Exhibit 10.91
Excecution Copy
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
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Dated as of December 1, 2001
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NC CAPITAL CORPORATION
as Borrower
and
XXXXXX XXXXXXX XXXX XXXXXX MORTGAGE CAPITAL INC.
as Lender
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TABLE OF CONTENTS
ARTICLE I
Definitions and Accounting Matters.
Section 1.1 Certain Defined Terms.......................................... 1
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Section 1.2 Section 1.2 Accounting Terms and Determinations................ 12
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ARTICLE II
Loans, Note, and Prepayments
Section 2.1 Loans.......................................................... 12
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Section 2.2 Notes.......................................................... 12
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Section 2.3 Procedure for Borrowing........................................ 12
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Section 2.4 Limitation on Types of Loans Illegality........................ 13
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Section 2.5 Repayment of Loans; Interest................................... 14
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Section 2.6 Mandatory prepayments or Pledge................................ 15
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Section 2.7 Extension of Termination Date.................................. 15
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ARTICLE III
Payments; Computations; Etc.
Section 3.1 Payments....................................................... 15
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Section 3.2 Computations................................................... 15
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Section 3.3 Requirements of Law............................................ 15
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Section 3.4 Facility Fee................................................... 17
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ARTICLE IV
Collateral Security.
Section 4.1 Collateral; Security Interest.................................. 17
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Section 4.2 Further Documentation.......................................... 18
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Section 4.3 Changes in Locations, Name. etc................................ 18
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Section 4.4 Lender's Appointment as Attorney-in-Fact....................... 18
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Section 4.5 Performance by Lender of Borrower's Obligations................ 20
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Section 4.6 Proceeds....................................................... 20
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Section 4.7 Remedies....................................................... 20
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Section 4.8 Limitation on Duties Regarding Preservation of Collateral...... 21
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Section 4.9 Powers Coupled with an Interest................................ 22
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Section 4.10 Release of Security Interest................................... 22
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ARTICLE V
Conditions Precedent.
Section 5.1 Initial Loan................................................... 22
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Section 5.2 Initial and Subsequent Loans................................... 23
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ARTICLE VI
Representations and Warranties.
Section 6.1 Existence...................................................... 25
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Section 6.2 Financial Condition............................................ 26
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Section 6.3 Litigation..................................................... 26
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Section 6.4 No Breach...................................................... 26
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Section 6.5 Action......................................................... 27
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Section 6.6 Approvals...................................................... 27
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Section 6.7 Margin Regulations............................................. 27
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Section 6.8 Taxes.......................................................... 27
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Section 6.9 Investment Company Act......................................... 27
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Section 6.10 Collateral; Collateral Security................................ 27
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Section 6.11 Chief Executive Office/Jurisdiction of Organization............ 28
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Section 6.12 Location of Books and Records.................................. 28
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Section 6.13 True and Complete Disclosure................................... 28
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Section 6.14 ERISA.......................................................... 29
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Section 6.15 Subsidiaries................................................... 29
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ARTICLE VII
Covenants of the Borrower.
Section 7.1 Financial Statements........................................... 29
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Section 7.2 Litigation..................................................... 31
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Section 7.3 Existence, etc................................................. 32
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Section 7.4 Prohibition of Fundamental Changes............................. 32
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Section 7.5 Borrowing Base Deficiency...................................... 33
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Section 7.6 Notices........................................................ 33
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Section 7.7 Reports........................................................ 33
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Section 7.8 Underwriting Guidelines........................................ 33
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Section 7.9 Transactions with Affiliates................................... 34
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Section 7.10 Limitation on Liens............................................ 34
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Section 7.11 Limitation on Guarantees....................................... 34
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Section 7.12 Limitation on Distributions.................................... 34
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Section 7.13 Servicer; Servicing Tape....................................... 34
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Section 7.14 Required Filings............................................... 35
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Section 7.15 No Adverse Selection........................................... 35
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Section 7.16 Remittance of Prepayments...................................... 35
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ARTICLE VIII
Events of Default.
Section 8.1 Events of Default.............................................. 35
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ARTICLE IX
Remedies Upon Default
Section 9.1 Remedies....................................................... 37
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ARTICLE X
No Duty of Lender.
Section 10.1 No Duty........................................................ 38
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ARTICLE XI
Miscellaneous
Section 11.1 Waiver......................................................... 38
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Section 11.2 Notices........................................................ 38
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Section 11.3 Indemnification and Expenses................................... 39
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Section 11.4 Amendments..................................................... 40
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Section 11.5 Successors and Assigns......................................... 40
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Section 11.6 Survival....................................................... 40
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Section 11.7 Captions....................................................... 40
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Section 11.8 Counterparts................................................... 40
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Section 11.9 Loan Agreement Constitutes Security Agreement: Governing Law... 40
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Section 11.10 Submission To Jurisdiction: Waivers............................ 41
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Section 11.11 WAIVER OF JURY TRIAL........................................... 41
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Section 11.12 Acknowledgments................................................ 41
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Section 11.13 Hypothecation or Pledge of Loans............................... 42
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Section 11.14 Servicing...................................................... 42
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Section 11.15 Due Diligence Review........................................... 43
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Section 11.16 Set-Off........................................................ 44
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Section 11.17 Intent......................................................... 44
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SCHEDULES
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SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
EXHIBITS
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EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C-1 Form of Opinion of Counsel to Borrower
EXHIBIT C-2 Form of Opinion of Counsel to Guarantor
EXHIBIT D Form of Request for Borrowing
EXHIBIT E-1 Form of Borrower's Release Letter
EXHIBIT E-2 Form of Warehouse Lender's Release Letter
EXHIBIT F Underwriting Guidelines
EXHIBIT G Form of Servicer Notice
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT, dated as of
December 1, 2001, between NC CAPITAL CORPORATION, a California corporation (the
"Borrower"), and XXXXXX XXXXXXX XXXX XXXXXX MORTGAGE CAPITAL INC., a New York
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corporation (the "Lender").
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RECITALS
The Borrower and the Lender are party to that certain Master Loan and
Security Agreement, dated as of December 1, 2001, as supplemented by Amendment
No. 1 thereto, dated as of April 2, 2001, Amendment No. 3 thereto, dated as of
June 12, 2001, Amendment No. 5 thereto, dated as of September 18, 2001 and
Amendment No. 6 thereto, dated as of October 29, 2001 (as so amended, the
"Existing Master Loan and Security Agreement").
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Pursuant to the terms of such Existing Master Loan and Security
Agreement, the Borrower has requested and the Lender has agreed, from time to
time, to make revolving credit loans to the Borrower to finance certain
residential mortgage loans owned by the Borrower.
The Borrower has requested that the Lender continue, from time to time,
to make revolving credit loans to the Borrower to finance certain residential
mortgage loans owned by the Borrower.
The parties hereto now desire to amend and restate the Existing Master
Loan and Security Agreement in its entirety in the form of this Loan Agreement
and to provide for an extension of the Termination Date as provided in Section
2.7 of the Existing Master Loan and Security Agreement.
In consideration of the mutual covenants and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
ARTICLE I
Definitions and Accounting Matters.
Section 1.1 Certain Defined Terms. As used herein, the following terms
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shall have the following meanings (all terms defined in this Section 1.1 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" shall mean with respect to any Person, any "affiliate" of
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such Person, as such term is defined in the Bankruptcy Code.
"Applicable Collateral Percentage" shall mean, except as may be reduced
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pursuant to Section 11.16 hereof, for any date of determination and each type of
Eligible Mortgage Loan, the applicable percentage specified below:
Unseasoned Mortgage Loan 98.5%
Second Lien Mortgage Loan 98.5%
30+ Delinquent Mortgage Loan 85%
60+ Delinquent Mortgage Loan 75%
Defaulted Mortgage Loan the applicable BPO Percentage
Discretionary Mortgage Loan the applicable percentage specified
by the Lender one (1) Business Day
prior the applicable Funding Date
provided, however, if a Minimum Credit Trigger Event or a Tangible Net Worth
Trigger Event shall have occurred, the Applicable Collateral Percentage with
respect to all Unseasoned Mortgage Loans and all Second Lien Mortgage Loans
shall be reduced to 98%; provided, further, if more than one of the
aforementioned categories shall apply to an Eligible Mortgage Loan, the lower
percentage shall be applicable.
"Applicable Loan Rate" shall mean the Eurodollar Loan Rate in effect from
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time to time, unless an event set forth in Section 2.4 shall occur, in which
case the Applicable Loan Rate from and after the date of such event shall mean
the Federal Loan Rate.
"Applicable Margin" shall mean, except as may be increased pursuant to
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Section 11.16 hereof, the sum of the weighted average of the applicable rates
per annum for each type of Eligible Mortgage Loan for each day that Loans shall
be secured by such Eligible Mortgage Loans. For each type of Eligible Mortgage
Loan, the applicable rate shall be equal to the product of (a) a fraction equal
to (1) the Collateral Value of all Eligible Mortgage Loans of such type, divided
by (2) the Collateral Value of all Eligible Mortgage Loans, and (b) the
applicable percentage specified below; provided, however, if more than one of
the following categories shall apply to an Eligible Mortgage Loan, the higher
percentage shall be applicable:
Unseasoned Mortgage Loan 1.00%
Second Lien Mortgage Loan 1.00%
30+ Delinquent Mortgage Loan 1.20%
60+ Delinquent Mortgage Loan 1.20%
Defaulted Mortgage Loan 1.45%
Discretionary Mortgage Loan the percentage specified by
the Lender one (1) Business
Day prior to the applicable
Funding Date
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
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U.S.C. (s) 10 1 et. seq., as amended from time to time.
"Board Report" shall mean the documentation delivered to the Board of
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Directors of the Guarantor pursuant to Section 7.1(b), which shall include, but
is not limited to (i) financial overview, (ii) consolidated financial statements
and (iii) any additional financial information included in such report from time
to time.
"Borrower" shall have the meaning provided in the heading hereof.
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"Borrowing Base" shall mean the aggregate Collateral Value of all Eligible
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Mortgage Loans.
"Borrowing Base Deficiency" shall have the meaning provided in Section 2.6
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hereof.
"BPO Percentage" shall mean (i) with respect to any Defaulted Mortgage Loan
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for which a Broker Price Opinion has not been obtained, 50% and (ii) with
respect to any Defaulted Mortgage Loan for which a Broker Price Opinion has been
obtained, 65%.
"Broker Price Opinion" shall mean, with respect to a Mortgage Loan or an
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REO Property, a broker's price opinion prepared by a duly licensed real estate
broker who has no interest, direct or indirect, in the Mortgage Loan or REO
Property or in the Borrower or any Affiliate of the Borrower and whose
compensation is not affected by the results of the broker's price opinion, and
which valuation (i) indicates the expected proceeds for a sale of the related
Mortgaged Property or REO Property and, (ii) with respect to any condominium
development or planned unit development that was not Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation approved, the amount, if
any, by which the valuation was decreased as a result of such lack of approval,
and (iii) includes certain assumptions, including those as to the condition of
the exterior and interior of the applicable Mortgaged Property or REO property
and carrying costs and expenses during marketing time.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
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(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or the Custodian is authorized or obligated by law or executive order to be
closed.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
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such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Loan Agreement. the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Capital Stock" shall mean any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
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to time.
"Collateral" shall have the meaning provided in Section 4.1(b) hereof.
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"Collateral Value" shall mean, with respect to each Eligible Mortgage Loan,
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the lesser of (a) the product of (i) the Market Value of such Eligible Mortgage
Loan, and (ii) the Applicable Collateral Percentage for such Eligible Mortgage
Loan, and (b) 101% of the unpaid principal balance of such Eligible Mortgage
Loan; provided, however, if a Minimum Credit Trigger Event or a Tangible Net
Worth Trigger Event shall have occurred, the Collateral Value with respect to
each Eligible Mortgage Loan shall the lesser of (a) the product of (1) the
Market Value of such Eligible Mortgage Loan, and (ii) the Applicable Collateral
Percentage for such Eligible
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Mortgage Loan, and (b) 100% of the unpaid principal balance of such Eligible
Mortgage Loan; provided, further, that the Collateral Value shall be deemed to
be zero with respect to each Mortgage Loan (1) in respect of which there is a
breach of representation and warranty set forth on Schedule 1 (assuming each
representation and warranty is made as of the date the Collateral Value thereof
is determined), (2) which ceases to be an Eligible Mortgage Loan for any reason
or (3) for which any Mortgage Loan Documents have been released from the
possession of the Custodian under the Custodial Agreement for a period in excess
of 15 days.
"Collection Account" shall mean one or more accounts established by the
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Servicer subject to a security interest in favor of the Lender, into which all
Collections shall be deposited by the Servicer.
"Collections" shall mean, collectively, all collections and proceeds on, or
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in respect of the Mortgage Loans, excluding collections required to be paid to
the Servicer or a mortgagor on the Mortgage Loans.
"Custodial Agreement" shall mean the Amended and Restated Custodial
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Agreement, dated as of the date hereof, among the Borrower, the Custodian and
the Lender, substantially in the form of Exhibit B hereto, as the same shall be
modified and supplemented and in effect from time to time.
"Custodian" shall mean U.S. Bank Trust National Association, as custodian
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under the Custodial Agreement, and its successors and permitted assigns
thereunder.
"Default" shall mean an Event of Default or an event that with notice or
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lapse of time or both would become an Event of Default.
"Defaulted Mortgage Loan" shall mean, as of any date of determination, an
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Eligible Mortgage Loan which is 90 days or more Delinquent and/or is subject to
a foreclosure proceeding.
"Delinquent" shall mean that a Monthly Payment (as defined in Part III of
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Schedule 1 hereto) has not been made by the close of business on the related Due
Date (as defined in Part III of Schedule 1 hereto).
"Discretionary Mortgage Loan" shall mean either a Seasoned Mortgaged Loan
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or any other Mortgage Loan which does not specifically meet the parameters of an
Eligible Mortgage Loan as described herein.
"Dollars" and "$" shall mean lawful money of the United States of America.
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"Due Diligence Review" shall mean the performance by the Lender of any or
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all of the reviews permitted under Section 11.15 hereof with respect to any or
all of the Mortgage Loans, as desired by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions precedent
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set forth in Section 5.1 shall have been satisfied.
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"Eligible Mortgage Loan" shall mean a Mortgage Loan originated by the
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Borrower or any Affiliate of the Borrower, secured by a first or second mortgage
Lien on a one-to-four family residential property, as to which the
representations, and warranties in Section 6.10 and Part I and Part II of
Schedule 1 hereof are correct; provided, however, that, in no event shall any
Eligible Mortgage Loan be a security for purposes of any securities or blue-sky
laws; and provided, further, that the following Mortgage Loans shall not be an
Eligible Mortgage Loan: (1) a Mortgage Loan for which the related obligor is
subject to a voluntary or involuntary bankruptcy proceeding or for which the
related Mortgaged Property has been acquired through foreclosure, acceptance of
a deed-in-lieu of foreclosure or otherwise in accordance with applicable law in
connection with the default of such Mortgage Loan, (2) a Defaulted Mortgage Loan
for which a Broker Price Opinion can not be obtained, (3) a Mortgage Loan that
is listed on the Exception Report, and (4) a Mortgage Loan which shall have been
pledged to the Lender hereunder for 120 days or more. The Lender shall have sole
discretion in determining whether the concentration limits provided for in Part
11 of Schedule 1 hereto have been exceeded.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that is a
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member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Equity Proceeds" shall mean with respect to the Guarantor, an amount equal
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to the net proceeds from the issuance of any securities of the Guarantor or the
net proceeds to the Guarantor from contributions to capital or otherwise by
another Person.
"Eurodollar Loan Rate" shall mean a rate per annum equal to the sum of the
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Eurodollar Rate plus the Applicable Margin.
"Eurodollar Rate" shall mean, with respect to each day a Loan is
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outstanding, the rate per annum based on the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR on such date (and if such date is not a
Business Day, the Eurodollar Rate in effect on the Business Day immediately
preceding such date), and if such rate shall not be so quoted, the rate per
annum at which the Lender is offered Dollar deposits at or about 10:00 A.M., New
York City time, on such date by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency exchange operations in respect of its
Loans are then being conducted for delivery on such day for a period of 30 days
and in an amount comparable to the amount of the Loans to be outstanding on such
day.
"Execution" shall have the meaning specified in the Custodial Agreement.
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"Exception Report" shall mean the portion of the Mortgage Loan Schedule and
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Exception Report detailing Exceptions in respect of each Mortgage Loan.
"Event of Default" shall have the meaning, provided in Article VIII
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hereof.
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"Federal Funds Rate" shall mean, for any day, the weighted average of the
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rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.
"Federal Loan Rate" shall mean a rate per annum equal to the sum of (a) the
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Federal Funds Rate plus 1.00% and (b) the Applicable Margin.
"Funding Date" shall mean the date on which a Loan is made hereunder.
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"GAAP" shall mean generally accepted accounting principles as in effect
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from time to time in the United States.
"Governmental Authority" shall mean any nation or government, any state or
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other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Subsidiaries or any of its properties.
"Guarantee" shall mean, as to any Person, any obligation of such Person
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directly or indirectly guaranteeing any Indebtedness of any other Person or in
any manner providing for the payment of any Indebtedness of any other Person or
otherwise protecting the holder of such Indebtedness against loss (whether by
virtue of partnership arrangements, by agreement to keep well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise);
provided, that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
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correlative meanings.
"Guarantor" shall mean New Century Financial Corporation.
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"Indebtedness" shall mean, for any Person: (a) obligations created, issued
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or incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted
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by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; (f) obligations of such Person under
repurchase agreements, sale/buy-back agreements or like arrangements; (g)
Indebtedness of others Guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; and (i) Indebtedness of general partnerships of which such
Person is a general partner.
"Initial Servicer" shall have the meaning provided in Section 11.14(a)
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hereof.
"Intangible Assets" shall mean the excess of the cost over book value of
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assets acquired, patents, trademarks, copyrights, franchises and other
intangible assets (excluding, in any event, the value of any residual securities
and the value of any owned or purchased mortgage servicing rights).
"Interest Rate Protection Agreement" shall mean, with respect to any or all
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of the Mortgage Loans, any short sale of US Treasury Securities, futures
contract, mortgage related security, Eurodollar futures contract, options
related contract, interest rate swap, cap or collar agreement or similar
arrangement providing for protection against fluctuations in interest rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies, entered into by the Borrower and an Affiliate of the Lender, and
acceptable to the Lender.
"Lender" shall have the meaning provided in the heading hereto.
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"Lien" shall mean any mortgage, lien, pledge, charge, security interest or
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similar encumbrance.
"Loan" shall have the meaning provided in Section 2.1(a) hereof.
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"Loan Agreement" shall mean this Amended and Restated Master Loan and
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Security Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the Note,
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the Custodial Agreement and the New Century Guaranty.
"Market Value" shall mean, as of any date in respect of an Eligible
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Mortgage Loan, the value determined by the Lender in good faith and in its sole
discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
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Property, business, operations, financial condition or prospects of the Borrower
or any of its Material Affiliates, (b) the ability of the Borrower or any of its
Material Affiliates to perform its obligations under any of the Loan Documents
to which it is a party, (c) the validity or enforceability of any of the Loan
Documents, (d) the rights and remedies of the Lender under any of the Loan
Documents, (e) the timely payment of the principal of or interest on the Loans
or other amounts payable in connection therewith or (f) the Collateral as a
whole.
"Material Affiliate" shall mean each of New Century Financial Corporation
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and New Century Mortgage Corporation, and their respective successors and
assigns.
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"Maximum Credit" shall mean $400,000,000.00, as reduced in accordance with
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Section 2.1 hereof.
"Minimum Credit Trigger Event" shall have occurred, if at any time the
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average daily balance of all the Loans is less than $150,000,000.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
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"Mortgage" shall mean the mortgage, deed of trust or other instrument
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securing a Mortgage Note, which creates a first or second Lien on the fee in
real property securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the Custodial
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Agreement.
"Mortgage Loan" shall mean a mortgage loan which the Custodian has been
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instructed to hold for the Lender pursuant to the Custodial Agreement, and which
Mortgage Loan includes, without limitation, a Mortgage Note and related
Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage Loan, the
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documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan Schedule" shall have the meaning assigned thereto in the
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Custodial Agreement.
"Mortgage Loan Schedule and Exception Report" shall mean the mortgage loan
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schedule and exception report prepared by the Custodian pursuant to the
Custodial Agreement.
"Mortgage Loan Tape" shall mean a computer-readable file containing
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information with respect to each Mortgage Loan, to be delivered by the Borrower
to the Lender pursuant to Section 2.3(a) hereof which tape fields are identified
on Annex I to the Custodial Agreement.
"Mortgage Note" shall mean the original executed promissory note or other
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evidence of the indebtedness of a mortgagor/borrower with respect to a Mortgage
Loan.
"Mortgaged Property" shall mean the real property (including all
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improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
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"MS & Co." shall mean Xxxxxx Xxxxxxx & Co. Incorporated, a registered
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broker-dealer.
"MS Indebtedness" shall mean any indebtedness of the Borrower hereunder and
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under any other arrangement between the Borrower on the one hand and the Lender
or an Affiliate of the Lender on the other hand (including, without limitation,
any Loans, interest due and default interest, termination payments, hedging
costs, facility fees and expenses).
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"Multiemployer Plan" shall mean a multiemployer plan defined as such in
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Section 3(37) of ERISA to which contributions have been or are required to be
made by the Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"Net Income" shall mean, for any period, the net income of the Guarantor
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for such period as determined in accordance with GAAP.
"New Century Guaranty" shall mean the Amended and Restated Guaranty by and
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between the Guarantor and the Lender, dated as of December 1, 2001.
"1934 Act" shall mean the Securities and Exchange Act of 1934, as amended.
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"Note" shall have the meaning provided in Section 2.2(a) hereof.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
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succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
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association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
----
maintained by the Borrower or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of any Loan or
-----------------
any other amount under this Loan Agreement, the Note or any other Loan Document
that is not paid when due to the Lender (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 4% per annum plus the Prime
Rate in effect on such due date and from time to time thereafter until such
amount is paid in full.
"Prime Rate" shall mean the prime rate announced to be in effect from time
----------
to time, as published as the average rate in The Wall Street Journal.
--- ---- ------ -------
"Property" shall mean any right or interest in or to property of any kind
-------
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
----------------------
Governors of the Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"Remittance Date" shall mean the 5/th/ Business Day of each month. For
---------------
purposes of this definition, "Business Day" shall mean any day other than (a) a
Saturday or Sunday or (b) a day on which banking and savings and loan
institutions in the States of Florida and California are authorized or obligated
by law or executive order to be closed.
-9-
"Responsible Officer" shall mean, as to any Person, the chief executive
-------------------
officer or, with respect to financial matters, the chief financial officer of
such Person.
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"S&P" shall mean Standard and Poor's Ratings Services, a division of The
---
XxXxxx-Xxxx Companies, Inc.
"Seasoned Mortgage Loan" shall mean, as of any date of determination, an
----------------------
Eligible Mortgage Loan which has been originated 121 days or more prior to the
related Funding Date, but not more than 365 days prior to the related Funding
Date.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan which is
-------------------------
secured by a second Lien on the related Mortgaged Property.
"Secured Obligations" shall have the meaning provided in Section 4.1(c)
-------------------
hereof.
"Servicer" shall mean the Initial Servicer or a Third Party Servicer, as
--------
the context requires.
"Servicer Notice" shall have the meaning provided in Section 11.14(c)
---------------
hereof.
"Servicing Agreement" shall have the meaning provided in Section 11.14(c)
-------------------
hereof.
"Servicing Records" shall have the meaning provided in Section 11.14(b)
-----------------
hereof.
"60+ Delinquent Mortgage Loan" shall mean, as of any date of determination,
----------------------------
an Eligible Mortgage Loan which is between 60 days and 89 days (inclusive)
Delinquent.
"Sub-prime Mortgage Loan" shall mean an Eligible Mortgage Loan with respect
-----------------------
to which the related Mortgagor has received a credit rating of "C" or "D" as
determined in accordance with the Borrower's origination guidelines in effect as
of the Effective Date.
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
-10-
"System" shall mean all hardware or software, or any system consisting of
------
one or more thereof, including, without limitation, any and all enhancements,
upgrades, customizations, modifications and the like utilized by any Person for
the benefit of such Person to perform its obligations and to administer and
track, store, process, provide, and where appropriate, insert, true and accurate
dates and calculations for dates and time spans with respect to the Mortgage
Loans.
"Tangible Net Worth" shall mean, as of any date of determination, all
------------------
amounts which would be included under capital on a balance sheet of the
Guarantor at such date, determined in accordance with GAAP, less (i) amounts
owing to the Guarantor from Affiliates and (ii) Intangible Assets.
"Tangible Net Worth Trigger Event" shall have occurred (based on the
--------------------------------
Guarantor's most recent monthly financials) if the Tangible Net Worth of the
Guarantor is less than the sum of (i) $150,000,000, (ii) 75% of the aggregate
consolidated positive Net Income, calculated from the period beginning December
31, 2001 to the most recently ended monthly period and (iii) an amount equal to
50% of any Equity Proceeds received by the Guarantor since December 31, 2001.
"Termination Date" shall mean December 13, 2002 or such earlier date on
----------------
which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"Third Party Servicer" shall have the meaning provided in Section 11.14(c)
--------------------
hereof.
"30+ Delinquent Mortgage Loan" shall mean, as of any date of determination,
----------------------------
an Eligible Mortgage Loan which is between 30 days and 59 days (inclusive)
Delinquent.
"Total Indebtedness" shall mean, for any period, the aggregate Indebtedness
------------------
of a the Guarantor during such period maintained in accordance with GAAP.
"Underwriting Guidelines" shall mean the underwriting guidelines attached
-----------------------
as Exhibit F hereto.
---------
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect on the date hereof in the State of New York; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Unseasoned Mortgage Loan" shall mean, as of any date of determination, an
------------------------
Eligible Mortgage Loan (provided, that notwithstanding the definition of the
term "Eligible Mortgage Loan," an Unseasoned Mortgage Loan must have a first
Lien status with respect to the related Mortgaged Property) which has been
originated 120 days or less prior to the related Funding Date.
-11-
Section 1.2 Section 1.2 Accounting Terms and Determinations. Except as
-----------------------------------------------
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
ARTICLE II
Loans, Note and Prepayments.
Section 2.1 Loans.
------
(a) The Lender agrees to make, on the terms and subject to the
conditions of this Loan Agreement, loans (individually, a "Loan" and,
----
collectively, the "Loans") to the Borrower in Dollars, from and including the
-----
Effective Date to but not including the Termination Date in an aggregate
principal amount at any one time outstanding up to but not exceeding the lesser
of (i) the Maximum Credit and (ii) the Borrowing Base as in effect from time to
time.
(b) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder;
provided, that notwithstanding the foregoing, the Lender shall have no
obligation to make Loans to the Borrower in excess of the lesser of (i) the
Maximum Credit and (ii) the Borrowing Base and, if a Tangible Net Worth Trigger
Event shall have occurred or in the event the obligation of the Lender to make
Loans to the Borrower shall otherwise be terminated as permitted hereunder, the
Lender shall have no further obligation to make additional Loans hereunder.
Section 2.2 Notes.
------
(a) The Loans made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit A hereto
---------
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
----
equal to the amount of the Maximum Credit as originally in effect and otherwise
duly completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under the Note in
respect of the Loans.
Section 2.3 Procedure for Borrowing.
-----------------------
(a) The Borrower may request a borrowing hereunder, on any
Business Day during the period from and including the Effective Date to, but not
including, the Termination Date by delivering to the Lender, with a copy to the
Custodian, a written request for borrowing, substantially in the form of Exhibit
-------
D attached hereto, which request must be received by the Lender prior to 11:00
-
a.m., New York City time, at least one (1) Business Day prior to the
-12-
requested Funding Date. Such request for borrowing shall (i) attach a schedule
identifying the Eligible Mortgage Loans that the Borrower proposes to pledge to
the Lender and to be included in the Borrowing Base in connection with such
borrowing, (ii) specify the requested Funding Date, (iii) be accompanied by a
Mortgage Loan Tape containing information with respect to the Eligible Mortgage
Loans that the Borrower proposes to pledge to the Lender and to be included in
the Borrowing Base in connection with such borrowing, and (iv) attach an
officer's certificate signed by a Responsible Officer of the Borrower as
required by Section 5.2(b) hereof
(b) Upon the Borrower's request for a borrowing pursuant to
Section 2.3(a), the Lender shall, subject to the limitations set forth in
Section 2.1(a) hereof and upon satisfaction of all conditions precedent set
forth in Sections 5.1 and 5.2 hereof, make a Loan to the Borrower on the
requested Funding Date, in the amount so requested; provided, however, that if
the Mortgage Loan Tape includes Discretionary Mortgage Loans that Borrower
proposes to pledge to the Lender and which are to be included in the Borrowing
Base in connection with such borrowing, the Lender's obligation to fund such
Discretionary Mortgage Loans shall be in its sole and absolute discretion. The
Borrower acknowledges that the Lender may retain an amount equal to $100 per
Defaulted Mortgage Loan to cover the costs of obtaining Broker Price Opinions.
(c) The Borrower shall release to the Custodian no later than
12:00 p.m., New York City time, two (2) Business Days prior to the requested
Funding Date, the Mortgage File pertaining to each Eligible Mortgage Loan to be
pledged to the Lender and included in the Borrowing Base on such requested
Funding Date, in accordance with the terms and conditions of the Custodial
Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall
deliver to the Lender and the Borrower, no later than 11:00 a.m. New York City
time on a Funding Date, a Trust Receipt (as defined in the Custodial Agreement)
in respect of all Mortgage Loans pledged to the Lender on such Funding Date, and
a Mortgage Loan Schedule and Exception Report. The Borrower acknowledges that
Mortgage Loans listed in the Exception Report are not Eligible Mortgage Loans
and the Lender is not required to advance funds in respect of such Mortgage
Loans and such Mortgage Loans listed in the Exception Report shall not be
subject to the Lien of this Loan Agreement.
(e) Subject to Article V hereof, such borrowing will then be
made available to the Borrower by the Lender transferring, via wire transfer, to
the following account of the Borrower: U.S. Bank, N.A., for the A/C of NCM
Collateral Account, ABA# 000-000-000, Account # 1731-0091-1378, Attn: Xxxxxx
Xxxxx, in the aggregate amount of such borrowing in funds immediately available
to the Borrower.
Section 2.4 Limitation on Types of Loans Illegality. Anything herein
-----------------------------------------
to the contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits referred
to in the definition of "Eurodollar Rate" in Section 1.1 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Loans as provided herein; or
-13-
(b) the Lender determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the definition of
"Eurodollar Rate" in Section 1.1 hereof upon the basis of which the rate of
interest for Loans is to be determined is not likely adequately to cover the
cost to the Lender of making or maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its
obligation to make or maintain Loans hereunder using a Eurodollar Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Loans, and the Borrower shall, at its sole option and
discretion, either prepay all such Loans as may be outstanding or pay interest
on such Loans at a rate per annum equal to the Federal Loan Rate; provided, that
if the Lender determines not to make any additional Loans, then the Lender shall
reimburse the Borrower a pro rata portion of the facility fee paid to the Lender
pursuant to Section 3.4, based upon the number of days elapsed from the
Effective Date to date of such determination.
Section 2.5 Repayment of Loans; Interest.
----------------------------
(a) The Borrower hereby promises to repay in full in Dollars
on the Termination Date, the aggregate outstanding principal amount of the Loans
plus all accrued and unpaid interest thereon and any other sums due hereunder on
such date.
(b) The Borrower hereby promises to pay to the Lender
interest on the unpaid principal amount of each Loan for the period from and
including the date of such Loan to, but excluding, the date such Loan shall be
paid in full, at a rate per annum equal to the Applicable Loan Rate.
Notwithstanding the foregoing, the Borrower hereby promises to pay to the Lender
interest at the applicable Post-Default Rate on any principal of any Loan and on
any other amount payable by the Borrower hereunder or under the Note that shall
not be paid in full when due (whether at stated maturity, by acceleration or by
mandatory prepayment or otherwise) for the period from and including the due
date thereof to but excluding the date the same is paid in full. Interest shall
accrue on the unpaid principal balance of each Loan on a daily basis. Accrued
interest on each Loan shall be payable monthly on the first Business Day of each
month and for the last month of the Loan Agreement on the first Business Day of
such last month and on the Termination Date; provided, that the Lender may, in
its sole discretion, require accrued interest to be paid simultaneously with any
prepayment of principal made by the Borrower on account of any of the Loans
outstanding. Interest payable at the Post-Default Rate shall accrue daily and
shall be payable in accordance with the foregoing.
(c) It is understood and agreed that, unless and until a
Default shall have occurred and be continuing, the Borrower shall be entitled to
the proceeds of the Mortgage Loans pledged to the Lender hereunder.
Section 2.6 Mandatory prepayments or Pledge.
-------------------------------
If at any time the aggregate outstanding principal amount of Loans
exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined by the
-------------------------
Lender and notified to the Borrower on any Business Day, the Borrower shall no
later than one (1) Business Day after
-14-
receipt of such notice, either prepay the Loans in part or in whole or
pledge additional Eligible Mortgage Loans (which Collateral shall be in all
respects acceptable to the Lender in its sole discretion) to the Lender, such
that after giving effect to such prepayment or pledge of additional Eligible
Mortgage Loans a Borrowing Base Deficiency shall no longer exist.
Section 2.7 Extension of Termination Date.
------------------------------
At the request of the Borrower made at least thirty (30) days, but in
no event earlier than ninety (90) days, prior to the then current Termination
Date, the Lender may in its sole discretion extend the Termination Date for a
period to be determined by Lender in its sole discretion by giving written
notice of such extension to the Borrower no later than twenty (20) days, but in
no event earlier than thirty (30) days, prior to the then current Termination
Date. Any failure by the Lender to deliver such notice of extension shall be
deemed to be the Lender's determination not to extend the then current
Termination Date.
ARTICLE III
Payments; Computations; Etc.
Section 3.1 Payments.
---------
(a) Except to the extent otherwise provided herein, all payments
of principal, interest and other amounts to be made by the Borrower under this
Loan Agreement and the Note, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the
following account maintained by the Lender: Account No. 00000000, for the
account of MSMCI, Citibank, N.A., ABA No. 000000000, Attn: Whole Loan
Operations, not later than 1:00 p.m., New York City time, on the date on which
such payment shall become due (and each such payment made after such time on
such due date shall be deemed to have been made on the next succeeding Business
Day). The Borrower acknowledges that it has no rights of withdrawal from the
foregoing account.
(b) Except to the extent otherwise expressly provided herein, if
the due date of any payment under this Loan Agreement or the Note would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
Section 3.2 Computations. Interest on the Loans shall be computed on the
-------------
basisof a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
Section 3.3 Requirements of Law.
--------------------
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
-15-
(i) shall subject the Lender to any tax of any kind
whatsoever with respect to this Loan Agreement, the Note or any Loan
made by it (excluding net income taxes) or change the basis of
taxation of payments to the Lender in respect thereof;
(ii) shall impose or hold applicable any reserve, special
deposit, compulsory Loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
Loans or other extensions of credit by, or any other acquisition of
funds by, any office of the Lender which is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy) by
an amount deemed by the Lender to be material, then from time to time, the
Borrower shall either (i) promptly pay to the Lender such additional amount or
amounts as will compensate the Lender for such reduction or (ii) at its sole
option and discretion, prepay all Loans as may be outstanding and terminate this
Loan Agreement. If the Borrower prepays all outstanding Loans and terminate this
Loan Agreement as provided in (ii) of the prior sentence, then the Lender shall
reimburse the Borrower a pro rata portion of the facility fee paid to the Lender
pursuant to Section 3.4, based upon the number of days elapsed from the
Effective Date to the date of termination.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this Article, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by the Lender to the Borrower
shall be conclusive in the absence of manifest error.
Section 3.4 Facility Fee.
------------
The Borrower agrees to pay to the Lender on or prior to the
execution of this Loan Agreement a facility fee of $800,000.00, such payment to
be made in Dollars, in immediately
-16-
available funds, without deduction, set-off or counterclaim, to the Lender at
the account set forth in Section 3.1(a) hereof.
ARTICLE IV
Collateral Security.
Section 4.1 Collateral; Security Interest.
-----------------------------
(a) Pursuant to the Custodial Agreement, the Custodian shall
hold the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver Trust Receipts
(as defined in the Custodial Agreement) to the Lender each to the effect that it
has reviewed such Mortgage Loan Documents in the manner and to the extent
required by the Custodial Agreement and identifying any deficiencies in such
Mortgage Loan Documents as so reviewed.
(b) All of the Borrower's right, title and interest in, to and
under each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Collateral":
----------
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including, without
limitation, all promissory notes and all Servicing Records,
Servicing Agreements and any other collateral pledged or otherwise
relating to such Mortgage Loans, together with all files,
documents, instruments, surveys, certificates, correspondence,
appraisals, accounting records and other books and records relating
thereto, including electronic records;
(iii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties
or insurance relating to any Mortgage Loan and all claims and
payments thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
(v) all Interest Rate Protection Agreements, relating to or
constituting any and all of the foregoing;
(vi) the Collection Account and all monies from time to time
on deposit in the Collection Account;
(vii) all collateral, however defined, under any other
agreement between the Borrower or any of its Affiliates on the one
hand and the Lender or any of its Affiliates on the other hand;
-17-
(viii) all "general intangibles", "accounts" and "chattel
paper" as defined in the Uniform Commercial Code relating to or
constituting any and all of the foregoing; and
(ix) any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a security
interest in all of its right, title and interest in, to and under the Collateral
to the Lender to secure the MS Indebtedness including, without limitation, the
repayment of principal of and interest on all Loans and all other amounts owing
to the Lender hereunder, under the Note and under the other Loan Documents
(collectively, the "Secured Obligations"). The Borrower agrees to xxxx its
-------------------
computer records and tapes to evidence the interests granted to the Lender
hereunder.
Section 4.2 Further Documentation. At any time and from time to time,
---------------------
upon the written request of the Lender, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver, or will promptly cause
to be executed and delivered, such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby. The
Borrower also hereby authorizes the Lender to file any such financing or
continuation statement without the signature of the Borrower to the extent
permitted by applicable law. A photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
Section 4.3 Changes in Locations, Name. etc. The Borrower shall not (i)
--------------------------------
change the location of its chief executive office/chief place of business from
that specified in Article VI hereof, (ii) change its name, identity or corporate
structure (or the equivalent) or (iii) unless it shall have given the Lender at
least 30 days prior written notice thereof and shall have filed or delivered to
the Lender for filing all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue the perfected status of the Lender in
the Collateral with the same or better priority.
Section 4.4 Lender's Appointment as Attorney-in-Fact.
-----------------------------------------
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
-18-
(i) in the name' of the Borrower or its own name, or
otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any mortgage insurance or with respect
to any other Collateral and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Lender for the purpose of collecting any
and all such moneys due under any such mortgage insurance or with
respect to any other Collateral whenever payable; or
(ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and (A) to direct any party
liable for any payment under any Collateral to make payment of any
and all moneys due or to become due thereunder directly to the
Lender or as the Lender shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding
brought against the Borrower with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give
such discharges or releases as the Lender may deem appropriate; and
(G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Lender were the absolute owner
thereof for all purposes, and to do, at the Lender's option and the
Borrower's expense, at any time, and from time to time, all acts
and things which the Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender's Liens thereon and to
effect the intent of this Loan Agreement, all as fully and
effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and from
time to time, to execute, in connection with any sale provided for in Section
4.7 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence, bad faith or willful misconduct.
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Section 4.5 Performance by Lender of Borrower's Obligations. If the
-----------------------------------------------
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations.
Section 4.6 Proceeds. If an Event of Default shall occur and be
--------
continuing,(a) all proceeds of Collateral received by the Borrower consisting of
cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwit
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then or at any time thereafter may
be applied by the Lender against, the Secured Obligations (whether matured or
unmatured),such application to be in such order as the Lender shall elect. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to receive the
same. Forpurposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
Section 4.7 Remedies. If a Default shall occur and be continuing, the
--------
Lender may, at its option and at the Borrower's expense, enter into one or more
Interest Rate Protection Agreements covering all or a portion of the Mortgage
Loans pledged to the Lender hereunder, and the Borrower shall be responsible for
all damages, judgments, costs and expenses of any kind which may be imposed on,
incurred by or asserted against the Lender relating to or arising out of such
Interest Rate Protection Agreements; including, without limitation, any losses
resulting from such Interest Rate Protection Agreements. If an Event of Default
shall occur and be continuing, the Lender may exercise, in addition to all other
rights and remedies granted to it in this Loan Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code. Without limiting the generality of the foregoing, the Lender
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (each and all of which
demands, presentments, protests, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions and at such prices as it may deem best in its good faith
judgment, for cash or on credit or for future delivery without assumption of any
credit risk. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right
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or equity of redemption in the Borrower, which right or equity is hereby waived
or released. The Borrower further agrees, at the Lender's request, to assemble
the Collateral and make it available to the Lender at places which the Lender
shall reasonably select, whether at the Borrower's premises or elsewhere. The
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required or
permitted by any provision of law, including, without limitation, Section 0-000
(x)(x)(x) of the Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by the Lender of any of its rights hereunder,
other than those claims, damages and demands arising from the gross negligence,
bad faith or willful misconduct of the Lender. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper ifgiven at least 10 days before such sale or
other disposition. The Borrower shall remain liable for any deficiency (plus
accrued interest thereon as contemplated pursuant to Section 2.5(b) hereof) if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Secured Obligations and the fees and disbursements of any attorneys
employed by the Lender to collect such deficiency.
Section 4.8 Limitation on Duties Regarding Preservation of Collateral.
---------------------------------------------------------
The Lender's duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither
the Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or otherwise.
Section 4.9 Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
Section 4.10 Release of Security Interest. Upon termination of this
----------------------------
Loan Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents, the Lender shall
release its security interest in any remaining Collateral.
ARTICLE V
Conditions Precedent.
Section 5.1 Initial Loan. The obligation of the Lender to make its
------------
initialLoan hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the condition precedent that the
Lender shall have received all of the following items, each of which shall be
satisfactory to the Lender and its counsel in form and substance:
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(a) Loan Documents.
--------------
(i) Loan Agreement. This Loan Agreement, duly executed and
--------------
delivered by the Borrower;
(ii) Note. The Note, duly executed and delivered by the
----
Borrower;
(iii) Custodial Agreement. The Custodial Agreement, duly
-------------------
executed and delivered by the Borrower and the Custodian; and
(iv) New Century Guaranty. The New Century Guaranty duly
--------------------
executed and delivered by the Guarantor.
(b) Organizational Documents. A good standing certificate and
------------------------
certified copies of the charter and by-laws (or equivalent documents) of the
Borrower and the Guarantor and of all corporate or other authority for the
Borrower and the Guarantor with respect to 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 from time to time in
connection with the Loan Documents (and the Lender may conclusively rely on such
certificate until it receives notice in writing from the Borrower or the
Guarantor to the contrary).
(c) Legal Opinions. Legal opinions of inside and outside counsels
--------------
to the Borrower and the Guarantor, substantially in the form attached hereto as
Exhibit C.
---------
(d) Trust Receipt and Mortgage Loan Schedule and Exception Report.
-------------------------------------------------------------
A Trust Receipt, substantially in the form of Annex 2 of the Custodial
-------
Agreement, dated the Effective Date, from the Custodian, duly completed, with a
Mortgage Loan Schedule and Exception Report attached thereto.
(e) Servicing Agreement(s). Any Servicing Agreement, certified as
----------------------
a true, correct and complete copy of the original together, with a fully
executed Servicer Notice and, if the Servicer is the Borrower or an Affiliate of
the Borrower, the letter of the applicable Servicer consenting to termination of
such Servicing Agreement, without charge, upon the occurrence of an Event of
Default.
(f) [Reserved].
--------
(g) [Reserved].
--------
(h) Facility Fee. The facility fee as contemplated by Section 3.4.
------------
(i) Financial Statements. The financial statements referenced in
--------------------
Section 6.2.
(j) Underwriting Guidelines. A certified copy of the Underwriting
-----------------------
Guidelines, which shall be in form and substance satisfactory to the Lender.
(k) Consents, Licenses, Approvals, etc. Copies certified by the
-----------------------------------
Borrower of all consents, licenses and approvals, if any, required in connection
with the execution, delivery
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and performance by the Borrower of, and the validity and enforceability of, the
Loan Documents, which consents, licenses and approvals shall be in full force
and effect.
(l) Other Documents. Such other documents as the Lender may
---------------
reasonably request.
Section 5.2 Initial and Subsequent Loans. The making of each Loan to the
----------------------------
Borrower (including the initial Loan) on any Business Day is subject to the
satisfaction of the following further conditions precedent, both immediately
prior to the making of such Loan and also after giving effect thereto and to the
intended use thereof:
(a) No Default. No Default or Event of Default shall have
----------
occurred and be continuing.
(b) Representations and Warranties. Both immediately prior to
------------------------------
the making of such Loan and also after giving effect thereto and to the intended
use thereof, the representations and warranties made by the Borrower in Article
VI and Schedules 1 and 2 hereof, and elsewhere in each of the Loan Documents,
shall be true, correct and complete on and as of the date of the making of such
Loan in all material respects (in the case of the representations and warranties
in Section 6.10 and Schedules 1 and 2, solely with respect to Mortgage Loans
included in the Borrowing Base) with the same force and effect as if made on and
as of such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date). The Lender
shall have received an officer's certificate signed by a Responsible Officer of
the Borrower certifying as to the truth, accuracy and completeness of the above,
which certificate shall specifically include a statement that the Borrower is in
compliance with all governmental licenses and authorizations and is qualified to
do business and in good standing in all required jurisdictions.
(c) Borrowing Base. The aggregate outstanding principal amount
--------------
of the Loans shall not exceed the Borrowing Base.
(d) Due Diligence. Subject to the Lender's right to perform one
-------------
or more Due Diligence Reviews pursuant to Section 11.15 hereof, the Lender shall
have completed its due diligence review of the Mortgage Loan Documents for each
Loan and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Mortgage Loans as the Lender in its
sole discretion deems appropriate to review and such review shall be
satisfactory to the Lender in its sole discretion.
(e) Mortgage Loan Schedule and Exception Report. The Lender
-------------------------------------------
shall have received from the Custodian a Mortgage Loan Schedule and Exception
Report with Exceptions as are acceptable to the Lender in its sole discretion in
respect of Eligible Mortgage Loans to be pledged hereunder on such Business Day.
(f) Release Letter. If applicable, the Lender shall have
--------------
received from the Borrower a Warehouse Lender's Release Letter substantially in
the form of Exhibit E-2 hereto (or such other form acceptable to the Lender) or
-----------
a Seller's Release Letter substantially in the form of Exhibit E-1 hereto (or
-----------
such other form acceptable to the Lender) covering each Mortgage Loan to be
pledged to the Lender.
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(g) Fees and Expenses. The Lender shall have received all fees
-----------------
and expenses of counsel to the Lender as contemplated by Section 11.3, which
amount, at the Lender's option, may be netted from any Loan advanced under this
Agreement.
(h) No Market Events. None of the following shall have occurred
----------------
and/or be continuing:
(i) an event or events shall have occurred resulting in
the effective absence of a "repo market" or comparable "lending
market" for financing debt obligations secured by mortgage loans
or securities or an event or events shall have occurred resulting
in the Lender not being able to finance any Mortgage Loans
through the "repo market" or "lending market" with traditional
counterparties at rates which would have been reasonable prior to
the occurrence of such event or events;
(ii) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in the Lender not being able to sell
securities backed by mortgage loans at prices which would have
been reasonable prior to such event or events; or
(iii) there shall have occurred a material adverse change in
the financial condition of the Lender which affects (or can
reasonably be expected to affect) materially and adversely the
ability of the Lender to fund its obligations tinder this Loan
Agreement;
provided, however, that if any such events shall have occurred or be continuing
and the Lender shall have determined, in its sole discretion, to not make any
additional Loans, then the Lender shall reimburse the Borrower a pro rata
portion of the facility fee paid to the Lender pursuant to Section 3.4 based
upon the number of days elapsed from the Effective Date to date of such
determination.
(i) No Xxxxxx Xxxxxxx Downgrade. Xxxxxx Xxxxxxx Xxxx Xxxxxx &
---------------------------
Co.'s corporate bond rating as calculated by S&P or Xxxxx'x has not been lowered
or downgraded to a rating below "A-" as indicated by S&P or below "A3" as
indicated by Xxxxx'x.
(j) Filings, Registrations, Recordings. Any documents
----------------------------------
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a perfected,
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and executed for
filing (including the applicable county(ies) if the Lender determines such
filings are necessary in its sole discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest;
provided, that assignments of the Mortgages securing or related to the Mortgage
Loans shall not be required to be recorded prior to the occurrence of an Event
of Default.
-24-
(k) Discretionary Mortgage Loans. At least three (3) Business
----------------------------
Days prior to a Funding Date, the Borrower shall have provided to the Lender a
certification as to the reason why a Discretionary Mortgage Loan has not been
previously disposed of by the Borrower and the Lender shall have approved of the
inclusion of such Discretionary Mortgage Loan in the Mortgage Loan Schedule and
Exception Report to be pledged hereunder on such Funding Date.
Each request for a borrowing by the Borrower hereunder shall
constitute a certification by the Borrower that all the conditions set forth in
this Article V (other than Sections 5.2(h) and (i)) have been satisfied (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
ARTICLE VI
Representations and Warranties.
The Borrower represents and warrants to the Lender that throughout the term
of this Loan Agreement:
Section 6.1 Existence. The Borrower (a) is a corporation duly organized,
---------
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect, and
(c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect.
Section 6.2 Financial Condition. Each of the Borrower and the Guarantor
-------------------
has heretofore furnished to the Lender a copy of (a) its consolidated balance
sheet and the consolidated balance sheets of its consolidated Subsidiaries for
the fiscal year of the Borrower ended December 31, 2000 and the related
consolidated statements of income and retained earnings and of cash flows for
the Borrower, the Guarantor and their consolidated Subsidiaries for such fiscal
year, setting forth in each case in comparative form the figures for the
previous year, with the opinion thereon of KPMG, LLC and (b) its consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the three most recently ended quarterly fiscal periods of the
Borrower and the related consolidated statements of income and retained earnings
and of cash flows for the Borrower, the Guarantor and its consolidated
Subsidiaries for such quarterly fiscal periods, setting forth in each case in
comparative form the figures for the previous year. All such financial
statements fairly present, in all material respects, the consolidated financial
condition of the Borrower, the Guarantor and its Subsidiaries and the
consolidated results of their operations as at such dates and for such fiscal
periods, all in accordance with GAAP applied on a consistent basis. Since
September 30, 2001, there has been no material adverse change in the
consolidated business, operations or financial condition of the Borrower, the
Guarantor and its consolidated Subsidiaries taken as a whole from that set forth
in said financial statements.
-25-
Section 6.3 Litigation. There are no actions, suits, arbitrations,
----------
investigations (including, without limitation, any of the foregoing which are
pending or, to the Borrower's knowledge, threatened) or other legal or
arbitrable proceedings affecting the Borrower or any of its Affiliates or
affecting any of the Property of any of them before any Governmental Authority
that (i) questions or challenges the validity or enforceability of any of the
Loan Documents or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $1,000,000, (iii) which, individually or in the aggregate, if adversely
determined, could reasonably be likely to have a Material Adverse Effect or (iv)
requires filing with the Securities and Exchange Commission in accordance with
the 1934 Act or any rules thereunder.
Section 6.4 No Breach. Neither (a) the execution and delivery of the
---------
Loan Documents nor (b) the consummation of the transactions therein contemplated
in compliance with the terms and provisions thereof will conflict with or result
in a breach of the charter or by-laws of the Borrower, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any Servicing Agreement or other material agreement or instrument
to which the Borrower or any of its Affiliates is a party or by which any of
them or any of their Property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant
to this Loan Agreement) upon any Property of the Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
Section 6.5 Action. The Borrower has all necessary corporate or other
------
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by the Borrower of each of the Loan Documents to which it is a
party have been duly authorized by all necessary corporate or other action on
its part; and each Loan Document has been duly and validly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms.
Section 6.6 Approvals. No authorizations, approvals or consents of, and
---------
no filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by the
Borrower of the Loan Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to this Loan Agreement.
Section 6.7 Margin Regulations. Neither the making of any Loan
------------------
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulations T, U or X.
Section 6.8 Taxes. The Borrower and its Subsidiaries have filed all
-----
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes as
are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate.
-26-
Section 6.9 Investment Company Act. Neither the Borrower nor any of its
----------------------
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 6.10 Collateral; Collateral Security.
-------------------------------
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any Mortgage Loan or other Collateral to any other
Person, and immediately prior to the pledge of such Mortgage Loan or any other
Collateral to the Lender, the Borrower was the sole owner of such Mortgage Loan
or such other Collateral and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released simultaneously
with the Liens granted in favor of the Lender hereunder. No Mortgage Loan or
other Collateral pledged to the Lender hereunder was acquired (by purchase or
otherwise) by the Borrower from an Affiliate of the Borrower, other than those
Mortgage Loans or other Collateral which were acquired by the Borrower pursuant
to (i) the Mortgage Loan Purchase and Servicing Agreement, dated December 1,
1998 between the Borrower and New Century Mortgage Corporation and (ii) the
Mortgage Loan Purchase and Servicing Agreement, dated July 1, 2001 between Worth
Funding Incorporated and New Century Mortgage Corporation, unless such
acquisition (by purchase or otherwise) is evidenced by a sale agreement and an
assignment of rights thereunder to the Lender, in each case, in form and
substance acceptable to the Lender, and the Borrower and its Affiliate file or
have filed in all relevant jurisdictions, UCC-1 financing statements reflecting
the transfer of such Mortgage Loan to the Borrower, together with the assignment
of such interest described in such financing statement to the Lender.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note,
endorsed in blank by a duly authorized officer of the Borrower, the Lender shall
have a fully perfected first priority security interest therein, in the Mortgage
Loan evidenced thereby and in the Borrower's interest in the related Mortgaged
Property.
(d) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as "Debtor" and describing the
Collateral in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
Section 6.11 Chief Executive Office/Jurisdiction of Organization. On the
---------------------------------------------------
Effective Date, and during the four months immediately preceding the Effective
Date, the Borrower's chief executive office, is, and has been, located at 00000
Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000. On the Effective Date, the
Borrower's jurisdiction of organization is California.
-27-
Section 6.12 Location of Books and Records. The location where the
-----------------------------
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
Section 6.13 True and Complete Disclosure. The information, reports,
----------------------------
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Borrower to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer of the
Borrower, after due inquiry, that could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing, furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby.
Section 6.14 ERISA. Each Plan to which the Borrower or its Subsidiaries
-----
make direct contributions, and, to the knowledge of the Borrower, each other
Plan and each Multiemployer Plan is in compliance in all material respects with,
and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which the Borrower would
be under an obligation to furnish a report to the Lender under Section 7.1 (d)
hereof
Section 6.15 Subsidiaries. Schedule 3 sets forth the name of each direct
------------
or indirect Subsidiary of the Borrower and of the holders of Capital Stock of
the Borrower, its form of organization, its jurisdiction of organization, the
total number of issued and outstanding shares or other interests of Capital
Stock thereof, the classes and number of issued and outstanding shares or other
interests of Capital Stock of each such class, the name of each holder of
Capital Stock thereof and the number of shares or other interests of such
Capital Stock held by each such holder and the percentage of all outstanding
shares or other interests of such class of Capital Stock held by such holders.
ARTICLE VII
Covenants of the Borrower.
The Borrower covenants and agrees with the Lender that, so long as any Loan
is outstanding, and until payment in full of all Secured Obligations:
Section 7.1 Financial Statements. The Borrower shall deliver to the
--------------------
Lender:
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(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the consolidated balance sheets of
the Borrower and its consolidated Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income and retained earnings and of
cash flows for the Borrower and its consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP, and a certificate of such accountants stating that, in making, the
examination necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default or Event of Default;
(b) as soon as available and in any event within 30 days after
the end of each month, the unaudited consolidated balance sheets of the Borrower
and its consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its consolidated Subsidiaries for such month and the
portion of the fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year, accompanied by (i) a
certificate of a Responsible Officer of the Borrower, which certificate shall
state that said consolidated financial statement fairly represents the
consolidated financial condition and results of operation of the Borrower and
its consolidated Subsidiaries in accordance with GAAP, consistently applied, as
of the end of, and for, such month (subject to normal year-end audit
adjustments) and (ii) the Board Report.
(c) from time to time such other information regarding the
financial condition, operations, or business of the Borrower as the Lender may
reasonably request; and
(d) as soon as reasonably possible, and in any event within
thirty (30) days after a Responsible Officer of the Borrower knows, or with
respect to any Plan or Multiemployer Plan to which the Borrower or any of its
Subsidiaries makes direct contributions, has reason to believe, that any of the
events or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial officer of
the Borrower setting forth details respecting such event or condition and the
action, if any, that the Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in Section 4043(c) of
ERISA and the regulations issued thereunder, with respect to a
Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within thirty (30) days of the occurrence of such event
(provided, that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA, including,
without limitation, the failure to make on or before its due date
a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless
of the issuance of
-29-
any waivers in accordance with Section 412(d) of the Code); and
any request for a waiver under Section 412(d) of the Code for any
Plan;
(ii) the distribution under Section 4041(c) of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower
or any ERISA Affiliate of a notice from a Multiemplover Plan that
such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Borrower or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemplover Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an amendment to any Plan that would
result in the loss of tax-exempt status of the Plan and trust of
which such Plan is a part if the Borrower or an ERISA Affiliate
fails to provide timely security to such Plan if and as required
by the provisions of Section 401(a)(29) of the Code or Section
307 of ERISA.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Loan Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing, the same in reasonable detail and
describing the action the Borrower has taken or proposes to take with respect
thereto).
Section 7.2 Litigation. The Borrower will promptly, and in any event
----------
within ten (10) days after service of process on any of the following, give to
the Lender notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened) or other legal or arbitrable proceedings affecting the
Borrower or any of its Subsidiaries or affecting, any of the Property of any of
them before any Governmental Authority that (i) questions or challenges the
validity or enforceability of any of
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the Loan Documents or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $1,000,000, (iii) which, individually or in the aggregate, if adversely
determined, could be reasonably likely to have a Material Adverse Effect or (iv)
requires filing with the Securities and Exchange Commission in accordance with
the 1934 Act and any rules thereunder.
Section 7.3 Existence, etc. The Borrower will:
---------------
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided, that nothing in
this Section 7.3(a) shall prohibit any transaction expressly permitted under
Section 7.4 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) change its jurisdiction of organization from the jurisdiction
referred to in Section 6.11 unless it shall have provided the Lender 30 days'
prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy, the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained; and
(f) permit representatives of the Lender, during normal business
hours, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender.
Section 7.4 Prohibition of Fundamental Changes. The Borrower shall not
----------------------------------
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that the
Borrower may merge or consolidate with (a) any wholly owned subsidiary of the
Borrower or (b) any other Person if the Borrower is the surviving corporation
and the Borrower's Net Worth would not be affected by such merger or
consolidation and provided further, that if after giving effect thereto, no
Default would exist hereunder.
Section 7.5 Borrowing Base Deficiency. If at any time there exists a
-------------------------
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.6 hereof
Section 7.6 Notices. The Borrower shall give notice to the Lender:
--------
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(a) promptly upon receipt of notice or knowledge of the occurrence
of any Default or Event of Default;
(b) with respect to any Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt of any principal prepayment (in full or
partial) of such pledged Mortgage Loan;
(c) with respect to any Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt of notice or knowledge that the underlying
Mortgaged Property has been damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged so
as to affect adversely the Collateral Value of such pledged Mortgage Loan;
(d) promptly upon receipt of notice or knowledge of (i) any
default related to any Collateral, (ii) any Lien or security interest (other
than security interests created hereby or by the other Loan Documents) on, or
claim asserted against, any of the Collateral or (iii) any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect; and
(e) promptly upon any material change in the market value of any
or all of the Borrower's assets.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
Section 7.7 Reports. The Borrower shall provide the Lender with a
-------
quarterly report, which report shall include, among other items, (a) a summary
of the Borrower's delinquency and loss experience with respect to mortgage loans
serviced by the Borrower, any Servicer or any designee of either, plus any such
additional reports as the Lender may reasonably request with respect to the
Borrower's or any Servicer's servicing portfolio or pending originations of
mortgage loans and (b) a xxxx to market summary of any residual and/or
subordinate securities held by the Borrower.
Section 7.8 Underwriting Guidelines. Without the prior written consent of
-----------------------
the Lender, the Borrower shall not amend or otherwise modify the Underwriting
Guidelines. Notwithstanding the preceding sentence, in the event that the
Borrower makes any amendment or modification to the Underwriting Guidelines, (i)
the Borrower shall promptly deliver to the Lender a complete copy of the amended
or modified Underwriting Guidelines and (ii) if such change is made without the
prior written consent of the Lender, then Lender may, at its sole option and
discretion, refrain from funding any additional borrowings under Section 2.3
hereof.
Section 7.9 Transactions with Affiliates. The Borrower will not enter into
----------------------------
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of the Borrower's business and (c) upon fair and reasonable
terms no less favorable to the Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, or make a
payment that is not
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otherwise permitted by this Section 7.9 to any Affiliate. In no event shall the
Borrower pledge to the Lender hereunder any Mortgage Loan acquired by the
Borrower from an Affiliate of the Borrower.
Section 7.10 Limitation on Liens. The Borrower will defend the Collateral
-------------------
against, and will take such other action as is necessary to remove, any Lien,
security interest or claim on or to the Collateral, other than the security
interests created under this Loan Agreement, and the Borrower will defend the
right, title and interest of the Lender in and to any of the Collateral against
the claims and demands of all persons whomsoever.
Section 7.11 Limitation on Guarantees. The Borrower shall not create,
------------------------
incur, assume or suffer to exist any Guarantees.
Section 7.12 Limitation on Distributions. After the occurrence and during
---------------------------
the continuation of any Default, the Borrower shall not make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
or partnership interest of the Borrower, whether now or hereafter outstanding,
or make any other distribution in respect of any of the foregoing or to any
shareholder or equity owner of the Borrower, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any of the
Borrower's consolidated Subsidiaries.
Section 7.13 Servicer; Servicing Tape. The Borrower shall provide to the
------------------------
Lender on the tenth (10/th/) Business Day of each month a computer readable file
containing servicing information, including, without limitation, those fields
specified by the Lender from time to time, on a loan-by-loan basis and in the
aggregate, with respect to the Mortgage Loans serviced hereunder by the Borrower
or any Servicer. The Borrower shall not cause the Mortgage Loans to be serviced
by any servicer other than a servicer expressly approved in writing by the
Lender.
Section 7.14 Required Filings. The Borrower shall promptly provide the
----------------
Lender with copies of all documents which the Borrower or any Affiliate of the
Borrower is required to file with the Securities and Exchange Commission in
accordance with the 1934 Act or any rules thereunder.
Section 7.15 No Adverse Selection. The Borrower has not selected the
--------------------
Collateral in a manner so as to adversely affect the Lender's interests.
Section 7.16 Remittance of Prepayments. The Borrower shall remit, with
-------------------------
sufficient detail to enable the Lender to appropriately identify the Mortgage
Loan to which any amount remitted applies, to the Lender on each Remittance Date
all principal prepayments that the Borrower has received since the prior
Remittance Date.
ARTICLE VIII
Events of Default.
Section 8.1 Events of Default.
-----------------
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Each of the following events shall constitute an event of default (an
"Event of Default") hereunder:
----------------
(a) the Borrower shall default in the payment of any principal of or
interest on any Loan when due (whether at stated maturity, upon acceleration or
at mandatory or optional prepayment); or
(b) the Borrower shall default in the payment of any other amount payable
by it hereunder or under any other Loan Document after notification by the
Lender of such default, and such default shall have continued unremedied for
five (5) Business Days; or
(c) any representation, warranty or certification made or deemed made
herein or in any other Loan Document by the Borrower or any certificate
furnished to the Lender pursuant to the provisions hereof or thereof shall prove
to have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule
1, which shall be considered solely for the purpose of determining the
Collateral Value of the Mortgage Loans; unless (i) the Borrower shall have made
any such representations and warranties with knowledge that they were materially
false or-misleading at the time made or (ii) any such representations and
warranties have been determined by the Lender in its sole discretion to be
materially false or misleading on a regular basis); or
(d) the Borrower shall fail to comply with the requirements of Section
7.3(a), Section 7.4, Section 7.5, Section 7.6, or Sections 7.9 through 7.16
hereof; or the Borrower shall otherwise fail to comply with the requirements of
Sections 7.3, 7.7 and 7.8 hereof and such default shall continue unremedied for
a period of five (5) Business Days; or the Borrower shall fail to observe or
perform any other covenant or agreement contained in this Loan Agreement or any
other Loan Document and such failure to observe or perform shall continue
unremedied for a period of seven (7) Business Days; or
(e) a final judgment or judgments for the payment of money in excess of
$1,500,000 in the aggregate shall be rendered against the Borrower or any of its
Material Affiliates by one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be satisfied, discharged (or
provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from the date of entry
thereof, and the Borrower or any such Material Affiliate shall not, within said
period of 30 days, or such longer period during which execution of the same
shall have been stayed or bonded, appeal there from and cause the execution
thereof to be stayed during such appeal; or
(f) the Borrower or any of its Material Affiliates shall admit in writing
its inability to pay its debts as such debts become due; or
(g) the Borrower or any of its Material Affiliates shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition
-34-
or readjustment of debts, (v) acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate or other action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the application or
consent of the Borrower or any of its Material Affiliates, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Affiliate or of all or any substantial part of its property or (iii) similar
relief in respect of the Borrower or any such Affiliate under any law relating
to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 30 or more days; or an order for relief against the
Borrower or any such Affiliate shall be entered in an involuntary case under the
Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Borrower; or
(j) the Borrower shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Collateral in
favor of the Lender or shall be Liens in favor of any Person other than the
Lender; or
(k) the Borrower or any of the Borrower's Material Affiliates shall be
in default under any note, indenture, loan agreement, guaranty, swap agreement
or any other contract to which it is a party in excess of $1,000,000, including,
without limitation, any MS Indebtedness, which default (i) involves the failure
to pay a matured obligation or (ii) permits the acceleration of the maturity of
obligations by any other party to or beneficiary of such note, indenture, loan
agreement, guaranty, swap agreement or other contract; or
(l) any materially adverse change in the Property, business, financial
condition or prospects of the Borrower or any of its Material Affiliates shall
occur, in each case as determined by the Lender in its sole discretion, or any
other condition shall exist which, in the Lender's sole discretion, constitutes
a material impairment of the Borrower's ability to perform its obligations under
this Loan Agreement, the Note or any other Loan Document; or
(m) MS & Co.'s corporate bond rating has been lowered or downgraded to
a rating below "A-" by S&P or "A3" by Xxxxx'x and the Borrower shall have failed
to repay all amounts owing to the Lender under this Agreement, the Note and the
other Loan Documents within 90 days following such downgrade; or
(n) the discovery by the Lender of a condition or event which existed
at or prior to the execution hereof and which the Lender, in its sole
discretion, determines materially and adversely affects: (i) the condition
(financial or otherwise) of the Borrower and the
-35-
Guarantor, their Subsidiaries or Affiliates; or (ii) the ability of the Borrower
or the Guarantor to fulfill their respective obligations under this Loan
Agreement; or
(o) any representation, warranty or certification made or deemed
made in the New Century Guaranty by the Guarantor shall prove to have been false
or misleading in any material respect as of the time made or furnished; or
(p) the Guarantor shall fail to observe or perform any covenant or
agreement contained in Section II of the New Century Guaranty.
ARTICLE IX
Remedies Upon Default.
Section 9.1 Remedies.
---------
(a) An Event of Default shall be deemed to be continuing unless
expressly waived by the Lender in writing. Upon the occurrence of one or more
Events of Default hereunder, the Lender's obligation to make additional Loans to
the Borrower shall automatically terminate without further action by any Person.
Upon the occurrence of one or more Events of Default other than those referred
to in Sections (f), (g) and (h) of Article VIII, the Lender may immediately
declare the principal amount of the Loans then outstanding under the Note to be
immediately due and payable, together with all accrued and unpaid interest
thereon and fees and expenses accruing under this Loan Agreement. Upon the
occurrence of an Event of Default referred to in Sections (f), (g) and (h) of
Article VIII, such amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the occurrence of a Default, the Lender shall have the
right to obtain, and the Borrower shall deliver or cause to be delivered, on
demand, physical possession of the Servicing Records and all other files of the
Borrower relating to the Collateral and all documents relating to the Collateral
which are then or may thereafter come in to the possession of the Borrower or
any third party acting for the Borrower and the Borrower shall deliver to the
Lender such assignments as the Lender shall request. The Lender shall be
entitled to specific performance of all agreements of the Borrower contained in
this Loan Agreement.
ARTICLE X
No Duty of Lender.
Section 10.1 No Duty. The powers conferred on the Lender hereunder are
-------
solely to protect the Lender's interests in the Collateral and shall not impose
any duty upon it to exercise any such powers. The Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its or their own gross negligence, bad faith or willful misconduct.
-36-
ARTICLE XI
Miscellaneous.
Section 11.1 Waiver. No failure on the part of the Lender to exercise and
------
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
Section 11.2 Notices. Except as otherwise expressly permitted by this Loan
-------
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party provided, that a copy of all notices given
under Section 7.1 shall simultaneously be delivered to Credit Department, Xxxxxx
Xxxxxxx Xxxx Xxxxxx, 1221 Avenue of the Americas, 35th Floor, Attention: Xxxxxxx
Xxxxxxx. Except as otherwise provided in this Loan Agreement and except for
notices given under Article II (which shall be effective only on receipt), all
such communications shall be deemed to have been duly given when transmitted by
telex or telecopy or personally delivered or, in the case of a mailed notice,
upon receipt, in each case given or addressed as aforesaid.
Section 11.3 Indemnification and Expenses. The Borrower agrees to hold the
----------------------------
Lender and its Affiliates and their officers, directors, employees, agents and
advisors (each an "Indemnified Party") harmless from and indemnify any
Indemnified Party against all liabilities, losses, damages, judgments, costs and
expenses of any kind which may be imposed on, incurred by or asserted against
such Indemnified Party (collectively, the "Costs") relating to or arising out of
this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Loan Agreement, the Note,
any other Loan Document or any transaction contemplated hereby or thereby, that,
in each case, results from anything, other than any Indemnified Party's gross
negligence, bad faith or willful misconduct. Without limiting the generality of
the foregoing, the Borrower agrees to hold any Indemnified Party harmless from
and indemnify such Indemnified Party against all Costs with respect to all
Mortgage Loans relating to or arising, out of any violation or alleged violation
of any environmental law, rule or regulation or any consumer credit laws,
including without limitation, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
such Indemnified Party's gross negligence, bad faith or willful misconduct. In
any suit, proceeding or action brought by an Indemnified Party in connection
with any Mortgage Loan for any sum owing thereunder, or to enforce any
provisions of any Mortgage Loan, the Borrower will save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by the
-37-
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Borrower. The Borrower also agrees
to reimburse an Indemnified Party as and when billed by such Indemnified Party
for all such Indemnified Party's costs and expenses incurred in connection with
the enforcement or the preservation of such Indemnified Party's rights under
this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, including, without limitation, the reasonable
fees and disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
The Borrower agrees to pay as and when billed by the Lender
all of the out-of-pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith,
including the New Century Guaranty. The Borrower agrees to pay as and when
billed by the Lender all of the out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the transactions
contemplated hereby and thereby including, without limitation, (i) all the
reasonable and documented fees, disbursements and expenses of counsel to the
Lender, (ii) all the due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement, including, but not limited to, those costs and expenses incurred by
the Lender pursuant to Sections 11.3, 11.14 and 11.15 hereof and (iii) except to
the extent amounts in respect thereof have previously paid pursuant to Section
2.3, the costs of Broker Price Opinions in respect of Defaulted Mortgage Loans.
Section 11.4 Amendments. Except as otherwise expressly provided in this
----------
Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
Section 11.5 Successors and Assigns. This Loan Agreement shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 11.6 Survival. The obligations of the Borrower under Sections 3.3
--------
and 11.3 hereof shall survive the repayment of the Loans and the termination of
this Loan Agreement. In addition, each representation and warranty made or
deemed to be made by a request for a borrowing, herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making, any Loan, any Default that may
arise because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that the Lender may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time such Loan was made.
Section 11.7 Captions. The table of contents and captions and section
--------
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
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Section 11.8 Counterparts. This Loan Agreement may be executed in any
-------------
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
Section 11.9 Loan Agreement Constitutes Security Agreement: Governing Law.
-------------------------------------------------------------
This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine, and shall constitute a security agreement within the
meaning of the Uniform Commercial Code.
Section 11.10 Submission To Jurisdiction: Waivers. The Borrower hereby
------------------------------------
irrevocably and unconditionally:
1. SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEINIENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
2. CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
3. AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED; AND
4. AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION.
Section 11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
---------------------
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 11.12 Acknowledgments. The Borrower hereby acknowledges that:
----------------
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(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower, and
the relationship between the Borrower and the Lender is solely that of debtor
and creditor; and
(c) no joint venture exists between the Lender and the Borrower.
Section 11.13 Hypothecation or Pledge of Loans. The Lender shall have free
--------------------------------
and unrestricted use of all Collateral and nothing in this Loan Agreement shall
preclude the Lender from engaging in repurchase transactions with the Collateral
or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan Agreement shall
obligate the Lender to segregate any Collateral delivered to the Lender by the
Borrower.
Section 11.14 Servicing.
----------
(a) The Borrower covenants to maintain or cause the servicing of
the Mortgage Loans to be maintained in conformity with accepted and prudent
servicing practices in the industry for the same type of mortgage loans as the
Mortgage Loans and in a manner at least equal in quality to the servicing the
Borrower provides for mortgage loans which it owns. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of Default, (ii) the date on which all the Secured
Obligations have been paid in full or (iii) the transfer of servicing approved
by the Lender in writing. The Lender hereby approves Ocwen Federal Bank FSB as
the initial servicer (the "Initial Servicer") of the Mortgage Loans. If the
----------------
Initial Servicer is terminated as servicer for any reason, New Century Mortgage
Corporation, an Affiliate of the Borrower, shall be the successor servicer of
the Mortgage Loans.
(b) If the Mortgage Loans are serviced by the Borrower, (i) the
Borrower agrees that the Lender is the collateral assignee of all servicing
records, including, but not limited to, any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Mortgage Loans (the "Servicing Records"), and (ii)
-----------------
the Borrower grants the Lender a security interest in all servicing fees and
rights relating to the Mortgage Loans and all Servicing Records to secure the
obligation of the Borrower or its designee to service in conformity with this
Section and any other obligation of the Borrower to the Lender. The Borrower
covenants to safeguard such Servicing Records and to deliver them promptly to
the Lender or its designee (including the Custodian) at the Lender's request.
(c) If the Mortgage Loans are serviced by a third party servicer
(such third party servicer, the "Third Party Servicer") the Borrower (i) shall
--------------------
provide a copy of the servicing agreement to the Lender, which shall be in form
and substance acceptable to the Lender (the "Servicing Agreement"), and (ii)
-------------------
shall provide a Servicer Notice to the Third Party Servicer substantially in the
form of Exhibit G hereto (a "Servicer Notice") and shall cause such Third Party
--------- ---------------
Servicer to acknowledge and agree to the same. Any successor or assignee of a
Third Party
-40-
Servicer shall be approved in writing by the Lender and shall acknowledge and
agree to a Servicer Notice prior to such successor's assumption of servicing
obligations with respect to the Mortgage Loans.
(d) If the Servicer of the Mortgage Loans is the Borrower or an
Affiliate of the Borrower, the Borrower shall provide to the Lender a letter to
the effect that upon the occurrence of an Event of Default, the Lender may
terminate any Servicing Agreement and in any event transfer servicing to the
Lender's designee, at no cost or expense to the Lender, it being agreed that the
Borrower will pay any and all fees required to terminate the Servicing Agreement
and to effectuate the transfer of servicing to the designee of the Lender.
(e) After the Funding Date, until the pledge of any Mortgage
Loan is relinquished by the Custodian, (i) the Borrower shall give prior written
notice to the Lender of any proposed modification or alteration to the terms of
any such Mortgage Loan and unless the Borrower shall have received the Lender's
written approval of such modification or alteration within five (5) Business
Days thereafter, in the event the Borrower nevertheless makes such modification
or alteration to the terms of such Mortgage Loan thereafter, such Mortgage Loan
shall thereupon have a Collateral Value equal to zero, and (ii) the Borrower
will have no obligation or right to repossess such Mortgage Loan or substitute
another Mortgage Loan, except as provided in the Custodial Agreement.
(f) In the event the Borrower or its Affiliate is servicing the
Mortgage Loans, the Borrower shall permit the Lender from time to time during
business hours and upon prior reasonable notice (provided, that if a Default
shall have occurred and be continuing, no such notice shall be required) to
inspect the Borrower's or its Affiliate's servicing facilities, as the case may
be, for the purpose of satisfying the Lender that the Borrower or its Affiliate,
as the case may be, has the ability to service the Mortgage Loans as provided in
this Loan Agreement.
Section 11.15 Due Diligence Review.
---------------------
(a) Mortgage Loans. The Borrower acknowledges that the Lender
--------------
has 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 upon reasonable (but no less than one (1) Business Day's) prior
notice to the Borrower or the Servicer, as the case may be, the Lender or its
authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Mortgage Files and
Servicing Records 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, the Servicer and/or the Custodian. The Borrower also
shall make available to the Lender a knowledgeable financial or accounting,
officer for the purpose of answering questions respecting the Mortgage Files and
the Mortgage Loans. Without limiting the generality of the foregoing, the
Borrower acknowledges that the Lender may make Loans to the Borrower based
solely upon the information provided by the Borrower to the Lender in the
Mortgage Loan Tape and the representations, warranties and covenants contained
herein, and that the Lender, at its option, has the right at any time to conduct
a partial or complete due diligence review on some or all of the Mortgage Loans
securing such Loan, including without limitation ordering new credit reports and
new appraisals on the related
-41-
Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. The Lender may underwrite such Mortgage Loans
itself or engage a mutually agreed upon third party underwriter to perform such
underwriting. The Borrower agrees to cooperate with the Lender and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in the possession, or under the control, of the Borrower.
(b) Borrower. The Borrower acknowledges that the Lender has the
--------
right to perform quarterly due diligence reviews of the Borrower's operations,
including, but not limited to, a review of (1) the financial condition of the
Borrower, (2) loan origination and servicing guidelines, and (3) other corporate
due diligence matters at the discretion of the Lender. In connection therewith,
the Borrower agrees that upon reasonable (but no less than two (2) Business
Day's) prior notice to the Borrower (provided, that if a Default has occurred
and is continuing, no such notice shall be required), the Lender or its
authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of all documents, records,
agreements, instruments or information relating to the Borrower which are in
possession or under the control of the Borrower, as the Lender may reasonably
request. The Borrower shall also make available to the Lender a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the financial condition of the Borrower and make available to the
Lender an officer of the Borrower for the purpose of answering questions
respecting other corporate due diligence matters.
(c) Fees and Expenses of Due Diligence Review. The Borrower
------------------------------------------
further agrees that the Borrower shall reimburse the Lender for any and all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.15.
Section 11.16 Set-Off. In addition to any rights and remedies of the Lender
--------
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any Affiliate
thereof to or for the credit or the account of the Borrower. The Lender agrees
promptly to notify the Borrower after any such set-off and application made by
the Lender; provided, that the failure to give such notice shall not affect the
validity of such set-off and application.
Section 11.17 Intent. The parties recognize that each Loan is a "securities
-------
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
-42-
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
--------
NC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------
Name: XXXXXXX XXXXXXXX
Title: PRESIDENT
Address for Notices:
-------------------
18400 Xxx Xxxxxx, Xxxxx 00000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Assistant Vice
President and Corporate Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
LENDER
------
XXXXXX XXXXXXX XXXX XXXXXX
MORTGAGE CAPITAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Name:
Title: Vice President
Address for Notices:
--------------------
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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
--------
NC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: XXXXXXX XXXXXXXX
Title: President
Address for Notices:
-------------------
18400 Xxx Xxxxxx, Xxxxx 00000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Assistant Vice
President and Corporate Counsel
Telecopier No.: (000) 000-0000
Tephone No.: (000) 000-0000
LENDER
------
XXXXXX XXXXXXX XXXX XXXXXX
MORTGAGE CAPITAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address for Notices:
--------------------
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Schedule 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Representations and Warranties with respect to each Eligible
Residential Mortgage Loan
As to each residential Mortgage Loan included in the Borrowing Base on
a Funding Date (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 Value is determined (certain defined terms used herein and not
otherwise defined in the Loan Agreement appearing, in Part III to this Schedule
1):
(a) Mortgage Loans as Described. The information set forth in
---------------------------
the Mortgage Loan Schedule with respect to the Mortgage Loan is complete,
true and correct in all material respects.
(b) No Outstanding Charges. Other than delinquencies in payment
----------------------
of principal or interest in respect of the 30+ Delinquent Mortgage Loans, 60+
Delinquent Mortgage Loans and Defaulted Mortgage Loans, there are no defaults in
complying with the terms of the Mortgage securing the Mortgage Loan. All taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is earlier, to the day which precedes by one month the
Due Date of the first installment of principal and interest thereunder.
(c) Original Terms Unmodified. The terms of the Mortgage Note
-------------------------
and Mortgage have not been impaired, waived, altered or modified in any respect
from the date of origination except by a written instrument which has been
recorded, if necessary, to protect the interests of the Lender, and which has
been delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required, and
its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect
of the Mortgage Loan has been released, in whole or in part, except in
connection with an assumption agreement approved by the title insurer, to the
extent required by such policy, and which assumption agreement is part of the
Mortgage File delivered to the Custodian and the terms of which are reflected in
the Mortgage Loan Schedule.
(d) No Defenses. The Mortgage Loan is not subject to any right
-----------
of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right
1-1
thereunder, render either the Mortgage Note or the Mortgage unenforceable. in
whole or in part and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto, and no Mortgagor in respect of
the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated. The Borrower has no
knowledge nor has it received any notice that any Mortgagor in respect of the
Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency
proceeding
(e) No Retail Installment Contracts. The Mortgage Loan is not a
-------------------------------
retail installment contract for goods or services or a home improvement loan for
goods or services, which would be either "consumer credit contracts" or
"purchase money loans" as such terms are defined in 16 C.F.R. Section 433.1.
(f) No Implied Warranty. The Mortgagor on the Mortgage Loan does
-------------------
not have a claim or defense against the Borrower or any assignor or assignee of
the Borrower under any express or implied warranty with respect to goods or
services provided in connection with the Mortgage Loan.
(g) Hazard Insurance. The Mortgaged Property is insured by a
----------------
fire and extended perils insurance policy, issued by a Qualified Insurer, and
such other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against earthquake and
other risks insured against by Persons owning like properties in the locality of
the Mortgaged Property, in an amount not less than the greatest of (i) 100% of
the replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan or (iii) the amount necessary
to avoid the operation of any co-insurance provisions with respect to the
Mortgaged Property, and consistent with the amount that would have been required
as of the date of origination in accordance with the Underwriting Guidelines. If
any portion of the Mortgaged Property is in an area identified by any federal
Governmental Authority as having special flood hazards, and flood insurance is
available, a flood insurance policy meeting the current guidelines of the
Federal Emergency Management Agency is in effect with a generally acceptable
insurance carrier in an amount representing coverage not less than the least of
(1) the outstanding principal balance of the Mortgage Loan, (2) the full
insurable value of the Mortgaged Property and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the "Hazard Insurance Policy") contain a standard mortgagee
clause naming the Borrower, its successors and assigns (including, without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 30 days' prior written notice to the
mortgagee. No such notice has been received by the Borrower. All accrued
premiums on such insurance policy have been paid. The related Mortgage obligates
the Mortgagor to maintain all such insurance and, at such Mortgagor's failure to
do so, authorizes the mortgagee to maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from such Mortgagor. Where
required by state law or regulation, the Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" Hazard Insurance Policy covering a condominium, or
any Hazard Insurance policy covering the common facilities of a planned unit
development. The Hazard Insurance Policy is the valid and binding obligation of
the insurer and is in full force and effect. The Borrower has not engaged
1-2
in, and has no knowledge of the Mortgagor's having engaged in, any act or
omission which would impair the coverage of any such policy, the benefits of the
endorsement provided for therein, or the validity and binding effect of either
including, without limitation, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or realized by the Borrower.
(h) Compliance with Applicable Laws. Any and all requirements of
-------------------------------
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Lender, and shall deliver to the Lender, upon demand,
evidence of compliance with all such requirements.
(i) No Satisfaction of Mortgage. The Mortgage has not been
---------------------------
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Borrower has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(j) Location and Type of Mortgaged Property. The Mortgaged
---------------------------------------
Property is fee simple property located in a state identified in the Mortgage
Loan Schedule. The Mortgaged Property consists of a real property with a
detached single family residence erected thereon, or a two-to four-family
dwelling, or an individual residential condominium unit in a low-rise
condominium project, or an individual unit in a planned unit development, a
manufactured home; provided, however, that any condominium unit or planned unit
development shall conform with the Underwriting Guidelines. In the case of any
Mortgaged Properties that are manufactured homes (a "Manufactured Home Mortgage
Loan"), (i) such Manufactured Home Mortgage Loan conforms with the applicable
FNMA or FHLMC requirements regarding mortgage loans related to manufactured
dwellings, (ii) the related manufactured dwelling is permanently affixed to the
land, (iii) the related manufactured dwelling and the related land are subject
to a Mortgage properly filed in an appropriate public recording office and
naming the Borrower as mortgagee, (iv) the applicable laws of the jurisdiction
in which the related Mortgaged Property is located will deem the manufactured
dwelling located on such Mortgaged Property to be a part of the real property on
which such dwelling is located and (v) such Manufactured Home Mortgage Loan is
(a) a qualified mortgage under section 860G(a)(3) of the Code and (y) secured by
a manufactured housing treated as a single residence under Section 25(e)(10) of
the Code. No portion of the Mortgaged Property is used for commercial purposes;
provided, that Mortgaged Properties which contain a home office shall not be
considered as being used for commercial purposes so long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes.
1-3
(k) Valid Lien. The Mortgage is a valid, subsisting, enforceable
----------
and perfected first or second lien on the real property included in the
Mortgaged Property, including all buildings on the Mortgaged Property and all
additions, alterations and replacements made at any time with respect to the
foregoing. The lien of the Mortgage is subject only to:
1. the lien of current real property taxes and assessments not yet
due and payable;
2. in the case of any Mortgage Loan with a second lien position, a
first lien on such Mortgaged Property and subject, in all
cases, to the exceptions to title set forth in the title
insurance policy with respect to the related Mortgage Loan,
which exceptions are generally acceptable to second mortgage
lending companies, and such other exceptions to which similar
properties are commonly subject and which do not individually,
or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such
mortgage;
3. covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date
of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of
the Mortgage Loan and (a) referred to or otherwise considered
in the appraisal made for the originator of the Mortgage Loan
or (b) which do not adversely affect the Appraised Value of the
Mortgaged Property set forth in such appraisal; and
4. other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first or second lien and first or second priority
security interest on the property described therein and the Borrower has full
right to pledge and assign the same to the Lender.
(l) Validity of Mortgage Documents. The Mortgage Note and the
------------------------------
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan. The Borrower
1-4
has reviewed all of the documents constituting the Servicing File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
(m) Full Disbursement of Proceeds. The Mortgage Loan has been
-----------------------------
closed and the proceeds of the Mortgage Loan have been fully disbursed and there
is no further requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(n) Ownership. The Borrower is the sole owner and holder of the
---------
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Borrower
has good, indefeasible and marketable title thereto, and has full right to
transfer, pledge and assign the Mortgage Loan to the Lender free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Loan Agreement and following the
pledge of each Mortgage Loan, the Lender will hold such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest except any such security interest created pursuant to
the terms of this Loan Agreement.
(o) Title Insurance. The Mortgage Loan is covered by an ALTA
---------------
lender's title insurance policy or, with respect to the Mortgaged Properties
located in California, a CLTA lender's title insurance policy, or other
generally acceptable form of policy of insurance acceptable to FNMA or FHLMC,
issued by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Borrower, its successors and assigns as to the first or second priority lien
of the Mortgage in the original principal amount of the Mortgage Loan and
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment, subject only to the exceptions
contained in clauses (1), (3) and (4) and, with respect to each Second Lien
Mortgage Loan clause (2), of paragraph (k) of this Part I of this Schedule 1.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress and against encroachments by or upon the Mortgaged Property or any
interest therein. The title policy does not contain any special exemptions
(other than the standard exclusions) for zoning and uses and has been marked to
delete the standard survey exception or to replace the standard survey exception
with a specific survey reading. The Borrower, its successors and assigns, are
the sole insured of such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect upon the consummation of the
transactions contemplated by this Loan Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder or servicer of the
Mortgage, including the Borrower, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy, including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by
1-5
any attorney, firm or other Person, and no such unlawful items have been
received, retained or realized by the Borrower.
(p) No Defaults. There is no default, breach, violation or
-----------
event of acceleration existing under the Mortgage or the Mortgage Note and no
event has occurred which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and neither the Borrower nor its
predecessors have waived any default, breach, violation or event of
acceleration.
(q) No Mechanics' Liens. There are no mechanics' or similar
-------------------
liens or claims which have been filed for work, labor or material (and no rights
are outstanding that under applicable law could give rise to such liens)
affecting the Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the Mortgage.
(r) Location of Improvements: No Encroachments. All
------------------------
improvements which were considered in determining the Appraised Value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning and building,
law, ordinance or regulation.
(s) Origination; Payment Terms. Either (a) the Mortgage Loan
--------------------------
was originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and examined
by a federal or state authority or (b) the following requirements have been met
with respect to the Mortgage Loan: the Mortgage Loan meets the requirements set
forth in clause (a), and (i) such Mortgage Loan was underwritten in accordance
with standards established by the Borrower, using application forms and related
credit documents approved by the Borrower, (ii) the Borrower approved each
application and the related credit documents before a commitment by the
correspondent was issued, and no such commitment was issued until the Borrower
agreed to fund such Mortgage Loan, (iii) the closing documents for such Mortgage
Loan were prepared on forms approved by the Borrower and (iv) such Mortgage Loan
was actually funded by the Borrower and was purchased by the Borrower at closing
or soon thereafter. No Mortgage Loan contains terms or provisions which would
result in negative amortization . The Mortgage Interest Rate is adjusted, with
respect to adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date
equal to the Index plus the Gross Margin (rounded up or down to the nearest
0.125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable
on the first day of each month in equal monthly installments of principal and
interest, which installments of interest, with respect to adjustable rate
Mortgage Loans, are subject to change due to the adjustments to the Mortgage
Interest Rate on each Interest Rate Adjustment Date, with interest calculated
and payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than 30 years from the
commencement of amortization.
(t) CLTV. The Mortgage Loan has a CLTV less than or equal to
----
100%.
1-6
(u) Customary Provisions. The Mortgage Note has a stated
--------------------
maturity. The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale and (ii) otherwise by judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage.
(v) Conformance with Underwriting Guidelines and Agency
---------------------------------------------------
Standards. The Mortgage Loan was underwritten in accordance with the
---------
Underwriting Guidelines. The Mortgage Note and Mortgage are on forms similar to
those used by FHLMC or FNMA and the Borrower has not made any representations to
a Mortgagor that are inconsistent with the mortgage instruments used.
(w) No Additional Collateral. The Mortgage Note is not and
------------------------
has not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in clause (k) above.
(x) Deeds of Trust. In the event the Mortgage constitutes a
--------------
deed of trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is named
in the Mortgage, and no fees or expenses are or will become payable by the
Custodian or the Lender to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(y) Delivery of Mortgage Documents. The Mortgage Note, the
------------------------------
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Borrower or its agent is in possession of a
complete, true and accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered
to the Custodian.
(z) Transfer of Mortgage Loans. The Assignment of Mortgage is
--------------------------
in recordable form and is acceptable for recording, under the laws of the
jurisdiction in which the Mortgaged Property is located.
(aa) Due-On-Sale. The Mortgage contains an enforceable
-----------
provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee thereunder.
(bb) No Buydown Provisions: No Graduated Payments or
-----------------------------------------------
Contingent Interests. The Mortgage Loan does not contain provisions pursuant to
--------------------
which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Borrower, the Mortgagor, or anyone on behalf
of the Mortgagor, or paid by any source other than the
1-7
Mortgagor nor does it contain any other similar provisions which may constitute
a "buydown" provision. The Mortgage Loan is not a graduated payment mortgage
loan and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature.
(cc) Consolidation of Future Advances. Any future advances
--------------------------------
made to the Mortgagor prior to the Funding Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first or second lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan.
(dd) Mortgaged Property Undamaged. The Mortgaged Property is
----------------------------
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair. There have not been
any condemnation proceedings with respect to the Mortgaged Property and the
Borrower has no knowledge of any such proceedings.
(ee) Collection Practices: Escrow Deposits; Interest Rate
----------------------------------------------------
Adjustments. The origination and collection practices used by the originator,
-----------
each servicer of the Mortgage Loan and the Borrower with respect to the Mortgage
Loan have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such payments are in
the possession of, or under the control of, the Borrower and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. An escrow of funds is not prohibited
by applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments due
the Borrower have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited.
(ff) Conversion to Fixed Interest Rate. With respect to
---------------------------------
adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed
interest rate Mortgage Loan.
(gg) Other Insurance Policies. No action, inaction or event
------------------------
has occurred and no state of facts exists or has existed that has resulted or
will result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
1-8
(hh) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has
---------------------------------------
not notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(ii) Appraisal. The Mortgage File contains an appraisal of the
---------
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of FNMA or FHLMC and Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 as amended and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated.
(jj) Disclosure Materials. The Mortgagor has executed a statement
--------------------
to the effect that the Mortgagor has received all disclosure materials required
by applicable law with respect to the making of adjustable rate mortgage loans,
and the Borrower maintains such statement in the Mortgage File.
(kk) Construction or Rehabilitation of Mortgaged Property. No
----------------------------------------------------
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(ll) No Defense to Insurance Coverage. No action has been taken
--------------------------------
or failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence or fraud of the Borrower, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay.
(mm) Capitalization of Interest. The Mortgage Note does not by
--------------------------
its terms provide for the capitalization or forbearance of interest.
(nn) No Equity Participation. No document relating to the
-----------------------
Mortgage Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
b the Mortgage Note is not convertible to an ownership interest in the Mortgaged
Property or the Mortgagor and the Borrower has not financed nor does it own
directly or indirectly, any equity of any form in the Mortgaged Property or the
Mortgagor.
1-9
(oo) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan
-------------------------
have not been and shall not be used to satisfy, in whole or in part, any debt
owed or owing by the Mortgagor to the Borrower or any Affiliate or correspondent
of the Borrower.
(pp) Withdrawn Mortgage Loans. If the Mortgage Loan has been
------------------------
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 15 days (or if such tenth day
was not a Business Day, the next succeeding Business Day).
(qq) Origination Date. If a Mortgage Loan is an Unseasoned
----------------
Mortgage Loan, it has been originated within three months prior to the related
Funding Date, and if a Mortgage Loan is a Defaulted Mortgaged Loan or a Seasoned
Mortgage Loan, it has been originated within twelve (12) months prior to the
related Funding Date.
(rr) Qualified Originator. The Mortgage Loan has been originated
--------------------
by, and, if applicable. purchased by the Borrower from, a Qualified Originator.
(ss) Mortgage Submitted for Recordation. If an Event of Default
----------------------------------
under the Loan Agreement has occurred, the Mortgage either has been or will
promptly be submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.
(tt) Xxxxxx Act. None of the Mortgage Loans are classified as
----------
"high cost" loans under the Home Ownership and Equity Protection Act of 1994.
(uu) Second Lien Mortgages. The related first Lien on the
---------------------
Mortgage Loan does not require a consent from the holder of the first Lien, or
if such a consent is required, it has been obtained and is contained in the
Mortgage File. The Borrower has not received notice of a default of the related
first Lien which has not been cured.
(vv) Section 32 Mortgage Loan. The Mortgage Loan is not a Section
------------------------
32 Mortgage Loan.
Part II. Representations and Warranties with respect to all Eligible
Residential Mortgage Loans
As to all Mortgage Loans included in the Borrowing Base on a Funding
Date (and the related Mortgages, Mortgage Notes, Assignments of Mortgage and
Mortgaged Properties), 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 Value is determined (certain defined terms used herein and not
otherwise defined in the Loan Agreement appearing in Part III to this Schedule
1):
(a) Payment Current. All payments required to be made up to the
---------------
Funding Date for all Mortgage Loans (other than 30+ Delinquent Mortgage Loans,
60+ Delinquent Mortgage Loans and Defaulted Mortgage Loans) under the terms of
the related Mortgage Note have been made and credited. No payment required under
the Mortgage Loans (other than 30+ Delinquent Mortgage Loans, 60+ Delinquent
Mortgage Loans and Delinquent Mortgage Loans) are delinquent nor have any
payment under the Mortgage Loans been delinquent at any time
1-10
since the origination of such Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its Due Date or within the grace
period, all in accordance with the terms of the related Mortgage Note; provided,
however, that any Mortgage Loan that defaulted on its first Monthly Payment is
current on all subsequent Monthly Payments.
(b) Concentration Limit. As of a Funding Date:
-------------------
1. the aggregate unpaid principal balance of the Second Lien
Mortgage Loans shall not exceed $40,000,000;
2. the aggregate unpaid principal balance of the 30+ Delinquent
Mortgage Loans shall not exceed $15,000,000;
3. the aggregate unpaid principal balance of the 60+ Delinquent
Mortgage Loans shall not exceed $10,000,000;
4. the aggregate unpaid principal balance of the Mortgage Loans
that are secured by Mortgaged Properties consisting of
Qualified Manufactured Housing shall not exceed $40,000,000;
5. the aggregate unpaid principal balance of the Mortgage Loans
that are secured by Mortgaged Properties consisting of
condominiums shall not exceed $25,000,000;
6. the aggregate unpaid principal balance of the Mortgage Loans
that are secured by Mortgaged Properties which are non-owner
occupied shall not exceed $25,000,000;
7. the aggregate unpaid Principal Balance of the Sub-prime
Mortgage Loans shall not exceed 18% of the outstanding
principal balance of the Loan.
8. the aggregate unpaid principal balance of the Defaulted
Mortgage Loans shall not exceed $10,000,000.
9. the aggregate unpaid principal balance of the Discretionary
Mortgage Loans shall not exceed 10% of the aggregate
outstanding principal balance of the Loans.
(c) Location of Mortgaged Properties. To the best of the
--------------------------------
Borrower's knowledge, no Mortgaged Property is located within a one-mile radius
of any site listed in the National Priorities List as defined under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on any similar state list of hazardous waste sites which are known
to contain any hazardous substance or hazardous waste.
(d) Bulk Transfer. The transfer, assignment and conveyance of
-------------
the Mortgage Notes and the Mortgages by the Borrower pursuant to this Loan
Agreement are not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction.
1-11
Part III - Defined Terms
In addition to terms defined elsewhere in the Loan Agreement, the
following terms shall have the following meanings when used in this Schedule 1:
"Accepted Servicing Practices" shall mean, with respect to any
----------------------------
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"ALTA" means the American Land Title Association.
----
"Appraised Value" shall mean the value set forth in an appraisal made
---------------
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Best's" means Best's Key Rating Guide, as the same shall be amended
------
from time to time.
"Combined Loan-to-Value Ratio" or "CLTV" shall mean with respect to
---------------------------- ----
any Second Lien Mortgage Loan, the ratio (expressed as a percentage) of (a) the
outstanding principal balance on the date of origination of the sum of (i) the
mortgage loan constituting the first Lien plus (ii) the Second Lien Mortgage
Loan to (b) the lesser of (i) the Appraised Value of the Mortgage property and
(ii) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
"Due Date" means the day of the month on which the Monthly Payment is
--------
due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" means with respect to any Mortgage Loan, the amounts
---------------
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
-----
successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
----
successor thereto.
"Gross Margin" means with respect to each adjustable rate Mortgage
------------
Loan, the fixed percentage amount set forth in the related Mortgage Note.
"Ground Lease" means a lease for all or any portion of the real
------------
property comprising the Mortgaged Property, the lessee's interest in which is
held by the Mortgagor of the related Mortgage Loan.
"Index" means with respect to each adjustable rate Mortgage Loan, the
-----
index set forth in the related Mortgage Note for the purpose of calculating the
interest rate thereon.
1-12
"Insurance Proceeds" means with respect to each Mortgage Loan,
------------------
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means with respect to each adjustable
-----------------------------
rate Mortgage Loan, the date, specified in the related Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
------------------- ---
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Monthly Payment" means the scheduled monthly payment of principal and
---------------
interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.
"Mortgage Interest Rate" means the annual rate of interest home on a
----------------------
Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable rate
--------------------------
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
"Mortgagee" means the Borrower or any subsequent holder of a Mortgage
---------
Loan.
"Qualified Manufactured Housing" shall mean a manufactured home so
------------------------------
affixed to land upon which it sits that it is deemed a part of real property and
treated as such for all municipal purposes in the jurisdiction in which such
manufactured home is located.
"Origination Date" shall mean, with respect to each Mortgage Loan, the
----------------
date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Borrower with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is 40
days prior to the date of the first payment under the Mortgage Note relating to
such Mortgage Loan.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
---------- ------------------------
mortgage guaranty insurance issued by a Qualified Insurer.
"Qualified Insurer" means an insurance company duly qualified as such
-----------------
under the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by any of the rating agencies with respect to primary mortgage
insurance and in the two highest rating categories by Best's with respect to
hazard and flood insurance.
"Qualified Originator" means an originator of Mortgage Loans
--------------------
reasonably acceptable to the Lender.
1-13
"Servicing File" means with respect to each Mortgage Loan, the file
--------------
retained by the Borrower consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of the Mortgage
Loan Documents set forth in Section 2 of the Custodial Agreement.
"Underwriting Guidelines" means the underwriting guidelines attached
-----------------------
as Exhibit E hereto.
---------
1-14
Schedule 2
FILING JURISDICTIONS AND OFFICES
1. California
2-1
Schedule 3
SUBSIDIARIES
3-1
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$_____________ __________ ___, 20_
New York, New York
FOR VALUE RECEIVED, NC CAPITAL CORPORATION, a California corporation
(the "Borrower"), hereby promises to pay to the order of XXXXXX XXXXXXX XXXX
XXXXXX MORTGAGE CAPITAL INC. (the "Lender"). at the principal office of the
Lender at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, in lawful money of the
United States, and in immediately available funds, the principal sum of FOUR
HUNDRED MILLION DOLLARS ($400,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower under the Loan Agreement referred to below), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement. Capitalized terms used but not defined herein shall have the meanings
specified in the Loan Agreement.
Pursuant to and subject to the terms of the Loan Agreement, the
Borrower may borrow, repay and reborrow funds until December 13, 2002 or such
earlier date on which the Loan Agreement shall terminate in accordance with the
provisions of the Loan Agreement or by operation of law (the "Termination
-----------
Date"). In all events, the Borrower shall repay the aggregate outstanding
----
principal amount of all Loans plus all accrued interest thereon on the
Termination Date.
Pursuant to the Loan Agreement, from time to time the Borrower will be
required to pledge additional Collateral or to prepay Loans to cure a Borrowing
Base Deficiency.
The date, amount and interest rate of each Loan made by the Lender to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.
This Note is the Note referred to in the Amended and Restated Master
Loan and Security Agreement dated as of December 1, 2001 (as amended,
supplemented or otherwise modified and in effect from time to time, the "Loan
----
Agreement") between the Borrower and the Lender, and evidences Loans made by the
---------
Lender thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this
A-1
Note when incurred, including, without limitation, reasonable
attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this Note, (b) expressly agree that this
Note, or any payment hereunder, may be extended from time to time, and consent
to the acceptance of further Collateral, the release of any Collateral for this
Note, the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and apply
to every subsequent holder of this Note. Reference is made to the Loan Agreement
for provisions concerning optional and mandatory prepayments, Collateral,
acceleration and other material terms affecting this Note.
This Note shall be governed by and construed under the laws of the
State of New York (without reference to choice of law doctrine) whose laws the
Borrower expressly elects to apply to this Note. The Borrower agrees that any
action or proceeding brought to enforce or arising out of this Note may, be
commenced in the Supreme Court of the State of New York, Borough of Manhattan,
or in the District Court of the United States for the Southern District of New
York.
NC CAPITAL CORPORATION
By: ___________________________
Name:
Title:
A-2
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount of Amount Paid or Unpaid Principal Notation
Date Made Loan Interest Rate Prepaid Amount Made by
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A-4
Principal Amount of Amount Paid or Unpaid Principal Notation
Date Made Loan Interest Rate Prepaid Amount Made by
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A-4
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
B-1
EXHIBIT C-1
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to [NAME OF
BORROWER], a [________ corporation] (the "Borrower"), with respect to certain
matters in connection with that certain Amended and Restated Master Loan and
Security Agreement, dated ________, 200__ (the "Loan and Security Agreement"),
---------------------------
by and between the Borrower and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
(the "Lender"), being executed contemporaneously with a Promissory Note, dated
------
_________, 200__, from the Borrower to the Lender (the "Note"), an Amended and
----
Restated Custodial Agreement, dated as of _______, 200__, (the "Custodial
---------
Agreement"), by and among the Borrower, [NAME OF CUSTODIAN] (the "Custodian"),
--------- ---------
and the Lender. Capitalized terms not otherwise defined herein have the meanings
set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. the Custodial Agreement;
4. unfiled copies of the financing statements listed on Schedule
--------
I (collectively, the "Financing Statements") naming the Borrower as
- --------------------
Debtor and the Lender as Secured Party and describing the
Collateral (as defined in the Loan and Security Agreement) as to which security
interests may be perfected by filing under the Uniform Commercial Code of the
States listed on Schedule I (the "Filing Collateral"), which [we][I] understand
-----------------
will be filed in the filing offices listed on Schedule I (the "Filing Offices");
--------------
5. the reports listed on Schedule 2 as to UCC financing,
----------
statements (collectively, the "UCC Search Report");
-----------------
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we]
[I] have relied upon the representations and warranties of the Borrower
contained in the Loan and Security Agreement. [We] [I] have assumed the
authenticity of all documents submitted to [us][me] as originals, the
C-1-1
genuineness of all signatures, the legal capacity of natural persons
and the conformity to the originals of all documents submitted to [us] [me] as
originals.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a [_______ corporation] duly organized,
validly existing and in good standing under the laws of [state] and is qualified
to transact business in, and is in good standing under, the laws of the [state].
2. The Borrower has the [corporate] power to engage in the
transactions contemplated by the Loan and Security Agreement, the Note, and the
Custodial Agreement and all requisite [corporate] power, authority and legal
right to execute and deliver the Loan and Security Agreement, the Note, and the
Custodial Agreement and observe the terms and conditions of such instruments.
The Borrower has all requisite [corporate] power to borrow under the Loan and
Security Agreement and to grant a security interest in the Collateral under the
Loan and Security Agreement.
3. The execution, delivery and performance by the Borrower of
the Loan and Security Agreement, the Note, and the Custodial Agreement, and the
borrowings by the Borrower and the pledge of the Collateral under the Loan and
Security Agreement have been duly authorized by all necessary [corporate] action
on the part of the Borrower. Each of the Loan and Security Agreement, the Note
and the Custodial Agreement have been executed and delivered by the Borrower and
are legal, valid and binding agreements enforceable in accordance with their
respective terms against the Borrower, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Lender's
security interest in the Collateral.
4. No consent, approval, authorization or order of, and no
filing or registration with, any court or governmental agency or regulatory body
is required on the part of the Borrower for the execution, delivery or
performance by the Borrower of the Loan and Security Agreement, the Note and the
Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral, under the Loan and Security Agreement.
5. The execution, delivery and performance by the Borrower of,
and the consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Custodial Agreement do not and will not (a) violate
any provision of the Borrower's charter or by-laws, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to the Borrower of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which [we][I] have knowledge (after due
inquiry) to which the Borrower is a party or by which it is bound or to which it
is subject, or (except for the Liens created pursuant to the Loan
C-1-2
and Security Agreement)result in the creation or imposition of any
Lien upon any Property of the Borrower pursuant to the terms of any such
agreement or instrument.
6. There is no action, suit, proceeding or investigation
pending or, to the best of [our] [my] knowledge, threatened against the Borrower
which, in [our] [my] judgment, either in any one instance or in the aggregate,
would be reasonably likely to result in any material adverse change in the
properties, business or financial condition, or prospects of the Borrower or in
any material impairment of the right or ability of the Borrower to carry on its
business substantially as now conducted or in any material liability on the part
of the Borrower or which would draw into question the validity of the Loan and
Security Agreement, the Note, the Custodial Agreement or the Mortgage Loans or
of any action taken or to be taken in connection with the transactions
contemplated thereby, or which would be reasonably likely to impair materially
the ability of the Borrower to perform under the terms of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Mortgage Loans.
7. The Loan and Security Agreement is effective to create, in
favor of the Lender, a valid security interest under the Uniform Commercial Code
in all of the right, title and interest of the Borrower in, to and under the
Collateral as collateral security for the payment of the Secured Obligations (as
defined in the Loan and Security Agreement), except that (a) such security
interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-203 and Section 9-315 of
the Uniform Commercial Code, and (b) the security interests in Collateral in
which the Borrower acquires rights after the commencement of a case under the
Bankruptcy Code in respect of the Borrower may be limited by Section 552 of the
Bankruptcy Code.
8. When the Mortgage Notes are delivered to the Custodian,
endorsed in blank by a duly authorized officer of the Borrower, the security
interest referred to in paragraph 7 above in the Mortgage Notes will constitute
a fully perfected first priority security interest in all right, title and
interest of the Borrower therein, in the Mortgage Loan evidenced thereby and in
the Borrower's interest in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form UCC-1
naming the Lender as "Secured Party" and the Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule I attached hereto, the security interests referred to in paragraph 7
----------
above will constitute fully perfected security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, which can be perfected by filing under the Uniform
Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices
and the proper debtors necessary to identify those Persons who have on file in
the jurisdictions listed on Schedule I financing statements covering the Filing
Collateral as of the dates and times specified on Schedule 2. The UCC Search
Report identifies no Person who has filed in any Filing Office a financing
statement describing the Filing Collateral prior to the effective dates of the
UCC Search Report.
C-1-3
The Assignments of Mortgage are in recordable form, except for
the insertion of the name of the assignee, and upon the name of the assignee
being, inserted, are acceptable for recording under the laws of the state where
each related Mortgaged Property is located.
The Borrower is not an "investment company", or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
Very truly yours,
EXHIBIT C-2
[FORM OF OPINION OF COUNSEL TO GUARANTOR]
(date)
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 000000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to [NAME OF
GUARANTOR], a [_________ corporation] (the "Guarantor"), with respect to certain
---------
matters in connection with that certain Amended and Restated Guaranty, dated as
--------
of ______, 200__ (the "Guaranty"), by and between the Guarantor and Xxxxxx
Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc. (the "Lender.'), being executed
------
contemporaneously with an Amended and Restated Master Loan and Security
Agreement, dated as of ________, 200__ (the "Loan and Security Agreement"), by
--------------------------
and between the [NAME OF BORROWER] (the "Borrower") and the Lender and a
-------
Promissory Note, dated _____, 200__, from the Borrower to the Lender (the
"Note"). Capitalized terms not otherwise defined herein have the meanings set
----
forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Guaranty;
2. the Loan and Security Agreement;
3. the Note;
4. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Borrower [and the
Guarantor] contained in the Loan and Security Agreement [and the Guaranty,
respectively]. [We] [I] have assumed the authenticity of all documents submitted
to [us][me] as originals, the genuineness of all signatures, the legal capacity
of natural persons and the conformity to the originals of all documents
submitted to [us] [me] as copies.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Guarantor is a [_______ corporation] duly organized,
validly existing and in good standing under the laws of [state] and is qualified
to transact business in, and is in good standing under, the laws of [state].
C-2-1
2. The Guarantor has all requisite [corporate] power,
authority and legal right to execute and deliver the Guaranty and observe the
terms and conditions thereof
3. The execution, delivery and performance by the Guarantor of
the Guaranty have been duly authorized by all necessary [corporate] action on
the part of the Guarantor. The Guaranty has been executed and delivered by the
Guarantor and is a legal, valid and binding obligation enforceable in accordance
with its terms against the Guarantor, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder.
4. No consent, approval, authorization or order of, and no
filing or registration with, any court or governmental agency or regulatory body
is required on the part of the Guarantor for the execution, delivery or
performance by the Guarantor of the Guaranty.
5. The execution, delivery and performance by the Guarantor
of, and the consummation of the transactions contemplated by the Guaranty does
not and will not (a) violate any provision of the Guarantor's charter or
by-laws, (b) violate any applicable law, rule or regulation applicable to the
Guarantor, (c) violate any order, writ, injunction or decree of any court or
governmental authority or agency or any arbitral award applicable to the
Guarantor of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which [we][I] have knowledge (after due
inquiry) to which the Guarantor is a party or by which it is bound or to which
it is subject, or result in the creation or imposition of any Lien upon any
Property of the Guarantor pursuant to the terms of any such agreement or
instrument.
6. There is no action, suit, proceeding or investigation
pending or, to the best of [our] [my] knowledge, threatened, against the
Guarantor which, in [our] [my] judgment, either in any one instance or in the
aggregate, would be reasonably likely to result in any material adverse change
in the properties, business or financial condition, or prospects of the
Guarantor or in any material impairment of the right or ability of the Guarantor
to carry on its business substantially as now conducted or in any material
liability on the part of the Guarantor or which would draw into question the
validity of the Guaranty or of any action taken or to be taken in connection
with the transactions contemplated thereby, or which would be reasonably likely
to impair materially the ability of the Guarantor to perform under the terms of
the Guaranty.
Very truly yours,
C-2-2
EXHIBIT D
[FORM OF REQUEST FOR BORROWING]
Amended and Restated Master Loan and Security Agreement, dated as of
December 1, 2001 (the "Loan and Security Agreement"), by and between the
--------------------------
Borrower and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc. (the "Lender"),
------
Lender Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
Borrower: NC Capital Corporation
Requested Fund Date: __________________________________
Transmission Date: __________________________________
Transmission Time:
Mortgage
Loans to be Pledged See Attached
UPB: $_________________________________
Requested Wire Amount $_________________________________
Wire Instructions
Requested by:
NC CAPITAL CORPORATION
By: _______________________
Name:
Title:
D-1
Attachment 1
SCHEDULE OF ELIGIBLE MORTGAGE LOANS PROPOSED TO BE PLEDGED
D-2
Attachment 2
OFFICER'S CERTIFICATE
The undersigned hereby certifies to the Lender on behalf of the
Borrower, as of the requested Funding, Date, that:
(a) no Default or Event of Default has occurred and is
continuing on the date hereof nor will occur after giving effect to such Loan as
a result of such Loan;
(b) each of the representations and warranties made by the
Borrower in or pursuant to the Loan Documents is true and correct in all
material respects on and as of such date as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business and in good
standing in all required jurisdictions.
Responsible Officer Certification:
By: _________________________
Name:
Title:
D-3
EXHIBIT E-1
[FORM OF BORROWER'S RELEASE LETTER]
[Date]
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 000000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Re: Amended and Restated Master Loan and Security Agreement,
dated as of December 1, 2001 (the "Loan and Security
-----------------
Agreement"), by and between NC Capital Corporation (the
---------
"Borrower") and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital
--------
Inc. (the "Lender")
--------------------------------------------------------------
Ladies and Gentlemen:
With respect to the mortgage loans described in the attached Schedule A
(the "Mortgage Loans") (a) we hereby certify to you that the Mortgage Loans are
--------------
not subject to a lien of any third party and (b) we hereby release all right,
interest or claim of any kind with respect to such Mortgage Loans, such release
to be effective automatically without further action by any party upon payment
from Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc., of the amount of the Loan
contemplated under the Loan and Security Agreement (calculated in accordance
with the terms thereof) in accordance with the wiring instructions set forth in
the Loan and Security Agreement.
Very truly yours,
NC CAPITAL CORPORATION
By: _______________________
Name:
Title:
EXHIBIT E-2
[FORM OF WAREHOUSE LENDER'S RELEASE LETTER]
[Date]
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Re: Certain Mortgage Loans Identified on Schedule A hereto and
owned by NC Capital Corporation
---------------------------------------------------------------
The undersigned hereby releases all right, interest, lien or claim of
any kind with respect to the mortgage loan(s) described in the attached Schedule
--------
A, such release to be effective automatically without any further action by any
-
party upon payment in one or more installments, in immediately available funds
of $_____________, in accordance with the following wire instructions:
---------------------------
---------------------------
Very truly yours,
[WAREHOUSE LENDER]
By:________________________
Name:
Title:
EXHIBIT F
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY THE BORROWER]
EXHIBIT G
FORM OF SERVICER NOTICE
-----------------------
___________ ___, 200__
[SERVICER], as Servicer
[ADDRESS]
Attention: _____________
Re: Amended and Restated Master Loan and Security Agreement,
dated as of December 1, 2001 (the "Loan Agreement"), by and
--------------
between NC Capital Corporation (the "Borrower") and Xxxxxx Xxxxxxx
-------- -------
Xxxx Xxxxxx Mortgage Capital Inc. (the "Lender")
------------------------------------------------
Ladies and Gentlemen:
[SERVICER] (the "Servicer") is servicing certain mortgage loans for the
Borrower pursuant to certain Servicing Agreements between the Servicer and the
Borrower. Pursuant to the Loan Agreement between the Lender and the Borrower,
the Servicer is hereby notified that the Borrower has granted a security
interest to the Lender in certain mortgage loans which are serviced by Servicer.
Upon receipt of a Notice of Event of Default from the Lender in which
the Lender shall identify the mortgage loans which are then pledged to the
Lender under the Loan Agreement (the "Pledged Mortgage Loans"), the Servicer
----------------------
shall segregate all amounts collected on account of such Pledged Mortgage Loans,
hold them in trust for the sole and exclusive benefit of the Lender, and remit
such collections in accordance with the Lender's written instructions. Following
such Notice of Event of Default, the Servicer shall follow the instructions of
the Lender with respect to the Pledged Mortgage Loans, and shall deliver to the
Lender, any information with respect to the Pledged Mortgage Loans reasonably
requested by the Lender.
Notwithstanding any contrary information or direction which may be
delivered to the Servicer by the Borrower, the Servicer may conclusively rely on
any information, direction or notice of an Event of Default delivered by the
Lender, and the Borrower shall indemnify and hold the Servicer harmless for any
and all claims asserted against the Servicer for any actions taken in good faith
by the Servicer in connection with the delivery of such information or Notice of
Event of Default.
No provision of this letter may be amended, countermanded or otherwise
modified without the prior written consent of the Lender. The Lender is an
intended third party beneficiary of this letter.
Please acknowledge receipt and your agreement to the terms of this
instruction letter by signing in the signature block below and forwarding an
executed copy to the Lender promptly upon receipt. Any notices to the Lender
should be delivered to the following, address: 0000
X-0
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Xx. Xxxxx Xxxxxxxxxx;
Telephone: (000) 000-0000, Facsimile: (000) 000-0000, with a copy to Mr. Xxxx
Xxxxxx; Telephone: (000) 000-0000; Facsimile: (000) 000-0000.
Very truly yours,
NC CAPITAL CORPORATION
By:________________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
---------------------------
___________________________
as Servicer
By: _______________________
Title:
Telephone:
Facsimile:
G-2
