1
================================================================================
Exhibit 10.28
AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
AMONG
MORTGAGE PORTFOLIO SERVICES, INC.,
A DELAWARE CORPORATION,
BANK UNITED,
================================================================================
A FEDERAL SAVINGS BANK, IN ITS CAPACITY AS ONE OF THE
LENDERS AND ADMINISTRATIVE AGENT AND
COLLATERAL AGENT FOR THE LENDERS,
AND
THE LENDERS PARTY HERETO
DATED AS OF AUGUST 28, 2000
2
TABLE OF CONTENTS
1. DEFINITIONS.......................................................................................Page 1
1.1 Defined Terms. ................................................................Page 1
1.2 Other Definitional Provisions..................................................Page 22
2. THE CREDIT.......................................................................................Page 22
2.1 The Commitment.................................................................Page 22
2.2 Procedures for Obtaining Advances..............................................Page 25
2.3 Notes. .......................................................................Page 27
2.4 Interest.......................................................................Page 27
2.5 Principal Payments.............................................................Page 27
2.6 Expiration of Commitment. ....................................................Page 31
2.7 Method of Making Payments and Distributions. .................................Page 31
2.8 Commitment Fee.................................................................Page 31
2.9 Swingline. ...................................................................Page 32
2.10 Increased Costs; Capital Requirements. ........................................Page 33
2.11 Restatement. .................................................................Page 34
3. COLLATERAL.......................................................................................Page 34
3.1 Grant of Security Interest. ..................................................Page 34
3.2 Security Interest in Mortgage-backed Securities. .............................Page 36
3.3 Delivery of Collateral Documents. ............................................Page 37
3.4 Delivery of Additional Collateral or Mandatory Prepayment......................Page 37
3.5 Right of Redemption from Pledge. .............................................Page 38
3.6 Collection and Servicing Rights. .............................................Page 38
3.7 Return or Release of Collateral at End of Commitment. ........................Page 38
4. CONDITIONS PRECEDENT.............................................................................Page 38
4.1 Initial Advance. .............................................................Page 38
4.2 Each Advance. ................................................................Page 39
5. REPRESENTATIONS AND WARRANTIES...................................................................Page 40
5.1 Organization; Good Standing; Subsidiaries. ...................................Page 40
5.2 Authorization and Enforceability. ............................................Page 41
5.3 Financial Condition............................................................Page 41
5.4 Litigation.....................................................................Page 41
5.5 Compliance with Laws...........................................................Page 42
5.6 Regulation U...................................................................Page 42
5.7 Investment Company Act. ......................................................Page 42
5.8 Agreements. ..................................................................Page 42
5.9 Title to Properties. .........................................................Page 42
5.10 ERISA. .......................................................................Page 42
5.11 Eligibility. .................................................................Page 43
5.12 Special Representations Concerning Collateral. ...............................Page 43
5.13 RICO. ........................................................................Page 46
5.14 Proper Names. ................................................................Page 46
Page i
3
5.15 Direct Benefit From Loans. ...................................................Page 46
5.16 Loan Documents Do Not Violate Other Documents. ...............................Page 46
5.17 Consents Not Required. .......................................................Page 46
5.18 Material Fact Representations. ...............................................Page 46
5.19 Place of Business. ...........................................................Page 47
5.20 Use of Proceeds; Business Loans. .............................................Page 47
5.21 No Undisclosed Liabilities. ..................................................Page 47
5.22 Tax Returns and Payments. ....................................................Page 47
5.23 Holding Company. .............................................................Page 48
5.24 REO Closing Proceeds...........................................................Page 48
6. AFFIRMATIVE COVENANTS............................................................................Page 48
6.1 Payment of Notes. ............................................................Page 48
6.2 Financial Statements and Other Reports.........................................Page 48
6.3 Maintenance of Existence; Conduct of Business. ...............................Page 51
6.4 Compliance with Applicable Laws. .............................................Page 51
6.5 Inspection of Properties and Books. ..........................................Page 51
6.6 Notice. ......................................................................Page 51
6.7 Payment of Debt, Taxes, etc. .................................................Page 52
6.8 Insurance. ...................................................................Page 52
6.9 Closing Instructions. ........................................................Page 52
6.10 Other Loan Obligations. ......................................................Page 53
6.11 Use of Proceeds of Advances. .................................................Page 53
6.12 Special Affirmative Covenants Concerning Collateral............................Page 53
6.13 Cure of Defects in Loan Documents..............................................Page 54
6.14 Staged Disbursements...........................................................Page 54
7. NEGATIVE COVENANTS...............................................................................Page 54
7.1 Contingent Liabilities. ......................................................Page 55
7.2 Pledge of Servicing Contracts/Mortgage Loans. ................................Page 55
7.3 Merger; Acquisitions. ........................................................Page 55
7.4 Loss of Eligibility. .........................................................Page 55
7.5 Debt to Consolidated Tangible Net Worth Ratio. ...............................Page 55
7.6 Minimum Consolidated Tangible Net Worth. .....................................Page 55
7.7 Transactions with Affiliates. .................................................Page 55
7.8 Limits on Corporate Distributions. ...........................................Page 55
7.9 RICO. ........................................................................Page 56
7.10 No Loans or Investments Except Approved Investments. .........................Page 56
7.11 Charter Documents and Business Termination.....................................Page 56
7.12 Changes in Accounting Methods. ...............................................Page 56
7.13 No Sales, Leases or Dispositions of Property. ................................Page 56
7.14 Changes in Business or Assets. ...............................................Page 57
7.15 Changes in Office or Inventory Location. .....................................Page 57
7.16 Special Negative Covenants Concerning Collateral...............................Page 57
7.17 Limitation on Indebtedness.....................................................Page 57
7.18 Ownership of the Company.......................................................Page 58
7.19 Payments of Subordinated Debt..................................................Page 58
7.20 Policies and Procedures........................................................Page 58
Page ii
4
8. DEFAULTS; REMEDIES...............................................................................Page 58
8.1 Events of Default. ...........................................................Page 58
8.2 Remedies.......................................................................Page 61
8.3 Application of Proceeds. .....................................................Page 64
8.4 Administrative Agent Appointed Attorney-in-Fact. .............................Page 65
8.5 Right of Offset. .............................................................Page 65
8.6 Waivers. .....................................................................Page 66
8.7 Performance by Administrative Agent. .........................................Page 66
8.8 No Responsibility. ...........................................................Page 66
8.9 No Waiver. ...................................................................Page 66
8.10 Cumulative Rights. ...........................................................Page 67
8.11 Rights of Individual Lenders. ................................................Page 67
8.12 Notice to Administrative Agent. ..............................................Page 67
8.13 Costs. .......................................................................Page 67
8.14 Sharing. .....................................................................Page 68
9. NOTICES..........................................................................................Page 68
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.............................................................Page 69
11. FINANCIAL INFORMATION............................................................................Page 71
12. AGREEMENTS CONCERNING THE ADMINISTRATIVE AGENT AND THE LENDERS...................................Page 72
12.1 Authorization and Action. ....................................................Page 72
12.2 Employment of Others by the Administrative Agent. ............................Page 72
12.3 No Liability. ................................................................Page 73
12.4 Reliance. ....................................................................Page 74
12.5 Resignation of the Administrative Agent. .....................................Page 74
12.6 Removal of the Administrative Agent. .........................................Page 75
12.7 Effective Date of Resignation or Removal. ....................................Page 75
12.8 Successor Administrative Agent. ..............................................Page 75
12.9 Credit Decision. .............................................................Page 76
12.10 Expense Reimbursement. ........................................................Page 76
12.11 Merger of the Administrative Agent. ...........................................Page 76
12.12 Administrative Agent and Affiliates. .........................................Page 76
13. MISCELLANEOUS....................................................................................Page 77
13.1 Terms Binding Upon Successors; Survival of Representations. ..................Page 77
Page iii
5
13.3 Amendments and Modifications. .................................................Page 78
13.4 Governing Law. ...............................................................Page 78
13.5 Relationship of the Parties. .................................................Page 78
13.6 Severability. ................................................................Page 79
13.7 Usury. .......................................................................Page 79
13.8 Consent to Jurisdiction. .....................................................Page 80
13.9 Arbitration. ..................................................................Page 80
13.10 ADDITIONAL INDEMNITY. ........................................................Page 81
13.11 No Waivers Except in Writing. ................................................Page 82
13.12 WAIVER OF JURY TRIAL...........................................................Page 82
13.13 Multiple Counterparts. .......................................................Page 83
13.14 No Third Party Beneficiaries. ................................................Page 83
13.15 RELEASE OF LIABILITY. ........................................................Page 83
13.16 Entire Agreement; Amendment. .................................................Page 83
13.17 NO ORAL AGREEMENTS. ..........................................................Page 84
EXHIBIT "A-1".............................................................................................Page 87
EXHIBIT "A-2".............................................................................................Page 89
EXHIBIT "B"...............................................................................................Page 91
EXHIBIT "C-SF"............................................................................................Page 92
SCHEDULE "I"..............................................................................................Page 93
EXHIBIT "C-RML"...........................................................................................Page 94
EXHIBIT "C-FML"...........................................................................................Page 95
EXHIBIT "D"...............................................................................................Page 96
SCHEDULE "II"............................................................................................Page 103
EXHIBIT "E"..............................................................................................Page 104
EXHIBIT "F"..............................................................................................Page 105
EXHIBIT "G"..............................................................................................Page 106
ANNEX "A"................................................................................................Page 107
EXHIBIT "H"..............................................................................................Page 109
EXHIBIT "I"..............................................................................................Page 110
EXHIBIT "J"..............................................................................................Page 111
Page iv
6
EXHIBIT "K"..............................................................................................Page 112
EXHIBIT "L"..............................................................................................Page 122
EXHIBIT "M"..............................................................................................Page 123
EXHIBIT "N"..............................................................................................Page 124
EXHIBIT "O"..............................................................................................Page 125
EXHIBIT "P"..............................................................................................Page 126
EXHIBIT "Q"..............................................................................................Page 127
EXHIBIT "R"..............................................................................................Page 128
EXHIBIT "S"..............................................................................................Page 130
Page v
7
AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT
(this "Agreement"), is dated as of August 28, 2000, by and among MORTGAGE
PORTFOLIO SERVICES, INC., a Delaware corporation (the "Company"), the lenders
from time to time party hereto (together with any successors and assigns
thereof, being hereinafter referred to individually as a "Lender" and
collectively as the "Lenders"), and BANK UNITED, a federal savings bank ("Bank
United") in its capacity as one of the Lenders and as Administrative Agent (it
and its successors in that capacity called the "Administrative Agent") for the
Lenders.
WHEREAS, the Company, the Lenders, and the Administrative Agent entered
into that certain Credit Agreement (as amended prior to August 28, 2000, the
"Existing Agreement") dated June 15, 1999 whereby Lenders agreed, subject to the
terms and conditions of the Existing Agreement, to make certain loans to the
Company to finance the origination or purchase of mortgage loans which loans are
for the benefit of the Company;
WHEREAS, the Company, the Administrative Agent, and the Lenders desire
to make certain amendments to the Existing Agreement;
NOW, THEREFORE, for good and valuable consideration, the amount and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree that the Existing Agreement is amended and restated in its
entirety as follows:
10 DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or elsewhere in this
Agreement (including the exhibits hereto) shall have the following meanings:
"Acceptable Manufactured Housing State" means any state: (1)
listed on a schedule of "Acceptable Manufactured Housing States"
mutually agreed to by Company and Majority Lenders, from time to time,
with the initial such schedule in the form of that attached hereto as
EXHIBIT "Q" and (2) as to which Administrative Agent shall have
received an opinion of counsel to Company in form and substance
satisfactory to Administrative Agent regarding the perfection of
Administrative Agent's security interest in Mortgage Loans secured by
Mortgaged Property in such state and covering such other matters as
Administrative Agent may request; provided, however, that no state
shall be an Acceptable Manufactured Housing State unless the laws of
such state treat manufactured housing as real property rather than as
personal property for purposes of perfection of a Lien thereon.
"A Credit Mortgage Loan" means a Mortgage Loan that is a
Conventional Mortgage Loan, an FHA Loan, a Jumbo Loan or a VA Loan and
has a Risk Rating of A.
"Additional Lender" means a Person admitted as a Lender under
this Agreement by the terms of an amendment hereto.
Page 1
8
"Advance" means a disbursement by the Lenders under the
Commitment pursuant to Article 2 of this Agreement. For the purposes
hereof, the term "Advances" includes Warehouse Advances, Construction
Advances, Repurchased Advances and Foreclosure Advances.
"Advance Date" means, for any Advance, the date it is
disbursed.
"Advance Request" means a Warehouse Advance Request, a
Repurchased Advance Request or a Foreclosure Advance Request.
"Affiliate" means and includes, with respect to a specified
Person, any other Person:
(a) that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control
with the specified Person;
(b) that is a director, trustee, general partner or executive
officer of the specified Person or serves in a similar capacity in
respect of the specified Person;
(c) that, directly or indirectly through one or more
intermediaries, is the beneficial owner of ten percent (10%) or more of
any class of equity securities of the specified Person; or
(d) of which the specified Person is directly or indirectly
the owner of ten percent (10%) or more of any class of equity
securities.
"Aged Mortgage Loan" means (a) an Eligible Mortgage Loan that
has been included in Collateral for a period of more than ninety (90)
days and (b) an Eligible Construction Mortgage Loan that has been
included in Collateral for a period of more than three hundred sixty
(360) days.
"Administrative Agent" means, at any time, Bank United or its
successors acting as agent for Lenders under the Loan Documents.
"Agreement" means this Amended and Restated Warehousing Credit
and Security Agreement, either as originally executed or as it may from
time to time be supplemented, modified or amended.
"Applicable Law" means the laws of the State of Texas and the
United States of America in effect from time to time and applicable to
the transactions between the Lenders and the Company pursuant to this
Agreement and the other Loan Documents whichever permits the charging
and collection of the highest nonusurious rate of interest on such
transactions. For purposes of determining Texas law with respect to the
highest nonusurious rate of interest, the "weekly ceiling"as defined in
Chapter 303 of the Texas Finance Code (the "Texas Finance Code"), as
amended, shall be controlling.
Page 2
9
"Applicable Margin" means, with respect to
(a) Advances outstanding against A Credit Mortgage Loans,
Second Mortgage Loans, High LTV Second Mortgage Loans, or Manufactured
Home Loans that are not Aged Mortgage Loans, 150 basis points (1.50%)
per annum;
(b) Advances outstanding against Subprime Mortgage Loans that
are not Aged Mortgage Loans, 162.5 basis points (1.625%) per annum;
(c) Advances outstanding against Construction Mortgage Loans,
200 basis points (2.00%) per annum;
(d) Foreclosure Advances and Repurchased Advances, 250 basis
points (2.50%) per annum;
(e) Advances outstanding against Delinquent Loans or Past Due
Loans, 250 basis points (2.50%) per annum.
"Applicable Rate" means, with respect to any Lender's Advances
or Swingline Lender's Swingline Advances, for each day during any
month, the Monthly Average LIBOR Rate for such month plus the
Applicable Margin.
"Appraised Value" means, with respect to each Construction
Mortgage Loan, the "as completed" market value of the real property and
all improvements to be constructed thereon securing such Construction
Mortgage Loan determined by an appraisal that meets appraisal
requirements of FNMA or FHLMC.
"Approved Custodian" means a Person acceptable to the
Administrative Agent from time to time in its sole discretion, who
possesses Mortgage Loans that secure Mortgaged-backed Securities.
"Balance Calculation Period" means each calendar month.
"Balance Funded Amount" means with respect to any Lender for
any Balance Calculation Period, the average of the Qualifying Balances
of such Lender for such Balance Calculation Period. As used in this
paragraph, "Qualifying Balances" shall mean, with respect to any
Lender, for any day the lesser of (x) the amount of such Lender's
Advances on such day, or (y) the sum of the collected balances in all
identified non-interest bearing accounts of Company maintained with
such Lender less (i) amounts necessary to satisfy reserve and deposit
insurance requirements and (ii) amounts required to compensate such
Lender for services rendered in accordance with such Lender's system of
charges for services to similar accounts.
"Balance Funded Rate" means, with respect to any Lender's
Advances, for any month, the Applicable Margin.
"Bailee Letter" has the meaning set forth in Section 3.3
hereof.
Page 3
10
"Business Day" means any day other than Saturday, Sunday or
any day on which Administrative Agent is closed for business.
"Capitalized Lease" means any lease under which rental
payments are required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capitalized Rentals" means the amount of aggregate rentals
due and to become due under all Capitalized Leases under which the
Company is a lessee that would be reflected as a liability on a balance
sheet of the Company.
"Capitalized Servicing Rights" means as of any Person, all
rights to service Mortgage Loans which would be capitalized under GAAP
(regardless of whether such rights result from asset securitizations,
whole loan sales or originations of Mortgage Loans).
"Cash Collateral Account" means a non-interest bearing demand
deposit account maintained at Bank United in the name of the
Administrative Agent for the benefit of the Lenders, and designated for
receipt of the proceeds of the sale or other disposition of the
Collateral and the payment of the Obligations.
"Change of Control" means (i) the acquisition by any Person or
group of Persons acting together, of a direct interest in more than
twenty percent (20%) of the voting power of the voting stock of
Company, by way of merger or consolidation or otherwise; or (ii) Xxxxx
Xxxxxx ceases to be and act as President and CEO of Company.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Agency Agreement" means the agreement dated as of
the date hereof among the Company, the Administrative Agent and the
Collateral Agent substantially in the form of EXHIBIT "E" hereto, as it
may from time to time be supplemented, modified, or amended.
"Collateral Agent" means Bank United, in its capacity as
Collateral Agent under the Collateral Agency Agreement, and any
successor appointed pursuant to the Collateral Agency Agreement.
"Collateral Documents" means all documents and other items
described in EXHIBIT "D" and required to be delivered to the
Administrative Agent in connection with an Advance.
"Collateral Value" means, at the time of any determination,
(a) with respect to any Eligible Mortgage Loan, an amount
equal to the least of (i) the Par Value of such Mortgage Loan, (ii) the
amount which the Investor has committed to pay for such Mortgage Loan
pursuant to a Purchase Commitment, or with respect to an Uncommitted
Subprime Mortgage Loan, the amount represented by the Company that an
Investor will pay for such Subprime Mortgage Loan, or at the
Administrative Agent's discretion, (iii) the Fair Market Value of such
Mortgage Loan;
Page 4
11
(b) with respect to any Eligible Construction Mortgage Loan,
an amount equal to the lesser of (i) the Par Value thereof or (ii) the
appraised value of the real property and improvements thereon as
completed covered by the Mortgage securing such Construction Mortgage
Loan on an "as completed" basis;
(c) with respect to any Eligible Repurchased Mortgage Loan,
Eligible Foreclosure Mortgage Loan, Eligible Past Due Loan or Eligible
Delinquent Loan, an amount equal to the lesser of (i) the outstanding
principal balance of such Mortgage Loan at such date or (ii) the
appraised value of the Mortgaged Property securing such Mortgage Loan
at such date as reflected by an appraisal or broker's opinion
acceptable to Administrative Agent;
(d) with respect to any Eligible REO, an amount equal to the
least of (i) the appraised value of the Eligible REO at the time of
acquisition by Company; (ii) the acquisition cost to Company of such
Eligible REO; or if neither of these is available, (iii) the Market
Value of such Eligible REO as determined by the Administrative Agent.
(e) with respect to any Mortgage Loan that is not an Eligible
Mortgage Loan, an Eligible Construction Mortgage Loan, an Eligible Past
Due Loan, an Eligible Delinquent Loan, an Eligible Foreclosure Mortgage
Loan, or an Eligible Repurchased Mortgage Loan or any other Collateral,
the Collateral Value shall be equal to zero (0).
"Combined Loan-to-Value Ratio" means, with respect to any
Mortgage Loan, the ratio expressed as a percentage that the sum of the
original principal balance of such Mortgage Loan at the time of any
determination and the then current principal balance of any related
first priority mortgage bears to the appraised value of the related
mortgaged property at the time such Mortgage Loan was originated.
"Commitment" means the commitment of the Lenders to make
Advances hereunder in an aggregate principal amount at any time
outstanding shall not exceed FIFTY-FIVE MILLION AND NO/100 DOLLARS
($55,000,000.00), provided, however, that no Lender's portion of such
Advances may ever exceed its Commitment Amount.
"Commitment Amount" means, with respect to each Lender, the
amount set forth opposite its name and so designated on EXHIBIT "B"
hereto, as the same may be amended and as that amount may be canceled
or terminated under this Agreement.
"Commitment Percentage" means, at any time, for any Lender,
the proportion (stated as a percentage) that its Commitment Amount
bears to the total Commitment subject to any adjustment by the
Administrative Agent pursuant to the terms of this Agreement.
"Company" has the meaning set forth in the first paragraph of
this Agreement.
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries.
References herein to a Person's Consolidated financial statements,
financial position, financial condition, liabilities, etc. refer to the
consolidated financial statements, financial position, financial
condition, liabilities, etc.
Page 5
12
of such Person and its properly consolidated subsidiaries.
"Consolidated Net Worth" of any Person means, as of any date,
the remainder of all Consolidated assets of such Person minus such
Person's Consolidated liabilities, each as determined by GAAP.
"Consolidated Tangible Net Worth" means, as of any date, (a)
Company's Consolidated Net Worth as of such date minus (b) all
Consolidated assets of Company which would be classified as intangible
assets under GAAP, including Capitalized Servicing Rights, goodwill
(whether representing the excess cost over book value of assets
acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises, deferred charges and intercompany Indebtedness plus (c)
ninety percent (90%) of the book value of Capitalized Servicing Rights
plus (d) the unpaid principal amount of the Subordinated Debt (without
including any accrued interest or payments of interest made by the
issuance of additional Indebtedness or otherwise compounded or added to
the principal).
"Construction Advance" means a disbursement by Lenders under
the Commitment in respect of the origination and Staged Disbursements
of an Eligible Construction Mortgage Loan.
"Construction Home" means a single family residence that (a)
is being constructed on real property subject to a First Mortgage and
(b) is being sold to a prequalified purchaser/borrower.
"Construction Loan Sublimit" has the meaning set forth in
Section 2.1(b)(10) hereof.
"Construction Mortgage Loan" means a Mortgage Loan secured by
a First Mortgage on Property consisting of a Construction Home.
"Conventional Mortgage Loan" means a Single-family Mortgage
Loan, other than an FHA Loan or a VA Loan, that is underwritten in
conformity with FHLMC or FNMA underwriting standards and is otherwise
eligible for purchase by FNMA or FHLMC.
"Debt" means, with respect to any Person, at any date (a) all
indebtedness or other obligations of such Person which, in accordance
with GAAP, would be included in determining total liabilities as shown
on the liabilities side of a balance sheet of such Person at such date;
and (b) all indebtedness or other obligations of such Person for
borrowed money or for the deferred purchase price of property or
services; provided that for purposes of this Agreement, there shall be
excluded from Debt at any date loan loss reserves, deferred taxes
arising from capitalized excess service fees, and operating leases.
"Default" means the occurrence of any event or existence of
any condition which, but for the giving of notice, the lapse of time,
or both, would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.4(c)
hereof.
Page 6
13
"Delinquent Loan" means a Mortgage Loan owned by Company with
respect to which one payment under such Mortgage Loan is thirty (30)
days, but less than sixty (60) days, past due the payment due date set
forth in the underlying Mortgage Note and Mortgage.
"Dry Advance" means an Advance made by the Lenders after all
of the Collateral Documents have been delivered to the Administrative
Agent.
"Electronic Request" has the meaning set forth in Section
2.2(a) hereof.
"Eligible Construction Mortgage Loan" means a Construction
Mortgage Loan owned by Company with respect to which each of the
following statements shall be accurate and complete (and Company by
including such Construction Mortgage Loan in the Collateral shall be
deemed to so represent to Administrative Agent and Lenders and as of
the date of such pledge):
(a) Such Construction Mortgage Loan has not been included in
the Collateral for more than three hundred sixty (360) days;
(b) Such Construction Mortgage Loan is secured by a First
Mortgage on Property consisting of a Construction Home;
(c) The Mortgage Note, Mortgage and other documents and
instruments evidencing such Mortgage Loan provide that the Mortgage
Loan will become a fully amortizing Mortgage Loan immediately upon
certification by the contractor and Company that the Construction Home
has been completed and is ready for occupancy;
(d) The Construction Home will be completed within twelve (12)
months from the date on which construction commences;
(e) Such Mortgage Loan, upon completion of the Construction
Home, shall be eligible for inclusion in the Collateral as an Eligible
Mortgage Loan.
(f) Such Construction Mortgage Loan was originated and funded
in strict compliance with the Policies and Procedures;
(g) Such Construction Mortgage Loan is made to a pre-qualified
natural person or persons for the construction of a Construction Home
and is fully covered by permanent financing which will be funded by
Company upon completion of the Construction Home and qualify as an
Eligible Mortgage Loan.
(h) The total principal amount of such Construction Mortgage
Loan shall not exceed the sum of SIX HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($650,000.00);
(i) Such Construction Mortgage Loan shall be covered by a
Purchase Commitment; and
Page 7
14
(j) The face amount of such Construction Mortgage Loan when
added to the aggregate face amounts of all Construction Mortgage Loans
included in Collateral shall not exceed the Construction Loan Sublimit.
"Eligible Delinquent Loan" means a Delinquent Loan with
respect to which the following statements shall be accurate and
complete (and Company by including such Delinquent Loan in the
Collateral shall be deemed to so represent to Administrative Agent and
Lenders at and as of the date of such pledge):
(a) Such Mortgage Loan meets all requirements set forth in the
definition of an Eligible Mortgage Loan, except clauses (e), (f), (h)
and (i) of such definition;
(b) Such Mortgage Loan has not been included in Collateral as
a Foreclosure Mortgage Loan;
(c) Such Mortgage Loan shall not have been included in
Collateral for more than an aggregate period of three hundred sixty
(360) days; and
(d) Such Mortgage Loan is secured by a First or Second
Mortgage on Mortgaged Property consisting of a completed one-to-four
unit family residence, including a condominium, planned unit
development or townhouse.
"Eligible Foreclosure Mortgage Loan" means a Foreclosure
Mortgage Loan owned by the Company that (a) meets all requirements set
forth in the definition of an Eligible Mortgage Loan, except clauses
(e), (f), (h), and (i) of such definition, (b) is validly pledged to
the Administrative Agent for the benefit of the Lenders, subject to no
other Liens; (c) shall not be included in Collateral as an Eligible
Foreclosure Mortgage Loan for more than an aggregate period of three
hundred sixty (360) days, and (d) has not been included in Collateral
as a Past Due Loan, a Repurchased Mortgage Loan, or Delinquent Loan.
"Eligible Mortgage Loan" means a closed end Mortgage Loan
that, at all times during the term of this Agreement, (a) is, without
duplication, an A Credit Mortgage Loan, a Manufactured Home Loan, a
High LTV Second Mortgage Loan, or a Subprime Mortgage Loan; (b) is
evidenced by loan documents that are the standard forms approved by
FNMA or FHLMC or forms previously approved, in writing, by the
Administrative Agent in its sole discretion; (d) is validly pledged to
the Administrative Agent for the benefit of the Lenders, subject to no
other Liens; (e) is not in default in the payment of principal and
interest under such Mortgage Loan for more than thirty (30) days past
due the payment due date set forth in the underlying Mortgage Note and
Mortgage; (f) has closed less than thirty (30) days prior to the date
of the Advance made in connection with such Mortgage Loan unless such
Mortgage Loan was purchased and not originated by Company in which
event such thirty (30) day period shall be ninety (90) days; (g) the
representations and warranties of the Company set forth in Section 5.12
of this Agreement applicable to such Mortgage Loan are accurate and
complete in all material respects; (h)is covered by a Purchase
Commitment; and (i) is not a Repurchased Mortgage Loan, a Past Due
Loan, a Delinquent Loan or a Foreclosure Mortgage Loan.
Page 8
15
"Eligible Mortgage Pool" means a pool of Mortgage Loans that
will secure a "mortgage related security", as defined in Section
3(a)(41) of the Exchange Act administered or to be administered by a
trustee acceptable to Administrative Agent in its sole discretion where
the Mortgage, Mortgage Note and other documents relating to such
Mortgage Loans are held or to be held by an Approved Custodian.
"Eligible Past Due Loan" means a Past Due Loan with respect to
which each of the following statements shall be accurate and complete
(and Company by including such Past Due Loan in the Collateral shall be
deemed to so represent to Administrative Agent and Lenders at and as of
the date of such pledge):
(a) Such Mortgage Loan meets all the requirements set forth in
the definition of an Eligible Mortgage Loan except clauses (e), (f),
(h), and (i) of such definition;
(b) Such Mortgage Loan has not been included in Collateral as
a Foreclosure Mortgage Loan;
(c) Such Mortgage Loan shall not have been included in
Collateral for more than an aggregate period of three hundred sixty
(360) days; and
(d) Such Mortgage Loan is secured by a First Mortgage or
Second Mortgage on Property consisting of a completed one-to-four unit
family residence, including a condominium, planned unit development or
townhouse.
"Eligible REO" means REO wholly owned in fee simple title by
Company with respect to which each of the following statements shall be
accurate and complete (and Company by including such Eligible REO in
Collateral shall be deemed to so represent to Administrative Agent and
Lenders at and as of the date of such pledge):
(a) such REO secured a Foreclosure Mortgage Loan or
Repurchased Mortgage Loan owned by the Company;
(b) such REO is not encumbered by a mortgage or a deed of
trust in favor of any Person, other than in favor of Administrative
Agent on behalf of Lenders; and
(c) such REO shall not have been included in the Collateral
for more than an aggregate period of three-hundred sixty (360) days
(including any period of time the Eligible Mortgage Loan secured by
such REO was previously included in the Collateral).
"Eligible Repurchased Mortgage Loan" means a Repurchased
Mortgage Loan owned by the Company that (a) meets all requirements set
forth in the definition of an Eligible Mortgage Loan, except clauses
(e), (f), (h), and (i) of such definition, (b) is validly pledged to
the Administrative Agent for the benefit of the Lenders, subject to no
other Liens and (c) shall not have been included in Collateral as an
Eligible Repurchased Mortgage Loan for more than an aggregate period of
three hundred sixty (360) days.
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated thereunder, as amended
from time to time and any successor statute.
Page 9
16
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which, together with either Obligor, would be treated as
a single employer under Section 4001 of ERISA.
"Event of Default" means any of the conditions or events set
forth in Section 8.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and any successor statute.
"Fair Market Value" shall mean, at any date, with respect to:
(a) any Mortgage-backed Security, the bid price rate reflected
on the Telerate screen for a Mortgage-backed Security with the closest
coupon rate that does not exceed that of the Mortgage-backed Security
in question multiplied by the original face amount of such
Mortgage-backed Security, and multiplied by the current pool factor for
such Mortgage-backed Security.
(b) any Mortgage Loan, the market price rate reflected on the
Telerate screen for thirty (30) day mandatory future delivery of such
Mortgage Loan multiplied by the outstanding principal balance thereof.
In the event Telerate does not publish or ceases to publish
either the market or bid price for any Mortgage Loan or Mortgage-backed
Security referenced in (a) and (b) above, the average bid price rate
quoted in writing to the Administrative Agent as of the date of
determination by any two nationally recognized dealers selected by
Administrative Agent that are making a market in similar Mortgage Loans
or Mortgaged-backed Securities shall be utilized in lieu of the market
or bid price rate, as the case may be.
"Federal Funds Rate" means for any day, the rate per annum
(rounded upwards if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
quoted to Administrative Agent on such day on such transactions from
three Federal funds brokers of recognized standing.
"FHA" means the Federal Housing Administration and any
successor thereto.
"FHA Loan" means a Single-family Mortgage Loan, payment of
which is insured by FHA or with respect to which there is a current,
binding and enforceable commitment for such insurance issued by the FHA
or its delegated underwriter.
Page 10
17
"FHLMC" means the Federal Home Loan Mortgage Corporation and
any successor thereto.
"FHLMC Guide" means the Xxxxxxx Xxx Xxxxxxx' and Servicers'
Guide, dated September 17, 1984, applicable bulletins, the applicable
MIDANET Users Guide (or the MIDAPHONE User's Guide) and any particular
purchase documents as defined in the Sellers' and Servicers' Guide, as
revised prior to the date hereof.
"FICA" means the Federal Insurance Contributions Act or any
successor statute.
"First Mortgage" means a mortgage or deed of trust which
constitutes a first Lien on improved property containing one-to-four
family residences.
"First Mortgage Loan" means a Mortgage Loan secured by a First
Mortgage.
"FNMA" means the Federal National Mortgage Association and any
successor thereto.
"FNMA Guide" means the FNMA Servicing Guide dated June 30,
1990, as revised prior to the date hereof.
"Foreclosure Advance" means an Advance under the Commitment
pursuant to Article 2 of this Agreement for the purposes of financing
or refinancing the repurchase of an Eligible Foreclosure Mortgage Loan
or purchase of Eligible REO or a Swingline Advance made as a
Foreclosure Advance.
"Foreclosure Advance Request" means an appropriate request
executed by the Company and delivered to the Administrative Agent in
connection with a Foreclosure Advance against an Eligible Foreclosure
Mortgage Loan or Eligible REO in substantially the form of EXHIBIT
"C-FML" attached hereto and incorporated herein for all purposes.
"Foreclosure Mortgage Loan" means a defaulted Single-family
Mortgage Loan (a) that Company is obligated to purchase from an
Investor pursuant to a Purchase Commitment between such Investor and
Company or other contractual obligation owed by Company to such
Investor for any reason other than fraud of the Company or its
Affiliates, agents, employees, correspondents, or brokers in the
origination of such Mortgage Loan or any incurable violation of the
Real Estate Settlement Procedures Act, Equal Credit Opportunity Act,
the Federal Truth-in-Lending Act or any other applicable laws or
regulations in the origination of such Mortgage Loans, (b) that is in
default in the payment of principal and interest or performance of any
obligation under the Mortgage Note or Mortgage evidencing or securing
such Mortgage Loan for a period of thirty (30) days or more and/or for
which foreclosure proceedings have been initiated but a foreclosure
sale has not occurred nor has a deed-in-lieu of foreclosure been
accepted, and (c) that is not a Repurchased Mortgage Loan.
"Funding Account" means the non-interest bearing demand
checking account established with, maintained by, and pledged to
Administrative Agent into which shall be
Page 11
18
deposited the proceeds of Advances and from which funds shall be
disbursed for the funding or acquisition of Mortgage Loans.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board and 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" means the Government National Mortgage Association and
any successor thereto.
"GNMA Guide" means the GNMA I Mortgage-Backed Securities
Guide, Handbook GNMA 5500.1 REV. 6, as revised prior to the date
hereof, and as may be revised from time to time, and GNMA II
Mortgage-Backed Securities Guide Handbook GNMA 5500.2, as revised prior
to the date hereof.
"Guarantor" means NAB Asset Corporation, a Texas corporation,
or any other Person who has guaranteed some or all of the Obligations
and who has been accepted by Agent as a Guarantor.
"Guaranty" means the Guaranty in the form attached hereto as
EXHIBIT "K", as the same may from time to time be further supplemented,
amended or restated.
"High LTV Second Mortgage Loan" means a Second Mortgage Loan
that (a) is not a Subprime Mortgage Loan; (b) has been preapproved by
an Investor for purchase and continues at all times to comply with all
applicable underwriting guidelines and other requirements of an
Investor relating to its purchase of such Mortgage Loan; (c) has a
Combined Loan-to-Value Ratio not less than 100% but not more than 125%;
(d) is secured by a Second Mortgage; (e) has a FICO (Fair Xxxxx &
Company) score of at least 640; and (f) is covered by a specific
Purchase Commitment with respect to which there is no condition which
cannot be reasonably anticipated to be satisfied or complied with
before its expiration.
"HUD" means the U.S. Department of Housing and Urban
Development and any successor thereto.
"Indebtedness" means and includes, without duplication, (1)
all items which in accordance with GAAP, consistently applied, would be
included on the liability side of a balance sheet on the date as of
which Indebtedness is to be determined (excluding shareholders'
equity), (2) Capitalized Rentals under any Capitalized Lease, (3)
guaranties, endorsements and other contingent obligations in respect
of, or any obligations to purchase or otherwise acquire, Indebtedness
of others, and (4) indebtedness secured by any mortgage, pledge,
security interest or other Lien existing on any property owned by the
Person with respect to which indebtedness is being determined, whether
or not the indebtedness secured thereby shall have been assumed.
"Indemnified Liabilities" has the meaning set forth in Article
10 hereof.
Page 12
19
"Interim Date" has the meaning set forth in Section 4.1(a)(4)
hereof.
"Internal Revenue Code" means the Internal Revenue Code of
1986, or any subsequent federal income tax law or laws, as any of the
foregoing have been or may from time to time be amended.
"Investor" means FNMA, FHLMC, GNMA, any of the Persons listed
in EXHIBIT "M" hereto, or a financially responsible institution which
is acceptable to Administrative Agent, in its sole reasonable
discretion; provided that at any time by written notice to Company,
Administrative Agent may disapprove any Investor in its sole reasonable
discretion, whether or not that Person is named as an Investor in this
definition or in EXHIBIT "M" or has been previously approved as an
Investor by Administrative Agent. Upon receipt of such notice, the
Persons named in Administrative Agent's notice shall no longer be
Investors from and after the date of the receipt of such notice.
"Jumbo Loan" means a Single-family Mortgage Loan (other than a
FHA Loan or VA Loan) that substantially complies with all applicable
requirements for purchase under the FNMA or FHLMC standard form of
conventional mortgage purchase contract then in effect except that the
amount of such Mortgage Loan exceeds the maximum amount under those
requirements, but in no event shall the amount of such Single-family
Mortgage Loan exceed SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($650,000.00).
"Laws" means all applicable statutes, laws, ordinances,
orders, writs, injunctions or decrees of any Tribunal.
"Lender" has the meaning set forth in the first paragraph of
this Agreement.
"LIBOR Rate" means a rate of interest equal to the London
Interbank Offered Rate for U. S. dollar deposits for an interest period
of one month as quoted or published by Telerate, Bloomberg or any other
rate quoting service, selected by Administrative Agent in its sole
discretion for any day during a given month. In the event such rate
ceases to be published or quoted, LIBOR Rate shall mean a comparable
rate of interest reasonably selected by Administrative Agent.
Administrative Agent's determination of the LIBOR Rate shall be
conclusive and binding on the Company, absent manifest error.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Loan Documents" means this Agreement, the Notes, the
Swingline Note, the Guaranty and each other document, instrument or
agreement executed by the Company or any other Person in connection
herewith or therewith, as any of the same may be amended, restated,
supplemented renewed, extended or replaced from time to time.
"Majority Lenders" means, at any date, (a) if there are only
two (2) Lenders hereunder, both Lenders or (b) if there are more than
two (2) Lenders hereunder, the Lenders holding not less than sixty-six
and two-thirds percent (66.67%) of the Commitment
Page 13
20
or, if the Commitment has expired, the aggregate outstanding principal
balance of Advances.
"Manufactured Home" means a structure, transportable in one or
more sections, which is built on a permanent basis and designed to be
used as a dwelling with a permanent foundation when affixed to real
property and connected to the required utilities, including, without
limitation, plumbing and electrical systems.
"Manufactured Home Loan" means a Mortgage Loan with respect to
which each of the following statements is accurate and complete (and
Company by including such Mortgage Loan in the Collateral shall be
deemed to so represent to Administrative Agent and Lenders at and as of
the date of such pledge):
(a) Such Mortgage Loan is secured by a First Mortgage on the
related Property;
(b) The proceeds of said Mortgage Loan are utilized by the
borrower under such Mortgage Loan to facilitate the permanent
attachment of a new Manufactured Home on the related Mortgaged
Property;
(c) The Mortgaged Property securing such Mortgage Loan is
located in an Acceptable Manufactured Housing State;
(d) Upon completion and attachment of the related Manufactured
Home to the related Mortgaged Property, such Mortgage Loan will meet
all underwriting and other criteria for purchase by an Investor under
the Purchase Commitment relating to such Mortgage Loan;
(e) The Manufactured Home financed with the proceeds of such
Mortgage Loan is a new Manufactured Home which has not previously been
financed;
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as
in effect from time to time.
"Market Value" at any time shall be determined by
Administrative Agent, in its sole discretion, based upon (a)
information then available to Administrative Agent regarding quotes to
dealers for the purchase of mortgage notes similar to the Mortgage
Notes that have been delivered to Administrative Agent pursuant to this
Agreement or (b) sales prices actually received by Company for mortgage
notes sold by Company during the immediately preceding thirty (30) day
period similar to the Mortgage Notes that have been delivered to
Administrative Agent pursuant to this Agreement.
"Material Adverse Effect" means any material adverse effect on
(i) the validity or enforceability of this Agreement, the Notes, the
Guaranty, or any other Loan Document, (ii) the business, operations,
total Property or financial condition of the Company or Guarantor,
(iii) the collateral under any Security Instrument, or (iv) the ability
of any Related Person to fulfill its obligations under this Agreement,
the Notes, the Guaranty, or any other Loan Document to which it is a
party.
Page 14
21
"Maximum Rate" means the maximum lawful non-usurious rate of
interest (if any) that, under Applicable Law, any Lender may charge the
Company on the Advances from time to time. To the extent that the
interest rate laws of the State of Texas are applicable and unless
changed in accordance with law, the applicable rate ceiling shall be
the "weekly ceiling" determined in accordance with the Texas Finance
Code, as amended.
"Monthly Average LIBOR Rate" means the average of all LIBOR
Rates quoted during a given month. In the event (i) the Notes are paid
in full and the Commitment is terminated prior to a month end; or (ii)
the initial Advance hereunder occurs on a date other than the first day
of that month on which LIBOR Rates are quoted, the Monthly Average
LIBOR Rate shall mean, in the case of clause (i), the average of all
LIBOR Rates quoted that month up to and including the last Business Day
prior to such payment in full; or, in the case of clause (ii), the
average of all LIBOR Rates quoted on the date of the initial Advance
through the end of that month.
"Mortgage" means a First Mortgage or Second Mortgage on
improved real property containing one-to-four family residences.
"Mortgage-backed Securities" means FHLMC, GNMA OR FNMA
securities that are backed by Pledged Mortgages.
"Mortgage Loan" means any loan evidenced by a Mortgage Note. A
Mortgage Loan, unless otherwise expressly stated herein, means a
Single-family Mortgage Loan.
"Mortgage Note" means a note secured by a Mortgage.
"Mortgage Note Amount" means, as of the date of determination,
the then outstanding unpaid principal amount of a Mortgage Note.
"Mortgage Pool" means a pool of Mortgage Loans that were
warehoused with the Administrative Agent, on the basis of which there
is to be issued a Mortgage-backed Security.
"Mortgaged Property" means the property, real, personal,
tangible or intangible, securing a Mortgage Note.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA that is maintained for employees of the
Company or a Subsidiary of the Company.
"Net Investable Balances" means the average collected balances
in non-interest bearing deposit accounts controlled or maintained by
the Company and its Subsidiaries in accounts at Bank United, less
balances to support float, activity charges, reserve requirements,
Federal Deposit Insurance Corporation insurance premiums and such other
assessments as may be imposed by governmental authorities from time to
time.
"Note" means any promissory note delivered by Company to a
Lender or Additional Lender pursuant to Section 2.3 or Section 8.15 in
the form attached hereto as
Page 15
22
EXHIBIT "A-1" and all renewals, modifications and extensions thereof.
"Notes" means, collectively, each Lender's and Additional Lender's
Note.
"Notices" has the meaning set forth in Article 9 hereof.
"Obligations" means any and all indebtedness, obligations and
liabilities of the Company to any Lender, the Administrative Agent, and
the Swingline Lender (whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and
later increased, created or incurred), arising out of or related to the
Loan Documents, or any of them and all renewals, extensions, and
modifications thereof.
"Obligor" means the Company and any guarantor or other person
liable for payment or performance of the Obligations.
"Officer's Certificate" means a certificate executed on behalf
of the Company by its chief financial officer or its treasurer or by
such other officer as may be designated herein, substantially the form
of EXHIBIT "G" hereto.
"Operating Account" means the non-interest bearing demand
checking account established by Company with Administrative Agent to be
used for Company's operations.
"Order" has the meaning set forth in Section 12.4 hereof.
"Par Value" means, with respect to any Mortgage Loan at the
time of any determination, the unpaid principal balance of such
Mortgage Loan on such date.
"Participant" has the meaning set forth in Section 13.2
hereof.
"Past Due Loan" means a Mortgage Loan owned by Company with
respect to which two or more payments under such Mortgage Loan are more
than thirty (30) days past due the payment due date set forth in the
underlying Mortgage Note and Mortgage.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether
or not legal entities, and federal and state governments and agencies
or regulatory authorities and political subdivisions thereof.
"Plans" has the meaning set forth in Section 5.10 hereof.
"Pledged Mortgages" has the meaning set forth in Section
3.1(a) hereof.
"Pledged Securities" has the meaning set forth in Section
3.1(b) hereof.
"PMI" means any private mortgage insurance company which is
acceptable to Administrative Agent, in its sole discretion; provided
that at any time by written notice to Company, Administrative Agent may
disapprove any PMI because it has determined in its
Page 16
23
sole discretion and for any reason that it is no longer comfortable
with that Person being a PMI, whether or not that Person has been
previously approved as a PMI by Administrative Agent. Upon receipt of
such notice, the Persons named in Administrative Agent's notice shall
no longer be PMIs from and after the date of receipt of such notice.
"Policies and Procedures" means those policies and procedures
adopted by the Company and acceptable to Administrative Agent relating
to Company's disbursements of loan proceeds under Construction Mortgage
Loans at various stages of construction. The Company's current Policies
and Procedures are attached as EXHIBIT "P" hereto and incorporated
herein for all purposes. Such Policies and Procedures shall not be
amended or modified by Company in any material respect without the
prior written consent of the Administrative Agent.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Purchase Commitment" means (a) with respect to any Eligible
Mortgage Loan that is an A Credit Mortgage Loan, a written commitment
of an Investor to purchase such Mortgage Loan on terms satisfactory to
Administrative Agent, in its sole discretion and, (b) with respect to
any Eligible Mortgage Loan that is a Manufactured Home Loan, Subprime
Mortgage Loan or a Second Mortgage Loan (including a High LTV Second
Mortgage Loan), a written master commitment or a loan specific
commitment of an Investor to purchase Collateral on terms satisfactory
to Administrative Agent, in its sole discretion.
"Qualifying Balances" is defined in definition of "Balance
Funded Amount."
"Redemption Amount" has the meaning set forth in Section 3.5
hereof.
"REO" means any interest in real property and the improvements
thereon owned by Company as a result of the foreclosure or transfer in
lieu of foreclosure of a Mortgage Loan.
"RFC" means Residential Funding Corporation, a Delaware
corporation.
"Repurchased Advance" means an Advance under the Commitment
pursuant to Article 2 of this Agreement for the purpose of financing or
refinancing the repurchase of a Repurchased Mortgage Loan or a
Swingline Advance made as a Repurchased Advance.
"Repurchased Advance Request" means an appropriate request
executed by the Company and delivered to the Administrative Agent in
connection with a Repurchased Advance against a Repurchased Mortgage
Loan in substantially the form of EXHIBIT "C-RML" attached hereto and
incorporated herein for all purposes.
"Repurchased Mortgage Loan" means a Single-family Mortgage
Loan (a) that the Company is obligated to purchase from an Investor
pursuant to a Purchase Commitment between such Investor and Company or
other contractual obligation owed by Company to such Investor for any
reason other than fraud of the Company or its Affiliates, agents,
employees, correspondents, or brokers in the origination of such
Mortgage Loan or any
Page 17
24
incurable violation of the Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, the federal Truth-in-Lending Act or any other
applicable laws and regulations in the origination of such Mortgage
Loans, (b) for which foreclosure proceedings have not been initiated,
and (c) that is not a Foreclosure Mortgage Loan.
"RICO" means the Racketeer Influenced and Corrupt
Organizations Act of 1970, as amended.
"Risk Rating" means the risk rating of a Mortgage Loan
determined by the underwriting guidelines of Company or other
applicable standards of an Investor to which such Mortgage Loan is to
be sold by the Company under a Purchase Commitment, provided that such
underwriting guidelines or other applicable standards comply with
industry standards in the sole judgment of Administrative Agent.
"Second Mortgage" means a mortgage or deed of trust which
constitutes a second Lien on improved property containing one-to-four
family residences.
"Second Mortgage Loan" means a Single-family Mortgage Loan
that (a) is underwritten in conformity with underwriting standards
approved by the applicable Investor, (b) has a Combined Loan-to-Value
Ratio not greater than ninety-five percent (95%) except for High LTV
Second Mortgage Loans and (c) secured by a Second Mortgage.
"Servicing Contract" means, with respect to any Person, the
arrangement, whether or not in writing, pursuant to which such Person
has the right to service Mortgage Loans.
"Servicing Rights" means the obligations, rights, remedies,
powers, privileges, benefits and responsibilities of a Person to
service Mortgage Notes for GNMA, FNMA or FHLMC under and in accordance
with the GNMA Guide, the FNMA Guide and the FHLMC Guide, respectively
or for any Investor under any Servicing Contract, including, without
limitation, (i) the right to receive servicing fees, termination fees,
net sales proceeds, late charges, insufficient fund fees, and other
ancillary income relating to the Mortgage Notes (ii) the right to hold
and administer the escrow accounts, and (iii) the right to all loan
files, insurance files, tax records, collection records, documents,
ledgers, computer printouts, computer tapes and other records, data or
information relating to the Mortgage Notes, the escrow accounts or the
servicing or otherwise necessary or proper to perform the obligations
of servicer.
"Single-family Mortgage Loan" means a Mortgage Loan that is
secured by a Mortgage covering improved real property containing one to
four family residences.
"Staged Disbursements" means disbursements by the Company of
loan proceeds under a Construction Mortgage Loan at various stages of
construction in accordance with its Policies and Procedures.
"Statement Date" has the meaning set forth in Section
4.1(a)(4) hereof.
Page 18
25
"Subordinated Debt" means unsecured Indebtedness of Company
which matures at least twelve (12) months after the Termination Date
and is subject to a subordination agreement in form and substance
satisfactory to Administrative Agent in its sole and absolute
discretion, which subordination agreement shall provide for, among
other things, a prohibition on (i) principal payments of such
Indebtedness until the Obligations are paid in full and all commitments
of Lenders to advance funds hereunder have terminated, (ii) interest
payments on such Indebtedness if a Default is then continuing or would
arise as a result of such payment and (iii) the exercise of any rights
or remedies by the subordinating creditor against Company, Guarantor
(if Guarantor is not the subordinating creditor) or any of the
Collateral until such time as the Obligations have been paid in full.
"Subprime Mortgage Loan" means a Single-family Mortgage Loan
that (a) is, in the reasonable judgment of the Administrative Agent,
consistent in all respects with traditional standards imposed by whole
loan purchasers, relevant rating agencies and pool insurers for
classification as "A-", "B" or "C" Mortgage Loan, (b) has a maximum
loan amount that does not exceed THREE HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($350,000.00) without prior written consent of the
Administrative Agent, (c) is secured by a First Mortgage or Second
Mortgage, (d) has a Combined Loan-to-Value Ratio not greater than one
hundred percent (100%), (e) is underwritten in accordance with
standards acceptable to the Administrative Agent so that such Mortgage
Loan is readily salable to an Investor and (f) is covered by a Purchase
Commitment.
"Subsidiary" means any corporation, association or other
business entity in which more than fifty percent (50%) of the total
voting power or shares of stock entitled to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"Swingline Advance" means an Advance made by Swingline Lender
pursuant to Section 2.9 of this Agreement.
"Swingline Lender" means Bank United.
"Swingline Note" means the promissory note delivered by
Company to Swingline Lender pursuant to Section 2.9 of this Agreement
in the form attached hereto as EXHIBIT "A-2", and all renewals,
extensions, and modifications thereof and all substitutions therefor.
"Termination Date" shall mean October 15, 2000, or such
earlier date upon which Lenders' obligation to fund shall be terminated
pursuant to the terms of this Agreement.
"Texas Finance Code" is defined in the definition of
"Applicable Law."
"Tribunal" shall mean any court or governmental department,
commission, board, bureau, agency, or instrumentality of any state,
commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted and/or existing.
Page 19
26
"Unit Collateral Value" means, at the time of any
determination,
(a) with respect to each Eligible Mortgage Loan included in
the Collateral for not more than ninety (90) days, that is not a Second
Mortgage Loan or an High LTV Second Mortgage Loan, ninety-eight percent
(98%) of the Collateral Value of such Mortgage Loan as of such date;
and
(b) with respect to each Eligible Mortgage Loan included in
the Collateral for more than ninety (90) days but not in excess of one
hundred twenty (120) days, that is not a Second Mortgage Loan or an
High LTV Second Mortgage Loan, ninety percent (90%) of the Collateral
Value of such Mortgage Loan at such date; and
(c) with respect to each Eligible Mortgage Loan included in
the Collateral for more than one hundred twenty (120) days but not in
excess of one hundred fifty (150) days, that is not a Second Mortgage
Loan or an High LTV Second Mortgage Loan, eighty percent (80%) of the
Collateral Value of such Mortgage Loan at such date; and
(d) with respect to each Eligible Mortgage Loan included in
the Collateral for more than one hundred fifty (150) days but not in
excess of two hundred forty (240) days, that is not a Second Mortgage
Loan or an High LTV Second Mortgage Loan, seventy percent (70%) of the
Collateral Value of such Mortgage Loan at such date; and
(e) with respect to each Eligible Mortgage Loan included in
the Collateral for more than ninety (90) days that is a Second Mortgage
Loan or an High LTV Second Mortgage Loan, ninety percent (90%) of the
Collateral Value of such Mortgage Loan as of such date; provided,
however, if such Mortgage Loan is covered by a specific Purchase
Commitment from an Investor for Second Mortgage Loans as set forth on
EXHIBIT "M", hereto, such amount shall be ninety-five (95%) of the
Collateral Value of such Mortgage Loan; and
(f) with respect to each Eligible Mortgage Loan included in
the Collateral for more than ninety (90) days but not in excess of one
hundred twenty (120) days, that is a Second Mortgage Loan or an High
LTV Second Mortgage Loan, eighty percent (80%) of the Collateral Value
of such Mortgage Loan as of such date; and
(g) with respect to each Eligible Mortgage Loan included in
Collateral for more than one hundred twenty (120) days but not in
excess of one hundred fifty (150) days, that is a Second Mortgage Loan
or an High LTV Second Mortgage Loan, seventy percent (70%) of the
Collateral Value of such Mortgage Loan as of such date; and
(h) with respect to each Eligible Mortgage Loan included in
the Collateral for more than one hundred fifty (150) days but not in
excess of two hundred forty (240) days, that is a Second Mortgage Loan
or an High LTV Second Mortgage Loan, sixty percent (60%) of the
Collateral Value of such Mortgage Loan as of such date; and
(i) with respect to each Eligible Construction Mortgage Loan
included in the Collateral for not more than three hundred sixty (360)
days, ninety-five percent (95%) of the Collateral Value of such
Mortgage Loan as of such date; and
Page 20
27
(j) with respect to each Eligible Construction Mortgage Loan
included in the Collateral for more than three hundred sixty (360)
days, sixty-five percent (65%) of the Collateral Value of such Mortgage
Loan as of such date; and
(k) with respect to each Eligible REO included in the
Collateral, fifty percent (50%) of the least of: (i) the appraised
value of the Eligible REO at the time of acquisition by Company; (ii)
the acquisition cost to Company of such Eligible REO; or (iii) the
market value of such Eligible REO; and
(l) with respect to each Eligible Repurchased Mortgage or
Eligible Delinquent Loan included in the Collateral, seventy percent
(70%) of the Collateral Value of such Mortgage Loan as of such date;
provided that the Unit Collateral Value of any Delinquent Loan shall
not be changed in the event any past-due payments under such Mortgage
Loan are brought current; and
(m) with respect to each Eligible Past Due Loan and Eligible
Foreclosure Mortgage Loan included in the Collateral, seventy percent
(70%) of the Collateral Value of such Mortgage Loan as of such date;
and
(n) with respect to any Mortgage Loan that is not an Eligible
Mortgage Loan, an Eligible Construction Mortgage Loan, an Eligible Past
Due Loan, an Eligible Delinquent Loan, an Eligible Foreclosure Mortgage
Loan, or an Eligible Repurchased Mortgage Loan, the Collateral Value
shall be equal to zero (0).
"VA" means the U.S. Department of Veteran's Affairs and any
successor thereto.
"VA Loan" means a Single-family Mortgage Loan, payment of
which is guaranteed by the VA or with respect to which there is a
current binding and enforceable commitment for such a guaranty issued
by the VA or its delegated underwriter.
"Warehouse Advance" means an Advance under the Commitment
pursuant to Article 2 of this Agreement against an Eligible Mortgage
Loan or an Eligible Delinquent Loan, an Eligible Past Due Loan, or an
Eligible Construction Mortgage Loan.
"Warehouse Advance Request" means a request for a Warehouse
Advance executed by the Company and delivered to the Administrative
Agent in substantially the form of EXHIBIT "C-SF".
"Wet Advance" means an Advance made by the Lenders prior to
all of the Collateral Documents being delivered to the Administrative
Agent.
1.2 Other Definitional Provisions.
(a) Accounting terms not otherwise defined herein shall have
the meanings given the terms under GAAP.
Page 21
28
(b) Defined terms may be used in the singular or the plural,
as the context requires.
(c) All references to time of day shall mean the then
applicable time in Houston, Texas, unless expressly provided to the
contrary.
(d) References in any of the Loan Documents to any property's
being pledged to the Administrative Agent or any Liens or security
interests being granted to or held by the Administrative Agent (or
required so to be) shall mean, respectively, pledged to, granted to or
held by Administrative Agent for itself as Lender and as agent for the
other Lenders.
2. THE CREDIT.
2.1 The Commitment.
(a) Subject to the terms and conditions of this Agreement and
provided no Default or Event of Default has occurred and is continuing,
each Lender severally and not jointly agrees, from time to time during
the period from the date hereof to, but not including the Termination
Date, to make Advances to the Company, provided, however, that (1) the
sum of the total aggregate principal amount outstanding at any one time
of all Advances hereunder shall not exceed the Commitment and (2) no
Lender's portion of the Advances shall exceed such Lender's Commitment
Amount. Within the Commitment, the Company may borrow, repay and
reborrow. All Advances under this Agreement shall constitute a single
indebtedness, and all of the Collateral shall be security for the Notes
and the Swingline Note and for the performance of all the Obligations
of the Company to the Lenders, Swingline Lender, and the Administrative
Agent.
(b) Advances shall be used by the Company solely for the
purpose of funding of (i) with respect to Warehouse Advances for the
acquisition or origination of Eligible Mortgage Loans, Eligible
Delinquent Loans, Eligible Construction Mortgage Loans, and Eligible
Past Due Loans, (ii) with respect to Repurchased Advances, the
repurchase of Eligible Repurchased Mortgage Loans, (iii) with respect
to Foreclosure Advances, the repurchase of Eligible Foreclosure
Mortgage Loans and the purchase of Eligible REO. Advances shall be made
against the pledge of such Collateral as is eligible to be pledged
against such Advances hereunder. Advances shall also be subject to the
following restrictions:
(1) No Warehouse Advance shall be made against
Mortgage Loans that are not Eligible Mortgage Loans, Eligible
Delinquent Loans, Eligible Construction Mortgage Loans, or
Eligible Past Due Loans.
(2) No Repurchased Advance shall be made against a
Repurchased Mortgage Loan that is not an Eligible Repurchased
Mortgage Loan.
(3) No Foreclosure Advance shall be against a
Foreclosure Mortgage Loan that is not an Eligible Foreclosure
Mortgage Loan or REO that is not Eligible REO.
Page 22
29
(4) The aggregate amount of Wet Advances against
Mortgage Loans outstanding at any one time shall not exceed
TWENTY-THREE MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($23,100,000.00).
(5) The aggregate amount of Advances outstanding at
any one time against Subprime Mortgage Loans shall not exceed
TWENTY-TWO MILLION AND NO/100 DOLLARS ($22,000,000.00).
(6) The aggregate amount of Advances outstanding at
any one time against Second Mortgage Loans (including High LTV
Second Mortgage Loans) shall not exceed SEVEN MILLION AND
NO/100 DOLLARS ($7,000,000.00) in the aggregate.
(7) The aggregate amount of Advances outstanding at
any one time against Manufactured Home Loans shall not exceed
ONE MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($1,650,000.00).
(8) The aggregate amount of Foreclosure Advances and
Repurchased Advances outstanding at any one time shall not
exceed ONE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($1,375,000.00).
(9) The aggregate amount of all Advances outstanding
at any one time against Aged Mortgage Loans shall not exceed
ONE MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,100,000.00).
(10) The aggregate amount of Advances outstanding at
any one time against Construction Mortgage Loans shall not
exceed SIX MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS
($6,600,000.00).
(c) No Advance shall exceed the following amounts applicable
to the type of Collateral determined as of the date the Collateral is
pledged to Administrative Agent:
(1) No Warehouse Advance against an A Credit Mortgage
Loan, Subprime Mortgage Loan or a Manufactured Home Loan shall
exceed an amount equal to ninety-eight percent (98%) of the
Collateral Value of such Mortgage Loan.
(2) No Warehouse Advance against a Second Mortgage
Loan (including a High LTV Second Mortgage Loan) shall exceed
an amount equal to ninety percent (90%) of the Collateral
Value of such Mortgage Loan; provided, however, if
Administrative Agent is provided a prior written approval from
an Investor for Second Mortgage Loans as shown on EXHIBIT "M"
hereto approving the purchase of such Mortgage Loan for
purchase by such Investor, the advance rate shall be increased
to ninety-five percent (95%).
(3) with respect to each Eligible Construction
Mortgage Loan covered by a Purchase Commitment, an amount
equal to ninety-five percent (95%) of each
Page 23
30
Staged Disbursement; provided, however, that the total
aggregate Advances outstanding against such Construction
Mortgage Loan, as of but prior to the final draw thereunder
and concurrent with the permanent loan funding thereof, shall
not exceed ninety percent (90%) of the Appraised Value of the
Mortgaged Property securing such Construction Mortgage Loan.
(4) No Warehouse Advance against a Delinquent Loan or
Past Due Loan shall exceed an amount equal to seventy percent
(70%) of the Collateral Value of such Mortgage Loan.
(5) No Repurchased Advance shall exceed an amount
equal to seventy percent (70%) of the Collateral Value of the
Repurchased Mortgage Loan funded or refinanced from the
proceeds of such Repurchased Advance.
(6) No Foreclosure Advance shall exceed an amount
equal to seventy percent (70%) of the Collateral Value of the
Foreclosure Mortgage Loan or with respect to REO funded or
refinanced from the proceeds of such Foreclosure Advance,
fifty percent (50%) of the Collateral Value of the REO.
Page 24
31
2.2 Procedures for Obtaining Advances.
(a) The Company may obtain an Advance hereunder, subject to
the satisfaction of the conditions set forth in Sections 4.1 and 4.2
hereof, upon compliance with the procedures set forth in this Section
2.2 and in EXHIBIT "D" attached hereto and made a part hereof. Requests
for Advances shall be initiated by the Company (i) by delivering to the
Administrative Agent, by telecopy (with original to be sent immediately
thereafter by overnight mail) a completed and signed Advance Request,
or (ii) by using the electronic data transmission service provided by
the Administrative Agent and its licensor, MBMS Incorporated, to
transmit to the Administrative Agent a request for Advance ("Electronic
Request"), which shall include all information required by the Advance
Request through the Warehouse Management System software provided by
the Administrative Agent and its licensor, MBMS Incorporated. The
Administrative Agent shall have the right, on not less than three (3)
Business Days' prior notice to the Company, to modify the Advance
Request, Electronic Request, or any exhibits hereto to conform to
current legal requirements or Administrative Agent's practices, and, as
so modified, said Advance Request, Electronic Request or exhibits shall
be deemed a part hereof. In consideration of the Lenders permitting the
Company to make Electronic Requests for Advances utilizing the
Warehouse Management System software or Advance Requests by telecopy,
the Company covenants and agrees to assume liability for and to
protect, indemnify and save the Lenders and the Administrative Agent
harmless from, any and all liabilities, obligations, damages,
penalties, claims, causes of action, costs, charges and expenses,
including attorneys' fees and expenses of employees, which may be
imposed, incurred by or asserted against the Lenders or the
Administrative Agent by reason of any loss, damage or claim howsoever
arising or incurred because of, out of or in connection with (i) any
action of the Administrative Agent or any Lender pursuant to Electronic
Requests or Advance Requests by telecopy, (ii) the breach of any
provisions of this Agreement by the Company, (iii) the transfer of
funds pursuant to such Electronic Requests or Advance Requests by
telecopy, or (iv) the Administrative Agent's or any Lender honoring or
failing to honor any Electronic Request or Advance Request by telecopy
for any reason or no reason whatsoever. The Administrative Agent is
entitled to rely upon and act upon Electronic Requests or Advance
Requests by telecopy, and the Company shall be unconditionally and
absolutely estopped from denying (x) the authenticity and validity of
any such transaction so acted upon by the Administrative Agent once the
Administrative Agent has advanced funds and has deposited or
transferred such funds as requested in any such Electronic Request or
Advance Request by telecopy, and (y) the Company's liability and
responsibility therefor.
(b) In the case of any Wet Advances, the Company shall follow
the procedures and, at or prior to the Lenders' making of such Wet
Advances, shall deliver to the Administrative Agent or its designee the
documents required by EXHIBIT "D" in connection with such Wet Advance.
In case of Mortgage Loans financed through a Wet Advance, the Company
shall cause all Collateral Documents to be delivered to the
Administrative Agent or its designee within seven (7) Business Days
after the date of the Wet Advance relating thereto.
(c) Before funding, the Administrative Agent and its designee
shall have a reasonable time to examine such Advance Request and the
Collateral Documents to be
Page 25
32
delivered prior to such requested Advance, and may reject such of them
as do not meet the requirements of this Agreement. The Advance Request
and the Collateral Documents (unless such Advance is a permitted Wet
Advance) must be received by Administrative Agent and all other
conditions to such Advance must be satisfied no later than 12:00 noon
Houston, Texas time in order for funding to occur the same day.
(d) Each Advance Request shall constitute a request for both
(1) a Swingline Advance to be funded by Swingline Lender and the
Advances to be made by Lenders to refinance that Swingline Advance, and
(2) if Swingline Lender elects not to make a Swingline Advance, the
Advances actually requested by the text of the Advance Request to be
funded by the Lenders. The Administrative Agent shall promptly, and in
any case not later than 1:00 p.m. on the date an Advance is to be made,
notify each Lender of its receipt of an Advance Request, the matters
specified therein, and of such Lender's Commitment Percentage of the
requested Advance. If all conditions precedent to such Advance have
been met and Administrative Agent has notified each Lender that
Swingline Lender has elected not to make a Swingline Advance pursuant
to such Advance Request, each Lender shall remit its Commitment
Percentage of any Advance requested in an Advance Request to
Administrative Agent's principal office in Houston, Texas, by wire
transfer according to Administrative Agent's wire instructions, in
funds that are available for immediate use by Administrative Agent by
4:00 p.m. on the date such Advance is to be made.
(e) Absent contrary written notice from a Lender received by
Administrative Agent by 2:00 p.m. on the Advance Date, Administrative
Agent may assume that each Lender has made its Commitment Percentage of
an Advance under an Advance Request available to Administrative Agent
on the Advance Date and may, but is not obligated to, make available to
Company a corresponding amount. If a Lender fails to make its
Commitment Percentage of that Advance available to Administrative Agent
on the Advance Date (whether because of that Lender's default, because
that Lender is not open for business on that Business Day, or
otherwise) then Administrative Agent may recover that amount on demand
(i) from that Lender, together with interest at the Federal Funds Rate,
during the period from the Advance Date to the date Administrative
Agent recovers that amount from that Lender - which payment is deemed
to be that Lender's Commitment Percentage of that Advance or (ii) if
that Lender fails to pay that amount upon demand, then from Company
together with interest at an annual interest rate equal to the rate
applicable to the requested Advance during the period from the Advance
Date to the date Administrative Agent recovers that amount from
Company. If any Lender fails to fund its Commitment Percentage in any
Advance, the other Lenders shall be entitled, but not obligated, to
fund the defaulting Lender's Commitment Percentage in such Advance.
Thereafter, the Commitment Percentage of each Lender shall be adjusted
accordingly. Nothing in these provisions changes or limits the
obligation of each Lender to lend its Commitment Percentage of each
Advance. Each Lender assumes the credit risk for amounts lent by
Administrative Agent pursuant to this Section 2.2(e) from the time the
Advance is made available to or for the Company, and, after
Administrative Agent has recovered the amount of interest provided for
in clause (i) above, is entitled to interest on such amount lent from
such time.
Page 26
33
(f) Although no Lender is responsible for the failure of any
other Lender to make its Commitment Percentage of any Advance, that
failure does not excuse any other Lender from making its Commitment
Percentage of that Advance.
(g) To make an Advance, the Administrative Agent shall credit
the Company's Funding Account with the Administrative Agent upon
compliance by the Company with the terms of this Agreement.
2.3 Notes. The Company's obligation to pay the principal of, and
accrued and unpaid interest on, all Advances made by the Lenders shall be
evidenced by the Notes of the Company in favor of each Lender. All terms and
provisions of the Notes are hereby incorporated herein.
2.4 Interest.
(a) Except as otherwise provided in Section 2.4(c) below, each
Lender's Advances (exclusive of any past due principal) from time to
time outstanding shall bear interest on each day outstanding at the
Applicable Rate in effect on such day; provided, however, that the
portion of such Lender's Advances which is equal to the Balance Funded
Amount, if any, for such Lender computed for the immediately preceding
Balance Calculation Period, shall bear interest on each day outstanding
at the Balance Funded Rate. Each Lender which has any Balance Funded
Amount for any Balance Calculation Period shall provide Administrative
Agent written notice of such Balance Funded Amount not later than two
(2) Business Days after the end of such Balance Calculation Period, and
Administrative Agent shall be entitled to rely on the accuracy of such
notice in calculating the interest accrued for such Balance Calculation
Period.
(b) Interest shall be computed on the basis of a 360-day year
and applied to the actual number of days elapsed in each interest
calculation period and shall be payable monthly in arrears, on the
twenty-fifth (25th) day of each month, commencing with the first month
following the date of this Agreement, and continuing on the 25th day of
each calendar month thereafter until the Termination Date when all
outstanding and unpaid Advances plus all accrued and unpaid interest
shall be immediately due and payable.
(c) Obligations not paid when due (whether at stated maturity,
upon acceleration following the occurrence of an Event of Default or
otherwise) shall bear interest, from the date due until paid in full,
at a rate of interest ("Default Rate") at all times equal to the lesser
of (i) four percent (4) per annum over the Applicable Rate; or (ii) the
Maximum Rate, said interest to be payable on demand by Administrative
Agent.
2.5 Principal Payments.
(a) The outstanding unpaid principal amount of all Advances
shall be payable in full on October 15, 2000.
(b) The Company shall have the right to prepay the outstanding
Advances in whole or in part, from time to time, without premium or
penalty.
(c) The Company shall be obligated to pay to the
Administrative Agent, on behalf of Lenders, without the necessity of
prior demand or notice from the Administrative
Page 27
34
Agent or any Lender, (and the Company authorizes the Administrative
Agent on behalf of the Lenders to charge the Funding Account or any
other accounts of the Company [excluding any monies held by Company in
trust for third parties] in Administrative Agent's possession for) the
amount of any outstanding Advance against any Collateral upon the
earliest occurrence of any of the following events:
(1) The expiration of ninety (90) days from the date
any Mortgage Loan was originally pledged as Collateral,
excluding Aged Mortgage Loans, Construction Mortgage Loans,
Past Due Loans, Foreclosure Mortgage Loans, Repurchased
Mortgage Loans, and Delinquent Loans;
(2) The expiration of forty-five (45) days from the
date any Mortgage Loan was delivered to an Investor for
examination and purchase, without the purchase being made, or
upon rejection of the Mortgage Loan as unsatisfactory by an
Investor and without such Mortgage Loan being redelivered by
such Investor to the Lender and continuing thereafter to
qualify as an Eligible Mortgage Loan hereunder;
(3) The expiration of forty-five (45) days from the
date Mortgage Loan is delivered to the certificating custodian
acceptable to the Administrative Agent for the issuance of a
Mortgage-backed Security;
(4) The expiration of seven (7) Business Days from
the date a Wet Advance was made without receipt of all
Collateral Documents relating to any Mortgage Loan funded by a
Warehouse Advance, or such Collateral Documents, upon
examination by the Administrative Agent, are found not to be
in compliance with the requirements of this Agreement or the
related Purchase Commitment;
(5) The expiration of ten (10) calendar days from the
date a Collateral Document in connection with any Mortgage
Loan included in Collateral was delivered to the Company for
correction or completion, without being returned to the
Administrative Agent, corrected or completed;
(6) Any Mortgage Loan included in Collateral is
foreclosed, except for Eligible Foreclosure Mortgage Loans;
(7) Any Mortgage Loan included in Collateral ceases
to be or is not an Eligible Mortgage Loan, an Eligible
Construction Mortgage Loan, an Eligible Past Due Loan, an
Eligible Delinquent Loan, an Eligible Foreclosure Mortgage
Loan, or an Eligible Repurchased Mortgage Loan;
(8) Upon sale of any Collateral;
(9) Payment of any Lien prior to a Second Mortgage
Loan is delinquent for a period of thirty (30) days or more;
and
Page 28
35
(10) The expiration of three hundred sixty (360) days
from the date of any Repurchased Advance or Foreclosure
Advance against any Collateral that support such Advances.
Upon receipt of such payment by the Administrative Agent, such
Collateral shall be considered to have been redeemed from pledge, and
the Collateral Documents, relating thereto which have not been
delivered to an Investor or the pool custodian or pool trustee, as the
case may be, shall be released by the Administrative Agent to the
Company. Administrative Agent shall endeavor to provide written notice
to the Company of any charging against the Funding Account pursuant to
Section 2.5(c) of this Agreement, provided that Administrative Agent
shall not be obligated to provide such notice as a condition precedent
to debiting against the Funding Account in accordance with Section
2.5(c) of this Agreement and the failure to provide such notice shall
not subject the Administrative Agent to any claim for damages by the
Company.
(d) With respect to each Aged Mortgage Loan that is an A
Credit Mortgage Loan, a Subprime Mortgage Loan, or a Manufactured Home
Loan, the Company shall be obligated to pay to the Administrative Agent
on behalf of the Lenders without the necessity of prior demand or
notice from Administrative Agent or any Lender (and the Company
authorizes the Administrative Agent to charge the Funding Account or
any other accounts of the Company [excluding monies held by the Company
in trust for third parties] in Administrative Agent's possession for
the payment thereof) the principal payments in the amounts and on the
dates specified below:
(1) On the date such Mortgage Loan becomes an Aged
Mortgage Loan, a principal payment in an amount necessary to
reduce the outstanding unpaid Advances against such Aged
Mortgage Loan to an amount equal to ninety percent (90%) of
the Collateral Value of such Aged Mortgage Loan as of such
date
(2) On the date which is thirty-one (31) days from
the date such Mortgage Loan became an Aged Mortgage Loan, a
principal payment in an amount necessary to reduce the
outstanding unpaid Advances made against such Aged Mortgage
Loan to an amount equal to eighty percent (80%) of the
Collateral Value of such Aged Mortgage Loan as of such date;
(3) On the date which is sixty-one (61) days from the
date such Mortgage Loan became an Aged Mortgage Loan, a
principal payment in an amount necessary to reduce the
outstanding unpaid Advances against such Aged Mortgage Loan to
an amount equal to seventy percent (70%) of the Collateral
Value of such Aged Mortgage Loan as of such date;
(4) On the date which is one hundred fifty-one (151)
days from the date such Mortgage Loan became an Aged Mortgage
Loan, an amount equal to the balance of the aggregate
outstanding unpaid Advances against such Aged Mortgage Loan.
(e) With respect to each Aged Mortgage Loan that is a Second
Mortgage Loan (including a High LTV Second Mortgage Loan), the Company
shall be obligated to pay to
Page 29
36
the Administrative Agent on behalf of the Lenders, without necessity of
prior demand or notice from Administrative Agent or any Lender (and the
Company authorizes the Administrative Agent on behalf of the Lenders to
charge the Funding Account or any other accounts of the Company
[excluding monies held by the Company in trust for third parties] in
Administrative Agent's possession for the payment thereof) the
principal payments in the amounts and on the dates specified below:
(1) On the date such Mortgage Loan becomes an Aged
Mortgage Loan, a principal payment in an amount necessary to
reduce the outstanding unpaid Advances against such Aged
Mortgage Loan to an amount equal to eighty percent (80%) of
the Collateral Value of such Aged Mortgage Loan as of such
date
(2) On the date which is thirty-one (31) days from
the date such Mortgage Loan became an Aged Mortgage Loan, a
principal payment in an amount necessary to reduce the
outstanding unpaid Advances made against such Aged Mortgage
Loan to an amount equal to seventy percent (70%) of the
Collateral Value of such Aged Mortgage Loan as of such date;
(3) On the date which is sixty-one (61) days from the
date such Mortgage Loan became an Aged Mortgage Loan, a
principal payment in an amount necessary to reduce the
outstanding unpaid Advances against such Aged Mortgage Loan to
an amount equal to sixty percent (60%) of the Collateral Value
of such Aged Mortgage Loan as of such date;
(4) On the date which is one hundred fifty-one (151)
days from the date such Mortgage Loan became an Aged Mortgage
Loan, an amount equal to the balance of the aggregate
outstanding unpaid Advances against such Aged Mortgage Loan.
(f) With respect to each Aged Mortgage Loan that is a
Construction Mortgage Loan, the Company shall be obligated to pay to
the Administrative Agent on behalf of the Lenders, without the
necessity of prior demand or notice from Administrative Agent or any
Lender, (and the Company authorizes the Administrative Agent to charge
the Funding Account or any other accounts of the Company [excluding
monies held by the Company in trust for third parties] in
Administrative Agent's possession for the payment thereof) the
principal payments in the amounts and on the dates specified below:
(1) On the date such Mortgage Loan becomes an Aged
Mortgage Loan, a principal payment in an amount necessary to
reduce the outstanding unpaid Advances against such Mortgage
Loan to an amount equal to sixty-five percent (65%) of the
Collateral Value of such Mortgage Loans as of such date;
(2) On the date such Mortgage Loan has been included
in the Collateral for five hundred forty (540) days (computed
from the date it was originally pledged as Collateral), an
amount equal to the balance of the aggregate outstanding
unpaid Advances against such Construction Mortgage Loan.
Page 30
37
2.6 Expiration of Commitment. Unless extended or terminated
earlier as permitted hereunder, the Commitment shall expire of its own term, and
without the necessity of action by the Lenders, at the close of business on the
Termination Date. However, the remainder of this Agreement shall remain in full
force and effect until all amounts due on the Obligations have been paid in
full. The Lenders have not made, and do not hereby make, any commitment to
renew, extend, rearrange or otherwise refinance the outstanding and unpaid
principal of the Notes or accrued interest thereon. In the event, however, the
Lenders from time to time renew, extend, rearrange, increase and/or otherwise
refinance any portion or all of any Obligation and any accrued interest thereon
at any time, such refinancing shall be evidenced by appropriate promissory notes
in form and substance satisfactory to the Lenders and, unless otherwise noted or
modified at such time or times by the terms of such promissory note or any
agreements executed in connection therewith, any such promissory notes and
refinancing evidenced thereby shall be governed in all respects by the terms of
this Agreement.
2.7 Method of Making Payments and Distributions.
On or before the fifth (5th) Business Day of each month, Administrative Agent
shall deliver to the Company a statement of interest due and payable to each
Lender or Swingline Lender on its Advances or Swingline Advances, as the case
may be, during the previous month. On or before the twenty-fifth (25th) of each
month, the Company shall pay to the Administrative Agent the amount of interest
payable to each Lender or Swingline Lender for the preceding month. The
Administrative Agent shall distribute the amount so paid to the Lenders and
Swingline Lender, as appropriate. Except as otherwise specifically provided
herein, all payments hereunder shall be made to the Administrative Agent, on
behalf of the Lenders, not later than 2:00 p.m. (Houston, Texas time) on the
date when due unless such date is a non-Business Day, in which case, such
payment shall be due not later than 2:00 p.m. (Houston, Texas time) on the first
Business Day thereafter, and shall be made in lawful money of the United States
of America in immediately available funds. Any such payment made after 2:00 p.m.
(Houston, Texas time) shall be deemed to be received on the next Business Day
and, if applicable, interest thereon shall continue to accrue until such next
Business Day. When received, Administrative Agent shall promptly, and in any
case not later than 3:00 p.m. (Houston, Texas time) on the date received, if
received prior to 2:00 p.m. (Houston, Texas time), otherwise on the date deemed
received, distribute each payment (a) first to the Swingline Lender until the
principal amount of all outstanding Swingline Advances have been paid in full
and (b) the balance, if any, pro rata to the Lenders according to their
applicable Commitment Percentage in such payments.
2.8 Commitment Fee.
(a) In consideration of the Lender's Commitment to make
Advances, Company shall pay to Administrative Agent for the ratable
account of each Lender in accordance with their respective Commitment
Percentage, a commitment fee ("Commitment Fee") determined by applying
a rate of 17.5 basis points (0.175%) per annum (based on a 360 day-year
and applied to the actual number of days elapsed) on the amount of the
Commitment from the effective date of this Agreement through and
including the Termination Date, which Commitment Fee shall be due and
payable in quarterly installments with the first quarterly installment
being due and payable upon the execution and delivery of this Agreement
and a like installment every ninety (90) days thereafter until the
Commitment Fee has been paid in full. The Commitment Fee shall be
deemed fully earned and nonrefundable upon the execution and delivery
of this Agreement
Page 31
38
notwithstanding any decrease of the Commitment or the Commitment is not
fully funded. If the Commitment is increased, Company shall pay to
Agent for the account of the Lenders, in accordance with their
respective Commitment Percentage in such increase, an additional
commitment fee of 0.175% per annum on the amount of such increase from
the effective date of such increase through and including the
Termination Date, such additional commitment fee shall be due and
payable on the effective date of such increase.
(b) To the Administrative Agent for its own account, an agency
fee in an amount agreed to by Company and the Administrative Agent.
(c) To the Collateral Agent for its own account, such fees as
may be separately agreed to by Company and the Collateral Agent.
2.9 Swingline. On the terms and subject to the
conditions set forth herein, the Swingline Lender agrees that it may, from time
to time to, but not including, the Termination Date, agree to make Warehouse
Advances, Construction Advances, Repurchased Advances, and Foreclosure Advances
requested by the Company in an aggregate outstanding amount not to exceed FOUR
MILLION AND NO/100 DOLLARS ($4,000,000.00). Such Swingline Advances shall be in
an amount equal to the amount of the Advance requested by the Company less any
payments applied to reduce outstanding Advances on the date of such Swingline
Advance. A Swingline Advance may be made as a Warehouse Advance, a Repurchased
Advance, and a Foreclosure Advance, and shall bear interest, from the date of
such Swingline Advance until paid in full, at the Applicable Rate applicable to
that type of Advance. Swingline Advances shall be evidenced by a Swingline Note.
The Lenders (including Bank United) hereby agree to purchase from the Swingline
Lender an undivided participation interest in all outstanding Swingline Advances
held by the Swingline Lender at any time in an amount equal to each Lender's
Commitment Percentage of such Swingline Advances. The Swingline Lender may at
any time in its sole and absolute discretion (and shall no less frequently than
weekly) request the Lenders to fund their Commitment Percentage in the aggregate
amount necessary to repay the outstanding Swingline Advances and each Lender
absolutely and unconditionally agrees to fund such Lender's Commitment
Percentage of such Swingline Advances, regardless of any Default or Event of
Default or other condition which would otherwise excuse such Lender from funding
its Commitment Percentage of such Swingline Advances, provided that no Lender
shall be required to make Advances to repay Swingline Advances which would cause
such Lender's portion of all Advances then outstanding to exceed such Lender's
Commitment Amount, in each case at the time the Lender funds its Commitment
Percentage of such Swingline Advances; and provided further, that a Lender shall
not be obligated to make Advances to repay Swingline Advances unless (A) the
Swingline Lender believed in good faith that all conditions to making the
subject Swingline Advance were satisfied at the time such Swingline Advance was
made, or (B) such Lender had actual knowledge, by receipt of the statements
furnished to it pursuant to Section 6.2 hereof or otherwise, that any such
condition had not been satisfied and failed to notify the Swingline Lender in a
writing received by the Swingline Lender prior to the time it made such
Swingline Advance that the Swingline Lender was not authorized to make a
Swingline Advance until such condition had been satisfied, or (C) the
satisfaction of any such condition that was not satisfied had been waived in
writing by the requisite Lenders in accordance with the provisions of this
Agreement. Upon an Event of Default and the acceleration of the Obligations,
each Lender (including Bank United) shall fund such Lender's Commitment
Percentage of such Swingline Advances. Each Lender's Commitment Percentage of
the Swingline Advances shall be delivered directly to the
Page 32
39
Swingline Lender in immediately available funds at the office of the
Administrative Agent by 2:00 o'clock, p.m. on (i) the date of such request
therefor, if such request is made prior to 10:00 o'clock, a.m., or (ii)
otherwise, the first (1st) Business Day following such request therefor, and
shall be promptly applied against the outstanding Swingline Advances. Upon any
such delivery and application, the amount so refunded shall cease to be a
Swingline Advance, and shall become an Advance made by the applicable Lender to
the Company.
2.10 Increased Costs; Capital Requirements. In the event any
applicable law, order, regulation or directive issued by any governmental or
monetary authority, or any change therein or in the governmental or judicial
interpretation or application thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) by any
governmental or monetary authority:
(a) Does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Advances made
hereunder, or change the basis of taxation on payments to such Lender
of principal, fees, interest or any other amount payable hereunder
(except for change in the rate of tax on the overall gross or net
income of such Lender by the jurisdiction in which such Lender's
principal office is located);
(b) Does or shall impose, modify or hold applicable any
reserve, capital requirement, special deposit, compulsory loan or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
such Lender which are not otherwise included in the determination of
the interest rate as calculated hereunder;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining any Advance or to reduce any amount receivable
in respect thereof or to reduce the rate of return on the capital of such Lender
or any Person controlling such Lender as it relates to credit facilities in the
nature of that evidenced by this Agreement, then, in any such case, the Company
shall promptly pay necessary to compensate such Lender for reduced amounts
receivable or reduced rate by such Lender with respect to this Agreement
hereunder or such Lender's obligations becomes entitled to claim any additional
amounts pursuant to this Section, it shall notify the Company through the
Administrative Agent of the event by reason of which it has become so entitled
and the Company shall pay such amount within fifteen (15) days thereafter.
Notwithstanding the foregoing, the Company shall not be obligated to pay any
such additional amounts attributable to the period (the "Excluded Period")
ending ninety (90) days prior to the date the Company receives written notice of
the law, order, regulation, directive, change or request by reason of which such
additional amounts are payable, except to the extent such additional amounts
accrued during the Excluded Period due to the retroactive application of such
law, order, regulation, directive, change or request, in which case the
limitation set forth in this sentence shall not apply. A certificate as to any
additional amount payable pursuant to the foregoing sentence containing the
calculation thereof in reasonable detail submitted by a Lender, through the
Administrative Agent, to the Company shall be conclusive in the absence of
manifest error. The obligations of the Company under this Section shall survive
the payment of all other Obligations and the termination of this Agreement.
2.11 Restatement. This Agreement amends and restates the Existing
Agreement in its entirety. All outstanding and unpaid advances under the
Existing Agreement shall continue and
Page 33
40
be deemed Advances hereunder and evidenced by the Notes. All liens, security
interests, and assignments securing the obligations of the Company under the
Existing Agreement are hereby ratified, confirmed, and brought forward as
security for the Obligations, in addition to and cumulative of all other
security.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment and
performance of all of the Company's Obligations, the Company hereby assigns and
transfers all right, title and interest in and to and grants a security interest
to the Administrative Agent, for the benefit of the Lenders, Administrative
Agent, and Swingline Lender in the following described property (the
"Collateral"):
(a) All Mortgage Loans, including all promissory notes,
mortgages, deeds of trust, or other security instruments and documents
evidencing or securing such loans, which from time to time are
delivered or caused to be delivered to the Administrative Agent or its
designee, come into the possession, custody or control of the
Administrative Agent for the purpose of assignment or pledge or in
respect of which an Advance has been made hereunder, including, without
limitation, all Mortgage Loans in respect of which Wet Advances have
been made hereunder (the "Pledged Mortgages").
(b) All Mortgage-backed Securities which are from time to time
created in whole or in part on the basis of the Pledged Mortgages or
are delivered or caused to be delivered to, or are otherwise in the
possession of the Administrative Agent, or its designee, its agent,
bailee or custodian as assignee or pledged to the Administrative Agent,
or for such purpose are registered by book-entry in the name of the
Administrative Agent (the "Pledged Securities").
(c) All private mortgage insurance and all commitments issued
by the FHA or VA to insure or guarantee any Pledged Mortgages; all
guaranties related to Pledged Securities; all Purchase Commitments held
by the Company covering the Pledged Mortgages or the Pledged Securities
and all proceeds resulting from the sale thereof to Investors pursuant
thereto; all personal property, contract rights, servicing and
servicing fees and income or other proceeds, amounts and payments
payable to the Company as compensation or reimbursement, accounts and
general intangibles of whatsoever kind relating to the Pledged
Mortgages and the Pledged Securities, and all other documents or
instruments relating to the Pledged Mortgages, the Pledged Securities,
including, without limitation, any interest of the Company in any fire,
casualty or hazard insurance policies and any awards made by any public
body or decreed by any court of competent jurisdiction for a taking or
for degradation of value in any eminent domain proceeding as the same
relate to the Pledged Mortgages.
(d) All right, title and interest of the Company in and to all
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records (including all information, records, tapes, data,
programs, discs and cards necessary or helpful in the administration or
servicing of the foregoing Collateral) and other information and data
of the Company relating to the foregoing Collateral.
Page 34
41
(e) All now existing or hereafter acquired cash delivered to
or otherwise in the possession of the Administrative Agent or its
agent, bailee or custodian or designated on the books and records of
the Company as assigned and pledged to the Administrative Agent, on
behalf of the Lenders.
(f) All of Company's present and future rights to have,
demand, receive, recover, obtain and retain payment or reimbursement
from any source or sources of (and any compensation for) funds paid or
advanced by or for Company to purchase any Repurchased Mortgage Loan or
Foreclosure Mortgage Loan, to pay any direct or indirect costs of
effectively foreclosing (whether by judicial or nonjudicial
foreclosure, by deed in lieu of foreclosure or by any other means or
method) or preparing or attempting to effectively foreclose any
Repurchased Mortgage Loan or Foreclosure Mortgage Loan, whether or not
such Repurchased Mortgage Loan or Foreclosure Mortgage Loan is
repurchased by Company, and whether such payment, reimbursement or
compensation is (or is due) from or owing or paid by (1) any VA
guaranty, FHA insurance or any other governmental or private mortgage
insurance or guarantee, (2) any owner or holder of such Repurchased
Mortgage Loan or Foreclosure Mortgage Loan, (3) GNMA, FNMA, FHLMC, or
any other issuer or guarantor of any Mortgage-backed Securities
(whether pursuant to an express or implied advances reimbursement
covenant under a contract between Company and GNMA, FNMA, FHLMC or
another issuer or guarantor of any Mortgage-backed Securities contained
in or executed pursuant to any mortgage or mortgage-backed securities
selling or servicing guide, pursuant to any other agreement or by
operation of any legal or equitable rule or principle including, but
not limited to, subrogation), (4) any proceeds of realization on any
security for or guarantees or insurance of Repurchased Mortgage Loans
or Foreclosure Mortgage Loan, (5) any title insurance, (6) any
insurance on property or property rights covered by any Repurchased
Mortgage Loan or Foreclosure Mortgage Loan, or (7) any other source
whatsoever. Collateral also includes (8) all Repurchased Mortgage Loans
or Foreclosure Mortgage Loan repurchased by Company with funds advanced
or lent by Lenders, (9) the promissory notes, mortgage, deed of trust
or other security instrument and other papers evidencing and securing
it, (10) all related VA guaranty or FHA, PMI or other insurance or
guaranty papers and all of Company's rights to collect, receive and
receipt for payments thereon, all of Company's estates, rights, titles
and interests, whether now owned or hereafter acquired, in and to any
and all money, claims and property resulting or realized from any
foreclosure (judicial or nonjudicial) or conveyance in lieu of
foreclosure of any real or personal property security such repurchased
loans. Collateral also includes all of Company's present and future
accounts and general intangibles arising from or relating to any of the
foregoing.
(g) All Accounts, Chattel Paper, Instruments, General
Intangibles, Certificated Securities, Uncertificated Securities, and
Investment Property, as those terms are defined in the Texas Uniform
Commercial Code, arising from or relating to any of the foregoing
Collateral.
(h) All cash and non-cash proceeds of the foregoing
Collateral, including all dividends, distributions and other rights in
connection with, and all additions to, modifications of and
replacements for, the foregoing Collateral, and all products and
proceeds of the foregoing Collateral, together with whatever is
receivable or received when the foregoing Collateral or proceeds
thereof are sold, collected, exchanged or otherwise
Page 35
42
disposed of, whether such disposition is voluntary or involuntary,
including, without limitation, all rights to payment with respect to
any cause of action affecting or relating to the foregoing Collateral
or proceeds thereof.
3.2 Security Interest in Mortgage-backed Securities. The Company's
ability to convert Mortgage Loans that are within the Collateral to
Mortgage-backed Securities are subject to the following conditions:
(a) Pledged Mortgages that are to be transferred to a pool
custodian in connection with the issuance of Mortgage-backed
Securities, shall be released from the security interest granted
hereunder only against payment to the Administrative Agent of the
amount due in connection with such Pledged Mortgages as determined in
accordance with Section 3.5 of this Agreement or against the issuance
of such Mortgage-backed Securities and the continuation of the
Administrative Agent's first priority, perfected security interest in
such Mortgage-backed Securities and the proceeds thereof until payment
due the Lenders, in respect of said Pledged Mortgages is made to the
Administrative Agent on behalf of the Lenders.
(b) In the case of Mortgage-backed Securities created from
Pledged Mortgages, the Administrative Agent, for the benefit of the
Lenders, shall have the exclusive right to the possession of the
Mortgage-backed Securities or, if the Mortgage-backed Securities are
not to be issued in certificated form, shall have the right to have the
book entries for the Mortgage-backed Securities issued in the
Administrative Agent's name or the name or names of its designees, in
each case, for the benefit of the Lenders. Administrative Agent shall
cause delivery of the Mortgage-backed Securities to be made to the
Investor or the book entries registered in the name of the Investor or
the Investor's designee only against payment therefor. The Company
acknowledges that the Administrative Agent may enter into one or more
standing arrangements with other financial institutions for the
issuance of Mortgage-backed Securities in book entry form in the name
of such other financial institutions, as agent for the Administrative
Agent, and the Company agrees upon request of the Administrative Agent,
to execute and deliver to such other financial institutions the
Company's written concurrence in any such standing arrangements.
3.3 Delivery of Collateral Documents. The Administrative Agent or
its designee exclusively shall deliver Mortgage Loans or Mortgage-backed
Securities included within the Collateral to (a) an Investor that has issued a
Purchase Commitment with respect thereto for its examination and purchase, or
(b) an Approved Custodian for purposes of examination or delivery in connection
with the issuance of Mortgage-backed Securities. In such cases where the
Administrative Agent must deliver documents to an Investor or Approved
Custodian, the Administrative Agent must receive signed shipping instructions
(in the form of EXHIBIT "E" attached hereto), no later than 2:00 p.m. Houston,
Texas time one (1) Business Day prior to the expiration of the appended Purchase
Commitment, in addition to any other documents listed in EXHIBIT "D" in respect
of the issuance of Mortgage-backed Securities. If shipping instructions are
received by Administrative Agent before 2:00 p.m. Houston, Texas time of any
Business Day, Administrative Agent will ship the documents together with the
Bailee Letter (in form of EXHIBIT "L") to the Investor or Approved Custodian on
the same Business Day, otherwise Administrative Agent will ship the documents
the next Business Day following receipt of shipping instructions. In any case in
which a Warehouse Advance has been made hereunder against Mortgage Loans,
Page 36
43
based on the existence of a Purchase Commitment covering such Mortgage Loans,
the Company agrees that such Mortgage Loans will not be placed in any mortgage
pool other than an Eligible Mortgage Pool, unless such Mortgage Loans have been
redeemed from pledge as permitted hereunder or other arrangements, satisfactory
to the Administrative Agent in its sole discretion, have been made for the
redemption of such Mortgage Loans from pledge hereunder. The Administrative
Agent may deliver any document relating to the Mortgage Loans to the Company for
correction or completion against a trust receipt in the form of EXHIBIT "F"
attached hereto executed by the Company. The Company hereby represents and
warrants to the Administrative Agent that any request by the Company for release
of Mortgage Loans included within the Collateral to the Company shall be solely
for the purposes of correcting clerical or non-substantial documentation
problems in preparation for returning such Collateral to the Administrative
Agent for ultimate sale or exchange; the Company shall request such release in
compliance with all of the terms and conditions of such release set forth
herein; and the Company will return to the Administrative Agent such
documentation released to the Company pursuant to this Section 3.3 within ten
(10) calendar days after such delivery.
3.4 Delivery of Additional Collateral or Mandatory Prepayment. At
any time that the aggregate sum of the Unit Collateral Values of all Collateral
is less than the aggregate amount of the Advances then outstanding hereunder,
the Administrative Agent may request, and the Company shall within two (2)
Business Days after Notice by the Administrative Agent (a) deliver to the
Administrative Agent or its designee for pledge hereunder additional Mortgage
Loans and/or cash, in aggregate amounts sufficient to cover the difference
between the aggregate Unit Collateral Values of all Collateral and the aggregate
amount of Advances outstanding hereunder, or (b) repay the Advances in an amount
sufficient to reduce the aggregate balance thereof outstanding to an amount
equal to or below the aggregate Unit Collateral Values of all Collateral. If at
any time or from time to time any of the limitations of Section 2.1(b) hereof
are exceeded, the Company shall immediately pay to the Administrative Agent on
behalf of the Lenders the amount of such excess for application to the principal
balance of the Notes.
3.5 Right of Redemption from Pledge. So long as no Event of
Default has occurred, the Company may redeem any Collateral against which the
Lenders have made an Advance hereunder by notifying the Administrative Agent of
its intention to redeem such Collateral from pledge and by paying to the
Administrative Agent, on behalf of the Lenders, for application to prepayment of
the principal balance of the Notes as determined by the Administrative Agent in
its reasonable discretion, an amount (the "Redemption Amount") equal to the
aggregate amount of the Advances made with respect to such Collateral.
3.6 Collection and Servicing Rights. So long as no Event of
Default shall have occurred, the Company shall be entitled to service and
receive and collect directly all sums payable to the Company in respect of the
Collateral other than proceeds of any Purchase Commitment or proceeds of the
sale of any Collateral. Following the occurrence of any Event of Default, the
Administrative Agent or its designee shall thereafter be entitled to service and
receive and collect all sums payable to the Company in respect of the
Collateral, and in such case (a) the Administrative Agent or its designee in its
discretion may, in its own name or in the name of the Company or otherwise,
demand, xxx for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but shall be
under no obligation to do so, (b) the Company shall, if the Administrative Agent
so requests, forthwith pay to the Administrative Agent, on behalf of the
Lenders, at its principal office all amounts thereafter
Page 37
44
received by the Company upon or in respect of any of the Collateral, advising
the Administrative Agent as to the source of such funds, and (c) all amounts so
received and collected by the Administrative Agent shall be held by it for the
benefit of the Lenders as part of the Collateral.
3.7 Return or Release of Collateral at End of Commitment. If (a)
the Commitment shall have expired or been terminated, and (b) no Advances,
interest or other Obligations evidenced by the Loan Documents or due under this
Agreement shall be outstanding and unpaid, the Administrative Agent shall
deliver or release all Collateral in its possession to the Company. The receipt
of the Company for any Collateral released or delivered to the Company pursuant
to any provision of this Agreement shall be a complete and full acquittance for
the Collateral so returned, and the Administrative Agent and the Lenders shall
thereafter be discharged from any liability or responsibility therefor.
4. CONDITIONS PRECEDENT.
4.1 Initial Advance. The obligation of the Lenders to make the
initial Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Administrative Agent, on or before the date thereof, of the
following conditions precedent:
(a) The Administrative Agent shall have received the
following, all of which must be satisfactory in form and content to the
Administrative Agent, in its sole discretion:
(1) The Loan Documents dated as of the date hereof
duly executed by the Company;
(2) Certificates of good standing dated no less
recently than thirty (30) days prior to the Closing Date for
its state of incorporation and for each other state in which
the Company is required to be qualified to do business;
(3) An original resolution of the board of directors
of the Company, certified as of the Closing Date by its
corporate secretary, authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents,
and all other instruments or documents to be delivered by the
Company pursuant to this Agreement;
(4) Financial statements of the Company (and its
Subsidiaries, on a consolidated basis) containing a balance
sheet as of December 31, 1999 (the "Statement Date") and
related statements of income, changes in stockholders' equity
and cash flows for the period ended on the Statement Date and
a balance sheet as of June 30, 2000 ("Interim Date") and
related statement of income for the period ended on the
Interim Date, all prepared in accordance with GAAP applied on
a basis consistent with prior periods and in the case of the
statements as of the Statement Date, audited by independent
certified public accountants of recognized standing acceptable
to the Administrative Agent;
(5) Evidence that the Company has paid all fees due
the Administrative Agent and the Lenders on or prior to the
date of this Agreement;
Page 38
45
(6) Such additional documents, instruments, and
information as Administrative Agent or its legal counsel may
reasonably require.
4.2 Each Advance. The obligation of the Lenders to make the
initial and each subsequent Advance under this Agreement is subject to the
satisfaction, in the sole discretion of the Administrative Agent, as of the date
of each such Advance, of the following additional conditions precedent:
(a) In connection with an Advance, the Company shall have
delivered to the Administrative Agent the Advance Request or the
Electronic Request, Collateral Documents, and documents required under
and shall have satisfied the procedures set forth in Section 2.2 and
EXHIBIT "D". All items delivered to the Administrative Agent or its
designee shall be satisfactory to the Administrative Agent in form and
content, and the Administrative Agent may reject such of them as do not
meet the requirements of this Agreement.
(b) The Administrative Agent shall have received evidence
satisfactory to it as to the making and/or continuation of any book
entry or the due filing and recording in all appropriate offices of all
financing statements and other instruments as may be necessary to
perfect the security interest of the Administrative Agent in the
Collateral under the Uniform Commercial Code of Texas or other
applicable law.
(c) The representations and warranties of the Company
contained in Article 5 hereof shall be accurate and complete in all
material respects as if made on and as of the date of each Advance.
(d) The Company shall have performed all agreements to be
performed by it hereunder and, as of the date of the Advance Request,
and after giving effect to the requested Advance, there shall exist no
Default or Event of Default hereunder.
(e) The Company shall not have incurred any material
liabilities, direct or contingent, except as approved by Administrative
Agent pursuant to Section 7.17, since the dates of the Company's most
recent financial statements theretofore delivered to the Administrative
Agent.
(f) The Administrative Agent shall have received from counsel
for the Company, if requested by the Administrative Agent in its sole
discretion, an updated opinion, in form and substance satisfactory to
the Administrative Agent, addressed to the Lenders and dated as of the
date of such Advance, covering such of the matters as the
Administrative Agent may reasonably request.
(g) Such additional documents, instruments, and information as
Administrative Agent or its legal counsel may reasonably require.
Acceptance of the proceeds of the requested Advance by the Company
shall be deemed a representation by the Company that all conditions set forth in
this Article 4 shall have been satisfied as of the date of such Advance.
Page 39
46
5. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Administrative Agent
and the Lenders, as of the date of this Agreement and (unless otherwise notified
in writing by the Company and Administrative Agent, in its sole discretion,
approves in writing) as of the date of each Advance Request and the making of
each Advance, that:
5.1 Organization; Good Standing; Subsidiaries. The Company and
each Subsidiary of the Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the full legal power and authority to own its property and to carry on its
business as currently conducted and is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction in which the
transaction of its business makes such qualification necessary, except in
jurisdictions, if any, where a failure to be in good standing has no material
adverse effect on the business, operations, assets or financial condition of the
Company or any such Subsidiary. For the purposes hereof, good standing shall
include qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which the Company transacts business. The Company has no Subsidiaries except as
set forth on EXHIBIT "H" hereto. EXHIBIT "H" sets forth with respect to each
such Subsidiary, its name, address, place of incorporation, each state in which
it is qualified as a foreign corporation, and the percentage ownership of the
Company in such Subsidiary.
5.2 Authorization and Enforceability. The Company has all
requisite corporate power and authority to execute, deliver, create, issue,
comply and perform this Agreement, the Notes and all other Loan Documents to
which the Company is party and to make the borrowings hereunder. The execution,
delivery and performance by the Company of this Agreement, the Notes and all
other Loan Documents to which the Company is party and the making of the
borrowings hereunder and thereunder, have been duly and validly authorized by
all necessary corporate action on the part of the Company (none of which actions
has been modified or rescinded, and all of which actions are in full force and
effect) and do not and will not conflict with or violate any provision of law or
of the articles of incorporation or by-laws of the Company, conflict with or
result in a breach of or constitute a default or require any consent under any
contracts to which Company is a party, or result in the creation of any Lien
upon any property or assets of the Company other than the Lien on the Collateral
granted hereunder, or result in or require the acceleration of any Indebtedness
of the Company pursuant to any agreement, instrument or indenture to which the
Company is a party or by which the Company or its property may be bound or
affected, the contravention, conflict, inconsistency, breach, or default of
which will have a Material Adverse Effect. This Agreement, the Notes and all
other Loan Documents contemplated hereby or thereby constitute legal, valid, and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other such laws
affecting the enforcement of creditors' rights generally.
5.3 Financial Condition. The balance sheet of the Company provided
to Administrative Agent pursuant to Section 4.1(a)(4) hereof (and if applicable,
its Subsidiaries, on a consolidating and consolidated basis) as at the Statement
Date, and the related statements of income, changes in stockholders' equity, and
cash flows for the fiscal year ended on the Statement Date, heretofore furnished
to the Administrative Agent, fairly present the financial condition of the
Company and its Subsidiaries as at the Statement Date and the Interim Date and
the results of its and their operations for the fiscal period ended on the
Statement Date and the Interim Date. The Company
Page 40
47
had, on the Statement Date and the Interim Date, no known material liabilities,
direct or indirect, fixed or contingent, matured or unmatured, or liabilities
for taxes, long-term leases or unusual forward or long-term commitments not
disclosed by, or reserved against in, said balance sheet and related statements,
and at the present time there are no material unrealized or anticipated losses
from any loans, advances or other commitments of the Company except as
heretofore disclosed to the Administrative Agent and the Lenders in writing.
Said financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved. Since the Statement Date,
there has been no material adverse change in the business, operations, assets or
financial condition of the Company or its Subsidiaries, nor is the Company aware
of any state of facts particular to the Company which (with or without notice or
lapse of time or both) would or could result in any such material adverse
change.
5.4 Litigation. Except as disclosed on EXHIBIT "I", there are no
actions, claims, suits or proceedings pending, or to the knowledge of the
Company, threatened or reasonably anticipated against or affecting the Company
or any Subsidiary of the Company in any court or before any arbitrator or before
any government commission, board, bureau or other administrative agency which,
if adversely determined, may reasonably be expected to result in any material
and adverse change in the business, operations, assets or financial condition of
the Company or any of Company's Subsidiaries, as a whole.
5.5 Compliance with Laws. To the knowledge of Company, neither the
Company nor any Subsidiary of the Company is in violation of any provision of
any law, or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority which might have
a material adverse effect on the business, operations, assets or financial
condition of the Company or any of Company's Subsidiaries, as a whole.
5.6 Regulation U. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock, and no part of the proceeds of
any Advances made hereunder will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
5.7 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" or controlled by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
5.8 Agreements. Neither the Company nor any Subsidiary of the
Company is a party to any agreement, instrument or indenture, or subject to any
restriction, materially and adversely affecting its business, operations, assets
or financial condition, except as disclosed in the financial statements
described in Section 5.3 hereof. The Company and each Subsidiary of the Company
are not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement, instrument, or
indenture which default could have a material adverse effect on the business,
operations, properties or financial condition of the Company as a whole. No
holder of any Indebtedness of the Company or of any of its Subsidiaries has
given notice of any alleged default thereunder or, if given, the same has been
cured or will be cured by Company within the cure period provided therein, and
no liquidation or dissolution of the Company or any of its Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Company or any of its Subsidiaries or any of their
respective properties is pending, or to the knowledge of the Company,
threatened.
Page 41
48
5.9 Title to Properties. The Company and each Subsidiary of the
Company has good, valid, insurable (in the case of real property) and marketable
title to all of its properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described in Section 5.3
hereof, and all such properties and assets are free and clear of all Liens
except as disclosed in such financial statements and not prohibited under this
Agreement.
5.10 ERISA. All plans ("Plans") of a type described in Section 3(3)
of ERISA in respect of which the Company or any Subsidiary of the Company is an
"Employer," as defined in Section 3(5) of ERISA, are in substantial compliance
with ERISA, and none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Internal Revenue Code, and neither the Company nor any Subsidiary of the
Company has incurred any material liability (including any material contingent
liability) to or on account of any such Plan pursuant to Sections 4062, 4063,
4064, 4201 or 4204 of ERISA; and no proceedings have been instituted to
terminate any such Plan, and no condition exists which presents a material risk
to the Company or a Subsidiary of the Company of incurring a liability to or on
account of any such Plan pursuant to any of the foregoing Sections of ERISA. No
Plan or trust forming a part thereof has been terminated since December 1, 1974.
5.11 Eligibility. The Company has all requisite corporate power and
authority and all necessary licenses, permits, franchises and other
authorizations to own and operate its property and to carry on its business as
now conducted. If approved now or hereafter as a lender or seller/servicer for
any one or more of the governmental agencies as set forth below, the Company
will remain at all times approved and qualified and in good standing and meet
all requirements applicable to such status:
(a) FNMA approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to FNMA.
(b) FHLMC approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to FHLMC.
(c) GNMA approved seller/servicer of Mortgage Loans, eligible
to originate, purchase, hold, sell, and service Mortgage Loans to be
sold to GNMA.
(d) HUD approved lender, eligible to originate, purchase,
hold, sell and service FHA-insured Mortgage Loans.
(e) VA lender in good standing under the VA loan guarantee
program eligible to originate, purchase, hold, sell, and service
VA-guaranteed Mortgage Loans.
(f) A lender in good standing with any Investor.
5.12 Special Representations Concerning Collateral. The Company
hereby represents and warrants to the Administrative Agent and the Lenders, as
of the date of this Agreement and as of the date of each Advance, that:
Page 42
49
(a) The Company is the legal and equitable owner and holder,
free and clear of all Liens (other than Liens granted hereunder), of
the Pledged Mortgages and, the Pledged Securities, included within the
Collateral. All Pledged Mortgages, Pledged Securities, and Purchase
Commitments have been duly authorized and validly granted or issued to
the Company, and all of the foregoing items of Collateral comply with
all of the requirements of this Agreement, and have been validly
pledged or assigned to the Administrative Agent, for the benefit of the
Lenders, subject to no other Liens.
(b) The Company has, and will continue to have, the full
right, power and authority to pledge the Collateral pledged and to be
pledged by it hereunder.
(c) Any Mortgage Loan (excluding Past Due Loans, Delinquent
Loans, Repurchased Mortgage Loans and Foreclosure Mortgage Loans) and
related documents included within the Collateral (1) as of the date of
the Advance Request for such Mortgage Loan, has been duly executed and
delivered by the parties thereto at a closing held not more than thirty
(30) days prior to such date unless such Mortgage Loan was purchased
and not originated by Company in which event such thirty (30) day
period shall be ninety (90) days; (2) has been made in compliance with
all requirements of the Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, the federal Truth-In-Lending Act, the Financial
Institutions Reform, Recovery and Enforcement Act, and all other
applicable laws and regulations; (3) is valid and enforceable in
accordance with its terms, without defense or offset; (4) has not been
modified or amended except in writing, which writing is part of the
Collateral Documents, nor any requirements thereof waived; and (5)
complies with the terms of this Agreement and, with the related
Purchase Commitment held by the Company. Each Mortgage Loan has been
fully advanced in the face amount thereof, except for Construction
Mortgage Loans, and each First Mortgage is a first Lien on the premises
described therein, each Second Mortgage is second Lien on the premises
described therein, and each Mortgage Loan, has or will have a title
insurance policy, in American Land Title Association form or equivalent
thereof, from a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the usual requirements
of Investor purchasing such Mortgage Loans, other than a Second
Mortgage Loan; provided, the Investor does not require a title
insurance policy in connection therewith or has waived such
requirement.
(d) Any Repurchased Mortgage Loan, Past Due Loan, Delinquent
Loan, and Foreclosure Mortgage Loan and related documents included
within the Collateral (1) is valid and enforceable in accordance with
its terms, without defense or offset; (2) has not been modified or
amended except in writing, which writing is part of the Collateral
Documents, nor any requirements thereof waived; (3) complies with the
terms of this Agreement; and (4) with respect to any Repurchased
Mortgage Loan, has not been required to be repurchased by any Investor
because of any fraud of the Company in the origination of such
Repurchased Mortgage Loan or any incurable violation of any of the Real
Estate Settlement Procedures Act, Equal Credit Opportunity Act, the
federal Truth-in-Lending Act or any other laws or regulations in the
origination of Single-family Mortgage Loans.
(e) Except for any Repurchased Mortgage Loan, Past Due Loan,
Delinquent Loan, and Foreclosure Mortgage Loan included in Collateral,
no monetary default, nor, to the knowledge of the Company, any event
which, with notice or lapse of time or both,
Page 43
50
would become a default, has occurred and is continuing under any
Mortgage Loan included in the Pledged Mortgages; provided, however,
that, with respect to Pledged Mortgages which have already been pledged
as Collateral hereunder, if any such default or event has occurred, the
Company will promptly notify the Administrative Agent and the Lenders
and the same shall not have continued for more than thirty (30) days.
(f) The Company has complied with all laws, rules and
regulations in respect of the FHA insurance or VA guarantee of each
Mortgage Loan included in the Pledged Mortgages designated by the
Company as an FHA insured or VA guaranteed Mortgage Loans, and such
insurance or guarantee is in full force and effect. All such FHA
insured and VA guaranteed Mortgage Loans comply in all respects with
all applicable requirements for purchase under the FNMA standard form
of selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect.
(g) All fire and casualty policies covering Mortgaged Property
encumbered by a Pledged Mortgage (1) name the Company and its
successors and assigns as the insured under a standard mortgagee
clause, (2) are and will continue to be in full force and effect, and
(3) afford and will continue to afford insurance against fire and such
other risks as are usually insured against in the broad form of
extended coverage insurance from time to time available, as well as
insurance against flood hazards if the same is required by FHA or VA,
except for Construction Mortgage Loans during the construction phase
which in such instance shall be covered by a builder risk policy in
accordance with the foregoing requirements.
(h) Pledged Mortgages encumbering Mortgaged Property located
in a special flood hazard area designated as such by the Secretary of
HUD are and shall continue to be covered by special flood insurance
under the National Flood Insurance Program, except for Construction
Mortgage Loans (such Mortgage Loans shall be covered by special flood
insurance at the closing of the permanent loan).
(i) Each FHA insured Mortgage Loan pledged hereunder meets all
applicable governmental requirements for such insurance. Each Mortgage
Loan, against which an Advance is made on the basis of a Purchase
Commitment meets all requirements of such Purchase Commitment. The
Company shall assure that Mortgage Loans pledged pursuant to this
Agreement and intended to be used in the formation of Mortgage-backed
Securities shall comply, or prior to the formation of any such
Mortgage-backed Security, shall comply with the requirements of the
governmental instrumentality, department or agency guaranteeing such
Mortgage-backed Security.
(j) For Pledged Mortgages which will be used to secure GNMA
Mortgage-backed Securities, the Company has received from GNMA a
Confirmation Notice or Confirmation Notices for Request Additional
Commitment Authority and for Request Pool Numbers, and there remains
available thereunder a commitment on the part of GNMA sufficient to
permit the issuance of GNMA Mortgage-backed Securities in an amount at
least equal to the amount of such Pledged Mortgages designated by the
Company as the Mortgage Loans to be used to secure such GNMA
Mortgage-backed Securities; each such Confirmation Notice is in full
force and effect; each of such Pledged Mortgages has been assigned by
the Company to one of such Pool Numbers and a portion of the available
GNMA Commitment has been allocated thereto by the Company, in an
Page 44
51
amount at least equal to the principal amount of each Mortgage Note
secured by such Pledged Mortgages; and each such assignment and
allocation has been reflected in the books and records of the Company.
(k) Each Pledged Mortgage in excess of TWO HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($250,000.00) is supported by an appraisal
that meets the appraisal requirements of FNMA or FHLMC (in the case of
residential Mortgaged Property), or the Office of Thrift Supervision
for the type of Mortgaged Property securing that Mortgage Loan; or,
alternatively, such Mortgage Loan is eligible for purchase or is
guaranteed or insured by a U.S. Government agency or a U.S. Government
sponsored enterprise.
5.13 RICO. The Company is not in violation of any laws, statutes or
regulations, including, without limitation, RICO, which contain provisions which
could potentially override the security interest in the Collateral granted to
the Administrative Agent for the benefit of the Lenders.
5.14 Proper Names. The Company does not operate in any jurisdiction
under a trade name, division, division name or name other than those names set
forth on EXHIBIT "J" attached hereto and all such names included on EXHIBIT "J"
are utilized by the Company only in the jurisdictions listed therein.
5.15 Direct Benefit From Loans. The Company has received, or, upon
the execution and funding thereof, will receive (a) direct benefit from the
making and execution of this Agreement and the other Loan Documents to which it
is a party, and (b) fair and independent consideration for the entry into, and
performance of, this Agreement and the other Loan Documents to which it is a
party. Contemporaneously with the disbursements of each Advance by the Lenders
to the Company, all such proceeds will be used to (a) finance the origination or
purchase of Eligible Mortgage Loans, Eligible REO, Eligible Past Due Loans,
Eligible Delinquent Loans, Eligible Repurchased Mortgage Loans and Eligible
Foreclosure Mortgage Loans.
5.16 Loan Documents Do Not Violate Other Documents. Neither the
execution and delivery by the Company of this Agreement or any other Loan
Document to which it is a party nor the consummation of the transactions herein
and therein contemplated, nor the performance of, or compliance with, the terms
and provisions hereof and thereof, does or will contravene, breach or conflict
with any provision of either of its articles of incorporation or by-laws, or any
applicable law, statute, rule or regulation or any judgment, decree, writ,
injunction, franchise, order or permit applicable to the Company or its assets
or properties, or does or will conflict or be inconsistent with, or does or will
result in any breach or default of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien upon any of the property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
or other instrument to which the Company is a party or by which the Company or
any of its property may be bound, the contravention, conflict, inconsistency,
breach or default of which will have a Material Adverse Effect.
5.17 Consents Not Required. Except for those consents that have
already been obtained and delivered to Administrative Agent or required as a
condition to any Advance hereunder, no consent of any Person and no consent,
license, permit, approval, or authorization of, exemption by, or registration or
declaration with, any Tribunal is required in connection with the execution,
Page 45
52
delivery, performance, validity, or enforceability of this Agreement or any of
the Loan Documents by the Company.
5.18 Material Fact Representations. Neither the Loan Documents nor
any other agreement, document, certificate, or written statement furnished to
the Administrative Agent or the Lenders by or on behalf of the Company in
connection with the transactions contemplated in any of the Loan Documents
contains any untrue statement of a material adverse fact. There are no material
adverse facts or conditions relating to the making of the Commitment, any of the
Collateral, and/or the financial condition and business of the Company known to
the Company which have not been fully disclosed, in writing, to the
Administrative Agent and the Lenders, it being understood that this
representation is made as of, and shall be limited to the date of this
Agreement. All writings heretofore or hereafter exhibited or delivered to the
Administrative Agent and/or any Lender by or on behalf of the Company are and
will be genuine and what they purport to be.
5.19 Place of Business. The principal place of business of the
Company is 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and
the chief executive office of the Company and the office where it keeps its
financial books and records relating to its property and all contracts relating
thereto and all accounts arising therefrom is located at the address set forth
for the Company in Section 9 hereof.
5.20 Use of Proceeds; Business Loans. The Company will use the
proceeds of the Advances made pursuant to the Commitment solely as follows, and
for no other purpose: (a) the origination or purchase of Eligible Mortgage
Loans, Eligible REO, Eligible Past Due Loans, Eligible Delinquent Loans,
Eligible Repurchased Mortgage Loans, Eligible Construction Mortgage Loans and
Eligible Foreclosure Mortgage Loans. All loans evidenced by the Notes are and
shall be "business loans", as such term is used in the Depository Institutions
Deregulation and Monetary Control Act of 1980, as amended, and such loans are
for business or commercial purposes and not primarily for personal, family,
household or agricultural use, as such terms are used or defined in Texas
Revised Civil Statutes, Chapter 303 of the Texas Finance Code, Regulation Z
promulgated by the Board of Governors of the Federal Reserve System, and Titles
I and V of the Consumer Credit Protection Act. Section 346 of the Texas Finance
Code which regulates revolving loans and revolving triparty accounts shall not
apply to this Agreement.
5.21 No Undisclosed Liabilities. Other than as permitted in Section
7.17 hereof, the Company does not have any liabilities or Indebtedness, direct
or contingent, except for liabilities or Indebtedness which, in the aggregate,
do not exceed TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00).
5.22 Tax Returns and Payments. All federal, state and local income,
excise, property and other tax returns required to be filed with respect to
Company's operations and those of its Subsidiaries in any jurisdiction have been
filed on or before the due date thereof (plus any applicable extensions); all
such returns are true and correct; all taxes, assessments, fees and other
governmental charges upon the Company, and Company's Subsidiaries and upon its
property, income or franchises, which are due and payable have been paid,
including, without limitation, all FICA payments and withholding taxes, if
appropriate, other than those which are being contested in good faith by
appropriate proceedings, diligently pursued and as to which the Company has
established adequate reserves determined in accordance with GAAP, consistently
applied. The
Page 46
53
amounts reserved, as a liability for income and other taxes payable, in the
financial statements described in Section 5.3 hereof are sufficient for payment
of all unpaid federal, state and local income, excise, property and other taxes,
whether or not disputed, of the Company and its Subsidiaries, accrued for or
applicable to the period and on the dates of such financial statements and all
years and periods prior thereto and for which the Company, and Company's
Subsidiaries may be liable in their own right or as transferee of the assets of,
or as successor to, any other Person.
5.23 Holding Company. The Company is not a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.24 REO Closing Proceeds. Company shall send a notice to each and
every closing agent and closing attorney employed by Company to sell REO on
behalf of Company, which notice shall instruct said closing agent or closing
attorney to remit any and all proceeds (net of expenses of the sale) derived
from the sale of REO directly to the Administrative Agent.
6. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees with the Administrative Agent
and the Lenders that, so long as the Commitment is outstanding or there remain
any Obligations of the Company to be paid or performed under this Agreement or
under any other Loan Document, the Company shall:
6.1 Payment of Notes. Punctually pay or cause to be paid the
principal of, interest on and all other amounts payable hereunder and under the
Notes in accordance with the terms thereof.
6.2 Financial Statements and Other Reports.
(a) Company shall furnish to Agent and each Lender the following, all
in form and detail reasonably satisfactory to Majority Lenders:
(1) As soon as available and in any event within thirty (30)
days after the end of each calendar month, statements of income and
changes in stockholders' equity of the Company and, if applicable,
Company's Subsidiaries, on a consolidated and consolidating basis for
the immediately preceding month, and related balance sheet as at the
end of the immediately preceding month, all in reasonable detail,
prepared in accordance with GAAP applied on a consistent basis, and
certified as to the fairness of presentation by the president, chief
financial officer, controller or treasurer of the Company, subject,
however, to year-end audit adjustments.
(2) As soon as available and in any event within ninety (90)
days after the close of each fiscal year: statements of income, changes
in stockholders' equity and cash flows of the Company, and, if
applicable, Company's Subsidiaries, on a consolidated and consolidating
basis for such year, the related balance sheet as at the end of such
year (setting forth in comparative form the corresponding figures for
the preceding fiscal year), all in reasonable detail, prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved, and accompanied by an opinion in form and substance
Page 47
54
satisfactory to the Administrative Agent and prepared by an accounting
firm reasonably satisfactory to the Administrative Agent, or other
independent certified public accountants of recognized standing
selected by the Company and acceptable to the Administrative Agent, as
to said financial statements and a certificate signed by the president,
chief financial officer, controller or treasurer of the Company stating
that said financial statements fairly present the financial condition
and results of operations of the Company and, if applicable, Company's
Subsidiaries as at the end of, and for, such year.
(3) Together with each delivery of financial statements
required in this Section 6.2, an Officer's Certificate in substantially
the form of EXHIBIT "G" hereto.
(4) Monthly or more frequently as the Administrative Agent may
from time to time request, commitment summaries and pipeline reports
for the Company substantially in the form of EXHIBIT "N" (the
"Commitment Summary Report") dated as of the close of business on the
last Business Day of each calendar month and provided to the
Administrative Agent by facsimile by 10:00 a.m. on the next succeeding
Business Day, and the signed original thereof shall be sent to the
Administrative Agent by first class mail on such next succeeding
Business Day.
(5) Together with each delivery of the monthly financial
statement required in Section 6.2(a), reports in respect of the Pledged
Mortgages and Pledged Securities, in such detail and at such times as
the Administrative Agent in its discretion may request at any time or
from time to time, including, without limitation, mortgage production
and sale report, mortgage loan deficiency report, mortgage loan
delinquency report and mortgage loan collateral value report.
(6) Copies of all regular or periodic financial and other
reports, if any, which the Company shall file with the Securities and
Exchange Commission or any governmental agency successor thereto and
copies of any audits completed by GNMA, FHLMC, or FNMA.
(7) With respect to Aged Mortgage Loans, copies of the
complete credit and collateral file relating to each Aged Mortgage
Loan, an updated title opinion covering the Mortgaged Property securing
each Aged Mortgage Loan issued in form and substance acceptable to
Administrative Agent and issued by a title company acceptable to
Administrative Agent, a current appraisal or brokers price opinion
certifying the current market value of the Mortgaged Property securing
each Aged Mortgage Loan in form and substance acceptable to
Administrative Agent and such other information or documentation
relating to the borrowers or Mortgaged Property of each Aged Mortgage
Loan, all of the foregoing to be provided as the Administrative Agent
in its discretion may request at any time or from time to time and at
the sole cost and expense of the Company.
(8) Promptly and in any event within thirty (30) days after
the end of each month a list of all Repurchased Mortgage Loans
(including the outstanding principal amounts of each) repurchased by
Company during such month, together with a list of all other
Repurchased Mortgage Loans (including the outstanding principal amount
of each) then owned by Company;
Page 48
55
(9) Promptly and in any event within thirty (30) days after
the end of each month a Securitization Reporting Worksheet for Monthly
Reporting in the form of EXHIBIT "R" hereto, executed by the president,
chief financial officer, controller or treasurer of Company;
(10) Promptly and in any event within thirty (30) days after
the closing of any securitization of Mortgage Loans, a Securitization
Reporting Worksheet in the form of EXHIBIT "S" hereto, executed by the
president, chief financial officer, controller or treasurer of Company;
(11) Promptly and in any event within thirty (30) days after
the end of each month, a report detailing the following information,
with respect to any Mortgage Loans serviced by Company during such
month: the aggregate unpaid principal amount of such Mortgage Loans,
the weighted average interest rate of such Mortgage Loans, the weighted
average maturity date of such Mortgage Loans; the principal amount of
each Mortgage Loan which was paid in full during such month; the
aggregate principal amount of such Mortgage Loans which are 30, 60 or
90 days delinquent, the aggregate principal amount of any such Mortgage
Loans either repurchased or foreclosed upon during such month;
(12) Promptly and in any event within thirty (30) days after
the end of each month, a list of all REO (including the acquisition
cost to Company of such REO) purchased by Company during such month,
together with a list of all other REO then owned by Company;
(13) From time to time, with reasonable promptness, such
further information regarding the business, operations, properties or
financial condition of the Company as the Administrative Agent may
reasonably request.
(b) Guarantor shall furnish to Administrative Agent and each Lender the
following, all in form and detail reasonably satisfactory to Majority Lenders:
(1) Promptly after becoming available, and in any event within
ninety (90) days after the close of each fiscal year of Guarantor, the
Consolidated balance sheet of Guarantor and its Consolidated
Subsidiaries as of the end of such year, and the related Consolidated
statements of income, stockholders' equity and cash flows of Guarantor
and its Consolidated Subsidiaries for such year, setting forth in each
case in comparative form the corresponding figures for the preceding
fiscal year, accompanied by the related report of independent certified
public accountants, KPMG Peat Marwick or other independent certified
public accountants of national standing acceptable to Majority Lenders
which report shall be to the effect that such statements have been
prepared in accordance with GAAP applied on a basis consistent with
prior periods except for such changes in such principles with which the
independent public accountants shall have concurred;
(2) Promptly after becoming available, and in any event within
forty-five (45) days after the end of each fiscal quarter of Guarantor,
including the last fiscal quarter in the fiscal year of Guarantor,
Guarantor's Consolidated and consolidating balance sheet as of the end
of such fiscal quarter and the related Consolidated and consolidating
statements of income, stockholder's equity and cash flows of Guarantor
and its Consolidated Subsidiaries
Page 49
56
for such fiscal quarter and the period from the first day of the then
current Fiscal Year of Guarantor through the end of such fiscal
quarter, and
(3) Promptly after becoming available, and in any event within
forty-five (45) days after the end of each fiscal quarter, including
the last fiscal quarter in the fiscal year of Guarantor, a copy of
Guarantor's 10-Q as of the end of such fiscal quarter filed by
Guarantor with the Securities and Exchange Commission or any similar
governmental authority.
6.3 Maintenance of Existence; Conduct of Business. Preserve and
maintain its corporate existence in good standing and all of its rights,
privileges, licenses and franchises necessary in the normal conduct of its
business, including, without limitation, its eligibility as lender,
seller/servicer and issuer described under Section 5.11 hereof; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required by HUD at any and all times for maintaining the Company's
status as a FHA approved mortgagee; and make no material change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement.
6.4 Compliance with Applicable Laws. Comply with the requirements
of all applicable laws, rules, regulations and orders of any governmental
authority, a breach of which could materially adversely affect its business,
operations, assets, or financial condition, except where contested in good faith
and by appropriate proceedings, and with sufficient reserves established
therefor.
6.5 Inspection of Properties and Books. Permit authorized
representatives of the Administrative Agent or any Lender to (a) discuss the
business, operations, assets and financial condition of the Company and
Company's Subsidiaries with their officers and employees and to examine their
books of account, records, reports and other papers and make copies or extracts
thereof, and (b) inspect all of the Company's property and all related
information and reports at the expense of such Lender or Administrative Agent,
as applicable, all at such reasonable times as the Administrative Agent or any
Lender may request. The Company will provide its accountants with a copy of this
Agreement promptly after the execution hereof and will instruct its accountants
to answer candidly any and all questions that the officers of the Administrative
Agent or any Lender or any authorized representatives of the Administrative
Agent or any Lender may address to them in reference to the financial condition
or affairs of the Company and Company's Subsidiaries. The Company may have its
representatives in attendance at any meetings between the officers or other
representatives of the Administrative Agent or any Lender and the Company
accountants held in accordance with this authorization.
6.6 Notice. Give prompt written notice to the Administrative Agent
of (a) any action, suit or proceeding instituted by or against the Company or
any of its Subsidiaries in any federal or state court or before any commission
or other regulatory body (federal, state or local, domestic or foreign) which
action, suit or proceeding has at issue in excess of TWENTY-FIVE THOUSAND
DOLLARS AND NO/100 DOLLARS ($25,000.00) (except for normal collection and
foreclosure proceedings initiated by the Company in connection with a Mortgage
Loan or any other mortgage loan), or any such proceedings threatened against the
Company, or any of Company's Subsidiaries in writing containing the details
thereof, (b) the filing, recording or assessment of any federal, state or local
tax Lien against it, or any of its assets or any of its
Page 50
57
Subsidiaries, (c) the occurrence of any Event of Default hereunder or the
occurrence of any Default and continuation thereof for five (5) days, (d) the
suspension, revocation or termination of the Company's eligibility, in any
respect, as approved lender, seller/servicer or issuer as described under
Section 5.11 hereof, (e) the transfer, loss or termination of any Servicing
Contract to which the Company is a party, or which is held for the benefit of
the Company, and the reason for such transfer, loss or termination, if known to
the Company, and (f) any other action, event or condition of any nature which
may lead to or result in a Material Averse Effect or which, with or without
notice or lapse of time or both, would constitute a default under any other
agreement, instrument, or indenture to which the Company is a party or to which
the Company its properties or assets may be subject.
6.7 Payment of Debt, Taxes, etc. Pay and perform all obligations
and Indebtedness of the Company, and cause to be paid and performed all
obligations and Indebtedness of its Subsidiaries in accordance with the terms
thereof and pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon the Company or its
Subsidiaries, or upon their respective income, receipts or properties before the
same shall become past due, as well as all lawful claims for labor, materials
and supplies or otherwise which, if unpaid, might become a Lien or charge upon
such properties or any part thereof; provided, however, that the Company and its
Subsidiaries shall not be required to pay obligation, Indebtedness, taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies for which the Company or its Subsidiaries shall have obtained an
adequate bond or adequate insurance or which are being contested in good faith
and by proper proceedings which are being reasonably and diligently pursued if
such proceedings do not involve any likelihood of the sale, forfeiture or loss
of any such property or any interest therein while such proceedings are pending,
and provided further that book reserves adequate under generally accepted
accounting principles shall have been established with respect thereto and
provided further that the owing Person's title to, and its right to use, its
property is not materially adversely affected thereby.
6.8 Insurance. Maintain (a) errors and omissions insurance or
mortgage impairment insurance and blanket bond coverage, with such companies and
in such amounts as satisfy prevailing FNMA and FHLMC requirements applicable to
a qualified mortgage originating institution, and (b) liability insurance and
fire and other hazard insurance on its properties, with responsible insurance
companies approved by the Administrative Agent, in such amounts and against such
risks as is customarily carried by similar businesses operating in the same
vicinity; and (c) within thirty (30) days after notice from the Administrative
Agent, obtain such additional insurance as the Administrative Agent shall
reasonably require, all at the sole expense of the Company. Copies of such
policies shall be furnished to the Administrative Agent without charge upon
obtaining such coverage or any renewal of or modification to such coverage.
6.9 Closing Instructions. Indemnify and hold the Administrative
Agent and the Lenders harmless from and against any loss, including reasonable
attorneys' fees and costs, attributable to the failure of a title insurance
company, agent or attorney to comply with the disbursement or instruction letter
or letters of the Company or of the Administrative Agent relating to any
Mortgage Loan. The Administrative Agent shall have the right to pre-approve the
closing instructions of the Company to the title insurance company, agent or
attorney in any case where the Mortgage Loan to be created at settlement is
intended to be warehoused by the Company pursuant hereto.
Page 51
58
6.10 Other Loan Obligations. Perform all obligations under the
terms of each loan agreement, note, mortgage, security agreement or debt
instrument by which the Company is bound or to which any of its property is
subject, and promptly notify the Administrative Agent in writing of a declared
default under or the termination, cancellation, reduction or non-renewal of any
of its other lines of credit or financing agreements with any other lender.
EXHIBIT "O" hereto is a true and complete list of all such lines of credit or
financing agreements as of the date hereof.
6.11 Use of Proceeds of Advances. Use the proceeds of each Advance
solely for the purpose of (a) originating or purchasing Eligible Mortgage Loans,
Eligible REO, Eligible Past Due Loans, Eligible Delinquent Loans, Eligible
Repurchased Mortgage Loans, and Eligible Foreclosure Mortgage Loans and in
accordance with the purposes specified in the Advance Request relating to such
Advance.
6.12 Special Affirmative Covenants Concerning Collateral.
(a) Warrant and defend the right, title and interest of the
Administrative Agent and the Lenders in and to the Collateral against
the claims and demands of all Persons whomsoever.
(b) Service or cause to be serviced all Pledged Mortgages in
accordance with the standard requirements of the issuers of Purchase
Commitments covering the same and all applicable FHA and VA
requirements, including without limitation taking all actions necessary
to enforce the obligations of the obligors under such Mortgage Loans.
The Company shall service or cause to be serviced all Mortgage Loans
backing Pledged Securities in accordance with applicable governmental
requirements and issuers of Purchase Commitments covering the same. The
Company shall hold all escrow funds collected in respect of Pledged
Mortgages and Mortgage Loans backing Pledged Securities in trust,
without commingling the same with non-custodial funds, and apply the
same for the purposes for which such funds were collected.
(c) Execute and deliver to the Administrative Agent such
Uniform Commercial Code financing statements with respect to the
Collateral as the Administrative Agent may request. The Company shall
also execute and deliver to the Administrative Agent such further
instruments of sale, pledge or assignment or transfer, and such powers
of attorney, as required by the Administrative Agent to secure the
Collateral, and shall do and perform all matters and things necessary
or desirable to be done or observed, for the purpose of effectively
creating, maintaining and preserving the security and benefits intended
to be afforded the Lenders under this Agreement. The Administrative
Agent, on behalf of the Lenders, shall have all the rights and remedies
of a secured party under the Uniform Commercial Code of Texas, or any
other applicable law, in addition to all rights provided for herein.
(d) Notify the Administrative Agent within two (2) Business
Days after receipt of notice from an Investor of any default under, or
of the termination of, any Purchase Commitment relating to any Pledged
Mortgage, Eligible Mortgage Pool or Pledged Security.
(e) Promptly comply in all respects with the terms and
conditions of all Purchase Commitments, and all extensions, renewals
and modifications or substitutions
Page 52
59
thereof or thereto. The Company will cause to be delivered to the
Investor the Pledged Mortgages and Pledged Securities to be sold under
each Purchase Commitment not later than the expiration thereof.
(f) Maintain, at its principal office or in a regional office
approved by the Administrative Agent, or in the office of a computer
service bureau engaged by the Company and approved by the
Administrative Agent, and, upon request, shall make available to the
Administrative Agent, for the benefit of the Lenders, the originals, or
copies in any case where the originals have been delivered to the
Administrative Agent, for the benefit of the Lenders, or to an
Investor, of its Mortgage Notes and Mortgages included in Collateral,
Mortgage-backed Securities delivered to the Administrative Agent, for
the benefit of the Lenders, as Pledged Securities, Purchase
Commitments, and all related Mortgage Loan documents and instruments,
and all files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other
information and data relating to the Collateral.
6.13 Cure of Defects in Loan Documents.
(a) Promptly cure and cause to be promptly cured any defects
in the creation, issuance, execution and delivery of this Agreement and
the other Loan Documents; and
(b) Upon request of the Administrative Agent and at the
Company's expense, promptly execute and deliver, and cause to be
executed and delivered, to the Administrative Agent, for the benefit of
the Lenders, or its designee, all such additional documents, agreements
and/or instruments in compliance with or in accomplishment of the
covenants and agreements of this Agreement and the other Loan
Documents, and/or to create, perfect, preserve, extend and/or maintain
any and all Liens created pursuant hereto or pursuant to any other Loan
Document as valid and perfected Liens (of a priority as set forth in
this Agreement) in favor of the Administrative Agent, for the benefit
of the Lenders, to secure the Obligations, all as reasonably requested
from time to time by the Administrative Agent.
6.14 Staged Disbursements. Will originate, purchase, and disburse
all Construction Mortgage Loans that are Pledged Mortgages in strict accordance
with the Policies and Procedures. Permit the Administrative Agent to monitor in
any manner whatsoever the Staged Disbursements of each pledged Construction
Mortgage Loan. If Administrative Agent is not satisfied with any Staged
Disbursement for any pledged Construction Mortgage Loan, upon Administrative
Agent's written request, Company shall pay all or a portion of the Construction
Advances relating to such Construction Mortgage Loan as directed by the
Administrative Agent.
7. NEGATIVE COVENANTS.
The Company hereby covenants and agrees with the Administrative Agent
and the Lenders that, so long as the Commitment is outstanding or there remain
any Obligations of the Company to be paid or performed under this Agreement or
any other Loan Document, the Company shall not, either directly or indirectly,
without the prior written consent of the Administrative Agent:
Page 53
60
7.1 Contingent Liabilities. Assume, incur, create, guarantee,
endorse, or otherwise become or be liable for the obligation of any Person other
than the Company except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business and excluding the sale of Mortgage
Loans with recourse in the ordinary course of the company's business.
7.2 Pledge of Servicing Contracts/Mortgage Loans. existing or
future Mortgage Loans or Servicing Rights acquired by the Company other than to
the Administrative Agent, for the benefit of the Lenders, except as otherwise
expressly permitted in this Agreement; provided, however, that if no Default or
Event of Default has occurred and is continuing, servicing on individual
Mortgage Loans may be sold concurrently with and incidental to the sale of such
Mortgage Loans (with servicing released) in the ordinary course of the Company's
business.
7.3 Merger; Acquisitions. Liquidate, dissolve, consolidate or
merge, or acquire any substantial part of the assets of another, except for
transactions involving not more than TWO HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($250,000.00) each.
7.4 Loss of Eligibility. Take any action that would cause the
Company to lose all or any part of its status as an eligible lender,
seller/servicer and issuer as described under Section 5.11 hereof.
7.5 Debt to Consolidated Tangible Net Worth Ratio. Permit the
ratio of Debt to Company's Consolidated Tangible Net Worth to exceed 10:1,
computed as of the end of each calendar month.
7.6 Minimum Consolidated Tangible Net Worth. Permit Company's
Consolidated Tangible Net Worth to be less than SIX MILLION AND NO/100 DOLLARS
($6,000,000.00), computed as of the end of each calendar month.
7.7 Transactions with Affiliates. Enter into any transactions
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of
Company's business and are upon fair and reasonable terms no less favorable to
Company than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
7.8 Limits on Corporate Distributions. Without the prior written
consent of the Majority Lenders, pay, make or declare or incur any liability to
pay, make or declare any dividend (excluding stock dividends) or other
distribution, direct or indirect, on or on account of any shares of its stock or
any redemption or other acquisition, direct or indirect, of any shares of its
stock or of any warrants, rights or other options to purchase any shares of its
stock nor purchase, acquire, redeem or retire any stock or ownership interest in
itself whether now or hereafter outstanding.
7.9 RICO. Violate any laws, statutes or regulations, whether
federal or state, for which forfeiture of its properties is a potential penalty,
including, without limitations, RICO.
Page 54
61
7.10 No Loans or Investments Except Approved Investments. Without
the prior written consent of Administrative Agent, make or permit to remain
outstanding any loans or advances to, or investments in, any Person, except that
the foregoing restriction shall not apply to:
(a) investments in marketable obligations maturing no later
than one hundred eighty (180) days from the date of acquisition thereof
by the Company and issued or fully guaranteed, directly, by the full
faith and credit of the Government of the United States of America or
any agency thereof; and
(b) investments in certificates of deposit maturing no later
than one hundred eighty (180) days from the date of issuance thereof
and issued by commercial banks in the United States and such banks
rated by Xxxxx'x Investor Service, Inc. and receiving a rating of
Prime-2 or higher on Moody's short term debt rating or rated by
Standard & Poor's Corporation and receiving a rating of AA-/A1+ or
higher on S&P's short term debt rating, it being acknowledged and
agreed that the foregoing requirements shall pertain to certificates of
deposit issued and/or received on a date on or after the date of this
Agreement); and
(c) investments not to exceed TWO HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($250,000.00) each.
7.11 Charter Documents and Business Termination.
(a) Amend or otherwise modify its corporate charter or
otherwise change its corporate structure in any manner which will have
a materially adverse effect on the Company's condition, financial or
otherwise, or which will have a material adverse effect upon the
Company's ability to perform, promptly and fully, its obligations
hereunder or under any of the other Loan Documents, or
(b) Take any action with a view toward its dissolution,
liquidation or termination, or, in fact, dissolve, liquidate or
terminate its existence.
7.12 Changes in Accounting Methods. Make any change in its
accounting method as in effect on the date of this Agreement or change its
fiscal year ending date from December 31, unless such changes (a) are required
for conformity with generally accepted accounting principles and, in such event,
the Company will give prior written notice of each such change to the
Administrative Agent or (b) or if not so required, are in conformity with
generally accepted accounting principles and have the prior written approval of
the Administrative Agent which approval shall not be unreasonably withheld.
7.13 No Sales, Leases or Dispositions of Property. Except in the
ordinary course of its business, sell, lease, transfer or otherwise dispose of
all or any material portion or portions or integral part of its properties or
assets, whether now owned or hereafter acquired (whether in a single transaction
or in a series of transactions), or enter into any arrangement, directly or
indirectly, with any person, whereby it shall sell or transfer any of its
properties or assets, whether now owned or hereafter acquired, and thereafter
rent or lease as lessee such property or any part thereof which it intends to
use for substantially the same purpose or purposes as the property sold or
transferred.
Page 55
62
7.14 Changes in Business or Assets. Make any substantial change (a)
in the nature of its business as now conducted, or (b) in the use of its
property as now used and proposed to be used.
7.15 Changes in Office or Inventory Location. Change the address
and/or location of its chief executive office or principal place of business or
the place where it keeps its books and records or its inventory to a location
outside the State of Texas unless, prior to any such change, the Company shall
execute and cause to be executed such additional agreements and/or lien
instruments as the Administrative Agent may reasonably request to conform with
the provisions hereof and the transactions and perfected Liens in the Collateral
contemplated under this Agreement and the other Loan Documents.
7.16 Special Negative Covenants Concerning Collateral.
(a) Compromise, extend, release, or adjust payments on any
Pledged Mortgage, accept a conveyance of Mortgaged Property in full or
partial satisfaction of any Pledged Mortgage, or release any Pledged
Mortgage securing or underlying any Pledged Mortgage;
(b) Agree to the amendment or termination of any Purchase
Commitment in which Administrative Agent has a security interest or to
substitution of a Purchase Commitment for a Purchase Commitment in
which Administrative Agent has a security interest hereunder, if such
amendment, termination or substitution may reasonably be expected (as
determined by Majority Lenders in their sole discretion) to have a
Material Adverse Effect;
(c) Transfer, sell, assign, or deliver any Pledged Mortgage or
Pledged Security pledged to Administrative Agent to any Person other
than Administrative Agent, except pursuant to a Purchase Commitment; or
(d) Grant, create, incur, permit or suffer to exist any Lien
upon any Pledged Mortgage or Pledged Security except for Liens granted
to Administrative Agent to secure the Notes and obligations and such
non-consensual Liens as may be deemed to arise as a matter of law
pursuant to any Purchase Commitment.
7.17 Limitation on Indebtedness. Incur, create, contract, assume,
have outstanding, guarantee or otherwise be or become, directly or indirectly,
liable in respect of any Indebtedness except:
(a) the Obligations;
(b) liabilities for taxes, assessments, governmental charges
or levies which are not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently conducted
if reserves adequate under generally accepted accounting principles
have been established therefor;
(c) trade debt, equipment leases, equipment loans and liens
for taxes and assessments not yet due and payable owed in the ordinary
course of business;
Page 56
63
(d) Indebtedness of Company under gestation agreements, which
Indebtedness shall be incurred on terms satisfactory to Majority
Lenders;
(e) Indebtedness in an aggregate amount not to exceed FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00) to support securitizations
of Mortgage Loans transferred by Company to a special purpose entity,
which Indebtedness shall be incurred on terms satisfactory to Majority
Lenders; and
(f) the Subordinated Debt.
7.18 Ownership of the Company.
(a) Permit any change in the legal or beneficial ownership of
any capital stock, instruments convertible to same, or other equity
instruments, of the Company that results or would result in a Change of
Control.
(b) Issue, sell or authorize or commit to issue, sell or
authorize any capital stock, instruments convertible to same, or other
equity instruments, of the Company that results or would result in a
Change of Control.
(c) Reissue treasury stock of the Company.
7.19 Payments of Subordinated Debt. Except for any accrued interest
on any Subordinated Debt as and when it becomes due and payable (provided no
Event of Default exists hereunder and subject to the prior written consent of
Administrative Agent, which consent should not be unreasonably withheld), make
any payment of any kind on any Subordinated Debt owed by the Company until the
Commitments have terminated, all Obligations have been paid and performed in
full, and any applicable preference period has expired.
7.20 Policies and Procedures. Amend or otherwise modify or change
in any manner its Policies and Procedures.
8. DEFAULTS; REMEDIES.
8.1 Events of Default. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):
(a) Failure to pay the principal of any Advance when due,
whether at stated maturity, by acceleration, or otherwise; or failure
to pay any installment of interest on any Advance or any other amount
due under this Agreement within ten (10) days after the due date; or
failure to pay, beyond any applicable grace period, the principal or
interest on any other Indebtedness due any Lender; or
(b) Failure of the Company or any of its Subsidiaries to pay,
or any default in the payment of any principal or interest on, any
other Indebtedness or in the payment of any contingent obligation
beyond any period of grace provided; or breach or default with respect
to any other material term of any other Indebtedness of any loan
agreement,
Page 57
64
mortgage, indenture or other agreement relating thereto, if the effect
of such failure, default or breach is to cause, or to permit the holder
or holders thereof (or a trustee on behalf of such holder or holders)
to cause, Indebtedness of the Company or its Subsidiaries in the
aggregate amount of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) or more to become or be declared due prior to its stated
maturity (upon the giving or receiving of notice, lapse of time, both,
or otherwise); or failure of the Company to perform or comply with any
term or condition applicable to it contained in Sections 6.3, 6.11, and
any Section in Article 7 hereof other than Sections 7.5 and 7.6 of this
Agreement; or
(c) Any of the Company's representations or warranties made or
deemed made herein or in any other Loan Document, or in any statement
or certificate at any time given by the Company in writing pursuant
hereto or thereto shall be inaccurate or incomplete in any materially
adverse respect on the date as of which made or deemed made; or
(d) The Company shall default in the performance of or
compliance with any term or covenant contained in this Agreement and
such default shall not have been remedied or waived within thirty (30)
days after receipt of notice from the Administrative Agent of such
default other than those referred to above in Subsections 8.1(a),
8.1(b), or 8.1(c); or
(e) (1) A court having jurisdiction shall enter a decree or
order for relief in respect of the Company or any of Company's
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect in respect
of the Company or any of Company's Subsidiaries, which decree or order
is not stayed; or a filing of an involuntary case under any applicable
bankruptcy, insolvency or other similar law in respect of the Company
or any of Company's Subsidiaries has occurred; or (2) any other similar
relief shall be granted under any applicable federal or state law; or a
decree or order of a court having jurisdiction for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over the Company or any of Company's
Subsidiaries, or over all or a substantial part of their respective
property, shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of the Company or any of
Company's Subsidiaries, for all or a substantial part of their
respective property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of the
property of the Company or any of Company's Subsidiaries, and the
continuance of any such events in Subsections (1) and (2) above for
sixty (60) days unless dismissed or discharged; or
(f) The Company or any of Company's Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion to an
involuntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by
the Company or any of Company's Subsidiaries of any assignment for the
benefit of creditors; or the failure of the Company or any of Company's
Subsidiaries, or the admission by any of them of its inability, to pay
its debts as such debts become due; or
Page 58
65
(g) Any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of TWO
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) shall be
entered or filed against the Company or any of its Subsidiaries or any
of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of thirty (30) days or in any event
no later than five (5) days prior to the date of any proposed sale
thereunder; or
(h) Any order, judgment or decree shall be entered against the
Company decreeing the dissolution or split up of the Company and such
order shall remain undischarged or unstayed for a period in excess of
thirty (30) days; or
(i) Any Plan maintained by the Company or any of Company's
Subsidiaries shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States
district court to administer any Plan, or the Pension Benefit Guaranty
Corporation (or any successor thereto) shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan if as
of the date thereof the Company's or any Subsidiary's liability (after
giving effect to the tax consequences thereof) to the Pension Benefit
Guaranty Corporation (or any successor thereto) for unfunded guaranteed
vested benefits under the Plan exceeds the then current value of assets
accumulated in such Plan by more than FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) (or in the case of a termination involving the Company or
any of Company's Subsidiaries as a "substantial employer" (as defined
in Section 4001(a)(2) of ERISA) the withdrawing employer's
proportionate share of such excess shall exceed such amount); or
(j) The Company or any of Company's Subsidiaries as employer
under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount
exceeding FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00); or
(k) The Company shall purport to disavow its obligations
hereunder or shall contest the validity or enforceability hereof, or
the Administrative Agent's security interest on any portion of the
Collateral shall become unenforceable or otherwise impaired; provided
that, subject to the Administrative Agent's approval, no Event of
Default shall occur as a result of such impairment if all Advances made
against any such Collateral shall be paid in full within ten (10) days
of the date of such impairment; or
(l) The Company dissolves or terminates its existence, or
discontinues its usual business; or
(m) Any court shall find or rule, or the Company shall assert
or claim, (i) that the Administrative Agent does not have a valid,
first priority, perfected, enforceable Lien in the Collateral for the
benefit of the Lenders, or (ii) that this Agreement or any of the Loan
Documents does not or will not constitute the legal, valid, binding and
enforceable obligations of the party or parties (as applicable)
thereto, or (iii) that any Person has a conflicting or adverse Lien,
claim or right in, or with respect to, the Collateral and the
Page 59
66
Company is unable within thirty (30) days to have such finding or
ruling reversed or to have such adverse Lien, claim or right removed;
or
(n) The Company shall have concealed, removed, or permitted to
be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or shall
have made any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not
been paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal
proceedings or distraint or other process which is not vacated within
sixty (60) days from the date thereof; or
(o) Guarantor fails to make any payment of any Obligation on
the date such payment is due; or
(p) A Change of Control occurs.
8.2 Remedies.
(a) If a Lender shall have knowledge of a Default or an Event
of Default, it shall forthwith give Notice thereof to the
Administrative Agent. If the Administrative Agent shall have knowledge
of a Default or an Event of Default, it shall forthwith give Notice
thereof to each Lender and to the Company. The Administrative Agent
shall not be deemed to have knowledge or Notice of the occurrence of a
Default or an Event of Default unless the Administrative Agent has
received Notice from a Lender or the Company.
(b) Upon the occurrence of any Event of Default described in
Sections 8.1(e), or 8.1(f), the Commitments shall be terminated and all
Obligations shall automatically become due and payable, without
presentment for payment, demand, notice of non-payment, protest, notice
of protest, notice of intent to accelerate, notice of acceleration,
maturity, or any other notices or requirements of any kind to the
Company or any other Person liable thereon or with respect thereto, all
of which are hereby expressly waived by the Company.
(c) Upon the occurrence of any Event of Default, other than
those described in Sections 8.1(e) and 8.1(f), the Administrative Agent
may, by written notice to the Company, terminate the Commitments and/or
declare all Obligations of the Company to be immediately due and
payable, whereupon the same shall forthwith become due and payable,
together with all accrued interest thereon, and the obligations of the
Lenders to make any Advances shall thereupon terminate.
(d) Upon the occurrence of any Event of Default, the
Administrative Agent may also do any of the following:
(1) Foreclose upon or otherwise enforce its security
interest in and Lien on the Collateral to secure all payments
and performance of Obligations of the Company in any manner
permitted by law or provided for hereunder.
Page 60
67
(2) Notify all obligors in respect of the Collateral
that the Collateral has been assigned to the Administrative
Agent, for the benefit of the Lenders, and that all payments
thereon are to be made directly to the Administrative Agent,
for the benefit of the Lenders, or such other party as may be
designated by the Administrative Agent; settle, compromise, or
release, in whole or in part, any amounts owing on the
Collateral, any such obligor or any Investor or any portion of
the Collateral, on terms acceptable to the Administrative
Agent; enforce payment and prosecute any action or proceeding
with respect to any and all Collateral; and where any such
Collateral is in default, foreclose on and enforce security
interests in, such Collateral by any available judicial
procedure or without judicial process and sell property
acquired as a result of any such foreclosure.
(3) Act, or contract with a third party to act, as
servicer or subservicer of each item of Collateral requiring
servicing and perform all obligations required in connection
with Purchase Commitments, such third party's fees to be paid
by the Company.
(4) Require the Company to assemble the Collateral
and/or books and records relating thereto and make such
available to the Administrative Agent at a place to be
designated by the Administrative Agent.
(5) Enter onto property where any Collateral or books
and records relating thereto are located and take possession
thereof with or without judicial process.
(6) Prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the
Administrative Agent deems appropriate.
(7) Exercise all rights and remedies of a secured
creditor under the Uniform Commercial Code of Texas or other
applicable law, including, but not limited to, selling or
otherwise disposing of the Collateral, or any part thereof, at
one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit
or future delivery, on such terms and in such manner as the
Administrative Agent may determine, including, without
limitation, sale pursuant to any applicable Purchase
Commitment. If notice is required under such applicable law,
the Administrative Agent will give the Company not less than
ten (10) days' notice of any such public sale or of the date
after which private sale may be held. The Company agrees that
ten (10) days' notice shall be reasonable notice. The
Administrative Agent 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
the Administrative Agent until the selling price is paid by
the purchaser thereof, but the Administrative Agent 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. The Administrative Agent may, however, instead of
exercising the power of sale
Page 61
68
herein conferred upon it, proceed by a suit or suits at law or
in equity to collect all amounts due upon the Collateral or to
foreclose the pledge and sell the Collateral or any portion
thereof under a judgment or decree of a court or courts of
competent jurisdiction, or both.
(8) Proceed against the Company on the Notes.
(9) Proceed against the Guarantor.
(e) The Administrative Agent shall follow the instructions of
the Majority Lenders in exercising or not exercising its rights under
this Section 8.2(e), but (i) the Administrative Agent shall have no
obligation to take or not to take any action which it believes may
expose it to any liability, and (ii) the Administrative Agent may, but
shall be under no obligation to, await instructions from the Majority
Lenders before exercising or not exercising its rights under this
Section 8.2(e)
(f) Any sale of Collateral pursuant to the terms of a Purchase
Commitment, or any other disposition of collateral arranged by the
Company, whether before or after the occurrence of an Event of Default,
shall be deemed to have been made in a commercial reasonable manner.
(g) The Company acknowledges that Mortgage Loans and
Mortgage-backed Securities are collateral of a type which is
customarily sold on a recognized market. The Company waives any right
it may have to prior notice of the sale of any Pledged Mortgage or
Pledged Security, and agrees that any Lender may purchase any Pledged
Mortgages or Pledged Securities at a private sale of such Collateral.
(h) Neither the Administrative Agent nor any Lender shall
incur any liability as a result of the sale or other disposition of the
Collateral, or any part thereof, at any public or private sale or
disposition. The Company hereby waives (to the extent permitted by law)
any claims it may have against the Administrative Agent and the Lenders
arising by reason of the fact that the price at which the Collateral
may have been sold at such 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 outstanding Advances and the unpaid interest
accrued thereon, even if the Administrative Agent accepts the first
offer received and does not offer the Collateral to more than one
offeree and none of the actions described herein shall render
Administrative Agent's disposition of the Collateral in such a manner
as commercially unreasonable. Any sale of Collateral pursuant to the
terms of a Purchase Commitment, or any other disposition of collateral
arranged by the Company, whether before or after the occurrence of an
Event of Default, shall be deemed to have been made in a commercial
reasonable manner.
(i) The Company specifically waives (to the extent permitted
by law) any equity or right of redemption, all rights of redemption,
stay or appraisal which the Company has or may have under any rule of
law or statute now existing or hereafter adopted, and any right to
require the Administrative Agent to (1) proceed against any Person, (2)
proceed against or exhaust any of the Collateral or pursue its rights
and remedies as against the Collateral in any particular order, or (3)
pursue any other remedy
Page 62
69
in its power. The Administrative Agent shall not be required to take
any steps necessary to preserve any rights of the Company against
holders of mortgages prior in lien to the Lien of any Mortgage included
in the Collateral or to preserve rights against prior parties.
(j) The Lenders may, but shall not be obligated to, advance
any sums or do any act or thing necessary to uphold and enforce the
Lien and priority of, or the security intended to be afforded by, any
Mortgage included in the Collateral, including, without limitation,
payment of delinquent taxes or assessments and insurance premiums. All
advances, charges, costs and expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Lenders in exercising
any right, power or remedy conferred by this Agreement, or in the
enforcement hereof, together with interest thereon, at the Default
Rate, from the time of payment until repaid, shall become a part of the
principal balance outstanding hereunder and under the Notes.
(k) No failure on the part of the Administrative Agent to
exercise, and no delay in exercising, any right, power or remedy
provided hereunder, at law or in equity shall operate as a waiver
thereof; nor shall any single or partial exercise by the Administrative
Agent of any right, power or remedy provided hereunder, at law or in
equity preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. Without intending to limit the
foregoing, all defenses based on the statute of limitations are hereby
waived by the Company to the extent permitted by law. The remedies
herein provided are cumulative and are not exclusive of any remedies
provided at law or in equity.
8.3 Application of Proceeds. The proceeds of any sale, disposition
or other enforcement of the security interest in all or any part of the
Collateral (excluding proceeds from that shall be applied only to ) shall be
applied by the Administrative Agent as follows:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to the Administrative
Agent's agents and counsel, and all expenses, liabilities and advances
made or incurred by or on behalf of the Administrative Agent in
connection therewith;
Second, to the payment of all amounts due and payable on the
Swingline Note;
Third, to the payment of all amounts due (other than principal
and interest) under the Notes or this Agreement - payable ratably to
Lenders in the proportion that each Lender's share of those amounts
bears to the total of those amounts for all Lenders;
Fourth, to the payment of interest accrued and unpaid on the
Notes payable ratably to each Lender in accordance with the amount of
accrued interest owed to each of them until such interest accrued at
the rates set forth hereby is paid in full;
Fifth, to the payment of the outstanding principal amounts of
all Advances payable ratably to each Lender in accordance with its
Commitment Percentage;
Sixth, to the payment of all other Obligations - payable
ratably to Lenders in the proportion that each Lender's share of those
amounts bears to the total of those amounts for all Lenders; and
Page 63
70
Finally, to the payment to the Company, or to its successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
If the proceeds of any such sale, disposition or other enforcement are
insufficient to cover the costs and expenses of such sale, as aforesaid, and the
payment in full of all Obligations of the Company, the Company shall remain
liable for any deficiency.
8.4 Administrative Agent Appointed Attorney-in-Fact. The
Administrative Agent is hereby appointed the attorney-in-fact of the Company,
with full power of substitution, for the purpose of carrying out the provisions
hereof and taking any action and executing any instruments which the
Administrative Agent 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, the Administrative
Agent shall have the right and power to give notices of its security interest in
the Collateral to any Person, either in the name of the Company or in its own
name, to endorse all Pledged Mortgages or Pledged Securities payable to the
order of the Company, to change or cause to be changed the book-entry
registration or name of subscriber or Investor on any Pledged Security, or to
receive, endorse and collect all checks made payable to the order of the Company
representing any payment on account of the principal of or interest on, or the
proceeds of sale of, any of the Pledged Mortgages or Pledged Securities and to
give full discharge for the same. The Lenders agree that the Administrative
Agent shall not exercise the foregoing power of attorney unless there exists at
the time of such exercise a continuing Event of Default.
8.5 Right of Offset. Company hereby grants to Administrative Agent
and to each Lender a right of offset, to secure the repayment of the
Obligations, upon any and all monies, securities, or other property of Company,
and the proceeds therefrom now or hereafter held or received by or in transit to
Administrative Agent or such Lender from or for the account of Company, whether
for safekeeping, custody, pledge, transmission, collection, or otherwise, and
also upon any and all deposits (general or special, time or demand, provisional
or final) and credits of Company, and any and all claims of Company against
Administrative Agent or such Lender, at any time existing. Upon the occurrence
of any Default, Administrative Agent and each Lender are authorized at any time
and from time to time, without notice to Company, to offset, appropriate, and
apply any and all of those items against the Obligations. Notwithstanding
anything in this section or elsewhere in this Agreement to the contrary, neither
Administrative Agent nor any other Lender shall have any right to offset,
appropriate, or apply any accounts of Company which consist of escrowed funds
(except and to the extent of any beneficial interest which Company have in such
escrowed funds) which have been so identified by Company in writing at the time
of deposit thereof.
8.6 Waivers. Company waives any right to require Administrative
Agent to (a) proceed against any Person, (b) proceed against or exhaust any of
the Collateral or pursue its rights and remedies as against the Collateral in
any particular order, or (c) pursue any other remedy in its power.
Administrative Agent shall not be required to take any steps necessary to
preserve any rights of Company against any Person from which Company purchased
any Mortgage Loans or to preserve rights against prior parties. Company and each
surety, endorser, guarantor, pledgor, and other party ever liable or whose
property is ever liable for payment of any of the Obligations jointly and
severally waive presentment and demand for payment, protest, notice of intention
to
Page 64
71
accelerate, notice of acceleration, and notice of protest and on payment, and
agree that their or their property's liability with respect to the Obligations,
or any part thereof, shall not be affected by any renewal or extension in the
time of payment of the Obligations, by any indulgence, or by any release or
change in any security for the payment of the Obligations, and hereby consent to
any and all renewals, extensions, indulgences, releases, or changes, regardless
of the number thereof.
8.7 Performance by Administrative Agent. Should any covenant,
duty, or agreement of Company fail to be performed in accordance with the terms
of this Agreement or of any document delivered under this Agreement,
Administrative Agent may, at its option, after notice to Company, as the case
may be, perform, or attempt to perform, such covenant, duty, or agreement on
behalf of the Company and shall notify each Lender that it has done so. In such
event, Company shall jointly and severally, at the request of Administrative
Agent, promptly pay any amount expended by Administrative Agent in such
performance or attempted performance to Administrative Agent at its principal
place of business, together with interest thereon at the Maximum Rate from the
date of such expenditure by Administrative Agent until paid. Notwithstanding the
foregoing, it is expressly understood that Administrative Agent does not assume
and shall never have, except by express written consent of Administrative Agent,
any liability or responsibility for the performance of any duties of Company
under this Agreement or under any other document delivered under this Agreement.
8.8 No Responsibility. Except in the case of fraud, gross
negligence, or willful misconduct, neither Administrative Agent nor any of its
officers, directors, employees, or attorneys shall assume or ever have any
liability or responsibility for, any diminution in the value of the Collateral
or any part of the Collateral.
8.9 No Waiver. The acceptance by Administrative Agent or any
Lender at any time and from time to time of partial payment or performance by
Company of any of their respective obligations under this Agreement or under any
Loan Document shall not be deemed to be a waiver of any Default then existing.
No waiver by Administrative Agent or any Lender shall be deemed to be a waiver
of any other then existing or subsequent Default. No delay or omission by
Administrative Agent or any Lender in exercising any right under this Agreement
or under any other document required to be executed under or in connection with
this Agreement shall impair such right or be construed as a waiver thereof or
any acquiescence therein, nor shall any single or partial exercise of any such
right preclude other or further exercise thereof, or the exercise of any other
right under this Agreement or otherwise.
8.10 Cumulative Rights. All rights available to Administrative
Agent and the Lenders under this Agreement or under any other document delivered
under this Agreement shall be cumulative of and in addition to all other rights
granted to Administrative Agent and the Lenders at law or in equity, whether or
not the Notes be due and payable and whether or not Administrative Agent shall
have instituted any suit for collection, foreclosure or other action in
connection with this Agreement or any other document delivered under this
Agreement.
8.11 Rights of Individual Lenders. No Lender shall have any right
by virtue of, or by availing itself of any provision of this Agreement to
institute any actions or proceedings at law, in equity, or otherwise (excluding
any actions in bankruptcy), upon or under or with respect to this Agreement or
for the appointment of a receiver, or for any other remedy under this Agreement,
unless (a) all Lenders previously shall have given to Administrative Agent
written notice of a
Page 65
72
Default and the continuance thereof, including a written request upon
Administrative Agent to institute such action or proceedings in its own name and
offering to indemnify Administrative Agent against the costs, expenses and
liabilities to be incurred thereon or thereby, (b) Administrative Agent, for ten
Business Days after its receipt of such notice, shall have failed to institute
any such action or proceedings, and (c) no direction inconsistent with such
written request shall have been given to Administrative Agent by all Lenders. It
is understood and intended, and expressly covenanted by the taker and holder of
every Note with every other taker and holder and Administrative Agent, that no
one or more holders of Notes shall have any right in any manner whatever by
virtue, or by availing itself of any provision of this Agreement to affect,
disturb or prejudice the rights of any other Lender or to address or seek to
obtain priority over or preference to any other such Lender, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Lenders. For the protection and
enforcement of the provisions of this Section 8.11, each and every Lender and
Administrative Agent shall be entitled to such relief as can be given either at
law or in equity.
8.12 Notice to Administrative Agent. Should any Event of Default or
Default occur and be continuing, any Lender having actual knowledge thereof
shall notify Administrative Agent and Company of the existence thereof, but the
failure of any Lender to provide that notice shall not prejudice that Lender's
rights under this Agreement.
8.13 Costs. All court costs, reasonable attorneys' fees, other
costs of collection, and other sums spent by Administrative Agent or any Lender
in the exercise of any right provided in any Loan Document is payable to
Administrative Agent or that Lender, as the case may be, on demand, is part of
the Obligations, and bears interest at the Default Rate from the date paid by
Administrative Agent or any Lender to the date repaid by Company.
8.14 Sharing. If any Lender obtains any amount - whether voluntary,
involuntary, or otherwise, including, without limitation, as a result of
exercising its rights under Section 8.5 - that exceeds the portion of that
amount it is otherwise entitled under the Loan Documents to receive, then that
Lender shall purchase from the other Lenders participations that result in the
purchasing Lender's sharing the excess amount ratably with each Lender in
accordance with the portion it is entitled to receive under the Loan Documents.
If all or any of that excess amount is subsequently recovered from that
purchasing Lender, then the purchase of participations in it is automatically
rescinded and the purchase price restored to that purchasing Lender to the
extent of the recovery. Any Lender purchasing a participation from another
Lender under this Section may, to the extent lawful, exercise all of its rights
of payment (including the right of offset) with respect to that participation as
fully as if that Lender were the direct creditor of Company in the amount of
that participation.
8.15 Commitment Increases.
(a) At any time and from time to time after the Closing Date,
the Commitment may be increased either by an Additional Lender
establishing a Commitment Amount or by one or more then existing
Lenders ("Increase Lender") increasing its Commitment Amount (each such
increase by either means, a "Commitment Increase") provided that no
Commitment Increase shall be come effective unless and until (i) the
Company, the Administrative Agent and the Additional Lender or the
Increase Lender shall have executed and delivered an amendment with
respect to such Commitment Increase, and (ii) such
Page 66
73
Commitment Increase shall have been consented to by each of the other
Lenders. Prior to the effective date of any Commitment Increase, the
Company shall issue a Note to the Additional Lender or, against
surrender of its existing Note to an Increase Lender, in the amount of
such Lender's Commitment Amount after giving effect to such Commitment
Increase. Such new promissory notes shall constitute a "Note"for the
purpose of the Loan Documents.
(b) On the effective date of any Commitment Increase, the
Administrative Agent shall recompute the Commitment Percentage for each
Lender following the Commitment Increase, and within in two (2)
Business Days, the Administrative Agent shall request Advances of the
affected category from or shall direct prepayments of such Advances to,
each Lender so that the total amount of all then outstanding Advances
of the affected category of each category are shared pro rata with each
Lender, pursuant to Section 2.1 hereof.
9. NOTICES.
All notices, demands, consents, requests and other communications
required or permitted to be given or made hereunder (collectively, "Notices")
shall, except as otherwise expressly provided hereunder, be in writing and shall
be delivered in person or mailed, first class, return receipt requested, postage
prepaid, or delivered by overnight courier, addressed to the respective parties
hereto at their respective addresses hereinafter set forth or, as to any such
party, at such other address as may be designated by it in a Notice to the
other. All Notices shall be conclusively deemed to have been properly given or
made when duly delivered, in person or by overnight courier, or if mailed on the
third Business Day after being deposited in the mails, addressed as follows:
If to the Company: Mortgage Portfolio Services, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to the Guarantor: NAB Asset Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Page 67
74
If to Bank United as
the Administrative Agent
or a Lender: Bank United
Attn: Xxxxx Xxxxxxxx, Director
Mortgage Banker Finance
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
and Bank United
Attn: Xxxxxxxx X. Xxxxxxx, General Counsel
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
If to the Lenders: Residential Funding Corporation
Attn: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
10. REIMBURSEMENT OF EXPENSES; INDEMNITY.
10.1 Reimbursement of Expenses and Indemnification by Company. The
Company shall: (a) pay all out-of-pocket costs and expenses of the
Administrative Agent, including, without limitation, reasonable attorneys' fees
in connection with the preparation, negotiation, documentation, enforcement and
administration of this Agreement, the Notes, and other Loan Documents and the
making and repayment of the Advances and the payment of interest thereon; (b)
PAY, AND HOLD THE ADMINISTRATIVE AGENT AND THE LENDERS AND ANY HOLDER OF THE
NOTES HARMLESS FROM AND AGAINST, ANY AND ALL PRESENT AND FUTURE STAMP,
DOCUMENTARY AND OTHER SIMILAR TAXES WITH RESPECT TO THE FOREGOING MATTERS AND
SAVE THE ADMINISTRATIVE AGENT AND THE LENDERS AND THE HOLDER OR HOLDERS OF THE
NOTES HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES WITH RESPECT TO OR
RESULTING FROM ANY DELAY OR OMISSION TO PAY SUCH TAXES; (c) INDEMNIFY, PAY AND
HOLD HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, AND ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS AND ANY SUBSEQUENT HOLDER OF THE NOTES
(COLLECTIVELY, THE "INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER (THE "INDEMNIFIED
LIABILITIES") (INCLUDING, WITHOUT LIMITATION, INDEMNIFIED LIABILITIES RESULTING,
IN WHOLE OR IN PART, FROM ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE OR STRICT
LIABILITY) WHICH MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST SUCH
INDEMNIFIED PARTY IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE
NOTES, OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
Page 68
75
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY TO THE EXTENT THAT ANY SUCH
INDEMNIFIED LIABILITIES RESULT (DIRECTLY OR INDIRECTLY) FROM ANY CLAIMS MADE, OR
ANY ACTIONS, SUITS OR PROCEEDINGS COMMENCED OR THREATENED, BY OR ON BEHALF OF
ANY CREDITOR (EXCLUDING THE LENDERS AND THE HOLDER OR HOLDERS OF THE NOTES),
SECURITY HOLDER, SHAREHOLDER, CUSTOMER (INCLUDING, WITHOUT LIMITATION, ANY
PERSON HAVING ANY DEALINGS OF ANY KIND WITH THE COMPANY), TRUSTEE, DIRECTOR,
OFFICER, EMPLOYEE AND/OR AGENT OF THE COMPANY ACTING IN SUCH CAPACITY, THE
COMPANY OR ANY GOVERNMENTAL REGULATORY BODY OR AUTHORITY. THE FOREGOING
INDEMNITY SHALL NOT APPLY TO THE EXTENT THE INDEMNIFIED LIABILITIES RESULT FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY OR ANY
INDEMNIFIED PARTY'S OWN VIOLATIONS OF REGULATIONS APPLICABLE TO IT. THE
AGREEMENT OF THE COMPANY CONTAINED IN THIS SUBSECTION (c) SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT AND THE PAYMENT IN FULL OF THE
NOTES. ATTORNEYS' FEES AND DISBURSEMENTS INCURRED IN ENFORCING, OR ON APPEAL
FROM, A JUDGMENT PURSUANT HERETO SHALL BE RECOVERABLE SEPARATELY FROM AND IN
ADDITION TO ANY OTHER AMOUNT INCLUDED IN SUCH JUDGMENT, AND THIS CLAUSE IS
INTENDED TO BE SEVERABLE FROM THE OTHER PROVISIONS OF THIS AGREEMENT AND TO
SURVIVE AND NOT BE MERGED INTO SUCH JUDGMENT.
10.2 INDEMNIFICATION BY THE LENDERS. THE LENDERS AGREE TO INDEMNIFY THE
ADMINISTRATIVE AGENT IN ITS RESPECTIVE CAPACITY AS SUCH (TO THE EXTENT NOT
REIMBURSED BY THE COMPANY AND WITHOUT LIMITING THE OBLIGATION OF THE COMPANY TO
DO SO), RATABLY ACCORDING TO THE RESPECTIVE AMOUNTS OF THEIR COMMITMENT
PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING WITHOUT LIMITATION AT
ANY TIME FOLLOWING THE PAYMENT OF THE OBLIGATIONS) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR ARISING OUT
OF THE LOAN DOCUMENTS OR ANY DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR
THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY ACTION TAKEN
OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER OR IN CONNECTION WITH ANY OF THE
FOREGOING; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT OF ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM ADMINISTRATIVE
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE AGREEMENTS IN THIS SECTION
SHALL SURVIVE THE PAYMENT OF THE OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT. ATTORNEYS' FEES AND DISBURSEMENTS INCURRED IN ENFORCING, OR ON APPEAL
FROM, A JUDGMENT PURSUANT HERETO SHALL BE RECOVERABLE SEPARATELY FROM
Page 69
76
AND IN ADDITION TO ANY OTHER AMOUNT INCLUDED IN SUCH JUDGMENT, AND THIS CLAUSE
IS INTENDED TO BE SEVERABLE FROM THE OTHER PROVISIONS OF THIS AGREEMENT AND TO
SURVIVE AND NOT BE MERGED INTO SUCH JUDGMENT.
TO THE EXTENT THAT, AFTER THE LENDERS HAVE MADE PAYMENTS TO
ADMINISTRATIVE AGENT PURSUANT TO THIS SECTION 10.2, ADMINISTRATIVE AGENT
RECEIVES FROM THE COMPANY, THE COLLATERAL OR ANY OTHER SOURCE (OTHER THAN THE
LENDERS) ANY AMOUNT ON ACCOUNT OF THE LIABILITIES SO PAID BY THE LENDERS,
ADMINISTRATIVE AGENT SHALL REIMBURSE SUCH AMOUNT RECEIVED FROM THE COMPANY, THE
COLLATERAL OR SUCH OTHER SOURCE TO THE LENDERS, RATABLY IN ACCORDANCE WITH THE
AMOUNTS RECEIVED FROM THEM PURSUANT TO SECTION 10.2. FOR PURPOSES OF THE
FOREGOING SENTENCE, ADMINISTRATIVE AGENT MAY APPLY ANY AMOUNT RECEIVED FROM THE
COMPANY OR ANY SUCH OTHER SOURCE TO ANY OBLIGATIONS OWING TO IT UNDER ANY LOAN
DOCUMENT.
11. FINANCIAL INFORMATION.
All financial statements and reports furnished to the Administrative
Agent hereunder shall be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as at, and
for the period ended, the Statement Date (except to the extent otherwise
required to conform to good accounting practice).
12. AGREEMENTS CONCERNING THE ADMINISTRATIVE AGENT AND THE LENDERS.
12.1 Authorization and Action. Each of the Lenders hereby irrevocably
appoints Bank United as the Administrative Agent under this Agreement and the
other Loan Documents and authorizes the Administrative Agent to act on such
appointing Lender's behalf and to exercise such powers under this Agreement and
all other Loan Documents as are specifically delegated to or required of the
Administrative Agent by their terms, together with all reasonably incidental
powers. If the Administrative Agent (in such capacity) (a) receives any material
writing from the Company (including any report or statement required by any of
the Loan Documents), (b) receives any default notice from any Lender alleging or
relating to any Default by the Company, or (c) gives any Default notice to the
Company pursuant to the terms of this Agreement, the Administrative Agent shall
promptly forward copies of such material writing or Default notice to the other
Lenders. As to any matter not expressly provided for by this Agreement
(including enforcement or collection of any Note and foreclosure on any
Collateral for any or all of the Company's present or future Obligations), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the joint
instructions of all of the affected Lenders, and such instructions shall be
binding upon all Lenders; provided, that the Administrative Agent shall not be
required to take any action that it reasonably believes may (1) expose it to
personal liability or (2) be contrary to this Agreement, or applicable
requirements of law. The Administrative Agent may (but shall not be under any
obligation to) propose to take action or actions under this Agreement in a
notice to the other affected Lenders; unless otherwise directed by the other
affected
Page 70
77
Lenders within ten (10) Business Days after the date of such notice, the
Administrative Agent may (but shall not be obligated to) take the action or
actions proposed in such notice and the Administrative Agent shall be fully
protected in so acting as if it had received instructions to take such action or
actions from the other affected Lenders; provided, that without the other
affected Lenders' approval, the Administrative Agent shall not (A) declare in
writing that a Default that has occurred under this Agreement has been waived or
cured, (B) consent to any merger or consolidation of Company with or into
another Person that would have the effect described in this Agreement's
definition of "Change of Control", or (C) declare the maturity of any Note
accelerated, foreclose on any Collateral or exercise any of the Lenders' other
material remedies after the occurrence of any Default unless such actions set
forth in this clause (C) are (i) reasonably susceptible of being rescinded
without materially and adversely affecting the other Lenders or any of the
Collateral if the other affected Lenders should elect to have the Administrative
Agent rescind them or (ii) actions that the Administrative Agent, acting
reasonably in light of the circumstances then prevailing and known to the
Administrative Agent, shall deem necessary or appropriate to take on an urgent
basis in order to protect or preserve Collateral or to protect the rights or
interests of the Lenders.
12.2 Employment of Others by the Administrative Agent. The
Administrative Agent may execute and perform any of its duties under the Loan
Documents by or through agents other than (a) Company or (b) any of Company's
Affiliates or (c) any of Company's attorneys or other agents, and shall be
entitled to rely (and shall be protected in reasonably relying) on the advice of
such agents and attorneys concerning all matters pertaining to its duties under
the Loan Documents, and, except as otherwise provided in Section 12.3, the
Administrative Agent shall not be responsible for the negligence or misconduct
of any such agents and attorneys selected by it with reasonable care. Each
Lender recognizes and understands that if, after the occurrence of any Default
under this Agreement, the Administrative Agent services any Collateral
consisting of loans secured by mortgages and the Administrative Agent does not
have adequate facilities (and the Administrative Agent shall have no obligation
to develop adequate facilities) to service such Collateral, it will be necessary
for the Administrative Agent to contract with a third party to service such
Collateral and the fees to be paid for such services will be treated as expenses
payable out of the income and proceeds realized from such Collateral having
priority over other applications of such income and proceeds pursuant to the
Loan Documents. The Administrative Agent will identify any such servicing agent
selected by the Administrative Agent for such purpose by written notice to the
Lenders, and may engage and continue to employ such servicing agent unless and
until the other Lenders notify the Administrative Agent in writing that they
disapprove of such servicing agent so selected, in which event the
Administrative Agent shall promptly engage such other servicing agent as shall
be approved in writing by all of the Lenders and replace the servicing agent so
originally selected.
12.3 No Liability. Except in the case of its, his or her own (or own
agent's) fraud, gross negligence, or willful misconduct, IT BEING SPECIFICALLY
INTENDED THAT THE RELEASED PERSONS BE HEREBY RELEASED FROM LIABILITY FOR THEIR
OWN SIMPLE NEGLIGENCE, the "Administrative Agent, et al." (meaning the
Administrative Agent, its Affiliates and its - and each of its Affiliates' -
officers, shareholders, directors, employees and agents), the Lenders and their
respective shareholders, directors, officers, employees, attorneys and agents
(collectively, the "Released Persons") shall not be (a) liable for any action
taken or omitted to be taken by such Released Person (1) under the Loan
Documents in good faith and believed by such Released Person to be within the
discretion or power conferred upon such Released Person by the Loan Documents or
Page 71
78
(2) with the consent or at the request of all Lenders or (b) responsible for
consequences of any error of judgment. The Administrative Agent, et al., shall
not be responsible in any manner to anyone for (1) the effectiveness,
enforceability, legality, genuineness, sufficiency, validity, due execution,
filing, registration or recording of any of the Loan Documents, (2) any
representation, warranty, document, certificate, report or statement made or
furnished in, under or in connection with the Loan Documents other than its own
representation, warranty, certificate, report or statement furnished to one or
more Lenders in or pursuant to any Loan Document, whether deemed given pursuant
to Section 12.3 of this Agreement or given in a separate writing (and no
certificate, report or statement so furnished that is prepared in reliance upon
information furnished by the Company or any source other than the Administrative
Agent itself shall be construed to be a certification, confirmation, guaranty or
undertaking of any kind by the Administrative Agent of the correctness or
completeness of any of the information so relied upon by the Administrative
Agent), (3) the value of any of the Collateral, (4) except to the extent the
Administrative Agent is required to hold Collateral or take or perform any other
action with respect to it in accordance with this Agreement and which action is
required of such perfection, the perfection of any Lien on any Collateral or (5)
any delay, error, omissions or default of any third party mail, telegraph,
telecopy, electronic mail, cable or wireless agency or operator. The
Administrative Agent, et al., shall not be under any obligation to anyone to (a)
ascertain or to inquire as to the performance or observation of any of the
terms, covenants, or conditions of any of the Loan Documents on the part of the
Company or any other Person or (b) inspect the Property (including the books and
records) of the Company. Also, the Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default unless a Vice
President or more senior officer of the Mortgage Banking Group of the
Administrative Agent has actual knowledge of it or such an officer shall have
received notice from the Company or a Lender referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
Subject to the foregoing limitations and to any direction from the Lenders to
take action pursuant to this Article, the Administrative Agent shall perform the
duties imposed upon it under the Loan Documents with respect to the Collateral
with the same amount of diligence and using the same amount of judgment and
discretion as if it were acting solely for its own account and, in connection
therewith, the Administrative Agent is hereby authorized to (a) settle,
compromise and release claims against the makers of any Collateral and any other
Person obligated with respect to any Collateral; (b) foreclose on and enforce
security interests in any Collateral or Property securing any Collateral; (c)
sell Collateral and Property acquired as a result of foreclosure on or under the
Collateral; and (d) do all other acts and things as the Administrative Agent, in
its sole discretion, may deem necessary or appropriate to protect the rights and
interest of the Administrative Agent and the Lenders and to realize the benefits
of the Collateral.
12.4 Reliance. The Administrative Agent, et al., shall be entitled to
rely - and shall be fully protected in reasonably relying - upon any writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telex or teletype message, statement, order or other document or
conversation believed by it, him or her to be genuine and correct and to have
been signed or made by the proper Person. The Administrative Agent shall not be
required in any way to determine the identity or authority of any Person
delivering or executing the same. If any order, writ, judgment or decree (an
"Order") shall be made or entered by any court affecting the rights, duties and
obligations of the Administrative Agent under the Loan Documents, then and in
any of such events the Administrative Agent is authorized, in its sole
discretion, to rely upon and comply with such Order; and if the Administrative
Agent complies with any such Order, then the
Page 72
79
Administrative Agent, et al., shall not be liable to any Lender or to any other
Person by reason of such compliance, even though such Order may be subsequently
reversed, modified, annulled, set aside, held inapplicable or vacated.
12.5 Resignation of the Administrative Agent. The Administrative Agent,
or any agent or agents hereafter appointed, at any time may resign by giving
written notice of resignation to the Company and the Lenders and complying with
the applicable provisions of this Section. The Administrative Agent may be
removed in accordance with the applicable provisions of Section 12.6 and with
written notice to the Company. Upon receiving such notice of resignation or
removal, a successor Administrative Agent shall be promptly appointed by
unanimous action of the Lenders by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Administrative Agent and
one copy to the successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed and have accepted the appointment within
thirty (30) days after such notice of resignation, then the resigning
Administrative Agent may appoint a successor Administrative Agent, which shall
itself be subject, however, to removal by the Lenders (other than any Lender
which is then the Administrative Agent) without cause (i.e., notwithstanding the
conditions to removal of the Administrative Agent stated in Section 12.6) upon
thirty (30) days' written notice, provided that the removing Lenders designate
another successor Administrative Agent in such notice - or in a separate written
notice given on or before five (5) days thereafter - to the Administrative Agent
being removed. If the resigning Administrative Agent does not appoint a
successor Administrative Agent as provided in the preceding sentence, then the
resigning Administrative Agent or the Lenders (other than any Lender which is
then the Administrative Agent) may petition any appropriate court for the
appointment of a successor Administrative Agent. After such notices, if any, as
it may deem proper and prescribe, such court may appoint a successor
Administrative Agent.
12.6 Removal of the Administrative Agent. If (a) a receiver shall be
appointed by any Governmental Authority of competent jurisdiction and shall take
charge or control of the Administrative Agent or of its Property or affairs for
the purpose of rehabilitation, conservation or liquidation, or (b) the
Administrative Agent shall be grossly negligent in the performance of its
material duties and obligations under this Agreement or engage in willful
misconduct concerning any such material duties and obligations, then, in any
such case, the Lenders (other than any Lender which is then the Administrative
Agent) may remove the Administrative Agent and appoint a successor by written
instrument, in duplicate, one copy of which shall be delivered to the
Administrative Agent so removed and one copy to the successor Administrative
Agent; or the Lenders (other than any Lender which is then the Administrative
Agent) may petition any court of competent jurisdiction for the removal of the
Administrative Agent and the appointment of a successor Administrative Agent.
After such notice, if any, as it may deem proper and prescribe, such court may
remove the Administrative Agent and appoint a successor Administrative Agent.
12.7 Effective Date of Resignation or Removal. No resignation or
removal of the Administrative Agent shall be effective until (a) a successor
Administrative Agent is appointed pursuant to the provisions of this Agreement
and has accepted the appointment as provided in this Agreement, with a copy of
such acceptance to be provided by the successor Administrative Agent to the
predecessor Administrative Agent, the Company and the Lenders (but no notice to
any other Person shall be required), and (b) the resigning or removed
Administrative Agent has taken such actions (including the deliver to the
successor Administrative Agent of Collateral and the execution
Page 73
80
and delivery to the successor Administrative Agent of assignments) as may be
necessary or appropriate to cause the successor Administrative Agent to have a
perfected Lien in the collateral for the benefit of the Lenders (provided, that
the Lenders may elect to waive the requirements of this clause (b) to facilitate
succession, although no such waiver shall excuse the resigning or removed
Administrative Agent from its obligations under this clause (b) or otherwise),
and the Administrative Agent agrees to take any and all such actions as the
successor Administrative Agent may reasonably request. Each Lender shall be
responsible, ratably, for its share of all reasonable expenses of the resigning
or removed Administrative Agent and of the successor Administrative Agent
incurred in connection with the actions to be taken in accordance with the
provisions of this Section.
12.8 Successor Administrative Agent. Any successor Administrative Agent
appointed as provided in this Article shall execute and deliver to the Company
and to its predecessor Administrative Agent an instrument accepting such
appointment, and thereupon the resignation or removal of the predecessor
Administrative Agent shall become effective and such successor Administrative
Agent, without any further act, deed or conveyance, shall become vested with all
the rights and obligations of its predecessor, with like effect as if originally
named as the Administrative Agent; provided, that upon the written request of
the Company or the successor Administrative Agent, the Administrative Agent
ceasing to act shall execute and deliver (a) an instrument transferring to such
successor Administrative Agent all of the rights of the Administrative Agent so
ceasing to act and (b) to such successor Administrative Agent such instruments
as are necessary to transfer the Collateral to such successor Administrative
Agent (including assignments of all Collateral or Collateral Documents). Upon
the request of any such successor Administrative Agent made from time to time,
the Company shall execute any and all papers which the successor Administrative
Agent shall request or require to more fully and certainly vest in and confirm
to such successor Administrative Agent all such rights.
12.9 Credit Decision. Each Lender acknowledges and agrees that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based upon the Financial Statements of the Company and such other
documents and information as it has deemed appropriate (and such Lender
represents and agrees that it has received and reviewed all of the information
which it requested and that it requested all information which it considered
material to its credit decision), made its own credit analysis and decision to
enter into this Agreement . Each Lender also acknowledges and agrees that it
will, independently and without reliance upon the Administrative Agent, et al.
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
12.10 Expense Reimbursement. The Administrative Agent shall use its
best efforts to recover from the Company all Extraordinary Servicing Expenses
that are the responsibility of the Company under the Loan Documents. If the
Company fails to pay the Administrative Agent for any Extraordinary Servicing
Expenses, each Lender shall, upon demand of the Administrative Agent, reimburse
the Administrative Agent for its respective share of all such Extraordinary
Servicing Expenses pro rata in accordance with their respective Commitment
Percentages. If any such Extraordinary Servicing Expenses are reimbursed to the
Administrative Agent by the Company after having been collected from the
Lenders, the Administrative Agent shall repay the Lenders their respective
shares thereof in accordance with their respective Commitment Percentages.
Page 74
81
12.11 Merger of the Administrative Agent. Any Person into which the
Administrative Agent may be merged or converted or with which it may be
consolidated, or any Person surviving or resulting from any merger, conversion
or consolidation to which the Administrative Agent shall be a party or any
Person succeeding to the commercial banking business of the Administrative
Agent, shall be the successor Administrative Agent without the execution or
filing of any paper or any further act on the part of any of the parties.
12.12 Administrative Agent and Affiliates. With respect to its own
Notes, the Administrative Agent shall have the same rights and powers under the
Loan Documents as any other Lender and may exercise the same as though it were
not the Administrative Agent. Each of the Administrative Agent and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with the Company,
any of its Affiliates and any Person who may do business with or own securities
of any of them, all as if it was not the Administrative Agent and without any
duty to account therefor to the Lenders.
13. MISCELLANEOUS.
13.1 Terms Binding Upon Successors; Survival of Representations. The
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. All
representations, warranties, covenants and agreements herein contained on the
part of the Company shall survive the making of any Advance and the execution of
the Notes, and shall be effective so long as the Commitment is outstanding
hereunder or there remain any Obligations of the Company hereunder or under the
Notes to be paid or performed.
13.2 Participation and Assignments. This Agreement and the obligations
of the Company may not be assigned by the Company. Any Lender may assign or
transfer, in whole or in part, and further may, subject to the limitations set
forth below, sell participations in all or any part of its Advances or
Commitments or any other interest in the Obligations or any of its obligations
hereunder, to one or more financial institutions, with minimum assets of FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00), in which event (a) in the case of an
assignment, the assignee shall have, to the extent of such assignment (unless
otherwise provided thereby), the same rights and benefits as it would have if it
were a "Lender" hereunder, and, if the assignee has expressly assumed, for the
benefit of the Company, such Lender's obligations hereunder, such Lender shall
be relieved of its obligations hereunder to the extent of such assignment and
assumption and (b) in the case of a participation, upon written notice thereof
by such Lender to the Administrative Agent, the participating Person's (a
"Participant") rights against the Lender from whom it has purchased such
participation (the "Participating Lender") in respect of such participation are
those set forth in the agreement executed by such Lender in favor of the
Participant relating thereto. Such Participating Lender shall remain solely
responsible to the other parties hereto for the performance of such Lender's
obligations under the Loan Documents, whether or not such Lender shall remain
the holder of any Note. Such Participating Lender shall retain all voting rights
with respect to such Note, the Advances hereunder and the Lender's Commitments.
The Company, the Administrative Agent and the other Lenders shall continue to
deal solely and directly with such Participating Lender in connection with such
Lender's rights and obligations under the Loan Documents and the consent of the
Participant shall not be required for amendments or waivers of the Loan
Documents other than any consent of Participant required
Page 75
82
under any participating agreement of any amendment or waiver described in
Section 13.3 requiring the written consent of 100% of the Lenders.
Notwithstanding the foregoing, nothing contained herein shall in any manner or
to any extent affect the right of any Lender to pledge any portion of its Notes
for security purposes to any Federal Reserve Bank or, except as set forth in the
following sentence, to assign its Note and its right to receive and retain
payments on its Note provided such Lender remains primarily and directly liable
pursuant to the terms and conditions of this Agreement to keep, observe and
perform all of its obligations under this Agreement, and all such assignments
shall be treated, considered and administered as a sale of a participation and
not as an assignment and shall be subject to and governed by the provisions of
this Section. Any Lender may furnish any information concerning the Company in
the possession of such Lender from time to time to Affiliates of such Lender and
to assignees and Participants (including prospective assignees and Participants)
and the Company hereby consents to the provision of such information.
Notwithstanding the foregoing, Administrative Agent and Bank United hereby
consent and agree that RFC may assign its rights under the Agreement and its
Note in its current, as well as any future, off-balance sheet financing program,
so long as such assignment is part of an ongoing financing program and RFC shall
remain fully liable for the performance of all obligations under the Agreement
in connection with its Commitment Amount.
13.3 Amendments and Modifications. Without the written consent of all
of the Lenders, including Bank United, the Administrative Agent shall not agree
to any amendments or modifications to the Loan Documents, or grant a written
waiver of any provision of them, the effect of which would be to (a) change the
amount or the due date of any required payment of principal or accrued interest
or any fees,(b) extend the maturity date of any Note, (c) change any sharing
ratio applicable to the Lenders under this Agreement except pursuant to the
express provisions of this Agreement, (d) change the several nature of the
Lenders' respective obligations to make Advances this Agreement, (e) change the
conditions precedent to any Advance, (f) release Collateral other than pursuant
to the express provisions of this Agreement, (g) amend this Section or the
definition of "Majority Lenders", (h) amend, or waive any violation of, the
provisions of Section 7.12 hereof, (i) amend the definition of "Eligible
Mortgage Loan," or amend any defined term used within the definition of
"Eligible Mortgage Loan," (provided that, with the approval of the Majority
Lenders, the Administrative Agent may temporarily waive or suspend one or more
of this Agreement's eligibility requirements or conditions for a particular
grouping of Mortgage Loans to qualify as Eligible Mortgage Loan, where their
failure to so qualify is beyond the Company's reasonable control and if the
Administrative Agent believes at the time of such temporary waiver or suspension
that the factors which apparently caused such disqualification will be
eliminated in a reasonably short time and provided further that Administrative
Agent may, in its sole discretion, warehouse or continue to warehouse Mortgage
Loans ("Ineligible Mortgage Loans") which fail to qualify as Eligible Mortgage
Loans, and waive or temporarily suspend or delay any obligation of the Company
hereunder in connection with such Ineligible Mortgage Loans, including, without
limitation, suspension of any mandatory prepayment due in connection with such
Ineligible Mortgage Loans, so long as the aggregate Advances outstanding at any
one time against such Ineligible Mortgage Loans shall not exceed ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00)), (j) increase the amount of any Lender's
Commitment Amount, and (k) amend or modify the provisions of Sections 2.10 or
2.11 of this Agreement. Without the consent of the Majority Lenders, the
Administrative Agent shall not agree to any other amendments or modifications to
the Loan Documents, or grant a written waiver of any other material provision of
the Loan Documents; provided that any such amendment or waiver proposed by
Administrative Agent or Company shall be submitted to all Lenders concurrently,
even though
Page 76
83
the consent or approval of Lenders may not be required, and the Administrative
Agent may proceed to make any such amendment or waiver that requires only the
Majority Lenders' approval when the Administrative Agent has obtained that
approval even if not all Lenders have yet responded to the Administrative
Agent's proposal.
13.4 Governing Law. This Agreement and the other Loan Documents shall
be governed by the laws of the State of Texas, without reference to its
principles of conflicts of laws.
13.5 Relationship of the Parties. This Agreement provides for the
making of Advances by the Lenders, in their capacities as lenders, to the
Company, in its capacity as a borrower, and for the payment of interest,
repayment of principal by the Company to the Lenders, and for the payment of
certain fees by the Company to the Lenders and the Administrative Agent. The
relationship between the Lenders and the Company is limited to that of
creditor/secured party, on the one hand, and debtor, on the other hand. The
provisions herein for compliance with financial covenants and delivery of
financial statements are intended solely for the benefit of the Lenders to
protect their interests as lenders in assuring payments of interest and
repayment of principal and payment of certain fees, and nothing contained in
this Agreement shall be construed as permitting or obligating the Administrative
Agent or the Lenders to act as a financial or business advisor or consultant to
the Company, as permitting or obligating the Administrative Agent or the Lenders
to control the Company or to conduct the Company's operations, as creating any
fiduciary obligation on the part of the Administrative Agent or the Lenders to
the Company, or as creating any joint venture, agency, or other relationship
between the parties hereto other than as explicitly and specifically stated in
this Agreement. The Company acknowledges that it has had the opportunity to
obtain the advice of experienced counsel of its own choosing in connection with
the negotiation and execution of this Agreement and to obtain the advice of such
counsel with respect to all matters contained herein, including, without
limitation, the provision for waiver of trial by jury. The Company further
acknowledges that it is experienced with respect to financial and credit matters
and has made its own independent decisions to apply to the Lenders for credit
and to execute and deliver this Agreement.
13.6 Severability. If any provision of this Agreement shall be declared
to be illegal or unenforceable in any respect, such illegal or unenforceable
provision shall be and become absolutely null and void and of no force and
effect as though such provision were not in fact set forth herein, but all other
covenants, terms, conditions and provisions hereof shall nevertheless continue
to be valid and enforceable.
13.7 Usury. It is the intent of Lenders and the Company in the
execution and performance of this Agreement and the Notes or any Loan Document
to remain in strict compliance with Applicable Law from time to time in effect.
In furtherance thereof, Lenders and the Company stipulate and agree that none of
the terms and provisions contained in the Notes, this Agreement or any Loan
Document shall ever be construed to create a contract to pay for the use,
forbearance or detention of money with interest at a rate or in an amount in
excess of the Maximum Rate or amount of interest permitted to be charged under
Applicable Law. For purposes of this Agreement, the Notes and any other Loan
Document, "interest" shall include the aggregate of all charges which constitute
interest under Applicable Law that are contracted for, taken, charged, reserved,
or received under this Agreement, the Notes or any other Loan Document. The
Company shall never be required to pay unearned interest or interest at a rate
or in an amount in excess of the Maximum Rate or amount of interest that may be
lawfully charged under Applicable Law, and
Page 77
84
the provisions of this paragraph shall control over all other provisions of this
Agreement and the Notes or any Loan Document, which may be in actual or apparent
conflict herewith. If the Notes are prepaid, or if the maturity of the Notes is
accelerated for any reason, or if under any other contingency the effective rate
or amount of interest which would otherwise be payable under the Notes would
exceed the Maximum Rate or amount of interest any Lender or any other holder of
the Notes is allowed by Applicable Law to charge, contract for, take, reserve or
receive, or in the event any Lender or any holder of the Notes shall charge,
contract for, take, reserve or receive monies that are deemed to constitute
interest which would, in the absence of this provision, increase the effective
rate or amount of interest payable under the Notes to a rate or amount in excess
of that permitted to be charged, contracted for, taken, reserved or received
under Applicable Law then in effect, then the principal amount of the Notes or
the amount of interest which would otherwise be payable under the Notes or both
shall be reduced to the amount allowed under Applicable Law as now or
hereinafter construed by the courts having jurisdiction, and all such moneys so
charged, contracted for, taken, reserved or received that are deemed to
constitute interest in excess of the Maximum Rate or amount of interest
permitted by Applicable Law shall immediately be returned to or credited to the
account of the Company upon such determination. Lenders and the Company further
stipulate and agree that, without limitation of the foregoing, all calculations
of the rate or amount of interest contracted for, charged, taken, reserved or
received under the Notes which are made for the purpose of determining whether
such rate or amount exceeds the Maximum Rate, shall be made to the extent not
prohibited by Applicable Law, by amortizing, prorating, allocating and spreading
during the period of the full stated term of the Notes, all interest at any time
contracted for, charged, taken, reserved or received from the Company or
otherwise by any Lender or any other holder of the Notes.
13.8 Consent to Jurisdiction. Subject to the provisions of Section
13.10 of this Agreement, the Company hereby agrees that any action or proceeding
under this Agreement, the Notes or any document delivered pursuant hereto may be
commenced against it in any court of competent jurisdiction within the State of
Texas, by service of process upon the Company by first class registered or
certified mail, return receipt requested, addressed to the Company at its
address last known to the Administrative Agent. The Company agrees that any such
suit, action or proceeding arising out of or relating to this Agreement or any
other such document may be instituted in Xxxxxx County, State District Court or
in the United States District Court for the District of Texas at the option of
the Administrative Agent; and the Company hereby waives any objection to the
venue, or any claim as to inconvenient forum, of any such suit, action or
proceeding. Nothing herein shall affect the right of the Administrative Agent to
accomplish service of process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any other
jurisdiction or court.
13.9 Arbitration. To the maximum extent not prohibited by law, any
controversy, dispute or claim arising out of, in connection with, or relating to
the Commitment or the Loan Documents or any transaction provided for therein,
including but not limited to any claim based on or arising from an alleged tort
or an alleged breach of any agreement contained in any of the Loan Documents,
shall, at the request of any party to the Loan Documents (either before or after
the commencement of judicial proceedings), be settled by arbitration pursuant to
Title 9 of the United States Code, which the parties hereto acknowledge and
agree applies to the transaction involved herein, and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"). If Title 9 of the United States Code is inapplicable to any such claim,
dispute or controversy for any reason, such arbitration shall be conducted
pursuant to the Texas
Page 78
85
General Arbitration Act and in accordance with the Commercial Arbitration Rules
of the AAA. In any such arbitration proceeding: (i) all statutes of limitations
which would otherwise be applicable shall apply; and (ii) the proceeding shall
be conducted in Houston, Texas, by a single arbitrator, if the amount in
controversy is ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) or less, or by a
panel of three arbitrators if the amount in controversy is over ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00). All arbitrators shall be selected by the process
of appointment from a panel pursuant to Section 13 of the AAA Commercial
Arbitration Rules and each arbitrator shall be either an active attorney, a
mortgage banker or retired judge with an AAA acknowledged expertise in the
subject matter of the controversy, dispute or claim. Any award rendered in any
such arbitration proceeding shall be final and binding, and judgment upon any
such award may be entered in any court having jurisdiction.
If any party to any Loan Document files a proceeding in any court to
resolve any such controversy, dispute or claim, such action shall not constitute
a waiver of the right of such party or a bar to the right of any other party to
seek arbitration under the provisions of this Section of that or any other
claim, dispute or controversy, and the court shall, upon motion of any party to
the proceeding, direct that such controversy, dispute or claim be arbitrated in
accordance with this Section.
Notwithstanding any of the foregoing, the parties hereto agree that no
arbitrator or panel of arbitrators shall possess or have the power to (i) assess
punitive damages, (ii) dissolve, rescind or reform (except that the arbitrator
may construe ambiguous terms) any Loan Document, (iii) enter judgment on the
debt, (iv) exercise equitable powers or issue or enter any equitable remedies
with respect to matters submitted to arbitration, or (v) allow discovery of
attorney/client privileged information. The Commercial Arbitration Rules of the
AAA are hereby modified to this extent for the purpose of arbitration of any
dispute, controversy or claim arising out of, in connection with, or relating to
the Loan or any Loan Document. The parties hereby further agree to waive, each
to the other, any claims for punitive damages and agree neither an arbitrator
nor any court shall have the power to assess such damages.
No provision of, or the exercise of any rights under, this Section
shall limit or impair the right of any party to any Loan Document before, during
or after any arbitration proceeding to: (i) exercise self-help remedies such as
setoff or repossession; (ii) foreclose (judicially or otherwise) any Lien on or
security interest in any real or personal Collateral; or (iii) obtain emergency
relief from a court of competent jurisdiction to prevent the dissipation,
damage, destruction, transfer, hypothecation, pledging or concealment of assets
or of Collateral securing any Indebtedness, obligation or guaranty referenced in
any Loan Document. Such emergency relief may be in the nature of, but is not
limited to: pre-judgment attachments, garnishments, sequestrations, appointments
of receivers, or other emergency injunctive relief to preserve the status quo.
13.10 ADDITIONAL INDEMNITY. IN ADDITION TO THE INDEMNITY PROVIDED IN
SECTION 10, THE COMPANY SHALL INDEMNIFY AND HOLD EACH ADMINISTRATIVE AGENT,
LENDER, AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, AND EMPLOYEES
(COLLECTIVELY, THE "INDEMNIFIED PARTIES"), HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, ACTIONS, SUITS, PROCEEDINGS, COSTS, EXPENSES, DAMAGES, FINES, PENALTIES,
AND LIABILITIES, INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND COSTS,
ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM (A) THE
Page 79
86
OPERATION OF THE COMPANY'S BUSINESSES, (B) ANY INDEMNIFIED PARTY'S PRESERVATION
OR ATTEMPTED PRESERVATION OF COLLATERAL, AND (C) ANY FAILURE OF THE SECURITY
INTERESTS AND LIENS IN THE COLLATERAL GRANTED TO THE AGENT FOR THE BENEFIT OF
THE LENDERS PURSUANT TO THIS AGREEMENT TO BE OR TO REMAIN PERFECTED OR TO HAVE
THE PRIORITY AS CONTEMPLATED THEREIN REGARDLESS OF WHETHER THE CLAIM IS CAUSED
BY OR ARISES OUT OF, IN WHOLE OR IN PART, THE NEGLIGENCE OF ANY INDEMNIFIED
PARTY OR MAY BE BASED ON THE STRICT LIABILITY OF ANY INDEMNIFIED PARTY. THIS
INDEMNITY SHALL NOT APPLY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS
CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY
INDEMNIFIED PARTY. AT THE REQUEST OF ANY INDEMNIFIED PARTY, THE COMPANY SHALL,
AT ITS OWN COST AND EXPENSE, DEFEND OR CAUSE TO BE DEFENDED ANY AND ALL SUCH
ACTIONS OR SUITS THAT MAY BE BROUGHT AGAINST ANY INDEMNIFIED PARTY AND, IN ANY
EVENT, SHALL SATISFY, PAY, AND DISCHARGE ANY AND ALL JUDGMENTS, AWARDS,
PENALTIES, COSTS, AND FINES THAT MAY BE RECOVERED AGAINST ANY INDEMNIFIED PARTY
IN ANY SUCH ACTION, PLUS ALL ATTORNEYS' FEES AND COSTS RELATED THERETO TO THE
EXTENT PERMITTED BY APPLICABLE LAW; PROVIDED, HOWEVER, THAT SUCH INDEMNIFIED
PARTY SHALL GIVE THE COMPANY (TO THE EXTENT SUCH INDEMNIFIED PARTY SEEKS
INDEMNIFICATION THEREFOR FROM THE COMPANY UNDER THIS SECTION 13.11) WRITTEN
NOTICE OF ANY SUCH CLAIM, DEMAND, OR SUIT AFTER SUCH INDEMNIFIED PARTY HAS
RECEIVED WRITTEN NOTICE THEREOF, AND SUCH INDEMNIFIED PARTY SHALL NOT SETTLE ANY
SUCH CLAIM, DEMAND, OR SUIT, IF SUCH INDEMNIFIED PARTY SEEKS INDEMNIFICATION
THEREFOR FROM THE COMPANY, WITHOUT FIRST GIVING NOTICE TO THE COMPANY OF THE
INDEMNIFIED PARTY'S DESIRE TO SETTLE AND OBTAINING THE CONSENT OF THE COMPANY TO
THE SAME, WHICH CONSENT THE COMPANY HEREBY AGREES NOT TO UNREASONABLY WITHHOLD.
ALL OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 13.10 SHALL SURVIVE THE
PAYMENT OF THE NOTES AND THE OBLIGATIONS.
13.11 No Waivers Except in Writing. No failure or delay on the part of
the Administrative Agent in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No notice
to or demand on the Company or any other Person in any case shall entitle the
Company or such other Person to any other or further notice or demand in similar
or other circumstances.
13.12 WAIVER OF JURY TRIAL. AS TO THIS AGREEMENT THE COMPANY, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY (a) COVENANTS AND AGREES NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH OF
THE LENDERS, AND THIS WAIVER IS INTENDED TO
Page 80
87
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT OF A
JURY TRIAL WOULD OTHERWISE ACCRUE. THE ADMINISTRATIVE AGENT, THE LENDERS AND THE
COMPANY ARE HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS
TO SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY
TRIAL. FURTHER, THE ADMINISTRATIVE AGENT, THE COMPANY AND EACH OF THE LENDERS
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF ANY OF THEM, RESPECTIVELY,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF THE UNDERSIGNED THAT THE
ADMINISTRATIVE AGENT, THE COMPANY OR ANY OF THE LENDERS WILL NOT SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
13.13 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which, taken together, shall constitute one and
the same instrument.
13.14 No Third Party Beneficiaries. This Agreement is for the sole and
exclusive benefit of the Company, the Administrative Agent, and Lenders. This
Agreement does not create, and is not intended to create, any rights in favor of
or enforceable by any other Person. This Agreement may be amended or modified by
the agreement of the Company, the Administrative Agent, and Lenders, without any
requirement or necessity for notice to, or the consent of or approval of any
other Person.
13.15 RELEASE OF LIABILITY. TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW
FROM TIME TO TIME IN EFFECT, THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY (AND AFTER IT HAS CONSULTED WITH ITS OWN ATTORNEY) IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT NO CLAIM MAY BE MADE BY THE COMPANY AGAINST THE
ADMINISTRATIVE AGENT, EACH LENDER, OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, AGENTS OR INSURERS, OR ANY OF THEIR
SUCCESSORS AND ASSIGNS, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED
ON CONTRACT OR TORT OR DUTY IMPOSED BY LAW) ARISING OUT OF, OR RELATED TO, THE
TRANSACTIONS CONTEMPLATED BY ANY OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN
DOCUMENTS, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH. IN FURTHERANCE OF THE FOREGOING, THE COMPANY HEREBY WAIVES, RELEASES
AND AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
13.16 Entire Agreement; Amendment. This Agreement, the Notes, and the
other Loan Documents referred to herein 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. The provisions of this Agreement and
Page 81
88
the other Loan Documents to which the Company is a party may be amended or
waived only by an instrument in writing signed by the parties hereto.
13.17 NO ORAL AGREEMENTS. THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Page Follows]
Page 82
89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY:
MORTGAGE PORTFOLIO SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President and CEO
BANK UNITED, as Administrative Agent
and a Lender
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, AVP/Account Officer
Mortgage Banker Finance
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Director
Page 83
