EXECUTION COPY
================================================================================
MASTER ASSIGNMENT AGREEMENT
BETWEEN
FIRSTPLUS FINANCIAL, INC.
AND
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
Dated as of April 10, 1997
================================================================================
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS; CONSTRUCTION....................................... 1
(a) Definitions............................................ 1
(b) Accounting Terms and Determinations.................... 4
(c) Other Definitional Terms............................... 4
SECTION 2. GRANT OF SECURITY INTEREST; DELIVERY OF
COLLATERAL; LOANS DISCRETIONARY........................ 5
(a) Grant of Security Interest............................. 5
(b) Delivery of Instruments of Transfer.................... 5
(c) Funding of Loans....................................... 5
SECTION 3. EARNINGS ON COLLATERAL.......................................... 6
SECTION 4. CONFIRMATION STATEMENT.......................................... 6
SECTION 5. MARGIN DETERMINATIONS........................................... 7
(a) Margin Requirement..................................... 7
(b) Current Margin......................................... 7
(c) Supplemental Collateral................................ 7
(d) Release of Supplemental Collateral..................... 7
SECTION 6. RELEASE AND SUBSTITUTION OF COLLATERAL.......................... 8
SECTION 7. CONDITIONS TO THE LOANS......................................... 8
(a) Conditions to the Effective Date....................... 8
(b) Conditions Precedent to all Loans and Substitutions.... 9
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................. 10
(a) Due Incorporation...................................... 10
(b) Authorization.......................................... 10
(c) No Conflict............................................ 11
(d) Approvals, etc......................................... 11
(e) Good Title............................................. 11
(f) Tax Liens.............................................. 11
(g) Financial Statements................................... 12
(h) No Litigation.......................................... 12
(i) Disclosure............................................. 12
(j) Permits, Licenses, Approvals, Consents, etc............ 12
(k) The Investment Company Act............................. 12
i
SECTION 9. AFFIRMATIVE COVENANTS........................................... 12
(a) Financial Statements and Other Information............. 12
(b) Existence, Conduct of Business, etc.................... 13
(c) Taxes.................................................. 14
(d) Laws................................................... 14
(e) Name and Locations..................................... 14
(f) Records................................................ 14
(g) Pay Obligations........................................ 14
(h) Notices................................................ 14
SECTION 10. NEGATIVE COVENANTS............................................. 15
(a) Liens.................................................. 15
(b) Mergers, Sales, Dissolution, etc....................... 15
(c) Corporate Changes...................................... 15
(d) Credit Covenants....................................... 15
(e) Use of Proceeds........................................ 16
(f) Further Covenants...................................... 16
SECTION 11. EVENTS OF DEFAULT.............................................. 16
(a) Nonperformance......................................... 16
(b) Termination of Interest................................ 16
(c) Act of Insolvency...................................... 16
(d) Material Adverse Change................................ 17
(e) Default Under Other Contracts.......................... 17
(f) Merger or Consolidation................................ 17
(g) Anticipated Insolvency................................. 17
(h) Final Judgment......................................... 17
(i) Breach of Representation............................... 17
(j) Breach of Covenant..................................... 17
SECTION 12. REMEDIES....................................................... 17
(a) Action Regarding Collateral............................ 17
(b) Deficiency............................................. 18
(c) Private Sale........................................... 18
(d) Application of Proceeds................................ 19
(e) Default Rate of Interest............................... 19
(f) Attorney-in-Fact....................................... 19
(g) Payments on Collateral to Assignor..................... 19
SECTION 13. MATURITY DATE; INTEREST PAYMENT DATES;
REPAYMENT OF PRINCIPAL................................. 20
(a) Payment on Maturity Date............................... 20
ii
(b) Extension of Maturity Date............................. 20
(c) Interest Payment....................................... 20
(d) Payment of Principal................................... 20
(e) Event of Default....................................... 20
SECTION 14. PAYMENT OF TAX LIABILITY....................................... 21
SECTION 15. GENERAL PROVISIONS............................................. 21
(a) No Waiver.............................................. 21
(b) Governing Law; Severability............................ 21
(c) Construction........................................... 21
(d) Assignment............................................. 21
(e) Notices, Payments, Deliveries.......................... 21
(f) Termination............................................ 22
(g) Aggregate Amount of Loans; Disbursement of Funds....... 23
(h) Expenses............................................... 23
(i) MLMCI's Right to Pledge................................ 24
(j) Indemnification........................................ 24
(k) Further Assurances..................................... 24
(l) Remedies Cumulative.................................... 24
(m) Litigation............................................. 24
EXHIBIT A..................................................................A-1
LOAN SCHEDULE..............................................................A-4
EXHIBIT B..................................................................B-1
EXHIBIT C..................................................................C-1
EXHIBIT D..................................................................D-1
iii
THIS AGREEMENT is made as of the 10th day of April, 1997 by and
between FIRSTPLUS FINANCIAL, INC. ("Assignor") and XXXXXXX XXXXX MORTGAGE
CAPITAL INC. ("MLMCI"). By executing this Agreement, Assignor and MLMCI agree to
be bound by the terms of this Agreement.
WITNESSETH
WHEREAS the parties elect to enter into this Agreement and, at the
request of Assignor, MLMCI may from time to time at its option agree to make one
or more loans (in each instance, a "Loan") to Assignor, which Loans shall be
limited in aggregate outstanding principal amount to the lesser of (i)
$75,000,000 and (ii) 33 1/3% of the average aggregate amount of advances
outstanding under the Master Repurchase Agreement during each calendar quarter,
said Loans to be evidenced by Assignor's Note (the "Note") of even date
herewith, maturing on April 10, 1998 (the "Maturity Date"), a form of which is
attached hereto as Exhibit A; and
WHEREAS, in order to induce MLMCI to make Loans from time to time to
it, Assignor has agreed to assign and pledge to MLMCI and grant to MLMCI a lien
upon and a security interest in the Collateral (as hereinafter defined) for the
purpose of securing its obligations under the Note;
NOW, THEREFORE, in consideration of the foregoing and of the covenants
and agreements hereinafter set forth, Assignor and MLMCI agree as follows:
SECTION 1. DEFINITIONS; CONSTRUCTION
(a) Definitions. As used herein, the following terms shall have the
meaning herein specified (to be equally applicable to be the singular and plural
forms of the terms defined):
"Act of Insolvency" shall have the meaning ascribed to it in Section 11(c)
hereof.
"Agreement" shall mean this Master Assignment Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Approvals" shall have the meaning set forth in Section 8(d) hereof.
"Assignor" shall have the meaning set forth in the preamble hereof.
"Book Net Worth" shall refer to the equity of Assignor determined in
accordance with GAAP.
"Business Day" shall mean any day excluding Saturday, Sunday, or any other
day on which banks in New York, New York or Dallas, Texas are authorized or
required by law to close or a day on which trading by and between banks in
Dollars in the London interbank market is not conducted.
"Closing Date" shall mean with respect to each Loan, the settlement date
set forth in the Confirmation Statement applicable to such Loan.
"Collateral" shall have the meaning ascribed thereto in Section 2 hereof
and shall include any Supplemental Collateral.
"Confirmation Statement" shall have the meaning set forth in Section 4
hereof.
"Current Margin" shall have the meaning ascribed to it in Section 5(b)
hereof.
"Default" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning specified in Section 12(e) hereof.
"Dollar" and the sign "$" shall mean lawful money of the United States of
America.
"Effective Date" shall mean the date that all of the conditions set forth
in Section 7 hereof have been met.
"Event of Default" shall have the meaning set forth in Section 11 hereof.
"FFG" shall mean FIRSTPLUS FINANCIAL GROUP, INC. (formerly, RAC Financial
Group, Inc.), the direct or indirect sole shareholder of Assignor.
"GAAP" shall have the meaning specified in Section 1(b) hereof.
"Governmental Authority" shall mean any nation, government, or State, or
any political subdivision of any of them, or any court, entity or agency
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Lien" shall mean any interest in property, or a claim by, a Person other
than the owner of such property, whether such interest is based on the common
law, statute or contract, and including, but not limited to, a security
interest, security title or lien arising from a security agreement, mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, conditional sale,
financing statement or trust receipt or a lease, consignment or bailment for
security purposes.
"Loan" shall have the meaning set forth in the preamble hereof.
"Loan Documents" shall mean and include this Agreement, the Note, each
Confirmation Statement and all instruments and documents now or hereafter
executed and/or delivered pursuant hereto or thereto or in connection herewith
or therewith.
2
"Margin Stock" shall have the meaning provided in Regulation G of the
Board of Governors of the Federal Reserve System.
"Market Value" shall mean the fair market value of any Pledged MBS as
determined in accordance with MLMCI's valuation model for such type of Pledged
MBS, provided that such fair market value or valuation model may be modified by
MLMCI in its discretion using reasonable business judgment and taking into
consideration relevant market conditions at the time of such determination. The
pricing assumptions used by MLMCI in determining the fair market value of any
Pledged MBS will be set forth in the related Confirmation Statement.
"Master Repurchase Agreement" shall mean the Master Repurchase Agreement,
dated as of April 10, 1997, among MLMCI, Xxxxxxx Xxxxx Credit Corporation and
Assignor, as the same shall be amended from time to time.
"Material Adverse Change" shall mean a material adverse change in (a) the
business, operations, properties, prospects or condition (financial or
otherwise) of the Assignor or (b) the ability of Assignor to perform its
obligations hereunder and under the other Loan Documents.
"Maturity Date" shall mean with respect to each Loan the earlier of (a)
one year from the related Closing Date as specified in the Confirmation
Statement with respect to such Loan, subject to extension under Section 13(b),
and (b) the Termination Date.
"MBS Issuance Agreements" shall mean the agreements pursuant to which the
related Pledged MBS has been issued, including any agreements relating to the
payment or distribution of amounts to the holder of such Pledged MBS, which
agreements have been previously approved by MLMCI or its affiliate.
"MLMCI" shall have the meaning set forth in the preamble hereof.
"Note" shall have the meaning set forth in the preamble hereof.
"Obligations" shall mean the principal of and all interest on the Loans,
all fees, expenses, reimbursements (including, without limitation the reasonable
fees and expenses of attorneys), taxes and indemnities and other amounts payable
by the Assignor under the Loan Documents and under any other documents or
instruments executed and delivered by Assignor in connection therewith to MLMCI
pursuant to Section 2 hereof or any of their respective successors or assigns,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising and however arising.
"Outstanding Loans" shall mean on the date of determination thereof the
aggregate unpaid principal amount of each Loan made hereunder.
3
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"Pledged MBS" shall mean any residual, subordinated or interest strip
class of asset backed securities (i) issued in connection with a securitization
involving Assignor and in which MLMCI or an affiliate of MLMCI has acted as the
lead or co-lead underwriter or placement agent and (ii) pledged by Assignor and
accepted by MLMCI in connection with a Loan hereunder.
"Proceeds" shall have the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (i) any and all Proceeds of any
insurance, indemnity, warranty or guaranty payable to the Assignor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Assignor from time to time in
connection with any reacquisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
and any sale, transfer or other disposition of all or any part of the
Collateral, and (iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Substitute Collateral" shall have the meaning set forth in Section 6
hereof.
"Supplemental Collateral" shall mean collateral acceptable to MLMCI in
accordance with the provisions of Section 5(c) hereof.
"Termination Date" shall have the meaning ascribed to it in Section 15(f)
hereof.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York or in any other applicable jurisdiction.
(b) Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms shall be construed herein, all accounting
determinations hereunder shall be made, all financial statements required to be
delivered hereunder shall be prepared and all financial records shall be
maintained in accordance with generally accepted accounting principles ("GAAP")
applied on a basis consistent with the financial statements referred to in
Sections 9(a)(i) and 9(a)(ii) hereof.
(c) 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
article, section, schedule, exhibit and like references are to this Agreement
unless otherwise specified. Any defined term which relates to a document shall
include within its definition any amendments, modifications, renewals,
restatements, extensions, supplements or substitutions which may have been
heretofore or may be hereafter executed in accordance with the terms hereof.
4
SECTION 2. GRANT OF SECURITY INTEREST; DELIVERY OF COLLATERAL; LOANS
DISCRETIONARY
(a) Grant of Security Interest. Assignor hereby grants, pledges, assigns,
transfers and delivers to MLMCI with respect to each Loan on the Closing Date,
and grants to MLMCI a lien upon and continuing security interest in all of
Assignor's right, title and interest in, to and under all of the following
whether now owned or existing, or at any time hereafter acquired or arising, by
Assignor or in which Assignor now has or at any time in the future may acquire
any right, title or interest (all of which being hereinafter collectively called
the "Collateral"): (i) the Pledged MBS described in the Confirmation Statement
delivered pursuant to Section 4 relating to a Loan, (ii) any Supplemental
Collateral that may be granted to MLMCI pursuant to Section 5(c) hereof
(provided, however, that any representations, warranties or covenants contained
herein, and the grant of a lien and security interest with respect to any
Supplemental Collateral, shall be effective as to any Supplemental Collateral
(or any Proceeds, distributions or other amounts realized in respect of such
Supplemental Collateral) only upon the delivery of such Supplemental Collateral
to MLMCI pursuant to such Section 5(c) hereof), (iii) all Proceeds,
distributions and other amounts realized in respect of any of the foregoing, as
security for the due and punctual payment by Assignor of the Note and any
amounts that may become payable thereunder or hereunder and (iv) with respect to
any Loan, all books and records of Assignor pertaining to any of the foregoing.
(b) Delivery of Instruments of Transfer. Assignor shall, with respect to
each Loan, deliver to MLMCI the Collateral endorsed in the name of MLMCI or its
nominee or with properly endorsed instruments of transfer (including, without
limitation, any necessary assignments, corporate resolutions and opinions of
legal counsel) that will enable MLMCI to cause such Collateral to be so
registered without further action on the part of the Assignor and such
instruments of transfer to the appropriate transfer agent.
(c) Funding of Loans. (i) MLMCI Discretion. MLMCI shall not be required to
make any Loans hereunder and any Loan hereunder shall be made by MLMCI in its
sole discretion.
(ii) Loan Advances. If MLMCI determines to make any Loan hereunder,
then in accordance with the related Confirmation Statement, MLMCI shall advance
such Loan to Assignor at a principal amount equal to 65% of the Market Value of
the Collateral described in such Confirmation Statement. Each Loan advance
hereunder shall be recorded as such by MLMCI and be evidenced by the "Loan
Schedule" attached to the Note, and any repayments of each such Loan shall be
recorded as such by MLMCI and be evidenced by such "Loan Schedule"; provided,
however, that the failure of such recordation by MLMCI shall not affect the
rights of the parties hereunder with respect to such Loan.
(iii) Interest Rate. Each Loan shall bear interest, as calculated on a
monthly basis, on the unpaid principal amount thereof from the related Closing
Date through maturity at a rate
5
per annum equal to two hundred and twenty-five (225) basis points over the
prevailing London Interbank Offered Rate for one-month United States Dollar
deposits as set forth on page 4833 of Telerate as of 8:00 a.m. New York City
time on the last Business Day of the month preceding the month in which such
interest is currently accruing.
(d) MLMCI's Duty of Care. Except as herein provided in this Section 2(d),
MLMCI's sole duty with respect to the Collateral shall be to use reasonable care
in the safekeeping, custody, use, operation and preservation of the Collateral
in its possession or control. MLMCI shall incur no liability to Assignor for any
act of government, act of God, or other destruction in whole or in part or
negligence or wrongful act of custodians or agents selected by and supervised by
MLMCI with reasonable care, or MLMCI's failure to provide adequate protection or
insurance for the Collateral. MLMCI shall have no obligation to take any action
to preserve any rights in any of the Collateral against prior parties, and
Assignor hereby agrees to take such action. Assignor shall defend the Collateral
against all such claims and demands of all persons, at all times, as are adverse
to MLMCI. MLMCI shall have no obligation to realize upon any Collateral, except
through proper application of any distributions with respect to the Collateral
made directly to MLMCI or its agent(s). So long as MLMCI shall act in a
commercially reasonable manner, Assignor hereby waives the defense of impairment
of the Collateral.
SECTION 3. EARNINGS ON COLLATERAL
All payments and distributions, whether in cash or in kind, made on or
with respect to the Collateral shall, so long as an Event of Default as defined
in Section 11 hereof shall not have occurred and be continuing, be paid to
Assignor directly by the applicable paying agent by wire transfer in immediately
available funds pursuant to wiring instructions delivered in writing by Assignor
to MLMCI, and upon receipt by Assignor such payments and distributions shall be
released from the lien and security interest granted to MLMCI hereunder. Subject
to compliance with the MBS Issuance Agreements, MLMCI may, in its sole
discretion after the occurrence and during the continuation of an Event of
Default, cause all such payments and distributions to be paid, delivered or
transferred directly to MLMCI.
6
SECTION 4. CONFIRMATION STATEMENT
MLMCI shall, with respect to each Loan, deliver a confirmation statement
substantially in the form attached hereto as Exhibit B (in each case, the
"Confirmation Statement") to Assignor confirming the agreement between Assignor
and MLMCI as to the specific terms of the Loan. Each such Confirmation Statement
shall constitute a binding agreement between Assignor and MLMCI, and this
Agreement is hereby incorporated in each such Confirmation Statement and made a
part thereof as if it were set out in full in each such Confirmation Statement.
Each such Confirmation Statement will be binding upon the parties hereto unless
written notice of objection is given by the objecting party to the other party
within two (2) Business Days after the objecting party's receipt of such
Confirmation Statement.
SECTION 5. MARGIN DETERMINATIONS
(a) Margin Requirement. A margin requirement (the "Margin Requirement")
expressed as a percentage shall be established by MLMCI with respect to each
Loan on the related Closing Date and shall be set forth in the related
Confirmation Statement. The Margin Requirement for any Loan shall not be less
than 35%.
(b) Current Margin. MLMCI may, in its reasonable discretion, from time to
time calculate the Current Margin with respect to any Loan, which shall equal
the amount by which (i) 100% exceeds (ii) a fraction (expressed as a percentage)
(A) the numerator of which is the then outstanding principal amount of such Loan
together with accrued and unpaid interest thereon to the date of determination
and (B) the denominator of which shall be the then current Market Value of the
related Collateral (including any Supplemental Collateral delivered pursuant to
this Agreement) then held by MLMCI.
(c) Supplemental Collateral. If MLMCI shall at any time determine with
respect to a Loan that the Current Margin is less than the related Margin
Requirement, MLMCI may in its discretion notify Assignor of such fact, and
Assignor shall, on the day of such notice, if such notice is received prior to
10:00 a.m. New York City time, and on the Business Day next succeeding the day
of such notice, if such notice is received after 10:00 a.m. New York City time,
deliver to MLMCI cash or Supplemental Collateral acceptable to MLMCI in its sole
reasonable judgment as Collateral hereunder, which cash shall be applied to
reduce the principal balance of the related Loan and which Supplemental
Collateral shall, in the aggregate, equal an amount such that, after giving
effect to the application of such cash and the delivery of such Supplemental
Collateral, the Current Margin for such Loan will be at least equal to the
related Margin Requirement. Delivery of Supplemental Collateral pursuant to this
Section 5(c) shall be in such manner as is acceptable to, and under such
additional conditions as may be required by, MLMCI in its sole reasonable
judgment.
(d) Release of Supplemental Collateral. If at any time the Current Margin
for a Loan
7
exceeds the Margin Requirement for such Loan and provided that Assignor shall
not have failed to satisfy the requirements of Section 5(c) with respect to any
notice thereunder given by MLMCI relating to any Loan, Assignor may, upon notice
to MLMCI, demand that MLMCI redeliver all or any portion of the Supplemental
Collateral, provided, however, that after giving effect to such redelivery, the
Current Margin would not be less than the Margin Requirement, and MLMCI shall
make good delivery of such Supplemental Collateral, in a manner equivalent to
the manner in which such Supplemental Collateral was delivered to MLMCI, no
later than the Business Day following receipt by MLMCI of such notice. In such
connection, MLMCI shall execute such other documents and take such other actions
as the Assignor may reasonably request in order to evidence and give effect to
the release of such Supplemental Collateral from the security interest granted
by this Agreement.
SECTION 6. RELEASE AND SUBSTITUTION OF COLLATERAL
(a) Assignor may obtain the release from MLMCI of the security interest in
and lien on all or any part of the Collateral at any time, and from time to
time, by paying to MLMCI as a repayment the amount of the Loan outstanding with
respect to such Collateral to be so released; provided, however, that the date
of any such repayment must be acceptable to MLMCI. Any release of the security
interest in and lien on all or any part of the Collateral as a result of a
repayment or a substitution pursuant to this Section shall be evidenced by the
execution and delivery by MLMCI of appropriate documentation to evidence such
release.
(b) MLMCI shall allow Assignor, in Assignor's sole discretion, to provide
collateral acceptable to MLMCI, in MLMCI's sole reasonable discretion, to be
substituted for existing Collateral of equal market value. All certificates or
instruments representing such substituted collateral shall be accompanied by
duly executed instruments of transfer or assignments in blank, all in form and
substance reasonably satisfactory to MLMCI.
SECTION 7. CONDITIONS TO THE LOANS
(a) Conditions to the Effective Date. The obligation of MLMCI to enter
into this Agreement is subject to the satisfaction by Assignor of the following
conditions on the Effective Date:
(i) Loan Documents. MLMCI shall have received the following
documents each in form and substance satisfactory to MLMCI and its counsel:
a. this Agreement, executed and delivered on behalf of Assignor
by a duly authorized officer of Assignor,
b. the Note, executed and delivered on behalf of Assignor by a
duly
8
authorized officer of Assignor,
c. the related Collateral, if delivery of the Collateral is
required in order to perfect MLMCI's security interest in such
Collateral, and
d. the Master Repurchase Agreement, executed and delivered on
behalf of Assignor by a duly authorized officer of Assignor.
(ii) Proceedings of Assignor. MLMCI shall have received a copy of
the resolutions in form and substance satisfactory to MLMCI and its counsel, of
Assignor authorizing (i) the execution, delivery and performance of the Loan
Documents and the other documents to be executed and/or delivered by it pursuant
hereto or thereto or in connection herewith or therewith, (ii) the borrowings
contemplated hereunder and (iii) the granting by it of the security interest
contemplated hereby, certified by a duly authorized officer of Assignor as of
the Effective Date, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate.
(iii) Corporate Documents. MLMCI shall have received true and complete
copies of the Certificate of Incorporation and By-Laws of Assignor (including
any and all amendments, supplements and modifications thereto) certified to such
effect by a duly authorized officer of Assignor as of the Effective Date.
(iv) No Violation. The consummation of the transactions contemplated
hereby and by the other Loan Documents shall not contravene, violate or conflict
with, nor involve MLMCI in a violation of, any requirement of law.
(v) Permits, Licenses, Approval , Consent, etc. MLMCI shall have
received a certificate of a duly authorized officer of Assignor certifying that
all permits, licenses, approvals and consents required in connection with the
execution, delivery and performance by Assignor and the validity and
enforceability against Assignor of this Agreement and the other Loan Documents
have been obtained and such permits, licenses, approvals and consents are in
full force and effect and have not been amended, modified, revoked or rescinded.
(vi) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to MLMCI
and its counsel.
(b) Conditions Precedent to all Loans and Substitutions. The making of any
Loan or the permitting of any substitution of Substitute Collateral by MLMCI
hereun er is, except as otherwise provided in this Section 7, subject to
compliance by Assignor with the following conditions precedent and the other
terms and conditions hereof and, the giving of any notice by Assignor with
respect to a Loan pursuant to Section 4 and the acceptance of the Proceeds of
any Loan by Assignor and the substitution of any Substitute Collateral shall be
deemed certification
9
by Assignor that the following conditions shall have been met:
(i) Representations and Warranties. Each of the representations and
warranties made by Assignor herein and in the other Loan Documents are true and
correct on and as of the Closing Date, before and after giving effect to the
Loan (and the application of the Proceeds therefrom) or the substitution, as
though made on and as of such date.
(ii) No Default. Before and after giving effect to such Loan (and
the application of Proceeds therefrom) or such substitution, no Default or Event
of Default shall have occurred and is continuing on and as of the Closing Date.
(iii) Financing Statements. The separate financing statement,
instrument or other document, if required by MLMCI to be recorded and/or filed
with respect to the subject Loan or substitution, shall have been so recorded
and/or filed.
(iv) Good Standing Certificates. On or pri r to the initial Closing
Date hereunder and from time to time thereafter as MLMCI may reasonably request
(but not more frequently than quarterly), MLMCI shall have received original
certificates, in form and substance satisfactory to MLMCI and its counsel, from
the Secretary of State or other appropriate authority of such jurisdiction,
evidencing the good standing of Assignor in the States of Delaware and Texas and
in each other jurisdiction where the ownership of its property or the conduct of
its business requires such qualification.
(v) Legal Opinion of Counsel to Assignor. On or prior to the initial
Closing Date hereunder and on each date after the initial Closing Date that a
security interest in Collateral is granted to MLMCI hereunder Assignor shall
cause to be delivered to MLMCI an opinion of counsel to Assignor (which counsel
may be internal counsel for Assignor and shall be satisfactory to MLMCI), in
substantially the form attached hereto as Exh bit C or such other form as MLMCI
and Assignor may mutually agree.
(vi) Recordings and Filings. All material instruments and documents
(including, without limitation, financing statements and continuation
statements) required to be filed hereunder in order to create in favor of MLMCI
a perfected security interest in the Collateral hereunder shall have been
properly filed in each office in each relevant jurisdiction and copies of such
instruments and do uments, stamped to indicate such filing, shall have been
delivered to MLMCI.
SECTION 8. REPRESENTATIONS AND WARRANTIES
In order to induce MLMCI to enter into this Agreement and to make the
Loans hereunder, Assignor hereby represents and warrants to MLMCI, and shall on
and as of the Closing Date of each Loan and each date on which Substitute
Collateral is substituted, be deemed to represent and warrant to MLMCI, that:
10
(a) Due Incorporation. Assignor has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of its
incorporation and is duly qualified and in good standing in each other
jurisdiction where the conduct of its business or the ownership, lease or
operation of its property requires such qualification.
(b) Authorization. Assignor has full power and authority to execute and
deliver the Loan Documents and to perform its obligations hereunder and
thereunder; the Loan Documents have each been duly authorized by all necessary
action and neither requires any additional approval of any directors or officers
other than that which has already been obtained, each has been duly executed and
delivered by Assignor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization or similar laws of
general applicability relating to or affecting creditors' rights, to the
assumption that enforcement will be undertaken in a commercially reasonable
manner and to general principles of equity and equitable remedies, regardless of
whether enforcement is considered in a proceeding in equity or at law.
(c) No Conflict. Neither the execution and delivery nor the performance by
Assignor of this Agreement or the Note will conflict with the governing
instruments of Assignor or conflict with, result in a breach of or constitute a
default or require any consent under any instrument or agreement to which
Assignor is a party or by which Assignor may be bound, or any law, order or
regulation applicable to Assignor of any court, governmental agency, authority
or body having jurisdiction over Assignor and do not and will not result in or
require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant hereto) upon or with respect to any of
Assignor's properties.
(d) Approvals, etc. Neither the execution and delivery nor the performance
by Assignor of this Agreement requires any authorization, approval, consent,
license, exemption (other than any self-executing exemption), filing,
registration or the taking of any other action in respect of any federal or
state authority except where the failure to comply with such requirement would
not adversely affect the delivery, execution or performance by Assignor of this
Agreement or cause a Material Adverse Change.
(e) Good Title. (i) Subject to the MBS Issuance Agreements, Assignor is
the owner of the Collateral and such Collateral is free and clear of all
security interests, liens, charges, encumbrances and rights of others, except
for the lien and security interest created hereby, and on the related Closing
Date, MLMCI has a first priority lien on and security interest in the Collateral
(including all Proceeds, distributions and other amounts realized in respect
thereof) in favor of MLMCI, subject to no prior security interest, lien, charge,
encumbrance or rights of others, and, MLMCI having taken possession of the
Collateral endorsed in the name of MLMCI or its nominee or delivered with such
instruments of transfer as provided in Section 2(b) hereof, no further action,
including any filing or recordation of any document, is currently required in
order to establish and perfect the liens on and security interests in the
Collateral in favor of MLMCI
11
against any third parties in any jurisdiction.
(ii) Assignor's chief executive office and the place where its books and
records concerning the Collateral are kept is set forth on Exhibit D hereto.
Each location of Assignor where any of the Collateral is located is set forth on
Exhibit D.
(f) Tax Liens. There are no delinquent federal, state, city, county or
other taxes relating to Assignor, the Collateral or any arrangement pursuant to
which the Collateral is issued that might, in the reasonable judgment of MLMCI,
materially adversely affect any of the Collateral or cause a Material Adverse
Change in Assignor, and all such delinquent tax liabilities have been satisfied
except those that are being contested by Assignor in good faith and with respect
to which payment has been stayed by a court of competent jurisdiction.
(g) Financial Statements. Since the date of the most recent financial
statement delivered by Assignor to MLMCI, there has been no Material Adverse
Change. Assignor shall provide MLMCI with such financial statements and other
information as is contemplated in Section 9(a) hereof.
(h) No Litigation. There are no actions, suits, investigations, or other
proceedings pending, or, to the best knowledge of Assignor, after due inquiry,
threatened, against or affecting Assignor by or before any court, arbitrator,
Governmental Authority which challenge any of the transactions contemplated
under this Agreement or any other Loan Document or could result in a Material
Adverse Change and there are no preliminary or permanent injunctions or orders
by any court or other Governmental Authority pending affecting this Agreement or
any other Loan Document or any of the transactions contemplated hereby or
thereby.
(i) Disclosure. No certificate, statement, report or other document
furnished and no representation or warranty made or to be furnished or made to
MLMCI by or on behalf of Assignor in or in connection with this Agreement or any
transaction contemplated hereby, or in connection with any other Loan Document
or any transaction contemplated thereby, at the time furnished, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make the statements contained therein
not misleading.
(j) Permits, Licenses, Approvals, Consents, etc. Assignor has obtained any
and all permits, licenses, approvals and consents of any Governmental Authority
or other Person as may be required in connection with the execution, delivery
and performance by and the validity and enforceability against Assignor of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby or thereby (all such permits, licenses, approvals and
consents, if any, are in full force and effect and have not been amended,
modified, revoked or rescinded).
(k) The Investment Company Act. Assignor is not an "investment company",
or an
12
entity "controlled by an "investment company", within the meaning of the
Investment Com- pany Act of 1940, as amended.
SECTION 9. AFFIRMATIVE COVENANTS
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated, Assignor covenants and agrees that it will:
(a) Financial Statements and Other Information. Furnish to MLMCI:
(i) as soon as available and in any event within sixty (60) days after the
close of each of the first three (3) quarters of each fiscal year of Assignor,
the FFG applicable quarterly Form 10-Q as filed with the Securities and Exchange
Commission, including the consolidating statements for the Assignor, subject to
normal recurring year-end audit adjustments, and as prepared in accordance with
GAAP;
(ii) as soon as available and in any event within one hundred and twenty
(120) days after the close of each fiscal year of Assignor, a balance sheet of
Assignor, a statement of income of Assignor and a statement of changes in
financial position of Assignor as at the end of and for the fiscal year just
closed, setting forth the corresponding figures of the previous fiscal year, if
applicable, in comparative form, all in reasonable detail and certified (without
any qualification or exception deemed material by MLMCI) by independent public
accountants selected by Assignor and reasonably satisfactory to MLMCI and
concurrently with such financial statements, a written statement signed by such
independent public accountants to the effect that, based solely on the
examination necessary for their certification of such financial statements,
Assignor is in compliance with the covenants in Section 10(d) hereof, or if such
independent public accountants shall have obtained from such examination any
knowledge to the contrary, they shall disclose in such written statement the
related Event of Default or Default and the nature thereof;
(iii) concurrently with the delivery of the financial statements required
to be furnished by Section 9(a)(ii) hereof, a certificate signed by the chief
executive or financial officer of Assignor, stating (1) that a review of the
activities of Assignor during such quarter or fiscal year, as the case may be,
has been made under his or her immediate supervision with a view to determining
whether Assignor has observed, performed and fulfilled all of its obligations
under this Agreement and whether Assignor is in compliance with the
representations and warranties in Section 8 hereof and the covenants in Sections
9 and 10 hereof, and (2) that there existed during such quarter or fiscal year,
as the case may be, no Event of Default and no Default or if any such Event of
Default or Default did exist, specifying the nature thereof, the period of
existence thereof and what action Assignor proposes to take, or has taken, with
respect thereto;
(iv) promptly, and in any event no later than five (5) Business Days,
after the commencement thereof, written notice of any material actions, suits or
proceedings (including arbitrations) against Assignor before any court or other
Governmental Authority;
13
(v) immediately upon becoming aware of any development or other
information which is reasonably likely to result in a Material Adverse Change,
written notice specifying the nature of such development or information, such
anticipated effect and action, if any, Assignor proposes to take or has taken
with respect thereto;
(vi) with reasonable promptness, such other information respecting any
matter likely to result in a Material Adverse Change as MLMCI may reasonably
request from time to time.
(b) Existence, Conduct of Business, etc. Continue to engage primarily in
the business of the same general type as now conducted by it and preserve, renew
and maintain in full force and effect its existence and all permits, licenses,
approvals, consents, rights, privileges and franchises necessary or desirable in
the conduct or transaction of its business or the ownership or operation of its
properties or the lease of its properties to which it is a lessee.
(c) Taxes. Assignor will pay and discharge all taxes, levies, liens and
other charges on its assets and on the Collateral that, in each case, in any
manner would create any lien or charge upon the Collateral.
(d) Laws. Assignor will at all times comply in all material respects with
all laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Assignor or any of its assets.
(e) Name and Locations. Assignor will immediately advise MLMCI in writing
of the opening of any new chief executive office or the closing of any such
office and of any change in Assignor's name or the places where the books and
records pertaining to the Collateral are kept. MLMCI is hereby advised and
acknowledges that during April and May 1997 Assignor will by opening a new chief
executive office at 0000 Xxxxxxx Xxxxx, Xxxxxx Xxxxx 00000-0000 and closing its
existing chief executive office.
(f) Records. Assignor will maintain records with respect to the Collateral
and the conduct and operation of its business in conformity with general
industry standards and with no less a degree of prudence than if the Collateral
were held by Assignor for its own account and will furnish MLMCI, upon
reasonable request by MLMCI or its designated representative, with reasonable
information with respect to the Collateral and the conduct and operation of its
business. Assignor will permit MLMCI or its designated representative to inspect
Assignor's records with respect to the Collateral and the conduct and operation
of its business upon reasonable notice from MLMCI or its designated
representative, at such reasonable times and with reasonable frequency, and to
make copies or extracts of any and all thereof. MLMCI shall act in a
commercially reasonable manner in requesting and conducting any inspection
relating to the conduct and operation of Assignor's business.
(g) Pay Obligations. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its material
obligations of whatever nature,
14
except when the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and the Assignor has established adequate
reserves with respect thereto and no Liens have attached to the Collateral or
any portion thereof.
(h) Notices. Promptly, and in any event within one (1) Business Day of the
occurrence thereof, notify MLMCI in writing of (i) the occurrence of any Default
or Event of Default hereunder or under any other Loan Document or (ii) any event
of default by any party thereto under any indenture, mortgage, deed of trust,
agreement or other instrument or contractual obligation to which the Assignor is
a party or by which any of its properties may be bound or affected which could
result in a Material Adverse Change, and specifying in each case the action the
Assignor has taken or proposes to take with respect thereto.
SECTION 10. NEGATIVE COVENANTS
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated, the Assignor covenants and agrees that it will not:
(a) Liens. Create, incur, assume or suffer to exist, any Lien on any of
the Collateral whether now owned or hereafter acquired, other than Liens in
favor of MLMCI hereunder.
(b) Mergers, Sales, Dissolution, etc. (i) Merge into or consolidate with
any other Person without the prior consent of MLMCI, which consent shall not be
unreasonably withheld, or (ii) assign, transfer, sell, lease, or otherwise
dispose of any of the Collateral, or all or substantially all of its other
property or assets to any other Person or (iii) wind up, liquidate or dissolve,
or agree to do any of the foregoing.
(c) Corporate Changes. Change its name, principal place of business, the
location where its books and records are kept with respect to the Collateral or
corporate structure on less than thirty (30) days prior written notice to MLMCI.
MLMCI is hereby notified and acknowledges the prospective change in Assignor's
principal place of business as described in Section 9(e) above.
(d) Credit Covenants. (i) The ratio of Assignor's outstanding indebtedness
(determined in accordance with GAAP but including for this purpose any warehouse
or repurchase facilities accounted for as off balance sheet transactions) to all
lenders (including, without limitation, all indebtedness incurred under any loan
agreement, warehouse finance agreement and repurchase agreement) to its Book Net
Worth shall at any time be more than 8 to 1;
(ii) Assignor shall experience losses or changes in its financial
condition that cause its Book Net Worth for any two consecutive calendar
quarters to be less than or equal to 80% of its Book Net Worth as of the
commencement of such period;
15
(iii) Assignor's Book Net Worth shall at any time, from the date of this
Agreement to April 30, 1997, be less than $140,000,000 and shall at any time
thereafter be less than $200,000,000; and
(iv) Assignor shall pay or declare any dividend or other distribution
except (a) dividends payable solely in the form of capital stock, (b) dividends
to RAC to the extent of Assignor's portion of the consolidated federal income
tax liability of RAC and its subsidiaries, (c) dividends to RAC to the extent of
interest on the subordinated debt of Assignor owed by RAC, (d) other dividends
to RAC that do not in any fiscal year of Assignor when added to the dividends
during that year under clauses (b) and (c) preceding exceed 25% of Assignor's
net income for that fiscal year, or (e) dividends otherwise approved in writing
by Buyer; notwithstanding the above, Seller may not pay or declare any dividends
at any time while an Event of Default exists and is continuing or would be
created by such dividends.
(e) Use of Proceeds. The Proceeds of the Loans made pursuant to this
Agreement will not be used by the Assignor, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock or for the purpose of
reducing or retiring any debt which was originally incurred to purchase or carry
Margin Stock or for any other purpose which might constitute the Loans under
this Agreement as being "purpose credit" within the meaning of Regulation G or X
of the Board of Governors of the Federal Reserve System.
(f) Further Covenants. Without prior written consent of MLMCI, Assignor
will not: (i) assign, sell, transfer, pledge or grant any security interest in
or lien on any of the Collateral to anyone except MLMCI, permit any financing
statement (except any financing statements in favor of MLMCI) or assignment
(except for any assignments in favor of MLMCI) to be on file in any public
office with respect thereto, (ii) permit or suffer to exist any security
interest, lien, charge, encumbrance or right of others to attach to any of the
Collateral, except as contemplated by this Agreement, or (iii) consent to any
amendment or supplement to any MBS Issuance Agreement that is reasonably likely
to result in a material adverse affect on the Market Value of the Pledged MBS,
but excluding in any event any amendment or supplement that effectuates a
letter-of-credit and the limited quarterly substitution into a related reserve
fund for the release of cash as contemplated in such MBS Issuance Agreement.
SECTION 11. EVENTS OF DEFAULT
Each of the following, so long as it shall not have been remedied, shall
constitute an "Event of Default" hereunder:
(a) Nonperformance. Any failure to pay, whether on the acceleration
thereof or otherwise, any amounts due under the Note or any failure to pay any
amount due under this Agreement or to perform any provision of this Agreement in
accordance herewith, or any material breach of any representation, warranty or
covenant set forth herein or in the Note.
16
(b) Termination of Interest. The lapse or termination of Assignor's
interest in any of the Collateral.
(c) Act of Insolvency. The filing by Assignor or any affiliate, of a
petition in bankruptcy, the adjudication of Assignor or any affiliate as
insolvent or bankrupt, the petition or application by Assignor or any affiliate
for any receiver or trustee for itself or any substantial part of its property,
the commencement by Assignor or any affiliate of any proceeding relating to it
under any reorganization, arrangement, dissolution or liquidation law, or the
initiation of any such proceeding against Assignor or any affiliate, if Assignor
or such affiliate indicates by any act its consent thereto or if such proceeding
is not dismissed within thirty (30) days.
(d) Material Adverse Change. In the reasonable judgment of MLMCI, a
Material Adverse Change shall have occurred.
(e) Default Under Other Contracts. Assignor shall be in default with
respect to any normal and customary covenants under any contract or agreement to
which it is a party (which covenants include, but are not limited to, an Act of
Insolvency of Assignor or the failure of Assignor to make required payments
under such contract or agreement as they become due) which default permits
acceleration of the obligations of Assignor under such contract or agreement by
any other party thereto and which default, in the reasonable judgment of MLMCI,
is likely to result in a Material Adverse Change.
(f) Merger or Consolidation. Assignor shall merge or consolidate into any
entity unless MLMCI shall have expressly consented to such merger or
consolidation in writing, which consent shall not be unreasonably withheld.
(g) Anticipated Insolvency. MLMCI shall reasonably determine that Assignor
is or will be unable to meet its commitments hereunder, notifies Assignor of
such determination and Assignor shall not have responded with appropriate
information to the contrary to the satisfaction of MLMCI within thirty-six (36)
hours.
(h) Final Judgment. A final judgment by any competent court in the United
States for the payment of money in an amount of at least $100,000 is rendered
against Assignor, and the same remains undischarged and unpaid for a period of
sixty (60) days during which execution of such judgment is not effectively
stayed.
(i) Breach of Representation. Any representation or warranty made by
Assignor herein shall have been incorrect or untrue in any material respect when
made or repeated or when deemed to have been made or repeated and which breach,
in the reasonable judgment of MLMCI, is likely to result in a Material Adverse
Change.
(j) Breach of Covenant. Assignor shall breach in any material respect any
covenant
17
made by it herein and MLMCI's interests shall have been materially adversely
affected thereby.
SECTION 12. REMEDIES
(a) Action Regarding Collateral. If an Event of Default shall occur,
MLMCI, without demand of performance or other demand or notice of any kind to
Assignor or any other person, all of which are hereby expressly waived, may
forthwith apply the cash, if any, then held by it as part of the Collateral
relating to any Loan to the payment of any of the Obligations, and, if there
shall be no such cash or the cash so applied shall not be sufficient to pay in
full all such Obligations, may thereafter collect, receive, appropriate, retain
and realize upon the Collateral, or any part thereof, and may forthwith sell,
assign, give an option or options to purchase, contract to sell, or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
parcels at such public or private sale or sales, at such place or places, at
such price or prices and upon such other terms and conditions as MLMCI may deem
best (provided, however, that MLMCI shall act in all respects in a commercially
reasonable manner), for cash or on credit or for future delivery without
assumption of any credit risk, with the right of MLMCI upon any such sale or
sales to purchase all or any part of the Collateral so sold. Upon any sale,
transfer or other disposition of the Collateral pursuant hereto MLMCI shall have
the right to deliver, assign and transfer to the transferee thereof the
Collateral so sold. Each transferee upon any such transfer or other disposition
shall hold the property thereby acquired by it absolutely free from any claim or
right of any kind, including any equity or rights of redemption, of Assignor,
who hereby specifically waives all rights of redemption, stay or appraisal which
it has or may have under any rule of law or statute whether now existing or
hereafter adopted (in the latter case, to the extent permitted thereby).
Assignor agrees that MLMCI need give only such notice of the time and place of
any public or private sale (including any adjourned private sale) or other
intended disposition as may be required by market conditions and standards of
commercial reasonableness and that MLMCI need not in any event give more than
five (5) Business Days' notice that such sale or disposition is to take place.
Assignor agrees that the notice provided for in the preceding sentence is
reasonable notification of such matters.
MLMCI shall not be obligated to make any sale pursuant to any such notice.
MLMCI may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by MLMCI until the selling price is paid by the purchaser thereof, but
MLMCI shall not incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice. MLMCI, however, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the lien and security interest created
hereby and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
18
(b) Deficiency. If the Proceeds of sale, collection, foreclosure or other
realization of or upon the Collateral are insufficient to cover the costs and
expenses of such realization and the payment in full of the Obligations,
Assignor shall remain liable for any deficiency.
(c) Private Sale. MLMCI shall incur no liability as a result of the sale
of the Collateral (provided, however, that MLMCI shall act in a commercially
reasonable manner) or any part thereof, at any private sale. Assignor hereby
waives any claims against MLMCI or any holder or holders of the Note arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, even
if MLMCI accepts the first offer received and does not offer the Collateral to
more than one offeree (provided, however, that MLMCI shall act in a commercially
reasonable manner).
(d) Application of Proceeds. The Proceeds of any sale or other realization
of all or any part of the Collateral, and any other cash at the time held by
MLMCI under this Agreement, shall be applied by MLMCI in the following order of
priority:
First, to the payment of the costs and expenses of such sale and all
expenses (including the reasonable fees and expenses of counsel),
liabilities and advances made or incurred by MLMCI in connection
therewith.
Second, to the payment of all accrued interest under the Note due or
past due.
Third, to the payment of principal upon the Note due or past due.
Fourth, to the payment of all other amounts owing under this
Agreement.
Fifth, to the payment to Assignor, or to such other person as a
court of competent jurisdiction may direct, of any surplus then remaining
from such Proceeds and other cash.
(e) Default Rate of Interest. After demand is made with respect to the
Note or upon acceleration thereof, until the balance thereof shall be paid, the
Loan amounts due thereunder, shall bear interest at a per annum rate (based on a
year of 360 days and actual days elapsed) equal to two hundred (200) basis
points in excess of the interest rate for such Loan, but in no event higher than
the maximum rate permitted by law.
(f) Attorney-in-Fact. Effective upon the occurrence of an Event of Default
hereunder, MLMCI is hereby appointed the attorney-in-fact of Assignor for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which MLMCI may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, after an Event of Default has occurred, MLMCI shall have the right
19
and power to receive, endorse and collect all checks made payable to the order
of Assignor representing any distribution in respect of the Collateral or any
part thereof and to give full discharge for the same.
(g) Payments on Collateral to Assignor.
(i) All rights of Assignor to receive any payments from the related
Collateral which it would otherwise be authorized to receive shall cease, and
all such rights shall thereupon become vested in MLMCI, which shall thereupon
have the sole right to receive and hold as Collateral such payments.
(ii) All payments which are received by Assignor contrary to the
provisions of the preceding subsection (i) shall be received in trust for the
benefit of MLMCI, shall be segregated from other funds of Assignor and shall be
promptly paid to MLMCI.
SECTION 13. MATURITY DATE; INTEREST PAYMENT DATES; REPAYMENT OF PRINCIPAL
(a) Payment on Maturity Date. Assignor and MLMCI hereby agree that the
Obligations of Assignor hereunder and under the Note are payable on the Maturity
Date unless earlier payment thereof is required pursuant to the terms of this
Agreement.
(b) Extension of Maturity Date. Assignor may, not later than three (3)
months prior to the Maturity Date, request in writing that MLMCI extend such
Maturity Date for a period not exceeding one year. MLMCI will use its best
efforts to respond within two (2) weeks of receiving such written request. Such
response will include whether or not MLMCI would be willing to so extend the
Maturity Date and the terms of any such extension. Nothing contained herein
shall be deemed to limit the right of MLMCI, in its sole discretion, to decline
to enter into such extension or to agree to such extension on terms different
from those set forth herein. Any such extension shall be evidenced only by a
written agreement among the parties amending this Agreement and the Note.
(c) Interest Payment. Interest on each Loan shall be payable on the dates
described in the related Confirmation Statement.
(d) Payment of Principal. The principal portion of each Loan may be repaid
in whole or in part at the discretion of Assignor on any date on which a payment
of interest is to be made thereon by Assignor pursuant to the terms of this
Agreement and the related Confirmation Statement provided that (i) Assignor
shall have provided MLMCI with not less than two (2) Business Days' written
notice of Assignor's intention to effect such repayment and the amount thereof,
(ii) all payments of interest then due and owing on the Loan are paid in full
and (iii) no Event of Default has occurred and is continuing with respect to any
of Assignor's Obligations
20
hereunder or under the Note.
(e) Event of Default. Nothing in this Section 13 shall be deemed to limit
the right of MLMCI to require, so long as an Event of Default shall have
occurred and is continuing, the payment by Assignor of all Obligations arising
hereunder and under the Note.
SECTION 14. PAYMENT OF TAX LIABILITY
The Assignors and MLMCI agree that any tax or other liability (excluding
any tax liability arising from the receipt by MLMCI of interest income on any
Loan under this Agreement) incurred by the beneficial owner or the registered
holder of any Collateral pledged under the this Agreement shall be borne by
Assignor. So long as any Obligations are outstanding hereunder, Assignor agrees
to indemnify MLMCI for, and to hold MLMCI harmless against, any liability
inuring to MLMCI as a result of the endorsement of the Collateral in MLMCI's
name, or MLMCI's status as the lender hereunder or beneficial holder of such
Collateral, including, without limitation, any tax liability or liability for
the payment of expenses of the trust funds established under the applicable MBS
Issuance Agreements.
SECTION 15. GENERAL PROVISIONS
(a) No Waiver. No waiver or amendment of or forbearance in enforcing any
provision of this Agreement nor consent to any departure by either party
herefrom shall be effective unless expressly granted in writing and shall be
limited to the extent expressed therein.
(b) Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and entirely performed therein. Unless otherwise defined herein,
terms defined in the UCC are used herein as defined therein. Each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or be invalid under such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
(c) Construction. The captions in this Agreement are for convenience of
reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
(d) Assignment. This Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any rights or other
obligations hereunder may be assigned by Assignor without prior written consent
of MLMCI and any attempted or purported assignment hereof or thereof shall be
void. MLMCI may assign any or all of its rights hereunder without
21
consent.
(e) Notices, Payments, Deliveries. Unless otherwise provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, facsimile or telex communication), and such notices and
other communications shall, when mailed, telegraphed, communicated by facsimile
transmission or telexed, be effective when received at the address for notices
for the party to whom such notice or communications is to be given as follows:
If to MLMCI:
Xxxxxxx Xxxxx Mortgage Capital Inc.
Xxxxxxx Xxxxx World Headquarters
World Financial Center
Xxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Assignor:
FIRSTPLUS FINANCIAL, INC.
0000 Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
provided, however, that a facsimile or other form of electronic transmission
shall be deemed to be received by the parties hereto when transmitted so long as
the transmitting machine has provided an electronic confirmation of such
transmission and such facsimile or other form of electronic transmission is
confirmed with a printed paper copy thereof by mail or overnight courier
service. All payments on and deliveries of Collateral hereunder shall be made to
the
22
address or account for payments and deliveries of such Collateral for the party
to whom such payment or delivery is to be made as set forth above. Either party
may revise any information relating to it by notice in writing to the other
party, which notice shall be effective on the third Business Day following
receipt thereof.
(f) Termination. When all Obligations shall have been paid in full and
upon the written request of Assignor, this Agreement shall terminate and MLMCI
shall release its lien and security interest hereunder and assign, transfer and
deliver, against receipt, any remaining Collateral and money received in respect
thereof to or on the order of Assignor. Upon the request of Assignor, MLMCI will
then execute termination statements and such other documents as Assignor may
reasonably request as are necessary to make clear upon the public record the
termination of the lien and security interests created hereby with respect to
such assignment. The obligations of Assignor under Section 15(h) below shall,
with respect to each transaction entered into hereunder, survive any termination
hereof.
(g) Aggregate Amount of Loans; Disbursement of Funds.
(i) The aggregate outstanding principal amount of the Loans made by
MLMCI hereunder shall be limited to the lesser of $75,000,000 and (ii)
331/3% of the average aggregate amount of advances outstanding under the
Master Repurchase Agreement during each calendar quarter.
(ii) Assignor may request disbursement of amounts borrowed hereunder
upon not less than two (2) Business Days' written notice to MLMCI.
(iii) MLMCI is not obligated to make any Loan or advance under this
Agreement or pursuant to the Note; provided that MLMCI agrees in good
faith to give reasonable notice to Assignor of its intention not to make
any further Loans or advances hereunder, and if practicable to give such
notice at least ten (10) Business Days prior to any contemplated Loan or
advance hereunder.
(h) Expenses.
(i) Assignor shall pay its own costs and expenses and all reasonable
costs and expenses of MLMCI (including reasonable expenses for legal
services) incident to the preparation and negotiation of this Agreement
and any documents relating hereto, provided that Assignor's liability for
such costs and expenses of MLMCI shall not exceed a total of $13,750.
(ii) Assignor agrees to pay to MLMCI on demand all reasonable costs
and expenses (including reasonable expenses for legal services) of any
subsequent enforcement of any of the provisions hereof, or of the
performance by MLMCI of any Obligations of Assignor in respect of the
Collateral which Assignor has failed or refused to perform, or
23
any actual or attempted sale, or any exchange, enforcement, collection,
compromise or settlement in respect of any of the Collateral and for the
custody, care or preservation of the Collateral (including insurance
costs) and defending or asserting rights and claims of MLMCI in respect
thereof, by litigation or otherwise, including expenses of insurance. In
addition, Assignor agrees to pay to MLMCI on demand all costs and expenses
(including reasonable expenses for legal services) of the registration of
the Collateral in the name of MLMCI or its nominee. All such expenses
shall be Obligations to MLMCI secured under this Agreement.
(i) MLMCI's Right to Pledge. Nothing in this Agreement shall preclude
MLMCI from engaging in transactions with third parties involving the selling
pursuant to a repurchase arrangement, pledging or hypothecating of the
Collateral, but no such transaction shall relieve MLMCI of its obligations
hereunder. MLMCI hereby grants to Assignor the right to perform in MLMCI's stead
under any repurchase, reverse repurchase, loan or similar transaction in which
MLMCI has sold, pledged or otherwise transferred any Pledged MBS in the event
that MLMCI has defaulted on its obligations to repurchase or accept redelivery
of such Pledged MBS in conformity with the terms of any such transaction and so
long as an Event of Default hereunder by Assignor shall not have occurred and be
continuing. MLMCI further acknowledges that each Pledged MBS identified in a
Confirmation Statement and included as Collateral for a Loan hereunder is unique
and identifiable on the date of such Loan and that an award of money damages
would be insufficient to compensate Assignor for the losses and damages incurred
by Assignor in the event of MLMCI's failure to release and redeliver any Pledged
MBS upon the repayment of the related Loan by Assignor as provided hereunder.
(j) Indemnification. Assignor agrees to indemnify and hold harmless MLMCI
against all liabilities and expenses to which MLMCI may become subject relating
to any fees, taxes or liability to any third party resulting from any action
taken or omitted by or upon instructions of Assignor with respect to the
Collateral.
(k) Further Assurances. Assignor agrees that, from time to time upon the
prior written request of MLMCI, it will (i) execute and deliver such further
documents and do such other acts and things as MLMCI may reasonably request in
order to fully effectuate the purposes of this Agreement and (ii) provide such
opinions of counsel concerning matters relating to this Agreement as MLMCI may
reasonably request.
(l) Remedies Cumulative. All rights, remedies and powers of MLMCI
hereunder and in connection herewith are irrevocable and cumulative, and not
alternative or exclusive, and shall be in addition to all other rights, remedies
and powers of MLMCI whether under law, equity or agreement. In addition to the
rights and remedies granted to it in this Agreement or under the Note, MLMCI
shall have all the rights and remedies of a secured party under the UCC.
(m) Litigation. Notwithstanding any termination hereof, Assignor hereby
agrees that any legal action or proceeding against it in connection herewith may
be brought in the courts of the
00
Xxxxx xx Xxx Xxxx xx xx xxx Xxxxxx Xxxxxx of America located in the City and
State of New York, Borough of Manhattan, as MLMCI may elect, and Assignor hereby
irrevocably submits to the jurisdiction of each of said courts, and waives any
objection on the grounds of venue, forum non conveniens or similar grounds.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FIRSTPLUS FINANCIAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
26
EXHIBIT A
THIS NOTE IS NOT A
NEGOTIABLE INSTRUMENT.
NO TRANSFER OR SALE OF THIS NOTE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH SAID ACT
AND LAWS.
NOTE
$75,000,000 New York, New York April 10, 1997
FOR VALUE RECEIVED, FIRSTPLUS FINANCIAL, INC. (the "Assignor") promises to
pay to XXXXXXX XXXXX MORTGAGE CAPITAL INC. (the "Payee") the principal sum of
Seventy-Five Million Dollars ($75,000,000) (or so much thereof as shall have
been advanced here against pursuant to the Master Assignment Agreement and shall
be outstanding), in lawful money of the United States of America, in immediately
available funds, with interest on each principal sum advanced here against or
the unpaid balance thereof with such frequency and to such location as is
specified in the related confirmation statement (in each case, the "Confirmation
Statement") for such advance (or on such other day and with such other frequency
and to such other location as may be mutually agreed upon by the Assignor and
the Payee) at said office and in said money and funds from the date of the
related Loan advance until the related Maturity Date for such Loan at the rate
per annum (based on a year of 360 days and actual days elapsed) indicated on the
related Confirmation Statement attached hereto, but in no event higher than the
maximum rate permitted by law, and after such Maturity Date, or upon
acceleration as hereinafter provided, until said balances shall be paid, at the
rate per annum (based on a year of 360 days and actual days elapsed) equal to
two hundred (200) basis points in excess of the interest rate for such advance,
but in no event higher than the maximum rate permitted by law.
Loans here against shall be in minimum amounts of $1,000,000. The Assignor
may request disbursement of amounts borrowed hereunder upon not less than two
(2) Business Days' written notice to the Payee. The Payee is not obligated to
make any advances hereunder. The Payee is hereby authorized by the Assignor to
endorse on the Loan Schedule amounts advanced here against, the rate of interest
relating thereto and any principal prepayments hereunder (as permitted by the
Assignment defined below), it being understood, however, that failure to make
A-1
any such endorsement shall not affect the obligations of the Assignor hereunder
in respect of the amounts advanced here against.
This Note is the Note referred to in the Master Assignment Agreement (the
"Master Assignment Agreement"), dated as of April 10, 1997, between Assignor and
the Payee, granting to the Payee a first priority perfected security interest in
the Collateral, as described therein. The holder is entitled to the benefits of
the Master Assignment Agreement and may enforce the agreements of the Assignor
contained therein and exercise the remedies provided for thereby or otherwise
available in respect thereof. All capitalized terms used in this Note and not
otherwise defined shall have the respective meanings set forth in the Master
Assignment Agreement except where the context clearly indicates otherwise.
This Note and all other present and future obligations of any and all
kinds of the Assignor in favor of the holder hereof, whether created directly or
acquired by assignment, whether absolute or contingent, shall, unless the holder
shall otherwise elect, forthwith be due and payable without notice or demand of
any kind (except as expressly provided in the Master Assignment Agreement), all
of which are expressly waived upon the occurrence of an Event of Default.
The Assignor hereby agrees that any legal action or proceeding against it
for enforcement of this Note or of any judgment with respect to this Note may be
brought in the courts of the State of New York or of the United States of
America located in the City and State of New York, Borough of Manhattan, as the
holder may elect, and the Assignor hereby irrevocably submits to the
jurisdiction of each of said courts, and waives any objection on the grounds of
venue, forum non conveniens or similar ground. The Assignor irrevocably consents
that service of process in any such action or proceeding may be made upon the
Assignor by the mailing thereof by the holder by United States registered or
certified mail, postage prepaid, to the Assignor at the address set forth herein
below the signature of the Assignor, and the Assignor hereby further agrees that
service of process in such manner shall be full and sufficient notice of any
such action or proceeding.
The Assignor waives diligence, presentment of any instrument, protest and
notice of non-payment or protest and any and all other notices and demands
whatsoever in connection with the delivery, acceptance, performance, default or
enforcement of this Note. The Assignor will pay on demand all costs of
collection (including reasonable attorneys' fees) paid or incurred by the holder
in enforcing this Note on default. As used herein, the world "holder" shall mean
the Payee or any endorsee of this Note who is in possession hereof, if this Note
is at the time payable to the bearer.
A-2
This Note shall be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and entirely performed
therein.
FIRSTPLUS FINANCIAL, INC.
By:
-------------------------------------------------------
Name:
-----------------------------------------------------
Title:
----------------------------------------------------
Address until April or May 1997: 0000 Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Address thereafter: 0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
A-3
LOAN SCHEDULE
This Note evidences Loans made by the Payee to the Assignor and the repayment of
principal by the Assignor to the Payee, in the principal amounts and on the
dates and with the related interest rates set forth below as well as the total
amount advanced here against as of each such date:
PRINCIPAL AMOUNT INTEREST PRINCIPAL AMOUNT TOTAL
DATE LOANED RATE REPAID OUTSTANDING
---- ------ ---- ------ -----------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
---------- -------------------- ----------- -------------------- ---------------
A-4
EXHIBIT B
CONFIRMATION STATEMENT
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
Date: __________________________
Assignor: FIRSTPLUS FINANCIAL, INC.
Address:
Attention:
Telephone:
Fax Number:
Re: LOAN PURSUANT TO MASTER ASSIGNMENT AGREEMENT
Gentlemen:
Xxxxxxx Xxxxx Mortgage Capital Inc. ("MLMCI") is pleased to confirm our Loan to
you (the "Assignor") pursuant to the Master Assignment Agreement (the "Master
Assignment Agreement"), dated as of April 10, 1997, between you and MLMCI under
the following terms and conditions:
1. Collateral Description: ________________________
A. Security Issue Date: ______________________
B. Percentage Ownership: _____________________%
C. Face Amount: $_____________________
D. Current Market Value: $_____________________
E. Margin Requirement: _____________________%
2. Loan: _____ New Funds _____ Roll
A. Amount: $______________
B. Closing Date: _______________
C. Interest Payment Date: The last Business Day of each month.
B-1
MLMCI's Wiring Instructions Assignor's Wiring Instructions
Bankers Trust New York Bank One, Texas, NA
For the Account of Xxxxxxx Xxxxx For the Account of
Mortgage Capital Inc. FIRSTPLUS FINANCIAL, INC.
Account Number: 00000000 Account Number: 1885162956
ABA Number: 000-000-000 ABA Number: 000000000
The Note, dated April 10, 1997, which evidences advances under the
Master Assignment Agreement will be annotated on the schedule attached thereto
to reflect the date, amount and interest rate relating to this advance.
The Master Assignment Agreement is incorporated by reference into
this Confirmation Statement and made a part hereof as if it were fully set forth
herein. All capitalized terms used herein but not otherwise defined shall have
the meanings specified in the Master Assignment Agreement.
Very truly yours,
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AGREED AND ACKNOWLEDGED:
FIRSTPLUS FINANCIAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
B-2
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE ASSIGNOR]
Gentlemen:
We have acted as counsel to FIRSTPLUS FINANCIAL, INC., a Delaware
corporation (the "Assignor"), in connection with (i) the execution and delivery
of the Master Assignment Agreement, dated as of April 10, 1997 (the
"Agreement"), between the Assignor and Xxxxxxx Xxxxx Mortgage Capital Inc., a
Delaware corporation ("MLMCI") and (ii) the execution and delivery of the Note,
dated April 10, 1997 in the principal amount of $75,000,000 ("Note") made by the
Assignor to the order of MLMCI. Unless otherwise defined herein, all defined
terms used herein shall have the meanings assigned thereto in the Agreement.
As counsel to the Assignor, we have participated in the preparation and
negotiation of the Agreement, the Note and the other documents and instruments
executed and delivered pursuant thereto and in connection therewith by the
Assignor.
In this connection, we have examined, among other documents, the
Certificate of Incorporation and By-Laws of the Assignor, the minutes of
meetings of the Assignor, and such other documents and records of the Assignor
as we have deemed relevant and necessary as a basis for the conclusions
contained in the opinions hereafter set forth. We have had various conferences
with officers and directors of the Assignor with respect to the provisions of
the Agreement and the Note as to certain matters contemplated by the opinions
expressed below, we have relied upon information as provided by said officers
and directors. In our examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to originals of all documents submitted to us photostatic
copies.
Based upon the foregoing, we are of opinion that:
1. Assignor is duly organized and validly existing as a corporation in
good standing under the laws of the State of Texas and has power and authority
to enter into and perform its obligations under this Agreement. Assignor is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the business transacted by it requires such qualification and
in which the failure so to qualify would have a material adverse effect on the
business, properties, assets or condition (financial or other) of Assignor and
its subsidiaries, considered as a whole.
C-1
2. This Agreement and the Note have each been duly authorized, executed
and delivered by Assignor, and each constitutes a valid and legally binding
obligation of Assignor enforceable against Assignor in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles.
3. No consent, approval, authorization or order of any state or federal
court or government agency or body is required to be obtained by Assignor for
the consummation of the transactions contemplated by this Agreement or the Note.
4. The consummation of any of the transactions contemplated by this
Agreement and the Note will not conflict with, result in a breach of, or
constitute a default under the articles of incorporation or bylaws of Assignor
or the terms of any indenture or other agreement or instrument known to us to
which Assignor is party or bound, or any order known to such counsel to be
applicable to Assignor or any regulations applicable to Assignor, of any state
or federal court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Assignor.
5. There is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any arbitrator involving
Assignor or relating to the transaction contemplated by this Agreement or the
Note which, if adversely determined, would have a material adverse effect on
MLMCI.
6. Assignor is duly registered as a finance company in each state in
which such registration is required by applicable law.
7. Each Pledged MBS will have been endorsed in a manner which satisfies
any requirement of endorsement in order to transfer all right, title and
interest in and to that Pledged MBS from Assignor to MLMCI.This Agreement
together with (a) the delivery of such related Pledged MBS to MLMCI and (b) the
endorsement of such Pledged MBS to MLMCI , creates a valid, perfected security
interest in such Pledged MBS in favor of MLMCI. Such security interest will have
the same priority and will be subject to the same security interests and liens
as apply to such Pledged MBS in the hands of Assignor.
Very truly yours,
C-2
EXHIBIT D
LOCATION OF CHIEF EXECUTIVE OFFICES AND COLLATERAL
Chief Executive Office
Until April or May 1997: 0000 Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Thereafter: 0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Collateral
With respect to any Loan, the Pledged MBS to be delivered to, and
held by, MLMCI or its bailee.
D-1
