Exhibit 10.74
Execution Copy
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MASTER LOAN AND SECURITY AGREEMENT
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Dated as of December 1, 2000
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NC CAPITAL CORPORATION
as Borrower
and
XXXXXX XXXXXXX XXXX XXXXXX MORTGAGE CAPITAL INC.
as Lender
TABLE OF CONTENTS
ARTICLE I
Definitions and Accounting Matters.
Section 1.1 Certain Defined Terms.........................................1
Section 1.2 Accounting Terms and Determinations..........................11
ARTICLE II
Loans, Note and Prepayments.
Section 2.1 Loans........................................................11
Section 2.2 Notes........................................................11
Section 2.3 Procedure for Borrowing......................................12
Section 2.4 Limitation on Types of Loans; Illegality.....................12
Section 2.5 Repayment of Loans; Interest.................................13
Section 2.6 Mandatory Prepayments or Pledge..............................13
Section 2.7 Extension of Termination Date................................14
ARTICLE III
Payments; Computations; Etc.
Section 3.1 Payments.....................................................14
Section 3.2 Computations.................................................14
Section 3.3 Requirements of Law..........................................14
Section 3.4 Facility Fee.................................................15
ARTICLE IV
Collateral Security.
Section 4.1 Collateral; Security Interest................................16
Section 4.2 Further Documentation........................................17
Section 4.3 Changes in Locations, Name, etc..............................17
Section 4.4 Lender's Appointment as Attorney-in-Fact.....................17
Section 4.5 Performance by Lender of Borrower's Obligations..............18
Section 4.6 Proceeds.....................................................19
Section 4.7 Remedies.....................................................19
Section 4.8 Limitation on Duties Regarding Preservation of Collateral....20
Section 4.9 Powers Coupled with an Interest..............................20
Section 4.10 Release of Security Interest.................................20
ARTICLE V
Conditions Precedent.
Section 5.1 Initial Loan.................................................20
Section 5.2 Initial and Subsequent Loans.................................22
ARTICLE VI
Representations and Warranties.
Section 6.1 Existence....................................................24
Section 6.2 Financial Condition..........................................24
Section 6.3 Litigation...................................................24
Section 6.4 No Breach....................................................25
Section 6.5 Action.......................................................25
Section 6.6 Approvals....................................................25
Section 6.7 Margin Regulations...........................................25
Section 6.8 Taxes........................................................25
Section 6.9 Investment Company Act.......................................25
Section 6.10 Collateral; Collateral Security..............................25
Section 6.11 Chief Executive Office/Jurisdiction of Organization..........26
Section 6.12 Location of Books and Records................................26
Section 6.13 True and Complete Disclosure.................................26
Section 6.14 ERISA........................................................27
Section 6.15 Subsidiaries.................................................27
ARTICLE VII
Covenants of the Borrower.
Section 7.1 Financial Statements.........................................27
Section 7.2 Litigation...................................................29
Section 7.3 Existence, etc...............................................30
Section 7.4 Prohibition of Fundamental Changes...........................30
Section 7.5 Borrowing Base Deficiency....................................31
Section 7.6 Notices......................................................31
Section 7.7 Reports......................................................31
Section 7.8 Underwriting Guidelines......................................31
Section 7.9 Transactions with Affiliates.................................32
Section 7.10 Limitation on Liens..........................................32
Section 7.11 Limitation on Guarantees.....................................32
Section 7.12 Limitation on Distributions..................................32
Section 7.13 Servicer; Servicing Tape.....................................32
Section 7.14 Required Filings.............................................32
Section 7.15 No Adverse Selection.........................................32
Section 7.16 Remittance of Prepayments....................................32
ARTICLE VIII
Events of Default.
Section 8.1 Events of Default............................................33
ARTICLE IX
Remedies Upon Default.
Section 9.1 Remedies.....................................................35
ARTICLE X
No Duty of Lender.
Section 10.1 No Duty......................................................36
ARTICLE XI
Miscellaneous.
Section 11.1 Waiver.......................................................36
Section 11.2 Notices......................................................36
Section 11.3 Indemnification and Expenses.................................36
Section 11.4 Amendments...................................................37
Section 11.5 Successors and Assigns.......................................37
Section 11.6 Survival.....................................................37
Section 11.7 Captions.....................................................38
Section 11.8 Counterparts.................................................38
Section 11.9 Loan Agreement Constitutes Security Agreement; Governing Law.38
Section 11.10 Submission To Jurisdiction; Waivers..........................38
Section 11.11 WAIVER OF JURY TRIAL.........................................39
Section 11.12 Acknowledgments..............................................39
Section 11.13 Hypothecation or Pledge of Loans.............................39
Section 11.14 Servicing....................................................39
Section 11.15 Due Diligence Review.........................................40
Section 11.16 Set-Off......................................................41
Section 11.17 Intent.......................................................42
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Subsidiaries
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C-1 Form of Opinion of Counsel to Borrower
EXHIBIT C-2 Form of Opinion of Counsel to Guarantor
EXHIBIT D Form of Request for Borrowing
EXHIBIT E-1 Form of Borrower's Release Letter
EXHIBIT E-2 Form of Warehouse Lender's Release Letter
EXHIBIT F Underwriting Guidelines
EXHIBIT G Form of Servicer Notice
MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of December 1, 2000,
between NC CAPITAL CORPORATION, a California corporation (the "Borrower"), and
XXXXXX XXXXXXX XXXX XXXXXX MORTGAGE CAPITAL INC., a New York corporation (the
"Lender").
RECITALS
The Borrower has requested that the Lender from time to time make
revolving credit loans to it to finance certain residential mortgage loans owned
by the Borrower, and the Lender is prepared to make such loans upon the terms
and conditions hereof. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters.
Section 1.1 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.1 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" shall mean with respect to any Person, any "affiliate"
of such Person, as such term is defined in the Bankruptcy Code.
"Applicable Collateral Percentage" shall mean, except as may be
reduced pursuant to Section 11.16 hereof, for any date of determination and each
type of Eligible Mortgage Loan, the applicable percentage specified below:
Unseasoned Mortgage Loan 98.5%
Second Lien Mortgage Loan 98.5%
30+ Delinquent Mortgage Loan 85%
60+ Delinquent Mortgage Loan 75%
Defaulted Mortgage Loan the applicable BPO Percentage
provided, however, if a Minimum Credit Trigger Event or a Tangible Net Worth
Trigger Event shall have occurred, the Applicable Collateral Percentage with
respect to all Unseasoned Mortgage Loans and all Second Lien Mortgage Loans
shall be reduced to 98%; provided, further, if more than one of the
aforementioned categories shall apply to an Eligible Mortgage Loan, the lower
percentage shall be applicable.
"Applicable Loan Rate" shall mean the Eurodollar Loan Rate in effect
from time to time, unless an event set forth in Section 2.4 shall occur, in
which case the Applicable Loan Rate shall mean the Federal Loan Rate.
"Applicable Margin" shall mean, except as may be increased pursuant
to Section 11.16 hereof, the sum of the weighted average of the applicable rates
per annum for each type of Eligible Mortgage Loan for each day that Loans shall
be secured by such Eligible Mortgage
Loans. For each type of Eligible Mortgage Loan, the applicable rate shall be
equal to the product of (a) a fraction equal to (1) the Collateral Value of all
Eligible Mortgage Loans of such type, divided by (2) the Collateral Value of all
Eligible Mortgage Loans, and (b) the applicable percentage specified below;
provided, however, if more than one of the following categories shall apply to
an Eligible Mortgage Loan, the higher percentage shall be applicable:
Unseasoned Mortgage Loan 1.05%
Second Lien Mortgage Loan 1.05%
30+ Delinquent Mortgage Loan 1.25%
60+ Delinquent Mortgage Loan 1.25%
Defaulted Mortgage Loan 1.50%
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C. ss.101 et. seq., as amended from time to time.
"Borrower" shall have the meaning provided in the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of all
Eligible Mortgage Loans.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.6 hereof.
"BPO Percentage" shall mean (i) with respect to any Defaulted
Mortgage Loan for which a Broker Price Opinion has not been obtained, 50% and
(ii) with respect to any Defaulted Mortgage Loan for which a Broker Price
Opinion has been obtained, 65%.
"Broker Price Opinion" shall mean, with respect to a Mortgage Loan
or an REO Property, a broker's price opinion prepared by a duly licensed real
estate broker who has no interest, direct or indirect, in the Mortgage Loan or
REO Property or in the Borrower or any Affiliate of the Borrower and whose
compensation is not affected by the results of the broker's price opinion; and
which valuation (i) indicates the expected proceeds for a sale of the related
Mortgaged Property or REO Property and, (ii) with respect to any condominium
development or planned unit development that was not Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation approved, the amount, if
any, by which the valuation was decreased as a result of such lack of approval,
and (iii) includes certain assumptions, including those as to the condition of
the exterior and interior of the applicable Mortgaged Property or REO property
and carrying costs and expenses during marketing time.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is authorized or obligated by law or executive
order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
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Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning provided in Section 4.1(b)
hereof.
"Collateral Value" shall mean, with respect to each Eligible
Mortgage Loan, the lesser of (a) the product of (i) the Market Value of such
Eligible Mortgage Loan, and (ii) the Applicable Collateral Percentage for such
Eligible Mortgage Loan, and (b) 101% of the unpaid principal balance of such
Eligible Mortgage Loan; provided, however, if a Minimum Credit Trigger Event or
a Tangible Net Worth Trigger Event shall have occurred, the Collateral Value
with respect to each Eligible Mortgage Loan shall the lesser of (a) the product
of (i) the Market Value of such Eligible Mortgage Loan, and (ii) the Applicable
Collateral Percentage for such Eligible Mortgage Loan, and (b) 100% of the
unpaid principal balance of such Eligible Mortgage Loan; provided, further, that
the Collateral Value shall be deemed to be zero with respect to each Mortgage
Loan (1) in respect of which there is a breach of representation and warranty
set forth on Schedule 1 (assuming each representation and warranty is made as of
the date the Collateral Value thereof is determined), (2) which ceases to be an
Eligible Mortgage Loan for any reason, (3) which remains pledged to the Lender
hereunder later than 120 days after the date on which it is first included in
the Collateral or (4) for which any Mortgage Loan Documents have been released
from the possession of the Custodian under the Custodial Agreement for a period
in excess of 10 days.
"Collection Account" shall mean one or more accounts established by
the Servicer subject to a security interest in favor of the Lender, into which
all Collections shall be deposited by the Servicer.
"Collections" shall mean, collectively, all collections and proceeds
on or in respect of the Mortgage Loans, excluding collections required to be
paid to the Servicer or a mortgagor on the Mortgage Loans.
"Custodial Agreement" shall mean the Custodial Agreement, dated as
of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean U.S. Bank Trust National Association, as
custodian under the Custodial Agreement, and its successors and permitted
assigns thereunder.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
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"Defaulted Mortgage Loan" shall mean, as of any date of
determination, an Eligible Mortgage Loan which is 90 days or more Delinquent
and/or is subject to a foreclosure proceeding.
"Delinquent" shall mean that a Monthly Payment (as defined in Part
III of Schedule 1 hereto) has not been made by the close of business on the
related Due Date (as defined in Part III of Schedule 1 hereto).
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Due Diligence Review" shall mean the performance by the Lender of
any or all of the reviews permitted under Section 11.15 hereof with respect to
any or all of the Mortgage Loans, as desired by the Lender from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.1 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan originated by
the Borrower or any Affiliate of the Borrower, secured by a first or second
mortgage Lien on a one-to-four family residential property, as to which the
representations and warranties in Section 6.10 and Part I and Part II of
Schedule 1 hereof are correct; provided, however, that, in no event shall any
Eligible Mortgage Loan be a security for purposes of any securities or blue-sky
laws; and provided, further, that the following Mortgage Loans shall not be an
Eligible Mortgage Loan: (1) a Mortgage Loan for which the related obligor is
subject to a voluntary or involuntary bankruptcy proceeding or for which the
related Mortgaged Property has been acquired through foreclosure, acceptance of
a deed-in-lieu of foreclosure or otherwise in accordance with applicable law in
connection with the default of such Mortgage Loan, (2) a Defaulted Mortgage Loan
for which a Broker Price Opinion can not be obtained, (3) a Mortgage Loan that
is listed on the Exception Report, and (4) a Mortgage Loan which shall have been
pledged to the Lender hereunder for 120 days or more. The Lender shall have sole
discretion in determining whether the concentration limits provided for in Part
II of Schedule I hereto have been exceeded.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Borrower is a member.
"Equity Proceeds" shall mean with respect to the Guarantor, an
amount equal to the net proceeds from the issuance of any securities of the
Guarantor or the net proceeds to the Guarantor from contributions to capital or
otherwise by another Person.
"Eurodollar Rate" shall mean, with respect to each day a Loan is
outstanding, the rate per annum based on the rate appearing at page 5 of the
Telerate Screen as one-month
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LIBOR on such date (and if such date is not a Business Day, the Eurodollar Rate
in effect on the Business Day immediately preceding such date), and if such rate
shall not be so quoted, the rate per annum at which the Lender is offered Dollar
deposits at or about 10:00 A.M., New York City time, on such date by prime banks
in the interbank eurodollar market where the eurodollar and foreign currency
exchange operations in respect of its Loans are then being conducted for
delivery on such day for a period of 30 days and in an amount comparable to the
amount of the Loans to be outstanding on such day.
"Exception" shall have the meaning specified in the Custodial
Agreement.
"Exception Report" shall mean the portion of the Mortgage Loan
Schedule and Exception Report detailing Exceptions in respect of each Mortgage
Loan.
"Eurodollar Loan Rate" shall mean a rate per annum equal to the sum
of the Eurodollar Rate plus the Applicable Margin.
"Event of Default" shall have the meaning provided in Article VIII
hereof.
"Federal Funds Rate" shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.
"Federal Loan Rate" shall mean a rate per annum equal to the sum of
(a) the Federal Funds Rate plus 1.00% and (b) the Applicable Margin.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Subsidiaries or any of its properties.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by the Lender. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee
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is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith. The
terms "Guarantee" and "Guaranteed" used as verbs shall have correlative
meanings.
"Guarantor" shall mean New Century Financial Corporation.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements, sale/buy-back agreements
or like arrangements; (g) Indebtedness of others Guaranteed by such Person; (h)
all obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; and (i) Indebtedness of general
partnerships of which such Person is a general partner.
"Interest Rate Protection Agreement" shall mean, with respect to any
or all of the Mortgage Loans, any short sale of US Treasury Securities, futures
contract, mortgage related security, Eurodollar futures contract, options
related contract, interest rate swap, cap or collar agreement or similar
arrangement providing for protection against fluctuations in interest rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies, entered into by the Borrower and an Affiliate of the Lender, and
acceptable to the Lender.
"Lender" shall have the meaning provided in the heading hereto.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan" shall have the meaning provided in Section 2.1(a) hereof.
"Loan Agreement" shall mean this Master Loan and Security Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
Note, the Custodial Agreement and the New Century Guaranty.
"Market Value" shall mean, as of any date in respect of an Eligible
Mortgage Loan, the value determined by the Lender in good faith and in its sole
discretion.
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"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition or prospects of the
Borrower or any of its Material Affiliates, (b) the ability of the Borrower or
any of its Material Affiliates to perform its obligations under any of the Loan
Documents to which it is a party, (c) the validity or enforceability of any of
the Loan Documents, (d) the rights and remedies of the Lender under any of the
Loan Documents, (e) the timely payment of the principal of or interest on the
Loans or other amounts payable in connection therewith or (f) the Collateral as
a whole.
"Material Affiliate" shall mean each of New Century Financial
Corporation and New Century Mortgage Corporation, and their respective
successors and assigns.
"Maximum Credit" shall mean $400,000,000, as reduced in accordance
with Section 2.1 hereof.
"Minimum Credit Trigger Event" shall have occurred, if at any time
the average daily balance of all the Loans is less than $150,000,000.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Mortgage Note, which creates a first or second Lien on the
fee in real property securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Mortgage Loan" shall mean a mortgage loan which the Custodian has
been instructed to hold for the Lender pursuant to the Custodial Agreement, and
which Mortgage Loan includes, without limitation, a Mortgage Note and related
Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage
Loan, the documents comprising the Mortgage File for such Mortgage Loan.
"Mortgage Loan Schedule" shall have the meaning assigned thereto in
the Custodial Agreement.
"Mortgage Loan Schedule and Exception Report" shall mean the
mortgage loan schedule and exception report prepared by the Custodian pursuant
to the Custodial Agreement.
"Mortgage Loan Tape" shall mean a computer-readable file containing
information with respect to each Mortgage Loan, to be delivered by the Borrower
to the Lender pursuant to Section 2.3(a) hereof which tape fields are identified
on Annex I to the Custodial Agreement.
"Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
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"Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"MS & Co." shall mean Xxxxxx Xxxxxxx & Co. Incorporated, a
registered broker-dealer.
"MS Indebtedness" shall mean any indebtedness of the Borrower
hereunder and under any other arrangement between the Borrower on the one hand
and the Lender or an Affiliate of the Lender on the other hand (including,
without limitation, any Loans, interest due and default interest, termination
payments, hedging costs, facility fees and expenses).
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been or are required to be
made by the Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"Net Income" shall mean, for any period, the net income of the
Guarantor for such period as determined in accordance with GAAP.
"New Century Guaranty" shall mean the guaranty agreement by and
between the Guarantor and the Lender, dated as of December 1, 2000.
"1934 Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Note" shall have the meaning provided in Section 2.2(a) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan or any other amount under this Loan Agreement, the Note or any other Loan
Document that is not paid when due to the Lender (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 4% per annum plus the Prime
Rate in effect on such due date and from time to time thereafter until such
amount is paid in full.
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"Prime Rate" shall mean the prime rate announced to be in effect
from time to time, as published as the average rate in The Wall Street Journal.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Regulations T, U and X" shall mean Regulations T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"S&P" shall mean Standard and Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"Second Lien Mortgage Loan" shall mean an Eligible Mortgage Loan
which is secured by a second Lien on the related Mortgaged Property.
"Secured Obligations" shall have the meaning provided in Section
4.1(c) hereof.
"Servicer" shall have the meaning provided in Section 11.14(c)
hereof.
"Servicer Notice" shall have the meaning provided in Section
11.14(c) hereof.
"Servicing Agreement" shall have the meaning provided in Section
11.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"60+ Delinquent Mortgage Loan" shall mean an Eligible Mortgage Loan
which is between 60 days and 89 days (inclusive) Delinquent.
"Sub-prime Mortgage Loan" shall mean an Eligible Mortgage Loan with
respect to which the related Mortgagor has received a credit rating of "C" or
"D" as determined in accordance with the Borrower's origination guidelines in
effect as of the Effective Date.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes
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of such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"System" shall mean all hardware or software, or any system
consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications and the like utilized by
any Person for the benefit of such Person to perform its obligations and to
administer and track, store, process, provide, and where appropriate, insert,
true and accurate dates and calculations for dates and time spans with respect
to the Mortgage Loans.
"Tangible Net Worth" shall mean, as of any date of determination,
all amounts which would be included under capital on a balance sheet of the
Guarantor at such date, determined in accordance with GAAP, less (i) amounts
owing to the Guarantor from Affiliates and (ii) intangible assets.
"Tangible Net Worth Trigger Event" shall have occurred (based on the
Guarantor's most recent monthly financials) if the Tangible Net Worth of the
Guarantor is less than the sum of (i) $145,000,000, (ii) 75% of the aggregate of
the consolidated positive Net Income since the beginning of the Guarantor's
fiscal year (without deduction for losses during that period) and (iii) an
amount equal to 50% of any Equity Proceeds received by the Guarantor since the
Effective Date.
"Termination Date" shall mean December 7, 2001 or such earlier date
on which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"30+ Delinquent Mortgage Loan" shall mean, as of any date of
determination, an Eligible Mortgage Loan which is between 30 days and 59 days
(inclusive) Delinquent.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of a the Guarantor during such period less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP.
"Underwriting Guidelines" shall mean the underwriting guidelines
attached as Exhibit F hereto.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Unseasoned Mortgage Loan" shall mean, as of any date of
determination, an Eligible Mortgage Loan which has been included as part of the
Collateral for 120 days or less.
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"Year 2000 Compliant" shall mean the ability of a System to continue
its normal functions including and following January 1, 2000 and the ability of
such System to support its continued normal usage such that neither the
performance nor the correct functioning of such System will be affected by the
approach, and passing into, the year 2000.
Section 1.2 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
ARTICLE II
Loans, Note and Prepayments.
Section 2.1 Loans.
(a) The Lender agrees to make, on the terms and subject to the
conditions of this Loan Agreement, loans (individually, a "Loan" and,
collectively, the "Loans") to the Borrower in Dollars, from and including the
Effective Date to but not including the Termination Date in an aggregate
principal amount at any one time outstanding up to but not exceeding the lesser
of (i) the Maximum Credit and (ii) the Borrowing Base as in effect from time to
time.
(b) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder;
provided that, notwithstanding the foregoing, the Lender shall have no
obligation to make Loans to the Borrower in excess of the lesser of (i) the
Maximum Credit and (ii) the Borrowing Base and, if a Tangible Net Worth Trigger
Event shall have occurred or in the event the obligation of the Lender to make
Loans to the Borrower shall otherwise be terminated as permitted hereunder, the
Lender shall have no further obligation to make additional Loans hereunder.
Section 2.2 Notes.
(a) The Loans made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit A hereto
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Maximum Credit as originally in effect and otherwise
duly completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Loan made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under the Note in
respect of the Loans.
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Section 2.3 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on any Business
Day during the period from and including the Effective Date to but not including
the Termination Date, by delivering to the Lender, with a copy to the Custodian,
a written request for borrowing, substantially in the form of Exhibit D attached
hereto, which request must be received by the Lender prior to 11:00 a.m., New
York City time, at least one (l) Business Day prior to the requested Funding
Date. Such request for borrowing shall (i) attach a schedule identifying the
Eligible Mortgage Loans that the Borrower proposes to pledge to the Lender and
to be included in the Borrowing Base in connection with such borrowing, (ii)
specify the requested Funding Date, (iii) be accompanied by a Mortgage Loan Tape
containing information with respect to the Eligible Mortgage Loans that the
Borrower proposes to pledge to the Lender and to be included in the Borrowing
Base in connection with such borrowing, and (iv) attach an officer's certificate
signed by a Responsible Officer of the Borrower as required by Section 5.2(b)
hereof.
(b) Upon the Borrower's request for a borrowing pursuant to Section
2.3(a), the Lender shall, subject to the limitations set forth in Section 2.1(a)
hereof and upon satisfaction of all conditions precedent set forth in Sections
5.1 and 5.2 hereof and provided that no Default shall have occurred and be
continuing, make a Loan to the Borrower on the requested Funding Date, in the
amount so requested. The Borrower acknowledges that the Lender may retain an
amount equal to $100 per Defaulted Mortgage Loan to cover the costs of obtaining
Brokers Price Opinions.
(c) The Borrower shall release to the Custodian no later than 12:00
p.m., New York City time, two (2) Business Days prior to the requested Funding
Date, the Mortgage File pertaining to each Eligible Mortgage Loan to be pledged
to the Lender and included in the Borrowing Base on such requested Funding Date,
in accordance with the terms and conditions of the Custodial Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall deliver
to the Lender and the Borrower, no later than 11:00 a.m. New York City time on a
Funding Date, a Trust Receipt (as defined in the Custodial Agreement) in respect
of all Mortgage Loans pledged to the Lender on such Funding Date, and a Mortgage
Loan Schedule and Exception Report. The Borrower acknowledges that Mortgage
Loans listed in the Exception Report are not Eligible Mortgage Loans and the
Lender is not required to advance funds in respect of such Mortgage Loans.
(e) Subject to Article V hereof, such borrowing will then be made
available to the Borrower by the Lender transferring, via wire transfer, to the
following account of the Borrower: U.S. Bank, N.A., for the A/C of NCM
Collateral Account, ABA# 000-000-000, Account # 1731-0097-1378, Attn: Xxxxxx
Xxxxx, in the aggregate amount of such borrowing in funds immediately available
to the Borrower.
Section 2.4 Limitation on Types of Loans; Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Rate:
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(a) the Lender determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
rates of interest for Loans as provided herein; or
(b) the Lender determines, which determination shall be conclusive,
that the relevant rate of interest referred to in the definition of "Eurodollar
Rate" in Section 1.1 hereof upon the basis of which the rate of interest for
Loans is to be determined is not likely adequately to cover the cost to the
Lender of making or maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its obligation to
make or maintain Loans hereunder using a Eurodollar Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Loans, and the Borrower shall, at its sole option and
discretion, either prepay all such Loans as may be outstanding or pay interest
on such Loans at a rate per annum equal to the Federal Loan Rate.
Section 2.5 Repayment of Loans; Interest.
(a) The Borrower hereby promises to repay in full in Dollars on the
Termination Date the then aggregate outstanding principal amount of the Loans
plus all accrued and unpaid interest thereon and any other sums due hereunder.
(b) The Borrower hereby promises to pay to the Lender interest on
the unpaid principal amount of each Loan for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
a rate per annum equal to the Applicable Loan Rate. Notwithstanding the
foregoing, the Borrower hereby promises to pay to the Lender interest at the
applicable Post-Default Rate on any principal of any Loan and on any other
amount payable by the Borrower hereunder or under the Note that shall not be
paid in full when due (whether at stated maturity, by acceleration or by
mandatory prepayment or otherwise) for the period from and including the due
date thereof to but excluding the date the same is paid in full. Interest shall
accrue on the unpaid principal balance of each Loan on a daily basis. Accrued
interest on each Loan shall be payable monthly on the first Business Day of each
month and for the last month of the Loan Agreement on the first Business Day of
such last month and on the Termination Date; provided, that, the Lender may, in
its sole discretion, require accrued interest to be paid simultaneously with any
prepayment of principal made by the Borrower on account of any of the Loans
outstanding. Interest payable at the Post-Default Rate shall accrue daily and
shall be payable in accordance with the foregoing.
(c) It is understood and agreed that, unless and until a Default
shall have occurred and be continuing, the Borrower shall be entitled to the
proceeds of the Mortgage Loans pledged to the Lender hereunder.
Section 2.6 Mandatory Prepayments or Pledge.
If at any time the aggregate outstanding principal amount of Loans
exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined by the
Lender and notified to
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the Borrower on any Business Day, the Borrower shall no later than one Business
Day after receipt of such notice, either prepay the Loans in part or in whole or
pledge additional Eligible Mortgage Loans (which Collateral shall be in all
respects acceptable to the Lender in its sole discretion) to the Lender, such
that after giving effect to such prepayment or pledge of additional Eligible
Mortgage Loans a Borrowing Base Deficiency shall no longer exist.
Section 2.7 Extension of Termination Date.
At the request of the Borrower made at least thirty (30) days, but
in no event earlier than ninety (90) days, prior to the then current Termination
Date, the Lender may in its sole discretion extend the Termination Date for a
period to be determined by Lender in its sole discretion by giving written
notice of such extension to the Borrower no later than twenty (20) days, but in
no event earlier than thirty (30) days, prior to the then current Termination
Date. Any failure by the Lender to deliver such notice of extension shall be
deemed to be the Lender's determination not to extend the then current
Termination Date.
ARTICLE III
Payments; Computations; Etc.
Section 3.1 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the
following account maintained by the Lender: Account No. 00000000, for the
account of MSMCI, Citibank, N.A., ABA No. 000000000, Attn: Whole Loan
Operations, not later than 1:00 p.m., New York City time, on the date on which
such payment shall become due (and each such payment made after such time on
such due date shall be deemed to have been made on the next succeeding Business
Day). The Borrower acknowledges that it has no rights of withdrawal from the
foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Loan Agreement or the Note would otherwise
fall on a day that is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.
Section 3.2 Computations. Interest on the Loans shall be computed on the
basis of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
Section 3.3 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any
amendment made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
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(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Loan Agreement, the Note or any Loan made by it
(excluding net income taxes) or change the basis of taxation of
payments to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory Loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, Loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy) by
an amount deemed by the Lender to be material, then from time to time, the
Borrower shall promptly pay to the Lender such additional amount or amounts as
will compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this Article, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by the Lender to the Borrower
shall be conclusive in the absence of manifest error.
Section 3.4 Facility Fee.
The Borrower agrees to pay to the Lender on or prior to the
execution of this Loan Agreement a facility fee of $800,000.00, such payment to
be made in Dollars, in immediately available funds, without deduction, set-off
or counterclaim, to the Lender at the account set forth in Section 3.1(a)
hereof.
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ARTICLE IV
Collateral Security.
Section 4.1 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver to the Lender
Trust Receipts (as defined in the Custodial Agreement) each to the effect that
it has reviewed such Mortgage Loan Documents in the manner and to the extent
required by the Custodial Agreement and identifying any deficiencies in such
Mortgage Loan Documents as so reviewed.
(b) All of the Borrower's right, title and interest in, to and under
each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Collateral":
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including without limitation
all promissory notes, and all Servicing Records, Servicing
Agreements and any other collateral pledged or otherwise relating to
such Mortgage Loans, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and
other books and records relating thereto;
(iii) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loan and all claims and payments
thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
(v) all Interest Rate Protection Agreements, relating to or
constituting any and all of the foregoing;
(vi) the Collection Account and all monies from time to time
on deposit in the Collection Account;
(vii) all collateral, however defined, under any other
agreement between the Borrower or any of its Affiliates on the one
hand and the Lender or any of its Affiliates on the other hand;
(viii) all "general intangibles", "accounts" and "chattel
paper" as defined in the Uniform Commercial Code relating to or
constituting any and all of the foregoing; and
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(ix) any and all replacements, substitutions, distributions on
or proceeds of any and all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a security
interest in all of its right, title and interest in, to and under the Collateral
to the Lender to secure the MS Indebtedness including without limitation the
repayment of principal of and interest on all Loans and all other amounts owing
to the Lender hereunder, under the Note and under the other Loan Documents
(collectively, the "Secured Obligations"). The Borrower agrees to xxxx its
computer records and tapes to evidence the interests granted to the Lender
hereunder.
Section 4.2 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A photographic or other reproduction of this Loan Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
Section 4.3 Changes in Locations, Name, etc. The Borrower shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Article VI hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or (iii) unless it shall have given the
Lender at least 30 days prior written notice thereof and shall have delivered to
the Lender all Uniform Commercial Code financing statements and amendments
thereto as the Lender shall request and taken all other actions deemed necessary
by the Lender to continue its perfected status in the Collateral with the same
or better priority.
Section 4.4 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys
due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other
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action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Lender for the purpose of collecting any
and all such moneys due under any such mortgage insurance or with
respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and (A) to direct any party
liable for any payment under any Collateral to make payment of any
and all moneys due or to become due thereunder directly to the
Lender or as the Lender shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect
of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral;
(E) to defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral; (F) to settle, compromise
or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or
releases as the Lender may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Lender were the absolute owner thereof for all purposes,
and to do, at the Lender's option and the Borrower's expense, at any
time, and from time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon the Collateral
and the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and from
time to time, to execute, in connection with any sale provided for in Section
4.7 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
Section 4.5 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such
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agreement, the expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Post-Default Rate, shall be payable by the Borrower to the Lender
on demand and shall constitute Secured Obligations.
Section 4.6 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then or at any time thereafter may
be applied by the Lender against, the Secured Obligations (whether matured or
unmatured), such application to be in such order as the Lender shall elect. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to receive the
same. For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
Section 4.7 Remedies. If a Default shall occur and be continuing, the
Lender may, at its option and at the Borrower's expense, enter into one or more
Interest Rate Protection Agreements covering all or a portion of the Mortgage
Loans pledged to the Lender hereunder, and the Borrower shall be responsible for
all damages, judgments, costs and expenses of any kind which may be imposed on,
incurred by or asserted against the Lender relating to or arising out of such
Interest Rate Protection Agreements; including without limitation any losses
resulting from such Interest Rate Protection Agreements. If an Event of Default
shall occur and be continuing, the Lender may exercise, in addition to all other
rights and remedies granted to it in this Loan Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code. Without limiting the generality of the foregoing, the Lender
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (each and all of which
demands, presentments, protests, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions and at such prices as it may deem best in its good faith
judgment, for cash or on credit or for future delivery without assumption of any
credit risk. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is hereby waived or
released. The Borrower further agrees, at the Lender's request, to assemble the
Collateral and make it available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's
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premises or elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including
without limitation reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Secured Obligations, in such order as the Lender may
elect, and only after such application and after the payment by the Lender of
any other amount required or permitted by any provision of law, including
without limitation Section 9-504(1)(c) of the Uniform Commercial Code, need the
Lender account for the surplus, if any, to the Borrower. To the extent permitted
by applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Lender arising out of the exercise by the Lender of any of
its rights hereunder, other than those claims, damages and demands arising from
the gross negligence or willful misconduct of the Lender. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. The Borrower shall remain liable for any
deficiency (plus accrued interest thereon as contemplated pursuant to Section
2.5(b) hereof) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Lender to collect such
deficiency.
Section 4.8 Limitation on Duties Regarding Preservation of Collateral. The
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender nor
any of its directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or otherwise.
Section 4.9 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
Section 4.10 Release of Security Interest. Upon termination of this Loan
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral.
ARTICLE V
Conditions Precedent.
Section 5.1 Initial Loan. The obligation of the Lender to make its initial
Loan hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the condition precedent that the
Lender shall have received all of the following items, each of which shall be
satisfactory to the Lender and its counsel in form and substance:
(a) Loan Documents.
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(i) Loan Agreement. This Loan Agreement, duly executed and
delivered by the Borrower;
(ii) Note. The Note, duly executed and delivered by the
Borrower;
(iii) Custodial Agreement. The Custodial Agreement, duly
executed and delivered by the Borrower and the Custodian; and
(iv) New Century Guaranty. The New Century Guaranty, duly
executed and delivered by the Guarantor.
(b) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of the
Borrower and the Guarantor and of all corporate or other authority for the
Borrower and the Guarantor with respect to the execution, delivery and
performance of the Loan Documents to which it is a party, and each other
document to be delivered by the Borrower and the Guarantor from time to time in
connection with the Loan Documents (and the Lender may conclusively rely on such
certificate until it receives notice in writing from the Borrower or the
Guarantor to the contrary);
(c) Legal Opinions. Legal opinions of inside and outside counsels to
the Borrower and the Guarantor, substantially in the form attached hereto as
Exhibit C;
(d) Trust Receipt and Mortgage Loan Schedule and Exception Report. A
Trust Receipt, substantially in the form of Annex 2 of the Custodial Agreement,
dated the Effective Date, from the Custodian, duly completed, with a Mortgage
Loan Schedule and Exception Report attached thereto;
(e) Servicing Agreement(s). Any Servicing Agreement, certified as a
true, correct and complete copy of the original together, with a fully executed
Servicer Notice and, if the Servicer is the Borrower or an Affiliate of the
Borrower, the letter of the applicable Servicer consenting to termination of
such Servicing Agreement, without charge, upon the occurrence of an Event of
Default;
(f) Filings, Registrations, Recordings. Any documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create, in favor of the Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created hereunder, shall have been properly prepared and executed for filing
(including the applicable county(ies) if the Lender determines such filings are
necessary in its sole discretion), registration or recording in each office in
each jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest; provided, that
assignments of the Mortgages securing or related to the Mortgage Loans shall not
be required to be recorded prior to the occurrence of an Event of Default;
(g) [Reserved];
(h) Facility Fee. The facility fee as contemplated by Section 3.5;
(i) Financial Statements. The financial statements referenced in
Section 6.2;
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(j) Underwriting Guidelines. A certified copy of the Underwriting
Guidelines, which shall be in form and substance satisfactory to the Lender;
(k) Consents, Licenses, Approvals, etc. Copies certified by the
Borrower of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by the Borrower of, and the
validity and enforceability of, the Loan Documents, which consents, licenses and
approvals shall be in full force and effect; and
(l) Other Documents. Such other documents as the Lender may
reasonably request.
Section 5.2 Initial and Subsequent Loans. The making of each Loan to the
Borrower (including the initial Loan) on any Business Day is subject to the
satisfaction of the following further conditions precedent, both immediately
prior to the making of such Loan and also after giving effect thereto and to the
intended use thereof:
(a) No Default. No Default or Event of Default shall have occurred
and be continuing;
(b) Representations and Warranties. Both immediately prior to the
making of such Loan and also after giving effect thereto and to the intended use
thereof, the representations and warranties made by the Borrower in Article VI
and Schedules 1 and 2 hereof, and elsewhere in each of the Loan Documents, shall
be true, correct and complete on and as of the date of the making of such Loan
in all material respects (in the case of the representations and warranties in
Section 6.10 and Schedules 1 and 2, solely with respect to Mortgage Loans
included in the Borrowing Base) with the same force and effect as if made on and
as of such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date). The Lender
shall have received an officer's certificate signed by a Responsible Officer of
the Borrower certifying as to the truth, accuracy and completeness of the above,
which certificate shall specifically include a statement that the Borrower is in
compliance with all governmental licenses and authorizations and is qualified to
do business and in good standing in all required jurisdictions.
(c) Borrowing Base. The aggregate outstanding principal amount of
the Loans shall not exceed the Borrowing Base;
(d) Due Diligence. Subject to the Lender's right to perform one or
more Due Diligence Reviews pursuant to Section 11.15 hereof, the Lender shall
have completed its due diligence review of the Mortgage Loan Documents for each
Loan and such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Mortgage Loans as the Lender in its
sole discretion deems appropriate to review and such review shall be
satisfactory to the Lender in its sole discretion;
(e) Mortgage Loan Schedule and Exception Report. The Lender shall
have received from the Custodian a Mortgage Loan Schedule and Exception Report
with Exceptions as are acceptable to the Lender in its sole discretion in
respect of Eligible Mortgage Loans to be pledged hereunder on such Business Day;
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(f) Release Letter. If applicable, the Lender shall have received
from the Borrower a Warehouse Lender's Release Letter substantially in the form
of Exhibit E-2 hereto (or such other form acceptable to the Lender) or a
Seller's Release Letter substantially in the form of Exhibit E-1 hereto (or such
other form acceptable to the Lender) covering each Mortgage Loan to be pledged
to the Lender;
(g) Fees and Expenses. The Lender shall have received all fees and
expenses of counsel to the Lender as contemplated by Section 11.3(b), which
amount, at the Lender's option, may be netted from any Loan advanced under this
Agreement;
(h) No Market Events. None of the following shall have occurred
and/or be continuing:
(i) an event or events shall have occurred resulting in the
effective absence of a "repo market" or comparable "lending market"
for financing debt obligations secured by mortgage loans or
securities or an event or events shall have occurred resulting in
the Lender not being able to finance any Mortgage Loans through the
"repo market" or "lending market" with traditional counterparties at
rates which would have been reasonable prior to the occurrence of
such event or events;
(ii) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans or an event or events shall have occurred resulting
in the Lender not being able to sell securities backed by mortgage
loans at prices which would have been reasonable prior to such event
or events; or
(iii) there shall have occurred a material adverse change in
the financial condition of the Lender which affects (or can
reasonably be expected to affect) materially and adversely the
ability of the Lender to fund its obligations under this Loan
Agreement; or
(i) No Xxxxxx Xxxxxxx Downgrade. Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co.'s
corporate bond rating as calculated by S&P or Xxxxx'x has not been lowered or
downgraded to a rating below A- as indicated by S&P or below A3 as indicated by
Xxxxx'x.
(j) Filings, Registrations, Recordings. Any additional documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Lender, a perfected,
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and executed for
filing (including the applicable county(ies) if the Lender determines such
filings are necessary in its sole discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and
recordations are required to perfect such first-priority security interest;
provided, that assignments of the Mortgages securing or related to the Mortgage
Loans shall not be required to be recorded prior to the occurrence of an Event
of Default.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower that all the conditions set forth in this Article
V (other than Sections 5.2(h) and (i))
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have been satisfied (both as of the date of such notice, request or confirmation
and as of the date of such borrowing).
ARTICLE VI
Representations and Warranties.
The Borrower represents and warrants to the Lender that throughout
the term of this Loan Agreement:
Section 6.1 Existence. The Borrower (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect, and
(c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect.
Section 6.2 Financial Condition. Each of the Borrower and the Guarantor
has heretofore furnished to the Lender a copy of (a) its consolidated balance
sheet and the consolidated balance sheets of its consolidated Subsidiaries for
the fiscal year of the Borrower ended December 31, 1999 and the related
consolidated statements of income and retained earnings and of cash flows for
the Borrower, the Guarantor and their consolidated Subsidiaries for such fiscal
year, setting forth in each case in comparative form the figures for the
previous year, with the opinion thereon of KPMG, LLC and (b) its consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal periods of the Borrower ended September
30, 2000, June 30, 2000 and March 31, 2000 and the related consolidated
statements of income and retained earnings and of cash flows for the Borrower,
the Guarantor and its consolidated Subsidiaries for such quarterly fiscal
periods, setting forth in each case in comparative form the figures for the
previous year. All such financial statements are complete and correct and fairly
present, in all material respects, the consolidated financial condition of the
Borrower, the Guarantor and its Subsidiaries and the consolidated results of
their operations as at such dates and for such fiscal periods, all in accordance
with GAAP applied on a consistent basis. Since September 30, 2000, there has
been no material adverse change in the consolidated business, operations or
financial condition of the Borrower, the Guarantor and its consolidated
Subsidiaries taken as a whole from that set forth in said financial statements.
Section 6.3 Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or, to the Borrower's knowledge, threatened) or other legal or
arbitrable proceedings affecting the Borrower or any of its Affiliates or
affecting any of the Property of any of them before any Governmental Authority
that (i) questions or challenges the validity or enforceability of any of the
Loan Documents or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $1,000,000, (iii) which, individually or in the aggregate, if adversely
determined, could reasonably be likely to have a Material Adverse
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Effect or (iv) requires filing with the Securities and Exchange Commission in
accordance with the 1934 Act or any rules thereunder.
Section 6.4 No Breach. Neither (a) the execution and delivery of the Loan
Documents nor (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will conflict with or result in
a breach of the charter or by-laws of the Borrower, or any applicable law, rule
or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any Servicing Agreement or other material agreement or instrument
to which the Borrower or any of its Affiliates is a party or by which any of
them or any of their Property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien (except for the Liens created pursuant
to this Loan Agreement) upon any Property of the Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
Section 6.5 Action. The Borrower has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by the Borrower of each of the Loan Documents to which it is a
party have been duly authorized by all necessary corporate or other action on
its part; and each Loan Document has been duly and validly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms.
Section 6.6 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by the
Borrower of the Loan Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to this Loan Agreement.
Section 6.7 Margin Regulations. Neither the making of any Loan hereunder,
nor the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulations T, U or X.
Section 6.8 Taxes. The Borrower and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes as
are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate.
Section 6.9 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 6.10 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Loan or other Collateral to any other Person, and
immediately prior
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to the pledge of such Mortgage Loan or any other Collateral to the Lender, the
Borrower was the sole owner of such Mortgage Loan or such other Collateral and
had good and marketable title thereto, free and clear of all Liens, in each case
except for Liens to be released simultaneously with the Liens granted in favor
of the Lender hereunder. No Mortgage Loan or other Collateral pledged to the
Lender hereunder was acquired (by purchase or otherwise) by the Borrower from an
Affiliate of the Borrower unless such acquisition (by purchase or otherwise) is
evidenced by a sale agreement and an assignment of rights thereunder to the
Lender, in each case, in form and substance acceptable to the Lender, and the
Borrower and its Affiliate file or have filed in all relevant jurisdictions,
UCC-1 financing statements reflecting the transfer of such Mortgage Loan to the
Borrower, together with the assignment of such interest described in such
financing statement to the Lender.
(b) The provisions of this Loan Agreement are effective to create in
favor of the Lender a valid security interest in all right, title and interest
of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note, endorsed in
blank by a duly authorized officer of the Borrower, the Lender shall have a
fully perfected first priority security interest therein, in the Mortgage Loan
evidenced thereby and in the Borrower's interest in the related Mortgaged
Property.
(d) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and the Borrower as "Debtor" and describing the
Collateral in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
Section 6.11 Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, and during the four months immediately preceding the Effective
Date, the Borrower's chief executive office, is, and has been, located at 00000
Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000. On the Effective Date, the
Borrower's jurisdiction of organization is California.
Section 6.12 Location of Books and Records. The location where the
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
Section 6.13 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of the
Borrower to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be
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true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to a Responsible
Officer of the Borrower, after due inquiry, that could reasonably be expected to
have a Material Adverse Effect that has not been disclosed herein, in the other
Loan Documents or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Lender for use in connection
with the transactions contemplated hereby or thereby.
Section 6.14 ERISA. Each Plan to which the Borrower or its Subsidiaries
make direct contributions, and, to the knowledge of the Borrower, each other
Plan and each Multiemployer Plan is in compliance in all material respects with,
and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which the Borrower would
be under an obligation to furnish a report to the Lender under Section 7.1(d)
hereof.
Section 6.15 Subsidiaries. Schedule 3 sets forth the name of each direct
or indirect Subsidiary of the Borrower and of the holders of Capital Stock of
the Borrower, its form of organization, its jurisdiction of organization, the
total number of issued and outstanding shares or other interests of Capital
Stock thereof, the classes and number of issued and outstanding shares or other
interests of Capital Stock of each such class, the name of each holder of
Capital Stock thereof and the number of shares or other interests of such
Capital Stock held by each such holder and the percentage of all outstanding
shares or other interests of such class of Capital Stock held by such holders.
ARTICLE VII
Covenants of the Borrower.
The Borrower covenants and agrees with the Lender that, so long as
any Loan is outstanding and until payment in full of all Secured Obligations:
Section 7.1 Financial Statements. The Borrower shall deliver to the
Lender:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal year of
the Borrower, the unaudited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash flows for
the Borrower and its consolidated Subsidiaries for such period and the portion
of the fiscal year through the end of such period, setting forth in each case in
comparative form the figures for the previous year, accompanied by a certificate
of a Responsible Officer of the Borrower, which certificate shall state that
said consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, the consolidated balance sheets of the
Borrower and its consolidated
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Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for the Borrower
and its consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of the
Borrower and its consolidated Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default or Event of
Default;
(c) as soon as available and in any event within 30 days after the
end of each month, the unaudited consolidated balance sheets of the Borrower and
its consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its consolidated Subsidiaries for such month and the
portion of the fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of the Borrower, which certificate shall
state that said consolidated financial statement fairly represents the
consolidated financial condition and results of operation of the Borrower and
its consolidated Subsidiaries in accordance with GAAP, consistently applied, as
of the end of, and for, such month (subject to normal year-end audit
adjustments);
(d) as soon as available and in any event within 30 days after the
end of each month, cash flow projections of the Borrower and its consolidated
Subsidiaries as at the end of such month for the next succeeding month,
accompanied by a certificate of a Responsible Officer of the Borrower, which
certificate shall state that said cash flow projection fairly represents the
financial projection and results of operations of the Borrower and its
consolidated Subsidiaries in accordance with GAAP, consistently applied, as of
the end of, and for, the next succeeding month;
(e) from time to time such other information regarding the financial
condition, operations, or business of the Borrower as the Lender may reasonably
request; and
(f) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer of the Borrower knows, or with respect to
any Plan or Multiemployer Plan to which the Borrower or any of its Subsidiaries
makes direct contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of the
Borrower setting forth details respecting such event or condition and the
action, if any, that the Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in Section 4043(c) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within thirty (30) days
of the occurrence of such event (provided that a
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failure to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA, including without limitation the
failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by the Borrower or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it
intends to terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an amendment to any Plan that would
result in the loss of tax-exempt status of the Plan and trust of
which such Plan is a part if the Borrower or an ERISA Affiliate
fails to provide timely security to such Plan if and as required by
the provisions of Section 401(a)(29) of the Code or Section 307 of
ERISA.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Loan Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Borrower has taken or proposes to take with respect
thereto).
Section 7.2 Litigation. The Borrower will promptly, and in any event
within 10 days after service of process on any of the following, give to the
Lender notice of all litigation,
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actions, suits, arbitrations, investigations (including, without limitation, any
of the foregoing which are pending or threatened) or other legal or arbitrable
proceedings affecting the Borrower or any of its Subsidiaries or affecting any
of the Property of any of them before any Governmental Authority that (i)
questions or challenges the validity or enforceability of any of the Loan
Documents or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $1,000,000, (iii) which, individually or in the aggregate, if adversely
determined, could be reasonably likely to have a Material Adverse Effect or
(iii) requires filing with the Securities and Exchange Commission in accordance
with the 1934 Act and any rules thereunder.
Section 7.3 Existence, etc. The Borrower will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that nothing in
this Section 7.3(a) shall prohibit any transaction expressly permitted under
Section 7.4 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office from the address referred to
in Section 6.11 or change its jurisdiction of organization from the jurisdiction
referred to in Section 6.11 unless it shall have provided the Lender 30 days'
prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained; and
(f) permit representatives of the Lender, during normal business
hours, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by the Lender.
Section 7.4 Prohibition of Fundamental Changes. The Borrower shall not
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that the
Borrower may merge or consolidate with (a) any wholly owned subsidiary of the
Borrower or (b) any other Person if the Borrower is the surviving corporation
and the Borrower's Net Worth would not be affected by such merger or
consolidation; and provided further, that if after giving effect thereto, no
Default would exist hereunder.
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Section 7.5 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.6 hereof.
Section 7.6 Notices. The Borrower shall give notice to the Lender:
(a) promptly upon receipt of notice or knowledge of the occurrence
of any Default or Event of Default;
(b) with respect to any Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt of any principal prepayment (in full or
partial) of such pledged Mortgage Loan;
(c) with respect to any Mortgage Loan pledged to the Lender
hereunder, immediately upon receipt of notice or knowledge that the underlying
Mortgaged Property has been damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise damaged so
as to affect adversely the Collateral Value of such pledged Mortgage Loan;
(d) promptly upon receipt of notice or knowledge of (i) any default
related to any Collateral, (ii) any Lien or security interest (other than
security interests created hereby or by the other Loan Documents) on, or claim
asserted against, any of the Collateral or (iii) any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect; and
(e) promptly upon any material change in the market value of any or
all of the Borrower's assets.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken or
proposes to take with respect thereto.
Section 7.7 Reports. The Borrower shall provide the Lender with a
quarterly report, which report shall include, among other items, (a) a summary
of the Borrower's delinquency and loss experience with respect to mortgage loans
serviced by the Borrower, any Servicer or any designee of either, plus any such
additional reports as the Lender may reasonably request with respect to the
Borrower's or any Servicer's servicing portfolio or pending originations of
mortgage loans and (b) a xxxx to market summary of any residual and/or
subordinate securities held by the Borrower.
Section 7.8 Underwriting Guidelines. Without the prior written consent of
the Lender, the Borrower shall not amend or otherwise modify the Underwriting
Guidelines. Notwithstanding the preceding sentence, in the event that the
Borrower makes any amendment or modification to the Underwriting Guidelines, (i)
the Borrower shall promptly deliver to the Lender a complete copy of the amended
or modified Underwriting Guidelines and (ii) if such change is made without the
prior written consent of the Lender, then Lender may, at its sole option and
discretion, refrain from funding any additional borrowings under Section 2.3
hereof.
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Section 7.9 Transactions with Affiliates. The Borrower will not enter into
any transaction, including without limitation any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of the Borrower's business and (c) upon fair and reasonable
terms no less favorable to the Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, or make a
payment that is not otherwise permitted by this Section 7.10 to any Affiliate.
In no event shall the Borrower pledge to the Lender hereunder any Mortgage Loan
acquired by the Borrower from an Affiliate of the Borrower.
Section 7.10 Limitation on Liens. The Borrower will defend the Collateral
against, and will take such other action as is necessary to remove, any Lien,
security interest or claim on or to the Collateral, other than the security
interests created under this Loan Agreement, and the Borrower will defend the
right, title and interest of the Lender in and to any of the Collateral against
the claims and demands of all persons whomsoever.
Section 7.11 Limitation on Guarantees. The Borrower shall not create,
incur, assume or suffer to exist any Guarantees.
Section 7.12 Limitation on Distributions. After the occurrence and during
the continuation of any Default, the Borrower shall not make any payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
or partnership interest of the Borrower, whether now or hereafter outstanding,
or make any other distribution in respect of any of the foregoing or to any
shareholder or equity owner of the Borrower, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any of the
Borrower's consolidated Subsidiaries.
Section 7.13 Servicer; Servicing Tape. The Borrower shall provide to the
Lender on the tenth Business Day of each month a computer readable file
containing servicing information, including without limitation those fields
specified by the Lender from time to time, on a loan-by-loan basis and in the
aggregate, with respect to the Mortgage Loans serviced hereunder by the Borrower
or any Servicer. The Borrower shall not cause the Mortgage Loans to be serviced
by any servicer other than a servicer expressly approved in writing by the
Lender.
Section 7.14 Required Filings. The Borrower shall promptly provide the
Lender with copies of all documents which the Borrower or any Affiliate of the
Borrower is required to file with the Securities and Exchange Commission in
accordance with the 1934 Act or any rules thereunder.
Section 7.15 No Adverse Selection. The Borrower has not selected the
Collateral in a manner so as to adversely affect the Lender's interests.
Section 7.16 Remittance of Prepayments. The Borrower shall remit, with
sufficient detail to enable the Lender to appropriately identify the Mortgage
Loan to which any amount remitted applies, to the Lender on each Thursday (or
the next Business Day if such Thursday is not a Business Day) all principal
prepayments that the Borrower has received during the previous week.
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ARTICLE VIII
Events of Default.
Section 8.1 Events of Default.
Each of the following events shall constitute an event of default
(an "Event of Default") hereunder: (a) the Borrower shall default in the payment
of any principal of or interest on any Loan when due (whether at stated
maturity, upon acceleration or at mandatory or optional prepayment); or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after notification by
the Lender of such default, and such default shall have continued unremedied for
five (5) Business Days; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Loan Document by the Borrower or any certificate
furnished to the Lender pursuant to the provisions hereof or thereof shall prove
to have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule
1, which shall be considered solely for the purpose of determining the
Collateral Value of the Mortgage Loans; unless (i) the Borrower shall have made
any such representations and warranties with knowledge that they were materially
false or misleading at the time made or (ii) any such representations and
warranties have been determined by the Lender in its sole discretion to be
materially false or misleading on a regular basis); or
(d) the Borrower shall fail to comply with the requirements of
Section 7.3(a), Section 7.4, Section 7.5, Section 7.6, or Sections 7.9 through
7.16 hereof; or the Borrower shall otherwise fail to comply with the
requirements of Sections 7.3, 7.7 and 7.8 hereof and such default shall continue
unremedied for a period of five (5) Business Days; or the Borrower shall fail to
observe or perform any other covenant or agreement contained in this Loan
Agreement or any other Loan Document and such failure to observe or perform
shall continue unremedied for a period of seven (7) Business Days; or
(e) a final judgment or judgments for the payment of money in excess
of $1,500,000 in the aggregate shall be rendered against the Borrower or any of
its Material Affiliates by one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be satisfied, discharged (or
provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from the date of entry
thereof, and the Borrower or any such Material Affiliate shall not, within said
period of 30 days, or such longer period during which execution of the same
shall have been stayed or bonded, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(f) the Borrower or any of its Material Affiliates shall admit in
writing its inability to pay its debts as such debts become due; or
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(g) the Borrower or any of its Material Affiliates shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator or the like of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v)
acquiesce in writing to, any petition filed against it in an involuntary case
under the Bankruptcy Code or (vi) take any corporate or other action for the
purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the application
or consent of the Borrower or any of its Material Affiliates, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower or any such
Affiliate or of all or any substantial part of its property or (iii) similar
relief in respect of the Borrower or any such Affiliate under any law relating
to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 30 or more days; or an order for relief against the
Borrower or any such Affiliate shall be entered in an involuntary case under the
Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Borrower; or
(j) the Borrower shall grant, or suffer to exist, any Lien on any
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Collateral in
favor of the Lender or shall be Liens in favor of any Person other than the
Lender; or
(k) the Borrower or any of the Borrower's Material Affiliates shall
be in default under any note, indenture, loan agreement, guaranty, swap
agreement or any other contract to which it is a party, including, without
limitation, any MS Indebtedness, which default (i) involves the failure to pay a
matured obligation or (ii) permits the acceleration of the maturity of
obligations by any other party to or beneficiary of such note, indenture, loan
agreement, guaranty, swap agreement or other contract; or
(l) any materially adverse change in the Property, business,
financial condition or prospects of the Borrower or any of its Material
Affiliates shall occur, in each case as determined by the Lender in its sole
discretion, or any other condition shall exist which, in the Lender's sole
discretion, constitutes a material impairment of the Borrower's ability to
perform its obligations under this Loan Agreement, the Note or any other Loan
Document; or
(m) MS & Co.'s corporate bond rating has been lowered or downgraded
to a rating below A- by S&P or A3 by Xxxxx'x and the Borrower shall have failed
to repay all
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amounts owing to the Lender under this Agreement, the Note and the other Loan
Documents within 90 days following such downgrade; or
(n) the discovery by the Lender of a condition or event which
existed at or prior to the execution hereof and which the Lender, in its sole
discretion, determines materially and adversely affects: (i) the condition
(financial or otherwise) of the Borrower and the Guarantor, their Subsidiaries
or Affiliates; or (ii) the ability of the Borrower or the Guarantor to fulfill
their respective obligations under this Loan Agreement.
(o) any representation, warranty or certification made or deemed
made in the New Century Guaranty by the Guarantor shall prove to have been false
or misleading any material respect as of the time made or furnished; or
(p) the Guarantor shall fail to observe or perform any covenant or
agreement contained in Section 11 of the New Century Guaranty.
ARTICLE IX
Remedies Upon Default.
Section 9.1 Remedies.
(a) An Event of Default shall be deemed to be continuing unless
expressly waived by the Lender in writing. Upon the occurrence of one or more
Events of Default hereunder, the Lender's obligation to make additional Loans to
the Borrower shall automatically terminate without further action by any Person.
Upon the occurrence of one or more Events of Default other than those referred
to in Sections (f), (g) and (h) of Article VIII, the Lender may immediately
declare the principal amount of the Loans then outstanding under the Note to be
immediately due and payable, together with all accrued and unpaid interest
thereon and fees and expenses accruing under this Loan Agreement. Upon the
occurrence of an Event of Default referred to in Sections (f), (g) and (h) of
Article VIII, such amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the occurrence of a Default, the Lender shall have the
right to obtain, and the Borrower shall deliver or cause to be delivered, on
demand, physical possession of the Servicing Records and all other files of the
Borrower relating to the Collateral and all documents relating to the Collateral
which are then or may thereafter come in to the possession of the Borrower or
any third party acting for the Borrower and the Borrower shall deliver to the
Lender such assignments as the Lender shall request. The Lender shall be
entitled to specific performance of all agreements of the Borrower contained in
this Loan Agreement.
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ARTICLE X
No Duty of Lender.
Section 10.1 No Duty. The powers conferred on the Lender hereunder are
solely to protect the Lender's interests in the Collateral and shall not impose
any duty upon it to exercise any such powers. The Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its or their own gross negligence or willful misconduct.
ARTICLE XI
Miscellaneous.
Section 11.1 Waiver. No failure on the part of the Lender to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
Section 11.2 Notices. Except as otherwise expressly permitted by this Loan
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including without limitation by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party provided, that a copy of all notices given
under Section 7.1 shall simultaneously be delivered to Credit Department, Xxxxxx
Xxxxxxx Xxxx Xxxxxx, 1221 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; Attention: Xxxxxxx Xxxxxxx. Except as otherwise provided in this Loan
Agreement and except for notices given under Article II (which shall be
effective only on receipt), all such communications shall be deemed to have been
duly given when transmitted by telex or telecopy or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 11.3 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender and its Affiliates and
their officers, directors, employees, agents and advisors (each an "Indemnified
Party") harmless from and indemnify any Indemnified Party against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, the "Costs") relating to or arising out of this Loan Agreement,
the Note, any other Loan Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Loan Agreement, the Note, any other Loan
Document or any transaction contemplated hereby or
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thereby, that, in each case, results from anything other than any Indemnified
Party's gross negligence or willful misconduct. Without limiting the generality
of the foregoing, the Borrower agrees to hold any Indemnified Party harmless
from and indemnify such Indemnified Party against all Costs with respect to all
Mortgage Loans relating to or arising out of any violation or alleged violation
of any environmental law, rule or regulation or any consumer credit laws,
including without limitation the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
such Indemnified Party's gross negligence or willful misconduct. In any suit,
proceeding or action brought by an Indemnified Party in connection with any
Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, the Borrower will save, indemnify and hold such Indemnified Party
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Borrower. The Borrower also agrees
to reimburse an Indemnified Party as and when billed by such Indemnified Party
for all such Indemnified Party's costs and expenses incurred in connection with
the enforcement or the preservation of such Indemnified Party's rights under
this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, including without limitation the reasonable fees
and disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender all
of the out-of-pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith,
including the New Century Guaranty. The Borrower agrees to pay as and when
billed by the Lender all of the out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the transactions
contemplated hereby and thereby including without limitation (i) all the
reasonable and documented fees, disbursements and expenses of counsel to the
Lender, (ii) all the due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement, including, but not limited to, those costs and expenses incurred by
the Lender pursuant to Sections 11.3(a), 11.14 and 11.15 hereof and (iii) the
costs of Broker Price Opinions in respect of Defaulted Mortgage Loans.
Section 11.4 Amendments. Except as otherwise expressly provided in this
Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
Section 11.5 Successors and Assigns. This Loan Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 11.6 Survival. The obligations of the Borrower under Sections 3.3
and 11.3 hereof shall survive the repayment of the Loans and the termination of
this Loan Agreement. In
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addition, each representation and warranty made or deemed to be made by a
request for a borrowing, herein or pursuant hereto shall survive the making of
such representation and warranty, and the Lender shall not be deemed to have
waived, by reason of making any Loan, any Default that may arise because any
such representation or warranty shall have proved to be false or misleading,
notwithstanding that the Lender may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the time
such Loan was made.
Section 11.7 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
Section 11.8 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
Section 11.9 Loan Agreement Constitutes Security Agreement; Governing Law.
This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine, and shall constitute a security agreement within the
meaning of the Uniform Commercial Code.
Section 11.10 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
1. SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
2. CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
3. AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER
SHALL HAVE BEEN NOTIFIED; AND
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4. AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION.
Section 15.1 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 15.2 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower, and
the relationship between the Borrower and the Lender is solely that of debtor
and creditor; and
(c) no joint venture exists between the Lender and the Borrower.
Section 15.3 Hypothecation or Pledge of Loans. The Lender shall have free
and unrestricted use of all Collateral and nothing in this Loan Agreement shall
preclude the Lender from engaging in repurchase transactions with the Collateral
or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan Agreement shall
obligate the Lender to segregate any Collateral delivered to the Lender by the
Borrower.
Section 15.4 Servicing.
(a) The Borrower covenants to maintain or cause the servicing of the
Mortgage Loans to be maintained in conformity with accepted and prudent
servicing practices in the industry for the same type of mortgage loans as the
Mortgage Loans and in a manner at least equal in quality to the servicing the
Borrower provides for mortgage loans which it owns. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of Default, (ii) the date on which all the Secured
Obligations have been paid in full or (iii) the transfer of servicing approved
by the Borrower in writing. The Lender hereby approves New Century Mortgage
Corporation, an Affiliate of the Borrower, as the initial Servicer of the
Mortgage Loans.
(b) If the Mortgage Loans are serviced by the Borrower, (i) the
Borrower agrees that the Lender is the collateral assignee of all servicing
records, including but not limited to any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Mortgage Loans (the "Servicing Records"), and (ii)
the Borrower grants the Lender
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a security interest in all servicing fees and rights relating to the Mortgage
Loans and all Servicing Records to secure the obligation of the Borrower or its
designee to service in conformity with this Section and any other obligation of
the Borrower to the Lender. The Borrower covenants to safeguard such Servicing
Records and to deliver them promptly to the Lender or its designee (including
the Custodian) at the Lender's request.
(c) If the Mortgage Loans are serviced by a third party servicer
(such third party servicer, the "Servicer"), the Borrower (i) shall provide a
copy of the servicing agreement to the Lender, which shall be in form and
substance acceptable to the Lender (the "Servicing Agreement"), and (ii) shall
provide a Servicer Notice to the Servicer substantially in the form of Exhibit G
hereto (a "Servicer Notice") and shall cause the Servicer to acknowledge and
agree to the same. Any successor or assignee of a Servicer shall be approved in
writing by the Lender and shall acknowledge and agree to a Servicer Notice prior
to such successor's assumption of servicing obligations with respect to the
Mortgage Loans.
(d) If the servicer of the Mortgage Loans is the Borrower or the
Servicer is an Affiliate of the Borrower, the Borrower shall provide to the
Lender a letter from the Borrower or the Servicer, as the case may be, to the
effect that upon the occurrence of an Event of Default, the Lender may terminate
any Servicing Agreement and in any event transfer servicing to the Lender's
designee, at no cost or expense to the Lender, it being agreed that the Borrower
will pay any and all fees required to terminate the Servicing Agreement and to
effectuate the transfer of servicing to the designee of the Lender.
(e) After the Funding Date, until the pledge of any Mortgage Loan is
relinquished by the Custodian, (i) the Borrower shall give prior written notice
to the Lender of any proposed modification or alteration to the terms of any
such Mortgage Loan and unless the Borrower shall have received the Lender's
written approval of such modification or alteration within five (5) Business
Days thereafter, in the event the Borrower nevertheless makes such modification
or alteration to the terms of such Mortgage Loan thereafter, such Mortgage Loan
shall thereupon have a Collateral Value equal to zero, and (ii) the Borrower
will have no obligation or right to repossess such Mortgage Loan or substitute
another Mortgage Loan, except as provided in the Custodial Agreement.
(f) In the event the Borrower or its Affiliate is servicing the
Mortgage Loans, the Borrower shall permit the Lender from time to time during
business hours and upon prior reasonable notice (provided that if a Default
shall have occurred and be continuing, no such notice shall be required) to
inspect the Borrower's or its Affiliate's servicing facilities, as the case may
be, for the purpose of satisfying the Lender that the Borrower or its Affiliate,
as the case may be, has the ability to service the Mortgage Loans as provided in
this Loan Agreement.
(g) The Borrower shall ensure that the Servicer will maintain the
Servicer's System in a manner that permits the Servicer to be Year 2000
Compliant.
Section 15.5 Due Diligence Review.
(a) Mortgage Loans. The Borrower acknowledges that the Lender has
the right to perform continuing due diligence reviews with respect to the
Mortgage Loans, for
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purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and the Borrower agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to the
Borrower or the Servicer, as the case may be, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Mortgage Files and Servicing
Records and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession or under the
control of the Borrower, the Servicer and/or the Custodian. The Borrower also
shall make available to the Lender a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Mortgage Files and
the Mortgage Loans. Without limiting the generality of the foregoing, the
Borrower acknowledges that the Lender may make Loans to the Borrower based
solely upon the information provided by the Borrower to the Lender in the
Mortgage Loan Tape and the representations, warranties and covenants contained
herein, and that the Lender, at its option, has the right at any time to conduct
a partial or complete due diligence review on some or all of the Mortgage Loans
securing such Loan, including without limitation ordering new credit reports and
new appraisals on the related Mortgaged Properties and otherwise re-generating
the information used to originate such Mortgage Loan. The Lender may underwrite
such Mortgage Loans itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. The Borrower agrees to cooperate with
the Lender and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Lender and any third party
underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the possession, or
under the control, of the Borrower.
(b) Borrower. The Borrower acknowledges that the Lender has the
right to perform quarterly due diligence reviews of the Borrower's operations,
including, but not limited to, a review of (1) the financial condition of the
Borrower, (2) loan origination and servicing guidelines, and (3) other corporate
due diligence matters at the discretion of the Lender. In connection therewith,
the Borrower agrees that upon reasonable (but no less than two (2) Business
Day's) prior notice to the Borrower (provided that if a Default has occurred and
is continuing, no such notice shall be required), the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, all documents, records, agreements,
instruments or information relating to the Borrower which are in possession or
under the control of the Borrower, as the Lender may reasonably request. The
Borrower shall also make available to the Lender a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
financial condition of the Borrower and make available to the Lender an officer
of the Borrower for the purpose of answering questions respecting other
corporate due diligence matters.
(c) Fees and Expenses of Due Diligence Review. The Borrower further
agrees that the Borrower shall reimburse the Lender for any and all
out-of-pocket costs and expenses incurred by the Lender in connection with the
Lender's activities pursuant to this Section 11.15.
Section 15.6 Set-Off. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder
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(whether at the stated maturity, by acceleration or otherwise) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender or any Affiliate thereof to or for the credit or the account
of the Borrower. The Lender agrees promptly to notify the Borrower after any
such set-off and application made by the Lender; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
Section 15.7 Intent. The parties recognize that each Loan is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
NC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
Address for Notices:
00000 Xxx Xxxxxx, Xxxxx 00000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Assistant Vice
President and Corporate Counsel
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
LENDER
XXXXXX XXXXXXX XXXX XXXXXX
MORTGAGE
CAPITAL INC.
By:
----------------------------------------
Name:
Title:
Address for Notices:
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
NC CAPITAL CORPORATION
By:
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
Address for Notices:
00000 Xxx Xxxxxx, Xxxxx 00000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Assistant Vice
President and Corporate Counsel
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
LENDER
XXXXXX XXXXXXX XXXX XXXXXX
MORTGAGE
CAPITAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Address for Notices:
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Schedule 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Representations and Warranties with respect to each Eligible Residential
Mortgage Loan
As to each residential Mortgage Loan included in the Borrowing Base
on a Funding Date (and the related Mortgage, Mortgage Note, Assignment of
Mortgage and Mortgaged Property), the Borrower shall be deemed to make the
following representations and warranties to the Lender as of such date and as of
each date Collateral Value is determined (certain defined terms used herein and
not otherwise defined in the Loan Agreement appearing in Part III to this
Schedule 1):
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule with respect to the Mortgage Loan is complete, true and
correct in all material respects.
(b) No Outstanding Charges. Other than delinquencies in payment of
principal or interest in respect of the 30+ Delinquent Mortgage Loans, 60+
Delinquent Mortgage Loans and Defaulted Mortgage Loans, there are no defaults in
complying with the terms of the Mortgage securing the Mortgage Loan. All taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrower nor the Qualified
Originator from which the Borrower acquired the Mortgage Loan has advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the proceeds of the
Mortgage Loan, whichever is earlier, to the day which precedes by one month the
Due Date of the first installment of principal and interest thereunder.
(c) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect from
the date of origination; except by a written instrument which has been recorded,
if necessary to protect the interests of the Lender, and which has been
delivered to the Custodian and the terms of which are reflected in the Mortgage
Loan Schedule. The substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required, and its terms are
reflected on the Mortgage Loan Schedule. No Mortgagor in respect of the Mortgage
Loan has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by
such policy, and which assumption agreement is part of the Mortgage File
delivered to the Custodian and the terms of which are reflected in the Mortgage
Loan Schedule.
(d) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right
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thereunder, render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto, and no Mortgagor in respect of
the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated. The Borrower has no
knowledge nor has it received any notice that any Mortgagor in respect of the
Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency
proceeding.
(e) No Retail Installment Contracts. The Mortgage Loan is not a
retail installment contract for goods or services or a home improvement Loan for
goods or services, which would be either "consumer credit contracts" or
"purchase money loans" as such terms are defined in 16 C.F.R. Section 433.1.
(f) No Implied Warranty. The Mortgagor on the Mortgage Loan does not
have a claim or defense against the Borrower or any assignor or assignee of the
Borrower under any express or implied warranty with respect to goods or services
provided in connection with the Mortgage Loan.
(g) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by the Borrower as of the date of
origination consistent with the Underwriting Guidelines, against earthquake and
other risks insured against by Persons owning like properties in the locality of
the Mortgaged Property, in an amount not less than the greatest of (i) 100% of
the replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan or (iii) the amount necessary
to avoid the operation of any co-insurance provisions with respect to the
Mortgaged Property, and consistent with the amount that would have been required
as of the date of origination in accordance with the Underwriting Guidelines. If
any portion of the Mortgaged Property is in an area identified by any federal
Governmental Authority as having special flood hazards, and flood insurance is
available, a flood insurance policy meeting the current guidelines of the
Federal Emergency Management Agency is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(1) the outstanding principal balance of the Mortgage Loan, (2) the full
insurable value of the Mortgaged Property and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the Borrower, its successors and assigns (including without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 30 days' prior written notice to the
mortgagee. No such notice has been received by the Borrower. All premiums on
such insurance policy have been paid. The related Mortgage obligates the
Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do
so, authorizes the mortgagee to maintain such insurance at the Mortgagor's cost
and expense and to seek reimbursement therefor from such Mortgagor. Where
required by state law or regulation, the Mortgagor has been given an opportunity
to choose the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering a condominium, or
any hazard insurance policy covering the common facilities of a planned unit
development. The hazard insurance policy is the valid and binding obligation of
the insurer and is in full force and effect. The Borrower has not engaged in,
and has no knowledge
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of the Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
therein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Borrower.
(h) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Lender, and shall deliver to the Lender, upon demand,
evidence of compliance with all such requirements.
(i) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Borrower has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Borrower waived any default resulting from any action or inaction by the
Mortgagor.
(j) Location and Type of Mortgaged Property. The Mortgaged Property
is located in an Acceptable State as identified in the Mortgage Loan Schedule
and consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
condominium unit in a low-rise condominium project, or a Qualified Manufactured
Housing unit, or an individual unit in a planned unit development or a de
minimis planned unit development, provided, however, that any condominium unit
or planned unit development shall conform with the applicable FNMA and FHLMC
requirements regarding such dwellings and that no residence or dwelling is a
mobile home. No portion of the Mortgaged Property is used for commercial
purposes.
(k) Valid Lien. The Mortgage is a valid, subsisting, enforceable and
perfected first or second lien on the real property included in the Mortgaged
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing. The lien of the
Mortgage is subject only to:
1. the lien of current real property taxes and assessments not
yet due and payable;
2. in the case of any Mortgage Loan with a second lien
position, a first lien on such Mortgaged Property and subject in all
cases to the exceptions to title set forth in the title insurance
policy with respect to the related Mortgage
1-3
Loan, which exceptions are generally acceptable to second mortgage
lending companies, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such mortgage;
3. covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged Property set
forth in such appraisal; and
4. other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first or second lien and first or second priority
security interest on the property described therein and the Borrower has full
right to pledge and assign the same to the Lender. The Mortgaged Property was
not, as of the date of origination of the Mortgage Loan, subject to a mortgage,
deed of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage.
(l) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan. The Borrower
has reviewed all of the documents constituting the Servicing File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
(m) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
further requirement for future advances thereunder, and any and all requirements
as to completion of any on-site or off-site improvement and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the
1-4
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(n) Ownership. The Borrower is the sole owner and holder of the
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Borrower
has good, indefeasible and marketable title thereto, and has full right to
transfer, pledge and assign the Mortgage Loan to the Lender free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to assign, transfer and
pledge each Mortgage Loan pursuant to this Loan Agreement and following the
pledge of each Mortgage Loan, the Lender will hold such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest except any such security interest created pursuant to
the terms of this Loan Agreement.
(o) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state or (D) not doing business in such state.
(p) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC and each such title insurance policy is
issued by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Borrower, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan (or to the extent
a Mortgage Note provides for negative amortization, the maximum amount of
negative amortization in accordance with the Mortgage), subject only to the
exceptions contained in clauses (1), (2) and (3) of paragraph (k) of this Part I
of Schedule 1, and in the case of adjustable rate Mortgage Loans, against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment to the Mortgage Interest
Rate and Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress and against encroachments by or upon
the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Borrower, its successors and assigns, are the sole insureds of such lender's
title insurance policy, and such lender's title insurance policy is valid and
remains in full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this Loan Agreement. No claims
have been made under such lender's title insurance policy, and no prior holder
or servicer of the related Mortgage, including the Borrower, has done, by act or
omission, anything which
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would impair the coverage of such lender's title insurance policy, including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have
been received, retained or realized by the Borrower.
(q) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event has
occurred which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration, and neither the Borrower nor its predecessors have waived any
default, breach, violation or event of acceleration.
(r) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.
(t) Origination; Payment Terms. The Mortgage Loan was originated by
or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than 60 days after funds were disbursed in connection
with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with respect to
adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to equal
the Index plus the Gross Margin (rounded up or down to the nearest .125%),
subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable on the
first day of each month in equal monthly installments of principal and interest,
which installments of interest, with respect to adjustable rate Mortgage Loans,
are subject to change due to the adjustments to the Mortgage Interest Rate on
each Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than 30 years from commencement of
amortization. The due date of the first payment under the Mortgage Note is no
more than 60 days from the date of the Mortgage Note.
(u) CLTV. The Mortgage Loan has a CLTV less than or equal to 100%.
(v) Customary Provisions. The Mortgage Note has a stated maturity.
The Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (ii) otherwise by judicial foreclosure. Upon default by a
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Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage.
(w) Conformance with Underwriting Guidelines and Agency Standards.
The Mortgage Loan was underwritten in accordance with the Underwriting
Guidelines. The Mortgage Note and Mortgage are on forms similar to those used by
FHLMC or FNMA and the Borrower has not made any representations to a Mortgagor
that are inconsistent with the mortgage instruments used.
(x) Occupancy of the Mortgaged Property. As of the Funding Date the
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities. The Borrower has not received notification from any
Governmental Authority that the Mortgaged Property is in material non-compliance
with such laws or regulations, is being used, operated or occupied unlawfully or
has failed to have or obtain such inspection, licenses or certificates, as the
case may be. The Borrower has not received notice of any violation or failure to
conform with any such law, ordinance, regulation, standard, license or
certificate. Except to the extent permitted by the provisions of paragraph 6 of
Part II of Schedule 1 hereto, each Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence.
(y) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (k) above.
(z) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
the Lender to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Borrower or its agent is in possession of a
complete, true and accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered
to the Custodian.
(bb) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
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(cc) Due-On-Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(dd) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Borrower, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.
(ee) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Funding Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan.
(ff) Mortgaged Property Undamaged. The Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair. There have not been
any condemnation proceedings with respect to the Mortgaged Property and the
Borrower has no knowledge of any such proceedings.
(gg) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and the Borrower with respect to the Mortgage
Loan have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such payments are in
the possession of, or under the control of, the Borrower and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. An escrow of funds is not prohibited
by applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments due
the Borrower have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited.
(hh) Conversion to Fixed Interest Rate. With respect to adjustable
rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest
rate Mortgage Loan.
1-8
(ii) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrower or by any officer, director, or
employee of the Borrower or any designee of the Borrower or any corporation in
which the Borrower or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(jj) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Borrower, and the Borrower has no knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(kk) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrower, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of FNMA or FHLMC and Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 as amended and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated.
(ll) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans, and
the Borrower maintains such statement in the Mortgage File.
(mm) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(nn) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrower on
or prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence or fraud of the Borrower, the
related Mortgagor or any party involved in the application for such coverage,
including the appraisal, plans and specifications and other exhibits or
documents submitted therewith to the insurer under such insurance policy, or for
any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay.
(oo) Capitalization of Interest. The Mortgage Note does not by its
terms provide for the capitalization or forbearance of interest.
1-9
(pp) No Equity Participation. No document relating to the Mortgage
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and the Borrower has not financed nor does
it own directly or indirectly, any equity of any form in the Mortgaged Property
or the Mortgagor.
(qq) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan
have not been and shall not be used to satisfy, in whole or in part, any debt
owed or owing by the Mortgagor to the Borrower or any Affiliate or correspondent
of the Borrower.
(rr) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to the Borrower pursuant to a Request for Release as permitted under
Section 5 of the Custodial Agreement, then the promissory note relating to the
Mortgage Loan was returned to the Custodian within 10 days (or if such tenth day
was not a Business Day, the next succeeding Business Day).
(ss) Origination Date. The Mortgage Loan has been originated no
later than twelve (12) months and no earlier than three (3) months prior to the
Funding Date.
(tt) No Exception. The Custodian has not noted any material
Exceptions on an Exception Report with respect to the Mortgage Loan which would
materially adversely affect the Mortgage Loan or the Lender's security interest,
granted by the Borrower, in the Mortgage Loan.
(uu) Qualified Originator. The Mortgage Loan has been originated by,
and, if applicable, purchased by the Borrower from, a Qualified Originator.
(vv) Mortgage Submitted for Recordation. The Mortgage either has
been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(ww) Xxxxxx Act. None of the Mortgage Loans are classified as "high
cost" loans under the Home Ownership and Equity Protection Act of 1994.
(xx) Second Lien Mortgages. The related first Lien on the Mortgage
Loan does not require a consent from the holder of the first Lien, or if such a
consent is required, it has been obtained and is contained in the Mortgage File.
The Borrower has not received notice of a default of the related first Lien
which has not been cured.
(yy) Section 32 Mortgage Loan. The Mortgage Loan is not a Section 32
Mortgage Loan.
Part II. Representations and Warranties with respect to all Eligible Residential
Mortgage Loans
As to all Mortgage Loans included in the Borrowing Base on a Funding
Date (and the related Mortgages, Mortgage Notes, Assignments of Mortgage and
Mortgaged Properties), the Borrower shall be deemed to make the following
representations and warranties to the
1-10
Lender as of such date and as of each date Collateral Value is determined
(certain defined terms used herein and not otherwise defined in the Loan
Agreement appearing in Part III to this Schedule 1):
(a) Payment Current. All payments required to be made up to the
Funding Date for all Mortgage Loans (other than 30+ Delinquent Mortgage Loans,
60+ Delinquent Mortgage Loans and Defaulted Mortgage Loans) under the terms of
the related Mortgage Note have been made and credited. No payment required under
the Mortgage Loans (other than 30+ Delinquent Mortgage Loans, 60+ Delinquent
Mortgage Loans and Delinquent Mortgage Loans) are delinquent nor have any
payment under the Mortgage Loans been delinquent at any time since the
origination of such Mortgage Loan. The first Monthly Payment shall be made with
respect to the Mortgage Loan on its Due Date or within the grace period, all in
accordance with the terms of the related Mortgage Note; provided, however, that
any Mortgage Loan that defaulted on its first Monthly Payment is current on all
subsequent Monthly Payments.
(b) Concentration Limit. As of a Funding Date:
1. the aggregate unpaid principal balance of the Second Lien
Mortgage Loans shall not exceed $40,000,000;
2. the aggregate unpaid principal balance of the 30+ Delinquent
Mortgage Loans shall not exceed $15,000,000;
3. the aggregate unpaid principal balance of the 60+ Delinquent
Mortgage Loans shall not exceed $10,000,000;
4. the aggregate unpaid principal balance of the Mortgage Loans that
are secured by Mortgaged Properties consisting of Qualified
Manufactured Housing shall not exceed $10,000,000;
5. the aggregate unpaid principal balance of the Mortgage Loans that
are secured by Mortgaged Properties consisting of condominiums shall
not exceed $25,000,000;
6. the aggregate unpaid principal balance of the Mortgage Loans
that are secured by Mortgaged Properties which are non-owner
occupied shall not exceed $25,000,000;
7. the aggregate unpaid Principal Balance of the Sub-prime Mortgage
Loans shall not exceed 15% of the outstanding principal balance of
the Loan.
8. the aggregate unpaid principal balance of the Defaulted Mortgage
Loans shall not exceed $10,000,000.
(c) Location of Mortgaged Properties. To the best of the Borrower's
knowledge, no Mortgaged Property is located within a one-mile radius of any site
listed in the National Priorities List as defined under the Comprehensive
Environmental Response,
1-11
Compensation and Liability Act of 1980, as amended, or on any similar state list
of hazardous waste sites which are known to contain any hazardous substance or
hazardous waste.
(d) Bulk Transfer. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Borrower pursuant to this Loan Agreement
are not subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
Part III. Defined Terms
In addition to terms defined elsewhere in the Loan Agreement, the
following terms shall have the following meanings when used in this Schedule 1:
"Acceptable State" shall mean any state notified by the Borrower to
the Lender from time to time and approved in writing by the Lender, which
approval has not been revoked by the Lender in their sole discretion, any such
notice of revocation to be given no later than 10 Business Days prior to its
intended effective date.
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"ALTA" means the American Land Title Association.
"Appraised Value" shall mean the value set forth in an appraisal
made in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Best's" means Best's Key Rating Guide, as the same shall be amended
from time to time.
"Combined Loan-to-Value Ratio" or "CLTV" shall mean with respect to
any Second Lien Mortgage Loan, the ratio (expressed as a percentage) of (a) the
outstanding principal balance on the date of origination of the sum of (i) the
mortgage loan constituting the first Lien plus (ii) the Second Lien Mortgage
Loan to (b) the lesser of (i) the Appraised Value of the Mortgage property and
(ii) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
"Due Date" means the day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges and
1-12
any other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other document.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Gross Margin" means with respect to each adjustable rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note.
"Ground Lease" means a lease for all or any portion of the real
property comprising the Mortgaged Property, the lessee's interest in which is
held by the Mortgagor of the related Mortgage Loan.
"Index" means with respect to each adjustable rate Mortgage Loan,
the index set forth in the related Mortgage Note for the purpose of calculating
the interest rate thereon.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.
"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.
"Mortgage Interest Rate" means the annual rate of interest borne on
a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
"Mortgagee" means the Borrower or any subsequent holder of a
Mortgage Loan.
"Qualified Manufactured Housing" shall mean a manufactured home so
affixed to land upon which it sits that it is deemed a part of real property and
treated as such for all municipal purposes in the jurisdiction in which such
manufactured home is located.
1-13
"Origination Date" shall mean, with respect to each Mortgage Loan,
the date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by the Borrower with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is 40
days prior to the date of the first payment under the Mortgage Note relating to
such Mortgage Loan.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
"Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by any of the rating agencies with respect to primary mortgage
insurance and in the two highest rating categories by Best's with respect to
hazard and flood insurance.
"Qualified Originator" means an originator of Mortgage Loans
reasonably acceptable to the Lender.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by the Borrower consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of the Mortgage
Loan Documents set forth in Section 2 of the Custodial Agreement.
"Underwriting Guidelines" means the underwriting guidelines attached
as Exhibit E hereto.
1-14
Schedule 2
FILING JURISDICTIONS AND OFFICES
[TO BE PROVIDED BY COUNSEL TO BORROWER]
2-1
Schedule 3
SUBSIDIARIES
2-1
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$_________________ ________ __, 00__
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, NC CAPITAL CORPORATION, a California corporation
(the "Borrower"), hereby promises to pay to the order of XXXXXX XXXXXXX XXXX
XXXXXX MORTGAGE CAPITAL INC. (the "Lender"), at the principal office of the
Lender at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, in lawful money of the
United States, and in immediately available funds, the principal sum of FOUR
HUNDRED MILLION DOLLARS ($400,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower under the Loan Agreement referred to below), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement. Capitalized terms used but not defined herein shall have the meanings
specified in the Loan Agreement.
Pursuant to and subject to the terms of the Loan Agreement, the
Borrower may borrow, repay and reborrow funds until December 8, 2001 or such
earlier date on which the Loan Agreement shall terminate in accordance with the
provisions of the Loan Agreement or by operation of law (the "Termination
Date"). In all events, the Borrower shall repay the aggregate outstanding
principal amount of all Loans plus all accrued interest thereon on the
Termination Date.
Pursuant to the Loan Agreement, from time to time the Borrower will
be required to pledge additional Collateral or to prepay Loans to cure a
Borrowing Base Deficiency.
The date, amount and interest rate of each Loan made by the Lender
to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of this
Note, endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of December 1, 2000 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement") between the
Borrower and the Lender, and evidences Loans made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this
A-1
Note when incurred, including, without limitation, reasonable attorneys' fees
through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this Note, (b) expressly agree that this
Note, or any payment hereunder, may be extended from time to time, and consent
to the acceptance of further Collateral, the release of any Collateral for this
Note, the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
This Note shall be governed by and construed under the laws of the
State of New York (without reference to choice of law doctrine) whose laws the
Borrower expressly elects to apply to this Note. The Borrower agrees that any
action or proceeding brought to enforce or arising out of this Note may be
commenced in the Supreme Court of the State of New York, Borough of Manhattan,
or in the District Court of the United States for the Southern District of New
York.
NC CAPITAL CORPORATION
By: _______________________________________
Name:
Title:
A-2
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Unpaid
Amount Interest Amount Paid Principal Notation
Date Made of Loan Rate or Prepaid Amount Made by
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A-3
Principal Unpaid
Amount Interest Amount Paid Principal Notation
Date Made of Loan Rate or Prepaid Amount Made by
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A-4
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
[STORED AS A SEPARATE DOCUMENT]
B-1
EXHIBIT C-1
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to [NAME OF
BORROWER], a [________ corporation] (the "Borrower"), with respect to certain
matters in connection with that certain Master Loan and Security Agreement,
dated ______________, 200__ (the "Loan and Security Agreement"), by and between
the Borrower and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc. (the
"Lender"), being executed contemporaneously with a Promissory Note, dated
__________, 200__ , from the Borrower to the Lender (the "Note"), a Custodial
Agreement, dated as of _________, 200__, (the "Custodial Agreement"), by and
among the Borrower, [NAME OF CUSTODIAN] (the "Custodian"), and the Lender.
Capitalized terms not otherwise defined herein have the meanings set forth in
the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. Custodial Agreement;
4. unfiled copies of the financing statements listed on Schedule 1
(collectively, the "Financing Statements") naming the Borrower as Debtor and the
Lender as Secured Party and describing the Collateral (as defined in the Loan
and Security Agreement) as to which security interests may be perfected by
filing under the Uniform Commercial Code of the States listed on Schedule 1 (the
"Filing Collateral"), which [we][I] understand will be filed in the filing
offices listed on Schedule 1 (the "Filing Offices");
5. the reports listed on Schedule 2 as to UCC financing statements
(collectively, the "UCC Search Report");
C-1-1
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Borrower contained in
the Loan and Security Agreement. [We] [I] have assumed the authenticity of all
documents submitted to [us][me] as originals, the genuineness of all signatures,
the legal capacity of natural persons and the conformity to the originals of all
documents submitted to [us][me] as originals.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a [________ corporation] duly organized, validly
existing and in good standing under the laws of [state] and is qualified to
transact business in, and is in good standing under, the laws of the [state].
2. The Borrower has the [corporate] power to engage in the
transactions contemplated by the Loan and Security Agreement, the Note, and the
Custodial Agreement and all requisite [corporate] power, authority and legal
right to execute and deliver the Loan and Security Agreement, the Note, and the
Custodial Agreement and observe the terms and conditions of such instruments.
The Borrower has all requisite [corporate] power to borrow under the Loan and
Security Agreement and to grant a security interest in the Collateral under the
Loan and Security Agreement.
3. The execution, delivery and performance by the Borrower of the
Loan and Security Agreement, the Note, and the Custodial Agreement, and the
borrowings by the Borrower and the pledge of the Collateral under the Loan and
Security Agreement have been duly authorized by all necessary [corporate] action
on the part of the Borrower. Each of the Loan and Security Agreement, the Note
and the Custodial Agreement have been executed and delivered by the Borrower and
are legal, valid and binding agreements enforceable in accordance with their
respective terms against the Borrower, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Lender's
security interest in the Collateral.
4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of the Loan and Security Agreement, the Note and the Custodial
Agreement or for the borrowings by the Borrower under the Loan and Security
Agreement or the granting of a security interest to the Lender in the
Collateral, under the Loan and Security Agreement.
C-1-2
5. The execution, delivery and performance by the Borrower of, and
the consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Custodial Agreement do not and will not (a) violate
any provision of the Borrower's charter or by-laws, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to the Borrower of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which [we][I] have knowledge (after due
inquiry) to which the Borrower is a party or by which it is bound or to which it
is subject, or (except for the Liens created pursuant to the Loan and Security
Agreement) result in the creation or imposition of any Lien upon any Property of
the Borrower pursuant to the terms of any such agreement or instrument.
6. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against the Borrower which, in
[our] [my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business
substantially as now conducted or in any material liability on the part of the
Borrower or which would draw into question the validity of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the transactions contemplated
thereby, or which would be reasonably likely to impair materially the ability of
the Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Custodial Agreement or the Mortgage Loans.
7. The Loan and Security Agreement is effective to create, in favor
of the Lender, a valid security interest under the Uniform Commercial Code in
all of the right, title and interest of the Borrower in, to and under the
Collateral as collateral security for the payment of the Secured Obligations (as
defined in the Loan and Security Agreement), except that (a) such security
interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, and (b) the security interests in Collateral in which the
Borrower acquires rights after the commencement of a case under the Bankruptcy
Code in respect of the Borrower may be limited by Section 552 of the Bankruptcy
Code.
8. When the Mortgage Notes are delivered to the Custodian, endorsed
in blank by a duly authorized officer of the Borrower, the security interest
referred to in paragraph 7 above in the Mortgage Notes will constitute a fully
perfected first priority security interest in all right, title and interest of
the Borrower therein, in the Mortgage Loan evidenced thereby and in the
Borrower's interest in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form UCC-1 naming
the Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 1
attached hereto, the security interests
C-1-3
referred to in paragraph 7 above will constitute fully perfected security
interests under the Uniform Commercial Code in all right, title and interest of
the Borrower in, to and under such Collateral, which can be perfected by filing
under the Uniform Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices and
the proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Filing
Collateral as of the dates and times specified on Schedule 2. The UCC Search
Report identifies no Person who has filed in any Filing Office a financing
statement describing the Filing Collateral prior to the effective dates of the
UCC Search Report.
10. The Assignments of Mortgage are in recordable form, except for
the insertion of the name of the assignee, and upon the name of the assignee
being inserted, are acceptable for recording under the laws of the state where
each related Mortgaged Property is located.
11. The Borrower is not an "investment company", or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
Very truly yours,
C-1-4
EXHIBIT C-2
[FORM OF OPINION OF COUNSEL TO GUARANTOR]
(date)
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to [NAME OF
GUARANTOR], a [________ corporation] (the "Guarantor"), with respect to certain
matters in connection with that certain Guaranty, dated as of ___________, 200_
(the "Guaranty"), by and between the Guarantor and Xxxxxx Xxxxxxx Xxxx Xxxxxx
Mortgage Capital Inc. (the "Lender"), being executed contemporaneously with a
Master Loan and Security Agreement, dated as of ______________, 200__ (the "Loan
and Security Agreement"), by and between the [NAME OF BORROWER] (the "Borrower")
and the Lender and a Promissory Note, dated ________, 200_, from the Borrower to
the Lender (the "Note"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Loan and Security Agreement.
[We] [I] have examined the following documents:
1. the Guaranty;
2. the Loan and Security Agreement;
3. the Note;
4. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Borrower [and the
Guarantor] contained in the Loan and Security Agreement [and the Guaranty,
respectively]. [We] [I] have assumed the authenticity of all documents submitted
to [us][me] as originals, the genuineness of all signatures, the legal capacity
of natural persons and the conformity to the originals of all documents
submitted to [us][me] as copies.
Based upon the foregoing, it is [our] [my] opinion that:
C-2-1
1. The Guarantor is a [________ corporation] duly organized, validly
existing and in good standing under the laws of [state] and is qualified to
transact business in, and is in good standing under, the laws of [state].
2. The Guarantor has all requisite [corporate] power, authority and
legal right to execute and deliver the Guaranty and observe the terms and
conditions thereof.
3. The execution, delivery and performance by the Guarantor of the
Guaranty have been duly authorized by all necessary [corporate] action on the
part of the Guarantor. The Guaranty has been executed and delivered by the
Guarantor and is a legal, valid and binding obligation enforceable in accordance
with its terms against the Guarantor, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder.
4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of the Guarantor for the execution, delivery or performance
by the Guarantor of the Guaranty.
5. The execution, delivery and performance by the Guarantor of, and
the consummation of the transactions contemplated by the Guaranty does not and
will not (a) violate any provision of the Guarantor's charter or by-laws, (b)
violate any applicable law, rule or regulation applicable to the Guarantor, (c)
violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to the Guarantor of which I
have knowledge (after due inquiry) or (d) result in a breach of, constitute a
default under, require any consent under, or result in the acceleration or
required prepayment of any indebtedness pursuant to the terms of, any agreement
or instrument of which [we][I] have knowledge (after due inquiry) to which the
Guarantor is a party or by which it is bound or to which it is subject, or
result in the creation or imposition of any Lien upon any Property of the
Guarantor pursuant to the terms of any such agreement or instrument.
6. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened, against the Guarantor which, in
[our] [my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Guarantor or in any
material impairment of the right or ability of the Guarantor to carry on its
business substantially as now conducted or in any material liability on the part
of the Guarantor or which would draw into question the validity of the Guaranty
or of any action taken or to be taken in connection with the transactions
contemplated thereby, or which would be reasonably likely to impair materially
the ability of the Guarantor to perform under the terms of the Guaranty.
Very truly yours,
C-2-2
EXHIBIT D
[FORM OF REQUEST FOR BORROWING]
Master Loan and Security Agreement, dated as of December 1, 2000
(the "Loan and Security Agreement"), by and between the Borrower and Xxxxxx
Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc. (the "Lender"),
Lender: Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
Borrower: NC Capital Corporation
Requested Fund Date: ______________________________
Transmission Date: ______________________________
Transmission Time:
Mortgage
Loans to be Pledged: See Attached
UPB: $_____________________________
Requested Wire Amount: $_____________________________
Wire Instructions:
Requested by:
NC CAPITAL CORPORATION
By:
___________________________
Name:
Title:
D-1
Attachment 1
SCHEDULE OF ELIGIBLE MORTGAGE LOANS PROPOSED TO BE PLEDGED
D-2
Attachment 2
OFFICER'S CERTIFICATE
The undersigned hereby certifies to the Lender on behalf of the
Borrower, as of the requested Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing
on the date hereof nor will occur after giving effect to such Loan as a result
of such Loan;
(b) each of the representations and warranties made by the
Borrower in or pursuant to the Loan Documents is true and correct in all
material respects on and as of such date as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date); and
(c) the Borrower is in compliance with all governmental licenses
and authorizations and is qualified to do business and in good standing in all
required jurisdictions.
Responsible Officer Certification:
By:____________________________
Name:
Title:
D-3
EXHIBIT E-1
[FORM OF BORROWER'S RELEASE LETTER]
[Date]
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Re: Master Loan and Security Agreement, dated as of December 1, 2000
(the "Loan and Security Agreement"), by and between NC Capital
Corporation (the "Borrower") and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage
Capital Inc. (the "Lender")
Ladies and Gentlemen:
With respect to the mortgage loans described in the attached
Schedule A (the "Mortgage Loans") (a) we hereby certify to you that the Mortgage
Loans are not subject to a lien of any third party and (b) we hereby release all
right, interest or claim of any kind with respect to such Mortgage Loans, such
release to be effective automatically without further action by any party upon
payment from Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc., of the amount of
the Loan contemplated under the Loan and Security Agreement (calculated in
accordance with the terms thereof) in accordance with the wiring instructions
set forth in the Loan and Security Agreement.
Very truly yours,
NC CAPITAL CORPORATION
By:_________________________________________
Name:
Title:
EXHIBIT E-2
[FORM OF WAREHOUSE LENDER'S RELEASE LETTER]
(Date)
Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Re: Certain Mortgage Loans Identified on Schedule A hereto and owned
by NC Capital Corporation
The undersigned hereby releases all right, interest, lien or claim
of any kind with respect to the mortgage loan(s) described in the attached
Schedule A, such release to be effective automatically without any further
action by any party upon payment in one or more installments, in immediately
available funds of $__________________, in accordance with the following wire
instructions:
____________________________________________
____________________________________________
Very truly yours,
[WAREHOUSE LENDER]
By: ________________________________________
Name:
Title:
EXHIBIT F
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY THE BORROWER]
EXHIBIT G
FORM OF SERVICER NOTICE
__________ __, 200__
[SERVICER], as Servicer
[ADDRESS]
Attention: ___________
Re: Master Loan and Security Agreement, dated as of December 1, 2000
(the "Loan Agreement"), by and between NC Capital Corporation (the
"Borrower") and Xxxxxx Xxxxxxx Xxxx Xxxxxx Mortgage Capital Inc.
(the "Lender").
Ladies and Gentlemen:
[SERVICER] (the "Servicer") is servicing certain mortgage loans for
the Borrower pursuant to certain Servicing Agreements between the Servicer and
the Borrower. Pursuant to the Loan Agreement between the Lender and the
Borrower, the Servicer is hereby notified that the Borrower has granted a
security interest to the Lender in certain mortgage loans which are serviced by
Servicer.
Upon receipt of a Notice of Event of Default from the Lender in
which the Lender shall identify the mortgage loans which are then pledged to the
Lender under the Loan Agreement (the "Pledged Mortgage Loans"), the Servicer
shall segregate all amounts collected on account of such Pledged Mortgage Loans,
hold them in trust for the sole and exclusive benefit of the Lender, and remit
such collections in accordance with the Lender's written instructions. Following
such Notice of Event of Default, the Servicer shall follow the instructions of
the Lender with respect to the Pledged Mortgage Loans, and shall deliver to the
Lender any information with respect to the Pledged Mortgage Loans reasonably
requested by the Lender.
Notwithstanding any contrary information or direction which may be
delivered to the Servicer by the Borrower, the Servicer may conclusively rely on
any information, direction or notice of an Event of Default delivered by the
Lender, and the Borrower shall indemnify and hold the Servicer harmless for any
and all claims asserted against the Servicer for any actions taken in good faith
by the Servicer in connection with the delivery of such information or Notice of
Event of Default.
No provision of this letter may be amended, countermanded or
otherwise modified without the prior written consent of the Lender. The Lender
is an intended third party beneficiary of this letter.
i
Please acknowledge receipt and your agreement to the terms of this
instruction letter by signing in the signature block below and forwarding an
executed copy to the Lender promptly upon receipt. Any notices to the Lender
should be delivered to the following address: 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000; Attention: Xx. Xxxxx Xxxxxxxxxx; Telephone: (000) 000-0000, Facsimile:
(000) 000-0000, with a copy to Mr. Xxxx Xxxxxx; Telephone: (000) 000-0000;
Facsimile: (000) 000-0000.
Very truly yours,
NC CAPITAL CORPORATION
By: _________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
_____________________________
as Servicer
By:__________________________
Title:
Telephone:
Facsimile:
ii
