Exhibit 10.1
Execution Copy
SECOND AMENDED AND RESTATED
WAREHOUSING CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT dated as
of September 9, 2002 by and among HOMEAMERICAN MORTGAGE CORPORATION (the
"Company"), a Colorado corporation, the financial institutions which are
signatories hereto (each individually a "Bank" and collectively the "Banks") and
U.S. BANK NATIONAL ASSOCIATION, (formerly known as First Bank National
Association), a national banking association, one of the Banks, as
administrative agent for the Banks (in such capacity, the "Agent").
RECITALS
WHEREAS, the Company and the Banks have heretofore entered into an
Amended and Restated Warehousing Credit Agreement dated as of December 3, 1999,
as amended by a First Amendment dated as of September 26, 2000, a Second
Amendment dated as of October 30, 2000, a Third Amendment dated as of December
21, 2000, a Fourth Amendment dated as of April 17, 2001, a Fifth Amendment dated
as of October 9, 2001 and a Sixth Amendment dated as of August 1, 2002 (as so
amended, the "Existing Credit Agreement"), pursuant to which the Banks have made
certain credit facilities available to the Company, said credit facilities being
further evidenced by separate promissory notes of the Company in favor of the
Banks (collectively, the "Existing Notes"); and
WHEREAS, the Company wishes to amend certain provisions of the Existing
Credit Agreement; and
WHEREAS, the Company and the Banks now desire to amend and restate the
Existing Credit Agreement in its entirety and to amend and restate the Existing
Notes in their entireties;
NOW THEREFORE, the Company and the Banks hereby agree that the Existing
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
Section 1 DEFINITIONS AND ACCOUNTING TERMS.
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1.01 Certain Defined Terms. As used herein, the following terms
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shall have the following respective meanings (such meanings to be
equally applicable to both the singular and plural form of the terms
defined):
"Adjusted Consolidated Tangible Net Worth": as of a date of
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determination, the sum of (a) Consolidated Tangible Net Worth, plus (b)
Servicing Portfolio Value, minus (c) the aggregate principal amount of
all Intercompany Loans.
"Advance": a Prime Rate Advance, a Fixed Rate Advance, a
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Fixed Eurodollar Rate Advance or a Floating Eurodollar Rate Advance.
"Affiliate": the Parent and each corporation at least 20% of
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the shares of the outstanding capital stock of which is owned directly
or indirectly by the Parent.
"Aggregate Commitment Amount": as of any determination, the
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total of the Commitment Amounts of the Banks.
"Aggregate Outstandings": as of any determination, the total
----------------------
of the unpaid principal balances of the Notes then outstanding.
"Agreement": this Warehousing Credit Agreement, as modified,
---------
amended, supplemented or restated and in effect from time to time.
"Applicable Margin": with respect to:
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(a) Prime Rate Advances -- 0%
(b) Fixed Rate Advances -- 0%, subject, however, to
the requirements set forth in any Side Letter entered into
pursuant to Section 2.08(b).
(c) Fixed Eurodollar Rate Advances -- 1.25%
(d) Floating Eurodollar Rate Advances -- 1.25%
"Approved Investor": (a) FNMA, FHLMC, GNMA, (b) any Person
-----------------
listed on Schedule 1.01(a) hereto (until such time as the Agent gives
the Company and the Banks notice that such Person is no longer an
"Approved Investor") and (c) any other Person designated in writing by
the Agent as an "Approved Investor" (until such time as the Agent gives
the Company and the Banks written notice that such designation has been
revoked); provided, that the Agent or any Bank may at any time, by
written notice to the Company, reject any Person designated by the
Company as an Approved Investor or designate any Person as no longer
acceptable as an Approved Investor. Upon receipt of \such written
notice, any Person named in such notice to the Company shall not be
considered as an Approved Investor hereunder.
"Board": The Board of Governors of the Federal Reserve System
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or any successor thereto.
"Borrowing Base": as of a date of determination, an amount
--------------
equal to one hundred percent (100%) of the Collateral Value of the
Collateral.
"Borrowing Base/Compliance Certificate": as such term is
-------------------------------------
defined in Section 4.01(e) hereof.
"Business Day": a day on which the Banks, the Agent and the
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Collateral Agent are open for the transaction of business at the
addresses stated after their names on the signature pages of the Pledge
and Security Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
----
2
"Collateral": as such term is defined in the Pledge and
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Security Agreement.
"Collateral Account": account number 190272059634 of the
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Company with the Agent, which shall be under the Agent's sole dominion
and control.
"Collateral Agent": as such term is defined in the Pledge and
----------------
Security Agreement.
"Collateral Value": with respect to Collateral, as determined
----------------
in accordance with the formula contained in Exhibit A hereto.
"Commitment Amount": with respect to each Bank, the amount
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set forth opposite such Bank's name on Schedule 1.01(b) to this
Agreement.
"Commitment Ending Date": with respect to any Bank, as
----------------------
defined in Section 2.14(a).
"Commitments": the obligation of the Banks to make Advances
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to the Company pursuant to Section 2.01(a) hereof.
"Confirmation of Borrowing/Paydown": a confirmation in the
---------------------------------
form of Exhibit B hereto.
"Consolidated Net Earnings": for any period of determination,
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the net earnings of the Company and its Subsidiaries as included in the
Company's financial statements referred to in Section 3.04 or Section
4.01, as the case may be.
"Consolidated Tangible Net Worth": as of a date of
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determination, the sum of the capital stock, paid-in surplus and earned
surplus of the Company and its Subsidiaries (excluding stock of the
Company held by the Company or a Subsidiary), less the book value of
all assets of the Company and its Subsidiaries (to the extent reflected
as an asset in the consolidated balance sheet of the Company and its
Subsidiaries at such date) which would be treated as intangibles under
GAAP, including, without limitation, such items as good will,
trademarks, trade names, service marks, copyrights, patents, licenses,
originated mortgage servicing rights, purchased mortgage servicing
rights, deferred excess mortgage servicing rights, rights with respect
to any of the foregoing, unamortized debt discount and expense and the
excess of the purchase price over the net assets of businesses acquired
by the Company and its Subsidiaries.
"Effective Date": the date on or after the Signing Date on
--------------
which all of the conditions set forth in Section 5 shall have been met
or waived in writing by the Agent and the Banks.
"ERISA": the Employee Retirement Income Security Act of 1974,
-----
as amended, and any regulations promulgated thereunder.
3
"Eurodollar Business Day": a Business Day which is also a day
-----------------------
for trading by and between banks in United States dollar deposits in
the interbank Eurodollar market and a day on which banks are open for
business in New York City.
"Eurodollar Reserve Percentage": As of any day, that
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percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System, with deposits comparable in amount
to those held by the Bank, in respect of "Eurocurrency Liabilities" as
such term is defined in Regulation D of the Board. The rate of interest
applicable to any outstanding Eurodollar Rate Advances shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default": as such term is defined in Section 6.01
----------------
hereof.
"Existing Credit Agreement": as such term is defined in the
-------------------------
first recital clause hereto.
"Existing Note": as such term is defined in the first recital
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clause hereto.
"Federal Funds Effective Rate": for any period of
----------------------------
determination, a fluctuating interest rate per annum (based on a 360
day year) equal for each day during such period to the weighted average
of the rates of interest charged on overnight federal funds
transactions, with member banks of the Federal Reserve System only, as
reasonably determined by the Agent.
"FHA": the Federal Housing Administration and any successor
---
thereto.
"FHLMC": Xxxxxxx Mac and any successor thereto.
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"Fixed Adjusted Eurodollar Rate": with respect to each
------------------------------
Interest Period applicable to a Fixed Eurodollar Rate Advance, an
interest rate per annum (rounded upward, if necessary, to the next one
hundredth of one percent) determined by dividing the Fixed Eurodollar
Rate for such Interest Period by 1.00 minus the Eurodollar Reserve
Percentage.
"Fixed Eurodollar Rate": With respect to each Interest Period
---------------------
applicable to a Eurodollar Rate Advance, the average offered rate for
deposits in United States dollars (rounded upward, if necessary, to the
nearest 1/16 of 1%) for delivery of such deposits on the first day of
such Interest Period, for the number of days in such Interest Period,
which appears on the Telerate page 3750 as of 11:00 AM, London time (or
such other time as of which such rate appears) two Eurodollar Business
Days prior to the first day of such Interest Period, or the rate for
such deposits determined by the Bank at such time based on such other
published service of general application as shall be selected by the
Bank for such purpose; provided, that in lieu of determining the rate
in the foregoing manner, the Bank may determine the rate based on rates
at which United States dollar deposits are offered to the Bank in the
interbank Eurodollar market at such time for delivery in Immediately
Available Funds on the first day of such Interest Period in an amount
4
approximately equal to the Advance by the Bank to which such Interest
Period is to apply (rounded upward, if necessary, to the nearest 1/16
of 1%). "Telerate Page 3750" means the display designated as such on
the Telerate reporting system operated by Telerate System Incorporated
(or such other page as may replace page 3750 for the purpose of
displaying London interbank offered rates of major banks for United
States dollar deposits).
"Fixed Eurodollar Rate Advance": an Advance with respect to
-----------------------------
which the interest rate is determined by reference to the Fixed
Adjusted Eurodollar Rate.
"Fixed Rate": 1.25% per annum.
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"Fixed Rate Advance": an Advance which bears interest at the
------------------
Fixed Rate.
"Floating Adjusted Eurodollar Rate": on any date of
---------------------------------
determination with respect to any Floating Eurodollar Rate Advance, the
rate (rounded upward, if necessary, to the next higher one hundredth of
one percent) determined by dividing the Floating Eurodollar Rate for
such date by 1.00 minus the Eurodollar Reserve Percentage.
"Floating Eurodollar Rate": on any date of determination with
------------------------
respect to any Floating Eurodollar Rate Advance, the interest rate per
annum (rounded upward, if necessary, to the next one-sixteenth of one
percent) at which United States dollar deposits are offered to the
Agent in the interbank Eurodollar market for delivery in Immediately
Available Funds in the interbank Eurodollar market on such date and in
an amount approximately equal to such Floating Eurodollar Rate Advance
as determined by the Agent and for a maturity of one month; provided,
that in lieu of determining the rate in the foregoing manner, the Agent
may substitute the per annum Eurodollar rate (LIBOR) for United States
dollars which appears on the Telerate page 3750 as of 11:00 AM, London
time (or such other time as of which such rate appears), on the first
day of such one month period.
"Floating Eurodollar Rate Advance": an advance with respect
--------------------------------
to which the interest rate is determined by reference to the Floating
Adjusted Eurodollar Rate.
"FNMA": Xxxxxx Mae and any successor thereto.
----
"GAAP": generally accepted accounting principles set forth in
----
the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination.
"GNMA": the Government National Mortgage Association and any
----
successor thereto.
"Guarantees": any obligation, contingent or otherwise, of any
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Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any
5
other Person (the "primary obligor") in any manner, whether directly,
indirectly, by issuance of a letter of credit or otherwise, (i) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any direct or indirect security therefor, (ii) to
purchase property, securities, or services for the purpose of assuring
the owner of such Indebtedness of the payment of such Indebtedness,
(iii) to maintain working capital, equity capital, or other financial
statement condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or otherwise to protect the owner
thereof against loss in respect thereof, or (iv) entered into for the
purpose of assuring in any manner the owner of such Indebtedness of the
payment of such Indebtedness or to protect such owner against loss in
respect thereof; provided, that the term "Guarantee" shall not include
endorsements for collection or deposit, in each case in the ordinary
course of business.
"Immediately Available Funds": funds with good value on the
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day and in the city in which payment is received.
"Indebtedness": with respect to any Person at any time,
------------
without duplication, all obligations of such Person which, in
accordance with GAAP, consistently applied, should be classified as
liabilities on a consolidated balance sheet of such Person prepared in
accordance with GAAP, consistently applied, but in any event shall
include: (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations of such Person upon
which interest charges are customarily paid or accrued, (d) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred
purchase price of property or services, (f) all obligations of others
secured by any lien, mortgage, security interest or other encumbrance
on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all capitalized
lease obligations of such Person, (h) all obligations of any
partnership or joint venture as to which such Person is or may become
personally liable, and (i) all Guarantees by such Person of
Indebtedness of others.
"Intercompany Loans": at the time of any determination, the
------------------
aggregate principal amount of all loans and advances of the Company and
the Subsidiaries to, and Guarantees by the Company and the Subsidiaries
of the Indebtedness of, an Affiliate (other than the Company and the
Subsidiaries).
"Interest Period": (a) With respect to each Fixed Rate
---------------
Advance, the period commencing on the date of such Advance or on the
last day of the immediately preceding Interest Period, if any,
applicable to an outstanding Advance and ending on the last day of any
calendar month thereafter, as the Company may elect; provided, that any
Interest Period that would otherwise end after the Commitment Ending
Date shall end on the Commitment Ending Date.
(b) With respect to each Fixed Eurodollar Rate
Advance, the period commencing on the date of such Advance or
on the last day of the immediately
6
preceding Interest Period,
if any, applicable to an outstanding Advance and ending one,
two or three months thereafter, as the Company may elect in
the applicable notice of borrowing, continuation or
conversion; provided, that:
(1) Any Interest Period that would otherwise
end on a day which is not a Eurodollar Business Day
shall be extended to the next succeeding Eurodollar
Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case such
Interest Period shall end on the next preceding
Eurodollar Business Day;
(2) Any Interest Period that begins on the
last Eurodollar Business Day of a calendar month (or
a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest
Period) shall end on the last Eurodollar Business Day
of a calendar month; and
(3) Any Interest Period that would otherwise
end after the Commitment Ending Date shall end on the
Commitment Ending Date."
"Inventory/Pipeline Report": an inventory/pipeline position
-------------------------
report prepared each week showing with respect to each Take-Out
Commitment: the type, Investor type, expiration date, price, weighted
average commitment price, interest rate and/or required yield, the
original amount or aggregate thereof and the portions thereof that have
been utilized and the portions thereof that remain available, future
contracts, hedged positions, repurchase agreements and profit and loss,
indicating the number of Mortgage Loans owned by the Company, the
aggregate principal balance thereof and the warehouse and pipeline
balances (for purposes of this definition, "inventory" means Mortgage
Loans and Mortgage-backed Securities owned by the Company which have
been fully funded or with respect to which the Company has paid the
full purchase price and "pipeline" means the Mortgage Loans (or
applications for Mortgage Loans) as to which the Company has made firm
price quotes to purchase or fund but which have not been purchased or
funded by the Company).
"Investment": as applied to any Person, any direct or indirect
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purchase or other acquisition by that Person of, or a beneficial
interest in, stock or other securities of any other Person, or any
direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts and similar expenditures
in the ordinary course of business) or capital contribution by that
Person to any other Person, including all Indebtedness and accounts
receivable from that other Person which are not current assets or did
not arise from sales to that other Person in the ordinary course of
business, but excluding all operating bank accounts of such Person. The
amount of any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"Leverage Ratio": as of a date of determination, the ratio of
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(a) Total Indebtedness to (b) Adjusted Consolidated Tangible Net Worth.
7
"Lien": any security interest, mortgage, pledge, lien, charge,
----
encumbrance, title retention agreement or analogous instrument, in, of,
or on any of the assets or properties, now owned or hereafter acquired,
of the Company or any Subsidiary, whether arising by agreement or
operation of law.
"Loan" or "Loans": Warehousing Loans and Swingline Loans.
---- -----
"Loan Date": the date of the making of any Loan hereunder,
---------
which shall be a Business Day.
"Loan Documents": this Agreement, the Notes, the Security
--------------
Documents, the Side Letters and all other agreements, instruments,
certificates and other documents executed and delivered pursuant to or
in connection therewith, as the same may be supplemented, amended or
otherwise modified from time to time hereafter.
"Minimum Consolidated Tangible Net Worth": as of any date, an
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amount equal to $15,000,000.
"Mortgage": a mortgage or deed of trust on the fee interest
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in real property which has been improved by a completed single family
(i.e., one to four family units) dwelling unit (i.e., a detached house,
townhouse or condominium).
"Mortgage Loan": a Mortgage Note and the related Mortgage.
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"Mortgage Note": a promissory note which has a term not
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exceeding 30 years which is secured by a Mortgage.
"Mortgage-backed Security": a security (including, without
------------------------
limitation, a participation certificate) that is an interest in a pool
of Mortgage Loans or is secured by such an interest and is guaranteed
by GNMA or is issued or guaranteed by FNMA or FHLMC.
"Multiemployer Plan": as such term is defined in
------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the
Company or an ERISA Affiliate of the Company.
"Notes": as such term is defined in Section 2.04.
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"PBGC": the Pension Benefit Guaranty Corporation and any
----
successor thereto.
"Parent": M.D.C. Holdings, Inc., a Delaware corporation.
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"Percentage of the Aggregate Commitment Amount": at any time
---------------------------------------------
with respect to any Bank, the fraction (expressed as a percentage)
obtained by dividing such Bank's Commitment Amount by the Aggregate
Commitment Amount.
8
"Percentage of the Aggregate Outstandings": at any time with
----------------------------------------
respect to any Bank, the fraction (expressed as a percentage) obtained
by dividing the unpaid principal balance outstanding on such Bank's
Note by the Aggregate Outstandings.
"Person": any natural person, corporation, partnership, joint
------
venture, firm, association, trust, unincorporated organization,
government or governmental agency or political subdivision or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan": each employee benefit plan (whether now in existence
----
or hereafter instituted), as such term is defined in Section 3 of
ERISA, maintained for the benefit of employees, officers or directors
of the Company and any Subsidiary.
"Pledge and Security Agreement": the Second Amended and
-----------------------------
Restated Pledge and Security Agreement in the form of Exhibit C hereto,
as executed and delivered by the Company, the Banks, the Agent and the
Collateral Agent and as the same may be modified, amended, supplemented
or restated and in effect from time to time.
"Prime Rate": at the time of any determination thereof, the
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rate per annum which is most recently publicly announced by the Agent
as its "Prime Rate," which may be a rate at, above or below which the
Agent lends to other Persons. For purposes of determining any interest
rate hereunder or under the Notes that is based on the Prime Rate, such
interest rate shall change as and when the Prime Rate changes.
"Prime Rate Advance": an Advance with respect to which the
------------------
interest rate is determined by reference to the Prime Rate.
"Prohibited Transaction": the respective meanings assigned to
----------------------
such term in Section 4975 of the Code and Section 406of ERISA.
"Regulatory Change": with respect to any Bank, any change
-----------------
after the Signing Date in federal or state laws or regulations or the
adoption or making after such date of any interpretations, directives
or requests applying to a class of banks including such Bank under any
federal or state laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof.
"Reportable Event": a reportable event as defined in Section
----------------
4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, such events as to which the PBGC
by regulation has waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event.
"Required Banks": at any time of determination, Banks whose
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Percentages of the Aggregate Commitment total at least 70%; provided,
that if there is more than one Bank, the "Required Banks" shall not
consist of fewer than two Banks.
9
"Security Documents": the Pledge and Security Agreement, all
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agreements, instruments, documents and other papers creating,
evidencing or representing the Collateral and/or Security Interests
therein.
"Security Interest": each security interest, pledge, lien,
-----------------
hypothecation and other encumbrance now and hereafter granted by the
Company in favor of the Banks and the Agent in the Collateral.
"Servicing Portfolio": as of a date of determination, all
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Mortgage Loans owned by an investor and secured by a Mortgage serviced
by the Company for a fee, excluding (a) any Mortgage Loans held in
inventory by the Company and (b) any Mortgage Loans serviced by the
Company under a subservicing agreement.
"Servicing Portfolio Value": as of a date of determination,
-------------------------
an amount equal to one percent (1%) of the aggregate unpaid principal
balance of all Mortgage Loans included in the Servicing Portfolio.
"Side Letter": any written agreement relating to compensating
-----------
balances entered into between the Company and a Bank pursuant to
Section 2.08(b), and any written agreement relating to agent's fees
entered into between the Company and the Agent pursuant to Section
2.10.
"Signing Date": the date on which this Agreement is executed
------------
and delivered by the parties hereto.
"Subsidiary": any corporation or other entity of which
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securities or other ownership interests which have ordinary voting
power to elect a majority of the board of directors or other Persons
performing similar functions are at the time owned directly or
indirectly by the Company.
"Swingline Facility": the discretionary revolving credit
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facility provided by USBNA to the Company described in Section 2.01(b).
"Swingline Loan": a loan made by USBNA to the Company
--------------
pursuant to Section 2.01(b).
"Temporary Increase Termination Date": as such term is
-----------------------------------
defined in Section 8.05(c) hereof.
"Termination Date": as to any Bank, the earlier of (i) the
----------------
Commitment Ending Date applicable to such Bank's Commitment or (ii) the
date on which the Commitments terminate or are terminated pursuant to
Section 6.02 hereof.
"Total Indebtedness": all obligations, liabilities and
------------------
indebtedness of the Company and its Subsidiaries which in accordance
with GAAP should be included in determining total liabilities as shown
on the liabilities portion of a consolidated balance sheet of the
Company.
10
"Total Outstandings": As of the time of any determination
------------------
thereof, the sum of (a) Aggregate Outstandings at such time, (b) the
aggregate principal amount of Indebtedness of any Affiliate guaranteed
by the Company and outstanding at such time and (c) the aggregate
stated amount of any letters of credit issued by the Company to support
the obligations of Affiliates and outstanding at such time.
"Transferee": as such term is defined in Section 8.06 hereof.
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"Transferred Interest": as such term is defined in Section
--------------------
8.06 hereof.
"Unmatured Event of Default": any event which with the lapse
--------------------------
of time, or with notice to the Company and the lapse of time, would
constitute an Event of Default.
"USBNA": U.S. Bank National Association, a national banking
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association, its successors and assigns.
"VA": the Department of Veterans Affairs and any successor
--
thereto.
"Warehousing Loan": a loan or loans made by the Banks to the
----------------
Company pursuant to Section 2.01(a).
1.02 Terms. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP.
1.03 Computation of Time Periods. In this Agreement, in the computation
of a period of time from a specified date to a later specified date, unless
otherwise stated the word "from" means "from and including" and the word "to"
or "until" each means "to but excluding".
1.04 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section, schedule, exhibit and like references are to this
Agreement unless otherwise specified.
Section 2 TERMS OF LENDING.
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2.01 The Warehousing Facility and the Swingline Facility.
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(a) Warehousing Commitments. All "Loans" outstanding
-----------------------
under the Existing Credit Agreement shall constitute Loans outstanding
hereunder. Further, upon the terms and subject to the conditions of
this Agreement, each Bank agrees, severally but not jointly, to make
Loans to the Company on a revolving basis at any time and from time to
time from the Effective Date to the Termination Date, during which
period the Company may borrow, repay and reborrow in accordance with
the provisions hereof at such times and in such amounts as the Company
shall request, up to an aggregate principal amount at any time
outstanding equal to such Bank's Commitment Amount, subject to the
following limitations:
11
(i) the aggregate principal amount of Loans at
any time outstanding shall not exceed the sum of the
Commitment Amounts of all the Banks; and
(ii) the aggregate principal amount of Loans at
any time outstanding shall not exceed the Borrowing Base, as
determined by the Agent from its records.
No Bank shall be obligated to make Warehousing Loans if, after giving
effect thereto, either of the foregoing limitations would be exceeded.
The failure of any one or more of the Banks to make a Warehousing Loan
in accordance with its Commitment shall not relieve the other Banks of
their several obligations hereunder, but no Bank shall be liable with
respect to the obligation of any other Bank hereunder or be obligated
in any event to make Warehousing Loans which, together with its pro
rata share of outstanding Swingline Loans, would exceed its Commitment
Amount.
(b) Discretionary Swingline Facility. Upon the terms
--------------------------------
and subject to the conditions of this Agreement, until the Termination
Date, USBNA, in its sole discretion, may lend to the Company loans
(each such loan, a "Swingline Loan") at such times and in such amounts
as the Company shall request, up to an aggregate principal amount at
any time outstanding equal to the amount by which USBNA's Commitment
Amount exceeds the principal amount outstanding under USBNA's Note;
provided, that USBNA will not make a Swingline Loan if (i) after giving
effect thereto, either of the limitations set forth in Section 2.01(a)
would be exceeded or (ii) USBNA has received written notice from the
Company or any Bank that one or more of the conditions precedent set
forth in Section 5 for the making of a Warehousing Loan have not been
satisfied.
Loans may be obtained and maintained, at the election of the Company
and subject to the terms and conditions hereinafter set forth, as Prime
Rate Advances, Fixed Rate Advances (subject, however, to Section
2.08(b)), Fixed Eurodollar Rate Advances and Floating Eurodollar Rate
Advances, or any combination thereof.
2.02 Manner of Borrowing.
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(a) Warehousing Loans. The Company shall give the Agent
-----------------
telephonic notice of each request for Warehousing Loans not later than
12:00 noon (Minneapolis time) two Eurodollar Business Days prior to the
requested Loan Date, in the case of Warehousing Loans which are to be
made as Fixed Eurodollar Rate Advances, and not later than 12:00 noon
(Minneapolis time) on the requested Loan Date, in the case of
Warehousing Loans to be made in any other form of Advance.
(b) Swingline Loans. The Company shall give USBNA
---------------
telephonic notice of each request for Swingline Loans not later than
3:00 p.m. (Minneapolis time) on the requested Loan Date.
Each request for Warehousing Loans or Swingline Loans shall specify (a)
the Loan Date for such Loans, (b) whether such Loan is to be made as a
Prime Rate Advance, a Fixed Rate Advance (subject, however, to Section
2.08(b)), a Fixed Eurodollar Rate Advance and/or a Floating Eurodollar
Rate Advance, (c) the amount of each such Advance (which
12
amount shall not be less than $100,000) and (d) in the case of a Fixed
Rate Advance or a Fixed Eurodollar Rate Advance, the Interest Period
therefor, and shall promptly confirm any such request by delivering to
the Agent a duly completed and executed Confirmation of
Borrowing/Paydown.
The Agent shall notify each Bank by not later than 2:00 p.m.
(Minneapolis time) on the date it receives such request of each request
for Warehousing Loans received from the Company, of the type and amount
of Warehousing Loans to be made by such Bank and, in the case of Fixed
Rate Advances and Fixed Eurodollar Rate Advances, the applicable
Interest Period. Each Bank shall deposit into the Collateral Account in
Immediately Available Funds by not later than 3:00 p.m. (Minneapolis
time) on the Loan Date the total amount of the Warehousing Loans to be
made by such Bank. On the Loan Date of requested Swingline Loans, USBNA
may deposit into the Collateral Account in Immediately Available Funds
by not later than 4:00 p.m. (Minneapolis time) on the requested Loan
Date the amount of the requested Swingline Loans. Unless the Agent
shall have received notice from a Bank prior to 3:00 p.m. (Minneapolis
time) on any Loan Date that such Bank will not make available to the
Agent the Warehousing Loans to be made by such Bank on such date, the
Agent may assume that such Bank has made such Warehousing Loan
available to the Agent on such date and the Agent in its sole
discretion may, in reliance upon such assumption, make available to the
Company on such date a corresponding amount on behalf of such Bank. If
a Bank shall not have timely given such a notice, and to the extent
such Bank shall not have so made available to the Agent the Warehousing
Loans to be made by such Bank on such date and the Agent shall have so
made available to the Company a corresponding amount on behalf of such
Bank, such Bank shall, on demand, pay to the Agent such corresponding
amount together with interest thereon, at the Federal Funds Effective
Rate, for each day from the date such amount shall have been so made
available by the Agent to the Company until the date such amount shall
have been repaid to the Agent. If such Bank does not pay such
corresponding amount promptly upon the Agent's demand therefor, the
Agent shall promptly notify the Company and the Company shall
immediately repay such corresponding amount to the Agent together with
accrued interest thereon at the applicable rate or rates provided in
Section 2.08. Each request for Warehousing Loans or Swingline Loans
shall be deemed to be a representation by the Company that (i) no Event
of Default or Unmatured Event of Default has occurred or will exist
upon the making of the requested Warehousing Loans and (ii) the
representations and warranties contained in Section 3 hereof and in
Section 5 of the Pledge and Security Agreement are true and correct
with the same force and effect as if made on and as of the date of such
request.
2.03 Refinancing of Swingline Loans.
------------------------------
(a) Permitted Refinancings of Swingline Loans. USBNA, at
-----------------------------------------
any time in its sole and absolute discretion, may, upon notice given to
each other Bank by not later than 2:00 p.m. (Minneapolis time) on any
Business Day, request that each Bank (including USBNA) make a
Warehousing Loan in an amount equal to its pro rata share of a portion
of the aggregate unpaid principal amount of any outstanding Swingline
Loans for the purpose of refinancing such Swingline Loans. Such
Warehousing Loans shall be made as Floating Eurodollar Rate Advances,
unless the Company specifies otherwise.
13
(b) Mandatory Refinancings of Swingline Loans. Not later
-----------------------------------------
than 2:00 p.m. (Minneapolis time) at least on a weekly basis, USBNA
will notify each other Bank of the aggregate amount of Swingline Loans
which are then outstanding and the amount of Warehousing Loans required
to be made by each Bank (including USBNA) to refinance such outstanding
Swingline Loans (which shall be in the amount of each Bank's pro rata
share of such outstanding Swingline Loans). Such Warehousing Loans
shall be made as Floating Eurodollar Rate Advances, unless the Company
specifies otherwise.
(c) Banks' Obligation to Fund Refinancings of Swingline
---------------------------------------------------
Loans. Upon the giving of notice by USBNA under Section 2.03(a) or
-----
2.03(b), each Bank (including USBNA) shall make a Warehousing Loan in
an amount equal to its pro rata share of the aggregate principal amount
of Swingline Loans to be refinanced, and provide proceeds of such
Warehousing Loans, in Immediately Available Funds, by not later than
2:00 p.m. (Minneapolis time) on the date such notice was received;
provided, however, that a Bank shall not be obligated to make any such
Warehousing Loan unless (A) USBNA believed in good faith that all
conditions to making the subject Swingline Loan were satisfied at the
time such Swingline Loan was made, or (B) if the conditions to such
Swingline Loan were not satisfied, such Bank had actual knowledge, by
receipt of the statements furnished to it pursuant to Section 3.01 or
otherwise, that any such condition had not been satisfied and failed to
notify USBNA in a writing received by USBNA prior to the time it made
such Swingline Loan that USBNA was not authorized to make a Swingline
Loan until such condition had been satisfied, or USBNA was obligated to
give notice of the occurrence of an Event of Default or an Unmatured
Event of Default to the Banks pursuant to Section 6.01 and failed to do
so, or (C) any conditions to the making of such Swingline Loan that
were not satisfied had been waived in writing by the Required Banks
prior to or at the time such Swingline Loan was made. The proceeds of
Warehousing Loans made pursuant to the preceding sentence shall be paid
to USBNA (and not to the Company) and applied to the payment of
principal of the outstanding Swingline Loans, and the Company
authorizes the Agent to charge the Collateral Account or any other
account (other than escrow or custodial accounts) maintained by the
Company with the Agent (up to the amount available therein) in order to
immediately pay USBNA the principal amount of such Swingline Loans to
the extent Warehousing Loans made by the Banks are not sufficient to
repay in full the principal of the outstanding Swingline Loans
requested or required to be refinanced. Upon the making of a
Warehousing Loan by a Bank pursuant to this Section 2.03(c), the amount
so funded shall become due under such Bank's Note and the outstanding
principal amount of the Swingline Loans shall be correspondingly
reduced. If any portion of any Warehousing Loan made by the Banks
pursuant to this Section 2.03(c) should be recovered by or on behalf of
the Company from USBNA in bankruptcy or otherwise, the loss of the
amount so recovered shall be ratably shared among all the Banks in the
manner contemplated by Section 7.11. Each Bank's obligation to make
Warehousing Loans referred to in this Section 2.03(c) shall, subject to
the proviso to the first sentence of this Section 2.03(c), be absolute
and unconditional and shall not be affected by any circumstance,
including, without limitation, (1) any setoff, counterclaim,
recoupment, defense or other right which such Bank may have against
USBNA, the Company or anyone else for any reason whatsoever; (2) the
occurrence or continuance of a Default or an Event of Default; (3) any
adverse change in the condition (financial or otherwise) of the
Company; (4) any breach of this
14
Agreement by the Company, the Agent or any Bank; or (5) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided, that in no event shall a Bank be
obligated to make a Warehousing Loan if, after giving effect thereto,
the outstanding principal balance of such Bank's Note would exceed its
Commitment Amount.
2.04 Notes. Warehousing Loans made by each Bank shall be evidenced
-----
by the Company's promissory note in the form of Schedule 2.04 (each, together
with any promissory note subsequently executed and delivered by the Company to
evidence any Bank's Loans, a "Note"), which shall be made payable to the order
of such Bank in an amount equal to such Bank's Commitment Amount, shall be dated
the Effective Date and shall mature on the Termination Date. USBNA's Note shall
also evidence the Swingline Loans made by it hereunder. The aggregate amount of
the Warehousing Loans made by a Bank and, in the case of USBNA, Swingline Loans,
less all repayments of principal thereof shall be the principal amount owing and
unpaid on such Bank's Note. The principal amount of each Loan made by a Bank and
all principal payments and prepayments thereof may be noted by such Bank on a
schedule attached to its Note and shall be entered by such Bank on its ledgers
and computer records. The failure of any Bank to make such notations or entries
shall not affect the principal amount owing and unpaid on its Note. The entries
made by a Bank on its ledgers and computer records and any notations made by a
Bank on any such schedule annexed to its Note shall be presumed to be accurate
until the contrary is established.
2.05 Payment and Prepayment of Warehousing Loans and Swingline
---------------------------------------------------------
Loans. The Company shall pay the principal of the Warehousing Loans and
-----
Swingline Loans as follows:
(a) Mandatory Payments. The entire unpaid principal
------------------
balance of each Bank's Note shall be due and payable on the Termination
Date.
(b) Mandatory Prepayments. If, at any time, the aggregate
---------------------
principal amount of all Loans outstanding exceeds the Borrowing Base,
the Company shall immediately either (A) pledge additional Mortgage
Loans with a Collateral Value not less than the amount of such excess
to the Agent for the benefit of the Banks pursuant to the Pledge and
Security Agreement, or (B) make principal prepayments of the Notes in
an aggregate amount equal to the amount of such excess, which amount
shall be paid to the Agent and distributed (y) first, to USBNA as a
prepayment on the outstanding principal balance of any Swingline Loans
and (z) after repayment in full of any Swingline Loans, to the Banks
ratably on the basis of each Bank's pro rata share. In addition, all
Swingline Loans shall also be prepayable on demand therefor by USBNA as
provided pursuant to Section 2.03(c).
(c) Optional Prepayments. The Company shall have the
--------------------
right to prepay, without penalty, the outstanding principal balance of
the Notes in whole or in part at any time and from time to time, each
such principal prepayment to be paid to the Agent and distributed (A)
first, to USBNA as a prepayment on the outstanding principal balance of
any Swingline Loans and (B) after repayment in full of any Swingline
Loans, to the Banks ratably on the basis of each Bank's pro rata share.
15
(d) Confirmation. The Company shall promptly send the
------------
Agent a Confirmation of Borrowing/Paydown confirming any payment or
prepayment of principal made on the Notes.
2.06 Use of Proceeds. Except as otherwise provided in Section
---------------
2.03(c)with respect to refinancing Swingline Loans, the proceeds of the
Swingline Loans and the Warehousing Loans shall be used to make, originate or
acquire Mortgage Loans, to finance Mortgage Loans previously made, originated or
acquired or, in the case of Warehousing Loans made on the Effective Date, to
repay in full the Existing Warehousing Loans.
2.07 Conversions and Continuations. On the terms and subject to the
-----------------------------
limitations hereof, the Company shall have the option at any time and from time
to time to convert all or any portion of the Warehousing Loans or Swingline
Loans into Prime Rate Advances, Fixed Rate Advances (subject, however, to
Section 2.08(b)), Fixed Eurodollar Rate Advances or Floating Eurodollar Rate
Advances , or to continue a Fixed Rate Advance or a Fixed Eurodollar Rate
Advance as such; provided, however that a Fixed Rate Advance or a Fixed
Eurodollar Rate Advance may be converted or continued only on the last day of
the Interest Period applicable thereto and no Advance may be converted or
continued as a Fixed Eurodollar Rate Advance if an Event of Default or Unmatured
Event of Default has occurred and is continuing on the proposed date of
continuation or conversion; and provided, further, that no more than three (3)
Fixed Eurodollar Rate Advances shall be outstanding under any Bank's Note at any
time. Advances may be converted or continued only in amounts of $100,000 or
more. The Company shall give the Agent and the Banks written notice of any
continuation or conversion of any Advance and such notice must be given so as to
be received by the Agent and the Banks not later than 12:00 noon (Minneapolis
time) two Eurodollar Business Days prior to the date of such continuation or
conversion, in the case of continuation of, or conversion to, a Fixed Eurodollar
Rate Advance, and not later than 12:00 noon (Minneapolis time) on the date of
such continuation or conversion, in the case of continuation of, or conversion
to, any other type of Advance. Each such notice shall specify (a) the amount to
be continued or converted, (b) the date for the continuation or conversion
(which must be (i) the last day of the preceding Interest Period for any
continuation or conversion of Fixed Rate Advances or Fixed Eurodollar Rate
Advances and (ii) a Business Day, in the case of Fixed Rate Advances, and a
Eurodollar Business Day, in the case of Fixed Eurodollar Rate Advances), and (c)
in the case of conversions to or continuations as Fixed Rate Advances or Fixed
Eurodollar Rate Advances, the Interest Period applicable thereto. Any notice
given by the Company under this Section shall be irrevocable. If the Company
shall fail to notify the Agent and the Banks of the continuation of any Fixed
Rate Advance or Fixed Eurodollar Rate Advance or of the conversion of a Fixed
Rate Advance to a Eurodollar Rate Advance or vice versa within the time required
by this Section, such Advance shall, on the last day of the Interest Period
applicable thereto, automatically be converted into a Prime Rate Advance of the
same principal amount.
2.08 Interest Rates; Default Interest; Interest Payment Dates.
--------------------------------------------------------
Interest shall accrue and be payable as follows:
(a) Each Prime Rate Advance shall bear interest on the
unpaid principal amount thereof at a floating rate per annum equal to
the Prime Rate.
16
(b) Each Fixed Rate Advance shall bear interest on the
unpaid principal amount thereof at a rate per annum equal to the Fixed
Rate; provided, however, that Fixed Rate Advances shall not be made by
a Bank unless the Company and such Bank shall have entered into a
written agreement ("Side Letter") which provides for the making of
Fixed Rate Advances, which Side Letter may contain provisions relating
to the maintenance of compensating balances and/or the effect of
failure to maintain such compensating balances (including the payment
of additional interest or deficiency fees).
(c) Each Fixed Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof during the Interest
Period applicable thereto at a rate per annum equal to the sum of (i)
the Fixed Adjusted Eurodollar Rate for such Interest Period, plus (ii)
the Applicable Margin
(d) Each Floating Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof at a floating rate per
annum equal to the sum of (i) the Floating Adjusted Eurodollar Rate,
plus (ii) the Applicable Margin.
(e) Effective upon notice from the Agent, at the
direction of the Required Banks, whenever any Event of Default shall
have occurred and be continuing (whether or not the maturity of the
Notes shall have been accelerated), interest shall accrue on each
Advance until such Event of Default shall have been cured to the
written satisfaction of the Required Banks or, if such Event of Default
consists of the Company's failure to pay the Agent or any Bank any
amount owing under any Loan Document, until such amount shall have been
paid in full, (i) with respect to any Fixed Rate Advance or Fixed
Eurodollar Rate Advance, during the balance of any Interest Period
applicable to such Advance, at a rate per annum equal to the sum of the
rate applicable to such Advance during such Interest Period plus 2.0%
per annum, (ii) with respect to any Floating Eurodollar Rate Advance,
at a rate per annum equal to the sum of (A) the Floating Adjusted
Eurodollar Rate applicable to such Advance, plus (B) the Applicable
Margin, plus (C) 2% per annum, and (iii) otherwise, at a rate per annum
equal to the sum of the Prime Rate, plus 2.0% per annum.
(f) Interest shall be payable in arrears on the fifth
Business Day of each month and on the Termination Date; provided that
interest under Section 2.08(e) shall be payable on demand.
2.09 Facility Fees. The Company shall pay each Bank a facility fee for
-------------
the period beginning on the Signing Date and ending on the Termination Date at a
per annum rate of one-fourth of one percent (0.25%) on such Bank's Commitment
Amount, payable for each month in arrears on the first Business Day of the
following month and on the Termination Date.
2.10 Agent's Fees. The Company shall pay to the Agent, agent's fees at
------------
such times and in such amounts as may be agreed upon from time to time in a
written agreement ("Side Letter") between the Company and the Agent.
2.11 Payments and Computations.
-------------------------
17
(a) Payment of Principal, Fees and Expenses. All
---------------------------------------
payments and prepayments by the Company of principal on the Notes and
all fees, expenses and other obligations payable to the Banks under
this Agreement (other than interest and fees payable on the Notes and
additional interest or deficiency fees payable under any Side Letter
entered into pursuant to Section 2.08(b), which shall be payable in
accordance with Section 2.11(b)) shall be paid in Immediately Available
Funds not later than 12:00 noon (Minneapolis time) on the dates called
for under this Agreement at the main office of the Agent in
Minneapolis, Minnesota. Funds received after such hour shall be deemed
to have been received by the Banks on the next Business Day. The
Company irrevocably authorizes the Agent to charge the Collateral
Account in an amount equal to any such payment or permitted prepayment
of principal or any such fees, expenses or other obligations, as the
case may be, which are due and payable.
(b) Payment of Interest and Deficiency Fees. All
---------------------------------------
payments of interest on the Notes and all additional interest or
deficiency fees payable to a Bank under any Side Letter entered into
pursuant to Section 2.08(b) shall be billed to the Company by each Bank
with respect to its Notes and shall be paid by the Company, (i) prior
to the occurrence of an Event of Default, directly to each such Bank,
and (ii) upon and during the continuance of an Event of Default, to the
Agent, in either case by not later than 1:00 p.m. (Minneapolis time) on
the dates called for under this Agreement at the respective offices of
the Banks or the Agent, as the case may be, designated on the signature
pages of this Agreement. The Company irrevocably authorizes the Agent
and each Bank to charge the Collateral Account or any other demand
account of the Company maintained with the Agent or such Bank (other
than an account of the Company with such Bank which the Company holds
in escrow or in trust for the benefit of other Persons) in an amount
equal to any such payment of interest, additional interest or
deficiency fees, as the case may be, which are due and payable.
(c) Computations. Fees and interest on the Notes shall
------------
be computed on the basis of actual days elapsed and a year of 360 days.
2.12 Setoff. Whenever an Event of Default shall have occurred and be
------
continuing, the Company hereby irrevocably authorizes each Bank to set off the
Indebtedness of the Company to such Bank under this Agreement (including any
Indebtedness owing under any Side Letter), the Notes and the other Loan
Documents against all deposits and credits of the Company with, and any and all
claims of the Company against, such Bank (excluding deposits of the Company with
such Bank which the Company holds in escrow or in trust for the benefit of other
Persons), whether or not said Indebtedness of the Company to such Bank, or any
part thereof, shall be then due.
2.13 Collateral. To secure the payment of Aggregate Outstandings and
----------
all other liabilities of the Company under any Loan Document, the Company from
time to time shall grant to the Agent and the Banks a Security Interest in such
of its Mortgage Loans, Mortgage-backed Securities and other assets as the
Company shall select. All Collateral shall be subject to, and be governed by,
the terms and conditions of the Pledge and Security Agreement.
18
If no Event of Default or Unmatured Event of Default has occurred and
is continuing, the Agent and the Banks, at the request of the Company, shall
release their Security Interest in any item of Collateral; provided, that after
giving effect to any such requested release, the Borrowing Base (including that
attributable to any Collateral given in substitution of the Collateral requested
to be released) shall not be less than the Total Outstandings.
2.14 Termination of Commitments; Reduction of Commitment Amounts.
-----------------------------------------------------------
(a) Termination. The Company and each Bank shall have
-----------
the right, prior to any termination of the Commitments pursuant to
Section 6.02, to terminate, with respect to the Company, any
Commitment, and with respect to a Bank, its Commitment, by giving the
Agent notice in writing, specifying the date on which the applicable
Commitment is to terminate (as to such Commitment, the "Commitment
Ending Date"), which Commitment Ending Date shall be no less than 120
days after the Agent gives notice as set forth in the following
sentence. The Agent shall give telephonic notice (confirmed in writing)
to each Bank of the Agent's receipt of a notice of termination of a
Commitment or Commitments given by the Company by not later than the
Agent's close of business on the third Business Day following the date
of receipt of such notice by the Agent and shall give telephonic notice
(confirmed in writing) to the Company and each other Bank of the
Agent's receipt of a notice of termination by a Bank of its Commitment
by not later than the Agent's close of business on the third Business
Day following the date of receipt of such notice by the Agent. After
receipt from the Agent of a party's termination of a Commitment or
Commitments, each other party hereto who has not initially given notice
of termination may, in the case of a Bank, terminate its Commitment,
and, in the case of the Company, terminate a Commitment or Commitments,
by giving the Agent telephonic notice (promptly confirmed in writing)
of such termination, specifying the applicable Commitment Ending Date
(which may be any date on or after the Commitment Ending Date specified
by the party which gave the initial notice of termination pursuant to
the preceding sentence), within four Business Days after receipt by
such party of notice from the Agent of the Agent's receipt of the
initial notice of termination pursuant to the preceding sentence.
Notwithstanding the foregoing, any termination of the Commitments
pursuant to Section 6.02 hereof shall supersede any notice of
termination under this Section 2.14(a).
(b) Reduction. The Company shall have the right at any
time upon at least seven days prior written notice to the Agent and the
Banks to reduce the Commitment Amounts; provided, that the aggregate
amount of each such reduction in the Commitment Amounts shall be in a
minimum amount of $1,000,000 or an integral multiple in excess thereof
for each Bank's Commitment and shall be apportioned among the Bank's
Commitments in accordance with their respective Percentage of the
Aggregate Commitment Amounts; and provided, further, that no such
reduction shall reduce the Aggregate Commitment Amount to less than
Aggregate Outstandings.
(c) Effect. Once the Commitments have been terminated
------
pursuant to Section 6.02 or the Commitment Amounts have been reduced,
they may not be reinstated.
19
2.15 Interest Rate Not Ascertainable, Etc. If, on or prior to the date
------------------------------------
for determining the Fixed Adjusted Eurodollar Rate in respect of the Interest
Period for any requested Fixed Eurodollar Rate Advance, a Bank determines (which
determination shall be conclusive and binding, absent manifest error) that:
(a) deposits in dollars (in the applicable amount) are
not being made available to such Bank in the relevant market for such
Interest Period, or
(b) the Fixed Adjusted Eurodollar Rate, as the case may
be, will not adequately and fairly reflect the cost to such Bank of
funding or maintaining Fixed Eurodollar Rate Advances, as the case may
be, for such Interest Period, such Bank shall forthwith give notice to
the Company and the Agent of such determination, whereupon the
obligation of such Bank to make or continue, or to convert any Advances
to, Fixed Eurodollar Rate Advances, as the case may be, shall be
suspended until such Bank notifies the Company and the Agent that the
circumstances giving rise to such suspension no longer exist. No such
suspension shall affect the interest rate then in effect during the
applicable Interest Period for any Fixed Eurodollar Rate Advance
outstanding at the time such suspension is imposed.
2.16 Increased Cost. If any Regulatory Change:
--------------
(a) shall subject a Bank to any tax, duty or other charge
with respect to Fixed Eurodollar Rate Advances, the Note payable to
such Bank to the extent it evidences Fixed Eurodollar Rate Advances, or
its obligation to make Fixed Eurodollar Rate Advances, or shall change
the basis of taxation of payment to such Bank of the principal of or
interest on Fixed Eurodollar Rate Advances or any other amounts due
under this Agreement in respect of Fixed Eurodollar Rate Advances or
its obligation to make Fixed Eurodollar Rate Advances (except for
changes in the rate of tax on the overall net income of such Bank
imposed by the laws of the United States or any jurisdiction in which
such Bank's principal office is located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement (including
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Fixed Eurodollar Rate
Advance any such requirement to the extent included in calculating the
applicable Fixed Adjusted Eurodollar Rate, as the case may be) against
assets of, deposits with or for the account of, or credit extended by,
such Bank or shall impose on such Bank or on the United States market
for certificates of deposit any other condition affecting Fixed
Eurodollar Rate Advances, its Note or its obligation to make Fixed
Eurodollar Rate Advances;
and the result of any of the foregoing is to increase the cost to such
Bank of making or maintaining any Fixed Eurodollar Rate Advance, or to
reduce the amount of any sum received or receivable by such Bank under
this Agreement or under its Note, then, within 30 days after demand by
such Bank, the Company shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost or
reduction. Such Bank will promptly notify the Company of any event of
which it has knowledge,
20
occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section. A certificate of such Bank
claiming compensation under this Section, setting forth the additional
amount or amounts to be paid to it hereunder and stating in reasonable
detail the basis for the charge and the method of computation, shall be
conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution
methods. Failure on the part of such Bank to demand compensation for
any increased costs or reduction in amounts received or receivable with
respect to any Interest Period shall not constitute a waiver of such
Bank's rights to demand compensation for any increased costs or
reduction in amounts received or receivable in any subsequent Interest
Period.
2.17 Illegality. If any Regulatory Change shall make it unlawful or
----------
impossible for a Bank to make, maintain or fund Fixed Eurodollar Rate Advances,
such Bank shall notify the Company, whereupon the obligation of such Bank to
make Fixed Eurodollar Rate Advances, as the case may be, shall be suspended
until such Bank notifies the Company that the circumstances giving rise to such
suspension no longer exist. If such Bank determines that it may not lawfully
continue to maintain any outstanding Fixed Eurodollar Rate Advances to the end
of the applicable Interest Periods, all of the affected Advances shall be
automatically converted to Prime Rate Advances as of the date of such Bank's
notice, and upon such conversion the Company shall indemnify such Bank in
accordance with Section 2.19.
2.18 Capital Adequacy. In the event that any Regulatory Change reduces
----------------
or shall have the effect of reducing the rate of return (by an amount such Bank
deems material) on the capital of a Bank or on the capital of such Bank's parent
corporation as a consequence of such Bank's Commitment and/or the Loans made by
such Bank to a level below that which the Bank or its parent could have achieved
but for such Regulatory Change (taking into account the policies of such Bank
and its parent corporation with respect to capital adequacy), then the Company
shall, within 30 days after written notice and demand from such Bank, pay to
such Bank additional amounts sufficient to compensate such Bank or its parent
corporation for such reduction; provided, however, that the Company shall not be
obligated to pay any such amount or amounts (i) unless such Bank shall have
first notified the Company in writing that it intends to seek compensation from
the Company pursuant to this sentence, and (ii) which are attributable to
periods exceeding 180 days prior to the date of receipt by the Company of such
notice. A certificate as to the amount of any such reduction (including
calculations in reasonable detail showing how such Bank computed such reduction
and a statement that the Bank has not allocated to its Commitment or its
outstanding Advances a proportionately greater amount of such reduction than is
attributable to each of its other commitments to lend or to each of its other
outstanding credit extensions that are affected similarly by such compliance by
such Bank, whether or not such Bank allocates any portion of such reduction to
such other commitments or credit extensions) shall be furnished promptly by such
Bank to the Company. Any determination by a Bank under this Section and any
certificate as to the amount of such reduction given to the Company by such Bank
shall be final, conclusive and binding for all purposes, absent manifest error.
2.19 Funding Losses. Upon the written request of a Bank, the Company
--------------
shall compensate such Bank for all losses, expenses and liabilities (including
any interest paid by such Bank to lenders of funds borrowed by it to make or
carry Fixed Eurodollar Rate Advances to the
21
extent not recovered by such Bank in connection with the re-employment of such
funds and including loss of anticipated profits) which such Bank may sustain:
(a) if for any reason, other than a default by such Bank, a funding of a Fixed
Eurodollar Rate Advance does not occur on the date specified therefor in the
Company's request or notice as to such Advance under Section 2.02 or 2.05, or
(b) if, for whatever reason (including acceleration of the maturity of such
Bank's Note following an Event of Default), any repayment of a Fixed Eurodollar
Rate Advance, or a conversion pursuant to Section 2.07, occurs on any day other
than the last day of the Interest Period applicable thereto. The Bank's request
for compensation shall set forth the basis for the amount requested and shall be
final, conclusive and binding, absent manifest error.
2.20 Discretion of Banks as to Manner of Funding. Each Bank shall be
-------------------------------------------
entitled to fund and maintain its funding of Fixed Eurodollar Rate Advances in
any manner it may elect, it being understood, however, that for the purposes of
this Agreement all determinations hereunder (including determinations under
Section 2.19) shall be made as if the Bank had actually funded and maintained
each Fixed Eurodollar Rate Advance during the Interest Period for such Advance
through the issuance of its certificates of deposit, or the purchase of
deposits, having a maturity corresponding to the last day of the Interest
Period.
Section 3 REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce the Banks to grant the Commitments, the Company represents
and warrants that:
3.01 Corporate Existence. The Company is a corporation duly organized
-------------------
and validly existing in good standing under the laws of the State of Colorado,
has the requisite power to own its properties and to carry on its business as
now being conducted, and is duly qualified and authorized to do business in each
jurisdiction in which the nature of its business or properties makes such
qualification necessary.
3.02 Corporate Power and Authority. The Company has full power and
-----------------------------
authority (corporate and other) to enter into this Agreement, to make the
borrowings herein contemplated, to execute and deliver the Notes and the other
Loan Documents and to perform its obligations hereunder and thereunder, all of
which have been duly authorized by all proper and necessary corporate action and
will not contravene or conflict with any provision of any law or regulation or
of the Articles of Incorporation or bylaws of the Company or any agreement to
which the Company is a party or which is binding upon it or its properties; this
Agreement is, and the Notes, the Side Letters and the other Loan Documents, when
delivered for value, will be the valid and binding obligations of the Company,
enforceable in accordance with their respective terms (subject to limitations as
to enforceability which might result from bankruptcy, reorganization,
arrangement, insolvency or other similar laws affecting creditors' rights
generally).
3.03 Subsidiaries. Schedule 3.03 hereto correctly sets forth as to
------------
each Subsidiary its name, the jurisdiction of its incorporation, the name of its
immediate parent and the percentage of its capital stock that is directly or
indirectly owned by the Company. Each such Subsidiary is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation, has the requisite power to own its properties
and to carry on its
22
business as now being conducted, and is duly qualified and authorized to do
business in each jurisdiction in which the nature of its business or properties
makes such qualification necessary.
3.04 Financial Condition. The Company's audited consolidated financial
-------------------
statements as at December 31, 2001, and its unaudited financial statements as at
June 30, 2002, copies of which have been furnished to the Banks, have been
prepared in conformity with GAAP applied on a basis consistent with that of the
preceding fiscal year and present fairly the consolidated financial condition of
the Company and its Subsidiaries as at such dates and the results of their
operations for the periods then ended and there has been no material adverse
change in said consolidated financial condition except as disclosed in Schedule
3.04 hereto. Neither the Company nor any Subsidiary has any contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate, except as described in such statements or
Schedule 3.04 hereto.
3.05 Properties. The Company and each Subsidiary has good and
----------
marketable title to all of its properties and assets and, with the exception of
properties acquired by foreclosure or by deed in lieu of foreclosure, none of
the assets of the Company and its Subsidiaries is subject to any Lien, except
for those permitted by Section 4.08 hereof.
3.06 Litigation. No litigation, tax claim, proceeding, dispute or
----------
governmental proceeding is pending or, to its knowledge, threatened against the
Company which (a) involves an uninsured claim of over $500,000 against the
Company, or (b) may have a material adverse effect on the business or condition
(financial or other), affairs or operations of the Company except those referred
to in Schedule 3.06 hereto.
3.07 Regulations U and X. No part of the proceeds of the borrowings
-------------------
hereunder will be used to purchase or carry any margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any margin
stock, and the Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purposes of purchasing
or carrying any such margin stock. If requested by the Agent or any Bank, the
Company will furnish the Agent or such Bank with a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation. The
Company also warrants that no part of the proceeds of the borrowing hereunder
will be used by it for any purpose which violates, or which is inconsistent
with, the provisions of Regulation X of said Board of Governors.
3.08 Investment Company Act. The Company 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.
3.09 Securities Acts. The Company has not issued any unregistered
---------------
securities in violation of the registration requirements of Section 5 of the
Securities Act of 1933, as amended, or any other law, and is not violating any
rule, regulation or requirement under the Securities Act of 1933, as amended, or
the Securities and Exchange Act of 1934, as amended. The Company is not required
to qualify an indenture under the Trust Indenture Act of 1939, as amended, in
connection with its execution and delivery of the Notes.
23
3.10 Other Governmental Regulation. Neither the Company nor any of the
-----------------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or the Interstate Commerce Act or to any
Federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed.
3.11 Consents, etc. No consent, approval, authorization of, or
-------------
registration, declaration or filing with any governmental authority (except for
a disclosure the Parent may make in periodic securities filings) is required on
the part of the Company in connection with the execution and delivery of this
Agreement, the Notes, the Side Letters or the Security Documents (other than
filings to perfect the Security Interest) or the performance of or compliance
with the terms, provisions and conditions hereof.
3.12 ERISA. No fact or circumstance, including but not limited to any
-----
Reportable Event, exists in connection with any Plan of the Company which is
guaranteed by PBGC which might constitute grounds for the termination of any
such Plan by PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan. The Company has no
knowledge of any event which could result in a liability of the Company or any
Affiliate or Subsidiary to PBGC. For purposes of this representation and
warranty, the Company shall be deemed to have knowledge of all facts
attributable to the Plan administrator designated pursuant to ERISA.
3.13 Principal Office, etc. The principal office, chief executive
---------------------
office and principal place of business of the Company is at 0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx 00000.
3.14 No Default. The Company is not in default under any loan
----------
agreement, mortgage, security agreement or other material agreement or
obligation to which it is a party or by which any of its property is bound.
3.15 Full Disclosure. There is no material fact that the Company has
---------------
not disclosed to the Agent and the Banks which could adversely affect the
properties, business, prospects or financial condition of the Company or could
adversely affect the Collateral or the Company's servicing rights with respect
to the Servicing Portfolio or any portion thereof. Neither the financial
statements referred to in Section 3.04, nor any borrowing request, Confirmation
of Borrowing/Paydown, officer's certificate or statement delivered by the
Company to the Agent or any Bank contains any untrue statement of material fact.
3.16 Year 2000. The Company has reviewed and assessed its business
---------
operations and computer systems and applications to address the "year 2000
problem" (that is, that computer applications and equipment used by the Company,
directly or indirectly through third parties, may be unable to properly perform
date-sensitive functions before, during and after January 1, 2000). The Company
reasonably believes that the year 2000 problem will not result in a material
adverse change in the Company's business condition (financial or otherwise),
operations, properties or prospects or ability to repay the Banks. The Company
will promptly deliver to the Agent such information relating to this
representation as the Agent may request from time to time.
24
3.17 Survival of Representations. All representations and warranties by
---------------------------
the Company herein shall survive delivery of the Notes and the making of the
Loans and Advances, and any investigation at any time made by or on behalf of
the Agent or any Bank shall not diminish the right of the Agent or any Bank to
rely thereon.
Section 4 COMPANY'S COVENANTS.
-------------------
From the date hereof and until the Termination Date and thereafter
until the Commitments are terminated and the Aggregate Outstandings and other
liabilities of the Company under any Loan Document are paid in full, the Company
agrees that, unless the Required Banks shall otherwise consent in writing, it
will:
4.01 Financial Statements and Other Reports. Furnish to the Agent and
--------------------------------------
the Banks (a) as soon as available and in any event within 100 days after the
end of each fiscal year of the Company, audited consolidated financial
statements of the Company and the Subsidiaries consisting of a statement of
income and reconciliation of capital accounts of such year and related balance
sheets as of year-end, setting forth in each case in comparative form the
corresponding figures for the preceding year, prepared in conformity with GAAP,
applied on a basis consistent with that of the preceding year, certified,
without qualification, by the accounting firm of Ernst & Young LLP or by any
other independent certified public accountants reasonably satisfactory to the
Banks; (b) as soon as available and in any event within 30 days after the end of
each monthly accounting period of the Company, a copy of the unaudited financial
statements of the Company and the Subsidiaries as of the end of each such
period, prepared in conformity with GAAP (but without footnotes and subject to
normal year-end adjustments) consisting of a balance sheet and a statement of
income and surplus for the period from the beginning of the current fiscal year
to the end of such accounting period, certified by the chief financial officer
or chief accounting officer of the Company on behalf of the Company; (c) as soon
as available and in any event within 100 days after the end of each fiscal year
of the Parent, a copy of the audited consolidated financial statement of the
Parent and its consolidated subsidiaries, including the opinion of the
accounting firm of Ernst & Young LLP or of any other independent certified
public accountants reasonably satisfactory to the Banks, and a copy of the 10-K
report filed by the Parent with the Securities and Exchange Commission for such
fiscal year; (d) as soon as available and in any event within 60 days after the
close of each quarterly accounting period in each fiscal year of the Parent, a
copy of the 10-Q report filed by the Parent with the Securities and Exchange
Commission for such quarter; (e) as soon as available and in any event within 20
days after the end of each month, a certificate in the form of Schedule 4.01(e)
hereto ("Borrowing Base/Compliance Certificate"), prepared as of the last
Business Day of such month; (f) as soon as available and in any event within 30
days after the end of each calendar month a servicing/delinquency report
prepared as of the end of such month and showing with respect to the Servicing
Portfolio: the number of Mortgage Loans (including Mortgage Loans subject to
Mortgage-backed Securities) included therein, the total principal amount
thereof, Investor type, geographic concentration, weighted average coupon,
weighted average maturity, weighted average servicing fee, delinquency status
and foreclosure experience; (g) within five Business Days after the end of each
calendar month, an Inventory/Pipeline Report satisfactory to the Required Banks;
(h) promptly upon their becoming available, copies of all audit reports prepared
for FNMA, GNMA or FHLMC with respect to the Company or any subservicer of the
Company; (i) as promptly as practicable (but in any event not later than five
25
Business Days) after the President, Vice President-Finance or Treasurer of the
Company obtains actual knowledge of the occurrence of any Event of Default or
Unmatured Event of Default, notice of such occurrence, together with a detailed
statement by an officer of the Company on behalf of the Company of the steps
being taken by the Company to cure the Event of Default or Unmatured Event of
Default; and (j) from time to time, with reasonable promptness, such further
information regarding the business, affairs and financial condition of the
Company as the Agent or any Bank may reasonably request.
4.02 Corporate Existence. Maintain its corporate existence in good
-------------------
standing under the laws of the State of Colorado, maintain the corporate
existence of each Subsidiary in good standing under the laws of the respective
jurisdiction of its incorporation, and maintain its and each Subsidiary's right
to transact business in each jurisdiction where its assets or the nature of its
activities makes such qualification necessary.
4.03 Taxes. Duly and punctually pay all taxes, assessments and
-----
governmental charges or levies imposed on it or on its income or profits or on
any of its properties prior to the date on which penalties attach thereto
(except insofar as contested in good faith by appropriate proceedings, and
adequate reserves are maintained therefor in accordance with GAAP) and cause the
Subsidiaries to do likewise.
4.04 Insurance. Maintain or require to maintain, and cause each
---------
Subsidiary to maintain or require to maintain, in full force and effect (a) an
adequate errors and omissions insurance policy, (b) such other insurance
coverage by financially sound and respectable insurers, on all properties of a
character usually insured by organizations engaged in the same or similar
business (including, without limitation, all real property covered by mortgages,
deeds of trust or similar security deeds securing Mortgage Loans owned by the
Company to the extent normally required by prudent mortgagees) against loss or
damage of a kind customarily insured against by such organizations, (c) adequate
public liability insurance against tort claims which may be asserted against the
Company, and (d) a mortgage bankers blanket bond insurance policy in an amount
customarily maintained by organizations engaged in the same or similar business
and under similar circumstances as the Company.
4.05 Litigation. Give prompt written notice to the Agent and the Banks
----------
of any litigation or governmental proceeding pending or, to its actual
knowledge, threatened against the Company or any Subsidiary which (i) involves
an uninsured claim of over $500,000 or (ii) if adversely determined, may have a
material adverse effect on the business or condition (financial or other)
affairs or operations of the Company or any Subsidiary.
4.06 Access to Books and Inspection. Upon application by the Agent or
------------------------------
any Bank, give any representative of the Agent or such Bank access during normal
business hours to, and permit such representative to examine, copy or make
extracts from, any and all books, records and documents in the possession of the
Company or under its control relating to its affairs, and to inspect any of the
properties of the Company.
4.07 Debt. Not incur, assume or permit to exist, or allow any
----
Subsidiary to incur or permit to exist, any Indebtedness, except:
26
(a) borrowings under the Notes;
(b) current liabilities (other than Indebtedness for
borrowed money), not overdue unless contested in good faith, incurred
by the Company or a Subsidiary in the ordinary course of business;
(c) Indebtedness secured by Liens permitted under Section
4.08;
(d) Guarantees permitted under Section 4.09; and
(e) Indebtedness under hedging transactions with respect
to Mortgage Loans and Mortgage-backed Securities owned by the Company
or such Subsidiary and Indebtedness under reverse repurchase agreements
entered into with Investors in the normal course of the Company's
business.
4.08 Liens. Not create or permit to exist, or allow any Subsidiary to
-----
create or permit to exist, any Lien with respect to any assets (including,
without limitation, servicing rights with respect to the Servicing Portfolio)
now owned or hereafter acquired by the Company or any Subsidiary except:
(a) the Security Interest;
(b) materialmen's, mechanics', suppliers', tax or
warehousemen's liens, statutory liens of landlords and other like liens
arising in the ordinary course of business securing obligations which
are not yet due and payable or which are being contested in good faith
by appropriate proceedings;
(c) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security or to secure
the performance of statutory obligations, surety or appeal bonds, bids,
leases, performance and return of money bonds and similar obligations
(exclusive of obligations for the payment of borrowed money);
(d) encumbrances consisting of zoning regulations,
easements, rights of way, survey exceptions and other similar
restrictions on the use of real property and minor irregularities in
titles thereto which do not materially impair their use in the
operation of its business;
(e) Liens on Mortgage-backed Securities which secure the
repurchase obligations of the Company or any Subsidiary to brokers with
respect to such Mortgage-backed Securities;
(f) lease purchase liens in an aggregate amount less than
$1,000,000; and
(g) existing Liens described in Schedule 4.08 hereto.
4.09 Guarantees. Not, and not allow any Subsidiary to, enter into any
----------
Guarantee or endorse, assume, become surety for, indemnify or otherwise in any
way become or be
27
responsible for the obligations of any other Person except Guarantees of, or
letters of credit issued by, the Company guaranteeing or supporting the
obligations of its Affiliates in the residential home development business in an
aggregate amount not exceeding $10,000,000 at any time outstanding, provided
that no Event of Default or Unmatured Event of Default shall exist upon or
immediately after the issuance by the Company of any such Guarantee or letter of
credit.
4.10 Leases. Not, and not allow any Subsidiary to, enter into or permit
------
to exist any arrangement involving the leasing from any lessor of real or
personal property (or any interest therein) except under:
(a) leases of automobiles, office furniture and
equipment, and computer and related equipment used in the ordinary
course of business of the Company and the Subsidiaries; and
(b) leases of offices occupied by the Company or any
Subsidiary.
4.11 Merger, etc. Not, and not permit any Subsidiary to, (a) sell,
-----------
transfer or otherwise dispose of all or any substantial part of its assets to
any other Person except in the ordinary course of business or (b) merge or
consolidate into or with any corporation except that any Subsidiary may merge or
consolidate with or be liquidated into the Company (provided that the Company is
the surviving entity) or may merge or consolidate with another Subsidiary and
except as the Required Banks may otherwise consent in writing, which consent
will not be unreasonably withheld.
4.12 Net Worth. Not at any time permit (a) Consolidated Tangible Net
---------
Worth to be less than Minimum Consolidated Tangible Net Worth, or (b) Adjusted
Consolidated Tangible Net Worth to be less than $13,000,000.
4.13 Leverage Ratio. Not permit the Leverage Ratio to exceed 8 to
--------------
1 at any time.
4.14 ERISA Contributions. At all times, make prompt payment of
-------------------
contributions required to meet the minimum funding standards set forth in ERISA
with respect to any Plan.
4.15 VA Guaranties and FHA Insurance. Not, and not permit any
-------------------------------
Subsidiary to, commit or suffer to be committed any act which would invalidate
the guaranty of the VA or the insurance by the FHA or cause any impairment to
the validity of or priority of the lien securing any Mortgage Loan pledged to
the Banks under the Pledge and Security Agreement.
4.16 Maintenance of Qualifications. Not, and not permit any Subsidiary
-----------------------------
to, commit or suffer to be committed any act which either (a) would adversely
affect its eligibility to participate as an FHA-approved mortgagee, as an
approved lender under the VA loan guaranty program, as an approved
seller-servicer of mortgage notes to FNMA and to FHLMC in the FHLMC regions in
which it operates, or its eligibility to issue Mortgage-backed Securities or to
service the mortgage pools formed with respect to Mortgage-backed Securities or
(b) results in a loss of such eligibility.
28
4.17 Servicing Portfolio. Not, and not permit any Subsidiary to, commit
-------------------
or suffer to be committed any act which would constitute a material breach of
any material contract to which the Company now is or hereafter becomes a party
under which the Company is obligated to service Mortgage Loans for another
Person.
4.18 Dividends, etc. Not declare, pay or make any dividend or
--------------
distribution on any shares of capital stock of any class of the Company other
than dividends or distributions payable in stock of the Company, or apply any
funds, properties or assets to the purchase, redemption or other retirement of
any shares of capital stock of the Company; provided, however, that (a) the
Company may pay dividends with respect to any fiscal year in an aggregate amount
not to exceed 50% of Consolidated Net Earnings (if positive) for such fiscal
year, determined as of the last day of such fiscal year based on the audited
consolidated financial statements for such fiscal year and payable after such
audited consolidated financial statements have been furnished to the Banks in
accordance with Section 4.01(b), but only if no Event of Default or Unmatured
Event of Default exists or would exist immediately after giving effect to the
payment of such dividend, and (b) the Company may pay a one-time only dividend
in the amount of $12,000,000 during its fiscal year ending December 31, 1999,
but only if no Event of Default or Unmatured Event of Default exists or would
exist immediately after giving effect to the payment of such dividend, which
dividend shall be in addition to any dividend permitted for such fiscal year
under clause (a) of this Section 4.18, and (c) if such dividend has not been
paid on or prior to the Effective Date, the Company may pay a one-time dividend
in the aggregate amount of $5,000,000 during its fiscal year ending December 31,
2002, but only if no Event of Default or unmatured Event of Default exists or
would exist immediately after giving effect to the payment of such dividend,
which dividend should be in addition to any dividend permitted for such fiscal
year under clause (a) of this Section 4.18.
4.19 Compliance with Laws. Comply with the requirements of all
--------------------
applicable laws, rules, regulations and orders of any governmental authority, a
breach of which might materially adversely affect its business, affairs,
properties, financial condition or ability to obtain credit except where
contested in good faith and by appropriate proceedings.
4.20 Collateral. (i) Defend the right, title, and interest of the Agent
----------
and the Banks in the Collateral against the claims and demands of all Persons;
(ii) not amend, modify, or waive any of the terms and conditions of, or settle
or compromise any claim in respect of, any Collateral in a manner which would
materially adversely affect the interests of the Agent and the Banks; and (iii)
not sell, assign, transfer, or otherwise dispose of, or grant any option with
respect to, or pledge or otherwise encumber, any of the Collateral or any
interest therein except in a manner whereby the Agent alone would be entitled to
receive the proceeds therefrom.
4.21 Material Adverse Change. Not create, permit to occur or
-----------------------
suffer to exist any material adverse change in its condition or operations.
4.22 Investments. Not, and not permit any Subsidiary to, directly
-----------
or indirectly, make or own any Investment in any Person, except:
(a) Investments in (i) certificates of deposit and
bankers acceptances issued by, and time deposits on deposit with, a
Bank or any other domestic commercial bank
29
which has, or the holding company of which has, a long-term debt rating
of at least AA" from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc., or a short-term debt rating of at least AA-1"
from Standard & Poor's Corporation or AP-1" from Xxxxx'x Investors
Service, Inc., in each case having a maturity not exceeding 90 days
from the date of issuance thereof, (ii) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and credit of
the United States, in each case maturing within 90 days from the date
of acquisition thereof, and (iii) commercial paper maturing no more
than 90 days from the date of creation thereof and which is rated at
least AA-1" by Standard & Poor's Corporation or at least AP-1" by
Xxxxx'x Investors Service, Inc.;
(b) Mortgage Loans and Mortgage-backed Securities
acquired, in each case, in the ordinary course of business;
(c) repurchase agreements fully collateralized by
Investments of the types described in Sections 4.22(a) and/or 4.22(b);
(d) money market and cash accounts which are invested
entirely in Investments of the types described in Sections 4.22(a)
and/or 4.22(b) above;
(e) securities or evidences of indebtedness of others
acquired by the Company in settlement of accounts receivable or other
debts arising in the ordinary course of business, so long as the
aggregate amount of any such securities or evidences of indebtedness is
not material to the business or condition of the Company or any
Subsidiary;
(f) loans and advances to employees, officers and
directors of the Company or any Subsidiary in an aggregate principal
amount outstanding at any one time not to exceed $100,000;
(g) Investments of the Company in Subsidiaries in an
aggregate amount not exceeding $1,000,000 at any time outstanding; and
(h) loans, advances or extensions of credit to the Parent
or any of its Affiliates if no Event of Default or Unmatured Event of
Default exists or would exist immediately after giving effect to the
making of any such loan, advance or extension of credit.
4.23 Transactions with Affiliates. Not, and not permit any Subsidiary
----------------------------
to, enter into any transactions, including, without limitation, any purchase,
sale, lease or exchange of property or services with or the incurring of any
Indebtedness to any Affiliate unless such transactions are otherwise permitted
under this Agreement, are in the ordinary course of business and are upon fair
and reasonable terms.
4.24 Independence of Covenants. All covenants hereunder shall be given
-------------------------
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Unmatured Event of Default if such
action is taken or condition exists.
30
Section 5 CONDITIONS PRECEDENT.
--------------------
5.01 Effectiveness. This Agreement shall not become effective until,
-------------
and shall become effective when, each of the following conditions precedent
shall have been satisfied:
(a) The Agent shall have received the following, in form
and substance satisfactory to the Banks:
(i) This Agreement, duly executed by the Company
and each Bank.
(ii) The Pledge and Security Agreement, duly executed
by the Company, the Collateral Agent and each Bank.
(iii) The Notes, duly executed by the Company, which
shall constitute amendments and restatements of the Existing
Notes.
(iv) A Uniform Commercial Code financing statement or
statements prepared for filing in all appropriate filing
offices and duly executed by the Company.
(v) A copy of the resolutions of the Board of
Directors of the Company authorizing the execution, delivery
and performance of this Agreement, the other Loan Documents
and the borrowing hereunder, certified by the Secretary or an
Assistant Secretary of the Company on behalf of the Company,
together with such other documents as the Agent or the Banks
shall reasonably request.
(vi) A certificate, signed by the Secretary or an
Assistant Secretary of the Company on behalf of the Company,
as to the incumbency and signatures of the person or persons
authorized to execute and deliver this Agreement and the other
Loan Documents.
(vii) A favorable written opinion of counsel to the
Company, addressed to the Bank and covering the matters set
forth in Schedule 5.01(a)(x) hereto.
(b) All legal matters incident hereto and to the
satisfaction of the foregoing conditions precedent shall be reasonably
satisfactory to counsel to the Banks.
5.02 Each Extension of Credit. The obligations of the Banks to
------------------------
make the Loans are subject to the following further conditions precedent that at
each time the Banks are requested to make Loans:
(a) no Event of Default and no Unmatured Event of Default
shall have occurred and be continuing or will exist upon the making of
the requested Loans; and
(b) the representations and warranties contained in
Section 3 hereof and in Section 5 of the Pledge and Security Agreement
shall be true and correct in all material respects with the same force
and effect as if made on and as of the date of such request.
31
Section 6 EVENTS OF DEFAULT; REMEDIES.
---------------------------
6.01 Events of Default. The occurrence of one or more of the following
-----------------
events shall constitute an "Event of Default" if not cured within the applicable
notice and grace periods specified, if any:
(a) Default for one Business Day in the payment when due
of any principal of a Bank's Note, except upon maturity, in which case
default in the payment when due of such principal of a Note; or
(b) Default for five Business Days in the payment when
due of interest on a Bank's Note; or
(c) Default in the performance of the Company's covenants
contained in Sections 4.07, 4.08, 4.09, 4.11, 4.18, 4.20, 4.22 or 4.23
or in the Pledge and Security Agreement; or
(d) Default by the Company in the performance of any
other covenant contained herein or in any Loan Document (and not
constituting a default under Sections 6.01(a), 6.01(b) or 6.01(c))
which shall remain unremedied for 15 days after the earliest of (i) the
date on which the Agent, at the request of any Bank, gives written
notice of such default to the Company, (ii) the date on which the
Company gives written notice of such default to the Agent or (iii) the
latest date by which the Company is required to give notice of such
default to the Agent and the Banks pursuant to Section 4.01(i); or
(e) Any warranty made by the Company herein is untrue in
any material respect, or any certificate, schedule, statement, report,
notice or writing furnished by or on behalf of the Company to a Bank,
the Agent or the Collateral Agent is untrue in any material respect on
the date as of which the facts set forth therein are stated or
certified; or
(f) Any creditor or representative of any creditor of the
Company or any Subsidiary shall become entitled to declare any
Indebtedness in excess of $250,000 owing on any bond, debenture, note
or other evidence of indebtedness for borrowed money of the Company or
such Subsidiary to be due and payable prior to its expressed maturity,
whether or not such Indebtedness is actually declared to be immediately
due and payable, or any such Indebtedness becomes due and payable prior
to its expressed maturity by reason of any default by the Company, or
any Subsidiary in the performance or observance of any obligation or
condition and such default shall not have been effectively waived or
shall not have been cured within any grace period allowed therefor or
any such Indebtedness shall have become due by its terms and shall not
have been promptly paid or extended; or
(g) Any creditor or representative of any creditor of the
Parent shall declare any Indebtedness of the Parent owing on any bond,
debenture, note or other evidence of indebtedness for borrowed money in
excess of $5,000,000 (other than Indebtedness which by its terms is
without recourse to the Parent) to be due and payable prior to its
32
expressed maturity by reason of any default by the Parent in the
performance or observance of any obligation or condition and such
default shall not have been effectively waived or shall not have been
cured within any grace period allowed therefor or any such Indebtedness
shall have become due by its terms and shall not have been promptly
paid or extended; or
(h) The Company, any Subsidiary or the Parent becomes
insolvent or generally does not pay its debts as they become due or
applies for, consents to, or acquiesces in the appointment of a trustee
or receiver of the Company, such Subsidiary or the Parent or any of
their respective property; or, in the absence of such application,
consent or acquiescence, a trustee or receiver is appointed for the
Company, any Subsidiary or the Parent or for a substantial part of
their respective property and is not discharged within sixty (60) days;
or any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law is instituted by or
against the Company, any Subsidiary or the Parent, and if instituted
against the Company, any Subsidiary or the Parent is consented to or
acquiesced in by the Company, such Subsidiary or the Parent or remains
for 60 days unstayed or undismissed; or
(i) Any dissolution or liquidation proceeding (other than
as permitted by this Agreement) is instituted by or against the
Company, any Subsidiary or the Parent and, if instituted against the
Company, any Subsidiary or the Parent, is consented to or acquiesced in
by the Company, such Subsidiary or the Parent or remains for 60 days
unstayed or undismissed; or
(j) Any material adverse change in the condition of the
Company, financial or otherwise which has not been cured, corrected or
remedied to the reasonable satisfaction of the Required Banks within
fifteen (15) days after the Agent, at the direction of the Required
Banks, shall have given the Company written notice of the occurrence
thereof; or
(k) Any Reportable Event or any other fact or
circumstance, which the Required Banks determine in good faith
constitutes grounds for the termination of any Plan of the Company or
any Subsidiary by PBGC or for the appointment by an appropriate United
States District Court of a trustee to administer any such Plan, shall
have occurred and be continuing 60 days after written notice of such
determination shall have been given to the Company by the Agent, at the
direction of the Required Banks, or any Plan of the Company or any
Subsidiary shall be terminated within the meaning of Title IV of ERISA,
or a trustee shall be appointed by the appropriate United States
District Court to administer any Plan of the Company, or PBGC shall
institute proceedings to terminate any Plan of the Company or any
Subsidiary or to appoint a trustee to administer any such Plan and,
upon the occurrence of any of the foregoing, the aggregate amount of
the vested unfunded liability under all such Plans exceeds Two Hundred
Fifty Thousand Dollars ($250,000) and such liability is not covered by
insurance.
6.02 Remedies. If any Event of Default described in Sections 6.01(h) or
--------
6.01(i) shall occur, the Commitments shall immediately terminate and the
principal of and accrued interest on
33
the Notes shall become immediately due and payable all without further notice of
any kind. If any other Event of Default shall occur, the Agent, at the direction
of the Required Banks, may terminate the Commitments and may declare the
principal of and accrued interest on the Notes to be immediately due and
payable, whereupon the Commitments shall terminate immediately and the Notes
shall become immediately due and payable, all without further notice of any
kind.
Section 7 THE AGENT.
---------
7.01 Appointment and Authorization. Each Bank appoints and authorizes
-----------------------------
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees shall
be liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for its or
their own gross negligence or willful misconduct. The Agent shall act as an
independent contractor in performing its obligations as Agent hereunder and
under the other Loan Documents and nothing herein contained shall be deemed to
create a fiduciary relationship among or between the Agent, the Company or the
Banks.
7.02 Note Holders. The Agent may treat the payee of any Note as the
------------
holder thereof until written notice of transfer shall have been filed with it
signed by such payee and in form satisfactory to the Agent.
7.03 Consultation With Counsel. The Agent may consult with legal
-------------------------
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
7.04 Documents. The Agent shall not be under a duty to examine into or
---------
pass upon the validity, effectiveness, genuineness or value of the Notes, the
Loan Documents or any other instrument or document furnished pursuant thereto or
thereunder, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
7.05 Agent and Affiliates. With respect to its Commitment and the Loans
--------------------
and Advances made by it in its capacity as a Bank, the Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any other
Bank and may exercise the same as though it were not the Agent consistent with
the terms thereof, and the Agent and its affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Company or
any Subsidiary as if it were not the Agent.
7.06 Action by Agent. The Agent shall be entitled to use its discretion
---------------
with respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement
and the Loan Documents. The Agent shall incur no liability under or in respect
of this Agreement or any of the Loan Documents by acting upon any notice,
consent, certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or with
respect to anything which it may do or refrain
34
from doing in the reasonable exercise of its judgment, or which may seem to it
to be necessary or desirable in the premises.
7.07 Credit Analysis. Each Bank has made, and shall continue to make,
---------------
its own independent investigation or evaluation of the operations, business,
property and condition, financial and otherwise, of the Company, in connection
with the making of its Commitment and has made its own appraisal of the
creditworthiness of the Company. Except as explicitly provided herein, the Agent
has no duty or responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the Effective Date or at any
time thereafter.
7.08 Notices of Event of Default, etc. In the event that any Bank shall
--------------------------------
have acquired actual knowledge of any Event of Default or Unmatured Event of
Default, such Bank shall promptly give notice thereof to the Agent and the other
Banks. Upon receipt from any Bank of a request that the Agent give notice to the
Company of the occurrence of an Event of Default or Unmatured Event of Default
under Section 6, the Agent shall promptly forward such request to the other
Banks and will take such action and assert such rights under this Agreement and
the other Loan Documents as the Required Banks shall direct in writing.
7.09 Indemnification. Each Bank agrees to indemnify the Agent (to the
---------------
extent not reimbursed by the Company), ratably according to its Percentage of
the Aggregate Commitment Amount, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or the Loan Documents or any action taken or omitted by
the Agent under this Agreement or the Loan Documents provided that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
7.10 Payments. All payments of principal of the Notes and all other
--------
funds received by the Agent in respect of any payments made by the Company
pursuant to this Agreement, the Notes or the other Loan Documents (other than
payments of interest payable on the Banks' Notes, payments of agent fees made to
the Agent under its Side Letter, payments of additional interest or deficiency
fees made to the Banks pursuant to Section 2.08(b) and the provisions of any
Side Letter) shall be distributed forthwith by the Agent (in like currency and
funds and on the same day received, provided that any such payment is received
by the Agent prior to 12:00 noon (Minneapolis time) on such day) to the Banks
ratably in accordance with each Bank's Percentage of the Aggregate Outstandings
and in like currency and funds and on the same day as received.
7.11 Sharing of Payments. If any Bank shall receive and retain any
-------------------
payment during the persistence of an Event of Default or Unmatured Event of
Default, whether by setoff, application of deposit balance or security, or
otherwise, in respect of indebtedness under this Agreement or the Notes in
excess of such Bank's share based on its Percentage of the Aggregate
Outstandings, then such Bank shall purchase from the other Banks for cash and at
face value and without recourse, such participation in the Notes held by them as
shall be necessary to cause
35
such excess payment to be shared ratably as aforesaid with each of them;
provided, that if such excess payment or part thereof is thereafter recovered
from such purchasing Bank, the related purchases from the other Bank shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest. Each Bank agrees to exercise
any and all rights of setoff, counterclaim or bankers' lien first fully against
any such Notes and participations therein held by such Bank, and only then to
any other indebtedness of the Company to such Bank.
7.12 Advice to Banks. The Agent shall forward to the Banks copies of
---------------
all notices, financial reports and other communications received from the
Company hereunder. In addition, the Agent will provide monthly collateral and
collateral aging reports to each of the Banks.
7.13 Resignation and Removal.
-----------------------
(a) The Agent may resign at any time by giving 30 days
written notice thereof to the Banks and the Company. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent, which successor Agent shall (unless an Event of
Default has then occurred and is continuing) be reasonably acceptable
to the Company. If no successor Agent shall have been so appointed and
shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of its resignation, then the retiring Agent
may, on behalf of the Banks, appoint an Agent or custodian which shall
be a Banks or a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000 and which shall be reasonably
acceptable to the Company (unless an Event of Default has occurred and
is continuing). Any such resignation shall be effective upon the
appointment of a successor Agent. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations, under this
Agreement and the other Loan Documents. After any retiring Agent's
resignation or removal hereunder as the Agent, the provisions of this
Section 7 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was acting as the Agent under this Agreement
and any other Loan Document.
(b) If the Agent is placed in receivership or
conservatorship or ceases to be eligible to serve as depository or
document custodian on behalf of FNMA, FHLMC or GNMA, the Required Banks
(excluding the Agent in its capacity as a Bank) shall have the right to
remove the Agent upon written notice to the Agent. Upon submission of
such notice, such Required Banks may designate a successor agent.
Section 8 MISCELLANEOUS.
-------------
8.01 Non-Waiver. No failure on the part of the Agent or the Banks to
----------
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
36
the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
8.02 Notices. Except as otherwise specifically provided for herein, all
-------
notices and other communications provided for herein shall be by telex,
telecopier, telegraph, cable or in writing and telexed, telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the address specified
on the signature pages hereto; or, as to any party, at such other address as
shall be designated by such party in a notice to the other parties. All notices
and other communications hereunder shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered to the telegraph or cable office
or personally delivered or, in the case of a mailed notice, upon receipt thereof
as conclusively evidenced by the signed receipt therefor, in each case given or
addressed as aforesaid.
8.03 Expenses; Indemnification.
-------------------------
(a) Expenses. The Company agrees to pay: (i) the
--------
reasonable fees and expenses of counsel for the Agent and the Banks in
connection with the preparation, execution and delivery of this
Agreement, the Notes and the other Loan Documents and in connection
with the Loans hereunder, whether or not any Loan is made hereunder,
(ii) the reasonable fees and expenses of counsel for the Agent and the
Banks in connection with any amendment, modification or waiver of any
of the terms of this Agreement, the Notes and the other Loan Documents
and (iii) all reasonable costs and expenses of the Agent and the Banks
(including reasonable counsels' fees) in connection with the
enforcement of this Agreement, the Notes and the other Loan Documents.
(b) Indemnification.
---------------
(i) The Company will indemnify and hold harmless the
Agent and each Bank, the Agent's and each Bank's directors,
officers, employees, agents and attorneys and each Person, if
any, who is deemed to control the Agent or any Bank (any and
all of whom are referred to as the "Indemnified Party") from
and against any and all losses, claims, damages and
liabilities, joint or several (including all losses, claims,
damages and liabilities resulting from the negligence, but not
the gross negligence of such Indemnified Party, and including
all legal fees or other expenses reasonably incurred by any
Indemnified Party in connection with the preparation for or
defense of any pending or threatened claim, action or
proceeding, whether or not resulting in any liability), to
which such Indemnified Party may become subject (whether or
not such Indemnified Party is a party thereto) under any
applicable Federal, state or local law or otherwise caused by
or arising out of, or allegedly caused by or arising out of,
this Agreement or any transaction contemplated hereby, except
for losses, claims, damages or liabilities resulting from the
gross negligence, willful misconduct or fraud of such
Indemnified Party or the failure of such Indemnified Party to
fulfill its obligations under this Agreement.
(ii) Promptly after receipt by an Indemnified Party
of notice of any claim, action or proceeding with respect to
which an Indemnified Party is entitled
37
to indemnity hereunder, such Indemnified Party will notify the
Company of such claim or the commencement of such action or
proceeding, provided that the failure of an Indemnified Party
to give notice as provided herein shall not relieve the
Company of its obligations under this Section 8.03(b) with
respect to such Indemnified Party, except to the extent that
the Company is actually prejudiced by such failure. The
Company will assume the defense of such claim, action or
proceeding and will employ counsel reasonably satisfactory to
the Indemnified Party and will pay the fees and expenses of
such counsel. Notwithstanding the preceding sentence, the
Indemnified Party will be entitled, at the expense of the
Company, to employ counsel separate from counsel for the
Company and for any other party in such action if the
Indemnified Party reasonably determines that a conflict of
interest or other reasonable basis exists which makes
representation by counsel chosen by the Company not advisable,
provided that the Company shall not be obligated to pay for
the fees and expenses of more than one counsel for all
Indemnified Parties in respect of a particular controversy. In
the event an Indemnified Party appears as a witness in any
action or proceeding brought against the Company or any of its
Subsidiaries (or any of its officers, directors or employees)
in which an Indemnified Party is not named as a defendant, the
Company agrees to reimburse such Indemnified Party for all
expenses incurred by it (including fees and expenses of
counsel) in connection with its appearing as a witness.
8.04 Taxes. The Company agrees to pay, and save the Agent, the
-----
Collateral Agent and the Banks harmless from all liability for, any stamp or
other taxes which may be payable with respect to the execution or delivery of
this Agreement or the issuance of the Notes and the Security Documents, which
obligation of the Company shall survive the termination of this Agreement.
8.05 Amendments, Etc.
---------------
(a) Except as provided in Sections 8.05(b) and 8.05(c),
no amendment or waiver of any of the provisions of this Agreement, the
Notes or the Loan Documents, nor any consent to any departure by the
Company from the provisions hereof or thereof, shall be effective
unless the same shall be in writing and signed by the Required Banks,
and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall,
unless in writing and signed by all of the Banks, do any of the
following: (i) waive any of the conditions specified in Section 2, (ii)
increase the Commitment Amounts of the Banks, except as provided in
Sections 8.05(b) and 8.05(c), or subject the Banks to any additional
obligations, (iii) reduce the principal of, or interest on the Notes or
any fees payable to the Banks hereunder, (iv) postpone any date fixed
for any payment in respect of principal of, or interest on, the Notes
or any fees payable to the Banks hereunder, (v) change the Percentage
of the Aggregate Commitment Amount or the Percentage of the Aggregate
Outstandings as to any Bank, except as provided in Sections 8.05(b) and
8.05(c), or the number or identity of the Banks which shall be required
for the Banks or any of them to take any action hereunder, (vi) amend
this Section 8.05, Section 2.08(b), Section 6, Section 8.06 or Exhibit
A hereto, (vii) release
38
any Collateral, except as is provided in Sections 9 and 10 of the
Pledge and Security Agreement, (viii) amend the definitions of
"Collateral" set forth in the Pledge and Security Agreement, or (ix)
permit the release of Collateral not otherwise permitted to be released
under the terms of the Loan Documents as constituted prior to such
amendment; and provided, further, that no such amendment, waiver or
consent shall, unless in writing and signed by the Agent, and, if
applicable, the Collateral Agent, in addition to the Banks required
hereinabove to take such action, affect the rights or duties of the
Agent or the Collateral Agent under this Agreement, any Note or the
other Loan Documents.
(b) From time to time, so long as no Event of Default is
then continuing, the Company may agree, with the prior written consent
of the Agent, to add a bank chartered under the laws of the United
States or any State thereof, an insurance company, another lender or a
mutual fund (a "New Bank") as a "Bank" under this Agreement with a
Commitment, for the purpose of increasing the aggregate amount of the
Commitments; provided, however, that upon giving effect to any such new
Commitment, the Commitment Amount of the New Bank shall not be less
than $10,000,000; and provided, further, that the aggregate Commitment
Amounts, after giving effect to any such increase, shall not exceed
$175,000,000. The Company, the Agent and each New Bank shall agree on
the date as of which the New Bank's Commitment Amount shall become
effective, and each New Bank shall execute and deliver an instrument in
the form prescribed by the Agent to evidence its agreement to be bound
by this Agreement and the other Loan Documents. Upon the effective date
of the inclusion of a New Bank as a lender under this Agreement, the
Agent shall deliver to the Company and each of the Banks a revised
Schedule 1.01(b) reflecting the revised aggregate Commitment Amounts
and the Company shall execute and deliver to the New Bank a Note in the
amount of the New Bank's Commitment Amount. Any reallocation of Loans
outstanding on the date that the New Bank's Commitment Amount shall
become effective necessitated by the addition of the New Bank as a Bank
under this Agreement shall be effected on and as of such date by the
purchase and sale among the Banks of the Obligations outstanding on
such date.
(c) From time to time, so long as no Event of Default is
then continuing, the Company may agree, with the prior written consent
of the Agent, to permit a Bank to permanently or temporarily increase
its Commitment Amount for the purpose of increasing the aggregate
amount of the Commitments; provided, however, that the aggregate
Commitment Amounts, after giving effect to any such increase, shall not
exceed $175,000,000. The Company, the Agent and each Bank increasing
its Commitment Amount shall agree on the date as of which the increased
Commitment Amount shall become effective and, if such increase is a
temporary rather than a permanent increase, the date on which that
increase shall terminate (the "Temporary Increase Termination Date").
Upon the effective date of an increase in any Bank's Commitment Amount
under this Agreement, the Agent shall deliver to the Company and each
of the Bank's a revised Schedule 1.01(b) reflecting the revised
aggregate Commitment Amounts and the Company shall execute and deliver
to the Bank increasing its Commitment Amount a Note in the amount of
such Bank's increased Commitment Amount. Any reallocation of Loans
outstanding on the date that an increase in a Bank's Commitment Amount
shall become effective shall be effected on and as of such date by
39
the purchase and sale among the Banks of the Loans outstanding on such
date. If an increase in a Bank's Commitment Amount was a temporary
rather than a permanent increase, the Company shall, on the Temporary
Increase Termination Date, repay the Loans by the amount by which the
outstanding principal balance of all Loans on such date exceeds the sum
of the Commitment Amounts, after giving effect to the termination of
such temporary increase. Notwithstanding the existence of any Event of
Default or Unmatured Event of Default or any other failure to satisfy
the conditions pursuant to Warehousing Loans under this Agreement, each
of the Banks (other than the Bank that temporarily increased its
Commitment Amount) shall make Warehousing Loans on such date in the
amount, if any, required to increase its outstanding Warehousing Loans
to its Percentage of the Aggregate Commitment Amount, and shall deliver
the proceeds of such Warehousing Loans to the Agent. The Agent shall
distribute to the Bank that temporarily increased its Commitment Amount
on such date, out of any payments made by the Company as set forth
above and the proceeds of Warehousing Loans made by the other Banks as
set forth above, the amount required to reduce such Bank's outstanding
Warehousing Loans to its Percentage of the Aggregate Commitment Amount.
8.06 Successors and Assigns; Disposition of Advances; Transferees.
------------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that the Company may not assign its rights or
obligations hereunder or under the Notes without the prior consent of
all of the Banks.
(b) Any Bank may at any time sell, assign, transfer,
grant participations in, or otherwise dispose of any portion of its
Notes and the Loans made by such Bank (each such interest so disposed
of being herein called a "Transferred Interest") to banks or other
entities which meet the minimum financial rating requirements
established by FNMA, FHLMC and GNMA for custodial depositories that are
FDIC-insured ("Transferees"). Without in any way limiting the rights of
Transferees hereunder, the Company agrees that each Transferee shall be
entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.19 and 2.20 to
the extent of its Transferred Interest as if it were the "Bank" which
has made Loans in an aggregate amount equal to such Transferred
Interest. The Company agrees that each Transferee may exercise any and
all rights of banker's lien, setoff as provided in Section 2.12 and
counterclaim available pursuant to law with respect to its Transferred
Interest as fully as if such Transferee were a direct lender to the
Company.
(c) Each Bank may pledge any portion of its Note for
security purposes to any Federal Reserve Bank.
8.07 Confidentiality. Any information which the Agent or any Bank
---------------
receives from the Company which is designated proprietary or confidential at the
time of receipt thereof by the Agent or such Bank shall not be disclosed by the
Agent or such Bank to any other Person, if such information is not otherwise in
the public domain, other than (a) to its independent accountants and legal
counsel, (b) pursuant to statutory or regulatory requirements, (c) pursuant to
any mandatory court order or (d) to any Transferee or prospective Transferee and
to the independent accountants and legal counsel of any such Transferee or
prospective Transferee.
40
8.08 Survival. The obligations of the Company under Sections 2.09,
--------
2.16, 2.18 and 8.03 shall survive the repayment of the Notes and the termination
of the Commitments; provided, however, that the obligations of the Company under
Sections 2.16 and 2.18 shall survive only with respect to the payment of
compensation for increased costs, reduction in amounts received or receivable or
reduced return attributable to periods prior to the repayment of the Notes and
the termination of the Commitments.
8.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF MINNESOTA, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision of this
Agreement and the Notes and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement or the Notes or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement and the Notes and any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto.
8.11 WAIVER OF JURY TRIAL; JURISDICTION.
----------------------------------
(a) THE COMPANY, BY ITS EXECUTION AND DELIVERY HEREOF,
AND EACH OF THE AGENT AND THE BANKS, BY THEIR ACCEPTANCE HEREOF, HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE
NOTES OR THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT OR
DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY CREDIT RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE LOAN DOCUMENTS, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
(b) THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN
HENNEPIN OR XXXXXX COUNTY, MINNESOTA OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE LOAN
DOCUMENTS. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
41
MAINTENANCE OF SUCH ACTION OR PROCEEDING. NOTHING IN THIS SECTION
8.11(b) SHALL AFFECT THE RIGHT OF THE AGENT AND THE BANKS TO BRING ANY
ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
8.12 Highest Lawful Rate. Anything herein to the contrary
notwithstanding, the obligations of the Company on each Bank's Note shall be
subject to the limitation that payments of interest shall not be required, for
any period for which interest is computed hereunder, to the extent that
contracting for or receipt thereof would be contrary to provisions of any law
applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank.
8.13 Section Titles. The section titles contained in this
--------------
Agreement shall be without substantive meaning or content of any kind whatsoever
and shall not govern the interpretation of any of the provisions of this
Agreement.
8.14 Reliance by the Agent and the Banks. All covenants, agreements,
representations and warranties made herein by the Company shall, notwithstanding
any investigation by the Agent and the Banks, be deemed to be material to and to
have been relied upon by the Agent and the Banks and shall survive the execution
and delivery of this Agreement.
8.15 Severability. Any provision of this Agreement which is prohibited
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
8.16 ENTIRE AGREEMENT. THIS AGREEMENT AND ALL LOAN DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO.
[The remainder of this page is intentionally left blank.]
42
S-2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
HOMEAMERICAN MORTGAGE
CORPORATION
By /s/ Xxxx X. Xxxxxx
--------------------------------
Its Senior Vice President
and Treasurer
--------------------------
Address:
HomeAmerican Mortgage Company
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier: (000) 000-0000
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Its: Senior Vice President
-------------------------
Address:
U.S. Bank National Association
Mortgage Banking Services
BC-MN-H03B
U.S. Bancorp Center
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
S-1
BANK ONE, N.A.
(successor by merger to Bank One,
Texas, N.A.)
By /s/ Xxxxxx Xxxxx
--------------------------------
Its Associate Director
--------------------------
Address:
x/x Xxxx Xxx, XX
Xxxx Xxxxx XX0-0000
0 Xxxx Xxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telecopier: (000) 000-0000
GUARANTY BANK, F.S.B.
By /s/ Xxxxxxx X. Xxxx
--------------------------------
Its Xxxxxxx X. Xxxx, Vice President
------------------------------
Address:
Guaranty Bank, F.S.B.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
COMERICA BANK
By /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its Xxxxxxx X. Xxxxx
Assistant Vice President
------------------------------
Address:
Comerica Tower at Detroit Center
000 Xxxxxxxx Xxxxxx, XX-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
S-2
