................................69
Section 8.07. Distributions......................................70
Section 8.08. Sale of Assets.....................................70
Section 8.09. Investments........................................70
Section 8.10. Financial Hedge Instruments........................71
Section 8.11. Guaranties, Etc....................................71
Section 8.12. Transactions With Affiliates.......................71
Section 8.13. Margin Regulations.................................71
Section 8.14. Subwarehousing.....................................71
Section 8.15. Bulk Purchases of Mortgage Loans...................71
Section 8.16. Payments...........................................71
ARTICLE IX. EVENTS OF DEFAULT.........................................72
Section 9.01. Events of Default..................................72
Section 9.02. Remedies...........................................74
Section 9.03. The Agent May Perform..............................75
Section 9.04. The Agent's Duties.................................75
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Section 9.05. Transfer of Note...................................76
Section 9.06. Defaulting Lender..................................76
ARTICLE X. AGENT......................................................77
Section 10.01. Appointment.......................................77
Section 10.02. Nature of Duties..................................77
Section 10.03. Rights, Exculpation, Etc. ........................78
Section 10.04. Reliance..........................................79
Section 10.05. Indemnification...................................79
Section 10.06. CIT Individually..................................79
Section 10.07. Successor Agent...................................79
Section 10.08. Collateral Matters................................80
ARTICLE XI. MISCELLANEOUS.............................................81
Section 11.01. Holidays..........................................81
Section 11.02. Records...........................................81
Section 11.03. Amendments and Waivers............................82
Section 11.04. No Implied Waiver; Cumulative Remedies............83
Section 11.05. Notices...........................................83
Section 11.06. Expenses; Taxes; Attorneys' Fees; Indemnification.83
Section 11.07. Application.......................................85
Section 11.08. Severability......................................85
Section 11.09. Governing Law.....................................85
Section 11.10. Prior Understandings..............................85
Section 11.11. Duration; Survival................................85
Section 11.12. Counterparts......................................86
Section 11.13. Assignments; Participations.......................86
Section 11.14. Successors and Assigns............................88
Section 11.15. Agent as Party in Interest........................88
Section 11.16. Confidentiality...................................88
Section 11.17. Waiver of Jury Trial..............................89
Section 11.18. Right of Setoff...................................89
Section 11.19. Headings..........................................90
Section 11.20. Periodic Due Diligence Review.....................90
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Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Custodian Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Description of Collateral Documents
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Interim Bankruptcy Court Order
Exhibit I Underwriting Guidelines -- High LTV Mortgage Loans
Exhibit J Underwriting Guidelines -- Home Equity Mortgage Loans
Exhibit K Servicing Terms and Provisions
Exhibit L Mortgage Loan Schedule
Exhibit M Form of Mortgage and Mortgage Note
Exhibit N Mortgage Loan Audit Report
SCHEDULES
Schedule 1.01(A) Commitments
Schedule 2.03 Designated Borrowing Officers
Schedule 3.10(7) Additional Representations and Warranties for Mortgage
Loans
Schedule 6.05 Litigation
Schedule 6.10 Subsidiaries
Schedule 8.02(A)(10) Liens
Schedule 8.11 Guaranties, Etc.
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REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of October 12,
1998 among CITYSCAPE CORP., as debtor and debtor-in-possession, a New York
corporation (the "Borrower"), CITYSCAPE FINANCIAL CORP., as debtor and
debtor-in-possession, a Delaware corporation (the "Guarantor"), the financial
institutions from time to time party hereto (individually, a "Lender" and
collectively, the "Lenders"), and The CIT GROUP/EQUIPMENT FINANCING, INC.
("CIT"), as agent for the Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower engages in the business of originating,
purchasing, selling and servicing Mortgage Loans (as hereinafter defined);
WHEREAS, the Borrower and the Guarantor have commenced cases (the
"Chapter 11 Cases") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"), and the Borrower and the
Guarantor have retained possession of their assets and are authorized under the
Bankruptcy Code to continue the operation of their businesses as
debtors-in-possession; and
WHEREAS, prior to the commencement of the Chapter 11 Cases by the
Borrower and the Guarantor, CIT and certain other lenders (the "Pre-Petition
Lenders") made loans and advances to the Borrower secured by substantially all
assets and properties of the Borrower and such loans and advances were
guaranteed by the Guarantor; and
WHEREAS, the Borrower has requested that the Lenders make
post-petition loans and advances to the Borrower in an aggregate principal
amount not to exceed $150,000,000 (which facility shall be limited to
$50,000,000 until the Final Bankruptcy Court Order (as hereinafter defined)
shall have been signed by the Bankruptcy Court), which loans and advances shall
be guaranteed by the Guarantor, and, subject to the terms and conditions set
forth herein, the Lenders have agreed to provide such facility;
NOW, THEREFORE, in consideration of the promises and the agreements
hereinafter set forth and intending to be legally bound hereby, the parties
agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular are to have a
correlative meaning when used in the plural and vice versa):
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"Affiliate" means, with respect to the Borrower, any Person: (1)
which directly or indirectly controls, or is controlled by, or is under common
control with the Borrower; (2) which directly or indirectly beneficially owns or
holds ten percent or more of any equity or partnership interest of the Borrower;
or (3) ten percent or more of the equity or partnership interest of which is
directly or indirectly beneficially owned or held by Borrower.
"Agencies" means FNMA or FHLMC.
"Agent" has the meaning specified in the first paragraph of this
Agreement and any successor(s).
"Agent Account" shall mean an account in the name of the Agent
designated to the Borrower from time to time into which the Borrower shall make
all payments to the Agent for the account of the Agent or the Lenders, as the
case may be, under this Agreement.
"Agent Advances" shall have the meaning given that term in Section
10.08(a) hereof.
"Agreed Administrative Expense Priorities" shall mean that
administrative expenses with respect to the Borrower and the Guarantor and, with
respect to sub-clause (ii) of clause "first", any official committee appointed
by the Bankruptcy Court, shall have the following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. Section 1930(a)(6)
and fees payable to the Clerk of the Bankruptcy Court and (ii) allowed fees and
expenses of attorneys, accountants and other professionals retained in the
Chapter 11 Cases pursuant to Sections 327 and 1103 of the Bankruptcy Code
(except to the extent that such fees and expenses were incurred in the
prosecution of actions, claims or causes of action seeking to invalidate, avoid,
subordinate or otherwise impair any claims of the Agent or the Lenders under the
Loan Documents or the claims of the Pre-Petition Lenders under the Pre-Petition
Agreements or any Liens created by the Loan Documents or the Pre-Petition
Agreements or which seeks to recover any transfer made to the Agent, the Lenders
or the Pre-Petition Lenders); provided, however, that after the occurrence and
during the continuance of an Event of Default hereunder or under the Interim
Bankruptcy Court Order or the Final Bankruptcy Court Order (x) the amount
entitled to priority under sub-clause (ii) of this clause first ("Priority
Professional Expenses") shall not exceed $575,000 outstanding in the aggregate
at any time (inclusive of any holdbacks required by the Bankruptcy Court) (the
"Professional Expense Cap"), provided that after (1) payment in full of all
obligations under the Greenwich DIP Facility, (2) the termination of all
commitments under the Greenwich DIP Facility and (3) the release of all of
Greenwich's Liens on the Collateral, the Professional Expense Cap shall be
increased by the unused portion of the professional expense cap provided under
the Greenwich DIP Facility but shall in no event exceed $1,150,000, and (y) any
payments actually made to such professionals after such occurrence or during
such continuance, under Sections 330 and 331 of the Bankruptcy Code or
otherwise, shall reduce the Professional Expense Cap on a dollar-for-dollar
basis,
second, all Obligations and, subject to the terms of the
Intercreditor Agreement, all obligations of the Borrower and the Guarantor under
the Greenwich DIP Facility, and
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third, all other allowed administrative expenses.
"Agreement" means this Revolving Credit and Security Agreement, as
amended, supplemented or modified from time to time.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Agent and, in the
absence of a continuing Event of Default, consented to by the Borrower,
substantially in the form of Exhibit G hereto.
"Availability" means, at any time, the sum of (i) the difference
between (A) the lesser of (x) the Borrowing Base and (y) the Total Commitment
and (B) the aggregate outstanding principal amount of all Loans and (ii) the
amount of cash in the Operating Account at such time.
"Avoided Payments" shall have the meaning given that term in Section
2.06(h) hereof.
"Bank" shall mean The Chase Manhattan Bank or The Dai-Ichi Kangyo
Bank, Limited, New York Branch, or their respective successors.
"Bankruptcy Code" shall have the meaning given that term in the
RECITALS to this Agreement.
"Bankruptcy Court" shall have the meaning given that term in the
RECITALS to this Agreement.
"Borrower" has the meaning specified in the first paragraph of this
Agreement.
"Borrower's DIP Account" shall have the meaning given that term in
Section 2.07(a) hereof.
"Borrowing Base" means, as of the date of determination, the
difference between (i) the Collateral Value of Eligible Mortgages for all
Eligible Residential Mortgage Loans and (ii) such reserves as the Agent, in its
reasonable business judgment, may deem appropriate from time to time.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit C hereto, properly completed, executed and delivered to the Agent and
the Lenders.
"Business Day" means any day other than Saturday, Sunday or any
other day on which banking institutions are authorized or obligated to close in
New York, New York and, with respect to any action under this Agreement that
requires the participation of the Custodian, the city in which the relevant
office of the Custodian is located, provided, that with respect to the
borrowing, payment, conversion to or continuation of Eurodollar Loans, Business
Day shall also mean a day on which dealings in Dollars are carried on in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of the Bank's eurodollar loans are then being
conducted.
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"Capital Lease" means any obligation under any lease which has been
or should be capitalized on the books of the lessee in accordance with GAAP.
"Carve-Out Expenses" means those amounts, fees, expenses and claims
set forth in clause "first" of the definition of the term "Agreed Administrative
Expense Priorities."
"Certificate of No Default" shall have the meaning specified in
Section 7.08(5) hereof.
"Change of Control" means (i) the Guarantor shall cease to directly
own and control, of record and beneficially, 100% of the then-outstanding
capital stock of the Borrower free and clear of all Liens other than Permitted
Liens or (ii) the person holding the office of the Chief Executive Officer and
President, Chief Financial Officer and Executive Vice President or Treasurer of
the Borrower, and of the President of the Guarantor, on the Closing Date shall
cease to be actively involved in the day to day operations and management of the
Borrower or the Guarantor, as applicable, except to the extent any changes in
such management personnel are deemed reasonably acceptable to the Lenders.
"Chapter 11 Cases" shall have the meaning given that term in the
RECITALS to this Agreement.
"CIT" shall have the meaning given to that term in the introductory
paragraph to this Agreement.
"Closing Agent" means a title company, a closing attorney or other
entity which conducts the settlement of a Mortgage Loan and which has not been
disapproved by the Agent upon written notice to the Borrower.
"Closing Date" means such date on which all of the conditions set
forth in Section 5.01 shall be satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, together with all rules and regulations promulgated in connection
therewith.
"Collateral" means the collateral described in Section 3.04(b)
hereof and any other collateral granted to the Agent and the Lenders in any
other Loan Document.
"Collateral Documents" means the documents described in the
Description of Collateral Documents.
"Collateral Market Value" means the price obtainable for any Pledged
Mortgage, as determined in good faith by the Agent, in the commercial markets
regularly trading Mortgage Loans of a similar nature. The Agent's determination
of Collateral Market Value shall be conclusive upon the parties absent manifest
error on the part of the Agent.
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"Collateral Sale Proceeds" shall mean all proceeds of the
refinancing, sale or other disposition of Pledged Mortgages and other Collateral
whether by securitization, whole loan sales or otherwise.
"Collateral Value of Eligible Mortgages" means, as of any date of
determination, an amount equal to the percentage specified below for the
appropriate category into which each Eligible Residential Mortgage Loan falls
applied to the least of, with respect to each such Eligible Residential Mortgage
Loan: (1) the outstanding principal amount of the Eligible Residential Mortgage
Loan, (2) the Collateral Market Value of the Eligible Residential Mortgage Loan,
(3) the price at which the Borrower purchased the Eligible Residential Mortgage
Loan or (4) Five Hundred Thousand Dollars ($500,000):
(i) with respect to each High LTV Mortgage Loan included in the
Borrowing Base which has a FICO score equal to or greater than 620 but less than
or equal to 640, seventy percent (70%);
(ii) with respect to each High LTV Mortgage Loan included in the
Borrowing Base which has a FICO score greater than 640, eighty percent (80%);
and
(iii) with respect to each Home Equity Mortgage Loan included in the
Borrowing Base, ninety percent (90%).
The percentages specified in paragraphs (i), (ii) and (iii) above may be
adjusted downward from time to time by the Agent, in its sole discretion, based
upon criteria such as a decrease in the yield on the Borrower's portfolio of
Mortgage Loans, an increase in the rate of delinquencies under the Borrower's
portfolio of Mortgage Loans, a decrease in the turn-over rate of the Borrower's
portfolio of Mortgage Loans, or such other criteria deemed appropriate by the
Agent.
"Commitment" shall mean, with respect to each Lender, the commitment
set forth on Schedule 1.01(A) to this Agreement or assigned to such Lender in
accordance with Section 11.13, as such amounts may be reduced from time to time
pursuant to the terms of this Agreement.
"Custodian" means U.S. Bank National Association and/or any other
financial institution acceptable to the Agent and the Lenders as well as, in the
absence of a continuing Event of Default, acceptable to the Borrower, and their
respective successors.
"Custodian Agreement" means that certain Custodian Agreement dated
as of June 5, 1998 among the Borrower, the Custodian and the Agent,
substantially in the form of Exhibit D hereto, as the same may be modified and
supplemented and in effect from time to time and any other or replacement
custodian agreement acceptable to the Agent.
"Debt" means, without duplication, (1) indebtedness or liability for
borrowed money; (2) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (3) obligations for the deferred purchase price of property
or services (other than current trade payables incurred in the ordinary course
of business and payable in accordance with customary
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practices); (4) obligations as lessee under Capital Leases; (5) current
liabilities in respect of unfunded vested benefits under Plans covered by ERISA;
(6) reimbursement obligations with respect to letters of credit; (7) obligations
under acceptance facilities; (8) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply funds to invest
in any Person or entity, or otherwise to assure a creditor against loss; (9)
obligations or liabilities secured by a Lien upon property owned by such Person,
whether or not owing by such Person and even though such Person has not assumed
or become liable for the payment thereof, and (10) net liabilities of such
Person under interest rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging agreements or
arrangements calculated on a basis satisfactory to the Agent and in accordance
with accepted practice. The term "Debt" shall not include deferred loan
origination fees of the Borrower.
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to the rate of interest
which would otherwise be applicable hereunder plus two percent (2%) or, if no
rate of interest would otherwise be applicable hereunder, the Prime Rate plus
2%.
"Defaulting Lender" has the meaning specified in Section 9.06.
"Description of Collateral Documents" means the documents described
on Exhibit F attached hereto.
"Designated Borrowing Officer" shall mean any officer of the
Borrower identified on Schedule 2.03 attached hereto, or such other officer as
shall be designated from time to time in writing by the Borrower to the Agent.
"Designated Financial Officer" of a Person shall mean the individual
designated from time to time by the Board of Directors or governing body
performing like functions of such Person to be the chief financial officer or
treasurer of such Person (and individuals designated from time to time by the
Board of Directors or governing body performing like functions of such Person to
act in lieu of the chief financial officer or the treasurer).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Distribution" means, for any Person, any dividend on, or any
purchase or acquisition for value of, any of its capital stock now or hereafter
outstanding, any return of capital to its stockholders as such, or any other
purchase, distribution, advance, draw, fees or other transfers of cash or other
assets by such Person to its stockholders.
"Eligible Residential Mortgage Loan" means the following
Non-Conforming Mortgage Loans each of which (i) must be made pursuant to the
requirements and limitations set forth in the applicable Underwriting Guidelines
and (ii) meets each of the following criteria, as applicable:
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(1) complies with all requirements (including all covenants,
representations and warranties) of this Agreement for the inclusion of
such Mortgage Loan in the Borrowing Base, including all documentary
requirements;
(2) is effectively pledged to the Agent and in respect of
which the Agent has a first perfected Lien not subject to any other Liens
or claims of any kind other than Permitted Liens;
(3) except in the case of a Wet Mortgage Loan, the related
Mortgage Note, assignment in recordable form and a certified copy of the
Mortgage are held by the Custodian pursuant to the Custodian Agreement and
the Custodian has delivered one or more trust receipts for such documents
to the Agent;
(4) if the Mortgage Loan was originated by a Person other than
the Borrower, such Mortgage Loan was not purchased by the Borrower more
than five Business Days prior to the date of the Custodian's receipt of
the related Mortgage Note, assignment and Mortgage;
(5) will fully amortize within thirty years or less after the
date of origination, is not subject to any negative amortization and is
not a balloon Mortgage Loan the amortization of which the Agent finds
unacceptable;
(6) is a valid, subsisting, enforceable and perfected first or
second Lien, provided that the Collateral Value of Eligible Mortgages of
second Lien Home Equity Mortgage Loans included in the Borrowing Base
shall not exceed the Second Mortgage Loan Sublimit;
(7) is secured by a premise which is (1) an owner-occupied
primary residence, or (2) a second home or investor property;
(8) not more than fourteen Business Days have elapsed from the
date a Collateral Document with respect to such Mortgage Loan was
delivered to the Borrower for correction or completion without the return
thereof to the Custodian;
(9) in the case of a Wet Mortgage Loan (a) the Wet Closing
Agent has received all Collateral Documents required to be delivered to
the Custodian prior to the funding of such Wet Mortgage Loan, (b) the
Custodian has received all Collateral Documents required to be delivered
to the Custodian within five Business Days, or such longer period agreed
to by the Agent pursuant to Section 5.05(2) hereof, after the funding of
such Wet Mortgage Loan, and (c) the Borrower fully complies with the Wet
Closing provisions enumerated in Section 5.05 hereof, and (d) the
Collateral Value of Eligible Mortgages of such Wet Mortgage Loan when
added to the Collateral Value of Eligible Mortgages of all other Wet
Mortgage Loans included in the Borrowing Base shall not exceed the Wet
Mortgage Loan Sublimit;
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(10) in the case of (a) a High LTV Mortgage Loan, has not
remained as Collateral for more than sixty days from the date of delivery
to the Custodian, and (b) a Home Equity Mortgage Loan, has not remained as
Collateral for more than ninety days from the date of delivery to the
Custodian;
(11) there is not a delinquency in any payment under the
related Mortgage Note and Mortgage;
(12) each of the related Mortgage Note and Mortgage is genuine
and is the legal, valid, binding and enforceable obligations of the maker
thereof, not subject to a right of recission, set-off, counterclaim or
defense;
(13) the related Mortgage Note has not been extinguished under
relevant state law in connection with a judgment of foreclosure or
foreclosure sale or otherwise;
(14) the related mortgaged property is not subject to a
foreclosure proceeding;
(15) the mortgagor is not subject to a bankruptcy or
insufficiency proceedings;
(16) in the case of a High LTV Mortgage Loan (a) the loan to
value ratio of the Mortgage Loan is not greater than 125%, (b) the FICO
score of the Mortgage Loan is not less than 620, and (c) the Collateral
Value of Eligible Mortgages of such High LTV Mortgage Loan when added to
the Collateral Value of Eligible Mortgages of all other High LTV Mortgage
Loans included in the Borrowing Base shall not exceed the High LTV
Mortgage Loan Sublimit;
(17) except in the case of a High LTV Mortgage Loan, without
the consent of the Agent, the loan to value ratio of the Mortgage Loan is
not greater than 90%; and
(18) is not a Mortgage Loan which the Agent notifies the
Borrower that, in the Agent's reasonable business judgment, is not
satisfactory as Collateral.
If a Mortgage Loan that initially satisfies all of the required conditions for
inclusion as an Eligible Residential Mortgage Loan and for inclusion in the
Borrowing Base ceases to satisfy such conditions and be included in the
Borrowing Base, such Mortgage Loan may subsequently be included as an Eligible
Residential Mortgage Loan and be included in the Borrowing Base if at such
subsequent time the Mortgage Loan satisfies all of the required conditions.
"Entry Date" means the date the Interim Bankruptcy Court Order is
entered.
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
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15
"Environmental Law" means any Law relating to pollution or the
environment, including, without limitation, Laws relating to noise or to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the workplace, the community or the environment, or otherwise relating to
the generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Environmental Liabilities and Costs" shall mean all liabilities,
monetary obligations, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any directive, order, litigation, judicial or administrative
proceeding, judgment, letter or other written communication from any
Governmental Authority relating to any environmental condition, violation of
Environmental Law or Environmental Discharge from or onto (i) any property
presently or formerly owned by the Borrower or any of its Subsidiaries or (ii)
any facility which received Hazardous Materials generated by the Borrower or any
of its Subsidiaries.
"Environmental Lien" shall mean any Lien securing Environmental
Liabilities and Costs incurred by a Governmental Authority.
"Environmental Notice" means any complaint, order, citation, letter,
inquiry, notice or other written communication from any Person (1) affecting or
relating to Borrower's compliance with any Environmental Law in connection with
any activity or operations at any time conducted by such Borrower, (2) relating
to the occurrence or Presence of or exposure to or possible or threatened or
alleged occurrence or Presence of or exposure to Environmental Discharges or
Hazardous Materials at any of the locations or facilities of any of the
Borrower, including, without limitation (a) the existence of any contamination
or possible or threatened contamination at any such location or facility and (b)
remediation of any Environmental Discharge or Hazardous Materials at any such
location or facility or any part thereof; and (3) any violation or alleged
violation of any relevant Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Escrow Deposits" means all monies held by the Borrower representing
principal, interest, tax, insurance and other deposits or payments made by
mortgagors under Mortgage Loans.
"Eurodollar Base Rate" shall mean, with respect to a Eurodollar Loan
for the relevant Interest Period, the rate determined by the Agent to be the
rate at which deposits in Dollars are offered by the Bank to first-class banks
in the interbank eurodollar market where the eurodollar
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and foreign currency and exchange operations in respect of its eurodollar loans
are then being conducted at approximately 11:00 a.m., New York City time, two
Business Days prior to the first day of such Interest Period, in the approximate
amount of the relevant Eurodollar Loan and having a maturity equal to such
Interest Period.
"Eurodollar Loan" shall mean a Loan bearing interest at the
Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/32 of 1%):
Eurodollar Base Rate
--------------------
1.00 - Reserve Requirements
"Event of Default" has the meaning specified in Section 9.01.
"Exception Report" shall mean the exception report prepared by the
Custodian pursuant to the Custodian Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
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 such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letters" means, collectively, (i) the letter agreement, dated
as of September 25, 1998, between the Borrower and The CIT Group/Business
Credit, Inc. (an affiliate of CIT) and (ii) the letter agreement, dated as of
September 25, 1998, between the Borrower and Nomura Asset Capital Corporation,
each obligating the Borrower to pay certain fees to the respective Lender in
connection with this Agreement, as such letter agreements may be modified,
supplemented or amended from time to time.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FICO" means the Fair ▇▇▇▇▇ Company Odds which is a credit risk
scoring system developed by Fair, ▇▇▇▇▇ & Co. that provides a numerical
weighting of a borrower's credit profile and permits lenders to evaluate the
credit risk a borrower presents and the likelihood that a loan will be repaid.
"Filing Date" means the date on which the Chapter 11 Cases were
commenced.
"Final Bankruptcy Court Order" means the order of the Bankruptcy
Court approving the Loans made and to be made to the Borrower and the Guaranty
of the Guarantor in accordance with this Agreement, substantially in the form of
the Interim Bankruptcy Court Order, as the same
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may be amended, modified or supplemented from time to time with the express
written joinder or consent of the Agent, the Lenders and the Borrower.
"Financial Assets" has the meaning specified therefor in the UCC.
"Fiscal Year" means each period from January 1 to December 31.
"FNMA" means the Federal National Mortgage Association and its
successors.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Greenwich" means Greenwich Capital Financial Products, Inc., a
Delaware corporation.
"Greenwich DIP Facility" shall have the meaning specified therefor
in Section 5.01(17) hereof.
"Guaranty" means the guaranty referred to in Section 5.01(6).
"Guarantor" has the meaning specified in the first paragraph of this
Agreement.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including, without limitation, asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based products or
derivatives.
"High LTV Mortgage Loans" means those Mortgage Loans having a loan
to value ratio in excess of 85% and not in excess of 125% which are underwritten
in accordance with the Borrower's Sav* A Loan Underwriting Guidelines attached
hereto as Exhibit I.
"High LTV Mortgage Loan Sublimit" means $30,000,000.
"Home Equity Mortgage Loan" means a Mortgage Loan, other than a High
LTV Mortgage Loan, which fails to satisfy all of the requirements for sale to
FNMA or FHLMC under their standard Mortgage Loan purchase programs, but which
satisfies all of the applicable requirements of the Underwriting Guidelines set
forth on Exhibit J hereto.
"Indemnified Parties" shall have the meaning specified therefor in
Section 11.06 hereof.
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"Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the date hereof among the Agent, the Lenders and Greenwich, and
acknowledged by the Borrower and the Guarantor, as the same may be amended,
modified and supplemented and in effect from time to time.
"Interim Bankruptcy Court Order" shall mean the order of the
Bankruptcy Court with respect to the Borrower and the Guarantor substantially in
the form of Exhibit H hereto, as the same may be amended, modified or
supplemented from time to time with the express written joinder or consent of
the Agent, the Lenders and the Borrower.
"Interest Period" shall mean, with respect to any Eurodollar Loan,
the period commencing on the borrowing date for, or the date of any continuation
of or conversion to, such Eurodollar Loan, as the case may be, and ending one
month thereafter as the Borrower may elect in the applicable notice given to the
Agent pursuant to Section 2.03 or Section 2.14, as appropriate; provided that
(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day, unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day, (ii) any Interest Period that begins on
the last Business Day of a calendar month or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period shall end on the last Business Day of the applicable calendar month, and
(iii) no Interest Period for any Loan shall end after the Termination Date.
Interest shall accrue from and include the first date of an Interest Period, but
exclude the last day of such Interest Period.
"Investment Property" has the meaning specified therefor in the UCC.
"Investor(s)" means FNMA, FHLMC, and any other Person that has
delivered to the Borrower a Purchase Commitment and may include banks, insurance
companies, mortgage bankers, pension funds, investment bankers, securities
dealers, and state, county or municipal housing agencies.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority, including any
judicial or administrative order, consent decree or judgment.
"Lender Default" has the meaning specified in Section 9.06.
"Lenders" shall have the meaning given that term in the introductory
paragraph to this Agreement.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same
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economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction to evidence any of
the foregoing).
"Loan" or "Loans" shall mean any and all loan or loans made by the
Lenders, or by the Agent on behalf of the Lenders, to the Borrower or made as a
result of charges made to the Borrower's DIP Account, in each case pursuant to
the terms of this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, the Pledge
Agreement, the Guaranty, the Interim Bankruptcy Court Order, the Final
Bankruptcy Court Order, the Fee Letters, the Custodian Agreement, the
Intercreditor Agreement, each Notice of Borrowing, each Borrowing Base
Certificate, and all other instruments, agreements and documents from time to
time delivered in connection with or otherwise relating to any Loan Document,
excluding, however, the Greenwich DIP Facility and any custodian agreement,
promissory note or guaranty relating to the Greenwich DIP Facility.
"Loan Party" means one or, if plural, both of the Borrower and the
Guarantor.
"Majority Lenders" means those Lenders whose Pro Rata Shares
aggregate not less than 66-2/3%.
"Material Adverse Change" means (1) a material adverse change in the
status of the business, results of operations, condition (financial or
otherwise), property or prospects of either of the Loan Parties, (2) any event
or occurrence of whatever nature which will have a material adverse effect on
either of the Loan Parties' ability to perform their obligations under the Loan
Documents, (3) a material adverse change in the Lien arising under this
Agreement on any Collateral or (4) any event or occurrence of whatever nature
which will have a material adverse effect or result in an adverse change in the
legality, validity or enforceability of this Agreement or any Loan Document, the
rights or remedies of the Agent and the Lenders under any Loan Document, or the
value, collectability or the nature of the Collateral.
"Minority Lender" shall have the meaning specified therefor in
Section 11.03(b) hereof.
"Mortgage" means a mortgage, deed of trust, security deed or similar
lien encumbering real property securing a Mortgage Loan.
"Mortgage Loan" means a loan which is secured by a first or second
mortgage.
"Mortgage Loan Closing Date" means the date that a Mortgage Loan is
scheduled to settle.
"Mortgage Loan Schedule" means a schedule of Mortgage Loans
containing the information specified in Exhibit L hereto with respect to each
Mortgage Loan to be delivered by the Borrower to the Agent pursuant to Section
2.03(a) hereof.
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"Mortgage Note" means the note or other evidence of indebtedness of
a mortgagor on a Mortgage Loan.
"Multiemployer Plan" means Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"New Lending Office" shall have the meaning specified therefor in
Section 2.15(g) hereof.
"Non-Conforming Mortgage Loan" means either a Home Equity Mortgage
Loan or a High LTV Mortgage Loan.
"Non-Defaulting Lender" has the meaning specified therefor in
Section 9.06 hereof.
"Non-U.S. Lender" shall have the meaning specified therefor in
Section 2.15(g) hereof.
"Notes" shall mean the promissory notes of the Borrower executed and
delivered to the Lenders under this Agreement and substantially in the form of
Exhibit A hereto, as modified or restated from time to time and any promissory
note or notes issued in exchange or replacement thereof under this Agreement,
including all extensions, renewals, refinancings or refundings under this
Agreement in whole or part.
"Notice of Borrowing" shall have the meaning given to that term in
Section 2.03(a) hereof.
"Notices" shall have the meaning specified therefor in Section 11.05
hereof.
"Obligations" means (1) each and every obligation, covenant and
agreement of the Borrower to the Lenders now or hereafter existing contained in
this Agreement, and any of the other Loan Documents, whether for principal,
interest, fees, expenses, indemnities or otherwise, and any amendments or
supplements thereto, extensions or renewals thereof or replacements therefor
under this Agreement, including but not limited to all indebtedness, obligations
and liabilities of such Borrower to the Agent and the Lenders now existing or
hereafter incurred under or arising out of or in connection with the Notes, this
Agreement, the other Loan Documents, and any documents or instruments executed
in connection therewith, (2) all sums advanced in accordance with this Agreement
by or on behalf of the Agent to protect any of the Collateral purported to be
covered hereby, and (3) any amounts paid by the Agent in preservation of any of
the Agent's and the Lenders' rights or interest in the Collateral, together with
interest on such amounts from the date such amounts are paid until reimbursement
in full at a rate per annum equal at all times to the Prime Rate or Default
Rate, as applicable, pursuant to the terms of this Agreement; in each case
whether direct or indirect, joint or several, absolute or contingent, liquidated
or unliquidated, now or hereafter existing, renewed or restructured, whether or
not from time to time decreased or extinguished and later increased, created or
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incurred, and including all indebtedness of the Borrower under any instrument
now or hereafter evidencing or securing any of the foregoing.
"Office" when used in connection with the Agent shall mean its
office located at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
office or offices of the Agent as may be designated in writing from time to time
by the Agent to the Borrower and when used in connection with the Bank shall
mean the office of such entity designated in writing from time to time by the
Agent to the Borrower. In the event The Chase Manhattan Bank shall be the Bank,
the Office for such entity shall until further written notice from the Agent to
the Borrower be its office located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Operating Account" means a demand deposit account established by
the Borrower with the Custodian for use by the Borrower for its general business
operations.
"Other Taxes" shall have the meaning given to that term in Section
2.15(b) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" has the meaning specified in Section 8.02.
"Person" means an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies.
"Plan of Reorganization" shall mean "Cityscape Financial Corp.'s and
Cityscape Corp.'s Joint Plan of Reorganization" attached to the Solicitation and
Disclosure Statement of the Borrower and the Guarantor dated August 28, 1998.
"Pledge Agreement" means that certain Pledge Agreement, dated as of
the date hereof, among the Borrower, the Guarantor, the Agent and Greenwich, as
collateral agent for the Lenders and Greenwich, substantially in the form of
Exhibit E hereto, as the same may be amended, supplemented and otherwise
modified from time to time.
"Pledged Mortgages" means all Mortgages and Mortgage Notes (1)
covered by or referred to or intended to be included, in a loan request, or (2)
for which any of the documentation related thereto is received by the Custodian
under or pursuant to the Custodian Agreement or any of the Loan Documents, or
(3) which are the subject of the Wet Closing provisions of this Agreement.
"Pre-Petition Agreements" shall mean the Pre-Petition Credit
Agreement and the Pre-Petition Loan Documents.
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"Pre-Petition Collateral" shall mean all "Collateral" as such term
is defined in the Pre-Petition Credit Agreement and all other security for the
Pre-Petition Obligations as provided in the Pre-Petition Agreements immediately
prior to the Filing Date.
"Pre-Petition Collateral Agreements" shall mean the Pre-Petition
Credit Agreement and the "Pledge Agreement)" and the "Pledge Agreement (UK)" as
such terms are defined in the Pre-Petition Credit Agreement.
"Pre-Petition Credit Agreement" shall mean the Revolving Credit and
Security Agreement, dated as of February 3, 1998, as amended, among the
Borrower, the Guarantor, the Pre-Petition Lenders, and The CIT Group/Equipment
Financing, Inc., as agent for the Pre-Petition Lenders.
"Pre-Petition Lenders" shall have the meaning given that term in the
RECITALS to this Agreement.
"Pre-Petition Loan Documents" shall have the meaning given to the
term "Loan Documents" in the Pre-Petition Credit Agreement.
"Pre-Petition Loans" shall mean all loans made by the Pre-Petition
Lenders to the Borrower under the Pre-Petition Credit Agreement and outstanding
on the Filing Date.
"Pre-Petition Obligations" shall mean all indebtedness, obligations
and liabilities of the Borrower to the Pre-Petition Lenders incurred prior to
the Filing Date arising from or related to the Pre-Petition Agreements plus
interest thereon accruing both before and after the Filing Date, whether such
indebtedness, obligations or liabilities are direct or indirect, secured or
unsecured, joint or several, absolute or contingent, due or to become due,
whether for payment or performance, now existing or hereafter arising.
"Presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Loan" means a Loan bearing interest at the Prime Rate.
"Prime Rate" shall mean the interest rate per annum publicly
announced from time to time by the Bank in New York, New York as its Prime Rate,
such interest rate to change automatically from time to time effective as of the
announced effective date of each change in the Prime Rate. The Prime Rate is not
intended to be the lowest rate of interest charged by the Bank to its borrowers.
"Priority Professional Expenses" shall mean those expenses entitled
to a priority as set forth in sub-clause (ii) of the clause "first" of the
definition of the term "Agreed Administrative Expense Priorities".
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"Professional Expense Cap" shall have the meaning given that term in
clause (ii) of the clause "first" of the definition of the term "Agreed
Administrative Expense Priorities".
"Prohibited Transaction" means any non-exempt transaction set forth
in Section 406 of ERISA or Section 4975 of the Code.
"Pro Rata Share" shall mean, with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the Total Commitment,
as adjusted from time to time in accordance with the provisions of Section 11.13
hereof, provided that, if the Total Commitment has been terminated, the
numerator shall be the unpaid amount of such Lender's Loans and the denominator
shall be the aggregate amount of all unpaid Loans.
"Purchase Commitments" means valid and enforceable written
commitments issued by Investors to purchase Mortgage Loans from the Borrower at
a fixed price.
"Register" shall have the meaning given that term in Section
11.13(c) hereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA (other than an event not subject to provision for the 30-day
notice to the PBGC under the regulations promulgated under such Section).
"Reserve Requirements" shall mean, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Federal Reserve Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exceptions or offsets which may be available
from time to time to any Lender or the Affiliate of any Lender under Regulation
D.
"Restricted Accounts" means one or more demand deposit accounts
established by the Agent with the Custodian or any other commercial bank to
which there may be deposited from time to time monies paid in connection with a
release of Collateral, which account shall be restricted in that the Borrower
shall not be entitled to withdraw money therefrom and the Agent shall be
authorized to make withdrawals from such account in accordance with the terms of
this Agreement in connection with a refinancing, sale or other disposition of
Collateral.
"Retained Interest" means, with respect to a pool of Mortgage Loans
that have been transferred by the Borrower to a trust or other Person through a
sale or securitization, the direct or indirect rights with respect to such pool,
including any rights to receive payments attributable to such pool, retained by
the Borrower subsequent to such transfer, whether such rights are security,
contractual, arise through the holding of an interest in such trust, or other
Person, or otherwise.
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"Retained Interest Receivables" means the direct or indirect right
to Retained Interests that would be capitalized on a Person's balance sheet (in
accordance with GAAP), including, without limitation, subordinated and
interest-only certificates and any similar rights arising by virtue of the
holding of capital stock or any other equity interest in any entity to which
Mortgage Loans have been transferred in a sale or securitization.
"Second Mortgage Loan Sublimit" means $10,000,000.
"Securities Account" has the meaning specified therefor in the UCC.
"Securities Entitlement" has the meaning specified therefor in the
UCC.
"Settlement Period" shall have the meaning set forth in Section
2.03(f) hereof.
"Single Family Mortgage Loan" means a Mortgage Loan which is secured
by a Mortgage which is a first or second Lien on a Single Family Residence.
"Single Family Residence" means a completed one (1) to four (4)
family residential dwelling and the property related thereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, limited liability company, limited
liability partnership, trust, association or other business entity of which an
aggregate of 50% or more of the outstanding stock or other interests entitled to
vote in the election of the board of directors of such corporation (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned or controlled by such Person and/or one or more Subsidiaries
of such Person.
"Subwarehouse Mortgage Loan" means a mortgage loan originated as a
result of the Borrower's Subwarehousing activities.
"Subwarehousing" means an arrangement pursuant to which the Borrower
extends credit to a mortgage lender (the "Subwarehouse Borrower") in order to
fund a mortgage loan to be made by the Subwarehouse Borrower pursuant to a
credit agreement between the Borrower, as lender and the Subwarehouse Borrower,
as borrower.
"Taxes" shall have the meaning given to that term in Section 2.15
hereof.
"Termination Date" shall have the meaning given to that term in
Section 2.01.
"Total Commitment" means the aggregate Commitments of the Lenders as
set forth on Schedule 1.01(A) which may be reduced or increased pursuant to the
terms of this Agreement.
"Transferee" shall have the meaning specified therefor in Section
2.15(a) hereof.
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"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of New York.
"Underwriting Guidelines" means the Underwriting Guidelines as in
effect on the Closing Date, attached as Exhibits I and J hereto.
"Unused Line Fee" shall have the meaning given to that term in
Section 2.07(e)
"Value" has the meaning specified in the Pledge Agreement.
"Warehouse Account" means a demand deposit account established by
the Borrower with the Custodian into which proceeds of a Loan may be deposited
and from which Mortgage Loan proceeds may be disbursed, in accordance with
instructions from the Borrower to the Custodian, directly to the Closing Agent
in connection with the settlement of Mortgage Loans.
"Wet Closing" means a Wet Mortgage Loan closing where the Agent is
requested to make a Loan prior to, on the date of, or after, the closing of the
Wet Mortgage Loan, but prior to the delivery of the documentation related
thereto required pursuant to the terms of this Agreement and the Custodian
Agreement to be delivered to the Custodian in all such cases in accordance with
the procedures outlined therefor under this Agreement.
"Wet Closing Agent" means each Closing Agent who (1) is designated
by the Borrower as responsible for the closing of a Wet Mortgage Loan and (2) is
not disapproved by the Agent, in its sole discretion.
"Wet Closing Agent Agreement" means an agreement executed by each
Wet Closing Agent in connection with the funding of each Wet Mortgage Loan
whereby such Wet Closing Agent agrees to act as the agent of the Agent in
accordance with the provisions of Section 5.05(3) hereof.
"Wet Collateral" has the meaning specified in Section 3.04(b)(6).
"Wet Loans" means Loans the proceeds of which are used to originate
Wet Mortgage Loans.
"Wet Mortgage Loan" means any Eligible Residential Mortgage Loan
that is pledged to the Agent pursuant to the Wet Closing provisions contained in
this Agreement.
"Wet Mortgage Loan Sublimit" means $5,000,000.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP, consistently applied.
Section 1.03. Computation of Time Periods. Except as otherwise
provided in this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
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Section 1.04. Rules of Construction. When used in this Agreement:
(1) a reference to time shall be the time in New York City; (2) a reference to
an agreement, instrument or document shall include such agreement, instrument or
document as the same may be amended, modified or supplemented from time to time
in accordance with its terms and as permitted by the Loan Documents; (3) a
reference to a day shall be a calendar day unless Business Day is specified.
ARTICLE II.
LOANS
Section 2.01. Commitment. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth and subject to
the terms of the Interim Bankruptcy Court Order and the Final Bankruptcy Court
Order, each Lender severally agrees to make Loans to the Borrower at any time
and from time to time on or after the date hereof and to, but not including, the
Termination Date, in an aggregate principal amount at any time outstanding to
the Borrower not to exceed the amount of such Lender's Commitment, as such
Commitment may be reduced in accordance with the provisions of this Agreement.
Notwithstanding the foregoing the aggregate principal amount of Loans
outstanding at any time to the Borrower shall not exceed the lesser of (A) the
Total Commitment and (B) the then current Borrowing Base. The Total Commitment
and the Commitment of each Lender shall automatically and permanently be reduced
to zero on the earliest of (1) October 12, 1998, if the Interim Bankruptcy Court
Order has not been entered on or prior to such date, (2) 30 days from the Entry
Date if the Final Bankruptcy Court Order shall not have been entered during such
30 day period, (3) 30 days from the Entry Date if the final order of the
Bankruptcy Court with respect to the Greenwich DIP Facility shall not have been
entered during such 30 day period, (4) the date of the substantial consummation
(as defined in Section 1101(2) of the Bankruptcy Code) of a plan of
reorganization in the Chapter 11 Cases that has been confirmed by an order of
the Bankruptcy Court, and (5) March 1, 1999 (the "Termination Date"). Within the
limits of time and amount set forth in this Section 2.01, the Borrower may
borrow, repay and reborrow hereunder subject to the provisions of this
Agreement.
Section 2.02. Notes. The obligation of the Borrower to repay the
unpaid principal amount of the Loans made to it by each Lender and to pay
interest thereon shall be evidenced by a Note dated the date of this Agreement
in the principal amount of such Lender's Commitment with the blanks
appropriately filled in. An executed Note for each Lender shall be delivered by
the Borrower to the Agent on the date of the execution and delivery of this
Agreement and in accordance with Section 11.13 hereof.
Section 2.03. Notice of Borrowing; Making of Loans.
(a) Whenever the Borrower desires to borrow, it shall provide
notice to the Agent of such proposed borrowing (a "Notice of Borrowing"), each
such notice, to be given not later than 10:00 a.m. (New York City time) on the
date of such proposed borrowing in the case of a Prime Loan and not later than
12:00 noon (New York City time) on the third Business Day before the date of
such proposed borrowing in the case of a Eurodollar Loan, setting forth: (i) the
date,
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which shall be a Business Day, on which such borrowing is to occur, (ii) whether
such Loan is requested to be a Prime Loan or a Eurodollar Loan, (iii) the
principal amount of the Loan being borrowed, the use of proceeds of such Loan
and, if the proceeds of such Loan are to be used to originate Mortgage Loans,
whether or not such Loan is a Wet Loan, (iv) the account information where such
Loan is to be received, which shall be either the Warehouse Account or the
Operating Account, and (v) the other information required by Sections 5.03,
5.04, and 5.05, as applicable. If the proceeds of the Loan are to be used to
originate or purchase Mortgage Loans, the Notice of Borrowing shall also have
attached a Mortgage Loan Schedule identifying the Mortgage Loans the Borrower
proposes to pledge to the Agent and to include in the Borrowing Base. Such
notice shall be given in writing by a Designated Borrowing Officer,
substantially in the form of Exhibit B hereto, containing the original or
facsimile signature of a Designated Borrowing Officer. Except for a Notice of
Borrowing when the Agent will fund the related Loan pursuant to Section 2.03(e)
hereof, the Agent shall provide each Lender with prompt notice of each Notice of
Borrowing. Except as otherwise provided in Section 2.03(e), on the date
specified in such notice, each Lender shall, subject to the terms and conditions
of this Agreement, make its Pro Rata Share of such Loan in immediately available
funds by wire transfer to the Agent at its Office not later than 12:00 noon (New
York City time). Unless (i) the Agent determines that any applicable conditions
in Article V have not been satisfied or (ii) the Borrower fails to deliver the
applicable Collateral Documents and any other certificates or documents to the
Custodian before the date of the proposed borrowing as required under this
Agreement and the Custodian Agreement, the Agent shall make the funds so
received from the Lenders available to the Borrower not later than 4:00 p.m.
(New York City time), on the date specified in such notice in immediately
available funds by initiating a wire transfer.
(b) The Agent and each Lender shall be entitled to rely
conclusively on each Designated Borrowing Officer's authority to request a Loan
on behalf of the Borrower until the Agent receives written notice to the
contrary. The Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing.
(c) The Agent and the Lenders shall not incur any liability to
the Borrower in acting upon any Notice of Borrowing referred to above which the
Agent and the Lenders believe in good faith to have been given by a Designated
Borrowing Officer or for otherwise acting in good faith under this Section 2.03
and, upon the funding of a Loan by the Lenders (or by the Agent on behalf of the
Lenders) in accordance with this Agreement pursuant to any such notice, the
Borrower shall have effected a Loan hereunder.
(d) Each Notice of Borrowing pursuant to this Section 2.03
shall be irrevocable and the Borrower shall be bound to make a borrowing in
accordance therewith except as otherwise provided in Section 2.10(a) hereof.
Each Prime Loan shall be in a minimum amount of $100,000 and in multiples of
$50,000 if in excess thereof, and each Eurodollar Loan shall be in a minimum
amount of $1,000,000 and in multiples of $100,000 if in excess thereof, provided
that the Borrower shall not be entitled to request any Loan that, if made, would
result in an aggregate of more than six separate Eurodollar Loans being
outstanding hereunder at any one time.
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(e) (i) Except as otherwise provided in this subsection 2.03(e), all
Loans under this Agreement shall be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares, it being understood that no Lender
shall be responsible for any default by any other Lender in that other Lender's
obligations to make a Loan requested hereunder, nor shall the Commitment of any
Lender be increased or decreased as a result of the default by any other Lender
in that other Lender's obligation to make a Loan requested hereunder.
(ii) Notwithstanding any other provision of this Agreement, and in
order to reduce the number of fund transfers among the Borrower, the Lenders and
the Agent, the Borrower, the Lenders and the Agent agree that the Agent may (but
shall not be obligated to), and the Borrower and the Lenders hereby irrevocably
authorize the Agent to, fund, on behalf of the Lenders, Loans pursuant to
Section 2.01, subject to the procedures for settlement set forth in subsection
2.03(f); provided, however, that (a) the Agent shall in no event fund such Loans
if the Agent shall have received written notice from the Majority Lenders on the
Business Day prior to the day of the proposed Loan that one or more of the
conditions precedent contained in Sections 5.02, 5.03, 5.04 and 5.05, as
applicable, will not be satisfied on the day of the proposed Loan, and (b) the
Agent shall not otherwise be required to determine that, or take notice whether,
the conditions precedent in Section 5.02, 5.03, 5.04 and 5.05, as applicable,
have been satisfied.
(iii) Unless (A) the Agent has notified the Lenders that the Agent,
on behalf of the Lenders, will fund a particular Loan pursuant to subsection
2.03(e)(ii), or (B) the Agent shall have been notified by any Lender on the
Business Day prior to the day of a proposed Loan that such Lender does not
intend to make available to the Agent such Lender's Pro Rata Share of the Loan
requested on such day, the Agent may assume that such Lender has made such
amount available to the Agent on such day and the Agent, in its sole discretion,
may, but shall not be obligated to, cause a corresponding amount to be made
available to the Borrower on such day. If the Agent makes such corresponding
amount available to the Borrower and such corresponding amount is not in fact
made available to the Agent by such Lender, the Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from the date such payment was due until the date
such amount is paid to the Agent, at the Federal Funds Rate for three Business
Days and thereafter at the Prime Rate. During the period in which such Lender
has not paid such corresponding amount to the Agent, notwithstanding anything to
the contrary contained in this Agreement or any other Loan Document, the amount
so advanced by the Agent to the Borrower shall, for all purposes hereof, be a
Loan made by the Agent for its own account. Upon any such failure by a Lender to
pay the Agent, the Agent shall promptly thereafter notify the Borrower of such
failure and the Borrower shall immediately pay such corresponding amount to the
Agent for its own account.
(iv) Nothing in this subsection 2.03(e) shall be deemed to relieve
any Lender from its obligations to fulfill its Commitment hereunder or to
prejudice any rights that the Agent or the Borrower may have against any Lender
as a result of any default by such Lender hereunder.
(f) (i) With respect to all periods for which the Agent has funded
Loans pursuant to subsection 2.03(e), on Friday of each week, or if the
applicable Friday is not a
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Business Day, then on the following Business Day, or such shorter period as the
Agent may from time to time select (any such week or shorter period being herein
called a "Settlement Period"), the Agent shall notify each Lender of the average
daily unpaid principal amount of the Loans outstanding during such Settlement
Period. In the event that such amount is greater than the average daily unpaid
principal amount of the Loans outstanding during the Settlement Period
immediately preceding such Settlement Period (or, if there has been no preceding
Settlement Period, the amount of the Loans made on the date of such Lender's
initial funding), each Lender shall promptly make available to the Agent its Pro
Rata Share of the difference in immediately available funds. In the event that
such amount is less than such average daily unpaid principal amount, the Agent
shall promptly pay over to each Lender its Pro Rata Share of the difference in
immediately available funds. In addition, if the Agent shall so request at any
time when a Default or an Event of Default shall have occurred and be
continuing, or any other event shall have occurred as a result of which the
Agent shall determine that it is desirable to present claims against the
Borrower for repayment, each Lender shall promptly remit to the Agent or, as the
case may be, the Agent shall promptly remit to each Lender, sufficient funds to
adjust the interests of the Lenders in the then outstanding Loans to such an
extent that, after giving effect to such adjustment, each Lender's interest in
the then outstanding Loans will be equal to its Pro Rata Share thereof. The
obligations of each Lender under this subsection 2.03(f) shall be absolute and
unconditional. Each Lender shall only be entitled to receive interest on its Pro
Rata Share of the Loans which have been funded by such Lender.
(ii) In the event that any Lender fails to make any payment
required to be made by it pursuant to subsection 2.03(f)(i), the Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from the date such payment was due
until the date such amount is paid to the Agent, at the Federal Funds Rate for
three Business Days and thereafter at the Prime Rate. During the period in which
such Lender has not paid such corresponding amount to the Agent, notwithstanding
anything to the contrary contained in this Agreement or any other Loan Document,
the amount so advanced by the Agent to the Borrower shall, for all purposes
hereof, be a Loan made by the Agent for its own account. Upon any such failure
by a Lender to pay the Agent, the Agent shall promptly thereafter notify the
Borrower of such failure and the Borrower shall immediately pay such
corresponding amount to the Agent for its own account. Nothing in this
subsection 2.03(f)(ii) shall be deemed to relieve any Lender from its obligation
to fulfill its Commitment hereunder or to prejudice any rights that the Agent or
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
Section 2.04. Payment of Principal. To the extent not due and
payable earlier pursuant to the terms of this Agreement, the entire unpaid
principal amount of each of the Loans shall be due and payable on the
Termination Date. The Borrower shall take all actions required so that all
Collateral Sale Proceeds will be paid directly to the Agent for the benefit of
the Lenders. Without limiting the generality of the foregoing, the Borrower
shall cause all Persons making such payments to remit directly to the Agent, by
way of wire transfer into a Restricted Account, from such proceeds, as payments
of principal hereunder, an amount equal to all Collateral Sale Proceeds.
Notwithstanding the foregoing (i) as long as the Borrower is required to pay to
Greenwich 50% of the proceeds of the sale of any Retained Interest Receivables
and/or the
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capital stock of the Subsidiaries of the Borrower that own such Retained
Interested Receivables, only 50% of the proceeds of the sale of any Retained
Interest Receivables and/or the capital stock of the Subsidiaries of the
Borrower that own such Retained Interest Receivables shall be required to be
paid directly to the Agent for the benefit of the Lenders, (ii) the Borrower
shall pay the proceeds from the sale of any Collateral subject to the
Intercreditor Agreement in accordance with the terms of the Intercreditor
Agreement and (iii) the Borrower shall only be required to pay directly to the
Agent for the benefit of the Lenders proceeds from the sale of real estate owned
by the Borrower, which are the proceeds of Pledged Mortgages released by the
Agent pursuant to Section 3.11(c) hereof, to the extent such proceeds exceed
$1,700,000, in the aggregate, in any calendar year, provided that after the
occurrence and during the continuance of an Event of Default all such proceeds
shall be paid to the Agent for the benefit of the Lenders. In the event that
notwithstanding the foregoing any such Collateral Sale Proceeds required to be
paid to the Agent shall be paid to the Borrower, the Borrower shall immediately
upon such receipt pay same over directly to the Agent; and while in such
Borrower's possession, such amounts shall be held in trust for the Agent.
Section 2.05. Interest.
(a) Interest Rate.
(i) Each Prime Loan shall bear interest at a rate per
annum for each day until paid equal to the Prime Rate.
(ii) Each Eurodollar Loan shall bear interest at a rate
per annum equal to the Eurodollar Rate plus 2.75% for the Interest Period in
effect for such Eurodollar Loan.
(b) Interest Payment Dates. The Borrower shall pay to the
Agent for the account of each Lender interest in arrears on the unpaid principal
amount of each Loan, from the date on which such Loan is advanced until such
principal amount has been repaid in full, which interest shall be payable (i) if
such Loan is a Prime Loan, monthly in arrears on the first day of each month,
commencing November 1, 1998, and (ii) if such Loan is a Eurodollar Loan on the
last day of the Interest Period of such Eurodollar Loan. After maturity of any
principal amount of any Loan (by acceleration, at scheduled maturity or
otherwise), interest on such amount shall be due and payable on demand.
Section 2.06. Reduction of Total Commitment; Prepayment of Loans.
(a) The Borrower may, reduce the Total Commitment to an amount
(which may be zero) not less than the sum of (i) the aggregate unpaid principal
amount of all Loans then outstanding and (ii) the aggregate principal amount of
all Loans not yet made as to which notice has been given by the Borrower under
Section 2.03 hereof. Each such reduction shall be in an amount which is an
integral multiple of $1,000,000, shall be requested by providing not less than
three Business Days' prior written notice to the Agent and shall be irrevocable
and may not be reinstated. Each such reduction of the Total Commitment shall
reduce the Commitment of each Lender on a pro rata basis.
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(b) Subject to the terms of Section 2.12 hereof, the Borrower
shall have the right to prepay, in whole or in part, all Loans.
(c) To the extent that the outstanding Loans exceed the lesser
of the Total Commitment and the Borrowing Base, the Borrower shall immediately
either (i) make a prepayment on the Loans in an amount equal to such excess or
(ii) provide additional Eligible Residential Mortgage Loans so that the
outstanding Loans do not exceed the Borrowing Base.
(d) Except as permitted in Section 2.04, all Collateral Sale
Proceeds shall be paid directly to the Agent by the Person making such payment,
provided that, any such Collateral Sale Proceeds paid to the Agent when no Loans
are outstanding and no other Obligations are due and payable under this
Agreement, shall be promptly paid to the Borrower.
(e) If for any reason a Wet Mortgage Loan is not closed and
funded on or before the second Business Day immediately following its Mortgage
Loan Closing Date, the Borrower will prepay the Wet Loan made in respect of such
Wet Mortgage Loan on the third Business Day immediately following such Mortgage
Loan Closing Date.
(f) Immediately upon receipt by the Borrower of all
outstanding principal under a Mortgage Note, the Borrower shall prepay the Loans
in an amount equal to the amount of such principal payment under such Mortgage
Note together with all interest accrued under such Mortgage Note and any penalty
or premium paid under such Mortgage Note.
(g) Subject to the terms of Section 2.12 hereof, without
limiting any other provision of this Agreement or any other Loan Document
permitting or requiring prepayment of the Loans in whole or part, the Borrower
shall prepay the Loans in whole without premium or penalty on the thirtieth
(30th) day following the Entry Date in the event the Final Bankruptcy Court
Order shall not have been entered on or before such date.
(h) In the event that the Pre-Petition Lenders are required to
repay or disgorge to the Borrower, or any representatives of the Borrower 's
estate, all or any portion of the Pre-Petition Obligations authorized and
directed to be repaid pursuant to the Interim Bankruptcy Court Order or the
Final Bankruptcy Court Order, as the case may be, or any payment on account of
the Pre-Petition Obligations made to any Pre-Petition Lender is rescinded for
any reason whatsoever, including, but not limited to, as a result of any action,
suit, proceeding or claim brought in connection with or pursuant to 11 U.S.C.
Sections 105, 510, 544, 547, 548, 549, 550 or 553, or any other provision
of the Bankruptcy Code or any applicable state law, or any other similar
provisions under any other state or federal statutory or common law (all such
amounts being hereafter referred to as the "Avoided Payments"), then, in such
event, (i) the Borrower shall prepay the Loans in an amount equal to 100% of
such Avoided Payments immediately upon receipt of the Avoided Payments by the
Borrower or any representative of the Borrower's estate and (ii) the Total
Commitment of the Lenders shall be permanently reduced by an amount equal to
100% of such Avoided Payments.
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Section 2.07. Payments.
(a) Time, Place and Manner. All payments and prepayments to be
made in respect of principal, interest, fees or other amounts due from the
Borrower hereunder, under the Fee Letter, the Notes or any other Loan Document
shall be payable at or before 12:00 noon, New York City time, on the day when
due without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived. Such payments shall be made to the Agent for the
account of the Agent, or the Lenders, as the case may be, at the Agent Account
in Dollars in funds immediately available at the Bank's Office without setoff,
counterclaim or other deduction of any nature. Any payment received by the Agent
after 12:00 noon, New York City time, will be deemed to have occurred on the
next Business Day. The Agent shall maintain a separate loan account (the
"Borrower's DIP Account") on its books in the name of the Borrower in which the
Borrower will be charged with Loans made by the Agent or the Lenders to the
Borrower hereunder and with any other Obligations. The Borrower and the Lenders
hereby authorize the Agent to, and the Agent may, from time to time charge the
Borrower's DIP Account with any interest, fees, expenses and other Obligations
that are due and payable under this Agreement or any Loan Document. The Borrower
and the Lenders confirm that any charges which the Agent may so make to the
Borrower's DIP Account as herein provided will be made as an accommodation to
the Borrower and solely at the Agent's discretion and shall constitute a Loan to
the Borrower funded by the Agent on behalf of the Lenders and subject to
subsections 2.03(e) and 2.03(f) of this Agreement. Each of the Lenders and the
Borrower agrees that the Agent shall have the right to make such charges
regardless of whether any Event of Default or Default shall have occurred and be
continuing or whether any of the conditions precedent in Section 5.02 have been
satisfied. The Borrower's DIP Account will be credited upon receipt of "good
funds" in the Agent Account with all amounts actually received by the Agent from
the Borrower or others for the account of the Borrower. Interest on all Loans
and all fees that accrue on a per annum basis shall be computed on the basis of
the actual number of days elapsed in the period during which interest or such
fee accrues and a year of 360 days. In computing interest on any Loan, the date
of the making of such Loan shall be included and, if received by 12:00 noon (New
York City time), the date of payment shall be excluded; provided, however, that
if a Loan is repaid on the same day on which it is made, one day's interest
shall be paid on such Loan.
(b) Periodic Statements. The Agent shall provide the Lenders
and the Borrower promptly after the end of each calendar month a summary
statement (in the form from time to time used by the Agent) of (A) the opening
and closing daily balances in the Borrower's DIP Account during such month, (B)
the amounts and dates of all Loans made during such month, (C) the amounts and
dates of all payments on account of the Loans made during such month and each
Lender's interest in the Loans, (D) the amount of interest accrued on the Loans
during such month, and (E) the amount and nature of any charges to the
Borrower's DIP Account made during such month on account of interest, fees and
expenses and other Obligations. All entries on any such statement shall, 30 days
after the same is sent, be presumed to be correct and shall constitute prima
facie evidence of the information contained in such statement, subject to the
Borrower's and each Lender's express right to rebut such presumption by
conclusively demonstrating the existence of any error on the part of the Agent.
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(c) Apportionment of Payments. Except as otherwise provided in
this subsection, aggregate principal and interest payments shall be apportioned
among all outstanding Loans to which such payments relate and payments of the
Unused Line Fee required to be paid by the Borrower to the Lenders under
subsections 2.07(e) shall be apportioned ratably among the Lenders, in each case
according to their Pro Rata Shares. All payments shall be remitted to the Agent
and all such payments and any other amounts, including, without limitation,
proceeds of Collateral received by the Agent from or on behalf of the Borrower
shall be applied subject to the provisions of this Agreement first, to pay
principal of and interest on any Loans funded by the Agent on behalf of the
Lenders and any fees, expense reimbursements or indemnities then due to the
Agent from the Borrower; second, to pay any fees, expense reimbursements or
indemnities then due to the Lenders; third, to pay interest due in respect of
Loans; fourth, to pay or prepay principal of Loans; and fifth, to the Borrower
or to such Person as may be lawfully entitled to receive such surplus proceeds.
The Agent shall promptly distribute to each Lender at its primary address set
forth on the appropriate signature page hereof, or at such other address as such
Lender may designate in writing, such funds as it may be entitled to receive.
The foregoing apportionment of payments is solely for the purpose of determining
the obligations of the Borrower hereunder and, notwithstanding such
apportionment, any Lender may on its books and records allocate payments
received by it in a manner different from that contemplated hereby. No such
different allocation shall alter the rights and obligations of the Borrower
under this Agreement determined in accordance with the apportionments
contemplated by this Section 2.07(c). To the extent that the Borrower makes a
payment or payments to the Agent or the Agent receives any payment or other
amount, which payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause then, to the
extent of such payment or proceeds received, the Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by the Agent.
(d) Interest Upon Events of Default. To the extent permitted
by law, after there shall have occurred and so long as there is continuing an
Event of Default pursuant to Section 9.01, all principal, interest, fees,
indemnities or any other Obligations of the Borrower hereunder, under the Fee
Letter or under any Note or any other Loan Document (and including interest
accrued under this subsection 2.07(d)) shall bear interest until paid (before
and after judgment), payable on demand, at the Default Rate such interest rate
to change automatically from time to time effective as of the announced
effective date of each change in the Prime Rate.
(e) Unused Line Fee. From and after the Closing Date until the
Termination Date, the Borrower shall pay to the Agent, for the account of each
Lender in accordance with such Lender's Pro Rata Share, an unused line fee (the
"Unused Line Fee") accruing at the rate of three-eighths percent (3/8%) per
annum, on the excess, if any, of the Total Commitment over the aggregate of the
Loans outstanding from time to time. All Unused Line Fees shall be payable
monthly in arrears on the first day of each month commencing November 1, 1998.
(f) Fees. The Borrower shall pay to the Agent the fees set
forth in the Fee Letter at the times set forth in the Fee Letter. All fees
required to be paid to the Agent pursuant
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to the Fee Letter, this Agreement or the other Loan Documents, shall be paid to
the Agent for its own account as described therein. All fees under this
Agreement, the Fee Letter and the other Loan Documents are non-refundable under
all circumstances.
Section 2.08. Use of Proceeds. The Borrower will use the proceeds of
the Loans only for the following purposes: (1) to repay the Pre-Petition
Obligations under the Pre-Petition Credit Agreement, (2) to originate or
purchase Mortgage Loans which will be Eligible Residential Mortgage Loans, and
(3) for general corporate purposes of the Borrower (including, without
limitation, payments of fees and expenses to professionals under Sections 330
and 331 of the Bankruptcy Code and administrative expenses of the kind specified
in Section 503(b) of the Bankruptcy Code incurred in the ordinary course of
business of the Borrower and the Guarantor).
Section 2.09. Reliance Upon Instructions. Without limiting the
coverage of any other indemnities provided in this Agreement, the Borrower
hereby indemnifies and agrees to hold harmless the Agent and each of the
Lenders, and their respective officers, employees and agents from and against
any and all liabilities, damages, losses, costs and expenses, including
reasonable counsel fees, however arising out of any actions taken in reliance
upon telephonic, telecopier or other instructions believed in good faith to have
been given under this Agreement on the Borrower's behalf by a Designated
Borrowing Officer.
Section 2.10. Eurodollar Rate Not Determinable; Illegality or
Impropriety.
(a) In the event, and on each occasion, that on or before the
day on which the Eurodollar Rate is to be determined for a borrowing that is to
include Eurodollar Loans, the Agent has determined in good faith that, or has
been advised by the Bank that, the Eurodollar Rate cannot be determined for any
reason or the Eurodollar Rate will not adequately and fairly reflect the cost of
maintaining Eurodollar Loans or Dollar deposits in the principal amount of the
applicable Eurodollar Loans are not available in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in respect of
the Bank's eurodollar loans are then being conducted, the Agent shall, as soon
as practicable thereafter, give written notice of such determination to the
Borrower and the other Lenders. In the event of any such determination, any
request by the Borrower for a Eurodollar Loan pursuant to Section 2.03 shall,
until the Agent shall have advised the Borrower and the other Lenders that the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for a Prime Loan unless the Borrower provides written notice to the
Agent revoking its request for such Eurodollar Loans. Each determination by the
Agent hereunder shall be conclusive and binding absent manifest error.
(b) In the event that it shall be unlawful or improper for any
Lender to make, maintain or fund any Eurodollar Loan as contemplated by this
Agreement, then such Lender shall forthwith give notice thereof to the Agent and
the Borrower describing such illegality or impropriety in reasonable detail.
Effective immediately upon the giving of such notice, the obligation of such
Lender to make Eurodollar Loans shall be suspended for the duration of such
illegality or impropriety and, if and when such illegality or impropriety ceases
to exist, such suspension shall cease, and such Lender shall notify the Agent
and the Borrower. If any such change shall make it unlawful or improper for any
Lender to maintain any outstanding Eurodollar
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Loan as a Eurodollar Loan, such Lender shall, upon the happening of such event,
notify the Agent and the Borrower, and the Borrower shall immediately, or if
permitted by applicable law, rule, regulation, order, decree, interpretation,
request or directive, no later than the date permitted thereby, convert each
such Eurodollar Loan into a Prime Loan.
Section 2.11. Reserve Requirements; Capital Adequacy Circumstances.
(a) Notwithstanding any other provision herein, if any change
in applicable law or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) shall impose any
tax on or change the basis of taxation of payments to any Lender or any
Affiliate of a Lender of the principal of or interest on any Eurodollar Loan
made by such Lender or of any amounts payable hereunder (other than taxes
imposed on the overall net income of such Lender or such Affiliate by the
jurisdiction in which such Lender or such Affiliate has its principal office or
by any political subdivision or taxing authority therein), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by
such Lender or Affiliate of such Lender (except any such reserve requirement
that is reflected in Reserve Requirements) or shall impose on such Lender or
such Affiliate any other condition affecting this Agreement or any Eurodollar
Loans made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) in respect thereof by an amount
deemed by such Lender to be material, then the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender shall have reasonably determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
(or any lending office of such Lender) or by any Affiliate of such Lender, as
the case may be, with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's Affiliate, as the case may
be, as a consequence of such Lender's obligations under this Agreement and the
Loan Documents to a level below that which such Lender or such Lender's
Affiliate, as the case may be, could have achieved but for such adoption, change
or compliance (taking into consideration such Lender's policies or such Lender's
Affiliate's policies, as the case may be, with respect to capital adequacy) by
an amount deemed by such Lender to be material, then, from time to time, the
Borrower shall reimburse such Lender for such reduction.
(c) Any amount or amounts payable by the Borrower to any
Lender in accordance with the provisions of paragraphs (a) or (b) of this
Section 2.11 shall be paid by the Borrower to such Lender within ten (10) days
after receipt by the Borrower from such Lender of a statement setting forth (i)
in reasonable detail the amount or amounts due, (ii) the basis for the
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determination from time to time of such amount or amounts, (iii) that such
amount(s) have been determined in good faith and (iv) that such Lender is using
reasonable efforts to receive comparable amounts from similarly situated
borrowers having similar relationships with such Lender under documentation
which gives such Lender substantially the same rights with respect to such
increased costs or reductions or payments as required in this Section 2.11,
which statement shall be conclusive and binding absent manifest error.
(d) Any Lender may demand compensation for any increased costs
or reduction in amounts received or receivable or reduction in return on capital
with respect to any period; provided that such Lender shall provide to the
Borrower a certificate setting forth the basis on which such demand is made. The
protection of this Section 2.11 shall be available to any Lender regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
(e) If the Borrower shall be obligated to pay amounts to any
Lender under this Section 2.11, then, any time within 30 days after the Borrower
shall become so obligated, the Borrower may request such Lender to assign its
rights and obligations under the Loan Documents to one or more Persons
designated by the Borrower (a) that are acceptable to the Agent and (b) to which
the Borrower reasonably expects that it will be obligated to pay lesser amounts
under such Section than the amounts it reasonably expects that the Borrower will
be obligated to pay such Lender. If the Borrower shall so request such an
assignment, such Lender shall cooperate to consummate such assignment, and shall
execute and deliver to the Borrower and the Agent an Assignment and Acceptance
with respect thereto, no later than 30 days after such request, if the proposed
assignee (x) unconditionally purchases all of such Lender's rights and
obligations under the Loan Documents, without recourse to or representation or
warranty by such Lender other than as provided in the Assignment and Acceptance,
for an amount equal to the aggregate amount owing to such Lender thereunder at
the time of such assignment (including such Lender's aggregate outstanding
Loans, accrued interest thereon and all fees and other amounts accrued or
payable to such Lender), (y) reimburses such Lender for all reasonable costs
incurred under this Section 2.11 as a result of such assignment to the extent
not reimbursed by the Borrower, and (z) executes and delivers to the Borrower
and the Agent such Assignment and Acceptance.
Section 2.12. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender actually sustains or incurs as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article V, (b) any
failure by the Borrower to borrow any Eurodollar Loan hereunder (except as
provided in Section 2.10(a) hereof) or to convert any Prime Loan into a
Eurodollar Loan after notice of such borrowing or conversion has been given
pursuant to Section 2.03 or Section 2.14, as the case may be, (c) any payment,
prepayment (mandatory or optional) or conversion of a Eurodollar Loan required
by any provision of this Agreement or otherwise made on a date other than the
last day of the Interest Period applicable thereto, (d) any default in payment
or prepayment of the principal amount of any Eurodollar Loan or any part thereof
or interest accrued thereon, as and when due and payable (at the due date
thereof, by notice of prepayment or otherwise), or (e) the occurrence of any
Event of Default, including, in each such case, any loss (including, without
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limitation, loss of margin) or reasonable expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan. Such loss or
reasonable expense shall include but not be limited to an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid or converted or not
borrowed or converted (based on the Eurodollar Rate applicable thereto) for the
period from the date of such payment, prepayment, conversion or failure to
borrow or convert to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow or convert, the last day of the Interest Period
for such Loan that would have commenced on the date of such failure to borrow or
convert) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in re-employing the funds so paid,
prepaid or converted or not borrowed or converted for such Interest Period. A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.12
and the basis for the determination of such amount or amounts shall be delivered
to the Borrower and shall be conclusive and binding absent manifest error.
Section 2.13. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Obligation as a result of
which the aggregate unpaid amount of the Obligations owing to it shall be
proportionately less than the aggregate unpaid amount of the Obligations owing
to any other Lender, it shall simultaneously purchase from such other Lender at
face value a participation in the Obligations owing to such other Lender, so
that the aggregate unpaid amount of the Obligations and participations in
Obligations held by each Lender shall be in the same proportion to the aggregate
unpaid amount of all Obligations owing to such Lender prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the aggregate unpaid
amount of all Obligations outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.13 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in an Obligation deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a loan directly to the Borrower in
the amount of such participation.
Section 2.14. Continuation and Conversion of Loans. Subject to
Section 2.03 and Section 2.10 hereof, the Borrower shall have the right, at any
time (i) on three (3) Business Days' prior irrevocable written or telecopy
notice to the Agent, to continue any Eurodollar Loan or any portion thereof into
a subsequent Interest Period or, to convert any Prime Loan or portion thereof
into a Eurodollar Loan, or (ii) on one (1) Business Day's prior irrevocable
written or telecopy notice to the Agent, to convert any Eurodollar Loan or
portion thereof into a Prime Loan, subject to the following:
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(A) in the case of a continuation of a Eurodollar Loan or
portion thereof as such or a conversion of a Prime Loan
or portion thereof into a Eurodollar Loan (1) no Event
of Default or Default shall have occurred and be
continuing at the time of such continuation or
conversion and (2) Eurodollar Loans resulting from this
Section 2.14 shall be limited in number as provided in
Section 2.03(d);
(B) in the case of a continuation or conversion of less than
all Loans, the aggregate principal amount of any
Eurodollar Loan continued or converted shall not be less
than $1,000,000 and in multiples of $100,000 if in
excess thereof;
(C) each conversion shall be effected by the Lenders by
applying the proceeds of the new Loan to the Loan (or
portion thereof) being converted; and, in the case of a
conversion from a Eurodollar Loan to a Prime Loan,
accrued interest on the Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrower
at the time of conversion;
(D) if the new Loan made in respect of a conversion shall be
a Eurodollar Loan, the first Interest Period with
respect thereto shall commence on the date of
conversion;
(E) no portion of any Loan shall be continued or converted
to a Eurodollar Loan with an Interest Period ending
later than the Termination Date; and
(F) if any conversion of a Eurodollar Loan shall be effected
on a day other than the last day of an Interest Period,
the Borrower shall reimburse each Lender on demand for
any loss incurred or to be incurred by it in the
reemployment of the funds released by such conversion as
provided in Section 2.12 hereof.
In the event that the Borrower shall not give notice to continue any Eurodollar
Loan into a subsequent Interest Period, such Loan (unless repaid) shall
automatically become a Prime Loan at the expiration of the then current Interest
Period.
Section 2.15. Taxes. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.07, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the net income of the Agent or any Lender
(or any transferee or assignee thereof, including a participation holder (any
such entity a "Transferee")) and (ii) franchise taxes imposed on the net income
of the Agent or any Lender (or Transferee), in each case by the jurisdiction
under the laws of which the Agent or such Lender (or Transferee) is organized or
any political subdivision thereof (all such nonexcluded taxes, levies, imposts,
deductions, charges withholdings and liabilities, collectively or individually,
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"Taxes"). If the Borrower shall be required to deduct any Taxes from or in
respect of any sum payable hereunder to any Lender (or any Transferee) or the
Agent, (i) the sum payable shall be increased by the amount (an "additional
amount") necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15) such
Lender (or Transferee) or the Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee)
and the Agent for the full amount of Taxes and Other Taxes paid by such Lender
(or Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability prepared
by a Lender, or the Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Lender (or Transferee) or the Agent, as the
case may be, makes written demand therefor.
(d) If a Lender (or Transferee) or the Agent shall become
aware that it is entitled to claim a refund from a Governmental Authority in
respect of Taxes or Other Taxes as to which it has been indemnified by the
Borrower, or with respect to which the Borrower has paid additional amounts,
pursuant to this Section 2.15, it shall promptly notify the Borrower of the
availability of such refund claim and shall, within 30 days after receipt of a
request by the Borrower, make a claim to such Governmental Authority for such
refund at the Borrower's expense. If a Lender (or Transferee) or the Agent
receives a refund (including pursuant to a claim for refund made pursuant to the
preceding sentence) in respect of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall within 30 days from
the date of such receipt pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.15 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of such Lender (or Transferee)
or the Agent and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
Borrower, upon the request of such Lender (or Transferee) or the Agent, agrees
to repay the amount paid over to the Borrower (plus penalties, interest or other
charges) to such Lender (or Transferee) or the Agent in the event such Lender
(or Transferee) or the Agent is required to repay such refund to such
Governmental Authority.
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(e) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrower to the relevant Governmental Authority, the
Borrower will deliver to the Agent, at its address referred to in Section 11.05,
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.15
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(g) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and the
Agent two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from U.S. Federal withholding tax on payments
by the Borrower under this Agreement and other Loan Documents. Such forms shall
be delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of a Transferee that is a participation holder,
on or before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Non-U.S. Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Notwithstanding any other provision of this Section 2.15(g), a
Non-U.S. Lender shall not be required to deliver after the date hereof any form
pursuant to this Section 2.15(g) that such Non-U.S. Lender is not legally able
to deliver.
(h) The Borrower shall not be required to indemnify any
Non-U.S. Lender, or pay any additional amounts to any Non-U.S. Lender, in
respect of United States Federal withholding tax pursuant to paragraph (a) or
(c) above to the extent that (i) the obligation to withhold amounts with respect
to United States Federal withholding tax existed on the date such Non-U.S.
Lender became a party to this Agreement (or, in the case of a Transferee that is
a participation holder, on the date such participation holder became a
Transferee hereunder) or, with respect to payments to a New Lending Office, the
date such Non-U.S. Lender designated such New Lending Office with respect to a
Loan; provided, however, that this clause (i) shall not apply to any Transferee
or New Lending Office that becomes a Transferee or New Lending Office as a
result of an assignment, participation, transfer or designation made at the
request of or with the consent of the Borrower; and provided further, however,
that this clause (i) shall not apply to the extent the indemnity payment or
additional amounts any Transferee, or Lender (or Transferee) through a New
Lending Office, would be entitled to receive (without regard to this
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clause (i)) do not exceed the indemnity payment or additional amounts that the
person making the assignment, participation or transfer to such Transferee, or
Lender (or Transferee) making the designation of such New Lending Office, would
have been entitled to receive in the absence of such assignment, participation,
transfer or designation, (ii) the obligation to pay such additional amounts
would not have arisen but for a failure by such Non-U.S. Lender to comply with
the provisions of paragraph (g) above or (iii) the obligation to pay such
additional amounts does not result from a change in applicable tax law
(including, without limitation, applicable judicial decisions, statutes,
regulations or other administrative interpretations) occurring after the date
hereof.
(i) Any Lender (or Transferee) claiming any indemnity payment
or additional payment amounts payable pursuant to this Section 2.15 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the Borrower or
to change the jurisdiction of its applicable lending office if the making of
such a filing or change would avoid the need for or reduce the amount of any
such indemnity payment or additional amount which may thereafter accrue and
would not, in the sole determination of such Lender (or Transferee), be
otherwise disadvantageous to such Lender (or Transferee).
(j) Nothing contained in this Section 2.15 shall require any
Lender (or Transferee) or the Agent to make available any of its tax returns (or
any other information which it deems to be confidential or proprietary).
ARTICLE III.
ACKNOWLEDGMENT, RATIFICATION,
SECURITY AND ADMINISTRATIVE PRIORITY
Section 3.01. Pre-Petition Obligations. Each of the Borrower and the
Guarantor hereby acknowledges, confirms and agrees that the Borrower and the
Guarantor are indebted to the Pre-Petition Lenders for the Pre-Petition
Obligations, as of October 13, 1998, in respect of Pre-Petition Loans in the
aggregate principal amount of $15,659,459.47, together with interest accrued and
accruing thereon, and costs, expenses, fees (including attorneys' fees) and
other charges now or hereafter owed by the Borrower and the Guarantor to the
Pre-Petition Lenders, all of which are unconditionally owing by the Borrower to
the Lenders, without offset, defense or counterclaim of any kind, nature and
description whatsoever.
Section 3.02. Acknowledgment of Security Interests. The Borrower
hereby acknowledges, confirms and agrees that the Pre-Petition Lenders have and
shall continue to have valid, enforceable and perfected first priority and
senior liens upon and security interests in all Pre-Petition Collateral pursuant
to the Pre-Petition Agreements as in effect on the Filing Date to secure all of
the Pre-Petition Obligations.
Section 3.03. Binding Effect of Documents. Each of the Borrower and
the Guarantor hereby acknowledges, confirms and agrees that: (a) each of the
Pre-Petition Agreements
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to which it is a party is in full force and effect as of the date hereof, (b)
the agreements and obligations of the Borrower and the Guarantor contained in
the Pre-Petition Agreements constitute the legal, valid and binding obligations
of the Borrower and the Guarantor enforceable against it in accordance with
their respective terms and the Borrower and the Guarantor have no valid defense,
offset or counterclaim to the enforcement of such obligations and (c) the
Pre-Petition Lenders are and shall be entitled to all of the rights, remedies
and benefits provided for in the Pre-Petition Agreements, except as clauses (b)
and (c) above are subject to the automatic stay under the Bankruptcy Code upon
commencement of the Chapter 11 Cases.
Section 3.04. Collateral; Grant of Lien and Security Interest.
(a) Pursuant to the Custodian Agreement, the Custodian shall
hold the Collateral Documents as the exclusive bailee and agent for the Agent
and the Lenders pursuant to the terms of the Custodian Agreement and shall
deliver to the Agent trust receipts each to the effect that it has reviewed such
Collateral Documents in the manner and to the extent required by the Custodian
Agreement and identifying any deficiencies in such Collateral Documents so
reviewed.
(b) As security for the full and timely payment and
performance of all of the Obligations, the Borrower hereby assigns and pledges
to the Agent for the benefit of the Lenders and hereby grants to the Agent for
the benefit of the Lenders, a security interest in and to all of the property,
assets or interests in property or assets of the Borrower, of any kind or nature
whatsoever, real or personal, now existing or hereafter acquired or created
(including without limitation all property of the estate (within the meaning of
the Bankruptcy Code), and all causes of action arising under the Bankruptcy Code
or otherwise other than under Sections 544, 545, 547, 548, 549, 550, 551 or 553
of the Bankruptcy Code), and all proceeds, rents, products and profits of any of
the foregoing, including, without limitation, a security interest in and to the
following (all property of the Borrower subject to the security interest
referred to in this Section 3.04 being hereinafter referred to as the
"Collateral"):
(1) all Mortgage Loans now or hereafter made, including,
without limitation, all Mortgage Loans which have been pledged to
the Agent (whether by delivery to the Agent or to the Custodian on
the Agent's behalf or otherwise) or upon which any Loan is made by
the Agent or the Lenders, the Mortgage Note and Mortgage and the
other Collateral Documents evidencing said Mortgage Loans, all
servicing rights and servicing fees and other income arising from or
relating to such Mortgage Loans, and all instruments, documents,
loan agreements, guarantees, interest rate swap, cap or collar
agreements or similar agreements, contract rights, general
intangibles, property rights, proceeds and payments arising
therefrom or relating thereto, including without limitation the
following:
(a) all payments and prepayments of principal,
interest, and other income due or to become due thereon and
all proceeds
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therefrom, and all the right, title and interest of every
nature whatsoever of the Borrower in and to such property;
(b) all Liens with respect thereto or as security
therefor;
(c) all hazard insurance policies, title insurance
policies or condemnation proceeds with respect thereto
including, without limitation, any FHA mortgage insurance; and
(d) all prepayment premiums and late payment
charges with respect thereto;
(2) all real estate acquired by the Borrower by deed in
lieu of foreclosure or by foreclosure attributable to any such
Mortgage Loan;
(3) all Purchase Commitments issued with respect to any
such Mortgage Loan and all rights of the Borrower with respect
thereto;
(4) all right, title and interest of the Borrower in and
to all files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records, and
other records, information, and related data of the Borrower with
respect to such Mortgage Loans;
(5) all business records, computer tapes, software and
microfiche necessary or useful to identify and locate the
Collateral;
(6) each Wet Mortgage Loan and all documents and
agreements delivered in connection therewith or relating thereto
including, without limitation, the Mortgage Note, Mortgage and
Collateral Documents related thereto (such Wet Mortgage Loan and all
such documents, instruments and agreements and Collateral Documents
related thereto, being herein collectively called, the "Wet
Collateral") immediately upon the funding of the Loan in respect
thereof and the creation of the Wet Mortgage Loan;
(7) all cash from time to time deposited in any deposit
account of the Borrower with the Custodian, including, without
limitation, the Warehouse Account, the Restricted Account, and the
Operating Account;
(8) (a) all moneys, securities and other property and
the proceeds thereof, now or hereafter held or received by, or in
transit to, the Agent or any Lender from or for the Borrower,
whether for safekeeping, pledge, custody, transmission, collection
or otherwise, and all of the Borrower's sums and credits with, and
all of the Borrower's claims against the Agent or any Lender at any
time existing; (b) all rights, interests, choses in action, causes
of actions, claims and all other intangible property of every kind
and nature, in each instance whether now owned or hereafter acquired
by the Borrower, including, without limitation, all
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corporate and other business records, all loans, royalties,
servicing rights and all other forms of obligations receivable
whatsoever; (c) all computer programs, software, printouts and other
computer materials, credit files, correspondence, advertising
materials and other source or business identifiers; (d) all rights
under license and franchise agreements, servicing contracts and
other contracts and contract rights; (e) all interests in
partnerships, limited liability companies and joint ventures,
including all moneys due from time to time in respect thereof; (f)
all federal, state and local tax refunds and federal, state and
local tax refund claims and all judgments in favor of Borrower and
all of Borrower's rights with respect thereto; (g) all right, title
and interest under leases, subleases, licenses and concessions and
other agreements relating to personal property, including all moneys
due from time to time in respect thereof; (h) all lock-box and all
deposit accounts (general or special) or other accounts with any
bank or other financial institution, including, without limitation,
all depository or other accounts maintained by the Borrower at any
Lender and all funds on deposit therein; (i) all rights to
indemnification; (j) all reversionary interests in pension and
profit sharing plans and reversionary, beneficial and residual
interests in trusts; (k) all proceeds of insurance of which the
Borrower is the beneficiary; (l) all letters of credit, guaranties,
liens, security interests and other security held by or granted to
the Borrower; (m) all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral; and (n) all
present and future accounts, contract rights, chattel paper,
documents, instruments, general intangibles and other obligations of
any kind, whether or not similar to the foregoing, in each instance,
however and wherever arising;
(9) all Investment Property, securities, Securities
Accounts, Financial Assets and all Securities Entitlements of the
Borrower in any and all of the foregoing, excluding all such
property to the extent it is Collateral pursuant to the terms of the
Pledge Agreements; and
(10) all proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds which constitute
property of the types described in any of the clauses of this
Section 3.04 and, to the extent not otherwise included, all payments
under insurance (whether or not the Agent or the Borrower is the
loss payee thereof), or any indemnity, warranty, guaranty or insured
closing letter, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral);
in each case howsoever the Borrower's interest therein may arise or
appear (whether by ownership, security interest, claim or
otherwise).
The Borrower agrees to ▇▇▇▇ its computer records and
tapes to evidence the interests granted to the Agent and the Lenders
hereunder.
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(c) Upon entry of the Interim Bankruptcy Court Order, the
Liens and security interests in favor of the Agent referred to in Section
3.04(b) hereof shall be valid and perfected Liens and security interests, prior
to all other Liens and interests hereafter arising, except for Permitted Liens.
Such Liens and security interests and their priority shall remain in effect
until the Total Commitment has been terminated and all Obligations have been
repaid in cash in full.
(d) Notwithstanding anything herein to the contrary, no Person
entitled to Carve-Out Expenses shall be entitled to sell or otherwise dispose,
or seek or object to the sale or other disposition, of any Collateral.
(e) Nothing contained in this Agreement shall prevent the
payment by the Borrower and the Guarantor of any Priority Professional Expenses
in accordance with the provisions set forth in clause "first" of the definition
of the term "Agreed Administrative Expense Priorities."
Section 3.05. Administrative Priority. Each of the Borrower and the
Guarantor hereby agrees that the Obligations of the Borrower shall constitute
allowed administrative expenses in the Chapter 11 Cases having priority over all
administrative expenses of and unsecured claims against the Borrower and the
Guarantor now existing or hereafter arising, of any kind or nature whatsoever,
including without limitation all administrative expenses of the kind specified
in Sections 503(b) and 507(b) of the Bankruptcy Code, subject, as to priority,
only to Carve-Out Expenses having priority over the Obligations to the extent
set forth in the definition of Agreed Administrative Expense Priorities and,
subject to the terms of the Intercreditor Agreement and the Pledge Agreement,
the obligations of the Borrower and the Guarantor under the Greenwich DIP
Facility.
Section 3.06. Grants, Rights and Remedies. The Liens and security
interests granted pursuant to Section 3.04(b) hereof and administrative priority
granted pursuant to Section 3.05 hereof may be independently granted by the Loan
Documents and by other Loan Documents hereafter entered into. This Agreement,
the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order and such
other Loan Documents supplement each other, and the grants, priorities, rights
and remedies of the Agent and the Lenders hereunder and thereunder are
cumulative.
Section 3.07. No Filings Required. The Liens and security interests
referred to herein shall be deemed valid and perfected by entry of the Interim
Bankruptcy Court Order and the Final Bankruptcy Court Order, as the case may be,
and entry of the Interim Bankruptcy Court Order shall have occurred on or before
the date of the initial Loan hereunder. The Agent shall not be required to file
any financing statements, notices of Lien or similar instruments in any
jurisdiction or filing office or to take any other action in order to validate
or perfect the Lien and security interest granted by or pursuant to this
Agreement, the Interim Bankruptcy Court Order, the Final Bankruptcy Order or any
other Loan Document.
Section 3.08. Survival. The Liens, Lien priority, administrative
priorities and other rights and remedies granted to the Lenders pursuant to this
Agreement, the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order
and the other Loan Documents (specifically including but not limited to the
existence, perfection and priority of the Liens and
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security interests provided herein and therein, and the administrative priority
provided herein and therein) shall not be modified, altered or impaired in any
manner by any other financing or extension of credit or incurrence of debt by
the Borrower (pursuant to Section 364 of the Bankruptcy Code or otherwise), or
by any dismissal or conversion of the Chapter 11 Cases, or by any other act or
omission whatever. Without limitation, notwithstanding any such order,
financing, extension, incurrence, dismissal, conversion, act or omission:
(a) except for the Carve-Out Expenses having priority over the
Obligations to the extent set forth in the definition of Agreed Administrative
Expense Priorities and, subject to the terms of the Intercreditor Agreement and
the Pledge Agreement, the obligations of the Borrower and the Guarantor under
the Greenwich DIP Facility, no costs or expenses of administration which have
been or may be incurred in the Chapter 11 Cases or any conversion of the same or
in any other proceedings related thereto, and no priority claims, are or will be
prior to or on a parity with any claim of the Agent and the Lenders against the
Borrower and the Guarantor in respect of any Obligation,
(b) the Liens in favor of the Lenders set forth in Section
3.04 hereof shall constitute valid and perfected Liens, subject only to the
Permitted Liens, to which such Liens and security interests shall or may be
subordinate and junior, and shall be prior to all other Liens and interests, now
existing or hereafter arising, in favor of any other creditor or any other
Person whatever, and
(c) the Liens in favor of the Lenders set forth herein and in
the Loan Documents shall continue valid and perfected without the necessity that
the Agent file financing statements or otherwise perfect its Lien under
applicable nonbankruptcy law.
Section 3.09. Responsibility for Collateral. To the extent required
by Section 9-207 of the applicable UCC or other applicable law, the Agent shall
use reasonable care in the care, transmittal, custody and preservation of
Collateral in its possession; reasonable care shall be deemed to be such care
that the Agent exercises in the transmittal, care, preservation and custody of
its own property of a similar nature. Notwithstanding the foregoing, the Agent
shall have (1) no responsibility with respect to the risk of accidental loss or
damage to Collateral in its possession, (2) no obligation to provide insurance
for or in respect of the Collateral and (3) no responsibility for Collateral not
in its possession. The Agent shall have no fiduciary responsibility or duty to
the Borrower with respect to the care, preservation, holding, maintenance or
transmittal of the Collateral delivered to the Agent, the Custodian or any other
Person.
Section 3.10. Representations and Warranties Concerning Collateral.
The Borrower hereby represents and warrants to the Agent and the Lenders and by
submitting each Loan request shall be deemed to have represented and warranted
to the Agent and the Lenders that as of the date of such Loan request and as to
each Pledged Mortgage included or to be included as an Eligible Residential
Mortgage Loan:
(1) Ownership; No Liens; Pledge to the Agent. The Borrower is
(or, in the case of a Wet Loan, will be upon the funding of the related
Wet Mortgage Loan)
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the legal and equitable owner of such Pledged Mortgage and all other items
of Collateral related thereto, free and clear of all Liens, except for the
Liens permitted under this Agreement. Such Pledged Mortgage and other
items of Collateral (a) comply (or, in the case of a Wet Loan, will comply
upon the funding of the related Wet Mortgage Loan), as applicable, with
all of the requirements of this Agreement, including those required for
the inclusion in the Borrowing Base, and (b) have been (or, in the case of
a Wet Loan, will be upon the funding of the related Wet Mortgage Loan)
validly pledged or assigned to the Agent, subject to no other Liens other
than Liens permitted under this Agreement, and the Agent has and, upon
entry of the Interim Bankruptcy Court Order, will have (or, in the case of
a Wet Loan, will have upon the funding of the related Wet Mortgage Loan) a
first perfected Lien thereon, within the meaning of the applicable UCC.
Such Borrower has the full right and authority to pledge the Collateral
pledged by it hereunder and has not pledged the Collateral, or any part
thereof, to any other Person other than in connection with Permitted
Liens.
(2) Compliance with Laws; Enforceability; Modification;
Required Documents, Etc. Each such Pledged Mortgage and documents related
thereto (a) has been made (or, in the case of a Wet Loan, will be made
upon the funding of the related Wet Mortgage Loan) in compliance, in all
respects, with all requirements of the Real Estate Settlement Procedures
Act, the Equal Credit Opportunity Act, the Federal Truth-In-Lending Act
and all other applicable Laws, (b) is (or, in the case of a Wet Loan, will
be upon the funding of the related Wet Mortgage Loan) genuine, valid, duly
authorized, properly executed, properly recorded (or duly delivered to the
appropriate recording office for recordation) and enforceable in
accordance with its terms, without defense or offset, (c) has not been
modified or amended and has not had any requirements thereof waived except
for minor modifications in the ordinary course of the Borrower's business
which do not in any event adversely affect the value or marketability of
the relevant item of Collateral, (d) complies with the terms of this
Agreement, (e) has been (or, in the case of a Wet Loan, will be upon the
funding of the related Wet Mortgage Loan) fully advanced in the respective
face amounts thereof and (f) is (or, in the case of a Wet Loan, will be
upon the funding of the related Wet Mortgage Loan) secured by a Mortgage
which is a first or second Lien on the respective Single Family Residence
described therein. With respect to each such Pledged Mortgage, the
Borrower has (or, in the case of a Wet Loan, will have upon the funding of
the related Wet Mortgage Loan) in its possession all documents and
instruments required to be possessed by the Borrower (x) under this
Agreement, (y) under FNMA's or FHLMC's rules, regulations or guidelines,
if applicable, and (z) under a Purchase Commitment, if any, other than
those documents and instruments which are in the possession of the
Custodian.
(3) Defaults. No default, nor any event which would become a
default with notice or lapse of time or both, has occurred and is
continuing under such Pledged Mortgage.
(4) [Intentionally Omitted]
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(5) Insurance Relating to Pledged Mortgages. All fire and
casualty policies covering the premises encumbered by such Mortgage
included in the Pledged Mortgages (a) name (or, in the case of a Wet Loan,
will name upon the funding of the related Wet Mortgage Loan) such Borrower
as the insured under a standard mortgagee clause not less favorable to the
Borrower than the applicable standard mortgagee endorsement, (b) are (or,
in the case of a Wet Loan, will be upon the funding of the related Wet
Mortgage Loan) in full force and effect, and (c) afford (or, in the case
of a Wet Loan, will afford upon the funding of the related Wet Mortgage
Loan) insurance against fire and such other hazards as are usually insured
against in the broad form of extended coverage insurance from time to time
available. All flood, title and other insurance policies (including
required private mortgage insurance) (i) name (or, in the case of a Wet
Loan, will name upon the funding of the related Wet Mortgage Loan) the
Borrower as an additional insured under a standard mortgagee clause not
less favorable to the Borrower than the applicable standard mortgagee
endorsement, or in the case of title insurance, the Borrower is the
insured mortgagee thereunder by virtue of being the assignee or assign
under the policy, (ii) are (or, in the case of a Wet Loan, will be upon
the funding of the related Wet Mortgage Loan) in full force and effect,
and (iii) afford (or, in the case of a Wet Loan, will afford upon the
funding of the related Wet Mortgage Loan) insurance against the hazards
and risks required to be insured against by any Agency or prudent
underwriting practices. The Borrower has (or, in the case of a Wet Loan,
will have upon the funding of the related Wet Mortgage Loan) (a) caused to
be performed all acts required to preserve the rights and remedies of the
Agent and the Lenders in any insurance policies of the Borrower or any
mortgagor applicable to a Mortgage Loan and (b) complied with all
requirements of the Agencies or any Investor for obtaining insurance with
respect to such Pledged Mortgage.
(6) Escrow Deposits. Any Escrow Deposits are held by the
Borrower in accordance with applicable Laws and any agreements relating to
same and have been and will be applied to the obligations for which they
were deposited in accordance with any agreements relating to same.
(7) Additional Representations. The additional representations
and warranties set forth in Schedule 3.10(7) attached hereto are true and
correct.
Section 3.11. Release of Security Interest. (a) With respect to
Collateral that constitutes Eligible Residential Mortgage Loans, the Agent
shall, promptly after the receipt of a request from the Borrower in connection
with any sale or refinancing of such Collateral, release such Collateral
specified in the Borrower's request from the Lien granted hereby and thereupon
deliver the same to the Borrower; provided, however, that any such release shall
be subject to the consent of the Agent if (i) either before or after giving
effect to such release and the transactions in connection therewith, the
aggregate amount of Loans outstanding shall exceed the then current Borrowing
Base or (ii) either before or after giving effect to such release a Default or
Event of Default has occurred and is continuing.
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(b) With respect to Collateral that does not constitute
Eligible Residential Mortgage Loans, the Agent shall, promptly after the receipt
of a request from the Borrower in connection with any sale or refinancing of
such Collateral, release such Collateral specified in the Borrower's request
from the Lien granted hereby and thereupon deliver the same to the Borrower;
provided, however, that (i) any such release shall be subject to the consent of
the Agent if either before or after giving effect to such release and the
transactions in connection therewith a Default or Event of Default has occurred
and is continuing, and (ii) the release procedures for the capital stock of the
Subsidiaries of the Borrower that own Retained Interest Receivables and the
Retained Interest Receivables themselves (none of which are pledged as
Collateral but which may be pledged as Collateral pursuant to the terms of the
Supplemental Security Agreement, in the form of Annex D to the Pledge Agreement,
signed by such Subsidiaries) shall be as set forth in the Pledge Agreement.
(c) Upon the commencement of a foreclosure proceeding relating
to a Pledged Mortgage, the Agent shall release the related Mortgage Note, the
Mortgage and the other related Collateral Documents with respect to such Pledged
Mortgage promptly after its receipt of a written notice from the Borrower,
certified by its Designated Borrowing Officer, of the need for such Collateral
Documents in connection with such foreclosure proceeding.
(d) Notwithstanding the provisions set forth in subsections
(a) and (b) of this Section 3.11, the obligation of the Agent to release any
Collateral is subject to its receipt of the Collateral Sale Proceeds from such
released Collateral, except to the extent otherwise permitted by Section 2.04.
Section 3.12. Covenants and Agreements Concerning Collateral. The
Borrower covenants and agrees as follows:
(1) Defense of Interests. It will defend the right, title and
interest of the Agent in and to the Pledged Mortgages and all other items
of Collateral against the claims and demands of all Persons other than
those in connection with Permitted Liens.
(2) Modification; Etc. Except as provided in Section 3.10(2),
it shall not amend, modify, or waive any of the terms and conditions of,
or settle or compromise any claim in respect of, any Pledged Mortgages or
other Collateral, or any rights related to any of the foregoing.
(3) Sale or Encumbrance. It shall not sell, option, assign,
transfer or otherwise alienate any Collateral, other than in the ordinary
course of its business and in accordance with the terms and provisions of
this Agreement, or permit any Collateral or any interest therein to be
subject to a Lien, except the Liens permitted by this Agreement.
(4) Performance under Servicing Contracts; Escrow Deposits. It
shall service or cause to be serviced all Mortgages in accordance with the
terms and provisions set forth in Exhibit K attended hereto. The Borrower
hereby agrees that upon the occurrence and during the continuance of an
Event of Default, the Agent may, subject to the prior rights of any
sub-servicer pursuant to a legally binding servicing agreement
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between the Borrower and such sub-servicer, terminate the Borrower as
servicer and transfer servicing to the Agent's designee, at no cost or
expense to the Agent and the Lenders, it being agreed that the Borrower
will pay any and all fees required to effectuate the transfer of servicing
to the designee of the Agent. The Borrower shall permit the Agent or its
designee to inspect the Borrower's servicing facilities, in the absence of
a continuing Event of Default, during normal business hours, for the
purpose of satisfying the Agent that the Borrower has the ability to
service the Mortgage Loans as provided in this Agreement. It shall hold
all Escrow Deposits in accordance with all applicable Laws and all
agreements relating to such Escrow Deposits, without commingling the same
with non-escrow funds, and shall hold and apply the same for the purposes
for which such Escrow Deposits were collected in accordance with all
applicable Laws and agreements.
(5) Failure to Qualify for Inclusion in Borrowing Base and
Related Matters. It shall notify the Agent of (a) any default under any
Pledged Mortgage, (b) the failure of any items of Collateral which are
required by the terms hereof to be covered by a Purchase Commitment to be
so covered, (c) the failure of any Eligible Residential Mortgage Loan that
is included in the Borrowing Base to no longer satisfy the requirements of
this Agreement for inclusion in the Borrowing Base, and (d) any other
matter which has a Material Adverse Effect on the Collateral.
(6) Further Assurances. From time to time, at the expense of
such Borrower (including the payment of all filing fees whether the items
are filed by such Borrower or by the Agent), the Borrower will promptly
execute and deliver all further instruments and documents, and take all
further actions, that may be necessary or desirable, or that the Agent may
reasonably request, in order to preserve, perfect and protect any Lien
granted or purported to be granted hereby or to enable the Agent and the
Lenders to exercise and enforce their rights and remedies hereunder with
respect to any Collateral. The assurances contemplated by this Section
3.12(6) shall be given under applicable nonbankruptcy Law as well as the
Bankruptcy Code, it being the intention of the parties that the Agent may
request assurances under applicable nonbankruptcy Law, and such request
shall be complied with (if otherwise made in good faith by the Agent)
whether or not the Interim Bankruptcy Court Order or the Final Bankruptcy
Court Order, as the case may be, is in force and whether or not dismissal
of the Chapter 11 Cases or any other action by the Bankruptcy Court is
imminent, likely or threatened.
(7) Inspection. The Agent or a representative thereof, shall
have the right (i) to maintain a representative from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or
any other independent accountant on the premises of the Borrower
commencing on the Closing Date and continuing for so long as the Agent may
require and (ii) thereafter, at any reasonable time, from time to time, to
enter the Borrower's premises to inspect, in the absence of a continuing
Event of Default, during normal business hours the Collateral, documents
and agreements related thereto, the records relating to the Collateral and
the underwriting and other procedures of the Borrower. The Agent and each
of the Lenders shall have the right to make abstracts or photocopies from
or of the Borrower's books and records pertaining
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to the Collateral and the cost and expense of such abstracts and
photocopies shall be borne by the Borrower.
(8) Wet Collateral. The Borrower shall execute any and all
additional documents, agreements, notices or acknowledgments as the Agent
shall request to maintain, preserve, perfect or protect the Agent's Lien
in such Wet Collateral. While the Borrower is in possession of the Wet
Collateral, it will hold same exclusively for the Agent, without authority
to make any other disposition thereof, or of the proceeds thereof.
Section 3.13. Agent's Approval of Investors. With respect to any
Mortgage Loan that is required hereunder to be subject to a Purchase Commitment,
the Agent shall have the right, in its sole discretion, to approve or disapprove
of the Investor that issued the Purchase Commitment.
Section 3.14. Uniform Commercial Code Financing Statements. The
Agent is hereby authorized to file in the name of the Borrower, without the need
for the Borrower's signature thereto, such UCC financing statements, amendments
thereto and continuations thereof which the Agent at any time determines is
necessary to perfect or better assure the Lien and other benefits, intended to
be afforded hereby. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
Section 3.15. Collection Rights. Unless a Default or Event of
Default shall have occurred and be continuing, and except with respect to
Collateral Sale Proceeds which pursuant to the terms of this Agreement shall be
required to be paid to the Agent directly by any Person purchasing or
refinancing a Mortgage Loan or other Collateral, the Borrower shall be entitled
to receive and collect directly all principal and interest payable to such
Borrower in respect of the Collateral and to exercise all voting or consensual
powers in respect of the Collateral in a manner not inconsistent with the terms
of this Agreement. Upon the occurrence and during the continuance of a Default
or an Event of Default, the Agent shall be entitled to receive and collect all
sums payable to the Borrower in respect of the Collateral, and in such case (a)
the Agent may, in the Agent's name or in the name of the Borrower or otherwise,
demand, ▇▇▇ for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but shall be
under no obligation to do so, (b) the Borrower shall forthwith pay to the Agent
at its principal office all amounts thereafter received by the Borrower upon or
in respect of any of the Collateral, advising the Agent as to the source of such
funds, and (c) all amounts so received and collected by the Agent shall be held
by the Agent as part of the Collateral and used to reduce the Obligations.
Section 3.16. Attorney-in-Fact. The Agent is hereby appointed the
agent and attorney-in-fact of the Borrower for the purpose of carrying out the
provisions of this Agreement, taking any action and executing any instruments
which the Agent may deem necessary or advisable to accomplish the purposes
hereof and to obtain for the Agent, on behalf of the Lenders, the benefits of
this Agreement, the other Loan Documents, the Collateral and the security
intended to be provided to the Lenders hereby and thereby, which agency and
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appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, the Agent shall have the right
and power in the place and stead of the Borrower, and in the name of the
Borrower or otherwise (from time to time, upon the occurrence and during the
continuance of an Event of Default and without prior notice to or consent from
the Borrower, and without releasing or in any manner affecting the Borrower's
Obligations hereunder): (a) to receive, endorse and collect all checks, drafts
or chattel paper made payable to the order of the Borrower (provided that all
such endorsements recite that they are made without recourse) representing any
payment of the Pledged Mortgages or other items of Collateral, to give full
discharge for the same and to complete any endorsements or assignments made in
blank or which are updated or otherwise incomplete or to execute new
endorsements (provided that all such endorsements recite that they are made
without recourse) or assignments to any Persons, (b) to ask, demand, collect,
▇▇▇ for, recover, compound, receive and give, acquittances and receipts for
moneys due and to become due under or in respect of any of the Collateral, (c)
to file any claims or take any action or institute any proceedings which the
Agent may deem necessary or desirable for the collection or completion of, or
perfection of the Agent's interest in any of the Collateral or otherwise to
enforce the rights of the Borrower or the Agent with respect to any of the
Collateral, this Agreement or the other Loan Documents, including, without
limitation, the endorsement of any Mortgage Note, and the creation, execution
and recording of any Assignment of Mortgage for any Pledged Mortgage and (d) if
the Borrower fails to perform any obligation under this Agreement or any Loan
Document or cause performance of such obligation.
Section 3.17. The Borrower Remains Liable. Anything herein to the
contrary notwithstanding: (1) the Borrower shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed; (2) the exercise by the Agent
of any of its rights hereunder shall not release the Borrower from any of its
duties or obligations under the contracts and agreements included in the
Collateral; and (3) the Agent and the Lenders shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Agent and the Lenders be obligated to
perform any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
ARTICLE IV.
BORROWING BASE
Section 4.01. Condition of Lending. The Agent and the Lenders shall
have no obligation to make a Loan to the extent that the aggregate unpaid
principal amount of the Loans exceeds, or after giving effect to a requested
Loan will exceed, the lesser of the Total Commitment and the then current
Borrowing Base.
Section 4.02. Mandatory Prepayment. Concurrently with the delivery
of any Borrowing Base Certificate, the Borrower shall give notice to the Agent
of any mandatory prepayment pursuant to Section 2.06(c), which notice shall
specify a prepayment date no later than
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the earlier of the date on which such Borrowing Base Certificate is given and
the date on which such Borrowing Base Certificate is required to be provided to
the Lenders.
Section 4.03. Rights and Obligations Unconditional. Without
limitation of any other provision of this Agreement, the rights of the Agent and
the Lenders and the obligations of the Borrower under this Article IV are
absolute and unconditional, and the Agent and the Lenders shall not be deemed to
have waived the condition set forth in Section 4.01 hereof or their right to
payment in accordance with Section 4.02 hereof in any circumstance whatever,
including but not limited to circumstances wherein the Agent or the Lenders
(knowingly or otherwise) make a Loan hereunder in excess of the Borrowing Base.
Section 4.04. Borrowing Base Certificate.
(a) By 12:00 noon, New York City time (i) on Friday of each
week, or if the applicable Friday is not a Business Day, then on the following
Business Day (and on any other date on which the Agent reasonably requests), the
Borrower shall furnish to the Agent a Borrowing Base Certificate, certified as
true and correct by a Designated Financial Officer, setting forth the Borrowing
Base and the other information required therein as of the Borrower's close of
business on the Friday of the preceding week, together with such other
information with respect to any asset included in the Borrowing Base as the
Agent may request.
(b) In the event of any dispute about the eligibility of any
Mortgage Loan for inclusion in the Borrowing Base or the valuation thereof, the
Agent's good faith judgment shall control.
(c) The Agent may dispute the eligibility of any Mortgage Loan
for inclusion in the Borrowing Base or the valuation thereof by notice of such
dispute to the Borrower, in which case the value of such Mortgage Loan shall, at
the discretion of the Borrower, either not be included in the Borrowing Base or
be included in the Borrowing Base with a value reasonably acceptable to the
Agent.
(d) Each Borrowing Base Certificate shall be accompanied by
backup schedules showing the derivation thereof and containing such detail and
such other and further information as the Agent may reasonably request from time
to time.
Section 4.05. General Provisions. Notwithstanding anything to the
contrary in this Article IV, in no event shall any single Mortgage Loan be
counted twice in determining the Borrowing Base.
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Initial Loan. The obligation
of each Lender to make the initial disbursement of its portion of the initial
Loan is subject to the
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condition precedent that the Agent shall have received on or before the Closing
Date each of the following documents, in form and substance satisfactory to the
Agent and its counsel, and each of the following requirements shall have been
fulfilled:
(1) Interim Bankruptcy Order. The Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order shall have been entered by the
Bankruptcy Court and the Agent shall have received a certified copy of
such order, and such order shall be in full force and effect and shall not
have been reversed, stayed, modified or amended absent the consent of the
Agent, the Lenders and the Borrower.
(2) Evidence of Due Organization of and all Corporate Actions
by the Borrower and the Guarantor. A certificate of the respective
Secretary or Assistant Secretary of the Borrower and the Guarantor, dated
the Closing Date, attesting to the certificate of incorporation and
by-laws of the Borrower and the Guarantor and all amendments thereto, and
to all corporate actions taken by the Borrower and the Guarantor,
including, without limitation, resolutions of its board of directors,
authorizing the execution, delivery and performance of the Loan Documents
to which it is a party, and each other document to be delivered by the
Borrower and the Guarantor pursuant to the Loan Documents to which it is a
party.
(3) Incumbency and Signature Certificate of the Borrower and
the Guarantor. A certificate of the respective Secretary or Assistant
Secretary of the Borrower and the Guarantor, dated the Closing Date,
certifying the names and true signatures of the officers of the Borrower
and the Guarantor authorized to sign the Loan Documents to which it is a
party, and the other documents to be delivered by the Borrower and the
Guarantor to which it is a party including, without limitation, each loan
request.
(4) Good Standing Certificates for the Borrower and the
Guarantor. A certificate, dated reasonably near the Closing Date, from the
respective Secretary of State (or other appropriate official) of the
jurisdiction of incorporation of the Borrower and the Guarantor certifying
as to the due incorporation and good standing of the Borrower and the
Guarantor, and certificates, from the Secretary of State (other
appropriate official) of each other jurisdiction where the Borrower and
the Guarantor is required to be qualified to conduct business or where
such qualification is necessary to enforce any Mortgage Loan, certifying
that the Borrower and the Guarantor, as applicable, are duly qualified to
do such business and is in good standing in such state.
(5) Notes. The Notes duly executed by the Borrower.
(6) Guaranty. The Guaranty duly executed by the Guarantor.
(7) Pledge Agreement. The Pledge Agreement duly executed and
delivered by the Borrower, the Guarantor and Greenwich, together with
stock certificates, stock powers, Retained Interest Receivables, bond
powers and other documents and instruments in each case required by the
terms of the Pledge Agreements.
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(8) Material Adverse Change. No Material Adverse Change has
occurred since August 31, 1998, except as disclosed in the Form 10-Q and
8-K statements filed with the Securities and Exchange Commission after
such date, copies of which have been provided to the Agent, and other than
events that customarily occur as a result of events leading up to and
following the commencement of a case under Chapter 11 of the Bankruptcy
Code.
(9) Fees. All fees, costs and expenses payable to the Agent
and its legal counsel required to be paid at or prior to the closing of
the transactions contemplated hereby including, without limitation, the
fees set forth in the Fee Letter, shall have been paid in full on the
Closing Date.
(10) Opinion of Counsel for the Borrower and Guarantor. A
favorable opinion of internal and external counsel for the Borrower and
Guarantor, dated the Closing Date, in form and substance satisfactory to
the Agent, covering, among other things, entry of the Interim Bankruptcy
Court Order or the Final Bankruptcy Court Order, as appropriate, and as to
such other matters as the Agent may reasonably request.
(11) Certificate. The following statements shall be true and
the Agent shall have received a certificate signed by the President or
Senior Vice President of the Borrower dated the Closing Date stating that:
(a) The representations and warranties contained in this
Agreement and in each of the other Loan Documents are correct on and
as of the Closing Date as though made on and as of such date; and
(b) No Default or Event of Default has occurred and is
continuing.
(12) Custodian Agreement. An amendment to the Custodian
Agreement duly executed and delivered by the Borrower and the Custodian.
(13) Mortgage Loan Schedule and Exception Report. A Mortgage
Loan Schedule and Exception Report, dated the Closing Date, from the
Custodian duly completed relating to the Pledged Mortgages on the Closing
Date.
(14) Receipt of Financial Statements. Unaudited financial
statements of the Borrower for the eight months ended August 31, 1998, in
accordance with the requirements of subsection 7.08(2).
(13) Insurance. A certificate of insurance evidencing
insurance as is required by Section 7.05 hereof, naming the Agent and the
Lenders as loss payee or additional insured, as appropriate.
(14) Wet Closing Agent Agreement. A form of the Wet Closing
Agent Agreement shall be delivered to and approved by the Agent.
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(15) Lien Priority. The Liens in favor of the Agent pursuant
to Section 3.05 hereof shall be valid and perfected Liens prior to all
other Liens on the Collateral, except for Permitted Liens.
(16) Payment of Pre-Petition Obligations. All Pre-Petition
Obligations outstanding as of the Closing Date shall be repaid in full
(which may be with the proceeds of the initial Loans made hereunder) and
the Borrower shall have obtained and delivered to the Agent an order
signed by the Bankruptcy Court, in form and substance satisfactory to the
Agent, providing for such payment.
(17) Greenwich DIP Facility. Evidence satisfactory to the
Agent that Greenwich has provided the Borrower with a debtor-in-possession
financing facility substantially similar to its pre-petition financing
facility (the "Greenwich DIP Facility") for such amount as approved by the
Bankruptcy Court in its interim order relating to the Greenwich DIP
Facility.
(18) Intercreditor Agreement. The Intercreditor Agreement duly
executed and delivered by Greenwich.
(19) Availability. After giving effect to all Loans
outstanding on the Closing Date (including all Loans made on the Closing
Date), the Availability shall not be less than $20,000,000 and the
Borrower shall deliver to the Agent a certificate of its Designated
Financial Officer certifying that the Availability is not less than
$20,000,000 and containing the calculation thereof.
(20) Additional Documentation. Such other approvals, opinions
or documents as the Agent any reasonably request.
Section 5.02. Conditions Precedent to All Loans. As a condition
precedent to the Agent or the Lender making any Loan (including the initial
Loan), each of the following conditions precedent shall be true, and the
submission by the Borrower to the Agent of a Notice of Borrowing and the
Borrower's acceptance of the proceeds of such Loan shall be deemed to be a
representation and warranty by the Borrower on the date of such Loan that:
(a) all the representations and warranties contained in
this Agreement and in each of the other Loan Documents are correct
on and as of the date of providing such Loan as though made on and
as of such date (other than those which expressly speak only as of a
different date, which must be correct as of such date);
(b) no Default or Event of Default has occurred and is
continuing, or could result from providing such Loan;
(c) since August 31, 1998 there has been no Material
Adverse Change, except as disclosed in Form 8-K statements filed
after such date and on or before the Closing Date with the
Securities and Exchange Commission, copies
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of which have been provided to the Agent, and other than events that
customarily occur as a result of events leading up to and following
the commencement of a case under Chapter 11 of the Bankruptcy Code;
(d) on the date of such Loan, the Interim Bankruptcy
Court Order or the Final Bankruptcy Court Order, as the case may be,
and the interim order or the final order, as the case may be, of the
Bankruptcy Court relating to the Greenwich DIP Facility shall have
been entered by the Bankruptcy Court, and the Agent shall have
received a certified copy of the same and such order shall be in
full force and effect and shall not have been reversed, stayed,
modified or amended absent the consent of the Agent, the Lenders and
the Borrower; and
(e) with respect to any Loan to be made on or after the
thirtieth day following the Entry Date, (i) the Final Bankruptcy
Court Order shall be in full force and effect and shall not have
been reversed, stayed, modified or amended absent the consent of the
Agent, the Lenders and the Borrower, and (ii) the final order of the
Bankruptcy Court relating to the Greenwich DIP Facility shall be in
full force and effect and shall not have been reversed, stayed,
modified or amended absent prior written notice of such action given
by the Borrower to the Agent and the Lenders.
Section 5.03. Loan Requests. In connection with each request for a
Loan, the Borrower shall deliver to the Agent a signed Notice of Borrowing and a
Mortgage Loan Schedule attached thereto. For each Loan requested, the Agent
shall receive the written Notice of Borrowing request not later than (i) 10:00
a.m. (New York City time) on the Business Day of the proposed borrowing in the
case of a Prime Loan and (ii) not later than 12:00 noon (New York City time) on
the third Business Day before the date of such proposed borrowing in the case of
a Eurodollar Loan. Prior to the funding of a Loan the proceeds of which shall be
used to originate a Mortgage Loan, other than a Wet Mortgage Loan (and during
the rescission period required by the Truth in Lending Act), the Borrower or the
Closing Agent on behalf of the Borrower shall deliver to the Custodian all of
the Collateral Documents as listed on Exhibit F attached hereto (the
"Description of Collateral Documents"), including, without limitation, each of
the following:
(a) written wire instructions advising the Custodian to wire
Loan proceeds from the Borrower's account to the Closing Agent reflecting
the intended amount of the Mortgage Loans to be financed and giving other
wiring instructions as needed by the Custodian;
(b) the original of each Mortgage Note duly executed at
settlement, and duly endorsed by the Borrower in blank and containing any
necessary intervening endorsements on a Mortgage purchased by the
Borrower;
(c) a copy of each Mortgage duly executed at settlement and in
recordable form, certified in writing by the Closing Agent as being a true
and accurate copy of the original Mortgage;
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(d) original assignment of each Mortgage, in recordable form
and executed by the Borrower in blank, and with respect to a Mortgage
purchased by the Borrower, the original recorded intervening assignment or
a copy thereof certified in writing by the Borrower as being a true and
accurate copy of the original intervening assignment delivered for
recording; and
(e) with respect to each Mortgage Loan to be pledged by the
Borrower hereunder which was funded by the Borrower with the Borrower's
own funds or purchased by the Borrower, the Borrower will deliver the
documents required by this Section 5.03 at or prior to the time of making
its loan request.
Upon receipt thereof, the Custodian shall review all documents and instruments
to determine whether on their face only they are satisfactory pursuant to the
terms of the Custodian Agreement. Not later than 3:00 p.m., New York City time,
on the date of the proposed Loan, the Custodian shall deliver to the Agent and
the Borrower an Exception Report and a trust receipt with respect to the
Collateral Documents for the Mortgage Loans to be pledged to the Agent.
Section 5.04. Disbursing Loans. Upon satisfaction of all conditions
for the making of a Loan (other than a Wet Loan) under this Agreement to fund
Mortgage Loans and subject to the limitations contained herein, on the date of
the requested Loan, the Agent shall, subject to the next sentence, wire transfer
to the Warehouse Account the requested Loan amount and instruct the Custodian to
wire transfer such amount to the Closing Agent account designated in the
applicable Mortgage Loan Schedule (or with respect to a requested Loan where the
Pledged Mortgage was previously funded by the Borrower with the Borrower's own
funds, to the Operating Account). To the extent that the amount of funds to be
provided by the Lenders are insufficient to close and fund the applicable
Mortgage Loan, the Custodian shall transfer from the Operating Account to the
Warehouse Account sufficient additional funds, and the Custodian will not
initiate a wire transfer of funds to the applicable Closing Agent until the
Agent has received a confirmation from the Custodian that sufficient additional
funds are on deposit in the Warehouse Account. To the extent that the amount of
funds to be provided by the Lenders exceeds the amount needed to close and fund
the applicable Mortgage Loan, the Custodian shall transfer the excess amount
from the Warehouse Account to the Operating Account for use by the Borrower.
Upon the Agent's wire transfer of the Loan proceeds into the Warehouse Account,
the applicable Loan shall be deemed made.
Section 5.05. Wet Mortgage Loan Closings. (1) The Borrower may,
subject to the Agent's approval, and in the Agent's sole discretion, deliver Wet
Mortgage Loans in pledge under this Agreement for inclusion in the Borrowing
Base up to the Wet Mortgage Loan Sublimit without the prior delivery of all
original Collateral Documents otherwise required by this Agreement. In
connection with the pledge of any such Wet Mortgage Loans, the Borrower shall
deliver to the Agent a Notice of Borrowing which specifies that the requested
Loan shall fund a Wet Mortgage Loan. Upon such receipt of the required Notice of
Borrowing, the Agent shall include any such Wet Mortgage Loan in the Borrowing
Base on the applicable Mortgage Loan Closing Date notwithstanding that such Wet
Mortgage Loan many not yet have been closed and funded for purposes of
permitting the requested Wet Loan to be made in respect thereof. If a Wet
Mortgage Loan shall not be closed and funded on or before the second Business
Day
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immediately following the Mortgage Loan Closing Date specified, or shall be
closed but subsequently rescinded pursuant to the Truth in Lending Act, the
Borrower shall immediately notify the Agent and the Wet Closing Agent to such
effect and such Wet Mortgage Loan shall cease to be included in the Borrowing
Base and the Wet Closing Agent shall on the third Business Day immediately
following the Mortgage Loan Closing Date return to the Agent in immediately
available funds the amount of Loan proceeds advanced in respect thereof.
(2) In connection with each Wet Closing, the Borrower agrees that it
shall deliver all Collateral Documents relating to a Wet Mortgage Loan to the
Custodian not later than five Business Days after the date of the making of the
Wet Loan in respect thereof, provided that the Agent, in its sole discretion,
may extend such five Business Day period to ten Business Days but in no event
shall the aggregate principal amount of Wet Loans with respect to which the
related Collateral Documents have not been delivered to the Custodian within
five Business Days after the date of such Wet Loan exceed at any time $500,000.
In the event that the Agent shall not have received all such Collateral
Documents complying in all respects with the requirements of this Agreement
within such five Business Day period or such extended period (as the case may
be), such Wet Mortgage Loan shall cease to be included in the Borrowing Base.
Promptly after the receipt of the Collateral Documents, the Custodian shall
deliver an Exception Report and trust receipt with respect thereto.
(3) Upon satisfaction of all conditions for the making of a Wet Loan
under this Agreement and subject to the limitations contained herein, Wet Loans
shall be funded in the following manner as directed by the Borrower in each
Notice of Borrowing:
(a) Wire Transfers: On the date of the requested Wet Loan, the
Agent shall, subject to the next sentence, wire transfer to the
Warehouse Account the requested Loan amount and direct the Custodian
to wire transfer such amounts to the Closing Agent account
designated in the applicable Mortgage Loan Schedule. To the extent
that the amount of funds to be provided by the Lenders are
insufficient to close and fund the applicable Wet Mortgage Loan, the
Custodian shall transfer from the Operating Account to the Warehouse
Account sufficient additional funds, and the Custodian will not
initiate a wire transfer of funds to the applicable Wet Closing
Agent until sufficient additional funds are on deposit in the
Warehouse Account. Upon the Agent's wire transfer of the Loan
proceeds into the Warehouse Account, the applicable Wet Loan shall
be deemed made, provided, however, that until the applicable Wet
Mortgage Loan is closed and funded, the Lenders shall have a Lien on
the Wet Loan proceeds as security for all Obligations owed to the
Lenders and the Closing Agent shall hold such Wet Loan proceeds as
agent for and on behalf of the Agent and the Lenders in accordance
with the applicable Wet Closing Agent Agreement.
(b) Upon closing each Wet Mortgage Loan, the Wet Closing Agent
shall, unless advised by the Custodian to the contrary (which advice
may be by telephone), deliver the applicable Collateral Documents to
the Borrower for endorsement of the Note and transmittal to the
Custodian within the five Business
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Day time period provided herein as such period may be extended
pursuant to Section 5.05(2). While the Collateral Documents are in
the Borrower's possession, they shall be held in trust for the
benefit of the Agent and the Lenders and the Borrower shall have no
authority to transfer same to any other Person other than the
Custodian, or, if required by the Agent, at the Agent's direction.
(c) The Borrower will not request the delivery of any wire
transfer Wet Loan proceeds to a Closing Agent who has been
disapproved by the Agent. The Borrower shall obtain at the
Borrower's expense "stand behind," indemnity or similar agreement,
or "insured closing letters," for all Closing Agents in form and
substance acceptable to the Agent from title insurance companies
acceptable to the Agent providing such assurance to the Agent that
the funds delivered to a Closing Agent will be applied only for the
purposes intended in accordance with this Agreement and providing
such other assurances as the Agent shall reasonably require. The
delivery by Borrower of any such agreement or letter from an
approved title insurance company shall not affect the rights that
the Lenders or any other Person would otherwise have with respect to
any Wet Closing Agent.
Section 5.06. Investor Requirements; Other Approvals. For all Loans,
the Borrower shall have possession of all other documents required by the
relevant Investor to be held by the Borrower, and the Custodian shall have
received such other approvals, opinions and documents as the Agent may
reasonably request.
Section 5.07. [Intentionally Omitted]
Section 5.08. Temporary Release of Collateral Documents: Delivery of
Collateral Documents. (1) Return to the Borrower. The Borrower may from time to
time request in writing that the Custodian return Collateral Documents to the
Borrower on a temporary basis for the purpose of correction or completion and
the Custodian may, with the consent of the Agent, which consent may be withheld
in the sole discretion of the Agent, deliver the requested Collateral Documents
to the Borrower. The written request to release shall be in the form of a trust
receipt in form and content satisfactory to the Agent. Promptly upon completion
of such correction or completion, the Borrower shall return such Collateral
Documents to the Custodian, but in no case later than fourteen Business Days
from the date same were shipped to the Borrower. The Agent shall not release to
the Borrower at any given time Collateral Documents related to Pledged Mortgages
with an outstanding principal balance in excess of $500,000. If the Borrower
fails to return any Collateral Documents within fourteen Business Days of the
delivery thereof to the Borrower, or if such Collateral Documents are not
corrected or completed so as to comply with the terms of this Agreement within
such fourteen Business Day period, the Pledged Mortgage to which such Collateral
Documents relate shall not be included in the Borrowing Base.
(2) Delivery to any Investor. Provided that there is no Default or
Event of Default hereunder, the Borrower may from time to time make requests by
written notice to the Custodian to deliver Collateral Documents relating to a
Mortgage Loan to an Investor (or to the
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custodian designated by and acting as the bailee of such Investor) who has
issued a Purchase Commitment to the Borrower, for review prior to purchase.
Provided that there is no Default or Event of Default hereunder, the Custodian
shall deliver the requested Collateral Documents relating to such Mortgage Loan
to the Investor designated by the Borrower, along with a bailee letter in form
and content satisfactory to the Agent. If any Investor fails to return any
Collateral Documents to the Custodian within twenty-one days of the delivery
thereof or on such earlier date requested by the Agent, the Mortgage Loan to
which such Collateral Documents relate shall not be included in the Borrowing
Base.
Section 5.09. Deemed Representation. Each request for a Loan and
acceptance by the Borrower of any Loan proceeds shall constitute a
representation and warranty that the statements contained in Section 5.02 are
true and correct both on the date of such notice and as of the date of the
providing of such Loan.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
Section 6.01. Formation, Good Standing and Due Qualification. The
Borrower is duly formed, validly existing and in good standing under the laws of
the jurisdiction of its formation, has the power and authority to own its assets
and to transact the business in which it is now engaged or proposed to be
engaged, subject to the prior approval of the Bankruptcy Court as required under
the Bankruptcy Code, and is duly qualified and in good standing under the laws
of each other jurisdiction in which the failure to qualify would cause, or
result in, a Material Adverse Change, or where such qualification is necessary
to permit the Borrower to enforce any Mortgage Loan.
Section 6.02. Power and Authority. Each of the Borrower and the
Guarantor has all necessary corporate power to execute and deliver this
Agreement and the other Loan Documents to which it is or is to be a party. As of
the Entry Date, each of the Borrower and the Guarantor will have the power and
authority to perform its obligations hereunder and thereunder, and all such
action has been duly and validly authorized by all necessary corporate and
judicial action other than, during the period between the Entry Date and the
entry date of the Final Bankruptcy Court Order, the Final Bankruptcy Court
Order.
Section 6.03. Execution and Binding Effect. As of the entry of the
Interim Bankruptcy Court Order, this Agreement and each of the other Loan
Documents required to be executed and delivered on or prior to the date hereof
have been duly and validly executed and delivered by each of the Borrower and
the Guarantor which is a party thereto and constitute legal, valid and binding
obligations of each of the Borrower and the Guarantor which is a party thereto
enforceable in accordance with the terms hereof or thereof. Each Loan Document
that is not required to be executed and delivered by the Borrower or the
Guarantor prior to the Entry Date, when executed and delivered, will be validly
executed and delivered by the Borrower and the
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Guarantor party thereto and will constitute legal, valid and binding obligations
of the Borrower and the Guarantor party thereto enforceable in accordance with
the terms thereof.
Section 6.04. Absence of Conflicts. Neither the execution and
delivery of this Agreement or any other Loan Document to which the Borrower or
the Guarantor is a party nor consummation of the transactions herein or therein
contemplated nor performance of or compliance with the terms and conditions
hereof or thereof will (a) violate any Law, (b) conflict with or result in a
breach of or default under its charter or by-laws, or any material agreement or
instrument to which the Borrower or the Guarantor is a party or by which it or
any of its properties (now owned or hereafter acquired) may be subject or bound
(other than conflicts, breaches and defaults the enforcement of which will be
stayed by virtue of the filing of the Chapter 11 Cases) or (c) result in the
creation or imposition of any Lien upon any property (now owned or hereafter
acquired) of the Borrower, except the Lien in favor of the Agent with respect to
the Collateral and the Lien securing the obligations of the Borrower and the
Guarantor under the Greenwich DIP Facility.
Section 6.05. Litigation. Except as set forth in the financial
statements referred to in Section 6.06 hereof and on Schedule 6.05 hereto, there
are no actions, suits or proceedings pending or threatened, against the Borrower
or the Guarantor by any Governmental Authority, which could, in any one case or
in the aggregate, result in a Material Adverse Change.
Section 6.06. Financial Statements. All financial information
furnished to the Lenders concerning the operations of the Borrower and the
Guarantor, their balance sheets and related statements of income and retained
earnings, for all periods prior to August 31, 1998, fairly present the financial
condition of the Borrower at such dates and the results of their operations for
the periods covered by such statements. No information, exhibit, or report
furnished by the Borrower to the Lenders in connection with this Agreement
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not materially
misleading.
Section 6.07. Ownership and Liens. The Borrower has title to, or
valid leasehold interests in, all of the Borrower's properties and assets, real
and personal, including the properties and assets, and leasehold interests
reflected in the financial statements referred to in Section 6.06 (other than
(i) any properties or assets disposed of in the ordinary course of business or
(ii) any property or assets other than Mortgage Loans having an aggregate fair
market value of less than Five Hundred Thousand Dollars ($500,000)), and none of
the properties and assets owned by the Borrower and none of its leasehold
interests is subject to any Lien, except as may be permitted under this
Agreement.
Section 6.08. Taxes. The Borrower has filed all tax returns
(federal, state and local) required to be filed and has paid all taxes,
assessments and governmental charges and levies shown thereon to be due,
including interest and penalties for which the failure to pay could result in a
Material Adverse Change.
Section 6.09. ERISA. The Borrower is in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction has occurred with respect to any Plan; no notice of
intent to terminate a Plan has
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been filed nor has any Plan been terminated; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; neither the Borrower nor any ERISA
Affiliate of the Borrower has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower has met its
minimum funding requirements under ERISA with respect to all of its Plans and
there are no unfunded vested liabilities; and neither the Borrower nor any ERISA
Affiliate of the Borrower has incurred any liability to the PBGC under ERISA.
Section 6.10. Subsidiaries. Except as set forth on Schedule 6.10
hereto, the Borrower has no Subsidiaries and the Borrower is not a partner in
any partnership, limited liability company or joint venture.
Section 6.11. Operation of Business; Prior or Existing Restrictions,
Etc. The Borrower possesses all material licenses, qualifications (including
licenses and qualifications required in each state where each Single Family
Residence securing each Mortgage Loan acquired or originated by the Borrower is
located), Agency approvals, permits, franchises, patents, copyrights, trademarks
and trade names, or rights thereto, to conduct the Borrower's business
substantially as now conducted and as presently proposed to be conducted and the
Borrower is not in violation of any valid rights of others with respect to any
of the foregoing. The Borrower has disclosed all written reports, actions and/or
sanctions of any nature threatened, and all reviews, investigations,
examinations, audits, actions and/or sanctions that have been undertaken and/or
imposed as of the date of this Agreement and of which it has knowledge, by any
federal or state agency or instrumentality (including any Agency) with respect
to either the lending or related financial operations of the Borrower. The
Borrower is not operating under any type of agreement or order (including,
without limitation, a supervisory agreement, memorandum of understanding, cease
and desist order, capital directive, supervisory directive, or consent decree)
with any state or federal banking department or government banking or other
agency or instrumentality (including any Agency), and the Borrower is in
compliance with any and all capital, leverage or other financial standards and
requirements imposed by any applicable regulatory authority, agency or
instrumentality, including any Agency, except to the extent that the failure to
be in compliance with any such standards or requirements would not result in the
loss of a material license, agency approval, permit or franchise.
Section 6.12. Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower has been or continues to be affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hurricane, hail, earthquake, embargo, act of God or of the public enemy
or other casualty (whether or not covered by insurance), which could result in a
Material Adverse Change.
Section 6.13. Environmental Protection. The Borrower has obtained
all permits, licenses and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization could not result in a Material Adverse Change. The
Borrower is in compliance with all Environmental Laws and the terms and
conditions of the required permits, licenses and authorizations, and are also in
compliance with
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all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those Laws or
contained in any plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
failure to comply could not result in a Material Adverse Change.
The Collateral contains no Hazardous Materials that, under any
Environmental Law currently in effect, (1) would impose liability on the
Borrower that could result in a Material Adverse Change, or (2) could result in
the imposition of a Lien on the Collateral (other than real estate owned by the
Borrower) or any portion thereof or any other assets of the Borrower, in each
case if not properly handled in accordance with applicable Law.
Section 6.14. Compliance with Laws. Subject to Section 6.11 with
respect to licenses, the Borrower and the operation of its business is in
compliance with all material Laws applicable to the Borrower or the Mortgage
Loans except to the extent that any consequential, punitive or remedial action
arising from, or in connection with, noncompliance with any such Laws is stayed
pursuant to the Bankruptcy Code.
Section 6.15. Licenses. Lenders will not be required solely as a
result of taking a pledge of the Mortgage Loans to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently is not so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation,
except that the Agent is required to be approved as a lender to a mortgage
banker by the New York State Banking Department.
Section 6.16. Chief Executive Office. The Borrower's chief executive
office on the Closing Date is located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. The location where the Borrower keeps its books and records, including
all computer tapes and records relating to the Collateral is either its chief
executive office or ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Section 6.17. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (A) the Borrower's and
the Guarantor's computer systems and (B) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
Borrower's and the Guarantor's systems interface but excluding software leased
from others) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by October 1, 1999. The cost to the Borrower and
the Guarantor of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrower and the Guarantor
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in an Event of Default or a Material
Adverse Change. Except for such of the reprogramming referred to in the
preceding sentences of this Section 6.17 as may be necessary, the computer and
management information systems of the Borrower and the Guarantor are and, with
ordinary course upgrading and maintenance, will continue to be, sufficient to
permit the Borrower and the Guarantor to conduct their business without a
Material Adverse Change.
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Section 6.18. Administrative Priority; Lien Priority.
(a) After the Entry Date, the Obligations of the Borrower and
the Guarantor will constitute allowed administrative expenses in the Chapter 11
Case having priority in payment over all other administrative expenses and
unsecured claims against the Borrower and the Guarantor now existing or
hereafter arising, of any kind or nature whatsoever, including without
limitation all administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code, subject, as to priority, only to Carve-Out
Expenses having priority over the Obligations to the extent set forth in the
Agreed Administrative Expense Priorities and, subject to the terms of the
Intercreditor Agreement, the Obligations of the Borrower and the Guarantor under
the Greenwich DIP Facility.
(b) Upon entry of the Interim Bankruptcy Court Order, the
Liens on the Collateral shall be valid and perfected Liens, subject only to
Permitted Liens.
Section 6.20. Bankruptcy Court Order. The Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order, as the case may be, is in full force
and effect, and has not been reversed, stayed, modified or amended absent the
joinder and consent of the Agent, the Lenders and the Borrower.
ARTICLE VII.
AFFIRMATIVE COVENANTS
So long as the Notes shall remain unpaid or the Lenders shall have
any Commitment hereunder, or any other amount is owing by the Borrower hereunder
or under any Loan Document, the Borrower shall:
Section 7.01. Maintenance of Existence. Preserve and maintain (which
may be by virtue of the stay imposed in the Chapter 11 Cases) its existence and
good standing in the jurisdiction of its formation and qualify and remain
qualified in each jurisdiction in which the failure to qualify and/or remain in
good standing would cause, or result in, a Material Adverse Change.
Section 7.02. Conduct of Business. Continue to engage in an
efficient and economical manner in a business of the same general type as
conducted by it on the Closing Date. Use its best efforts to adhere to customary
practices and standards in effect from time to time in the mortgage banking
industry.
Section 7.03. Maintenance of Properties. Maintain, keep and preserve
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply at all times with the provisions of all
material leases to which it is a party as lessee or under which it occupies
property, so as to prevent any loss or forfeiture thereof or thereunder, in each
case other than
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sales of property or rejection of leases approved by the Bankruptcy Court and
otherwise permitted by this Agreement.
Section 7.04. Maintenance of Records. Keep adequate records and
books of account, in which complete entries will be made in accordance with
GAAP, reflecting all of its financial transactions.
Section 7.05. Maintenance of Insurance. Maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated or required by any
agreement to which the Borrower is a party, including, without limitation, a
standard policy of mortgage bankers' blanket bond insurance. To the extent
permitted under the terms of the policy, the Borrower shall cause the Agent to
be named, and remain named as long as any amounts are outstanding on the Notes,
an additional insured on such mortgage bankers' blanket bond insurance policies.
Such insurance may provide for reasonable deductibility from coverage thereof.
Section 7.06. Compliance with Laws. Comply in all respects with all
Laws and orders applicable to it or the Mortgage Loans, such compliance to
include, without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property,
except to the extent that the failure to so comply would not result in a
Material Adverse Change.
Section 7.07. Right of Inspection. At any reasonable time and from
time to time the Borrower shall permit the Agent or any Lender or representative
thereof, to examine and make copies and abstracts from the records and books of
account of, and visit the properties of, the Borrower and to discuss the
affairs, finances and accounts of the Borrower with any of the Borrower's
officers and directors and independent certified public accountants.
Section 7.08. Reporting Requirements. Furnish directly to the Agent
and to each Lender:
(1) Annual Financial Statements of the Borrower and the Guarantor.
As soon as available and in any event within 90 days after the end of each
Fiscal Year of the Borrower and the Guarantor (a) the balance sheet of the
Borrower and the Guarantor as of the end of such Fiscal Year, the
statements of income and retained earnings, and the statements of cash
flows of the Borrower and the Guarantor for such Fiscal Year, both on a
consolidated basis and on a consolidating basis, all prepared in
accordance with GAAP consistently applied and with respect to the
consolidated statements only accompanied by an opinion thereon acceptable
to the Agent by KPMG Peat Marwick or any other independent certified
public accountants of national standing selected by the Borrower and the
Guarantor and acceptable to the Agent, (b) with respect to the foregoing
consolidated statements only, a report of the independent certified public
accountants stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year, and (c) a
Certificate of No Default.
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(2) Quarterly Financial Statements. Each quarter (other than the
fourth quarter), as soon as available and in any event not later than 60
days after the end of the reporting quarter, a balance sheet of the
Borrower and the Guarantor as of the end of such quarter, statements of
income and retained earnings of the Borrower and the Guarantor for the
period commencing at the end of the previous fiscal year and ending with
the end of such quarter, and statements of changes in financial position
of the Borrower and the Guarantor for the portion of the fiscal year ended
with the last day of such quarter, all on a consolidated and consolidating
basis and all in reasonable detail and stating in comparative form the
respective figures of the corresponding date and period in the previous
fiscal year and all prepared in accordance with GAAP consistently applied
and certified by the Designated Financial Officer of the Borrower;
(3) Monthly Financial Statements. Each month, as soon as available
and in any event not later than 30 days after the end of such month, a
balance sheet of the Borrower and the Guarantor as of the end of such
quarter, statements of income and retained earnings of the Borrower and
the Guarantor for the period commencing at the end of the previous fiscal
year and ending with the end of such month, and statements of changes in
financial position of the Borrower and the Guarantor for the portion of
the fiscal year ended with the last day of such month, all on a
consolidated and consolidating basis and all in reasonable detail and
stating in comparative form the respective figures of the corresponding
date and period in the previous fiscal year and all prepared in accordance
with GAAP consistently applied and certified by the Designated Financial
Officer of the Borrower;
(4) Management Letters. As soon as available after the end of each
Fiscal Year, copies of any reports submitted to the Borrower by KPMG Peat
Marwick or any other independent certified public accountants in
connection with the examination of the financial statements of the
Borrower and the Guarantor made by such accountants.
(5) Certificate of No Default. Not later than 60 days after the last
day of each quarter and not later than 90 days after the last day of each
Fiscal Year, a certificate (the "Certificate of No Default") of the chief
financial officer, controller or chief executive officer of the Borrower
certifying that no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto.
(6) Notice of Litigation. Promptly after the commencement thereof,
but in any event within five Business Days after the service of process
with respect thereto on the Borrower or the Guarantor, notice of all
actions, suits, and proceedings before any court or Governmental
Authority, affecting the Borrower or the Guarantor which, if determined
adversely to the Borrower or the Guarantor, could result in a Material
Adverse Change.
(7) Notices of Defaults and Events of Default. As soon as possible
and in any event within three Business Days after the occurrence of each
Default or Event of
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Default, a written notice setting forth the details of such Default or
Event of Default and the action which is proposed to be taken by the
Borrower with respect thereto.
(8) ERISA Reports. As soon as possible and in any event within
thirty days after any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or the PBGC or the Borrower has
instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, the Borrower will deliver to the Agent a certificate
of the chief financial officer of the Borrower setting forth details as to
such Reportable Event or Prohibited Transaction or Plan termination and
the action the Borrower proposes to take with respect thereto.
(9) Reports to Other Creditors. Promptly after the furnishing
thereof, unless prohibited by law, copies of any statement or report
furnished to any other creditor of the Borrower or the Guarantor pursuant
to the terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Agent pursuant to any other
clause of this Agreement.
(10) Reports, Etc. Promptly after the sending or filing thereof,
copies of all financial statements and reports which the Borrower and/or
the Guarantor send to, or receive from, any Governmental Authority or
Agency, and, upon the request of the Agent, copies of all consultants'
reports, investment bankers' reports, business plans and similar
documents.
(11) Pleadings, Etc. The Borrower shall give or cause to be given or
served on the Lenders' respective counsel copies of all pleadings,
motions, applications, financial information and other papers and
documents filed by the Borrower or the Guarantor in the Chapter 11 Cases.
(12) Reports to Committees. Promptly after the sending thereof,
copies of all written reports given by the Borrower and the Guarantor to
any official or unofficial creditors' committee in the Chapter 11 Cases,
provided that the Borrower may redact confidential information contained
in any such report if it provides a summary of the nature of the
information redacted.
(13) Insurance. Upon the occurrence of any casualty, damage or loss,
whether or not giving rise to a claim under any insurance policy of the
Borrower, in an amount greater than Two Hundred Fifty Thousand Dollars
($250,000), notice thereof, together with copies of any document relating
thereto (including copies of any such claim) in possession or control of
the Borrower or any agent of the Borrower.
(14) Material Adverse Change. As soon as possible and in any event
within three Business Days after the occurrence of any event or
circumstances which could result in or has resulted in a Material Adverse
Change, written notice thereof.
(15) Offices. Thirty days prior written notice of any change in the
chief executive office or principal place of business of the Borrower or
the Guarantor.
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(16) Liens. As soon as possible and in any event within three
Business Days after the occurrence of any event that could have a Material
Adverse Change on the value or marketability of the Collateral or the
validity, enforceability or priority of the Liens created under this
Agreement, written notice thereof.
(17) Environmental Notices. As soon as possible and in any event
within five Business Days after receipt, copies of all Environmental
Notices received by the Borrower which are not received in the ordinary
course of the Borrower's business.
(18) Reports Relating to Collateral.
(a) If requested by the Agent, within ten days after such
request:
(1) A schedule satisfactory in form and content to the
Agent of all commitments to make Mortgage Loans, commitments
to purchase Mortgage Loans and other information related to
all Mortgage Loans intended to be or which are pledged under
this Agreement.
(2) A schedule satisfactory in form and content to the
Agent of all Purchase Commitments held by the Borrower grouped
by type of Mortgage Loan (whether or not delivered as
Collateral hereunder) which qualifies for delivery pursuant to
such Purchase Commitments, listing the name of the investor,
the commitment type (i.e., mandatory, optional, standby,
etc.), the commitment amount which remains available for
future deliveries, the yield requirement or the price and
interest rate for which said price is quoted, and the
expiration, delivery or settlement date for each such Purchase
Commitment, and the weighted average yield requirement or the
weighted average price at each applicable interest rate for
each such group of Purchase Commitments and (b) a schedule in
a form satisfactory in form and content to the Agent listing
the mandatory Purchase Commitments held by the Borrower which
shall be satisfied by delivering Mortgage Loans which the
Borrower has committed to purchase;
(3) Not later than fifteen days after the end of a
calendar quarter, a list of the Investors to whom the Borrower
delivered Mortgage Loans during such quarter and a list of the
Investors to whom the Borrower anticipates delivering Mortgage
Loans during the succeeding calendar quarter; and
(4) From time to time, with reasonable promptness, such
further information regarding the Collateral as the Agent or
any Lender may reasonably request.
(b) As soon as available, but in any event not later than the
date that such reports, if any, are delivered to the Agencies,
copies of all annual and
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regularly delivered reports to the Agencies relating to the
Borrower's Mortgage Loan origination and acquisition activities and
other matters requested or required by the Agencies.
(c) As soon as available, but in any event not later than five
Business Days after the receipt thereof by the Borrower any notice
received from an Agency or an Investor relating to a material
default or other deficiency under a Purchase Commitment which could
result in termination thereof.
(19) Mortgage Loan Audit Report. Borrower shall (i) with respect to
any Mortgage Loans originated, purchased or serviced by Borrower, deliver
each month, as soon as available and in any event not later than thirty
days after the end of such month, a report in the form attached hereto as
Exhibit N, (ii) prepare and deliver reports each month, detailing, with
respect to all Mortgage Loans pledged to the Agent, such other information
as the Agent may from time to time reasonably request and (iii) deliver on
the fifth Business Day of each month a Mortgage Loan Schedule as of the
end of the prior month.
(20) Borrowing Base Certificate. Weekly (not later than Friday of
each week) or more frequently if requested by the Agent, a Borrowing Base
Certificate, current as of the last Business Day of the reporting period
in question, signed by the chief financial officer or such other officer
as the Borrower's chief financial officer may designate in writing to the
Agent. The Borrower shall send a copy of the Borrowing Base Certificate to
each Lender at the same time that the Borrower sends the Borrowing Base
Certificate to the Agent.
(21) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower and/or
the Guarantor as the Agent or any Lender may from time to time reasonably
request.
Section 7.09. Compliance With Environmental Laws. Comply in all
material respects with all applicable Environmental Laws and immediately pay or
cause to be paid all costs and expenses incurred in connection with such
compliance.
Section 7.10. Purchase Commitments. Maintain valid and enforceable
Purchase Commitments where required pursuant to this Agreement sufficient at all
times to (i) satisfy the requirements of this Agreement an (ii) in accordance
with prudent business practices to protect the Borrower against interest rate
risk with respect to Mortgage Loans originated or acquired by it and to permit
the timely sale of Mortgage Loans in accordance with prudent mortgage banking
industry practices.
Section 7.11. Pledge of Mortgage Loans. Within two Business Days
after the origination or purchase of a Mortgage Loan by the Borrower, pledge to
the Agent and the Lenders in accordance with the terms and provisions of this
Agreement and the Custodian Agreement all such Mortgage Loans not otherwise sold
or financed by the Borrower during such two Business Day period, unless such
Mortgage Loans are pledged to Greenwich pursuant to the
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Greenwich DIP Facility; provided, that Wet Mortgage Loans shall be pledged to
the Agent and the Lenders in accordance with the terms and provisions of Section
5.05 hereof and the Custodian Agreement. The Agent may, at any time, in its sole
discretion, upon delivery of a written notice to the Borrower, require all
Mortgage Loans that have not otherwise been pledged to Greenwich to be pledged
to the Agent and the Lenders immediately upon the origination or purchase
thereof by the Borrower.
Section 7.12. Taxes. Pay and discharge all taxes, assessments or
other governmental charges or levies imposed on it or any of its property or
assets for which the failure to pay or discharge could result in a Material
Adverse Change.
Section 7.13. [Intentionally Omitted]
Section 7.14. ERISA.
(A) Comply in all material respects with the provisions of ERISA to
the extent applicable to any employee benefit plan maintained for any of the
Borrower's or a Subsidiary's employees or any multiemployer pension plan to
which the Borrower, any Subsidiary or any ERISA Affiliate is required to
contribute; not incur any accumulated funding deficiency or withdrawal liability
(within the meaning of ERISA), or any liability to the PBGC; and not permit any
Prohibited Transaction or Reportable Event or other event to occur which could
result in a Material Adverse Change with respect to the Borrower or any employee
benefit plan or which may be the basis for the PBGC to assert a material
liability against it or which may result in the imposition of a Lien on the
Borrower's properties or assets.
(B) Notify the Agent and the Lenders in writing promptly after the
assertion or threat of any Prohibited Transaction or Reportable Event, the
existence of any fact or set of facts or event (including without limitation any
change in the actuarial assumptions or funding methods of any employee benefit
plan or the incurrence of any withdrawal liability under any multiemployer plan)
which could have a Material Adverse Change or may be the basis for the PBGC to
assert a material liability against it or impose a Lien on the Borrower's
properties or assets. The Borrower shall also provide to the Agent and the
Lenders promptly after receipt thereof, copies of (i) all notices received by
the Borrower or any ERISA Affiliate of the reorganization of any multiemployer
pension plan or the PBGC's intent to terminate any Plan or Multiemployer Plan,
or to have a trustee appointed to administer any such employee benefit plan; and
(ii) at the request of a Lender each annual report and all accompanying
schedules, the most recent actuarial reports, the most recent financial
information concerning the financial status of each Plan or Multiemployer Plan,
and schedules showing the amounts contributed to each such plan by or on behalf
of the Borrower or any ERISA Affiliate in which any of their personnel
participate or from which such personnel may derive a benefit, and each Schedule
B (Actuarial Information) to the annual report filed by the Borrower or any
ERISA Affiliate with the Internal Revenue Service with respect to each such
plan.
Section 7.15. Borrowing Base. Maintain all Loans in compliance with
the then current Borrowing Base.
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Section 7.16. Compliance With Custodian Agreement. With respect to
each Pledged Mortgage, the Borrower shall comply with all document delivery
requirements set forth in the Custodian Agreement.
Section 7.17. Availability. Maintain at all times Availability of at
least $20,000,000.
Section 7.18. Underwriting Guidelines. Without the prior written
consent of the Agent, the Borrower shall not materially amend or otherwise
materially modify the Underwriting Guidelines. In the event that the Borrower
proposes to amend the Underwriting Guidelines, the Borrower shall submit the
proposed amendment to the Agent in writing. The Agent shall notify the Borrower
whether or not it approves any such proposed material amendment, which approval
shall not be unreasonably withheld. If the Borrower wishes to finance a Mortgage
Loan hereunder that does not comply in all respects with the Underwriting
Guidelines, the Borrower shall request prior approval thereof from the Agent and
will deliver to the Agent, no later than three (3) Business Days prior to the
requested Mortgage Loan Closing Date, the related underwriting file. The Agent
shall notify the Borrower promptly (i) whether or not it chooses to finance any
such Mortgage Loan and, if so, (ii) whether it chooses to treat such Mortgage
Loan as includible in the Borrowing Base.
Section 7.19. Wet Closing Agents. Cause each Wet Closing Agent to
execute a Wet Closing Agent Agreement in which such Wet Closing Agent
acknowledges and agrees to act as the agent for the Agent and the Lenders
pursuant to Section 5.03 hereof in connection with the funding of each Wet
Mortgage Loan.
Section 7.20. Year 2000 Compatibility. Each of the Borrower and the
Guarantor shall take all action reasonably necessary to assure that the
Borrower's and the Guarantor's material computer-based systems are to operate
and effectively process data including datafields requiring references to dates
on and after January 1, 2000. At the request of the Agent, the Borrower and the
Guarantor shall provide to the Agent written assurances and other evidence
acceptable to the Agent and the Lenders of the Borrower's and the Guarantor's
compliance with this Section 7.20.
ARTICLE VIII.
NEGATIVE COVENANTS
So long as the Notes or any Obligations shall remain unpaid or the
Lenders shall have any Commitment hereunder or any other amount is owing by the
Borrower hereunder or under any other Loan Document, the Loan Parties shall not:
Section 8.01. Interim Bankruptcy Court Order; Final Bankruptcy Court
Order; Administrative Priority; Lien Priority; Payment of Claims; Greenwich DIP
Facility.
(A) The Borrower shall not at any time seek, consent to or suffer to
exist any modification, stay, vacation or amendment of the Interim Bankruptcy
Court Order or the Final
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Bankruptcy Court Order except for modifications and amendments agreed to by the
Agent and the Lenders.
(B) The Borrower and the Guarantor shall not at any time suffer to
exist a priority for any administrative expense or unsecured claim against the
Borrower or the Guarantor (now existing or hereafter arising of any kind or
nature whatsoever, including without limitation any administrative expenses of
the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code) equal
or superior to the priority of the Lenders in respect of the Obligations, except
for (i) the Carve-Out Expenses having priority over the Obligations to the
extent set forth in the definition of Agreed Administrative Expense Priorities
and (ii) subject to the terms of the Intercreditor Agreement and the Pledge
Agreement, the obligations of the Borrower and the Guarantor under the Greenwich
DIP Facility.
(C) The Borrower shall not at any time suffer to exist any Lien on
the Collateral having a priority equal or superior to the Lien in favor of the
Lenders in respect of the Collateral except for Permitted Liens.
(D) Prior to the date on which the Obligations have been paid in
full in cash and the Total Commitment has been terminated, the Borrower and the
Guarantor shall not pay any administrative expense claims except (i) Priority
Professional Expenses and other payments pursuant to sub-clause (i) of clause
"first" of the definition of the term "Agreed Administrative Expense
Priorities", (ii) subject to the terms of the Intercreditor Agreement and the
Pledge Agreement, the obligations of the Borrower and the Guarantor under the
Greenwich DIP Facility, (iii) any Obligations due and payable hereunder, and
(iv) other administrative expense claims incurred in the ordinary course of the
business of the Borrower and the Guarantor or their respective Chapter 11 Cases,
in each case to the extent and having the order of priority set forth in the
Agreed Administrative Expense Priorities.
(E) Prior to the date on which the Obligations have been repaid in
full in cash and the Total Commitment has been terminated, the Borrower shall
not modify or amend any term or provision set forth in any document evidencing
or relating to the Greenwich DIP Facility without the prior written consent of
the Agent, to the extent such modification or amendment adversely affects or
diminishes any rights of the Agent or the Lenders.
Section 8.02. Liens.
(A) Create, incur, assume, or suffer to exist, any Lien upon or with
respect to any of their properties (including, without limitation, any of the
Loan Parties' interest in partnerships), now owned or hereafter acquired, except
the following kinds of Liens on properties other than Pledged Mortgages
("Permitted Liens"):
(1) Liens in favor of the Agent, for the benefit of the
Lenders;
(2) Liens in connection with any taxes or assessments or other
governmental charges or levies if not yet due and payable or, if due and
payable, if they are stayed by the Bankruptcy Court or the Bankruptcy
Code;
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(3) Liens imposed by Law, such as mechanics' materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty days or, if due and payable, which are
stayed by the Bankruptcy Court or the Bankruptcy Code;
(4) Liens under workers' compensation, unemployment insurance,
Social Security or similar legislation;
(5) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, indemnity, performance, or other similar bonds, or
other similar obligations arising in the ordinary course of business, and
the pledge of assets for the purpose of securing an appeal, stay or
discharge in the course of any legal proceedings, provided that the
aggregate amount of liabilities of the Borrower and/or the Guarantor
secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $500,000
at any one time outstanding;
(6) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower of the property or assets
encumbered thereby in the normal course of the Borrower's business or
materially impair the value of the property subject thereto;
(7) Purchase-money Liens on any property hereafter acquired or
the assumption of any Lien on property existing at the time of such
acquisition, (and not created in contemplation of such acquisition) or a
Lien incurred in connection with any conditional sale or other title
retention agreement or a Capital Lease;
(8) Liens on real estate acquired and owned as a result of
foreclosure of a Mortgage held by the Borrower;
(9) Liens in favor of Greenwich to the extent such Liens are
subject to the terms of the Pledge Agreement or the Intercreditor
Agreement; and
(10) Liens existing on the Filing Date set forth in Schedule
8.02(A) 10 hereof.
No Liens shall be permitted on the Collateral constituting Pledged
Mortgages and the capital stock of any Subsidiary of the Borrower pledged
to the Agent and the Lenders other than the Liens in favor of the Agent
and the Lenders hereunder, the Liens in favor of Greenwich pursuant to the
Pledge Agreement and, subject to the terms of the Intercreditor Agreement,
the Liens in favor of Greenwich pursuant to the Greenwich DIP Facility.
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(B) After the date hereof, agree with any other Person to prohibit
or otherwise restrict its ability to grant Liens upon, or security interests in,
any of its property to the Agent and the Lenders.
Section 8.03. Debt. Create, incur, assume, or suffer to exist, any
Debt, except:
(1) Debt of the Borrower under this Agreement or the Notes;
(2) Debt existing on the Filing Date;
(3) Accounts payable to trade creditors for goods or services
and current operating liabilities (other than for borrowed money), in each
case incurred in the ordinary course of business, as presently conducted;
(4) Debt of the Borrower secured by purchase-money Liens
permitted by Section 8.02(A)(7);
(5) Debt of the Borrower pursuant to hedging agreements
permitted by Section 8.10;
(6) Debt of the Borrower to Greenwich pursuant to the
Greenwich DIP Facility; and
(7) Debt not otherwise permitted by this Section in an
aggregate amount not to exceed $250,000.
Section 8.04. Mergers, Etc.
(A) Wind up, liquidate or dissolve itself, reorganize, merge or
consolidate with or into, or convey, sell, assign, transfer, lease, or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of their assets (whether now owned or hereafter acquired) to
any Person, except sales permitted by Section 8.08 hereof, or
(B) acquire all or substantially all of the assets or the business
of any Person, except with the prior written approval of the Agent, such
approval not to be unreasonably withheld.
Section 8.05. Leases. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except: (1) Capital Leases permitted under Section 8.02(A)(7); (2) leases
existing on the date of this Agreement and any extensions, renewals or
replacements thereof and (3) new leases for office space and equipment and
similar items used in the ordinary course of the Borrower's or the Guarantor's
business.
Section 8.06. Sale and Leaseback. Sell, transfer, or otherwise
dispose of any real or personal property to any Person and thereafter directly
or indirectly lease back the same or similar property.
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Section 8.07. Distributions. Directly or indirectly declare or pay
any dividends or other Distributions; or purchase, redeem, retire, or otherwise
acquire for value any shares of its capital stock, now or hereafter outstanding;
or make any Distribution of assets to its shareholders whether in cash, assets,
or obligations of the Borrower; or allocate or otherwise set apart any sum for
the payment of any dividend on, or for the purchase, redemption, or retirement
or any of the Borrower's shares of capital stock; or make any other Distribution
by reduction of capital or otherwise in respect of its shares of capital stock;
provided, that, the Borrower may pay dividends or other Distributions to the
Guarantor to pay administrative expenses permitted to be paid pursuant to the
terms of this Agreement.
Section 8.08. Sale of Assets. (A) Sell, lease, assign, transfer, or
otherwise dispose of any of the Borrower's now-owned or hereafter acquired
assets (including, without limitation, receivables, and leasehold interests),
except, subject to Sections 2.06(d) and 3.11 and Subsection (B) of this Section
8.08, (i) the sale or other disposition of assets (x) other than Mortgage Loans,
in the ordinary course of the Borrower's business, (y) consisting of Mortgage
Loans, in the ordinary course of the Borrower's business, including the sale or
refinancing of Pledged Mortgages in accordance with Section 3.11 hereof, or (z)
no longer used or useful in the conduct of its business, and (ii) the sale or
other disposition of Residual Interest Receivables to the extent permitted by
the Pledge Agreement; or
(B) Sell any Mortgage Loans (other than Mortgage Loans financed by
Greenwich under the Greenwich DIP Facility) on a recourse basis except with the
consent of the Majority Lenders.
Section 8.09. Investments. Make any loan or advance to any Person
(other than Mortgage Loans in the ordinary course of business), or purchase or
otherwise acquire any capital stock, assets, obligations, or other securities
of, make any capital contribution to, or otherwise invest in or acquire any
interest in any Person, or participate as a partner or joint venturer with any
other Person, or make any additional investments in the partnerships and
corporations referred to in Schedule 6.10 except: (1) direct obligations of the
United States or any agency thereof with maturities of one year or less from the
date of acquisition; (2) commercial paper of a domestic issuer rated at least
"A-1" by Standard & Poor's Corporation or "P-1" by ▇▇▇▇▇'▇ Investors Service,
Inc.; (3) certificates of deposit with maturities of one year or less from the
date of acquisition issued by any commercial bank having capital and surplus in
excess of One Billion Dollars ($1,000,000,000); (4) stock, obligations, or
securities received in settlement of debts (created in the ordinary course of
business) owing to the Borrower; (5) investments required to be made or
purchased by any Agency or any applicable provisions of law; (6) loans and
advances to employees of the Borrower in an aggregate principal amount not to
exceed $250,000, provided that no employee shall receive loans and advances
aggregating more than $100,000; (7) advances to pay interest shortfalls on the
Borrower's securitization transactions which are approved by the Bankruptcy
Court; and (8) investments in Persons in an aggregate amount not in excess of
$250,000, provided that the aggregate of such investments in any one Person
shall not exceed $100,000.
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Section 8.10. Financial Hedge Instruments. Engage in or enter into
any derivatives or hedging transactions of any kind other than transactions
regarding the hedging of interest rate or exposure, provided that such
transactions are not entered into for speculative purposes.
Section 8.11. Guaranties, Etc. Assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or liable
(including, but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds, assets, goods, or
services, or an agreement to maintain or cause such Person to maintain a minimum
working capital or net worth, or otherwise to assure the creditors of any Person
against loss) for obligations of any Person other than the Borrower or the
Guarantor, except (i) guaranties by endorsement of negotiable instruments for
deposits or collection or similar transactions in the ordinary course of
business and (ii) as set forth on Schedule 8.11 hereto.
Section 8.12. Transactions With Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate (other than the
Guarantor or any Subsidiary of the Borrower), except in the ordinary course of
and pursuant to the reasonable requirements of the Borrower's business and upon
fair and reasonable terms no less favorable to the Borrower than would obtain in
a comparable arm's-length transaction with a Person not an Affiliate.
Section 8.13. Margin Regulations. Use any part of the proceeds of
Loans (i) for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System or (ii) to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
Section 8.14. Subwarehousing. Purchase any Subwarehouse Mortgage
Loan or engage in any other Subwarehousing activity.
Section 8.15. Bulk Purchases of Mortgage Loans. Make a bulk purchase
of Mortgage Loans.
Section 8.16. Payments. Each of the Borrower and the Guarantor shall
not make any payment of principal or interest or otherwise on account of any
Indebtedness or trade payable incurred prior to the Filing Date, provided that
such payments may be made: (i) to the holders of, or in respect of, wage,
salary, commission and employee benefit obligations (including expense
reimbursements) which arose prior to the Filing Date; (ii) to landlords in
connection with the assumption of unexpired leases under Section 365 of the
Bankruptcy Code in an aggregate amount not to exceed $250,000; (iii) to lessors
and non-debtor parties to executory contracts in connection with the assumption
of such leases and contracts under Section 365 of the Bankruptcy Code; (iv) to
the Pre-Petition Lenders to repay the Pre-Petition Obligations; (v) to the
trustee of any of the Borrower's securitization transactions in order to cover
an interest payment deficiency thereunder as required under the terms of the
applicable pooling and servicing agreement; (vi) to the holders of "Trade
Claims" (as defined in the Plan of Reorganization) in an aggregate amount not to
exceed $3,000,000; in each case after prior written notice of such payment has
been given by the Borrower to the Agent and subject to approval of the
Bankruptcy Court. Nothing contained in this Section
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8.16 shall prevent the Borrower from making payments with respect to payroll
taxes, garnishment payments or other trust fund disbursements in accordance with
past practice of the Borrower.
ARTICLE IX.
EVENTS OF DEFAULT
Section 9.01. Events of Default. Any of the following events shall
be an "Event of Default":
(1) the Borrower shall: (a) fail to pay the principal of the
Loans as and when due; or (b) fail to make any of the prepayments required
by Section 2.06 as and when required; or (c) fail to fulfill or satisfy
any of the covenants regarding the Collateral in Section 3.12 or the
Collateral or any Residual Securities in Sections 3, 4 or 14(b) of the
Pledge Agreement; or (d) fail to pay within three days after the due date
therefor interest on the Loans or any fee or interest or any other amount
due under this Agreement or any other Loan Document;
(2) any representation or warranty made or deemed made by the
Borrower or the Guarantor in this Agreement or in any other Loan Document
or which is contained in any certificate, document, opinion, or financial
or other statement furnished by the Borrower, the Guarantor or their
respective agents or representatives at any time under or in connection
with any Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made (other than the
additional representations and warranties made pursuant to Section
3.10(7), which shall be considered solely for the purpose of determining
whether such Mortgage Loans will be Eligible Residential Mortgage Loans,
unless the Borrower shall have made any such representations and
warranties with knowledge that they were materially false or misleading at
the time made);
(3) any Loan Party shall fail to perform or observe any
covenant contained in Sections 7.01, 7.05, 7.06, 7.07, 7.10, 7.11, 7.12,
7.14, 7.16, 7.17, 7.18 or 7.19 or in Article VIII of this Agreement;
(4) Any Loan Party shall default in the performance or
observance of (i) the covenants contained in subparagraphs (6), (7), (14),
(16), (18), (19) and (20) of Section 7.08 of this Agreement and such
default shall continue unremedied for a period of 3 Business Days, (ii)
the covenant contained in Section 7.15 of this Agreement and such default
shall continue unremedied for 1 Business Day, or (iii) any other covenants
contained in this Agreement or any other Loan Document not described in
paragraph (3) above or clause (i) of this paragraph (4) and such default
shall continue unremedied for a period of 10 days;
(5) An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court, or the Borrower or the Guarantor shall
file an application for an order with
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respect to the Chapter 11 Cases, (i) appointing a trustee under Section
1104, or (ii) appointing an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in Section
1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code; or
(6) An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court converting such Chapter 11 Cases to a
chapter 7 case; or
(7) An order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in the Chapter 11 Cases which does not
contain a provision for termination of the Total Commitment and payment in
full in cash of all Obligations of the Borrower and the Guarantor
hereunder and under the other Loan Documents on or before the effective
date of such plan or plans upon entry thereof; or
(8) An order shall be entered by the Bankruptcy Court
dismissing the Chapter 11 Cases which does not contain a provision for
termination of the Total Commitment and payment in full in cash of all
Obligations of the Borrower and the Guarantor hereunder and under the
other Loan Documents upon entry thereof; or
(9) An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent
of the Agent and the Lenders, (i) to revoke, reverse, stay, modify,
supplement or amend the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order or (ii) to permit any administrative expense or any
claim (now existing or hereafter arising, of any kind or nature
whatsoever) to have administrative priority as to the Borrower or the
Guarantor equal or superior to the priority of the Agent and the Lenders
in respect of the Obligations, except for allowed administrative expenses
having priority over the Obligations to the extent set forth in the Agreed
Administrative Expense Priorities and, subject to the terms of the
Intercreditor Agreement and the Pledge Agreement, the Obligations of the
Borrower and the Guarantor under the Greenwich DIP Facility, or (iii) to
grant or permit the grant of a Lien on the Collateral, except for any
Permitted Lien; or
(10) An application for any of the orders described in clauses
(5), (6), (7), (8) or (9) above shall be made by a Person other than the
Borrower or, if applicable, the Guarantor and such application is not
contested by the Borrower and the Guarantor in good faith and the relief
requested is granted in an order that is not stayed pending appeal; or
(11) An order shall be entered by the Bankruptcy Court that is
not stayed pending appeal granting relief from the automatic stay to any
creditor of the Borrower or the Guarantor with respect to any claim in an
amount equal to or exceeding $250,000 in the aggregate; provided, however,
that it shall not be an Event of Default if relief from the automatic stay
is granted (i) solely for the purpose of allowing such creditor to
determine the liquidated amount of its claim against the Borrower or the
Guarantor, or (ii) to permit the commencement of and/or prosecution of a
proceeding to collect against an insurance company; or
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(12) any of the following events shall occur or exist with
respect to the Borrower or the Guarantor or any ERISA Affiliate; (a) any
Prohibited Transaction involving any Plan; (b) any Reportable Event shall
occur with respect to any Plan; (c) the filing under Section 4041 of ERISA
of a notice of intent to terminate any Plan or the termination of any
Plan; (d) any event or circumstance exists which might constitute grounds
entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer,
any Plan, or the institution by the PBGC of any such proceedings; (e)
complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of
any Multiemployer Plan; and in each case above, such event or condition,
together with all other events or conditions, if any, could in the
reasonable opinion of the Agent subject the Borrower or the Guarantor, as
the case may be, or any ERISA Affiliate to any tax, penalty, or other
liability to a Plan, Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed Five
Hundred Thousand Dollars ($500,000);
(13) this Agreement or any Loan Document shall at any time and
for any reason cease to create a valid and perfected first priority Lien
in the Collateral (other than Collateral released pursuant to the terms of
this Agreement and the other Loan Documents and except as otherwise
provided in this Agreement and the other Loan Documents) or the validity
or enforceability of this Agreement or any Loan Document shall be
contested by the Borrower or the Guarantor, or the Borrower or the
Guarantor shall deny it has any further liability or obligation under this
Agreement or any Loan Document to which it is a party;
(14) if there is a Material Adverse Change in the Collateral
subsequent to October 5, 1998 or if there shall occur a Material Adverse
Change (as determined by the Majority Lenders in their sole discretion),
or if the Majority Lenders in good faith believe that the prospects of
payment, performance or realization upon the Collateral is impaired in any
material respect;
(15) a Change of Control shall occur; or
(16) the Custodian Agreement or any other Loan Document or the
Greenwich DIP Facility shall for whatever reason be terminated or cease to
be in full force and effect or an "event of default" shall occur and be
continuing under the Greenwich DIP Facility, in either case other than
with the consent of the Lenders, or the enforceability of any such
agreement shall be contested by the Borrower.
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Agent may and, at the request of the Majority Lenders, shall by
notice to the Borrower, (1) declare the Total Commitment to be terminated,
whereupon the same shall forthwith terminate without further order of, or
application to the Bankruptcy Order; (2) declare the Notes, all interest
thereon, and all other amounts payable under this Agreement, and any other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest, and all such amounts due
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under this Agreement, and under any other Loan Document shall become and be
forthwith due and payable, without further order of, or application to the
Bankruptcy Order, presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by the Borrower; and/or (3) exercise
any remedies provided in any of the Loan Documents at law (including but not
limited to the Bankruptcy Code and the Uniform Commercial Code) or otherwise,
with respect to the Collateral and the Loans.
Upon the occurrence of any Event of Default, the Agent may exercise
in respect of the Collateral, in addition to other rights and remedies provided
for herein, at law or otherwise available to it, all the rights and remedies of
a secured party on default under the applicable UCC (whether or not the
applicable UCC applies to the affected Collateral) and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Agent forthwith, assemble all or part of the Collateral as
directed by the Agent and make it available to the Agent at a place to be
designated by the Agent, and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other commercially reasonable terms. The Borrower
agrees that, to the extent notice of sale shall be required by Law, five
Business days prior notice to the Borrower of the time and place of any public
sale or the time after which any private sale is to made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the Agent, be held by
the Agent in a cash collateral account (which the Agent is hereby authorized to
establish) as Collateral for, and/or then or at any time thereafter applied in
accordance with the terms of Section 2.07(c) in whole or in part by the Agent
against, all or any or the Obligations in such order as the Agent shall elect.
After the occurrence of any Event of Default, the Agent shall have the right to
deliver any Pledged Mortgage into any Purchase Commitment, in any such event
either in the name of the Agent or the Borrower, pursuant to the power of
attorney granted under this Agreement or otherwise.
Section 9.03. The Agent May Perform. If the Borrower fails to
perform any agreement contained in this Agreement, the Agent may itself perform
(but shall not be obligated to perform), or cause performance of, such
agreement, and the expenses of the Agent incurred in connection therewith shall
be payable by the Borrower under Section 11.06.
Section 9.04. The Agent's Duties. The powers conferred on the Agent
under this Agreement are solely to protect its interest and the interests of the
Lenders in the Collateral and shall not impose any duty upon the Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Agent shall not have any duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
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Section 9.05. Transfer of Note. This Agreement creates a continuing
Lien in the Collateral and shall (i) remain in full force and effect until
payment in full of all the Obligations to the Lenders after the Termination
Date, (ii) be binding upon the Borrower, its successors and assigns, and (iii)
inure to the benefit of the Lenders and their successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), each
Lender may assign or otherwise transfer any document evidencing any Obligation
held by it to its successors or any Affiliate, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise. Upon the payment in full of the Obligations after
the Termination Date and cancellation of the Total Commitment, the Lien granted
hereby shall terminate and this Agreement shall terminate (except to the extent
set forth in Section 11.11) and all rights to the Collateral shall revert to the
Borrower. Upon any such termination, the Agent will, at the Borrower's expense,
instruct the Custodian pursuant to Section 14 of the Custodian Agreement to
release all Collateral held by it and execute and deliver to the Borrower such
documents as the Borrower shall reasonably request to evidence such termination.
Section 9.06. Defaulting Lender. Notwithstanding anything to the
contrary contained herein, in the event that any Lender (x) refuses (which
refusal constitutes a breach by such Lender of its obligations under this
Agreement and which has not been retracted) to make available its portion of any
Loan or (y) notifies the Agent and/or the Borrower that it does not intend to
make available its portion of any Loan (each, a "Lender Default"), all rights
and obligations hereunder of the Lender (a "Defaulting Lender") as to which a
Lender Default is in effect and of the other parties hereto shall be modified by
this Section 9.06 while such Lender Default remains in effect.
Loans shall be incurred pro rata from the Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitments, and no Commitment shall be increased as a result of such
Lender Default. Amounts received in respect of principal of the Loans shall be
applied to reduce the Loans of each of the Lenders pro rata based on the
aggregate of the outstanding Loans of all of the Lenders at the time of such
application; provided that, such amount shall not be applied to any Loan of a
Defaulting Lender at any time when, and to the extent that, the aggregate amount
of Loans of any Non-Defaulting Lender exceeds such Non-Defaulting Lenders' Pro
Rata Share of all Loans then outstanding.
A Defaulting Lender shall not be entitled to give instructions to
the Agent or to approve, disapprove, consent to or vote on any matters relating
to this Agreement and the other Loan Documents. All amendments, waivers and
other modifications of this Agreement and the other Loan Documents may be made
without regard to a Defaulting Lender and, for purposes of the definition of
"Majority Lenders", a Defaulting Lender shall be deemed not to be a Lender, not
to have a Commitment and not to have Loans outstanding.
Other than as expressly set forth in this Section 9.06, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
the Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 9.06 shall be deemed to release any Defaulting Lender from its
Commitment hereunder, shall alter such Commitment, shall operate as a waiver of
any default by such Defaulting Lender hereunder, or shall prejudice any rights
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which the Borrower, the Agent or any Lender may have against any Defaulting
Lender as a result of any default by such Defaulting Lender hereunder.
ARTICLE X.
AGENT
Section 10.01. Appointment. Each Lender (and each subsequent holder
of any Note by its acceptance thereof) hereby irrevocably appoints and
authorizes the Agent (i) to receive on behalf of each Lender any payment of
principal of or interest on the Notes outstanding hereunder and all other
amounts accrued hereunder for the account of the Lenders and paid to the Agent,
and, subject to Section 2.03 of this Agreement, to distribute promptly to each
Lender its Pro Rata Share of all payments so received, (ii) to distribute to
each Lender copies of all material notices and agreements received by the Agent
and not required to be delivered to each Lender pursuant to the terms of this
Agreement, provided that the Agent shall not have any liability to the Lenders
for the Agent's inadvertent failure to distribute any such notice or agreements
to the Lenders, (iii) subject to Section 10.03 of this Agreement, to take such
action as Agent deems appropriate on its behalf to administer the Loans, and the
Loan Documents and to exercise such other powers delegated to the Agent by the
terms hereof or the Loan Documents (including, without limitation, the power to
give or to refuse to give notices, waivers, consents, approvals and instructions
and the power to make or to refuse to make determinations and calculations)
together with such powers as are reasonably incidental thereto to carry out the
purposes hereof and thereof and (iv) to enter into the Pledge Agreement pursuant
to which the capital stock of certain Subsidiaries of the Borrower that own
Retained Interest Receivables have been pledged to Greenwich for the benefit of
Greenwich, the Agent and the Lenders and to enter into the Intercreditor
Agreement. As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions of the
Majority Lenders shall be binding upon all Lenders and all holders of Notes;
provided, however, the Agent shall not be required to take any action which, in
the reasonable opinion of the Agent, exposes the Agent to liability or which is
contrary to this Agreement or any Loan Document or applicable law.
Section 10.02. Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Agent shall be mechanical and administrative
in nature. The Agent shall not have by reason of this Agreement or any Loan
Document a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon the Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the Borrower in connection with the making
and the continuance of the Loans hereunder and shall make its own appraisal of
the creditworthiness of the Borrower and the value of the Collateral, and the
Agent shall have no duty
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or responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the initial Loan hereunder or at any time or times
thereafter, provided that, upon the reasonable request of a Lender, the Agent
shall provide to such Lender any documents or reports delivered to the Agent by
the Borrower pursuant to the terms of this Agreement or any Loan Document. If
the Agent seeks the consent or approval of the Majority Lenders to the taking or
refraining from taking any action hereunder, the Agent shall send notice thereof
to each Lender. The Agent shall promptly notify each Lender any time that the
Majority Lenders have instructed the Agent to act or refrain from acting
pursuant hereto.
Section 10.03. Rights, Exculpation, Etc. The Agent and its
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement or the other Loan Documents, except for their own gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agent (i)
may treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof, pursuant to Section 11.13
hereof, signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including, without limitation, counsel to the Agent
or counsel to the Borrower), independent public accountants, the Custodian, and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, the Custodian or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, certificates, warranties or representations made in or in connection
with this Agreement or the other Loan Documents; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Loan Documents on the
part of any Person, the existence or possible existence of any Default or Event
of Default, or to inspect the Collateral or other property (including, without
limitation, the books and records) of any Person; (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; and
(vi) shall not be deemed to have made any representation or warranty regarding
the existence, value or collectability of the Collateral, the existence,
priority or perfection of the Agent's Lien thereon, or the Borrowing Base or any
certificate prepared by the Borrower or the Custodian in connection therewith,
nor shall the Agent be responsible or liable to the Lenders for any failure to
monitor or maintain the Borrowing Base or any portion of the Collateral or the
failure of the Custodian to perform its obligations under the Custodian
Agreement. The Agent shall not be liable for any apportionment or distribution
of payments made by it in good faith pursuant to Section 2.07(c), and if any
such apportionment or distribution is subsequently determined to have been made
in error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount which
they are determined to be entitled. The Agent may at any time request
instructions from the Lenders with respect to any actions or approvals which by
the terms of this Agreement or of any of the Loan Documents the Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval under any of the Loan Documents until it
shall have received such instructions from the Majority Lenders. Without
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limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
under this Agreement, the Notes, or any of the other Loan Documents in
accordance with the instructions of the Majority Lenders.
Section 10.04. Reliance. The Agent shall be entitled to rely upon
any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
Section 10.05. Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or any of the Loan Documents or any action taken or omitted by
the Agent under this Agreement or any of the Loan Documents, in proportion to
each Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 10.08; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
resulted from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 10.05 shall survive the payment in
full of the Loans and the termination of this Agreement.
Section 10.06. CIT Individually. With respect to its Pro Rata Share
of the Total Commitment hereunder, the Loans made by it and the Note issued to
or held by it, CIT shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender or holder of a Note. The terms
"Lenders" or "Majority Lenders" or any similar terms shall, unless the context
clearly otherwise indicates, include CIT in its individual capacity as a Lender
or one of the Majority Lenders. CIT and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with the Borrower or any of its Subsidiaries as if it were not acting
as Agent pursuant hereto without any duty to account to the Lenders.
Section 10.07. Successor Agent.
(a) The Agent may resign from the performance of all its
functions and duties hereunder and under the other Loan Documents at any time by
giving at least thirty (30) Business Days' prior written notice to the Borrower
and each Lender. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent who, in the absence of a continuing Event of
Default, shall be reasonably satisfactory to the Borrower. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
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rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any Agent's resignation hereunder as the
Agent, the provisions of this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so appointed
within said thirty (30) Business Day period, the retiring Agent, with the
consent of the Borrower if an Event of Default is not continuing, shall then
appoint a successor Agent who shall serve as Agent until such time, if any, as
the Majority Lenders, with the consent of the Borrower, if an Event of Default
is not continuing, appoint a successor Agent as provided above.
(d) The Borrower, the Guarantor and each Lender consent to The
CIT Group/Business Credit, Inc., an affiliate of CIT, replacing CIT as the Agent
and receiving an assignment of all of CIT's rights and obligations as a Lender
under this Agreement, provided that The CIT Group/Business Credit, Inc. is
approved by the New York State Banking Department as a lender to a mortgage
banker.
Section 10.08. Collateral Matters.
(a) The Agent may from time to time, during the occurrence and
continuance of an Event of Default, make such disbursements and advances ("Agent
Advances") which the Agent, in its sole discretion, deems necessary or desirable
to preserve or protect the Collateral or any portion thereof, to enhance the
likelihood or maximize the amount of repayment by the Borrower of the Loans and
other Obligations or to pay any other amount chargeable to the Borrower pursuant
to the terms of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 11.06. The Agent Advances shall be repayable on
demand and be secured by the Collateral. The Agent Advances shall not constitute
Loans but shall otherwise constitute Obligations hereunder. The Agent shall
notify each Lender and the Borrower in writing of each such Agent Advance, which
notice shall include a description of the purpose of such Agent Advance. Without
limitation to its obligations pursuant to Section 10.05, each Lender agrees that
it shall make available to the Agent, upon the Agent's demand, in Dollars in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Agent Advance. If such funds are not made available to the Agent by
such Lender the Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Agent, at the Federal
Funds Rate for three Business Days and thereafter at the Prime Rate.
(b) The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral upon termination of the Total Commitment and payment
and satisfaction of all Loans, and all other Obligations which have matured and
which the Agent has been notified in writing are then due and payable; or
constituting property being sold or disposed of in the ordinary course of the
Borrower's business and in compliance with the terms of this Agreement and the
other Loan Documents; or constituting property in which the Borrower owned no
interest at the time the Lien was granted or
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at any time thereafter; or if approved, authorized or ratified in writing by the
Lenders. Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release particular types or items of Collateral
pursuant to this Section 10.08(b).
(c) Without in any manner limiting the Agent's authority to
act without any specific or further authorization or consent by the Lenders (as
set forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon
request by the Agent, the authority to release Collateral conferred upon the
Agent under Section 10.08(b). Upon receipt by the Agent of confirmation from the
Lenders of its authority to release any particular item or types of Collateral,
and upon prior written request by the Borrower, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent for the
benefit of the Lenders upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any obligations
or entail any consequence other than the release of such Liens without recourse
or warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Lien upon (or obligations of the Borrower in
respect of) all interests in the Collateral retained by the Borrower.
(d) The Agent shall have no obligation whatsoever to any
Lenders to assure that the Collateral exists or is owned by the Borrower or is
cared for, protected or insured or has been encumbered or that the Lien granted
to the Agent pursuant to this Agreement has been properly or sufficiently or
lawfully created, perfected, protected or enforced or is entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent in this Section
10.08 or in any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Agent's own interest in the Collateral as one of the Lenders and that
the Agent shall have no duty or liability whatsoever to any other Lender.
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Holidays. Except as otherwise provided herein,
whenever any payment or action to be made or taken hereunder or under the Notes
shall be stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day and such
extension of time shall be included in computing interest or fees, if any, in
connection with such payment or action.
Section 11.02. Records. The unpaid principal amount of the Notes,
the unpaid interest accrued thereon, the interest rate or rates applicable to
such unpaid principal amount, the duration of such applicability, the Total
Commitment, and the accrued and unpaid fees set forth in the Fee Letter, Unused
Line Fee and Early Termination Fee shall at all times be ascertained from the
records of the Agent, which shall be conclusive and binding absent manifest
error.
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Section 11.03. Amendments and Waivers. (a) No amendment or
modification of any provision of this Agreement or of any of the Notes or of any
other Loan Document shall be effective without the written agreement of the
Majority Lenders and the Borrower and no termination or waiver of any provision
of this Agreement or of any of the Notes, or consent to any departure by the
Borrower therefrom, shall in any event be effective without the written
concurrence of Majority Lenders, which Majority Lenders shall have the right to
grant or withhold at their sole discretion; except that any amendment,
modification, or waiver (i) of any provision of Article II or III which
amendment, modification or waiver increases the Total Commitment of any Lender,
reduces the principal of, or interest on, the Loans or the amounts payable to
any Lender, reduces the amount of any fee payable for the account of any Lender,
or postpones or extends any date fixed for any payment of principal of, or
interest or fees on, the Loans payable to any Lender, (ii) that increases the
aggregate amount of the Total Commitment, (iii) of the definitions of
"Termination Date", "Majority Lenders" or "Pro Rata Shares", (iv) of the
definitions of "Eligible Residential Mortgage Loan", "Borrowing Base",
"Collateral Value of Eligible Mortgages", "High LTV Mortgage Loan Sublimit", or
"Wet Mortgage Loan Sublimit" if the effect of such amendment, modification or
waiver is to increase the availability of the Borrower under the Borrowing Base,
(v) of any provision of this Agreement or any Loan Document that would release
all or a substantial portion of Collateral or the Guarantor (except as set forth
in Section 10.08 hereof or except as otherwise permitted in a Loan Document),
(vi) of any provision in this Agreement or the Loan Documents which amends,
modifies, waives, releases or subordinates the super priority claim status of
the Obligations (except as permitted in this Agreement and the Loan Documents),
(vii) of any provision in the Intercreditor Agreement or the Pledge Agreement or
(viii) of the provisions contained in this Section 11.03, shall be effective
only if evidenced by a writing signed by or on behalf of (A) any Lender affected
thereby in the case of the amendments, modifications or waivers described in
clause (i) above or (B) all Lenders in the case of the amendments, modifications
or waivers described in clauses (ii) through (viii) above. No amendment,
modification, termination, or waiver of any provision of Article X or any other
provision referring to the Agent shall be effective without the written
concurrence of the Agent. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances. Any amendment,
modification, waiver or consent effected in accordance with this Section 11.03
shall be binding on each Lender, each future Lender, and, if signed by the
Borrower, on the Borrower.
(b) Notwithstanding anything to the contrary contained in
subsection 11.03(a), in the event that the Borrower requests that this Agreement
or any other Loan Document be amended or otherwise modified in a manner which
would require the unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Majority Lenders, then, with the consent
of the Borrower and the Majority Lenders, the Borrower and the Majority Lenders
may amend this Agreement without the consent of the Lender or Lenders which did
not agree to such amendment or other modification (collectively the "Minority
Lenders") to provide for (i) the termination of the Commitment of each of the
Minority Lenders, (ii) the addition to this Agreement of one or more other
Lenders, or an increase in the Commitment of one or more of the Majority
Lenders, so that the Total Commitment after giving effect to such amendment
shall be in the same aggregate amount as the Total Commitment immediately before
giving effect to such
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amendment, (iii) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new Lenders or Majority Lenders, as the
case may be, as may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such amendment and (iv) the
payment of all interest, fees and other Obligations payable or accrued in favor
of the Minority Lenders and such other modifications to this Agreement as the
Borrower and the Majority Lenders may determine to be appropriate.
Section 11.04. No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Lenders or the Agent in exercising any
right, power or privilege under this Agreement, the Notes or any other Loan
Document shall affect any other or future exercise thereof or exercise of any
other right, power or privilege; nor shall any single or partial exercise of any
such right, power or privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies of the
Lenders or the Agent under this Agreement, the Notes and the other Loan
Documents are cumulative and not exclusive of any rights or remedies which the
Lenders or the Agent have thereunder or at law or in equity or otherwise. The
Lenders or the Agent may exercise their rights and remedies against the Borrower
and the Collateral as the Lenders and the Agent may elect, and regardless of the
existence or adequacy of any other right or remedy.
Section 11.05. Notices.
(a) All notices, requests, demands, directions and other
communications (collectively "Notices") under the provisions of this Agreement
or the Notes shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, or delivered and shall be
effective (i) if mailed, three days after being deposited in the mails, (ii) if
telecopied, when sent, confirmation received and (iii) if delivered, upon
delivery. All notices shall be sent to the applicable party at the address
stated on the applicable signature page hereof or in accordance with the last
unrevoked written direction from such party to the other parties hereto.
(b) Nothing in this Agreement or in any other Loan Document
shall be construed to limit or affect the obligation of the Borrower or any
other Person to serve upon the Agent in the manner prescribed by the Bankruptcy
Code any pleading or notice required to be given to the Agent pursuant to the
Bankruptcy Code.
(c) The Lenders and the Agent may rely, and shall be fully
protected in relying, on any notice purportedly made by or on behalf of the
Borrower and the Lenders and the Agent shall have no duty to verify the identity
or authority of any Person giving such notice. The preceding sentence shall
apply to all notices whether or not made in a manner authorized or required by
this Agreement or any other Loan Document.
Section 11.06. Expenses; Taxes; Attorneys' Fees; Indemnification.
The Borrower agrees to pay or cause to be paid, on demand, and to save the Agent
(and, in the case of clauses (c) through (m) below, the Lenders) harmless
against liability for the payment of, all reasonable out-of-pocket expenses,
regardless of whether the transactions contemplated hereby are consummated,
including but not limited to reasonable fees and expenses of counsel for the
Agent
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(and, in the case of clauses (a) and (b) below, Nomura Asset Capital
Corporation, and, in the case of clauses (c) through (m) below, the Lenders),
accounting, due diligence, periodic field audits, appraisals, lien, judgment and
title searches, filing fees, investigations, monitoring of assets, syndication,
miscellaneous disbursements, examination, travel, lodging and meals, incurred by
the Agent (and, in the case of clauses (c) through (m) below, the Lenders) from
time to time arising from or relating to: (a) the negotiation, preparation,
execution, delivery, performance and administration of this Agreement and the
other Loan Documents, (b) any amendments, waivers or consents to this Agreement
or the other Loan Documents whether or not such documents become effective or
are given, (c) the preservation and protection of any of the Agent's and the
Lenders' rights under this Agreement or the other Loan Documents, (d) the
defense of any claim or action asserted or brought against the Agent or the
Lenders by any Person that arises from or relates to this Agreement, any other
Loan Document, the Agent's or the Lenders' claims against the Borrower, or any
and all matters in connection therewith, (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Loan Document, provided that this clause (e) shall apply to all
Lenders only in connection with any defense of any court proceedings or in all
instances during a continuing Event of Default; (f) the filing of any petition,
complaint, answer, motion or other pleading by the Agent or the Lenders, or the
taking of any action in respect of the Collateral or other security, in
connection with this Agreement or any other Loan Document, (g) the protection,
collection, lease, sale, taking possession of or liquidation of, any Collateral
or other security in connection with this Agreement or any other Loan Document,
(h) any attempt to enforce any Lien or security interest in any Collateral or
other security in connection with this Agreement or any other Loan Document, (i)
any attempt to collect from the Borrower any Obligations, (j) the receipt of any
advice with respect to any of the foregoing, provided that this clause (j) shall
apply to all Lenders only with respect to the matters described in clauses (c)
through (i) and clauses (k) through (m) of this Section 11.06, (k) all
Environmental Liabilities and Costs arising from or in connection with the past,
present or future operations of the Borrower or any of its Subsidiaries
involving any damage to real or personal property or natural resources or harm
or injury alleged to have resulted from any Environmental Discharge on, upon or
into such property, (l) any costs or liabilities incurred in connection with the
investigation, removal, cleanup and/or remediation of any Hazardous Materials
present or arising out of the operations of any facility of the Borrower or any
of its Subsidiaries, or (m) any costs or liabilities incurred in connection with
any Environmental Lien. Without limitation of the foregoing or any other
provision of any Loan Document: (x) the Borrower agrees to pay all stamp,
document, transfer, recording or filing taxes or fees (including, without
limitation, mortgage recording taxes) and similar impositions now or hereafter
determined by the Agent or any of the Lenders to be payable in connection with
this Agreement or any other Loan Document, and the Borrower agrees to save the
Agent and the Lenders harmless from and against any and all present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying any such taxes, fees or impositions, and (y) if the
Borrower fails to perform any covenant or agreement contained herein or in any
other Loan Document, the Agent may itself perform or cause performance of such
covenant or agreement, and the expenses of the Agent incurred in connection
therewith shall be reimbursed on demand by the Borrower. The Borrower agrees to
indemnify and defend the Agent and the Lenders and their directors, officers,
agents, employees and affiliates (collectively, the "Indemnified Parties") from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages, costs or expenses of any nature whatsoever (including reasonable
attorneys' fees
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and amounts paid in settlement) incurred by, imposed upon or asserted against
any of them arising out of or by reason of any investigation, litigation or
other proceeding or claim brought or threatened relating to, or otherwise
arising out of or relating to, the execution of this Agreement or any other Loan
Document, the transactions contemplated hereby or thereby or any Loan or
proposed Loan hereunder (including, but without limitation, any use made or
proposed to be made by the Borrower of the proceeds of any thereof, or the
delivery or use or transfer of or the payment or failure to pay under any Loan)
but excluding any such losses, liabilities, claims, damages, costs or expenses
(i) to the extent finally judicially determined to have resulted from the gross
negligence or willful misconduct of the Indemnified Party, (ii) in connection
with any claim made by the Agent or any Lender against the Agent or another
Lender or (iii) arising under or in connection with any of the Pre-Petition
Agreements.
Section 11.07. Application. Except to the extent, if any, expressly
set forth in this Agreement or in the Loan Documents, the Agent and the Lenders
shall have the right to apply any payment received or applied by it in
connection with the Obligations to such of the Obligations then due and payable
as it may elect.
Section 11.08. Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.09. Governing Law. This Agreement and the Notes shall be
deemed to be contracts under the laws of the State of New York, without regard
to choice of law principles, and for all purposes shall be governed by and
construed and enforced in accordance with the laws of said State except as
governed by the Bankruptcy Code.
Section 11.10. Prior Understandings. This Agreement supersedes all
prior understandings and agreements, whether written or oral, among the parties
hereto relating to the transactions provided for herein other than the Fee
Letter.
Section 11.11. Duration; Survival. All representations and
warranties of the Borrower contained herein or made in connection herewith shall
survive the making of the Loans and shall not be waived by the execution and
delivery of this Agreement, the Notes or any other Loan Document, any
investigation by or knowledge of the Agent or the Lenders, the making of any
Loan hereunder, or any other event whatsoever. All covenants and agreements of
the Borrower contained herein shall continue in full force and effect from and
after the date hereof so long as the Borrower may borrow hereunder and until the
Obligations have been paid in full. Without limitation, it is understood that
all obligations of the Borrower to make payments to or indemnify the Agent and
the Lenders (including, without limitation, obligations arising under Section
11.06 hereof) shall survive the payment in full of the Notes and of all other
obligations of the Borrower thereunder and hereunder, termination of this
Agreement and all other events whatsoever and whether or not any Loans are made
hereunder.
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Section 11.12. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
Section 11.13. Assignments; Participations. (a) Each Lender may with
the written consent of the Agent and, in the absence of a continuing Event of
Default, the Borrower, which consent shall not be unreasonably withheld, assign
to one or more commercial banks or other financial institutions a portion of its
rights and obligations under this Agreement (including, without limitation, a
portion of its Commitment and the Loans owing to it) and the other Loan
Documents; provided, however, that (i) each such assignment shall be in a
principal amount of not less than $5,000,000 (or the remainder of such Lender's
Commitment) and (ii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
hereinafter defined), an Assignment and Acceptance. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (A) the assignee thereunder shall be a party
hereto and to the other Loan Documents and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and thereunder
and (B) the Assigned Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto; (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or the performance or observance by
the Borrower of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
such other documents and information it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Assigning Lender
or any Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement and the other Loan Documents are required to be
performed by it as a Lender and (vii) such assignee
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represents and warrants that it has been approved as a lender to a mortgage
banker by the New York State Department of Banking.
(c) The Agent shall maintain at its address referred to on the
signature page hereto, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, together with the Note subject to such
assignment, the Agent shall, if the Agent and, if applicable, the Borrower
consent to such assignment and if such Assignment and Acceptance has been
completed (i) accept such Assignment and Acceptance, (ii) give prompt notice
thereof to the Borrower unless the Borrower has consented to such assignment,
(iii) record the information contained therein in the Register and (iv) prepare
and distribute to each Lender and the Borrower a revised Schedule 1.01(A) hereto
after giving effect to such assignment, which revised Schedule 1.01(A) shall
replace the prior Schedule 1.01(A) and become part of this Agreement. Within
five Business Days after its consent to such assignment or its receipt of notice
thereof from the Agent, as the case may be, the Borrower, at its own expense,
shall execute and deliver to the Agent in exchange for the surrendered Note a
new Note to the order of such assignee Lender in an aggregate principal amount
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance, and if the assigning Lender has retained any Commitment hereunder, a
new Note to the order of the assigning Lender in an aggregate principal amount
equal to the Commitment retained by it hereunder, in each case prepared by the
Agent. Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note, shall be dated the date of
the Agent's acceptance of such Assignment and Acceptance and shall otherwise be
in substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without limitation, all
or a portion of its Commitment and the Loans owing to it); provided, that (i)
such Lender's obligations under this Agreement (including, without limitation,
its Commitment hereunder) and the other Loan Documents shall remain unchanged;
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents; and (iii) a participant shall not be entitled to
require such Lender to take or omit to take any action hereunder except (A)
action directly effecting an extension of the maturity dates (other than the
extension of the maturity date for up to 10 days if all the Lenders consent to
such extension) or decrease in the principal amount of the Loans or Obligations,
or (B) action directly effecting an extension of the due dates or a decrease in
the rate of
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interest payable on the Loans or the fees payable under this Agreement, or (C)
actions directly effecting a release of all or a substantial portion of the
Collateral or any Guarantor (except as set forth in Section 11.08 of this
Agreement or any Loan Document).
(f) Notwithstanding the foregoing provisions of this Section
11.13, (i) each Lender may at any time sell, assign, transfer, or negotiate all
or any part of its rights and obligations under this Agreement and the Loan
Documents to any Affiliate of such Lender, and (ii) there shall not be more than
four (4) Lenders under this Agreement at any time.
(g) Each Lender shall have the right to engage in repurchase
transactions in the ordinary course of its business with its Note and may
pledge, transfer, hypothecate or assign its Note in connection therewith with
the prior consent of the Agent, which consent shall not be unreasonably
withheld.
Section 11.14. Successors and Assigns. This Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns (including, except for the
right to request Loans, any trustee succeeding to the rights of the Borrower
pursuant to Chapter 11 of the Bankruptcy Code or pursuant to any conversion to a
case under Chapter 7 of the Bankruptcy Code) except that the Borrower may not
assign or transfer any of its rights hereunder or thereunder without the prior
written consent of all of the Lenders.
Section 11.15. Agent as Party in Interest. Each of the Borrower and
the Guarantor hereby stipulates and agrees that, until all Loans have been paid
in full in cash and the Total Commitment has terminated, the Agent is and shall
remain a party in interest in the Chapter 11 Cases and shall have the right to
participate, object and be heard in any motion or proceeding in connection
therewith. Nothing in this Agreement or any other Loan Document shall be deemed
to be a waiver of any of the Agent's rights or remedies under applicable law or
documentation. Without limitation of the foregoing, the Agent shall have the
right to make any motion or raise any objection it deems to be in its interest
(specifically including but not limited to objections to use of proceeds of the
Loans, to payment of professional fees and expenses or the amount thereof, to
sales or other transactions outside the ordinary course of business or to
assumption or rejection of any executory contract or lease), provided that the
Agent will not exercise such right if the action or inaction by the Borrower
which is the subject of such motion or objection is not prohibited by any
covenant or provision of this Agreement.
Section 11.16. Confidentiality. Upon delivering to any Lender or the
Agent, or permitting any Lender or the Agent to inspect, any written information
pursuant to this Agreement or the other Loan Documents, the Borrower is
delivering or making available such information to the Lenders or the Agent with
the understanding that each Lender and the Agent shall treat such information as
confidential to the extent such information is conspicuously marked
confidential. Each Lender and the Agent agrees to hold such information in
confidence from the date of disclosure thereof. Subject to the other provisions
of this Section 11.16, each Lender and the Agent may disclose confidential
information to its officers, directors, employees, attorneys, accountants or
other professionals engaged by any Lender or the Agent only after determining
that such third party
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has been instructed to hold such information in confidence to the same extent as
if it were a Lender. Notwithstanding the foregoing, the provisions of this
Section 11.16 shall not apply to information within any one of the following
categories or any combination thereof: (i) information the substance of which,
at the time of disclosure by any Lender or the Agent, has been disclosed to or
is known to any creditor of the Borrower or official or unofficial creditors'
committee (other than information as to which such creditor or creditors'
committee is then under an obligation of nondisclosure), or any Person other
than (A) a director, officer, employee or agent of any of the Borrower or a
professional engaged by the Borrower or (B) a Person who is then under an
obligation of nondisclosure (otherwise than as a consequence of a wrongful act
of any Lender or the Agent), (ii) information which any Lender or the Agent had
in its possession prior to receipt thereof from the disclosing party, or (iii)
information received by any Lender or the Agent from a third party having no
obligations of nondisclosure with respect thereto. Nothing contained in this
Section 11.16 shall prevent any disclosure: (x) believed in good faith by any
Lender or the Agent to be required by any law or guideline or interpretation or
application thereof by any Governmental Authority, arbitrator or grand jury
charged with the interpretation or administration thereof or compliance with any
request or directive of any Governmental Authority, arbitrator or grand jury
(whether or not having the force of law), (y) determined by counsel for any
Lender or the Agent to be necessary or advisable in connection with enforcement
or preservation of rights under or in connection with this Agreement or any
other Loan Document or (z) of any information which has been made public by a
Person other than any Lender or the Agent who, to the Agent's or such Lender's
actual knowledge, was then under an obligation of nondisclosure. The Lenders and
the Agent shall have the right to disclose any confidential information
described in this Section 11.16 to an assignee or prospective assignee or to a
participant or prospective participant in Loans hereunder, provided that the
assigning or selling Lender shall have obtained from such assignee or
prospective assignee or participant or prospective participant a written
agreement to hold such information in confidence to the same extent as if it
were a Lender.
Section 11.17. Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE AGENT, EACH LENDER, THE GUARANTOR AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE AGENT, THE LENDERS, THE GUARANTOR OR THE BORROWER IN CONNECTION HEREWITH
OR THEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS TO ENTER INTO THIS AGREEMENT.
Section 11.18. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default any Lender and the Agent may, and is hereby
authorized to, at any time from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower) and to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provision or final) at any time held and other
indebtedness at any time
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owing by such Lender or the Agent and to or for the credit or the account of the
Borrower against any and all Obligations of the Borrower now or hereafter
existing under the Loan Documents, irrespective of whether or not any Lender and
the Agent shall have made any demand hereunder or thereunder and although such
Obligations may be contingent or unmatured. Each Lender and the Agent agrees
promptly to notify the Borrower after any such setoff and application made by
such Lender or the Agent; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender and the Agent under this Section 11.18 are in addition to the
other rights and remedies (including, without limitation, other rights of setoff
under applicable law or otherwise) which such Lender or the Agent may have.
Section 11.19. Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
Section 11.20. Periodic Due Diligence Review. The Borrower
acknowledges that the Agent and each Lender have the right to perform continuing
due diligence reviews with respect to the Mortgage Loans, for purposes of
verifying compliance with the representations, warranties and specifications
made hereunder, or otherwise, and the Borrower agrees that on a monthly basis,
the Agent or its authorized representatives (including, without limitation,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or any other independent accountants retained by the Agent at
the expense of the Borrower) will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Collateral Documents and
any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in the possession or under the control of the Borrower
and/or the Custodian. The Borrower also shall make available to the Agent a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Collateral Documents and the Mortgage Loans. Without
limiting the generality of the foregoing, the Borrower acknowledges that the
Agent and the Lenders may make loans to the Borrower based solely upon the
information provided by the Borrower to the Agent in the Mortgage Loan Schedule
and the representations, warranties and covenants contained herein, and that the
Agent, at its option, has the right at any time to conduct a partial or complete
due diligence review on some or all of the Mortgage Loans securing such Loan,
including without limitation ordering new credit reports and new appraisals on
the related mortgaged properties and otherwise regenerating the information used
to originate such Mortgage Loans. The Agent may underwrite such Mortgage Loans
itself or engage a third party underwriter to perform such underwriting. The
Borrower agrees to cooperate with the Agent 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 documents,
records, agreements, instruments or information relating to such Mortgage Loans
in the possession, or under the control, of the Borrower. The Borrower further
agrees that the Borrower shall reimburse the Agent for any and all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the
Agent's activities pursuant to this Section 11.20.
[SIGNATURE PAGE FOLLOWS]
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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.
BORROWER
CITYSCAPE CORP.,
as debtor and debtor-in-possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTOR
CITYSCAPE FINANCIAL CORP.,
as debtor and debtor-in-possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Secretary
Address for Notices:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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AGENT AND LENDER
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Fall, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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LENDER
NOMURA ASSET CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
Address for Notices:
2 World Financial ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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SCHEDULE 3.10(7)
ADDITIONAL REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Eligible Residential Mortgage Loans
As to each Mortgage Loan included in the Borrowing Base on the date
of a Loan (and the related Mortgage, Mortgage Note, assignment of mortgage and
mortgaged property), the Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Market Value is determined. With respect to any representations and
warranties made to the best of the Borrower's knowledge, in the event that it is
discovered that the circumstances with respect to the related Mortgage Loan are
not accurately reflected in such representation and warranty notwithstanding the
knowledge or lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Loan may, at the option of the Agent, be excluded from the
Borrowing Base or be assigned a Collateral Market Value lower than that set
forth in the Agreement:
(1) Mortgage Loan Schedule. The information set forth on the Mortgage Loan
Schedule with respect to such Eligible Residential Mortgage Loan is true
and correct as of the date of each Loan in all material respects;
(2) Payments Current. As of the Date of each Loan, no payment required under
the Mortgage Loan is delinquent;
(3) No Delinquent Taxes. To the best of the Borrower's knowledge there was no
delinquent tax or assessment lien against any related mortgaged property;
(4) No Defenses. To the best of the Borrower's knowledge, there is no valid
offset, defense or counterclaim to any related Mortgage Note or Mortgage,
including the obligation of the mortgagor to pay the unpaid principal of
or interest on such Mortgage Note;
(5) No Mechanics' Liens. To the best of the Borrower's knowledge, there are no
mechanics' liens or claims for work, labor or material affecting any
related mortgaged property which are or may be a lien prior to, or equal
with, the lien of such Mortgage, except those which are insured against by
the title insurance policy referred to in (8) below;
(6) Mortgaged Property Undamaged. To the best of the Borrower's knowledge,
each related mortgaged property is free of material damage and is in good
repair;
(7) No Modifications. Neither the Borrower nor any prior holder of any related
Mortgage has modified such Mortgage in any material respect (except that
such a Mortgage Loan may have been modified by a written instrument which
has been recorded, if necessary, to protect the interests of the Agent and
which has been delivered to the Custodian); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the related
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mortgaged property in whole or in part from the lien of such Mortgage
except for the subordination of a Mortgage securing a Mortgage Loan, with
respect to which the related superior lien was released in connection with
the refinancing of the mortgage loan relating to such superior lien; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto except as has been disclosed to Agent
prior to the date of the Loan, in which case a copy of such modification
agreement will have been delivered to the Borrower and the Custodian;
(8) Title Insurance. Except with respect to High LTV Mortgage Loans, a
lender's policy of title insurance together with a condominium
endorsement, if applicable, and extended coverage endorsement and, if
applicable, an adjustable rate mortgage endorsement in an amount at least
equal to the principal balance as of the date of the funding of the
related Loan of each such Eligible Residential Mortgage Loan or a
commitment (binder) to issue the same was effective on the date of the
origination of such Eligible Residential Mortgage Loan, each such policy
is valid and remains in full force and effect, and each such policy was
issued by a title insurer qualified to do business in the jurisdiction
where the related mortgaged property is located and acceptable to FNMA or
FHLMC and in a form acceptable to FNMA or FHLMC, which policy insures the
Borrower and successor owners of indebtedness secured by the insured
related Mortgage, as to the first or second priority lien of such
Mortgage; to the best of the Borrower's knowledge, no claims have been
made under such mortgage title insurance policy and no prior holder of
such Mortgage, including the Borrower, has done, by act or omission,
anything which would impair the coverage of such mortgage title insurance
policy;
(9) Origination. Such Eligible Residential Mortgage Loan was originated by the
Borrower or, if not originated by the Borrower, was purchased by the
Borrower and substantially in accordance with the Underwriting Guidelines
then in effect;
(10) No Encroachments. To the best of the Borrower's knowledge, all of the
improvements which were included for the purpose of determining the
Collateral Market Value of the related mortgaged property lie wholly
within the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon such mortgaged
property unless the applicable title insurance policy for such mortgaged
property affirmatively insures against loss or damage by reason of any
encroachment that is disclosed or would have been disclosed by an accurate
survey;
(11) Occupancy. To the best of the Borrower's knowledge, no improvement located
on or being part of related mortgaged property is in violation of any
applicable zoning law or regulation. To the best of the Borrower's
knowledge, all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of such 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 and to the
best of the Borrower's knowledge, such mortgaged property was lawfully
occupied under applicable law at origination and is lawfully occupied
under applicable law;
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(12) Doing Business. To the best of the Borrower's knowledge, all parties which
have had any interest in any related Mortgage, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which they
held and disposed of such interest, were) (1) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
related mortgaged property is located, and (2)(A) organized under the laws
of such state, (B) qualified to do business in such state, (C) federal
savings and loan associations or national banks having principal offices
in such state, or (D) not doing business in such state;
(13) Customary Provisions. The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related mortgaged
property of the benefits of the security, including, (i) if such Mortgage
is designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial foreclosure;
(14) Deeds of Trust. With respect to any related Mortgage constituting a deed
of trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by, the Agent
to the trustee under the deed of trust, except in connection with a
trustees sale after default by the related mortgagor;
(15) Form of Documents. The related Mortgage Note and the related Mortgage is
in substantially the form attached as Exhibit M hereto with such revisions
as are necessary to comply with applicable state law;
(16) Collection Practices. The collection practices used by the Borrower with
respect to such Eligible Residential Mortgage Loan have been in all
respects legal, proper, prudent and customary in the mortgage lending and
servicing business with respect to mortgage loans similar to such Eligible
Residential Mortgage Loan;
(17) No Additional Collateral. The related Mortgage Note is not secured by any
collateral, pledged account or other security except for the lien of the
related Mortgage and certain personalty relating thereto or a third party
guaranty;
(18) No Shared Appreciation; No Contingent Interests. Such Eligible Residential
Mortgage Loan does not have a shared appreciation feature, or other
contingent interest feature;
(19) Due on Sale. Such Eligible Residential Mortgage Loan contains a
"due-on-sale" clause unless prohibited by applicable law;
(20) No Condemnation. To the best of the Borrower's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of
the related mortgaged property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or
earth movement except for normal wear and tear;
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(21) Type of Mortgaged Property. The related mortgaged property is improved by
a one to four-family residential dwelling, including condominium units,
dwelling units in "PUDs" or planned unit developments and manufactured
housing, which, to the best of the Borrower's knowledge, does not include
cooperatives and does not constitute other than real property or
personalty related to the mortgaged property under state law;
(22) Servicing. Unless otherwise specified in the related Notice of Borrowing,
each Eligible Residential Mortgage Loan is being serviced by the Borrower;
(23) No Future Advances. There is no obligation on the part of the Borrower or
any other party under the terms of the related Mortgage or related
Mortgage Note to make payments in addition to those made to the related
Mortgagor;
(24) Consolidation of Future Advances. Any future advances made prior to the
funding date of the related Loan have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal
amount of such Eligible Residential Mortgage Loan. The related Mortgage
Note does not permit or obligate the Borrower to make future advances to
the related Mortgagor at the option of the Mortgagor;
(25) No Assessments. To the best of the Borrower's knowledge, there are no
defaults in complying with the terms of the Mortgage that would have a
material adverse effect on the value of the related Mortgage Loan, and all
taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents that would have a
material adverse effect on the value of the related Mortgage Loan 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. The Borrower has not advanced funds, or induced, solicited
or knowingly received any advance of funds by a party other than the
related Mortgagor, directly or indirectly, for the payment of any amount
required by the related Mortgage except for (A) payments in the nature of
escrow payments, including without limitation, taxes and insurance
payments, and (B) interest accruing from the date of the related Mortgage
Note or date of disbursement of the related Mortgage proceeds, whichever
is later, to the day which precedes by one month the due date of the first
installment of principal and interest;
(26) Application of Proceeds. All amounts received with respect to such
Eligible Residential Mortgage Loan to which the Agent is entitled have
been transferred to the Agent;
(27) Underwriting. Such Eligible Residential Mortgage Loan was underwritten in
accordance with the Borrower's underwriting guidelines no less stringent
than the Underwriting Guidelines; provided, however, that from time to
time the Borrower may propose reasonable changes to such Underwriting
Guidelines and, in the case of any material changes to such Underwriting
Guidelines, with Agent's written consent thereto, may materially amend
such Underwriting Guidelines;
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(28) Appraisal. Except with respect to High LTV Mortgage Loans, the related
Mortgage File (as defined in the Custodian Agreement) contains an
appraisal of the related mortgaged property signed by an appraiser which
meets the minimum FNMA or FHLMC requisite qualifications for appraisers,
duly appointed by the originator, who had no interest, direct or indirect
in the related mortgaged property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Eligible Residential Mortgage Loan; the appraisal is
in a form acceptable to FNMA and FHLMC, with such riders as are acceptable
to FNMA or FHLMC, as the case may be, and satisfies the requirements of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989;
(29) No Graduated Payments; No Buydowns: No Convertible Mortgage Assets. Unless
otherwise specified in the related Notice of Borrowing, such Eligible
Residential Mortgage Loan is not a graduated payment mortgage loan or a
growing equity mortgage loan, nor is such Eligible Residential Mortgage
Loan subject to a temporary buydown or similar arrangement. If the
Eligible Residential Mortgage Loan has an adjustable rate, it is not
convertible at the option of the related mortgagor to a fixed rate
mortgage loan;
(30) Environmental Matters. To the best of Borrower's knowledge at origination
either (i) the related mortgaged property was not located within a 1 mile
radius of any site with environmental or hazardous waste of which the
Borrower had actual knowledge, or (ii) as to any related mortgaged
property located within a 1 mile radius of any site as to which the
Borrower has actual knowledge of environmental or hazardous waste, the
related Eligible Residential Mortgage Loan was reviewed in accordance with
the Borrower's established environmental review procedures; and
(31) No Fraud. To the best of the Borrower's knowledge, no error, omission,
misrepresentation, negligence, fraud or similar action occurred on the
part of any person in connection with the origination of any Eligible
Residential Mortgage Loan.
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Part II. Eligible Home Equity Mortgage Loans
As to each Home Equity Mortgage Loans included in the Borrowing Base
on the date of a Loan (and the related Mortgage, Mortgage Note, assignment of
mortgage and mortgaged property), the Borrower shall be deemed to make the
following representations and warranties to the Lender as of such date and as of
each date Collateral Market Value is determined (in addition to the
representations and warranties set forth in Part I of this Schedule 3.10(7)).
With respect to any representations and warranties made to the best of the
Borrower's knowledge, in the event that it is discovered that the circumstances
with respect to the related Mortgage Loan are not accurately reflected in such
representation and warranty notwithstanding the knowledge or lack of knowledge
of the Borrower, then, notwithstanding that such representation and warranty is
made to the best of the Borrower's knowledge, such Mortgage Loan may, at the
option of the Agent, be excluded from the Borrowing Base or be assigned a
Collateral Market Value lower than that set forth in the Agreement:
Conformance With Underwriting Guidelines. Borrower represents
and warrants to the Agent and the Lenders with respect to each Home
Equity Mortgage Loan consisting of an interest in a residential
property in a pool of Eligible Residential Mortgage Loan that each
such Eligible Residential Mortgage Loan shall have been originated
in conformity with and meets, as of the date of the related Loan,
underwriting guidelines no less stringent than the Underwriting
Guidelines; provided, however, that from time to time the Borrower
may propose reasonable changes to such Underwriting Guidelines and,
in the case of the material changes to the Underwriting Guidelines,
with Agent's written consent thereto, may materially amend such
Underwriting Guidelines.
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Schedule 1.01(A)
Lenders and Lenders' Commitments
During the period while the Interim Order is in effect:
Lender Commitment Percentage
------ ---------- ----------
The CIT Group/Equipment $ 25,000,000 50%
------------
Financing, Inc.
Nomura Asset Capital Corporation $ 25,000,000 50%
============ ===
$ 50,000,000 100%
------------ -------
During the period following the effective date of the Final Order:
Lender Commitment Percentage
------ ---------- ----------
The CIT Group/Equipment $ 75,000,000 50%
Financing, Inc.
Nomura Asset Capital Corporation $ 75,000,000 50%
============ ===
$150,000,000 100%